NBPP 2023 Part 4: ECPs, User Fees & SEPs!

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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 tweaks to some of the specifics of how the ACA is actually implemented.

This morning, CMS issued the final NBPP for the upcoming 2023 Open Enrollment Period. Since there's so many provisions included, this year I've decided to break it into multiple posts which only focus on one or a few of them at a time:

(Note: QHP = Qualified Health Plan...basically, an ACA-compliant major medical policy available on an ACA exchange.)

Expanding Access to Essential Community Providers

Under the final rule, for Plan Year (PY) 2023 and beyond, CMS is increasing the Essential Community Provider (ECP) threshold from 20% to 35% of available ECPs in each plan’s service area to participate in the plan’s provider network. The higher ECP threshold will increase access to a variety of providers for consumers who are low-income or medically underserved. CMS anticipates that most issuers will easily meet the 35% threshold – for PY2021, 80% of the QHPs on the FFM already met this standard. 

Additional details from the Fact Sheet:

Raise the Essential Community Provider (ECP) Threshold from 20% to 35%

For PY2023 and beyond, CMS finalizes increasing the ECP threshold from 20% to 35% of available ECPs in each plan’s service area to participate in the plan’s provider network. For PY2021, the percentages of medical and dental QHP issuers on the FFMs that could have satisfied a 35% ECP threshold were 80% and 74%, respectively. CMS anticipates that issuers will be able to meet the 35% threshold with only minimal reliance on our ECP write-in and justification processes, if needed.

Here's the definition of ECPs via the Kaiser Family Foundation:

The ACA regulation defines essential community providers (ECPs) as providers that serve predominantly low-income, medically underserved individuals, and specifically include providers described in section 340B of the Public Health Service (PHS) Act and the Social Security Act. 340B Entities include safety net providers listed in the 340B Statute as eligible to purchase drugs at a discounted rate through the 340B Drug Pricing Program.

CMS further clarified the regulation by identifying six ECP categories: (1) Federally Qualified Health Centers (FQHCs) and FQHC "Look-Alike" clinics; (2) Ryan White HIV/AIDS Program Providers; (3) Family Planning Providers; (4) Indian Health Providers; (5) Hospitals; and (6) Other ECP Providers including STD clinics, TB clinics, Hemophilia treatment centers, Black Lung clinics and other entities that serve predominately low-income, medically underserved individuals.


Further Streamlining HealthCare.gov Operations

The rule sets the FFM and State-based Marketplaces on the Federal Platform (SBM-FPs) user fees for 2023 at the same level as 2022. Maintaining FFM and SBM-FPs user fees at the 2022 level will ensure adequate funding for essential Marketplace functions such as consumer outreach and education, eligibility determinations, and enrollment process activities. CMS finalizes two of the three proposed model specification changes to the risk adjustment models, improving risk prediction for the lowest and highest risk enrollees. 

Both FFMs and SBM-FPs are hosted by HealthCare.Gov. 30 states are "FFM" states; these operate as Federally-Facilitated Marketplaces. Another 3 states (Arkansas, Oregon and Virginia) are "SBM-FP" states, which means that they operate as their own state-based legal entity (with a board of directors, their own operating budget, etc) but which still utilize HealthCare.Gov as their enrollment platform.

The Fact Sheet specifies that the FFM and SBM-FP user fee rates will remain of 2.75% and 2.25% of premiums respectively.

Special Enrollment Period (SEP) Verification

CMS finalizes changes to scale back pre-enrollment SEP verification in the FFMs and SBM-FPs to include only the SEP for loss of minimum essential coverage—the SEP type that comprises the majority of all SEP enrollments on the Marketplaces on the federal platform—and to clarify that Marketplaces maintain the option to verify eligibility for any SEP types and may provide an exception to pre-enrollment SEP verification when verification may cause undue burden, such as during natural disasters or public health emergencies impacting consumers or the Marketplace.

