On April 5, 2013, the Department of Health and Human Services released its final Letter to Issuers on Federally Facilitated and State Partnership Exchanges.  This letter lays down guidelines for insurers that will sell qualified health plans on the federal exchanges in 2014.  A proposed version of this letter was published for comment on March 1, 2013, which I blogged about here.  The final issuer letter tracks the proposed letter with few significant changes.  In part because I am supposed to be on vacation in France and in part because of limited access to technology, I am not going to review the issuer letter in depth, but rather refer the reader to my earlier post, providing here only a brief overview of the final letter that highlights the respects in which it differs from the proposed letter discussed in my earlier post.

Overview of the final letter

The topics covered by the issuer letter are virtually identical to those covered by the proposed letter.  Its chapters include certification standards for qualified health plans, QHP certification processes, QHP performance and oversight, stand-alone dental plans, consumer enrollment and premium payment, consumer support, and tribal regulations and support.  Not only are all of the main headings of the paper identical to the proposed letter, all of the subheadings are identical as well.  This does not mean,  however, that nothing has changed;  one just has to dig deeper.

CMS begins by again reaffirming its intention to rely to the extent possible on states in overseeing the 2014 market reforms and on state partnership exchanges to assess QHP compliance with certification standards in its own certification of compliance.  For example, CMS will rely primarily on the states to assess the network adequacy of QHPs.  Where states lack the authority or means to regulate network adequacy, CMS will rely on an issuer’s accreditation status  for demonstrating adequacy.   Unaccredited issuers must submit an access plan and CMS will monitor compliance, for example through complaints.  (On April 5 CMS also published a chart setting out who is responsible for determining network adequacy.)

Essential Community Providers

A particularly contentious issue has been coverage by QHPs of essential community providers — providers that provide vital services to the poor and to communities with special medical needs.  The proposed letter set out a safe harbor standard, which would allow approval of a QHP that contracted with at least of 20 percent of available essential community providers in its service area, including all available Indian providers and at least one ECP from each ECP category in its service area.  QHPs that failed to meet this standard could still meet a  “minimum expectation” by contracting with at least 10 percent of available ECPs and providing a narrative justification as to why the lesser network was adequate.   Finally, an issuer that could not even meet the 10 percent minimal level could explain why it could not meet the standard and why its coverage was adequate.  The proposed letter had stated that CMS anticipated that issuers that could not meet minimum expectations would likely not be certified as QHPs.  In the final issuer letter, however CMS omits this prediction that plans that do not meet ECP standards might not be certified, suggesting even greater flexibility on inclusion of ECPs beyond its already remarkably generous policy.  HHS has recently published a non-exhaustive list of ECPs from which QHPs can select those with which they will contract. Although the list is admittedly not complete, it will form the basis for evaluating whether a plan has met the 20 percent safe harbor and 10 percent minimal level standard.  The final letter, like the proposed letter, sets out alternate standards that integrated issuers can use to establish ECP compliance.   Again the final letter omits language from the proposed letter stating that it will be difficult for issuers that do not meet minimum expectations to meet regulatory compliance standards in favor of language promising to take into account factors and circumstances in evaluating compliance.

QHP compliance standards

Provisions in the proposed letter for phasing in accreditation status requirements and using CAHPS data are unchanged in the final letter.  The rate review section also remains unchanged.  CMS will continue to rely heavily on state rate review, primarily looking for outliers.  CMS’s proposed strategy for ensuring that plans are nondiscriminatory, which also focuses on outliers, also continues unchanged.

Despite the similarities in the proposed and final issuer letters there are also significant differences.  The final issuer letter includes a much more specific approach to determining  whether two plans offered by an issuer are “meaningfully different” or will simply confuse consumers.  For example, two plans with the same network, metal level, and formulary with a $25 difference in deductible or $50 difference in out-of-pocket maximum would not qualify as meaningfully different and cannot be separately offered.

