CMS Proposes Rule Establishing Marketplace Financial Integrity Standards

Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...

By Sara Hansard  

 

The Centers for Medicare & Medicaid Services June 14 released a proposed rule that would establish oversight and financial integrity standards for the online marketplaces that are to open for enrollment Oct. 1 under the Affordable Care Act.

The overarching goal of the 253-page proposed rule, Program Integrity: Exchange, SHOP, Premium Stabilization Programs, and Market Standards (CMS-9957-P), “is to safeguard federal funds and to protect consumers by ensuring that issuers, Marketplaces, and other entities comply with federal standards meant to ensure consumers have access to quality, affordable health insurance,” CMS said in a fact sheet. The proposed rule is scheduled to be published in the June 19 Federal Register. Comments are due July 19.

“The release of these guidelines signals that we're ready to build on our ongoing efforts and ensure that the new systems are fiscally sound,” CMS Administrator Marilyn Tavenner said in a release. Many of the provisions in the proposed rule build on guidance previously issued to states and other key stakeholders, it said.

Much of the proposed rule focuses on program integrity in the state-based marketplaces (SBMs) that will sell health plans in the individual and small group market, as well as on issuers offering qualified health plans (QHPs) in the federally facilitated marketplaces (FFMs), according to the fact sheet. The FFMs will operate in 33 states that are not setting up their own SBMs.

Policies for Premium Tax Credits

The proposed rule would set policies governing advance payments of the premium tax credit, cost-sharing reductions, and premium stabilization programs for low- and moderate-income people.

“One of [the Department of Health and Human Services'] key goals with respect to the oversight of advance payments of the premium tax credit and cost-sharing reductions is ensuring that eligible enrollees receive the correct tax credit and/or cost sharing reduction,” the agency said in the fact sheet. It proposed time frames for refunds to enrollees and providers when an issuer incorrectly applies the tax credits. Those credits are provided immediately by the Internal Revenue Service directly to insurers through the marketplaces, rather than requiring people to wait for tax refunds.

The rule proposes standards for the oversight of states that operate either risk adjustment or reinsurance programs, which are intended to make sure that plans that end up with a high share of unhealthy people are compensated. It would require that states keep an accurate accounting for the programs and make public reports on their operations.

The proposed rule includes standards for agents and brokers, as well as standards for how premiums may be set based on geographic areas, and the guaranteed availability and renewability of plans.

Different Payment Forms

The proposed rule would require QHPs to accept a variety of forms of premium payments, Brian Haile, senior vice president for health policy with Jackson Hewitt Tax Service Inc., told BNA. Jackson Hewitt, based in Parsippany, N.J., issued a report May 21 warning that many uninsured people would not be able to access coverage without such alternatives (see previous article).


 

The proposed rule would require QHPs to accept a variety of forms of premium payments, Brian Haile of Jackson Hewitt Tax Service Inc. told BNA.

 

 

 


“This proposed rule effectively ensures that if you don't have a banking account, then you can still enroll in an insurance plan through the new marketplaces,” Haile said. “Before this proposed rule, insurance companies could discriminate on the basis of someone's banking status. With this clarification the feds have said insurance companies must provide coverage to people even if they don't have a checking account.” More than one in four Americans who are eligible for the new tax credits do not have checking accounts, he said.

“We realize that a segment of the population that will seek health insurance coverage through an Exchange will not have bank accounts or credit cards, and we have received numerous questions and comments on this topic,” the proposed rule said. “These people should be able to access coverage through an Exchange on the same basis as those with a bank account or credit card and should not be unable to access coverage merely due to the inability to pay their share of the premium.”

The proposed rule would require QHP issuers to accept a variety of payment types, including paper checks, cashier's checks, money orders, and prepaid debit cards, so that people without bank accounts could make monthly premium payments. Issuers could also offer electronic fund transfers from bank accounts and automatic deductions from credit or debit cards as payment options.

State SHOP Programs

CMS proposed permitting states to operate state-based Small Business Health Options Program (SHOP) marketplaces, while HHS would operate an individual market FFM in the state. HHS announced in May that Utah will be allowed to continue to operate its existing Avenue H marketplace as a state-based SHOP marketplace, and there will be an FFM for the individual market in the state (see previous article).

The proposed rule specifies civil monetary penalties that could be taken against QHP issuers participating in FFMs if they did not comply with standards set for the marketplaces, and it sets out procedures for decertifying plans.

“The proposed rule allows for direct sales of policies by issuers through the marketplaces,” Timothy Jost, Washington and Lee University School of Law professor, told BNA in an email. “That means insurers may be able to enroll consumers in their own plans without the consumer necessarily seeing the full range of plans available through the marketplace,” he said.

Consumers will receive more information in the coming weeks and months about enrolling in the new marketplaces, CMS said in its release. The agency is re-launching its HealthCare.gov website this summer to help consumers sign up for coverage when open enrollment begins. A marketplace call center will begin taking consumer calls, and CMS will begin consumer assistance training this summer, it said.

 


A fact sheet on the proposed rule is available in HealthDocs™.