Prior to this rule, Marketplaces on the federal platform conducted pre-enrollment verification of eligibility for five SEP types (loss of minimum essential coverage, Medicaid/Children’s Health Insurance Program (CHIP) denial, permanent move, marriage, and dependent addition) representing 90% of SEP applications. While pre-enrollment SEP verification can decrease the risk of adverse selection and improve program integrity, it can also deter eligible consumers from enrolling in coverage through an SEP because of the barrier of document verification. Our experience operating the FFMs and the federal platform shows that pre-enrollment SEP verification disproportionately negatively impacts Black and African American consumers who submit acceptable documentation to verify their SEP eligibility at much lower rates than white consumers. We have also found that younger, often healthier consumers submit acceptable documentation to verify their SEP eligibility at much lower rates than older, often less healthy consumers, which can negatively impact the risk pool. Scaling back SEP verification would mitigate the negative impacts of pre-enrollment SEP verification on populations that have historically faced barriers to accessing health care, and would decrease the overall consumer burden without substantially sacrificing program integrity.

As I noted last winter, there are three main reasons for having a limited time Open Enrollment Period in the first place: First, to help spur people into action (most people are very deadline-oriented). Second, to make sure the carriers have as much enrollment data as possible locked in in time to have their actuaries figure out what impact their risk pool will have when it comes to setting pricing for the following year; and third. The most important reason, however, is to avoid adverse selection.

Avoiding adverse selection is the reason you can't drive a car without auto insurance and you can't get a mortgage without homeowner's insurance. Otherwise people would wait until after they crashed their car or after their house caught on fire to buy it. By restricting ACA enrollment to a limited time window, you prevent people from "going bare" until after they get diagnosed with cancer or diabetes to #GetCovered. The ACA used to have two measures in place to prevent this...but of course the federal Individual Mandate Penalty is no more, though 4 states + DC still have their own these days.

If you're going to limit most people to a limited time window (OEP), that of course means you have to have rules about who can enroll outside of that period. That's where Special Enrollment Periods (SEPs) come in. To be eligible to enroll via an SEP, you generally have to have had a Qualifying Life Experience (QLE) such as losing your employer-based healthcare coverage, moving outside your rating area, turning 26 and being kicked off your parents plan, losing Medicaid eligibility, getting out of prison, having a baby, getting married and so on.

For the first few years of ACA Open Enrollment, verification of SEP eligibility was pretty much done on the honors system. There was a warning that lying about having a QLE was a federal offense, but that was about it. In 2015, when a lot of carriers were losing money on ACA exchange enrollees, there was a backlash in which they demanded that CMS start cracking down on SEP verification by requiring enrollees to upload documentation to prove they were eligible.

The Obama Administration started doing so in 2016 with "spot checks" (they required documentation from random enrollees, but not all of them). Under the Trump Administration, CMS cracked down even harder, requiring documentation of every SEP enrollee.

It's important to understand that there wasn't a whole lot of evidence that people were deliberately gaming the system, mind you; the carriers assumed that this was a widespread problem, but I don't know if they ever proved it.

All of this came to a head when the pandemic hit in spring 2020, however: As tens of millions of Americans suddenly became unemployed overnight, the SEP verfiication system became overwhelmed, and everyone from my own Governor to the health insurance industry itself began clamouring for CMS to re-open enrollment to anyone who would otherwise be eligible during OEP regardless of whether they provided proof of SEP eligibility or not.

CMS refused to do this under the Trump Administration (though they did quietly smooth the path by "unofficially" waiving the verfication process and, later, by widening the eligiblity period from 60 days all the way back to the beginning of January 2020), but the Biden Administration did exactly that this past spring...in a big way.

Result? Over 2.8 million additional Americans enrolled nationally over the spring/summer...over 3.7x as many as normally would have via standard SEP policy. Put another way, a good 2 million more people enrolled who otherwise likely wouldn't have...and the fact that they didn't have to go through a lot of cumbersome QLE documentation is a big reason for this.

Going forward, it looks like the Biden Administration has decided to split the difference: They'll still require verification for most SEPs (loss of coverage, which is what the vast majority of SEP cases involve), but will no longer do so for cases where the enrollee was denied Medicaid/CHIP coverage, moved outside their rating area, got married or gave birth/adopted a child...all of which seems reasonable to me.