CMS bows to my will for 2017 Rate Review!! (and lists other proposed policy changes)

Just a few hours ago, I was amused to note that HealthCare.Gov took my advice by adding a short explanatory message to one of the first screens you see on the window shopping tool. While a seemingly tiny thing, this one simple improvement could potentially increase 2016 enrollments by a few thousand people (or, at the very least, make the process slightly less annoying for many more).

Anyway, that alone would've been enough to make my day...but then, just moments ago, the CMS division sent out the following list of Proposed Improvements for the 2017 Marketplace (ie, for next year):

The Centers for Medicare & Medicaid Services (CMS) today issued the proposed annual Notice of Benefit and Payment Parameters for 2017, governing participation in the Health Insurance Marketplaces. The proposed rule seeks comment on proposals that will provide continued choice and competition for consumers, and a vibrant and growing market for affordable, quality health plans. The proposed rule seeks to improve the consumer experience, both when individuals shop for health insurance and when they use it.

Here's the full list of proposals. Some of them go above my pay grade (I don't know anything about "Risk Adjustment Model Recalibration", for instance), but some are very interesting to the average Joe...and one in particular made me do a big happy dance. Here's the ones which stood out to me:

FFM User Fee for 2017: We propose a Federally-facilitated Marketplaces (FFM) user fee rate of 3.5% for 2017, a rate calculated to cover user fee-eligible costs. This user fee rate is the same as the rate for each year from 2014-2016. We also propose a user fee rate of 3.0% for State-based Marketplaces utilizing the federal platform (SBM-FP) to generate funding to support FFM operations associated with providing these services. We are considering reducing the SMB-FP user fee rate for the 2017 benefit year to ease the transition for States, and offering to collect a user fee on behalf of the SMB-FP at their discretion.

In plain English: HC.gov, just like the state-based exchanges, obviously has certain ongoing operational costs. Each exchange covers these costs differently; the Commonwealth Fund has posted a handy table (scroll down) explaining the fee amounts and who they're charged to in every exchange. For instance, the Connecticut exchange charges 1.35% of the premiums for every individual policy sold state-wide, regardless of whether it's sold on or off exchange, while California charges a flat $13.95 per month per policy...but only for the ones sold on the CA exchange. Other exchange fees vary. In the case of HealthCare.Gov, they charge a higher percentage than most of the state exchanges (3.5%), but only for on-exchange policies. The above seems to indicate that they don't plan on changing this for 2017 for most states.

HOWEVER, there's several exceptions: The "SMB-FP" states, otherwise known as "States which were running their own tech platform but screwed them up so badly that they had to scrap their system and move everything over to HealthCare.Gov" (Oregon, Nevada and, this year, Hawaii), as well as "States which were planning on moving onto their own platform the 2nd or 3rd year, but later changed their minds and decided to stay put at HC.gov" (that is, New Mexico).

Those states still charge their own fees to carriers since, legally speaking, they're still a "state-based" exchange...but they then, in turn, have to pay HC.gov for handling the IT side of things. Until now, I believe they've still had to pay HC.gov the same 3.5% that every other state does. If I'm reading the above correctly, HC.gov is saying that they plan on knocking this down to 3.0% for those states, presumably since the states are still doing a lot of the other stuff (marketing, call centers and so on) for their states instead of dumping that on the feds as well.

Premium Adjustment Percentage: This percentage measures the premium increase since 2013, based on the most recent National Health Expenditures Accounts (NHEA) projection of per enrollee employer sponsored insurance (ESI) premiums for 2016. The premium adjustment percentage is used to set the rate of increase for three key parameters: the maximum annual limitation on cost sharing, the required contribution percentage for eligibility for a hardship exemption under section 5000A of the Code, and the affordability percentage for calculation of assessable payment amounts under section 4980H(a) and (b) of the Code. For 2017, we propose a premium adjustment percentage of approximately 13.2%, covering the three year period from 2014 to 2017.

