UPDATE: #NBPP2022: Trump Admin drops a couple of rancid turkeys on the #ACA on their way out the door

UPDATE: It looks like the 2022 NBPP will be open for Public Comment starting on December 4th and ending on December 30th at 5pm. This is obviously 4 days shorter than the typical 30-day minimum, and it includes Christmas Eve & Christmas Day as well. I've been informed that this is technically legal as allowing a minimum of 30 days is a guideline, not requirement...but it sure wouldn't look good if the rule is brought in front of a judge.

The Affordable Care Act includes a long list of codified instructions about what's required under the law. However, like any major piece of legislation, many of the specific details are left up to the agency responsible for implementing the law.

While the PPACA is itself a lengthy document, it would have to be several times longer yet in order to cover every conceivable detail involved in operating the ACA exchanges, Medicaid expansion and so forth. The major provisions of the ACA fall under the Department of Health & Human Services (HHS), and within that, the Centers for Medicare & Medicaid (CMS)

Every year, CMS issues a long, wonky document called the Notice of Benefit & Payment Parameters (NBPP) for the Affordable Care Act. This is basically a list of proposed tweaks to some of the specifics of how the ACA is actually implemented.

For example, here's what the actual PPACA legislative text itself said about the annual Open Enrollment Period (OEP):

(6) Enrollment periods.--The Secretary shall require an Exchange to provide for--

(A) <<NOTE: Determination.>> an initial open enrollment, as determined by the Secretary (such determination to be made not later than July 1, 2012);

(B) <<NOTE: Determination.>> annual open enrollment periods, as determined by the Secretary for calendar years after the initial enrollment period;

(C) special enrollment periods specified in section 9801 of the Internal Revenue Code of 1986 and other special enrollment periods under circumstances similar to such periods under part D of title XVIII of the Social Security Act; and

(D) <<NOTE: Native Americans.>> special monthly enrollment periods for Indians (as defined in section 4 of the Indian Health Care Improvement Act).

You'll notice that nowhere above does it specify how long the annual Open Enrollment Period has to be, nor the starting or ending date; it just says that there had to be an initial one decided by 2012 and another one each year after that. This is why the first OEP was a full six months long (from Oct 1st - March 31st); the next few years it was only three months long; and for the past several years the federal OEP has only lasted 45 days (from Nov. 1st - Dec. 15th). The length and start date of Open Enrollment is pretty much up to the HHS Secretary (and in most cases is actually determined by the CMS Administrator).

There are hundreds of other examples of these sorts of details being up to whoever runs HHS/CMS, most of which aren't nearly as obvious to the general public...and like anything else, this authority can be used for Good or Evil.

Yesterday, CMS issued the NBPP...for 2022. It's important to note that since we're already over halfway through the 2021 OEP, the changes proposed in the NBPP released last night wouldn't go into effect until 2022. It's also important to note that for now, these are just proposed rules. There's a 30-day comment period during which any member of the public can offer feedback, and as Families USA Senior Fellow Stan Dorn noted last night...

Comments!!!!!!!! CMS must respond to each comment, building a factual record justifying the rule. If they get many, many discrete comments with strong content, they either (1) take a lot of time to respond or (2) rush and risk losing a later Administrative Procedures Act lawsuit.

— Stan Dorn (@standorn) November 26, 2020

The reason why this is so important will become clear below.

I should also note that not every NBPP rule implemented by the Trump Administration (via CMS Administrator Seema Verma) has been terrible. Some are either perfectly in line with Obama-era NBPPs, inconsequential, and in a few cases have actually been good and helpful.

For instance: If your income is under 250% FPL, you're eligible for additional Cost Sharing Reduction (CSR) assistance...but only if you're enrolled in a Silver plan. This means that if your income ends up being higher than 250% FPL, you lose eligibility for CSR help...but you're stuck with the Silver plan for the full year. Last year CMS added a new Special Enrollment Period option for households in that situation which lets them switch to a Bronze or Gold plan mid-year if they want to. This may not happen that often but it's a reasonable tweak.

Other proposed changes, however, can be either stupid or flat-out devastating. The proposed 2022 rule changes...which were pushed out after hours on Thanksgiving Eve, just 56 days before the Trump Administration ends...includes some OK ideas, but also includes some which would be harmful and one which would be disastrous (I've changed the order they're listed below to put the most troubling ones at the bottom):

Defrayal and Annual Reporting of State Mandates:

In the 2021 Payment Notice, we finalized a requirement for states to annually notify HHS of any state-required benefits applicable to QHPs in the individual and/or small group market that are considered to be “in addition to EHB” and set a July 1, 2021 deadline for states to submit to HHS their first complete reporting package. In the 2022 proposed rule, we are proposing July 1, 2022 as the deadline for states to submit to HHS the complete reporting package for the second year of reporting.

This is...fine.

