FACT SHEET
FOR IMMEDIATE RELEASE
June 8, 2016
Contact: CMS Media Relations
(202) 690-6145 | CMS
Media Inquiries
Strengthening the Marketplace – Actions to Improve the Risk
Pool
With millions of Americans insured
through the Health Insurance Marketplaces, it's clear that Marketplace coverage
is a product consumers want and need and an important business for insurers,
with several major issuers expanding their Marketplace presence. At the
Department of Health and Human Services (HHS), we are constantly monitoring the
health of the Marketplace and are always looking to make improvements that
benefit both consumers and issuers. Over the past several months, HHS has taken
a series of actions
to strengthen the Marketplace risk
pool, limit upward pressure on rates,
and ensure a strong
Marketplace for the long term. We believe those actions are bringing positive
results. As part of our continued commitment to the long-term strength of the
Marketplace, we are announcing new measures to ensure that the Marketplace
continues to provide affordable coverage for millions of Americans.
During the month of June, HHS will
make three announcements regarding our ongoing efforts to: strengthen the risk
pool by spreading the costs of care over a diverse mix of enrollees, work with
issuers and state Departments of Insurance to improve coverage options, and
step up Marketplace outreach, especially to young adults and uninsured families
in advance of Open Enrollment 4.
Today, HHS is announcing a series
of actions to strengthen the Marketplace risk pool. These actions include:
· Curbing abuses
of short-term plans that exploit gaps in current rules to use medical
underwriting to keep some of the healthiest consumers out of the Affordable
Care Act’s single risk pool.
· Improving the risk adjustment program
to more accurately reflect the cost of partial-year enrollees and to
incorporate prescription drug utilization data that provide a more complete
picture of enrollees’ health status. These improvements will ensure that the
program continues to work as intended to compensate issuers with higher-risk
enrollees and thereby help issuers sustainably serve all types of consumers.
· Helping consumers who turn 65 make the
transition to Medicare, so that older consumers are served by the program
designed for them and their health needs.
· Beginning full implementation of the Special
Enrollment Confirmation Process, which ensures that eligible
individuals continue to have access to coverage through Special Enrollment
Periods (SEPs), but prevents people from misusing the system to enroll in
coverage only if they get sick.
· Continuing our efforts
to reduce data-matching issues (DMIs). CMS outreach, education,
and operational improvements have contributed to a sharp reduction in total
data matching issues generated and an almost 40 percent year-over-year increase
in documents submitted to help resolve income and citizenship and immigration
data matching issues. Improving the resolution of DMIs benefits the risk pool
because it keeps eligible consumers, often younger and healthier consumers less
motivated to overcome obstacles such as extra paperwork, from losing coverage
mid-year.
Risk Pool Actions
Curbing Abuse of Short-Term
Limited Duration Plans
Short-term limited duration
coverage is health care coverage issued for a short period of time. Because
short-term limited duration plans are designed to fill only very short coverage
gaps, this coverage is not subject to any of the key rules governing the ACA’s
single risk pool: they can be priced based on health status (medically
underwritten), can discriminate against consumers with pre-existing conditions,
and do not have to cover essential health benefits. Some issuers are now
offering short-term limited duration plans to consumers as their primary form
of health coverage for periods that last nearly 12 months, allowing them to
target only the healthiest consumers while avoiding consumer protections. As
highlighted in recent press accounts, by keeping these consumers out of the
ACA single risk pool, such abuses of limited duration coverage increase costs
for everyone else, and they could have a greater impact over time if allowed to
become more widespread.
Today, the Department of Labor,
Department of Treasury, and Department of Health and Human Services (HHS)
issued a proposed rule to revise the definition of short-term, limited duration
coverage. Under the new rules, short-term policies may be offered only for less
than three months, and coverage cannot be renewed at the end of the three month
period. The proposed rule also improves transparency for consumers by requiring
issuers to provide notice to consumers that the coverage is not minimum
essential coverage, does not satisfy the health coverage requirement of the
ACA, and will not prevent the consumer from owing a tax penalty. The proposed
changes will help strengthen the risk pool by ensuring that short term limited
duration plans are used only as intended, to fill truly temporary gaps in
coverage.
Maturing the Risk Adjustment
Program
By reducing incentives for issuers
to try to design products that attract a disproportionately healthy risk pool,
risk adjustment lets them design products that meet the needs of all consumers,
protecting consumers’ access to a range of robust options. Updating risk adjustment to more
accurately assess every enrollee’s risk makes it more effective in achieving
this goal. Earlier this year, CMS made a number of changes to improve the
stability, predictability, and accuracy of the risk adjustment program for
issuers. These changes include better modeling of costs for preventive
services, changes to the data update schedule, and earlier reporting of
preliminary risk adjustment data where available. We also published a Risk
Adjustment White Paper and hosted a conference on March 31, 2016 to
solicit feedback from issuers, consumers, and other stakeholders on additional
areas for improvement.
