Editor’s note: This post was updated on March 20 to conclude with a note about Association of Physicians and Surgeons v. Koskinen, in which a judge rejected another legal challenge to the Affordable Care Act.
On March 14, 2014, the Department of Health and Human Services, Centers for Medicare and Medicaid Services, published a proposed rule titled “Patient Protection and Affordable Care Act: Exchange and Insurance Market Standards.” The rule was accompanied by a bulletin on product discontinuance, one of the issues addressed by the rule. The proposed rule was one of a number of March 14 ACA issuances, the rest of which were addressed in earlier posts.
The Exchange and Insurance Market Standards proposed rule addresses a grab bag of issues that all relate loosely to exchanges or to the ACA’s insurance market reforms. Some of these — like QHP quality reporting — are issues that HHS had failed to address earlier because these issues did not rise to the urgency of other issues that needed to be resolved immediately for health reform to proceed. Others — like regulation of navigators — are issues that had been addressed earlier, but where it has become apparent that mid-course corrections are necessary. Still others, like modifications in the premium stabilization programs, are issues that have arisen in the unfolding course of events as problems developed in implementation.
Most of the issues are largely unrelated to one another; thus this description of the rule will proceed like the rule itself, addressing seriatim a catalog of largely unrelated issues. (A list of topics addressed by the rule is included in a note at the end of this post.)
The proposed rule begins by proposing new standards for allowing self-funded non-federal governmental plans to opt out of certain requirements of the Public Health Services Act (PHSA). Prior to the enactment of the ACA, self-funded, non-federal governmental health plans were allowed to opt out of certain requirements of Title XXVII of the PHSA, adopted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and later amendments. Provisions subject to opting out included limitations on preexisting condition exclusion periods; requirements for special enrollment periods; prohibitions on health status discriminations; newborn and mother benefits standards; mental health and substance abuse disorder benefit parity requirements; coverage of reconstructive surgery after mastectomy requirements; and coverage of dependent students on medically necessary leave of absence.
Under the ACA, self-funded non-federal governmental plans may no longer opt out of the first three of these requirements, although they may still opt out of the later four. Group health plans maintained pursuant to a collective bargaining agreement ratified before March 23, 2010, however, that were exempted from any of the first three requirements do not need to come into compliance with any of these provisions until the first plan year following the expiration of the last plan year governed by the collective bargaining agreement. These changes had earlier been implemented by guidance, but the proposal would modify the existing rule to bring it into conformity with the statutory provisions. The amendment would also require electronic submission of the opt-out.
The proposal would amend the guaranteed availability and renewability requirements of the current regulations to clarify that these requirements should not be construed to require health insurers to offer or renew coverage where other federal laws would prohibit them from doing so. These include, for example, federal laws prohibiting the sale of individual insurance coverage to an individual covered by Medicare Parts A or B where the individual coverage would duplicate the Medicare coverage or provisions of the ACA prohibiting the sale of catastrophic coverage to individuals who are over 30 years of age and can afford other coverage. Only federal, and not state laws, can create exceptions to the guaranteed availability and renewability requirements of the ACA.
The proposed rule addresses at some length the issue of product withdrawal and modification as exceptions to the guaranteed renewability requirement. The PHSA provisions adopted by HIPAA and the ACA require insurers to guarantee renewal of coverage unless a statutory exception applies. One of these exceptions is that an insurer can withdraw a particular product from the market and discontinue an existing block of business if certain requirements are met. Insurers may also, only at the time of coverage renewal, modify health insurance coverage for a product offered in the group or individual market if the modification is consistent with state law and effective uniformly for all groups and individuals covered by the product. The proposed rule proposes standards for determining whether certain modifications to an insurance policy are “uniform modifications” or are withdrawals. These provisions would apply to both grandfathered and nongrandfathered coverage.
Under the proposal, modifications made solely pursuant to federal or state law requirements — such as increases in annual limits on cost-sharing — would be considered modifications rather than product withdrawals. Modifications not required by law would be considered modifications of coverage if they met all of the following criteria:
- The product is offered by the same insurer;
- The products is the same product type (PPO, HMO);
- The product covers the majority of the same counties in its service area;
- The product has the same cost-sharing structure, except for variations in cost-sharing related solely to the utilization or cost of medical care or necessary to maintain the same metal level of coverage; and
- The product provides the same level of covered benefits, except for changes in benefits, not attributable to legal requirements, that cumulatively affect the rate for the product by no more than 2 percent.
