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New CMS Rules Shine Light on ACA Implementation
The Centers for Medicare & Medicaid Services (CMS) released a proposed rule and other guidance documents March 14, 2014, in a continued effort to implement the Affordable Care Act (ACA). The two documents most important to Brokers are the 2015 final annual letter to issuers and a proposed rule entitled, “Patient Protection and Affordable Care Act: Exchange and Insurance Market Standards,” which addresses many top issues regarding health plan offerings – both on and off the Exchanges.
New Rule on Exchanges and Market Reforms
The proposed rule, which is centered on implementation of market reform provisions of the ACA and Exchange plans, offers new information essential to Brokers. One important change is to the risk corridors program, which was instituted as a way to cushion issuers from excessive gains or losses due to uncertainty surrounding premium rates. In conjunction with changes to the risk corridor program, the rule makes a temporary change to the administrative cost ceiling. Currently, as a result of the Medical Loss Ratio (MLR), insurers are allowed to have 20% of their costs be administrative, with the other 80% devoted to claims. That number has been increased to 22% for 2015 under the proposal to accommodate the increased burden issuers have faced in complying with the law and adjusting to the Exchanges. Issuers now have some more resources to devote to administrative costs next year, including Broker compensation.
Navigator Program Changes
The proposed rule makes several changes to navigator and other consumer assistance programs within the ACA. First, the federal government would be able to investigate and impose civil penalties on navigators or other assisters (and their organizations) for failing to comply with federal rules. Rules include providing false information in enrollment or favoring certain health plans, among others. These penalties could only be issued to navigators operating through federal or partnership Exchanges.
The proposed rule also clearly defines how states may regulate navigators and consumer assistance personnel. The rule prohibits regulations that make it impossible for navigators to do their jobs, but allows for fingerprinting, background checks and other safeguards that have been passed in some states. States may not, however, require navigators and assisters to refer clients to Brokers, prevent them from servicing business owners in the SHOP Exchange, prevent them from offering advice on benefits, or require them to be Brokers or carry errors or omissions insurance. Federal rules also prohibit navigators, certified application counselors and non-navigator assisters from seeking payment from consumers for enrollment. Navigator and non-navigator assistance organizations would also be unable to pay their individual navigators or assisters on a per-consumer or per-enrollment basis.
There are additional restrictions on navigators and other assisters, such as going door-to-door, conducting cold calls to enroll consumers, or providing significant promotional materials to encourage enrollment.
These changes come following numerous state laws meant to regulate these workers. Proponents of these laws claim that they provide important consumer protections while opponents claim that they are a way to undermine the ACA by depressing enrollment.
The proposal also contains some SHOP Exchange updates. Individual states may request a one-year delay of employee choice (allowing an employer to choose one plan to offer employees instead) if allowing employee choice would either lead to significant adverse selection in the small group market, or if an inadequate number of Qualified Health Plans exists to create competition within the SHOP Exchange. The rule also creates a period of time (the same as the individual open enrolment in 2014-2015) in which an employer could change his contribution level, coverage offering, and method by which plans are chosen. Thirty-day minimum periods to choose a plan in the SHOP also would be eliminated, allowing employers and their employees more time to choose plans.
Other changes in the law include the start of implementation of an Exchange quality rating system where QHPs would be rated based on federal analysis, as well as other minor changes to the MLR.
The several-hundred-page proposed rule is subject to public comment before being finalized, and Brokers should seek legal assistance for more information on the provisions being implemented in the rule.
Final Annual Letter to Issuers
In addition to the rule, CMS also finalized its annual letter to insurers, which highlights areas of importance regarding Exchanges in the coming year. CMS discusses QHP certification for next year, noting that state-based Exchanges will manage their own certification approvals while plans in federally facilitated Exchanges (FFEs) will be subject to a joint review process QHP applications will be due between May 27 and June 27, with final approvals set to take place between October 14 and November 3. Open enrollment for 2015 will begin November 15, 2014.
One major complaint of plans offered through many Exchanges is the limited nature of the networks. The annual letter announces that CMS will review networks of all QHPs to ensure enrollees have a wider choice of hospitals and providers from which to choose. In addition to the general focus on networks, CMS also will raise the minimum level of provider availability within essential community providers, which serve largely low-income Americans.
The letter also recommends Brokers not include the words “Exchange” or “Marketplace” in their names. Further, if Brokers enroll individuals through a website other than a public Exchange, they must provide a disclaimer that their site is not the public Exchange and must provide a link to the appropriate Exchange.
CMS also addresses some issues with the SHOP Exchanges. In addition to allowing states to request a one-year delay in employee choice (as discussed earlier), the option of employee choice is required by January 1, 2015. If a state does not receive a delay, employee choice will allow an employer to offer multiple plans within a metal level, or a single QHP.
The letter also describes the use of “single bill, single payment under premium aggregation.” Under the ACA, employers with plans beginning on January 1, 2015, will be able to submit one payment from one bill directly to the federal SHOP Exchange. This avoids the hassle of dealing with multiple issuers resulting from the employee choice provision. The single bill will be generated around the 10th of each month.
We will continue to keep you apprised of new developments in ACA implementation so you can serve your clients as well as possible. In the meantime, please visit www.benefitmall.com to view past blogs and Legislative Alerts. Or you may visit www.HealthcareExchange.com for more blog posts, polls, surveys and numerous resources.
It’s important to note that the federal health care reform initiative discussed in this blog is referred to by several different acronyms including ACA, PPACA and ObamaCare. No matter what the term, BenefitMall will continue tracking and reporting on key health care reform trends that are impacting Brokers, payroll personnel and key stakeholders.
The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.