Stakeholder Perspectives on Round Three of CMS’s 2022 Notice of Benefit and Payment Parameters. Part 1: State Insurance Departments and Marketplaces

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By Rachel Schwab and Rachel Swindle

For the second time, stakeholders provided feedback on proposed changes to Affordable Care Act (ACA) marketplace and insurance standards that will go into effect for the 2022 plan year. In July, the Centers for Medicare & Medicaid Services and the Treasury Department proposed additional rules as part of an annual effort to set requirements for enrollment and other health insurance standards. This portion of the 2022 Notice of Benefit and Payment Parameters (NBPP) comes after the previous administration finalized a set of rules in January of this year and in April, after the transition, the Biden administration finalized a different set of rules. This latest proposal would add to and amend the 2022 NBPP by reversing several policies finalized by the prior administration and, pursuant to President Biden’s directives to strengthen the ACA and promote equity, implement new policies designed to improve access to comprehensive coverage through the ACA’s marketplaces.

To learn more about the potential impact of the proposed rules, we reviewed samples of comments from three different stakeholder groups: consumer advocates, insurers, and states. This blog focuses on comments from state insurance departments (DOI) and state-based marketplaces (SBMs), who will take on a primary role implementing the 2022 NBPP:

Increasing User Fees for HealthCare.gov

The federal marketplace platform, HealthCare.gov, is funded by user fees paid by insurers. States on the federally facilitated marketplace (FFM) and state-based marketplaces using the federal platform (SBM-FP) are affected by changes to the user fee based on the premium impact as well as the resulting funds available to support and improve HealthCare.gov and the federal government’s marketing and outreach efforts. The proposed rules would set user fees at 2.75 percent for the FFM and 2.25 percent for SBM-FPs. While below the current 2021 user fees for the FFM and SBM-FPs (3 percent and 2.5 percent, respectively), the proposed fees are 0.5 percent higher than the prior administration’s previously finalized fees for 2022, and are anticipated to generate an additional $200 million next year. These funds will go towards efforts such as expanded outreach and increased investment in marketplace Navigators.

Among the SBMs and DOIs that submitted formal comments on this proposed change, all but one are in support: marketplaces in D.C., Minnesota, and California, in addition to California’s DOI all favor the increase, though none of these states use HealthCare.gov. The California marketplace noted that this increase might not go far enough, citing prior reductions in the federal platform’s user fees that were associated with declines in enrollment and stressing the importance of robust funding for outreach and marketing. Oregon, a SBM-FP, opposed the fee increase; the combined comments of the DOI and agency overseeing the marketplace asked for transparency regarding federal expenditures to maintain the federal platform prior to any increase in the user fee. Oregon also argued against the continued use of a premium-based assessment, advocating instead for a fixed dollar fee based on how many consumers enroll in the marketplace in states using HealthCare.gov.

Repeal of the Exchange Direct Enrollment Option

The January NBPP would have allowed states to operate their ACA marketplace through private web brokers or insurers. Under this model, consumers would enroll directly through private entities rather than the federal marketplace platform, HealthCare.gov, or a state-run alternative. The proposed rule would repeal the Exchange Direct Enrollment (Exchange DE) option, instead returning to the ACA’s original requirement for states to either use HealthCare.gov or a state-run enrollment platform.

Almost every state in our sample commented on this proposal, and all who commented supported the repeal of the Exchange DE option. The New York and Minnesota marketplaces cited the operational issues inherent in the Exchange ED option, such as complicating coordination between the marketplace and Medicaid and creating consumer confusion. Both the Massachusetts and California marketplaces suggested that the previous administration’s policy contradicts the ACA’s purpose, with California noting the law created marketplaces to promote clear comparison of insurance based on price and quality and Massachusetts indicating that the Exchange ED option would diminish consumer protections. The California DOI, voicing its support for the Biden administration’s proposal, emphasized that private companies should not “supplant the proven advantages” of SBMs. 

Extending the Open Enrollment Period

Since 2017, the annual Open Enrollment Period (OEP) on HealthCare.gov has run from November 1 to December 15. The Biden administration is proposing a one-month extension of the OEP so that it runs from November 1 until January 15 starting this year. While the administration anticipates that the new enrollment period would apply to all exchanges, it asked for comments on whether to provide SBMs with the flexibility to set different OEP dates.

All of the states in our sample supported the extended enrollment period. Comments underscored the consumer benefits of having additional time to enroll, from more opportunities to consult with Navigators to the potential to increase signups and associated improvements to the marketplace risk mix. While Oregon and Michigan will be beholden to the dates the Biden administration finalizes due to their use of HealthCare.gov, SBMs have enjoyed the flexibility to extend their enrollment periods beyond the federal enrollment period. Several marketplaces responded to the administration’s request for comments on providing SBMs with the flexibility to set their own OEP dates. Massachusetts and New York both supported continued flexibility for SBMs to extend the OEP beyond the federal default period, with New York clarifying that the federal guidelines should reflect the minimum acceptable length for the annual enrollment opportunity. Conversely, Minnesota’s marketplace noted that while they are in support of an extension for the federal platform, they would prefer to maintain the flexibility to conclude open enrollment by the end of December, pointing to the ability of consumers to sign up for a full year of health insurance and avoid coverage gaps. In a similar vein, California’s marketplace requested the administration ensure that coverage begins no later than February 1 of the plan year, citing the potential for consumers to experience lapses in coverage with a later effective date. Oregon also highlighted the potential for coverage gaps, suggesting that all plans purchased through December 31st have a coverage effective date of January 1.

