WASHINGTON BUREAU – Applying the new rate review rules to association health plans can help protect the enrollees – and the insurers operating outside the association plan market, according to officials at the Center for Consumer Information and Insurance Oversight (CCIIO).
Officials at CCIIO, an arm of the Centers for Medicare & Medicaid Services (CMS) at the U.S. Department of Health and Human Services, note that they acted on the issue after commenters — including officials at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo. — suggested that not doing so could lead to antiselection problems.
CCIIO officials discuss commenters’ views in a preamble to a version of the rate review definitions final rule that appears today in the Federal Register.
CCIIO officials have stated in the final rule that major medical coverage sold to individuals or small groups through an association will be subject to the new rate review system created by the Patient Protection and Affordable Care Act of 2010 (PPACA) for rates that are filed, or, in states without filing requirements, take effect on or after Nov. 1, 2011.
CCIIO officials said last week the rule will level the playing field between issuers and assure that all enrollees in individual and small group plans receive the benefit of rate review.
Commenters told the CCIIO that, if association coverage were excluded from the rate review rule, “the association coverage market would be treated differently from traditional markets in some states, and consumers in these plans would not benefit from the Affordable Care Act’s rate review process,” CCIIO officials say in the rule preamble.
In the past, state law exceptions for association health plans have let the plans avoid market reforms such as guaranteed issue rules and community rating rules, and helped them “cherry pick” individuals and groups with favorable risk profiles, officials say.
“A state regulator also noted that exempting coverage sold through the associations from the regulatory process leads to a concentration of poorer risk in non-association coverage in community rating states,” officials say. “Based on past state experience with association coverage exceptions, the NAIC advised against allowing exceptions for association coverage.”
In states where associations are not regulated, “this differential treatment gives residents little recourse if their association health plan changes its terms of coverage, denies claims, or completely ceases operation,” officials say.
One consumer advocate reported that individuals and small businesses often buy health plans through
associations with little knowledge of the protections that they do or do not have in the plans, officials say.
Some states let the home-state regulator of an association health plan take charge of regulatory oversight, and that also can result in different consumers in the same state being subject to different levels of protection, CCIIO officials say.
CCIIO officials say they did receive 5 comments that supported keeping the current policy, with 4 of those comments coming from associations and 1 from an association professional membership organization.
Some of the associations discussed the history of associations in their state and indicated that their states treat association health plans as large group plans not subject to individual or small group requirements for all purposes, not just rate review, CCIIO officials say
These associations expressed concern about potential logistical and administrative burdens for association plans were the plans to be regulated as small group market coverage at the state and federal levels.
In addition, all 5 commenters that support keeping the current treatment of association plans asserted that, because association health plans have a larger insurance pool, they should not be regulated in the same fashion as plans and policies written in the individual and small group markets.