ACAP Comments on Marketplace Stabilization Rule

March 7, 2017

Jeff Wu, Acting Director & Acting Chief Executive Officer
Center for Consumer Information and Insurance Oversight
Centers for Medicare & Medicaid Services
Department of Health & Human Services

Submitted electronically via:

Dear Director Wu:

The Association for Community Affiliated Plans (ACAP) respectfully submits comments regarding HHS’ Patient Protection and Affordable Care Act; Market Stabilization Proposed Rule.

ACAP is an association of 59 not-for-profit and community-based Safety Net Health Plans (SNHPs) located in 28 states. Our member plans provide coverage to more than 17 million individuals enrolled in Medicaid, the Children’s Health Insurance Program (CHIP) and Medicare Special Needs Plans for dually-eligible individuals, including over 600,000 Marketplace enrollees. Nationally, Safety Net Health Plans plans serve almost half of all Medicaid managed care enrollees. Seventeen of ACAP’s Safety Net Health Plan members offer qualified health plans (QHPs) in the Marketplaces in 2017.

Summary of ACAP’s Comments
ACAP has chosen to respond to a subset of proposals in the proposed Marketplace Stabilization rule that are particularly relevant to Safety Net Health Plans, and we further wish to draw attention to a particular subset of our comments. ACAP appreciates the Administration’s recognition of the importance of market stability during a time of political uncertainty in the Legislative Branch. ACAP is supportive of numerous provisions throughout the rule but would also caveat that many provisions will need to be carried out carefully so as not to place undue burden or harm on consumers, in particular the low-income and vulnerable populations that are traditionally served by Safety Net Health Plans. Furthermore, while not addressed in the proposed rule, we believe one of the most important actions that can be taken to help stabilize the Marketplace is to ensure full cost sharing reduction payments are made to issuers.

ACAP would like emphasize that the comments herein support Safety Net Health Plans in their efforts to serve their communities, which they are generally well-acquainted to by way of their 2 experience with serving Medicaid enrollees. We believe there is a careful balance that must be struck in order to support issuers in the Marketplace while at the same time not instituting policies that would have a deleterious impact on consumers.

In particular, we wish to draw attention to the following sections of our comments:

Support Tightened Rules for Non-Payment of Premiums: ACAP strongly supports CMS’ efforts to allow issuers to collect unpaid debts prior to effectuating new coverage. Based on our experience serving many low-income enrollees that may churn between Medicaid and Marketplaces, some ACAP member plans may choose to institute a threshold premium payment policy given the likelihood that their enrollees are low-income. Accordingly, we strongly believe that if plans choose not to require full payment from their enrollees, they should not be required to make this information public, as that is likely to lead to gaming.

We further believe that consumers should not be permitted to receive a special enrollment period (SEP) for loss of minimum essential coverage, if the reason for such a loss in coverage was termination due to non-payment of premiums. Insofar as gaming of SEPs may or may not be an issue, we believe that this particular SEP has the most potential for abuse.

Oppose Shortened Open Enrollment: ACAP strongly opposes CMS’ proposal to shorten the open enrollment period by half for plan year 2018, as it is likely to both create a significant operational burden for issuers, but may also have a deleterious unintended impact on the risk pool and enrollment.

Urge Caution in Pre-Enrollment Verification of SEPs: ACAP appreciates CMS’ efforts to limit abuse and gaming of Special Enrollment Periods by individuals who wait until they need to care to enroll in coverage, particularly if they are fraudulently trying to qualify for an SEP. At the same time, we urge caution to ensure that any such new requirements do not ultimately create barriers that deter healthy consumers from completing the enrollment process, thus harming the risk pool.

Urge Greater Flexibility in Actuarial Value: ACAP supports CMS’ proposed changes to increase the permitted de minimis variation of actuarial value levels. However, some ACAP plans may wish to offer richer benefit packages and urge CMS to permit greater positive de minimis variation as well.

Adjust Timeline to Allow Issuers to Better Account for Risk Adjustment: While ACAP generally supports the delay to the QHP application submission timeline, we are concerned about 3 the operational burden caused by compressing the timeline. In addition, we strongly urge CMS to consider other changes to the timeline, such as releasing the Risk Adjustment and Reinsurance summary report prior to the QHP application submission window so that issuers can fully account for any such gains or losses in premium development.

Expanded Comments
ACAP’s comments are expanded below, with additional background.

