HealthCare.gov Adopts Standardized Health Plans

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By Sara Hansard

Feb. 29 — Standardized health plans will be offered in the federal HealthCare.gov exchanges starting in 2017 under a final rule released Feb. 29 by the HHS.

Health insurers opposed including the standardized options in the federal exchange, arguing that doing so would reduce their ability to promote more economical plans, such as plans that have narrow provider networks. However, the Department of Health and Human Services said in the 2017 Notice of Benefit and Payment Parameters (NBPP) final rule (CMS-9937-F) that introducing standardized options in the individual markets, which consumer groups have supported, would “allow consumers to more easily compare plans across issuers.”

The standardized option will have a specific cost-sharing structure for each of the bronze, silver and gold tiers in the federal exchange markets, which are being used in 38 states in 2016. The policy doesn't restrict issuers' ability to offer nonstandardized options, the HHS said in the final rule, to be published in the March 8 Federal Register.

The HHS also released its final 2017 Letter to Issuers in the Federally-facilitated Marketplaces, a more technical document for insurers.

12.7 Million Enrollees in 2016

Open enrollment concluded for the 2016 benefit year with 12.7 million people selecting a plan, and another 400,000 people enrolling in the ACA's Basic Health Programs in New York and Minnesota, the Centers for Medicare & Medicaid Services said in a fact sheet on the wide-ranging rule.

To help small issuers, who have been hard hit by ACA risk adjustment payments intended to help plans that cover a higher-than-average number of people with health problems, small plans will receive a separate, lower risk adjustment charge starting with the 2016 benefit year, the fact sheet said.

In addition, drug expenditures will be accounted for separately from medical expenditures, among other steps, the fact sheet said. Analysts have recommended that drug costs be better accounted for in the risk adjustment model used.

User Fees Unchanged

The user fee rate charged for issuers who sell through the federal exchange was set at 3.5 percent of premiums for 2017, the same rate that was charged from 2014 through 2016. Issuers in state-based marketplaces using the federal platform will be charged a reduced rate of 1.5 percent of premiums to ease the transition to the federal exchange, and the HHS said “additional flexibility” would be allowed in assessing charges to those states.

The average health insurance premium increase since 2013 is about 13.3 percent for the three years from the beginning of 2014 to 2017, an average annual rate of 4.3 percent, the fact sheet said. The 2017 annual limit on cost sharing for individual coverage will be $7,150 for individual coverage and $14,300 for family coverage.

Open enrollment for 2017 will begin Nov. 1 and run through Jan. 31, 2017, corresponding to the same period for open enrollment in 2016.

Network Rules

A minimum network adequacy standard, or “adequacy threshold,” was proposed but not finalized in the NBPP final rule. The CMS had considered setting network standards for the amount of time and the distance traveled by enrollees to reach providers, similar to what are used for Medicare Advantage. However, state insurance regulators opposed that, saying state markets differ widely.

To limit “surprise bills” for enrollees, beginning in 2018 issuers must count cost sharing charged to enrollees for some out-of-network services toward annual limits.

The federal exchange is also establishing a framework to support expanded direct enrollment for Web brokers and qualified health plans starting in 2018, the fact sheet said.

Additional SHOP Option

For the Small Business Health Options Program (SHOP), a program intended for smaller companies that has not attracted many customers, the HHS added a third employee choice option starting in 2017 that would give employers the option of offering all plans from one issuer at all actuarial values, which is the share of claims covered. States can recommend not to offer that option in their state.

“While CMS is taking some positive steps to provide greater stability for the Exchanges in 2017, we must stay focused on policies and solutions that promote choice and affordability for consumers in the future,” America's Health Insurance Plans Executive Vice President Matthew Eyles said in a statement. “We will closely review the final notice against these two goals. Choice and affordability are fundamental to consumers and critical for the stability of the market in the long run.”

The HHS did not include a provision requiring that more third-party nonprofits be allowed to pay premiums for some enrollees. Patient advocacy groups and hospitals had called for the HHS to allow that for patients who need the help.

Additional Documents

Other documents released by the HHS were:

  • a bulletin on the rate filing justifications for the 2016 filing year providing guidance on the timing for submitting justifications for proposed rate increases in the individual and small group markets. The guidance offers states greater flexibility than the proposed bulletin;
  • frequently asked questions on the 2017 moratorium on the health insurance provider fee enacted in appropriations legislation in 2015; and
  • guidance for individual and small group plans that have been continuously renewed since 2014.
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    A public uproar ensued when millions of people discovered their plans were being canceled at the end of 2013 because the plans didn't comply with the additional coverage rules of the ACA. That prompted the Obama administration to allow plans to be continued if state regulators permitted it.

    The guidance is intended to allow for a “smooth wind-down of transition relief,” giving states and issuers the option to renew individual and small group plans until Dec. 31, 2017.

    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

    For More Information

    The Final HHS Notice of Benefit and Payment Parameters for 2017 (CMS-9937-F) is at http://src.bna.com/cXc.

    The 2017 Letter to Issuers in the Federally-facilitated Marketplaces is at http://src.bna.com/cXa.

    A fact sheet is at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-02-29.html.

    The bulletin on rate filing justifications for 2016 is at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-rate-filing-justification-bulletin-2-29-16.pdf.

    The Frequently Asked Questions on the moratorium on the health insurance provider fee is at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FINAL_9010_FAQ_2-29-16.pdf.

    Guidance for plans that have been continuously renewed since 2014 is at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/final-transition-bulletin-2-29-16.pdf.