On September 17, 2021, the U.S. Department of Health and Human Services (HHS) and the Treasury Department issued a final rule to bolster access to marketplace coverage and reverse several Trump-era regulatory changes under the Affordable Care Act (ACA). This is the Biden administration’s first full rule on the marketplaces and provides additional insight into its priorities for the ACA more broadly. The rule was accompanied by a press release and fact sheet.
The final rule touches on a range of topics and is technically the third installment of the annual payment notice for 2022. But it is more akin to the Trump administration’s “market stabilization” rule, which was issued early in 2017 to reverse Obama-era changes and adopt policies that applied that year and for 2018. Because the references to the various Obama- and Trump-era rules can get confusing quickly, this post refers to the final rule as the “market modernization” rule.
This rule was expected. In finalizing the remainder of the 2022 payment rule in April 2021, HHS made clear that future rulemaking would address, at a minimum, the subset of policies that the Trump administration finalized before inauguration day, such as allowing states to transition away from HealthCare.gov. Because those changes were already finalized, HHS had to undertake additional notice-and-comment rulemaking to undo those changes. This final rule completes that process.
Beyond undoing these changes, HHS adopts additional marketplace policies. Some reverse other Trump-era regulations that, for instance, limited the duration of the annual open enrollment period (OEP) or required “double billing” for certain abortion services. Others are new policies—such as a monthly special enrollment period (SEP) for low-income consumers—to help ensure that many uninsured people who currently qualify but are not enrolled can access free or nearly-free platinum-equivalent coverage. Many of these changes were identified as priorities for the Biden-Harris presidential transition team by a broad range of health care stakeholders.
In finalizing the rule, HHS invokes President Biden’s executive orders on the ACA and racial equity, as well as the administration’s goals of greater access to coverage, improved affordability, and reduced administrative burdens. The preamble emphasizes that expanded access to coverage and affordability is critical to advancing health equity. Half of the nation’s uninsured population are people of color and even people with health insurance face barriers to care because of affordability, health literacy, and a lack of in-network providers. These challenges, HHS notes, have been underscored during the pandemic, which has disproportionately affected people of color.
The comment period on the proposed rule was 30 days, and many of the 390 comments on the proposed rule can be viewed here. Some commenters raised concerns about the length of the comment period and decision to begin the comment period based on the rule’s initial posting date (as opposed to its publication date in the Federal Register). HHS disagreed on both counts, noting that 30 days was sufficient and the link to the public inspection date was needed to help insurers finalize their rates for 2022. The final rule was issued days before the September 21 deadline for insurers to sign final qualified health plan agreements.
New Low-Income SEP To Expand Access To Marketplace Coverage
The most significant new policy included in the final rule is a monthly SEP for individuals and dependents who are eligible for advance premium tax credits and whose household income is under 150 percent of the federal poverty level (FPL) (i.e., up to $32,580 for a family of three). This includes lawfully present immigrants who otherwise qualify for advance premium tax credits. This change will make it easier for low-income people to enroll in marketplace coverage throughout the year and could be especially critical to helping the millions of people who are expected to lose Medicaid coverage at the end of the declared public health emergency successfully transition to exchange coverage.
This policy will be permanent but will be in effect only during periods of time when this population qualifies for maximal advance premium tax credits (i.e., when Congress sets the taxpayer’s premium contribution to 0 percent). This is the case for 2021 and 2022 under the American Rescue Plan Act (ARPA): individuals at this income level qualify for a $0 or very-low premium silver plan and cost-sharing reductions that boost their plan’s actuarial value to 94 percent (i.e., platinum-equivalent coverage). While ARPA’s enhanced subsidies are temporary, Congress is actively considering making these enhancements permanent which would extend the duration of this new SEP.
The low-income SEP will be available only through the exchanges (not for off-exchange coverage in the broader individual market) and only at the option of the exchanges, so state-based exchanges (SBEs) can choose to implement, or not implement, the SEP. Exchanges that adopt the low-income SEP can require consumers to submit documentation to confirm their eligibility. Recognizing the challenges that low-income people may face in submitting documentation to prove their income and eligibility, HealthCare.gov will assess eligibility based on attested household income and apply standard post-enrollment income verification requirements. Exchanges can choose the coverage effective date to be either the first day of the month following plan selection or to align with existing rules.
Individuals who qualify can enroll in any metal level of coverage. But those who are already enrolled and want to use the SEP to switch marketplace plans during the year would be limited to switching to a silver plan. Individuals could not, say, switch to a gold plan mid-year and then back to a silver plan. But individuals could move from their current silver plan to a silver plan with a more generous (or simply different) provider network or drug formulary. This risk could introduce some adverse selection. However, HHS continues to believe that consumers would be sufficiently disincentivized from doing so because they would lose progress towards deductibles and other accumulators.
