Implementing Health Reform (May 11 update on FFM Procedures For 2017). On May 10, 2016, CMS issued a brief guidance describing how the federally facilitated marketplace (FFM) intends to handle annual eligibility redeterminations and reenrollments for 2017 in the states where it handles eligibility and enrollment.

In most respects, the eligibility and enrollment processes will be identical to those followed in 2016. The FFM will continue to request updated information from the Internal Revenue Service (IRS) on individuals who benefit from advance premium tax credits (APTC) and income-based cost-sharing reduction (CSR) payments and have authorized the IRS to release information to the FFM for redeterminations. The FFM will again send marketplace open enrollment notices (MOENs), which will include general information on the upcoming open enrollment period. The MOENs will also be customized for specific groups, such as individuals who refused to authorize the FFM to query IRS data or individuals whose income may exceed APTC eligibility levels.

Insurers will continue to send required renewal or discontinuation notices to their enrollees. The FFM will continue to redetermine eligibility based on updated poverty level, benchmark plan, and applicable percentage information, largely using the procedures employed in 2016. And the marketplace will automatically reenroll 2016 enrollees who do not themselves select a plan using the reenrollment hierarchy applied in 2016, as modified by the 2017 benefit and payment parameter rule.

Finally, the FFM promise to improve operational aspects of the redetermination and reenrollment process, for example, by providing specialized notices in states that have expanded Medicaid since the last open enrollment period and sending preliminary auto re-enrollment transactions earlier to insurers.

Changes For 2017

The guidance announces a few changes for 2017. Individuals who were automatically re-enrolled for 2015 and 2016 but did not update their eligibility information for 2015 or 2016, for whom the IRS has no income information available for tax years 2014 and 2015, and who do not submit an updated application by December 15, 2016 (the last date for which a plan can be selected for coverage effective January 1, 2017), will have APTC and income-based CSRs terminated. The 2016 guidance had stated that CMS would not reenroll individuals at all for 2017 under these circumstances.

The ACA provides that individuals who fail to file a tax return and reconcile the APTC they received with the tax credits they should have received are ineligible to receive APTC in following years until they file and reconcile. In determining 2016 eligibility, the FFM queried the IRS to determine whether enrollees had filed taxes for 2014 and discontinued APTC and income-based CSRs for enrollees who had failed to do so.

Beginning in September of 2016, the IRS will expand the data it provides upon request to the marketplaces, reporting for 2015 (and 2014 if relevant), whether an individual

  1. failed to file a return or request an extension,
  2. requested an extension, or
  3. filed taxes but failed to reconcile APTC using form 8962.

It is not clear what difference this reporting will make, although it is possible that it may treat individuals who filed but failed to reconcile or who requested an extension differently from those who failed to file at all.

The guidance states that during the 2017 open enrollment period in situations where:

  1. an enrollee is on an application where one or more enrollees are receiving APTC or income-based CSR;
  2. the enrollee authorized marketplace access to IRS tax data,
  3. the IRS reports in response to a marketplace query that the enrollee received APTC but the “tax filer” responsible for the enrollee’s coverage did not file a return, and
  4. the enrollee (presumably a different person than the tax-filer) does not return to the marketplace to obtain an updated eligibility determination by the last day for which plan selection can be made for coverage effective on January 1, 2017,

the marketplace will discontinue APTC and income-based CSR for the enrollee prospectively for 2017. The implication is that if the enrollee (for example an adult child dependent) had provided eligibility information to the marketplace, it would have been able to establish eligibility even though the “tax filer” (for example, a parent) had in fact not filed.

Health Plan Innovation Forum

CMS also on May 10, 2016, issued invitations to stakeholders for a June 9 forum on health plan innovation. Many marketplace plans seem poised to raise their premiums for 2017, while others are leaving the marketplaces. But some marketplace plans are succeeding, and are doing so through innovative approaches to consumer engagement, provider contracting, and care coordination. These innovators will report on their strategies at the forum.

