CMS lets states get cre­ative with fed­eral ex­change funds un­der 1332 waivers

Modern Healthcare - - Policy - By Vir­gil Dick­son

CMS AD­MIN­IS­TRA­TOR Seema Verma last week out­lined ways that states can use 1332 waivers to launch new fi­nanc­ing op­tions that re­sem­ble health sav­ings ac­counts.

Un­der the new ap­proach, states would pro­vide a cash con­tri­bu­tion to an ac­count that peo­ple can use to pay both pre­mi­ums and any out-of-pocket health ex­penses.

This ap­proach max­i­mizes con­sumer choice and en­gage­ment, giv­ing peo­ple flex­i­bil­ity to make smarter de­ci­sions with their health­care dol­lars be­cause they keep any un­spent funds in the ac­count, ac­cord­ing to Verma. This flex­i­bil­ity also helps to con­trol pre­mium hikes and limit the num­ber of pub­lic sub­si­dies paid out by es­tab­lish­ing a clear in­di­vid­ual health­care bud­get up­front, she said.

Verma laid out four 1332 waiver con­cepts last week dur­ing re­marks at the States and Na­tion Pol­icy Sum­mit of the Amer­i­can Leg­isla­tive Ex­change Coun­cil. The speech fol­lowed up guid­ance is­sued by the CMS last month. That doc­u­ment rep­re­sented a dra­matic over­haul of the cur­rent 1332 waiver process.

States can also de­velop a new pre­mium sub­sidy struc­ture and de­cide how the sub­si­dies should be tar­geted, set the rules for what type of health plan qual­i­fies for state sub­si­dies to give peo­ple ac­cess to more op­tions, and im­ple­ment risk sta­bi­liza­tion strate­gies to ad­dress the costs of high-risk in­di­vid­u­als to re­duce pre­mi­ums for ev­ery­one.

But these ideas are not go­ing un­chal­lenged. First, the new per­mis­sions must go through the rule­mak­ing process, Chris­ten Linke Young, a fel­low at the Brook­ings In­sti­tu­tion and former CMS of­fi­cial, wrote in an anal­y­sis.

“By re­leas­ing the doc­u­ment as guid­ance, the agen­cies are im­plic­itly tak­ing the po­si­tion that it is an ‘in­ter­pre­ta­tive rule’ ex­empt from the stan­dard rule­mak­ing process,” she said. “How­ever, the new guid­ance con­tains pol­icy that would likely be clas­si­fied un­der the (fed­eral law) as a leg­isla­tive rule. As a re­sult, the agency likely can­not adopt these changes with­out no­tice and com­ment rule­mak­ing.”

The dis­tinc­tion is im­por­tant. Any state look­ing to im­ple­ment the ideas could be sued even if the

CMS ap­proved their 1332 waiver re­quest.

Un­der the guid­ance is­sued last month, state of­fi­cials were given more au­ton­omy to ap­prove waiver plans by let­ting gov­er­nors by­pass leg­is­la­tures and sub­mit waivers on their own. Se­condly, states could di­vert their Af­ford­able Care Act sub­si­dies to help con­sumers buy short-term du­ra­tion plans, which do not have to con­tain the same pa­tient pro­tec­tions as ACA-com­pli­ant plans.

The no­tice stated that a waiver could still be ap­proved even if it re­sulted in some res­i­dents los­ing or drop­ping cov­er­age. States would have to en­sure that a com­pa­ra­ble num­ber of peo­ple re­main cov­ered. The Obama ad­min­is­tra­tion had strict guide­lines in place to en­sure waivers wouldn’t re­sult in a loss of cov­er­age.

The CMS hopes the new guid­ance will en­cour­age cre­ativ­ity in waiver cre­ation. So far, seven of the eight ap­proved 1332 waivers fo­cus on rein­sur­ance pro­grams. The new guide­lines should also ex­pe­dite the waiver ap­proval process. Congress has pushed the agency to has­ten its re­view of the waivers, hold­ing sev­eral hear­ings on the process last fall.

States can re­quest 1332 waivers for vir­tu­ally ev­ery cov­er­age com­po­nent of the ACA as long as the state’s health­care cov­er­age is con­sis­tent with the law’s pro­vi­sions and doesn’t in­crease the fed­eral deficit.

HHS un­der the Trump ad­min­is­tra­tion ap­proved a 1332 waiver from Alaska, cre­at­ing a state rein­sur­ance pro­gram to re­duce pre­mi­ums, ef­fec­tive in 2018. Maine, Mary­land, Min­nesota, New Jer­sey, Ore­gon and Wis­con­sin re­ceived sim­i­lar ap­provals. HHS un­der the Obama ad­min­is­tra­tion ap­proved a waiver for Hawaii that re­quired em­ploy­ers to pro­vide more gen­er­ous cov­er­age than is

● re­quired un­der the ACA.

Verma says the new op­tions will give con­sumers more flex­i­bil­ity.

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