CMS Issues Notice on Improvements to 2017 Health Insurance Marketplace

The centers for Medicare & Medicaid Services (CMS) has issued their final annual Notice of Benefit and Payment Parameters for 2017.

The notice includes payment parameters and looks to establish new standards that help improve, stabilize, and promote continuity in the Marketplace with a goal of ensuring that health care coverage is both accessible and affordable to consumers.

The rule addresses provisions that include helping consumers with surprise out-of-network costs at in-network facilities, notifying consumers of provider network changes, providing the option to insurance companies for plans with standardized cost-sharing structures, and improving the risk adjustment formula.

“As the Health Insurance Marketplace continues to mature, we are able to focus on strategies that help it work even better for consumers and insurers,” said CEO of the Health Insurance Marketplaces, Kevin Counihan. “That means making targeted improvements that keep the Marketplace working smoothly for consumers and keeps the Marketplace an attractive place to do business.”

Payment Parameters:

• Risk Adjustment Model Recalibration — Will try and reduce data lag by updating the risk factors to reflect the years of 2012, 2013, and 2014 of claims data. Specialty and traditional drug expenditures will trend at separate growth rates from medical expenditures to help alleviate the lag in data.
• Smaller Issuer Rule for Default Risk Adjustment Charge — For small issuers (500 or fewer billable member months) a separate, lower default risk adjustment charge was finalized for the 2016 benefit year.
• Default Risk Adjustment Charge — The default risk adjustment charge will be raised from the 75^th percentile to the 90^th of absolute transfers nationwide as a percent of stage average premium.
• FFM User Fee for 2017 — A Federally-facilitated Marketplaces (FFM) user fee will be charged at 3.5% of premium, which will help cover user fee eligible costs. Issuers that operate in a State-based Marketplace on the Federal platform (SBM-FP) will be charged a reduced user fee rate of 1.5% of premium for 2017. Additional flexibility will be allowed for the assessment of these charges.
• Premium Adjustment Percentage — For the 2017 benefit year the adjustment is about 13.3% (average annual rate of 4.3%) and will cover increase over the 3 year period from 2014 to 2017.
• Annual Limitation on Cost Sharing — The maximum on cost sharing is now $7,150 for individual coverage and $14,300 for family coverage.

Market Rules:

• Student Health Insurance Plans — Based on a bona fide school related classification — not health status – issuers can establish 1 or more separate risk pools for each college or university. Premium rates for risk pools reflect claims experience of the person in the risk pool and adjustments must be actuarially justified. The requirement for student health insurance plans to offer coverage with a metal level will be eliminated, and plans will be required to now offer and actuarial value of at least 60%.
• Rate Review — Regardless of proposed rate increases, decreases, or no changes in rates, issuers are required to submit the unified rate review template (URRT) for all single risk pool products in the person’s small group markets.

Eligibility, Enrollment, and Benefits:

• Annual Open Enrollment Period — For benefit years 2017 and 2018, the open enrollment period for individual marketplaces will be finalized to correspond with the 2016 open enrollment. Open enrollment period for 2019 benefit year and after is finalized.
• State-based Marketplaces Using the Federal Platform — In the future states might want to use the federal information technology (IT) platform for eligibility and enrollment instead of SBMs, so the SBM-FPs model will be used for these states. Also SBM-FPs can enforce certain QHP and QHP issuer requirements.
• Standardized Options — Standardized options will give consumers the chance to easily compare plans by different issuers within a metal level in order to simplify the shopping experience.
• Network Adequacy (Continuity of Care) — Continuity of care for QHPs on FFMs that will require an issuer to give written notice to enrollees seen on a regular basis of the discontinuation of a provider 30 days prior to effective change. When a provider is terminated without cause, an issuer is required to allow enrollees in active treatment until the treatment is complete or 90 days at in-network costs-sharing rates.
• Network Adequacy (Cost Sharing) — Starting in 2018 issuers will be required to count the cost sharing that is charged to the enrollee for using certain out-of-network services that were provided at an in-network facility. Exceptions are made for issuers that proved written notice to enrollees.
• Network Adequacy (Transparency) — When selecting a plan, a rating of QHP’s relative network coverage will be provided by HealthCare.gov, and hopes to start in 2017.
• Third-party Payments — Interim Final rule regarding third party payments (IFR) was updated to clarify that “State and Federal Government programs” include programs in the political subdivision of the state. Also, downstream entities like PBMs are required to accept third party cost-sharing payments.
• QHP Patient Safety Requirements — QHP issuer offering coverage through Marketplaces can only begin a contract with a hospital that has more than 50 beds if the hospital participates in Patient Safety Organization, or meets the reasonable exception standard by implementing and evidence based initiative to improve health care quality.
• SHOP — A third employee choice option is being added and employers can have the choice of offering all plans across actuarial value levels from an issuer.
• Post-enrollment Assistance and Other Requirements for Assisters — FFM Navigators duties will be expanded to include specific post-enrollment and other assistance activities. Navigators and non-Navigator assistance personal are required to complete their training prior to outreach and education activities.
• Direct Enrollment Enhancements and Agent and Broker FFM Enforcement — A plan will be established that supports the use of expanded direct enrollment pathway options for web brokers and QHP issuers. Also standards will be set for suspending and terminating agreements made between agents and brokers and the FFM in cases of abusive conduct or fraud.

Open enrollment for 2017 and 2018 coverage years will start on November 1 of the previous year and run through January 31 of the overage year. The 2019 coverage year and on will begin on November 1 and end on December 15 of the preceding year.

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