In one change from the proposed rule, current enrollees will face some restrictions in adding new individuals or dependents to coverage through this SEP. Enrollees can add individuals or dependents only to 1) the enrollee’s current plan; 2) a new joint silver plan (for both the current and new enrollees); or 3) a new silver plan for the current enrollee and a separate plan for the new enrollees. This will prevent enrollees from adding new people to the plan to switch to a non-silver plan.
Many commenters supported the new low-income SEP and emphasized its potential to advance health equity and increase coverage among low-income and hard-to-reach communities. These commenters were skeptical that the policy would present a significant risk of adverse selection. (Because consumers could enroll at any time during the year (including after a health issue arises), HHS expected some adverse selection and estimated that insurers might increase premiums by 0.5 to 2 percent annually at a cost of about $250 million to $1 billion.) As discussed here, concerns about adverse selection may be overblown because 1) comparable state experiences have not resulted in adverse selection; 2) those eligible for the low-income SEP will be primarily motivated to enroll in coverage because of generous subsidies (rather than a health need); and 3) the remaining uninsured are disproportionately young, meaning this SEP could increase enrollment of younger consumers, thereby improving the health of the overall risk pool. In light of these benefits, some commenters called on HHS to increase the qualifying income level from 150 percent FPL to 200 or 250 percent FPL, but HHS declined to do so.
Some commenters, including many insurers, disagreed, arguing that this policy would result in adverse selection, especially for plans with broader provider networks or drug formularies. Consumers who enrolled in coverage and then developed a health issue could use the low-income SEP to switch to a silver plan with a more generous provider network or more generous benefits. To address these concerns, some recommended additional restrictions, such as limiting the SEP to only currently uninsured consumers. HHS rejected these recommendations and believes the policy mitigates concerns about adverse selection, especially when combined with robust outreach and education efforts and enrollment duration factors included in the risk adjustment methodology.
HHS devotes part of the preamble to discussing comments on, and opportunities to improve, coordination between Medicaid and the exchanges. HHS may, if needed, provide a separate SEP to former Medicaid beneficiaries who are prevented from enrolling in exchange coverage due to challenges that result from the end of the public health emergency.
Reversing Policies In The 2022 Payment Notice
Much of the 341-page final rule is dedicated to reversing the more controversial ACA policies adopted by the Trump administration at the end of its term. Those changes were adopted in a rule published in the Federal Register on January 19 (the January rule), which meant that federal officials had to use a new round of notice-and-comment rulemaking to amend them.
There was some urgency for the Biden administration to address these changes in new rulemaking, in part because many of the changes apply for the 2022 plan year and must be built into 2022 rates. This is among the reasons why the Biden administration previewed its intended approach when finalizing the remainder of the 2022 payment notice in late April (the April rule).
Increasing The User Fee For 2022
HHS adopts adjusted user fees for the 2022 plan year of 2.75 percent for federally facilitated exchanges (FFE) (up from 2.25 percent in the January rule) and 2.25 percent for state-based exchanges that use the federal platform (SBE-FP) (up from 1.75 percent in the January rule). This will result in an increase of about $200 million in user fees for 2022. Even with this increase from the January rule, the user fee for 2022 will remain lower than 2021, when it was 3.0 percent for FFEs and 2.5 percent for SBE-FPs. HHS believes that the user fees are set at an appropriate level to sustain essential exchange-related activities based on federal costs, the need to fund consumer outreach and navigators, and Biden administration priorities. Most commenters supported the increased user fee rates for 2022.
No More State Exchange Direct Enrollment Option
The January rule adopted a new Exchange Direct Enrollment (Exchange DE) option that would have allowed states to transition away from a single, centralized exchange (e.g., HealthCare.gov) to enrollment via private sector entities (insurers, web-brokers, and agents and brokers). The exchange—whether the FFE, SBE-FP, or an SBE—would link its back-end eligibility system to the private DE entities. These private entities would then operate the enrollment pathways where consumers would shop, select a plan, and enroll in coverage. This option was inspired by Georgia’s Section 1332 waiver, which allows Georgia to eliminate the use of HealthCare.gov and replace it with a decentralized enrollment system of web-brokers and insurers. The January rule extended this option to other states without the need for a Section 1332 waiver.
The Exchange DE option would have been available for SBE states beginning with the 2022 plan year and FFE or SBE-FP states beginning with the 2023 plan year. For 2023, states with the FFE and SBE-FP that pursued this option would pay a user fee of 1.5 percent. Even under the Trump administration, HHS did not expect any current SBEs to take advantage of this option for 2022.
The final market modernization rule eliminates the Exchange DE option and the corresponding user fee. In doing so, HHS notes that the Exchange DE option is inconsistent with Biden administration priorities, there has been a lack of interest among states in pursuing this model, DE itself remains an option, and there have been significant changes to policy and operational priorities since the DE option was proposed and finalized. These changes—including implementation of ARPA, the broad COVID-19 SEP, and enforcement of new federal and state requirements under the No Surprises Act—require new resources and add complexity to state, exchange, and insurer operations. Federal funding and resources should be directed to these efforts, which benefit consumers directly, and not diverted to optional programs.
