PPACA; HHS Notice of Benefit and Payment Parameters for 2017, 45 CFR Parts 144, 147, 153, 154, 155, 156, and 158, 81 Fed. Reg. 12203 (Mar. 8, 2016); Fact Sheet: Final HHS Notice of Benefit and Payment Parameters for 2017 (Feb. 29, 2016)
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HHS has finalized regulations establishing benefit and payment parameters for 2017. The regulations, which also address some Exchange-related items, primarily impact individuals, insurers, Exchanges, and navigators and brokers providing Exchange support—but some of the provisions apply to employers and advisors. Here are highlights:
- State Exchange Hybrid. The final regulations adopt a new hybrid Exchange model—referred to as a “State-based Exchange on the Federal platform (SBE-FP)”—under which a state Exchange uses the eligibility and enrollment platform and information technology infrastructure of the federally facilitated Exchange (FFE). Insurers offering products through the SBE-FP must comply with enrollment and eligibility guidance as if they were offering products on the FFE.
- Small Employer Definition. Consistent with the PACE Act (see our Checkpoint article), the final regulations define a small employer as one with at least one and not more than 50 employees on business days in the preceding calendar year, with an option for states to expand the cutoff to 100 employees. This definition applies for small/large group market delineations and also establishes eligibility for the SHOP. Consistent with Code § 4980H, if an employer was not in existence throughout the preceding calendar year, employer size is based on the average number of employees expected to be employed during the current calendar year.
- Guaranteed Availability/Guaranteed Renewability. Health care reform generally requires insurers to guarantee availability and renewability of coverage, subject to limited exceptions. HHS had proposed changes to certain exceptions (see our Checkpoint article), but the proposals were not included in these final regulations. More specifically, HHS decided not to add an exception to guaranteed availability under which insurers would have been permitted to deny coverage to new individuals or groups during the 90- or 180-day notice period applicable to product discontinuance or market withdrawal. It also decided to retain exceptions to guaranteed renewability when employers cease to be members of an association or violate insurers’ minimum participation or employer contribution rules. [EBIA Comment: Based on comments to the proposed regulations, HHS acknowledged that employers’ rights are different under guaranteed availability and guaranteed renewability and decided not to adopt the proposed changes.]
- Annual Enrollment. The annual open enrollment period for Exchange coverage will be November 1, 2016 through January 31, 2017 for 2017 coverage; and November 1, 2017 to January 31, 2018 for 2018 coverage. This period will change to November 1 to December 15, 2018 beginning for 2019 coverage.
- SHOP. HHS finalized the proposal allowing employers in the FF-SHOP to offer qualified employees a “vertical” choice among all plans available from a single insurer, across all levels of coverage (e.g., all plans of an insurer at the platinum, gold, silver, and bronze level)—but states using the SBE-FP can opt out of vertical choice, and states using the FF-SHOP can recommend that the FF-SHOP not offer vertical choice in their state. (This vertical choice option is in addition to offering either a single plan or a “horizontal” choice of all plans available at a selected level of coverage (e.g., all plans at the silver level). State-based Exchanges already have all of these options.) The final regulations also modify certain premium payment guidelines, including the rules governing when coverage is effectuated. In addition, employers participating in the FF-SHOP must offer employees an annual enrollment period of at least one week. FF-SHOPs will also be required to send employees 90-day advance notice of a child’s loss of eligibility due to age. And the preamble acknowledges that the FF-SHOP still does not have composite premium or auto-enrollment capabilities.
- Risk Stabilization Programs. Health care reform included three programs designed to promote market stability by balancing risk: the transitional reinsurance, temporary risk corridors, and permanent risk adjustment programs. Only the last of these three will still be active in 2017, receiving most, but not all, of the attention in the final regulations. For example, HHS did not finalize a proposal that would have authorized HHS to audit third-party administrators (TPAs), administrative-services-only contractors (ASOs), and other third parties that assisted contributing entities (such as self-insured health plans) with calculating or submitting reinsurance contributions for 2014–2016. Instead, contributing entities must ensure cooperation of third parties during any audit of the contributing entity. [EBIA Comment: Contracts between service providers and self-insured plan sponsors should be reviewed and possibly amended to ensure cooperation in case of a reinsurance audit.]
- Notice of Employee Enrollment in Subsidized Exchange Coverage. Under the final regulations, Exchanges are only required to notify employers when their employees actually enroll in Exchange coverage and have been determined eligible to receive a premium tax credit. The Exchange may either send notices employee-by-employee, or in batches, so long as notice is provided within a reasonable time. [EBIA Comment: Limiting notices to cases of actual enrollment is an improvement over the current rule, which requires a notice from the Exchange whenever an employee is determined to be eligible for the premium tax credit—whether or not the employee enrolls. Because employer shared responsibility penalties under Code § 4980H may be triggered only when a full-time employee actually receives a premium tax credit, being notified of mere eligibility for the credit doesn’t provide employers with all the information they need and generates unnecessary notices. The FFEs intend to publish a sample notice. The first batch of federal Exchange notices is expected to be sent in spring 2016 (see our Checkpoint article). The preamble includes a reminder that the Exchange notice does not establish Code § 4980H liability; only the IRS can assess these penalties.]
- Brokers and Agents. Brokers and agents wanting to assist individuals or employers with Exchange enrollment must register with the Exchange and receive training. The final regulations add standards of conduct for brokers and agents assisting with enrollment in the FFE or SBE-FP, with a focus on consumer protection. In addition to protecting personally identifiable information and not being coercive, misleading, or discriminatory, brokers must obtain consent before enrolling individuals or employers in Exchange coverage. The final regulations will allow applicants to enroll directly on a broker’s or agent’s website without being redirected to an Exchange website, as has previously been required, so long as certain consumer protections are incorporated into the agent or broker’s website. [EBIA Comment: Recognizing the complexity of its enhanced direct enrollment process, HHS has delayed implementation until the individual market open enrollment period for 2018 coverage.]
EBIA Comment: The annual benefits and parameters updates provide for dense but essential reading for those dealing with the Exchanges. Among the many details are increases in annual cost-sharing limits ($7,150 for individual coverage and $14,300 for family coverage). Insurers will be interested in changes to the rate review process, which are outlined in a bulletin, and will want to review important operational and technical guidance in the 2017 Letter to Issuers in the Federally-facilitated Marketplace. There are also points of interest for those working with individuals who may be eligible for hardship or other exemptions from the individual responsibility mandate, or following the network adequacy standards controversy. For more information, see EBIA’s Health Care Reform manual at Sections XX (“Mechanisms to Allocate Risk”), XXI (“Exchanges, Qualified Health Plans (QHPs), and CO-OPs”), XXVIII.H (“Certification of Premium Tax Credit and Employer’s Payment of Penalties”), and XXXVI.I (“Required Contributions Toward Reinsurance Contributions”). See also EBIA’s HIPAA Portability, Privacy & Security manual at Section XVIII (“Guaranteed-Availability and Guaranteed-Renewability Rules for Large Group, Small Group, and Bona Fide Association Plans”).
Contributing Editors: EBIA Staff.