CMS has released a proposed rule to implement several health market reform rules of PPACA. The proposed health insurance market reform regulations provide new rating parameters for health insurance premiums, extend guaranteed availability (also known as guaranteed issue) protections to the individual market, continue current guaranteed renewability protections, prohibit issuers from dividing up their insurance pools, and clarify the approach used to enforce the applicable requirements of the Affordable Care Act with respect to issuers and group health plans that are non-federal governmental plans. In addition, the new health insurance market reform rules provide coverage and enrollment guidelines for catastrophic plans. More specifically, some of the major provisions of the proposed rules are:
- Health Insurance Premiums. The proposed regulations require issuers offering nongrandfathered health insurance coverage in the individual and small group markets starting in 2014, and the large group market if such coverage is available through an Affordable Insurance Exchange (Exchange) starting in 2017, to limit any variation in premiums based on a limited set of specific factors. The factors relate to, with respect to a particular plan or coverage, age and tobacco use within limits, family size and geography. The proposed rule prohibits the use of other rating factors such as health status, medical history, gender and industry of employment to set premium rates. Other factors that might be considered for rating purposes, such as eligibility for tax credits, prior source of coverage and credit worthiness, also are prohibited.
- Guaranteed Availability of Coverage. The proposed regulations provide that issuers offering non-grandfathered health insurance coverage must accept every individual or employer who applies for coverage in the individual or group market, as applicable, subject to certain exceptions (for example, limits on network capacity). These exceptions allow issuers to limit enrollment: (1) to certain open and special enrollment periods, (2) to an employerʼs eligible individuals who live, work or reside in the service area of a network plan, and (3) in certain situations involving network capacity and financial capacity. In addition, individuals would have new special enrollment rights in the individual market when they experience certain losses of other coverage.
- Guaranteed Renewability of Coverage. The proposed regulations direct that any health insurance issuer offering health insurance coverage in the individual or group market must renew all coverage at the option of the plan sponsor or individual, subject to certain exceptions (for example, nonpayment of premiums or fraud).
- Single Risk Pool. The proposed regulations generally would require health insurance issuers to treat all of their non-grandfathered business in the individual market and small group market, respectively, as a single risk pool. This requirement applies to health plans both inside and outside of an Exchange for both markets. A state would have the authority to choose to direct issuers to merge their nongrandfathered individual and small group pools into a combined pool.
These provisions would generally apply to non-grandfathered health insurance coverage in the individual and small group markets for plan years (group market) and policy years (individual market) starting on or after January 1, 2014, and the large group market, if such coverage is available through the Exchange, for plan years and policy years starting on or after January 1, 2017. The proposed rule can be found at: http://cciio.cms.gov/resources/regulations/index.html.