Annual Limitation on Cost Sharing: The maximum annual limitation on cost sharing is the product of the dollar limit for calendar year 2014 ($6,350 for self-only coverage) and the premium adjustment percentage for 2017. The 2017 maximum annual limitation on cost sharing would be $7,150 for individual coverage and $14,300 cumulative for family coverage.

In plain English: I think the first part is explaining the formula that is used to determine just what the actual maximum dollar maximums the HHS Dept. considers to be "affordable" for people in terms of cost sharing (deductibles, co-pays, coinsurance etc), while the second part is stating what those dollar maximums will actually be. It looks like they used the average premium rates for employer-sponsored plans (interesting that they used this instead of the individual market...I guess ESI was more stable?) as of 2013 as the baseline to start with. Based on this, they're saying that for 2017, the cap for individuals will go up from $6,350 in 2015 to $7,150 in 2017.

Here's the one which literally made me shout "Woo-Hoo!!" loudly, scaring our dog:

Rate Review: We propose to require all issuers to submit the unified rate review template (URRT) for all single risk pool products in the individual and small group markets (excluding Student Health Plans) regardless of whether they propose rate increases, rate decreases, or no change in rates for these products.

Why is this a Big Friggin' Deal to me? This is why:

HC.gov's Rate Review: Incredibly useful AND completely useless at the same time!

The new Rate Review searchable database added to Healthcare.Govshould make it much easier to figure out the weighted average rate change requests for every state. It's clean, simple to use, includes all 50 states (plus DC and even throws in U.S. Territories to boot!), lets you filter out transitional policies and pre-2016 years and so on. In addition, the layout is consistent and doesn't require downloading 6,000 page PDF files (!)

Yes, in terms of following the requirements of the HHS Dept, it's very useful for people to look up their particular company in their state, see what their "average" rate increase request is and submit cranky public comments (which will in most cases probably be ignored, but hey, you never know).

And yes, this certainly makes it easier to fill in some of the missing pieces of the puzzle, and helps cut down on how much hunting around people like myself have to do to track down some of this data. For that alone, I'm extremely glad to see this tool added.

HOWEVER, at the same time, there are several major gaps in this tool. Some of them, such as not breaking out the rate requests by metal levels, are merely unfortunate. One, however, is extremely important, and from a media perspective could make this tool worse than not having it at all: It only includes companies which are asking for increases of more than 10%.

Again, from the perspective of following the regulations, this makes perfect sense; if they don't have to justify increases of less than 10%, there's no need to list them for public comment.

HOWEVER, there's a slew of reporters, pundits and activists who are going to be poring over these rate filings...and by only listing those higher than 10%, the HHS Dept. is setting themselves up for a whole bunch of OMG!!! SKY IS FALLING!!! CRAZY HIGH RATE SPIKES FOR 2016!! headlines over the next week or so.

As I expected, of course, that's exactly what proceeded to happen. And again. And again. And again.

For 2017, CMS is saying that they're going to do resolve the very problem I complained about: They're gonna list all rate change requests on the RateReview website regardless of whether they're above 10% or not (as well as rates which stay the same or even drop).

The only rain on the parade here is that they still don't plan on posting the covered lives for each filing, at least not in an easy-to-read format; those numbers will still be difficult to come by depending on the state, company and filing format. In some states, I believe that information--which, after all, is basically market share data--is protected as a trade secret, and is therefore only publicly available at the carrier's discretion.

Even so, this will be a huge improvement over this past summer, where I had to make wild guesses as to the "average" rate increases for many insurance carriers to come up with my overall, nationally weighted average rate hike figure of 12-13% which was so widely cited by the media.

OK, moving on...

Annual Open Enrollment Period: We propose to set the open enrollment period for the individual market Marketplace for benefit year 2017 to correspond to the 2016 benefit year, meaning it will begin on November 1, 2016 and end on January 31, 2017.

