Round III of the 2022 Notice of Benefit & Payment Parameters: Implications for States
Sabrina Corlette, Georgetown University’s Center on Health Insurance Reforms
The U.S. Departments of Health & Human Services (HHS) and Treasury have released a proposed rule governing the Affordable Care Act (ACA) health insurance marketplaces and insurance standards for plan year 2022. The rule reverses several provisions that were finalized on January 19, 2021 by the previous administration. It also includes new proposals designed to achieve several goals outlined in Executive Order 14009, which called on federal agencies to protect and strengthen the ACA, and Executive Order 13985, which called for polices that advance equity for all, including people of color and those who have been historically underserved. A full summary of the proposals is provided on the Health Affairs blog, here. This post reviews provisions of the proposed rule of particular import to the state-based marketplaces (SBMs) and state insurance regulators. Comments on the proposed rule are due by July 28, 2021.
Reversing and Updating Prior Policy: User Fees, Direct Enrollment Exchanges, and 1332 Waivers
User Fee Changes
In its January 19 final rule, the administration lowered user fees for the federally facilitated marketplace (FFM) to 2.25 percent and for state-based marketplaces using the federal platform (SBM-FPs) to 1.75 percent. Here, the administration would establish new user fees of 2.75 percent for the FFM and 2.25 percent for the SBM-FPs. The agencies note that the increase is necessary to finance the operations of the FFM, in part due to increased investments in the Navigator program, outreach, and marketing.
Direct Enrollment Exchanges
In its January 19 final rule, the administration created an option for states to establish “direct enrollment” exchanges, which would work with private sector entities such as insurers and web brokers to operate enrollment websites through which consumers could apply for coverage and receive premium tax credits and cost-sharing reduction (CSR) plans. The proposed rule would repeal this option, noting that the administration’s priorities under Executive Orders 14009 and 13985 have shifted, and that implementing this option would detract from the resources necessary to implement the ACA-related provisions of the American Rescue Plan.
1332 Waivers: Reversals and Updates to Prior Policies
The administration finds that federal guidance issued in 2018 as well as provisions of the January 19 final rule governing the standards applicable to Section 1332 waiver applications are inconsistent with its priorities and Executive Orders 14009 and 13985. It therefore is proposing to revoke some interpretations of the prior administration, while also adding some new rules relating to waiver extensions and amendments; the administration expects the impact of these changes on states to be “minimal.” Going forward, the administration encourages states to develop waiver proposals that will “diminish barriers to…health insurance coverage for people of color and other underserved groups,” and to consider programs that “increase plan options for comprehensive coverage, reduce premiums, improve affordability, as well as address social determinants of health.”
Returning to 2015 Guidance on the Statutory “Guardrails”
The administration proposes new policies with respect to the ACA’s guardrails for Section 1332 waivers that would supersede and rescind those adopted in the 2018 guidance and the January 19 final rule. For the most part, the new policies are consistent with federal guidance issued in 2015. Specifically, the 2015 guidance required an assessment of states’ waiver applications based on the actual number of people projected to be enrolled in affordable, comprehensive coverage compared to the number enrolled absent the waiver. The 2018 guidance and January 19 final rule loosened this requirement by allowing the assessment to be based on who would have access to coverage that is as comprehensive and affordable as would have been available without the waiver, regardless of the actual number enrolled. This administration takes the view that the comprehensiveness and affordability guardrails should focus on what individuals actually purchase, rather than what they have access to. It further defines “coverage” to, at minimum, meet the ACA’s standards for minimum essential coverage, while the prior administration had adopted a looser definition.
The administration will further 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 does not propose any changes to the standards for assessing whether a state proposal meets the “deficit neutrality” guardrail in Section 1332.
Waiver Approval: Review Considerations and Process
Although the ACA permits states to submit coordinated Section 1332 and Section 1115 Medicaid waivers, the administration does not factor into the Section1332 waiver assessment any savings that might be accrued under a proposed Medicaid or CHIP Section 1115 waiver. However, in a continuation of longstanding policy, they would take into account any changes in Medicaid or CHIP coverage or federal spending that result directly from the proposed Section 1332 waiver.
The administration proposes that the amount of pass-through funding allotted to a state would equal the amount of any premium tax credits, small business tax credits, or cost-sharing reductions that individuals and small employers would otherwise be eligible for, absent the waiver. This amount will be determined annually by HHS and Treasury. In a continuation of longstanding policy, any amount the state receives in pass-through funding must be used to implement the state’s Section 1332 waiver plan.
Waiver Amendments and Extensions
The proposed rule sets up processes for states to apply for Section 1332 waiver amendments and extensions. A state might submit an amendment when it has an approved waiver in place and wants to make changes that could impact any of the statutory guardrails and is not otherwise allowable under the specific terms and conditions of the approved waiver. To receive approval of an amendment, the state would need to submit a letter of intent 15 months prior to the program going into effect, and submit the proposed amendment within nine months of it going into effect. Under the ACA, states’ Section 1332 waiver programs expire within five years unless the state requests an extension. This proposed rule provides the process for those extension requests. In general, the extension request would be deemed granted within 90 days, unless HHS and Treasury deny the request or seek more information from the state.
Open and Special Enrollment Periods
The administration is proposing to extend the open enrollment period for the 2022 plan year by one month, to last from November 1 to January 15. They anticipate that this change would apply to both the FFM and SBMs, but request comments from states about SBM flexibility as well as any potential operational challenges.
The administration further is proposing to create a new monthly special enrollment period (SEP) for individuals eligible for premium tax credits whose household income is under 150 percent of the federal poverty line (or $19,140 annual income for an individual, $39,300 for a family of four). SBMs would have the option, but would not be required, to implement this new SEP. The administration further proposes that current enrollees and their dependents at this income level be permitted to switch to a silver level plan. Insurers that offer plans outside the health insurance marketplaces would not be required to provide this SEP. SBMs are encouraged to submit comments on methods to verify consumers’ eligibility for this SEP, as well as operational considerations and whether it will be possible to implement this SEP in time for the 2022 plan year.
The proposed rule also seeks to expand eligibility for an existing SEP for enrollees who are newly eligible or ineligible for premium tax credits. Individuals will qualify as newly “ineligible” for premium tax credits if they are technically eligible but in practice they receive zero dollars per month in such tax credits. The administration seeks comments from SBMs on whether this definition is consistent with their current policies, and if not whether they would have any concerns about the burden of implementing this change.
In March 2021, a federal court ruled that several provisions of a 2019 federal marketplace rules must be vacated. Of particular note, the court found that HHS must reinstate the standardized plan options that had previously been offered on HealthCare.gov. In this proposed rule, the agency notes that it intends to do so for plan year 2023, and asks for comments from states regarding how unique state cost-sharing laws could affect the standardized plan designs.
Expanded Navigator Duties
The proposed rule would reinstitute a requirement 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 administration notes that the FFM has significantly expanded Navigator funding this year, enabling them to take on an expanded role.
Ending the 2-bill Policy for Abortion Services
The administration proposes to rescind a regulation that would require marketplace insurers to send a separate bill to enrollees for the portion of the premium attributable to coverage of certain abortion services. Instead, they propose to revert to prior policy that gives insurers flexibility to determine how they will comply with the ACA’s requirement that abortion services be paid for separately.