We are delighted to welcome Sloane Daly as a Research Assistant.

Sloane Daly is joining as a Research Assistant at the Center on Health Insurance Reforms (CHIR) at Georgetown University’s McCourt School of Public Policy. Her research work at CHIR focuses on expanding access to high quality, affordable care. She has been a contributor to CHIR’s Improving Access to Mental Health and Substance Use Disorder Services project since May 2024 when she first joined the CHIR team as an intern. Prior to her work at Georgetown, Sloane contributed to health policy research efforts as a research assistant at Children’s National Hospital. As a student at the University of Virginia (UVA) she spearheaded the launch of a free STI testing program in partnership with UVA Student Health and Wellness which provided $100,000+ worth of free testing to students from 2022 to 2025.

Sloane received a BA in Leadership & Public Policy, and Sociology from the University of Virginia where she graduated with highest distinction.

The budget reconciliation bill signed into law on July 4 (“H.R. 1”) and a major new regulation finalized by the Centers for Medicare & Medicaid Services (CMS) include numerous changes to Affordable Care Act (ACA) health insurance Marketplace standards and operations. These changes, combined with the December 31, 2025 expiration of enhanced premium tax credits (ePTCs) collectively will make it harder for people to access, maintain, and afford health insurance coverage. Indeed, Marketplace enrollment is projected to shrink by up to 57%, and Marketplace insurers are proposing median increases of 18% for 2026 plan premiums.

H.R. 1 and the Marketplace rule’s required changes are slated to be phased in over time, with the first several changes scheduled to go into effect on August 25—unless two recent legal challenges can successfully block them. This post outlines what these changes are, their projected impact, and how federal court challenges could help derail the Trump Administration’s “death by a thousand cuts” strategy to reverse the coverage gains achieved under the ACA.

Major Marketplace Changes Slated for August 25, 2025

The Marketplace rule includes numerous changes, several of which go into effect on August 25.* Several others go into effect on January 1, 2026. These changes will strip away coverage for thousands of current enrollees, eliminate special enrollment opportunities, increase paperwork burdens, and throw up new barriers for people to get and maintain private health insurance. CMS itself estimates that collectively, the rule’s provisions will result in up to 1.8 million people losing their coverage. Provisions slated to go into effect this month include:

Terminating Coverage for DACA Recipients

Thousands of Deferred Action for Childhood Arrivals (“DACA”) recipients will soon receive notices that their Marketplace coverage is being terminated. In its final rule, CMS re-defined the term “lawfully present” to exclude DACA recipients, meaning that they would no longer be eligible for Marketplace and Basic Health Program (“BHP”) coverage, premium tax credits, and cost-sharing reductions. For DACA recipients, losing coverage mid-year will result in interrupted and canceled health care services, increased exposure to catastrophic medical bills, and greater uncompensated care costs for their providers.

Ending Enrollment Opportunities

The Marketplace final rule reverses a Biden-era policy that allowed low-income people (earning up to $23,475/year for an individual, $39,975/year for a family of 3) to enroll in Marketplace coverage year-round. Between 2022 and 2023, the low-income special enrollment period (SEP) allowed 1.3 million individuals to overcome bureaucratic challenges and enroll in health coverage. These challenges are particularly acute for lower-income individuals who may lack access to necessary documentation, face greater employment and household volatility, or reside in areas without sufficient enrollment assistance.

To justify ending this SEP for low-income people, CMS argued that it will reduce “adverse selection” by discouraging these individuals from waiting until they need medical care to enroll. CMS estimates that this change will result in premiums being 3 to 4 percent lower than if the SEP were allowed to remain in place. However, CMS largely ignored evidence provided by state-based Marketplaces that the risk profile of people enrolling through SEPs has been consistently “equal to or lower” than those who enroll during the annual open enrollment period (OEP). And indeed, in CHIR’s current review of insurers’ 2026 rate filings, the vast majority are proposing significant premium rate increases, with many pointing to the Marketplace Integrity rule as a factor driving rates up, not down. We have yet to find a single insurer suggesting that ending the low-income SEP will reduce adverse selection or have a material impact on premiums.

New Red Tape Requirements

Beginning August 25, the Marketplace rule will require many people applying for Marketplace coverage to manually submit documents to prove their eligibility. Further, CMS will now be giving people less time to provide that documentation, even as the burdens on Marketplace staff to review these documents skyrocket. The new red tape requirements will affect an estimated 3.3 million applicants, requiring these people, many of whom are low income, to track down and submit paperwork in order to purchase health insurance. Although this policy will only be in effect for a little over one year, CMS expects people will spend $80 million in unpaid time responding to paperwork requests, and state and federal Marketplaces will spend $263.7 million updating their IT systems and paying staff to review the documents. An estimated 481,000 people, most of whom are likely eligible, will have their premium tax credits reduced or denied. Those who are young and healthy are more likely to grow frustrated with the process and go uninsured, worsening the risk pool for insurers and raising premiums for those who remain enrolled.

New Flexibility for Insurers to Deny People Coverage

Under the ACA, insurers are required to provide coverage to anyone that lives within their service area and applies during an open or special enrollment period. The Marketplace regulation would give insurers a new tool to deny people coverage by allowing them to condition their enrollment on the repayment of outstanding premium debt for any prior coverage. This policy will have a disproportionate impact on low-income applicants. Further, it is likely to primarily deter young and healthy people from enrolling, resulting in an older, sicker Marketplace risk pool and higher premiums.

At the same time these new rules are going into effect, the Trump Administration has slashed funding for Marketplace Navigators by 90% and fired hundreds of CMS caseworkers who could have helped guide consumers through the new thicket of red tape.

Lawsuits Ask Courts to Halt Marketplace Changes

Led by the City of Columbus and joined by other U.S. cities, provider organizations, and small businesses, a challenge to the final rule was filed in the federal district court of Maryland. Their complaint alleges that the final Marketplace rule will reduce enrollment in health insurance and increase enrollees’ out-of-pocket costs. The city government and provider plaintiffs note that the resulting increase in un- and under-insured residents will increase their uncompensated care costs. The Main Street Alliance, an association of small business owners, joined the challenge because many of its members purchase coverage on the Marketplaces and object to the final rule’s impact on their premiums and cost-sharing.

In a second challenge, 21 states, led by California’s attorney general, have filed suit in the Massachusetts federal district court to block implementation of key provisions in the final Marketplace rule. The plaintiff states argue that the new rules will impose onerous burdens on enrollment, leading millions of people to lose their health insurance. The complaint also flags the significant unfunded costs imposed on states through new requirements on state-run Marketplaces and an increase in uncompensated care for local providers, as more people become uninsured. The plaintiff states have been joined by amici representing individual Marketplace enrollees, affected organizations, and local governments and public hospitals.

The plaintiffs in both cases are asking the judges for a preliminary injunction and stay. With the rule scheduled to go into effect on August 25, a decision from one or both judges could be imminent.

What’s Next

If the pending litigation succeeds, several provisions of the rule that are projected to reduce access to insurance coverage and increase premiums will be blocked, at least temporarily.** But the rule is just one part of a “death by a thousand paper cuts” strategy to repeal the ACA. If ePTCs are not extended, millions of Marketplace enrollees will receive notices in just a few weeks that their 2026 premiums are skyrocketing. Leading up to the open enrollment period, an estimated 300,000 lawfully present immigrants will learn that they’re losing their health insurance lifeline, and 100,000 additional enrollees could be cut off from premium tax credits for failing to meet a new tax filing deadline. Protecting consumers from the looming loss of coverage and higher out-of-pocket costs will require congressional action—and soon. 

*For a full summary of the Marketplace Integrity rule, see our article here.

**Neither lawsuit challenges the rule’s changes to the definition of “lawfully present” or the end of the low-income SEP. Regardless of the outcome of these cases, both of those provisions will go into effect as scheduled.

Increasing consolidation among hospitals, physician practices, and other health care entities is driving up health care prices. At the same time, growing corporatization of health care makes it increasingly hard to uncover which entities own or control a health care practice or other health care entity. As state policymakers grapple with high and rising commercial health care prices, they showed a growing interest during 2025 legislative sessions in leveraging ownership transparency as a tool to better understand their changing health care markets, strengthen oversight efforts, and inform consumers. 

Bills to increase the transparency of ownership and control of health care entities were introduced in at least eight states in 2025, and made it across the finish line in four of them. The increase in state policymakers’ interest and activity likely reflects several interrelated factors, including: 

• Growing concern about health care provider consolidation and mounting evidence of its negative impacts on health care prices and spending; 
• High-profile collapses of health care providers backed by private equity and growing concerns about the negative impact of private equity on health care access and quality;
• The recent update of a state model law to counter health care consolidation by the National Academy for State Health Policy, which includes an annual ownership reporting mechanism; and 
• The lack of meaningful progress to address these issues at the federal level, despite some interest. 

This blog post examines the role of state ownership transparency within broader reform efforts and reviews ownership transparency-related laws passed in 2025 in Massachusetts, Indiana, New Mexico, and Washington, as well as bills considered, but not enacted, in Maine, Minnesota, Texas, and Vermont. 

Role of ownership transparency

Who owns or controls a physician practice, hospital, and other providers—and their vested financial interests—can impact prices charged, services offered, quality, and access to care, yet it can be hard or impossible to know which entities own or control a health care practice or facility. A web of complex corporate structures among interrelated entities can obscure the ownership or controlling interests of individual practices or facilities, as well as overall trends in consolidation in health care markets. Existing data sources on ownership have gaps, and there is no complete, publicly available data source with ownership information for physician practices.

States generally collect some ownership information as part of state licensure of, for example, hospitals and health insurers. Some states go further, collecting additional information to leverage ownership transparency as a tool for monitoring and understanding their changing health care markets. Ownership transparency efforts, where they exist, generally require: (1) annual or periodic reporting, and/or (2) reporting triggered by proposed changes, such as mergers and acquisitions. These two structures serve different purposes and can be complementary: 

• Annual reporting enables an ownership registry that can provide information—some or much of it otherwise unknowable—to several types of users. It could, for example, allow an individual patient to learn whether their doctor’s office is owned or controlled by a hospital, an insurance conglomerate, Amazon, private equity, or other corporate entities. Annual reporting can also help reveal the degree of consolidation in health care markets today and the nature of relationships between entities. This can inform state policymakers, regulators, and researchers seeking to better understand their markets or limit anticompetitive practices. Massachusetts has the longest-standing model for this approach that requires a range of provider organizations to systematically report ownership and control information on a regular basis, which the state then makes publicly available.  
• Notices of proposed transactions alert states to impending or potential changes to ownership or control. They can provide information necessary for state certificate of need or pre-transaction review and oversight programs. Notices can be made public or kept confidential. Even in states that lack authority to administratively review or approve/reject proposed health care transactions, a broad requirement for health care entities to provide advance notice of transactions allows the state to track patterns of consolidation and fully leverage existing state antitrust authority. At least 35 states require hospitals, and in some cases, other health care entities, to provide notice of certain proposed transactions or changes.

Transparency alone cannot prevent harmful consolidation nor address anti-competitive behavior, as better calibrated tools can. But transparency provides insights into changing health care markets and can serve as a foundation for or complement to additional strategies to address consolidation and control the growth in commercial health care prices. 

