Takeaway: Addresses grace periods, SEPs, network adequacy, enrollment period and asks for ideas on encouraging continuous coverage

This morning the Trump administration released the much anticipated "Market Stabilization" Rule to address insurer uncertainty in the individual market. The rule makes the following changes to regulations:

  • Exchange enrollees must pay past due premiums before being permitted to enroll in a new plan. This rule applies on an issuer basis and would not affect an enrollee with a past due premiums from enrolling in a plan issued by a different sponsor
  • Open enrollment for 2018 will begin on November 1, 2017 and end on December 15, 2017 instead of January 31, 2018 as previously announced
  • Pre-enrollment verification will be required for individuals wishing to access coverage through a Special Enrollment Period. This pre-enrollment verification will go into effect in June 2017. HHS is also considering limits on plan switching and is seeking comment on policies that could address the issue
  • Individuals accessing coverage through a SEP due to a marriage must demonstrate that at least one spouse had minimum essential coverage for at least one day in the 60 days preceeding the marriage
  • The de minimis range for metal level actuarial value calculation increases from +/- 2 percent to -4/+2 percent. So, a silver plan could have an actuarial value of 66 to 72 percent
  • Network adequacy will be determined by states using a reasonable access standard. States that did not have the ability to review network adequacy could rely on an issuer's accredidation from a recognized authority
  • HHS is also seeking comment on other ways it can encourage continuous coverage. Specifically, HHS asks the public if it should consider policies that encourage continuous coverage similar to HIPAA. Under HIPAA, individuals in the group market must demonstrate creditable continuous coverage without a 63 day break in order to avoid the pre-existing condition exclusion

The rule also suggests a new timeline for qualifying plans for sale on the individual market so as to allow time for this rule to be considered and any other changes that can assure plan sponsors and give them time to adjust.

The proposed rule will probably provide some comfort to insurers but is falls short of what they were seeking. It does not mention increasing state flexibility for essential health benefits - a major premium cost driver - nor does it mention any changes to the age bands. (as we noted earlier, changes to age bands would be tough to change through regulation due to the language of the ACA). Other changes sought by the industry like assurances about cost-sharing subsidies and reinsurance programs are probably outside the scope of regulatory authority.

To our mind, the most significant part of the rule is the consideration being given to ways continuous coverage can be encouraged - a significant policy shift away from the individual mandate (which not coincidentally, the IRS has announced it will not be enforcing this tax season.) While not proposing anything specific, CMS is signalling a willingness to consider other approaches instead of the dreaded individual mandate - which is both ineffective and politically toxic.

Overall, the changes should improve the risk pool somewhat - or at least provide a little more certainty. Of course, what is good for insurers is generally bad for providers who have benefited the last several years from pretty lax standards that permitted near unfettered access to covered health care services.

Call with questions. We have the Federal Register open on our desk all day long.

Emily Evans

Managing Director

@HedgeyeEEvans