Nothing stops states from continuing to leverage DE. But HHS no longer believes that the purported benefits of the Exchange DE option—which “could serve as a barrier to consumers getting comprehensive coverage rather than facilitate such enrollment”—outweigh its risks.
HHS also cites concerns from commenters that shifting from a centralized marketplace such as HealthCare.gov would harm consumers. “[N]early all commenters” on the January rule “cautioned about potential harmful impacts to consumers from the introduction of the Exchange DE option.” Comments on the proposed market modernization rule raised similar concerns, and HHS notes that the “overwhelming majority of commenters” supported repeal of the Exchange DE option.
HHS notes that a shift away from the exchanges now would be especially harmful given that more than 2.8 million consumers enrolled during the broad COVID-19 SEP. Other concerns about the Exchange DE option include consumer confusion, the potential for steering to non-comprehensive plan options, a lack of coordination with state Medicaid and CHIP programs, and coverage disruption. Commenters also raised health equity concerns if the Exchange DE option, for instance, made Medicaid less accessible to underserved or historically marginalized groups or made it harder for individuals to enroll in comprehensive, affordable marketplace coverage.
A Revised Interpretation Of Section 1332
Section 1332 allows states, with federal approval, to waive certain ACA requirements if a state demonstrates that their proposal meets certain statutory procedural and substantive “guardrails.” These statutory guardrails prohibit approval of a waiver unless it will:
- “Provide coverage that is at least as comprehensive as the coverage defined in Section 1302(b) and offered through Exchanges;”
- “Provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as the provisions of this title would provide;”
- “Provide coverage to at least a comparable number of its residents as the provisions of this title would provide;” and
- “Not increase the federal deficit.”
HHS and Treasury adopted prior regulations to implement Section 1332’s procedural requirements but not the statute’s substantive guardrails, which remained in guidance only. Guidance on the substantive guardrails was issued by the Obama administration in 2015 and then rescinded and replaced by the Trump administration in 2018. To date, only Georgia has been approved for a broad waiver under the 2018 guidance. Georgia’s waiver has since been challenged in court and may soon be revisited in light of recent changes to federal law and policy. Of the other 15 states with a Section 1332 waiver, all but one is for a state-based reinsurance program.
Citing the need to give states certainty about the future of Section 1332 waivers, the January rule codified the 2018 guidance’s guardrail interpretations into regulations. As a result, for each substantive guardrail under the Section 1332 statute, the regulations reflect the Trump administration’s much-criticized interpretation that Section 1332 waivers could be approved even if only some coverage under a waiver is as comprehensive, as affordable, and as available as coverage provided under the ACA.
The January rule also explicitly defined coverage in a way that included short-term limited duration insurance (which allows medical underwriting and does not have to comply with ACA requirements), allowed flexibility in state legal authority for a waiver, focused on only aggregate effects of a waiver (meaning some residents could be worse off so long as the overall waiver improved comprehensiveness and affordability), and changed the standards for monitoring and compliance and periodic evaluation to require the Secretaries to assess compliance on bases that include any interpretive guidance.
New Interpretation Looks Back To 2015
The final market modernization rule reflects new priorities for assessing Section 1332 waivers and rescinds the 2018 guidance, eliminates any references to or incorporation of the 2018 guidance, and replaces the Trump-era interpretations with an approach that generally tracks the Obama-era guidance from 2015. In doing so, the Biden administration notes new priorities, further consideration of prior comments, and concerns that the 2018 interpretation could allow waivers that do not satisfy the guardrails. Among other concerns, the 2018 interpretation failed to satisfy the Biden administration’s goal of ensuring that individuals are actually enrolled in affordable, comprehensive coverage.
A “majority” of prior comments—on both the 2018 guidance and the January rule—opposed the 2018 interpretations and its incorporation into federal regulations. Those commenters expressed concern about the guidance’s legality and its expansive view of “coverage” to include options that allow underwriting. Some urged the agencies to rescind and abandon the 2018 guidance itself. HHS and Treasury responded to these comments in the preamble to the January rule but declined to change any of substantive policies or interpretations in the 2018 guidance, even though only “a few” commenters expressed their support for the guidance and its incorporation into regulations.
Commenters shared the same views in comments on the proposed market modernization rule. HHS and Treasury received 262 comments on the Section 1332 waiver proposals. The “overwhelming majority” of stakeholders supported the revised interpretations and urged the agencies to finalize the proposed changes, raising many of the same concerns noted above (with an additional emphasis on the need to promote health equity and ensure comprehensive coverage during the pandemic). Only a few comments supported the 2018 interpretation, asserting that the proposed changes would be overly restrictive and stifle state innovation. Some commenters also urged additional flexibility for states on issues such as deficit neutrality, coordinated waiver processes, and plan design. In response, HHS and Treasury noted that more specific regulatory changes are not needed at this time and urged states to bring forward specific proposals and concerns for discussion.