Essential Health Benefits:

The 2019 Payment Notice stated that we would propose EHB benchmark plan submission deadlines in the HHS annual Notice of Benefit and Payment Parameters. Accordingly, we are proposing May 6, 2022, as the deadline for states to submit the required documents for the state’s EHB-benchmark plan selection for the 2023 plan year. We are also proposing May 6, 2022 as the deadline for states to notify HHS that they wish to permit between-category substitution for the 2023 plan year.

This is...fine.

Special Enrollment Periods:

In order to protect the risk pool from adverse selection and ensure program integrity in the utilization of special enrollment periods (SEPs), we propose to require all Exchanges to conduct SEP verification for at least 75% of new enrollments for consumers not already enrolled in coverage through the relevant Exchange. Because some SBEs are very small and will have very low volumes on certain SEP types, we proposed to provide flexibility for SBEs to conduct verification through alternative means, with HHS’s permission.

If you want to enroll in an ACA policy outside of the Open Enrollment Period, you do so using a Special Enrollment Period (SEP). However, you can only do so if you have a Qualifying Life Experience (QLE). Generally this includes things like losing your employer-sponsored healthcare coverage, getting married or divorced, moving, turning 26, giving birth, getting out of prison and the like.

For the first few years, HC.gov (and most of the state exchanges, I think) were fairly lax about requiring SEP enrollees to provide proof of their QLE; it was pretty much done on the honor system. Insurance carriers started to complain about this, believing that too many people were gaming the system by faking QLEs in order to enroll mid-year.

In response, in January 2016, CMS announced that they would be doing random spot-checks of SEP enrollees & requiring them to provide documentation of their QLE...along the lines of a train conductor checking one or two passengers per car to make sure they have their ticket. Later on, they extended this to all SEPs involving loss of coverage, moving, giving birth/adoption or marriage, which covered around 3/4 of HC.gov SEP enrollees. I assume they picked these QLEs because those are the ones which require official documentation in every instance.

Under the Trump Administration, I think this was expanded to include all SEP enrollments, though I could be wrong about this.

However, all of the enforcement above only applied to the federal exchange, HC.gov...not the state-based exchanges, which have their own rules about how strictly they enforce SEP verification. With the 2022 NBPP, it looks like CMS wants to require all ACA exchanges (15 states now have their own exchange, and two more, Kentucky and Virginia, plan on launching theirs next year) to mandate verification of at least 75% of SEP enrollments.

I have mixed feelings about this. I have no problem with requiring some sort of verification of eligibility; it defeats the entire point of having a limited Open Enrollment Period if people can enroll year-round just by lying on a form.

On the other hand, doing so is a federal offense whether you're required to provide verification or not, and there's a checkbox on the form where you acknowledge knowing this; you could face loss of coverage, a stiff fine and potentially even jail time depending on the situation. Furthermore, as I noted back in April, acquiring documentation for some SEPs can be a royal pain in the ass...and requiring it in the middle of a pandemic, when tens of millions of people lose their employer-sponsored coverage in a very short timeframe is a recipe for disaster.

Pharmacy Benefit Manager Transparency:

HHS proposes to codify in regulation the statutory requirement that Pharmacy Benefit Managers (PBMs) under contract with QHP issuers report certain prescription drug data. The data will be used to enhance our understanding of the true cost of prescription drugs provided in Exchange plans. The data collected is required to be kept confidential and may only be disclosed for limited purposes outlined in statute.

I don't know enough about this issue to comment.

Audits, Compliance Reviews, and Civil Money Penalties (CMPs) Authority:

HHS proposes to codify audit and compliance review processes to further protect the integrity of federal funds. Specifically, HHS proposes several amendments to provide more clarity on its audit authority over the advance payments of the premium tax credit (APTC), cost-sharing reductions (CSR), and user fee programs. We also propose to extend these authorities to QHP issuers in State Exchanges on the Federal platform to align with our existing authority over issuers in FFE and State Exchange states. In addition, HHS proposes to make amendments to clarify that HHS has the ability to impose civil monetary penalties (CMPs) when it is enforcing the applicable federal requirements in any Exchange, regardless of whether the Exchange is established and operated by HHS or a state (including a regional Exchange or subsidiary Exchange). Additionally, HHS proposes minor procedural changes to the requirements for administrative appeals of CMPs by health insurance issuers and non-federal governmental plans to align with current practices for the Departmental Appeals Board. HHS also proposes to codify similar audit and compliance review processes for the transitional reinsurance program operated by HHS, as well as the HHS-operated risk adjustment program.

This is kind of interesting...it's basically pushing to give CMS substantially more authority/power to crack down on ACA subsidies not only on the federal exchange but also for state-based exchanges. If Trump had won a second term this would make perfect sense...but it's a bit surprising that his HHS Dept. is deliberately giving itself more authority under an incoming Democratic Administration. Huh.

