The rule has several proposals that may be attractive to insurers in the area of risk adjustment.
CMS on Friday proposed a 365-page rule that would swing the regulatory pendulum in healthcare back toward the states, giving them the power to define essential health benefits and to take back a larger role in certifying qualified health plans.
In doing so, the Trump administration appears to be trying to do by rule what it could not do in Congress: repeal and replace parts of the Affordable Care Act (ACA), a cornerstone of President Donald Trump’s campaign. The most important changes would take effect in 2019. The proposal offers only 30 days for comment, half the usual comment period.
The rule calls for “enhancing the role of states” by providing added flexibility, reducing regulatory burden, empowering consumers, and improving affordability.
CMS takes its power to craft the rule from the executive order that Trump signed within hours of taking office on January 20, 2017. The proposed rule states that, “to the maximum extent permitted by law,” HHS “should exercise all authority and discretion” to delay ACA provisions that impose fiscal burdens on states, families, or individuals. “We are proposing, within the limits of the current statute, to reduce fiscal and regulatory burdens across different program areas, and to support innovative health insurance models.”
The rule could become a bargaining chip in the current negotiations over a bipartisan plan brokered by Senators Lamar Alexander, R-Tennessee, and Patty Murray, D-Washington, that seeks to retain subsidies for insurers, allowing them to hold down premiums for lower-income Americans buying ACA coverage. Trump canceled the cost-sharing reductions on October 12, after House Republicans sued in federal court to show they had not been funded by Congress.
Essential health benefits were a flash point in Congress' failed efforts to repeal the ACA, because they require all health plans to cover items like maternity services, emergency care, and behavioral health. Mental health advocates in particular feared that losing essential health benefits could mean a return to the days when mental health care was excluded from standard coverage.
The proposal contains elements that could attract support from the insurers, such as provisions to extend the period for distributing funds under risk adjustment formulas, which were designed to compensate insurers who take on costlier enrollees. And, the proposal would change the formulas for these fund transfers to reflect high-cost specialty drugs these patients take.
The rule would also let states apply for a change from the 80% medical loss ratio (MLR) standard for their state. The key ACA tenet requires insurers to spend 80 cents of every premium dollar on customers medical claims and activities to improve the quality of care. The MLR has been cited in the many consolidations that have occurred in healthcare under the ACA, as insurers have sought efficiencies to meet the standard.
Finally, the rule seeks comment on possible changes to promote “exchange program integrity,” which insurers have long sought to reduce the ability of people to game the system and wait until they become sick to enroll for coverage.
Besides changes already under way to shorten the enrollment period, the proposal would require more prompt consumer reporting of personal circumstances in the benefit year that could affect exchange eligibility status. The proposal also asks whether CMS should consider “shortening the length of time the exchanges are authorized to obtain enrollee tax information.”