Massachusetts extends ownership transparency to private equity and related entities

Massachusetts’ Registration of Provider Organizations (MA-RPO) program requires provider organizations that meet certain revenue and patient thresholds to annually file ownership, financial, and other information with relevant state agencies. In addition, large providers must submit a notice of material change 60 days before proposed changes, including mergers and acquisitions. This information informs the state’s market oversight and analysis functions, and Massachusetts publicly posts the provider registry data and material change notices to allow policymakers, researchers, and market participants to understand and improve the state’s health care system. 

The 2024 collapse of Steward Health Care, which stemmed in part from destabilizing private equity tactics, provided a stress test for these state programs and exposed a few blind spots. In response,  Massachusetts enacted a law in January 2025 that, among other provisions, closed loopholes that had effectively exempted many private equity and corporate investors from provider transparency and oversight requirements. The law extends MA-RPO reporting requirements to include new information related to private equity investors, real estate investment trusts, and management services organizations, and increases the penalties for failing to report information from $1,000 per week to $25,000 per week. The law also adds specific transactions– such as private equity taking ownership or control of a provider group and a significant transfer of assets, including the sale and subsequent lease-back of a health care provider’s real estate –to the state’s list of material changes that require an advance notice. 

Indiana enacts a broadly applicable ownership transparency law

Indiana enacted a slate of health care cost containment bills in 2025, including HB 1666, which requires a range of health care entities that operate in Indiana to report ownership information to the state on a regular basis. A similar bill failed to pass the year before. The law applies broadly to health care providers (though certain practitioner-owned practices are exempted) along with health insurers, health maintenance organizations (HMOs), third-party administrators (TPAs), and pharmacy benefit managers (PBMs). These entities must generally disclose the entities or people that hold an ownership or controlling interest or interest as a private equity partner to an applicable state agency. Hospitals, insurers, HMOs, TPAs, and PBMs must report annually and are subject to fines for noncompliance. Health care providers other than hospitals must report every other year and are not subject to fines. 

The Department of Health must compile the ownership information reported to various state agencies into an annual report and post it online. As filed, the bill would have made this ownership information publicly available, but as passed, it contains broad exclusions. The state may omit the name of a person or entity that holds an ownership stake in any health care entity, as well as ownership information that is not widely available to the general public. It remains to be seen whether the information released under this law could, for example, help a person understand which entity owns or controls their doctor’s practice. The Department of Health can, however, share ownership information with the Office of Attorney General, which is authorized under this law to investigate the market concentration of a health care entity at any time, in addition to its existing authority related to health care antitrust investigations.

New Mexico adds transparency strategies to its consolidation oversight 

In April, New Mexico enacted a law to extend and expand expiring state regulatory authority from the Health Care Consolidation Oversight Act passed the previous year. HB 586 authorizes state regulators to oversee proposed transactions, including a change in ownership or control of a hospital, a change in control of the real estate on which a hospital is located, and the acquisition of an independent provider practice by an insurer or its affiliates. The updated law adds transparency provisions that the prior version lacked. It requires the New Mexico Health Care Authority to publicly post notice of and take public comment on proposed transactions. The agency must also annually post hospital ownership on its website and provide updates when there are changes to a hospital’s ownership or the real estate on which it stands. HB 586 passed on the heels of the failure of a separate oversight bill that included more robust reporting on ownership and control of health care entities.  

Washington lays the groundwork for future ownership transparency

Washington enacted a law that lays the groundwork for future ownership transparency. The preamble of the new law explains that Washington is currently ill-equipped to monitor trends in its health care market, including significant consolidation among health care entities and a sharp increase in private equity acquisitions, and understand their impacts on health care access and affordability. 

The law directs the Department of Health, in consultation with other state agencies, to develop a plan for a “complete and interactive registry” that makes health care entity ownership and control transparent. The Department must specify which entities should report (including at least health systems, facilities, providers, insurers, and health care benefit managers) and what information should be collected. The law acknowledges the complexity in unearthing layers of often-obscured ownership or control and calls for strategies to understand direct and indirect ownership and control (and changes to them) by monitoring corporate structures, funding, and contractual relationships. The Department must submit a progress report to the legislature by the end of 2027 and a final report by late 2028. Lawmakers allocated $500,000 for the biennium to develop the plan. 

Maine, Minnesota, Texas, and Vermont show interest in ownership transparency

Lawmakers in Maine, Minnesota, Texas, and Vermont filed ownership transparency bills in 2025 that did not ultimately make it across the finish line. These bills would have required certain health care entities to report on their ownership both annually and after a material change, and information would have been made publicly available. The bills would have generally required health care entities to disclose the entities or individuals that hold an ownership, investment, or controlling interest in them, along with their significant equity investors and relationships with management services organizations. 

Looking Ahead

The states that passed ownership transparency bills thus far in 2025 demonstrate that progress is possible in states with starkly different political environments, though in some cases, only after a multi-session effort. Legislation considered in 2025 also shows that states are responding to the increasing corporatization of health care by tailoring transparency requirements to capture which corporate actors exert control over a health care entity’s operations or take possession of its real estate, even if they do not directly own the health care entity. Interest in ownership transparency may continue to grow as state policymakers seek tools to help inform consumers, control the growth in health care prices, and mitigate harms from consolidation in health care markets.

Early in his second term, President Trump issued an Executive Order instructing the Secretary of Health & Human Services (HHS) to “take all appropriate actions” to stop the provision of treatment for gender dysphoria to children. A separate Executive Order barred the use of federal funds to promote “gender ideology.” Shortly following these executive orders, HHS proposed, and then finalized, a regulation prohibiting health insurers from treating so-called “sex trait modification procedures” as an “essential health benefit” (EHB) under the Affordable Care Act (ACA). Although 21 states have filed suit to enjoin this provision and other parts of the regulation, this provision will, if allowed to go into effect, apply to benefits for plan year 2026.

The size of the transgender population is small (an estimated 0.5% to 1.5% of the U.S. population), and the cost of covering treatment for gender dysphoria is low. However, barring health plans from covering such treatment will expose individuals who need these services to significant out-of-pocket burdens. Transgender individuals, on average, have lower incomes than non-transgender individuals, making higher costs a greater barrier to getting the care they need.

In her latest expert perspective for the Robert Wood Johnson Foundation’s State Health & Value Strategies project, CHIR’s Sabrina Corlette describes the regulatory changes to EHB policy and discusses key considerations for state officials charged with implementing this policy. You can access the full article here.

By Billy Dering, Amy Killelea, and Christine Monahan

The recently enacted federal budget law is set to significantly roll back critical provisions of the Affordable Care Act (ACA) that have expanded health insurance coverage to millions. The law takes aim at health care programs that primarily serve low- and moderate- income Americans. As experts at CHIR have discussed, the law and complementary regulatory changes tighten eligibility rules and add new administrative barriers to enrolling in and maintaining Medicaid and Marketplace coverage. The Congressional Budget Office estimates that over 10 million people will lose health coverage due to the federal budget law. The law also fails to extend enhanced premium tax credits, which have made coverage significantly more affordable for Marketplace enrollees following the COVID-19 pandemic. An additional 4.2 million are projected to lose coverage if Congress decides not to extend enhanced premium tax credits. Congress could still extend the enhanced subsidies, but time is running out. 

The anticipated loss of coverage will make care less accessible and affordable for people across the country, particularly those with chronic conditions for whom access to health care is a matter of life and death. People with insulin-requiring diabetes are a prime example of a population who will be hit hardest by the upcoming changes. One such person from Illinois recently recounted what losing the enhanced health insurance premium support would mean for him as part of a Center on Budget and Policy Priorities project collecting enrollee stories from all over the country:

“I would have to consider switching to a cheaper plan which has a higher deductible which means that at the beginning of the year I’d have to pay my medications out of pocket which would be difficult of course. And maybe I would have to hold back on some of those medications, eat less, so take less insulin to treat my diabetes. And also it’s possible I’d have to switch to cheaper versions of my medications that don’t work as well.”

He will not be alone. People with insulin-requiring diabetes, a population of around 2 million in the United States, need regular access to insulin, glucose monitors, pumps, and many other items and services. They depend on health insurance to make that care accessible and affordable. For those that can’t get coverage through their employer, Medicaid and the ACA Marketplaces are a critical backstop. National survey data from 2019 revealed that adults aged 18-64 years living with diabetes (many but not all of whom use insulin) were significantly more likely to have Medicaid, Medicare, or other public coverage than those without diabetes. The data also show that individuals with diabetes purchase private health insurance through the ACA Marketplaces at a higher rate (10.6%) than people without diabetes (6.9%). For people with diabetes, the upcoming changes threaten their ability to secure comprehensive and affordable health insurance coverage, and expose them to dangerous disruptions in care and treatment and financial hardship.

As people with diabetes are affected by the loss of coverage caused by the new restrictive eligibility rules and the possible expiration of premium tax credits, they may face significant challenges finding affordable health insurance that will meet their needs. Unsubsidized premiums in the ACA Marketplaces can be very expensive, and are likely to become much more expensive as a result of the recent policy changes. Insurers expect the average health insurance participant will be sicker than in previous years. Those with chronic or complex conditions, including insulin-requiring diabetes, are more likely to endure the extra hurdles federal policymakers are imposing, while those who are healthier may drop out of the market. This will leave insurers with a smaller pool of enrollees that use, on average, more health care services, requiring them to increase premiums. And indeed, in the wake of federal policy changes, they are proposing to do just that: a preliminary analysis of Marketplace insurer filings found premiums increasing by a median of 15%, with some states seeing average rate increases above 20%. 

In the longer term, restrictions on Medicaid and Marketplace eligibility, increased paperwork to access and maintain coverage, and higher premiums and cost-sharing will mean individuals with insulin-requiring diabetes could face reduced coverage continuity and for many, the loss of coverage. As CHIR authors highlighted in a recent Health Affairs Forefront post, patients with insulin-requiring diabetes cannot afford gaps in their insurance coverage. Any coverage change requires considerable effort to assess what insulin, monitors, and pumps are covered, what copays they are responsible for, and what prior authorization a new plan will require, among other diabetes-specific considerations. Gaps in access to care can have serious, life threatening implications. Yet, just when patients and consumers will need help navigating the new red tape, CMS has cut the ACA Navigator program by almost 90%.

The federal budget law and related regulatory changes also imperil efforts of states across the political spectrum to increase affordability and accessibility of care for individuals with insulin-requiring diabetes through insurance reforms. States across the country with political environments as different as Utah and Illinois have implemented coverage requirements, limits on cost sharing, and prior authorization reforms that affect cost and availability of diabetes services. Even as more states introduce and enact reforms to follow in their footsteps, the disruptions under the new federal budget law could very well limit their progress as attention and funding turns to responding to coverage churning, reductions in individual market enrollment, and skyrocketing premiums. 

The looming changes to Medicaid and the ACA Marketplaces as a result of federal legislative and regulatory actions represent a disproportionate threat to Americans with insulin-requiring diabetes who rely on affordable health insurance to manage their conditions. With the expiration of enhanced premium tax credits, new restrictions on insurance eligibility and enrollment, and increases in red tape, these people will face ever greater barriers to accessing needed items and services.

