«Department of Health and Human Services has submitted this rule to the Office of the Federal Register. The official version of the rule will be ...»
Under these definitions, an issuer must guarantee availability and guarantee renewability at the option of the plan sponsor or individual of the particular product that they purchased in the group or individual market, including each of the plans available in the sponsor or individuals service area that are part of all the plans that comprise the product at the time of renewal. The product discontinuance and uniform modification exceptions to guaranteed renewability also apply at the product level. An issuer may discontinue offering a particular product in a market only if the issuer uniformly withdraws the product from that market. Similarly, an issuer may
modify the health insurance coverage for a product if the issuer ensures the modification is effective uniformly for all plans within that product. Issuers have flexibility, however, to make modifications at the plan level or to discontinue plans within a product consistent with the provisions of (e)(2) or (3).
As further described in subsequent responses to comments in this section, we are clarifying how three of the proposed criteria—related to cost-sharing, benefits, and service area—apply primarily at the plan level rather than the product level.
Comment: A few commenters sought clarification about the changes that could be made under the criterion related to product type. Two commenters raised particular questions about changes with respect to combined product arrangements, such as adding a point of service (POS) option to a health maintenance organization (HMO) product or removing an exclusive provider organization (EPO) benefit from a preferred provider organization (PPO) product. One commenter recommended that restrictions on product type be limited to situations when a product transitions to or from an HMO.
Response: While an issuer may offer particular benefits within a product using various network options, HHS believes most products generally are based on a single primary network type. For example, an HMO product with a POS option is nonetheless an HMO product, and a PPO product with an EPO benefit is nonetheless a PPO product. Accordingly, a product will not cease to be offered as the same product type solely because it adds or removes certain secondary network options. We believe referring to “product network type” more accurately conveys the intent of this requirement and make that revision in the final rule. We also provide the examples of HMO, PPO, EPO, POS and indemnity as product network types in the definition of “product”
Comment: Regarding the proposed service area criterion, a number of commenters recommended focusing only on service area reductions, rather than expansions. One commenter expressed concern about discriminatory service areas and suggested HHS establish standards to prevent issuers from dropping coverage in areas that are expected to have higher health risk.
Two commenters noted that, in many States, product service areas are not filed with the State insurance department, presenting challenges for State regulators to administer requirements related to service areas.
Response: Under the proposed rule, for modifications to be considered uniform modifications of coverage, a product must continue to cover a majority of the same counties in its service area. This standard prevents significant reductions in a product’s service area;
however, service area expansions of any degree would satisfy this standard, provided that a majority of the original product service area remains covered. We acknowledge the concerns but believe the standard established in this final rule balances consumers’ interest in coverage stability and issuers’ interest in flexibility to appropriately manage their provider networks. We note that, since 1996, the HIPAA guaranteed renewability provisions (sections 2712(b)(5) and 2742(b)(4) of the PHS Act, as codified prior to enactment of the Affordable Care Act) have allowed issuers to non-renew or discontinue coverage under a network plan if there is no longer any enrollee in connection with the plan who lives, resides, or works within the service area of issuer (or in the area for which the issuer is authorized to do business).
In response to these comments, we are finalizing the rule so that the provision now requires that, “The product continues to cover a majority of the same service area” to be considered a uniform modification of coverage. We are making this change in recognition that a
indicates that geographical rating areas can be based on counties, zip codes, or metropolitan statistical areas.
Comment: Many commenters requested clarification about the extent of changes that could be made to a plan’s cost-sharing structure. Some commenters interpreted the provision as limiting changes in the type of cost-sharing used (for example, a co-payment versus coinsurance) and recommended that issuers be allowed to revise specific cost-sharing amounts (for example, based on historical or anticipated utilization of a particular benefit). Other commenters requested flexibility to modify cost sharing as long as the plan maintains the same metal level, meaning the same actuarial value metal tier (or catastrophic coverage).
Response: As stated above, we interpret the guaranteed renewability provisions of section 2703 of the PHS Act to apply at the product-level. But, in accordance with our definitions of “product” and “plan,” we note that cost-sharing applies at the plan level. Similar to the proposed rule, this final rule provides that, for a modification to be considered a uniform modification of coverage, each plan within the product must continue to have the same costsharing structure as before the modification, except for any variation in cost sharing solely related to changes in cost and utilization of medical care (medical inflation or demand for services based on inflationary increases in the cost of medical care), or to the extent that changes are necessary to maintain the same level of coverage (that is, bronze, silver, gold, platinum, or catastrophic). This provision is intended to establish basic parameters around cost sharing modifications to protect consumers from extreme changes in deductibles, copayments, coinsurance, while preserving issuer flexibility to make reasonable and customary adjustments from year to year. Further, States have flexibility to permit broader changes to cost sharing
to allow all types of changes to cost sharing within a metal level, since this could be subject to manipulation and potential abuse. HHS will monitor compliance with this provision and may issue future guidance if necessary.
