This is the annual hodge-podge of changes to the risk adjustment, reinsurance, and risk corridors programs, cost sharing parameters, cost-sharing reductions, and Healthcare.gov user fees, usually filling hundreds of Federal Register pages. Stuff gets buried deep, scattered among 45 CFR Parts 144, 146, 147, 153, 154, 155, 156 and 158. Yesterday (101 pages) was no exception. ‘Tis the season for over-stuffing.

HHS will change its method of calculating the required contribution percentage, originally 8% of household income (also the subsidy eligibility trigger). For 2017, the number will be 8.16%. The 2017 annual cost sharing limits will be $7,150 (self-only) and $14,300 (family). The IRS uses these HHS calculations to set annual increases in § 4980H assessable payment amounts.

We’re updated, marginally, about HHS efforts to notify employers and to process employer appeals of Healthcare.gov subsidies granted to their employees. Here are the highlights for 2017:

  • No subsidy certification notice will be provided unless the employee actually enrolls in a QHP;
  • Notices needn’t be individual; they may list multiple employees;
  • Notices must be issued, “within a reasonable timeframe following any month an employee was determined eligible for either form of Exchange financial assistance and enrolled in a QHP.”

There is no definition of “reasonable timeframe.” If an employer appeals under 45 CFR § 155.555, Healthcare.gov must give the applicant another chance to prove eligibility, accepting new data for that purpose. Appeal options for rejected applicants also are enhanced.

Until now, there were state-based exchanges and, for states without one, Healthcare.gov. But state-based exchanges are failing. So, HHS will allow them to piggy-back on Healthcare.gov beginning with open enrollment next year – i.e., November 1, 2016 through January 31, 2017. Each will be called a “State-based Exchange on the Federal platform (SBE-FP).” “Although the SBE-FPs are legally distinct from FFEs, this difference will not always be apparent to Healthcare.gov consumers.” So, Healthcare.gov user fees, prescription formularies, network adequacy, meaningful difference and essential community provider standards will apply to issuers selling through such exchanges.

Each insurer offering coverage through Healthcare.gov or an SBE-FP must offer one “standardized option” in each metal level (Bronze – Gold), having identical cost sharing features and just one provider tier. See Table 9 for the details.

HHS will publish minimum network adequacy standards – e.g., required travel to provider locations (county-by-county) and provider/patient ratios – in its annual Letter to Issuers. These will be minimum federal standards below which no state may sink. HHS also will address compensation of non-network physicians who render services at in-network hospitals, and insurer notification to patients of provider network termination. For example, balance billed amounts for EHB must be counted toward the annual cost sharing limit unless the insurer gives an advance written notice. HHS may add wait times to network adequacy determinations and may even contract directly with providers.

Due to recent legislation, “large employer” now will be defined to mean –

An employer who employed an average of at least 51 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year, but . . . a State may elect to define large employer by substituting “101employees” for “51 employees.” Conversely, we propose to revise the regulatory definition of small employer to mean, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 50 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year, but would provide that a State may elect to define small employer by substituting “100 employees” for “50 employees.”

The 2016 reinsurance deal for Healthcare.gov insurers, subject to 7% sequestration, may be as good as 100% coinsurance with a $90,000 attachment point. And –

[I]f the issuer reported a certified estimate of 2014 cost-sharing reductions on its 2014 MLR and Risk Corridors Annual Reporting Form that is lower than the actual cost-sharing reductions provided, HHS would make an adjustment to the issuer’s 2015 risk corridors payment or charge amount in order to address the impact of the inaccurate reporting on the risk corridors and MLR calculations for the 2014 benefit year. We also propose that the issuer must adjust the cost-sharing reduction amounts it reports for the 2015 MLR and risk corridors reporting cycle by any difference between 2014 reported and actual cost-sharing reductions amounts.

Not commenting; just reporting. There are catches. Study them well, issuers.

As to risk corridors –

[I]f the issuer reported a certified estimate of 2014 cost-sharing reductions on its 2014 MLR and Risk Corridors Annual Reporting Form that is lower than the actual cost-sharing reductions provided (as calculated under §156.430(c) for the 2014 benefit year, which will take place in the spring of 2016), HHS would make an adjustment to the amount of the issuer’s 2015 benefit year risk corridors payment or charge measured by the full difference between the certified estimate reported and the actual cost-sharing reductions provided as calculated under §156.430(c) in order to address the impact of the inaccurate reporting on the risk corridors and MLR calculations for the 2014 benefit year.

HHS also will –

require an issuer to adjust the cost-sharing reduction amount it reports on its 2015 risk corridors and MLR forms by the difference (if any) between the reported cost-sharing reduction amount used to adjust allowable costs and incurred claims on the 2014 MLR Annual Reporting Form and the actual cost-sharing reductions provided by the issuer for the 2014 benefit year (as calculated under §156.430(c) for the 2014 benefit year, which will take place in the spring of 2016). Issuers must report the amount as calculated under §156.430(c) when reporting risk corridors and MLR for the applicable benefit year.

