UPDATE: 1/8/19 – Links to Families USA’s comments on the proposed Program Integrity Rule are available here.
On November 7, 2018—the morning after Election Day—the Trump administration proposed an “Exchange Program Integrity” rule governing coverage provided in health insurance marketplaces. The proposal has five main parts. Some appear useful. Some changes offer potential help to consumers but require changes. Others threaten to create serious harm. Comments are due by January 8, 2019, at 5 pm.
A Net Positive: Sharing Data to Crack Down on Fraudulent Agents and Brokers
The proposed regulation would make clear that marketplaces can use personally identifiable information to investigate fraudulent practices of brokers, agents, and others. A marketplace could thus convey a consumer’s personal information to an insurance regulator to assist in the latter’s investigation.
Given the danger that fraud poses to consumers, this is a reasonable step. It may become even more important in the coming years, as enrollment pathways multiply outside exchanges; as new forms of non-ACA-protected, substandard health insurance become available, such as short-term, limited duration insurance; and as agents and brokers receive financial incentives to steer consumers to forms of coverage that may not be in the consumers’ best interests.
Unrealized Potential, Part I: Helping Consumers Move from Unsubsidized Exchange Coverage to Medicare
One element of the proposed regulation involves consumers who are enrolled in qualified health plans (QHPs) without claiming premium tax credits (PTCs). The rule would let such consumers authorize their exchange to do two things: (1) periodically “ping” HHS data to see whether the consumer has qualified for Medicare; and, if so, (2) terminate QHP coverage, providing the consumer with advance notice and an opportunity to revoke that termination.
This proposal addresses the situation of QHP enrollees who turn 65, qualify for Medicare, and begin receiving premium-free Medicare Part A coverage – potentially without realizing that such coverage has begun. Such consumers may unknowingly delay the start of Medicare Part B, subjecting themselves to higher premium costs when they later begin such coverage. These consumers may also pay more in QHP payments than they would pay for Medicare coverage. The rule gives consumers the option to authorize an automatic termination of exchange coverage when their Medicare eligibility begins.
This policy in its current form would create serious problems. Consumers who age into Medicare eligibility would automatically get only Medicare Part A and yet simply find their QHP coverage terminated, without being fully enrolled in other parts of Medicare. Coverage gaps could result, undermining seniors’ access to care and financial security. If coverage gaps exceeded 63 days in length, they could also cause lifelong increases to Part D premiums after affected seniors sign up. Moreover, it is not completely clear that consumers would need to give fully voluntary and informed consent before this default arrangement was put in place.
A much better approach would have a QHP enrollee’s imminent aging into Medicare automatically trigger both written notices and outreach from a navigator, the exchange call center, or another consumer assister who would help the QHP enrollee understand their options and make an informed choice about how to proceed. With these complicated and confusing issues, one-on-one assistance can be essential to consumers receiving the kind of coverage they need and want.
The proposed rule identifies a real problem – the confusing transition from QHP coverage to Medicare, when a wrong choice can have serious and longstanding consequences. Unfortunately, the policy’s current details threaten to do more harm than good. A far more robust strategy is needed to overcome this important challenge.
Unrealized Potential, Part II: Data Matching to Prevent Duplicative Enrollment in PTC-Funded Coverage and Other Public Programs
The proposed rule requires exchanges, twice a year, to match eligibility records of PTC beneficiaries with enrollment records for Medicaid, the Children’s Health Insurance Program (CHIP), and Medicare. If data matches indicate that a PTC beneficiary is enrolled in one of these public programs, their PTC eligibility will be terminated, under the proposed rule.
In theory, regular matches of PTC records with information about other sources of coverage could be a positive step for consumers that also strengthens program integrity. Such matches could prevent some people from owing money when they file year-end federal income tax returns. Under the ACA, people are ineligible for PTCs if they qualify for forms of Medicaid or CHIP or receive forms of Medicare that the ACA classifies as “minimum essential coverage,” or “MEC.” In theory, measures like these could inform consumers when they are mistakenly receiving duplicative coverage, ending PTC-funded exchange coverage that otherwise could create year-end tax liabilities. More broadly, basing eligibility determination on data matches, rather than asking consumers to provide paper documentation, offers the potential to simultaneously accomplish three goals: (1) eliminating red-tape barriers to enrollment, boosting eligible consumers’ participation levels; (2) increasing the efficiency of ongoing program operations; and (3) avoiding eligibility errors.
In practice, the proposed rule could pose a problem for consumers, rather than help them. In promulgating the regulation, HHS implicitly assumed the accuracy, comprehensiveness, and freshness of Medicaid eligibility records. In fact, state Medicaid agencies face serious challenges with their eligibility systems. In this case, not only must Medicaid programs provide near-real-time information about enrollment, the data must distinguish between forms of Medicaid that are MEC, and thus prevent PTC eligibility, and those that are not. It is essential that changes like those proposed by HHS not take place until after a careful advance analysis of Medicaid’s data quality has been completed. Otherwise, PTC beneficiaries are likely to be erroneously terminated based on supposed Medicaid MEC, ending eligible consumers’ coverage rather than protecting consumers from year-end tax liability.
