Evolving Regulations on the Health Insurance Marketplace

Stephanie Leftwich
Director, Provider Innovation Strategies

In an era of rapid change in the healthcare ecosystem, the Health Insurance Marketplace (HIM) is arguably the most dynamic space While some large insurers have announced their departure, many are continuing to support the Marketplace, adjusting business processes to address and meet new challenges. Ever-changing regulatory requirements are having an extensive impact on plans across the marketplace.

To better understand the current challenges these plans face, DST Health Solutions reached out to plan executives to ask a few questions about how they are responding to regulatory changes on the horizon. We completed our survey in September this year.

We asked opinions about some of the most significant upcoming regulatory changes. Here is what we learned about their views, plus some additional background to put some of these changes into perspective.

Standard Plan Designs: When asked about changes coming for standardized plan designs, most respondents indicated standardization is very important. Some of the concerns raised include "confusing language" and "lack of consistency from state to state". As expected, the most popular standardized plan was silver because this is the level in which individuals are eligible for government subsidies.

Starting in 2017, HHS (Department of Health and Human Services) will permit Federally Facilitated Marketplace (FFM) issuers to offer standardized metal-level plan designs. The standardized plan design features apply to bronze, silver, and gold metal levels.
Qualified Health Plan (QHP) issuers are not required to offer standardized plans. However, standardized plans will have favorable placement and ranking on the healthcare.gov website which is expected to direct more consumers to them.

Network Adequacy: We asked how the new Provider Participation Rating will impact network strategy. The majority expressed it will have some impact with about half indicating "somewhat' and the other half indicating "significantly."

The proposed county-specific time and distance standards for access to providers have been a highly debated topic. For plan year 2017, a new rating was proposed for healthcare.gov website to compare the network strength of the available plans. When implemented, healthcare.gov will rate each QHP's relative network strength calculated by the number of hospitals and providers. CMS will determine the percentage of providers in a plan's network compared to the total number of available providers. This percentage is the Provider Participation Rate (PPR). The network strength will be displayed as:

  • Broad: Plan above one standard deviation of the mean
  • Standard: Plan within one standard deviation of the mean
  • Basic: Plan below one standard deviation of the mean

In October this year, HSS announced it is reducing this network adequacy requirement to a pilot in only four states. The tool to give consumers information about network breadth will be piloted in Main, Ohio, Tennessee, and Texas. We'll need to wait to see the impact of this pilot before it is rolled out to the entire Marketplace.

Surprise Bills: We asked how your are planning to address the 'surprise bills' in 2018. Almost all (about 80%) are evaluating how to address this.

Starting in 2018, HHS is addressing the problem of 'surprise bills,' bills that occur when a member unknowingly receives care from an out-of-network provider. Starting in 2018, if an enrollee receives care from an out-of-network ancillary provider, the issuer is required to cover that service up to the annual limit on cost-sharing unless the issuer provided advanced notices.

The most common approaches under consideration are:

  • Adding advanced notification to prior-authorization correspondence
  • Creating new correspondence for advanced notification
  • Negotiating with contracted facilities to encourage them to influence their ancillary providers

Risk Adjustment: When asked about the impact of including preventive services in your risk score, about two-thirds were unsure ; the other third indicated it will have a positive impact.

To improve the accuracy of risk adjustment for 2017, HHS made two significant changes. Risk adjustment now includes the cost of preventive services. In addition, HHS updated the risk coefficients with 2014 data to reflect changing healthcare costs.

These changes should increase the risk scores for those issuers with healthy enrollees who take advantage of the preventive services. The risk coefficients for 2017 are based on the use of discrete trend factors for traditional drugs, specialty drugs, and medical and surgical expenditures to more accurately reflect expenditure growth rates. HHS is incorporating data on preventive services into its risk-adjustment calculation, thus improving the risk scores of plans with healthier populations.

Other Future Changes: Most of our respondents are supportive of many of the proposed changes related to prescription drug use and changes in data-collection approach to make individual claims available to calibrate future years.

Adding drug utilization information could improve identification of healthcare costs in situations where individuals have a chronic disease and are taking medication for it, but do not have a diagnosis code in their claims for a year (because their provider failed to note it or for some reason – such as the stigma associated with the diagnosis – decided not to). The use of prescription drugs may also be a marker of the severity of a condition identified through a diagnosis. Also, most plans generally welcome initiatives to improve the way the EDGE server works. CMS continues to take feedback to streamline and improve the EDGE server data-collection process.


The Marketplaces are heading into their fourth year of operation in 2017. Responding to what we are learning from this model, HHS continues to make adjustments with the goal of improving the consumer experience and providing affordable, quality healthcare. Navigating complexities continues to challenge HIM plan issuers as they face operational and information technology changes each year. There is still much uncertainty about future direction for the Marketplace. This hinges greatly on congressional, gubernatorial, and presidential elections.

DST Health understands the complexities you face in the Marketplace. We are committed to helping you adjust business processes to address and meet new challenges. We offer strategic advisory, tools, and services necessary to optimize clinical and financial outcomes for Marketplace plans.

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