Health Reform WK-EDGE New 2018 Marketplace rules designed to help insurers and consumers arrive early
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Thursday, September 1, 2016

New 2018 Marketplace rules designed to help insurers and consumers arrive early

By Harold Bishop, J.D.

Normally issued in November, HHS has decided to issue its proposed annual Notice of Benefit and Payment Parameters for 2018 early. The Proposed rule comes as high-profile insurers like Aetna, Humana and UnitedHealth Group have opted to cut back on participation in the exchanges in 2017. Currently available as an Advance Release, the proposal provides numerous steps to strengthen the health insurance marketplace and respond to insurer concerns. Specifically, the proposal would revamp the risk-adjustment methodology, the cost-sharing parameters, and make changes designed to promote consumer choice in health plans. The final version of the proposal rule will publish in the Federal Register on September 6, 2016

Risk adjustment changes. To promote stable premiums in the individual and small group markets, HHS proposes several changes to the risk adjustment methodology:

  • the use of partial year adjustment factors to better estimate the risk associated with enrollees who are not enrolled for a full 12 months;
  • the use of prescription drug data to improve the predictive ability of risk adjustment models;
  • modifying the treatment of high-cost enrollees to improve the ability to better predict risk for issuers who enroll sicker-than-average enrollees;
  • creating a pool of high-cost enrollees where an adjustment to issuers’ transfers would fund 60 percent of costs where individual costs are above $2 million;
  • issuing final 2018 benefit year coefficients prior to the 2018 benefit year risk adjustment calculations using the most recently available MarketScan® data, likely in the early spring of 2019; and
  • using data from external data gathering environment (EDGE) servers, the systems issuers use to submit data for the risk adjustment and reinsurance programs, to recalibrate the risk adjustment models beginning for the 2019 benefit year, which would improve model accuracy.

Cost-sharing parameters. HHS also proposes four changes related to cost-sharing parameters. First, HHS proposes to charge federally-facilitated marketplaces (FFM) a user fee rate of 3.5 percent of premium for the 2018 benefit year and to charge issuers operating in a state-based marketplace on the federal platform (SBM-FP) a user fee rate of 3 percent of premium for the 2018 benefit year. Second, for 2018, HHS is proposing a premium adjustment percentage of approximately 16.17 percent, reflecting an increase of 2.6 percent from 2017. Third, HHS is proposing a maximum annual limitation on cost sharing for 2018 of $7,350 for individual coverage and $14,700 for family coverage. Lastly, HHS proposes maintaining the dental annual limitation on cost sharing at $350 for one child and $700 for one or more children, rather than indexing the limitation based on the Consumer Price Index.

Plan benefits. HHS also proposes a number of amendments that it believes would help promote consumer choice in health plans:

  • specifying that at least one qualified health plan (QHP) in the silver coverage level and at least one QHP in the gold coverage level must be offered throughout each service area in which a QHP issuer offers coverage through the exchange;
  • permitting a broader de minimis range for the actuarial value of bronze plans when the plan covers services before application of the deductible;
  • requiring QHP issuers on an exchange to participate in the exchange for a full plan year to help ensure that individuals enrolling through special enrollment periods and newly qualified employees have access to a range of plans that is generally comparable to the range of plans that can be accessed by those who enroll during an open enrollment period.

Additional proposals. The Proposed rule also proposes several additional changes, including:

  • expanding the medical loss ratio (MLR) provision allowing issuers to defer reporting of policies newly issued with a full 12 months of experience (rather than policies newly issued and with less than 12 months of experience) in that MLR reporting year, and to limit the total rebate liability payable with respect to a given calendar year;
  • several changes to the guaranteed renewability regulations that would address instances where issuers may inadvertently trigger a five-year prohibition on re-entering an applicable market;
  • codifying several special enrollment periods that are already available to consumers in order to ensure the rules are clear and to limit abuse;
  • amendments related to insurance affordability programs, including eligibility determinations, and periodic data matching;
  • amendments to assist consumers in selecting and enrolling in QHPs and insurance affordability programs, including requiring four bronze standardized options and three standardized options at each of the silver, silver cost-sharing reduction variations, and gold metal levels;
  • differential display of standardized options available in SBE-FPs at the state’s option;
  • differential display of standardized options by QHP issuers and web-brokers using a direct enrollment pathway to facilitate enrollment through an FFE or SBE-FP;
  • amendments to the standards regarding providing taglines in non-English languages indicating the availability of language services;
  • requiring issuers attempting to rescind coverage purchased through the exchange to show that the rescission is appropriate; and
  • making explicit HHS’s authority to impose civil money penalties in situations where QHP issuers are nonresponsive or uncooperative with compliance reviews.

Comments. In addition to comments on the proposals, HHS also seeks comment on ideas to improve the risk pool, such as clarified coordination of benefits rules, grace period policy, specifying a certain amount or percent of user fee revenue for education and outreach, and how to further support the transition of former Pre-Existing Condition Insurance Plan (PCIP) Program enrollees into the marketplace to ensure that they do not experience a lapse in coverage. The proposal also seeks comments on whether to remove a requirement tying participation in the individual FFM to participation in the federally-facilitated Small Business Health Options Programs (SHOP).

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