By Brian Craig, J.D.
In an effort to expand flexibility and empower states to address problems with their individual insurance markets while increasing coverage options for their residents, HHS has issued a guidance on state innovation waivers. In the new guidance which takes effect immediately and supersedes the 2015 guidance, HHS provides guidance on the goals to provide increased access to affordable private market coverage, encourage sustainable spending growth, foster state innovation, support and empower those in need, and promote consumer-driven healthcare under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) (Notice, 83 FR 53575, October 24, 2018).
Changes to 2015 guidance. The new guidance, which supersedes the 2015 guidance published on December 16, 2015 (80 FR 78131), provides additional information about the requirements that must be met, the application review procedures, the amount of pass-through funding, certain analytical requirements, operational considerations, and public comment. Section 1332 of the ACA provides the Secretary of HHS and the Secretary of the Treasury with the discretion to approve a state’s proposal for a State Innovation Waiver, also referred to as a State Relief and Empowerment Waiver. The updated guidance provides supplementary information about the requirements for a State Innovation Waiver, the application review procedures, the calculation of pass-through funding, certain analytical requirements, and operational considerations. The new guidance will take effect immediately and will be applicable to waivers submitted after the publication date of the new guidance, including waivers submitted, but not yet approved. The overarching goal of innovation waivers is to increase access to health coverage while empowering states to develop health coverage strategies that best meet the needs of their residents.
Guardrail requirements. The guidance explains the guardrail requirements related to comprehensiveness, affordability, coverage, and deficit neutrality. Comprehensiveness refers to the scope of benefits provided by the coverage as measured by the extent to which coverage meets essential health benefits (EHB). In April 2018, CMS provided states with substantially more options in the selection of an EHB-benchmark plan. Affordability refers to state residents’ ability to pay for health care expenses relative to their incomes and may generally be measured by comparing each individual’s expected out-of-pocket spending for health coverage and services to their income. To meet the coverage requirement, the state plan must provide meaningful health care coverage to a comparable number of its residents as Title I of ACA would provide.
HHS and the U.S. Department of the Treasury will assess the coverage guardrail by requiring the state to forecast, for each year state plan will be in effect, the number of individuals that will have health care coverage under the section 1332 state plan, and then compare that to the number of individuals that would have had health care coverage absent the waiver. In terms of deficit neutrality, waivers must not increase the federal deficit over the 10-year budget plan submitted by the state as part of the application. HHS revised the 2015 guidance to clarify that the 10-year budget plan should describe the changes in projected federal spending and changes in federal revenues attributed to the waiver for each of the ten years.
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