November 30 Update: Marketplace Assister Resources

The Centers for Medicare and Medicaid Services have released several documents for navigators, non-navigator assistance personnel, and certified application counselors, collectively referred to as “assisters.” The first is an updated standard operating procedures manual for assisters in the federally facilitated marketplace.  The manual comes in a pdf version which can be printed out, but also has a hyperlinked table of contents for easy navigation online. A consumer protection section contains information on safeguarding consumer information privacy and security, preventing and reporting fraud, and dealing with complaints and grievances. The remainder of the manual covers standard operating procedures for handling eligibility, enrollment, and post-enrollment application processes; paying premiums; requesting eligibility appeals; applying for exemptions; reporting life changes: and renewing coverage. The manual contains numerous screenshots from Healthcare.gov processes.

CMS has also released an updated Assisters’ Roadmap to Resources.  It contains links to numerous resources available from governmental and nongovernmental agencies for assister programs, including resources relating to consumer coverage programs and the marketplace application and enrollment process. It includes links to resources in languages other than English.

Finally, CMS has released a guidance on how navigator cooperative agreement programs may carry out navigator duties and activities through subrecipients or contractors. Subrecipients receive federal funds through a subaward for carrying out federal program requirements, while contractors are paid by a navigator entity for goods and services purchased for the entity’s own use.

Entities that enter into navigator cooperative agreements must carry out all the legal duties of a navigator (although they may focus on some activities more than others). But navigator entities may, with CMS approval, carry out program activities through subrecipients or contractors. Indeed, an FFM navigator entity may carry out most of its activities and duties through subrecipients or contractors as long as it retains management and coordination responsibilities and its project director is a navigator employee, properly trained and certified. Staff of contractors or subrecipients must also be properly trained and certified.

November 23 Update: Department Of Justice Brief Opposes House Request For Delay in House v. Burwell

On November 23, 2016, the Department of Justice (DOJ) filed its response to the House’s motion to stay the proceedings in House v. Burwell pending the new administration. The DOJ objected strongly to the House’s motion, noting that the court had already granted the House a month’s delay and reiterating its arguments that the House’s lawsuit “meddl[es] in the internal affairs of the legislative process,” by allowing the House to act alone without the concurrence of the Senate; “arrogates to the House” the role of the executive in deciding how the law should be executed; and contravenes the traditional role of the judiciary by asking the court to decide essentially a political question. The lower court’s judgment was also, the DOJ argues, wrong on the merits.

The brief notes that none of the separation of power principles at stake in the case has been changed by the election. Indeed, the DOJ observes, “The House does not suggest that the incoming Administration would welcome heretofore unprecedented suits by subcomponents of Congress that seek to alter the way the Executive Branch is administering the law.” Delay, moreover, creates “untenable business uncertainty” for insurers, which must soon decide whether to participate in the marketplaces for 2018. Proceeding with the agreed-to briefing on the agreed-to schedule would not harm the House, the DOJ asserts. The agency concludes that it would not object to the House dismissing its complaint voluntarily, but that if the House wants to proceed, it should file its brief by December 23.

The court will now have to decide whether to delay the case or not. As it now stands, the final government brief is due on the last day of the Obama administration. After that, the Trump administration will have to decide whether or not it indeed wishes to have a precedent on the books allowing a single house of Congress to sue the executive, and whether it is willing to risk the chaos in the individual insurance market that would likely ensue from an abrupt cut-off of cost-sharing reduction payments to insurers.

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On November 21, the House of Representatives filed a motion to “Hold Briefing in Abeyance or, in the Alternative, to Extend the Briefing Schedule” in House v. Burwell. To recap briefly, House v. Burwell is a lawsuit brought by the House of Representatives challenging the payments the administration is making to insurers to reimburse them for reducing cost sharing for low-income marketplace enrollees. The House claims that no funds have been appropriated for the cost sharing reduction (CSR) program and that the reimbursement payments are thus illegal. The administration asserts that the appropriation Congress adopted for the premium tax credits includes the CSR payments, which cover almost 60 percent of marketplace enrollees. The administration also argues that Congress does not have standing to sue the administration and thus the court lacks jurisdiction to hear the case.

