CMS Approves Montana Reinsurance Waiver, Issues New Direct Enrollment Guidance


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On August 16, 2019, the Centers for Medicare and Medicaid Services (CMS) approved Montana’s request to develop a state-based reinsurance program under Section 1332 of the Affordable Care Act (ACA). CMS also recently released new guidance on direct enrollment (DE) compliance reviews and continues to approve new enhanced direct enrollment (EDE) entities.

Montana Approved For State-Based Reinsurance Program

On August 16, CMS and the Department of Treasury approved Montana’s application to operate a state-based reinsurance program. Montana’s waiver has been approved for five years from 2020 through 2024. The state’s $34.5 million reinsurance program is expected to reduce 2020 premiums by 8 percent (relative to what premiums would have been in the absence of the waiver). The federal government is expected to contribute about $22.1 million while state funds (based on an assessment on major medical insurers) are expected to account for $12.4 million.

As with most states with a state-based reinsurance program, Montana will use an attachment point model. For 2020, Montana’s program will reimburse insurers for 60 percent of claims between $40,000 and $101,750. These parameters can be adjusted as needed and will be set annually by the Montana Reinsurance Association Board of Directors and the insurance commissioner.  

Montana submitted its waiver application on June 19. The application was deemed complete shortly thereafter on July 1. During a 30-day federal comment period, federal regulators received and then responded to a total of four supportive comments on the application. In a letter to Commissioner Matt Rosendale on August 16, the Departments laid out the terms and conditions that the state must accept within 30 days for the waiver to go into effect. The Departments will notify Montana of the amount of pass-through funding for 2020 later this fall. The approval was accompanied by a fact sheet.

With this approval, 10 of the 11 states with an approved Section 1332 waiver have established state-based reinsurance programs. If the additional two states that have applied for a 2020 waiver—Rhode Island and Delaware—are approved, 12 states will have reinsurance programs under Section 1332. The federal comment period on the applications for Rhode Island and Delaware both ended in mid-August, and approvals are expected soon.

Compliance Reviews For Web Broker DE Entities

DE enables a consumer to enroll in marketplace coverage through a web broker or insurer’s website. Under the DE pathway, a consumer visits a web broker or insurer’s website, is directed to HealthCare.gov to get an eligibility determination, and is then directed back to the web broker or insurer’s website to enroll in coverage. 

On August 9, CMS issued new guidance outlining key priorities for assessing whether web brokers are complying with federal DE standards. Much of the final 2020 payment notice was devoted to streamlining federal DE standards. Under the notice, a web broker is defined broadly to include an individual agent or broker, a group of agents or brokers, direct enrollment technology providers, and a business entity that performs DE (i.e., a business entity that is registered with a marketplace and develops and hosts a non-marketplace website that interfaces with a marketplace to assist consumers with DE in marketplace plans). The notice also included standards for displaying non-ACA plans, a ban on explicit (although not implicit) compensation- or incentive-based plan recommendations, and stronger mechanisms for oversight and compliance.

The new guidance spells out that CMS will perform compliance reviews of web brokers that perform DE. The goal of the compliance review is to confirm that web brokers are complying with all federal regulations and guidance as well as with their DE agreement with CMS. The guidance summarizes many, although not all, of the regulatory standards that apply to web brokers; these are the standards that CMS expects to include as part of its compliance review. To ensure that web brokers are complying with these requirements, CMS will request and review policies, protocols, standard operating procedures, manuals, and other relevant documentation.

Compliance reviews could be a necessary, but perhaps insufficient, step towards ensuring compliance with federal standards and limiting consumer confusion. At least one recent study includes examples of DE sites that offer non-ACA plans and may benefit financially if consumers enroll in those plans over ACA plans. The report also found that Medicaid-eligible consumers face additional enrollment barriers and that direct DE prevents consumers from comparing all plans, which limits competition.

New EDE Entities

To streamline the DE process, CMS has also developed an “enhanced” DE pathway. EDE enables consumers to enroll in marketplace coverage through a web broker or insurer without being redirected back to HealthCare.gov. CMS announced this option in May 2017, released additional guidance in 2018, and approved its first EDE partner in early December 2018.

EDE entities can be approved under one of three phases depending on the entity’s ability to address complex application scenarios. If the entity cannot accommodate complex enrollment scenarios, they may still be approved as an EDE entity, but consumers with more complex enrollment situations will be directed to HealthCare.gov to complete their enrollment.

CMS has continued to update its list of EDE entities since December 2018. As of April 2019, there were nine approved EDE entities. Only two of these nine entities were approved to host an EDE platform. (Entities that host an approved EDE platform can lease the platform to other “upstream” EDE entities.) Two of the entities were web brokers while the remaining entities were insurers.

As of CMS’s most recent update on August 12, the number of approved EDE entities has jumped to 13 entities. Three of these entities—GetInsured, HealthSherpa, and Stride Health—are web brokers, and one is a DE technology provider. Each of these four entities is hosting an EDE platform. GetInsured is reportedly the first approved entity for the third phase of EDE, meaning its platform can manage all complex enrollment scenarios. The remaining nine entities are insurers.


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