If changes exceeded these limits, the insurer would be regarded as having withdrawn a product from the market and issued a new product. This proposal would allow insurers flexibility to make adjustments in coverage while minimizing unnecessary terminations in coverage, ensuring predictability and continuity for consumers. State law could allow for more extensive modifications, but state laws that narrowed permitted modifications would be preempted.
Insurers that discontinue offering a product must provide to each plan sponsor and insured individual, and to all participants and beneficiaries with group coverage, at least 90 days written notice of the discontinuance. Under the proposed rule, insurers must also give notice to plan sponsors and individuals when they provide the option to renew coverage, including renewals with modifications.
HHS published with the proposed rule, as noted above, proposed notices that insurers must send out when they withdraw or renew a policy. The withdrawal notices inform the insured employer or individual of the need to enroll in a new policy on or before the 15th day of the last month of coverage to ensure continuous coverage, and of coverage options available in and outside the exchange. The renewal notices inform the insured employer or individual that nothing needs to be done and that if nothing is done the policy will renew automatically, but that options are available in and outside of the exchange.
CMS expresses a concern in the preamble to the proposed rule that insurers might seek to evade the process provided by the ACA for review of unreasonable rate increases in the small group and individual market by withdrawing a product and then reissuing it as a “new” product. Under the proposed rules, if an insurer withdraws a product and then reissues it within 12 months, not making any modifications other than those set out above, the product would be considered to be the same product, subject to rate review for unreasonable premium increases.
The proposal would also amend rules governing the individual market promulgated earlier pursuant to HIPAA to align these with ACA requirements. Notably, they would eliminate the requirements that health plans and insurers provide certificates of creditable coverage after December 31, 2014, as these are no longer necessary to avoid pre-existing condition exclusions.
The proposed rule next turns to fixed-dollar indemnity policies in the individual health insurance market. Policies that pay a fixed dollar amount under specified conditions have long been a fixture in health insurance markets. They are illegal under the ACA, however, as medical coverage because they have fixed annual dollar limits, which have been limited since 2010 and are no longer legal as of 2014.
Fixed indemnity insurance is recognized under the PHSA as an excepted benefit — not subject to the annual limit requirement — if it meets certain conditions. The benefits must be provided under a separate policy, certificate, or contract from any comprehensive medical coverage; there can be no coordination of provision of indemnity benefits and any exclusion in a group health plan provided by the same plan sponsor; and benefits must be paid regardless of whether benefits are provided with respect to the same event under a group policy.
Excepted benefit coverage does not satisfy the individual responsibility provision of the ACA, but can supplement coverage that does meet that requirement. Under current regulatory requirements, individual excepted benefit indemnity insurance can only be paid on a per-period rather than a per-service basis and must be paid at a fixed amount regardless of the cost of a service. Fixed indemnity coverage is supposed to be cash-replacement coverage for persons who have other health coverage, not provide major medical coverage itself. But policies are commonly being sold — and approved by state insurance regulators — that are paid on a per-service rather than a per-period basis.
Under the proposed rule (foreshadowed by an FAQ published by CMS in January) fixed indemnity coverage could be sold in the individual market as an excepted benefit if 1) it is only sold to individuals who otherwise have minimum essential coverage, 2) there is no coordination of benefits with any other health coverage, 3) benefits are paid at a fixed dollar amount per day or per service regardless of expenses involved or benefits provided under any other coverage, and 4) a notice is displayed prominently in plan materials explaining that the coverage does not satisfy the minimum essential coverage requirement of the individual responsibility provision and that failure to have other coverage could result in a tax.
CMS recognizes in the preface to the proposed rulemaking that this proposal could be subject to abuse. While minimum essential coverage in the individual and small group markets must meet essential health benefits and minimum actuarial value requirements, large group and self-insured coverage that covers very little can meet the minimum essential coverage requirement. For large group members, therefore, limited fixed dollar individual “mini-med” policies could become the primary means of coverage. CMS asks, therefore, whether fixed indemnity coverage should only be sold to individuals with other coverage that covers the essential health benefits.
