October 26, 2018




In This Issue
Fast Facts
Trump Administration Issues HRA Proposed Rule
State Spotlight: Trump Administration Grants Greater State Flexibility through Section 1332 Waivers
Healthcare Happy Hour: BAN’s Perry Braun Joins NAHU CEO Janet Trautwein for 2019 Industry Predictions
Trump Administration Seeks to Reduce Prescription Drug Prices to International Levels
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State Spotlight: Trump Administration Grants Greater State Flexibility through Section 1332 Waivers

This week, HHS and the Department of Treasury released new guidance on Section 1332 State Innovation waivers, now referred to as State Relief and Empowerment Waivers. The changes will override 2015 guidance by the Obama Administration and significantly alter the way CMS evaluates and approves Section 1332 waivers under the ACA. Several states had waivers approved by CMS this year, but the Trump Administration maintains that this new guidance will restore flexibility and encourage innovation originally intended by the ACA.

Through Section 1332 of the ACA, states may apply for waivers to alter key elements of the ACA (individual and employer mandates, essential health benefits, metal tiers of coverage, premium tax credits, etc.). However, these waivers are not without limits, as guardrails were established to limit the extent of changes a state can make. The purpose of the Section 1332 waivers is to allow states the opportunity to undertake innovative approaches to achieving the ACA’s main goals – as long as these plans provide coverage that is at least as comprehensive in covered benefits, coverage to at least a comparable number of residents in the state, coverage that is at least as affordable, and does not increase the federal deficit.

The new guidance focuses on these guardrails and relaxes the standards set by the 2015 guidance. The new guidance establishes a new “access” standard, as CMS will now no longer look to the actual coverage purchased under the waiver to ensure that a state is compliant with the guardrail that coverage is provided to at least a comparable number of residents in the state. Instead, the departments will now evaluate applications based on whether residents in the state have access to comprehensive and affordable coverage under the waiver, even if they do not enroll in the coverage.

Moreover, states will no longer need to ensure that coverage under their waivers qualify as minimum essential coverage under the ACA, as CMS will interpret coverage to be either minimum essential coverage or health insurance coverage as defined under 45 C.F.R. 144.103. As a result, the new guidance expands the definition of “coverage” to include short-term limited duration and association health plans. In regards to comprehensiveness of coverage, CMS will continue to look to the ACA’s essential health benefits (EHB) requirements. Under 2015 guidance, applications would be rejected if it reduced the number of people with minimum cost-sharing protections. However, the new guidance provides states with more leeway, as CMS may still approve a waiver application if it makes coverage much more affordable for some and only slightly more expensive for a larger number of individuals.

Any state seeking a waiver must demonstrate that it will be deficit-neutral to the federal government over 10 years. The new guidance eliminates a provision in the 2015 guidance that says any waiver request that increases the deficit in any given year may not meet the deficit neutrality guardrail. This suggests that a waiver could increase the federal deficit in any given year over that 10-year period, as long as the overall waiver does not increase the federal deficit. In addition, the new guidance will empower governors to authorize waivers in certain circumstances, as states are no longer required to adopt new legislation to authorize a specific 1332 waiver application. If there is an existing state law authorizing the enforcement of ACA provisions or to develop a 1332 waiver, then adding a state regulation or executive order may satisfy the requirement going forward.

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