Health Reform WK-EDGE CMS, Treasury soliciting ideas for Section 1332 waivers under the ACA
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Wednesday, May 22, 2019

CMS, Treasury soliciting ideas for Section 1332 waivers under the ACA

By Pamela Wolf, J.D.

In an RFI, CMS and the Department of Treasury are soliciting ideas for new waiver concepts that are consistent with earlier Section 1332 guidance that loosened ACA requirements.

The Department of the Treasury and CMS (collectively, departments) are soliciting public comments on ideas for "innovative programs" and "waiver concepts" that states could consider in developing a Section 1332 waiver plan under the Affordable Care Act (ACA). Specifically, the departments are seeking feedback and ideas on how states might take advantage of "new flexibilities" provided in October 24, 2018 guidance (Notice, 84 FR 19000, May 3, 2019).

Waiver guidance. The Section 1332 guidance, known as State Relief and Empowerment Waivers, loosened certain ACA requirements. The October guidance replaced the previous Section 1332 published in 2015. The new guidance further relaxed controls set by the initial guidance, creating additional flexibilities for states, as departments see it, including:

  • Allowing states to provide consumers with plan options that best meet their needs while ensuring those with pre-existing conditions retain access to the same level of coverage available today;
  • continuing to require that a comparable number of people have coverage, while expanding the definition of coverage to include more types (such as short-term plans);
  • providing greater flexibility for states to consider improvements for state residents as a whole, rather than for specific populations;
  • supporting increased variation and flexibility for states that want to leverage components of the federal exchange to implement new models; and
  • providing flexibility for states to meet the state legislative authority requirement.

The guidance also loosened the departments’ evaluation of statutory "guardrails" related to comprehensiveness and affordability of coverage, the number of state residents covered, and deficit neutrality.

Guidance immediately questioned. The guidance faced immediate criticism from some members of Congress who saw it as just another way to undermine the ACA. The guidance was also questioned as skirting Administrative Procedures Act requirements.

According to analysis released by the Brookings Institution November 28, the guidance "claims to make significant new policy, primarily by loosening the standards for comprehensive, affordable coverage. But importantly, the agencies chose to release it as guidance, rather than as a rule subject to the typical notice and comment rulemaking process. There are serious questions about whether the policy articulated in the guidance is a permissible interpretation of the underlying statute, but, at the very least, it is likely invalid for the agency to attempt to make this policy without a full rulemaking process."

Waiver concepts. On November 29, 2018, CMS released of four "waiver concepts" to illustrate how states can waive certain ACA provisions under Section 1332 of the health reform law and develop alternatives to what CMS Administrator Seema Verma called the ACA’s "otherwise one-size-fits-all approach." Those concepts are: account-based subsidies; state-specific premium assistance; adjusted plan options; and risk stabilization strategies.

Purpose of Section 1132 waivers. In this new request for information (RFI), the departments said that the overarching goal of Section 1332 waivers is to "give all Americans the opportunity to gain high value and affordable health coverage regardless of income, geography, age, gender, or health status while empowering states to develop health coverage strategies that best meet the needs of their residents."

The departments say they want to empower states "to innovate in ways that will strengthen their health insurance markets, expand choices of coverage, target public resources to those most in need, and meet the unique circumstances of each state." The RFI is intended to solicit ideas and spur additional thinking and innovation as states consider developing Section 1332 waiver plans.

Other waiver concepts. The departments are looking for ideas for other innovative waiver concepts. They are seeking public comments on ideas that states may be able to use to develop innovative waiver programs that meet Section 1332 "guardrails." The departments are soliciting comments on waiver concepts that states could potentially use alone or in combination with other waiver concepts, state proposals, or policy changes. The RFI also seeks comments on ideas for waiver concepts that could advance some or all of the principles outlined in the October 2018 guidance, among other things.

Further, the departments are soliciting comments on ideas for waiver concepts that incorporate the entire range of waivable requirements allowed under Section 1332. They are also interested in how states might align these "flexibilities" under Section 1332 with other flexibilities under federal law, including regulatory flexibility, Section 1115 Medicaid waivers, and state law.

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