Enrollment in individual market coverage continues to grow, and insurers are expressing concern about their ability to tailor coverage to different populations given limits on nonstandard plan options.
For the 2024 plan year, the Centers for Medicare & Medicaid Services finalized regulations that limit insurers to offering four non-standardized plan designs per tier in a service area. In its latest Notice of Benefit and Payment Parameters for 2025, which is an annual rule governing the Affordable Care Act's exchanges, CMS is proposing to drop that limit to two.
The agency argued that this would make it easier for enrollees to select a plan that meets their needs, as they would have to sift through fewer options. However, insurers counter that it stifles innovation and prevents them from widely offering coverage that's designed for people with specific conditions or needs.
"AHIP is particularly concerned about the impact of non-standardized plan limits on issuers’ ability to offer broad networks for consumers that want access to a variety of providers and specialists, which is often a key factor in plan selection for those with chronic health conditions," the lobbying group wrote in comments on the proposed rule.
Oscar Health, for example, has launched multiple new plans designed for specific subgroups. It began offering its Diabetes Care Plan in 2022 and has evolved them over time to include unique benefits tailored to patients with the disease, such as $0 diabetic foot and retinopathy exams, tailored wellness programs and health coaching.
The insurer has seen these benefits pay off, too. Members enrolled in the plan have a 9% higher rate of medication adherence, a 16% higher rate of eye exams and a 12% higher rate of kidney disease screenings compared to those in other Oscar plans.
Alessa Quane, senior vice president and chief insurance officer at Oscar Health, told Fierce Healthcare that because of the limitations on nonstandard plans, the insurer had to cut back where it offered the plan to comply, despite seeing positive results.
In one state, for example, the plan had about 7,000 members. But given that other plan offerings boasted 25,000 or more, Quane said Oscar chose not to offer the diabetes-focused plan in that state and move its members to other types of coverage. This had a side effect of raising their cost share for key diabetic services, though, she said. Out-of-pocket costs to visit a diabetic specialist rose by about $80, and costs rose by about $20 for primary care and behavioral health visits.
"For someone who has a disease they really need to manage, we think it's just really important to be able to have these sorts of nuances, and to serve people that might not be the majority and need something a bit more individualized," Quane said.
In submitted comments, insurers suggested that CMS delay lowering the limit to allow for it to gather data on the impacts of the current four-plan limit.
"This would allow CMS to observe the impact of limiting non-standardized plans, which we expect will be significant, before introducing exceptions and further plan limitations," wrote the Blue Cross Blue Shield Association.
They also note that it's fairly rare for people to select the standardized plan options that are provided. In its comments, AHIP said that while it's too early to tell what impact the limits will have on enrollment numbers for 2024, historically about 80% of those signing up for exchange coverage select a nonstandard plan.
Quane said for Oscar, about 88% of its members selected a nonstandard plan for 2023. And through early January, the insurer was seeing about 83% of its members select nonstandard plans during open enrollment, despite the limitations.
The discussion around standardized plan options comes as the ACA exchanges have seen record highs in enrollment. The feds said on Wednesday that more than 20 million people had selected a plan on Healthcare.gov as of Dec. 23. The coverage deadline closes on Jan. 16.
That includes 3.7 million people who are new enrollees on exchanges, CMS said.
"I think as we move forward and this population In the market continues to grow, you're gonna have a lot more pockets of needs," Quane said. "I think having the ability to be able to innovate or make these plans more specific to their needs will just benefit them more generally, and help keep people in the market and keep the market stable."