Moreover, even when reliable data shows duplicative enrollment, the proposed policy would have exchanges simply send a notice to the consumer terminating PTC receipt. A much better approach is used by at least some state-based exchanges that conduct regular data-matching to identify duplication. Under this better approach, navigators or other assisters reach out to the consumer, explain the potential duplicative enrollment, see if in fact there is problematic duplication, and if so work with the consumer to facilitate a transition to the single source of coverage that is in the consumer’s best interest. Such hands-on involvement is likely to be crucial to an effective eligibility transition for consumers who do not realize that they have two forms of coverage.
There is a broader problem with this part of the rule. Without any evidence of a serious problem in exchange eligibility determinations, the proposed regulation has the federal government micro-manage exchange operations by defining the frequency and nature of periodic eligibility matches. Such federal regulations, which could potentially constrain exchange options to streamline enrollment, should not move forward without a clear showing that actual eligibility errors are significant.
Harmful Proposals, Part 1: Greater Federal Authority over State-Based Marketplaces
The proposed rule requires state-based marketplaces (SBMs) to provide additional information to HHS about eligibility and enrollment procedures and outcomes. It gives HHS an open-ended grant of federal authority to require each SBM to report to HHS about any virtually any topic, including eligibility verification procedures. The rule makes clear that HHS plans to use this information to mandate specific changes to policy and practice and potentially impose sanctions when an SBM does not comply with HHS requirements.
Along with this general expansion in federal authority, the proposed rule requires that annual exchange audits must sample eligibility outcomes to determine error rates. This is reminiscent of statutorily mandated federal Medicaid and CHIP eligibility reviews, which have deterred states from streamlining verification and enrollment procedures lest an unpredictable federal authority find fault with them after the fact.
The legal basis for this new assertion of federal authority may be questionable. Eligibility sampling, in the context of Medicaid and CHIP, resulted from very specific statutory direction to HHS. No remotely comparable statutory grant of authority applies to this new, regulatory assertion of federal power.
More broadly, HHS has not put forward evidence of SBM mistakes warranting this escalated level of federal involvement. The proposed rule’s new and unwarranted requirements comprise an ominous extension of federal involvement in SBM operations, potentially preventing the kind of state innovations that could increase enrollment of the eligible uninsured.
Harmful Proposals, Part 2: Another Step in the Trump Administration’s Ongoing Campaign to Limit Women’s Access to Reproductive Health Care
A particularly absurd part of this rule involves accounting for abortion services. The Hyde Amendment limits federal funding for abortions, and the ACA bars PTCs and cost-sharing reductions (CSRs) from being used to fund abortion services outside the scope allowed by the Hyde Amendment.
As part of the compromise around abortion that enabled passage, the ACA authorizes plans to cover PTC beneficiaries’ abortion services, so long as plans implement tracking procedures to ensure that consumer premium payments, rather than PTCs, cover the cost of non-Hyde abortions. Since the ACA’s enactment, HHS gave plans three choices for meeting this accounting requirement in their interactions with members: (1) send each member a single bill each month that include distinct invoice items for non-Hyde abortion services and for other coverage, thereby allowing a single payment to cover the entire bill; (2) provide consumers advance notice that their monthly bills will have a single charge, which will combine payment for non-Hyde abortion services with payment for other services, thereby letting a single payment cover the entire monthly bill; and (3) send each member two separate bills every month, one for non-Hyde abortion services and the other for everything else. Another regulation specified that plans must charge at least $1 a month for non-Hyde abortion services.
The proposed rule would eliminate the first two options for plans to interact with their members. Instead, any plans that chose to cover non-Hyde abortion services would need to send separate bills, every month, for coverage of non-Hyde abortion services and for all other coverage. If bills are sent via “snail mail,” two separate bills in two separate envelopes would go to the consumer, who would be asked to send in two payments in separate envelopes. Monthly electronic billing would also need to have two separate transactions for each consumer, a $1 charge for abortion services and another charge for everything else.
If a consumer mistakenly sent in a single payment covering both charges, the plan would have to accept that payment rather than terminate coverage. It would need to tell the consumer not to repeat the mistake, demanding separate monthly payments in the future. But if the consumer continued to make unitary monthly payments that covered the full combined cost of both monthly charges, the carrier could not terminate coverage. In effect, carriers would be legally required to mislead their members by implying that failure to send separate payments would cause consequences that the carriers would be legally forbidden from imposing.
Mandating misleading messages is a sign of several deeper problems. First, if a confused consumer fails to send in their $1 payment for non-Hyde abortion coverage, the proposed rule requires the termination of the consumer’s entire coverage, increasing the ranks of the uninsured by setting a trap for the unwary. Second, rather than tackle the administrative challenges of dual monthly billing and accounting, as well as the obligation to mislead their members, many if not most carriers are likely to simply stop offering non-Hyde abortion services. The proposed rule thus converts the Hyde Amendment, an abortion restriction limited to federal funding, into a powerful, bureaucratic tool to end purely private coverage of abortion services.
This foreseeable result may be the purpose of this bizarre policy, which fits into a broader pattern through which the Trump administration is limiting women’s access to reproductive health care. It is not hard to imagine why the Trump administration may have wanted to keep this proposed rule secret until after the mid-term elections.