What health plans need to know about QHPs now that the ACA is here to stay

The provision of Qualified Health Plans, or QHPs, that meet the requirements of the Affordable Care Act has become an integral part of many health plan offerings. Now that numerous repeal requests and lawsuits filed against the ACA over the years have failed, health plans can finally invest with confidence in this line of business.

As health care costs continue to rise, Americans need QHP. With 35 million people enrolled in ACA-related coverage and rapid growth in enrollments, QHP plans represent an incredible growth opportunity for participating health plans. Here’s what health plans need to know to successfully navigate this market.

The regulatory filing is fundamental and inflexible

QHPs can be lucrative for health plans, but this particular revenue stream comes with unique responsibilities. Regulatory filing for the purpose of maintaining compliance can be a cumbersome and tedious task – there are a myriad of changes every year – but even the simplest of mistakes can result in millions of dollars in lost revenue.

For example, Tufts Health missed a Rhode Island regulatory filing deadline by two minutes — which Tufts attributed to traffic and construction — and may have caused them to lose a $400 million Medicaid contract. The snafu disqualified Tufts from bidding on Rhode Island’s $7 billion contract for five years. The rejection of the mentioned Tufts appeal avoided creating a precedent which would allow the acceptance of proposals presented late. In other words, if you can’t apply on time, you can’t be trusted to offer a health plan in the market.

In addition to high-risk examples like this one with long-term repercussions, the Center for Medicaid and Medicare Services evaluates and rates health plans based on the quality of their QHPs on an annual basis. Evaluations are based on a number of measures using CMS methodology and criteria such as enrollee experience, plan efficiency, affordability, and country-specific and country-specific management of the health plan.

While the health insurance business is highly regulated, investing in QHP’s offerings comes with an added layer of scrutiny and complexity that health plans must be prepared for. Non-compliance can result in federal fines, years of federal and state withdrawal from trade, or other penalties. Some states will impose fines of one thousand dollars a day for failing to meet a deadline.

A seasonal specialization

Each state releases updates to its guidelines, often hundreds of pages long, that mandate changes to benefit coverage — changes to expense allowances, copays, filing deadlines, etc. – during the first quarter of the year. So for large health plans offering QHP in a dozen or more states, that’s a lot to assume, interpret, document, and process to maintain compliance. Simply monitoring regulatory changes and making recommendations to the organization could be a full-time job.

For example, the Department of Health and Human Services recently extended the Covid-19 public health emergency through December 31, 2024. This will have a large impact on how benefits are determined for QHP members and could involve major travel between carriers. Any health plan that offers QHP has likely monitored and predicted how this will play out.

While guidelines and information can change at any time, Q2 is the time to file. This requires an extraordinary effort from the health plan employees dedicated to completing this task. But as we move into the second half of the year, those responsibilities slow down dramatically. People who handle regulatory filing usually find their responsibilities assigned elsewhere.

While this is inherently treated as a hybrid position, it is crucial that these employees are experts in this area. Given the cutthroat nature of the regulatory process, the health plan’s bottom line — or a big chunk of it — rests in the hands of those who do these paperwork, even if they have other duties at other times of the year.

The QHP market can be volatile

Massive job losses in 2020 due to the pandemic meant that many Americans who were previously insured through their employer suddenly needed QHP. They turned to state and federal exchanges. But when those same people returned to work in 2021, they left their QHP for employer-sponsored plans.

While an event like Covid-19 is quite rare, the demand for QHP can vary. Careful business planning is required for health plans, some of which earn half of their revenue from QHPs, to navigate this ebb and flow.

While demand may shift, there’s no question that this type of plan is needed. As the threat of an ACA repeal that would wipe out the QHP market has diminished, that demand will continue for the foreseeable future. Health plans can finally offer these products with confidence, provided they can navigate the regulatory landscape effectively.

Photo: Sylverarts, Getty Images

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