On May 12, we told you about the Obama Administration's decision to eliminate a number of Special Enrollment Periods (SEPs) in the Health Insurance Marketplaces. One SEP in particular - the one to accomodate a "permanent move" - was being exploited by highly mobile lower income individuals to access insurance coverage only as long as necessary to obtain services. Insurers asked for a change and HHS agreed. That announcement, however, has been followed by requests for double digit rate increases in a number of states suggesting insurer concerns are not assuage by the change to SEP and that a whole lot more needed to be done to get risk pools (and the associated costs) under control. From HHS's perspective, insurer happiness - or at least their participation - is important to combatting public perception that the ACA's Health Insurance Marketplaces are in a death spiral.
Today's changes include:
1. Changing the definition of short-term health insurance plans from: "health insurance coverage provided pursuant to a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer’s consent) that is less than 12 months after the original effective date of the contract" to "Coverage must be less than three months in duration, including any period for which the policyholder renews or has an option to renew with or without the issuer’s consent."
Futhermore, HHS is requiring insurers to include in a prominent place on their contracts the following warning:
THIS IS NOT QUALIFYING HEALTH COVERAGE (“MINIMUM ESSENTIAL COVERAGE”) THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON’T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.
Short term plans like those sold by QIIH and UNH, because they are exempt from the rather onerous requirements of the ACA like Essential Health Benefits and guaranteed issue, have become more popular in response to the rising costs to the consumers for qualified plans on the Marketplace. People that purchase these short plans - often relatively healthy individuals who do not need a lot of health services - do not enter the risk pool thus driving up costs.
It will be interesting to see if HHS is successful here. As long as premiums on the exchanges remain high and the benefit design of the plans offered there includes services many people do not want to buy, we are skeptical. State regulation would probably be more effective but that will be far from uniform.
2. A proposal to propose in future rulemaking changes to the risk adjustment program. These would changes include:
- Beginning for the 2017 benefit year, the risk adjustment model would include an adjustment factor for partial-year enrollees. "By more accurately accounting for the costs of short term enrollees in ACA-compliant risk pool, this change will support the Marketplace’s important role as a source of coverage for people who are between jobs, experiencing life transitions, or otherwise need coverage for part of the year." says HHS.
- Beginning for the 2018 benefit year, prescription drug utilization data be incorporated in risk adjustment, as a source of information about individuals’ health status and the severity of their conditions.
- Other unannounced changes for 2018 and beyond.
The risk adjustment model is the only permanent risk mitigation program in the ACA. The other two, risk corridors and reinsurance end this year. The risk adjustment model requires payments from insurers that accepted lower than average risk to insurers that accepted higher than average risk. Partial year enrollees like those that entered through a SEP were not being properly scored. In other words, the risk score did not accurately measure that reality which is the partial year enrollee was there largely for the purposes of getting services and then planning to exit.
The inclusion of the prescription drug utilization data is meant as a proxy for patient health. Larger insurers like UNH have the resources to access diagnosis data on their enrollees in a way that smaller firms cannot. So, a few have mispriced their plans and pressured HHS to make some accomodation. This change should make smaller insurers more competitive on the exchanges.
3. Outreach to educate Marketplace enrollees when they are eligible for Medicare and what they need to do to make the switch.
4. Implementing a Special Enrollment Confirmation process. This change is a big one for the insurance industry. When the changes in May were, AHIP and others were quick to point out the need for a confirmation process that included submission of documentation in support of SEP eligibility. HHS has relented and included their demand in this latest round of changes. The documentation requirement will go into effect on June 17.
5. Addressing data matching issues that discourage younger enrollees. Eligibility data is verified electronically but from time-to-time it cannot be and in that case HHS advises the enrollee of the need for additional information. Younger enrollees tend to drop the enrollment process at this point thus limiting their admission to the risk pool.
HHS indicates that they will be making three announcements in June, today's being the first. The purpose of these announcements is: "strengthen the risk pool by spreading the costs of care over a diverse mix of enrollees, work with issuers and state Departments of Insurance to improve coverage options, and step up Marketplace outreach, especially to young adults and uninsured families in advance of Open Enrollment 4." Today's announcement is clearly meant to address risk pool issues. Later in the month we should hear more about enrollment options and outreach.
In sum, HHS is bowing to considerable insurer pressure - the political kind and the rate request kind - in making these changes. Changes like those to the SEP and tighter eligibility processes that make insurance harder to obtain, mean less access to services. Limiting short term insurance - even if that proves effective - is likely to send people to the uninsured category not to the exchanges. And that means more momentum to the ongoing #ACATaper.