UPDATE: You Down With NBPP? (Yeah You Know Me!)

via Amy Lotven of Inside Health Policy two days ago:

Issuers Urge CMS To Offer Guidance On 2020 Exchange Policy As Rule Stalled

Two associations representing health plans tell CMS that with the annual exchange rule stalled at the White House Office of Management and Budget (OMB) due to the government shutdown, the agency should immediately issue informal guidance that the plans need to understand regulatory and operational changes for the 2020 plan year. Issuers will likely be asked to submit applications in May, and it is critical to get guidance as soon as possible for adequate preparation, the Association for Community Affiliated Plans (ACAP) and the Alliance for Community Health Plans (ACHP) say in a Jan. 15 letter.

CMS typically released the draft Notice of Benefit and Payment Parameters (NBPP) in the early fall and it was generally finalized prior to the new year, although last year the final version was delayed until spring, which also frustrated plans. This year, the proposed rule didn’t land at the OMB for review until Nov. 28.

As David Anderson explains over at Balloon Juice:

The Notice for Benefit and Payment Parameters (NBPP) is an annual rule that the Center for Medicare and Medicaid Services (CMS) puts out. NBPP is the operational rule book for the Affordable Care Act. It determines what types of plans can be offered, how pricing is determined, when do things need to be approved, and whether or not Silver Loading is allowed or a Broad Load is required. This is all big stuff for the ACA markets.

The annual NBPP is supposed to be released sometime in November. Last year it wasn't released until December. This year it's mid-January and still no NBPP, although it's supposedly trudging along slowly:

The 2020 NBPP has (finally!) cleared OMB https://t.co/I9nna6TF9K

— Ariel Cohen (@ArielCohen37) January 17, 2019

(Note: That doesn't mean it's been released publicly yet, just that it's still crawling through the system.)

Both Lotven and Anderson go on to note that as long as there's no major changes in the final NBPP rules, the excessively late release of the rules shouldn't be too big of a deal...but if there are big changes, it could once again cause more havoc. There's one potential major change which is particularly concerning to all involved:

ACAP officials tell Inside Health Policy they hope that given the delays in releasing the NBPP, the agency will not be making any large-scale changes. ACAP would be very concerned, for example, if CMS proposed making changes to the silver-loading practice, officials say. Issuers and state regulators devised the silver-loading workaround in late 2017 after the Trump administration cut off direct payments to plans to reimburse for cost-sharing reductions.

CMS Administrator Seema Verma has repeatedly suggested that she has concerns that silver-loading results in higher premiums for people who do not get subsidies and hikes federal spending. She has not fully committed to allowing the practice to continue in 2020 or beyond.

As a reminder:

  • Both Silver Loading and Silver Switching are ways of holding subsidized enrollees harmless from Trump's Cost Sharing Reduction (CSR) reimbursement payment cut-off.
  • Silver Loading actually helps subsidized enrollees by causing their subsidies to increase more than premium increases for Bronze and Gold plans. The downside is that it also causes unsubsidized premiums for Silver plans to increase dramatically, which is what Verma is referring to above.
  • Silver Switching, however, helps subsidized enrollees even more, while also allowing unsubsidized enrollees a way of avoiding the CSR cost hit.

In short, Silver Switching is a good thing all around, but more complicated. Silver loading is a good thing for most enrollees, but potentially harmful to unsubsidized enrollees.

In both cases, the maneuver still helps more people than it hurts, so it should be kept, and disallowing it would be a Very Bad Thing®.

UPDATE 5pm: Huh. Well, whaddya know? They released it today after all:

CMS issues the proposed Payment Notice for the 2020 coverage year
User fees for plans using the federal enrollment platform are lowered under 2020 proposal

The Centers for Medicare & Medicaid Services (CMS) today issued the proposed annual Notice of Benefit and Payment Parameters for the 2020 benefit year (proposed 2020 Payment Notice). This rule proposes regulatory and financial parameters applicable to qualified health plans (QHPs) on theExchanges, plans in the individual, small group, and large group markets, and self-funded group health plans. These changes proposed in the rule would further the Trump Administration’s goals of lowering premiums, enhancing the consumer experience, increasing market stability, reducing regulatory burdens, and protecting taxpayers.

“Following the first-ever drop in premiums for plans sold on the Federal Exchange for 2019, in another first CMS is proposing to reduce the Exchange user fee charged to insurers to fund Exchange operations,” said CMS Administrator Seema Verma. “Reducing this user fee will reduce the premium each consumer pays in 2020. Under President Trump’s leadership, we’re finally moving the Exchange and the market in a new and positive direction.”

Setting aside the fact that no, premiums for plans sold on the federal exchange did not drop this year (they dropped for benchmark plans, but for the overall ACA-compliant marke they still went up slightly, by around 2% on average when you remove the state-based exchanges), this is pretty clearly in response to repeated questions, pressure and complaints by myself, some of the state exchanges and (most recently) the House Energy & Commerce Committee:

...The proposed 2020 Payment Notice continues to build on these prior rulemakings to further strengthen America’s health insurance markets. Specifically, due to successful efforts to operate the Federal Exchange more efficiently, including efforts to better target outreach and streamline the Navigator program, the rule proposes to reduce by one half of one percentage point the user fee rates that issuers participating on the Federal Exchange and on State-based Exchanges on the Federal Platform (SBE-FPs) would be required to pay to CMS. The savings from this reduction in fees will be passed along through lower premiums for consumers.

