Insurers cannot change commissions based on time of enrollment; Idaho, Minnesota Waiver Requests
On June 7, 2022, the Centers for Medicare and Medicaid Services (CMS) issued new direction confirming that insurers cannot change the remuneration of agents or brokers depending on whether the person they are assisting enrolls during the Open Enrollment Period (OEP) or a Special Enrollment Period (SEP). Arrangements that reduce or eliminate commissions (and other forms of compensation) for agents and brokers for SEP enrollment violate the Affordable Care Act (ACA) guaranteed issue requirement under the Section 2702 of the Public Health Services Act. Insurers could further violate federal non-discrimination standards if these provisions discourage agents and brokers from marketing to and enrolling consumers with significant health needs.
CMS released the new guidelines in response to reports that some insurers in the individual market were reduce or eliminate commissions for agents and brokers who help consumers take advantage of a SEP. Insurers appear to be doing this while making significant profits and receiving enhanced market subsidies under the American Rescue Plan Act.
Unfortunately, it’s nothing new for insurers to use commissions to discourage enrollment: media documented a similar trend in 2016 when insurers thought they were losing money on ACA plans in the individual market. And insurers have long supported policies that make it harder for consumers to register using SEPs, claiming that those who register during SEP have a worse risk profile than those who register during OEP. Although some preliminary data suggests this may be the case, more recent scans show that making it easier (not harder) to take up health insurance improves (not worsens) the risk pool.
This isn’t the first time CMS has looked at this issue either. In 1998, the Health Care Financing Administration interpreter issuance requirements similarly guaranteed under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), finding it violated HIPAA for insurers to pay agents and brokers less for those at high risk. These guidelines were issued in response to concerns that insurers were trying to discourage HIPAA-eligible individuals from enrolling in individual market policies by refusing to pay or reducing commissions or premiums. The 1998 guidelines were reiterated in the preamble to a first ACA market reform rule starting in 2012. And CMS issued new guidelines in 2016, saying any compensation agreement that discourages agents and brokers from marketing to and enrolling consumers with a significant health need is considered a discriminatory marketing practice. .
The new orientation 2022 confirms that, in accordance with guaranteed issue requirements, insurers in the individual market must maintain typical membership conduits for OEPs and SEPs. Compensation policies that eliminate or reduce agent or broker compensation for SEPs relative to OEPs in the same benefit year discourage agents or brokers from marketing and enrolling eligible individuals for SEP (which violates this standard). The only noted exception is when state regulators recommend an insurer not enroll more people due to solvency issues or financial limitations.
These tips are useful for consumers, agents, and brokers who want to help consumers sign up for marketplace plans and register for the marketplace. Agents and brokers continue to enroll, renew and otherwise assist significant numbers of consumers in market coverage. For plan year 2020, almost half of all HealthCare.gov enrollees were assisted by an agent or broker. If there are no or fewer incentives for agents and brokers to assist with market listing during SEPs, fewer people are likely to sign up. This is true even with the Biden administration’s efforts to increase access to navigators and certified application advisers.
Those who believe an insurer has violated these requirements should contact their state insurance department (or federal officials in the four states where CMS enforces the ACA). Agents and brokers may also contact the federally facilitated marketplace and are encouraged to provide documentation of the insurer’s compensation structure or practice. Consumers can file complaints about the marketing practices of insurers, agents, brokers and online brokers with the Marketplace Call Center.
Waiver requests for Idaho and Minnesota deemed complete
On June 3, CMS and the Treasury Department notified Idaho it is application for a state-based reinsurance program under ACA Section 1332 was over. Comments on the application can be made until July 3. Following the feedback process, agencies will approve or deny the request within 180 days.
Idaho’s five-year reinsurance program would be overseen by the Idaho Individual High Risk Reinsurance Pool, an entity created in 2000. The program would begin in plan year 2023 and is expected to reduce premiums by 7 to 10 % each year (compared to what premiums would have been in the absence of the exemption). Individual market registrations in 2023 would increase to 1,600 people.
Although the Pool has been around for a long time, legislation passed in 2022 makes future reinsurance payments for claims in the individual market conditional upon approval of a Section 1332 waiver and authorized the Idaho Department of Insurance to seek a waiver.
The size of the pool is unclear. For a 7% reduction in premiums, Idaho would have a $41 million reinsurance program for 2023. For a 10-11% reduction in premiums, the program would need total funding of approximately $59 million. dollars (assuming American Rescue Plan Act grants don’t extend through 2023). Much of the program would be funded by federal funding, while Idaho’s contributions would include 1) ceded reinsurance premiums from insurers; 2) other public funds (including an initial investment of $25 million from the Department of Insurance, existing reinsurance funds, and an annual premium tax allocation of approximately $16 million for 2023); and 3) an assessment of the insurers if necessary.
Idaho intends to use both a conditional list (which relies on previous legislation from 2017) and a global attachment point model with parameters set annually. Parameters will be set out in the Pool’s Operating Plan, although updates may be approved by the Director of the Insurance Department.
Also on June 3, federal officials deemed complete Minnesota’s request to expand its current Section 1332 waiver for a state-based reinsurance program. Minnesota’s application was deemed complete after state officials submitted a revised extension request; the revisions were made in response to a January 2022 letter from federal officials ask for more information. If approved, Minnesota will operate its program through the end of 2017. Comments are expected July 3.