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March 9, 2018

White House tells Idaho: You can't break the law—even if it's the ACA

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    CMS Administrator Seema Verma in a letter Thursday said Idaho's proposal to sell individual health plans that do not comply with the certain coverage requirements under the Affordable Care Act (ACA) violates the law—and suggested CMS would take enforcement action if such plans are sold.

    Just updated: Your cheat sheets for understanding health care's legal landscape


    Idaho's Department of Insurance in late January announced it would allow insurers to sell new so-called "state-based plans" that do not comply with ACA's pre-existing coverage requirements, essential health benefits requirements, rules prohibiting underwriting, and annual dollar benefit limits. Insurers under the plans also would be allowed to charge older enrollees up to five times as much as younger enrollees—up from a three-to-one ratio permitted under the ACA.

    Idaho officials argued that the state has legal standing to sell the plans, while several legal experts said Idaho's proposal violated federal law. So far, one insurer, Blue Cross of Idaho (BCI) has announced plans to sell coverage under the states new rules.

    Letter details

    In the letter Thursday, Verma said CMS has determined that Idaho's proposal would violate several ACA provisions and indicated the agency would step in if such plans are sold in the state.

    Verma wrote, "This Administration recognizes and supports the fundamental role states play in regulating insurance. ... However, the [ACA] remains the law and we have a duty to enforce and uphold the law."

    She continued, "If any issuer … sell[s] non-compliant plans in the state, CMS … could initiate an investigation of the potential violation and based on the outcome, could impose a civil money penalty for each violation of up to $100 each day, for each responsible entity [and] for each individual affected by the violation."

    However, Verma in the letter said her agency is willing to work with state officials on an alternative plan. She cited the Trump administration's recent proposal to allow insurers to sell short-term health plans that are valid for up to 12 months, suggesting such plans could serve as path forward for the state. She wrote, "We believe that, with certain modifications, [Idaho's] state-based plans could be legally offered under [the ACA] exception for short-term, limited-duration plans."


    Industry experts said CMS' decision appears to close the door on similar state proposals to get around certain ACA requirements, but some insurer groups raised concerns about the letter's support for short-term plans.

    Larry Levitt, a senior vice president for health reform at the Kaiser Family Foundation, said, "It wasn't necessarily clear that the federal government was going to stop states like Idaho from flouting the ACA's insurance rules," adding, "With the new secretary in power, this does lay down a marker that it looks like HHS is going to enforce the law."

    Margaret Murray, CEO of the Association for Community Affiliated Plans, which represents safety-net insurers, said, "We are pleased that CMS has chosen to draw the line at extralegal action." Murray said, "But we're concerned about the enthusiasm the letter seems to convey for short-term plans, which invite back the dysfunctions that inspired health reform to begin with."

    Ceci Connolly, CEO of the Alliance of Community Health Plans, said, "We continue to have concerns regarding extending short-term plans beyond short, discrete time periods." Connolly said, "We hope that future discussions with Idaho or other states will strive to provide adequate coverage."

    The Idaho governor's office declined to comment Thursday, according to Politico.  The state's insurance director did not respond to a request for comment, according to Modern Healthcare (Baker, "Vitals," Axios, 3/9; Radnofsky, Wall Street Journal, 3/8; Meyer/Luthi, Modern Healthcare, 3/8; Sullivan, The Hill, 3/8; Abutaleb, Reuters, 3/8; Pradhan, Politico, 3/8).

    Just updated: Your cheat sheets for understanding health care's legal landscape


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