Building off the Risk Adjustment
White Paper and stakeholder feedback, today we are announcing two additional important changes to risk
adjustment that we intend to propose in future rulemaking. First, we intend to propose that, beginning for the 2017
benefit year, the risk adjustment model include an adjustment factor for
partial-year enrollees. By more accurately accounting for the costs of short
term enrollees in ACA-compliant risk pool, this change will support the
Marketplace’s important role as a source of coverage for people who are between
jobs, experiencing life transitions, or otherwise need coverage for part of the
year. Second, we intend to propose that, beginning for the 2018 benefit year, prescription
drug utilization data be incorporated in risk adjustment, as a source of
information about individuals’ health status and the severity of their
conditions. We are also considering proposing additional changes to the model
for 2018 and beyond.
Transitioning Consumers to
Medicare
The Marketplace serves as an
essential backstop for consumers as they transition between different types of
coverage over their lifetime. For example, many early retirees access
Marketplace coverage until they become eligible for Medicare when they turn 65.
But once individuals turn 65, most people should end their Marketplace coverage
and switch to Medicare. In fact, if consumers do not enroll in Medicare Part B
when they turn 65, they could face financial consequences for years into the
future, because they could owe higher Medicare premiums. Meanwhile, the
Marketplace is intended to serve consumers who are not Medicare eligible, and
continued enrollment by individuals who are eligible for Medicare can raise
costs for other consumers.
To make sure consumers understand
the steps they need to take to move to Medicare, this summer the Marketplace
will start contacting enrollees as they near their 65th birthday.
This outreach will provide consumers with the information they need to enroll
in Medicare if they are eligible and end their Marketplace coverage if they
choose to. This builds off the changes we made to the
HealthCare.gov application this year which included new pop ups with reminders
for consumers who are about to turn 65 that they may be eligible for Medicare.
Implementing the Special
Enrollment Confirmation Process
Over the last several months, the
Marketplace has taken a number of steps to ensure that Special Enrollment
Periods (SEPs) are there for consumers when they need them while avoiding
misuse or abuse. We’ve strengthened
our rules and clarified
our processes for SEPs, so that the people who need to can still easily get
coverage, while making it hard for anyone thinking about taking advantage. We
also eliminated
7 SEPs, including the SEP for individuals who paid the tax penalty for not
having health insurance, contributing to an almost 30 percent year-over-year
drop in the number of SEP enrollments during the three months after Open
Enrollment.
Continuing that work, today we are
announcing that, consistent with the process we announced in February, starting
June 17 individuals enrolling in coverage through Special Enrollment Periods will
be asked to provide certain documents. We are also providing models of the
eligibility notices that consumers will receive with the list
of documents that people enrolling through a Special
Enrollment Period will need to prove their eligibility for their SEP. Consumers
should provide the appropriate documents by the deadline listed in their notice
to confirm eligibility for a Special Enrollment Period to avoid any disruptions
to their coverage.
Reducing the Impact of Data
Matching Issues
CMS takes very seriously its
obligation to ensure that access to coverage and financial assistance are
limited to those individuals who are indeed eligible. The Marketplace verifies
eligibility for most consumers through electronic trusted data sources, but if
consumers’ data cannot be matched electronically we generate a data matching
issue to request additional information from enrollees. Consumers who do not
provide the necessary information will have their coverage or financial
assistance ended or modified.
Unfortunately, eligible individuals
sometimes lose coverage or financial assistance through the Marketplace during
the year because they have trouble finding documents or navigating the data
matching process. In addition to the direct impact on consumers, avoidable
terminations due to data-matching issues also negatively impact the risk pool,
since younger, healthier individuals appear to be less likely to persevere
through the data matching process. In fact, in 2015, younger open enrollment
consumers who experienced a data matching issue were about a quarter less
likely to resolve their problem than older consumers.
This year, CMS made a range
of improvements to the data matching process to help consumers avoid
generating data matching issues in the first place and to help them resolve
these issues once generated. More recently, we have also intensified our
outreach, and partnered with issuers so that they are reaching out to consumers
about data-matching issues as well. These efforts are beginning to pay off,
with a sharp reduction in total data-matching issues generated and an almost 40
percent year-over-year increase in the number of documents consumers have
submitted to resolve these issues. Continued progress in this area should
benefit both directly affected consumers and other consumers who will benefit
from a stronger risk pool.
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