The Biden administration’s new interpretation of the guardrails, which is incorporated throughout the final market modernization rule, largely reverts to the interpretation included in the Obama-era guidance from 2015. In particular, the agencies interpret “coverage” the same way for all parts of Section 1332(b), including the coverage, comprehensiveness, and affordability guardrails. So, to be approved, a waiver must be expected to provide coverage that is at least as comprehensive and affordable as would have been provided absent the waiver and to the same number of residents.
In the preamble, the agencies renew their commitment to accounting for the effects of a waiver across different groups of state residents and, in particular, vulnerable residents (such as those who are elderly, low-income, or with serious health issues as well as people of color and other historically marginalized communities). So even if a waiver meets the comprehensiveness or affordability guardrails in aggregate, it will likely fail if it reduces the comprehensiveness or affordability of coverage for vulnerable populations. States are also encouraged to analyze whether a waiver would increase health equity, consistent with President Biden’s executive order on racial equity.
The comprehensiveness guardrail will be evaluated based on whether the waiver satisfies essential health benefits (EHB) requirements or, if appropriate, Medicaid or CHIP standards. The agencies will consider the impact of a waiver on the comprehensiveness of coverage for all state residents regardless of the type of coverage they would have absent the waiver. A waiver will not meet this guardrail if it reduces the number of people with coverage that meets the state’s benchmark in all 10 EHB categories, for any one category of EHB, or for the full set of services covered under Medicaid or CHIP. Agency review will examine the waiver’s effects on benefits provided to vulnerable and underserved residents.
The affordability guardrail will be evaluated based on whether the waiver provides coverage that is at least as affordable overall for residents of the state as coverage absent the waiver. Affordability will be based on the ability to pay for health care relative to income and would account for total out-of-pocket spending—including premiums, cost-sharing, and any costs associated with non-covered services—for all residents. Again, the agencies will assess how the waiver affects affordability for vulnerable and underserved residents and those with high health spending burdens.
Waiver proposals that reduce the number of individuals with a minimum level of cost-sharing protection will also be rejected. This includes waivers that would reduce the number of people with coverage with an actuarial value of 60 percent or more and an out-of-pocket limit under the ACA, as well as any waiver that reduces the number of people with coverage that meets Medicaid affordability requirements. Waiver applications must show the effect of the waiver on premiums and out-of-pocket costs by income, health expenses, health insurance status, and age, and describe any anticipated changes in employer contributions or wages.
The coverage guardrail will be evaluated based on whether the waiver will provide coverage to a comparable number of state residents absent the waiver. Here, the emphasis is on the number of people that would have coverage under the waiver (as opposed to the number that could have access to this coverage). The agencies also clarify that “coverage” means minimum essential coverage under the ACA, eliminating the reference to “health insurance coverage” that includes short-term plans.
The agencies will consider the impact of a waiver on coverage losses for all state residents, including any impact on other programs (such as Medicaid). State analysis should account for whether the waiver will sufficiently prevent gaps in or discontinuation of coverage. Consistent with the other guardrails, the agencies will consider any effects on vulnerable and underserved residents, and states must analyze coverage effects by income, health expenses, health insurance status, and age.
Deficit Neutrality Guardrail And Pass-Through Funding
The agencies do not modify the deficit neutrality guardrail, which prevents the agencies from approving a waiver if doing so would increase the federal deficit. This unchanged approach is unsurprising, since the 2018 guidance largely maintained the 2015 guidance’s approach. Overall, projected federal spending under the waiver can be no greater than projected federal spending in the absence of the waiver. Federal spending includes all changes in tax revenue and other forms of revenue (including user fees) that result from a waiver. Waivers also account for direct federal spending, such as changes in Medicaid spending and administrative costs to the federal government.
A state’s 10-year budget plan should project changes in federal spending and revenues for each of the 10 years. In one change from the 2018 guidance, the agencies suggested that a waiver application that increases the deficit in any given year will be less likely to satisfy the deficit neutrality requirement.
The agencies received several comments that urged a more flexible approach to the deficit neutrality guardrail, citing concerns that the current interpretation disincentivizes states from applying for waivers that would increase enrollment among those who are already eligible for (but not enrolled in) subsidized exchange coverage. (This is because increased enrollment would cause higher federal spending in the form of premium tax credits, which would increase the federal deficit and cause a challenge for waiver approval; this would run afoul of the deficit neutrality guardrail even if new enrollees already qualified for premium tax credits in the absence of the waiver.) Commenters suggested alternative approaches, such as accounting for those already eligible or computing pass-through funding on a per capita basis, but HHS and Treasury rejected these ideas.
The final market modernization rule also newly codifies prior interpretations related to federal pass-through funding. The regulatory text generally tracks the statutory text in Section 1332(a)(3) while noting that the amount of pass-through funding can be updated to reflect changes in federal or state law (as HHS recently did in light of ARPA subsidies and the COVID-19 SEP). The amount of pass-through funding is calculated annually, and these funds must be used solely for purposes of implementing the approved waiver. States must outline how federal savings will result from the waiver and how the state intends to use the pass-through funding to implement its waiver plan.
