This afternoon, the Trump administration finalized the "market stabilization" rule to address complaints of insurers on the federal and state exchanges. We provided an analysis of the proposed rule here.
The proposed changes are for the most part being finalized. CMS got an earful on trying to revert to HIPAA continuous coverage requirements and did not finalize anything related to that objective.
The most significant parts of the rule are shortening the open enrollment period, limiting use of grace periods, limiting use of Special Enrollment Periods and deferring network adequacy determinations to the states.
Limiting the open enrollment period to November 1 thru December 15th will probably have the most significant impact on individual exchange enrollment and health care services utilization. The ACA was, at the end of the day, a poverty program. Proponents of the law have twisted themselves into knots trying to assert that it was a middle class entitlement but the fact is that most exchange enrollment is accounted for by people living at less than 250 percent of the Federal Poverty Threshold.
People living at and near poverty experience their lowest levels of liquidity between Thanksgiving and Martin Luther King Day. They experience their highest levels of liquidity when W-2s are issued in January and tax refunds (including EITCs) are deposited in February or March. Additionally, familiarity with annual income (and thus eligibility for subsidies and cost-sharing) are at their highest levels about the time tax returns are submitted. By shortening the open enrollment period to the toughest part of the year when predicting annual income is the least accurate for people living in poverty, the market stabilization rule is likely to limit participation in the exchange plans.
Limitations on SEPs and deference for network adequacy paid to the states will also limit enrollment and utilization. SEPs were a rich source of enrollment body count by an administration doing everything it could to make the individual market under the law successful. The shift in network adequacy determinations which will alleviate a time and distance standard will likely result in much narrower networks in states that take a more relaxed view of insurance regulation (i.e. Texas and Florida).
Of course exchange enrollment in the individual market is pretty small relative to total insured medical consumers, the hysteria on our Twitter feeds notwithstanding. So, the net negative impact will not be significant in 2018. The broader point is that the Trump administration, while not interested in sabatoge, is also not willing to be the eternal midwife to a law that has deep, unresolveable conflicts.
The major provisions of the rule are listed below.
Unchanged from the proposed rule:
- Open Enrollment will begin on November 1, 2017 and end on December 15, 2017.
- Exchange enrollees must pay past due premiums before being permitted to enroll in a new plan. This rule applies on a controlled group basis and would not affect an enrollee with past due premiums from enrolling in a plan issued by a different sponsor. Rule defers to state laws that may modify this standard.
- 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 and will apply to enrollment via the Healthcare.gov site and the exchanges operated in partnership with the states. It does not apply to state based exchanges.
- Special Enrollment Period for loss of essential minimum coverage will not be available if the loss of coverage was the result of non-payment of premiums.
- 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.
- Special enrollment for extradordinary circumstances will be "significantly" reduced.
- 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.
Not finalized or further pursued:
- HHS sought comment on other ways it can encourage continuous coverage. Specifically, HHS asked 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. This notion was not well received and HHS did not indicate if and how it might proceed with this issue
Call with questions. Congress is on vacation but we are not.
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
