The CMS unveiled an interim final rule late Friday that could help the Affordable Care Act's struggling co-op plans. The rule also responds to insurers' complaints that people are abusing special enrollments in the exchanges.
The CMS tightened the use of special enrollments, specifically making the rules around moving to a new home more restrictive to avoid any gaming of the system. Co-ops also can seek outside funding from investors to build up their capital, something that was outlawed previously.
The policies go into effect May 11, and the CMS will accept comments on the rule through July 5.
Twelve of the ACA's 23 co-ops have shut down largely because they attracted very sick enrollees and did not have enough in premiums to cover their medical costs. Republicans in Congress also restricted the ACA's risk-corridor funding, a move that many co-ops said was the final nail in the coffin.
The co-ops have been a political target because they were funded with federal taxpayer loans built into the ACA. However, Republicans severely hampered the rollout of the co-ops after they cut $4.9 billion from the program's $6 billion funding chest.
With Friday's interim final rule, co-ops will be able to “enter into strategic financial transactions with other entities” as a way to bolster their fledgling reserves, the CMS said. The agency added that because many of the remaining 11 co-ops are in perilous financial shape, “we believe that these changes are needed as soon as possible.”
“In the absence of additional federal loans to co-ops, many of these entities would benefit from the infusion of private capital to assist them in achieving long-term stability and competitive success in the market,” the CMS said in the rule. Federal loan agreements previously essentially prohibited co-ops from seeking outside investors.
CMS Acting Administrator Andy Slavitt told the Senate earlier this year that he thought allowing private investors to inject money into the co-ops would give them a better chance to be successful. However, some analysts have said co-ops may not attract a lot of interest because of their steep losses.
The CMS also amended the rule that required all co-op board directors to be elected by its health plan members. Instead, only a majority of board directors has to be voted in by members.
With special enrollments, the agency is taking steps to restrict misuse of special enrollment periods. Since the exchanges opened, insurers have been caught off guard by the amount of people who buy coverage during special enrollment periods.
America's Health Insurance Plans, Blue Cross and Blue Shield affiliates and other insurers have lobbied the CMS to tighten those qualifying events, arguing those people have higher medical claims and may be gaming the system by enrolling only when they need care. Plans also argued there was evidence people would jump from plan to plan through special enrollments without ever actually paying a premium.
The CMS purged several of those exemptions in January, and now the agency has gone a little further. That may dismay many consumer groups that have argued insurers are overstating the impact of special enrollments and that tighter restrictions would burden people who have legitimate reasons for needing new coverage outside of open enrollment.
The CMS acknowledged Friday that more could be done to ensure people were using special enrollment appropriately. Going forward, there will only be six circumstances in which a person can buy coverage outside of open enrollment: losing other health coverage, changes in household size due to marriage or birth, moving to a new home, changes in eligibility for financial help, errors made by marketplaces or plans, and cases of cycling between Medicaid and the marketplace or leaving Americorps coverage, according to the CMS.
While these qualifying events existed before, the CMS is restricting how they are used. For example, individuals attempting to gain coverage through a special enrollment due to moving to a new home must have ACA-compliant coverage for one or more days in the 60 days preceding the move.
“This ensures that individuals are not moving for the sole purpose of obtaining health coverage outside of the open-enrollment period,” the CMS said in a separate fact sheet.