CMS’s Notice of Benefit and Payment Parameters (BPP) seeks to reset the rules for health coverage sold through public exchanges beginning in 2017. The nearly 400-page document proposes standardized qualified health plans (QHPs) for HealthCare.gov and adequacy requirements for their provider networks. Most of the proposals apply only to federally facilitated exchange (FFE) states, but some, such as those that address risk-mitigation programs, would extend to state-based exchanges, too.

“This year’s Payment Notice takes on some big topics and puts CMS in a more assertive posture in overseeing the federal exchanges,” says Mike Adelberg, a former senior official in CMS’s Center for Consumer Information and Insurance Oversight (CCIIO), now at FaegreBD Consulting in Washington, D.C. “But the agency didn’t push aggressively on all fronts. For example, some were predicting that CMS would put out new guidance on discriminatory benefits, but the agency did not do so.”

The BPP was released Nov. 20 and published in the Dec. 2 Federal Register (80 Fed.Reg. 75487). Stakeholders have until Dec. 21 to comment.

While the BPP addresses a wide range of topics, one of the highest-profile proposals attempts to tackle network adequacy. The ACA requires that all QHPs include “an adequate network of primary care providers, specialists, and other ancillary health care providers.”

CMS’s proposal goes beyond a model approved by the National Association of Insurance Commissioners (NAIC) on Nov. 22 by establishing that CMS — as the operator of the federal exchanges — will review for network adequacy in states that do not meet CMS-articulated network adequacy standards.

The recently approved NAIC Managed Care Network Adequacy Model Act revamps an outdated model. It is intended to give state lawmakers some direction for evaluating the makeup of provider networks used by insurers in their state, but it stopped short of establishing quantitative measures or methodologies by which state regulators might assess network adequacy. The model act does, however, seek to ensure that provider directories are kept current and accurate, and assures that network plan designs don’t discriminate against certain members, such as those with chronic or complex conditions. It also looks to protect consumers against unexpected medical bills that occur when care is provided by out-of-network providers at an in-network facility. The model applies to all networks that are under the jurisdiction of state insurance commissioners. It could be adopted by some state legislatures in 2016.

While the NAIC model includes many important provisions, it lacks quantitative standards, instead leaving them to state lawmakers to define, says Claire McAndrew, private insurance program director at the consumer advocacy group Families USA. The BPP, by contrast, would require FFE states to have quantitative network adequacy measures such as time and distance standards. “Without quantitative standards, determining whether a network is adequate is pretty subjective,” she says.

CMS’s more prescriptive proposal could give state lawmakers an incentive to address the issue themselves rather than having the feds define the rules. McAndrew says many state legislatures already are looking into the topic, and the interest is running across party lines. She notes that Georgia lawmakers are examining network adequacy issues, and Maryland Insurance Commissioner Al Redmer (R) has suggested that network-adequacy legislation might be addressed in the next session. However, determining whether a provider network is too limited will be a challenge for both federal and state regulators.

Providers don’t always negotiate with every carrier in a region, which could make it difficult to meet such requirements, says Patrick Holland, a principal in the Government Health and Human Services practice at KPMG LLP. Holland is the former chief financial officer of the Commonwealth Health Insurance Connector Authority.

Under the BPP, if state rules don’t appear to do enough to address network adequacy, CMS will conduct its own review of QHPs sold through HealthCare.gov. Provider networks would be evaluated based on criteria including time and distance standards, which likely would be similar to those used for Medicare Advantage (MA) plans. But tighter regulations over QHPs could cause concern among some carriers, particularly those that have limited experience with MA.

Minnesota, for example, also has state-level network adequacy rules in place for QHPs sold through its state-based exchange, notes Hans Leida, a principal and consulting actuary in Milliman, Inc.’s Minnesota office. “There’s a big learning curve for a carrier that hasn’t had to operate under those kinds of restrictions. Carriers that already sell MA plans might have an advantage,” he says. If there is a time and distance standard, carriers will need to build or buy a tool that determines how long it will take a typical member to reach a given provider, he adds.

CMS expresses a concern that too many choices on the exchanges can overwhelm potential enrollees. Its proposal to standardize QHPs would create a new layer of consumer protections by making it easier to comparison shop, according to CMS. For the 2017 plan year, carriers would have the option of offering “standardized” coverage options through HealthCare.gov.

Some state-based exchanges, such as New York and California, already require standardized products. Although the standardized QHPs outlined in CMS’s proposal are optional, they could become mandatory. The proposal wouldn’t prohibit carriers from selling non-standardized plans, but the standardized ones would be displayed on HealthCare.gov in a way that would make them easy for consumers to find and compare, according to the proposal.

A standardized option would include a single provider tier, a fixed in-network deductible, a fixed annual limitation on cost sharing, and standardized copayments and coinsurance for a key set of essential health benefits (EHBs) that comprise a large percentage of the total allowable costs for an average enrollee, according to the BPP. CMS says it has designed standardized bronze, silver and gold options as well as standard designs for each level within the enhanced silver tiers (i.e., plans with actuarial values of 73%, 87% and 94%).

Along with simplifying the shopping experience, standardized plans also could eliminate some surprises among members, which can occur when they receive care at an in-network facility from providers who are out of network. Carriers would have to either provide a notice to members ahead of time, or count cost sharing for out-of-network services rendered at an in-network facility toward a member’s annual limit on cost sharing.

Leida says the standardized QHP proposal reminds him of standardized Medicare Supplemental plans, which differ only by price rather than plan design. While standardization can simplify shopping, it also can limit some of the innovative benefit designs such as value-based plans that incentivize people to maintain or improve their health. Moreover, the proposed standardized plans are toward the middle to upper level of the allowed actuarial value ranges, which could mean they will tend to cost more than plans designed to target the lower end of the range, he adds.

Excerpted from the 12/1/15 issue of AIS’s Inside Health Insurance Exchanges.

© 2015 by Atlantic Information Services, Inc.