CMS Proposes New Rule to Stabilize Health Insurance Exchanges

February 16, 2017 - CMS recently announced a proposed rule designed to help stabilize health insurance exchanges by promoting more coverage options and improving the risk pool for insurers.

The proposed rule comes just one day after Humana publicized its decision to quit the health insurance exchanges after the 2017 open enrollment period. The payer backed out because of an “unbalanced risk pool” that continued to threaten their financial health.

To encourage insurers to stay on the exchanges and provide more coverage options, CMS proposed several exchange changes, including shortening enrollment periods, expanding enrollment verifications, modifying guaranteed availability provisions, and increasing de minimis variation for some metal coverage levels.

“This proposal will take steps to stabilize the Marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options,” Patrick Conway, CMS Acting Administrator, stated in a press release. “They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”

CMS proposed to start stabilizing health insurance exchanges by cutting down enrollment periods. If finalized, the 2017 enrollment period would still start on Nov. 1, 2017, but the final date would move from Jan. 31, 2018 to Dec. 15, 2017.

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“We anticipate this change could improve the risk pool because it would reduce opportunities for adverse selection by those who learn they will need services in late December and January; and will encourage healthier individuals who might have previously enrolled in partial year coverage after December 15th to instead enroll in coverage for the full year,” the proposed rule stated.

Enrollment processes may also see some changes under the proposed rule. The rule would expand pre-enrollment eligibility verifications for individuals who decide to join a health plan during special enrollment periods.

Individuals can currently change or select coverage options during special enrollment periods if a qualifying event occurs. The health insurance exchanges allow individuals to self-attest to their eligibility for the period.

However, the proposal stated that some payers and other stakeholders expressed concerns that self-attestation during special enrollment periods may encourage individuals to seek plans they would not have qualified for during the regular enrollment period.

In December 2016, CMS proposed to implement a pilot program that would require 50 percent of health insurance exchange consumers to submit eligibility documentation during special enrollment periods.

READ MORE: Health Insurance Exchanges Require Engagement, Narrow Networks

The recently proposed rule, however, would expand the number of consumers selected for documentation submission to 100 percent starting in June 2017.

Additionally, CMS proposed to modify its official interpretation of guaranteed availability of coverage provisions. The potential interpretation would allow payers to collect past due coverage costs before enrolling an individual in the next year’s health plan.

Payers on the health insurance exchanges would be able to apply premium payments to an individual’s coverage-related debt as long as it is from the same payer from the past 12 months.

“We believe this proposal would have a positive impact on the risk pool by removing economic incentives individuals may have had to pay premiums only when they were in need of healthcare services,” wrote CMS. “We also believe this proposal is important as a means of encouraging individuals to maintain continuous coverage throughout the year and prevent gaming.”

The proposed rule also contained changes to de minimis ranges. If finalized, the rule would increase the de minimis variation in plan actuarial values, which are used to calculate metal coverage levels.

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Metal coverage levels must maintain a certain actuarial value, but the Department of Health and Human Services allows for some flexibility through the de minimis range. For example, the actuarial value of a health plan can vary by 2 percentage points either way as long as the true dollar value of the plan is not significantly different.

Under the proposed rule, CMS would boost the de minimis range to a variation of negative 4 to positive 2 percentage points.

“At this time, we believe that further flexibility is needed for the AV [actuarial value] de minimis range for metal levels to help issuers design new plans for future plan years, thereby promoting competition in the market,” stated the proposal. “In addition, we believe that changing the de minimis range will allow more plans to keep their cost sharing the same from year to year.”

The federal agency also plans for the proposed modifications to “affirm the traditional role of States in overseeing their health insurance markets while reducing the regulatory burden of participating in Exchanges for issuers.”

When reviewing qualified health plans, CMS would defer to state reviews in states with “the authority and means to assess” payer network adequacy. The federal agency added that states can better determine if their residents have access to high quality care networks.

Healthcare stakeholders have until March 7 to submit comments on the proposed rule.