CMS Wants More 'Catastrophic' Health Plans in ACA Exchanges

 The Trump administration says a proposed rule that introduces new types of insurance -- including multi-year catastrophic plans -- will expand consumer choice and lower premiums, but critics argue it could instead create more financial risk for patients.

The rule issued Monday will mainly affect offerings on the Affordable Care Act's (ACA) health insurance exchanges. Sen. Ron Wyden (D-Ore.) blasted the proposal, saying it's a gift to insurers at the expense of families.

"Here are just a few things on offer: raising the out-of-pocket maximum, allowing insurance companies to offer even more complicated and indecipherable plans that include fewer in-network providers, and rolling out the red carpet for junk plans that don't cover essential healthcare," Wyden said in a press release. "On top of that, the Trump administration continues to heap more red tape on top of consumers, making the task of getting and maintaining good health insurance even harder."

Previously, one might say "you can't make a terrible choice" when it comes to choosing a health plan on the exchanges -- for example, choosing between a gold- and silver-rated plan or between one insurer and another. But if the rule is implemented as designed, "I would definitely say there's a lot of risks for consumers now in making a bad choice in the marketplace," said Katherine Hempstead, PhD, senior policy adviser at the Robert Wood Johnson Foundation in Princeton, New Jersey.

Mehmet Oz, MD, MBA, administrator of the Centers for Medicare & Medicaid Services (CMS), took a different view. "We are cracking down on improper and misleading practices while giving states and health plans more room to innovate and compete. The goal is simple: lower costs, more choice, and exchanges that work as intended," Oz said in a press release.

The proposed Notice of Benefit and Payment Parameters for 2027 establishes standards for health insurance issuers, brokers, and agents involved in helping consumers get ACA coverage. In addition to changes in plan design and efforts to lower costs, the agency wants to implement stronger eligibility and income verification measures, and add tougher enforcement policies to make sure premium tax credits are directed only to eligible consumers and to prevent improper enrollments.

With regard to plan changes, one thing the proposal does is to make "almost everybody" eligible for a hardship exemption, and therefore eligible for a catastrophic plan, Hempstead noted.

People buy health insurance for two reasons: to guarantee access to affordable healthcare on an ongoing basis and to protect themselves from a catastrophic event, but "when you push everyone to a really low actuarial value plan [like a catastrophic plan], you're taking care of one thing at the expense of the other," she argued. So patients would be covered for an organ transplant that might otherwise bankrupt them, but might never know they need a transplant due to avoiding routine check-ups because of high out-of-pocket costs.

The proposed rule also floats the idea of catastrophic plans with multi-year contracts, as long as 10 years.

There are no clear examples of multi-year health insurance contracts currently, with the exception of possibly Medicare, Hempstead said. But even enrollees on Medicare Advantage plans must shop for a new plan annually. "It's hard for me to really see why that would be appealing to either plans or consumers," and how that would allow innovation, Hempstead said.

CMS also has proposed to restrict eligibility for premium subsidies, cost-sharing reductions, and advanced payments of benefits only to individuals meeting "immigration eligibility standards." To rein in unfair marketing practices, the agency also called for prohibiting monetary rebates and barring agents and brokers from "falsely asserting ... that consumers will qualify for zero-dollar insurance or zero-dollar premiums."

"These proposals would protect consumers enrolling on the exchanges from noncompliant agents, brokers, and web-brokers, and protect consumers from inaccurate eligibility determinations, being enrolled in health coverage that does not meet their needs, and unexpected tax liabilities," according to a CMS fact sheet.

Other provisions in the draft rule include:

• Requiring state-based exchanges to measure improper payments of advanced premium tax credits
• Requiring states with mandated benefits beyond the federally required "essential health benefits" to defray their costs
• Reintroducing a pre-enrollment special enrollment period verification requirement for enrollees on the federal exchange platform
• Simplifying the process for states to transition from federally funded exchanges to state-based exchanges

Hempstead said provisions seeking to rein in certain marketing practices among brokers and agents, such as banning cash incentives for enrollment, are a good thing, however other aspects of the rule are flawed.

"I'm all for program integrity, but I see it as something that should really be trying to maximize accuracy," she said. "I think that this administration only likes the part of program integrity that makes it harder for people to get benefits."

"In general, everything they're doing points toward having a market that has fewer people in it and costs less money. The way to do that is to make it harder to get coverage, by requiring more income verification [measures], fewer special enrollment periods, and restricting different kinds of immigrants' eligibility," Hempstead added. And there's "no real call" for excluding legal immigrants from insurance who are already supporting the government through federal and state taxes, she said.

In the proposed rule, the agency also reintroduces the idea of non-network or "indemnity plans," where doctors and insurers have no pre-arranged financial relationship. Such plans have largely been absent from healthcare since the late 20th century, when most physicians were self-employed, but are experiencing a kind of "renaissance," Hempstead said.

The benefit of such plans is if patients find really inexpensive healthcare, they can save money, she explained. But "if you can't find people who will accept what your plan is willing to pay them, you could have a problem in the other direction, where you don't really have any access to care," Hempstead said.

https://www.medpagetoday.com/publichealthpolicy/washington-watch/119844