A disappointing concession on out-of-pocket limits

Another major change in the final letter is an enormous disappointment to consumers.  The ACA places an absolute limit on out-of-pocket expenses for health plan enrollees tied to the out-of-pocket limit of health savings account qualified high deductible health plans (currently about $6400 for single individuals and$12,800 for couples.)  This limit does not apply to balance billing for non-network providers, but is otherwise absolute.  It is a very important protection for patients with serious diseases and high medical costs—it might mean the difference between losing a home or being denied care because it is unaffordable.  The enforcement agencies recently released guidance providing that if a large group has more than one provider of coverage (a separate major medical plan and a pharmaceutical benefit plan, for instance) and out-of-pocket limits are not coordinated (or if a particular plan did not even have an out-of-pocket limit), the group could wait until 2015 to achieve a single out-of-pocket limit for all services as long as out-of-pocket expenses for major medical and mental health services were confined to the statutory out-of-pocket limit.  The issuer letter extends this one-year grace period to small group qualified health plans.  It does not even require that mental health services be included in the major medical out-of-pocket limit, as did the FAQ for large employer plans.  Although the insurance companies undoubtedly fought hard for this accommodation, it is clearly contrary to the law and a bitter disappointment to consumer advocates.  It is ironic that employers and insurers that have seemingly had no trouble in coordinating out-of-pocket maximums when they are offering HSA-linked high deductible policies suddenly find it an impossible task when required by law for all of their plans.

QHP certification processes

Chapter 2 of the letter deals with QHP certification in the FFE, including state partnership exchanges.  This chapter is quite similar to the proposed letter, although there are some differences.  In sum, CMS will retain ultimate authority for certifying QHPs, but will largely rely on state health plan evaluations in partnership exchanges and, indeed, in states without partnership exchanges to the extent that states apply federal standards.  One change in the final letter is that it no longer includes a deadline in its non-partnership state timeline for CMS to receive and review a state’s evaluation and findings with respect to the certification of a QHP in non-partnership FFE states.  Apparently, CMS still intends to work with non-partnership states but does not want to bind itself or them to a particular timeline for the cooperation to take place.  The timeline for plan certification in partnership exchanges remains unchanged.   Sections dealing with QHP agreements, annual review and recertification, and certification of stand-alone dental plans,  CO-OP plans, and multi-state plans are also largely unchanged, although the letter contains a little more detail on multi-state plans in light of the Office of Personnel Management’s recent final MSPP rule.

Chapter 3 on QHP performance and oversight, containing sections on account management, QHP issuer compliance and oversight, and marketing, is unchanged from the proposed letter.  Chapter 4 on stand-alone dental plans has more changes.  It now includes a timeline for certifying stand-alone plans.  The final letter also modifies the annual limit on cost-sharing requirement, which was $1000 in the proposed letter but is $700 for one child and $1400 for two or more children in the final letter.

Direct enrollment through an insurer and agent and broker oversight

Most of the letter’s long and highly technical chapter 4 on consumer enrollment and premium payment is identical to the proposed letter except for minor changes in wording.  One troubling section of this chapter addresses direct enrollment through an issuer or web broker’s website.  Insurers would like to be able to enroll consumers directly for premium tax credits through their own websites without exposing consumers to the menu of plan choices that is the distinctive feature of the exchange and that will drive plan competition.  The final letter states “CMS intends to make available a technical solution that allows a consumer to enroll through the Exchange using an issuer’s website or web-broker to initiate the enrollment process and complete plan comparison and selection.”  While the meaning of this is not wholly clear, it is to be hoped that consumers who enroll through an insurer’s website will not be deprived of the right to see all of the alternatives available to them in the market.   The section on agents and brokers in the final rule is much briefer than the corresponding section in the proposed letter and omits mention of an exchange-specific agent/broker agreement and of monitoring of compliance.  Apparently CMS intends to leave regulation of agent and broker conduct to the states and take no active role itself, a disturbing development given the problematic experience of CMS with broker and agent conduct in the similar Medicare Advantage program.

Finally, chapter 6 on consumer support is virtually unchanged from the proposed letter.  CMS continues to promise further guidance on meaningful access for limited-English proficient speakers and people with disabilities.  As implementation draws ever nearer, the need for this guidance continues to become more urgent.  The final letter concludes with a chapter on tribal relations and support unchanged from the proposed letter.  It also includes appendices on drug formularies, actuarial value, and cost sharing.