Industry News

HHS Proposes Reforms to Stabilize Market in 2018

On Feb 15, 2017, HHS filed a proposed rule containing reforms to individual and small group market rules intended to stabilize those markets in 2018. We expect this rule to be the first of many revisions of existing regulation affecting the private insurance markets. The major changes proposed in the rule:

  • Shorten the annual Open Enrollment Period – Shorten the 2018 individual open enrollment period from 3 months (Nov 1 – Jan 31) to 1.5 months (Nov 1 – Dec 15).
  • Verify eligibility for Special Enrollments – Require HHS to conduct pre-enrollment verification of eligibility for all categories of special enrollment opportunities in the individual market starting June 2017.
  • Curb abuses from Special Enrollments – Allow carriers to collect unpaid premiums from the prior year before effectuating coverage. Prohibit current enrollees to purchase richer plans during a special enrollment period. Limit the scope of the special enrollment opportunity for a new marriage to couples with at least one person having current coverage.
  • Deferring to States – Defer to state reviews of carrier network adequacy and transition away from a federal standard, allow states to “write-in” essential community providers not on HHS’s list, and lower the essential community provider standard from 30% to 20% for network adequacy.
  • Expand actuarial value of metallic levels – Enable greater plan design flexibility in the individual and small group markets by increasing the actuarial variations for each metal level from +/-2% to -4/+2%. The rule maintains the +5% bronze plan variation finalized in the 2018 Payment Notice and expands the bottom side to -4% for a range of 9% overall. The graphic below is a visual representation of the impact of these changes on plan design flexibility with a comparison to large group and self-funded markets.

Prior drafts of the proposed rule included an expansion of the CMS standard age curve for community rating from 3:1 to 3.49:1 for adults in the individual and small group markets. HHS removed the proposal from the filed version as well as a proposal to shorten ACA’s grace periods for exchange customers from 90 days to 30 days.

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