ACA Exchanges

Panelists: CMS Prior Authorization Rule Should Help, But More Is Needed

The rule that CMS finalized last month regarding prior authorization (PA) should help streamline the increasingly scrutinized process and lead to faster decisions, according to panelists who spoke during a KFF webinar on Feb. 22. However, they noted that regulation did not apply to employer-sponsored plans or state-based exchange plans and did not address how PA decisions are made and the clinical criteria plans use in determining which procedures are subject to PA.

Troyen Brennan, M.D., former chief medical officer at CVS Health Corp. and Aetna, noted that the rule did not include prescription medications, which are often subject to PA — a process that draws the ire of providers who worry that delays could worsen patient outcomes. The CMS Interoperability and Prior Authorization Final Rule also required insurers to have a PA application programming interface (API), where providers can access information, although the regulation did not require them to disclose PA data on medications.

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Premium Rate Review: A Look at State Authority

Most states have authority to review premium rates for comprehensive, Affordable Care Act-compliant health plans in the individual and small group markets, while only a few have such authority in the large group market, according to an analysis published by the Georgetown University Center on Health Insurance Reforms. Additionally, the analysis found that while a “healthy minority of states” have the authority to question the rates that insurers negotiate with providers and suppliers, many struggle to actually do so.

The ACA, enacted in 2010, established the health insurance rate review program that requires the review and disclosure of “unreasonable” rate increases. As of August 2023, 43 states have authority to review and require changes to or disapprove proposed rates in the individual market, whereas only 26 states had such authority in 2010. Eight states — Arizona, California, Idaho, Indiana, Missouri, Montana, Texas and Wisconsin — have authority to require insurers to review proposed rates in the individual market, but they cannot require changes or disapprove the rates. Thirty-eight states currently have prior authority over rates in the small group market.

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Many States Can Conduct Robust Rate Reviews; Why Aren’t More Doing So?

Although a “healthy minority” of states have the authority to conduct enhanced reviews of proposed premium rates — in which they evaluate the rates that health insurers negotiate with providers — just a small handful are doing so, according to a new analysis.

A variety of barriers are preventing state regulators from fully flexing their rate-review muscles, including industry opposition, according to one of the researchers who produced the analysis. And although that opposition historically has included insurers, there’s an argument to be made that the sector should change its tune.

“I think the health plans should embrace this kind of regulation, because when you look at the hospital sector and how increasingly consolidated it is, and how so many hospitals and health systems are using their market power to demand ever-higher reimbursement rates in the commercial market…health plans are really powerless to push back, because these hospitals are must-have participating providers” in health plan networks, says Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms (CHIR).

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Centene Downplays Medicare MLR Miss, Reports ACA Marketplace Growth

Centene Corp.’s results for the fourth quarter of 2023 were largely positive, earning mild praise from Wall Street analysts. While Centene was the latest health insurer to face higher-than-expected Medicare Advantage utilization, executives claimed that the firm’s MA performance was far less worrisome than that of its peers — an argument that analysts seemed to accept.

Centene’s Medicare medical loss ratio (MLR) for the quarter was an eye-popping 95.3%, up from 87.5% in the fourth quarter of 2022, an increase of 780 basis points (bps). According to Jefferies analyst David Windley, that figure was 510 bps above Wall Street consensus projection for Centene’s Medicare book of business. However, during a Feb. 6 earnings call, Centene CEO Sarah London and Chief Financial Officer Drew Asher both insisted that the high MLR figure was not a reason for concern, was not caused by the same factors that drove high MLRs for MA peer firms like Humana Inc., and was accounted for in 2024 guidance.

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News Briefs: CMS Appeals to Public for More Medicare Advantage Data

The Biden administration on Jan. 25 released a Request for Information to seek feedback about the best way to enhance Medicare Advantage data capabilities and increase public transparency. In a press release, HHS pointedly noted that “transparency is especially important now that MA has grown to over 50% of Medicare enrollment, and the government is expected to pay MA health insurance companies over $7 trillion over the next decade.” To that end, the agency said it’s seeking data-related input on aspects of the MA program including access to care, prior authorization, provider directories and networks, supplemental benefits, marketing; care quality and outcomes, value-based care arrangements and equity, and “healthy competition in the market, including the effects of vertical integration and how that affects payment.”

