by Brandon C. Ge

In the months leading up to Election Day 2012, the pace of health reform implementation slowed considerably as the Obama administration held off on releasing regulations to avoid pre-election controversy. With the 2012 elections now in the books, health reform has scored two major victories: the re-election of President Barack Obama and the preservation of a Democratic majority in the Senate. Although the Affordable Care Act (ACA) is now safe from repeal, implementation still faces hurdles, such as state resistance, the fiscal cliff, and pending lawsuits challenging ACA’s contraception mandate.

Nonetheless, the administration has stormed ahead in recent weeks, issuing a torrent of regulations that will help determine operation of many key ACA provisions. These rules cover a bevy of health reform pieces, including:

  • Health insurance market reforms;
  • Employer wellness programs;
  • Essential health benefits and actuarial values;
  • Benefit and payment parameters; and
  • The Multi-State Plan Program.

Health Insurance Market Reforms

On November 20, the U.S. Department of Health and Human Services (HHS) proposed a rule that implements several ACA provisions aimed at protecting consumers from discrimination and other abuses when purchasing health insurance. The rule generally prohibits health insurance issuers from denying coverage to individuals with pre-existing conditions. Moreover, insurers would only be allowed to vary premiums based on age, tobacco use, family size, and geography. The proposed rule also requires health insurance issuers to have a single statewide risk pool for each of their individual and small employer markets unless the state merges the individual and small group pools. In addition, the rule provides for enrollment in catastrophic plans and amends the rate review program.

Employer Wellness Programs

HHS, in conjunction with the Labor and Treasury departments, also proposed rules implementing and expanding employer wellness programs. The rules would apply to both grandfathered and non-grandfathered group health plans and would be effective for plan years starting on or after January 1, 2014. The proposed rules continue to support workplace wellness programs, including participatory wellness programs, which are generally available regardless of an individual’s health status. The rules also amend standards for non-discriminatory health-contingent wellness programs, which usually require individuals to meet a health-related standard to obtain a reward.

Essential Health Benefits and Actuarial Values

In addition, HHS proposed a rule on November 20 outlining standards related to coverage of essential health benefits and determination of actuarial value. The rule implements ACA’s requirement that health plans offered in the individual and small group markets, both inside and outside of health insurance exchanges, offer essential health benefits, a core package of items and services in at least ten categories:

  • Ambulatory patient services;
  • Emergency services;
  • Hospitalization;
  • Maternity and newborn care;
  • Mental health and substance use disorder services;
  • Prescription drugs;
  • Rehabilitative and habilitative services and devices;
  • Laboratory services;
  • Preventive and wellness services and chronic disease management; and
  • Pediatric services.

The proposed rule also provides that starting in 2014, non-grandfathered health plans in the individual and small group markets must meet certain actuarial values, which are calculated as the percentage of total average costs for covered benefits that a plan will cover. Actuarial values correspond with certain metal levels: 60 percent for bronze plans, 70 percent for silver plans, 80 percent for gold plans, and 90 percent for platinum plans. HHS would allow a de minimis variation of 2 percent from these values.

Benefit and Payment Parameters

On November 30, HHS released a proposed rule addressing several issues, including parameters for the three new premium stabilization programs—the permanent risk adjustment program and the transitional reinsurance and risk corridor programs. These programs aim to more evenly spread financial risk by providing payments to health insurance issuers that cover higher-risk populations. The proposed rule expands on the framework outlined in the final rule on health insurance premium stabilization programs, with much of the regulatory text devoted to technical descriptions of calculation methodologies for these programs.

The proposed rule also addresses several other issues:

  • It provides more guidance on how the advance premium tax credit and cost-sharing reduction payment programs will operate.
  • The rule proposes a monthly federal exchange user fee. Under the proposed rule, this fee would be 3.5 percent of monthly premiums, but HHS may adjust this rate to align with rates charged by state-based exchanges.
  • It elucidates standards for the administration of Small Business Health Options Program (SHOP) exchanges.
  • Lastly, the proposed rule amends regulations regarding medical loss ratio calculation.

The Multi-State Plan Program

Also on November 30, the Office of Personnel Management (OPM) released a proposed rule describing establishment of ACA’s Multi-State Plan Program (MSPP), which aims to promote competition in the insurance marketplace and give consumers more high-quality, affordable insurance choices. Under the program, OPM will contract with at least two health insurers to offer multi-state plans (MSPs), which are to be available on exchanges in all states and the District of Columbia by the fourth year of the issuer’s participation in the MSPP. MSPP issuers must offer at least two MSPs—one gold-level and one silver-level—in each exchange. In addition to requirements for MSPP issuers and MSPs, the proposed rule also describes standards for coordination between OPM, HHS, and states to approve rates, standards for rating, medical loss ratios, and MSPP issuers’ participation in the premium stabilization programs.

A Shift in Scope

These recent regulations evidence a shift in the scope of ACA implementation—the administration appears to be moving away from the big-picture issues and towards more of the operational specifics that have yet to be ironed out. Stakeholders should stay abreast of these developments as implementation marches on.

EBG counsels clients on ACA implementation requirements and will continue to track developments in the area. For more information, contact the author at