Last month, the US Department of Health and Human Services (HHS) released its proposed 2022 Notice of Benefit and Payment Parameters, the annual rule that governs health insurance and the exchanges. Its most significant proposal is creation of a new option that allows a state to exclusively use direct enrollment by health insurers and brokers to enroll individuals in qualified health plans that meet all of the Affordable Care Act’s (ACA) coverage requirements, such pre-existing condition protections and essential health benefits.
What is enhanced direct enrollment (EDE)?
The concept of direct enrollment (DE) is not new. Since the exchanges first became operational in 2014, there has always been an option allowing insurers and web-brokers to enroll eligible individuals into coverage. DE was designed to supplement the capacities of the exchanges by giving insurers and brokers a way to still reach out to individuals eligible for coverage and the federal advance premium tax credits (APTCs) and cost-sharing reductions (CSRs). In its early stages, DE was conducted by routing applicants from insurer or broker websites to the exchange, where the individual would complete an application to determine eligibility for coverage and subsidies. Once the application was complete, the individual would be routed back to the insurer or broker to complete enrollment.
In 2018, HHS established a new process for states using the FFE called enhanced direct enrollment (EDE), which allows individual seeking coverage to enroll directly with insurers or web-brokers without ever interacting with an exchange. The insurer or web-broker’s system interacts with an exchange behind the scenes, transferring the information necessary to determine an individual’s eligibility for coverage without that individual ever having to leave the insurer or web-broker website.
Since establishing the EDE option, participation by insurers and web-brokers has grown significantly. As of November 2020, 32 insurers and eight web-brokers were certified to conduct enhanced direct enrollment. In addition, three companies had been approved to serve as a DE technology vendor, providing insurers or brokers with the technology necessary to do enhanced direct enrollment. According to HHS, one-third of all FFE enrollments are conducted through a DE or EDE entity.
Development of the New EDE-Exchange Option
The proposed rule establishes a process so that a state can opt to have all enrollments go through EDE entities certified in the state, eliminating the option for residents to enroll via a health insurance exchange. The exchange (whether the state uses an FFE or SBE) would still exist in states that adopt this model, but would be limited to providing the back-end functionality necessary to determine a consumer’s eligibility for coverage, as well as maintenance of a general website with basic comparative information about the QHPs that may be available to a consumer.
This new option (referred to as FFE-DE or SBE-DE, depending if it is implemented by a state using the FFE or an SBE) would effectively eliminate the existence of a central, “one-stop shop” where applicants are presented with all available QHPs that they can compare, shop for, and enroll in. There is no requirement in the proposed rule that EDEs provide complete information about all the QHPs available to an applicant, though the proposed rule does include an inquiry from HHS about adding a requirement that web-brokers include information somewhere about the QHPs an individual cannot enroll in via its website. Further, EDEs may include information about alternative coverage products, such as short-term, limited-duration health insurance plans (short-term plans). A comparison between the model and traditional exchange are detailed in the table below.
The option to eliminate use of an exchange and adopt a model similar to the proposed rule’s FFE-DE was first proposed by Georgia and was recently approved. The Georgia Plan, called the Health Access Model, will move all “front-end functions” of an exchange (consumer outreach, customer services, and plan shopping, selection, and enrollment) to private entities, including insurers and web-brokers. These entities will interact with a state system that coordinates with HHS to determine applicants’ eligibility for federal subsidies. The federal government will then transfer subsidy payments directly to insurers with qualified enrolled individuals, as it does now.
In its application, Georgia officials state that a privatized system will provide its residents with “better access [and] improved customer service,” suggesting that competition and market incentives will drive private web-brokers to offer improved plan selection and enrollment assistance and local, customized customer service to attract the uninsured. The market incentives are primarily described as the commissions that web-brokers are paid for enrolling individuals into coverage. The state will also develop a website, which will contain information about all the health coverage options available in the state, and direct consumers as to where they can enroll in coverage including state-approved carriers and web-brokers. Georgia’s waiver was approved in November 2020.
