The primary focus of the proposed rule is to allow greater flexibility in health plan benefit design.

Dec. 21—Insurers generally support proposed rules governing the 2019 individual insurance marketplaces, which were released in October.

After the Centers for Medicare & Medicaid Services (CMS) released the rules, 434 individuals, companies, hospitals, insurers, healthcare providers, and patient advocacy organizations submitted comments during the public comment period that ended Nov. 27.

That proposal would change marketplace rules, policies, and practices governing health insurance plans offered through the state and federal insurance exchanges and the individual market under the Affordable Care Act (ACA).

The primary theme of the rule is greater state flexibility, allowing states wider latitude in interpreting essential health benefits (EHB), medical loss ratio (MLR), qualified health plan (QHP) certification, risk adjustment and value-based insurance design (VBID).

Hospital Impacts

Hospitals could be impacted by the rule’s change in the scope of the insurance benefits provided to enrollees.

Timothy Jost, emeritus professor of health law at Washington and Lee University School of Law, said hospital financial executives should be concerned about proposed changes to the EHB provision.

The ACA requires insurers in the individual and small group markets to cover 10 EHBs, Jost noted.

“The proposed rule would give states greater discretion in defining those EHBs and it’s possible that some states will come up with definitions that could leave hospitals uncovered for some of the services they offer,” Jost said in an interview. “The proposed rule also permits states to allow insurers to have lower medical loss ratios (MLRs, now at 80 percent). If  plans pay out lower percentages of premiums in health services, that could mean more money  going to insurers and less to providers.”

Health plans and regional and national health insurance associations agreed with most of the proposed rule’s provisions, but some opposed certain provisions and sought changes or delays in implementation for others.

EHB Benefit Substitution

The EHB-related provisions drew the most comments. One of the more controversial components is the provision allowing states to ban or limit benefit substitution among the 10 EHBs.

Anthony Mader, vice president of public policy for Anthem, wrote that while benefit substitution affords insurers greater flexibility, it could result in gaming and consumer confusion. He noted that it “could lead some issuers to design plans that are unattractive to higher-cost, more complex populations, resulting in adverse selection that would further destabilize the marketplace.”

David Schwartz, head of global policy and federal affairs for Cigna, wrote that “Plan-level substitution across categories could lead to gaming and adverse selection.”

EHB Benchmark Plans

Anthem opposed the CMS proposal to allow states to update EHB benchmark plans annually and select from additional benchmark options, saying it may result in less affordable coverage.

Margaret Murray, CEO of the Association of Community-Affiliated Plans (ACAP), recommended that states be permitted to change their EHB benchmark or benefits every five years or less “in order to provide some consistency and stability for issuers.”

Paul Stordahl, vice president for United Healthcare (UHC), suggested states limit changes to EHB benchmark plans no more than once every three years. UHC said more frequent proposed changes would cause “a great operational burden on issuers that would need to adjust their product design accordingly and would lead to increased administrative costs.”

Kris Haltmeyer, a vice president for Blue Cross and Blue Shield Association (BCBSA), wrote that the proposed EHB-benchmark process “would allow states to increase the benefits offered under their EHB package without being held responsible for any resulting cost increases.”

The provision “would be a significant burden on states to implement, increase costs for issuers and result in disruptions in coverage for consumers,” predicted Matthew Eyles, senior executive vice president and chief operating officer for America’s Health Insurance Plans (AHIP).

Cigna has “serious reservations” regarding the timeframe, characterizing the new benchmark plan change introduction as aggressive, “particularly with finalization of benchmark plan selections by states not being required until nearly the end of the first quarter of 2018,” wrote David Schwartz, head of global policy for Cigna.

“Typical Employer Plan”

The ACA required that EHB benefits be comparable to those offered in a “typical employer plan.” CMS proposed expanding the definition of a typical employer plan to include other categories of health plans enrolling 5,000 or more.

ACAP was concerned that “self-insured group health plans” could be included under the umbrella definition. 

“Given the differing rules guiding ERISA plans and lack of transparency of what benefits are covered by many such plans, we do not believe it is appropriate at this time to use such an undefined, unknown plan type as an allowable benchmark,” ACAP wrote.

BCBSA wrote that the 5,000-enrollee level is too low to be considered “typical.”

Most insurers and AHIP urged CMS to delay implementing the EHB provisions until 2020.

Medical Loss Ratios

CMS proposed allowing states to request adjustments to the MLR through a simplified waiver process.

UHC wrote that employment taxes should be excluded from premiums under the proposed MLR formula. The ACA currently does not permit plans to exclude employment taxes, such as FICA contributions.

“We also recommend that HHS provide a concise definition of what employment taxes are to be excluded so that issuers are using the same metrics,” UHC wrote. The insurer recommended that the proposed rule exclude federal and state employment taxes from the determination of premium amounts.

Sabrina Corlette, research professor at the Center on Health Insurance Reforms (CHIR) at Georgetown University’s Health Policy Institute, who tracks insurance industry reactions to CMS rules, said that the health plans were generally supportive of most provisions of the proposed rule and the direction the administration is taking of increased flexibility and deference to state insurance practices.

“But I was surprised by some of the criticisms, Corlette said in an interview. “At times they appeared to be saying that they like flexibility, but not too much of it, and welcomed some regulation. Their response was not monolithic, but they seemed to agree that some regulation is a good thing to level the playing field and prevent real gaming behavior by some companies.”

Corlette said CMS recognizes that insurers know their business. Historically, she said, CMS listens to industry concerns and makes some adjustments. While the final rule will be implemented Jan. 1, 2019, Corlette said CMS has not announced a release date yet for the final rule.

“I’d expect it soon,” she said. “Because insurance companies and state insurance departments are developing rates, service areas, and plans now and are eager to have this information.” 

Mark Taylor is a freelance writer based in Chicago. 

Publication Date: Thursday, December 21, 2017