Final Round of Rulemaking for 2022 Affordable Care Act Marketplaces: Implications for States

Sabrina Corlette, Georgetown University Center on Health Insurance Reforms 

The annual regulatory process establishing standards and rules for the Affordable Care Act (ACA) marketplaces and insurance reforms has had its twists and turns this year. The U.S. Departments of Health & Human Services (HHS) and Treasury (the Departments) first proposed the 2022 Notice of Benefit and Payment Parameters (NBPP) in December 2020 and finalized some, but not all, of its provisions on January 19, 2021. In April 2021, the new administration finalized the remaining provisions, but signaled that it would chart a new direction for the ACA in a future rule. Indeed, just three months later, the Departments released a proposed rule with several new policies to expand marketplace enrollment opportunities and increase consumer assistance. It also proposed reversing several policies established by the prior administration. On September 17, 2021, the Departments finalized those proposals and announced a significant expansion of their oversight of health plans’ provider networks. A full summary of the final rule is on the Health Affairs blog available here. This post reviews provisions of the rule of particular import to the state-based marketplaces (SBMs) and state insurance regulators.

Building on the Affordable Care Act: Expanding Enrollment Opportunities, Boosting Consumer Assistance and Outreach, and Enhancing Plan Oversight

Open and Special Enrollment Periods

The administration is moving forward with its proposal to extend the annual open enrollment period for the ACA marketplaces by an additional month, so that instead of closing on December 15 it will end on January 15. While the proposed rule would have extended the open enrollment period in both the federally facilitated marketplace (FFM) and the state-based marketplaces (SBMs), the final rule allows SBMs to set their own end dates, so long as their open enrollment period ends no sooner than December 15. Some SBMs had requested this flexibility because of operational burdens associated with adjusting their systems to change the open enrollment period dates.

The administration is also finalizing a proposal to create a new monthly special enrollment period (SEP) for individuals with household income under 150 percent of the federal poverty line ($19,140 for an individual; $39,300 for a family of four), and who are eligible for advanced premium tax credits (APTC). HHS estimates that this new SEP will result in some increased adverse selection risk, causing insurers to increase premiums by approximately 0.5 to 2 percent.

To mitigate the adverse selection risk, in a modification from the original proposal, this SEP would only be available during periods of time when these individuals are eligible for a premium contribution percentage of zero. Thus, this SEP will be available in plan year 2022 because the American Rescue Plan Act reduced the required premium contribution percentage to zero for individuals up to 150 percent of FPL. If this changes in future years, this SEP would not be applicable. The SEP would also not be available outside of the ACA marketplaces, because people purchasing directly from insurers are not eligible for APTCs. SBMs may, but are not required, to implement this SEP.

HHS has also clarified that individuals may qualify for the SEP for those newly ineligible for APTCs if they meet the APTC eligibility rules but actually qualify for zero dollars per month because their expected contribution exceeds the benchmark plan premium. This frequently occurs when a higher-income or younger individual lives in an area where premium costs are relatively low. While some SBMs commented that this clarification aligns with their current understanding of the SEP, one SBM raised concerns that this policy “clarification” will require them to make significant system and messaging adjustments.

Boosting Consumer Assistance and Outreach: Increasing User Fees and Expanding Navigator Duties

User Fees

HHS is increasing the 2022 user fees for the FFM from 2.25 to 2.75 percent and for the SBMs that use the federal platform from 1.75 to 2.25 percent. The FFM’s 2022 user fees will be closer to the 3.0 percent user fee that the administration has charged insurers in plan years 2020 and 2021 (prior to 2020, the FFM’s user fee was 3.5 percent). The administration notes that most of the comments it received supported the user fee increase, and argues that it is necessary in part to finance increased investments in the Navigator program, outreach, and marketing.

Navigator Duties

The final rule reinstitutes requirements that Navigators in the FFM assist consumers with a range of post-enrollment issues, including the filing of appeals for marketplace eligibility determinations and the reconciliation of advance premium tax credits. Navigators will also be required to help improve consumers’ health insurance literacy by educating them on how to use their coverage. The FFM has significantly expanded Navigator funding this year, issuing $80 million in grants to Navigator organizations in 30 states.

