CMS: Insurers that make drastic changes to exchange plans face five-year ban

If insurers change the plans they sell on a health insurance exchange too drastically, they could be shut out of that exchange for five years, according to a new memo from the Centers for Medicare & Medicaid Services (CMS).

The federal agency made that clarification while answering frequently asked questions from insurers about Affordable Care Act rules for changing and withdrawing products they sell on the exchanges now that insurers must submit their rates for individual and small group plans to a review process supervised by CMS.

Most notably, CMS said that if an insurer amends its products so much that it looks as if it has discontinued its old products, CMS will ban the insurer from selling on the exchange for five years because the insurer will have "effectuated a market withdrawal under federal law," the agency said in the memo. 

During the five-year ban, the insurer would be prohibited from offering newly filed products.

But CMS clarified that an insurer won't have discontinued a product if it just removes a plan from or adds a plan to its product line--unless by removing the plan, it exceeds the scope of a change for the product. For example, a product that no longer covers most of the same service area would exceed the scope.

If insurers want to tweak a product without creating an entirely new product, CMS said they can:

  • Make "uniform changes" to all the plans in a product package, including updating deductible and co-payment amounts
  • Adjust benefits to increase or decrease the standardized plan cost no more than 2 percentage points
  • Make any other changes in cost-sharing structures that the state insurance regulators approve and CMS considered to be reasonable

CMS is also blocking ACA health plans that don't meet minimum value requirements, particularly if they don't include hospital benefits, FierceHealthPayer previously reported.

To learn more:
- here's the memo