United States: CMS Aims To Stabilize Exchanges But Does Not Address Issuers' Biggest Questions

Last Updated: May 19 2017
Article by Jeremy Earl, Ankur Goel and Seth Schneer


CMS recently released a final rule with the goal of stabilizing Exchange markets for 2018. The agency also issued several significant guidance documents where CMS extended the deadlines for 2018 rate and Exchange qualified health plan application submissions, adopted a good faith compliance standard for 2018 and delegated additional plan certification responsibilities to states. While these steps may provide some comfort for issuers, the agency did not address the most significant areas of issuer concern when it comes to 2018 Exchange participation. Namely, the Final Rule and guidance documents do not resolve ongoing uncertainty regarding cost-sharing reduction funding, the enforcement of the individual mandate or ongoing efforts to repeal the Affordable Care Act.

In Depth

The Centers for Medicare and Medicaid Services (CMS) recently finalized its proposed "market stabilization rule" (Final Rule). The Final Rule is largely consistent with the February 17 proposed rule (Proposed Rule), which we summarized in a previous On the Subject. On the same day the Final Rule was released, the agency also issued several significant guidance documents in which CMS: (i) finalized an extension to the deadlines for 2018 rate and Qualified Health Plan (QHP) application submissions, (ii) adopted a good faith compliance standard for 2018 issuers on the Federally-Facilitated Marketplace (FFM) and (iii) delegated additional QHP certification responsibilities to states.

While these steps may provide some comfort for issuers, the agency did not address the most significant areas of issuer concern when it comes to 2018 Exchange participation. Namely, the Final Rule and guidance documents do not resolve ongoing uncertainty regarding cost-sharing reduction (CSR) funding, the enforcement of the individual mandate, or ongoing efforts to repeal the Affordable Care Act (ACA). With premium rates due soon in many states, there is a narrow window for these outstanding concerns to be addressed before issuers must decide whether to offer products in the Exchanges and at what price.

Summary of Final Rule

In the preamble to the Final Rule, CMS emphasized that the Final Rule is needed to address the recent exit of issuers from the market and increased premium rates in certain counties. The agency explained that "prompt regulatory action is necessary to stabilize the markets for the upcoming plan year, and [we] recognize the importance of clearly communicating these changes in light of confusion and uncertainty for consumers and providers." In the two months since CMS's Proposed Rule, several issuers have announced they are withdrawing from the Exchanges for 2018, underscoring the agency's concern.

The Final Rule addresses several issuer concerns about issuer regulatory burdens related to plan and product development and consumers gaming special enrollment periods and the 90-day grace period. Generally, CMS finalized its rule as proposed and as described in more detail in our summary of the Proposed Rule. One notable change between the Proposed Rule and Final Rule relates to the "guaranteed availability" standard. CMS had proposed to create an exception to guaranteed availability for individuals with unpaid premiums due to the issuer from which the individual is seeking to purchase new coverage. In the Final Rule, CMS extended the policy to all health plan issuers within a controlled group, as defined under sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code. Thus, under the Final Rule, an applicant's unpaid premiums due to an issuer in a controlled group would permit another issuer in the same controlled group to refuse coverage to the applicant.

Additional Guidance Documents

CMS's guidance documents that were released on April 13 are also intended to address issuer uncertainty about 2018 by providing enforcement relief and extending certain federal filing deadlines:

  • Good Faith Compliance Standard. CMS announced that for issuers participating in FFMs, CMS will apply a good faith policy for enforcement during payment year (PY) 2018. The guidance explains that "CMS will not use formal enforcement remedies for non-compliance with QHP certification standards when QHP issuers participating in the FFMs in PY 2018 act in good faith and make reasonable efforts to address concerns in an appropriate time frame." Issuers should note that the good faith policy is limited to compliance with QHP certification standards in FFM states and does not appear to extend to issuers participating in state-based Exchanges or to other federal requirements that are not QHP certification standards, such as Public Health Service Act insurance market reforms or state insurance market standards.
  • Filing Deadlines. The agency finalized rate and QHP application filing deadlines for PY 2018 that were proposed on February 17, 2017. The agency extended the federal rate filing deadlines to the following dates:

    • States without an Effective Rate Review Program. QHP and non-QHP rate filings by the date set by the state, as long as the date is no later than June 1, 2017.
    • States with an Effective Rate Review Program. QHP and non-QHP rate filings are due by the date set by the state, as long as the date is no later than July 17, 2017.
    Although the rate filing deadline was extended to as late as July 17, QHP applications are due by June 21, 2017 and these applications must include QHP Rates Table Templates. The agency will allow updates, corrections, and changes to the QHP Rates Table Template after the initial submission.

    Issuers must still comply with applicable state rate filing deadlines that are earlier than the federal deadline, so the extended federal deadlines only provide relief if states also extend their rate filing deadlines. While deadlines for rate filing vary by state, for PY 2017, 33 states required rate filings prior to June 1. Some states, including New Hampshire and Washington, have already delayed their 2018 rate filing deadlines given the uncertainty regarding CSRs.
  • QHP Application Review. CMS announced that it will give additional responsibility to states during the QHP certification process in FFM states. For all FFM states, CMS will look to states to review licensure and good standing and network adequacy. In FFM states where the state performs plan management functions, the state will also review service area, prescription drug formulary outliers, and non-discrimination in cost-sharing.

Significant Questions Remain

Several significant areas of issuer uncertainty remain unaddressed in the Final Rule and related guidance, and this uncertainty will likely overshadow any stabilizing effect achieved by the Final Rule. Most importantly, CMS and the Trump Administration have not committed to providing CSRs for 2018, which appear to be caught in the middle of the ongoing negotiations over health care reform. Total CSR payments in 2016 were $7 billion. With rate filing deadlines fast approaching, issuers may face the difficult task of pricing 2018 products with no certainty regarding CSR funding.

In addition to the CSR uncertainty, one of President Trump's first acts was to issue an executive order that has created significant uncertainty regarding the continued enforcement of the requirement that most Americans purchase health insurance. More recently, the Internal Revenue Service revised its review of individual tax filings to accept the tax returns of individuals who fail to indicate whether they maintained health insurance for the previous year. Non-enforcement of the individual mandate penalty could lead to fewer healthy individuals in the individual market risk pool, so this uncertainty may affect 2018 Exchange pricing and participation decisions.

Finally, despite Republicans' initial failure to pass the American Health Care Act, House Republicans and President Trump continue to work towards agreement on ACA repeal and replace legislation. Continuing uncertainty regarding the fate of ACA's Exchanges and insurance market reforms will no doubt affect issuer decisions for 2018.

CMS Aims To Stabilize Exchanges But Does Not Address Issuers' Biggest Questions

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions