On January 17, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule that would raise consumers’ out-of-pocket costs for health care under individual and employer-sponsored health insurance plans, and decrease premium assistance in the individual marketplace. The rule also proposes a number of other changes: to navigator programs, to the information people get when enrolling in health insurance on the web, to drug formularies and cost-sharing requirements, to the benefits that plans must cover, and to abortion coverage. The public can comment until 5 PM February 19, 2019.
How the proposal would increase consumers’ costs:
- The Affordable Care Act (ACA) includes several provisions designed to limit consumers’ costs for health insurance in individual health insurance plans:
- It sets forth percentages of income that people who get premium tax credits at different levels can be charged for silver plans;
- It caps annual out-of-pocket expenses for all individuals and families in both individual and employer-sponsored plans, so that if someone is very sick in a year, the maximum they can be charged for deductibles, coinsurance, and copayments for covered essential services in their plan’s network is limited;
- People with low incomes (up to 250 percent of poverty) can get additional help in the individual marketplace – cost-sharing reductions – that further lower their deductibles, copayments, and coinsurance.
The proposed rule will increase costs for low- and middle-income people who can least afford it. It would increase both the percentage of income that people with premium tax credits pay for insurance, and the annual out-of-pocket caps that limit costs for people with major health care expenses.
Originally, the ACA set 2 percent as the amount of income an individual with income up to 138 percent of poverty could be charged in premiums, and 9.5 percent as the maximum amount a person with income up to 400 percent of poverty could be charged, for “benchmark” coverage (defined as the second lowest-cost silver plan in the marketplace). The ACA allowed that percentage to increase a bit annually as total average premiums for health insurance increased – but left up to CMS how it would measure the details of that average. Until now, this has been indexed to growth in employer-sponsored premiums, the dominant measure of private health insurance premiums in the United States. The proposed rule would change the indexing factor to reflect price increases in individual insurance premiums too. This is a thinly disguised move to increase the amount low- and moderate-income people pay for insurance. For example, as the Center on Budget and Policy Priorities explains, a family of four with income of $80,000 will pay $196 more in premiums.
This new growth factor would also apply to the cap on out-of-pocket expenses, and will increase that maximum by $200 for a single person and $400 for a family in 2019. Without this proposed change, individuals with lots of medical expenses would pay no more than $8,000 for deductibles, coinsurance, and copayments; with the change, they could be charged up to $8,200.
The proposed rule projects that 100,000 fewer people will enroll in marketplace coverage due to the proposed cost increases.
Amidst this bad news, there is an important reprieve on the cost-sharing reduction front. The proposed rule does not end the practice of silver-loading which has helped some people with premium tax credits buy bronze and gold plans for a somewhat lower price. Without silver loading, millions of premium tax credit beneficiaries would lose coverage, and many more would face stark increases in their premium costs. However, the rule asks if this should be permitted in the future, so it is very important that advocates address it in their comments.
Enrolling in a health plan
The Affordable Care Act uses health insurance exchanges (marketplaces) as the main way that people enroll in individual health insurance. The government-run marketplaces have a number of advantages: they allow consumers to see and compare all of the legitimate, comprehensive health insurance plans available in their area; they provide consumer education tools; they process advanced premium tax credits and they help Medicaid-eligible consumers learn about and apply for Medicaid. Originally, navigators were funded to provide free, unbiased outreach regarding these marketplaces, including to underserved communities with many uninsured people, and helped both with enrollment and with issues people confronted once they were enrolled in their plans.
Gradually though, the Trump administration has been moving away from this model, and in its place allowing private web-based brokers – who may be selling lots of other products besides comprehensive health insurance – to directly enroll people in individual health insurance. The proposed rule takes another step in this direction.
Under the proposal, web-brokers and health insurance issuers that allow consumers to enroll directly into their health plans could choose to display complete information about just some of the qualified health plan options available to consumers on their websites. For other qualified health plans, these web brokers and direct enrollment entities could instead display a disclaimer saying that information about other plans is available on the exchange website, and a link to the exchange website. It is questionable whether consumers will actually notice this disclaimer information or go through the additional step to compare those plans. Additionally, these private web-brokers are allowed to sell other products (such as short-term health insurance, indemnity policies, and disease-specific policies) that may bewilder consumers and lure them away from good coverage that complies with basic insurance protections. Under the proposed rule, those other products could only be sold on a separate webpage that included some disclosure language, but they can be sold to consumers before they make their final purchase of qualified marketplace coverage. This is not sufficient to prevent consumer confusion when brokers may be steering them to these junk insurance products. Advocates and the public should comment on this aspect of the proposed rule, the confusion that consumers already face in discerning what is legitimate and comprehensive insurance and when they are eligible for tax credits, and how this confusion should be remedied.
Navigators and assisters, under the proposal, would not receive as much training and might not be trained or available at all to help with issues consumers often face after they are enrolled in a plan. These issues range from reporting changes in income to appealing a health plan’s denial of care. The preamble contemplates that more work would be divided between private brokers/agents and lesser-trained clerical staff, and for the first time permits navigators and assisters to use private web broker sites instead of the official marketplace website to enroll consumers.
As with affordability of coverage, the proposed rule grants an important reprieve with respect to enrollment. The administration decided, for now, not to eliminate auto-renewals. Auto-renewals were responsible for 2.9 million people retaining marketplace coverage in 2019, according to the Trump administration. This mechanism gives people the ability to stay in the same plan, without any need to take action if they continue to qualify from year to year. Similar auto-renewal is a key feature of Medicare Advantage and other programs. Terminating coverage for those who fail to take action would increase the number of uninsured and harm the risk pool in the individual market, leading to premium spikes for those who buy coverage without premium tax credits. CMS requests comment on whether auto-renewal should be allowed to continue, and it is important for advocates to make their voices heard.
