This year's open enrollment may be mostly over. But for 2016 and beyond, insurers should prepare for evolving regulations on everything from premium increases to drug formularies.
The next iteration of health reform is coming in dozens of tweaks and changes outlined in the 2016 Final Notice of Benefit and Payment Parameters, for insurers that plan to sell individual, small group and public exchange plans.
As the main conductor of the Affordable Care Act's insurance market reforms and coverage programs, the Centers for Medicare & Medicaid Services is trying to "improve the consumer experience and promote accountability, uniformity and transparency," said CMS Administrator Marilyn Tavenner.
Health insurers will have spent two years getting acquainted to a new market system and individual risk pool with 10 million lives and growing. Going forward, CMS has an expectation that the industry will improve the choice and services in the new health plans, by making more information available and maybe broadening provider networks or drug offerings, at the same time that a less-expansive revenue stabilization program is phased in.
Ensuring openness in drugs, networks and rates
The agency is starting by clarifying standards for consumer information, requiring that network directories and drug formularies be publicly-available, up-to-date and complete, including any "tiering structure and any restrictions on the manner in which a drug can be obtained." The information must also be made available digitally in "standard, machine-readable formats," so third parties can "create resources that aggregate information on different plans," the agency noted.
In the 37 states covered by federal exchange, CMS is continuing to use the essential community providers network adequacy standard in place this year, requiring contracts with all Indian health providers in a service area, plus at least one from each of five categories, including FQHCs and Ryan White Providers.
On the drug benefit frontier, CMS is taking aim at a number of practices and mandates, amid consumer complaints about a lack of variety in drugs available for some diseases, drug tiering and cost-sharing.
In the final rules, CMS outlined a standard for consumers to be able to request medications not included on a plan's formulary. Upon an initial denial, there must now be an external review, and the drugs granted under exception will count towards annual cost sharing limits.
Starting in 2017. insurers must rely on a pharmacy and therapeutic committee to design formularies "using scientific evidence that will include consideration of safety and efficacy, cover a range of drugs in a broad distribution of therapeutic categories and classes, and provide access to drugs that are included in broadly accepted treatment guidelines."
CMS is also planning to perform an outlier analysis to identify plans with an "unusually large number of drugs subject to prior authorization and/or step therapy requirements" in a particular disease category or drug class. The agency is asking state exchange to do the same, and is considering another outlier review comparing out-of-pocket costs to guideline-recommended treatment for bipolar disorder, diabetes, HIV, rheumatoid arthritis and schizophrenia.
On the premium transparency front, CMS is hoping to shine a public light on how insurers craft rate increases, and adding additional regulatory review scrutiny, while protecting trade secrets. Insurers selling plans in the individual and small group markets on and off the exchanges will have to disclose their rate changes with a "uniform timeline," and be prepared to make changes.
Starting in 2017, individual and small group plans seeking rate increases of more than 10 percent, or above any state-designated threshold, must publicly disclose the proposed increases and their justification, and either the feds or state regulators will decide if the hikes are "not unreasonable" or "unreasonable."
Where once there were three, one remains
On the backend of the new market, the 3Rs premium stabilization programs, CMS is getting ready to manage the last of three years for risk corridors and reinsurance and set up the remaining, permanent risk adjustment program for 2017 and beyond.
For 2015, the reinsurance program helps cover claims above $45,000, up to $250,000, with a coinsurance rate of 50 percent. In 2016, ,the coinsurance and the cap will stay the same, but the attachment point is increasing to $90,000.
The agency will continue to subtract cost-sharing reduction payments from claims paid before reinsurance, but in 2017 payments will also be prorated according to any movement of consumers from one plan to another with different cost sharing.
The reinsurance contribution rate owed by issuers and self-insured groups using a TPA will be $27 per enrollee annually in 2016. Federal exchange plans will pay a 3.5 percent fee based on monthly premiums.
In the risk corridors program, if there are excess collections that "exceed the cumulative risk corridors payments owed, we will implement an adjustment to the profit floor and administrative cost ceiling to increase risk corridors payments for eligible issuers for benefit year 2016," CMS wrote. In the "unlikely event" that risk corridors collections are insufficient to make payments for the 2016 program year, "other sources of funding" will be made "subject to the availability of appropriations," regulators added.
Elsewhere in the regulations, CMS noted that states can selected new benchmark plans for 2017 based on plans that were available in 2014, and outlined maximum cost sharing limits for 2016 -- $6,850 for self-only coverage and $13,700 for family plans. Those with household incomes of up to 200 percent of the federal poverty level will have cost sharing capped at $2,250 for individual coverage; for those with incomes between 200 and 250 FPL the limit will be double that, $5,450