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CMS proposed rule reduces user fee in ACA exchanges 

States, as Georgia has done, could waive certain ACA requirements to develop their own state healthcare programs.

Susan Morse, Managing Editor

The Centers for Medicare and Medicaid Services is proposing to lower the Affordable Care Act exchange user fee that insurers must pay, passing the savings on to consumers. 

In the proposed annual Notice of Benefit and Payment Parameters for the 2022 Proposed Rule released late Wednesday afternoon, CMS is proposing to reduce the user fee for federally facilitated exchange issuers from 3% to 2.25% of premium for the 2022 benefit year. This will add to the 0.5% reduction in the user fee rate included in the 2020 payment notice, for a total reduction of 1.25% over the past four years. 

CMS proposes to reduce the user fee for issuers offering plans through state-based exchanges that use the federal platform to 1.75% of premium.  

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The rule also proposes to require state-based exchanges to verify eligibility for special enrollment periods in closer alignment with the verification standards used on the federally facilitated exchange since 2018.  All exchanges are now required to conduct special enrollment period verification for at least 75% of new enrollments. 

CMS is continuing to allow states to implement Section 1332 waivers to waive certain ACA statutory requirements. This proposal allows states to decentralized enrollment through insurers and web brokers rather than using HealthCare.gov. 

Earlier this month, CMS approved Georgia's request to implement a Section 1332 waiver to transition the state's individual market from the federally facilitated exchange to a private sector platform called the Georgia Access Model, beginning in 2023. Under the model, consumers will shop for available plans through web brokers, health insurance companies and traditional agents.

Opponents have said this is an "unlawful waiver" that will expose consumers to greater financial risk by encouraging the use of junk plans. 

The rule proposes the option for states to implement a private partner-based design using direct enrollment and enhanced direct enrollment as an alternative to their state's enrollment websites. To date, CMS has approved nine different private sector enhanced direct enrollment partners and more than 30 direct enrollment entities.

This leverages web brokers and issuers to serve as the consumer-facing means to apply and enroll in the individual market, but the exchanges would continue to be responsible for ensuring privacy and security controls and business standards and for making all eligibility determinations.
 
The rule also proposes to make full qualified health plan enrollee experience survey results across exchanges publicly available in an annual public use file.  

Finally, the rule proposes to create a new special enrollment period to help enrollees in off-exchange individual market coverage who become newly eligible for premium tax credits or cost-sharing reductions.

WHY THIS MATTERS

Tightening the standards on special enrollment period eligibility verification is expected to protect the risk pool, which will also lower premiums by preventing people from waiting until they are sick to enroll, the agency said.  

To improve the risk adjustment model's prediction of costs for healthier individuals necessary for a stable risk pool, this rule proposes policies that update the risk adjustment model's predictive power for both healthy and very sick individuals.  

In addition, the rule builds on flexibility provided in prior payment notices by proposing to allow states to reduce risk adjustment transfers by up to 50% on a multiyear basis for up to three years, if certain criteria are met.

The user fee reductions contribute directly to lower premiums, CMS said.  

Consumers can enroll in the ACA outside of the yearly open enrollment period based on certain qualifications such as the loss of health insurance or another life event like getting married. Lowering premiums will help consumers who have lost their jobs and employer insurance as a result of the COVID-19 pandemic.
 
THE LARGER TREND

CMS is accepting comments for 30 days after the rule has been filed for public inspection, rather than waiting for it to be filed in the Federal Register, which adds to an aggressive timeline, according to Health Affairs. Historically, these rules are released in the fall but since 2018, CMS has issued them around January.

With comments being due around the end of December, the rule could become final before President-elect Joe Biden is inaugurated on January 20, 2021.

ON THE RECORD

"Thanks to our market-oriented policies, the exchanges have stabilized: prices have gone down and insurers have returned," said CMS Administrator Seema Verma. "The actions we are taking today to reduce user fees will directly reduce premiums. The program is running better than ever before due to the actions we took to increase efficiency and reduce costs. The improvements our policies have made notwithstanding, we must never be satisfied when too many Americans still cannot afford coverage in the individual market."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com