By Madeline McBride, Liz Bielic, Zeynep Celik, JoAnn Volk and Kevin Lucia 

As discussed in a recent CHIRblog, coverage of adult dental services as an essential health benefit (EHB) was initially prohibited by the Affordable Care Act.  The 2025 Notice of Benefit and Payment Parameters changed federal rules and gave states the flexibility to require adult dental coverage beginning in plan year 2027. The deadline for states to submit proposed EHB benchmark updates to the Centers for Medicare & Medicaid Services (CMS) to take effect at the start of 2027 passed last month. This was the first update deadline since states were granted the adult dental coverage flexibility. 

Kentucky’s EHB Benchmark Update

In February, Kentucky’s Department of Insurance (DOI) announced its proposed EHB benchmark update and invited public comment. Kentucky’s initial proposal would have expanded coverage for five benefits, including coverage of Class I routine adult dental services. Routine services would have included oral exams, preventative care such as dental cleanings, fluoride treatments, x-rays, space maintainers, and emergency treatment.  

Ahead of the May 7 CMS submission deadline, the state published its finalized proposal. The final actuarial report and supporting documents indicate that the state moved forward with four of the expanded benefits in the EBH benchmark update but excluded routine adult dental coverage. If approved, Kentucky’s final proposal would eliminate the existing visit limit for speech therapy service, require coverage of biomarker testing and medically necessary infertility treatment, and expand coverage of recommended cancer screenings. Recently enacted state law required coverage of biomarker testing and infertility treatment and directed the DOI to consider removing visit limits for speech therapy and expanding coverage of cancer screenings as part of the state’s EHB benchmark plan.  However, in releasing the proposed EHB benchmark plan changes for public comment, the DOI said coverage of adult dental services was included because of new flexibility given states to require such coverage as an EHB. 

Why KY Did Not Move Forward With Adult Dental Services As An EHB

Public comments regarding Kentucky’s proposed EHB benchmark update have not been published, and the DOI has not publicly shared an explanation for the decision to remove adult dental coverage in the final EHB benchmark submission, but cost may have been a consideration. The initial actuarial report conducted by Lewis & Ellis found that the addition of routine adult dental benefits would increase the expected value of the benchmark plan by the equivalent of $20 per member per month. The expected value was lower in the final report, equivalent to $15.38 per member per month. This additional cost of coverage fell within the state’s EHB benchmark plan generosity range allowed by federal rules, but would likely translate to higher premiums. Increased premiums resulting from the inclusion of adult dental services as an EHB would have been offset by premium tax credits in the individual market, but this would not be the case for small group plans. 

Increased premiums may have been a primary driver of Kentucky’s decision not to take up the new flexibility to include adult dental services as an EHB, but costs are not the only challenge that KY and other states might face. Federal rules require that, if adopted, adult dental coverage be embedded into qualified health plans. This will have implications for the companies that offer stand-alone dental plans. It also requires QHP insurers to develop networks of dental providers, which they may not currently have.  

Looking Forward

To date, no state has opted to require coverage of routine adult dental services as an EHB for 2027, and recent and pending federal law changes that will raise premiums for most Marketplace enrollees may dampen state interest in expanding coverage for the foreseeable future. But oral health is increasingly recognized for its connection to overall health outcomes, and states may one day return to considering ways to improve access to and affordability of adult dental care.

On July 4, 2025, President Trump signed into law some of the most dramatic changes to our healthcare system since the Affordable Care Act (ACA) was enacted in 2010. The new law includes over $1 trillion in cuts to the social safety net and reverses a decade in coverage gains. But you don’t need to take our word for that: In this June-July Research Roundup, we provide a survey of key economic and actuarial publications projecting the impact of H.R. 1’s Marketplace provisions and the U.S. Health & Human Services Department’s proposed rule for Marketplaces, combined with the expiration of enhanced premium tax credits (EPTCs), on health insurance coverage rates, premium affordability, and uncompensated care costs. 

Projected Changes in Health Insurance Coverage

The Congressional Budget Office (CBO) published a completed score of H.R. 1 on July 21st. They project that 10 million people will lose health insurance under the bill within the 10-year budget window. In addition, Congress’ budget scorers expect that 4.2 million people will become uninsured because of the expiration of EPTCs. 

Separately, the Trump administration finalized changes to eligibility, enrollment, and health plan standards for the ACA Marketplaces. The Centers for Medicare & Medicaid Services (CMS) estimates that up to 1.8 million people will lose their health insurance because of those changes.

Other studies have also evaluated the coverage impacts of recent policy changes:

• Urban Institute found that nongroup and basic health plan (BHP) coverage will decline by 5.2 million people in 2026 alone due to the House-passed version of H.R. 1.
• A Wakely analysis found that the House-passed version of H.R.1 combined with the expiration of EPTCs could reduce current enrollment by up to 13.6 million individual market enrollees. 
• Among the people losing eligibility for coverage and financial assistance through ACA Marketplaces are those unable to navigate the newly complex red tape.
  • A Brookings analysis concludes that the added administrative burdens will particularly impact people getting married or divorced, people who have lost their jobs, and people with variable income.

Projected Changes in Health Insurance Costs

• The expiration of EPTCs is expected to significantly increase premium costs for ACA Marketplace enrollees, with KFF predicting average increases of about 75% for previously subsidized enrollees, and 90% average increases for people living in rural areas.
• The Wakely analysis found that the combined effects of House-passed H.R. 1 and the expiration of EPTCs could increase market average premiums up to 11.5%.
• A CAP analysis found that the House-passed version of H.R. 1 would have prompted net premiums to skyrocket for most Marketplace enrollees. For example, the study finds that a 60-year-old couple making $85,000 per year would see their annual premium costs skyrocket by $15,400, from about $6,900 to about $22,300.
• Young adults will be particularly hard hit by the recent policy changes. Another CAP analysis finds for example that a single 28-year-old earning $39,000 per year will see their premiums for a silver plan nearly double, while someone with a higher income, making $63,000, would see a 12% premium decrease.
• The House-passed version of H.R. 1 would have eliminated “silver loading,” raising premiums and out-of-pocket costs for millions of Marketplace enrollees who are currently enrolled in bronze or silver-level plans. Without silver loading, for example, a married, 60-year-old couple earning $62,000 a year with a gold plan would see their monthly premiums rise by $350, according to a Brookings analysis. While the provision was not included in the bill that was passed, the issue could resurface later this year, either through legislative or regulatory action.

Projected Changes in Uncompensated Care Costs

Previous research has consistently shown a strong link between higher uninsurance rates and increased levels of uncompensated care. Given the substantial rise in uninsurance projected under this bill, a corresponding increase in uncompensated care is highly likely.

• Urban Institute found that, attributable to the expiration of EPTCs and the House-passed reconciliation bill, there would be a decrease in healthcare spending from all payers between 2025-2034 of $1.03 trillion:
  • $408 billion decline in hospital payments
  • $118 billion decline in physician payments
  • $234 billion decline in prescription drug payments
  • and a $272 billion decline in payments for other services
• Urban Institute also found that, attributable to the expiration of EPTCs and the House-passed reconciliation bill, there would be a $278 billion increase in uncompensated care sought by uninsured people between 2025-2034:
  • $83 billion in uncompensated hospital services
  • $34 billion in uncompensated physician services
  • $54 billion in uncompensated prescription drug costs
  • and $107 billion in uncompensated other services
• Hospitals—particularly those in rural areas that serve a high proportion of low-income patients or have limited commercial insurance revenue—already experience elevated levels of uncompensated care. The policies in this bill further strain their financial stability, increasing the risk of service reductions, higher operating costs, or, in some cases, permanent closure. CAP estimates how each state could be affected.

An analysis from the Sheps Center found that hundreds of rural hospitals would be put at risk by H.R. 1. Based on an analysis model relying on hospital financial performance, organizational traits, and market performance, this study found that 83 rural hospitals are at the “highest relative risk of financial distress.”

The Georgetown University Center on Health Insurance Reforms (CHIR) and Center for Children and Families (CCF) teamed up to publish an explainer on the Medicaid, CHIP, and Marketplace provisions included in the Congressional Republican budget reconciliation bill that was signed into law on July 4.

The budget reconciliation law includes numerous provisions impacting health coverage. It makes deep and damaging cuts that will wreak havoc on state budgets, stress health systems and likely lead to 15 million more uninsured people.

Report authors Sabrina Corlette (CHIR) and Edwin Park (CCF) will explain the new law and answer your questions during a webinar on Monday at 1:30 ET. Register here.

The webinar is free and open to the press.

On May 22, 2025, the Departments of Health and Human Services, Labor, and the Treasury (the “tri-agencies”) issued a press release announcing several actions to enhance health care price transparency, including two new guidance documents and two requests for information (RFIs). Through these steps, the tri-agencies “aim to curb rising health care costs, promote competition, and empower patients.” For the most part, these actions, which will roll out over several months and perhaps years, mark the start of a process to make hospital and health plan price transparency data more accessible and useful.

The actions were in response to an earlier executive order from President Trump, discussed in a previous article. That order did not directly make changes; rather, it instructed the tri-agencies to further implement and enforce existing federal hospital and health plan price transparency rules and to issue further guidance by May 26, 2025.

The original rules, established during the first Trump administration and strengthened under the Biden administration, aim to spur competition and drive down costs by arming consumers, employers, researchers, and policymakers with long-hidden health care prices. Although hospitals and health plans are posting a massive amount of health care price data in response to these rules, actionable information on prices is not readily and widely available, partly due to ongoing issues with the accessibility and quality of the data.

Background On Price Transparency Rules

The first Trump administration established federal rules authorized by the Affordable Care Act that require hospitals and health plans to post their prices, including previously proprietary rates negotiated between payers and providers. They must post prices in two different formats: 1) a consumer-friendly format meant to help patients see costs upfront and shop for care, and 2) machine-readable files (MRFs). While not intended to be directly accessed by consumers, MRFs are nonetheless meant to benefit the public. The health plan price transparency rule, for example, envisions that MRFs would be accessed by users such as researchers, policymakers, state and federal regulators, employers, and app developers, who would leverage the data to deliver “more targeted oversight, better regulations, market reforms to ensure healthy competition, improved benefit designs, and more consumer-friendly price negotiations.”

Hospital Price Transparency Implementation

The Hospital Price Transparency rules took effect in January 2021. They require hospitals to post “standard charges,” including payer-specific negotiated rates, gross charges, discounted cash prices, and minimum and maximum negotiated rates for each item or service provided.

The Centers for Medicare and Medicaid Services (CMS) updated rules in subsequent years to require hospitals to post price data in a more uniform way, include additional context on price data, and make online price files easy to find. CMS also stepped up enforcement actions and increased the maximum civil monetary penalty for non-compliance, which was associated with improved compliance by hospitals. CMS has assessed penalties on 27 hospitals to date.

Despite these steps, recent reports show that data quality and hospital compliance remain ongoing issues. A 2024 report by the Department of Health and Human Services Office of Inspector General estimated that 46 percent of hospitals were not fully compliant with the rules based on its audit of a sample of hospitals. Furthermore, a 2024 Government Accountability Office report found that hospital data quality issues have prevented large-scale, systematic use of the data.

Transparency In Coverage Implementation

The Transparency in Coverage (TiC) rules, which apply to health insurers and group health plans, took effect in July 2022. They require health plans to post three separate MRFs each month that contain: 1) in-network negotiated rates for all covered items and services, 2) out-of-network allowed amounts and billed charges for all covered items and services, and 3) negotiated rates and historical net prices for covered prescription drugs.

