September 24 Update

CMS Approves Minnesota 1332 Waiver Application

On September 22, 2017, the Centers for Medicare and Medicaid Services approved Minnesota’s application for a 1332 state innovation waiver to establish a reinsurance program. CMS estimates that Minnesota will receive $139 million in pass-through funding for the reinsurance program for 2018, and a total of $1.003 billion for 2018 through 2022. The approval letter from CMS administrator Verma states, as Governor Dayton predicted, that the federal government will only pass through the amount that it will save through reduced premium tax credits and cost-sharing reduction payments, not the amount (which the letter does not quantify) that the federal government will save because premiums for standard plans under Minnesota’s Basic Health Program will also be reduced by the reinsurance program.

EEOC Sets Out Lengthy Timetable For Reconsideration Of Employer Wellness Program Surcharges

In late August, a District of Columbia federal district court remanded to the Equal Employment Opportunity Commission for further consideration its rule allowing employers to impose penalties of up to 30 percent of the cost of coverage on employees who refused to disclose health information otherwise protected by the Americans with Disabilities Act and the Genetic Information Non-discrimination Act. The order was entered in a lawsuit brought by the AARP. The court held that the EEOC had failed to offer a reasonable explanation for the 30 percent rule and remanded the rule to the agency for further consideration. The judge, however, did not vacate the rule while the agency was reconsidering it, but rather ordered the agency to provide a timeframe for its reconsideration.

On September 21, 2017, the EEOC filed a status report stating that it intended to issue a proposed rule addressing the issue by August of 2018 and a final rule by October of 2019. It noted, however, that the Senate is currently considering two of President Trump’s nominees to fill the chair position and one other vacancy in the EEOC and that the timetable may change under the new appointees. In any event, the EEOC noted, it would not require employers to comply with a new rule before 2021.

The AARP has asked the court to reconsider its refusal to vacate the EEOC rule pending the agency’s reconsideration. (EEOC response) The leisurely schedule suggested by the EEOC would seem to support an argument that a failure to vacate the rule effectively nullifies the AARP’s victory.

Original Post

Iowa has submitted a supplement to its application for a state innovation waiver under section 1332 of the Affordable Care Act. One of the issues raised by its application, as noted in an earlier post, was that its proposed waiver would eliminate cost-sharing reductions for low-income enrollees.  This raised concerns as to whether the proposal satisfies a section 1332 requirement that a waiver program “will provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable” as ACA coverage.

Under the supplement it submitted, Iowa offers to compensate insurers for reducing cost sharing for enrollees with incomes between 133 and 150 percent of the federal poverty level. Individuals in this income range would be offered coverage with a 94 percent actuarial value, subject to a maximum out-of-pocket of $1,000 for individuals and $2,000 for families. Iowa asserts that providing cost-sharing reductions to these individuals would cost $14 million for 2018 and might increase enrollment, but would not increase the federal deficit.

The ACA extends cost sharing reductions to enrollees with incomes up to 250 percent of the federal poverty level. Enrollees with incomes between 150 and 200 percent of the federal poverty level who enroll in silver plans must be provided with 84 percent actuarial value coverage and reduced out-of-pocket limits. The Iowa supplement does not explain how enrollees with incomes between 150 and 250 percent of poverty will be protected against excessive cost sharing.

In another 1332 development, Minnesota Governor Mark Dayton wrote to HHS Secretary Price on September 19 protesting the treatment Minnesota’s 1332 waiver is receiving from HHS. Governor Dayton noted that despite Minnesota’s having applied on May 5 for a waiver to institute an individual market reinsurance program, which HHS had earlier encouraged, and despite assurances that the application would be approved by August, it had still not been approved by late September. Moreover, he asserted, Minnesota had been informed that, although the state would receive $208 million in pass-through funds for two years for its 1332 waiver program, the Minnesota Basic Health Program, which covers 100,000 Minnesotans, would be cut by $369 million over that period. Thus, Minnesota would be financially worse off under its waiver than it would have been without it.

Finally, on September 22, 2017 Senator John McCain announced that he could not support pushing the Graham-Cassidy bill through on a strictly partisan basis, disregarding regular order in the Senate. With Senator Paul’s announced opposition to the bill, and with reservations expressed by Senators Collins and Murkowski and others, it now seems less likely that the Senate will pass ACA repeal legislation before the clock on budget reconciliation runs out on September 30. It may be time to revisit the bipartisan discussions held in the Senate Health, Education, Labor, and Pensions Committee throughout the first half of September to devise legislation that could in fact meet Senator McCain’s standards.