CMS also asks for comments on what verification insurers should have to require that the fixed indemnity coverage they offer is indeed supplemental to minimum essential coverage. Comments are also requested as to whether coverage should be issued by a separate insurer from the insurer that provides major medical coverage to avoid a situation where the insurer carves out benefits from its major medical coverage and packages them as an excepted benefit. The proposed rule would only apply to fixed indemnity coverage in the individual market. Fixed indemnity coverage in the group market under current rules cannot be coordinated with major medical coverage and must pay on a per period basis. The new rule would apply beginning January 1, 2015.
The proposed rules next propose a number of alterations in the reinsurance, risk corridor, and risk adjustment programs in response to changes that have occurred since the ground rules were established for these programs in the 2014 and 2015 payment notices. The reinsurance program is supposed to collect from insurers and third party administrators a reinsurance pool of $10 billion for 2014, $6 billion for 2015, and $4 billion for 2015, in addition to $2 billion for 2014, $2 billion for 2015, and $1 billion for 2016 as a contribution to the federal Treasury and administrative expenses. To collect this amount the payment notices establish a per capita contribution rate for 2014 of $53 and for 2015 of $44.
The proposed rule addresses the problem of what happens if collections fall short. In this case, CMS proposes that amounts collected would first go to the reinsurance pool and to cover administrative expenses, with funds being directed to the Treasury only after the total due the reinsurance pool and needed to cover administrative expenses ($10.02 billion) was fully paid. CMS seeks comments on the legality and wisdom of this approach.
For 2014, reinsurance funds are subject to sequester. This means that the $10 billion in reinsurance funds that would have been paid in the summer of 2015 for 2014 high-cost claims are subject to a 7.3 percent reduction, or reduced by $731 million. CMS states in the preface that if the sequester is not extended, these funds would become available for fiscal year 2016, which begins in October of 2015, and could be paid at that time. If the sequester continues, on the other hand, the situation foreseen by the proposed regulation where there is a revenue shortfall is likely to occur, although the proposal does not clearly indicate whether the allocation rules it proposes would apply if in fact the full $10 billion is collected but part of its is sequestered.
The Office of Management and Budget 2015 sequester report also suggests that the risk adjustment program will be cut by $247 million. The proposed rule does not address this shortfall.
The proposed rule also proposes changes in the risk corridor program. Unlike the reinsurance program, which covers all insurers in the individual market, the risk corridor program applies only to qualified health plans (QHPs), predominantly plans in the exchanges. In the 2015 Payment Notice, CMS suggested that additional risk corridor payments might be made in states where Departments of Insurance had permitted renewal of 2013 policies in response to the transitional relief permitted by HHS.
The proposed rule expands this, proposing adjustments to the risk corridor parameters in all states, not just in transitional relief states. It suggests that this relief is necessary not just because of the renewal of 2013 policies, but also because of increased additional insurer administrative costs due to implementation of the exchanges and the premium stabilization programs and risk pool uncertainties due to the phase-outs of state and federal high risk pools and potential shortfalls in the reinsurance program. CMS proposes that for the 2015 benefit year, the administrative cost ceiling for the risk corridor program be increased from 20 to 22 percent and the profit margin floor be increased from 3 percent to 5 percent. CMS states that it intends to implement the program in a revenue neutral way, and will make changes as necessary to meet this goal, although it is hard to see how this can happen.
Finally, CMS proposes that the additional payments that are made to insurers under the risk corridor program not be considered in calculating an insurer’s medical loss ratio. If the goal of increased risk corridor payments is to make insurers whole for increased costs and increased risks, this makes some sense. But it is contrary to the express language of the ACA, which requires medical loss ratios to be calculated after applying risk corridor contributions, and will result in reduced medical loss ratio rebates.
Navigators, non-navigator assistance personnel, certified application counselors, and certified application counselors. The proposed rule would create an exception to the non-discrimination provisions of the exchange regulations to clarify that certified application counselors that are funded to serve a particular population, such as people with AIDS or Indians, can limit their services to that population as long as they refer people who come to them who are not part of that group to other resources.
