First Trump-era CMS rule seeks to keep insurers on ACA exchanges

The administration of President Donald Trump has issued its first proposed rule regarding the Affordable Care Act (ACA) insurance exchanges, offering what health policy experts call “insurer-friendly” changes to keep companies from raising premiums or exiting the marketplace.

The changes being proposed by CMS appear to be aimed at gaining insurers’ confidence as Congress considers many different proposals to repeal, repair or replace the ACA.

“This proposal will take steps to stabilize the marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options," CMS Acting Administrator Patrick Conway, MD, said in a statement. "They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”

The regulation proposes many changes insurers have long advocated for, including:

• Extra verification for special enrollment periods. First proposed under the Obama administration, those signing up for coverage outside of the open enrollment period will have to provide extra documentation proving they qualify, such as proof of a change in address. Special enrollment period customers have been shown to have higher utilization, indicating some people are only buying coverage when they know they’ll need services.
• Cutting open enrollment period in half. Instead of lasting through Jan. 31, 2018 (with coverage then beginning in March), the next open enrollment period would run only from Nov. 1 to Dec. 15, with all coverage starting on Jan. 1, 2018.
• Changing minimum coverage standards. The rule proposes to change how much insurer policies have to cover in the different ACA tiers. For example, instead of the current 68-to-72 percent out-of-pocket cost coverage threshold for silver plans, those plans would be allowed as cover as little as 66 percent of costs.
• Changing who determines network adequacy. Under the rule, any question of whether an insurer’s network provides a “reasonable access standard” will be determined by the states, regardless of whether they use the federally-facilitated marketplace or their own.
• Changing the timeline for rate reviews. The rule doesn’t specify how far it will push back deadlines for insurers to submit 2018 to state regulators for approval, but announced its intention to do so to “give issuers flexibility to incorporate benefit changes and maximize the number of coverage options available to patients.”

The changes were quickly praised by the largest lobbying group for insurers, America’s Health Insurance Plans.

“Our commitment is to ensure short-term stability and long-term improvements,” said AHIP President and CEO Marilyn Tavenner. “While we are reviewing the details, we support solutions that address key challenges in the individual market, promote affordability for consumers, and give states and the private sector additional flexibility to meet the needs of consumers.”

Supporters of the ACA outside the administration, however, countered that the proposed rule would only lead to higher costs for consumers. Former Obama-era HHS spokesman Ben Wakana tweeted the changes would lead to higher deductibles on plans which cover fewer services.

The rule itself admitted the change in the actuarial value standard could “lead to more consumers facing increases in out-of-pocket expenses,” as well as reduce tax credits by dropping the price on benchmark silver-level plans. But it predicted it would also lower premiums by 1 to 2 percent and increase enrollment.

Insurers didn’t get all they wanted out of the proposed rule, as it doesn’t change the age ratio allowing insurers to charge older enrollees more than younger ones. That’s locked at 3:1, but early reports indicated the Trump administration believed it could increase that to as much as 3.49:1 without going through Congress.

Gaining insurer confidence as the ACA’s future remains uncertain may be key to preventing an exodus of companies from the exchanges for 2018. Humana became the first major insurer to announce it will be exiting all ACA exchanges in 2018.

Other insurers have expressed the same sort of concerns over the marketplace’s risk pool, with Aetna CEO Mark Bertolini telling the Wall Street Journal he considers the exchanges to be in a “death spiral.” A Feb. 8 study from the Brookings Institute said even with lower enrollment through Healthcare.gov for 2017, the market doesn’t fit the “death spiral” definition.