HHS Issues Proposed Regs On Financial Integrity, Oversight Standards For Exchanges

The Department of Health and Human Services (HHS) has issued proposed regulations on a number of policies related to the implementation of the Patient Protection and Affordable Care Act (ACA), including provisions regarding Affordable Insurance Exchanges, also known as Health Insurance Marketplaces. Much of the proposed rule focuses on program integrity regarding state Exchanges, issuers offering coverage in the federally-facilitated Exchanges (FFE), advance payments of the premium tax credit and cost-sharing reductions, and premium stabilization programs. The proposed regulation was published in the June 19 Federal Register.

The rule also proposes establishing standards for HHS-approved enrollee satisfaction survey vendors, standards for the handling of consumer complaints by issuers in the Exchanges, and other provisions meant to ensure smooth operation of the Exchanges, protect consumers, and give flexibility to states.

Oversight of state-operated premium stabilization programs. Risk adjustment and reinsurance programs are important elements in guaranteeing affordable health insurance to consumers by helping to ensure a level playing field and stabilization of premiums. To protect the financial integrity of these programs, HHS proposes standards for the oversight of states that operate either risk adjustment or reinsurance programs. The rule would require that states keep an accurate accounting for the programs, submit to HHS and make public reports on operations, and take other steps to ensure the soundness and transparency of the programs.

Advance payments of premium tax credit, cost-sharing reductions. One of HHS’s key goals with respect to the oversight of advance payments of the premium tax credit and cost-sharing reductions is ensuring that eligible enrollees receive the correct tax credit and/or cost sharing reduction. In order to achieve this goal, HHS proposes timeframes for refunds to eligible enrollees and providers, as applicable, when an issuer incorrectly applies the advance payment of the premium tax credit or cost-sharing reductions, or incorrectly assigns an individual to a plan variation (or a standard plan without cost-sharing reductions). HHS also proposes general standards necessary for the oversight of these payments, including the maintenance of records, annual reporting of summary level statistics, and audits.

Program integrity of state Exchanges. The rule proposes standards for the oversight of state Exchanges through monitoring, reporting, and oversight of financial activities and Exchange activities. These mechanisms would assure that consumers are properly given their choices of coverage available, that consumers correctly receive advance payments of the premium tax credit or cost-sharing reductions if they qualify, and that Exchanges are meeting the standards of the ACA in a transparent manner.

Oversight of QHP issuers in FFEs. To protect consumers and the financial integrity of FFEs, HHS proposes standards that would establish a progressive approach for the oversight of health insurance issuers. This includes HHS focusing on ensuring compliance with Exchange-related standards while preserving states’ traditional role in overseeing the general insurance market.

The proposed rule provides that QHP issuers in an FFE make available to HHS the issuer’s premises, physical facilities, and equipment for compliance reviews. HHS may conduct compliance reviews of a QHP issuer’s operations during any plan benefit year for up to ten years from the last day of that plan benefit year, except when a QHP is no longer available through an FFE, HHS would be able to conduct a compliance review of the last plan benefit year of that QHP only up to ten years from the last day that the QHP’s certification was effective.

State operation of SHOP-only. HHS is proposing additional state flexibility by permitting a state to operate a state-based Small Business Health Options Program (SHOP) while HHS would operate an individual market FFE in that state.

The proposed regulations provide that when a state establishes and operates a SHOP independently of an FFE, the SHOP would have the flexibility to focus its Navigator program on outreach and education to small employers. If the state takes this option, SHOP Navigators would be able to fulfill their statutory and regulatory obligations to facilitate enrollment in QHPs, and to refer consumers with complaints, questions, and grievances to applicable offices of health insurance consumer assistance or ombudsmen, by referring small businesses to agents and brokers for these types of assistance, so long as state law permits agents and brokers to carry out these functions.

Consumer protections for enrollment assistance. Agents and brokers will play an important role in helping consumers and small businesses shop for and compare coverage in the Exchanges. This rule proposes to build on existing standards for agents and brokers by clarifying the pathways through which agents and brokers will help consumers and small businesses in FFEs.

Regardless of what pathway they use, all agents and brokers must register with CMS before they may assist qualified individuals in enrolling in individual exchange coverage through an FFE. Once an agent or broker has completed the registration process, which includes undergoing basic CMS identity proofing, completing an FFE training course, and signing an agreement with CMS, he or she will receive an active FFE user identification number, which will be the agent’s or broker’s unique identifier in an FFE.

Standards for enrollee satisfaction survey vendors. The ACA provides for the development of an enrollee satisfaction survey that will be available to the public and will allow for the easy comparison of enrollee satisfaction levels among comparable plans in the Exchange. The proposed rule sets forth a process for approving and overseeing survey vendors to administer the survey on behalf of QHP issuers in the Exchange.

Other provisions. The proposed regulations provide that QHP issuers would be required, at a minimum, to accept a variety of payment formats, including, but not limited to, paper checks, cashier’s checks, money orders, and replenishable pre-paid debit cards, so that individuals without a bank account will have readily available options for making monthly premium payments. Issuers also may offer electronic funds transfer from a bank account and automatic deduction from a credit or debit card as payment options. HHS seeks comment on this proposal and whether other payment methods should be included.

HHS also proposes to amend the definitions of “small employer” and “large employer” in HHS Reg. Sec. 144.103, consistent with PHSA Sec. 2791(e). PHSA Sec. 2791(e)(2) generally defines a large employer as an employer with an average of at least 101 employees. Sec. 2791(e)(4) generally defines a small employer as an employer with an average at least one but not more than 100 employees. Pursuant to ACA Sec. 1304(b)(3), each state has the option to limit small employers to having no more than 50 employees until 2016.

Although the ACA amended the definitions of “small employer” and “large employer” for purposes of the PHSA, ERISA, and the Internal Revenue Code continue to define a small employer as one that has 50 or fewer employees. Additionally, although the ACA removed an exception for very small plans contained in PHSA Sec. 2721(a) (providing that title XXVII of PHS Act generally does not apply to plans (and health insurance coverage offered in connection with such plans) with less than two participants who are current employees), parallel provisions in ERISA Sec. 732(a)) and the IRC Sec. 9831(a)(2) generally continue to provide that the requirements of part 7 of ERISA, and chapter 100 of the IRC, do not apply to such plans.

The Departments of HHS, Labor, and the Treasury recognize that these statutory changes may create a conflict between the provisions of title XXVII of the PHSA and part 7 of ERISA and chapter 100 of the IRC with respect to insured group health plans. HHS solicits comments on what interpretations of the statute, if any, are necessary to ensure smooth implementation across the PHSA, ERISA, and the Code, including comments to help ensure that shared provisions are administered to have the same effect at all times.

Visit our News Library to read more news stories.