CMS plans to let states tinker with essential health benefits

Health insurance benefits form
The 2019 Notice of Benefit and Payment Parameters is largely aimed at increasing states' flexibility to administer the ACA. (Getty/michaelquirk)

The Trump administration has proposed a new federal rule that would give states more leeway to define essential health benefits, along with a host of other changes to the regulations governing the individual and small-group markets.

The 2019 Notice of Benefit and Payment Parameters (PDF), released Friday by the Centers for Medicare & Medicaid Services, has the overarching goal of increasing states’ power to administer the Affordable Care Act. A focus on increased flexibility for states has been a hallmark of the Trump administration’s approach to healthcare policy.

Perhaps most notably, CMS’ proposed rule would allow states to alter their essential health benefits benchmark plan annually, beginning as early as 2019.

As mandated by the Affordable Care Act, insurers in the individual and small-group markets will still have to cover 10 basic benefits, such as preventive care and prescription drugs. But once CMS’ proposed rule takes effect, states could borrow another state’s EHB benchmark plan—in whole or part—or create a new one altogether, provided it follows certain criteria.

“In addition to granting states more flexibility regulating their markets, we believe this change would permit states to modify EHBs to increase affordability of health insurance in the individual and small group markets,” CMS says.

But CMS also acknowledges the proposed changes might result in those with specific health needs losing coverage for certain services, depending on what option their state chooses.

EHBs aren’t the only areas where the agency is proposing changes. CMS also aims to:

  • Allow states to assume a larger role in the qualified health plan certification process for the federally facilitated exchanges.
  • Explore ways to make statebased exchanges that use the Healthcare.gov platform a more appealing and sustainable option for states.
  • Gives states “significantly more flexibility” in how they operate a Small Business Health Options Program, also known as SHOP.
  • Recalibrate the parameters for risk adjustment methodology and give states more flexibility regarding risk adjustment transfers in their markets.
  • Let states to apply for an adjustment to their individual market medical loss ratio standard.
  • Raise the threshold for review of “unreasonable” premium increases from 10% to 15%.
  • Allow states with effective rate review programs to set different rate filing deadlines for insurers, and lets them post rate-filing information on a rolling basis.
  • Remove the requirement that each exchange have at least two navigator entities, and the rule that navigators provide inperson outreach/enrollment support.

The proposed rule would also roll back the standardized plan options—known as “Simple Choice” plans—that were introduced during the Obama administration. Some insurers opposed those standardized options, arguing they will stymie innovation and competition, so the Trump administration’s new regulations are likely to be welcome news.

“We seek to encourage free market principles in the individual market, and to maximize innovation by issuers in designing and offering a wide range of plans to consumers,” the proposed rule says.