A closer look at CMS' new standardized exchange plan options

The now-finalized set of regulations for health plans that operate on the Affordable Care Act marketplace make good on the government's plan to create standardized exchange plan options despite some pushback from industry stakeholders.

The idea behind offering standardized options is to "simplify the consumer shopping experience and to allow consumers to more easily compare plans across issuers" in the federally facilitated exchanges, the Centers for Medicare & Medicaid Services (CMS) says in its 2017 Notice of Benefit and Payment Parameters.

Here's a breakdown of what CMS says about the new standardized options:

  • CMS will create a standardized plan option at three levels of exchange plans--bronze, silver and gold. Each option will have a fixed deductible, a fixed annual limitation on cost-sharing and a fixed copayment or coinsurance for a key set of essential health benefits.
  • The plans would likely exempt certain routine services such as primary care and generic drugs from a patient's deductible at all metal levels.
  • CMS will not stop insurers from offering non-standardized options on the exchanges, but it encourages plans to offer at least one standardized option, particularly at the silver level.
  • In order to reduce operational complexity, CMS does not plan to allow the standardized options to differ by region or state.
  • CMS made a few tweaks to its regulations surrounding standardized plans in response to requests from commenters, such as changing the cost-sharing for each of the top three drug tiers in the bronze standardized option, and increasing the copayment for generic drugs to $15 for the silver standardized option.
  • The final rule contains a provision "codifying the exchange's authority" to display standardized options on its consumer-facing plan comparison and shopping tools.

CMS also acknowledges that some of those who commented on its proposed rule argued that standardized options on the exchanges "will hamper innovation and limit competition and choice," and could inadvertently steer consumers with special health needs toward an inappropriate plan. Others, it says, argued it was a slippery slope toward ultimately banning or limiting non-standardized plan options.

Major insurers including Cigna and Aetna have called for more flexibility in what types of plans they can offer on the individual market, arguing this could help them reach the remaining uninsured. Similarly, in its comment letter about the 2017 Notice of Benefit and Payment Parameters, America's Health Insurance plans said CMS was engaging in an "unwarranted attempt at market engineering" with some of its proposals.

But CMS says since it is not forcing insurers to offer standardized options nor limiting what qualified health plans they offer, the regulations won't stifle innovation or limit consumer choice. Further, it says it will offer tools to explain to consumers the cost-sharing features of the standardized plans so that they will ultimately simplify the coverage shopping experience.

CMS did, however, respond to criticism of its plan to regulate health plans' network adequacy by saying in its final rule that it would defer to the National Association of Insurance Commissioners' proposed regulations.

To learn more:
- here's the final rule

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