health insurance iStock_000028383644_FullThe Centers for Medicare and Medicaid Services (CMS) recently issued a proposed rule aimed at improving the individual and small group markets that have been plagued with instability as issuers continue exiting the Exchanges. While the proposed rule is primarily focused on the Federally-facilitated Exchanges (FFEs), CMS is encouraging state-based Exchanges to adopt similar policies. Whether the proposed rule is the first of many steps in a “repair” scenario advocated by some in the GOP as an alternative to the nullification of the Affordable Care Act (ACA), or merely a curative backstop on the road to a full repeal, providers are likely to experience a further erosion in network participation and in network payment rates.

The overarching intent of the proposed rule is to “provide more flexibility to issuers to help attract healthy consumers to enroll in health insurance coverage, improving the risk pool and bringing stability and certainty to the individual and small group markets.” To that end, the proposed rule attempts to achieve this goal by focusing on several aspects of the FFEs:

  • Shortening the open enrollment periods.
  • Increasing pre-enrollment verification of eligibility for all categories of individual market special enrollment periods.
  • Changing the rules with regard to guaranteed availability by allowing an issuer to apply a premium to past debt owed – designed to remove abuse by purchasers who only paid when they needed the service.
  • Increasing the de minimis variation in actuarial values.

Additionally, and of note for providers, network adequacy provisions were loosened, with more control and flexibility proposed for states in an effort to attract issuers in difficult rural markets. CMS requests comments on the proposed rule by March 7, 2017.

Open enrollment; pre-enrollment verification

In an effort to better align the open enrollment period with Medicare and employer-based coverage, the proposed rule provides for an open enrollment period beginning on November 2, 2017, and ending on December 15, 2017, for plan year 2018. Along with this change, CMS proposes to increase pre-enrollment verification for special enrollment periods in an effort to curb reported abuses during changes in coverage such as adding a new dependent or other changes in life circumstances. Specifically, this provision addresses enrollee misuse of the special enrollment periods for upgrading metal coverage levels during the plan year, a practice that increases the potential for adverse selection and discourages issuers from participating in the marketplace.

Continuous coverage

Additionally, the proposed rule aims to curtail reported abuses associated with the ACA’s continuous coverage provisions, which prevent issuers from denying coverage to applicants irrespective of their past failures to pay premiums or instances where there has been a break in coverage. The continuous coverage provision has drawn criticism from the health insurance industry because it allows individuals to delay signing up for coverage until they are afflicted with an illness or injury. CMS is seeking comments on several proposed continuous coverage requirements with regard to the special enrollment periods, including (1) evidence of prior coverage for six to 12 months, (2) a 90-day waiting period before effectuating enrollment or (3) a late enrollment penalty.

De minimis range in actuarial values

The concept of changing the de minimis range in actuarial values would increase the acceptable ranges that a particular metal level could vary while retaining its category as bronze, gold or platinum. Silver plans were not included in this change.  While this could provide for lower-cost options, it also allows the issuer to offer less coverage in each metal option – a potential concern for beneficiaries who need to understand what they are purchasing and the limits of the coverage being provided.

Network adequacy

The changes proposed to the network adequacy requirements could increase concern for certain providers. This is an area already fraught with controversy as certain “high cost” providers are being terminated from networks across the U.S. The proposed rule would loosen requirements with regard to the need for certain “essential community providers” (ECPs), which include providers serving predominantly low-income and medically underserved individuals, such as those that are described in Section 340B of the Public Health Service Act. In an effort to “lessen the regulatory burden on issuers,” the required percentage of ECPs in a specific network would be reduced from 30 percent to 20 percent in each service area. Additionally, the proposed rule would allow issuers to write in ECPs that are not in the CMS database, and if they cannot satisfy the ECP regulatory standard, to provide a narrative explaining how their networks will provide an adequate level of service for low-income and medically underserved enrollees.

Most notable, however, is the proposal to delegate determination of network adequacy to the states, which does not bode well for providers that have complained about narrowing networks. Specifically for plan year 2018, CMS proposes “to defer to the States’ reviews in States with the authority that is at least equal to the ‘reasonable access standard’ defined in §156.230 and means to assess issuer network adequacy, regardless of whether the Exchange is a State-based Exchange (SBE) or FFE, and regardless of whether the State performs plan management functions.” This proposal is certain to increase the trend toward narrowly tailored network designs and raises the question of at what point do rare and unique services become inaccessible to those with coverage through the Exchanges.