United States: CMS Aims To Stabilize Exchanges But Does Not Address Issuers' Biggest Questions

Summary

CMS recently released a final rule with the goal of stabilizing Exchange markets for 2018. The agency also issued several significant guidance documents where CMS extended the deadlines for 2018 rate and Exchange qualified health plan application submissions, adopted a good faith compliance standard for 2018 and delegated additional plan certification responsibilities to states. While these steps may provide some comfort for issuers, the agency did not address the most significant areas of issuer concern when it comes to 2018 Exchange participation. Namely, the Final Rule and guidance documents do not resolve ongoing uncertainty regarding cost-sharing reduction funding, the enforcement of the individual mandate or ongoing efforts to repeal the Affordable Care Act.

In Depth

The Centers for Medicare and Medicaid Services (CMS) recently finalized its proposed "market stabilization rule" (Final Rule). The Final Rule is largely consistent with the February 17 proposed rule (Proposed Rule), which we summarized in a previous On the Subject. On the same day the Final Rule was released, the agency also issued several significant guidance documents in which CMS: (i) finalized an extension to the deadlines for 2018 rate and Qualified Health Plan (QHP) application submissions, (ii) adopted a good faith compliance standard for 2018 issuers on the Federally-Facilitated Marketplace (FFM) and (iii) delegated additional QHP certification responsibilities to states.

While these steps may provide some comfort for issuers, the agency did not address the most significant areas of issuer concern when it comes to 2018 Exchange participation. Namely, the Final Rule and guidance documents do not resolve ongoing uncertainty regarding cost-sharing reduction (CSR) funding, the enforcement of the individual mandate, or ongoing efforts to repeal the Affordable Care Act (ACA). With premium rates due soon in many states, there is a narrow window for these outstanding concerns to be addressed before issuers must decide whether to offer products in the Exchanges and at what price.

Summary of Final Rule

In the preamble to the Final Rule, CMS emphasized that the Final Rule is needed to address the recent exit of issuers from the market and increased premium rates in certain counties. The agency explained that "prompt regulatory action is necessary to stabilize the markets for the upcoming plan year, and [we] recognize the importance of clearly communicating these changes in light of confusion and uncertainty for consumers and providers." In the two months since CMS's Proposed Rule, several issuers have announced they are withdrawing from the Exchanges for 2018, underscoring the agency's concern.

The Final Rule addresses several issuer concerns about issuer regulatory burdens related to plan and product development and consumers gaming special enrollment periods and the 90-day grace period. Generally, CMS finalized its rule as proposed and as described in more detail in our summary of the Proposed Rule. One notable change between the Proposed Rule and Final Rule relates to the "guaranteed availability" standard. CMS had proposed to create an exception to guaranteed availability for individuals with unpaid premiums due to the issuer from which the individual is seeking to purchase new coverage. In the Final Rule, CMS extended the policy to all health plan issuers within a controlled group, as defined under sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code. Thus, under the Final Rule, an applicant's unpaid premiums due to an issuer in a controlled group would permit another issuer in the same controlled group to refuse coverage to the applicant.

Additional Guidance Documents

CMS's guidance documents that were released on April 13 are also intended to address issuer uncertainty about 2018 by providing enforcement relief and extending certain federal filing deadlines:

  • Good Faith Compliance Standard. CMS announced that for issuers participating in FFMs, CMS will apply a good faith policy for enforcement during payment year (PY) 2018. The guidance explains that "CMS will not use formal enforcement remedies for non-compliance with QHP certification standards when QHP issuers participating in the FFMs in PY 2018 act in good faith and make reasonable efforts to address concerns in an appropriate time frame." Issuers should note that the good faith policy is limited to compliance with QHP certification standards in FFM states and does not appear to extend to issuers participating in state-based Exchanges or to other federal requirements that are not QHP certification standards, such as Public Health Service Act insurance market reforms or state insurance market standards.
  • Filing Deadlines. The agency finalized rate and QHP application filing deadlines for PY 2018 that were proposed on February 17, 2017. The agency extended the federal rate filing deadlines to the following dates:

    • States without an Effective Rate Review Program. QHP and non-QHP rate filings by the date set by the state, as long as the date is no later than June 1, 2017.
    • States with an Effective Rate Review Program. QHP and non-QHP rate filings are due by the date set by the state, as long as the date is no later than July 17, 2017.
    Although the rate filing deadline was extended to as late as July 17, QHP applications are due by June 21, 2017 and these applications must include QHP Rates Table Templates. The agency will allow updates, corrections, and changes to the QHP Rates Table Template after the initial submission.

    Issuers must still comply with applicable state rate filing deadlines that are earlier than the federal deadline, so the extended federal deadlines only provide relief if states also extend their rate filing deadlines. While deadlines for rate filing vary by state, for PY 2017, 33 states required rate filings prior to June 1. Some states, including New Hampshire and Washington, have already delayed their 2018 rate filing deadlines given the uncertainty regarding CSRs.
  • QHP Application Review. CMS announced that it will give additional responsibility to states during the QHP certification process in FFM states. For all FFM states, CMS will look to states to review licensure and good standing and network adequacy. In FFM states where the state performs plan management functions, the state will also review service area, prescription drug formulary outliers, and non-discrimination in cost-sharing.

Significant Questions Remain

Several significant areas of issuer uncertainty remain unaddressed in the Final Rule and related guidance, and this uncertainty will likely overshadow any stabilizing effect achieved by the Final Rule. Most importantly, CMS and the Trump Administration have not committed to providing CSRs for 2018, which appear to be caught in the middle of the ongoing negotiations over health care reform. Total CSR payments in 2016 were $7 billion. With rate filing deadlines fast approaching, issuers may face the difficult task of pricing 2018 products with no certainty regarding CSR funding.

In addition to the CSR uncertainty, one of President Trump's first acts was to issue an executive order that has created significant uncertainty regarding the continued enforcement of the requirement that most Americans purchase health insurance. More recently, the Internal Revenue Service revised its review of individual tax filings to accept the tax returns of individuals who fail to indicate whether they maintained health insurance for the previous year. Non-enforcement of the individual mandate penalty could lead to fewer healthy individuals in the individual market risk pool, so this uncertainty may affect 2018 Exchange pricing and participation decisions.

Finally, despite Republicans' initial failure to pass the American Health Care Act, House Republicans and President Trump continue to work towards agreement on ACA repeal and replace legislation. Continuing uncertainty regarding the fate of ACA's Exchanges and insurance market reforms will no doubt affect issuer decisions for 2018.

CMS Aims To Stabilize Exchanges But Does Not Address Issuers' Biggest Questions

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.