On March 14, 2014, the Department of Health and Human Services released a flood of regulations, proposed regulations, and guidance addressing a host of Affordable Care Act implementation issues.  From all indications, HHS has cleared the decks of all the regulatory issuances it had under consideration– nothing involving ACA implementation remains pending at the Office of Management and Budget.  Perhaps someone made a promise that all would be completed by the end of the winter (or by Saint Patrick’s Day).  More likely the necessity of having the ground rules for 2015 in place so that insurers could proceed with their 2015 forms and rates, and states with approving them, drove the deluge. In any event, it will take several posts to cover it all.

Yesterday’s post covered a notice on extending the federal preexisting condition high risk pool and a frequently asked questions document on coverage of same-sex spouses.  The Internal Revenue Service also released a set of general Tax Tips for Same-Sex Couples (which covers general tax information and will not be discussed here), while HHS issued a blog post summarizing its frequently asked questions document.

This post will cover several other issuances released late in the day on March 14, 2014.  These include an interim final rule (with comment period) dealing with third party payments for qualified health plans (QHPs) and stand-alone dental plans (SADPs); the 2015 final annual letter to issuers in the federally facilitated marketplace; a set of frequently asked questions on retroactive coverage, and a set of frequently asked questions on the use of exchange grants and no-cost extensions.

A final post will examine a proposed rule on exchange and insurance standards for 2015 and beyond and an accompanying bulletin on product discontinuance.

Third-Party Payments From Ryan White Programs And Other Entities

An interim final rule (with comment period ) released by HHS late in the day on March 14, 2014, requires QHPs and SADPs to accept premium and cost—sharing payments from Ryan White HIV/AIDS Programs; Indian tribes, tribal organizations, or urban Indian organizations; and state or federal government programs.  This rule clarifies HHS’s position on third party payment somewhat, and settles a dispute that had been festering for some time with respect to Ryan White payments that has resulted in a lawsuit against insurers in Louisiana.

On October 31, 2013, Secretary Sebelius stated in a letter to Congressman Jim McDermott (D-WA) that QHPs were not federal health care programs and thus presumably were not subject to the anti-kickback laws.  That raised the possibility that hospitals or other providers could pay premiums for QHP enrollees, thus keeping them insured and the hospital’s bills covered.  HHS quickly shut down this possibility (sort of) though a Frequently Asked Questions document released on November 4, 2013, encouraging insurers to not accept premium payments from hospitals or other health care providers or commercial entities, for fear that such payments might distort the risk pool.  CMS did not clarify on what authority it was discouraging such payments.

This FAQ, however, was seized on by insurers to refuse to take any premium payments from third parties.  On February 7, 2014, therefore, CMS issued another FAQ, clarifying that the earlier FAQ did not bar payments by Ryan White programs, Indian organizations, or private charitable foundations under certain circumstances.

The interim final rule, which is effective immediately, clarifies that qualified health plans must accept third-party premium payments from Ryan White HIV/AIDS programs.  The Ryan White program has been authorized to provide insurance assistance for low-income Americans living with HIV since 1990 where such payments are cost-effective.  The rule clarifies that QHP insurers must accept these payments.  The Indian Health Care Act also authorizes Indian tribes, tribal organizations, and urban Indian organizations to pay QHP premiums on behalf of qualified Indians.  QHP insurers must also accept third-party payments for Indians from these organizations.   The preface to the rule, on the other hand, provides that QHPs do not need to accept payments from hospitals, other health care providers, and commercial entities and encourages them not to accept such payments.  It says nothing about private charitable foundation payments.

The interim final rule clarifies that insurers that refuse to accept payments from these organizations are subject to civil money penalties of up to $100 per day per individual adversely affected by their refusal for failing to substantially comply with exchange standards and for discouraging or denying enrollment for a person who is likely to need significant future medical services.  Insurers may also be subject to state sanctions.  Individuals who have been denied the right to have payment made on their behalf, and thus denied coverage, may be eligible for a special enrollment period or for a hardship exemption from the individual responsibility requirement.

2015 Final Annual Letter To Issuers In The Federally Facilitated Marketplace

Each year the Centers for Medicare and Medicaid Services at HHS issues a draft and then a final “letter to issuers” setting out the ground rules for insurer participation in the federal exchange or marketplace (FMM) and the federal Small Business Health Options Program marketplace (FF-SHOP).  The 2015 Draft Letter was examined in an earlier post.  The final letter largely finalizes the policies set out in the draft letter, but modifies a few proposed policies and delays the implementation of others pending further consideration.  These policies apply to QHP insurers for the 2015 benefit year and for succeeding benefit years unless they are modified in the future.

