April 19, 2017
On April 14, 2017, the Department of Health and Human Services (HHS) issued a market stabilization final rule under the Affordable Care Act (ACA). The final rule includes new reforms intended to help lower premiums, stabilize the individual and small group health insurance markets and increase choices for the 2018 plan year.
Specifically, the rule includes a variety of policy and operational changes to existing standards to stabilize the health insurance marketplaces, commonly referred to as Exchanges, including changes to the annual open enrollment period and special enrollment periods.
The changes made under the final rule are effective for the 2018 plan year.
The market stabilization final rule for 2018 includes new reforms that are aimed at stabilizing the individual and small group health insurance markets. Specifically, this rule makes certain policy changes designed to reduce premium rate increases and stem the tide of health insurers exiting the Exchanges, including the following:
HHS also issued separate guidance concurrently with the final rule to update the qualified health plan (QHP) certification timeline.
The open enrollment period for the 2018 plan year for the individual market will run from November 1, 2017, through December 15, 2017. In previous years, consumers had twice as much time to enroll (until January 31st). This shortened open enrollment period applies in all Exchanges. By encouraging individuals to enroll in coverage prior to the beginning of the year, this change is intended to align the Exchanges with the employer-sponsored insurance market and Medicare, and help lower prices by reducing adverse selection.
However, HHS recognizes that some state-based Exchanges may have operational difficulties this year in transitioning to the shorter open enrollment period. As a result, HHS notes that existing regulatory authority allows state-based Exchanges the option of supplementing the open enrollment period with a special enrollment period, as a transitional measure, to account for those operational difficulties.
The final rule expands the pre-enrollment verification of eligibility requirement to individuals who newly enroll through special enrollment periods (SEPs) in Exchanges using the federal platform. Previously, HHS allowed individuals to self-attest eligibility for most SEPs-and to enroll in coverage without further verification of eligibility-in an effort to minimize barriers for individuals to obtain coverage. However, this practice led to abuses of SEPs, allowing individuals to enroll in coverage that they would not otherwise qualify for.
To curb these abuses, the final rule requires HHS to conduct pre-enrollment verification of eligibility for all categories of SEPs for all new consumers in all Exchanges using the www.HealthCare.gov platform. According to HHS, this change will help make sure that SEPs are available to all who are eligible for them, but will require individuals to submit supporting documentation -- a common practice in the employer health insurance market. This is intended to help place downward pressure on premiums, curb abuses and encourage year-round enrollment.
The final rule also addresses potential abuses of the ACA's "guaranteed availability" rules, which require insurers to offer coverage to any eligible consumer who applies for coverage. HHS previously interpreted this requirement to mean that an insurer cannot refuse enrollment to an individual even in cases where the individual has failed to pay outstanding premiums for any prior coverage. The final rule attempts to curb these abuses by allowing issuers to collect unpaid premiums for prior coverage before enrolling a patient in the next year's plan with the same issuer. This is intended to incentivize patients to avoid coverage lapses.
The ACA requires QHPs offered through an Exchange to meet certain levels of actuarial value, referred to as "metal levels." HHS regulations have allowed for a de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates. The final rule adjusts the de minimis range to provide greater flexibility to issuers and thus, provide patients with more coverage options.
The final rule provides greater flexibility to states in the review of QHPs. Under the final rule, beginning with the 2018 plan year, HHS will defer to the states' reviews in states with the authority and means to assess issuer network adequacy. According to HHS, states are best positioned to ensure their residents have access to high quality care networks.
The rule applies to plans and issuers in the Exchanges and does not directly impact plans in the large group market. Instead, it aims to stabilize the individual and small group health insurance markets in light of pending changes that may be made to the ACA. That said, with all the uncertainty around the future of the ACA, the continued viability of the Exchanges remains a key concern for employers in both the large and small group markets, especially those that have significant numbers of employees participating in the Exchanges.
The changes made in this rule had been requested by insurers, who have indicated that this is a step in the right direction. Whether these changes will be successful in helping bring stability to the individual insurance market by keeping the insurers involved in the Exchanges, however, remains to be seen.
A copy of the final rule is available online at https://federalregister.gov/d/2017-07712.
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