Medical Loss Ratio (MLR):

We propose to amend the MLR regulation to establish the definition of prescription drug rebates and other price concessions that issuers must deduct from incurred claims for medical loss ratio (MLR) reporting and rebate calculation purposes beginning with the 2022 MLR reporting year (MLR reports filed in 2023). We additionally propose to explicitly allow issuers the option to prepay a portion or all of the estimated MLR rebate for a given MLR reporting year in advance of the deadlines set forth in §§ 158.240(e) and 158.241(a)(2) and the filing of the MLR Annual Reporting Form. We also propose to establish a safe harbor allowing such issuers, under certain conditions, to defer the payment of any remaining rebates owed after prepayment until the following MLR reporting year beginning with the 2020 MLR reporting year (MLR reports filed in 2021). In addition, we propose to allow issuers to provide MLR rebates in the form of a premium credit prior to the date that the rules currently provide and beginning with the 2020 MLR reporting year (MLR reports filed in 2021). Lastly, we propose to clarify MLR reporting and rebate requirements for issuers that choose to offer temporary premium credits during a public health emergency declared by the Secretary of HHS for future benefit years, beginning with the 2021 MLR reporting year (MLR reports filed in 2022).

Until this year, MLR rebates, which are calculated on a 3-year rolling average basis, were paid out to policyholders in late August/early September of each year at around the same time that the carrier MLR reports are submitted. Last spring, however, in light of the COVID-19 pandemic, some carriers who knew they were going to owe large rebates to their enrollees decided to jump the gun and send out rebate checks ahead of time, figuring that they might as well get some positive PR out of it since they were gonna have to pay a chunk of their revenue back later on anyway.

There's nothing wrong with this; it's actually exactly the point of the ACA's MLR rule. The only real difference is that the official MLR rebate check includes an accompanying letter explaining that the carrier has to do so thanks to the ACA itself, while I assume the carriers got to take credit for last spring's COVID-inspired rebate checks as being due to pure altruism.

With this rule, CMS is basically letting the insurance carriers pre-pay MLR rebates on a permanent basis if they want to, although they still have to include the letter giving the ACA credit for the check.

For the most part, I'm OK with this, but I'm a bit concerned about the "defering the payment of the remainder until the following year" part. And again, any rebate checks should still be required to give full credit to the ACA's MLR provision itself.

Risk Adjustment (RA) Model Specifications:

Beginning with the 2022 plan year, we propose updating the RA model specifications to better predict issuer liability for the healthiest and sickest enrollees. Specifically, we propose changes to the risk adjustment models to include a two-stage specification in the adult and child models, add severity and transplant indicators interacted with hierarchical condition category (HCC) counts factors to the adult and child models, and modify the enrollment duration factors in the adult models. These changes would refine the HHS risk adjustment models, encourage issuer participation, and strengthen the individual and small group markets. We also propose risk adjustment reporting requirements for issuers of risk adjustment covered plans who choose to provide temporary premium credits, if permitted by HHS during a future public health emergency. If finalized as proposed, these issuers would be required to report to their EDGE servers the lower, adjusted plan premiums that reflect actual premiums billed to enrollees.

Risk Adjustment has never been in my wheelhouse, so I'm not gonna try to opine on this one.

Risk Adjustment Data Validation:

For risk adjustment data validation (RADV), we propose to modify the schedule for the collection of HHS-RADV charges and disbursement of payments so they would occur within the same calendar year in which RADV results are released.

See above.

Risk Adjustment State Flexibility Requests:

HHS proposes to expand the current framework for state flexibility requests to permit states to request a reduction in risk adjustment state transfers calculated under the HHS methodology for up to three benefit years. HHS would retain the right to request additional information, terminate, or modify these requests after approval if the circumstances within the applicable state market risk pool materially change during the three-year period. This proposal may reduce burden in information submission for states and promote stability in risk adjustment state transfers and rate setting, since issuers in states with approved multi-year requests could depend on the state flexibility request applying for up to three benefit years. Additionally, the rule details the 2022 benefit year request submitted by the state of Alabama to reduce risk adjustment state transfers by 50 percent for both the individual market (including both the catastrophic and noncatastrophic risk pools) and the small group market.

Again, see above; while I understand the basics of Risk Adjustment, I've never been able to fully focus on the details of the program so I can't say whether this is a Good or Bad thing.

Premium Adjustment Percentage Index:

We updated the annual premium adjustment percentage using National Health Expenditure Accounts estimates and projections of per enrollee premiums for private health insurance (excluding Medigap and the medical portion of property and casualty insurance) that were available at the time of publication of the proposed rule. For the 2022 benefit year, the premium adjustment percentage will represent the percentage by which this measure for 2021 exceeds that for 2013. For the 2022 benefit year, the proposed premium adjustment percentage is 1.4409174688, which represents an increase in per enrollee premiums for private health insurance (excluding Medigap and the medical portion of property and casualty insurance) premiums of approximately 44.1 percent over the period from 2013 to 2021. In addition, for the 2023 benefit year and beyond, we propose to release the premium adjustment percentage in guidance by January of the year preceding the applicable benefit year which will provide issuers with this information earlier than in previous years and allow them more time to incorporate this information in plan design for the upcoming year.

