By Erin Mershon, CQ Roll Call
October 21, 2016 -- Insurance companies are pressing federal health officials for more policy changes to shore up the public exchanges created under President Barack Obama's signature health law.
In comments on the 2018 rules for the marketplace, which are set to be finalized later this year, nearly every insurance company pressed the administration to go further with efforts to tighten the rules around so-called special enrollment periods and to eliminate grace periods for individuals who don't pay their premiums. Insurers argue that the changes are imperative to strengthening the struggling marketplaces set up by the 2010 health law.
It has been a challenging year for the exchanges. Major insurers like UnitedHealth Group, Inc., and Aetna, Inc., announced massive withdrawals from many of the markets in which they had previously participated. Insurers who will still offer plans are requesting rate hikes in the double digits across the country; in some places, the increases top 50 percent.
"The exchange marketplace is showing serious signs of duress," Aetna wrote in its comments. "Most co-ops have collapsed, many major carriers have withdrawn from exchanges or reduced their offerings, enrollment has slowed, and carriers have been forced to request significant premium increases. Now is the time for bold action by CMS to stabilize a marketplace on which millions depend."
The 2018 draft rules, which came out in August, include a long list of changes that the administration hopes will increase flexibility for insurance companies and improve the so-called risk pool, which reflects the balance of sick and healthy consumers in any given insurance market. Many of the changes are aimed at reassuring companies who might be nervous about continuing to participate.
Unsurprisingly, insurers were largely pleased with the proposal. Most of the major companies and industry trade associations complimented the agency on releasing the proposal earlier in the year, noting it will help them better plan ahead and meet state deadlines. Nearly every major insurance company—including America's Health Insurance Plans (AHIP); Anthem, Inc.; the Blue Cross Blue Shield Association; and UnitedHealth Group, Inc.—also liked a proposal to increase flexibility for so-called bronze plans, which cover about 60 percent of consumers' costs. The same insurers praised a provision that makes it easier for them to change their plan offerings or merge with other companies, by tweaking rules that ban plans for five years from re-entering any market they leave.
The insurers also praised a provision that would eliminate a requirement that plans participating in a market also participate in the state's small business marketplace. Centers for Medicare and Medicaid Services (CMS), in the proposed rule, said it recognized that untying the participation might negatively affect the so-called SHOP marketplaces, but added that the current rules might be discouraging individual market participation.
Insurers' Concerns
But insurance companies also pressed for further changes. AHIP, Blue Cross Blue Shield Association, and many individual companies beseeched the agency to keep people who take advantage of a 90-day grace period that gives consumers time to pay their premiums late from signing up for a new plan without paying those outstanding premiums. They argued individuals are gaming the system by not paying their premiums toward the end of the year and stiffing the company, and then signing up for new plans.
CMS, however, has said it expects any changes to that provision will require an act of Congress.
Insurers also nearly uniformly pressed for a more aggressive approach to so-called special enrollment periods (SEPs). Though CMS has tightened the rules around SEPs and instituted a confirmation process for individuals seeking special enrollment, insurers are still clamoring for the agency to verify fully whether individuals are eligible for the SEPs before they actually enroll. In September, CMS offered a pilot project to test the impact of such rules on enrollment and compliance.
Anthem, Aetna, Cigna Corp., and others pushed back against the idea of standardized insurance plans, which CMS first proposed in 2015 to take effect next year. The plans are aimed at helping to simplify the customer experience in the exchanges, to allow consumers to better compare options. The proposed rule for 2018 would expand the framework around the plans, which insurers worry will increase consumer confusion.
Insurers also called on CMS to more slowly phase in a proposal that would change the way insurance companies charge premiums for children. Most of the major companies praised the proposed rules, which aims to keep 21-year-olds from seeing a huge spike in costs when they transition to "adult" premiums—but said they need three years to incorporate the changes.
Insurance companies also asked CMS to more aggressively move Medicare-eligible consumers out of the marketplaces. Right now, some consumers are still purchasing marketplace plans even when they are eligible for the federal program, which the insurers and CMS worry is because customers are confused. In many cases, marketplace coverage is probably more expensive for consumers. And insurers say many of those individuals are unhealthy, which can drive up costs for the companies and healthier consumers.
But the seniors' advocacy group AARP cautioned that the agency should not kick those individuals off their plans wholesale—because some consumers are choosing marketplace coverage over Medicare for a reason.
"We share CMS' goal of encouraging healthy individual market risk pools," they wrote in their comment. "[But] we would be concerned with changes to take away this important ACA consumer right for older adults who may be eligible for, but have made an informed decision not to enroll in, Medicare."
Mostly Praise for Risk Adjustment Changes
The biggest changes in the rule centered on the so-called risk adjustment program, a part of the health law intended to keep insurers from focusing their businesses on healthy consumers at the expense of sick people.
The program, the only one of the law's premium stabilization programs that is permanent, has been increasingly controversial. Small and newer plans who have less experience with the formula and the best ways to maximize payments under it have argued that it unfairly penalizes them and favors larger insurance companies.
In its 2018 proposed rule, CMS included a number of changes to the program aimed to make it more fair and transparent. If the rules take effect, the formula would take into account individuals who enroll mid-year, as well as plans' prescription drug costs.
The so-called CHOICES coalition, which includes co-ops and other small plans and which focuses on risk adjustment, said the changes were welcome but not nearly aggressive enough. They say the current rules discourage insurers from attracting healthy consumers or from offering the bronze plans that those consumers often choose—thus making the risk pools worse.
"It is widely accepted among the insurance industry that young and healthy populations result in negative underwriting gains once risk adjustment is factored in," they wrote. "The result of this leads issuers to avoid attracting the very consumers that this market requires to stay viable."
The proposed rule also included a provision that looks a lot like the health law's reinsurance program, which is set to expire this year. Under the new rules, CMS would tax insurance companies and use those funds to help cover extremely expensive patients whose health needs cost more than $2 million in one year.
Insurers, however, were much less positive about this program. UnitedHealth Group said it would add unnecessary complexity and could be better handled by the private sector. The Alliance of Community Health Plans, which represents smaller plans, said it would disadvantage companies that do a good job managing their high-cost patients. Both AHIP and Cigna also criticized the threshold, saying it might cross-subsidize patients in more expensive geographic locations and would be easy to manipulate. Anthem, meanwhile, praised the idea.
Consumer Groups Ask for More Outreach
Consumer groups like Families USA and Enroll America, for the most part, did not balk at the agency's efforts to stabilize the risk pools and improve the exchange experience for insurance companies. They praised the agency's work on standardized plans, even calling for the agency to make them mandatory in future plan years. They also expressed concerns that the agency might go too far on the issue of special enrollment periods, which they worry could dampen healthy enrollment just as much as it stamps out individuals who might game the system.
Enroll America emphatically called for the agency to spend more on outreach, arguing that the best way to improve the risk pools is to improve enrollment. The group argued CMS should spend about 30 percent of its net revenues from premiums, or 1 percent of consumers' total premium costs, on outreach and education—about double what the agency is currently spending, according to that group.
Meanwhile, both the American Medical Association (AMA) and the Pharmaceutical Research and Manufacturers of America (PhRMA) pushed CMS to include, in a future payment notice, protections to prevent insurers from charging patients the highest cost-sharing for all medicines for a condition. Both groups say that such practices amount to discrimination; the AMA called it "a form of back-door underwriting." CMS has issued some guidance on the issue, but AMA and PhRMA both called for stronger regulation.