In late June, the U.S. Department of Health and Human Services (HHS) issued its first proposed rule governing the health insurance markets and marketplaces. The rule includes some significant changes aimed at achieving priorities outlined in President Biden’s Executive Order to strengthen provisions within Medicaid and the Affordable Care Act (ACA).
Major changes proposed by the rule are summarized below. Comments on the rule may be submitted here by July 28.
Extends open enrollment period for an additional month
The proposed rule would extend the open enrollment period (OEP) deadline from December 15 to January 15. The change would apply to both federal and state-based marketplaces (the FFM and SBMs) and if finalized, would begin with this upcoming enrollment period, which is slated to begin on November 1, 2021.
The December 15 deadline has been in place since the 2018 plan year. States that operate their own marketplaces (SBMs) have flexibility to extend their deadlines beyond this period, and many opt to do so depending on the needs within their markets. Both the FFM and SBMs also have the ability to extend special enrollment periods (SEPs) particularly in the case of exceptional circumstance, as many did to address changing circumstances during the COVID-19 pandemic.
The proposed rule acknowledges that altering the years-long standing deadline may spur consumer confusion and that the current the December 15 deadline ensures that coverage for enrollees will be effective for the full year starting January 1. However, the proposed rule explains that the 45-day enrollment period does not provide sufficient time to assist all applicants and that additional time is needed for these consumers to sufficiently update information and review available plan options. Specifically, the rule cites a pattern of unexpected cost increases experienced by consumers who were automatically reenrolled into a plan without realizing the amount of their federal premium tax credits (PTCs) had decreased due to the existence of lower cost “benchmark plans” (the insurance plan against which PTCs are set). In these cases, the enrollees’ January bill may be the first time they become aware of cost changes and the January 15 deadline gives enrollees some leeway to switch before being locked into a potentially unaffordable option for a year.
Beyond requesting information on potential impacts of the proposed rule on insurance markets and enrollees, HHS is soliciting ideas for proposed alternate strategies, including possible institution of an SEP for enrollees who experience cost increases because of changes to their benchmark plan. In addition, HHS invites comments on flexibilities given to SBMs related to OEPs and SEPs.
Modifications to Section 1332 state innovation waiver program
Section 1332 waivers grant states the option to waive significant portions of the Affordable Care Act (ACA) so long as proposals meet four statutory guardrails:
- Provision of coverage at least as comprehensive as that offered under the ACA
- Provision of coverage as least as affordable as that offered through the ACA
- Assurance that a comparable number of individuals will be insured; and
- Assurance the plan will not increase the federal deficit.
Guidance issued in 2018, and further promulgated in later regulation, set a new interpretation of the guardrail definitions limiting how strictly all of a state’s proposed waiver changes needed to adhere to the guardrails. For instance, the 2018 regulation provided a looser definition of coverage that allows health plans that do not meet the ACA’s standards (ex. short-term plans) meet the criteria of the guardrails. (For more on the 2018 changes see: New Guardrail Definitions Reduce Minimum Requirements for Markets)
Further, HHS proposes to rescind recent rules and guidance, reinstating prior rules requiring that all coverage under a states’ waiver meet the guardrail requirements and clarifying that “coverage” means minimum essential coverage as defined under the ACA. The proposed rule also clarifies some processes related to waiver applications including reinforcing that HHS will not take into consideration waiver proposal elements contingent on the enactment of future state laws or waiver changes (e.g., Medicaid Section 1115 waivers). It also would codify a process by which states may request waiver amendments and clarifies that waiver funding may be adjusted annually based on changes in federal or state laws.
New SEP for low-income households eligible for $0 coverage
The proposed rule would institute a new SEP for individuals and families whose income is up to 150% of the federal poverty level (FPL), allowing them to enroll in marketplace coverage at any point during the year. The change is a direct response to the American Rescue Plan Act’s (ARP) temporary enhancements to the amount of PTCs available to all qualified individuals enabling individuals up to 150% FPL to enroll in a benchmark plan for $0 per month. Prior to the increased subsidy, these individuals would have to pay up to 4.14 percent of their income to purchase a benchmark plan.
The SEP would limit options by allowing eligible individuals to only enroll in a silver-level plan sold through the marketplace. Silver-level plans pose two advantages to enrollees at this income level. First, benchmark plans are set as the second-lowest cost silver plan available to that consumer, so most silver plans could be purchased at $0 to very low cost to the consumer. Second, individuals with income that is less than 250% FPL who enroll in a silver plan also qualify for cost-sharing reductions (CSRs), or subsidies that cover the cost of out-of-pocket expenses such as deductibles and co-pays. Low premium payments and CSRs combine to ensure enrollees high-value health coverage at little to no personal expense.
The SEP would be coupled with dedicated outreach efforts to spread awareness about the opportunity especially to the 20 percent of uninsured individuals estimated to live in households with income below 150% FPL. HHS doesn’t dictate when the SEP would be enacted and proposes to grant discretion to the SBMs about whether to implement the SEP. The proposed rule also doesn’t include requirements for document submission prior to eligibility determinations. HHS requests comments on these issues as well as on anticipated impacts of the policy on insurance markets including adverse selection.