(sigh) This is the continuation of a bad rule change which CMS instituted last year. The amount of federal tax credits which ACA enrollees receive (as well as the Maximum Out of Pocket (MOOP) enrollees have to pay) is based in part on the Premium Adjustment Percentage Index (PAPI), which is based on how much health insurance costs have increased since 2013. The higher the PAPI, the less generous ACA subsidies are and the higher the MOOP ceiling is.

The PAPI has always been used, but last year the Trump Administration changed from basing it on how much employer-sponsored insurance premiums change to how much overall private health insurance premiums change. The upshot of this is most subsidized ACA enrollees have to pay around $100 more per year than they otherwise would have to, and the maximum they have to pay out of pocket each year goes up by a couple hundred bucks more as well.

This isn't a major blow to the ACA, but it makes subsidies stingier when they should be made more generous.

Maximum Annual Limitation on Cost Sharing:

The proposed 2022 maximum annual limitation on cost sharing is $9,100 for self-only coverage and $18,200 for other than self-only coverage. This represents an approximately 6.4 percent increase above the 2021 parameters of $8,550 for self-only coverage and $17,100 for other than self-only coverage. Similar to the proposal for the premium adjustment percentage index, for the 2023 benefit year and beyond, we propose to release the maximum annual limitation on cost sharing in guidance by January of the year preceding the applicable benefit year.

See above. Again, the MOOP cap has always gone up a bit each year, but it's going up even more than it would otherwise due to last year's change in how it's calculated.

Reduced Maximum Annual Limitation on Cost Sharing

The reduced maximum annual limitation on cost sharing is a PPACA-required annual calculation to reduce maximum out-of-pocket costs for individuals enrolled in the various CSR plan variations by the amount prescribed in statute. We propose a 2022 reduced annual limitation on cost sharing for enrollees with incomes between 100 and 200 percent of the Federal Poverty Level (FPL) at $3,000 for self-only coverage and $6,000 for other than self-only coverage. The proposed 2022 reduced annual limitation on cost sharing for enrollees with incomes between 200 and 250 percent FPL is $7,250 for self-only coverage and $14,500 for other than self-only coverage. Similar to the proposal for the premium adjustment percentage index, for the 2023 benefit year and beyond, we propose to release the reduced maximum limitation on cost sharing in guidance by January of the year preceding the applicable benefit year. We also propose to establish reductions rates at 2/3rds reduction for households with incomes between 100 and 200 FPL and 1/5th reduction for households with incomes between 200 and 250 FPL for the 2023 benefit year and beyond, unless changed through notice-and-comment rulemaking.

The standard MOOP applies to every ACA policy; this is a major reason why it's a good idea to enroll in one even if it's an unsubsidized Bronze plan with a crazy-high deductible, since at the very least you'll be assured of avoiding being bankrupted. CSR enrollees, however (those earning less than 250% FPL enrolled in Silver plans) have a lower MOOP than everyone else. This rule locks those MOOP caps in at either $3,000 / $6,000 or $7,250 / $14,500 depending on the income bracket as opposed to the $9,100 / $18,200 for other enrollees.

Required Contribution Percentage:

The required contribution percentage is used to determine whether individuals age 30 and older qualify for an affordability exemption that would enable them to enroll in catastrophic coverage. For plan years after 2014, the required contribution percentage is the percentage determined by HHS that reflects the excess of the rate of premium growth between the preceding calendar year and 2013, over the rate of income growth for that period. We proposed a required contribution percentage for 2022 of 8.47228, which represents an increase of approximately 0.20 percentage points from the 2021 parameter of 8.27392. Similar to the proposal for the premium adjustment percentage index, for the 2023 benefit year and beyond, we propose to release the required contribution percentage in guidance by January of the year preceding the applicable benefit year.

In addition to the standard metal level ACA plans (Bronze, Silver, Gold and Platinum), there are also Catastrophic plans, but these are normally only available to those under 30 years old. If you're over 30, you may be eligible for one under certain circumstances; this just sets what that cut-off point is.

Special Enrollment Periods:

In order to promote continuity of coverage for consumers, we propose to permit Exchange enrollees who lose APTC eligibility to change to a plan of a lower metal level, and to allow qualified individuals who do not receive timely notice of an SEP qualifying event and otherwise are reasonably unaware that a triggering event occurred to select a plan based on the date that they knew, or reasonably should have known, of their triggering event. We also propose to clarify the availability of an SEP for individuals when an employer completely ceases contributions to COBRA continuation coverage.