In May, a federal district court sided with the House and enjoined further CSR payments. The Obama administration appealed to the District of Columbia Circuit Court of Appeals and the lower court stayed its order. The federal government filed its appellate brief in October. The House’s brief was initially due in November but the court granted its motion to extend the due date to December 23, 2016. The government’s final reply brief is currently due January 19, 2017, the final day of the Obama administration.

The House’s November 21 motion would delay any further action in the case until a status call on February 21, 2017. It states that “Appellees’ representatives and the President-Elect’s transition team currently are discussing potential options for resolution of this matter, to take effect after the President-elect’s inauguration on January 20, 2017.” The brief cites “public statements by the President-elect and his campaign, of meaningful change in policy in the new Administration that could either obviate the need for resolution of this appeal or affect the nature and scope of the issues presented for review.” Alternatively, the House asks that the due date for its brief be extended to February 6, 2017.

The House argues that delays in ongoing litigation to allow a new administration to assess and articulate a change in policy and litigation posture are common. The brief also notes, however, that the Obama administration, which is currently in charge of the litigation, does not consent to the delay.

House v. Burwell presents an immediate and pressing challenge for President-elect Trump and the incoming Republican Congress. Both have claimed to support immediate repeal of the ACA, but there is a widespread consensus that immediate repeal of the ACA is not possible legislatively, given the likelihood of a filibuster. Although repeal of key provisions of the ACA could take place relatively quickly through reconciliation legislation, repeal without replacement could leave 20 million Americans without coverage, a politically risky gambit.

An agreement between the Trump administration and the House to dismiss the appeal in House v. Burwell and let the lower court’s order to stop reimbursing insurers for cost-sharing reductions stand could immediately launch the marketplaces, and indeed the entire individual insurance market, into chaos without Congress having to take any further action. This has been described as the nuclear option for ending the ACA. If the Trump administration cut off the CSR payments, either as part of a settlement or simply as a policy decision (which may require a rule change and thus a delay), one of four things could happen:

Insurers Continue Cost-Sharing Reduction For Enrollees On Their Own

The insurers would continue to reduce cost sharing for eligible enrollees, as they are required to do by ACA. The Congressional Budget Office estimates that these reductions will cost $9 billion for 2017. If the CSR payments were cut off early in the year, most of this cost would fall on the insurers. This cost was not taken into account when the insurers established their premiums for 2017 and would result in billions of dollars in unanticipated losses for insurers over 2017, possibly driving some of them into insolvency. A number of the insurers would likely sue in the Court of Claims raising statutory, contractual, and constitutional claims and could well win, but not until the damage had been done to insurance markets.

Insurers Attempt To Withdraw From Marketplaces

Insurers could attempt to withdraw from the marketplaces. They might arguably be able to do this under their 2017 marketplace contract, but whether or not insurers could withdraw may also depend on state law. Enrollees whose insurer left the marketplace could try to find an insurer willing to continue to provide cost-sharing reductions in the marketplace without reimbursement, but it is unlikely any insurer would remain and pick up at its own cost enrollees from other insurers. Insurers would not be able to cancel their contracts with enrollees because of the guaranteed issue and renewal requirements of the ACA and state law. But enrollees who stuck with insurers who withdrew from the marketplace would have to continue their coverage without premium tax credits, which are not available outside the marketplace.

Many enrollees would not be able to afford the full premium and would probably be terminated for nonpayment. What exactly the insurers would have to do to terminate coverage for enrollees who did not pay the full premium would depend on state law, which would take some time to sort out. The terminations would likely include most enrollees who are eligible for premium tax credits, not just those who are eligible for CSRs, since the withdrawal of insurers from the marketplace would affect all of their marketplace enrollees.

