Serving the home health, home care and hospice industry since 1999.

On Monday, CMS announced that the Administration has granted another one-year extension to an executive order that allows insurance companies to sell policies that do not meet "minimum essential coverage" regulations of the Patient Protection and Affordable Care Act. The announcement, reprinted verbatim elsewhere in this week's issue, spins the extension as an opportunity for people to buy an affordable health insurance policy when they make too much money to qualify for premium subsidies but not enough to afford a market rate policy.

We looked into it and came away uncertain CMS should be describing exempting some insurance policies from ACA standards as "an opportunity." It may also cause payment problems for home care agencies providing services, assuming they will be reimbursed by a health insurance policy.

The history part

In 2013, as the unemployment rate was just beginning to come down after the so-called Great Recession of 2007-08, the Obama Administration saw that some people were going without insurance for a month or more when they moved from one job and one employer-provided insurance plan to another. To help bridge this gap, the Administration gave states the option to allow insurance companies to sell non-ACA-compliant policies -- to individuals, not on the exchanges -- for up to three months.

Typical characteristics of a non-compliant policy:

  • lower monthly premiums than can be found on the exchanges
  • not required to cover claims determined to result from pre-existing conditions
  • not required to guarantee coverage
  • not required to guarantee renewability
  • allowed to exclude coverage based on health status
  • allowed to review health status at every renewal
  • not subject to non-discrimination regulations
  • not subject to lifetime limits on out-of-pocket expenditures

In other words, these are the types of policies the ACA intended to eliminate, policies that charge premiums but almost never pay for care. One study found that typical out-of-pocket costs for people with these policies ranged from $7,000 to $20,000.1 The Obama Administration saw that allowing them to continue to exist, if restricted to covering people in the midst of life and job transitions for three months or less, was preferable to those people having no insurance at all during those interim periods.

A 'minor' modification

Everything changed in July, 2017 when Congress failed to pass a bill to repeal major parts of the ACA, a bill the Administration believed would lower monthly premiums. The following October, in a Plan B effort to slow the rapid rise of premiums, President Trump issued an executive order changing the wording of CMS's 2013 exemption from "three months or less" to "less than a year." Specifically, the order declared CMS would not enforce the requirement that such policies adhere to ACA minimum essential coverage standards.

Immediately, some insurance companies began to sell less costly, 364-day policies, but only to healthy people with no pre-existing conditions. There were several consequences, perhaps unintended, perhaps not.

  • These policies disproportionately attract young, healthy people who do not qualify for premium subsidies. The result is a segmented risk pool that left full-price, full-service policies with a risk pool of older, less healthy individual. Premiums on those compliant policies have to rise to accommodate a more costly demographic.
  • These policies, being temporary, do not satisfy the individual mandate. Until a Texas court ruled the mandate unconstitutional, many young people were surprised at tax preparation time to find out they had to pay the penalty even though they had purchased "insurance."
  • These policies are technically renewable but insurers have been requiring new health condition assessments every 364 days.
  • Many people who thought they were covered have experienced claim denials, with no possibility to appeal as the policies are exempt from ACA standards and denials are completely within the purview of the insurers.

Opportunity? Or con job?

Though CMS's Randy Pate, Director, Center for Consumer Information and Insurance Oversight, writes, "CMS is committed to bringing all non-grandfathered coverage in the individual and small group markets into compliance with all applicable Affordable Care Act requirements," his boss calls that commitment into question by extending the government's non-enforcement policy year after year. With this week's announcement, insurance companies can continue to sell non-compliant policies to individuals and small groups, as long as they promise to bring them up to minimum coverage standards January 1, 2021...unless the executive order is extended for a third time next year.




©2019 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Tim Rowan's Home Care Technology Report. One copy may be printed for personal use; further reproduction by permission only.