In other words, let's say that you're single and earn exactly $50,000/year...just barely below the subsidy cut-off threshold. In June you receive an unexpected raise, putting your annual income at $53,000...just over the cut-off. When you lose your subsidies, you have to start paying full price. This would give you the ability to downgrade your policy from Gold to Silver or Silver to Bronze to save the difference for the rest of the year.

The second one is for cases where you don't know the precise date that you lost coverage...let's say you lose your job but the paperwork is fuzzy about whether the healthcare policy cuts off that day, at the end of the month or whatever; this just means you can pick a date and the 60-day clock starts from there. The third one (COBRA cut off) is self-explanatory.

I have no problem with these, but it's ironic and a bit puzzling that the Trump Administration is so obsessed with making sure everyone provides documented proof that they're allowed to have an SEP and that they were adamant about not launching a COVID-19 SEP earlier this year...but at the same time they seem to be creating more and more SEPs for every other reason under the sun.

QHP Enrollee Experience Survey Results:

To further support transparency of QHP quality data and provide consumers, states, issuers, and researchers with valuable enrollee experience data, we propose to make full QHP Enrollee Experience Survey (QHP Enrollee Survey) results across Exchanges publicly available in an annual public use file (PUF).

This seems...fine.

Employer-Sponsored Coverage Verification:

For Exchanges that do not obtain sufficient verification data to verify whether an applicant has an offer of affordable coverage that meets minimum value standards through their employer, we propose extending non-enforcement discretion for the requirement to conduct random sampling from plan year 2021 to plan year 2022. We also discuss our intentions for future rulemaking to determine the best verification process for employer-sponsored coverage verification that is contingent on HHS completing its evaluation of the 2019 study results. This study was conducted to help HHS determine the populations greatest at risk to inappropriately enroll in Exchange coverage with APTC in lieu of coverage offered through their employer.

This is related to the SEP verification rule above. Pretty much any citizen or documented U.S. resident can enroll in an ACA exchange policy if they want to, but if your employer offers you a policy (ESI) which meets minimum requirements under the ACA, you aren't eligible for financial subsidies to help pay for it (unless the employer policy costs more than a certain amount of your income).

However, just as verifying SEP eligibility is something which CMS has changed their policy on over the years, it sounds like they're also wringing their hands over people enrolling who might not be eligible for subsidies because they're leaving a qualifying ESI policy on the table. As with SEP verification, I have no idea how often this happens, but the minimum requirements for ESI plans are so stingy ("the Skinny Plan glitch") that I wouldn't be surprised if it happens from time to time.

Of course, the solution to this problem is to beef up the minimum ESI requirements, not to put more of a burden on the employees trying to get a decent policy, but that's another discussion.

Section 1332 Application, Monitoring and Compliance, and Periodic Evaluations:

HHS and the Department of the Treasury (collectively, the Departments) propose that Departments reference and incorporate section 1332 guidance published in the Federal Register in 2018 (83 FR 53575) in existing regulations governing section 1332 waiver application procedures, monitoring and compliance, and periodic evaluation requirements. The Departments believe this proposal would give states greater certainty regarding how they will apply section 1332’s statutory guardrails when determining whether a state’s waiver proposal can receive and maintain approval. It will also mitigate risk that substantial state taxpayer funds and other state resources will be wasted on preparing and submitting incomplete waiver applications or proposals that are not approvable.

Back in 2018, Trump's CMS Administrator Seema Verma completely mutated the ACA's Section 1332 Waiver guidance to allow and promote non-ACA compliant junk plans...exactly the type of crappy policies which the ACA was specifically intended to avoid promoting. If I'm interpreting this correctly, it sounds like this part of the rule would basically lock in that mutated interpretation even more deeply into how the ACA is implemented in the future, though I could be wrong.

Needless to say, if I'm correct about this, it's a Bad Thing.

FFE and SBE-FP User Fees:

For the 2022 benefit year, we propose a reduction in the Federally-facilitated Exchange (FFE) user fee rate to 2.25% of premium charged and a reduction in the State-based Exchange on the Federal Platform (SBE-FP) user fee rate to 1.75% of premium charged to reflect cost-saving measures implemented over the last several years in hopes of reducing the user fee burden on consumers and creating downward pressure on premiums.

I have very mixed feelings about this one. Several years ago, I noted that the 3.5% of premium User Fee for insurance carriers to participate on HealthCare.Gov had stayed exactly the same since the first Open Enrollment Period even though a) HC.gov enrollment had increased by a good 50% or so over the next few years; and b) unsubsidized premiums had more than doubled over the years, meaning that the total amount of revenue generated by those user fees was a good 3x as much by 2017 as it had been in 2014...without any idea of how the money was actually being spent and without most people knowing what the overhead/operational costs of running the federal exchange were. I wasn't accusing anyone of anything neferious, mind you; I was just curious.