Where states are performing plan management functions for the federal exchange, the letter gives them some flexibility in some areas for assessing compliance with certification standards and adjusting processes.  (The 2015 exchange blueprint eliminates state plan management partnership exchanges, but states will still be carrying out plan management functions for CMS by informal agreement).  The letter supplements, but does not take the place of, existing regulations and guidance governing the exchanges and QHPs.

QHPs in the FFM must generally comply with the 2014 market reforms such as the guaranteed issue requirement and the prohibition against health status underwriting.  CMS will rely on state insurance department review of rate and form filings to ensure compliance with these laws, assuming state reviews are consistent with federal law and completed in a timely manner. Reviews of plans against standards that apply only to QHPs will be conducted either by a state performing plan management functions for CMS, or by CMS itself.  State-based exchanges will perform their own QHP certification reviews.  The 2015 certification process is similar to the 2014 process, but includes some changes.

States performing plan management functions will evaluate health plans against QHP standards and decide whether or not to recommend certification to CMS.  Where states are not performing certification functions, CMS will integrate state regulatory review into its processes to the extent possible.  CMS retains final responsibility, however, for QHP certification in FFM states.

The letter to issuers sets out a timeline for QHP certification.  SADPs will follow the same timeline.  In states where CMS is conducting the plan review, QHP applications are initially due between May 27 and June 27, 2014.  CMS will send a first notice to the QHPs as to needed corrections on July 29.  Plans must submit reviewed QHP data for review by August 7.  CMS will send a second correction notice on August 26.  Final submission of QHP data is due on September 4, with a re-review completed by September 22.  QHP agreements will be sent to insurers and the agreement finalized between October 14 and November 3, with open enrollment beginning November 15.

Insurers in states in which CMS performs certification functions must submit their applications and data through the Health Insurance Oversight System (HIOS).  They must certify compliance with regulations for themselves and for their delegated and downstream entities and submit requested supporting documentation.  They must also submit the Unified Rate Review Template (URRT) to allow CMS to review their rates.  CMS will coordinate its reviews with state regulators, who have primary responsibility for reviewing compliance with state law and market-wide standards as well as for compliance with essential health benefit and actuarial value standards.

In states where the state performs plan management functions, a QHP insurer will generally submit an application through the System for Electronic Rate and Form Filing (SERFF).  The state will set the deadline for application submission and review, but data must be transferred to CMS for review by August 8.  The FFM will notify the states of any needed corrections by August 26, and insurers must resubmit data to SERFF by September 4, to be transferred to CMS between September 5 and September 10.  CMS will make a final determination based on the state’s recommendation, and from that point the review will follow the timeline set out above.  QHP insurers must submit the URRT  to both the state and CMS.

QHPs that were certified for 2014 must be resubmitted for recertification for 2015 following the process set out above.  If a 2014 QHP is guaranteed renewable (under standards set out in the proposed market regulation to be discussed in my next post), may be recertified for 2015 if they continue to meet certification requirements.

For 2015, CMS will again largely rely on state review of QHP rates for states that have effective rate review programs.  Rate review will be based on the URRT, the first part of which must be publicly posted by the insurer on its website or linked to healthcare.gov.  CMS will not duplicate state rate review functions, but will perform an outlier review of rates to identify rates that are relatively high or low compared to other QHP rates in the same rating area.  Multistate plans certified by the Office of Personnel Management are deemed to be certified as QHPs.

QHPs and SADPs must meet certification standards.  QHP insurers must be licensed and in good standing with each state in which they offer QHPs.  CMS will consider any complaints it receives and state enforcement findings in determining whether offering a QHP is in the interest of consumers.  QHPs must normally cover a service area that is at least a county or group of counties unless CMS concludes that serving a smaller geographic area is necessary, nondiscriminatory, and in the interest of qualified individuals and employers.  Changes in the service area after the initial application will be considered only under very limited circumstances.

Network adequacy.  After widespread complaints about limited QHP networks in recent months, the 2015 letter to insurers pays increased attention to network adequacy.  Under the QHP regulations, “a QHP that has a provider network must maintain a network that is sufficient in number and types of providers, including providers that specialize in mental health and substance use disorder services, to assure that all services will be accessible to enrollees without unreasonable delay.”