The proposed rule would provide that HHS could impose civil money penalties on navigators, non-navigator assistance personnel, certified application counselors, and certified application counselor designated organizations in federally facilitated exchange (FFE) and state partnership states where they do not comply with federal requirements. CMPs could, for example, be assessed against navigators who provide false or fraudulent information to consumers, who encourage applicants or enrollees to submit false or fraudulent information, or who steer consumers to particular QHPs. CMS has authority under a separate provision described below to impose CMPs on consumer assisters who misuse or impermissibly disclose personally identifiable information. CMPs could be assessed against individuals or entities.
The proposed rule sets out a procedure for investigating potential violations by consumer assistance programs. CMS intends to work with consumer assistance programs that are identified as having violated requirements collaboratively to avoid the need for imposition of CMPs, and could permit entities against whom a CMP has been assessed to enter into a corrective action plan in lieu of paying the CMP. CMPs will not be assessed if the consumer assistance entity can show that it did not know or would not have known, had it exercised reasonable diligence, of the violation. CMPs could, however, amount to as much as $100 per day for each individual directly affected by the entities’ non-compliance. CMS is considering the possibility of an expedited process for imposing CMPs where necessary to protect the public. CMS is also considering an approach that would give the HHS Office of Inspector General (OIG) concurrent authority with CMS to impose CMPs. The OIG has a great deal of experience working with CMPs in other contexts.
Under existing regulations states may license or certify navigators. There is not express regulatory authority for states to license non-navigator assistance personnel or CACs, but in general, state laws that do not prevent the application of the ACA are not preempted; thus, states have authority to regulate these personnel.
A number of states have imposed licensure requirements on navigators and other consumer assistance personnel that seriously restrict their activities. These laws have been challenged by consumer groups, asserting both that the laws are preempted by federal law and violate the First Amendment by restricting speech. A federal court in Missouri in January enjoined the enforcement of the Missouri statute. The proposed rule lays out clearer guidelines as to what states can and cannot do in restricting the activities of navigators, non-navigator assisters, and CACs. The proposed rule does not purport to capture the full range of state requirements that might be preempted by federal law, and recognizes that a federal court might find additional state requirements preempted.
The preface to the rule states that:
As a general principle, if a non-Federal requirement would, on its face, prevent Navigators, non-Navigator assistance personnel . . ., or certified application counselors from carrying out Federally mandated duties or from otherwise meeting Federal standards that apply to them, or if a non-Federal requirement would make it impossible for an Exchange to implement those consumer assistance programs consistent with the Federal statutes and regulations governing those programs, then, in HHS’s view, such a requirement would prevent the application of the provisions of title I of the Affordable Care Act.
The preface expressly states that states may implement additional state law protections for consumers, explicitly mentioning fingerprinting and criminal background checks, as long as these requirements are consistent with federal requirements.
Under the proposed regulations, states may not impose on navigators, non-navigator assistance personnel, or CACS in either federal or state exchanges licensure or certification requirements that would:
- Require them to refer consumers to agents and brokers or to others sources not required to provide impartial advice, as federal law requires assistance personnel to provide fair and impartial information regarding the full range of available QHPs;
- Prevent them from providing services to all persons to whom they are required to provide assistance, including for example, employers or employees regarding SHOP coverage, or persons who had previously been insured or had purchased insurance with the aid of an agent or broker (this provision and the one preceding it would not apply in the SHOP exchange in states that have established a SHOP only exchange and have opted under federal regulations to have navigator functions be fulfilled through referrals to agents and brokers);
- Prevent them from providing advice regarding terms of coverage or substantive benefits or the comparative benefits of different health plans, including, for example, features of a plan such as cost-sharing provisions, coverage exclusions or limitations, and network participation (although assistance personnel cannot steer consumers to a particular plan);
- Require them to be agents or brokers or to carry errors or omissions insurance. The proposed rule does not address specifically whether states may require assistance personnel to be bonded or to carry liability insurance.
