Proposed Marketplace Program Integrity Rule: Summary and Implications for States
Sabrina Corlette, Center on Health Insurance Reforms, Georgetown University
On November 9, 2018, the U.S. Department of Health & Human Services (HHS) published a proposed set of new standards for the Affordable Care Act (ACA) marketplaces. The preamble describes these standards as part of HHS’ efforts to improve marketplace “oversight and financial integrity.” If finalized, they will be effective for the 2020 plan year. HHS is asking for comments on the proposal by January 8, 2019.
What is in the Program Integrity Proposed Rule?
HHS articulates the following priorities for its management of the marketplaces:
- Ensuring enrollees receive the correct amount of financial assistance for marketplace coverage, and that no premium tax credits (PTCs) or cost-sharing reduction (CSR) subsidies are used to pay for abortion services;
- Monitoring and effective oversight of the state-based marketplaces (SBMs) to ensure SBMs are meeting federal law requirements in a transparent manner; and
- Conducting oversight of participating health insurers by requiring maintenance of records and participation in investigations and compliance reviews.
In pursuit of these priorities, the proposed rule includes a few significant operational changes:
- Biannual data checks. Requiring SBMs to examine relevant data sources at least twice per year to determine whether enrollees have access to other sources of coverage, such as Medicare, Medicaid, CHIP, or if relevant, the Basic Health Program, that would render them ineligible for PTCs.
- Authorized plan terminations for Medicare beneficiaries. Adding a new field to the federally facilitated marketplace (FFM) application that would allow consumers to authorize the marketplace to receive information about the consumer’s Medicare eligibility and enrollment. The consumer could further allow the marketplace to automatically terminate their marketplace plan if he or she is found to be dually enrolled. HHS encourages the SBMs to adopt similar changes if they have not already done so.
- Separate bills for abortion coverage. Requiring marketplace insurers to separately bill enrollees for the cost of abortion coverage. In other words, enrollees would receive two separate premium bills each month with instructions to remit two separate payments in two separate transactions. Insurers must bill a minimum of $1 per enrollee per month for the abortion coverage, even if the consumer’s overall premium is less than $1/month due to premium tax credits.
- Combating fraud and abuse. Clarifying that the marketplaces may disclose applicants’ personal information to other entities, such as state departments of insurance, in order to investigate and stop fraudulent enrollments by agents and brokers.
For greater detail on the provisions in the proposed rule, see Katie Keith’s summary on Health Affairs.
Implications for States and Consumers
The proposed rule contains changes to marketplace operations that will need to be implemented by SBMs and new requirements for marketplace insurers that will require oversight from both SBMs and state departments of insurance (DOIs). These changes will also impact consumers. Below are a few considerations stakeholders may need to address if the proposed rule is finalized.
Biannual Data Checks
The proposed rule requires SBMs to conduct data matching checks at least twice per year to ensure that enrollees are not eligible for or enrolled in Medicare, Medicaid/CHIP or, if applicable, the Basic Health Program. For SBMs that do not currently do so, they will need to implement the necessary business, operational, and information technology changes to come into compliance by 2020. HHS estimates this will cost approximately $1.74 million per SBM.
However, HHS will deem any SBM that has a shared, integrated eligibility system with their state Medicaid program to be in compliance with this requirement. Similarly, if a SBM has an integrated eligibility system with its Basic Health Program, it will be deemed to be in compliance. After finalizing this rule, HHS will be in touch with the SBMs to assess and confirm which ones will be exempt.
For SBMs that are not exempt and are not currently conducting data matching checks twice yearly, this new requirement will increase administrative costs and, depending on when the rule is finalized and technical specifications are provided, could be difficult to implement in time for the 2020 plan year. Further, although HHS is not proposing specific penalties for SBMs that fail to comply, the agency notes that it could impose a corrective action plan on a SBM that do not meet the new requirements.
HHS predicts that conducting these checks on a more frequent basis will reduce marketplace premiums because the risk profile of Medicare and Medicaid/CHIP beneficiaries tends to be sicker than typical marketplace enrollees. These checks can also help protect enrollees from receiving – and needing to repay – APTC for which they are not eligible.
Authorized Dis-Enrollment for Medicare Beneficiaries
HHS proposes to allow FFM enrollees to authorize the FFM to obtain Medicare eligibility and enrollment information about them. The consumer would further be able to request automatic termination of their marketplace plan if they are found to be enrolled in both programs. Medicare eligibility and enrollment for marketplace consumers has been a frequent source of confusion, placing Medicare-eligible enrollees at risk for premiums for coverage they are not using or potential late enrollment penalties for Medicare Part B coverage. The authorization proposed in this rule could help mitigate problems for some beneficiaries by notifying them of impending Medicare enrollment and reducing incorrect tax credit receipt.
HHS encourages SBMs not already using the single streamlined application to provide this authorization opportunity on their own applications. However, they do not provide details on the operational, technology and data access changes that would need to take place to make this possible.
Separate Payments for Abortion Coverage
Marketplace insurers are responsible for implementing the new “two payments” policy. To ensure insurers’ compliance, HHS declares that if state regulators or marketplaces are not “substantially enforcing” these requirements, HHS will enforce them in the state’s place. Specifically, if state DOIs are not overseeing whether insurers are determining the actuarial value of abortion coverage, separately billing and collecting premiums of at least $1 per enrollee per month for the coverage, and segregating the premiums collected, then HHS will directly enforce the requirements. With respect to insurers operating in FFM states, HHS has put them on notice it will be requiring submission of documentation, including “detailed invoice and billing records” demonstrating compliance with the new requirements.
In addition, marketplace enrollees who fail to pay the abortion-related premium, even if it is only $1, could have their coverage discontinued for non-payment of premiums. SBMs will likely face increased consumer confusion, complaints, and potentially more plan dis-enrollments as a result of this policy.
HHS estimates that 60 insurers across the SBM states currently offer approximately 1,000 plans that include abortion coverage. A likely result of this policy, if finalized, is that many of these insurers will no longer cover abortion services in order to avoid the administrative and compliance hassles. However, in a few SBM states coverage of abortion services is required; these states will need to consider the operational impacts of this requirement as well as the certainty of widespread consumer confusion.
Stay Tuned: More Marketplace Changes are Coming
The Program Integrity proposed rule is not the only set of marketplace policies expected from HHS this fall. The draft 2020 Notice of Benefit & Payment Parameters will be published soon; this annual rule is likely to include a wide range of additional policy and operational changes for the ACA marketplaces, insurance market reforms, and premium stabilization programs. When that happens, State Health & Value Strategies will be ready to provide states with analysis and support.