The COVID-19 pandemic presents complex challenges for the US health care system and social safety net programs. In our latest blog post series, IMPAQ experts bring you timely updates and informed insights on the intersection of COVID-19 and pressing policy issues.
In just over three months, more than 40 million Americans have lost their jobs due to coronavirus shutdowns. We previously analyzed how this has resulted in millions of individuals losing employer-based health insurance coverage. As a result, many of these individuals may seek alternative coverage on the federal and state-based health insurance Exchanges provided by the Affordable Care Act (ACA).
States and insurance companies offering health plans on the Exchanges have already responded to the pandemic by implementing unprecedented changes to their benefits, such as expanding coverage for telehealth services and requiring COVID-19 testing and treatment to be covered at no cost. As COVID-19 spreads and cases rise again into the summer, states and health plans must make several key decisions over the next few months regarding how these changes will affect the Exchange plans offered to consumers in 2021.
For health insurers offering Qualified Health Plans (QHPs) on the ACA Exchanges, these decisions will largely be governed by deadlines and requirements set forth in state and federal regulations.
Which State and Federal Regulations Dictate which Exchange Plans are Available to Consumers during the COVID-19 Pandemic?
At the start of the pandemic, the federal government enacted the Families First Coronavirus Response Act and subsequently the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to require health plans to cover various coronavirus testing and treatment services with no additional cost-sharing for consumers. In addition to coronavirus-specific legislation, the annual updates to state and federal QHP Exchange regulations were also released with coronavirus impacts in mind.
Annual State Updates
Across the US, state insurance departments are responsible for providing financial and regulatory oversight for health plans looking to provide coverage on the Exchanges. All but four states, known as direct enforcement states, review and approve health plan offerings before they are submitted to the Centers for Medicare & Medicaid Services (CMS) for additional review and certification. States ensure that the health plans’ proposed prices for premiums and covered benefits are fair and reasonable, insurance plans follow state laws, and there are no significant coverage gaps for consumers.
Annual Federal Updates
In addition to state oversight, the federal government also regulates health plans. There are two key pieces of federal guidance that influence yearly plan offerings on the ACA Exchanges. First, the final Notice of Benefit and Payment Parameters (NBPP) or “payment notice” defines the annual requirements for the Health Benefit Exchanges established under the ACA. The rule’s goal is to maintain a stable insurance marketplace through various enrollment, cost-sharing, and operational reforms.
Each year, the payment notice is also accompanied by the annual Letter to Issuers (LTI), which provides operational and technical guidance to issuers seeking QHP certification. This includes information on the deadlines for submitting final rates (e.g., premiums) and benefit coverage.
While the payment notice and LTI are generally finalized in early spring, this year the payment notice was finalized the latest it has ever been, on May 7. By this time, several state deadlines for health plan submissions had either passed or were quickly approaching. This resulted in a condensed timeframe for health plans and states to make important coverage decisions for Plan Year 2021 (PY2021).
Key Changes Finalized in 2021 Federal Payment Notice
Despite the largely technical nature of the changes made in the payment notice, changes to state-mandated health benefits, restrictions on drug manufacturer coupons, and value-based insurance designs each have significant impacts on consumers during and after COVID-19. Additional information on the payment notice can be found here.
New Reporting Requirements for State-Mandated Health Benefits
To improve program integrity and transparency, the payment notice set forth a new requirement for states to report state-mandated health benefits to CMS every year. Due to concerns that states were not defraying the costs of these additional benefits, leading to potentially improper payments by the federal government in the form of premium tax credits to consumers, states are now required to annually report each of their state-required health benefits, and designate which of those fall beyond the 10 Essential Health Benefits (EHBs) mandated by the ACA.
How will new reporting requirements impact states?
States have responded to the coronavirus pandemic by implementing new coverage requirements, including mandating coverage of telehealth visits. With these new state requirements, as well as increased enforcement over EHB defrayal regulations, states may be hesitant to pass certain mandates if they believe they will trigger defrayal and cost the state more money. To ease concerns about the cost of mandating coverage of COVID-19 diagnosis and treatment, especially through expanded telehealth services, CMS released guidance assuring states and health plans that these benefits were already covered as EHBs and in most cases would not require additional defrayal.
Balancing the new reporting requirements, the desire to increase care coverage, and strained state budgets due to the pandemic will be a challenge for states in 2021.
CMS Allows Issuers to Restrict the Use of Drug Manufacturer Coupons in Annual Cost Sharing
The 2021 payment notice also finalized a CMS proposal to allow copay accumulator programs. In recent years, health plans began implementing “copay accumulators” to exclude the value of drug manufacturer coupons from contributing to an individual’s deductible or annual out of pocket maximum. The rule leaves final authority with states, providing increased flexibility for states’ treatment of these programs. Currently, Arizona, Illinois, Virginia, and West Virginia each ban or limit copay accumulator programs.
How do drug coupon restrictions impact consumers’ health?
In response to the payment notice rule, America’s Health Insurance Plans (AHIP) stated that health plans “have the option to employ market-based tools like accumulator programs to negotiate lower drug prices for everyone.” AHIP reasons that until drug manufacturers lower their prices, consumers are left to bear the burden of the cost.
Depending on how many states allow these programs, consumers with high cost and chronic conditions will be adversely affected by both the coronavirus and copay accumulator programs.