Guaranteed Availability
We support CMS’ proposed changes to guaranteed availability rules in the case of non-payment of premiums. ACAP plans have experienced instances of consumers not paying premiums during the grace period at year end. Accordingly, we support the proposal to permit, but not require, issuers to apply premium payments for a new product to any outstanding debts owed by the consumer from the past 12 months prior to effectuating coverage. We do believe this should be optional as some ACAP plans may choose not to pursue such a policy, particularly given that many of such enrollees may be churning between their Medicaid and Marketplace products.

In addition, ACAP strongly supports allowing issuers to also adopt a premium payment threshold policy, under which the issuer can consider an individual to have paid all amounts do if a sufficient amount has been paid. However, ACAP strongly opposes notice requirements if such a threshold policy has been adopted, as making such a policy public could encourage consumers to game the system by identifying which plans they can “get away” with not paying full premiums yet still retaining coverage. Many SNHPs are likely to adopt such a threshold payment policy given their focus and experience in working with low-income and vulnerable populations, but requiring notice of such policy could place them at significant risk for gaming and adverse selection.

Initial & Annual Open Enrollment Periods
In general, ACAP opposes CMS’ proposal to shorten the open enrollment period (OEP) for plan year 2018 given the current uncertainty in the individual market. If the individual mandate were eliminated we agree that it might make sense to shorten the OEP, however, the mandate currently stands and we remain very much in support of the mandate. While CMS’ goals of aligning Marketplace open enrollment with that of other lines of business and simplifying operational processes are laudable, and we believe it is important that individuals ultimately pay 4 a full year’s worth of premiums, we believe that shortening the OEP may actually have the opposite effect as intended.

Specifically, ACAP member plans are concerned about both the operational burden and the potential impact on the risk pool. While there are some potential positive operational impacts, such as helping to eliminate the confusion that arises from consumers switching products one or more times during the OEP, trying to enroll the same or similar number of enrollees in half the time as previous years will lead to significant operational challenges. For example, plans will need to significantly increase staffing at call centers with temporary staff, which poses quality and training concerns. Furthermore, the shortened time period could pose operational challenges insofar as processing enrollment transactions, which could lead to both a loss of premiums and a decrease in enrollment. While we very much appreciate that risk pool benefits that come along with being enrolled (and paying premiums) for a full twelve months, we also urge caution that there could be an adverse impact on the risk pool due to potentially fewer total enrollments as well as the fact that individuals with significant health needs tend to enroll in coverage up front, whereas healthy enrollees are more likely to wait to enroll in coverage. Lastly, from a streamlining and alignment perspective, we are concerned about the burden that the shortened OEP will place on navigators, potentially forcing them to prioritize QHP coverage over enrolling those who qualify into Medicaid.

Special Enrollment Periods
ACAP appreciates CMS’ efforts to limit abuse and gaming of Special Enrollment Periods (SEPs) by individuals who wait until they need to care to enroll in coverage, but at the same time urges caution to ensure that any such new requirements are not overly burdensome so as to create barriers that deter healthy consumers from completing the enrollment process—ultimately harming the risk pool. In general, ACAP member plans have seen very little by way of abuse of SEPs. ACAP plans have, however, seen fraudulent verification documents, which speaks to the concern that sick enrollees in need of care are more likely to complete the verification process, regardless of how burdensome it is. ACAP does, however, believe that encouraging consumers to enroll during open enrollment rather than during SEPs will be beneficial insofar as it would have a positive impact on risk by ensuring that consumers have continuous coverage for the full year whenever possible. ACAP member plans remain agnostic on the potential need to tighten some of the SEPs as proposed, such as those surrounding marriage, permanent moves, and exceptional circumstances, in particular.

Pre-enrollment Verification While some ACAP member plans support increasing pre-enrollment verification, ACAP believes it is also important to be able to quantify the extent of any unintended consequences, such as deterring healthier individuals from purchasing coverage they are eligible for. Accordingly, we believe that CMS should find a way to study the impact of the proposed changes.

Metal Level Changes
ACAP plans have seen some degree of consumers changing metal-levels in SEPs, generally between silver and bronze plans either due to marriage or divorce and gaining or losing a dependent. We appreciate and support CMS’ efforts to forestall the operational challenges that could arise if issuers were forced to reconcile claims across issuers that could occur while one policy was active and another pending with a retroactive start date. We do not, however, believe that a prohibition on changing metal levels is necessarily a protection against gaming, as we are sympathetic to the fact that consumers might well have legitimate reasons to change metal levels in some special enrollment periods—particularly where gaining a dependent may not have been foreseen at the beginning of the plan year. We also support allowing consumers newly-eligible for cost sharing reductions to be able to enroll in a silver level product, regardless of their previous metal level coverage.

