CMS Finalizes Rule to Stabilize Health Insurance Markets

The steps taken at CMS seek to curb adverse selection, when consumers wait until they have a health problem to sign up for coverage, then cancel after they receive treatment.

CMS has finalized a rule aimed at curbing abusive practices on the exchanges created by the Affordable Care Act (ACA). The rule, published late Thursday, addresses a host of complaints from insurers, who say inadequate controls on enrollment have fueled losses and premium increases, and led to lack of choice in many markets.

“CMS is committed to ensuring access to high quality affordable healthcare for all Americans and these actions are necessary to increase patient choices and to lower premiums,” CMS Administrator Seema Verma said in a statement. “While these steps will help stabilize the individual and small group markets, they are not a long-term cure for the problems that the Affordable Care Act has created in our healthcare system.”

Insurers have said that too many opportunities to access the exchanges made it easy for consumers to wait until they had an illness or an expensive health event, such as surgery, to sign up for coverage. Such adverse selection drove up costs for insurers, especially when many of these same consumers dropped coverage once they were finished treatment.

The rule does the following:

· Shortens the 2018 open enrollment period. Open enrollment on the exchanges will be cut in half from prior years, to 6 weeks from November 1, 2017, to December 15, 2017.

· Rein in fraud and abuse. Enrollees will need more documentation to prove that those signing up for coverage during special enrollment periods are eligible. Special enrollment periods allow people to access the exchanges outside open enrollment for a qualifying life event, such as getting married, moving, or a change of job status.

· Promotes continuous coverage. Breaks in coverage are always suspicious to insurers. Enrollees stop paying the premium and may have health problems without engaging with an insurer or doctor, leaving the insurer in the dark about health status if the person returns to the rolls. Provisions in the rule allow insurers to demand that consumers pay past due premiums before they sign up for plan after a break in coverage.

· Increasing choices. Insurers will be given “actuarial value flexibility,” which will allow them to develop low-cost premium options alongside existing plans.

· States have regulatory oversight. For decades, states insurance officials were the primary force in regulating the adequacy of networks, through a national system of state-based regulation under the umbrella of the National Association of Insurance Commissioners (NAIC). While some states have tougher rules than others, the NAIC creates model laws and rules that it encourages states to follow. This part of the CMS rule eliminates what it deems a duplicative federal role in ensuring network adequacy.

CMS also published the calendar for health plans to follow as they decide whether to participate in the exchanges in 2018. Already, Humana has said it will be leaving the exchanges following a failed attempt to merge with Aetna, and Anthem is weighing its participation.

Health plans can submit plans from May 10 to June 21, 2017, and the deadline for rate tables for single-risk pool coverage for qualified health plans in June 21, according to the schedule.

At the most recent NAIC meeting in Denver, state regulators and plans alike said the uncertainty over the future of the ACA is making it difficult to plan for 2018. As the Trump administration regroups from the failure of the House Republicans’ American Health Care Act to win enough votes, there is discussion that President Trump may hold back cost-sharing reductions, the subsidies that make coverage affordable for low- and moderate-income consumers. The move would aim to force Democrats to take part in a healthcare overhaul, Trump said in an interview with The Wall Street Journal.

However, leading healthcare organizations that include the American Hospital Association and the American Medical Association have called on the administration to commit to funding the cost-sharing reductions for 2018, to bring stability and certainty for insurers and consumers. The groups say the subsidies help about 7 million Americans.

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