Standards for Waiver Extensions and Amendments
The final market modernization rule establishes processes for states to request extensions of or amendments to approved waivers. Section 1332 contemplates waiver extensions, which have been requested by Alaska, Colorado, Hawaii, Oregon, and Wisconsin. Colorado has the only approved waiver extension to date. Under Section 1332, state continuation requests are deemed granted unless federal officials, within 90 days, deny the request or solicit additional information. The statute does not explicitly mention waiver amendments, but federal officials have been asked to entertain them by states such as Maine. The new requirements for both extensions and amendments are consistent with the processes included in the terms and conditions of recently approved state waivers.
A waiver amendment is a change to an approved waiver plan that is not otherwise allowable under the waiver’s terms and conditions, that could impact compliance with the guardrails, or that could impact program design for an approved waiver. This might include changes to eligibility, coverage, premiums, or out-of-pocket costs. A waiver extension is limited to extending the existing terms of an approved waiver plan (and would not allow substantive changes to the underlying approved waiver). If a state asks for substantive changes in its extension request, the request may be treated as an amendment request.
For both types of requests, states must submit a letter of intent with a description of intended changes and implementation plans. For waiver extensions, states must do so at least one year prior to the waiver’s end date. For waiver amendments, states must do so no later than 9 months (and ideally at least 15 months) prior to the proposed implementation date. The agencies will respond within 30 days to confirm that the change qualifies as an extension or amendment and identify the information that states must submit. Federal officials highlighted the types of information that states may be asked to submit but those requirements are expected to be responsive to state-specific needs and requests. The content of waiver amendment proposals generally tracks information needed to assess a new waiver application. (The same may not be true of waiver extension requests; the agencies might request an updated economic or actuarial analysis, but a full analysis might not be needed.)
State proposals will be subject to state and federal public comment requirements but could be combined with an annual state-level public forum for the approved waiver. The full program—the existing waiver plan and the amendment or extension request—will be analyzed together and must continue to meet Section 1332 requirements. Pass-through funding will be provided collectively, not separately.
Application Procedures And Other Changes
In other areas, HHS and Treasury discuss existing policies in the preamble but do not adopt changes to existing Section 1332 requirements. This is true for the coordinated waiver process, the timing of applications, actuarial and economic analyses, implementation timelines, public input processes for waivers, compliance and monitoring, or evaluation. Those issues are not discussed at length here.
While HHS is open to discussion of “potential technical collaboration,” HealthCare.gov generally cannot accommodate different rules for different states. Thus, states that want to use waivers to make significant changes must generally have an SBE. While the 2018 guidance touted enhanced DE as an option to get around this issue, the preamble to the final market modernization rule maintains that the Internal Revenue Service is unable to administer most state-specific tax rules and could only accommodate small adjustments that are already consistent with federal programs. Where states are interested in modifying ACA tax provisions, they may want to waive the provision entirely and create a state-administered subsidy program under a waiver. States interested in other customized or specialized federal technical or operational capabilities (such as the use of EDGE server data for state-based reinsurance programs) are responsible for paying for the costs of these federal services.
The agencies also permanently adopt and extend more flexible public notice requirements and procedures for emergency situations. These flexibilities were first adopted in an interim final rule from 2020 in response to the pandemic; the final rule extends them to all future emergencies (e.g., natural disasters, public health emergencies, or other emergent situations that threaten access to coverage, care, or life). Under this flexibility, states can ask to modify certain requirements regarding hearings and public comment periods. The agencies also broaden the Secretaries’ authority to modify public notice procedures to expedite a decision on a Section 1332 waiver during an emergent situation when a delay would undermine or compromise the request and be contrary to consumer interests. The same will apply to post-award public notice requirements for approved waivers.
As the agencies have in prior rules and guidance, the preamble notes that the Secretaries reserve the right to further evaluate an approved waiver and suspend or terminate an approved waiver (in whole or in part) if a state materially fails to comply with the terms and conditions of the waiver, Section 1332’s requirements, and other federal laws. This provision has come up as HHS and Treasury have requested additional information from Georgia to assess ongoing compliance with Section 1332’s guardrails.
Reversals Of Other Trump-Era Policies
The final market modernization rule reverses additional Trump-era rules. It extends the annual OEP by 30 days (to January 15) relative to recent years, updates navigator requirements, and eliminates the “double billing” rule for certain abortion services. Consistent with the proposed rule and the preamble to the April rule, HHS also discusses its intended approach for standardized plans and network adequacy in response to Columbus v. Cochran, a district court decision that vacated several Trump-era changes adopted in the 2019 payment rule.
