On October 27, 2017, the Department of Health and Human Services (HHS) released its annual proposed Notice of Benefit and Payment Parameters, containing proposed changes to the regulation of the individual and small group health insurance markets for 2019 and beyond (and in some cases, sooner).
HHS characterizes its focus this year as “enhancing the role of States in these programs and providing States with additional flexibilities, reducing unnecessary regulatory burden on stakeholders, empowering consumers, and improving affordability.” Many of the proposals would increase state flexibility, though some might limit it or come at the price of devalued coverage for consumers. The Notice is the first major announcement of HHS individual or small group market policy since President Trump’s Executive Order earlier last month on promoting health care choice and competition, but does not carry through any of the Order’s policies.
The most significant proposed change is the latitude HHS is considering extending to states in defining the Essential Health Benefits (EHB) package for which non-grandfathered individual or small group insurance must provide coverage. While HHS has some discretion in determining what constitutes EHBs, the benefits must include coverage of items or services within 10 basic categories, such as emergency services, hospitalization, maternity care, mental health and substance use disorder services, and prescription drugs. Current HHS policy requires states to select an EHB benchmark from among one of several actual plans in the state considered to be a typical employer plan. As proposed, beginning with the 2019 plan year, states would gain new flexibility in establishing the EHB benchmark plan. HHS would allow states to choose as its benchmark any EHB benchmark plan that another state used for the 2017 plan year. A state could alternatively replace one or more EHB categories of benefits from its own chosen benchmark plan with the same category of benefits from another state’s benchmark. It could also simply select a set of benefits to constitute its EHB benchmark, provided those benefits are not more generous than the state’s previous benchmark plan or other plans it could have chosen as its prior benchmark. States could revise their EHB benchmark plan annually.
A state’s EHB benchmark plan would still need to be equal in scope to a typical employer plan, but not necessarily a typical employer plan in that state. HHS would relax this requirement considerably and define a typical employer plan for EHB purposes as any small group, large group or self-insured product with enrollment of at least 5,000 enrollees in one or more states. HHS also says it is considering developing a “federal default definition of EHB” for plan years further in the future, which could include a national benchmark plan.
HHS is also proposing to defer further to states in their review of the adequacy of health insurers’ provider networks. Under the proposed permanent approach, HHS would expand upon a policy it put in place temporarily at the beginning of 2017 and rely on individual states where the Federally Facilitated Marketplace (FFM) operates to review Qualified Health Plan (QHP) network adequacy, provided that states perform a review that is at least equal to the “reasonable access” standard. Failing that, HHS will either accept health insurer accreditation from the National Committee for Quality Assurance, URAC or the Accreditation Association for Ambulatory Health Care, or require that the issuer demonstrate its network meets the standards of the National Association of Insurance Commissioners’ Health Benefit Plan Network Access and Adequacy Model Act. HHS is also proposing to lower permanently the percentage of available essential community providers in each plan’s service area that the plan must include in its network.
Other notable proposals include more latitude for insurers in meeting Medical Loss Ratio requirements and flexibility in plan design, limits on plan changes during special enrollment periods, and a major overhaul of the Small Business Health Options Program (SHOP) small-group Marketplace that would essentially end aspirations for it to become an online exchange similar to the individual Marketplaces.
Comments on the Notice are due at 5 p.m. on November 27, 2017.