On April 24, 2014, CMS flexed its regulatory muscle by issuing a notice allowing participants in the Pre-Existing Condition Insurance Program (PCIP) until June 30, 2014 to enroll in a qualified health plan offered through the Exchange, also known as the Health Insurance Marketplace. Introduced as part of the Patient Protection and Affordable Care Act (PPACA), PCIP was designed to provide health insurance for people with pre-existing conditions or who have been denied health insurance due to a health condition, and who have been without coverage for at least 6 months.
PCIP was slated to end in 2013 to coincide with the availability of coverage through the Exchanges and the requirement that most health plans eliminate pre-existing condition exclusions. PCIP coverage will now end April 30, 2014. Any participants who remain in the PCIP may contact their local Exchange prior to May 1, 2014 to begin the application for coverage. As long as the application is completed by June 30, 2014, PCIP participants enrolling in a qualified health plan through an Exchange will have coverage retroactive to May 1.
Under the Special Enrollment Period rules for the Exchanges, HHS has the regulatory power to issue guidelines allowing a special enrollment period outside of the Exchange annual enrollment period if the individual meets “exceptional circumstances” specified by HHS and the Exchange. This notice from CMS specifies the loss of PCIP coverage as a result of the program’s termination as an “exceptional circumstance” for PCIP participants.
CMS previously issued guidance on other exceptional circumstances, namely natural disasters, cases of domestic abuse, and certain system errors, that may warrant a special enrollment period. Click here to access this notice from March 26, 2014.
Why is this important? Now that Exchange annual enrollment has ended and the final migration of PCIP participants to the Exchanges has been set in motion, the waiting game begins. The combination of many of the market reforms, like guaranteed availability and guaranteed renewability, out-of-pocket limits, the elimination of pre-existing condition exclusions, and the prohibition of lifetime and annual limits on essential health benefits have led many industry stakeholders to frequent discussions on the topic of adverse selection.
In particular, discussions about the Exchanges and adverse selection leave industry stakeholders wondering what impact adverse selection might have on premium costs of qualified health plans offered through the Exchange in future years. Although PPACA contains measures to mitigate the impact of these requirements on rates and to shore up health insurers participating in the Exchange, the Exchanges are uncharted risk territory. Only time will show the true cost impact, and whether other measures designed to focus provider reimbursements on quality and efficiency in healthcare delivery will have any effect on decreasing the costs of healthcare.
