6 ACA exchange reforms suggested by AHA

In a letter to HHS Secretary Sylvia Burwell, the American Hospital Association suggested several possible changes to the Affordable Care Act’s health insurance exchanges, arguing “swift action” is needed to stabilize the markets.

With major insurers like UnitedHealth, Humana and Aetna scaling back their participation in the exchanges, marketplace customers in nearly 36 percent of market rating regions in the U.S. will be limited to a single insurer’s plans for 2017. AHA President and CEO Richard Pollack blamed the “significant losses” which led insurers to scale back on “inaccurate assumptions about the needs of the newly enrolled in the first years of the marketplaces” and state regulators’ reluctance to “allow insurers to raise rates.”

“In order to stabilize the marketplaces, we must focus on getting plan pricing right and balancing the risk pool by enrolling healthier individuals,” Pollack said. “While the states play a significant role in approving rates, the administration should use its levers to improve the risk pools and better adjust reimbursement based on enrollee risk.”

To achieve those goals, Pollack proposed six actions:

1. Further restrictions on special enrollment periods (SEPs). While CMS has already proposed greater restrictions on customers buying coverage outside of open enrollment periods, like requiring documentation on eligibility, Pollack suggested both a “pre-approval” process and making enrollment effective on the date of application. He said this would cut down on people using SEPs to delay coverage until they need health care services.
2. Use prescription drug and partial year enrollment data in determining risk-adjustment payments.
3. Loosen restrictions on third-party payment of premiums. CMS had recently attacked the practice of customers’ premiums being paid by third-party groups as an attempt by some to steer eligible consumers away from Medicare and Medicaid to boost hospital reimbursement. Pollack said third-party payments should be allowed for people not eligible for those programs, provided the subsidies are based on financial need and cover an entire plan year.
4. Improve risk pool through youth outreach. Pollack said “younger, Hispanic adults” should be a special focus for HHS, which in June had outlined its plans to attract younger, healthier people to the exchanges.
5. Support “state-level solutions.” Pollack mentioned Alaska’s state-run reinsurance program as one example which he said helped stabilize a troubled insurance exchange.
6. Work with state insurance regulators to “promote fair and stable plan pricing.” Pollack said double-digit increases in premiums—with some states approving average hikes of up to 62 percent—may be a “one-time correction” to make up for underpricing plans in 2014 and 2015. Resisting those big hikes would only continue the cycle, according to Pollack, but he encouraged CMS to help states better evaluate rate requests by making plans’ financial reporting more consistent.