There has been a great deal of confusion in the media in recent days about “direct enrollment,” the process through which insurers can enroll applicants directly in a qualified health plan through the exchange. Media reports characterize this process as a new, possibly illegal, development that the administration has suddenly come up with to address healthcare.gov problems. Some reports also seem to be based on a misunderstanding of the process, suggesting that insurers will be able to directly enroll applicants for premium tax credits without going through the exchanges.
It is, of course, and always has been, possible for insurers to directly enroll consumers in their own products, including qualified health plans, in the individual market outside of the exchange. Insurers cannot, however, legally or in reality, enroll consumers for advance premium tax credits or cost-sharing reduction payments without going through the exchange. A moment’s reflection will reveal the absurdity of allowing private businesses to make binding determinations of eligibility for federal income tax credits. It is also not possible for insurers to enroll individuals in qualified health plans outside of the exchange for which individuals can retroactively receive premium tax credits when they file their taxes. Tax credits, advance or retroactive, are only available for individuals who enroll in a qualified health plan through the exchange.
The Affordable Care Act does, however, explicitly provide that agents and brokers can, if permitted by a state, “enroll individuals and employers in any qualified health plans in the individual or small group market’ through an exchange and “assist individuals in applying for premium tax credits and cost-sharing reductions for plans sold through an Exchange.” This provision first appeared in the 2009 manager’s amendment in the Senate bill, apparently the result of lobbying by agents and brokers to ensure that they would have a piece of the action as the exchanges expanded the nongroup and small group market. In retrospect, it seems like a good idea, given that the exchanges will need any help they can get to expand enrollment and there are far more brokers and agents than there are navigators or assisters.
HHS implemented the agent and broker provision in its March, 2012 exchange regulations, which allowed agents and brokers, including web brokers, to enroll individuals and employers through the exchanges. Regulations governing web brokers were later amended to ensure that applicants going through web brokers would see the same plans as enrollees who went directly through the exchange website, although not necessarily with all of the same information.
The possibility that insurers would themselves be able to directly enroll applicants through the exchanges, effectively using their in-house agents, was first mentioned in the draft letter to issuers in the federal exchange, in March of 2013. In both the draft and the final letter to issuers, released in April of 2013, HHS stated its intention to develop a direct enrollment process. HHS issued proposed rules regulating direct enrollment by insurers in June of 2013 and finalized those rules in August.
When an insurer directly enrolls an applicant in one of its qualified health plans through the exchange, the applicant begins at the insurer’s website. Once the insurer has collected basic information, the applicant is transferred to the exchange website, where the applicant is registered and eligibility for premium tax credits is determined. The applicant is then transferred back to the insurer website for plan selection. A diagram and explanation of this process is available here. Each exchange can decide whether it will allow direct enrollment, but the federal exchange has announced that it will permit it, subject to state law.
The final rules provide some protection for consumers who are enrolled directly by insurers. First, the insurer must inform all applicants that other QHP products are offered by other insurers through the exchange. It must use an HHS-approved universal disclaimer to convey this information and display the weblink for the official exchange, and describe how to access the exchange website. Applicants must be informed that they have other alternatives to direct enrollment, although insurers are unlikely to try very hard to ensure that applicants understand this alternative.
Insurers must provide the direct enrollment applicant with an opportunity to view all QHPs offered by the insurer with the following information as to each plan:
- Premium and cost-sharing information;
- The plan’s summary of benefits and coverage;
- Whether the plan is a bronze, silver, gold, platinum, or catastrophic plan;
- The results of enrollee satisfaction surveys (once these are available);
- Quality ratings (once these are available);
- Medical loss ratio information;
- The plan’s provider directory; and
- Other transparency of coverage measures reported to the exchange.
The insurer’s website must clearly distinguish between QHPs for which the consumer is eligible and the insurer’s other non-QHPs, and indicate that advance payments of the premium tax credit and cost sharing reductions apply only to exchange QHPs.
The final rule also allows insurers to use application assisters to help individuals apply for coverage through the exchange as long as the assister receives training in QHP options and insurance affordability programs, including eligibility and benefit rules; complies with exchange privacy and security standards; and complies with state laws governing agent and broker licensure, confidentiality and conflicts of interest.
Consumer advocates have expressed concern that direct enrollment undermines two of the key goals of the exchange: maximizing consumer choice and facilitating plan competition. It is likely that direct enrollment will allow insurers that dominate certain markets to retain, perhaps even extend, their dominance. It is also likely that few consumers will abandon the direct enrollment process and proceed to the exchange website once they see the universal disclaimer. On the other hand, direct enrollment will play an important role in facilitating a third exchange goal — getting as many people enrolled in coverage as quickly as possible.
Apparently, the direct enrollment portal has not been working, or at least not working well, to this point. HHS has announced that it has fixed some of the problems with the direct enrollment process, and insurers are checking to see if they can make it work. If direct enrollment can be made to function properly, it is likely that we will see a surge of direct enrollments between now and the end of the year, and on through the open enrollment period. In particular, it is likely that many individuals who have received notices that their 2013 plans are no longer available will be directed by insurers to 2014 plans, with premium tax credit subsidies, though direct enrollment.