CMS will no longer, as it did in 2014, rely on accreditation status, state regulation, or QHP network access plans to establish network adequacy.  Rather, CMS will perform its own review, focusing on adequacy of hospital systems, mental health providers, oncology providers, and primary care providers.  CMS will coordinate with the states in overseeing network adequacy and develop time and distance standards for future rulemaking.  CMS will continue to monitor network adequacy through complaint tracking after certification.

CMS is also beefing up standards for essential community providers (ECPs) — providers that serve predominantly low-income and medically underserved individuals.  For 2015, QHP insurers must demonstrate that at least 30 percent of available ECPs in each plan’s service areas participate in a QHP’s provider network.  It must offer a contract in good faith to all Indian health provides in the service area and at least one ECPP in each ECP category in each county in the QHP’s service area where an ECP in that category is available.  The categories include federally qualified health centers (FQHCs), Ryan White HIV/AIDS providers, family planning provides, Indian health provides, safety net hospitals, and other ECP providers.

If an insurer’s application dos not satisfy the 30 percent standard, the insurer must offer a narrative justification meeting requirements listed in the letter as to how its current network meets the needs of low-income and medically underserved enrollees and how it intends to increase ECP participation in future years.  CMS will again for 2015 publish a non-exhaustive list of ECPs for insurers to use to determine compliance with ECP requirements.  Insurers can add to this list any non-profit or state-owned providers that they identify that serve predominantly low-income, medically underserved individuals, if their write-in meets certain criteria.  QHP insurers that provide a majority of covered services through employed physicians or a contract with a single contracted medical group must meet alternative standards to ensure reasonable and timely access for low-income, medically underserved populations.

QHP insurers are required to pay FQHCs rates that are not less than the enhanced rates paid under Medicaid, unless a QHP and FQHC agree on rates that are less than that amount but at least equal to the generally applicable rates paid by the insurer.  This requirement does not apply to noncovered services.

QHPs in their second year of certification must have had the administrative policies and procedures applicable to their exchange products reviewed and approved by a recognized accreditation entity or must have commercial or Medicaid health plan accreditation for the state in which they are seeking QHP certification.  New QHP applicants must schedule or plan to schedule an accreditation review.  SADP providers are not reviewed for accreditation status.  QHPs must also meet patient safety standards, which currently require them to contract with hospitals with more than 50 beds if those hospitals are Medicare certified or have a Medicaid-only CMS certification.

QHPs may not employ discriminatory benefit designs.  Non-discrimination with respect to the essential heath benefits is a market-wide standard and is primarily enforced by the states.  QHP insurers must additionally attest that they will not discriminate based on health status, race, color, national origin, disability, age, sex, gender identity, or sexual orientation; CMS will assess compliance through ongoing compliance review, including analysis of appeals and complaints.  CMS will also apply outlier analysis to QHP cost-sharing structures, focusing on inpatient hospital stays, inpatient mental/behavioral health stays, specialist visits, emergency room visits, and prescription drugs to identify discriminatory benefit designs.  In particular it will review plans that are outliers in terms of subjecting an unusually large number of drugs to prior authorization or step therapy requirements.

Examining drug formularies and coverage provisions.  To ensure compliance with non-discrimination requirements with respect to prescription drugs, CMS will review information contained in a QHP plans and benefits template “explanations” and “exclusions” section to identify potentially discriminatory anomalies or wording, typically involving reduction in the generosity of benefits for some subsets of individuals not based on common medical management techniques.  CMS is considering revising its formulary exceptions process standards to require expedited handling of exceptions requests under exigent circumstances, requiring for example decisions within 24 hours when an enrollee is suffering from a serious health condition or under current treatment using a non-formulary drug.

QHPs must provide a direct link to their drug formulary without requiring consumers to log on or enter a policy number.  Insurers with multiple formularies must make it clear which applies to which QHP.  Insurers are encouraged to offer a transitional fill to new enrollees using non-formulary drugs, and generally to offer transitional continuity of coverage for new enrollees.

Requiring a “meaningful difference among plans.  CMS intends to review QHPs to ensure a “meaningful difference” among plans offered by the same insurer, using standards identified in the 2015 Payment Notice.  Specifically, QHPs in the same plan type, metal level, and service area must differ from each other at least with respect to having different networks, different formularies, a difference of at least $50 in both individual and family in-network deductibles, a $100 or more difference in both individual and family in-network limits on cost-sharing, differences in covered benefits, difference in Health Savings Account eligibility, or differences in child-only, adult-only, or child and adult coverage offerings.   Insurers whose QHPs are identified as not meaningfully different through this process will have an opportunity to explain how QHPs are different.

