HHS Finalizes Market Stabilization Rule

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The Department of Health and Human Services (HHS) took a step towards providing insurers some degree of certainty when it finalized its proposed Exchange market stabilization rule on April 18, 2017. Right now, the Affordable Care Act’s (ACA) fate is anything but certain. Repeal and replace efforts are making little progress and questions surrounding what will happen to the cost-sharing subsidies are getting contradictory and conflicting responses. With deadlines for submitting applications to participate on the Exchanges in 2018 quickly approaching, insurers are looking to the Trump Administration and Congress for signs that steps will be taken to stabilize the Exchange markets.

Although many questions about the ACA’s future remain, the final rule issued by HHS is a small step towards ensuring Exchange market stability. The rule amends standards relating to open and special enrollment periods, guaranteed availability, network adequacy and the allowable de minimis variation in actuarial value for the metal tier plans.

Open Enrollment – Shortens the open enrollment period for 2018 Exchange coverage to November 1, 2017 – December 15, 2017 with an effective date for coverage of January 1, 2018. State-based Exchanges, such as Covered California, may elect to extend the enrollment period for 2018 coverage.

Special Enrollment – Increases pre-enrollment verification of eligibility for special enrollment periods and makes other changes to special enrollment rules, such as limiting changes from one metal tier plan to another and placing additional verification requirements on special enrollments due to marriage or permanent moves (e.g., must show evidence of prior coverage for 1 or more days during the 60 days preceding the date of marriage or move). These changes are applicable to individual Exchange coverage offered through HealthCare.gov. State-based Exchanges may decide whether and how to implement pre-enrollment eligibility verification procedures.

Guaranteed Availability – Allows insurers, to the extent permitted under applicable State law, to require a policyholder whose coverage is terminated for non-payment to pay all past due premiums owed to that issuer for coverage during the prior 12 months before resuming coverage with that issuer. This change applies to coverage offered inside and outside of the HealthCare.gov Exchanges and applies to the individual, small and large group markets. It does not apply to coverage through the Federally-facilitated Small Business Health Options Program. State-based Exchanges have discretion whether to adopt similar rules.

Actuarial Value – Increases the de minimis variation allowed for metal tier plans from +/- 2 to -4/+2 (e.g., the actuarial value for a silver level plan could range from 66% to 72%).

Network Adequacy – HHS will defer to states to review network adequacy for qualified health plans if the state has a review process in place. If a state does not have a review process in place or the resources to establish one, HHS will rely on an insurer’s accreditation through a recognized accreditation body.