And –

require issuers to adjust the claims reported as allowable costs for the 2015 and later benefit years by the amount by which the issuer’s estimate of unpaid claims for the preceding benefit year exceeded (or fell below) the actual payments that the issuer made after the date of the estimate for claims attributable to the preceding benefit year. For example, if in calculating its 2014 allowable costs, an issuer overestimated the amount of claims it incurred in 2014 that were unpaid as of March 31, 2015, then under this proposal, in calculating its 2015 allowable costs, the issuer would be required to subtract the amount by which its March 31, 2015 claims estimate exceeded the actual payments for 2014 claims that the issuer made between March 31, 2015 and June 30, 2016 (the claims reserves and liabilities valuation dates for the 2014 and 2015 benefit years, respectively).

Issuers’ time to appeal adverse payment determinations will drop from 60 to just 30 days.

Perceived and suspected abuses are targeted. For example, a “plan year” under 45 CFR § 144.103 may not exceed twelve months. HHS is considering limits on variance of state-established rating areas and age curves and may ban or limit insurer rejection of small employers that do not meet minimum participation requirements. TPAs that report reinsurance fees for self-insured plans, or that merely host related data, will be subject to audit under 45 CFR § 153.405(i).

“[S]tudent health insurance coverage [will] be subject to the index rate setting methodology of the single risk pool provision in the regulation at [45 CFR] §156.80(d),” but will be exempt from other AV requirements if it meets the 60% standard.

Thirteen individual mandate hardship exemptions are added to 45 CFR § 155.605(d):

  • Homelessness;
  • Eviction or facing eviction or foreclosure;
  • Received a shut-off notice from a utility company;
  • Experienced domestic violence;
  • Experienced the death of a family member;
  • Experienced a fire, flood or other nature or human-caused disaster that caused substantial damage to your property;
  • Filed for bankruptcy;
  • Experienced unexpected increases in necessary expenses due to caring for an ill, disabled or aging family member;
  • Seeking categorical Medicaid eligibility under section 1902(f) of the Social Security Act (the Act) for “209(b)” States (codified at §435.121);
  • Seeking Medicaid coverage provided to medically needy individuals under section 1902(a)(10(C) of the Act that is not included as government-sponsored minimum essential coverage under IRS regulations and not recognized as MEC by the Secretary of HHS in accordance with the CMS State Health Official (SHO) Letter #14-002;
  • Enrolled in Medicaid coverage provided to a pregnant woman that is not included as government-sponsored minimum essential coverage under IRS regulations and not recognized as minimum essential coverage by the Secretary of HHS in accordance with CMS SHO #14-002;
  • Enrolled in CHIP coverage provided to an unborn child that includes comprehensive prenatal care for the pregnant mother; or
  • As a result of an eligibility appeals decision the individual is eligible for enrollment in a qualified health plan through the Exchange, lower costs on the individual’s monthly premiums or CSRs for a time period when the individual was not enrolled in a QHP through the Exchange.

There is a three year time limit for claiming a hardship. Additional, previously recognized exemptions also are formalized, including residence in a state that did not expand Medicaid.

HHS may expand the list of entities from which issuers must accept third-party premium and cost sharing payments under 45 CFR § 156.1250 to add non-profit charities.

Quality and related reporting standards continue to be tightened.

[A] QHP issuer that contracts with a hospital with greater than 50 beds must verify that the hospital uses a patient safety evaluation system as defined in 42 CFR 3.20. The patient safety evaluation system is defined in the PHS Act as the collection, management, or analysis of information for reporting to or by a Patient Safety Organization. We propose in §156.1110(a)(2)(i)(B) to require that a QHP issuer that contracts with a hospital with greater than 50 beds must ensure that the hospital implemented a comprehensive person-centered discharge program to improve care coordination and health care quality for each patient.

***

We expect that QHP issuer contracted hospitals with more than 50 beds will contract with a PSO and implement a comprehensive person-centered discharge program to improve care coordination and health care quality for each patient. HHS will continue to monitor the status of the PSO program and other patient safety initiatives and will develop additional requirements or guidance, if needed, to support effective patient safety strategies and harmonization of evidence-based standards and requirements under §156.1110.

In addition, HHS strongly supports hospital tracking of patient safety events using the Agency for Healthcare Research and Quality Common Formats, which are a useful tool for a hospital regardless of what patient safety interventions are implemented for ongoing, data-driven quality assessment.

Our round-up concludes with a warning from the HHS Office of Civil Rights that it will enforce ACA § 1557 non-discrimination standards against Exchange issuers.  Among other things, this may mean that OCR will target exclusion of dependent pregnancy coverage.