May 9 update. Anyone who has received medical bills (which is just about everyone) realizes how frustratingly incomprehensible both the billing process and the bills themselves can be. May 9, 2016 Health and Human Secretary Sylvia Burwell announced a competition to challenge innovators to design a simpler, more consumer-friendly medical bill and to improve the billing process.

Two prizes are offered, one for the most easily understood medical bill and the other for the “best transformational approach to improve the medical billing system, focusing on what the patient sees and does throughout the process.” The competition lasts through August 10, with the awards announced in late September. Submissions must include a written description, brief video, visual representation of the product, and a “journey map” of the patient experience of the recommended process.

The prizes, funded by the AARP, are $5,000 each. But six major health systems and health insurers have agreed to test or implement the award-winning product. The winner will retain intellectual property rights in the product and will be able to negotiate the terms of its use.

HHS’ use of a challenge competition to engage private innovators in system innovation is itself an innovative approach. It may be an approach worth trying for tackling other intractable problems of our health care system.

Original Post. For some time insurers have been complaining that consumers have been abusing special enrollment periods (SEPs) to sit out open enrollment opportunities while healthy and then enroll in coverage through SEPs once they need health care. Consumer Oriented and Operated (CO-OP) plans have complained that excessively rigid regulatory requirements have impeded their operations.

On May 6, the Centers for Medicare and Medicaid Services took action by adopting an interim final rule that amends both current SEP requirements and regulations governing CO-OP board and marketing requirements (fact sheet) CMS also released consumer and insurer fact sheets describing the six SEPs that are currently available for consumers to enroll in health plans outside of the annual open enrollment periods (the insurer fact sheet is at the CMS website).

The Permanent Move SEP

The biggest change in the SEPs affects the permanent move SEP. Under current rules, if a consumer or his or her dependent gains access to new qualified health plans (QHPs) because of a permanent move, the consumer has up to sixty days to enroll in a new QHP. This has been true whether or not the consumer was previously enrolled in marketplace coverage. Insurers have objected that this SEP has given consumers who failed to enroll in coverage during open enrollment and then find that they are in need of medical care the opportunity to establish eligibility for coverage simply by moving to a new address (or claiming to have done so).

Under the amended SEP, most individuals who move will (as of July 11, 2016) be eligible for an SEP only if they have been enrolled in coverage for at least one day during the previous sixty days. In other words, consumers who have already enrolled in coverage and then move may enroll in marketplace plans covering their new homes, but consumers who were not enrolled before the move will have to wait until the next open enrollment period.

There are important exceptions to this changed rule, recognizing that some consumers who move would not previously have had an opportunity to enroll in coverage. First, individuals who move to the United States from outside the U.S. or from a United States territory will still have be able to enroll through an SEP. Second, individuals who gain access to coverage because they are released from incarceration will be granted an SEP; but not because they have moved, but rather because they were not eligible for marketplace coverage while they were incarcerated. Finally, individuals who lived in a state that did not expand Medicaid and were ineligible for marketplace coverage because their income was below 100 percent of poverty, but who become eligible for marketplace coverage when they move to another state (presumably because of increased income), are also eligible for an SEP.

Advance Availability Of SEPs

The interim final rule removes a requirement imposed by the 2016 Benefit and Payment Parameters rule that mandated that marketplaces be ready by January 1, 2017 to provide 60 days’ advance availability of an SEP for individuals who experience a permanent move, or who lose a dependent or are no longer considered a dependent because of divorce, legal separation, or death. The timing of Implementation of advance availability will now be at the option of the marketplaces. Presumably the federally facilitated marketplace will delay implementation of advance availability, although this is not explicitly stated.

The SEP Landscape

The SEP rule as amended provides for six SEPs, which are listed in the issuer and consumer fact sheets. These SEPS are for:

  • Loss of other qualified coverage, such as Medicare, Medicaid, or employer coverage;
  • Changes in household circumstances, such as through marriage, birth, adoption, divorce, or a death in the family;
  • Permanent moves as defined in the interim final rule;
  • Changes in eligibility for financial help, for example when an individual gains lawful alien, citizenship, or recognized Indian status, or experiences an increase of income to above 100 percent of the federal poverty level in a state where the individual was not eligible for Medicaid previously because the state had not expanded Medicaid eligibility;
  • Certain types of errors made by marketplaces or plans; and
  • Other specific situations, as defined by guidance, such as where an individual is a victim of spousal abandonment or domestic abuse apply for separate coverage.

