HHS Proposes Health Insurance Market Reforms for 2024 | Sheppard Mullin Richter & Hampton LLP

On December 21, 2022, the Department of Health and Human Services (“HHS”) issued a proposed rule aimed at promoting health equity and mitigating health disparities while minimizing administrative burdens. HHS Notice of Benefits and Payment Parameters for 2024 (“Proposed Rule”) Would Simplify ACA Health Plan Selection, Simplify Market Enrollment, and Expand Access to Care for Low-Income Consumers and medically underserved through review of adequacy of network and essential community provider (“ECP” standard). These proposed changes come in the midst of a record-breaking ACA market enrollment period, highlighting the increased demand for affordable health coverage.

Coverage expansion

The proposed rule reflects the Biden administration’s efforts to reduce administrative barriers to enrollment while improving overall consumer choice. In order to (i) promote fair treatment among consumers, (ii) ensure continuous coverage, and (iii) strengthen the risk pool, both federally subsidized exchanges and state-based exchanges on the federal platform (together, “exchanges”) be required to accept proof of the applicant’s expected annual household income when some information on the tax return is not available. Furthermore, members with income inconsistencies would be granted an extension of 60 days in addition to the 90 days provided for by current legislation.

To mitigate coverage gaps, the proposed rule would add a special enrollment period for people expected to lose Medicaid or children’s health insurance program coverage. Starting January 1, 2024, consumers will get up to 90 days after losing Medicaid or CHIP coverage to select a plan for Exchange coverage. In addition, HHS has proposed changes to Special Loss of Coverage (“SEP”) enrollment periods to avoid coverage gaps in cases where old coverage ends before the end of the month. Under the proposed rule, exchanges could allow coverage to begin on the first day of the month during which the old coverage ends.

Consumer choice

While expanding provider availability through the addition of new ECP categories is a commendable goal, HHS also aims to mitigate the plan choice overload that often leads to consumer confusion and frustration. By limiting the number of non-standardized plan options that issuers can provide on the Exchanges to two per product network type and metal tier, per service area, HHS hopes consumers can make more informed and focused enrollment decisions.

As an alternative to limiting the plan’s offers, HHS has proposed reinstating the significant difference requirement, which was first introduced by the Obama administration in 2015, but was rescinded by the Trump administration in 2019. However, the rule The proposal would strengthen the original standard by changing the criteria and difference thresholds used to determine whether plans are “significantly different” from each other.

Improved access

One of the intended objectives of the proposed rule is to improve the accessibility of affordable healthcare. This proposed rule reflects the current administration’s increased health oversight to address social and economic issues. CMS promotes several health equity initiatives in the proposed rule, thus aligning with the administration’s goals of mitigating health care disparities.

To promote access to care, especially to services for low-income and medically underserved consumers, HHS has proposed adding two new and distinct ECP categories for 2024: Mental Health Facilities and Centers for the treatment of substance use disorder (“SUD”). This would remove these providers from the “Other ECP Providers” category and would require issuers to attempt to contract with at least one SUD treatment center and at least one mental health facility.

The COVID-19 pandemic has severely impacted healthcare systems, economies and communities, while amplifying the mental health crisis the nation continues to grapple with. The proposed rule seeks to better facilitate and integrate mental health and SOUTH services as the pandemic continues to expose and exacerbate health system weaknesses.

Re-enrollment hierarchies

The proposed rule introduces a new policy to help more people take advantage of cost sharing reduction (“CSR”) opportunities by giving exchanges the flexibility to switch from a Bronze to a Silver plan. An eligible enrollee who would otherwise be automatically re-enrolled in a Qualified Bronze Level Health Plan (“QHP”) may instead be transferred to a Silver Level plan with a CSR, provided that the Silver award less prepayment tax credit (“APTC”) is less than or equal to the bronze award. (This is true even if the current bronze top remained available). HHS has also proposed hierarchical changes to create plan preferences for QHP enrollees that are no longer available through the marketplace.

Overall impact in perspective

Building on the promises set forth by the ACA, the proposed regulation highlights a renewed commitment to improve the equity and affordability of healthcare by expanding provider availability, simplifying consumer choice, and improving the enrollment process. In addition to the above changes, the proposed rule also allows door-to-door enrollment and updates risk adjustment models and requirements for agents and brokers to strengthen the overall integrity of the program. HHS is looking to streamline its enforcement and dispute resolution processes while easing some burdens on consumers by aligning regulations. Comments on the proposed rule are due January 30, 2023.

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