More Changes Coming for ACA Special Enrollments

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By Sara Hansard

Feb. 23 — More changes to special enrollment periods under the Affordable Care Act will be announced later this week, the head of the CMS said Feb. 23.

Speaking at a conference of health insurance brokers, Andy Slavitt, acting administrator of the Centers for Medicare & Medicaid Services, also said the agency is committed to making sure the ACA's risk adjustment premium stabilization program accounts for new trends that emerge, like higher drug costs.

In January the CMS eliminated six special enrollment periods and made other changes after insurers reported that many people who signed up outside of the normal open enrollment periods were having expensive medical treatments, such as knee and hip replacements that can be planned in advance, and then dropping coverage .

“Insurance can't work under those circumstances,” Rick Foster, former chief actuary for the CMS and now a consulting health insurance actuary, told Bloomberg BNA Feb. 23. Foster said Slavitt's comments to the health insurance brokers were intended to be reassuring in a “pretty jittery” market.

Special Enrollment Integrity `Critical.'

While special enrollment periods are important for people who lose employer-sponsored coverage or have another qualifying event, such as having a baby or getting married, “it is critical for us to enforce the integrity of the Special Enrollment eligibility process so that it serves those consumers who are eligible for them, not those who want to wait to buy insurance until they're sick,” Slavitt told the National Association of Health Underwriters.

Once the specific changes are announced, market participants, consumer advocates and other stakeholders will have the chance to comment on them, Slavitt said.

Individuals who gain coverage through special enrollment periods account for up to one-third of the exchange population and incur significantly higher medical costs than those who enroll during regular open enrollment periods, America's Health Insurance Plans and the Blue Cross Blue Shield Association said in an analysis released Feb. 23.

Slavitt also said the CMS is “committed to making sure that risk adjustment continues to work as it is intended and improves based on the most recent data and accounts for new trends that emerge, like higher cost drugs.”

In March, the CMS will release a risk adjustment white paper outlining a number of topics it is looking at, he said.

Risk Adjustment Conference

The CMS is holding a public risk adjustment conference on March 31 in Baltimore to bring together market participants, actuaries and other stakeholders to review the risk adjustment methodology now being used and make changes based on the first several years of experience. “We have the tools to make certain the proper incentives exist to insure sicker populations,” Slavitt said.

The ACA prohibits insurers from denying coverage or charging more to people who have medical problems, and the premium stabilization programs are intended to protect carriers that cover sicker-than-average populations. Under the permanent risk adjustment program, insurers with sicker-than-average enrollees receive payments from insurers who have healthier-than-average enrollees.

However, for the 2014 year, many of the nonprofit Consumer Operated and Oriented Plans (CO-OPs) created with government funding under the ACA, as well as provider-sponsored and other new ACA plans, were hit with large risk adjustment payments. The CO-OPs and other new plans have asked the CMS to cap risk adjustment payments at 2 percent of premiums for the 2015 plan year.

Better Information Earlier

Slavitt also said the CMS is committed to getting better risk adjustment information to health plans earlier to help them plan their care management, network strategy and pricing. In 2016, the CMS will provide early estimates of specific calculations where it has enough submissions from health plans, he said.

The agency also launched back-end automation Jan. 1 to make policy-specific payments to insurers, which should improve decision-making and reduce operating costs for exchange plans, Slavitt said.

The CMS also announced Feb. 12 that it will pay $7.7 billion under the ACA's reinsurance premium stabilization program for the 2015 benefit year . The reinsurance program protects carriers from very high claims, and Slavitt said it has been a “stabilizing force to date.”

Market Is `Jittery.'

Slavitt's comments to the health insurance brokers are “intended to be a reassuring message, because there are other indications that the market is pretty jittery,” Foster said.

Several large insurers, including UnitedHealth Group Inc. and Aetna Inc., have expressed doubts about the viability of ACA marketplace plans, and UnitedHealth Group Chief Executive Officer Stephen Hemsley has said United may not participate in the marketplaces in 2017 after losses of about $1 billion for exchange plans are expected for 2015 and 2016.

However, changes to the risk adjustment program contemplated by the CMS wouldn't take effect until 2018, Foster told Bloomberg BNA. He is doing consulting work with Leavitt Partners for a group of CO-OPs and provider-sponsored plans that have been adversely affected by the ACA's risk adjustment program. “The risk adjustment program had such unexpected effects for 2014 that there's a need to do something faster than that,” he said.

A major reason new ACA plans were hard hit was because they lacked medical history information about their enrollees, plan executives and analysts have told Bloomberg BNA. “The best approach would be to take into account the proportion of a plan's members who are brand new,” Foster said.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com