May 17 Update

Clarifying The Future Of The Federally Facilitated SHOP Exchange

A slide set released by CMS on May 16, 2017 at its REGTAP.info website offers a bit more information on the ideas CMS has for the future of the federally facilitated SHOP exchange. Small employers would continue to be able to sign up for coverage through the FF-SHOP through November 15, 2017 for coverage taking effect December 1, 2017. The FF-SHOP would continue to service these plans until the end of the plan year, which could be as late as the end of 2018 or early 2019. The call center would continue to be available. Insurers would continue to be charged the FF-SHOP user fee for plan years that begin in 2017, but not for plan years that begin in 2018.

Beginning in 2018, employers could use the See Plans and Prices tool at HealthCare.gov to find insurers offering SHOP coverage and HealthCare.gov to find FF-SHOP registered agents and brokers in their area. SHOP plans would still have to obtain qualified health plan status on an annual basis. Employers could apply for and obtain an eligibility determination from HealthCare.gov to establish eligibility for the small employer tax credit, but would then enroll directly with an insurer or through a registered agent or broker. Employers would pay premiums directly to their insurer and contact their insurer to add or drop employees and dependents.

CMS asserts that employee choice would be available in all states, but it further states that “employers with group members that enroll in more than one (1) plan will need to enroll separately with, and make individual monthly payments to, each issuer with which the group members enroll.” This hardly seems like an approach that will reduce the burden on small businesses and make it easier for them to purchase coverage. Minimum participation rates, however, would still be calculated based on a group’s total enrollment rather than on the issuer or plan level, making it at least theoretically possible for small employers to offer their employees a choice of several insurers.

Risk Adjustment Data Validation (HHS-RADV) Protocol

On May 16, 2017, CMS released at its REGTAP.info website (registration required) its 2016 Benefit Year HHS-Operated Risk Adjustment Data Validation (HHS-RADV) Protocol and a summary of 2016 protocol updates. Insurers participating in the individual and small group market must submit data for the risk adjustment program through the External Data Gathering Environment (EDGE) server. Data on a sample of 200 enrollees are audited by Initial Validation Audit (IVA) entities and a subsample of the initial sample is subsequently audited by a second validation (SVA) entity. The protocol describes the scope of review to be performed by the IVA and SVA entities for 2016 data. CMS has decided that 2016 will be a second pilot year for the validation process, postponing payment adjustments based on changes to plan average risk scores based on validation results until 2017.

The 2016 protocols overwhelmingly mirror the 2015 protocols. Where they differ, however, the 2016 protocols generally reduce requirements initially imposed. For example, insurers with total premiums of $15 million or less for 2016 or that are leaving the market for the 2017 benefit year will not be subject to audit. Demographic and enrollment validation will be required for only 50 of the sample of 200 enrollees for which validation is required for each insurer. Validation for all 200 was required for 2015. Premiums will also need to be validated for only 50 enrollees. CMS has left the standard for inter-rater reliability between the two IVA coders that must review health status coding at 85 percent rather than raising it to 95 percent as it had earlier intended.

Full implementation of risk adjustment validation will presumably take place in 2017, at which time payment adjustments will be imposed for the first time based on adjustments to plan average risk scores resulting from data validation. Insurers may be penalized for 2016 for not cooperating with the audits, however.

Original Post

On May 16, 2017, the National Center for Health Statistics released a report, “Health Insurance Coverage: Early Release Of Estimates From The National Health Interview Survey, 2016.” The report confirms what earlier reports have shown: a dramatic drop in the number of uninsured affecting all ages, racial and ethnic groups, parts of the country, and the poor and near-poor as Affordable Care Act changes in Medicaid and private insurance coverage have been implemented, particularly after 2014. Overall, the percentage of adults age 18 to 64 who were uninsured dropped from 20.4 percent in 2013 to 12.4 percent in 2016.

In general, the report evidences few statistically significant changes in coverage from 2015 to 2016. After dramatic changes during 2014 and 2015, coverage has on the whole stabilized. There are a few exceptions, however, that are of interest.

First, there were significant decreases between 2015 and 2016 in the percentage of adults who were uninsured for more than a year (from 9.1 percent to 7.6 percent) and for at least part of a year (from 18.1 percent to 17 percent). Second, there was a significant increase in the percentage of persons under 64 enrolled in an exchange plan, from 3.4 percent (9.1 million) in the fourth quarter of 2015 to 4.3 percent (11.6 million) in the fourth quarter of 2016. The percentage of persons aged 18 to 64 enrolled in exchange plans remained stable from the first quarter of 2016 (4.7 percent or 9.2 million) through the fourth quarter of 2016 (4.8 percent or 9.4 million). These developments suggest that although progress in covering the uninsured has plateaued, gains that have been made are being consolidated and solidified.

The percent of poor children who were uninsured increased from 4.4 percent in 2015 to 6.5 percent in 2016, although the number and percentage of children enrolled in exchange plans increased from the fourth quarter of 2015 (1.9 percent or 1.4 million) to the fourth quarter of 2016 (3 percent or 2.2 million). Finally, the percentage of persons under age 65 enrolled in a high-deductible health plan (HDHP) continues to increase (from 36.7 percent in 2015 to 39.4 percent in 2016) as does the percentage enrolled in a HDHP with a health savings account (from 13.3 percent in 2015 to 15.5 percent in 2016).

Requirements For Health Savings Accounts

The IRS has recently announced the 2018 inflation-adjusted amounts for health savings accounts. The annual limit on contributions to health savings accounts for calendar year for 2018 will be $3,450 for individuals with self-only coverage and $6,900 for family coverage unless Congress increases these amounts. To benefit from tax subsidies, health savings accounts must be coupled with high-deductible health plans that have annual deductibles of at least $1,350 for single coverage and $2,700 for family coverage, with out-of-pocket maximums that do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

Risk Adjustment And Reinsurance Attestation And Discrepancy Reporting

On May 11, 2017, CMS released a guide for the risk adjustment and reinsurance attestation and discrepancy reporting process for 2016. CMS also released a set of slides describing the process. All insurers participating using the EDGE server process, through which data are submitted for these programs, must review the 2016 data that they had submitted on the EDGE server as of May 1, 2017, the final date by which data were to be submitted for 2016. By May 22, 2017, insurers must either attest that the data they submitted are accurate or report discrepancies.

If an insurer discovers a discrepancy that could result in it paying a smaller charge or receiving a larger payment under these programs, CMS will take no action unless the discrepancy results from a processing or mathematical error by CMS or an incorrect application by CMS of a relevant methodology. If a discrepancy related to the risk adjustment program is the result of the insurer’s own error and results in a detriment to that insurer only and not to other insurers in the market, no changes will be made by CMS. If an error related to the risk adjustment program is the result of an insurer’s error and benefits the reporting insurer or harms other insurers, CMS will adjust transfers in order to balance the market.

Medical Loss Ratio Reporting

On May 9, 2017, the Centers for Medicare and Medicaid Services released an announcement setting out Medical Loss Ratio (MLR) and Risk Corridor Annual Reporting Procedures for the 2016 MLR Reporting Year. Insurers are required to file a MLR report for each market (large group, small group, and individual) and for each state in which they do business (except for expatriate plans). Insurers are also required to file a risk corridor report for each state in which they offer a qualified health plan.

MLR and risk corridor reporting forms for 2016 will become available on June 1, 2017, and must be submitted between June 30, 2017 and July 31, 2017. Forms will be submitted through the HCMS Health Insurance Oversight System (HIOS).