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COVID’s Not Over: Fitch, S&P Say Pandemic Forces Are Still Hitting Insurers

Although 2024 seems far removed from the height of the COVID-19 pandemic, the ripple effects associated with that disruptive global crisis are still influencing how this year will turn out for the U.S. health insurance sector, two top credit ratings firms predict.

“We’re calling it the pandemic hangover,” says Brad Ellis, senior director in Fitch Ratings' North American insurance rating group.

“I think this year might be the last year we’re seeing what we call pandemic-related effects on the industry,” adds James Sung, director of insurance ratings at S&P Global.

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Insurtechs Speaking at J.P. Morgan Expect to End 2024 in the Black

Three startup “insurtechs” — Oscar Health Inc., Clover Health Investments Corp. and Alignment Healthcare Inc. — presented at the J.P. Morgan Health Care Conference in San Francisco last week, where they reiterated earlier projections that they expect to close 2024 in the black. Oscar and Clover expect to turn a profit in 2024, while Alignment says it will break even.

Oscar reiterated its promise to be profitable in 2024, and it teased entry into the Individual Coverage Health Reimbursement Arrangement (ICHRA) market. ICHRAs, which allow participating employers to reimburse employees for Affordable Care Act marketplace coverage at a fixed rate in lieu of purchasing a traditional group health plan, have also been identified as a target market by Centene Corp. in recent weeks.

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Some Proposed Changes to ACA Marketplace Rules Aren’t Legal, Insurers Say

Health insurer trade groups have several bones to pick with the proposed 2025 Notice of Benefit and Payment Parameters (NBPP), the annual regulation that sets the rules of the road for the Affordable Care Act exchanges. In the case of certain proposals, AHIP and the Blue Cross Blue Shield Association (BCBSA) are even arguing that CMS is exceeding its legal authority.

Those proposed rule changes concern the process that states use to define their essential health benefits (EHB) benchmark plans, according to comments on the 2025 NBPP filed on or before a Jan. 8 deadline. The ACA lists 10 general categories of EHB that all individual market plans must cover — such as emergency services and prescription drugs — allowing states to determine the specific services that are included in those broad categories. To do that, state officials select a benchmark plan among a list of HHS-approved options, and insurers then use that benchmark to design their benefits.

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ACA Marketplaces Continue to See Record-Breaking Enrollment

Over 20 million people have enrolled in Affordable Care Act marketplace coverage since the start of the 2024 open enrollment period (OEP), reaching a record for the third consecutive year, according to CMS. Over 3.7 million people who have signed up for ACA plans are new enrollees this year.

More than 15.5 million people have enrolled through HealthCare.gov in the 32 states that use that platform, and another 4.8 million have enrolled across 18 states and the District of Columbia, which use their own marketplaces.

After adjusting enrollment figures to account for the fact that there is one fewer day included in the 2024 OEP data compared to last year’s report, an ACAsignups.net analysis showed that every state except Maine and the District of Columbia saw membership growth in 2024, ranging from 2.8% in Hawaii to 78.8% in West Virginia. A total of 10 states reported signup surges of more than 50%.

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Despite Rising Scrutiny of Insurers, Experts Predict Only Modest Policy Action

Although 2024 features both a presidential election and a split Congress — limiting any potential policy changes that could affect health insurers — the industry is facing mounting criticism regarding some of its business practices. Therefore, managed care organizations this year will be lobbying, perhaps largely behind the scenes, to not only mitigate that pressure but also to set the stage for future policy battles, industry observers tell AIS Health, a division of MMIT.

“I don’t think there’s a huge health insurance reform issue in the immediate future, but I do think [insurers] kind of exited 2023 in a hail of bullets,” says Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation.

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