October 2 Update: Rescission Guidance

On September 29, 2017, CMS posted at its REGTAP.info website (registration required) a guidance dated September 9 containing “Examples for Issuers of QHPs in the Exchanges of Elements Demonstrating and Appropriate Rescission.” Under the ACA, insurers can only rescind coverage on the basis of fraud or intentional misrepresentation of a material fact. The guidance addresses situations both where someone (for instance, an agent or broker) has signed up another person for coverage without that person’s knowledge and situations where individuals misrepresent their own situation to obtain coverage.

To rescind, an insurer must show both false information and intent by an individual (or a person seeking coverage on behalf of the individual) to use that false information to obtain coverage. The examples given in the guidance concern evidence of,

  • a false residency address (such as an unreasonable number of enrollees from a single address or enrollment pursuant to a permanent move special enrollment period where the address is for a facility where an applicant is temporarily located for treatment);
  • false enrollments (where the applicant is deceased or the premium is paid by an agent or broker) or
  • false billing for services not received by an enrollee.

Evidence is also needed to prove that false information was provided intentionally. Intent could be shown by corroboration from an enrollee that an application was made without the enrollee’s knowledge or by inability to contact the enrollee despite the use of every means of contact on record.

If an enrollee states to a qualified health plan (QHP) insurer within the 30-day rescission period that he or she wants the coverage which is being rescinded and demonstrates or attests that the information provided was not false, the insurer must not revoke the coverage.

Original Post

On September 29, 2017, the Centers for Medicare and Medicaid announced several measures that it is taking with respect to federal health care programs to aid people affected by hurricanes Harvey, Irma, and Maria. Several of these measures that will affect people who are covered or eligible for coverage through the Federally Facilitated Exchange (FFE) will be covered here. CMS also announced steps it is taking with respect to the Medicare program, including creating special Medicare enrollment periods and other public health emergency measures.

Individuals who experienced an event that would have qualified them for a special enrollment period (SEP) between the 60 days prior to the start of an incident period designated by the Federal Emergency Management Agency (FEMA) and December 31, 2017, but were unable to complete the application and plan selection process because they were affected by a hurricane-related weather event in 2017, will be eligible for an additional 60-day exceptional circumstances SEP. Individuals who qualify for an SEP directly caused by the hurricanes, for example a move to a new area, may also take advantage of the extended exceptional circumstances SEP.

Finally, individuals residing in or moving from affected areas will be eligible for an exceptional circumstances SEP that will extend the 2018 open enrollment period through December 31, 2017. CMS will continue to consider if enrollment dates for people affected by the hurricanes should be extended beyond December 31.

The SEPs will apply to people who resided in Texas counties affected by hurricane Harvey after August 23, 2017, people in Florida or Georgia counties affected by hurricane Irma beginning on September 4 or 5. It would presumably not apply to individuals residing in Puerto Rico or the Virgin Islands affected by hurricanes Irma or Maria, since the territories are not served by the FFE, but may affect individuals moving from the territories to FFE states because of the hurricanes.

The SEP will allow individuals until December 31, 2017 to select a new 2017 plan through the FFE or make changes in their current 2017 plan, which could apply retroactively to the date when they would have selected a plan absent the hurricanes as long as that date was no earlier than the date when FEMA designated their area as an affected area. The FFE will be waiving normal SEP documentary verification requirements for people who attest to eligibility and to being affected by the hurricanes. Affected individuals should call the marketplace call center, 1-800-318-2596 or TTY 1-855-889-4325.

Individuals who terminate coverage because of a hardship imposed by the hurricanes may be entitled to a hardship exemption from the individual mandate penalty. State regulators may also direct or allow insurers in affected areas to accept late binder payments for coverage or to allow coverage to be effectuated at a later date than would normally be required. In the absence of state guidance, insurers may allow extensions of us to 60 days from the original binder payment deadline.