My curiosity turned to concern, however, when it was revealed that CMS Administrator Seema Verma had decided to slash HC.gov's marketing, outreach & navigator budget by 90%, from a couple hundred million dollars per year to just a few tens of millions. It was also later revealed that Verma had been misusing those very user fees to produce propaganda videos which undermined and attacked the ACA itself.

With HC.gov's budget and spending seemingly already somewhat amorphous before Trump took office, and with the Trump Admin wiping out most of what they were supposed to be using the money for and instead using it for stuff they absolutely aren't supposed to be using it for, that 3.5% of premium fee became even more of an issue.

I wasn't the only one concerned about this; in January 2019, just a week after the Democrats retook control of the House of Representatives, a half-dozen House & Senate members sent a letter to Verma demanding to know how she was spending HC.gov money, and this past summer, H.R. 1425 (which passed the House in June) included a provision to formally require an audit of HC.gov.

In response to the pressure, in 2019 Verma caved and knocked the user fee down by half a point, from 3.5% to 3.0% (but increased the fee from 2.0% to 3.0% for a handful of states which are hosted by HC.gov but have their own state-based exchange entity). Then, for 2020, she knocked the fees on the second group down to 2.5%...and that seemed pretty reasonable to me.

They're keeping the fees locked in at 3.0% & 2.5% for 2021...but as shown above, they want to strip them down even more starting in 2022 (to 2.25% & 1.75% respectively).

The thing is, while the fees were probably too high for a few years, there's a certain point where cutting them further becomes a problem. This move--combined with the two changes being proposed below--make it clear that Seema Verma is still trying to kill the ACA exchanges through a gradual starvation process, even as she's about to lose her job.

I'm not the only one deeply concerned about this. Here's a press release from Peter Lee, Executive Director of Covered California, the largest state-based ACA exchange (which has their own user fee structure and their own marketing/outreach budgets, I should note):

“The proposed rule builds on years of actions by the outgoing administration to undercut the Affordable Care Act. Instead of marketing and promoting coverage options for millions of Americans, as they should during a pandemic, this proposed rule undermines efforts to get insurance coverage to those most in need.

The rationale for the proposed reduction of user fees is to “allow issuers to then pass on the savings to consumers,” which belies the reality that multiple policies enacted by this administration have resulted in premiums throughout much of the nation being far higher than they should be. These actions have priced millions of unsubsidized Americans out of coverage. Proclaiming that a reduction of user fees leads to a reduction of premiums flies in the face of the reality that well-spent marketing dollars by this administration would have had a five-to-one return on lowering health care costs for Americans.

Further, the policies of the outgoing administration have had nothing to do with lower premiums in the individual market. In 2020, premiums were lower in much of the nation due to a rebound from overpricing by health plans, while 2021 rates dipped across the nation because millions of Americans delayed and deferred care amidst the COVID-19 pandemic. Better profits for health plans should not be the marker of an effective marketplace.

The user fees can and should be well spent to make sure health plans are held accountable for delivering high-quality care and addressing health disparities. This proposal serves to reduce resources for ensuring more Americans know about and secure more affordable health coverage options for themselves and their families.

In other words, while the fees may have been too high to begin with, they're now in danger of becoming far too low to allow for a proper, robust marketing, outreach and navigator effort...which the Biden Administration was already going to have to ramp up regardless. A 0.75-point fee reduction amounts to a mere $52/year per enrollee...except that 85% of ACA exchange enrollees don't pay that fee anyway...and even that assumes that the insurance carriers pass the savings along to the enrollees in the first place (see the MLR rule about that). If you assume around 10 million enrollees, that's roughly $520 million/year which could be used for any number of positive, useful purposes by the Biden Administration which Verma is trying to eliminate.

You could go either way on this, I suppose, but once you see the last two proposals, the truth becomes pretty clear:

Web-broker and DE Entity QHP and Plan Display Requirements:

In order to provide web-brokers greater flexibility and to improve the shopping experience for consumers using web-brokers, we propose to create flexibility for web-broker non-Exchange websites to display a subset of QHP details rather than all QHP information in certain circumstances and subject to certain requirements. We further propose web-brokers must include premium and cost-sharing information in the details they display, as well as disclaimer language informing consumers of where they can find additional QHP information. We also propose to allow DE entities to display and market QHPs offered through the Exchange and other individual health insurance coverage offered outside the Exchange on the same website pages in certain circumstances.


HealthCare.Gov and the state-based ACA exchanges serve two main functions: First, in the early days of the ACA, it was technically difficult to integrate the various federal governmental databases/systems together in a way which allowed the enrollee's identity to be verified (using their Social Security Number, DMV records, INS records, etc) in such a way to determine whether they were legally eligible for financial subsidies, whether they should be re-routed towards Medicaid expansion instead, etc etc. For various legal/privacy reasons, all of this had to be done via official government-operated websites.

