BREAKING: Final OE5 Marketplace Rules Released: 45 Day Open Enrollment & More...

Well, HHS Secretary Tom Price and CMS Administrator Seema Verma have released the final, official rules for the 2018 Open Enrollment Period. For the most part they're exactly what was originally proposed a couple of months ago, but it's worth reviewing again now that the changes appear to be final. Here's the main ones:

  • 2018 Annual Open Enrollment Period: The final rule adjusts the annual open enrollment period for 2018 to more closely align with Medicare and the private market. The next open enrollment period will start on November 1, 2017, and run through December 15, 2017, encouraging individuals to enroll in coverage prior to the beginning of the year.

The first year of the ACA exchanges, the Open Enrollment Period lasted a full 6 months (actually 6 1/2 months, or 197 days more precisely, when you include the 2-week "overtime" period due to the technical mess at launch in October 2013). Over the next 3 years, it ran for 3 months (actually 101 days in OE2 (1-week overtime period), 93 days in OE3 (1 day overtime) and 92 days in OE4).

For OE5, CMS is hacking the timeframe in half again, to just 45 days: November 1st through December 15th.

I have mixed feelings about this. On the one hand, they're correct that most corporate Open Enrollment Periods, as well as Medicare Open Enrollment, are much shorter than the ACA exchange periods have been so far; in addition, HHS had already been planning on moving to 45 days starting in 2019 already; all Price/Verma are doing is bumping that up by a year. FInally, this would ensure that everyone (except for SEP enrollees) starts their 2018 effectuation on the exact same date (January 1st) instead of being spread out across January, February and March, which makes things much easier for data tracking/actuarial projections and so forth.

On the other hand, while most people have become more familiar with how open enrollment works since 2013 and the process has been greatly improved/streamlined, it's still a confusing world for a lot of people. Private corporations have much tighter control over their employee data, after all...they already have full records of everyone who's going to be enrolling that year for instance, whereas on the ACA exchanges there are brand new people trying to enroll every year. Medicare, meanwhile, has had 50+ years to fine-tune their process, and again, the process is already simpler due to the nature of the program. I've heard grumblings from a lot of ACA navigators and private insurance brokers saying that 45 days is simply too short a period of time to process that many people.

  • Reduce Fraud, Waste, and Abuse:  The final rule promotes program integrity by requiring individuals to submit supporting documentation for special enrollment periods and ensures that only those who are eligible are able to enroll. It will encourage individuals to stay enrolled in coverage all year, reducing gaps in coverage and resulting in fewer individual mandate penalties and help to lower premiums.

I've written several times about the SEP verification issue in the past. My understanding is that the big change here is going from verification of half of all SEP applications (50%) to requiring verification of all of them (100%) well as requiring that verification to be confirmed prior to the policy kicking into effect. This strikes me as being overkill, but without knowing just how big of an issue SEP "gaming" is, I'm not in a position to criticize it too much. I've heard experts both support and oppose SEP verification (some feel it would backfire by only having the sickest people even bother with the process, hurting the very risk pool it's supposed to help), and both have legit arguments in my opinion. In general, as long as the process isn't too onerous and works smoothly, I suppose I'm OK with it.

  • Promote Continuous Coverage: The final rule promotes personal responsibility by allowing issuers to require individuals to pay back past due premiums before enrolling into a plan with the same issuer the following year. This is intended to address gaming and encourage individuals to maintain continuous coverage throughout the year, which will have a positive impact on the risk pool.

I actually have no problem with this one...again, as long as it's applied in a reasonable fashion. Basically, if you were enrolled for 2017 but skip out of your December payment and then try to enroll for 2018, you can do so...but your first premium payment will be applied to your December bill, not January. Done properly, this makes sense to me.

  • Ensure More Choices for Consumers:  For the 2018 plan year and beyond, the final rule allows issuers additional actuarial value flexibility to develop more choices with lower premium options for consumers, and to continue offering existing plans.


In short, as David Anderson explains:

The theme is consistent.  Premiums are reduced for people who make more than 400% FPL by cutting benefits for people who make under 400% FPL.  It is a slight transfer of income upwards and risk downwards.

The AV spread increase is interesting as it is giving a lot of space for Silver Gap games.  In regions where there is a single carrier, the optimal strategy is to price a cheap 66% AV plan and then use a 72% AV plan as the benchmark to get an 8% pricing advantage.


  • Empower States & Reduce Duplication:  The final rule reduces waste of taxpayer dollars by eliminating duplicative review of network adequacy by the federal government.  The rule returns oversight of network adequacy to states that are best positioned to evaluate network adequacy.

Ugh. Mixed bag. Some states do a great job of reviewing their plan provider networks...but some suck at it. CMS is saying that they're no longer gonna review the networks; it's up to the states to do so.

I have to leave for a meeting so don't have time to do a real analysis, but that's the basics as I see them for now.