In addition, states with FFEs may not impose requirements that would in effect render ineligible to provide services individuals or entities that the FFE would deem eligible under federal requirements. This would seem, for example, to invalidate state laws that deem health care providers ineligible to serve as navigators because they receive remuneration for insurers in their capacity as providers, as federal conflict of interest regulations only prohibit navigators from receiving compensation from insurers in connection with enrollment of individuals or employers in exchanges. States may also not prohibit an entity from serving as a navigator in an FFE state merely because it does not have its principle place of business in the state.
Finally, states with FFEs may not impose standards that would as applied prevent the application of requirements applicable to the FFE. If, for example, a state imposed fingerprinting, background check, or additional educational requirements that might be permissible in principle, but as applied made it impossible for navigators to comply on a timely basis, the requirement could be preempted.
While the proposals for CMS may go far toward allowing consumer assistance programs to fulfill the role they were meant to play under the ACA, it is very unfortunate that CMS has waited until now to move on this issue. Restrictive state laws have already seriously limited the ability of consumer assisters to do their job. Had CMS laid out the rules on this issue clearly when it promulgated the original navigator, assister, and CAC regulations, it is possible that far more Americans could have been signed up for coverage during the 2014 open enrollment period.
The proposed rule would not only relieve consumer assistance personnel from the burden of state regulation, it would also impose on them additional federal requirements. First the rules would prohibit navigators and non-navigator assisters from charging consumers for their services. Federal rules already prohibit CACs from doing so. Navigators that have non-navigator connected businesses (such as hospitals) may charge for their other services, but may not use their position as navigators to solicit business for their non-navigator businesses.
Navigator and non-navigator assistance organizations would, under the proposed rule, be prohibited from compensating individual navigators or non-navigators assisters on a per-application, per-person assisted, or per-enrollment basis. Such compensation may create adverse incentives that could result in more errors or cause navigators or assisters to favor consumers who take less time or to pressure consumers to make quick decisions. (Ironically, this is the standard way in which agents and brokers have always been compensated.) Per-enrollment compensation may also discourage navigators and assisters from fulfilling their educational, informational, and referral duties.
Navigators and non-navigator assisters will also be prohibited from providing any applicant or potential enrollee with promotional items as an inducement for application assistance or enrollment unless they are of nominal value, defined as worth $15 or less. Provision of such items is an inappropriate use of grant funds. It may also shift the focus of the interaction with enrollees away from the provision of impartial information and toward marketing a particular product.
Navigators and non-navigator assisters will be prohibited from going door-to-door or otherwise directly contacting or cold-calling consumers to enroll them in coverage. They may not make robocalls or use automated telephone dialing systems or an artificial or pre-recorded voice when initiating contact with consumers. Navigators and assisters may go door to door to provide educational or outreach materials.
Navigators and assisters must provide applicants and enrollees with notice of their functions and responsibilities and obtain written authorization on a form provided by HHS, and retain the authorization forms for at least 3 years. Consumers may revoke the authorization at any time.
Finally, navigators, assisters, and CACs must maintain a physical presence in their exchange service area so they can provide face-to-face assistance. They are not required to maintain their principle place of business in the state in which they provide assistance.
The proposed rules set out further requirements for CACs, imposing on them essentially the same requirements that are imposed on navigators and assisters. Individual CACs must complete exchange-approved recertification training and be recertified at least annually. CACs must also receive an authorization from consumers before gaining access to the consumer’s personally identifiable information. CACs may not charge consumers for their services or receive consideration from insurers or stop loss insures in connection with enrollment of consumers in QHPs.
CACs may be agent or brokers, but if they are, may not receive any consideration for enrolling consumers in a QHP or non-QHP. CACs may not be compensated on a per-application, per-enrollment, or per-individual-assisted basis, and may not provide gifts or inducements to potential enrollees unless they are of nominal value. CACS may not go door-to-door to enroll consumers or otherwise initiate unsolicited contacts with consumers to provide application or enrollment assistance.
When an individual is enrolled in a plan for less than a month — for example because the individual has been added to the plan at birth in the middle or a month or an enrollee terminates a plan in the middle of a month to transition to Medicaid — the exchange may, under the proposed rule, establish a standardized methodology for prorating premiums. In the FFE, the premium for one month of coverage will be divided by the number of days in the month.
