ACA Insurance Exchanges and State Innovation Waivers

On December 4, 2020, the Department of Health and Human Services and the Department of the Treasury jointly issued proposed regulations that permit states to leave a state-sponsored insurance exchange, and permit private agents and brokers to conduct enrollments beginning in 2023. The proposed regulations streamline Affordable Care Act (ACA) Section 1332 State Innovation Waivers, and permit states to accelerate approval of modifications to their exchange programs. Moreover, the guidance includes the following changes affecting these exchanges.

• Sets forth payment paraments and provisions related to the risk adjustment program, cost-sharing parameters, and cost sharing reductions
• Modifies the special enrollment periods, navigator program standards, and administrative appeals process
• Clarifies network adequacy standards for qualified health plans that do not use provider networks
• Proposes changes to the regulations requiring reporting of certain prescription drug information by qualified health plans and their pharmacy benefit managers

Comments on the proposed regulations must be received by December 30, 2020.

Background

In 2018, the Trump administration issued guidance affecting ACA Section 1332 State Innovation Waivers, replacing guidance issued in 2015. Pursuant to the 2018 guidance, states may make broader changes to the exchange coverage offered to their residents, including the promotion of sales, the use of premium and cost subsidies, and the administration of other policies and procedures.  

ACA Section 1332 permits states to strategize their own exchange coverage and waive certain provisions, including essential health benefits, bronze/silver/gold tiers, and cost sharing. While the 2015 guidance was strict regarding how modifications could be made, the 2018 guidance was less stringent, permitting changes that likely would not have otherwise been approved by the Obama administration. These proposed rules would further support the 2018 guidance issued by the Trump administration but could be reversed under a new administration.   

The following outlines some differences between the 2015 and 2018 guidance.

• Coverage: The 2015 guidance limited coverage to minimum essential coverage. The 2018 guidance includes health insurance coverage, which expands coverage to include short-term, limited duration insurance.
• Affordability: The 2015 guidance requires affordability to be measured by comparing residents’ net out-of-pocket spending on premiums and cost sharing. The 2018 guidance measures affordability based on the individual’s expected out-of-pocket spending on premiums, cost sharing, and direct payments.
• Comprehensiveness: The 2015 guidance requires coverage offered to meet the state’s essential health benefit (EHB) standards or standards imposed by Medicaid or CHIP. The 2018 guidance grants states flexibility to select an EHB benchmark, and coverage offered would be compared to the elected EHB benchmark or any other benchmark chosen by the state.

Changes Affecting HRAs

The proposed regulations would require qualified health plan issuers in the exchange to accept premium payments on behalf of enrollees from individual coverage health reimbursement arrangements (ICHRAs) or qualified small employer health reimbursement arrangements (QSEHRAs). The clarification is intended to reduce issuer confusion regarding receipt of direct payments on behalf of enrollees.  

In addition, the proposed rules would permit states to develop consumer-friendly comparison tools to assist consumers in their review and election of individual health plans on and off the exchange.