On May 14, 2013, the Centers for Medicare & Medicaid Services (CMS) issued Frequently Asked Questions on Health Insurance Marketplaces (FAQs on HIM). The FAQs are only four pages long but cover a variety of topics. Generally, CMS intends to enforce Affordable Care Act (ACA) requirements on premium stabilization programs (PSPs), advance payments of premium tax credits (PTCs) and cost-sharing reductions by various means, including:
- Annual audits: requiring states and health insurance issuers to have annual external financial and program audits
- Annual reporting: requiring them to make public and provide to CMS annual summaries of the programs
- Record retention: requiring them to maintain relevant records for ten years
- Civil monetary penalties (fines)
- Decertification of Qualified Health Plans (QHPs) –expected to be uncommon
- Coordination with state agency monitoring and oversight efforts
The FAQs also address Privacy and Security standards, cost-sharing reductions and Health Savings Accounts (H.S.A.s), need for QHPs to obtain Health Plan Identifiers (HPIDs), and issuers’ ability to withdraw from the small or large group market in a state but continue to offer products in the other market.
Employers are not required to take any action in response to these CMS FAQs.
CMS Oversight Activities
CMS intends to propose standards for its oversight activities in all the areas listed above. The entities whose activities CMS will be overseeing are State-based Marketplaces (SBMs) and health plan issuers (insurance companies) that offer Qualified Health Plans (QHPs) in State-based Marketplaces or Federally Facilitated Marketplaces (FFMs).
Areas of oversight include those listed above and detailed below.
CMS Oversight of Health Insurance Issuers
Issuers will sell QHPs in Health Insurance Marketplaces, both state-based and federally-facilitated. CMS expects State Departments of Insurance to continue to oversee health issuers to ensure they comply with state laws and regulations, and CMS will coordinate with state monitoring and oversight efforts. CMS generally will look first to the states to enforce standards applicable to issuers in the FFMs; however if a state elects not to or lacks the regulatory or enforcement authority, CMS will enforce standards in FFMs through civil monetary fines and/or decertification of QHPs. CMS will release more specific guidance in the near future.
State-Based Marketplace Reporting Requirements
State-based Marketplaces will be required to hire independent qualified auditing entities to perform annual financial and process audits and to submit these audits to CMS. Additionally, annual submissions to CMS must include financial statements and summary level statistical reports on eligibility determinations, enrollments, appeals, errors, privacy and security, fraud and abuse, and performance monitoring data. SBMs must maintain records on all the above for 10 years.
Privacy and Security
CMS intends to propose that all SMBs and non-marketplace entities (such as Navigators, agents, brokers, assistors) associated with FFMs must comply with the security standards defined in the Minimum Acceptable Risk Standards for Marketplaces (MARS-E). CMS also will clarify that the security standards apply to all information used for marketplace functions, and not only to personally identifiable information.
Cost-Sharing Reductions and HSAs
Existing federal tax rules allow individuals to make contributions to HSAs only if they are enrolled in high deductible health plans (HDHPs) that can be paired with HSAs. Such HDHPs must meet specific plan designs, such as: the annual deductible for individual coverage must be at least $1,250 and the out-of-pocket maximum cannot be more than $6,350, and the plan can pay only for preventive services before the deductible is met. However, when such HDHPs are offered as QHPs in a Marketplace, they might be required to offer certain cost-sharing reductions or other variations to enrollees who qualify under PPACA for cost-sharing reductions based on their household income. CMS recommends that Marketplaces and issuers educate consumers about the potential issue that if they qualify for reduced cost-sharing in the HDHP, this might cause the individual to not be eligible to make contributions to an HSA. However, such individuals may purchase the plan without the cost-sharing reductions if they would prefer to be eligible for the HSA contributions. (Note: California has decided to not allow HDHPs as an option at the silver level in the individual Marketplace, to avoid this issue and the possible confusion for consumers.)
QHPs in FFMs will need HPIDs by October 1, 2013 (Eligibility and Enrollment)
Issuers of QHPs in the FFM probably will have to have Health Plan Identifiers (HPIDs) as of October 1, 2013, in order to conduct enrollment and payment transactions with the FFM. A standard for HPIDs was adopted by HHS in a September 5, 2012 final rule at 77 FR 54664, and the system to enable insurance issuers to obtain an HPID has been in place since March 28, 2013. All issuers will be able to obtain HPIDs before enrollment begins in the Marketplaces this October 1, 2013, even though this is earlier than the compliance date specified in the September 2012 final rule. (Under that rule, small plans had until November 5, 2015 to obtain an HPID, and large plans had until November 5, 2014.)
CMS is not requiring all issuers to obtain HPIDs before the compliance date, but only those health insurance issuers who will offer QHPs in the FFM. CMS notes that each QHP will be associated with an HPID, but the HPIDs need not be unique for each QHP. If an issuer offers several different QHPs in the FFM, it could use the HPID for a controlling health plan (CHP), as defined in 45 CFR 162.103, for all enrollment and payment transactions with the FFM for all the QHPs offered by that issuer.
Additional information on HPID is at:
Issuer Withdrawal from the Small Group or Large Group Market
CMS will issue future guidance to clarify that an issuer could, in accordance with applicable state law and subject to federal requirements, withdraw from the small group market in a particular state but continue to offer products in the large group market in that state (and vice versa). The reason clarification is needed is that the final rule implementing PHSA section 2703 (at 78 FR 13406, February 27, 2013) addressed the market withdrawal exception to guaranteed renewability only with reference to the individual and “group” market and did not distinguish between the small group and large group markets.