The tri-agencies have not yet implemented the prescription drug MRF requirement from the TiC rules. They deferred enforcement of this provision in August 2021 and, two years later, rescinded that approach, but they have not yet released the final technical specifications needed for prescription drug pricing MRFs.

Health plans appear to have complied more readily with MRF requirements than hospitals, though oversight is challenging, and compliance remains inconsistent. The tri-agencies have not, to date, announced plans to assess health plan compliance nor taken any enforcement actions.

Researchers and other stakeholders have identified a long list of issues that make data in TiC MRFs hard to access, analyze, and draw meaningful conclusions from. For example, the massive size and complexity of the files prevent most entities from accessing the data outside of commercial data vendors that have the costly and specialized infrastructure that is required. Accordingly, while the best-resourced stakeholders can buy data extracts and insights, actionable information from the data isn’t widely available to consumers, employers, regulators, and policymakers.

Updates Announced For Hospital Price Transparency

In May, CMS announced two actions to improve hospital price transparency MRFs: 1) updated guidance to hospitals on posting prices in dollar amounts, and 2) an RFI on improving compliance with hospital price transparency requirements.

The updated guidance reinforces CMS’s expectation that hospitals disclose negotiated rates as dollar amounts. CMS acknowledged in this and previous guidance that there are circumstances in which hospitals cannot readily derive a prospective dollar-value price. For example, when a negotiated rate is set as a percentage of a fee schedule that the hospital does not have access to, or when the rate is determined by an algorithm that yields variable dollar amounts rather than a simple or static dollar value. To convey context in dollars and cents in these circumstances, CMS introduced a new data element, the “estimated allowed amount,” starting in 2025 to capture the average historical amount received for a service from a specific payer.

Prior guidance recommended that hospitals use the code “999999999” when needed to indicate that the hospital lacks sufficient historical data to calculate an estimated allowed amount. CMS believes that hospitals have used this code more frequently than is necessary. For example, CMS notes that, in a sample of 68 MRFs from large hospitals, 38 percent used “999999999” for more than 90 percent of estimated allowed amount values. To produce more meaningful and comparable hospital price transparency data, CMS is discontinuing the use of the “999999999” code and providing additional guidance on how to calculate estimated allowed amounts in special circumstances, such as when there are few or no claims for a service within the prior 12 months.

CMS also issued an RFI soliciting input on ways the agency can improve hospital compliance and price transparency enforcement to ensure that data are accurate and complete. CMS is encouraging input from the range of stakeholders who utilize the hospital price transparency MRFs, including hospitals, innovators, employers, researchers, and consumers. CMS will accept responses through July 21, 2025, and will use the information collected to inform the development of future policies and processes.

Updates Announced For Health Plan Price Transparency

In May, the tri-agencies also announced two actions to implement and improve health plan price transparency MRFs: 1) an RFI on improving prescription drug price transparency, and 2) guidance on a future update to the technical specifications for TiC data.

The tri-agencies released an RFI to get input on implementing the prescription drug MRF requirements under the TiC rules. They are seeking information on data elements, for example, whether and how to capture pricing information for different dosage units, and on the required format and related state approaches. Comments will be due 30 days after the RFI is posted in the Federal Register. The agencies intend to use the information collected to inform future rulemaking or guidance, including, presumably, the final technical specifications needed to implement the long-delayed prescription drug MRF. 

The tri-agencies also released new guidance in the form of a frequently asked questions (FAQs) that lays out the process and timeline for creating an updated second version of the technical specifications payers use when publishing data in their in-network and out-of-network MRFs. The tri-agencies will repeat the same collaborative and iterative process used to develop the first version through their existing online platform. The tri-agencies aim to finalize the updates by October 1, 2025, and require plans and issuers to publish MRFs using the new specifications as of February 2, 2026.

The FAQs explain that the goal of updating TiC technical specifications is to address issues with accessibility due to large file sizes, data integrity, and a lack of information needed for users to contextualize the data. The tri-agencies anticipate that future updates to technical specifications will, at a minimum, include changes to file structures and data elements to reduce data redundancy and add reporting of provider network information. The tri-agencies also flagged that they may undertake future rulemaking to further improve TiC MRF requirements.

Many, but not all, of the issues that limit access to and use of TiC data could be mitigated through updates to the TiC technical specifications. Massive TiC file sizes, which render MRFs inaccessible for most would-be users, are a common complaint, and data redundancy is one contributing factor that unnecessarily inflates file sizes. For example, an analysis published in a Forefront article by Yang Wang and collaborators found that almost half of TiC price files posted by six major insurers were duplicates. Other common complaints about TiC data—such as substantial irrelevant data (referred to as “ghost rates” or “zombie rates”) and reporting of multiple, conflicting prices—are not explicitly mentioned as targets in the FAQs. Time will tell if they are addressed as part of this effort. 

Looking Ahead

For the most part, the recent tri-agency announcements mark the start of a process to collect input and update price transparency guidance that will unfold over several months and possibly years. Taken together, the actions provide a high-level roadmap of where the second Trump administration will focus its initial price transparency efforts: on improving access to and the utility of TiC data, implementing prescription drug price transparency requirements, and improving hospital compliance and accuracy. This roadmap focuses on improvements to just machine-readable files and not to the consumer-facing pieces of price transparency rules, and it notably lacks any mention of assessing health plan compliance with MRF requirements. But the actions announced otherwise broadly touch on many of the known issues with the implementation of MRF requirements and could ultimately make meaningful and actionable price information more readily available to consumers, employers, regulators, policymakers, and other stakeholders.

Stacey Pogue “Federal Officials Announce Steps To Strengthen Health Care Price Transparency” June 4, 2025, https://www.healthaffairs.org/content/forefront/federal-officials-announce-steps-strengthen-health-care-price-transparency. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

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We are delighted to welcome two new faculty members: Madison Harden and Abigail Knapp

Madison Harden, J.D.

Madison Harden, J.D., is joining CHIR as an Assistant Research Professor and will focus on affordability and coverage for behavioral health services along with state level policies regulating private health insurance.

Prior to joining CHIR, Madison worked on state-level health policy in Maryland, focusing on balance billing, network adequacy, and other behavioral health care accessibility legislation. She supported these efforts during her internship at the Legal Action Center and as a student attorney with the University of Maryland’s Public Health Law Clinic. Madison also completed internships with Legal Services of Northern Virginia and Disability Rights Maryland. She currently volunteers as the Program Director of The Purple Tutu VA, a non-profit program which provides free ballet classes for children with Down syndrome. 

Madison earned her B.A. in English Literature from New York University and her J.D. from the University of Maryland School of Law. 

Abigail Knapp, M.P.H.

Abigail Knapp is joining CHIR as a Research Fellow. Her research will focus on health insurance access, affordability, and health care cost containment. 

Before joining CHIR, Abigail worked at Children’s National Hospital as an intern on the Community Mental Health CORE team. At Children’s National, she analyzed federal, state, and District policies related to behavioral health parity and network adequacy, and tracked ongoing legislative and regulatory developments impacting pediatric and perinatal mental health. She also completed internships with the Office of National Drug Control Policy, Reservoir Communications Group, and the Dearborn Department of Public Health. During her time at George Washington University, she was also a Field Interviewer for the CDC National HIV Behavioral Surveillance (NHBS) study.

Abigail received a B.S. in Public Health Sciences from the University of Michigan, and a Master of Public Health in Health Policy from the George Washington University Milken Institute School of Public Health.

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By Kennah Watts and Jack Hoadley

The No Surprises Act (NSA) bans providers and facilities from sending consumers balance bills for certain services and thus protects consumers from surprise out-of-network (OON) bills in certain scenarios. When an OON provider and a payer cannot agree on a payment amount, the parties may enter into the independent dispute resolution (IDR) process. When this happens, both parties submit a payment amount and rationale, then a third-party arbitrator (IDR entity) selects and binds both parties to one offer. The IDR entities are required to “determine an appropriate payment amount” and have come to play an instrumental role in OON payments.

The Centers for Medicare and Medicaid Services (CMS) regularly release public use files (PUFs) on cases resolved through the IDR process. These files shed light on dispute outcomes and the prevailing party payment amounts. The PUFs allow researchers to examine trends in IDR use and to assess the effectiveness of NSA implementation. Previous analysis has shown unexpectedly high use of the IDR process, mostly by a small set of private-equity-backed provider organizations, with providers winning the vast majority of cases and winning large awards. This article builds on our previous analysis to discuss IDR entities’ role in the IDR process and outcomes. While IDR entities are not identified in the PUFs, we developed a method to identify the IDR entities, and we report here on their dispute volumes, determinations in favor of providers, and days to determination. As relevant, we also include observations from semi-structured conversations with stakeholders involved in the IDR process.

Background

After dispute initiation, the parties must select an IDR entity within three business days. Both parties have the opportunity to suggest or veto IDR entities. If there is no agreement, the Departments randomly select an IDR entity. In 2022, CMS certified 13 organizations to serve as IDR entities. As established in the NSA and described by CMS, to be certified, entities must demonstrate expertise in arbitration and claims administration; managed care; billing and coding; and health care law. While some entities vary in services offered, and most existed prior to the NSA, some work exclusively in IDR arbitration.

There are two fees assessed to the parties on a claim: an IDR entity fee and an administrative fee. The administrative fee is $115 per dispute (originally set by CMS guidance at $50 but then raised in 2024 through a final rule). Each IDR entity must select an IDR entity fee amount within CMS’s current predetermined upper and lower payment range: from $200 to $840 for single claims and $268 to $1,173 for batched determinations. These fees can and have changed, as shown in the 2023 and 2022 lists of IDR entity’s fees for single and batched disputes.

Both parties must pay the IDR entity fee up front. If the IDR entity determines the case is eligible and reaches a resolution, the entity must refund the prevailing party’s fee. The entity retains the non-prevailing party fee as compensation, and IDR entities are only paid for eligible cases. Both parties must pay the non-refundable administrative fee, remitted to the Departments. If either party does not pay, the other party prevails by default.

The IDR entity arbitrates the dispute and must consider the qualifying payment amount (QPA), among other factors designated in the law, and any additional non-prohibited information submitted by both parties. Given the intent of the bipartisan congressional NSA sponsors to have OON billing disputes adjudicated fairly and impartially, one might expect determinations to be evenly split between payers and providers, but data from 18 months of disputes indicates otherwise. In 2023, providers prevailed in 81 percent of disputes, and in the first half of 2024, providers won 85 percent. This significant skew raises questions of whether the patterns vary across the IDR entities.

Methodology

Since IDR entities are not identified in the PUF, we used two variables to reasonably infer which entity determined which dispute: “IDR Entity Compensation” and “Length of Time to Make Determination.” This methodology relies on several assumptions; as such, the results should be considered estimates rather than definitive analysis. We aimed to draw reasonable patterns across entities and disputes to demonstrate broad trends in determinations.

The variable “IDR Entity Compensation” is defined as the “dollar amount representing the compensation for the certified IDR entity for the dispute.” This field thus corresponds with the publicly listed fixed and batched payment amounts for each IDR entity. We limited our analysis to single determination disputes to pair the listed fixed fee amount with the compensation and identify the individual IDR entity. Isolating analysis to single cases does limit the scope of analysis: single disputes account for approximately 60 percent of resolved disputes. All results and exhibits exclude the other 40 percent of disputes that were part of batched cases.

