HHS Finalizes Affordable Care Act “Program Integrity” Rule

HHS announced the availability of a final rule governing policies of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) titled “Patient Protection and Affordable Care Act; Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014.” The new rule, scheduled for publication on October 30, 2013, focuses on program integrity standards throughout PPACA’s implementation, including state exchanges and federally facilitated exchanges (FFEs). It also amends and finalizes interim provisions set forth in “Amendments to the HHS Notice of Benefit and Payment Parameters for 2014,” published on March 11, 2013, related to risk corridors calculations and cost-sharing reduction reconciliation. The policies in the final rule are largely unchanged from previous proposed rules and guidance documents.

According to CMS, the overarching goal of the final rule’s provisions is to safeguard federal funds and protect consumers by ensuring that insurance issuers, exchanges, and other entities comply with federal standards. This is the second rule finalizing policies from a proposed rule published on June 19, 2013, titled “Program Integrity: Exchange, SHOP, Premium Stabilization Programs, and Market Standards.” Other provisions from the proposed rule were finalized on August 30, 2013, in a final rule titled “Patient Protection and Affordable Care Act; Program Integrity: Exchange, SHOP, and Eligibility Appeals.”

Exchanges

PPACA provided for the establishment of affordable insurance exchanges (also called Health Insurance Marketplaces) in each state. Individuals and small business owners will use the exchanges to shop for qualified health insurance, which will go into effect as soon as January 1, 2014. Some states are operating their own exchanges, and others are working in partnership with the federal government to establish exchanges. Some states have refused to take any action in establishing an exchange; the federal government will establish and run FFEs in those states. This final rule sets forth oversight and financial integrity standards with respect to exchanges, qualified health plan (QHP) issuers in FFEs, and states with regard to the operation of risk adjustment and reinsurance programs. It establishes additional standards for special enrollment periods, survey vendors that may conduct enrollee satisfaction surveys on behalf of QHP issuers in exchanges, and issuer participation in an FFE, and makes certain amendments to definitions and standards related to the market reform rules.

State-Operated Premium Stabilization Programs

The risk adjustment and reinsurance programs guarantee affordable health insurance to consumers by helping to provide a level playing field and stable premiums. To protect the financial integrity of these programs, the final rule establishes standards for the oversight of states that operate risk adjustment or reinsurance programs. The rule requires that states keep an accurate accounting for the programs, create reports on operations for the public and to submit to HHS, and take other steps to ensure the soundness and transparency of the programs.

Advance Payments of the Premium Tax Credit and Cost-Sharing Reductions

In overseeing advance payments of the premium tax credit and cost-sharing reductions, HHS seeks to ensure that eligible enrollees receive the correct credit and reductions. In order to achieve this goal, the final rule establishes timeframes for refunds to eligible enrollees and providers when an issuer or exchange incorrectly applies advance payments of the premium tax credit or cost-sharing reductions or incorrectly assigns an individual to a plan. It contains general standards for the oversight of refund payments, including record maintenance, annual reporting, and audits.

Exchange Program Integrity

The final rule establishes standards for the effective and efficient oversight of state exchanges through monitoring, reporting, and oversight of financial and exchange activities. These mechanisms will guarantee that consumers properly receive their choices of coverage available and the full amount of advance payments of the premium tax credit and cost-sharing reductions for which they qualify. It will also ensure that exchanges are meeting the standards of PPACA in a transparent manner. The rule provides for oversight of QHP issuers in FFEs to ensure compliance with exchange requirements, such as the maintenance of records requirement and participation in investigations and compliance reviews.

Standards for Enrollee Satisfaction Survey Vendors

PPACA includes provisions to develop enrollee satisfaction surveys. The surveys will be available to the public and will allow for the easy comparison of enrollee satisfaction levels among comparable plans in the exchanges. The final rule explains the process HHS will use for approving and overseeing survey vendors to administer the survey on behalf of QHP issuers in the exchanges.

HHS Interim Final 2014 Payment Notice

This final rule also amends standards and adopts as final the interim provisions published in the 2014 Payment Notice. These provisions align risk corridors calculations with the single risk pool provision. They also finalize standards permitting QHP issuers to use an alternate method to calculating the value of cost-sharing reductions for the purpose of reconciliation of advance payments of cost-sharing reductions.

Compliance With Effective Dates

Many of the provisions in this rule become effective by January 1, 2014. Affected parties should be able to comply with the provisions by their effective dates because most of the standards are already familiar to the parties. The provisions are based on standards currently in effect in the private market, were proposed through the Blueprint process, were discussed in agency-issued guidance, or were discussed in the preambles to the Exchange Establishment Rule, Premium Stabilization Rule, Market Reform Rule, or the HHS 2014 Payment Notice.

Future Guidance

In responding to the comments received on the interim final rule, HHS acknowledged that further documents will be necessary for some of the issues raised. Some of the topics that HHS plans to issue future rules, regulations, guidances, and methodologies include: small business counting methods for purposes of the Public Health Service Act; aspects of the risk corridors program; standards relating to oversight of programs, transparency, and audits; two installments of future rulemaking to alleviate the upfront burden of reinsurance contributions; and further details on the documents and records that states, contributing entities, and issuers will be required to maintain.

The regulations in the final rule are effective 60 days after publication in the Federal Register.