The proposed rule would authorize CMPs for provision of false or fraudulent information to an exchange or for misuse or disclosure of personally identifiable information (PII). Any person who fails to provide correct information to an exchange in connection with an application for premium tax or cost-sharing reduction payments, or for an exemption from the individual responsibility provision, may be subject to a civil penalty where such failure is attributable to negligence or disregard for an HHS regulation. A person who knowingly and willfully provides false or fraudulent information in these circumstances is subject to an enhanced CMP. No penalty may be imposed if HHS determines that there was reasonable cause for a failure to provide correct information and the applicant acted in good faith.
Finally, a person who knowingly and willfully uses improperly or discloses PII received from or about an applicant for purposes other than ensuring the efficient operation of the exchange is also subject to a CMP. In particular, use of PII for marketing activities without express, specific consent is prohibited. “Persons” include not only navigators, non-navigator assisters, and CACs, but also brokers, agents, web-brokers, QHP insurers, and other third-party contractors, and their agents and employees. The proposed regulation sets out factors to be considered in assessing CMPs, procedures for assessing CMPs (including appeal procedures), and maximum CMP limits.
Earlier regulations had provided that effective January 1, 2015, HHS would assist state exchanges in verifying enrollment in employer-sponsored plans or eligibility for enrollment in employer-sponsored plans. Realizing the technological difficulty of this task, the proposed rule would withdraw this offer of assistance. HHS also proposes to remove an option under which HHS would determine eligibility for exceptions from the individual responsibility penalty for state exchanges.
A number of proposed technical amendments would address issues like premium payment due dates, notices of annual open enrollment periods, or delayed enrollment during special enrollment periods. A proposed amendment to the exchange regulations would allow a person whose individual health insurance policy coverage ends during 2014 outside of the open enrollment period to enroll in a QHP through the exchange rather than renew the expired policy. HHS also proposes that individuals who lose coverage, like Medicaid pregnancy services or AmeriCorps coverage, that is not minimum essential coverage be permitted a special enrollment period to enroll in QHP coverage.
Individuals who lose existing minimum essential coverage would, under proposed rules, be allowed to enroll in QHP coverage up to 60 days before they lose coverage to permit continuity of coverage, although eligibility for premium tax credits cannot begin until coverage is actually lost. The proposed rules would allow exchanges discretion to set an appropriate effective date for coverage where a person was not enrolled in coverage or for premium tax credits, or enrolled in the wrong plan, because of misconduct of a non-exchange entity. Individuals who voluntarily terminate minimum essential coverage are not eligible for special enrollment periods.
The proposed rule would distinguish between cancellations — which are effective before a plan takes effect — and terminations — which end a plan already in place. The proposed rule would provide rules for how terminations are handled where eligibility for a new plan is applied retroactively. An amendment to the appeals process would allow for withdrawal of appeals by telephone.
Affordable coverage and the individual responsibility tax. An individual lacks affordable coverage, and is thus excused from the individual responsibility tax, if the cost of coverage exceeds a certain percentage of his or her modified adjusted gross household income. The percentage is 8 percent for 2014, but is supposed to be increased by a percentage determined by HHS to reflect the excess of the rate of premium growth and income growth between the preceding calendar year and 2013. The proposed rule preamble discusses various methodologies for determining this percentage.
SHOP exchanges. The proposed rule would provide for a one year transition policy, mentioned in the 2015 letter to issuers, that would allow state regulators to request SHOP exchanges (including the FF-SHOP) to delay employee choice within the exchange for one year if 1) it would result in significant adverse selection against the state’s small group market, or 2) there are an insufficient number of QHPs or stand-alone dental plans to allow for meaningful plan choice within the SHOP. The regulator must submit a mitigation plan to permit implementation for 2016 and must submit concrete evidence supporting its claims.
The proposed rule turns next to enrollment periods under the SHOP. The proposal would create an annual fixed election period during which an employer would be able to change the method by which the employer and employees select plans, the employer’s contribution, the level of coverage offered employees, and the QHP or QHPs offered employees. The annual election period would be aligned with the annual open enrollment period for the individual exchange, which for 2015 would begin November 15, 2014.
The rule would also eliminate the current 30-day minimum periods during which employers and then employees may choose a plan. SHOP exchanges would still allow employers to begin offering coverage initially at any point during the year (rolling enrollment). Changes in the SHOP appeal processes are also proposed, including allowing employers to withdraw appeals telephonically.