The letter includes a brief discussion of specific standards that apply to SADPs.  It also includes special provisions for reviewing cost sharing reduction plan variations to ensure that they meet actuarial value requirements and comply with plan variation requirements finalized in the 2015 Payment Notice.  The letter also incorporates changes made in the 2015 Payment Notice for cost-sharing reduction advance payments.

The letter states the intention of CMS to tighten up general enforcement oversight for 2015.  CMS had stated that it would not impose civil penalties on insurers that made a good faith effort to comply with regulatory requirements during 2014.  CMS will continue to provide insurers an opportunity to resolve all but the most serious compliance issues before imposing sanctions in 2015, but the agency expects insurers to be proactive in monitoring their own compliance and is not extending the good faith exception. CMS will work together with the states in ensuring compliance.  CMS will monitor various data sources, including complaint data, to oversee compliance, and will perform a limited number of compliance reviews.

CMS expects insurers to ensure that agents and brokers with whom they are affiliated are licensed and fulfill FM registration and training requirements, have executed an FFM privacy/security agreement, and have signed the general FFM marketplace agreement allowing them to assist consumers enrolling in the FFM.  CMS strongly suggests that agents and brokers not use “marketplace” or “exchange” in the name of their businesses or websites.  Agent and broker websites used for QHP selection must prominently display a disclaimer that they are not the marketplace website, and must link to the FFM website.

QHPs are prohibited from discriminating in their marketing of QHPs.  CMS will, however, rely on the states to review marketing materials for nondiscrimination and will normally rely on the states to investigate complaints about discriminatory marketing.

The federally facilitated SHOP.  The FF-SHOP, or small-business exchange  intends to allow employers to offer employee choice of plans within a metal tier.  HHS is proposing in its proposed 2015 market rule discussed in a later post a one year transition policy for 2015, however, under which a state insurance department could request that CMS delay employee choice for one year if employee choice would result in significant adverse selection that would not be remedied by the single risk pool requirement or premium stabilization programs or if there were too few QHPs and SADPs in the state’s SHOP to allow meaningful choice.   Unless this rule is finalized and a state qualifies for the exception, the FF-SHOP will offer employee choice for 2015.  It will also offer employee choice of SADPs as an option for employers.

The FF-SHOP will also offer premium aggregation for all QHPs covering employees resulting in a single monthly bill and single payment for each employer.  Invoices will be generated around the 10th of each month prior to a coverage month. Employers must pay within the FF-SHOP employer grace period.  FF-SHOP payments will be made through the FF-SHOP, which will forward payments to insurers. Insurers remain responsible for agent and broker commissions.

Exchange user fees will not be taken out of FF-SHOP premiums owed insurers, but may be set off against premium tax credits or cost-sharing reduction payments owed insurers that also participate in the individual exchange.   The FF-SHOP payment and reconciliation process is described in greater detail in the letter, but will not be discussed further here.  Minimum participation rates may be imposed on employers by the FF-SHOP except for renewals occurring between November 15 and December 15.

QHP insurers must make available on the FFM an up-to-date provider directory specific to a particular QHP that lists location, contact information, specialty, medical group, and institutional affiliations for each provider and whether the provider is accepting new patients, without the need for consumers to log-in, enter a policy number, or otherwise navigate a website.  Insurers are encouraged to list language spoken, provider credentials, and whether a provider is an Indian health provider. The letter includes provisions on complaint tracking and resolution and coverage appeals that track current regulations and guidance, including the recent guidance on the HICS case resolution system.

QHP insurers must provide meaningful access for individuals with limited English proficiency or with disabilities.  CMS specifically expects  that QHP issuers will ensure meaningful access to at least the following essential documents:

• Applications (including the single streamlined application);

• Consent, grievance, and complaint forms, and any documents requiring a signature;

• Correspondence containing information about eligibility and participation criteria;

• Notices pertaining to the denial, reduction, modification, or termination of services, benefits, non-payment, and/or coverage;

• A plan’s explanation of benefits or similar claim processing information;

• QHP ratings information;

• Rebate notices; and

• Any other document that contains information that is critical for obtaining health insurance coverage or access to care through the QHP.

