PPACA; Market Stabilization, 45 CFR Parts 147, 155, and 156, 82 Fed. Reg. 18346 (Apr. 18, 2017)
Regulations
News Release
HHS has issued regulations intended to stabilize the individual and small group health insurance markets, finalizing the provisions largely as proposed in February 2017. The regulations make changes to the guaranteed-availability rules, Exchange annual open enrollment and special enrollment periods, and other Exchange standards, and are generally effective June 19, 2017. Here are highlights:
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Guaranteed Availability. According to the preamble, HHS has adopted a previously proposed change to its interpretation of guaranteed availability that permits insurers to refuse to enroll individuals owing past-due premiums. Under HHS’s prior interpretation, insurers could not offset payments for new coverage against past-due amounts for previous coverage and then refuse to allow the new enrollment based on failure to pay premiums. Now, to the extent permitted by applicable state law, an insurer may attribute initial premium payments to any past-due premium amounts owed to that insurer (or an insurer in the same controlled group) for coverage in the 12-month period preceding the effective date of the new coverage and may refuse to effectuate the new enrollment until all premiums are paid. The new interpretation applies both inside and outside of the Exchanges in the individual, small group, and large group markets and during applicable open enrollment or special enrollment periods, but due to “operational limitations” it does not apply to the federally facilitated Small Business Health Options Program (SHOP). HHS emphasizes that insurers adopting this policy (as well as other insurers in the same controlled group) must clearly describe the consequences of nonpayment in enrollment materials and notices regarding nonpayment of premiums. [Comment: The preamble describes various technical aspects and limitations of the new interpretation and is required reading for insurers wishing to adopt the interpretation.]
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Exchange Annual Enrollment Period. The annual open enrollment period for obtaining Exchange coverage for the 2018 plan year is shortened—it will begin on November 1, 2017 and end on December 15, 2017, rather than January 31, 2018 as previously announced. The preamble notes that state-based Exchanges may elect to supplement the open enrollment period with a special enrollment period to account for any operational difficulties transitioning to the shorter period. [Comment: The shift to the earlier end date was already set to begin for 2019 coverage.]
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Exchange Special Enrollment Periods. Responding to insurer concerns about potential misuse and abuse of Exchange special enrollment periods, the regulations require all individuals seeking special enrollment in federally facilitated Exchanges and state-based Exchanges using the federal platform to submit documentation of eligibility as part of pre-enrollment verification. Additional changes include significantly limiting the “exceptional circumstances” special enrollment period. Some changes affecting special enrollment periods apply in the individual market only—not in the small group market or the SHOP. The preamble notes that this difference is not unusual, as other rules relating to special enrollment periods apply differently to the individual Exchanges and SHOPs.
Comment: These regulations appear to be a stop-gap measure to ease insurer concerns about the Exchanges and promote market stability. Their release was accompanied by additional items primarily for insurers, including a revised 2018 Actuarial Value Calculator and Methodology designed to allow additional actuarial value flexibility as permitted under the regulations. The regulations notably do not address the reimbursement provided to insurers for cost-sharing reductions. (Certain low-income individuals who enroll in Exchange coverage and qualify for premium tax credits may also qualify for reductions in cost-sharing features such as deductibles and copayments.) Reimbursement for cost-sharing reductions is of growing concern to insurers offering Exchange coverage as litigation continues regarding whether Congress appropriated funds for this purpose.