Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 1)

Abstract

March 5, 2014 was a banner day for Affordable Care Act implementation. The Department of Health and Human Services released its final 2015 Notice of Benefit and Payment Parameters rule (fact sheet here), as well as a bulletin extending until October 1, 2016 its transitional policy permitting the renewal of ACA non-compliant individual and small group health insurance policies. The Internal Revenue Service also issued two final rules regarding reporting by insurers of minimum essential coverage and reporting by employers on coverage under employer-sponsored health plans. (fact sheet here) This post will discuss the HHS bulletin and begin consideration of the benefit and payment parameter rule. Subsequent posts will discuss the remainder of the benefit and payment parameters rule and the IRS rules. HHS Bulletin On ACA Non-Compliant Policies On November 14, 2013, the Center for Medicare and Medicaid Services issued a letter to state insurance commissioners informing them that CMS would permit state regulators to allow insurers to renew non-grandfathered health insurance policies in the individual and small group market that did not comply with the 2014 market reform rules for policy years beginning by October 1, 2014. Specifically, renewed 2013 plans did not need to comply with the guaranteed issue and guaranteed renewability requirements; limitations on health status underwriting and preexisting condition exclusions (for adults); the single risk-pool requirement; the prohibition against discrimination; the essential health benefit and clinical trial coverage requirements; and limitations on cost-sharing. (Group plans are not excluded from the preexisting condition and discrimination provisions.) Insurance departments in 27 states allowed insurers to renew 2013 policies, while 21 states and the District of Columbia prohibited renewals. The March 5, 2014 bulletin permits states and insurers to extend this transitional relief for another two years, that is, for policies renewed prior to October 1, 2016. It also allows states to permit employers with 51 to 100 employees, which are currently considered large employers but will become small employers as of January 1, 2016, to renew their current policies through October 1, 2016. States that had not earlier decided to implement the transitional policy may still do so for 2013 policies renewing in 2014. States may also opt to implement the transitional policy for fewer than two years, or only in the individual or in the small-group market, or only for large employers that become small employers.