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.