Comment: The proposed rule provided that one of the criteria for uniform modification is that the product provides the same covered benefits, except for changes in benefits that cumulatively impact the rate for the product by no more than 2 percent (not including changes required by applicable Federal or State law). Some commenters sought clarification that benefit changes could either increase or decrease the rate by 2 percentage points without exceeding the 2 percent rate variation threshold. One commenter asked whether issuers could adjust for medical inflation when making this assessment. Other commenters requested clarification whether the provision includes both benefit enhancements and reductions. Some commenters requested clarification that benefit changes in response to Federal or State requirements, such as the addition of the pediatric dental benefit and State-mandated benefits, are excluded from the 2 percent rate variation threshold. One commenter recommended applying a separate rate change threshold to each EHB category and providing States and Exchanges the discretion to override benefit modifications that have the potential to substantially harm the consumer.
Response: While benefit changes occur at the product level, consumers are affected by plan-adjusted index rates based on those changes. We believe that benefit changes that affect the rate for any plan within a product by more than 2 percent, regardless of whether they increase or decrease the rate, are significant to the consumer and should therefore constitute a new product offering. Therefore, in accordance with our definitions of “product” and “plan” for purposes of this rule and in response to these comments, we are finalizing the rule to state that, to be a
adjusted index rate for any plan within the product must be within an allowable variation of +/- 2 percentage points. This provision applies only to changes in covered benefits, not cost sharing.
It includes changes both to EHB and non-EHB benefits covered under the plan, as well as increases or decreases in covered benefits. However, rate changes that are directly attributable to compliance with applicable Federal or State legal requirements concerning covered benefits (such as those related to the requirement to provide EHB) are excluded for purposes of determining the cumulative rate impact.
Comment: Several commenters favored auto-enrollment of individuals whose product is discontinued, where issuers would “map” enrollees to another product offered by that issuer that most closely resembles the individuals’ previous product. The commenters indicated this practice is common in the commercial market and Medicare Advantage and promotes continuity of coverage.
Response: Nothing in this final rule prevents an issuer from auto-enrolling individuals whose product is being discontinued into another available product offered by that issuer, as long as the issuer meets all of the requirements for product discontinuance under the guaranteed renewability regulations. This includes providing at least 90 days’ notice of the discontinuation in writing and offering each individual the option to purchase, on a guaranteed availability basis, any other coverage offered by the issuer.
There are some instances in which an individual may lose coverage under his or her particular plan but not under the product. For example, an issuer may decide to no longer offer a particular plan within a product or to modify a plan’s service area within a product such that the plan no longer covers certain individuals. If these plan-level changes do not give rise to a
the option of the plan sponsor or individual, as long other plans within that product cover their service area. Again, nothing in this rule prevents an issuer from re-enrolling individuals into another plan that covers their service area under the same product in which the individuals are enrolled. HHS expects that issuers would re-enroll individuals in a new plan providing the same metal level of coverage as their previous plan within the same product. If a plan at that metal level is not available, HHS expects that issuers will re-enroll individuals in a plan that is most similar in metal level to the individual’s previous plan under the same product for that service area.
We note that this does not address the operations of an Exchange, which may specify additional standards and processes for product termination, termination of enrollment, and reenrollment in QHPs through an Exchange.
Comment: Several commenters expressed support for using the uniform modification standards to determine whether a rate filing for a product that is discontinued and another product re-filed the following year is subject to submission and review under 45 CFR Part 154, noting that this is an important protection to prevent gaming of the rate review requirements.
Some commenters specifically recommended the clarification be incorporated into the rate review regulations.
Response: In response to comments, we have amended the definition of “product” in §154.102 to provide that the term includes “any product that is discontinued and newly filed within a 12-month period in a market within a State that meets the standards of §147.106(e)(2) or (3) of this subchapter (relating to uniform modification of coverage).” Comment: Many commenters supported the flexibility in the proposed rule for States to
Some commenters sought clarification about the meaning of “broaden” in this context. Other commenters recommended that State laws that prevent issuers from discontinuing or uniformly modifying coverage be expressly preempted by the Federal standards.
Response: After further consideration of this issue, we have determined not to finalize the ability of States to apply additional criteria that broaden the scope of what would be considered a uniform modification in connection with some of the criteria provided for in this rule, because the characteristics of a product defined in those criteria are so integral to the product that they cannot be altered without fundamentally changing the health insurance coverage for that product. These include the criteria that a product must continue to offered by the same issuer (paragraph (c)(3)(i)), maintain the same product network type (paragraph (c)(3)(ii)), and provide, subject to specific exceptions, the same covered benefits (paragraph (c)(3)(v)). Modifications that result in a product that does not meet these criteria will not constitute a uniform modification under this final rule. This final rule does, however, continue to provide States flexibility to broaden the definition of uniform modification of coverage based on the criteria related to service area and cost-sharing structure. Thus, States could designate a lower threshold for meeting the service area standard than the requirement to continue to cover at least a majority of the same service area standard established in this final rule for which a product must maintain the same service area, or permit greater changes to a plan’s cost-sharing structure, and still permit the changes to be considered a uniform modification under this final rule. We reiterate our statement from the preamble to the final rule published on February 27, 2013 under section 2703 of the PHS Act (78 FR 13419) that a State standard or requirement that prohibits an issuer from uniformly modifying coverage in accordance with this final rule would