Furthermore, while this method is accurate, it is incomplete, as multiple IDR entities may have the same fixed fee, so we cannot identify them separately. In these instances, we did not assign the case to an entity as we could not accurately distinguish the entities. For example, both Federal Hearings and Appeals Services and MCMC Services, LLC have a 2024 single determination fixed fee of $395, so we could not correlate the reported compensation of $395 to a specific entity.

We used the “Length of Time to Make Determination” variable to infer the year when the case was initiated and thus when the IDR entity fee was paid. For example, for disputes from Q1 of 2024 with times to determination greater than 410 days, we estimate the dispute was initiated in 2022. We conducted this calculation to pair all disputes with the corresponding IDR entity fixed fee amount for that year. We display the resolved cases based on the year they were initiated (12,007 total cases for 2022; 227,706 for 2023; 137,450 for 2024).

With these variables and applied methodologies, we identified IDR entities for 89 percent of single-determination cases initiated in 2022, 60 percent in 2023, and 42 percent in 2024. Given that these limitations also hinder volume-based analysis, it is difficult to assess how the analysis may be skewed as a result. As relevant, we pair our quantitative findings with observations from semi-structured conversations with several top plans, providers, and third-party intermediaries involved in the IDR process.

IDR Entities Varied Widely In How Often They Ruled In Favor Of Providers

Four IDR entities favored providers in more than 90 percent of cases resolved in the first half of 2024, while one IDR entity favored providers in only one-third of cases. For one IDR entity in one year, the share of disputes ruled in favor of providers was as high as 99 percent. Conversely, the lowest share across years and IDR entities was 19 percent, an 80 percentage-point difference. The full distribution of determinations by IDR entity are shown in Exhibit 1 below.

Exhibit 1. Share of Identified Single-Determination Disputes Decided in Favor of Providers by IDR Entity, 2022 – Q2 2024

Source: Author’s analysis of Federal IDR PUFs, Reporting Year 2022, 2023, and Q1-Q2 2024.

Note: Each IDR entity was assigned a number 1 to 13, as shown on the x-axis. Missing data for certain years indicates when the IDR entity did not have a unique payment amount and thus could not be individually identified. Graph only includes data from single determinations and does not include batched determinations.

Case Volume Varied Across Entities And Is Correlated To Outcomes

Volume also varied across IDR entities (Exhibit 2). For resolved single-determination cases estimated to be initiated in 2022, three IDR entities arbitrated nearly three-fourths of all disputes. The share of disputes is more evenly distributed among the IDR entities that could be identified in the first quarter of 2024, with six IDR entities each deciding 3 to 5 percent of cases initiated in that quarter and the two highest volume IDR entities deciding 7 percent and 9 percent of analyzed disputes.

Exhibit 2. Share of Identified Single-Determination Cases by IDR Entity, 2022 – Q2 2024

Source: Author’s analysis of Federal IDR PUFs, Reporting Year 2022, 2023, and Q1-Q2 2024.

Note: Each IDR entity was assigned a number 1 to 13, as shown on the x-axis. Missing data for certain years indicates when the IDR entity did not have a unique payment amount and thus could not be individually identified. Graph only includes data from single-determination cases and does not include batched determinations.

The share of cases appears correlated with determination outcomes: the IDR entities that rule in favor of providers tend to have higher case volumes. For example, the top IDR entity for resolved cases initiated in Q1-Q2 of 2024 decided more than 90 percent of cases in favor of providers. The lowest volume IDR entity had less than 1 percent of all disputes and determined only one-third in favor of providers. In our discussions with stakeholders, we heard that plans and providers may purposefully select or veto particular IDR entities, likely informed by internal data on decision trends. This veto strategy could explain how the IDR entities that most often ruled against providers ruled on so few cases. Overall decision-making patterns should ideally be similar across all IDR entities, so it will be important to understand why variations exist.

Lags In Days To Determination Have Declined; Average Times Varied By Entity

Differences are also apparent in IDR entities’ time to determination (Exhibit 3). In 2022, IDR entities decided single-determination cases within 131 days on average. Days to determination varied across the highest-volume IDR entities from 79 to 195 days. In 2024, while the overall average dropped to 54 days, the highest-volume IDR entities averaged 51 and 80 days. Only one IDR entity had an average (31 days) close to the statutory time to determination of 30 days. Volume does not appear correlated to time to determination, nor does it appear correlated to the IDR entities’ arbitration outcomes.

Exhibit 3. Average Days to Determination of Identified Single-Determination Cases by IDR Entity, 2022 – Q2 2024

Source: Author’s analysis of Federal IDR PUFs, Reporting Year 2022, 2023, and Q1-Q2 2024.

Note: Each IDR entity was assigned a number 1 to 13, as shown on the x-axis. Missing data for certain years indicates when the IDR entity did not have a unique payment amount and thus could not be individually identified. Graph only includes data from single determinations and does not include batched determinations.

Variability Across IDR Entities Underscores A Need For Greater Transparency

Our analysis indicates that IDR entities vary significantly in their decision-making practices despite expectations that decisions would be consistent across entities. Our stakeholder discussions suggest that parties may strategically veto particular IDR entities. Our analysis sheds some light on variations already known to provider and payer stakeholders engaging in IDR. More transparency in the PUFs would improve our understanding of the IDR process.

Similarly, the rationale behind payment determinations remains unclear due to limited transparency into how IDR entities evaluate submissions. While IDR entities must disclose certain information to CMS on each determination, such as the amounts of both parties’ offers and the final determination amount, they are not required by statute to disclose the rationale for their decisions (though the statute does allow the Secretary to require additional reporting). In our stakeholder discussions, both sides said that IDR entities’ reports on their determination decisions include minimal justification or rationale, limited to vague checkmarks and boilerplate language. Without public reporting, a standardized rubric, or an auditing mechanism, observers can only speculate on the basis for payment determinations. Stakeholders raised concerns about the credibility of submitted information, inconsistent sharing of case materials, and lack of transparency on how historical payments or rationales submitted by the parties brief may influence decisions. Greater transparency, either through legislative mandates or regulatory guidance, could address these concerns. 

The pace of IDR entity decision making may also warrant greater oversight by CMS. As our analyses show, the rate of filed cases continues to accelerate rapidly. The volume of ineligible cases continues to be high as well, raising concerns that ineligible cases are contributing to system inefficiency. Given that IDR entities determine case eligibility and are only paid for eligible cases, some stakeholders suggest that IDR entities are incentivized to determine ineligible cases as eligible. The IDR system needs a more effective means of screening out ineligible claims, but IDR entities may not be ideally positioned for this task. Proposed rules that are pending at the federal agencies should help address delays in eligibility determinations, but would not resolve incentives for IDR entities to determine eligibility.

As the volume of cases entering the IDR process continues to climb, IDR entities’ processes and determinations will continue to be examined and scrutinized. Better education, training, and oversight of IDR entities and their decision-making might help reduce some of the uncertainties in the current process and boost confidence for both the contesting parties and the wider community interested in the impact on costs and premiums that the amounts paid are as fair as possible.

Kennah Watts and Jack Hoadley “No Surprises Act Arbitrators Vary Significantly In Their Decision Making Patterns” June 24, 2025, https://www-healthaffairs-org.proxy.library.georgetown.edu/content/forefront/no-surprises-act-arbitrators-vary-significantly-their-decision-making-patterns. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By Sabrina Corlette and Tara Straw*

The Centers for Medicare & Medicaid Services (CMS) has finalized a set of policy and operational changes relating to the Affordable Care Act (ACA) and health insurance Marketplaces. The administration’s goals for these regulations are to change Marketplace eligibility and enrollment systems to prevent “waste, fraud and abuse,” reduce premiums for people ineligible for premium tax credits (PTC), and limit federal spending.

CMS received over 26,000 public comments on its draft rules, including from state government agencies, and representatives of insurers, providers, and consumers. The regulations are effective on August 25, 2025. Overall, the agency estimates that between 725,000 and 1.8 million people will lose insurance coverage in 2026 as a result of this rule. The rule is projected to reduce federal spending on PTCs by between $10.3 billion and $12.4 billion in 2026.

In a recent article for the Robert Wood Johnson Foundation’s State Health & Value Strategies project, CHIR’s Sabrina Corlette and Manatt Health’s Tara Straw dissect the final rule and its implications for state-based Marketplaces and state insurance regulators.

You can download the full article here.

*Tara Straw is a Senior Advisor at Manatt Health.

In 2024, the uninsured rate in the United States hit its lowest point ever, with just 8.2 percent of people uninsured. For those who had spent careers working to expand people’s access to affordable, high quality health insurance, it felt like we could finally say, “Mission (almost) Accomplished.” Thanks to the Affordable Care Act, 44 million people had gained insurance coverage through Medicaid and the health insurance Marketplaces, and 160 million more with employer-sponsored insurance had peace of mind that, if they did lose their job or need to take time off, there was a safety net to catch them.

At CHIR, we know that health insurance coverage matters. It improves access to primary care, preventive care, and timely care for emerging health conditions. It ensures a healthier population and drives productivity. It provides essential financial security.

For millions of Americans, the peace of mind that comes with health insurance is now gone. With the passage of H.R. 1, the budget reconciliation bill, Congress and the President have shredded the social safety net.

Up to 17 million people will be thrown off their health insurance; millions more will face higher barriers to accessing critical services. Hospitals, physicians, and other health care providers will lose over $1 trillion in revenue and face roughly $278 billion in uncompensated care costs, prompting up to 300 rural hospitals and many community health centers to close their doors. H.R. 1 amounts to an effective repeal of the Affordable Care Act and reverses a decade of progress.

The challenges ahead are enormous. At CHIR, we’ll be supporting the Marketplaces, insurance regulators, and other stakeholders in their efforts to implement this law while, to the extent possible, minimizing harms to consumers and plan enrollees. We’ll partner with researchers, the media, regulators, and policymakers to document and publicize the law’s effects on people’s ability to obtain, and maintain, the coverage for which they are eligible. And we’ll work with anyone interested in an accessible, affordable and equitable health system to identify and take advantage of opportunities to reverse the law’s worst abuses. As Mr. T once said, “To have a comeback, you got to have a setback.” At CHIR, we’re rolling up our sleeves and working towards that comeback.

By Zeynep Çelik, Liz Bielic, Kevin Lucia, and JoAnn Volk

The Center on Health Insurance Reforms (CHIR) has been closely tracking trends in dental coverage offered through the ACA Marketplaces. Building on our 2024 analysis of enrollment, premiums, and insurer participation in stand-alone dental plans (SADPs), this new interactive map allows users to dive deeper into state-level data.

Drawing from CMS data, the map visualizes how dental coverage varies across states, based on enrollment rates, average premiums, and the number of insurers for SADPs offered through both Federally Facilitated and State-based Marketplaces. 

The interactive map can be accessed here. For a full discussion of national trends and how policy decisions and market dynamics shape consumer access to affordable oral health benefits, read our complementary report here.

By Jack Hoadley, Kennah Watts, and Zachary Baron

The No Surprises Act (NSA) protects consumers from surprise out-of-network (OON) billing by banning providers and facilities from balance billing consumers for many facility-based OON medical services. Services subject to the law include most emergency services, non-emergency services from OON providers at in-network facilities, and services from OON air ambulance providers.