Extending The Annual Open Enrollment Period
The annual OEP for individual market coverage has extended for 45 days—from November 1 to December 15—since the 2018 plan year. However, this has not always been true: the initial OEP for 2014 lasted 180 days, and the OEPs for 2015, 2016, and 2017 lasted 90 days. The 2018 OEP was set for 90 days but halved by the Trump administration, which set a permanent 45-day open enrollment period via the market stabilization rule. The shortened OEP—combined with funding cuts for outreach—likely contributed to stagnant enrollment through HealthCare.gov during most of the Trump era.
The final market modernization rule establishes an annual OEP of 75 days—from November 1 to January 15—beginning with the 2022 plan year. In one change from the proposed rule, SBEs will be allowed to set a shorter annual OEP so long as it extends through at least December 15 (although most SBEs already allowed extended enrollment through January). HHS will also allow SBEs to extend their OEPs beyond January 15 and adopt expedited effective date rules. While consumers have generally grown accustomed to the December 15 deadline, HHS believes a one-month extension is warranted to give consumers additional time to assess their plan options and understand their premium liability. While HHS does not anticipate a significant impact on the exchange risk pool, the extended OEP is estimated to cost about $8.3 million annually in operational costs for the FFE and SBE-FP.
An extended OEP could be especially valuable for those who qualify for marketplace subsidies and are auto-reenrolled into coverage but receive a lower subsidy than the prior year (because the cost of their benchmark plan has dropped). This means that the enrollee may have to contribute a higher level of premium towards coverage. Because these consumers are auto-reenrolled, they may not be aware of their higher premium contribution until they receive a bill in early January. With the OEP extended through January 15, these consumers can change plans and select a more affordable option. Assisters—navigators, certified application counselors, and agents and brokers—have also raised concerns that the 45-day OEP does not provide enough time to assist all potential consumers. And consumers in underserved communities that may need more assistance or time to enroll (such as those with limited English proficiency) may also benefit from an extended enrollment period.
Most commenters supported the extension of the OEP to January 15 and reinforced HHS’s rationale from the proposed rule. Commenters cited additional benefits of extra time for those whose coverage is terminated, those transitioning from Medicaid, and those who may face premium increases for 2022 as certain ARPA benefits expire at the end of 2021. Many noted that SBEs with longer OEPs have not experienced adverse selection and have instead had a healthier risk pool mix. Many encouraged HHS to adopt an even longer OEP with different timeframes (such as starting on October 15 or extending to January 31). Commenters that opposed the OEP extension cited concerns about adverse selection, administrative burdens, and marketing or operational costs.
Reinstating Certain Requirements For Navigators
The Trump administration made many changes to the navigator program. Beyond significant funding cuts that were recently reversed by the Biden administration, the Trump administration eliminated the need for each marketplace to have at least two navigator entities (one of which must be a community and consumer-focused nonprofit group), eliminated a requirement that navigators maintain a physical presence in the marketplace service area, and made post-enrollment assistance activities optional. These changes were made in the 2019 payment rule and the 2020 payment rule.
The final market modernization rule reverses one of these changes by reinstating the requirement that navigators in the FFE provide information and assist consumers with certain post-enrollment issues. In particular, navigators will be required (not just permitted) to help consumers:
- Understand the process of filing appeals of exchange eligibility determinations (whether related to qualified health plan enrollment, subsidies, SEPs, or public programs);
- Understand how to apply for an exemption to the requirement to maintain minimum essential coverage from the exchange (which is only relevant for those who may qualify to enroll in catastrophic coverage now that Congress set the penalty to $0);
- Understand the exchange-related requirements for reconciling premium tax credits (such as helping consumers obtain and use Form 1095-A and directing consumers to the IRS for additional assistance with tax-specific issues);
- Understand basic concepts of health coverage to increase health insurance literacy (such as helping consumers understand terms like deductibles and coinsurance and how to identify in-network providers); and
- Contact appropriate tax preparers or other resources regarding tax-related issues.
These activities will now be mandatory, rather than optional although most existing navigator grantees continue to report on these activities. Since HHS already issued its navigator grants for 2022, this requirement will go into effect for the next round of navigator grantees. HHS intends to make training materials and other educational resources available. Certified application counselors do not receive the same resources as navigators and are not required to perform the post-enrollment assistance activities, although many do provide these services.
HHS believes that post-enrollment assistance requirements are consistent with Section 1311 of the ACA, which expressly requires navigators to provide some post-enrollment assistance by referring consumers with complaints, questions, or grievances to state agencies. The final rule simply clarifies additional topics of post-enrollment assistance. Most comments supported reinstatement of this policy.
Some commenters questioned why HHS did not address the other navigator-related policy changes put in place by the Trump administration that are noted above. Reinstatement of those requirements, HHS asserts, is not necessary because the navigator grant application process already accounts for these needs. Some exchanges may want to grant to only one organization, and a community and consumer-focused nonprofit group may not be the strongest applicant in a state. And most of the grantees for 2021 will maintain a physical presence in the states they are serving suggesting that a formal requirement is not necessary in the short-term.
