On January 18, the Department of Health and Human Services (HHS) issued its Notice of Benefit and Payment Parameters for 2020, commonly referred to as the NBPP. The NBPP is issued annually and outlines changes that HHS plans to apply to the Affordable Care Act (ACA) marketplaces and insurance rules in the next plan year. For 2020, the rule proposes numerous changes related to:
- Plan benefits and the coverage of prescription drugs;
- Marketplace standards for eligibility, enrollment, and cost-sharing;
- User fees for the federally facilitated marketplaces and the state-based marketplaces using the federal platform; and
- Risk adjustment and data validation programs, among other proposals.
The agency received over 26,100 comments on the proposal and will now review and respond to the feedback. As stakeholders anxiously await the final rule, CHIR reviewed a sample of comments from insurers, state-based marketplaces, departments of insurance, and consumer advocates to better understand their reactions. In the first blog of this series, we highlight a selection of comments from major medical insurers and associations, including:
- America’s Health Insurance Plans (AHIP)
- Blue Cross Blue Shield Association (BCBSA)
- CVS Health / Aetna
- Kaiser Permanente
Insurers Urged HHS to Maintain the Existing Auto Re-Enrollment Process
Currently, during the open enrollment period, individuals who enroll through the federally facilitated marketplace or through a state-based marketplace on the federal enrollment platform can re-enroll in their current plan, select a new plan, or take no action and the marketplace will automatically re-enroll them in their current plan. In 2019, 1.8 million consumers in federal marketplace states were automatically re-enrolled during the open enrollment period. In the proposed rule, HHS proposed no official change to this process, but expressed concern that automatic enrollment “shield[s]” consumers from annual plan changes, reduces their awareness of available plan options, and results in individuals missing the opportunity to update their coverage and tax credit eligibility information. HHS requested comment on the automatic re-enrollment process and any policies that might reduce eligibility errors in the future.
Seven of the nine insurers commented on automatic re-enrollment and all urged HHS to maintain the existing renewal process. Molina explained that automatic renewals promote continuity of care, are “standard practice” in most insurance markets (e.g., property and casualty), and “don’t deter consumers from actively shopping for coverage…rather, they provide an important backstop against loss of coverage.” To encourage active shopping, Molina recommended that HHS instead invest more in outreach and assistance and extend the open enrollment period. Several insurers cautioned that modifying the automatic process would create consumer disruption, impose additional burdens on insurers, and might lead healthy enrollees to forgo renewal (e.g., Kaiser). Many warned that if auto-renewals were discontinued, it would likely trigger an influx of concerned consumers to HealthCare.Gov’s and insurers’ call centers, ultimately increasing wait times and creating technical problems. Rather than eliminating the process, AHIP, Anthem, and BCBSA recommended that the agency improve program integrity by implementing upfront screening to avoid dual enrollment in qualified health plans (QHPs) and Medicare, and simplifying the process for reporting mid-year eligibility changes.
Support for a New SEP: Newly-Eligible APTC Consumers Coming Off-Exchange
HHS also proposed creating a new special enrollment period (SEP) for consumers who are enrolled in individual market coverage off-exchange, who then become eligible for advanced premium tax credits (APTCs) due to a decrease in income. To qualify for the SEP, consumers would need to provide evidence that they had minimum essential coverage and that their household income changed. AHIP, Anthem, BCBSA, Centene, and Kaiser commented on this proposal and all agreed the SEP should be added, so long as proper verification is required.
The Majority Argued That HHS Should Defer to States on Silver Loading
In October 2017, the White House announced that it would terminate cost-sharing reduction (CSR) payments to insurers. Instead of raising costs across all plans, many insurers responded – and most states allowed – increasing 2018 and 2019 premiums only for silver QHPs – a practice known as “silver loading.” This helped offset consumers’ premium costs, since many individuals in silver plans are eligible for federal subsidies, which increase along with any premium increases. In its proposal, HHS argues that this practice resulted in higher federal tax credits being paid and borne by taxpayers, and it expressed support for a legislative solution that either appropriates CSR funding or ends silver loading. It did not propose a change to the practice, but requested comment on how the agency might address silver loading in the future.
Seven of the insurers (AHIP, Anthem, BCBSA, Centene, Cigna, Kaiser, Molina) strongly recommended that, in the absence of CSR funding, HHS should defer to states to regulate rating practices (CVS/Aetna and Humana did not comment on silver loading). AHIP advised that restricting states’ ability to permit silver loading would increase premiums and the number of uninsured. It expressed support for HHS’ 2018 guidance, which encouraged states using this practice to offer an off-marketplace “mirror” alternative without the CSR load for silver enrollees who do not qualify for financial assistance. However, AHIP “strongly discouraged” requiring states to take up “broad loading,” which applies premium increases across all metal levels, including on plans where no federal subsidies are available. Kaiser noted that if broad loading were used, it would expect premiums to increase, while the individual market would “contrac[t]” 1.5 percent. The insurers agreed that state regulators are best positioned to monitor and regulate these processes, rather than HHS implementing a “one-size-fits-all federal solution” (Anthem, BCBSA).
