The CMS faces a daunting task in finalizing its rule for the 2017 health insurance market. The agency received more than 500 comments this week, many of which demand the rollback of provisions intended to help consumers.
Every corner of the industry, from health insurers and hospital associations to consumer advocacy organizations and trade groups, submitted comments on the proposed rule. There's intense pressure on the administration to get the 2017 regulations right because many view that as a year when the Affordable Care Act's insurance marketplaces and health plan designs should become more stable.
But based on the proposed rules, many stakeholders—especially large health insurers—don't believe that will be the case. Insurance companies and business groups slammed the CMS' proposals to regulate provider networks and standardize plan options, saying it would choke their ability to keep healthcare premiums low.
“We remain deeply concerned that this proposed rule will not stabilize the individual market,” Steven Kelmar, Aetna's executive vice president for corporate affairs, wrote in a letter to the CMS. “Unless some fundamental flaws are corrected, we believe there is a grave risk that the federal exchange will not operate as a viable, competitive market in 2017.”
One of the more significant and controversial provisions in the proposed rule involves the adequacy of provider networks. The CMS said all ACA-compliant health plans sold on the federal exchange in 2017 would have to abide by new quantitative network standards. Specifically, all plan networks would have to include hospitals and doctors within certain travel times or distances from members. There would also be minimum provider-to-member ratios for some medical specialties. The CMS wanted to make sure consumers had access to enough healthcare providers as more insurers moved to narrow-network products.
The proposal was a big departure from the recently approved model law from the National Association of Insurance Commissioners. In that draft legislation, which state legislatures are expected to bring up next year, the NAIC advocated against a federal mandate and in favor of individual state insurance commissioners creating their own criteria.
The NAIC said this week that the feds have vaguely deemed many exchange plan networks to be insufficient “because they do not have specialists in the middle of a lake or in a remote area,” and quantitative standards are an “unnecessary regulatory burden that is placed on the carriers.”
However, many hospital and doctor groups supported the CMS' proposal. The American Academy of Family Physicians asked the CMS to go a step further and build network standards for appointment wait times.
Insurance companies and regulators blasted the standards, saying the federal government deviated from the collaborative NAIC process, which took more than a year. They asked the CMS to ditch the network proposal.
“The NAIC model purposely did not include a time and distance standard because in states with large areas of sparsely populated land such as Nebraska, it is not realistic for a provider to be within a set number of miles from every insured,” Nebraska Insurance Director Bruce Ramge wrote in a letter. “By creating a time and distance standard, this effectively gives the advantage to providers who will demand a greater reimbursement rate if they are the only provider within a certain range since, without them, the insurer's network is automatically deemed inadequate.”
Anthony Barrueta, senior vice president of government relations at Kaiser Permanente, the Oakland, Calif.-based integrated health system, wrote that such standards are "not meaningful as measures of enrollees' true access to care."
The NAIC stood by its model law in its comments. “States have the information and expertise to set appropriate standards and work with carriers to ensure consumers are protected,” the group wrote. “Many states already have strong standards in place. Others will consider the best way to improve their oversight based on the updated NAIC model.”
New “standardized options” also caught the ire of many industry stakeholders. In an effort to make health plan shopping easier, the CMS proposed that all health plans in each metal tier on the federal exchange have the same benefits. For example, all 2017 bronze options would have a $6,650 deductible, and all plans would have no more than one provider tier.
Several state-based exchanges already require simplified plan designs. Hospitals have been particularly big supporters of cracking down on provider tiers, which place some facilities in higher cost-sharing brackets than others.
Aetna was blunt in its opposition: “Do not pursue standardized plans.” Other insurers took a more nuanced approach by saying such restrictions would go against free-market principles.
“Constricting issuers in the depth and breadth of plan options they wish to develop and market stifles competition and innovation, and runs counter to creating more affordable and accessible healthcare,” Thad Johnson, the chief legal officer of UnitedHealthcare, wrote in a 23-page comment letter.
Industry groups also criticized the government's suggestion of making all proposed premium rate increases, not just final rate increases of 10% or more, available to the public. Unveiling all proposed and final rate increases would be a big victory for those advocating for more transparency in healthcare, but most insurers cried foul.
“While we fully support increased transparency, we believe that making all rate increases public, including those not subject to rate review, would result in unnecessary consumer confusion,” wrote Kristin Lewis, vice president of government affairs and public policy at Tufts Health Plan, an insurer based in Watertown, Mass.
“The availability of this competitive information may encourage irrational pricing, which can harm consumers and creates market instability,” added UnitedHealthcare's Johnson.
However, Cigna Corp. was a notable exception. The insurer, which has a pending deal to be acquired by its larger rival Anthem, advocated that all rates—increases or decreases—be disclosed because it “would provide the public with comprehensive information and would increase the transparency of the rate-setting process.”
Several groups and organizations blasted the CMS for the short window to comment. The proposed rule was published in the Federal Register Dec. 2, but comments were due Monday. Most comment periods last at least 30 days.
“This shortened time frame is arbitrary and discourages full and fair discussion of the issues raised in the proposal,” wrote Ramge, the Nebraska insurance commissioner.
