CMS Offers State Relief and Empowerment Waiver Guidance

July 17, 2019 - CMS recently released new state relief and empowerment waiver resources for states to use as they stabilize their insurance markets through reinsurance and other methods.

“While states have tremendous opportunities to strengthen their health insurance markets through a State Relief and Empowerment Waiver, we’ve also heard from states that they need more help and detail from CMS in putting together their waiver applications. This new package of resources should reduce some of the guesswork and burden on states as they craft their waiver applications,” CMS Administrator Seema Verma said in a press release.

In the press release, CMS noted the rocky history that state insurance markets have experienced in recent years. Premiums doubled in states with healthcare.gov between 2013 and 2017 and over 50 percent of counties’ insurance markets nationwide dwindled down to one issuer by 2018.

The state relief and empowerment waiver, otherwise known as the 1332 waiver, helps state leaders respond to such health insurance market challenges. The waivers give states more flexibility to waive certain Affordable Care Act (ACA) requirements under Section 1332 to stabilize their health insurance markets, CMS explained.

However, states have complained that applying for the waiver and implementing a compliant initiative can be complex and burdensome.

READ MORE: Iowa Withdraws 1332 Waiver for Insurance Market Stabilization

To assist states with applying for the waivers, the new resources encompass an overview of each waiver concept’s strengths and templates that specify the requirements for application. It also includes an updated checklist, a tool CMS provided in the past that states found helpful, which delineates each facet of the waiver application, from specifics on waiver concepts to regulatory provisions citations.

Each state relief and empowerment waiver concept paper includes an executive summary, background, a set of steps to help states understand the application process, and the specific waiver concept description.

The templates are approximately 30 pages long each and have ten sections and seven appendices. The content spans legislative support, reporting targets, implementation plan and timeline, public communication, administrative planning, and additional information.

These new resources could provide even greater incentive for states to submit waiver applications by decreasing the administrative burden and streamlining the application process, CMS stated.

The papers and templates build out the four concepts which CMS proposed in 2018:

• State specified premium assistance waivers work best for states that want to attract specific demographics to their Medicaid program or reduce a subsidy cliff or other perverse incentive. The waiver allows a state-administered subsidy structure, customizable to the state’s population and needs.
• Adjusted plan options (APO) waivers are for states that want to increase affordability and plan choice. APOs let states contribute financially for different types of health insurance plans and enables them to expand eligibility beyond ACA restrictions.
• Account-based subsidies waivers allow states to deposit funds directly into accounts, which beneficiaries can use to select their own private health insurance plan. Beneficiaries may also aggregate their funding, combining individual and employer contributions with state funding to purchase a plan that suits their own or their family’s needs.
• Risk stabilization strategies waivers help states address high-risk healthcare costs. The waiver concept enables states to use reinsurance programs or high-risk pools outside of the ACA limitations.

READ MORE: Verma Shares Vision for More State “Flexibility” in Affordable Care Act

States can combine these concepts to further customize their approach, CMS pointed out.

Since 1332 waivers were recast from the original intent of the ACA, most states have used them for reinsurance programs to decrease marketplace premiums, the Kaiser Family Foundation (KFF) reported. Eight waivers have been approved, four are pending, three are considered incomplete, and three have been withdrawn.

The waivers used for reinsurance modifications have been successful, Commonwealth Fund reported. States that used 1332 waiver-funded insurance initiatives saw an eight to twenty percent decrease in premiums in 2018. Maryland is seeing a 30 percent rate impact for 2019.

But with the 2018 waiver concepts, the Trump administration hoped to encourage states to push beyond reinsurance and consider using these waivers to make more significant alterations and, some argue, to undermine the ACA.

In 2018, addressing the Nation Policy Summit of the American Legislative Exchange Council not long after announcing the state relief and empowerment waivers, Verma explained, “We are saying the states have the power to make the individual markets work through innovative policies that best meet the needs of your citizens. We are returning freedom, authority and innovation to you, state lawmakers.”

READ MORE: CMS Broadens ACA Waiver Scope for State Insurance Programs

Though the efforts may not have resulted in a more dynamic shift away from the ACA, applications have increased. Submissions, though few, steadily rose over the past three years and the number of 2019 pending applications already equal the total number of approved applications from 2018.

A few states toyed with concepts that expanded beyond reinsurance. Colorado and Virginia considered loosening eligibility requirements for catastrophic plans. Rhode Island officials have been working on a plan that would open up the state’s small-business marketplace to sole proprietors looking to buy ACA-compliant, small-group coverage. Vermont was planning to become a single-payer state. And Iowa submitted but ultimately withdrew its waiver to form an alternative marketplace and subsidy program.

“In states where [using waivers to broaden the availability of low-premium, limited-benefit products] is a goal, policymakers may well conclude the waiver program is too cumbersome a means to achieve it. The thorny technical, operational, policy, and legal questions clouding such an undertaking, one that’s resource-intensive to begin with, suggest states should be deliberative and study closely their options for future years,” suggested Commonwealth Fund.

That is, if the guidelines survive the House and Senate’s review.

On the same day as CMS released the new 2019 guidelines, the Government Accountability Office (GAO) issued an opinion concluding that the 2018 guidelines constitute a rule under the Congressional Review Act, do not qualify for an exemption, and as such must be submitted to both houses of Congress and the comptroller general for approval. As a result, the rule cannot take effect until it is submitted to and approved by all three parties.