January 11, 2016
By Jennifer Chow*
On December 23, 2015, the Centers for Medicare & Medicaid Services (CMS) issued its Draft 2017 Letter to Issuers in the Federally-facilitated Marketplaces (Draft Letter). This annual release provides operational and technical guidance to issuers seeking to offer qualified health plans (QHPs) in the Federally-facilitated Marketplaces or the Federally-facilitated Small Business Health Options Programs. Comments to the Draft Letter must be submitted by January 17, 2016. The final letter will govern QHPs in the federal marketplace in 2017.
While much of the Draft Letter mirrors the provisions of its 2015 and 2016 predecessors, CMS proposes several new initiatives relating to network adequacy, discriminatory benefit design, and prescription drugs.
QHP Application and Certification Process for 2017
As set forth in the Draft Letter, CMS would require that all initial QHP applications and rate filings be submitted by May 11, 2016. After June 15, 2016, CMS would exchange correction notices and revised QHP data with issuers. The final deadline for submission of QHP data would be August 23, 2016. For those plans it approves, CMS would send certification notices to issuers in mid-September. To complete the process, issuers would return signed certification agreements to CMS.
For the 2017 plan year, CMS proposed developments to network adequacy in the 2017 Payment Notice Proposed Rule (Proposed Payment Rule), which is currently being reviewed with comments. If CMS finalizes one or more of the network adequacy policies, the Draft Letter outlines the approach CMS would take to operationalize them.
In the Proposed Payment Rule, CMS proposed two alternative metrics for its quantitative network adequacy policy framework. QHPs would be required to meet either time and distance standards (i.e., travel time and miles to a provider) or minimum provider-to-covered person ratios for higher utilization specialties. In states with acceptable quantifiable standards, the federally facilitated marketplaces would rely on state network adequacy assessments. In other states, federal default standards would apply. These standards, which are provided for 14 specialties and facilities, and which vary by type of locality, must be met for at least 90% of enrollees. Regarding provider transitions, the Draft Letter requires that issuers provide patients at least 30 days' notice of termination of a provider. If the provider is terminated without cause, issuers would be required to allow certain patients—for example, those undergoing treatment for serious acute conditions—to continue treatment at in-network cost-sharing rates until treatment is complete or for 90 days.
CMS offered additional guidance in the Draft Letter on its intended development of a network breadth label, which would guide enrollees on www.healthcare.gov. Relatedly, as part of the agency’s attempt to deal with surprise out-of-network bills, the Draft Letter added more detail to the Proposed Payment Rule’s requirement that would require health plan issuers to count out-of-network services toward the in-network annual limitation on cost sharing in certain circumstances. The Draft Letter states that issuers could give written notice at least 10 business days prior to the provision of a benefit that additional costs may be incurred for essential health benefits (EHBs) provided by an out-of-network provider in an in-network setting. If a health plan provides this notice, it would not be required to apply the out-of-network cost-sharing toward the enrollee’s annual limit or be responsible for covering out-of-network cost sharing above the annual limit.
Discriminatory Benefit Design
CMS reminded issuers that individuals under the age of 65 with end-stage renal disease are not required to sign up for Medicare and, further, individuals who do not have Medicare Part A or Medicare Part B are eligible to enroll in individual market coverage if the individual is otherwise eligible to sign up for QHP coverage. Furthermore, CMS cautioned both issuers and states that age limits may potentially be discriminatory when applied to EHBs that have been found to be clinically effective at all ages.
To enforce the non-discrimination requirement, CMS would conduct a review of each QHP to identify outliers based on estimated out-of-pocket costs associated with standard treatment protocols for certain chronic and high-cost medical conditions. Additionally, CMS would analyze plan benefit information to identify discriminatory features or wording.
As part of the 2017 QHP certification process, CMS would conduct certain reviews regarding prescription drugs. As it has in prior years, CMS would review prescription drug coverage, taking into account nationally recognized clinical guidelines, for treatment of specific medical conditions. A formulary outlier review would compare plan formularies to formularies at both the state and the national level to determine whether QHPs meet outlier threshold levels. A third significant type of review would examine tier placement of prescription drugs recommended for treatment of specific medical conditions. Emphasizing that adverse tiering is potentially discriminatory, CMS explained that this review may determine whether QHPs are consistently placing drugs used to treat certain medical conditions on a high cost-sharing tier.
*We would like to thank Jennifer Chow, JD, LLM (Hall Render Killian Heath & Lyman PC, Indianapolis, IN) and Amy Sanders, JD (Bass Berry & Sims PLC, Nashville, TN) for respectively authoring and reviewing this email alert.