An official at the Center for Consumer Information & Insurance Oversight now has detailed the Obama administration’s policy cancellation fix.
The Obama administration earlier today announced that the U.S. Department of Health and Human Services would be letting carriers continue individual and small-group policies that are out of compliance with the Patient Protection and Affordable Care Act into 2014.
Gary Cohen, the director of CCIIO, an agency in charge of many implementation efforts, now has put the transitional relief program into writing, in a letter to state insurance commissioners.
Cohen acknowledges that some individuals and small groups facing cancellations could pay more for new policies, even if they get coverage through the exchanges.
To address that, a new transitional policy will let carriers renew individual and small-group policies that were in force Oct. 1, 2013, and conflict with some PPACA coverage standards, Cohen writes.
Regulators will make the relief available for a policy renewed for a plan year starting between Jan. 1, and Oct. 1, 2014.
Carriers could renew the plans even if they violate PPACA rules dealing with premium regulation, guaranteed availability of coverage, guaranteed renewability of coverage, the ban on pre-existing condition exclusions, the ban on discrimination in health care, the rules on comprehensive health coverage, and coverage requirements for people participating in approved clinical trials.
To use the transitional relief, a carrier has to tell the individuals and small businesses about any changes in the available options; which of the specified PPACA rules wouldn’t apply to the continued coverage; and the coverage holders’ potential right to enroll in the exchanges.
The administration would make the relief available by refraining from determining that the companies that make use of the relief are out of compliance with PPACA.
“Where individuals or small businesses have already received a cancellation or termination notice, the issuer must send this notice as soon as reasonably possible,” Cohen writes.
“State agencies responsible for enforcing the specified market reforms are encouraged to adopt the same transitional policy with respect to this coverage,” Cohen writes.
The PPACA “risk corridor” program – one of three designed to protect carriers against wild swings in reform-related claims risks – “should help ameliorate unanticipated changes in premium revenue,” Cohen says. “We intend to explore ways to modify the risk corridor program final rules to provide additional assistance.”
Karen Ignagni, president of America’s Health Insurance Plans, said in a statement that changing the rules after health plans have already complied with PPACA could destabilize the market and lead to higher premiums for consumers.
“Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace,” Ignagni said. “If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers. Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.”
Jim Donelon, president of the National Association of Insurance Consumers, also says the transitional relief program could destabilize the market.
“The NAIC has been clear from the beginning that allowing insurers to have different rules for different policies would be detrimental to the overall market and result in higher premiums,” Donelon says in a statement. “In addition, it is unclear how, as a practical matter, the changes proposed today by the president can be put into effect.”
Some commissioners, including William White of the District of Columbia, echoed the NAIC’s statement.
Other commissioners, including Dave Jones of California, welcomed the Obama administration move.