ACA Round-Up: Updated Preventive Services, MLR Rebates, And More

Federal officials remained busy throughout the end of December 2021 and into January 2022 issuing guidance on the Affordable Care Act (ACA). Covered topics include revised preventive services guidelines for women and children, additional resources for navigators, medical loss ratio (MLR) rebates, Section 1332 developments, interoperability, the latest insurer compliance review, and more. This article summarizes these announcements and other new guidance issued in recent weeks.

Updated Guidelines on Preventive Services

On January 11, the Department of Health and Human Services (HHS) and the Health Resources and Services Administration (HRSA) announced updated guidelines for preventive care and screening for women and infants, children, and adolescents. These guidelines help providers make clinical decisions and establish coverage standards for those with private health insurance and coverage through Medicaid expansion. The changes will go into effect for plan years that begin in 2023.

Under Section 2713 of the Public Health Service Act, all non-grandfathered private health plans—including individual, small group, large group, and group health plans—must cover certain preventive services without cost sharing. These preventive services include evidence-informed preventive care and screenings for infants, children, and adolescents as well as additional preventive care for women as outlined in comprehensive guidelines supported by HRSA. HRSA’s preventive care and screening guidelines for women are the source of the ACA’s contraceptive mandate.

Since 2016, HRSA has contracted with the American College of Obstetricians and Gynecologists—which established the Women’s Preventive Services Initiative—to review clinical guidelines and new evidence and recommend changes to HRSA’s guidelines. After soliciting public comment, HRSA then decides whether to adopt any updates or changes recommended by these expert stakeholders.

HRSA’s updated guidelines for women reflect updated recommendations for breastfeeding services and supplies; contraceptives; screening for HIV; counseling for sexually transmitted infections; and obesity prevention for women aged 40 to 60. The most notable changes include clarifications to the scope of breastfeeding equipment and supplies (including access to double electric breast pumps and milk storage supplies, as well as lactation consultations); allowing women to purchase male condoms for pregnancy prevention; and defining contraceptive follow-up care to include the management and evaluation of and changes to a contraceptive (such as removal, continuation, or discontinuation of a contraceptive). HRSA’s revised guidelines for infants, children, and adolescents reflect updated recommendations for suicide and depression screening (for those aged 12 to 21); changes to behavioral, social, and emotional screening (for all ages); new risk assessments for cardiac arrest and death (for those aged 11 to 21); and a new risk assessment for hepatitis B (for all ages).

Separately, the Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a new report showing that 151.6 million people with private health insurance—including 58 million women and 37 million children—received preventive services without cost sharing in 2020. ASPE also includes state-specific estimates of those with private plans and estimates the number of Medicaid and Medicare beneficiaries that have received preventive services benefits under the ACA.

Finally, ASPE summarized existing data on the impact of preventive services requirements on utilization and outcomes. In particular, the report highlights increases in cancer screening and vaccinations and discusses the impact of Medicare wellness visits, improved access to contraceptives, and earlier detection and treatment of chronic health conditions (such as hypertension and diabetes). The report also emphasizes the importance of these ACA requirements in helping narrow racial disparities in access to preventive services.

$10.2 Million More For Federal Navigators

On December 16, 2021, HHS announced that it would provide current navigator grantees with an additional $10.2 million in funding for the 2022 open enrollment period, which ends on January 15, 2022. This is on top of the largest-ever investment in the navigator program for the 2022 plan year: HHS awarded $80 million in grants to 60 organizations to serve as navigator grantees beginning with the 2022 plan year. This level of investment is expected to continue for the next three years through fall 2024.

HHS authorized the additional $10.2 million in light of this year’s longer open enrollment period, which was extended by 30 days under a rule finalized in fall 2021. Federal officials do not explain how they will allocate these funds across existing navigator grantees. But the additional funding will be used for continued outreach, education, and enrollment efforts during the extra 30 days of open enrollment.