Eliminating The Double Billing Rule For Non-Hyde Abortion Services
Section 1303 of the ACA prohibits insurers from using exchange subsidies to pay for non-Hyde abortion services. It also requires insurers that cover non-Hyde abortions to separately collect and segregate funds for non-Hyde abortion services in a separate account specifically designated for abortion. The estimated premium attributable to the coverage of non-Hyde abortion services cannot be less than $1 per enrollee per month. All services for non-Hyde abortions must be funded from the separate account.
In implementing Section 1303, HHS initially took the position that consumers could use a single transaction (such as paying with a single check) to pay premiums for both these abortion services and all other services. But HHS outlined other options for insurers to comply with Section 1303 as well and did not specify the method that an insurer must use to comply with the separate payment requirement. This was followed by additional guidance from the Trump administration on its approach to Section 1303, which was generally consistent with prior rules. To my knowledge, this prior interpretation had never been challenged in court.
Then, in 2019, the Trump administration shifted its interpretation by issuing the “double billing” rule, which requires insurers to send (and consumers to pay) two separate bills: one for the coverage of non-Hyde abortion services and one for the coverage of all other services. HHS asserted its new view that Section 1303 requires two separate payments (i.e., two distinct transactions) rather than two separate amounts. Consumers who fail to pay both bills could have their coverage terminated, and the rule was generally viewed as an effort to discourage insurers from covering non-Hyde abortion services (even though doing so is allowed under the ACA and several states mandate this coverage).
The double billing rule was quickly challenged in court by state attorneys general in California (on behalf of six other Democratic attorneys general) and Washington, as well as Planned Parenthood of Maryland. All three of those lawsuits were successful at the district court level where courts in California, Maryland, and Washington set aside the rule. The ruling in Washington was limited to Washington State and decided on preemption grounds. The rulings in California and Maryland vacated the rule under the Administrative Procedure Act, setting aside the rule on a nationwide basis. The government appealed those decisions to the Ninth Circuit (for the California and Washington cases) and to the Fourth Circuit (for the Maryland case), but all the appeals were put on hold (and will now likely be dismissed). Between the litigation and the pandemic, the double billing rule has never gone into effect (meaning HHS’s prior policies interpreting Section 1303 remained in effect).
The final market modernization rule repeals the separate billing requirement. HHS notes that repeal was supported by a majority of commenters from both a legal and policy perspective. Insurers must still comply with Section 1303 by collecting a payment of at least $1, treating that portion of premium as a separate payment, and segregating funds for non-Hyde abortion services. But insurers can continue to choose the method of doing so and will not have to burden consumers with two separate bills and payments. In particular, HHS reverts to a policy from the 2016 payment rule that gave insurers flexibility in complying with Section 1303. These options include sending an enrollee 1) a single monthly bill that separately itemizes the premium amount for the coverage of non-Hyde abortion services; 2) a separate monthly bill; or 3) a notice around enrollment time that a monthly bill will include a separate specified charge for these services. Enrollees can make the payment for all services—non-Hyde abortion services and all other services—in a single transaction.
HHS eliminated the separate billing requirement because Section 1303 does not require this policy. It also cited the court decisions; concerns about consumer confusion and coverage losses; and burdens on insurers, states, exchanges, and consumers to the tune of hundreds of millions of dollars. Further, HHS recognizes the risk that insurers might stop covering non-Hyde abortion services to avoid these costs, leading to higher out-of-pocket costs for consumers who need these services with a disproportionate impact on communities that already face barriers to care.
Some commenters objected to repeal of the double billing requirement, disputing concerns about consumer confusion and arguing that the 2016 interpretation is inadequate to satisfy Section 1303. These commenters questioned why HHS would retain the option for double billing by insurers if this option is so burdensome. These commenters also asserted that the new standard would weaken federal statutory conscience protections and limit transparency such that consumers will, unknowingly and against their will, purchase plans that include abortion coverage. HHS acknowledges these concerns but notes that multiple federal district courts have already set aside this requirement as the sole option to comply with Section 1303. HHS is codifying the 2016 policy to promote clarity among stakeholders.
Despite commenters urging it to do so, HHS did not prohibit insurers from sending separate bills altogether. But HHS does not believe that insurers are likely to use a separate bill for non-Hyde abortion services given the burdens associated with doing so. If an insurer opts to do so, it should do so in a manner that minimizes consumer confusion and promotes continuity of coverage (such as including both bills in the same mailing and explaining that enrollees can make a payment in a single transaction). Any premium nonpayment, including for non-Hyde abortion services, is subject to state and federal grace period requirements.
The final rule also eliminates a nonenforcement policy included in the double billing rule. Under this policy, enrollees who object to the coverage of non-Hyde abortion services for religious or moral reasons could “opt out” of that coverage by not paying the separate bill. HHS devotes a significant part of the preamble to its rationale for not allowing this opt-out and responses to commenter concerns that it misestimated its burden and savings on insurers, states, exchanges, and consumers.
