CMS in hot seat over exchange rules

The CMS faces a daunting task in finalizing regulations for health plans sold on the federal exchange in 2017, given insurance and business groups' strong pushback to the agency's proposed rules issued in November.

Insurers urged the agency to nix certain consumer protection and rate-transparency provisions, while provider and consumer groups favored those provisions.

There is growing criticism that Affordable Care Act plans offer inadequate coverage in terms of affordability and provider access. On the other hand, insurers led by UnitedHealth Group have threatened to abandon the ACA exchanges in 2017 if the rules and the risk pool make that business unprofitable. Now the Obama administration has to figure out how to find a balance.

More than 500 comments were submitted on the proposed rule, many slamming the CMS' proposals to more tightly regulate provider networks and standardize plan options. Critics said these provisions would hurt insurers' ability to keep premiums down.

“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,” wrote Steven Kelmar, Aetna's executive vice president for corporate affairs.

The CMS proposed that all plans sold on the federal exchange would have to include hospitals and doctors within certain travel times or distances from members.

There also would be minimum provider-to-member ratios for certain medical specialties. The goal was to ensure that consumers had adequate access to providers as more insurers moved to narrow-network products.

Many hospital and doctor groups supported the proposal. The American Academy of Family Physicians asked the CMS to go a step further and set network standards for appointment wait times.

But the CMS proposal was a big departure from the recently approved model law drafted by the National Association of Insurance Commissioners, which would let state insurance departments establish criteria for network adequacy.

“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. “This effectively gives the advantage to providers who will demand a greater reimbursement rate if they are the only provider within a certain range.”

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 said, “Many states already have strong standards in place. Others will consider the best way to improve their oversight based on the updated NAIC model.”

The CMS' proposal to standardize benefits among exchange plans, intended to make it easier for consumers to comparison shop, also drew fire from insurers. The CMS proposed that all plans in each metal tier on the federal exchange have similar benefits. For example, all 2017 bronze plans would have a $6,650 deductible and all plans would have no more than one provider tier.

Several state-based exchanges including California's already require more standardized 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.

But Aetna was blunt in its opposition: “Do not pursue standardized plans.” Thad Johnson, the chief legal officer of UnitedHealthcare, wrote that limiting plan options “stifles competition and innovation, and runs counter to creating more affordable and accessible healthcare.”

Insurers also criticized the government's suggestion to make public all proposed premium increases, not only final rate increases of 10% or more. Publicly disclosing all proposed and final rate increases would be a victory for transparency advocates.

“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 at Tufts Health Plan.

Cigna Corp. disagreed. The insurer advocated that all rate proposals be publicly disclosed because that “would increase the transparency of the rate-setting process.”