Insurers Owe $2 Billion In MLR Rebates

On December 17, HHS released new MLR data for the 2020 reporting year. This includes raw data from insurers in a public use file, MLR rebates by state and market for 2020, and a list of insurers that owe rebates for 2020.

The ACA requires insurers to spend a certain percentage of their premium revenue—80 percent in the individual and small group markets and 85 percent in the large group market—on health care claims or health care quality improvement expenses. If insurers fail to meet an MLR of 80 or 85 percent, they must rebate the difference to their enrollees. Insurers should provide rebates (or notice of any rebates) by September 31 of each year. Insurers can issue a premium credit (for those enrolled with the same insurer) or make a check payment to individual enrollees; in the group market, savings can be shared between an employer and employee.

For 2020, insurers owe rebates of about $2 billion to nearly 9.8 million consumers. This represents an average of $205 in rebates per person. Consistent with prior years, the rebates are most significant in the individual market, where insurers owe $1.3 billion to an estimated 4.8 million consumers. These rebates are down slightly from the record-high $2.46 billion owed to more than 11.2 million consumers last year but are still significant.

Rebates vary widely by state and insurer. At the low end, no rebates are owed in four states. At the high end, insurers in Florida, Texas, and Virginia owe rebates of more than $220 million, $212 million, and $234 million, respectively. This is followed by insurers in Maryland ($105 million) and Pennsylvania ($172 million).

While insurers struggled financially in the early years of the ACA, that is no longer the case. High individual market rebates are driven by exceptionally profitable years, which have continued during the pandemic. (Rebates issued this year are based on financial performance from 2018, 2019, and 2020.) In a comparison of MLRs across markets for 2018 to 2020, insurers offering individual market coverage have the lowest simple MLR when compared to coverage in the commercial group market, Medicare Advantage, and Medicaid managed care. This profitability is likely attracting new insurers into the individual market and leading existing insurers to expand their footprint.

The MLR provisions are popular, but billions of dollars in rebates each year suggests that premiums are overpriced, contributing to a higher uninsured rate. HHS also proposed tightening how insurers calculate their MLRs, citing concerns about insurer behavior and noncompliance with MLR reporting.

Latest Section 1332 Developments

HHS and the Department of the Treasury continue to consider and approve new Section 1332 waiver applications from states. This includes approval of Hawaii’s request for a waiver extension, Minnesota’s request to proceed with a waiver extension application, Colorado’s pending Section 1332 waiver request, and a federal comment deadline on Georgia’s waiver.

Hawaii

On December 10, 2021, HHS approved Hawaii’s request for a 5-year extension of its current waiver and also issued a fact sheet. Hawaii is the only state whose waiver does not include a state-based reinsurance program. Instead, Hawaii waived the ACA’s small business health options program (SHOP) and related requirements through December 31, 2021. The state’s waiver extension request would continue to waive the same requirements—such as the establishment of a SHOP, employee choice, the definition of qualified employer, and certain qualified health plan requirements—through December 31, 2026.

Hawaii’s extension request was deemed complete on September 14, and federal officials held a 30-day comment period that ended on October 14. Only one comment was received, and federal officials responded to it in coordination with feedback from state officials. The terms and conditions of the waiver approval look similar to other waivers with the added condition that Hawaii must promptly inform all SHOP-eligible employers that the waiver has been extended through plan year 2026 alongside information about eligibility and the implications of the extended waiver.

Minnesota

On January 13, HHS confirmed that Minnesota can proceed with an application to extend its existing Section 1332 waiver for a state-based reinsurance program through the end of 2027. Minnesota notified HHS on November 29 that it wanted to extend the waiver. If not extended, Minnesota’s waiver will expire at the end of 2022. The letter from HHS outlines the information that must be included in the extension application, including updated economic or actuarial analyses.