New Special Enrollment Period

The proposed rules include a new special enrollment period (SEP) for individuals with a household income that does not exceed 150 percent of the federal poverty level. Under the American Rescue Plan (ARP), this population qualifies for federal subsidies in 2022 which would provide access to free or nearly free silver plans along with cost-sharing reduction subsidies. The SEP would allow them to enroll in silver-level marketplace plans in states that use HealthCare.gov. SBMs would be able to choose whether or not to offer the SEP on their state’s marketplace, and insurers offering individual health plans outside the marketplace would not be required to implement the new SEP.

A majority of states in our sample provided comments on this proposal, and all comments supported of the creation of the new SEP. The California marketplace and the Michigan DOI indicated the SEP would allow consumers to take advantage of the ARP’s temporary subsidy enhancements. The Massachusetts marketplace pointed to its ConnectorCare program, a coverage option with enhanced premium and cost-sharing subsidies that offers a special enrollment opportunity for residents determined newly eligible for the program outside of the annual OEP, noting that the program’s success (including a lack of adverse selection, an oft-expressed fear associated with SEPs). Some states asked for changes to the proposed rule, criticizing the restriction of enrollment to silver plans. The DC marketplace, while indicating the new SEP would be easy to implement, called the restriction arbitrary and capricious and argued that consumers should be able to select whatever plan meets their need under the new SEP. In the alternative, the DC marketplace asked for SBM flexibility to implement the SEP without the metal-level restriction. Oregon suggested that rather than limiting enrollment to silver plans, consumers should be connected to enrollment assistance to help them choose a plan, noting some consumers may opt for a nearly free bronze plan that offers office visits pre-deductible, rather than a silver-level plan with cost-sharing assistance.

Reinstating Former 1332 Waiver Guardrails

The Biden administration also proposed rescinding 2018 guidance the previous administration codified related to waivers under Section 1332, a provision of the ACA allowing states to waive certain requirements under the health law within guardrails that ensure certain key consumer protections, coverage quality and affordability. The 2018 guidance reduced these safeguards, allowing states to use 1332 waivers to more easily circumvent the ACA’s rules. In response, the Biden administration proposed an interpretation of the guardrails that essentially tracks with previous policies in place under the Obama administration, including affordability, comprehensive coverage, and enrollment standards aimed at preventing state innovations from leaving consumers worse off than they would be under the default ACA rules.

By and large, states in our sample supported rescinding the 2018 guidance, noting that the lowered guardrails codified earlier this year reduce consumer protections and promote less-than-comprehensive coverage. The New York marketplace’s comments and Oregon’s dual-agency comments suggested that the proposal related to deficit neutrality and calculation of federal pass-through funding under Section 1332 should be revised so as not to penalize states that are able to increase enrollment (leading to greater federal expenditures on marketplace subsidies). The comments suggested either accounting for the projected enrollment increase, or the eligible but not enrolled, in the baseline when calculating pass-through funding, or to calculate pass-through funding on a per-capita basis. Notably, Oregon’s comments also opposed the modification to remove the prior administration’s interpretation of the comprehensive coverage guardrail. The state agencies’ comments suggested that the Biden administration’s proposal would stifle state innovation. 

Ending the Separate Billing Requirement for Non-Hyde Abortion Services 

A previous rule finalized by the last administration that has yet to go into effect required insurers covering non-Hyde abortion services to bill consumers separately for the portion of premium that covers this benefit with an entirely separate invoice. While the amount is nominal, if the rule were to go into effect, consumers would be at risk of losing their coverage should they fail to complete the two separate transactions to pay their premium in full. Insurers panned the rule, citing premium increases, costs to insurers and consumer confusion. The Biden administration, echoing these concerns and highlighted the risk that insurers may cease coverage of these services, proposed rules would instead allow insurers to choose how they will comply with a preexisting legal requirement to separate payment for these services, including the option of providing consumers with a single bill.

Of the states in our sample who commented on this proposal, all supported repealing the separate billing requirement, expressing that the two-bill rule would have caused consumer confusion, raised costs, and created additional administrative burdens. The New York marketplace, noting its “strong support” for the Biden administration’s proposal, suggested that if the prior administration’s rule went into effect costs would hit not only insurers and by extension consumers but also SBMs, who would bear the cost of consumer confusion through increased call center volume. DC highlighted concerns that under the double billing requirement, issuers who would have to make costly updates to their IT systems and operations could decide to either drop coverage of abortion services or leave the marketplace entirely, impacting health care access for millions of people across the country. These criticisms of the double billing rule underscored the positive response to the Biden administration’s proposal to repeal what the states described as an onerous requirement.  

Takeaway 

Thanks to a pandemic, a change in administration, and federal law changes, this has not been a normal year for marketplace policymaking. States have had to keep pace with shifting priorities and requirements in order to effectively implement them and serve their residents. Among the states in our sample, officials largely applauded the most recent proposals, indicating they will help expand insurance enrollment. States also urged the administration to maintain state flexibility to implement further improvements.

A Note on Our Methodology

This blog is intended to provide a summary of comments submitted by SBMs and state DOIs. 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. For more stakeholder comments, visit http://regulations.gov.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.