The Centers for Medicare and Medicaid Services (CMS) has issued the proposed annual Notice of Benefit and Payment Parameters for 2018, intended to strengthen the Health Insurance Marketplace. CMS is officially issuing this rule as of September 6, 2016, addressing changes that have been underway in the last six months.
The Affordable Care Act (ACA) law continues to evolve, and with the election looming, many are wondering about the latest proposed changes. The information is available early to assure the public that CMS continues to discuss problem areas and make necessary adjustments for the benefit of U.S. residents.
Based on the first few years of experience, Andy Slavitt, the Administrator of the CMS states, "These proposals help fulfill the promise that affordable, quality health coverage can be provided to everyone who needs it." These proposals deal with the following:
Risk Adjustment Program
- Beginning in 2017, there will be the addition of the Risk Adjustment Program. It will introduce changes for more effective risk pooling.
- In 2018, there will be a utilization of prescription drug data to improve the predictive ability of further risk adjustments.
- In 2018, there will be risk transfers to spread the risk of high-cost enrollees and improve the risk-sharing benefits for insurance providers and consumers.
The Affordable Care Act (ACA) has promised millions of Americans that they will no longer be discriminated against for pre-existing conditions when finding health insurance coverage, however, the additional risk of insuring those individuals requires higher premiums to cover claims.
The ACA's Risk Adjustment Program will help ensure that participating health insurance providers have incentives and financial support to continue to offer affordable plans despite the added costs that result in company losses.
There will also be more help to successfully transition the enrollees from the former Pre-Existing Condition Insurance Plan (PCIP) Program to the marketplace exchanges while avoiding any lapse in coverage.
These proposals are focused on supporting struggling insurance providers from leaving the marketplace system. Consumers need new health insurance providers to enter the marketplace and grow business in order to have more affordable options for enrollment.
Risk Pool Adjustment
Modifications to certain risk pools or groups can improve benefits and reduce consumer premiums. Each health plan issuer has their own individual risk pools. The pool for high-cost enrollees – claims exceeding $2 million per individual - can be combined among all participating insurance providers to help reduce uncertainty for insurance companies unable to accurately predict losses until there is more history with business conducted in the marketplaces. This creates stable premiums in the individual and small group markets.
By distributing the risk properly, it will be possible for each participating provider to offer at least one Qualified Health Plans (QHP) at the silver level and at least one QHP at the gold level for each service area in which they offer coverage through the Exchange. There will be more flexibility for the bronze plan benefit design and proposed updates for calculating values. Dealing with costs of less healthy individuals creates new approaches for the costs of healthier enrollees. Insurers can have the confidence to design products in the marketplaces for consumers in any category.
There is also a proposed premium adjustment percentage for 2018, to set the rate of increased plan costs including a maximum annual limitation on cost-sharing and plan variations as well as basic requirements for stand-alone dental plans (SADPs).
Attention is being focused on statistics for prescription drug plan tiers and formularies, as well as how and where prescriptions are being purchased, to lift the cost burden for people with serious conditions like Hepatitis C, Cancer, HIV, Diabetes, and more. By 2018, the ACA will be utilizing other curated data from an external data gathering environment (EDGE) server to further determine the severity of an enrollee's health condition and better predict risk adjustment models to transfer the risk of high-cost enrollees more effectively.
In 2017, adjustments will be made to account for financial losses concerning the risk insurance companies take on when consumers decide not to, or are unable to, keep the product for the full plan year.
Each of these changes and new proposals would help enable both health care issuers and enrollees in the marketplaces by enabling issuers to better account for the financial risk of all enrollees and continue to provide plans for all Americans in need of health coverage.
Strengthening the Marketplace, Medicare, and Medicaid
Strengthening the marketplace risk pools includes balancing the mix of consumers in the exchanges with plan providers. The current proposal regarding public option is one way of doing this. Moving those over-50 from the younger and healthier risk pool and into the over-65 Medicare Program benefits both groups.
- The under 50 are relieved of a higher risk cost burden and could achieve lower premiums.
- The over 65 Medicare enrollees will benefit with the addition of those younger and healthier than themselves, spreading the risk over a larger population.
Additional focus is needed on consumers who turn 65 to help them move into the Medicare program and stop a dual enrollment issue. Better coordination of benefit policies is also necessary to ensure those who qualify for Medicare and Medicaid are enrolled in the proper program. There have been some concerns of third-party entities directing Medicare and Medicaid patients into the marketplaces to receive higher compensation or reimbursement. CMS is requesting feedback regarding these issues.
Since 2016, the ACA has been finding ways to improve the use of Special Enrollment Periods (SEPs). Some people lose coverage or experience other qualifying events outside of the open enrollment period. It is necessary to confirm documentation for eligibility and also avoid any misuse or abuse of the SEP program going into the 2017 plan year.
A proposal will require QHP issuers on the exchanges to participate in the marketplaces for a full plan year as a certification requirement to give individuals enrolling through SEP a range of plans similar to the choice of plans offered at open enrollment.
Vigorous outreach and assistant programs are needed to encourage and increase the number of young and healthy enrollees to purchase coverage in the exchanges. Improvements are being developed to determine the amounts of user fees for Federally run marketplaces in order to dedicate more funding to outreach.
Greater technology - such as the EDGE system - will be researched and implemented in enrollment channels to create more competition, more options, and simpler processes for consumers to enroll, including the young and healthy. Multiple child age bands will address larger premium increases experienced after turning age 21 and revise the guaranteed renewability provisions for additional options for remaining in a specific insurance market.
There will be more concentration on transparency when dealing with online agents or brokers registered with the marketplaces or directly through insurance company websites in association with HealthCare.gov.
Further removing potential obstacles to enrollees and insurance providers' business and entering more markets will improve on the entire Affordable Care Act law and operation of the health care exchanges.
It may be necessary to eliminate the requirement that certain participating insurers in the individual federally-run marketplaces also offer coverage through the Small Business Health Options Program (SHOP) marketplaces.
More flexibility will be offered to health care issuers to design plans, especially with regard to bronze plan offerings, while still protecting the basic needs of consumers.
Proposals are included to give new and growing insurance companies more flexibility to calculate medical loss ratios, and to avoid inadvertently triggering a ban on participating in the individual or group market.
As the Marketplace continues to grow and mature, CMS will continue to study data, listen to market participants, test different approaches, and adapt. Their efforts are planned to generate a more attractive market for consumers and other participants in the program.
CMS is asking for more involvement through information and suggestions from issuers, consumers, providers, and others, to further improve the risk pool, change special enrollment periods, coordinate benefits between government programs, and adjust fees charged to fund education and outreach.
Read the CMS document scheduled to be published in the Federal Register on September 6, 2016, also available online at the Federal Register, and on FDsys.gov.
Sources and Links:
CMS News, Media Relations, 2016. PDF for 2018 Public Inspection. https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-20896.pdf