Under the law, the payer must make a timely payment (or a denial of coverage) to the OON provider. If the provider finds the payment amount inadequate and the parties do not privately reach an agreement, either party can request an independent dispute resolution (IDR), in which a third-party arbitrator (“IDR entity”) binds both parties to either the plan or provider offer.

In 2024, in compliance with NSA requirements, the relevant federal agencies released public use files (PUFs) with data on the resolved IDR cases for 2023. In March 2025, the agencies released PUFs for the first two quarters of 2024. These files include information on the provider and payer, as well as offer amounts from each party––expressed as a percentage of a qualifying payment amount (QPA), the inflation-adjusted median rate paid by a specific insurer in 2019 to its contracted in-network providers, based on insurance type and geographic location. The files also include information on the prevailing offer, as determined by the IDR entity.

In this article, we build on our findings from 2023 with analysis from the first two quarters of 2024. We illustrate trends in the IDR process across provider and payer types, offer amounts, geographic locations, IDR entities, and more. We also explore potential implications for the future use and cost of the IDR process. As relevant, we share findings from the agencies’ supplemental tables, from our own analysis of the PUFs, and from discussions with stakeholders.

Rapid Rates Of New Case Filings; More Decisions Emerging From IDR Entities

The volume of filed IDR cases remained high. The six-month total for filed cases (586,581) in Q1 and Q2 of 2024 is nearly as high as all of 2023 (657,040 filed cases), though this may be partly due to periods in 2023 when the IDR portal was suspended.

Exhibit 1. Number of Filed IDR Cases and Share Initiated by Provider Groups, Q1-Q4 2023 and Q1-Q2 2024

Source: Authors’ analysis of Federal IDR Supplemental Tables for 2023 and 2024

The rate of filed cases challenged as ineligible was higher in Q1 and Q2 of 2024 (45 percent) than in all of 2023 (37 percent), but the rate of closed cases later found ineligible was somewhat lower: about 18 percent in 2024 versus 22 percent in 2023. Cases may be ineligible based on the dates of service, whether a case is covered by the NSA, or the need to go through a state payment determination process in certain states.

In 2024, the pace of IDR entity decision-making accelerated substantially. About 335,000 payment determinations were made in Q1 and Q2 of 2024, compared to about 200,000 cases in all of 2023. The volume in the second quarter of 2024 was also well above that in the first quarter. Notably, about one in six determinations are made in cases where only one party submitted an offer—a rate that has remained generally steady from 2023 to 2024. Discussions with stakeholders suggested that this outcome may be the result of plans being overwhelmed by case volume and unable to respond before deadlines.

Cases Remain Concentrated In A Few States

IDR use remained highly concentrated by geography. States with high volumes of resolved cases were generally the same as in 2023: Texas, Florida, Arizona, Tennessee, Georgia, New Jersey, and New York. By contrast, several large-population states (Maryland, Massachusetts, and Washington) had fewer than 2,000 resolved cases in the first two quarters of 2024.

Providers were most successful in Texas, Florida, Arizona, and Virginia, with win rates between 89 percent and 91 percent of resolved cased in Q1 of 2024. This geographic concentration is likely somewhat attributable to high concentrations of the provider organizations that most frequently used IDR. For example, across most quarters, more than half of the cases in Texas involved Radiology Partners affiliated providers. Similarly, two-thirds of Tennessee and Florida cases involved Team Health.

Providers Continue To See More Success Than Plans

Providers continue to win far more often and at much higher offer amounts than plans. In 2023, the rate of providers prevailing rose from 70 percent of resolved cases in Q1 to 87 percent in Q4. Rates in 2024 matched the latter levels: providers won 88 percent and 83 percent of resolved cases in Q1 and Q2, respectively (Exhibit 2).

Exhibit 2. Percent of Resolved IDR Cases Won by Providers, Q1-Q4 2023 and Q1-Q2 2024

Source: Authors’ analysis of Federal IDR PUFs, Reporting Year 2023 and 2024.

Not only do providers win far more often, but their prevailing offers are much higher than plans. In Q1 of 2024, the median prevailing provider offer was 383 percent of QPA. This rose nearly 70 percentage points in Q2, with a median prevailing provider offer of 447 percent of QPA. By contrast, the comparable rates in 2023 were between 320 percent and 350 percent. In cases where plans prevailed, their median offer amount was much lower: 105 percent of QPA in both Q1 and Q2 of 2024.

Large Provider Groups Continue To Prevail At High Rates; Third-Party Entities Emerge

As in 2023, resolved IDR cases were predominantly from a few large provider organizations – mostly backed by private equity. Radiology Partners was the most frequent user of IDR in Q1 and Q2 of 2024, followed by Team Health, SCP Health, AGS Health, and HaloMD. Combined, these five organizations account for nearly two-thirds (63 percent) of resolved cases (Exhibit 3).

Exhibit 3. Share of Resolved IDR Cases by Top Provider Organizations, Q1-Q2 2024

Source: Authors’ analysis of Federal IDR PUFs, Reporting Year 2024.

In addition to a high volume of cases, these top five provider organizations won the vast majority of their disputes, with offer amounts at least two times greater than QPA. Radiology Partners significantly outmatched other provider groups, with a median prevailing offer at 631 percent of QPA and 610 percent of QPA in the first half of 2024.

While the activity level of Radiology Partners, Team Health, SCP Health, and AGS Health remained relatively stable from 2023 to 2024, HaloMD has emerged as a frequent participant in IDR cases. In 2023, HaloMD appeared in only 1 percent of resolved disputes, whereas in Q2 of 2024, HaloMD initiated 10 percent of disputes. HaloMD’s prevailing offers increased substantially as well: in Q1 of 2023, the organization prevailed in 17 percent of resolved cases, but their win rate steadily increased to 84 percent in Q4 of 2023. This success rate appears stable, reaching 89 percent and 81 percent in Q1 and Q2 of 2024.

HaloMD was specifically created “to be the leading provider of IDR services.” HaloMD illustrates the rise of profit enhancing middlemen focused on the IDR process. Whereas large provider organizations like Radiology Partners and Team Health have the internal resources to manage disputes on behalf of their providers, HaloMD and other third-party organizations can take on the administrative burden for smaller providers and offer them a greater opportunity to engage in IDR. As a provider group familiar with the IDR process wrote in a previous Forefront piece, “smaller practices have less ability to access IDR than do larger, well-capitalized organizations.” This trend might be changing with the rise of IDR-specific middlemen.

Emergency And Radiology Services Account For Two-Thirds Of Resolved IDR Cases

The median prevailing offers relative to QPA in Q1 and Q2 of 2024, by provider specialty, generally match or exceed those in 2023 (Exhibit 4). For most specialties, the median percentage of QPA grew across the four quarters of 2023.

Exhibit 4. Median Prevailing Offer among Resolved IDR Cases as Percent of QPA by Specialty, Q1-Q4 2023 and Q1-Q2 2024

Source: Authors’ analysis of Federal IDR PUFs, Reporting Year 2023 and 2024.

Radiology and emergency services are the two specialties with the highest volume of resolved cases, accounting for about two-thirds of all determinations (not shown). In the first half of 2024, the median prevailing offer for emergency services was 257 percent of QPA, a more than 30 percentage point increase from 224 percent in Q4 of 2023. Radiology services experienced a similar increase in win amounts: in the first half of 2024, the median prevailing offer in radiology cases was 40 percentage points more than the end of 2023 (600 percent QPA and 559 percent QPA, respectively). These specialties are closely correlated to certain provider groups. For example, Radiology Partners accounts for nearly all of radiology cases, while Team Health, SCP Health, and Envision represent well over half of all emergency cases.

Neurology and surgery, though a smaller volume (about 9 percent of resolved cases in 2024), won much higher awards than radiology or emergency services. In Q1 of 2024, the median prevailing party offer for neurology was 1222 percent of QPA, followed by 1178 percent in Q2. The median prevailing party offer for surgery was 1818 percent of QPA in Q1 and 1716 percent of QPA in Q2.

Plan Offers Minimally Increase; Win Rates Remain Low

Plan success in IDR is generally similar across 2023 and 2024. In 2023, the rate of plans prevailed declined from 28 percent of resolved cases in Q1 to 15 percent in Q4. Results from 2024 are similar: plans won 14 percent of resolved cases in Q1 and 18 percent in Q2. As previously stated, in cases where plans prevailed, the median prevailing offer amount was 105 percent in both quarters of 2024—a small, but not insignificant, increase of 5 percent from 2023. This shift could indicate some effort by plans to respond to their history of losing IDR cases.

In Q1 and Q2 of 2024, the bulk of resolved IDR cases involved a few large plans as recipients of cases filed by providers. United Healthcare, Aetna, HCSC, and Anthem accounted for two thirds of cases. By one national measure, these four companies account for nearly half of the national insurer market.

Third party claims management companies account for at least a fifth of resolved cases. MultiPlan (now Claritev) and Clear Health Strategies are the two largest entities (13 percent and 7 percent, respectively). The increased volume of cases attributable to management companies could be evidence that plans, like providers, also leverage intermediaries to manage their disputes and maximize their OON claims revenue.

Significant Variation Among IDR Entity Volume and Decisions

The pace of IDR entity decision-making has substantially accelerated in 2024, yielding hope that case backlogs will be reduced. But our conversations with stakeholders have indicated another potential concern: that some IDR entities may decide in favor of providers significantly more than others. This concern is supported by our analysis of PUF data. We find that four IDR entities made decisions favoring providers in over 90 percent of their cases in 2024, while one entity favored providers in only one-third of its cases. Ideally, the overall decision-making pattern should be similar across all IDREs, so it will be important to understand why variations exist.

Litigation And The IDR Process

Litigation also continues to shape the implementation of the NSA. Several ongoing cases and appeals could have a significant impact on the success of the arbitration process and its role in affecting health care costs more broadly.

Providers, led by the Texas Medical Association, successfully leveraged litigation to block past efforts by the Biden Administration to put modest guardrails in place concerning how arbitration entities should consider and weigh the relevant statutory factors when deciding between two offers. But providers have not been successful in cases across the board. The Biden Administration won an appeal before a Fifth Circuit panel last fall in a further challenge brought by the Texas Medical Association and air ambulance providers (sometimes referred to as “TMA III”) concerning certain regulatory provisions outlining the calculation of the QPA. That decision overturned much (though not all) of the lower court’s decision siding with the providers. But legal fights over the QPA methodology have still not concluded. The providers asked the full Fifth Circuit to reverse the panel—and on May 30, 2025, the 5th Circuit issued an order vacating the previous opinion and directing that the case be reheard en banc (by all active judges on the court). Briefing will run through early September 2025 (with oral argument to be scheduled subsequently). While certain enforcement discretion related to the QPA remains in effect until August 1, 2025, future agency guidance may be needed to clarify the immediate impact of this development on patients and the arbitration process.

In another case on pause in federal district court in Kentucky, providers challenged several NSA regulatory provisions under the Administrative Procedure Act and the Takings Clause of the Fifth Amendment. Various other ongoing cases relate to efforts to overturn certain arbitration awards or compel payment by a party to arbitration. Some involve cases brought by providers against insurers and arbitration entities directly. The results in such cases have been mixed thus far, with appeals filed in the Fifth and Eleventh Circuits. The Department of Justice (DOJ), through amicus briefs, has urged courts to find that arbitration entities themselves are not proper parties to such cases—arguing that such litigation ultimately could result in “thwarting Congress’s desire to create a low-cost, efficient” arbitration process. As to alleged nonpayment by parties to the arbitration process once IDR payment determinations have been made, DOJ has also told courts that if parties cannot obtain relief in courts for such nonpayment, “one of the [NSA]’s core features would be frustrated, upending Congress’s scheme.”

