This week, our In Focus section reviews the new 1332 State Relief and Empowerment Waiver resources released by the Centers for Medicare & Medicaid Services (CMS) on July 15, 2019. The new resources, intended to help states better understand regulations and reduce burdens associated with waiver application, include four waiver concept papers on how states can take advantage of the flexibility to wave certain Affordable Care Act (ACA) requirements, as well as their respective application templates. CMS has also released an updated application checklist of required elements.
The following table shows what provisions of the ACA states are able to request be waived:
Source: The Centers for Medicare & Medicaid Services
However, state waivers must meet four statutory requirements, known as “guardrails.” Programs proposed through a waiver application must:
- Provide coverage that is at least as comprehensive as the coverage defined in section 1302(b) as would be provided absent the waiver;
- Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as coverage absent the waiver;
- Provide coverage to at least a comparable number of residents as would be provided absent the waiver; and
- Not increase the federal deficit.
The waiver concept papers provide explanations of approaches including State Specific Premium Assistance, Adjusted Plan Options, Account-Based Subsidies, and Risk Stabilization Strategies, introduced in the guidance released in 2018 from CMS and the Department of the Treasury. States are free to combine multiple waiver concepts or come up with their own ideas tailored to their markets.
State-Specific Premium Assistance (SSPA)
The SSPA waiver concept allows states to alter health insurance premium subsidies to individual market needs. States can waive federal ACA premium tax credit (PTC) provisions and establish their own state subsidy structure to reduce the cost burden of certain populations. They can also redefine populations eligible for financial assistance. For instance, a state may replace the federal PTC structure with a framework that addresses subsidy cliffs by broadening eligibility criteria for federal premium tax credits. Or a state may design a subsidy structure that establishes a cap on the annual rate of growth of the state subsidy amount.
Adjusted Plan Options (APO)
The APO waiver concept allows states to provide state financial assistance for non-Qualified Health Plans (non-QHPs) that do not necessarily include all ten essential health benefits (EHBs) under the ACA. This may include allowing “non-QHPs to be sold on the existing Exchange, expanding the availability of catastrophic plans beyond the current eligibility limitations, and applying PTC to catastrophic plans and potentially certain non-QHPs sold on the Exchange.”
Account-Based Subsidies (ABS)
The ABS waiver concept allows states to direct subsidies into a consumer-directed Health Expense Account (HEA). Funding into the HEA can come from the consumer, state, and employer, as the figure below shows.
Source: The Centers for Medicare & Medicaid Services
The goals of the HEA are consumer choice and engagement; a defined contribution from the state; and fund aggregation from multiple sources.
Risk Stabilization Strategies: State Complex Care Plan (SCCP)
The SCCP waiver addresses consumers with pre-existing conditions. States can design new specific plans to offer to such individuals in order to reduce premium costs. These would include self-funded plans that would not need necessarily need to meet all of the federal requirements that apply to the individual market. However, CMS stresses that pre-existing condition protections for consumers who want individual market coverage cannot be waived. For example, states can contract directly with providers at a negotiated price, leverage care management tools, or develop a separate state subsidy structure for coverage under a SCCP waiver.
CMS goes into detail for all four of the waiver concepts on various design and implementation approaches, as well as administration options and expenses, policy choices, and how to maximize state flexibility.