The CMS issued both final and proposed rules Friday governing an insurance marketplace for businesses with fewer than 100 employees.
The Small Business Health Options Program, created under the healthcare reform law, will offer a marketplace of insurance plan options for small businesses beginning in 2014. States will have the option to allow businesses with more than 100 employees to purchase coverage through the SHOP Exchanges beginning in 2017.
The CMS issued a proposed rule to amend final rules expected to be published in the same issue of the Federal Register that all implement provisions of the small-business insurance program (PDF)
The proposed rule outlined a transitional policy for certain operations of the program to ensure market stability in 2014 and conforms SHOP special enrollment periods to those in the broader group health insurance market, according to a CMS fact sheet
In addition to detailing the overall features of that small-business insurance program, the final rule issued Friday outlined the risk-adjustment, reinsurance, and risk-corridors programs (PDF)
. Those initiatives aim to provide financial boosts to insurers to offset separate requirements in the Patient Protection and Affordable Care Act that eliminated many of the traditional insurance underwriting practices that kept those insurance plans solvent, such as gender-based pricing.
The rules allow states operating their own insurance exchanges to propose their own methodology for risk adjustment, while HHS is finalizing the risk adjustment methodology it will use in the federally run exchanges. The final rule includes a “framework” for the federal approach to validating risk-adjustment data and will consult with stakeholders on it before finalizing further details, according to the rule.
The final rule also specified details of temporary risk corridors, which aim to provide certainty for insurers issuing exchange plans by limiting the extent of their losses and gains.
The rule finalized details on premium tax credits HHS will give insurers on behalf of eligible individuals.
HHS also amended the medical loss-ratio program, known as the 80/20 rule, to ensure that insurers begin including next year the “premium stabilization” funds they receive in their calculations of the ratios of premiums dedicated to care compared to other activities.
The final rules allow tax-exempt not-for-profit insurers to deduct capped “community benefit expenditures” and state taxes on premiums from medical loss-ratio calculations.
Also included was an interim final rule with comment adjusting several aspects of the risk corridors calculation and exchange plans’ cost-sharing provisions.
Separately, the Office of Personnel Management issued a final rule to establish the multistate plan program, which will contract with two national insurance plans to be offered on exchanges in every state"
A not-for-profit insurer must offer at least one of the national plans, which can phase in coverage to all 50 states over four years.