The guidance describes these SEPS as “defined and limited,” but some of the SEPs are still quite open-ended, and the interim final rule does not further limit any SEPs other than the permanent move SEP. The SEPs as modified by the interim final rule apply for all non-grandfathered individual coverage as well as SHOP coverage.

The interim final rule also does not address what has until now been the key insurer SEP demand, that SEP eligibility be established by documentary evidence before consumers are enrolled in coverage through SEPs. But CMS may not yet be done with tightening up on access to SEPs; further action is likely. It will be unfortunate if the steps that CMS is taking only discourage SEP enrollment that insurers regard as inappropriate, rather than encouraging more consumers to enroll appropriately through SEPs. Expanding SEP enrollment to cover more healthy consumers could in fact do much to improve the risk pool, the ultimate goal of insurers.

Loosening Restrictions On CO-Op Board Membership

The interim final rule also amends a number of regulations affecting the CO-Ops. Under current rules, a majority of officers of a CO-OP must be CO-OP members. Government employees and employees of insurers that existed before the ACA have been ineligible to serve as board members. Under the amended rule, only high level government or insurer employees will be ineligible for board membership (although government employees will not be able to be board members of a CO-OP that serves their jurisdiction).

Moreover, the board member eligibility bar will apply only to employees of pre-existing insurers that operated in the individual or small group market. The requirement that board members with specialized expertise, experience, or affiliation not constitute a majority of a board is also removed.

Under the interim final rule, a majority of a CO-OP’s board will still have to be elected by a majority of its members, but a majority of board members will not actually have to be CO-OP members. Entities offering loans, investments, or services may now be represented on CO-OP boards.

CO-OP Plan Offerings And Wind-Downs

The interim final rule also modifies the requirement that at least two thirds of the plans issued by a CO-OP must be QHPs in the individual or small group market. The difficulty of achieving predictable compliance with the two-thirds rule has discouraged CO-OPs from diversifying their product lines by offering Medicare, Medicaid, or supplemental dental or vision coverage. The rule clarifies that if a CO-OP temporarily fails to meet the standard in a given year, HHS will not necessarily enforce its right to require early loan repayment as long as the CO-OP offers silver and gold plans, has a specific plan and timetable to return to compliance with the two-thirds requirement, and acts with diligence and good faith to return to compliance with the two-thirds standard for future years.

Additionally, the interim final rule addresses the application of the prohibition against a CO-OP converting or selling to a for-profit or non-consumer operated entity to the situation where CO-OP policies are sold or converted to a non-CO-OP insurer in connection with the wind-down of an insolvent CO-OP. Under the loan-agreement between CO-OPs and CMS, CMS can accelerate loan repayment or terminate its loan agreement if the prohibition is violated. HHS recognizes that in appropriate circumstances, it may allow an insolvent CO-OP to enter into an arrangement to sell or convert policies to preserve coverage for its enrollees.

The preface lists the outstanding loan amounts for each of the eleven remaining CO-OPs, totaling $1.2 billion. The CO-OP provisions of the interim final rule are effective as of May 11, 2016.

A CMS Openness To State Discretion On Risk Adjustment?

Finally, the preface to the interim final rule notes enigmatically that the risk adjustment program has caused problems for some new, small, or rapidly growing insurers. It recognizes that states are the primary regulators of insurance markets, and encourages states “to examine whether any local approaches, under State legal authority, are warranted to help ease this transition to new health insurance markets.” A National Association of Insurance Commissioners working group is reviewing what authority states may have to reallocate risk adjustment payments and contributions, and whether such authority should be exercised. This is the first sign I have seen that HHS might be sympathetic to a state’s exercise of such discretion.