New special enrollment period when income drops
The rule proposes a new special enrollment period that will be helpful to some consumers who lose income and become eligible for premium credits mid-year. Even if that household had previously purchased individual insurance outside of the exchange marketplace, when the person’s household income decreases to premium credit eligibility levels, the rule proposes to allow a 60-day special enrollment period during which that person or household can enroll in a marketplace plan and apply for premium credits. This proposed special enrollment period would help a number of consumers: at times, off-exchange plans may have the best prices for people who do not qualify for premium credits, but if their incomes decline, they need a chance to enroll in plans with premium credits.
The proposed rule continues to allow states three options to annually modify their essential health benefits packages; options that were finalized in 2018: they can change their whole essential health benefits standards to mirror another state’s essential health benefits, change one category of benefits to mirror another state’s benchmark, or select any set of benefits that is equal in scope to a typical employer plan to become its benchmark – and the notice proposes May 6 as the deadline for states to submit essential health benefits modification proposals. The preamble highlights an example in which this benefits flexibility allowed Illinois to require coverage of more opioid treatment, a good outcome. State advocates will want to watch their own states’ benefit requirement proposals to see if they will help or harm beneficiaries.
The rule also includes another obstacle to abortion coverage, currently offered by some health plans in 17 states: if an issuer offers a health plan that includes abortion coverage (which, already, requires separate billing to ensure that no federal funds are used for this under the “Hyde amendment”), it must also offer a plan that does not include abortion coverage – unless this would go against state law. As with the administration’s earlier proposed rule around separate billing, this rule adds further administrative burdens on a carrier that chooses to cover abortion. The evident intent and likely effect would be to deter carriers from offering abortion coverage, limiting women’s ability to use their own money to purchase full coverage of reproductive health services.
Under the proposal, if a generic equivalent drug becomes available midyear when previously, only a brand name version of that drug was sold, then a health plan can modify its formulary midyear to add the generic to its formulary and remove the equivalent brand-name drug from the formulary or place the brand name drug on a higher tier (increasing cost-sharing for the brand name drug). The plan would have to notify beneficiaries of this change and let them know how to qualify for an exception or appeal if they still needed the brand name drug. This proposal may be helpful to both consumers and health insurers since it will lower drug costs. Patients and advocates may want to comment on how to best ensure that consumers and prescribers are aware of any formulary changes and can get any needed exceptions processed on a timely basis.
Additionally, the rule proposes or offers for comment a set of policies to financially penalize consumers for use of brand name drugs when generics are available and “medically appropriate.” The rule proposes that if a patient continues to use a brand name drug when such a generic equivalent is available, and the patient has not received an exception, the health insurer could decide not to count spending for the brand name drug towards the patient’s out of pocket limit. In doing this, the rule removes the consideration of a brand name drug as an essential health benefit when a generic is available, thereby also opening up brand name drugs to the application of lifetime and annual dollar limits, which have been prohibited by the Affordable Care Act for essential health benefits. Since brand name drugs would no longer be considered an essential health benefit in this situation, it would also forbid the application of any premium tax credits for which the consumer is eligible to coverage of brand name drugs. The rule also proposes a policy stating that if a consumer uses a drug manufacturer’s coupon to pay for a brand name drug that has a generic equivalent, that spending won’t count toward the annual out-of-pocket limit.
The proposal also invites comment on whether, in the future, CMS should consider pursuing therapeutic substitution (substituting chemically different compounds within the same class for one another) or should allow reference-based drug pricing (allowing insurers to cover a group of similar drugs, such as within the same therapeutic class, up to a set price, with the enrollee paying the difference in cost if the enrollee desires a drug that exceeds the set (reference) price).
Finally, the proposed rule urges health insurers to cover all forms of Medication Assisted Treatment for substance use disorders, warning them that if they cover a drug when it is used for a different illness but not when it is used to combat opioid addiction, they are violating non-discrimination laws.\
The rule’s risk adjustment provisions mainly continue policies already in place. CCIIO proposes to continue using data from the individual market, rather than older data sources focused on the large-group market, to determine risk-adjustment levels. By helping risk adjustment fit the actual experience of individual-market enrollees, this is an important positive step.
A positive change is a major reduction in the risk adjuster triggered by HEP-C medication. In the past, this adjuster was so large that it gave carriers an incentive to pocket large profits by manipulating the timing of treatment. Delaying the commencement of care for HEP-C patients until late during one calendar year let insurers double their receipt of these generous funds by claiming the bonus twice, once for each calendar year. That incentive is substantially mitigated by the much reduced level of risk adjustment.
The proposed rule discusses CCIIO’s use of average statewide premiums as the basis for risk adjustment, which is an important continuation of past practice. Risk adjustment plays a critically important role of ensuring that plans can do well financially if they enroll consumers with chronic health problems. That function requires using average statewide premiums as a starting point for measuring enrollees in each plan, resulting in equitable monetary transfers from plans with below-average risk statewide to those with above-average risk. The inclusion of this analysis suggests that some stakeholders in the insurance industry may be challenging this longstanding practice, underlying the importance of advocates supporting the policy.
In total, the proposal includes a mixture of initiatives, some of which will be harmful and others of which may help consumers. The proposed rule is available on CMS’s website here. The introduction provides information on how to submit public comments by February 19.