OK, it looks like after bouncing the start/end dates around the calendar 3 years in a row, they've finally decided that a simple Nov/Dec/Jan schedule works out the best. I agree. It's easier to market and remember, maximizes the number of people who start right on January 1st while still giving people some extra time to avoid the tax penalty. As for shifting open enrollment forward towards tax season in April, they tried allowing that this year and it didn't end up motivating that many people after all, so I guess they're scrapping that idea going forward. Fair enough.

State-based Marketplaces Using the HealthCare.gov Platform: Today, a number of State-based Marketplaces (SBEs) rely on HealthCare.gov’s technology to fulfill certain requirements related to individual market eligibility and enrollment. In future years, additional states may wish to use the federal information technology (IT) platform for eligibility and enrollment for their individual and/or SHOP Marketplaces. We are proposing that these Marketplaces be known as SBMs on the Federal platform (SBM-FPs). These SBM-FPs retain primary responsibility to ensure all Marketplace requirements are met, but may do so through reliance on the FFM for its eligibility determinations and enrollment processing activities, as well as certain consumer call center services. The SBM-FPs also retain primary responsibility for performing all other Marketplace functions, including plan management, consumer assistance and outreach functions, and ongoing oversight and program integrity. We propose collecting user fees directly from QHP issuers operating in SBM-FP states, ensuring that SBM-FPs apply certain FFM QHP standards to their issuers, and coordinating with SBM-FPs to enforce those QHP standards on SBM-FP issuers.

In Plain English: As I noted above, states like Oregon, Nevada, Hawaii and New Mexico legally operate their own exchange (carrier haggling, marketing, some regulatory oversight and so on), but use HC.gov for the actual technology/website/enrollment side of things. Up until the King v. Burwell decision, this was sort of a temporary arrangement, because there was no way of knowing whether the Supreme Court would require all states to be set up this way or, worse yet, might even go so far as to say that this "state based using the federal website" setup might not be kosher at all.

With King v. Burwell out of the way, these state exchanges can relax; their arrangement is completely cool, and other states are free to do the same. In response, CMS is now officially declaring "SBM-FP" to be perfectly fine for any state which wants to do so in the future. Furthermore, the "direct fee collection" part indicates that instead of, for instance, Nevada charging insurance carriers $13 per policy per month and then having to turn around and pay $3.5% per policy per month to HC.gov, the federal exchange will cut out the middle man and just charge the carriers 3.0% per policy per month, saving a bunch of paperwork and money transfers.

At least, that's my reading of it; the actual fee charged to the carriers would be higher in some cases, lower in others if I'm understanding this correctly.

Re-Enrollment Hierarchy: To minimize potential disruptions of enrollee eligibility for cost-sharing reductions, we propose to amend §155.335(j)(1) to reconfigure the re-enrollment hierarchy for all enrollees in a silver-level qualified health plan (QHP) that is no longer available for re-enrollment. Specifically, if such an enrollee’s current silver-level QHP is not available and the enrollee's current product no longer includes a silver-level QHP available through the Marketplace, the enrollee's coverage would be renewed in a silver–level QHP in the product offered by the same issuer that is the most similar to the enrollee may elect to have their current product, rather than in a plan one metal level higher or lower than his or current silver-level QHP, but within the same product.

In Plain English: Actually, the wording of this one is so confusing that I'm not entirely sure I follow it myself. I think what they mean is this:

• Let's suppose it's November 2016 and you're enrolled in Big Eddy's Silver Plan 300.
• Let's suppose Big Eddy decides to drop the Silver Plan 300 for 2017, but still offers a Silver Plan 200 and Silver Plan 400 (or whatever).
• In that case, assuming you don't actively change your policy yourself, CMS will auto-enroll you in one of those other Silver Plans (whichever is closest).
• However, let's suppose Big Eddy drops all of their Silver Plans from the exchange. In that case...well, I presume they'll auto-enroll you in whatever Silver plan is offered by a different carrier that's the closest to the Eddy Silver 300.