The proposed rule proposes moving forward with an exchange quality rating system (QRS). HHS intends to begin beta testing of this system during 2015. A proposed QRS was released late last year and described here. Under the proposed rule, by 2016 exchanges would be required to begin prominently displaying on their websites quality rating information calculated for each QHP by HHS in a form and manner specified by HHS. Ratings would be assigned to plans using a five-star scale and displays would be similar to those used for Medicare Advantage and Part D drug plan ratings. States could also display their own rating information and link to the federal information on the federal exchange website.
The proposed regulations also include provisions governing QRS reporting by QHP insurers and implementation. QHPs will submit data at the product level (HMO, PPO, POS) in a state, rather than at the metal level and can combine data for QHPs offered inside and outside of the exchange. QHPs would submit quality data for the first year the QHP is offered on the exchange in their second year for beta testing, and submit validated second year data in their third year, which would be reported for plan selection for the fourth year. Thus QRS data for 2014 plans will first be publicly available for 2017 plan selection using 2015 data.
QRS data will be submitted for a six-month period beginning on the first day of a calendar year and running through the middle of the sixth month. Quality data must be validated by an independent third party (for example, HEDIS data must be validated through the HEDIS compliance audit process). Further guidance on the QRS will be released in 2014.
Exchanges would also begin displaying enrollee satisfaction survey (ESS) data in 2016 for plans with more than 500 enrollees. ESS data would be incorporated into quality ratings. Exchanges would be provided with full ESS data, and could choose whether to include only ESS data included in the QRS system, or full data. States could choose whether or not to display ESS 2015 beta tests results prior to 2016.
The proposed rule also expands and clarifies the ESS reporting and validation process and procedures for dealing with ESS vendors. ESS data would be collected at the product and metal level if enrollment is sufficient to ensure credibility but reported at the product level. As with QRS data, plans would submit 2014 information for beta testing in 2015 and 2015 data in 2016 for reporting for the 2017 open enrollment period. HHS also proposes to conduct a survey of consumer satisfaction with the exchanges beginning in 2015. QHPs could use accurate QRS and ESS information in their marketing materials.
Some of the complaints that have emerged with respect to QHPs have involved access to clinically appropriate drugs. QHPs are permitted to have formularies that limit enrollees to the particular drugs listed in the formulary. QHPs are, however, supposed to have exceptions processes so that enrollees can have access to drugs not covered by the formulary where necessary. CMS is considering amending the formulary rules to require an expedited exceptions process where an enrollee is suffering from a serious health condition or an enrollee is in a current course of treatment using a non-formulary drug. This process is currently suggested in the 2014 and 2015 letter to issuers.
Under the ACA, cost sharing and deductibles in small group plans may not exceed annual dollar limits. These limits are to be updated each year by the percentage by which the average per capita premium for health insurance coverage for the preceding calendar year exceeds the annual per capita premium for health insurance in 2013. In calculating this amount, HHS intends in the future to round the amount down to the nearest multiple of $50 that is lower than the amount calculated by the formula. The 2015 maximum for cost sharing will be $6600 for an individual, $13,200 for a family. The small group deductible will be $2,050 for an individual, $4,100 for a family.
The proposed rule would recognize as minimum essential coverage, coverage provided to expatriates (citizens or national of the U.S. living abroad for at least one day in any month and expected to live abroad for at least 6 months in any 12 month period, or citizens or nationals of other countries living in the U.S.) if the coverage is self-insured or insured by a foreign entity not subject to state regulation. Expatriate U.S. citizens or nationals who are present in the United States for at least one month are recognized as having minimum essential coverage if their expatriate coverage covers services within the U.S. Coverage for foreign citizens or nationals living in the U.S. must also cover services in the U.S. to be recognized as minimum essential coverage. Companies offering expatriate coverage to U.S. citizens and nationals must provide them notice as to whether they are offered minimum essential coverage and must comply with minimum essential coverage reporting requirements under the Internal Revenue Code.
The proposed rule contains several provisions on enforcement. The proposal clarifies that HHS will work together with state regulators on enforcement issues. The proposed regulation also clarifies procedures for providing notice of CMPs and for decertification through FFEs.