Secondly, the whole idea was to provide a trustworthy, respected, official source for people to compare and choose from all ACA-compliant policies only, without any bias toward or against any particular carrier or plan and without the enrollee being tricked or confused into signing up for a non-ACA compliant junk plan. Again: THAT'S ONE OF THE MAJOR POINTS OF THE PPACA IN THE FIRST PLACE: PATIENT PROTECTION.

This isn't to say that every ACA enrollee has done so via the official exchange websites. Since the earliest days, many of those who enroll have always done so via third-party private insurance brokers...who, for the first few years, would have to collect the enrollee's data, then re-enter it via HealthCare.Gov (or a state-based exchange) a second time in order to provide them with their tax credits. It was cumbersome, but it worked.

In more recent years, massive advances in software, encryption technology etc etc have mostly resolved the first issue. There are now a couple dozen authorized "Enhanced Direct Enrollment Entities" (basically, private third-party brokerage websites) which hook directly into the official database at HC.gov/etc., avoiding the "double-entry" process.

On the surface, this seems harmless: Making it easier for people to enroll in ACA policies via more outlets is a good thing, right? Unfortunately, as Tara Straw Center on Budget & Policy Priorities noted last year, EDEs raise a host of potential problems:

  • Many DE entities offer plans that don’t comply with ACA standards, and they may benefit financially if they enroll more people in them. Some insurers and brokers operating through DE offer short-term health plans and other types of plans that don’t meet ACA consumer protections and benefit standards but pay high commissions to agents and brokers. Federal rules bar DE entities from displaying these plans alongside marketplace plans, but some DE sites use screening tools to shift consumers away from marketplace options. This raises a serious threat to both consumers and the ACA marketplace if insurers and brokers use their status as approved DE entities to enroll consumers in non-compliant plans. Also, the sites’ screening tools collect personal and health information that can be used for future marketing of non-compliant plans.
    • For example, one web broker’s listing of “Health Insurance” options often shows only non-ACA plans; the site lists ACA-compliant plans under “Obamacare Coverage.”
  • People who are eligible for Medicaid or other programs may face additional barriers to enrolling when they rely on a DE website. The marketplace has a “no wrong door” policy, meaning that consumers who go to the marketplace website can fill out one application and be routed to Medicaid, CHIP, or marketplace subsidies based on the information they provide. But some DE websites divert consumers from the marketplace application process before they even reach it, by not informing them that they might be eligible for no-cost coverage or by steering them toward non-ACA products.
    • One health insurance issuer encourages consumers with Medicaid-eligible children to “buy a plan direct” from them, which bypasses the marketplace’s single streamlined application that would indicate their child’s Medicaid eligibility.
  • DE websites prevent consumers from fully comparing private health plans based on price and quality, which impedes competition among insurers. Unlike marketplace websites, which allow people to compare all qualified health plans on an apples-to-apples basis, DE entity websites may not present all available marketplace plans or comparable plan information. Moreover, DE entities may have financial incentives to steer consumers to certain insurers. Consumers thus may not end up with the plan that would best meet their needs. Moreover, insurers with significant market share can use DE and EDE to maintain their dominance, making it harder for small insurers or new entrants to compete.
    • One web broker lists what appears to be a complete list of plans (“17 of 17”) available in a rating area but in reality covers only about one-third of the available plans.

The proposed 2022 NBPP would deal a complete death blow to the first and third of the bullets above. It would allow DEs to list junk plans side by side with ACA plans and it would allow them to bury/hide some information on the policies which are offered.

This is horrible for reasons which should be self-evident, and should be a non-starter.

(I should note, by the way, that I'm not inherently opposed to allowing DEs to exist..in fact, one of them, Health Sherpa, is actually a sponsor of ACA Signups...but the only reason why I have them as a sponsor is because they only offer ACA-compliant policies, list all of them side by side, and don't promote one carrier over another. If & when they ever violate any of these standards I'll discontinue my relationship with them.)

Unfortunately, as Straw noted last year, other carriers aren't so scrupulous. Here's one example I found from last year, where the link takes you to a different website which lists a bunch of "short-term" junk plans side by side with ACA policies, confusing the hell out of people and presumably leading many to make a terrible choice.

Until now, these practices were tolerated by the Trump Administration but weren't explicitly authorized. If this part of the NBPP goes into effect, such shady techniques will be explicitly approved.