Insurers covering individuals in the affected areas may, subject to a request or direction from state authorities, extend the 90-day grace period allowed enrollees in a qualified health plan through the FFE to catch up on missed premium payments by an additional grace period of up to 60 days. An insurer extending the grace period would have to provide affected enrollee with notice that the coverage would not be terminated and information as to how the extension would affect the availability of coverage in the future for enrollees who will owe payment for past premiums under the new Market Stability Rule that allows insurers to deny coverage for past premiums owed. As is normally the case, insurers will only pay provider claims for the first month of the grace period and will thereafter pend claims for subsequent months, only paying them if the enrollees catch up on premium payments.

Finally, CMS will consider not taking compliance action against insurers that fail to comply with standards such as enrollment processing because of the storms.

Oklahoma Withdraws 1332 Waiver Application For 2018

On September 29, 2017, Oklahoma withdrew its application for a 1332 waiver for 2018. Oklahoma’s request for a waiver to operate a reinsurance program was determined to be complete in late August. The state had hoped that the waiver would be approved by September 25 so that it could be implemented for the 2018 plan year. Since approval was not forthcoming by that date, Oklahoma pulled its request. It will continue to pursue a 1332 waiver for future years.

Oklahoma’s action will no doubt result in further calls for streamlining 1332 waiver requests. But the 1332 process was intentionally designed to not allow states to substitute their own models for individual and small group markets without a transparent process and careful consideration. Nonetheless, Oklahoma states that CMS believed its application had been received in time and the state was expecting approval until the last minute.

Draft Instructions Drop Reference To Hardship Exemption For Termination Of Noncompliant Plans

On September 27, 2017, the Internal Revenue Service released a draft of the 2017 instructions for form 8965, the form that must be filed to claim an exemption from the individual responsibility penalty. The only change listed in the “What’s New?” section is that two exemptions listed in the 2016 instructions are being dropped. One of these is an exemption that was available on a one-time basis for certain months in 2016 for some people who were eligible for the trade assistance adjustment Health Coverage Tax Credit.

The other change, however, is the elimination of a hardship exemption for situations where the marketplace determined that “you were notified that your health insurance was not renewable and you considered the other plans available to be unaffordable.” This was a hardship exemption created as part of the “administrative fix” when non-compliant plans were cancelled as ACA individual and small group market requirements went into effect in 2014; it is apparently no longer in effect.

OIG Takes CMS To Task On Oversight Of State Exchanges

The Department of Health and Human Services Office of Inspector General (OIG) has released an inspection report criticizing CMS oversight of the state Affordable Care Act marketplaces. CMS is responsible for overseeing and providing technical assistance to the state marketplaces, but is limited in its enforcement authority over the states because the state marketplace establishment grants, which it had controlled, have expired.

CMS oversight over the state exchanges is exercised through open enrollment readiness reviews before each open enrollment period and the State Marketplace Annual Reporting Tool (SMART) reviews, which are supposed to collect data on state marketplace compliance with program integrity requirements.

The OIG criticized CMS for not ensuring during the 2014 to 2016 open enrollment periods that all state marketplaces had system functionality to verify properly applicants’ eligibility and resolve eligibility inconsistencies, and that state marketplaces had or used system functionality to ensure that enrollees had filed their taxes and reconciled their advance premium tax credits to establish ongoing eligibility for premium tax credits. The OIG expressed concern that people may be receiving premium tax credits who are not entitled to them. The OIG also expressed concern that CMS had not ensured that all state marketplaces completed required program audits.

The OIG recommended that CMS:

  • Set firm deadlines for marketplaces to develop full functionality for verifying eligibility and resolving inconsistencies,
  • Monitor marketplace progress in developing and using this functionality, and
  • Ensure that marketplaces have annual program audits.

It also recommended that CMS improve its SMART review procedures by:

  • Completing SMART reviews in time to inform the next open enrollment period,
  • Ensuring all data elements of quarterly metrics reports are submitted, and
  • Requiring additional reporting on marketplace performance on resolving inconsistencies and addressing failure to reconcile situations.

CMS concurred with most recommendations, but noted its limited authority to ensure compliance.