The correspondence makes no mention of the Basic Health Program (BHP). Minnesota has long asked HHS and Treasury to reconsider its pass-through funding calculation to allow Minnesota to receive the benefit of reduced premiums under the BHP. CMS responded in June 2021 to note only that federal officials are reviewing the request and will propose “potential approaches” to address the intersection of these two programs in a future rulemaking. This rulemaking could come soon: the White House is currently reviewing the proposed BHP methodology for 2023 as well as other changes to BHP rules.

Colorado

On November 30, Colorado submitted a Section 1332 waiver amendment application for its public option plans. This application was preliminarily deemed complete on January 3, 2022, and federal officials opened a 30-day public comment period. Comments are due February 2.

Colorado submitted a letter of intent to apply for a waiver amendment in July 2021. In October 2021, HHS confirmed that the application would be reviewed as an amendment request and outlined the information that Colorado should submit in its application. Colorado submitted its application in November 2021, asking for approval of a waiver from January 1, 2023 through December 31, 2027.

As discussed here, insurers in the individual and small group markets must, beginning with the 2023 plan year, offer a Colorado Option plan at premiums that are up to 15 percent lower than current premiums over three years. Premiums would be reduced by 5 percent in 2023, 10 percent in 2024, and 15 percent in 2025. In subsequent years, premiums would be allowed to increase only at the rate of national medical inflation. Premium reductions are expected to come from lower provider rates, reduced profits, and lower utilization from effective care management.

Colorado wants to amend its current approved (now extended) reinsurance waiver to receive additional federal pass-through funding that reflects new premium savings from the public option plans. The additional federal pass-through funding would help make coverage more affordable for individuals who do not currently qualify for marketplace subsidies (such as those in the family glitch). Colorado asks to continue to waive the ACA’s single risk pool requirement to support reinsurance and allow plan-level rating variation—and to extend this part of the waiver to the small group market.

The combined impact of the state’s reinsurance program and public option plans is estimated to reduce premiums by 22.3 percent, provide federal savings of $213.8 million, and increase enrollment by 4.1 percent in 2023 (relative to what would have occurred in the absence of the waiver). This would rise to premium savings of 32 percent, federal savings of $367.6 million, and enrollment increases of 15.1 percent in 2027.

Much of this impact will be driven by the reinsurance program, at least in 2023. The waiver amendment (i.e., introduction of the public option plans) alone would reduce premiums by 1.3 percent, provide federal savings of $13.3 million, and increase individual enrollment by about 1 percent in 2023. This impact would increase over time as public option plans meet higher premium savings thresholds. Beginning in 2025, premium savings would rise to nearly 14 percent, federal savings would be at least $137.8 million, and individual enrollment would increase by about 11 percent.

Pass-through funding would be used to subsidize coverage for individuals who do not currently qualify. In particular, Colorado will offer a $0 premium plan with a 94 percent actuarial value for those whose income is up to 150 percent of the federal poverty level (equivalent to coverage available for those who qualify with this income group through the marketplace). This would bring more than 10,000 people into Colorado’s individual market. Remaining funds would be used to increase the generosity of subsidies for those who already qualify for marketplace subsidies.

Georgia

 We may soon learn the fate of the Georgia Access Model, the second phase of Georgia’s waiver. As discussed here, HHS opened a new 60-day comment period to solicit input on the waiver after Georgia rebuffed repeated requests for updated actuarial and economic analyses to help assess the waiver. This comment period ended on January 9, 2022.

Latest Report on Insurer Compliance

On December 30, HHS released a summary report of compliance reviews of 22 insurers (19 medical insurers and three stand-alone dental insurers in the individual market) in 16 FFE states for the 2020 plan year. The states are Alaska, Arizona, Delaware, Georgia, Illinois, Louisiana, Maine, Michigan, Montana, North Carolina, Ohio, South Dakota, Texas, Utah, Virginia, and Wisconsin. However, because of the pandemic, HHS conducted full compliance reviews of only 7 insurers and modified compliance reviews of the remaining 15 insurers. Additional information on how compliance reviews are conducted (and reports from prior years) are available here.

