AHA: Biden admin's short-term plan crackdown a good start on addressing 'convoluted' coverage gaps

Hospitals are on board with the Biden administration’s increased scrutiny of “inadequate” short-term health plans, and are hoping that the federal government will go further in its crackdown on payers’ “convoluted policies.”

In early July, the White House said it was working to reverse a controversial Trump-era rule that expanded the duration of the controversial coverage option critics—patient advocates, medical groups and even some insurance industry organizations—often refer to as “junk plans.”

The plans are permitted to bypass preexisting condition coverage requirements that, at the time, the Department of Health and Human Services said was necessary to give consumers more options to the Affordable Care Act exchanges’ high premiums.

Among other adjustments, the Biden administration’s proposed changes would limit short-term health insurance plans to three or four months rather than the current three-year maximum, as well as require them to provide consumers with a disclaimer explaining their coverage limitations.

In a letter to Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure, the American Hospital Association said the administration has its strong support so long as the action does not hamper other types of effective alternative coverage.

“We commend CMS for taking this important step to restrict these types of plans beyond their intended purposes as doing so would create a much clearer distinction between these products and comprehensive coverage,” AHA Executive Vice President Stacey Hughes wrote in the letter. “However, we encourage CMS to ensure upon finalizing this proposal that the changes do not impede health insurance coverage innovations that could provide appropriate coverage through non-traditional structures."

The hospital lobby noted that enrolled patients “often find themselves surprised to be without coverage for emergency services, cancer care and hospital stays, among other services, due to misleading marketing practices,” and so applauded the proposed inclusion of “straightforward” notices to educate consumers on short-term plans’ limitations.

But short-term plans were just a jumping off point for the AHA, which said it is still “deeply concerned with both the amount and the complexity of patient cost sharing even in ACA-compliant health plans.” The organization urged the administration to review other coverage gaps that result in cost sharing for potential amendment in future rulemaking.

“For example, we increasingly are hearing reports of commercial health insurers implementing convoluted policies—such as midyear coverage changes, excessive application of prior authorization and complex cost-sharing and network structures—that leave patients unsure of whether their care will be covered,” Hughes wrote.

AHA would also like to see CMS take a closer look at the “concerning” increases in high-deductible health plan adoption and the size of their deductibles. The plans often “inaccurately” marketed as a cost-effective option for lower-income consumers, Hughes wrote, but lead many members to unexpectedly large medical bills for services they had believed were covered.

“This can create undo financial and emotional stress and contributes to medical debt,” Hughes wrote. “We urge the agency to take steps to simplify cost-sharing structures and reduce the amounts owed out of pocket.”

HHS’ proposed rule is published in the Federal Register and is open for public comment until Sept. 11.

Among those published to date is an early August letter (PDF) from the Association of American Medical Colleges similarly supporting the administration’s crackdown on short-term plans and noting that the increased number of underinsured patients has a downstream impact on hospitals and providers’ financials.

“These plans may force patients to forego needed, routine care because of limited benefits or high cost-sharing responsibilities,” AAMC Chief Health Care Officer Jonathan Jaffery, M.D., wrote. “Consequently, these patients can be sicker when they finally seek care—many waiting until they need to go to an emergency room—and thus require an increased use of services that are likely to be more costly.