But even this pales in comparison to the final item:

Establish Exchange Direct Enrollment Options:

HHS proposes to establish in regulation a new option by which an SBE, SBE-FP or FFE state may satisfy requirements under 45 CFR 155.400 related to the enrollment of qualified individuals into individual market QHPs by electing to use direct enrollment, through private sector entities, as the enrollment pathway for the consumers in their state. Under these new Exchange Direct Enrollment (DE) options, in lieu of using a centralized, Exchange-run website, an SBE, SBE-FP or FFE state that is approved by HHS to implement this option would direct consumers to approved private sector-operated websites through which consumers could apply for coverage and enroll in a QHP, as well as receive a determination of APTC and CSR eligibility from the Exchange. Under this option, the Exchange would remain responsible for making all eligibility determinations, performing required verifications of consumer application information, and meeting all of the statutory and regulatory requirements for the operation of an Exchange. SBE-FP and FFE states electing the Exchange DE option would enter into an agreement defining the responsibilities of HHS and the state and outlining the terms and conditions for the arrangement. We propose to permit State Exchanges to elect this option beginning with the 2022 plan year and to permit FFE and SBE-FP states to elect this option beginning with the 2023 plan year. For an FFE or SBE-FP state that exercises this option, HHS would continue to collect user fees from FFE and SBE-FP issuers. For the 2023 benefit year, we propose a FFE-DE and SBE-FP-DE user fee rate of 1.5% of premiums charged.


It's bad enough that the Trump Administration is trying to undermine the core principles of the Affordable Care Act by allowing private broker sites to hawk junk plans side by side with ACA-compliant ones (which would also mean that a portion of the User Fees being paid by carriers to promote their ACA-compliant policies would also effectively be going to market and promote junk plans sold by other carriers who don't pay the User Fee, I should note...which I'm guessing won't go over well with the ACA carriers). This final change, however, would allow any state to completely stop participating in an official ACA exchange altogether.

I don't mean splitting off of HealthCare.Gov onto their own state-based ACA exchange, as 15 states have done, mind you. I'm talking about not operating or even being listed on ANY official ACA exchange whatsoever.

This is simply unacceptable, period. I could write a torrent about why this is a horrible idea, but the Kaiser Family Foundation's Larry Levitt sums it up best:

There’s a legitimate argument that expanding how people get ACA coverage through private brokers and direct enrollment with insurers could get more people covered. Taking away an option by eliminating healthcare.gov only makes it harder for people to get insured.

— Larry Levitt (@larry_levitt) November 25, 2020

In short, this last item--which has already been approved for Georgia in particular via an earlier Section 1332 Waiver which is itself extremely legally questionable--would basically be the equivalent of allowing a state to opt out of using the United States Postal Service in favor of UPS or FedEx. Again, there's nothing wrong with allowing UPS/FedEx to operate alongside the USPS as long as they follow reasonable regulations...but to rely on them exclusively would be opening up a world of hurt.

As you can see, of the dozen or so changes listed above, some are perfectly fine; some are neutral...but the last two (and perhaps the 3rd from last, depending on your perspective) would blow a massive hole in the spirit and possibly the letter of the Affordable Care Act just days before Trump leaves office, without requiring a single piece of legislation or any judicial rulings to do so.

The good news, such as it is, is that the timing of all this is very tight. As Katie Keith says in Part One of her own NBPP 2022 explainer (which is far better than this one, but I've already put in the work):

CMS is accepting comments for 30 days after the rule has been filed for public inspection. Assuming that date is November 27, comments will presumably be due on December 28, 2020. It strikes me as unusual to tie the comment deadline to the filing date since most comment periods are tied to the date of actual publication in the Federal Register. The comment period typically begins after publication in case the rule changes between filing date and actual publication (as CMS acknowledges in a disclaimer).

If the comment deadline is in fact linked to the date of publication in the Federal Register, commenters will have slightly more time to weigh in, and CMS will have slightly less time to review and respond to comments. While only a slight difference, CMS is presumably trying to finalize the rule before the end of the Trump administration’s term. With Inauguration Day on January 20, 2021, mere days can be the difference between the Trump administration finalizing the rule—or an incoming Biden administration opting to significantly revise the rule.

Even if these changes are finalized, a Biden administration could delay the rule’s effective date and then issue subsequent rules to roll back the changes it does not think are justified. But doing so could take time and likely another round of notice and comment. (For context, the outgoing Obama administration finalized the 2018 payment notice in December 2016; the Trump administration almost immediately made changes to some of those and other policies in its market stabilization rule in early 2017.)

In other words, as Stan Dorn noted above, TIME and PUBLIC COMMENTS are of the essence here.

The 2022 NBPP hasn't been added to the Federal Register for Public Comment as of this writing. It's actually in the interest of ACA supporters to hope that the 30-day comment period starts as late as possible...because the more time there is to comment, the less time there is for Trump's CMS to review and respond to those comments. However, I'll be watching the Federal Register carefully to see when they do get around to posting it, and the moment they do, I'll be calling on every reader of this site (as well as my 42,000+ Twitter followers) to submit (polite) public comments strongly protesting at least the last two items above relating to Direct Enrollment entities and to allowing states to blow off the official ACA exchanges.

Stay tuned...