HHS Proposes Standards For Insurance Issuers And Marketplaces In 2016

The Department of Health and Human Services (HHS) has issued a proposed rule establishing standards for insurance issuers and Marketplaces for 2016. The proposed rule sets forth payment parameters and information related to the risk adjustment, reinsurance, and risk corridors programs; the cost sharing parameters and cost sharing reductions; as well as user fees for the Federally-facilitated Exchange (FFE). In addition, the proposed rule covers standards for the annual open enrollment period for the individual market in benefit years on or after Jan. 1, 2016, essential health benefits, qualified health plans (QHPs), network adequacy, quality improvement strategies, the Small Business Health Options Program (SHOP), guaranteed availability, guaranteed renewability, minimum essential coverage, the rate review program, the medical loss ratio (MLR) program, and related topics. The proposed rule was published in the November 26 Federal Register.

Background. The proposed rule covers policies and programs which were created under the Patient Protection and Affordable Care Act (ACA), as qualified individuals and qualified employers can purchase private health insurance through Affordable Insurance Exchanges or Exchanges, sometimes called Health Insurance Marketplaces or Marketplaces. Individuals may enroll in qualified health plans (QHPs) on an Exchange. Under these programs, HHS has a variety of premium stabilization programs in order to make high quality insurance affordable and available to all Americans. Some risk factors in the proposed rule might be recalculated for the corresponding final rule based on claims data from the Truven Health Analytics 2010 MarketScan Commercial Claims and Encounters database for 2013.

Payments and user fees. The following reinsurance payment parameters are proposed for 2016:
• $90,000 is the attachment point;
• $250,000 is the reinsurance cap;
• the coinsurance rate is 50 percent.

In 2016 the proposed per capita reinsurance contribution rate paid by health insurance issuers and certain self-insured group health plans on behalf of enrollees is $27, annually. The user fee (collected from participating issuers to fund FFM operations) will remain at 3.5 percent, the rate for 2014 and 2015. The premium adjustment percentage, or the percentage by which the average per capital premium for health insurance coverage in the U.S. exceeds the average per capita premium for 2013, will be adjusted, for a two year period, by 8.3 percent. This is a combination of the 4.3 percent premium increase between 2013 and 2014, as well as another 3.9 percent increase between 2014 and 2015.

Cost sharing. The maximum annual limit on cost sharing for 2016 will be $6,850 for self-only coverage and $13,700 for all other coverage. This applies to the plan year and not the calendar year for non-calendar plans. Issuers are permitted but not required to count out-of-network cost sharing against the limit. HHS proposes that individuals with incomes between 100 and 200 percent of the federal poverty level (FPL) have a reduced maximum annual limit for self-coverage only of $2,250, and for those with incomes between 200 percent to 250 percent of the FPL, a limit for self-coverage only of $5,450.

Risks. Clarification of risk corridors is proposed in order to strengthen current policy by which the risk corridors transitional adjustment for benefit year 2014 does not encompass early renewal plans unless and until the plan renews in late 2014 and becomes a transitional plan. Furthermore, if in the last year of the risk corridors program, there is an excess cumulative risk corridors collection exceeding the cumulative risk corridors payments owed, HHS proposes implementing an adjustment to the profit floor and administrative cost ceiling to increase payments for eligible issuers for the benefit year 2016. The adjustment would be for issuers whose medical loss ratios (MLR) meet or exceed the 80 percent MLR threshold for the 2016 benefit year. Furthermore, the proposed rule will require subscribers of non-federal governmental or other group health plans not subject to ERISA receive the benefit of MLR rebates within three months of receipt of the rebate by their group policy holder.

Open enrollment and benefits. Open enrollment for plans beginning on or after Jan. 1, 2016, will begin on Oct. 1, 2015, and run through Dec. 15, 2015. Pediatric benefits will be provided until the end of a plan year in which the beneficiary turns 19 years of age. HHS proposes replacing the current drug policy coverage standard with one based on a pharmacy and therapeutic committee system. Issuers would design their formularies using scientific evidence including safety and efficacy, cover a range of drugs in a broad distribution of therapeutic categories and classes, and provide access to drugs that are included in broadly accepted treatment guidelines. Alternatively, or in combination with the changes, HHS seeks comments on whether they should use another drug count standard based on the American Hospital Formulary Service. Furthermore, HHS proposes that issuers be required to provide most drugs at network retail pharmacies instead of only through mail order, although costs could be different between retail pharmacies and mail order.

Essential health benefits. The proposed rule reiterates that “an issuer does not provide essential health benefits if its benefits design, or the implementation of its benefits design, discriminates based on an individual’s age, expected length of life, present or predicted disability, degree of medical dependency, quality of life, or other health conditions’ and that HHS will identify specific practices that may be considered discriminatory in order to make plans aware of impermissible benefit designs. The term “habilitative services” will be formalized, although it will continue to use its current definition.

Qualified health plans. The good faith compliancy policy for QHPs in FFMs will be extended through the 2015 calendar year.

Newtwork adequacy. QHPs must publish an up-to-date, accurate, and complete provider directory. HHS seeks comments on the best way to make this information available in standard machine-readable forms, while proposing that providers place this information on their website with a clearly identifiable link or tab and without creating or accessing an account or providing a policy number.

Small Business Health Options Program (SHOP). The proposed rule also attempts to streamline the administration of SHOP. First, HHS proposes permitting SHOPs to assist employers in the administration of continuation coverage (COBRA) enrolled through a SHOP. Second, HHS proposes permitting a SHOP elect to renew an employer’s offer of coverage where the employer remains eligible to participate in the SHOP, and has taken no action to modify its offer of coverage or withdraw from the SHOP during its annual election period, as long as the offered coverage is still available through the SHOP. HHS also proposes that the minimum participation rates for the SHOP align with the current practices of issuers.

Rate review. For issuers seeking rate increases of 10 percent or more, or above a state-specified threshold, in individual or small group markets, the increases must be publicly disclosed and the increases must be reviewed by either a state regulator or HHS to determine their reasonability. Issuers also must submit information about all rate increases within the individual and small group markets for QHPs and non-QHPs on a uniform timeline. States would have the ability to establish earlier submission and posting timeframes at their discretion.

A fact sheet on the proposed rule is available at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Fact-Sheet-11-20-14.pdf.

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