Finally, the proposed rule would change several medical loss ratio reporting and rebate requirements. Because the conversion to ICD-10 reporting was delayed for a year, insurers will be able to claim up to 0.3 percent of their earned premium for ICD-10 conversion costs for 2014, as they could in 2012 and 2013. The rule clarifies that in states with merged small group and individual markets (Massachusetts, and as of 2014, Vermont, and the District of Columbia), data must be aggregated for MLR reporting.
The proposed rule would also allow insurers in the individual and small group market that implemented the transitional policy in states that permitted it to increase their incurred claims and quality improvement expenses incurred for 2014 only by a factor of 1.0001. Insurers that participate in the federal or state exchanges would also be allowed to increase their claims and quality improvement costs for their entire individual and small group book of business, including plans off of the exchange, by 1.0004, in recognition of the increased burden born by exchange plans due to the problems with the launch in 2014.
Finally, in the situation where some MLR rebates are de minimis (less than $20 for a group or $5 for an individual), current regulations permit insurers to distribute de minimis rebates to enrollees whose rebates exceed the de minimis level. The proposed rule would provide that if all of an insurer’s rebates are de minimis, or if distributing de minimis rebates to individuals whose rebates exceed the de minimis level would result in enrollees receiving rebates that exceed their annual premiums, insurers must instead distribute de minimis rebates to the enrollees whose policies generated those rebates.
Note: Specific topics addressed by the rule include standards related to product discontinuation and renewal; qualified health plan (QHP) minimum certification standards and responsibilities; standards for fixed-dollar indemnity policies; QHP quality reporting and enrollee satisfaction surveys; non-discrimination standards; modifications in the Small Business Health Options Program (SHOP); partial month premium payments; enforcement remedies in Federally-facilitated Exchanges; modification of HHS’s allocation of reinsurance contributions if those contributions fail to meet projections; changes in risk corridors calculation; modifications in the calculation of cost-sharing parameters; indexing of the required contribution used to determine eligibility for an exemption from the shared responsibility payment; privacy and security of personally identifiable information; grounds for imposing civil money penalties on persons who provide false or fraudulent information to the exchange and on persons who improperly use or disclose information; standards relating to navigator, non-navigator assistance, and certified enrollment counselors program, including limitations on state restrictions on navigators and assisters; standards relating to the opt-out provisions for self-funded, non-Federal governmental plans under the Health Insurance Portability and Accountability Act of 1996 (HIPAA); standards for recognition of certain types of foreign group health coverage; verification of minimum essential coverage; amendments to Exchange appeals standards and coverage enrollment and termination standards; and temporary adjustments to the medical loss ratio program standards.
Update: On March 18, 2014, Chief Judge William Griesbach of the federal court for the Eastern District of Wisconsin dismissed the claims of the Association of Physicians and Surgeons v. Koskinen, clearing out yet one more anti-Affordable Care Act case. The AAPS is a conservative membership group of physicians, “many of whom have ‘cash practices’ that do not accept payment from health insurance providers.” They had sued the Internal Revenue Service Commissioner claiming that the decision of the IRS to delay of the employer mandate without a corresponding delay of the individual mandate was in violation of the constitutional separation of powers doctrine and the Tenth Amendment (which reserves to the states and people powers not granted to the United States). They had asked that the court prohibit the IRS from implementing the ACA, or, alternatively, from implementing the individual mandate without implementing the employer mandate.
The court held that the Association had no “standing” to challenge the IRS policy, as it could not show that its members had been concretely injured by the policy. The Association claimed that the IRS decision would cause fewer large employers to offer coverage, which would cause more employees to purchase their own coverage, which would leave employees with less discretionary income, which would cause employees to purchase fewer services from the Association’s members. The Association had also claimed that insurance premiums paid by its own members would increase because of the IRS policy. The court noted that each of these claims was highly speculative, and that the plaintiffs had not shown an “imminent” or “certainly impending” injury of the kind needed to meet the constitutional “case or controversy” requirement that creates federal court jurisdiction. The plaintiffs were effectively asking the court to resolve “generalized grievances,” which are not subject to resolution by the courts.