Feb, 14, 2020

A Mixed Bag for States: The Proposed 2021 Notice of Benefit and Payment Parameters

Sabrina Corlette, Georgetown University’s Center on Health Insurance Reforms

On February 6, 2020, the U.S. Department of Health & Human Services (HHS) published its annual draft rule governing core provisions of the Affordable Care Act (ACA), including the operation of the marketplaces, standards for individual and small-group market health plans, and premium stabilization programs. Referred to as the “Notice of Benefit and Payment Parameters” or NBPP, a detailed summary of the proposed rule is available through Katie Keith’s three-part blog series for Health Affairs, here, here, and here. This expert perspective focuses on several policies that would have implications for state insurance regulation and the operation of the state-based marketplaces (SBMs). Comments on the rule are due March 2, 2020.

Risks for low-income Marketplace consumers who automatically re-enroll

In December 2019, Congress enacted legislation prohibiting HHS from taking two actions in 2021: banning “silver loading” and ending the automatic re-enrollment of qualified enrollees who do not proactively dis-enroll or switch plans during open enrollment. In spite of that ban, HHS is seeking comment on whether it should adjust the automatic re-enrollment process so that any enrollee whose premium tax credit (PTC) would be enough to cover their entire premium would be re-enrolled without any PTC unless they returned to the Marketplace for a new eligibility determination. In 2019, 1.8 million enrollees in states using Healthcare.gov were automatically re-enrolled. Of those, 270,000 received PTCs sufficient to cover their entire premium. HHS argues such a change is needed to ensure that no one receives PTCs to which they are not entitled, and suggests they would conduct outreach to affected enrollees alerting them to the new process and the importance of returning to the Marketplace if they want to maintain their eligibility for PTCs.

State Comments Needed? HHS notes that SBMs currently have flexibility to establish their own annual redetermination processes (though such alternative processes must receive HHS approval), and seeks comment on whether its proposed change to the automatic re-enrollment process should apply only to FFM and SBM-FP states, or to all Marketplaces. Further, all states may wish to comment that reducing bureaucratic hurdles to re-enrollment can help maintain a stable risk pool and thereby lower premiums, help reduce administrative costs for insurers, and prevent gaps in coverage and care.

User Fees for the FFM: Staying the Same or Going Down?

HHS is proposing to keep the user fees for operating the FFM at 2020 levels (3.0 percent for FFM states, 2.5 percent for SBM states using the federal platform (SBM-FPs)). However, HHS is seeking comment on whether they should lower the user fee rate below the current level to reflect their 2021 premium and enrollment projections, as well as their lower operational costs due to cuts in marketing, outreach, consumer assistance, and plan oversight.

State Comments Needed? SBM-FP and FFM states considering a transition to a full SBM may wish to comment on the budget impact of a change in the user fee rates. FFM states may further wish to comment on the impact of the Administration’s past cuts to the marketing and consumer assistance programs.

New Annual Reporting Obligation on Benefit Mandates

HHS is proposing to require states, beginning July 1, 2021, to report to HHS all state benefit mandates and indicate whether any are in addition to the essential health benefits (EHB). If a state does not submit such a report, HHS is proposing to conduct its own determination of which benefits are in addition to EHB in the state. HHS notes that such reporting is a predicate to determining whether any state benefit mandates would trigger the ACA’s requirement that states defray the cost.

State Comments Needed? States may wish to comment on the time and effort that would be associated with complying with such a reporting requirement. Further, HHS seeks comment on whether the state, the Marketplace, or HHS should be the entity responsible for determining whether there will be a defrayal obligation.

New Flexibility for Insurers on Application of Drug Manufacturers’ Coupons

In its 2020 NBPP, HHS allowed insurers to discount an enrollee’s use of drug manufacturers’ coupons to defray cost-sharing associated with brand-name drugs when determining the enrollee’s annual out-of-pocket spending, so long as an equally effective generic is available. HHS is now proposing to enhance this flexibility by allowing insurers to exclude those coupon amounts from the calculation of enrollees’ annual cost-sharing, regardless of whether a generic equivalent is available. HHS further notes they would expect insurers to inform enrollees of their policy with respect to the use of drug coupons and enrollees’ out-of-pocket liability under their plans.

State Comments Needed? HHS notes that this flexibility will only be available to insurers “to the extent consistent with state law.” States that limit insurers’ ability to discount the use of drug coupons in determining enrollees’ annual out-of-pocket liability may wish to comment in support of state authority to regulate fully insured plans in this context. Further, states may wish to encourage HHS to require, instead of encourage, insurers to clearly and prominently disclose to consumers their policies with respect to drug coupons.

Improving Special Enrollment Period (SEPs) Policies

HHS is proposing several changes to SEP policy to enhance consumers’ choices and improve efficiency. These include:

  • Allowing enrollees who become newly ineligible for cost-sharing reduction (CSR) plans to switch from a Silver plan to either a Bronze or a Gold plan.
  • Allowing individuals who are not dependents, but whose dependents are enrolled in a Marketplace plan, and who qualify for a SEP, to be added to their dependent’s current plan or into a separate Marketplace plan.
  • Allowing individuals who enroll through a SEP after the 15th of the month to effectuate coverage on the 1st of the following month (i.e., if the individual enrolls on May 17, their coverage would be effective on June 1). SBMs would be allowed to retain their current coverage effective dates.
  • Allowing individuals who are eligible for retroactive coverage, whether due to a SEP, a favorable appeal decision, or a processing delay, the option to pay the premiums for all the months of retroactive coverage, or only the premium for one month of coverage and receive prospective coverage only.
State Comments Needed? States may wish to applaud these SEP policy changes for improving consumer choices, reducing potential consumer confusion, and lowering the risk of gaps in coverage. SBMs may want to comment on any operational issues with respect to implementing any of the above proposed policies for plan year 2021.

Quality Rating: Some (Limited) State Flexibility

In August 2019, HHS extended its Quality Rating Information pilot to all Marketplaces for plan year 2020. Up to that time, SBMs had been permitted to display their own quality rating information. The proposed NBPP provides that SBMs have some flexibility to customize the display of quality rating information, but they must use the quality ratings that have been developed by HHS.

State Comment Needed? SBMs that have developed state-specific customization of their quality rating information to reflect local priorities may wish to comment on the importance of ensuring that those local priorities are reflected in plans’ ratings.  

Program Integrity Changes to Improve Efficiency

HHS is proposing several changes to periodic data matching (PDM) and other program integrity processes to improve efficiencies. These include:

  • Giving SBMs greater flexibility to verify applicants’ eligibility for or enrollment in employer-sponsored coverage through their own risk assessments. HHS is conducting a study to support its own risk assessment and is encouraging SBMs to do the same.
  • Allowing SBMs not to re-determine eligibility for subsidies for enrollees who are (1) dually enrolled in Marketplace and Medicare, Medicaid/CHIP or the Basic Health Plan, (2) have not responded to update their information within 30 days, and (3) consent to the Marketplace terminating their coverage if data show they are dually enrolled or eligible.
  • Allowing SBMs, when they identify a deceased enrollee through PDM, to terminate coverage retroactively to the date of death, without undertaking a redetermination of eligibility.

HHS also seeks comment from states on whether applicants who request eligibility pending an appeal should be limited in their choice of insurer or plan. They also ask for comment on whether a timeliness standard should be imposed on such requests, and whether SBMs should have flexibility to determine their own timeliness standards.

State Comment Needed? SBMs may wish to comment on the proposed new flexibility and program integrity efficiencies.