The focus of the report is on the degree to which insurer practices comply with federal requirements on prescription drug benefits, insurer participation standards, rates and benefits, transparency in coverage, marketing and benefit design, network adequacy, premium rate variations, and more. For each of the 17 review areas, HHS summarized federal requirements, described its review methodology, identified the results of its compliance review, and highlighted best practices for insurers.

The highest degrees of noncompliance or need for improvement were in the areas of 1) network adequacy; 2) termination of coverage; 3) downstream and delegated agencies; 4) notices for the Health Insurance Casework System (HICS); 5) privacy and security policies during enrollment; 6) transparency in coverage; and 6) agent and broker oversight. Many of these areas have been of concern in prior compliance reports. HHS documented no significant issues for these areas: prescription drugs, insurer participation, rates and benefits, marketing and benefit design, premium rate variation, notices for special enrollment periods, maintenance of records, compliance plans, and patient safety standards.

Among other findings, insurers failed to meet contracting requirements for essential community providers (such as Indian health care providers) and had incorrect or outdated provider directories. Agents and brokers did not complete the required federal registration and training process before helping individuals with enrollment. Certain notices (such as HICS notices and enrollment letters) were not provided to complainants in a timely manner and reflected incomplete information. Other notices—such as termination notices—were not standardized, were not sent at all, were not sent in a timely manner, or did not include required information (such as the coverage end date or reason for termination). Insurers also struggled with communicating with consumers about complaints, including not notifying consumers when their cases were resolved.

These overall results mask high noncompliance by some individual insurers during the full compliance review. Of the areas where HHS made findings or observations of noncompliance, four of the 22 insurers had a finding or observation in more than half of the areas. Fifteen insurers had no findings or observations.

Delay Of Interoperability Rule For Insurers

In March 2020, HHS issued a new rule requiring insurers that offer qualified health plans to comply with new interoperability measures. The goal of this rule was to help patients more easily access their health information across the many programs that HHS oversees. Insurers were required to develop application programming interfaces (APIs) for data such as patient claims and encounter information or insurer provider directory information by July 1, 2021. Insurers also had to comply with requirements for allowing electronic health data to be exchanged between payers by January 1, 2022.

About one month after the rule was issued, HHS announced a delay in enforcement for some requirements in light of the pandemic. In September 2021, HHS published additional guidance noting that it would not take enforcement action against certain payers for the payer-to-payer data exchange provision until the completion of future rulemaking. In taking this enforcement stance, HHS cited stakeholder concern about the lack of a single standard for payer-to-payer data exchange.

This was followed by the most recent notice issued on December 8, 2021, which formalized HHS’s decision to exercise enforcement discretion not to take action regarding certain payer-to-payer data exchange provisions. HHS expects to provide an update on enforcement later during calendar year 2022; in the meantime, the draft letter to insurers for the 2023 plan year notes that enforcement will not be incorporated into 2023 plan standards. HHS has shared additional information regarding its approach to health data exchange and interoperability.   

Approval Of More EDE Entities

HHS continues to approve new third-party entities to use the enhanced direct enrollment (EDE) pathway. The EDE pathway allows a consumer to complete the entire marketplace enrollment process on the website of a third party, such as a web-broker or insurer. Consumers can thus apply for coverage, be determined eligible for financial help, and enroll in a marketplace plan on a single third-party website without ever visiting or creating an account with HealthCare.gov.

As of November 23, 2021, HHS had approved 12 entities to host an EDE platform (meaning these entities can lease their approved EDE platform to other EDE entities) and 53 entities to use the EDE process. This is up significantly from August 30 when CMS had approved 11 hosts and 35 users. Of the host entities, all but one is a web-broker or DE technology provider. EDE users are primarily insurers, with only three web-brokers.

Updated List Of HIPAA Opt-Outs

HHS released a list, updated as of early mid-November 2021, of self-funded, non-federal governmental plans that have opted out of certain federal health insurance requirements. All but one plan sponsor and plan on the list opted to exempt those plans from (at least) federal mental health parity standards.