On April 6, 2017, as Congress headed out the door for its spring recess, a new amendment to the American Health Care Act was submitted to the House Rules Committee by congressmen Gary Palmer (R-AK) and David Schweikert (R-AZ). The amendment would create a federal “invisible risk sharing program” within the AHCA’s Patient and State Stability Fund (PSSF) program.

The “invisible risk sharing program,” is apparently modeled on similar programs that were implemented by Maine in 2011, and more recently by Alaska, in both instances successfully reducing premiums in the individual market.

The amendment would appropriate $15 billion for the program for a period beginning on January 1, 2018 and lasting until 2026. It would also allocate to the program any PSSF funds that were appropriated for any particular year that remain unallocated at the end of that year. The Centers for Medicare and Medicaid Services Administrator would be charged with developing a federal invisible risk sharing program within 60 days after the enactment of the legislation. States would be able to take over the program beginning in 2020.

CMS would define who would be eligible for the program. To this end, CMS would develop a list of high-cost medical conditions that would automatically qualify individuals for program participation. Applicants for insurance coverage would apparently be asked to complete a health status statement to be used to identify them for program qualification. Health insurers would also be able to voluntarily qualify individuals who did not qualify automatically at the time of application. Funding cannot be used under the program to pay for abortions for which federal funding is otherwise not available.

Insurers would cede to the program some proportion of the premiums that they received for individuals qualified for the program. Under the Maine program, insurers paid 90 percent of premiums for eligible individuals into the program. This created a disincentive for insurers identifying participants to the program inappropriately. CMS would establish the dollar thresholds above which it would make payments to health insurers under the program and the percentage of each claim above those thresholds that the program would cover. In Maine, the program reimbursed insurers for 90 percent of claims for qualified individuals between $7,500 and $32,500, and 100 percent of claims above that amount.

Insurer participation in the program would apparently be voluntary. The program does not require state matching fund contributions, as are required for receipt of PSSF funding for other purposes; indeed, it would initially be a nationwide program. Because it distributes funding by the cost of claims rather than by state, support would automatically be adjusted for the higher cost of care in some areas.

Invisible risk sharing is in fact a form of reinsurance. ACA reinsurance as originally conceived was similarly targeted at high-cost medical conditions, although as implemented it was simply based on high-cost claims. Invisible risk sharing avoids the problems of traditional risk pools — instead of segregating high-cost individuals in a separate insurance programs where they would likely face higher premiums and interruption of continuity of care, it offers them the same coverage and access to the same providers as would be available to healthier enrollees for the same premium. Were the program adequately funded, it could also make premiums more affordable for all enrollees. It would not only reduce the total cost of claims that insurers would have to cover from their premiums, it would also reduce the risk margins they would have to otherwise build into their premiums, although it also might diminish their incentives to manage high-cost conditions. If reduction of premiums attracted younger and healthier individuals into the market, it could reduce premiums further.

The $15 billion over nine years, however, is likely far less that would be needed to create a credible program, even with insurer contributions. Moreover, the reduction in premiums that would result from the program is unlikely to be sufficient to make coverage affordable for older, lower-income individuals or individuals in high-cost areas given the fixed-dollar, age-adjusted tax credits offered by the AHCA and the changes in age ratios in includes. The lower actuarial values permitted by the AHCA and its repeal of cost-sharing subsidies would also likely leave health care unaffordable for many with chronic diseases even if they could afford insurance premiums.

Finally, there is continuing talk of amending the AHCA further to permit states’ waivers to allow their insurers to avoid the ACA’s guaranteed issue, community rating, and essential health benefit requirements, which could reduce premiums further for healthy people, but only by dramatically increasing premiums and reducing benefits for people with health problems. These changes, if adopted, would significantly undermine the benefits the April 6 amendment offers for improving access to health insurance coverage.

Administration Asks For More Time In Health Equity Litigation

On April 4, 2017, the Department of Justice asked for an extension of time until May 2, 2017, to file its response to the plaintiff’s motion for summary judgment in Franciscan Alliance v. Price, stating that HHS is “now considering whether further administrative action concerning the Section 1557 regulation that Plaintiffs challenge would be appropriate.” The judge in the Franciscan Alliance case had entered a nationwide preliminary injunction on December 31, 2016, holding that the sex discrimination provisions of Title IX, as applied to health plans and providers under ACA section 1557, do not prohibit discrimination on the basis of gender identity or termination of pregnancy. Plaintiffs, led by the State of Texas, then filed a motion for summary judgment.

The Trump administration has not appealed the preliminary injunction order and may be attempting to moot the case by changing its regulations (although the case might be kept alive by organizations that are attempting to intervene). The plaintiffs objected to the request for an extension of time, asking that the administration be given at most an additional week to file its response to the summary judgment motion and thus clarify its position on the issues involved in the case.

Medicaid/Premium Tax Credits Dual Enrollment

On April 3, 2017, the Centers for Medicare and Medicaid Services (CMS) released at the REGTAP.info (registration required) website a series of frequently asked questions (FAQs) concerning the 2017 periodic data matching project. In March of 2017 CMS sent, for the third year, initial warning notices to households who include persons enrolled in premium tax credits (PTCs) and/or cost sharing reduction payments (CSRs) through HealthCare.gov who are also enrolled in Medicaid or CHIP coverage that is comprehensive, minimum essential coverage.

Consumers who are enrolled in Medicaid are not eligible for PTC or CSRs. Individuals who receive the notice are asked either to inform the marketplace that they are not enrolled in Medicaid or terminate their marketplace coverage with PTC or CSRs. They may continue marketplace enrollment at full cost without financial help.

Individuals who do not respond will receive a second notice this summer and be terminated from PTC or CSR but continue to be enrolled in marketplace coverage at full cost unless they ask that their coverage be terminated. The initial warning notice will also be available in the dually enrolled consumer’s marketplace account.

Consumers who receive the periodic data matching notice and are not enrolled in Medicaid should contact the marketplace to update their account to reflect this fact. Consumers who are erroneously enrolled in Medicaid should contact their state Medicaid agency to terminate coverage and then contact the marketplace to update their information. Consumers who disagree with the decision to terminate their PTC or CSR can appeal the decision with the marketplace.

The IRS has recently clarified that if the marketplace determines someone to be ineligible for Medicaid or CHIP and enrolls that person in a qualified health plan with PTC, the individual continues to be eligible for PTC for the remainder of the year even though the consumer is also enrolled in Medicaid or CHIP during part of that time. The consumer is not required to pay the PTC received back, although if the individual is identified through periodic data matching PTC may be terminated.

Finally, on April 4, 2017, CMS also provided at REGTAP a consolidated agent and broker resource page containing training resources, FAQs, and other resources readily available.