Value-Based Insurance Design
This year’s payment notice also encourages issuers to implement value-based insurance design (V-BID) following the University of Michigan framework. V-BID plans limit cost sharing for high-value, evidence-based medical interventions, making care more affordable for consumers. In the payment notice, CMS provides lists of high- and low-value services for issuers’ consideration while designing their plan offerings. For example, blood pressure monitors are indicated as high-value while high-cost diagnostic imaging services are listed as low-value.
How does value-based insurance design improve consumer care?
In the short term, affordable V-BID plans are likely to attract consumers, especially those whose incomes and/or health outcomes are affected by the coronavirus. Reduced cost sharing for high-value services has already been implemented by many insurers to provide increased access for COVID-19 testing and treatment, both of which are considered high-value services. Additionally, insurance plans are expanding telehealth coverage which provides services in high-value settings. Eventually, V-BID plans may also include coverage of a coronavirus vaccine.
In addition to the adoption of high-value services due to COVID-19, many providers have also significantly reduced the amount of elective low-value services they perform in an effort to preserve resources for COVID-19 treatment. Experts at the Healthcare Transformation Institute anticipate that without additional payment reform policy, this trend will not continue since low-value services are significant drivers of revenue. The Lown Institute notes that the pandemic provides an opportunity for the government and health plans to evaluate the effects of low-value care and seek ways to either reduce the provision of high-cost, low-value services or provide them in high-value virtual settings.
Going forward, how will federal legislation affect health plans, states, and vulnerable populations?
State and federal policy changes have significantly impacted how health plans will operate moving into 2021. Changes to telehealth and COVID-19 testing and treatment coverage, health plan premiums, and state budgets will all impact how consumers receive care through the pandemic and beyond. With this in mind, we revisit our initial questions:
Will health plans continue offering expanded telehealth services?
Prior to the payment notice and LTI release, states and health plans were already attempting to provide increased coverage for COVID-19 services, including telehealth. Recent statements from Senate HELP Committee Chairman Lamar Alexander signaled that the federal government is prepared to permanently expand telehealth coverage for Medicare and Medicaid. He also recognized the strides that states and private insurers are making in adopting telehealth. In the same hearing, Dr. Joseph Kvedar, President of the American Telemedicine Association and panelist of IMPAQ’s recent webinar on telehealth and health equity, expects telehealth visits throughout his Massachusetts-based health system to increase from 1,500 per month in February 2020 to nearly 250,000 per month post-pandemic.
Despite the increase in consumer demand for telehealth, unless policies established during the pandemic are made permanent, many health plans may not provide the same level of telehealth coverage in the future.
Will the expanded coverage implemented to address the coronavirus pandemic result in increased premiums for consumers?
The extent to which elective medical procedures will occur in 2021 is still unknown, however health plans are preparing for large payouts by requesting rate increases. Blue Cross Blue Shield of Vermont worries that delayed medical procedures will also worsen patients’ health, which will further raise insurers’ costs in 2021. Dr. Adam Block, Assistant Professor of Health Policy and Management at New York Medical College School of Health Sciences and Principal at Charm Economics, LLC, added that states must determine if they will approve requested rate increases based on whether they believe “pent up demand [for health care utilization] will exceed reductions in care due to social distancing.” If premiums rise for consumers next year, this could create a barrier to care for those who were financially impacted by the pandemic. As stated in the LTI, issuers must submit initial rates to CMS by July 22.
How will changes to health insurance offerings affect vulnerable populations?
During the pandemic, health plans, states, and the federal government have increased insurance coverage for COVID-19 services. However, these policies have the potential to increase health disparities for those who cannot afford or access health care coverage and services. While telehealth expansion provides patients the opportunity to receive high-value, mandated care in a socially-distanced manner, those lacking smartphones, computers, and high-speed internet may not be able to take advantage of these programs. This would require them to seek in-person care or delay care, which would further put their health at risk. Additionally, health plan premium increases and restrictions on drug manufacturer coupons each make health care more costly and inaccessible. As a result, those who are financially struggling during the pandemic will face significant challenges in receiving appropriate health care now and into the future.
IMPAQ experts are prepared to meet the changing needs of federal and state Exchange stakeholders, leveraging our expertise in health insurance policy, telemedicine, pharmaceutical health services, and value-based care. IMPAQ is committed to analyzing all emerging policy issues in the context of health equity and social justice.
Emily Baranski, Health Policy Analyst, IMPAQ Health
Ms. Baranski supports IMPAQ’s health insurance marketplace contract by conducting policy reviews, stakeholder outreach, and technical assistance. Ms. Baranski also assists with IMPAQ’s business development efforts.
Tali Fish, MPA, Senior Health Policy Analyst, IMPAQ Health
Ms. Fish is a senior analyst that specializes in ACA and Exchange policy, managing multiple IMPAQ projects in this space. Ms. Fish also supports projects related to value-based care and Medicaid reform.
Kevin Van Dyke, MPP, Managing Director, IMPAQ Health
Mr. Van Dyke is an expert in health insurance marketplaces, health care quality and patient safety, health information technology, Medicare and Medicaid payment policies, and hospitals and health systems. Mr. Van Dyke has served as a health insurance marketplace and health care quality SME and serves as a project director and business development lead for several Health Division projects.