HHS Proposed Rule Improves Transparency and Coverage of Marketplace Plans
On November 26, 2014 the Department of Health and Human Services (HHS) issued a Notice of Benefit and Payment Parameters for 2016 Proposed Rule (the Proposed Rule). 79 Fed. Reg. 70674 (November 26, 2014). The Proposed Rule is important because it proposes new regulations that, among other issues, will strengthen protections regarding coverage and transparency in Marketplace health insurance plans.
Encouragingly, the Proposed Rule is responsive to several of the changes advocates have been urging HHS to enact in order to ensure that ACA private health insurance plans work for people living with HIV and AIDS. While the Proposed Rule is lengthy and includes many potential changes, highlighted below are several of the most important proposed regulations relating to transparency and coverage.
Strengthened Regulations Around Drug Formularies:
HHS proposes to clarify that a health plan must publish an up-to-date, accurate, and complete list of all covered drugs on its formulary drug list, including any tiering structure and any restrictions on the manner in which a drug can be obtained, in a manner that is easily accessible to plan enrollees, prospective enrollees, the state, the Marketplace, HHS, OPM, and the general public.
Greater Transparency Around Rate Increases:
Insurers seeking rate increases of 10% or more in the individual or small group markets for their products are already required to publically disclose the proposed increases and justify the increases. However, each “product” can encompass many plans offered by the insurer at many metal levels across the Marketplace. Therefore, even if an insurer increases the rates of a particular plan by 10% or more, it may not trigger a disclosure requirement for that product. HHS proposes instead that rate increases in individual plans would trigger disclosure, increasing the likelihood that insurers will have to disclose rate increases.
Articulated New Standards for Prescription Drug Coverage:
HHS proposes to replace the drug count standard with a requirement that plans adopt a pharmacy and therapeutics (P&T) committee and use that committee to ensure that the plan’s formulary drug list covers a sufficient number and type of prescription drugs. Each P&T committee must ensure that an issuer’s formulary drug list covers a range of drugs across a broad distribution of therapeutic categories and classes and recommended drug treatment regimens that treat all disease states and does not substantially discourage enrollment by any group of enrollees. Issuers’ formularies must provide appropriate access to drugs that are included in broadly accepted treatment guidelines and which are indicative of and consistent with general best practice formularies in widespread use.
Alternatively, HHS proposes to replace the United States Pharmacopeia standard with the American Hospital Formulary Services, a widely used drug classification system with more nuanced categories. This change would go into effect in 2017.
Reiterated Anti-Discrimination Provisions:
Existing rules provide that an issuer does not provide essential health benefits if its benefit design, or the implementation of its benefit design, discriminates based on an individual’s health condition. In the Proposed Rule, HHS notes that it has become aware of benefit designs that we believe would discourage enrollment by individuals based on health condition, in effect making those plan designs discriminatory, thus violating this prohibition.
In particular, HHS is concerned with the needs of individuals living with serious and chronic conditions, such as HIV. HHS, in the Proposed Rule, cautioned issuers to avoid discouraging enrollment of individuals with chronic health needs citing the following examples as discriminatory practices:
- An issuer refusing to cover a single-tablet drug regimen or extended- release product that is customarily prescribed and is just as effective as a multi-tablet regimen; and
- An issuer placing most or all drugs that treat a specific condition on the highest cost tiers.
Prohibited Mail Order Pharmacy Restrictions:
HHS proposes to require issuers to provide most drugs at network retail pharmacies, instead of only through mail order. Issuers, however, would be allowed to charge different cost sharing if the enrollee obtains the prescription drug at a retail location. Additionally, HHS allowed that certain specialty medications may be exempt from this requirement.
Better Articulated Exceptions Process:
HHS proposes to require a standardized exception process for clinically appropriate drugs not on a plan’s formulary. The review must occur within a 72-hour period and, if granted, any cost sharing associated with the medication counts towards the beneficiary’s annual out of pocket maximum. HHS also proposes a second level of review by an independent review organization if the initial exception request is denied.
Comment Period Now Open
As a reminder, on November 26, 2014 HHS issued only the proposed rule, and not the final rule. This means that advocates and other stakeholders have an opportunity to send comments on the proposed regulations to HHS by December 22, 2014. Individuals and organizations should not hesitate to send in any concerns they have regarding these proposed changes.
Carmel Shachar is a staff attorney at The Harvard Law School's Center for Health Law and Policy Innovation.