I'm actually not sure how this differs from the current policy, nor am I sure how this would impact situations like the one I recently wrote about in Pennsylvania, where some people are being auto-renewed in a different plan (through the same carrier, Highmark), but off of the exchange (which means that they also lose out on any tax credits).

My best advice? Don't let yourself be auto-renewed in the first place. Even if you want to keep the same policy, do so actively instead of letting the system do it for you.

Standardized Options: To simplify the shopping experience for consumers on the individual market Federally-facilitated Marketplaces, we propose to designate plans with certain standardized cost-sharing structures as “standardized options.” We have developed 6 specific recommended designs (1 silver, which would be coupled with 3 silver cost-sharing reduction variations, 1 bronze, and 1 gold). We propose making it optional for issuers to offer standardized options, and allowing issuers to offer nonstandardized plans as well. Plans with standardized cost-sharing structures will give consumers the opportunity to more easily compare plans offered by different issuers within a metal level, and can simplify the consumer shopping experience. We are considering ways that such plans could be displayed on HealthCare.gov in a manner that makes it easier for consumers to find and consider them.

In Plain English: I love everything about this proposal...with one exception. I wrote about this very issue just 3 weeks ago:

Competition is good in general, and having lots of choices can be helpful...but it can also just confuse the hell out of people.

As an example of what I'm talking about, consider Steve Jobs' return to Apple nearly 20 years ago:

When Jobs took the reins as interim CEO in July of 1997, Apple was making more than 350 different products, many of which seemed redundant, expensive, and outdated. In order to get the company focused on making better products that made more sense to consumers, he cut that number down to just 10. He knew that in order for the company that he co-founded to survive, it needed to be leaner and more focused, than it had been under previous CEO Gil Amelio.

At the core of the new line-up were four products, a consumer laptop and desktop, as well as a laptop and desktop designed for professionals. Each of those computers had various configurations of course, but as far as Apple was concerned, the product line remained extremely streamlined and simple. This allowed the company to focus on new technology and design, which resulted in the first iMac, a computer that made waves due to its unique looks, and shift away from traditional IO ports in favor of USB – something that was radical at the time.

Obviously healthcare policies aren't computers, but the point is still valid: From the enrollee's POV, all of the different elements to consider (Premiums? Deductibles? Co-Pays? Networks? HMOs? PPOs? Coinsurance? Metal Levels?) are already confusing enough. Throw in a dozen other companies (in some areas) and it can scare the hell out of you.

Personally, I'd have no problem with each company on the exchange offering a total of 9 plans at most:

• Bronze, Silver, Gold & Platinum HMOs
• Bronze, Silver, Gold & Platinum PPOs
• One Catastrophic plan

I dunno...perhaps have "Multi-State", "Optical" and "Dental Included" thrown in there as optional add-ons to each one, like hard drive or RAM upgrades on a laptop...

Richard Mayhew of Balloon Juice has a related post about carriers "spamming" the exchanges with virtually-identical policies.

In fact, Covered California already has Standard Benefit Plan Designs which all ACA exchange-based policies must comply with. In their case it looks like these include 2 Platinums, 2 Golds, 4 Silvers, 2 Bronzes and 1 Catastrophic plans.

So what's the exception which I don't like?

• We propose making it optional for issuers to offer standardized options, and allowing issuers to offer nonstandardized plans as well.

(sigh) I understand that they're trying to ease carriers into this, but if the whole point is to simplify the plan choices, allowing non-standard plans as well kind of defeats the whole purpose. On the other hand, Andrew Sprung says that New York's exchange has a similar "Optional" Standardized Plans policy which works out nicely, so who knows...

There's a bunch of other proposals which mostly make sense to me, but these are the main ones I wanted to comment on.