CMS Final Rule Tinkers with Obamacare to Expand Options for Policy Design

The Centers for Medicare and Medicaid (CMS) today issued a final rule that seeks more elasticity in how the provisions of the Affordable Care Act (ACA, or Obamacare) are applied to allow more flexibility in policy offerings and pricing on the federal and state exchanges. The rule will be published in the Federal Register on April 17, and following a 60-day commentary period, will be implemented. CMS Administrator Seema Verma “Too many Americans are facing skyrocketing premiums that they can’t afford and every year consumers are faced with the threat of fewer choices. This rule gives states new tools to stabilize their health insurance markets and empower citizens to find coverage that fits their families’ needs and budgets,” explained CMS Administrator Seema Verma. As part of the package, individuals will be able to earn "hardship exemptions" from the individual mandate -- have insurance or pay a fine -- going back two years if: 1) they live in an area where only one insurer operates on the  ACA exchange or 2) they oppose abortion and the only insurer in their area offers abortion services. (Next year, the penalty goes away permanently.) Overall, states will be given more flexibility in choosing plans for the exchanges. The final rule affects policies issued Jan. 1, 2019 and after. Key provisions include:

• Expanding the list of Essential Health Benefits (EHBs) from 10 to 50 to allow states more choice in coverage and thus potentially lowering premiums.
• Loosening Qualified Health Plan (QHP) Certification Standards, again with an eye to streamlining and lowering the cost of policies.
• Amending the HHS-operated risk adjustment data validation program to reduce burdens on issuers.
• Eliminating the requirement that insurers offer a standardized set of benefits.
• Improving program integrity by requiring exchanges to implement stronger checks to verify applicants actually earn the income they claim to qualify.
• Expanding options for Special Enrollment Periods (SEPs).
• Modifying the medical loss ratio (MLR) formula, the amount an insurer spends on medical claims compared with income from premiums.
• Removing several regulatory requirements on Small Business Health Options Program (SHOP) and outlining a new enrollment process in the SHOP exchanges using the federal platform.

Easier Access to Small Business Health Options Program (SHOP) By removing regulatory burdens, CMS is streamlining the Small Business Health Options Program (SHOP) enrollment process in the SHOP exchanges using the federal platform for employers to use an issuer-based enrollment approach. This change allows SHOPs to eliminate the online enrollment process and allows employers to enroll directly with an exchange-registered agent, broker, or issuer. SHOP Exchanges are no longer required to provide employee eligibility, premium aggregation, and online enrollment functionality and for plan years beginning on or after Jan. 1, 2018 FF-SHOPs and SBE-FP for SHOP will no longer be providing these services. Due to the fact that SHOP exchanges have experienced much lower enrollment than expected and have proved challenging for many states to establish, these functionalities have not been cost effective. State-based SHOP exchanges have the flexibility to maintain current operations of their online SHOP enrollment platforms, or take advantage of the regulatory flexibilities available through the final rule to design a SHOP that best meets the needs of the small group market in their state. The Small Business Health Care Tax Credit will continue to be available to employers who enroll their small group in a SHOP plan. Further Details on Final Rule The 523-page final rule is actually known as the Notice of Benefit and Payment Parameters for 2019, a document that is issued annually so insurance companies can craft their policies and pricing. FAQs can be accessed here.