Taking Action Now for a Stable Marketplace for the Long-Term

By Kevin Counihan, CEO of the Marketplace

As we get ready for 2017 Open Enrollment and look to the future, one of our most important tasks is to continue to build a strong Health Insurance MarketplaceSM, where the millions of Americans who rely on the Marketplace can continue to find affordable plans that meet their needs. That is why today we are announcing a proposed rule with clear, substantive improvements that would help issuers deliver more affordable choices to consumers and will help strengthen the Marketplace for years to come.  These proposed actions and others we have taken over the last six months would help to: support issuers with high-cost enrollees, while updating risk adjustment; strengthen the risk pool; promote additional enrollment; and support issuers in entering the Marketplace or growing their Marketplace business.  While some of these changes are proposed for 2018, others could begin in 2017.  And other, related improvements are already underway.

Supporting Issuers with High-Cost Enrollees and Updating Risk Adjustment for Everyone

Prior to the Affordable Care Act (ACA), millions of Americans with pre-existing conditions were locked out of health insurance, and one of the core tenets of the ACA has been that people with pre-existing conditions finally have access to the coverage they need. The ACA’s risk adjustment program plays an important role in ensuring that issuers have both the incentives and the financial support to design products to serve all Americans, and today’s rule proposes significant actions to strengthen the risk adjustment program. These changes will support issuers in serving the highest cost enrollees while also seeking to make risk adjustment more predictable and more effective at spreading risk for all issuers.  Specifically:

  1. Beginning with the 2017 benefit year, the rule proposes a modification to risk adjustment regarding the cost of enrollees who do not stay with an issuer for the full plan year.
  2. In order to help reflect enrollees with serious conditions like Hepatitis C, HIV, or others, the rule proposes to use prescription drug utilization data as a source of information about enrollee’s health and the severity of their conditions beginning with the 2018 benefit year.
  3. The rule also proposes to modify risk adjustment as to costs associated with the most expensive enrollees. Under this proposal, a portion of costs exceeding $2 million for an individual would be shared among issuers. This type of risk sharing would reduce uncertainty for issuers who are not yet able to reliably predict the prevalence and nature of high-cost cases.
  4. The proposed rule also asks for comment on a number of approaches for addressing the costs of healthier enrollees. Our goal is to update risk adjustment for all types of enrollees, to ensure that issuers can have confidence in the program as they design products to attract all types of consumers.
  5. Lastly, separate from the risk adjustment program, we are seeking comment on whether and how to further support the successful transition of former Pre-Existing Condition Insurance Plan (PCIP) Program enrollees into the Marketplace to ensure that they do not experience a lapse in coverage.

These proposals would bring more certainty into the Marketplace, as they would enable issuers to account for the risk of all enrollees in their bottom line, while continuing to ensure that all Americans have access to the care they need.

Strengthening the Marketplace Risk Pool

Along with helping issuers cover enrollees with more serious health needs, we also recognize the importance of balancing the mix of enrollees in the Marketplace risk pool. Today’s rule builds on other steps already under way to strengthen the risk pool.

  1. Special enrollment periods (SEPs) exist to ensure that people who lose coverage or experience other qualifying events have the opportunity to enroll in coverage.  We are committed to making sure that SEPs are available to those who are eligible for them and equally committed to avoiding any misuse or abuse of special enrollment periods. In 2016, we took a number of steps to ensure appropriate use of SEPs, such as introducing a confirmation process under which consumers enrolling through common SEPs are directed to provide documentation to confirm their eligibility.  In the proposed rule, we are seeking information on additional steps related to SEP outreach or policy we could take as soon as the 2017 plan year to strengthen the SEP risk pool.
  2. We’re helping ensure consumers who turn 65 are moving into Medicare and off the Marketplace, and already this year we’ve begun to see the impact of the efforts we’ve made to do that, as we saw a precipitous drop in dual enrollment with those who just turned 65 in August.
  3. We’re seeking comments through our recently issued Request for Information regarding concerns that some third-party entities may be inappropriately steering their Medicare and Medicaid patients into the individual market in order to receive higher reimbursement rates.
  4. We seek comment in this proposed rule on coordination of benefit policy that, similarly, is intended to ensure individuals entitled to Medicare and Medicaid are appropriately enrolled in those programs.

Improving Enrollment Growth

We also are always looking for new opportunities to increase both the number of Marketplace enrollees and the share of enrollees who are young and healthy.

  1. We recognize that robust outreach and consumer assistance can help with enrollment growth. To that end, we see comment on whether a certain amount or percent of user fees for the Federally-facilitated Marketplace should be dedicated to outreach.
  2. Today’s proposed rule includes consumer protections intended to provide a transparent consumer experience when enrolling directly through online agents or brokers who are registered with the Marketplace, or directly through an insurance company’s website. We have been working hard on the technology behind this additional enrollment channel, and our proposals, if finalized, will further competition in the Marketplaces while providing another channel for consumers, including young, healthy consumers, to enroll.

Removing Obstacles to Issuer Entrance, Growth, and Innovation

Today’s proposed rule also contemplates further removing potential obstacles to issuers growing their business and entering more markets.

  1. We are seeking comment on whether we should eliminate a requirement that certain issuers participating in the individual market Federally-facilitated Marketplaces also offer coverage through the Federally-facilitated SHOP Marketplaces.
  2. The proposed rule offers more flexibility for innovation around plan design by issuers, particularly around bronze plan offerings, while still protecting the coverage upon which consumers rely.
  3. We also include proposals to give new and growing issuers more flexibility in calculating their medical loss ratios, and to avoid instances where issuers who are adjusting their individual market or group market portfolios would inadvertently trigger a ban on participating in the individual or group market.

In just a few weeks, Open Enrollment will begin for consumers to come and shop and find a wide variety of affordable choices. As the Marketplace continues to grow and mature, one of our most important priorities is to study data, listen to a range of market participants, test out different approaches, and adapt to what we see and hear. We have a number of tools to make adjustments like the ones we are proposing today, and are confident in our ability to make the Marketplace an even more attractive market for consumers and health plans alike.

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