Insurers Opposed HHS’ “Inappropriate” Changes to the Premium Adjustment Percentage
Among insurers’ top concerns were proposed changes to the premium adjustment percentage. The premium adjustment percentage is a measure of premium growth used to set (i) the maximum annual limitation on cost sharing, (ii) the required amount that subsidy-eligible enrollees must contribute to premiums, and (iii) the employer shared responsibility amounts. In 2015, the percentage was set based on projected average premiums in employer-sponsored insurance (learn more here). Under the proposed rule, HHS recommends updating the percentage using an alternative measure that captures both employer-sponsored and private individual market premium increases since 2013. HHS admits that this would result in “a higher maximum annual limitation cost sharing, a higher required contribution percentage, and higher employer shared responsibility payment amounts[.]” If implemented, HHS estimates that 100,000 fewer consumers would enroll in coverage and tax credits would decrease by $900 million.
Seven of the insurers commented on this proposal (AHIP, Anthem, BCBSA, Cigna, CVS/Aetna, Kaiser, Molina) and all were opposed. Most noted that the update would “negatively impact affordability for consumers,” and “further destabilize” the marketplaces (e.g., Cigna). CVS/Aetna wrote that HHS has “underestimated the significance of the proposed change’s impact on the [health insurance tax] and the increased premiums[.]” Several insurers, like Molina, explained that basing the percentage on private individual market premium changes since 2013 is “inappropriate” and “not  equitable or judicious,” because those changes reflect the significant impact of the ACA’s market reforms (e.g., AHIP). Further, premium fluctuations since 2014 were largely due to federal actions including: defunding the risk corridor program, eliminating CSR payments and the individual mandate penalty, and introducing short-term limited duration plans. In sum, Molina argued “CMS would be making individual market consumers financially liable for premium changes driven mostly by Federal legislative and regulatory actions[.]”
Clarifications Needed on Mid-Year Formulary Changes & Prescription Drugs
The agency outlined a number of proposals related to prescription drugs, including one that would allow insurers to make mid-year formulary changes when a generic version of a prescription drug becomes available. Insurers could add the generic equivalent to their formulary and then either (i) remove the equivalent brand drug from the formulary or (ii) move the brand drug to a different cost-sharing tier, if permitted by state law. Insurers would be required to provide a minimum of 60-days’ notice to consumers before making the change, and enrollees could request coverage of the removed/moved drug through an appeals process.
Insurers mostly appreciated HHS’ clarification on mid-year formulary changes, but offered feedback on implementation, and asked the agency to clarify that the NBPP is not intended to limit insurers’ current flexibility. For example, CVS/Aetna expressed concern that the proposal seems to “limit the scope” of permissible mid-year formulary changes, rather than increase opportunities for change. It recommended that insurers be allowed to make changes that are “necessary and appropriate” based on the availability of drugs in the market. It also noted – and others, like Cigna, agreed – that notifications of changes should only be required for current users of an affected drug and that 30-days’ notice is sufficient. BCBSA and others requested that HHS clarify that all mid-year formulary changes are still permissible, unless prohibited by state law, and not simply this generic-brand modification.
Opposition to Risk Adjustment Data Validation (RADV)
Another source of robust comment were the proposed technical changes to risk adjustment data validation (RADV). Insurers’ risk adjustment data is required to be validated by independent auditors and HHS. In order to do so, insurers must submit documentation for a sample of enrollees that HHS selects, such as enrollment, demographic, and medical record information (learn more here). The proposed rule offers a number of changes to the current process, including: varying the initial audit sample size, shortening the timeframe for insurers to confirm the findings and file any discrepancy reports, and expanding the sample size of the second audit, if statistically significant differences are found.
In general, insurers rejected the changes proposed, saying they would place an “undue administrative burden on plans without improving the quality of outcomes” (AHIP). Anthem called HHS’ current approach “fundamentally flawed,” noting that it threatens the individual and small group markets by “creating significant uncertainty,” and “must be corrected immediately.” While some insurers found a few of the adjustments to be acceptable, the majority felt that the changes would not achieve HHS’ goals and recommended they not be implemented.
Take-Away: Insurers were mostly aligned in identifying their top concerns for 2020. They urged HHS not to tamper with the automatic re-enrollment process and silver loading, noting that the proposed changes would only dampen enrollment and increase premiums. Insurers were supportive of the SEP for off-exchange consumers who become eligible for APTCs, but they took issue with the proposed changes to RADV and warned HHS of the need to clarify its intent regarding mid-year formulary changes. Overall, insurers most vehemently opposed changes to the premium adjustment percentage, since the agency itself confessed the provision would reduce enrollment and decrease financial assistance. Insurers found this change to be unfair, because recent fluxes in individual market premiums have mostly resulted from federal legislative and regulatory actions; yet, the change would place an increased burden on consumers.
A Note on Our Methodology
This blog is intended to provide a summary of comments submitted by specific stakeholder groups: major medical insurers and associations. This is not intended to be a comprehensive report of all comments on every element in the Notice of Benefit and Payment Parameters proposed rule, nor does it capture every component of the reviewed comments. Additionally, a portion of submitted comments were not available for our review at the time of publication. For more stakeholder comments, visit http://regulations.gov.