Heeding the calls of upset health insurers, the CMS has purged several categories of circumstances that allow consumers to get plans through the Affordable Care Act marketplaces outside the open-enrollment period.
The decision indicates the CMS is willing to work with insurers to amend the Affordable Care Act. UnitedHealth Group, which expects to lose $1 billion on its ACA plans in 2015 and 2016 combined, has called out the enrollment leeway in particular as a problem that needs fixing.
“This is probably more important in terms of the direction than the specifics of this guidance,” said Larry Levitt, a senior vice president and health insurance expert at the Kaiser Family Foundation. “I think it kind of signals to the industry that (the CMS) is listening.”
The CMS has already said it will not allow a special tax season enrollment for people who fail to sign up for a health plan during open enrollment. Now, six other categories have been eliminated to keep the Affordable Care Act's individual marketplaces “attractive” for both consumers and health insurance companies, Kevin Counihan, CEO of the ACA's exchanges, wrote in a blog post Tuesday.
“As the marketplace matures and consumers learn more about how and when to enroll, we continue to review the rules around special-enrollment periods in order to keep them fair for consumers and for issuers,” Counihan wrote.
President Barack Obama's healthcare law created the special enrollment periods so people could enroll for health insurance if they changed jobs, had a major life event such as having a child or had some other special circumstance—similar to what happens in employer-based plans.
But the insurance industry has criticized the administration, arguing that people are gaming the system so they can get health coverage whenever they want without facing a penalty, which drives up insurers' costs. More specific complaints have said the CMS is not doing enough to verify that someone qualifies to enroll outside of the open enrollment window.
“We are concerned that policies that were put in place to cover the uninsured and grow a new market are increasingly subject to abuse,” Blue Shield of California said in a letter to the CMS late last year. “This includes the expansion of special-enrollment periods with no requirement of documentation or validation as in other guaranteed-issue markets.”
Consumer advocacy groups, however, have said complaints about abuse of the enrollment periods are overblown and that most consumers don't willingly skirt the rules.
Several insurers, such as Blue Cross and Blue Shield plans, further contend that consumers who enroll via special enrollment periods have higher claims costs.
But that doesn't necessarily mean there's abuse, Levitt said.
“The fact that people enrolling through special-enrollment periods have higher costs doesn't by itself prove that consumers are gaming the system,” Levitt said. “It's to be expected those coming in throughout the year would have higher costs.”
There are more than 30 categories of special enrollment. The CMS will eliminate six of them, several of which involve processing malfunctions or “bureaucratic red tape,” Levitt said. For example, people who were affected by a technology error related to their premium subsidies won't be eligible.
America's Health Insurance Plans, the industry's largest lobbying group, supported the government's decision but said it didn't go far enough.
“While this is an important first step, more needs to be done to validate special-enrollment requests,” AHIP spokeswoman Clare Krusing said in a statement. “It's critical that there is a process in place to avoid potential abuse of special-enrollment periods and to ensure a stable, affordable market for consumers.”
The 2016 open-enrollment period ends Jan. 31. More than 11.3 million people had signed up for a plan on the state and federal exchanges as of Dec. 26.