Increased Oversight of Network Adequacy

In its 2019 NBPP, the administration established a policy of deference to states for the oversight and certification of marketplace plans’ network adequacy. A federal court vacated this policy in March of 2021 and required HHS to reinstate its oversight activities. While HHS indicates in this final rule that it will not be able to do so until plan year 2023, it did outline the approach it intends to take. In particular, HHS announced:

• It will promulgate standards that “promote health equity,” such as requiring provider directories to include information about the race/ethnicity, language(s) spoken, accessibility, and office hours of providers.
• It will consider adopting “time and distance” standards at the county level to assess whether plan networks offer reasonable access to in-network providers. These standards will be informed by those used in the oversight of Medicare Advantage plans.
• It will examine whether network adequacy is achieved by reviewing the numbers and types of providers that enrollees generally use and/or have historically been the subject of network adequacy concerns, such as behavioral health providers.
• It will take into account local geographical and topographical features that affect real-world access, such as bodies of water and mountains, as well as usage of various modes of travel, such as cars and public transit.
• It will “coordinate closely” with states to address compliance issues, eliminate duplication of effort, and reduce stakeholder burden.

Reversing Policies of the Prior Administration

The final rule reverses several policies of the prior administration that were finalized in January of 2021, including the option for states to pursue a “Direct Enrollment” marketplace and to seek Section 1332 waivers under more relaxed standards for coverage access and comprehensiveness. The rule also rescinds the prior administration’s requirement that plan enrollees receive a separate bill for the cost of covering abortion services.

Direct Enrollment Marketplaces

The final rule repeals “direct enrollment” marketplaces, which would enable states to eschew government-sponsored portals like HealthCare.gov and shift enrollment to private sector entities such as insurers and web brokers. In doing so, HHS noted that there have been significant changes in the administration’s policy priorities, as well as a “general lack of interest” among states in this new option. They further noted that they continue to offer enhanced direct enrollment options via the FFM, and that the SBMs may also pursue such complementary enrollment pathways if they choose. The “overwhelming majority” of public comments supported eliminating the Direct Enrollment marketplace option.

Section 1332 Waivers

The administration has finalized regulations to shape review of Section 1332 state innovation waivers. The new standards generally align with federal guidance issued in 2015. Specifically, it will assess states’ waiver applications based on the actual number of people projected to be enrolled in affordable, comprehensive coverage under the waiver compared to the number absent the waiver. The prior administration had loosened this requirement by allowing the assessment to be based on who would have access to coverage that is as comprehensive and affordable, regardless of the actual number enrolled. The new regulations further define “coverage” to, at minimum, meet the ACA’s definition of minimum essential coverage, while the prior administration had adopted a looser definition.

The administration will also assess the effect of any Section 1332 waiver proposal on “vulnerable and underserved residents, including low-income individuals, older adults, those with serious health issues or who have a greater risk of developing serious health issues, and people of color and others who have been historically underserved marginalized, and adversely affected by persistent poverty and inequality.” Waiver proposals will be “highly unlikely” to be approved if they reduce the affordability or numbers of covered for these populations that have been disenfranchised, even if it would maintain or improve affordability or maintain coverage levels in the aggregate.

The administration received several comments asking it to revisit Section 1332’s “deficit neutrality” guardrail. Specifically, some public comments expressed concerns that the deficit neutrality assessment is “overly strict and narrow” and prevents states from pursuing innovative new models to expand coverage. However, in this final rule the administration declined to make any changes.

HHS and Treasury also finalized processes for states to submit 1332 waiver amendments and extensions, and to allow for an expedited process in the event of an emergent situation, such as another public health crisis.

Ending the 2-bill Policy for Abortion Services

The final rule eliminates a requirement that marketplace insurers send a separate bill to enrollees for the portion of the premium attributable to coverage of certain abortion services. Instead, insurers will have some flexibility to determine how they will comply with the ACA’s requirement that abortion services be paid for separately.