Inside CMS' new proposed rule for 2020 exchange plans

CMS on Thursday released its proposed 2020 Notice of Benefit and Payment Parameters, which outlines ways the agency wants to change health plans sold through the Affordable Care Act's (ACA) exchanges for the 2020 coverage year, Inside Health Policy reports.

CMS said the proposed changes are intended to lower exchange plan premiums and reduce regulatory burdens, but some observers said the proposed changes could increase costs for exchange enrollees.

Proposed rule details

While the 331-page proposed rule includes some routine updates for exchange plans, it also contains proposals that could have significant effects for enrollees.

For example, CMS proposed changing the way it calculates premium assistance for lower-income enrollees. Currently, CMS bases the annual premium adjustment percentage—which is used to calculate cost-sharing limits, required contribution limits, and affordability exemptions, among other things—on premiums for employer-sponsored health plans. But the agency is now proposing basing the calculations on a blend of individual market and employer-sponsored plan premiums.

CMS projected the change, if finalized, would lower the total amount of financial assistance provided by $900 million, and result in 100,000 fewer exchange enrollees in 2020, Politico's "Pulse" reports. CMS said the change would help offset the spikes in federal subsidies that occurred after the Trump administration halted cost-sharing reduction payments to insurers, and insurers in turn began a practice known as "silver-loading" to stem the effects of steep premium increases. It has been widely rumored that CMS might ban the practice for 2020, but CMS in a release said it "is not proposing any regulatory changes regarding these practices at this time." Instead, the agency said it is "soliciting public comment to better understand the issues because states have addressed silver-loading in different ways."

In addition, CMS proposed allowing exchange insurers to make mid-year changes to their plans' drug formularies. The proposal is intended to incentivize the use of generic drugs, CMS said. When consistent with state law, the proposal would permit plans to implement cost-sharing requirements if enrollees choose a brand-name drug when a medically appropriate generic version of the drug is available. Insurers could implement the cost-sharing requirements even if the enrollee already has reached the plan's out-of-pocket spending maximum.

The proposed rule also would allow exchange insurers to exempt drug manufacturer coupons for brand-names drugs from counting toward enrollees' out-of-pocket maximums if the enrollee chooses a brand-name drug for which a generic drug is available.

CMS for the 2020 coverage year also proposed:

  • Consolidating training topics for ACA navigators and allowing navigators to have duties that are "permissible, but not required" after the ACA's annual open enrollment period ends;
  • Establishing a special enrollment period for U.S. residents who become newly eligible for ACA subsidies;
  • Increasing maximum out-of-pocket spending limits by 3.8%, from $7,900 to $8,200 for individual plans and from $15,800 to $16,400 for family plans;
  • Lowering user fees by half a percentage point, from 3.5% to 3%, for insurers participating in the federal exchange, and from 3% to 2.5% for insurers participating in state-run exchanges that rely on the federal exchange for enrollment;
  • Streamlining Enhanced Direct Enrollment, which took effect during the latest open enrollment period; and
  • Requiring exchange insurers offering health plans with coverage for abortion care to also offer an identical policy that does not include coverage for abortion care.

CMS in the notice also included a proposed calendar outlining application deadlines for qualified health plans (QHPs) interested in participating in the exchanges. The application cycle under the proposed calendar would begin on April 25 and end on June 19. QHPs would have until Aug. 21 to change an application, and CMS would send contracts to QHPs in early October.

CMS seeks comments on silver-loading, risk-adjustment programs, and more

In addition to seeking public comments on silver-loading, CMS in the proposed rule requested comments on:

  • Alabama's request to lower risk adjustment transfers in its small-group market by 50% for the 2020 coverage year;
  • The re-enrollment process for exchange plans; and
  • The sample size the agency uses for risk-adjustment data audits.

CMS is accepting comments on the proposed rule until Feb. 19.

Implications

According to Inside Health Policy, CMS has projected that the proposed rule would:

  • Decrease exchange plan enrollment by 100,000 individuals;
  • Generate about $900 million in savings for the federal government; and
  • Increase premiums for exchange plans by $181.

Specifically, Matthew Fiedler, a fellow with the Center for Health Policy in the Brookings Institution's Economic Studies Program, predicted that the proposed change to how CMS bases its annual premium adjustment percentage could result in an exchange enrollee with an annual income that is 300% below FPL losing $92 in annual subsidies, and family of four with the same income level losing $189 in annual subsidies.

Larry Levitt, SVP for health reform at the Kaiser Family Foundation, in a tweet called the proposed changes "incredibly consequential." He wrote, "In general, the direction the Trump administration is going would reduce government spending, but also decrease insurance enrollment and increase consumer costs."

Stan Dorn, a senior fellow at Families USA, said, "At first blush, it seems disappointing," claiming that the proposed changes "could raise premium costs for consumers" and allow "web brokers to make money by steering consumers to new forms of substandard insurance authorized by misguided Trump administration policies." However, Dorn said, "We are relieved that HHS did not pull the trigger on two ideas that would have been catastrophic: ending so-called 'silver loading,' which would have skyrocketed premiums for millions of low-wage workers and middle-class families; and ending automatic re-enrollment, which keeps millions of consumers insured if they remain eligible for coverage. The administration has requested comments on these terrible ideas, and we intend to provide it."

Sen. Ron Wyden (D-Ore.) said the "proposed rule deliberately and needlessly increases premiums and will result in too many Americans losing access to health coverage " (Diamond, "Pulse," Politico, 1/18; Lotven, Inside Health Policy, 1/17 [subscription required]; CMS release, 1/17; Armour, Wall Street Journal, 1/17; Alonso-Zaldivar, AP, 1/17; Livingston, Modern Healthcare, 1/17; McIntire, CQ News, 1/17 [subscription required]; CMS fact sheet, 1/17).

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The Patient Protection and Affordable Care Act, otherwise known as the ACA, is the comprehensive health care reform bill passed by Congress in March, 2010. The law reshapes the way health care is delivered and financed by transitioning providers from a volume-based fee-for-service system toward value-based care.

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