The Centers for Medicare & Medicaid Services (CMS) has proposed 373 pages of regulations that could affect how health plans fund and draw from new, multi-billion-dollar risk-management programs.
The proposed "notice of benefit and payment parameter" regulations also could affect how CMS, an arm of the U.S. Department of Health and Human Services (HHS), handles other responsibilities created by the Patient Protection and Affordable Care Act of 2010 (PPACA), such as running the PPACA individual exchanges, or Web-based health insurance supermarkets, and the health insurance exchange program for small businesses — the Small Business Health Option Program (SHOP).
One provision would let the SHOP small business exchanges put insurance agent and broker information on their websites, and another provision would require carriers selling coverage through a federal individual or SHOP exchange offer similar producer compensation in the exchange and non-exchange markets.
CMS said HHS might charge a 3.5 percent user fee to fund exchange operations.
CMS has posted a preliminary version of the regulations on the Web today, and it intends to publish them in the Federal Register Dec. 7.
Comments will be due 30 days after the official Federal Register publication date.
PPACA
Opponents of PPACA are still fighting implementation of the law in the courts and elsewhere.
If the law takes effect on schedule and works as drafters expect, it will require insurers to sell coverage on a guaranteed-issue basis starting in 2014. Insurers will have only a limited ability to take a consumer's age or health into account when setting rates.
Individual consumers and small employers are supposed to be able to use new tax subsidies to buy plans that sell a standardized "essential health benefits" (EHB) package through new PPACA exchanges, or Web-based health insurance supermarkets, starting in late 2013.
A "qualified health plan" (QHP) that sells coverage through an exchange can offer up to four "metal levels" of coverage, ranging from a bronze-level plan, which would cover 60 percent of the actuarial value of the EHB package, to a platinum-level plan, which would cover 90 percent of the actuarial value of the EHB package.
Individuals are supposed to be able to get "advanced payments" of the new premium tax credits while a calendar year is still in progress, long before they file their income tax forms for that year, so that they can use the "refundable credit" cash to pay for health coverage.
At least in the beginning, only employers with fewer than 50 full-time equivalent (FTE) employees will be able to use SHOP exchanges.
States can choose between setting up their own exchange programs, sharing responsibility with HHS, or relying entirely on HHS to provide exchange services for their residents.
States also can choose whether to combine the "Affordable Insurance Exchanges" for individuals with the SHOP exchanges for small businesses or keep the individual exchange programs and SHOP exchange programs separate.
SHOP
The proposed SHOP regulations released today would apply only to SHOP exchanges run by the federal government, not to state SHOP exchanges.
To give employees as many choices as possible, officials want to require any employer that uses the shop program to simply choose which level of coverage to pay for. The employees could buy any plan available at that metal level.
Some commenters who responded to CMS requests for comments said letting employees choose plans at different metal levels could increase adverse selection risk, or the risk that sicker employees will flock to certain health plans, or certain types of plans.
"There was general agreement among … commenters that the degree of risk segmentation is small if employee choice is limited to a single metal level of coverage, particularly given the presence of risk adjustment, and increases as employee choice is extended across metal levels of coverage," officials said. "Many commenters suggested that the risk segmentation associated with broad choice across all metal levels may adversely affect premiums."
CMS officials are now asking for comments about how letting employees "buy up" to a plan with a higher metal level would affect risk.
Health policy specialists have suggested that group health plans with low participation rates tend to have high claims costs.
CMS wants to try to manage SHOP exchange risk by setting a minimum SHOP program participation rate of 70 percent.
The minimum participation rate could be higher or lower in states with well-established minimum participation rates other than 70 percent, officials said.
Brokers
One section of the proposed regulations deals with broker compensation for coverage sold through a federal individual exchange or a federal SHOP small business exchange.
