In a proposed regulation released Friday, March 14, the Centers for Medicare and Medicaid Services (CMS) place a line in the sand for state laws inhibiting the ability of Navigators, non-Navigator assisters, and certified application counselors (referred to hereinafter as “assisters”) from performing their duties. As CHIR faculty have previously documented in blog posts for The Commonwealth Fund, at least 17 states have enacted laws or rules restricting assisters from certain activities, limiting the types of entities that can become assisters, and/or requiring assisters to comply with burdensome financial requirements. A number of states are currently debating similar legislation. Under CMS’ proposed rules, these laws, or portions of them, would be preempted because they “prevent the application of the provisions of Title I of the Affordable Care Act.” In other words, if a state law prevents assisters from doing the jobs required of them by Federal law, it is invalid.

What types of state laws will be preempted?

Not all state efforts to impose requirements on consumer assisters are preempted. For example, CMS says that requirements that assisters undergo a background check or get fingerprinted are not preempted. To guide states, CMS provides a “non-exhaustive” list of the types of state laws that prevent the application of Federal law. These include:

• State requirements that assisters refer consumers to agents or brokers. CMS notes that, under Federal law, assisters have a requirement to provide consumers with impartial advice. States that require assisters to refer consumers to people who are not under a requirement to provide impartial advice “make it impossible for these assisters to comply with…Federal…duties and standards.”
• State rules that restrict the types of entities or individuals to whom assisters can provide advice. For example, any state law prohibiting assisters from working with employers or employees regarding coverage through the Small Business Health Options Program (SHOP) would be preempted. Also, CMS concludes that states cannot prohibit an assister from helping an individual who is currently insured or who has previously purchased insurance through an agent or broker.
• State limitations on assisters’ ability to discuss the terms of any particular policy or plan. CMS notes that under the ACA, Navigators have a duty to “facilitate selection of a QHP.” On its face, that duty requires assisters to give consumers information about plan benefits and features, including deductibles, co-payments, and provider networks.
• State requirements that all Navigators be agents or brokers or to carry errors and omissions coverage. These rules conflict with the ACA requirement that at least two types of entities, including one community and consumer-focused nonprofit group, serve as Navigators.
• State rules that render any individual or entity ineligible to serve as an assister when they are eligible under Federal standards. For example, any state rule that prohibits an assister from receiving payment, directly or indirectly, from a health insurer goes beyond the conflict of interest standards in Federal rules. While assisters cannot receive payment or other compensation from health insurers for their work enrolling consumers in Marketplace plans, Federal rules do not prohibit them from receiving payment for other activities, such as the delivery of health care services. Thus, state rules that prevent providers such as hospitals and community health clinics from serving as assisters because they receive payments from insurance companies would be preempted.
• State rules that otherwise prevent assisters from continuing to perform their Federally required duties. For example, a state rule requiring fingerprinting or a background check would be permissible, but if it includes a deadline for compliance that makes it impossible for a Federally approved assister to comply in a timely way, it would be preempted.

Proposal to Impose Financial Penalties on Non-compliant Navigators

In addition to striking down some state Navigator laws, CMS is proposing an enforcement scheme that would include Federal civil monetary penalties (CMPs) for Navigators and other assisters who do not comply with Federal rules. The CMPs could be a maximum of $100 per day per violation, for each individual affected by the violation. The CMPs can be imposed against both entities and individuals. However, the agency notes that it intends to “continue to work collaboratively with consumer assistance entities and personnel to prevent noncompliance issues and address any that may arise before they might rise to the level where CMP would be assessed.” CMS also says they may allow Navigators to enter into a corrective action plan instead of paying the CMP.

CMS wants to “prioritize working collaboratively with consumer assistance entities to ensure that improvements are made and future violations are prevented.” The amount of CMP, and the opportunity to enter into a corrective action plan would depend on the assister’s track record, the gravity of the violation, and the “culpability” of the assister. Consumer assistance entities and individuals will have a right to appeal the assessment of CMPs.

What kinds of violations would trigger a CMP?

CMS provides examples of situations that could lead a Navigator or assister to be assessed a CMP. These include:

• Providing assistance to a consumer before obtaining Exchange certification.
• Providing false or fraudulent information to a consumer.
• Encouraging a consumer to provide false information on his or her application.
• Steering consumers to a particular health plan.
• Disclosing or misusing personally identifiable information.

By laying out a Federal framework for enforcement of bad behavior by Navigators and other assisters, CMS is asserting its authority, particularly in states with Federally facilitated Marketplaces (FFM), to operate and provide oversight of the Marketplace and the assisters working on its behalf.  The agency is also sending a clear signal to states that their attempts to regulate assisters will be scrutinized. And, if they prevent assisters from performing their required duties, they will be preempted. However, these are proposed rules, and CMS is requesting public input through a 30-day comment period. Comments can be submitted here.