Insurers have also filed multiple lawsuits alleging provider abuse of the IDR process through filing ineligible cases in order to obtain improper payment rates. Such cases remain in the early stages, but if they proceed, discovery could shed additional light on how certain providers are strategically leveraging the IDR process.

What Does It All Mean?

The analysis of resolved IDR cases shows that providers are often turning to IDR rather than accepting initial plan payments. Although the majority of cases are deemed eligible for the IDR process, plans are challenging the eligibility of nearly half the cases that providers file.

These high numbers highlight the disconnect between the two sides as they debate what constitutes a reasonable payment for OON services. Providers believe the high volume of IDR disputes reflects inadequate payment by plans, exacerbated by possible manipulation of the QPA. Plans respond that their QPAs are accurate and that providers should be willing to accept payments that align closely with in-network rates. Amidst this debate, the federal government has released the results of one QPA audit, and more audits could shed some light on the contrasting claims around QPAs.

Findings from the IDR data raise two important concerns. First, IDR cases are significantly concentrated among just a few provider organizations. Second, middlemen organizations are increasingly frequent users of the system. On one hand, middleman organizations could extend access to the IDR process to providers who are not part of large organizations and thus face administrative burdens in using the system. On the other hand, such organizations may contribute to higher overall case volume, increasing costs for the whole health system.

Additionally, providers continue to have a high share of cases decided in their favor, resulting in large payment awards. Providers make the case that their offers are simply more reasonable and that arbitrators agree. There are also some anecdotal reports that plans have been less aggressive than providers in putting their arguments in front of the IDR entities. As the federal agencies noted in background materials: “While health plans and issuers often benchmarked their offers to the QPA, providers, facilities, and air ambulance service providers often benchmarked their offers to past OON payment amounts with the disputing plan or issuers and past in-network rates with either the disputing plan or issuer, or with a different plan or issuer in the same state.” Plans have raised concerns that historical benchmarks may reflect circumstances before passage of the NSA when some plans paid full billed charges to ensure that costs were not passed along to consumers. Without public reporting of the rationale for IDR entity decisions, observers can only speculate how much historical payments influence the decisions.

The high volume of IDR cases, including the prevalence of ineligible cases, could be tempered if proposed rules for process improvements were finalized and if ongoing litigation over the QPA methodology was resolved. Better education, training, and oversight of IDR entity decision-making might also help reduce some of the uncertainties in the process.

The longer-term impact of IDR decisions on health costs is still mostly unknown. On the surface, it seems that the high provider winning rate and the size of the payments awarded would raise health costs and plan premiums. But the magnitude of any such increase is limited by the share of all health care claims represented by the IDR cases. Furthermore, stakeholder claims diverge wildly on whether we have seen an impact of the NSA on the size of provider networks or on negotiations over the fees paid to providers.

Notably, nothing in these findings from the IDR process raises questions about the effectiveness of the NSA in preventing consumers from experiencing surprise bills in the scenarios where the NSA created protections. The issue remains whether the law’s mechanism for establishing a reasonable payment from plans to providers is working. To the extent it is not, a key question is whether there are cost implications for the health care system as a whole and for consumers in particular.

To learn more about variation in the IDR process and potential cost implications, read the recently published companion piece: No Surprises Act Arbitrators Vary Significantly In Their Decision Making Patterns.

Jack Hoadley, Kennah Watts, and Zachary Baron “Independent Dispute Resolution Process 2024 Data: High Volume, More Provider Wins” June 11, 2025, https://www.healthaffairs.org/content/forefront/independent-dispute-resolution-process-2024-data-high-volume-more-provider-wins. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Editor’s Note: This testimony has been lightly edited for length. Ms. Corlette’s full testimony is available here.

At CHIR, we study how health insurance works and doesn’t work for people. People cannot take advantage of technological advances in health care if they do not have health insurance coverage or face insurmountable financial barriers to health care services. Therefore, I will be  focusing my remarks today on how proposed federal policies, in particular the House-passed H.R. 1, will affect people’s access to affordable, high quality health insurance. 

The Impact of H.R. 1 on Health Care Access and Affordability 

The budget reconciliation package—H.R. 1—passed by the U.S. House of Representatives on May 22 represents a massive redistribution of wealth from the least to the most well off. Specifically, families at the bottom 10% of the income scale would experience a resource decline of on average $1,600 per year, largely due to reductions in Medicaid and SNAP spending. Meanwhile, families in the top 10% of income would experience an increase in resources by on average $12,000 per family, largely due to the bill’s tax cuts.

If this bill is enacted and Congress fails to extend the enhanced premium tax credits that expire at the end of this year, CBO  projects that 16 million people will become uninsured. This represents an over 50 percent increase in the number of people who are currently uninsured, reversing coverage gains achieved by the Affordable  Care Act (ACA). 

The bill would also have a devastating impact on health care providers, particularly those providers serving rural and underserved communities. The Urban Institute has estimated that the combined cuts in H.R. 1 and end of enhanced premium tax credits will reduce provider revenue by $1.03 trillion between 2025-2034, with 40% of the decline attributable to hospitals and 11% to physician services. 

Deep, Damaging Cuts to Medicaid and CHIP 

H.R. 1 contains numerous provisions that will cut gross Medicaid and CHIP spending by $863.4 billion over the 10-year budget window, leading to 7.8 million newly uninsured people. In particular, the bill takes aim at the ACA’s Medicaid expansion by sharply cutting enrollment among people eligible for expansion, making it harder for expansion enrollees to access care, and reducing states’ incentives to adopt or continue their expansion programs.

Work requirements 

H.R. 1 includes a requirement that states implement a work requirement for their Medicaid programs. The Urban Institute has examined the impact of a less restrictive 2023 work  requirement proposal and found that 5.5 million to 6.3 million expansion individuals ages 19-64 would be disenrolled because they could not successfully navigate burdensome processes and systems to report their work activities or obtain exemptions. 

More frequent eligibility redeterminations 

Currently, states reassess eligibility for Medicaid expansion enrollees every twelve months. This bill would require all states to conduct eligibility redeterminations for expansion individuals every six months. This policy would significantly elevate the risk that people are removed from coverage solely because of paperwork issues, interrupting continuity of care and increasing administrative burdens for states, providers, and managed care plans. 

Increasing costs for eligible Medicaid enrollees  

Most Medicaid enrollees, due to their low income, do not face premiums and are subject to only nominal co-payments. H.R. 1 would require all states to charge cost-sharing to expansion enrollees with annual incomes between $15,650 and $21,597. The research literature on cost-sharing in Medicaid is clear: Even modest increases in co-payments lead to reduced access to necessary care.

Discouraging states from closing the Medicaid “coverage gap” 

H.R. 1 would repeal current financial incentives under the ACA for states to expand their Medicaid  programs, making it less likely that the remaining 10 non-expansion states take up the expansion and  leaving nearly 2.9 million low-income adults uninsured. This includes 1.5 million people in the “coverage gap” which is where people are too poor for Marketplace tax credits but not poor enough to qualify for their state’s Medicaid  program. 

Preventing states from financially supporting Medicaid through provider taxes 

All states except for Alaska rely on provider taxes as a critical source of revenue to support their Medicaid programs. Under H.R. 1, states would be prohibited from establishing any new provider taxes or increasing existing taxes. This means that states would no longer be able to use new or increased provider taxes to raise additional revenues to finance their share of Medicaid costs. States also would have zero flexibility on provider taxes moving forward. This could hinder states’ ability to respond to the evolving needs of the program and economic conditions.

Tying people up in red tape 

In addition to requiring people to undergo the eligibility redetermination process twice per year, the bill would block regulatory policies that significantly improve the speed and efficiency of Medicaid and CHIP eligibility and enrollment systems. CBO has previously estimated that by itself, rescinding these regulations would cut Medicaid enrollment by 2.3 million people in 2034. 

Financially punishing states that use their own funds to cover certain residents 

Under this bill, expansion states that provide coverage or financial assistance to undocumented  immigrants or to certain lawfully residing immigrants using their own funds would face a cut in the federal matching rate for the Medicaid expansion population from 90 to 80%. This would include efforts to cover people lawfully admitted to the U.S. for humanitarian reasons, such as, most recently, people from Ukraine and Afghanistan.

Threats to Marketplace Enrollment, Affordability, and Stability 

Approximately 8.2 million people are projected to lose insurance due to the combined impact of  Congress’ failure to extend the enhanced premium tax credits that expire in 2025 and the Marketplace provisions in H.R. 1. Policies that make it harder to enroll in and keep health insurance deter healthy people from enrolling in Marketplace health plans, while people with high medical costs will persevere through these hurdles. This will result in a smaller, sicker pool of enrollees. Insurers will need to raise their premiums to account for a more costly group of people and some may choose to exit the market entirely (as the company Aetna recently decided to do). 

Indeed, in states with early filing deadlines for insurance companies to submit their proposed premiums for 2026, we are seeing eye-popping increases. Although non-expansion states have later rate filing deadlines, we can expect insurers to project even bigger premium spikes in those states, as a greater proportion of their populations are enrolled in Marketplace  coverage. In the rate filings we’ve reviewed at CHIR to date, insurers are warning state insurance regulators that their premiums will need to rise even further if H.R. 1 is enacted. 

Raising Costs for People with Commercial Health Insurances  

H.R. 1 raises people’s health care costs by: 

• Modifying the formula for determining an individual or family’s premiums and cost-sharing. This would allow insurance companies to impose an additional $900 in deductibles and other cost sharing on families (up to $450 for an individual) with any private health insurance, including the 160 million people with employer-based insurance.
• Imposing significant new tax burdens on low-income Marketplace enrollees by requiring them to repay premium tax credits if they under-estimate their income. 
• Changing federal policy regarding cost-sharing reductions for Marketplace health plans, which in turn would end a state-driven practice known as “silver loading,” raising net premiums for at  least 10 million Marketplace enrollees, and increasing the numbers of uninsured by 1.2 million. 
• Allowing insurers to reduce the generosity of their plans, so that they could cover as little as 66% of costs but still be called a “Silver” plan, even though the ACA requires such plans to cover 70% of costs. This provision allows the bill sponsors to say they are “reducing” premiums, even  though they’re doing so mainly by making coverage skimpier.
• Imposing a $5-month premium penalty on certain low-income enrollees, even though they are  eligible for $0 premium coverage. 
• Prohibiting coverage of treatment for gender dysphoria, raising patient costs for services  recommended by virtually all major medical associations.

Limiting Eligibility and Enrollment Opportunities 

The bill would further slash enrollment in Marketplace coverage by taking away eligibility for over 1 million lawfully present immigrants and cutting back on enrollment opportunities, including by: 

• Reducing open enrollment periods for all Marketplaces, including state-based Marketplaces (SBMs), from 76 to just 44 days. 
• Taking away SBMs’ traditional authority to establish special enrollment periods (SEP) to meet  the needs of their consumers and markets. The bill would prohibit all Marketplaces from establishing a SEP based on income, eliminating a key pathway for low-income people to access  coverage as soon as they learn they are eligible. 
• Barring most lawfully present immigrants, including people with people with “Deferred Action  for Childhood Arrivals” (DACA) status, from eligibility for Marketplace premium tax credits.