The proposed rule also highlights the potential impact of this SEP given the impending end of the COVID-19 public health emergency (PHE). During the PHE, states are prohibited from disenrolling individuals from their Medicaid programs. Once disenrollments resume, marketplaces are expected to experience an influx of enrollees, particularly of individuals with income below 150% FPL. Currently, these enrollees would qualify for a 60-day SEP triggered by loss of essential coverage, but the proposed SEP would allow these individuals to enroll beyond that 60-day period. (See this blog offer more details about Medicaid and the end of the PHE.)
Reinstates required Navigator program post-enrollment duties
Every marketplace is required to institute a Navigator program—a network of community-based individuals trained to aid consumers with procuring health insurance coverage with a particular focus on serving underserved or vulnerable populations. Recognizing that many enrollees, especially in these targeted communities, need assistance beyond just applying for and enrolling in coverage, the proposal reinstates requirements for post-enrollment assistance
eliminated in the 2020 notice of benefits and payment parameters rule. Specifically, the rule would require Navigators to aid enrollees on topics including eligibility appeals, PTC reconciliation, and basics of using and accessing care. Furthermore, the rule broadens the interpretation of activities to support “use of and access to care” to include help with understanding:
- key health insurance terms,
- cost differences between use of emergency and primary care under selected plans,
- how to identify in-network providers,
- rights to coverage of certain preventive services without cost sharing, and
- common follow-up steps to care such as how to fill prescriptions.
To accomplish these tasks, the rule suggests that Navigators may leverage resources from the Centers for Medicare and Medicaid Services’ Coverage to Care initiative. These reinstated requirements were also reinforced in HHS’ latest funding announcement for Navigator grants.
Repeals Exchange Direct Enrollment option
Rules published in January 2021 established a new option by which states could leverage direct enrollment (DEs) entities in lieu of the FFM or SBM. DEs are private entities (ex., web-brokers, insurers) that are certified to sell marketplace coverage, though they may also sell other products including short-term plans. Individuals may apply for and enroll in coverage through enhanced DEs without ever interacting directly with a marketplace (e.g., healthcare.gov).
Beginning for plan year 2022, the new Exchange Direct Enrollment option would have allowed a state to abolish operation of the FFM or an SBM, and instead rely completely on DEs to enroll eligible individuals in coverage. HHS notes several reasons for proposing to eliminate the option including a need to focus resources on shifted priorities including implementation of the ARP. HHS also noted it had received no interest to date from states wishing to implement the option.
Increases federal marketplace user fee
Operation of the federal marketplace is financed through an assessment on monthly insurance premiums charged to all participating qualified health plan issuers. HHS is proposing a 0.5% increase to the assessment rate to 2.75% in states that use the FFM and 2.25% for states that use they hybrid federal partnership model (SBM-FP). The increases will be used to cover expanded federal services including increased investment in outreach and educational services. HHS anticipates that these investments will lead to improved risk pools, lower monthly premiums, and a reduction in the uninsured and comes on the heels of the federal government’s largest ever investment ($80 million) on Navigators.
Repeals “double-billing” requirement for abortion coverage
The proposed rule would repeal not-yet-implemented requirements on insurers to send separate bills and collect separate payments for premium expenses related to coverage of abortion services. Federal law prohibits use of federal dollars to pay for abortion coverage (except in certain circumstances). To ensure that federal subsidies (PTCs and CSRs) do not pay for such services, insurers are required to separate premium payments used to cover abortion services into a different funding pool and to alert enrollees of the charge by:
- Sending enrollees a notice that their monthly bill included this charge;
- Including the charge as a line item in the enrollees’ monthly bill; and/or
- Sending a separate monthly bill for these services.
Rules finalized in 2019 took these requirements further, mandating that insurers both send a separate bill for the abortion coverage and collect those premiums via payments separate from the enrollees primary premium payment. It was estimated the changes would cost $1 billion from 2020-2023, with $229 million in additional costs each ensuing year to implement.
The proposed rule would repeal 2019 requirements citing excessive administrative and operational burdens caused by the rule as well as ongoing litigation against the rule that had halted its implementation for reasons ranging from its inability to preempt state laws mandating certain billing procedures to incompatibility with federal laws preventing the promulgation of regulations that “create any unreasonable barriers to obtaining appropriate medical care or impede timely access to healthcare services”.
Essential Health Benefit (EHB) compliance with mental health parity
All marketplace plans are required to cover mental health and substance use disorder (SUD) services as part their benefits packages. The proposed rule would enact technical changes to clarify that coverage of mental health and SUD services must comply with all requirements of the Mental Health Parity and Addition Equity Act of 2008 (MHPAEA) including provision of behavioral health treatment services that meet the MHPAEA’s parity standards.