As premium rate increases for 2017 continue to come in high, the Centers for Medicare and Medicaid Services (CMS) continues to look for “fixes” that might calm down jittery marketplace insurers. A major focus of these efforts has been special enrollment periods (SEPs).
SEPs allow individuals to obtain coverage if they were unable to enroll during open enrollment for one of a number of reasons, such as loss of employee benefits or the birth of a child after enrollment closed. SEPs also allow people who meet certain criteria to change their insurer after open enrollment ends, for example because of a move. Insurers claim that individuals who enroll during SEPs are considerably costlier than those who enroll during open enrollment and assert that SEPs are open to abuse and misuse.
CMS has responded to these complaints, taking a series of steps to tighten up SEPs. These include eliminating some obsolete SEPs, adding warnings to HealthCare.gov against inappropriate use of SEPs, limiting access to the move SEP to individuals who were already covered prior to their move, and requiring SEP applicants to submit documentation confirming their eligibility for an SEP at the time of application. CMS has proposed further rule changes to clarify existing SEPs in the 2018 proposed payment notice. It has also proposed modifying the risk adjustment program to better compensate insurers for short-term enrollments.
The confirmation process seems to be having a significant effect. In a frequently asked question document released on September 6, CMS states that during the seven weeks prior to implementation of the confirmation process SEP plan selections came in at about the same rate as during the corresponding weeks in 2015; however, in the seven weeks after implementation, SEP plan selection rates have been 15 percent lower than during the corresponding weeks last year, although CMS acknowledges that it does not know why for certain.
A New Advance Verification Pilot Project
On September 6, 2016, CMS announced its intention to take a further step, instituting a pilot project for 2017 in which it would require advance verification of SEP eligibility for some HealthCare.gov applicants before enrollment. The purpose of the project would be to evaluate the impact of verification on compliance, enrollment and continuity of coverage, the risk pool, and other outcomes. Advance verification has been a key demand by insurers, which CMS seems prepared to meet. However, CMS is not allowing the insurers to verify eligibility themselves, which they would prefer but which is adamantly opposed by consumer advocates; the advocates fear the reinstatement of rescissions, which were strictly limited by the Affordable Care Act (ACA).
CMS requests comments on how the SEP pilot should be designed, whom it should affect, and how its results should be evaluated. Comments are due by September 20, 2016.
SEPs continue to be intensely controversial. Insurers have offered some evidence that individuals who enroll through SEPS are more costly. This should not be a surprise, since SEP enrollees include people losing their jobs, possibly for medical reasons, and newborn babies, who invariably arrive with medical expenses. It should also not be surprising that many SEP enrollees drop coverage before the end of the year — another insurer complaint. The vast majority of potential SEP enrollees are eligible because of loss of employer coverage, and many go back to work or become eligible for Medicaid before the year is up.
Most people eligible for SEPs—by some estimates 95 percent—do not enroll in coverage. It is likely that the drop in enrollments after CMS put the confirmation process in place is in part due to even more people who are eligible for coverage not applying.
It would stand to reason that individuals most in need of coverage would try to establish eligibility no matter what barriers are put in their way. But those who are healthy and expect to have low medical expenses—the people whom insurers and the marketplaces need most—may well decide to forego coverage rather than go through the hassle of the confirmation process.
Moreover, we have plenty of evidence from the current data matching process that some applicants will simply get lost in the verification process, and again the least healthy will be most likely to fight their way through the process to establish eligibility. Finally, the inevitable delays imposed by pre-enrollment verification are likely to result in some who are clearly eligible for coverage not being able to establish eligibility in time to get the medical care they need.
A Better Path Forward
CMS should consider alternate solutions that might better address problems with SEPs. Requiring insurers to pay commissions to brokers and agents for SEP enrollments could incentivize them to bring in healthy enrollees. Requiring group health plans to provide a notice of creditable coverage for individuals who lose group coverage, a requirement that used to apply but was repealed in 2014, would make it easier to establish eligibility for the most common SEP.
The difficulty of stabilizing the marketplaces is in part a problem of CMS’ own making. Insurers have comprehensive data on their own enrollments, disenrollments, and medical and pharmaceutical claims. CMS decided early on to deny itself access to these data, rather requiring the insurers to set up EDGE servers from which CMS could request data as necessary to run the reinsurance and risk adjustment programs. If CMS had immediate access to these data, even in anonymized form, it could pinpoint much more accurately and quickly where the problems are with SEPs and more readily design a solution. As long as it is wholly dependent on insurers to provide data, it will be limited in its ability to actually identify and solve problems in the marketplaces.
In the 2018 proposed payment notice, CMS has proposed seeking broader access to EDGE server data for risk adjustment and analysis purposes. CMS should move expeditiously to implement this proposal to facilitate the stabilization of the marketplaces.
Also on September 6, CMS announced that it is awarding $63 million in 2017 funding to 96 navigator programs returning for the second year of their three-year contracts signed in 2015, and to two new navigator programs in Hawaii. The grants are for programs in states served by the federally facilitated marketplace (FFM), including Hawaii which is transitioning to the FFM for 2017. State-based marketplaces fund their own navigator programs.
Navigators are individuals and organizations that help individual consumers and small businesses and their employees identify and apply for insurance coverage options and financial assistance through the marketplaces. In 2016, the first year of the three-year cycle, CMS awarded $67 million to 100 grantee organizations. A list of the 2016 grantees is available here.