QHPs are expected to comply with summary of benefit and coverage standards.  Plans that have been certified at least one year are expected to report information required by the ACA’s transparency data reporting requirements.

CMS expects to offer QHPs model contracts for contracting with Indian health providers.  QHPs must pay Indian health providers their reasonable costs, or, if higher, the highest rate they would pay other providers for the same service.  The FFM does not allow Indian organizations to pay premiums in aggregate for their members, but Indian organizations can pay premiums directly to insurers.

Retroactive Coverage

CMS’ February 27, 2014 Bulletin on the Availability of Retroactive Advance Payments of Premium Tax Credit and Cost Sharing Reductions in 2014 Due to Exceptional Circumstances raised as many questions as it answered.  On March 14, 2014, therefore, CMS released a set of Frequently Asked Questions attempting to clarify the earlier bulletin.  The first question asks whether the Retroactive Payment Bulletin applies to the FFM as well as the state exchanges.  The answer is that although the concepts of the bulletin apply to all individual exchanges, the FFM has established a separate process for addressing these issues in a series of bulletins released on February 6, 2014, and discussed in an earlier post.  The February 27 bulletin does not apply to SHOP exchanges.

The second and third FAQs ask whether state-based marketplaces are required to implement the options discussed in the bulletin and whether it was intended to apply to specific state-based marketplaces.  The bulletin applies to all state-based marketplaces, but some have experienced more technical difficulties than others.  None of the state-based marketplaces are required to implement the retroactive coverage options, but if a state chooses to do so, CMS will make available retroactive payment of premium tax credits and cost-sharing reduction payments and QHP insurers will be required to provide coverage retroactively, adjudicate or re-adjudicate claims for the period covered by retroactive eligibility, and provide refunds or credits to enrollees for retroactively covered benefits and services.  Marketplaces must not discriminate among issuers and must treat enrollees in similar circumstances consistently.  State-based marketplaces must each determine themselves whether to implement retroactive coverage and do not need approval form CMS to do so.

In response to a fourth question, the FAQ clarifies that states must approve retroactive coverage no later than November 14, 2014, before the 2015 open enrollment period begins.  Of course, under the original Bulletin, applicants must have applied for benefits before March 31 to be eligible for this relief.

The legal, indeed the constitutional basis, for allowing state exchanges to decide independently whether or not to offer a benefit provided by federal law has not been explained by HHS.  Although it is appropriate that exchanges that individuals who live in states whose exchanges have been technically incapable of offering benefits guaranteed by federal law should have a continuing opportunity to claim those benefits, the amount of discretion this policy offers states to decide whether or not to provide this opportunity is questionable.

A fifth FAQ clarifies that non-Indian individuals may not receive retroactive cost-sharing reduction payments if they were enrolled in a QHP other than a silver-level QHP.  Since Indians are eligible for zero-level cost sharing regardless of what level plan they are enrolled in, Indians are eligible for retroactive cost-sharing reductions even if they were not enrolled in a silver plan.  Individuals who were enrolled in a QHP outside of the exchange are entitled to a special enrollment period that will allow them to change plans upon enrollment through the exchange, including a change to a silver plan eligible for cost-sharing reductions.  A sixth FAQ provides that retroactive premium credits and cost- sharing reduction payments can only be offered for a QHP that is identical to a QHP offered in the marketplace.

The final two FAQs address direct enrollment in the SHOP.  The FF-SHOP has allowed employers, on a transitional basis, to enroll in plans directly through brokers and agents because online enrollment is not yet possible.  States in which online enrollment is also not possible can request permission from CMS to also allow direct enrollment.  CMS and Treasury will then work with the state to assist employers who enroll in eligible QHPs to assess the small employer premium tax credit.

Exchange Grants

Finally, CMS released on March 14, 2014 a series of FAQs on the use of 1311 state exchange grants and no-cost extensions of these grants.  States that reasonably require additional time to complete the design, development, and implementation of activities that were part of their original exchange grant can request a no-cost extension to extend the use of the funds beyond December 31, 2014.  These funds cannot be used for routine maintenance and operating costs, such as rent, software maintenance, telecommunications, utilities, or base operational personnel or contractors.

The availability of 2014 funds for current state-based marketplaces or partnership marketplace ends on December 31, 2014. State partnership marketplaces transitioning from a partnership marketplace to a state-based marketplace, or from an FFM to a state-based marketplace, may apply for a grant lasting from 1 to 3 years.