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CMS Finalizes Rules Governing Health Insurance Marketplaces

April 10, 2018

The Centers for Medicare & Medicaid Services (CMS) yesterday issued its final rule impacting insurance plans offered on the health insurance marketplaces under the Affordable Care Act (ACA). CMS Administrator Seema Verma outlined in a press statement that this rule is intended to “give states new tools to stabilize their health insurance markets” and provide consumers with expanded choice.

Components of the final rule include:

  • Changing the standards by which plans meet the requirements for essential health benefits (EHB). While the ten EHBs will not change, states will be able to choose from 50 EHB benchmark plans, or provide specific category coverage from a variety of in-state and out-of-state options. EHB categories include hospitalization, maternity and newborn care, mental health and substance use disorder services, and preventive care.
  • Shifting qualified health plan oversight to the states. As a result of this change, states now will be responsible for ensuring that health plans have enough providers within their networks.
  • Allowing states to request adjustments to their medical loss ratio (MLR) standards. Under the current MLR standards, payors may spend no more than 20 percent of income from premiums on costs not associated with health care delivery or quality improvement.
  • Changing enrollment practices for Small Business Health Options Program (SHOP) participants. Currently, SHOP participants are limited to purchasing coverage through their employer. Under the new rule, participants will be permitted to purchase insurance through agents and brokers.
  • Raising the threshold by which rate premium increases are scrutinized. Currently, rate increases of more than 10 percent are subject to review; under the new rule, rates of more than 15 percent will be subject to scrutiny.

CMS also released new guidance that expands the ability for individuals to receive “hardship exemptions”—a waiver of the penalties for not having insurance coverage (this provision is also known as the individual mandate). Consumers in counties with no insurance issuer or only one, will qualify for relief from having to pay the penalty for not having coverage. And individuals facing personal circumstances that require specialty care that is not covered will be eligible for a hardship exemption.

CMS also issued a bulletin that extends the transitional policy for one additional year, permitting certain plans that do not meet the ACA coverage requirements to remain in place through 2019.

These new policies come in the wake of a series of actions by the Trump Administration, aimed to roll back provisions of the ACA, including:

  • During October, 2017, President Trump issued an executive order directing the appropriate agencies to promote health insurance options that do not have to adhere to all of the requirements and protections under the ACA 
  • The Administration cancelled future cost-sharing reduction (CSR) subsidies. CSRs provided financial assistance to insurers to lower the price of purchasing certain plans on the health insurance marketplace
  • The Administration issued proposed rules to broaden the use of Associated Health Plans and expand the duration of short-term health plans to up to 364 days, allowing consumers to purchase cheaper, less-comprehensive plans that are not subject to the ACA’s key protections

The ACA has helped more than 1.1 million Pennsylvanians access affordable, reliable, comprehensive health care coverage through the insurance marketplace, Medicaid expansion, and dependent coverage.

The ACA also has provided key consumer protections that prevent insurers from turning away consumers with preexisting conditions, or charging them more for coverage. These protections have helped millions of Pennsylvanians access affordable, comprehensive, and preventive health care. These vital services only have become more important as Pennsylvania works to address the impacts of the opioid crisis:  Medicaid expansion has helped more than 175,000 Pennsylvanians access crucial drug and alcohol treatment services.

Throughout the debate about the future of the ACA, HAP has held as its guiding principles the need to preserve Pennsylvanians’ access to affordable, reliable comprehensive health care coverage. HAP has worked with Pennsylvania’s hospital and provider community to communicate the importance of continued Congressional support for measures to promote access to health care and stabilize the insurance marketplace.

HAP is carefully reviewing the potential impacts of these new policies and will provide updates to members as they arise. For more information about the CMS rule, contact Jolene Calla, vice president, health care finance and insurance. For more information about HAP’s federal legislative advocacy, please contact Laura Stevens Kent, vice president, federal legislative advocacy.

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