HomestoryAffordable Care Act › Issuers Must Use CMS-Crafted Policy Cancellation Notices

News Story

Issuers Must Use CMS-Crafted Policy Cancellation Notices

HEALTH EXCHANGE ALERT

CMS insurance chief Gary Cohen told stakeholders in a Thursday memo that in order to satisfy the administration's transitional policy on reinstating non-ACA compliant plans in 2014, insurers must inform consumers of their purchasing options using the exact language developed or approved by the agency, or CMS-approved state versions. Meanwhile, more state regulators have made announcements on whether they will allow canceled policies to be reinstated, including California, where the decision by the state-based exchange not to accept the administration's plan incensed the state's insurance commissioner who supports the policy.

HHS on Nov. 21 unveiled the standardized language that issuers must use under certain circumstances. In a separate "frequently asked questions" memo, Cohen said issuers must not deviate from that language "in any way" in order to be exempted from enforcement of certain market reforms in the law, per the administration's policy. However, Cohen said, a state insurance commissioner can add language that is "more consumer protective and more informative" than the CMS language, but must get approval from CMS. Once approved, a carrier in that state may not alter the language. Cohen stressed that the notices must be sent separately from other plan materials or correspondence to enrollees.

Last Wednesday (Nov. 20), a handful of state insurance regulars met with President Obama to discuss the transitional policy on plan cancellations that the administration had announced during the prior week. Jim Donelon, president of the National Association of Insurance Commissioners, and Louisiana's insurance regulator, told reporters after the meeting that commissioners and the White House agreed that insurers and state officials needed to ramp up outreach to consumers to address the confusion and angst regarding plan cancellations.

Many state insurance commissioners have yet to decide whether to allow their carriers may extend plans into 2014, although each day brings more announcements. Friday, Michigan's commissioner said that he would allow extensions, a day after California's exchange said it would not agree to let exchange plans do so -- a decision blasted by the state's insurance commissioner as well as a group of consumer advocates. Covered California's contracts with insurers say the plans must stop offering non-ACA compliant policies after Dec. 31 if they are offering plans on the exchange.

The decision by Covered California is a "disservice" to the 1.1 million residents facing plan cancellations, California Insurance Commissioner Dave Jones said. Jones said extending the policies would not have impacted the risk pool, and pointed out that the state already has strong mandates so those plans being canceled are not necessarily "junk" policies.

Jones also noted in a conference call that Cigna, which opted not to join the exchange, is planning to offer extensions.

California advocacy group Consumer Watchdog argued that 450,000 residents are now slated to see higher prices because of the decision. "Covered California today showed why we need elected officials, accountable to the public not politicians, to oversee how much health insurance companies charge. It's outrageous that this board would acknowledge that half the Californians facing cancellations will pay more money, then block them from continuing their existing policies for another year. Shame on Covered California for representing the insurance companies, not the policyholders, and standing in the way of President Obama's call for relief," Jamie Court, president of Consumer Watchdog, said in a statement. The group is sponsoring a petition on the 2014 ballot that would give the state's insurance commissioner the authority to reject unjustified rate hikes.

Covered California's exchange board had voted unanimously not to extend the policies. The board did, however, make other decisions aimed at mitigating stress over the cancellations, including extending the deadline for residents to enroll in a plan and have coverage effective Jan. 1, 2014, establishing a new phone line for questions about cancellations, sending information directly to impacted consumers, collecting and reporting data showing the impact on the conversion, and engaging consumers through agents/brokers and other certified enrollment counselors statewide. "The consumer is front and foremost in Covered California's policy decision process. These new strategies will provide consumers a better enrollment experience, more flexibility in the selection of a plan and, most importantly, increased knowledge with which to make the best health coverage choice possible," Covered California Executive Director Peter Lee said in a statement.

America's Health Insurance Plans has been tracking the decisions and recently released a map highlighting where each state regulator has landed. As of Monday (Nov. 25), AHIP's map showed 12 states refusing the extensions, 10 allowing them and another 4 still considering the policy; the group had no information on the remaining states.

However, the commissioner in one of the states with no information has given the green light to at least one carrier that planned to extend non-compliant plans next year. "We believe Blue Cross and Blue Shield of Kansas' announcement to extend for one year the policies for those individuals and small group plans who received cancellation notices is the right thing to do now while the problems still exist with the operation of the federal marketplace," Kansas Insurance Commissioner Sandy Praeger said in a statement. "We know that Blue Cross' decision to extend these policies will require the company to incur some additional operational costs, but, under the circumstances, it is a good decision for many Kansans, and Blue Cross is to be commended for taking this action."

Blue Cross and Blue Shield of Kansas had announced on Nov. 19 that it would soon send a letter to 10,000 individual policyholders to explain their options under the administration's plan. "This governmental change will allow many of our members to keep the benefit plan they already have and like, while still allowing them to consider new plans that they may be able to purchase with the help of a tax subsidy or small business tax credit," the company said in the announcement.

Blues plans in several other states have already revealed intentions to extend their policies. BCBS Michigan, for example, updated its website and is now specifically informing consumers that they have until Dec. 1 to apply for an existing plan, or can purchase a new policy that has the essential health benefits and may be eligible for subsidies. BCBS of North Carolina, which will allow extensions, has also decided to grant consumers that option.