Non-payment of Premiums
ACAP strongly supports CMS’ efforts to ensure that a SEP for loss of minimum essential coverage is not granted in cases where an individual was terminated for non-payment of premiums, similar to our support for the proposed changes to guaranteed availability for nonpayment of premiums. We believe that this is likely the single greatest opportunity for consumers to abuse SEPs and game the system by cycling in and out coverage over the course of the year based on their need for services. ACAP further supports CMS’ desire to explore options for automatically verifying whether consumers were terminated for non-payment of premiums as a precursor to being eligible for the loss of minimum essential coverage SEP. However, given the potential operational burden that could be required in order to implement such a policy, we urge CMS to seek stakeholder input in developing a proposal as well as publication for notice and comment.

Continuous Coverage
ACAP appreciates CMS’ desire to encourage enrollment in coverage. In fact, continuous enrollment has long been a priority for ACAP in other lines of business, such as Medicaid. We believe it is equally important in the Marketplaces given the potential impact on the risk pool. We believe that an individual mandate remains the most effective way to maintain continuous coverage and encourage consumers to enroll in coverage year-round, as compared to waiting periods or late enrollment penalties—though these certainly are better than nothing. However, for both operational and consumer-driven reasons, we strongly oppose any move to permit preexisting condition exclusions. In particular, as SNHPs with historically Medicaid-focused coverage experience rather than commercial coverage experience, we are concerned about the operational burden that would be associated with offering multiple sets of products—some with pre-existing condition exclusions and some without. We have also seen some discussion on Capitol Hill to permit underwriting for consumers who do not maintain continuous coverage, yet a move in this direction would likely result in a direct loss of SNHPs willing and able to offer coverage in the Marketplaces due to operational constraints.

Levels of Coverage (Actuarial Value)
ACAP supports CMS’ proposal to increase the flexibility in de minimis variation of actuarial value for plan design. ACAP member plans have noticed a need to rework plan design from year to year due to changes in the actuarial value calculator. Many ACAP plans, however, would like to also see the de minimis variation changed on the positive side as well, rather than only changing the negative values. ACAP member plans also would not be concerned by a requirement to have a silver CSR variant at 70 so long as they are properly reimbursed. Proper CSR reimbursement remains ACAP member plans most pressing concern at present.

Network Adequacy
ACAP supports CMS’ proposal to delegate network adequacy monitoring to the states where feasible. As we have stated in previous comments to the Agency, we believe in the importance of network adequacy standards as a means to ensuring consumers have access to care, however, we do not support a uniform nationwide time and distance standards that may not adequately serve the geographic needs of individual local markets. We believe states are better-suited to developing and monitoring network adequacy requirements.

Essential Community Providers
ACAP member plans have not had trouble meeting the 30 percent minimum threshold for essential community providers (ECPs) and recognize the importance ECPs play in serving low- 7 income and vulnerable populations. Many ACAP plans are integrated systems that provide coverage predominantly through a network of ECPs. ACAP encourages CMS to leave the threshold at 30 percent for all issuers, rather than reducing the threshold to 20 percent, as such a reduction may well have unintended consequences beyond simply reducing the regulatory burden on plans that must submit a justification—in fact we believe that some issuers would be likely to drop ECPs from their networks if permitted.

ACAP is submitting separate comments on the proposed QHP Certification and Rate Review Timelines and we are including those comments here as well given their interconnected nature. We are generally supportive of the proposal to delay the timeline if this rule is to be finalized, as the additional up-front time will be necessary from an operational standpoint. However, pushing the initial QHP submission deadline back so significantly will result in a significant operational burden on issuers later in the year, given the consolidation of so many activities into a shorter timeframe. ACAP encourages CMS to consider additional safe-harbor periods and flexibility for issuers that may ultimately have trouble meeting the newly compressed deadlines.

In addition, ACAP urges CMS’ to move up the release date of the final Risk Adjustment and Reinsurance Summary Report to prior to the initial application submission window. Developing rates for 2018 prior to knowing risk adjustment results for 2016 remains a significant problem for many ACAP member plans. While the Interim Risk Adjustment Report has been helpful for some issuers, the lack of any information in some states limits its utility. At a minimum, issuers need to know the statewide average premiums prior to submitting their initial QHP applications.

ACAP thanks CMS for its willingness to consider the aforementioned issues. If you have any additional questions or comments, please do not hesitate to contact Heather Foster (202-204- 7508 or



Margaret A. Murray
Chief Executive Officer

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