Implementing Health Reform. On February 29, 2016, the Department of Health and Human Services released its final 2017 Benefit and Payment Parameters Rule (with fact sheet) and final 2017 Letter to Issuers in the Federally Facilitated Marketplaces (FFMs). It also released a bulletin on rate filings for individual and small group non-grandfathered plans during 2016, a frequently asked questions document on the 2017 moratorium on the health insurance provider fee recently adopted by Congress, and a bulletin announcing that CMS intends to allow transitional (grandmothered) policies to continue (if states permit it) through December 31, 2017, rather than requiring them to terminate by October 1, 2017, as earlier announced.

I analyzed the notice or proposed rulemaking (NPRM) payment rule when it was issued in November and the draft letter to issuers when it was released in December. The final payment rule and letter include most of the provisions proposed earlier, but differ in important respects. I will be analyzing the final rule and letter in detail over the next couple of days (see part 1 and part 2 of that analysis), but now offer a few headlines, focusing on issues of particular interest to health insurance consumers.

Standardized Plans

To begin, the final rule and letter adopt with a few changes proposals regarding standardized plans. Beginning in 2017, qualified health plan insurers would have the option of offering six standardized plans: a bronze, a gold, and a standard silver, as well as three silver plan options, at the 73 percent, 87 percent, and 94 percent actuarial-value levels, for individuals eligible for cost sharing reduction payments. The plans would have

  • standard deductibles (ranging from $6,650 for the bronze plan to $3,500 for the standard silver to $250 for the 94 percent silver cost-sharing variation),
  • four-tier drug formularies,
  • only one in-network provider tier,
  • deductible-free services (for the silver level plan including urgent care, primary care visits, specialist visits, and drugs),
  • and a preference for copayments over coinsurance.

Insurers will not be required to offer standardized plans and could offer non-standardized plans (as long as they met meaningful difference standards), but standardized plans will be displayed in the marketplaces a manner that will make them easy for consumers to find.

Network Adequacy Requirements

The final rule and letter adopt some, but not all of the network adequacy requirements that were proposed, and delay some until 2018. The NPRM payment rule would have required states to adopt time and distance network adequacy standards for 2017 and imposed a federal default time and distance standard in states that failed to do so. The final rule backs off this requirement but provides that the FFM will itself generally apply quantitative time and distance standards in determining network adequacy for qualified health plans.

Provider Termination Notice

The final rule requires that health plans give patients 30 days notice when terminating a provider and continue to offer coverage for up to 90 days for a patient in active treatment by a provider who is terminated without cause. The insurer would only have to pay network rates to a provider for continuation coverage and the provider could balance bill. CMS is proceeding with its proposal to label health plans as to their relative network breadth on

Out-of-Network Bills At In-Network Facilities

CMS is not finalizing until 2018 a requirement the insurers apply to the in-network cost sharing limit the cost of services provided by out-of-network providers at an in-network facility; the agency is also weakening this already weak requirement. As finalized, the requirement only applies to ancillary providers, such as anesthesiologists or radiologists; can be avoided by giving notice (including form notice) 48 hours ahead of time or at the time of prior authorization that treatment might be received from out-of-network providers; and does not apply to balance bills as such where the provider bills for the difference between its charge and the network payment rate.

Open Enrollment Period And Procedures

Open enrollment for 2017 and 2018 will last from November 1 until January 31, as was true this year, but in future years, open enrollment will run from November 1 to December 15, to align enrollment with the calendar year. CMS is not finalizing until 2018 a proposal to allow applicants to remain on a web broker’s or insurer’s non-FFM website to complete a Marketplace applicant and enroll in coverage. Until then, web brokers and insurers will have to use the current direct enrollment process.

The rule changes the reenrollment hierarchy, requiring marketplaces to prioritize reenrollment in silver plans and allowing marketplaces to enroll consumers into plans offered by other insurers if their insurer does not have a plan available for reenrollment through the marketplace.  Other proposals to change the reenrollment process were not adopted.

FFM User Fees In State Marketplaces

The final rule and letter finalize the status of state-based marketplaces using the federal enrollment platform, which this year included Hawaii, Oregon, Nevada, and New Mexico. In future years insurers in these states will pay a FFM user fee of 3 percent, but for 2017 the user fee will be 1.5 percent. The standard user fee for other FFM states will be 3.5 percent again for 2017.

Navigators In The FFMs

The final rule requires navigators in FFMs as of 2018 to provide consumers with post-enrollment assistance, including assistance with filing eligibility appeals (though not representing the consumer in the appeal), filing for shared responsibility exemptions, providing basic information regarding the reconciliation of premium tax credits, and understanding basic concepts related to using health coverage. Navigators will also be required to provide targeted assistance to vulnerable or underserved populations.

“Vertical Choice” In The FF-SHOPs

The final rule allows FF-SHOPs to offer a “vertical choice” option, under which employers could allow their employees to choose any plan at any actuarial level offered by a single carrier. This is in addition to the options currently available where employers can offer a single plan or any plans offered by an insurer at a single level. States could recommend against the FF-SHOP offering vertical choice in their states and states with state-based marketplaces using the FFM could opt out of making vertical choice available.

Fraud Prevention In The Medical Loss Ratio Calculation

CMS decided not to allow insurers to count fraud prevention expenses in the numerator in calculating their medical loss ratios, as it had suggested it might in the NPRM.

Other Topics

The insurer fee FAQ clarifies that insurers will not be charged the insurer fee for the 2017 fee year (which would have based the fee on 2016 data). Insurers are expected to adjust their premiums downward to account for the fact that they will not owe the fee.

CMS is allowing states to extend transitional plans, which antedate 2014 and do not have to comply with the 2014 ACA insurance reforms through the end of 2017. Earlier guidance had allowed insurers to renew transitional plans ending before October 1, 2017. CMS concluded that it would be better to allow people in transitional plans to transition into ACA compliant plans during the 2018 open enrollment period rather than having them start a new ACA compliant plan in October 2017 that would only last for three months, and then have to restart a new deductible on January 1, 2018.

There is much more in the rule and letter. The rule is well over 500 pages long, the letter almost 100. Watch for further installments over the next couple of days.