Similar to the Georgia plan, the Centers for Medicare & Medicaid Services (CMS) states that use of EDEs through its proposed new model could enable the existence of “more curated, customized consumer experience designed to target diverse populations who need coverage.” The proposed rule also notes the ability of EDE entities to provide consumers with a “broader array” of options including ancillary products (e.g., vision, accident coverage), and alternative coverage products not sold through the exchanges, such as short-term plans. The proposed rule indicates these features may be especially important for consumers who do not qualify for federal subsidies, including individuals who are offered individual coverage health reimbursement accounts (HRAs) by their employers. (For more on individual coverage HRAs, read the NASHP blog, New Federal Health Reimbursement Proposal Adds New Variables to State Health Insurance Markets).
The proposal also would lower the user fee charged to issuers in states that opt to run the FFE-DE to 1.5 percent (the FFE fee is proposed to be 2.25 percent in 2022). The assumption is that savings from the lower user fee would be used by insurers to lower premiums or support enhancements to EDE platforms, though it is not a stated requirement in the HHS proposal. The proposed rule also suggests that states and the federal government could save money by no longer operating the full FFE or SBE models. It is assumed that instead, insurers and web-brokers would directly bear these operational costs, and may be able to do so at lower cost assuming their already enhanced technological capabilities.
The rule also indicates the potential for greater efficiency if consumers are allowed to enroll through various EDE entities available in a state rather than the “choke points” that may occur when a consumer only has access to one enrollment vehicle. However, because eligibility would still be conducted by exchanges, albeit on the backend, it is unclear how much efficiency could actually be attained through this method. It should also be noted that nothing currently prohibits an FFE state from having operational EDEs, and states could continue to function with EDEs and the exchange working in tandem.
As detailed in the table below, EDEs are required to meet many of the basic requirements similar to an exchange, including provisions to display accurate and complete information about the QHPs sold through their websites. However, none are required to clearly display all QHP options available to a consumer, and may only display some QHP options or even purposefully direct consumers away from QHP options. This is the case even if the consumer may be eligible for a state’s Medicaid program or federal subsidies that would help them to purchase an ACA-compliant QHP. In a report issued by the Center for Budget and Policy Priorities, several DEs were found to use tools that directed consumers away from QHPs and towards short-term plans. Such alternative forms of coverage do not meet all the coverage requirements enacted under the ACA, including guaranteed protections for individuals with pre-existing conditions, limits on cost-sharing, and provisions of essential health benefits (EHB). But, brokers, on average, are paid higher commissions for enrollment in short-term coverage than QHPs, which may influence DE practices.
If finalized as proposed, states looking to explore the new FFE-DE or SBE-DE option may decide to enact legislation or regulation to more strictly regulate EDEs, including prohibitions on practices that may divert individuals into coverage that may not best suit their financial, health, or family needs. States may also wish to consider policies to assure that EDEs do not negatively alter their risk pools by, for instance, diverting healthier individuals into alternatives that do not participate in insurer risk pools such as short-term plans.
The chart below provides additional details about the differences between the DE models and the health insurance exchanges. Comments on the rule are due by Dec. 30, 2020 and can be submitted here.