The New Administration Attempts To Release Insurers From Obligation To Reduce Cost Sharing

The Trump administration could announce that insurers could stop reducing cost sharing for low-income enrollees once the insurers no longer received CSR reimbursement payments. Such a proclamation would be illegal as the ACA imposes an unequivocal mandate on the insurers to reduce cost sharing for eligible individuals. It would likely lead to litigation by consumers, who could seek a nationwide injunction blocking the administration from implementing its policy. Until such an injunction went into effect, however, millions of low-income Americans would lose access to health care, which would be simply unaffordable without the CSRs.

Insurers Attempt To Raise Rates Mid-Year To Cover Cost Sharing Reduction

Insurers could continue to reduce cost-sharing and try to raise their rates mid-year to cover their losses. They would probably not be able to do this in most, perhaps all, states. If they were able to do so, they would likely have to raise their rates across the individual market, since it is a single risk pool. This would drive many enrollees out of the market.

As a practical matter, most people covered by the cost-sharing reductions cannot afford the additional cost-sharing they would incur were the reductions to disappear. Many would simply cancel their insurance and avoid seeking health care. Some of them would die or face serious deterioration of chronic conditions. But others would show up in hospital emergency rooms and become bad debt or uncompensated care.

If cost-sharing reductions were eliminated or insurers are forced to cancel coverage for millions of Americans, hospitals and safety-net providers would have to pick up much of the burden of those left uninsured. Hospitals agreed to Medicare and Medicaid cuts when the ACA was adopted because they anticipated that much of their uncompensated care burden would be picked up by the ACA coverage expansions. Hospitals would face a large additional financial burden, and some hospitals, probably particularly rural hospitals, would likely have to close.

Although discussions are apparently underway between the Trump administration and the House, it is not obvious that the administration would want to abandon this appeal. Doing so would leave on the books a strong precedent for allowing a single house of Congress to sue the president any time it disagrees with the administration’s position on an appropriations issue. President-elect Trump cannot guarantee that both houses of Congress will always be friendly and might not welcome such a precedent.

A Simple And Responsible Solution

Assuming, however, that a settlement is in the offing, Congress could consider a simple solution to this issue that would not launch health insurance markets into chaos long before it can come up with an ACA replacement plan. The House’s objection has not been to the CSRs as such, but rather to the administration reimbursing insurers for them without an explicit annual appropriation.

Congress could simply appropriate payments for the CSRs and arrange for HHS to dismiss its appeal. (Indeed, it could appropriate funds for 2017 and 2018. Just appropriating funds for 2017 would only delay the crisis for a few months, as insurers would be reluctant to sign up for 2018 if they were not assured that funds would be available for the CSRs.) The House might be able to preserve its favorable district court precedent and put off the problem of replacement until it has a replacement plan.

Because the alternative would be irresponsible, in my opinion, people signing up for coverage now should continue to do so, confident that the House will either appropriate the funds for CSRs or find some other way to dispose of this issue without destroying the individual insurance market. In any event, if the House’s motion is granted, the district court’s stay remains in effect and insurers will continue to be reimbursed for the CSRs until the appellate court takes further action.

ACA Round-Up Update: Medicaid & CHIP, Risk Corridor Funds, And More

On November 21, the Centers for Medicare and Medicaid Services (CMS) released both a final and proposed rule concerning Medicaid and CHIP eligibility requirements, notices, and appeal processes under the ACA. The rules are quite lengthy and address a wide variety of issues. Among other provisions, they provide for combined eligibility notices or coordinated eligibility content where individuals or members of a family apply for Medicaid or CHIP and for marketplace coverage, and for agreements between states and exchanges for the coordination with respect to joint fair hearing requests where the marketplace has made determinations affecting both marketplace financial assistance and Medicaid or CHIP eligibility.

On November 18, CMS released its transparency in coverage public use files. The information contained in these files is an initial effort to satisfy ACA requirements that health plans and insurers release to the public information regarding their coverage and performance.  Of particular interest, the files contain data for each insurer on Healthcare.gov for 2015 on the number of enrollments and disenrollments; number of in-network claims and in-network claims denied; number of internal appeals of adverse determination and number and percentage of adverse determinations overturned on internal appeal; and number of external appeals of adverse determinations and number and percent of adverse determinations overturned by external appeals.

