Guidance issued on ACA’s state innovation waivers

The Departments of Health and Human Services (HHS) and Treasury have released guidance that contains information about state innovation waiver requirements that must be met, the application review process, the amount of pass-through funding, certain analytical requirements, and operational considerations. Included in the guidance are the statutory criteria that must be met in order for a waiver approval and clarifications that proposals will be evaluated specifically as they affect vulnerable and low-income populations under the Patient Protection and Affordable Care Act (ACA) protections focusing on access to affordable and comprehensive care.

Background. The ACA allows the HHS and Treasury, with the discretion, to approve a state’s proposal to waive specific provisions of the ACA (a state innovation waiver), provided the proposal meets certain requirements. In particular, the Departments can only exercise their discretion to approve a waiver if they find that the waiver: (1) would provide coverage to a comparable number of residents of the state as would be provided coverage absent the waiver; (2) would provide coverage that is at least as comprehensive and affordable as would be provided absent the waiver; and (3) would not increase the federal deficit. These waivers are available for effective dates beginning on or after January 1, 2017, and are for five years and renewable.

Statutory criteria. To meet the coverage requirement, a comparable number of state residents must be forecast to have coverage under the waiver as would have coverage absent the waiver. The state must forecast that the coverage requirement is met each year that a waiver would be in effect. The state also should provide a description of the model used to produce these estimates including data sources and quality, key assumptions, and parameters; micro data and other information may be requested.

Under the comprehensiveness requirement, health care coverage provided under the waiver must meet the requirements for essential health benefits (EHB) as defined by the ACA or, as appropriate, Medicaid or Children’s Health Insurance Program (CHIP) standards. A waiver cannot meet the comprehensiveness requirement if the waiver decreases: (1) the number of residents with coverage that is at least as comprehensive as the benchmark in all 10 EHB categories; (2) for any of the 10 EHB categories, the number of residents with coverage that is at least as comprehensive as the benchmark in that category; or (3) the number of residents whose coverage includes the full set of services that would be covered under the state’s Medicaid or CHIP programs.

To meet the affordability requirement, health care coverage under the waiver must be forecasted to be as affordable overall for state residents if they waiver was not granted. Affordability refers to state residents’ ability to pay for health care and may generally be measured by comparing residents’ net out-of-pocket spending for health coverage and services to their incomes. Out-of-pocket expenses include both premium contributions, and any cost sharing, such as deductibles, co-pays, and co-insurance, associated with the coverage. The primary focus of evaluation will not be on reduction of average costs, but rather the affects on vulnerable residents and those with high health spending burdens. As with the coverage requirement, the state must forecast that the requirement is met each year of the waiver period.

Finally, the projected federal spending under the waiver must be equal to or lower than the projected federal spending if the waiver was not granted. The effect on federal spending includes all changes in exchange financial assistance and other direct spending. Waivers must not increase the federal deficit over the period of the waiver.

Waiver assessments. The assessment of whether a state innovation waiver proposal satisfies the statutory criteria takes into consideration the impact of changes to ACA provisions made pursuant to the a grant of a waiver. The assessment considers related changes to the state’s health care system that, under state law, are contingent only on the approval of the state innovation waiver. For example, assessments do not consider the impact of policy changes contingent on additional state action, such as proposed state legislation. Nothing in the guidance would alter a state’s ability to make changes to its Medicaid and CHIP services consistent with applicable law.

The guidance cautions that there cannot be different rules for different states under the federal exchange. States seeking to make changes, including customized plan management or non-standard enrollment periods, will need to establish their own state exchange to do so.

Federal pass-through funding. The federal pass-through funding amount equals the Departments’ annual estimate of the federal cost (including outlays and forgone revenue) for exchange financial assistance under the ACA that would be by claimed by participants in the in the state during the calendar year if there was an absence of a waiver. The amount would not be claimed as a result of the waiver.

SOURCE: 80 FR 78131, December 16, 2015.

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