Right now, ACA exchange carriers in 34 of the 39 states hosted on HealthCare.Gov have to pay 3.5% of their premium revenue to CMS in user fees, while the other 5 states which officially have their own exchanges but "piggyback" on HC.gov's technical platform (Nevada, Oregon, Kentucky, New Mexico and Arkansas) have to pay 3.0%.

The 3.5% fee stayed the same for 6 years straight, and CMS actually increased the fee for the other 5 states from 2% to 3% this year for no reason even as average unsubsidized premiums more than doubled and enrollment increased from an average of 5.5 million in 2014 to around 9.5 - 10.0 million each year from 2016 - 2018, which means that the amount of revenue brought in by CMS from these fees has more than tripled since 2014...even as HC.gov slashed their marketing & outreach budget by 90% and 40% respectively, begging the question of where the hell all that additional money was going.

Dropping the rates to 3.0% and 2.5% respectively in 2020 is actually a good thing...assuming 2019 average premiums of $612/month, that should knock premiums down by around $3 per month on average, or $36/year per enrollee. Not much, of course, but CMS Administrator Seema Verma presumably feels it'll be enough to get the E&C Committee off her back.

To further reduce costs and advance the President’s American Patients First blueprint, the rule proposes allowing individual, small group, and large group market health insurance issuers to adopt mid-year formulary changes to incentivize greater enrollee use of lower-cost generic drugs, consistent with the agency’s approach to Medicare Part D. The rule also proposes changes related to requirements for how such issuers and self-insured group health plans treat cost-sharing for brand drugs when a generic equivalent is available.

I don't know nearly enough about how pharmaceuticals are handled to comment on whether this is a good or bad thing, but it sounds like a positive development if it means substituting of more lower-priced generic medications mid-year.

The rule also includes proposals to enhance the consumer experience for individuals shopping for coverage. One proposal would streamline and update the direct enrollment regulations to accommodate further innovations for consumers to buy QHPs outside of HealthCare.gov.

This sounds neferious, but it depends on how it's implemented. Health Sherpa (full disclosure: they're a banner ad sponsor of ACASignups.net) is a Direct Enrollment partner of HC.gov, and they seem to be doing everything properly in terms of security, transparency, etc. It really depends on how stringently regulated the partners are, I suppose. Something to keep an eye on, but nothing that I'm too concerned about at the moment.

In response to President Trump’s first Executive Order, the proposed rule would also continue CMS’ work to eliminate overly burdensome regulations. For example, the rule proposes processes to allow individuals to more easily claim a hardship exemption from the individual mandate penalty directly on their tax return for the 2018 tax year.

Of course it does. Remember, the ACA's individual mandate was reset to $0 / 0.0% back in December 2017, but that change didn't actually go into effect until January 1st, 2019. That means that those who weren't covered with ACA-compliant healthcare coverage in 2018 will still be subject to the individual mandate penalty when they file their taxes over the next month or two. Verma's CMS is proposing making it far easier for people to get out of paying the 2018 penalty.

If someone truly did experience a hardship last year, I'm ok with this, but I suspect they're gonna be awfully lenient on their definition of "hardship".

Today’s proposal also aims to increase market stability with updates to the risk adjustment program, an important program that helps stabilize and balance the market by reducing incentives for insurers to avoid high-cost, high-risk individuals.

I've written about the risk adjustment program before but am no expert on it, and I'd have to read the details before commenting further.

To improve accuracy the proposed rule considers modifying the premium index to incorporate changes to individual market premiums, in addition to the group health plan premiums used today. The premium index is a figure that drives several other calculations, such as the maximum annual limitation on cost sharing.

Again, I'd have to read the details first.

In addition, the rule invites a public discussion on the practice of silver loading and the auto-reenrollment process through the Exchange. CMS is not proposing any regulatory changes regarding these practices at this time, but we are soliciting public comment to better understand the issues because states have addressed silver-loading in different ways. This process will help inform whether there are better options for potential future rulemaking.

Huh. VERY interesting...they're not scrapping Silver Loading or Silver Switching after all, but are instead asking for people to chime in. That's unexpected, and actually kind of welcome.

Also noteworthy is the bit about auto-renewals. That's been off my radar for years...to my knowledge the only time any states haven't allowed for auto-renewals have been:

  • In 2015, Rhode Island deliberately didn't allow them in order to encourage enrollees to actively shop around...but they changed their policy for 2016 and beyond
  • In 2015, autorenewals couldn't be done in Massachusetts, Maryland, Nevada and Oregon for technical reasons, since all four states had to scrap their original exchange platforms and the databases couldn't be ported over to the new platform
  • In 2015, Idaho, which moved off of HC.gov onto their own platform, was able to port over their 2014 database, but also warned against people auto-renewing due to potential glitches in the move
  • In 2016, Hawaii enrollees couldn't auto-renew when the state moved to HC.gov
  • In 2017, Kentucky enrollees couldn't auto-renew when the state moved to HC.gov

Today CMS also issued the 2020 Letter to Issuers in the Federal Exchange which provides guidance to issuers that want to offer QHPs on the Federal Exchange, as well as the Proposed Key Dates Charts for the 2019 Calendar Year, the Draft 2019 Filing Year Rate Review Timeline Bulletin, and the Draft 2020 Plan Year Actuarial Value (AV) Calculator.

I'll have more thoughts on the 2020 NBPP rules as I'm able to read through the details.