CMS Provides Guidance on Premium Reductions

The Centers for Medicare and Medicaid Services (CMS) released guidance on August 4^th allowing insurance companies to provide temporary premium reductions during the 2020 coverage year in the individual and small group markets. Doing so would otherwise violate the federal prohibition on mid-year premium changes.

Given the savings insurers have experienced due to a sharp decline in utilization during the COVID-19 pandemic, the guidance permits insurers to offer premium reductions through the end of 2020—if doing so is consistent with state law. These premium credits will help to support continuity of coverage for individuals and small businesses who may be facing economic challenges and/or health issues as a result of the impact of COVID-19. CMS encourages states to provide similar relief, stipulating that states will not be considered to have failed to substantially enforce federal law by virtue of allowing such credits. To provide premium credits, however, insurers are required to receive permission in advance from regulators, as well as the Exchange through which they offer Qualified Health Plans (QHPs). Insurers who offer QHPs through Federally-facilitated Exchanges (FFEs) or State-based Exchanges on the Federal Platform (SBM-FPs) must provide notice by October 1, 2020.

To comply with the guidance, premium credits must be:

• a fixed percentage;
• applied prospectively; and
• applied uniformly to all members in a state’s market, regardless of whether the plan is offered on or off the Exchange or whether the enrollee receives Advance Premium Tax Credits (APTCs).

CMS plans to provide updated guidance directing insurers to report their reduced premium amounts on the 2020 Medical Loss Ratio Annual Reporting Forms, as well as for purposes of the 2020 benefit year data submission for the federal risk adjustment program. The FFE and SBE-FP will continue to display full premium amounts and will use those amounts to make affordability calculations and to identify the Second Lowest Cost Silver Plan for purposes of APTCs. However, the premium credits will be considered for purposes of calculating the actual amounts due in APTCs and FFE and SBE-FP user fees.

CMS will also provide more guidance and templates for insurers on the FFE or SBM-FPs seeking to provide notice of credits. Questions can be directed to fmcc@cms.hhs.gov with “Temporary 2020 Premium Credits” in the subject line.

Published by Lisa Kaplan Howe

Lisa Kaplan Howe (J.D.) is a Senior Advisor who has spent her career working in health law and policy. At PCG, she focuses on statutory and regulatory analysis and strategic advising, particularly related to health care policy. Lisa has provided subject matter expertise to support state health care reform efforts, including policy development and regulatory support for health insurance Marketplaces and state insurance plan management efforts, Medicaid expansion and Medicaid Waivers (including DSRIP Waivers) and State Innovation Waivers. Lisa led PCG’s work with the New Hampshire Insurance Department relative the state’s Section 1115 Medicaid Waiver to provide coverage to newly-eligible adults through the Marketplace and continues to support the states’ Marketplace plan management work. In those roles, Lisa has served as the chief advisor and policy expert related to Medicaid and private insurance law to the New Hampshire Insurance Department, helping to identify, analyze and lead strategic consideration of federal opportunities and requirements. Lisa is also part of the team helping to design Colorado’s Delivery System Reform Incentive Payment (DSRIP) program. Ms. Kaplan Howe also provides broad policy and regulatory support to PCG’s other health care clients across the country, analyzing policy and regulatory developments, providing strategic advice relative to regulatory questions, and drafting policy briefs and position papers. Lisa is a managing editor of PCG’s monthly health practice area newsletter, Health Policy News. Prior to joining PCG, Lisa served as Policy Director at New Hampshire Voices for Health, where she led legislative and regulatory analysis, strategic planning, and implementation of the organization’s policy agenda. Her work included drafting bills, amendments, testimony, and communications and testifying at hearings. Lisa also held the positions of Private Market Policy Manager and Consumer Health Policy Coordinator at Health Care for All of Massachusetts. While there, she managed private insurance market policy work and was a member of the organization’s internal health reform team. Lisa also practiced law in the Ropes & Gray health care department, advising health care provider and insurer clients. View all posts by Lisa Kaplan Howe