HHS has already taken additional steps to improve transparency but notes that Section 1303 does not require insurers to alert consumers to this coverage for purposes of transparency. To the extent that all qualified health plan options in a state include this coverage—because of, say, a state mandate—this is an issue under state law. Further, opt-outs would conflict with other ACA requirements that prevent insurers from making changes except at renewal. Allowing individuals to opt out of certain services covered by marketplace coverage would violate Section 1303 and other ACA requirements.
Issues To Watch For The 2023 Payment Rule
In Columbus v. Cochran, a federal district court for the district of Maryland vacated four changes made under the 2019 payment rule related to network adequacy, standardized plans, income verification, and medical loss ratio (MLR) calculations. These parts of the rule were vacated, and most were remanded back to HHS for further action. In the April rule, HHS announced its plan to implement the decision as soon as possible for the income verification and MLR provisions but could not do so for network adequacy review and standardized plan options in time for the 2022 plan year.
Given the time needed to create new standards and allow stakeholders to adjust to these requirements, HHS will defer those changes to the 2023 plan year. The preamble to the market modernization rule maintains this stance, noting that both changes will take time to develop and will not be proposed until the 2023 payment notice. HHS also summarizes and responds to comments on these policies.
Comments were mixed with respect to standardized plans. Some opposed these plans altogether, arguing that the ACA’s metal tier levels already provide sufficient standardization and that standardized plans will stifle innovation and competition. Some urged HHS not to limit the number of non-standardized options, opposed preferential or differential display of standardized plans on the marketplace website, and asked for implementation delays until 2024. Some asked HHS to adopt a similar approach as in prior years by developing standardized plans based on popular current plans.
Others supported standardized plan options and urged preferential or differential display on the marketplace website. These comments focused on the need to simplify the shopping and plan selection experience for consumers and use standardized plans to help stifle discriminatory benefit design. Commenters noted the positive experience with standardized plans in SBEs, such as Covered California, and many recommended specific standardized plan elements (such as copays over coinsurance, low deductibles, and pre-deductible services).
Comments were also mixed on network adequacy. Commenters highlighted the role of network adequacy standards in advancing health equity and promoting full accessibility for consumers with disabilities, LGBTQ consumers, and consumers of color. Others focused on the specific standards that HHS should adopt and enforcement strategies to ensure provider access. Still others raised concerns about a single federal standard that may not account for state-specific differences or needs. Some commenters urged that telehealth options be allowed to satisfy network adequacy standards while others cautioned against over-reliance on telehealth in lieu of in-person care.
HHS provided some insight into what to expect for 2023. The department intends to set quantitative time and distance standards and focus on evaluating networks to help ensure access to providers where there have been complaints about network adequacy in the past (e.g., behavioral health providers). Time and distance standards will be informed by those used in Medicare Advantage and calculated at the county level. Insurers unable to meet those standards will be able to submit a written justification for the failure to do so. HHS expects that its methodologies will account for real-world geography, and it will require insurers to submit additional information in a machine-readable file and format specified by HHS to help assess plan network adequacy. Federal officials are also considering standards to promote health equity by, for instance, requiring provider directories to reflect information about each in-network provider’s race/ethnicity, languages spoken, accessibility, and office hours.
Past Due Premiums
In the preamble to the proposed market modernization rule, HHS had suggested it might revisit a Trump-era policy that allows insurers to refuse to enroll an applicant in a new plan if the consumer fails to pay outstanding premium debt from the prior year. This can lock consumers out of coverage that would otherwise be available during OEPs and SEPs if they cannot pay past-due premiums. HHS suggested the need to revisit this policy in light of President Biden’s executive order and its intent to address this in the 2023 payment notice. While this may still be the case, the final rule makes no mention of this policy or comments received on this issue.
HHS finalizes a technical change to confirm that individuals must qualify for some amount of advance premium tax credit above $0 to use SEPs based on being newly eligible or ineligible for subsidies. Individuals might be technically eligible for advance premium tax credit of $0, but those who are will be considered ineligible for advance premium tax credits for purposes of existing SEPs. HHS believes the clarification is important in light of ARPA subsidies, which increased financial help up the income scale and mean that many more people (an estimated 51,000 enrollees) may be technically eligible for $0 subsidies. The final rule clarifies that individuals qualify for relevant SEPs only when a change (to, say, income or household size) makes them newly eligible for advance premium tax credits of more than $0.
The market modernization rule also makes a technical change regarding the coverage of EHB. The rule confirms that insurers must comply with the Mental Health Parity and Addiction Equity Act (MHPAEA) when satisfying the requirement to cover mental health and substance use disorder services (including behavioral health treatment services) as an EHB. This corrects the prior rule that cross-referenced only implementing regulations for MHPAEA. The new final rule references the MHPAEA statute and implementing regulations to make clear that plans must comply with all MHPAEA requirements (including changes adopted in the Consolidated Appropriations Act of 2020 regarding non-quantitative treatment limits).