FAQs From CMS Address Health Insurance Marketplace Issues

The Centers for Medicaid and Medicaid Services (CMS) has issued a set of frequently asked questions (FAQs) on the health insurance marketplaces under the Patient Protection and Affordable Care Act (ACA). These FAQs address a variety of issues relating to marketplaces (also known as exchanges in ACA), including the oversight of premium stabilization programs, advance payments of the premium tax credit, and cost-sharing reductions; state-based marketplace reporting requirements; and eligibility and enrollment.

CMS oversight. The FAQs indicate that CMS intends to propose monitoring and oversight measures related to the premium stabilization programs applicable to both states and issuers. With respect to state-operated risk adjustment programs, CMS intends to propose a standard under which the state would maintain an accurate accounting for each benefit year of risk adjustment expenditures, receipts, and administrative expenses, and the state would provide to CMS and make public an annual summary of the program. CMS also intends to propose that each state-operated risk adjustment program provide for an annual external financial and programmatic audit, and maintain relevant records for ten years.

With respect to advance payments of the premium tax credit and cost-sharing reductions, CMS intends to propose standards for reimbursement to eligible enrollees, and providers as applicable, when a qualified health plan (QHP) issuer incorrectly applies cost-sharing reductions or advance payments of the premium tax credit with respect to an enrollee. CMS also intends to propose standards relating to record retention, annual reporting, and audits.

Issuer oversight. The FAQs indicate that CMS expects that state departments of insurance will continue to oversee issuers in the health insurance market pursuant to the respective states’ existing law and regulations. CMS will coordinate with state monitoring and oversight efforts to avoid duplicating such efforts, to the extent feasible and appropriate.

CMS will take an enforcement approach that would take into consideration various factors, including any past or concurrent state determinations and indications of the issuer’s good faith efforts in maintaining compliance with standards specific to the federally-facilitated marketplace. CMS will generally look to the states to enforce standards applicable to issuers in the federally-facilitated marketplace. Where a state has elected not to enforce a standard or lacks the regulatory or enforcement authority to do so, CMS intends to propose enforcement of federally-facilitated marketplace-specific standards through civil money penalties (CMPs) and decertification. Absent any extraordinary circumstances, decertification should be uncommon. Issuers will be able to appeal the issuance of CMPs or decertifications.

Reporting requirements. CMS will propose requiring state-based marketplaces to submit reports to CMS at least annually, including but not limited to financial statements and summary-level statistical reports regarding eligibility determinations, enrollments, appeals, eligibility determination errors, privacy and security safeguards, and fraud and abuse determinations. Additionally, state-based marketplaces will submit performance monitoring data including financial sustainability, operational efficiency, consumer satisfaction, and quality of care data.

The FAQs indicate that state-based marketplaces will be required to maintain—for a minimum of ten years—records related to external audits, annual financial reports, error rate testing, consumer complaints, and other data sources in anticipation of targeted audits. Also, state-based marketplaces will be required to engage an independent qualified auditing entity to perform an independent audit of their annual financial statements and a review of the process/internal controls associated with their eligibility determinations and enrollments. State-based marketplaces will be required to provide the results of this financial and programmatic audit to CMS.

Cost-sharing reductions and HSAs. If an issuer seeks to offer a QHP designed to be eligible for pairing with a health savings account (HSA) in 2014, the issuer must comply with the cost-sharing reduction standards described in applicable regulations.

The FAQs indicate that certain plan variations of a QHP may require a low or zero deductible, or that certain services be exempt from the deductible. This may result in the plan variation not meeting IRS standards for a high deductible health plan (HDHP) and therefore not being eligible to be offered in conjunction with an HSA. CMS recommends that issuers and marketplaces educate consumers about this issue, both during open enrollment and when an individual has a change in eligibility for cost-sharing reductions. An individual who would not be eligible for the tax advantages of an HSA because the plan variation to which he or she would be assigned does not qualify as an HDHP may purchase the plan without cost-sharing reductions.

Eligibility and enrollment. CMS intends to propose rulemaking and supplemental guidance on the use of Health Plan Identifiers (HPID) in enrollment and payment transactions between issuers and the federally-facilitated marketplace.

A standard for HPIDs was adopted by the Department of Health and Human Services (HHS) on Sep. 5, 2012, and the system to enable insurance issuers to obtain an HPID has been available since March 28, 2013. All health plans are required to obtain HPIDs by Nov. 5, 2014 (small plans have until Nov. 5, 2015). All HIPAA covered entities—health care clearinghouses, covered health care providers, and health plans—are required to use HPIDs to identify health plans in standard transactions such as claims, referrals, and remittance advice by Nov. 7, 2016.

Issuer withdrawal from the market. The FAQs indicate that issuers can elect to discontinue offering all products in the small group market in a state but continue to offer products in the large group market in that state (and vice versa).

Although the final rule implementing Public Health Service Act (PHSA) Sec. 2703 addressed the market withdrawal exception to guaranteed renewability only with reference to the individual and “group” market, CMS intends to propose amendments in future rulemaking that recognize the distinction between the large group and small group market segments for purposes of PHSA Sec. 2703. Accordingly, an issuer could, in accordance with applicable state law and subject to the other requirements of HHS Reg. Sec. 147.106(d), satisfy the requirement in that regulation to discontinue offering all coverage by doing so with respect to either the large group or small group market without being required to withdraw from both segments of the group market.

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