|Health Insurance Exchange (Traditional)||Direct Enrollment (DE)||Enhanced Direct Enrollment (EDE)|
|Definition||Enrollment platform through which individuals may shop, apply for, and enroll in qualified health plans (QHPs).||Process that allows individuals to enroll in a QHP directly through a DE entity (insurers or web-brokers), though eligibility applications are still completed and processed by an exchange.||A process that allows individuals to enroll in a QHP directly through a DE entity (insurers or web-brokers) without directly interacting with an exchange.|
|Operated by:||States (SBEs), federal government (FFE), or both (SBE-FPs)||DE entities (either a CMS-approved QHP issuer website or CMS-approved web-broker website)||DE entities – either a CMS-approved QHP issuer website or CMS-certified web-broker website.|
|Accountability and auditing||FFE and SBEs must comply with regular federal audits. In addition, many states conduct separate audits of their SBEs to ensure accountability.||DE entities must complete CMS certification before selling exchange products.||EDE entities must complete CMS certification before selling exchange products. Certification includes enhanced process for certifying compliance with privacy and security standards for transfer of enrollee data, as well as compliance with annual audits.|
|Eligibility and Enrollment Process|
|For private insurance coverage||An individual shops for and applies for coverage through the exchange. The exchange determines eligibility for QHPs, APTCs, and CSRs. If eligible, the individual may select and enroll in a QHP.||The individual shops for coverage through the DE partner. Upon applying, the individual is transferred to the exchange, where they complete their application to determine eligibility for QHPs, APTCs, or CSRs. Once completed, the individual is redirected back to the DE entity to select and enroll in a health plan.||Individual shops for and applies for coverage through the DE entity. If eligible, the individual may select and enroll in a QHP though the DE website. The DE entity’s system interacts “behind the scenes” with an exchange. The latter conducts the determination of eligibility for APTCs, CSRs, or QHPs.|
|For Medicaid coverage||An exchange determines applicant’s eligibility for Medicaid; provides “no wrong door” portal for eligible individuals to enroll in Medicaid. States using the FFE may opt to have the exchange only assess an applicant’s eligibility for Medicaid, after which the applicant is directed to the state Medicaid agency to enroll.||When the individual is transferred to the FFE, the FFE will assess or determine the applicant’s eligibility for Medicaid. If eligible, the FFE will send a notification to the applicant, the DE partner, and the state Medicaid office. Individual is not automatically enrolled in Medicaid coverage and may be directed to alternative coverage options.||The exchange will assess or determine the applicant’s eligibility for Medicaid as it processes the applicant’s information sent via the DE partner. If eligible, the FFE will send a notification to the applicant, the DE partner, and the state Medicaid office. Individual is not automatically enrolled in Medicaid coverage and may be directed to alternative coverage options.|
|Plans that can be displayed or sold through this platform:|
|All available QHP options||Yes||No||No, the proposed rule suggests a new requirement that web-brokers would have to identify to consumers QHPs not sold through it platform.|
|Display non-QHP options (including short-term plans)||No||Yes, non-QHP products must be displayed on a separate section of the website than QHPs.||Yes, non-QHP products must be displayed on a separate section of the website than QHPs.
Proposed rule suggests a new requirement that EDE entities build three distinct sections of their websites, one for the sale of on-exchange QHPs, one for the sale of insurance products sold off-exchange (which may also include QHPs), and one for excepted benefits products (e.g., vision, long-term care).
|Display of ancillary products (e.g., vision, accident insurance)||No||Yes||Yes|
|Required health plan details that must be displayed|
|Estimated premiums (total and net, including APTCs/CSRs)||Yes||Yes (for QHPs)||Yes (for QHPs)|
|Summary of benefits||Yes||Yes (for QHPs)||Yes (for QHPs)|
|Provider directory||Yes||Yes (for QHPs)||Yes (for QHPs)|
|Health plan metal level||Yes||Yes (for QHPs)||Yes (for QHPs)|
|Quality ratings||Yes||Yes (for QHPs)||Yes (for QHPs)|
|Enrollee satisfaction surveys||Yes||Yes (for QHPs)||Yes (for QHPs)|
|Shop and compare tools (sorting by premium, deductible, etc.)||Yes||Yes (for QHPs)||Yes (for QHPs)|
|Marketing and outreach requirements|
|Marketing requirements||Exchanges (FFE or SBE) are required to conduct marketing and outreach to consumers.||Exchanges conduct marketing and outreach. The DE entity may supplement as it chooses.||EDE entities are expected to conduct marketing and outreach. There are no direct requirements governing EDE marketing other than a prohibition that brokers
“refrain from marketing or conduct that is misleading, coercive, or discriminatory.”