Each year the U.S. Department of Health and Human Services issues a payment rule to update the requirements of the Affordable Care Act (ACA) for health insurers and health insurance marketplaces. Typically, much of the rule is routine; it addresses inflation updates, risk adjustment, and other details. But payment rules also can make significant policy changes in the administration of ACA programs and regulation of health plans.
The proposed 2023 payment rule continues the Biden administration’s efforts to reverse the health policies of the Trump administration, which had attempted to deregulate and privatize ACA insurance markets and to shift regulatory responsibility to the states. Such policies had made it more difficult for people to enroll in subsidized ACA coverage; facilitated enrollment in health plans that don’t comply with the ACA, like short-term plans; and reduced protections against discrimination in health coverage.
Some Trump administration policies were blocked by a federal court injunction, while others were reversed by the Biden administration shortly after coming into office. The proposed 2023 payment rule continues to reverse Trump policies while further articulating the Biden administration’s vision: facilitating access to public insurance coverage, advancing health equity, and enhancing protections for consumers.
Protecting Against Discrimination, Facilitating Consumer Choice, and Ensuring Adequate Provider Networks
The proposal would reinstate protections repealed by the Trump administration that prevented discrimination based on sexual orientation and gender identity by marketplaces, insurers, agents, and brokers. Additionally, it would prohibit discrimination in insurance plan benefit design and require all plan coverage requirements and benefit limitations to be based on clinical evidence. For example, hearing aids or autism spectrum disorder benefits could not be arbitrarily limited to minors if older people would benefit from them.
Standardized insurance plan designs, which were optional under the Obama administration but eliminated by the Trump administration, will be mandatory for 2023. The average marketplace enrollee currently faces an overwhelming range of more than 100 different health plans. Under the proposed rule, insurers in marketplaces run by the federal government would be required to offer plans with specific standardized cost-sharing features (e.g., deductibles or copayments) in every coverage level, network type, and service area in which they offer nonstandard plans. These standardized plans would be displayed preferentially by HealthCare.gov and by brokers, agents, and insurers that directly enroll consumers to allow for easy comparisons.
The federal government would again assume responsibility for ensuring that health insurance plans offer adequate provider networks, a job that was turned over to the states by the Trump administration. Network adequacy would be defined in terms of quantitative time and distance standards for particular kinds of providers and by standard appointment wait times. For example, 90 percent of an insurer’s enrollees in a rural county would have to be within 30 miles or a 40-minute drive of a primary care physician and be able to get a routine primary care appointment within 15 days. The proposed rule also would generally require marketplace insurers to contract with 35 percent of available “essential community providers” that serve underserved communities, such as community health centers or safety-net hospitals.
Curbing Excessive Insurer Profits and Simplifying Marketplace Enrollment
The proposed rule would define more clearly and narrowly the expenses insurers can claim toward their medical loss ratio (MLR) target. Insurers must spend a certain percentage (80% in individual and small-employer group markets and 85% in large-employer group markets) of their premium revenues on health care claims or quality-improvement expenses. If they fail to meet this target, they must rebate the difference between actual expenditures and target amount to enrollees. In 2021, insurers rebated $2 billion to enrollees. Some insurers have improperly classified expenses as claims or quality-improvement expenses. The proposed rule would stop these abuses and thus lower premiums or increase rebates.
The proposed rule would give marketplaces more flexibility in verifying coverage eligibility for most special-enrollment periods (i.e., typically circumstances like getting married or having a child that allows people to enroll outside the annual open-enrollment period). The proposal also would reduce the responsibility of exchanges to verify whether an applicant had an offer of employer coverage — which could disqualify the applicant from receiving premium tax credits — to situations where there was a risk of improper payment. The Trump administration expanded verification requirements, which had discouraged enrollment without significantly addressing fraud. The new rule also would tighten regulation of internet-based health insurance brokers and would no longer allow insurers to refuse applicants for missed premium payments in prior years.
Finally, the proposal focuses on the Biden administration’s priority of reducing health and health care disparities by requiring insurers to undertake “quality improvement initiatives” to reduce disparities. It also asks for comments on what more can be done to encourage insurers to achieve Biden administration priorities of reducing disparities, addressing climate health, and providing easier comparisons when consumers are finding and selecting plans.
Once implemented, the proposed rule promises to not only complete the Biden administration’s U-turn from Trump policies, but to set course in a different direction.