On November 21, CMS announced at its REGTAP.info website (registration required), that it is releasing remaining 2015 risk adjustment funds that had been held back pending risk adjustment appeals in all but seven states where appeals remain pending.  Hold backs of some 2014 risk adjustment funds still remain in Wisconsin and Florida pending final resolution of appeals in those states. CMS will also be releasing the second installment of 2015 reinsurance funds in January, 2017.  CMS also released guidance at REGTAP on reconsiderations and appeals of 2015 risk corridor determinations.

Finally, CMS released on November 18, a table of the amount qualified health plan insurers are due and the amount they owe for the risk corridor program for 2015, as well as the amount they will be paid from 2015 collections toward 2014 obligations. As expected, the amounts that the program owes insurers for their losses greatly exceed the amount that insurers owe the program from excess profits, no money will be paid out in 2016 for 2015 losses, and payments for 2014 losses will not cover 2014 obligations.  Insurers must pay amounts they owe to the program for 2015 during November 2016, and payments will be made by the program to insurers during December 2016.

November 23 Update: Missed Opportunity To Monitor Improper Claim Demials

As politicians and pundits ponder the future of the ACA, attention should also be paid to the opportunities that the ACA offered that were missed. On November 18, the Office of Audit of the Office of the Inspector General (IG) of the Department of Labor issued a report titled: “EBSA did not have the Ability to Protect the Estimated 79 Million Plan Participants in Self-Insured Health Plans from Improper Denials of Health Claims.”

The ACA required health plans and insurers, including self-insured employer plans, to afford their enrollees the opportunity for an internal review and an external review by an independent review organization (IRO) of denied health benefit claims. The Employee Benefit Services Administration (EBSA) is responsible for ensuring that ERISA employer plans meet these requirements.

The main tool that EBSA uses to collect information on health plans is the Form 5500. The IG asserts that the form 5500 does not capture statistical information on claims—such as the percentage of claims denied and the percentage of denials overturned—that regulators need to protect the rights of health plan participants. More importantly, health plans that cover 100 or fewer plan participants are exempt from annual reporting requirements. These smaller health plans cover approximately 79 million participants. Because of its failure to collect this information, EBSA was unable to conduct a study required by the ACA to report to Congress on, among other things, claim denial rates.

EBSA has not, the IG asserts, analyzed claim denial data for the plans that do file the form 5500 or the over 68,000 participant inquiries it received related to partially or fully denied claims from 2012 to 2015. The Departments of Labor and Treasury and the Pension Benefit Guaranty Corporation have proposed revising the form 5500 to add a new Schedule J to collect information on claims, denials, and appeals, and ending the small health plan exclusion. This information will not be collected until 2019 (if the Trump administration finalizes the data collection requirement), however, and the data would not be analyzed until at earliest 2020.

The IG also found that EBSA has not given sufficient guidance to IROs; it has conducted only limited reviews of IROs to ensure that they are free from conflicts of interest and properly contracted, and that their determinations are binding and implemented by the plans. The IG also asserted that the fiduciary status of IROs under ERISA needs to be clarified.

EBSA responded at length to the IG report—indeed, the response is longer than the IG report itself. EBSA noted, as did the IG report, that it is proposing to collect more information of claim denials and appeals through the revised form 5500 and would collect the information from small plans as well as large. It also described a number of programs through which it oversees health plan compliance and explained its reliance on self-compliance monitoring by health plans and on participant complaints for identifying problems. It claimed that it had no authority to require reporting by IROs and that no further guidance to clarify the fiduciary status of IROs is needed (although it did not clarify in its response whether IROs are fiduciaries or not).

When Congress attempted to adopt a managed care bill of rights in 2001, a major sticking point was whether consumers would be allowed to sue managed care plans for wrongful claim denials. The ACA did not include such a private right of action, offering instead impartial external review of denied claims. Strong external review protections were never fully implemented, however, and data has not been collected to determine the extent of compliance with such requirements as exist. Further progress in protecting the rights of workers may now be impossible.