Increasing Red Tape 

H.R. 1 requires applicants and enrollees to navigate a maze of red tape to obtain and maintain affordable health insurance coverage, including by: 

• Imposing onerous new paperwork requirements on all Marketplace applicants. This provision would effectively prohibit automatic re-enrollment in the  Marketplaces, a long standing industry practice across all lines of insurance. All consumers, new or returning, would be required to pay full price until they actively verify, and the Marketplace has confirmed, specific eligibility requirements. If they cannot pay full price, coverage would be cancelled or terminated, leaving them uninsured for a full year until the next open enrollment period.  
• Requiring people enrolling in a SEP to manually submit additional paperwork proving their eligibility before they can get coverage. 
• Requiring Marketplaces to deny premium tax credits to people when the IRS doesn’t have a record of them filing the correct tax form. 
• Requiring 2.5 million more people to manually submit documents to prove their income, and shorten the amount of time they have to provide that documentation.  

These new paperwork requirements will be imposed after the federal government has eliminated the jobs of hundreds of Marketplace caseworkers and reduced funding for Marketplace Navigators by 90%, meaning consumers won’t get the help they’ll need to cut through the red tape. 

Unprecedented federal mandates and new costs for states 

H.R. 1 would eliminate flexibilities states have long had to operate an SBM, impose costly new  mandates, and reduce their revenue base. These changes would undermine states’ value proposition for  establishing or maintaining an SBM. At the same time, the bill would infringe on states’ long-standing  primacy over the regulation of private health insurance by imposing arbitrary new federal rules. This is  why the National Association of Insurance Commissioners (NAIC) and a coalition of state-based Marketplaces have expressed their strong objections to this legislation. 

The reconciliation bill would eliminate this long-standing flexibility across a wide range of SBM functions, from enrollment periods to eligibility systems, while also imposing several new and costly operational mandates. This will make establishing or maintaining an SBM less attractive for states.

“Waste, Fraud and Abuse” as Red Herring – a Missed Opportunity to Counter Marketplace Fraud 

Supporters of changes to Marketplace eligibility and enrollment policies refer to a serious Marketplace issue: Unscrupulous brokers enrolling people in Marketplace coverage or switching their plans without their permission in the pursuit of commissions from health plans. However, the bill does absolutely nothing to increase oversight or accountability for unethical brokers and ignores straightforward measures to address broker fraud. In fact, in a telling move, H.R. 1 would enshrine into law every provision of the Marketplace Integrity rule that hinders consumer enrollment but not the one provision that touches on broker oversight. 

Conclusion 

Cost effective and innovative technologies that can help people better track and control chronic conditions are exciting opportunities to improve health outcomes and lower costs. But people need to be able to access and afford health insurance coverage in order to take advantage of such technologies. As drafted, H.R. 1, combined with inaction to extend enhanced premium tax credits, would actually make it harder for people to obtain health care, by tying them up in a maze of bureaucracy, raising their premiums, and imposing new federal mandates. The result will be 16 million people newly uninsured  and millions more facing higher costs in order to obtain needed health care services. 

By Stacey Pogue, Billy Dering, JoAnn Volk, and Kevin Lucia

It’s the beginning of rate review season for state insurance departments. Although most proposed premium rates for 2026 coverage will not be public until the end of July, some state regulators require submissions in May or June and release varying levels of information early in the process. These early rate filings provide an initial look at how insurers are responding to market trends and policy changes.

This year, insurers are setting their rates for 2026 while Congress and the administration weigh the following three policies that are projected to cause premiums to spike and the number of people with Marketplace coverage to plummet:

• CMS’ “Marketplace Integrity” rule proposed on March 19, 2025, and adopted on June 25, 2025;
• H.R. 1, the budget reconciliation bill, moving through Congress; and
• The scheduled expiration of enhanced premium tax credits at the end of 2025.

Any of these policies, explained further in other CHIRblog posts, individually could have a notable impact on premiums for 2026 and beyond. Insurers are facing the possibility that all three changes could be in place before 2026 coverage takes effect, and enormous uncertainty—which can also drive up rates—about which specific provisions will ultimately take effect and when.

The following is a round-up of information released so far by states on proposed rate changes for 2026 individual market coverage and related analysis.

Eye-popping proposed increases for 2026

A few states with earlier rate filing deadlines have released summary information on proposed rate changes in the individual market. Some states have released a weighted statewide average rate increase proposed across all insurers, others have posted average rate changes proposed by each insurer, and some have posted both. As shown in the table below, summary information released by state insurance regulators to date uniformly shows 2026 average rates heading in one direction: up, often substantially.  Statewide average proposed increases, where released by the state, all show double-digit rate hikes, ranging from 10% in Oregon to 24% in Rhode Island.

Table: Average Proposed Individual Market Rate Increases, Select States, Plan Year 2026

Note: Average proposed rate change statewide and/or by carrier for 2026 ACA individual market (or merged market, as applicable) coverage as posted by states as of June 23, 2025. See linked source materials for further information.

A few state insurance regulators provided context about the magnitude of the proposed spike in individual market rates for 2026. Rhode Island’s regulator noted the “requested rate increases are the highest in over a decade,” while Maryland’s said they “are the highest since the implementation of Maryland’s reinsurance program in 2019.”

Insurers point to loss of ePTC and uncertainty around federal policy changes

A handful of states also publish the detailed supporting documentation filed by insurers relatively early compared to other states. These documents explain the assumptions used by insurers and their justifications for the types of proposed rate increases shown above. We reviewed* insurer justifications from three of these states, Maryland, Maine, and Vermont, to see how anticipated policy changes and uncertainty around them are impacting proposed rates for 2026.

Expiration of ePTC drives up rates

A variety of factors impact proposed rate changes, including changes to the unit cost of health care services and supplies, utilization, benefits, and the covered population. In addition to these types of factors that commonly drive annual changes, insurers in our sample states universally cited the expiration of ePTC at the end of 2025 as having a key impact on proposed rate increases. As explained in excerpts from filings below, the end of ePTC is expected to create a smaller, sicker risk pool, driving up rates.

• In Maine, Community Health Option proposed a 34% average rate increase. It explains that with the loss of ePTC, enrollment will drop, and they “anticipate the remaining risk pool in 2026 [will] have higher healthcare needs, on average, as healthier consumers are more likely to lapse coverage.”
•  In Maryland, Optimum Choice proposed an average rate increase of 18.6%. It pointed to the end of ePTCs driving lower enrollment, and as a result, “[h]ealthier members are expected to leave at a disproportionately higher rate than those with significant healthcare needs, increasing market morbidity in 2026.”
• In Vermont, Blue Cross Blue Shield proposed an average rate increase of 23.3%, which incorporates “an additional increase of 6.6 percent” from the loss of ePTC. The carrier anticipates that the end of ePTC “will shrink the population with coverage and worsen the risk pool, requiring higher premiums for the remaining members.”
• Also in Vermont, MVP proposed a 6.2% average increase and assumes healthy individuals with subsidies will drop coverage when ePTCs expire at twice the rate of other subsidized individuals, leading to a sicker risk pool.

Policy-induced turbulence may further drive up rates or spur insurer exits

As a general rule, state insurance regulators require insurance companies to submit proposed rates that reflect current law. In other words, proposed rates should not attempt to anticipate future changes in law, such as enactment of H.R. 1 or the finalization of the proposed Marketplace Integrity rule.

Therefore, insurers in most states had to set their rates for 2026 amidst significant uncertainty from the shifting federal policy landscape.  Some states asked insurers to file more than one set of rates for 2026, reflecting uncertainty over whether ePTC would expire or be extended by Congress and/or whether cost sharing reduction (CSR) payments would remain unfunded. But even with those contingencies, filings for 2026 had caveats hinting at concerns about policy changes that may happen after rates are submitted for regulator review.

• In Maryland, Wellpoint, which proposed an average 8.1% increase, flagged uncertainty about ePTCs and assumptions about CSR payments while cautioning that that, “[f]uture modifications in legislation, regulation and/or court decisions may affect the extent to which the premium rates are neither excessive nor deficient. Wellpoint reserves the right to file revised rates in the event of changes to the regulatory environment in which they were developed.”
• In Maine, Anthem proposed an 18.0% average rate increase. The insurer cautions that “the rates proposed in this submission reflect the regulatory framework and insurer participation in the market as of June 5, 2025. If the regulatory framework or insurer participation in the market changes after this date, proposed rates may no longer be appropriate and should be reevaluated for revision and resubmission.”
• In Vermont, MVP notes that it filed two sets of rates, one with and another without, continued ePTC, but the carrier “reserves the right to modify the submitted rates,” given that eventual PTC changes could differ from both of the modeled scenarios.
• In Maryland, Optimum Choice proposed an average 18.6% rate increase for 2026, and noted that the proposed Marketplace Integrity rule (which was just finalized, a month after this rate filing), “will lead to healthier enrollees leaving the market and an overall worsening of the risk pool.”

Uncertainty about ACA policy shifts can also feed into decisions about whether insurers remain in current markets. Aetna, for example, recently announced it would exit ACA Marketplaces entirely after 2025 due in part to uncertainty over federal ACA policy. This change affects 1 million consumers across 17 states, including Maryland.

• In Maryland, Optimum Choice proposed an average 18.6% rate increase for 2026. After flagging regulatory considerations related to ePTC expiration and CSR payments, the carrier warned,”[t]he submission of these rates does not guarantee that OCI will continue to participate in the individual market in 2026.”

Policies advancing in Congress will have profound effects on the individual market

Most of the states that have released early rate filings operate their own state-based Marketplace and have expanded Medicaid under the Affordable Care Act. Proposed rates are likely to be even higher in states that have not expanded Medicaid. A sobering new report from Wakely predicts “a much smaller and less stable individual market” across all states if Congress enacts H.R. 1 as passed by the House (which incorporates changes proposed in the Marketplace Integrity rule, many of which have now been made final) and fails to extend ePTC. Wakely estimates that individual market enrollment could plummet by 47% to 57% on average, with even larger enrollment losses, up to 64%, in non-Medicaid expansion states. In total, the individual market would lose an estimated 11 million to 14 million enrollees, dropping to low levels not seen “since the early years of the Marketplaces, if not lower.”

As enrollment shrinks, “morbidity” will increase. In other words, people who retain coverage will be sicker and have higher health care needs than those who drop coverage, driving up premiums. The combined impacts of just these policies would cause “large gross premium increases” of 7-12% on average, and far higher average net premium increases for subsidized individuals as premium tax credits shrink. 

Insurance regulators in some states are also raising concerns about the totality of impacts of federal  policies on the table on premiums and coverage. For example, Maryland Insurance Commissioner Marie Grant noted that while the “significant rate increases” already filed for 2026 reflect the loss of ePTC, “recent actions by Congress have the potential to further lower tax credits for Marylanders to help purchase health coverage and further increase rates in this critical market.”

Takeaway

Early information on proposed individual market rates for 2026 shows widespread and substantial rate increases. Among the many factors driving up rates, some are not business as usual. Instead, insurers are responding to an array of disruptive federal ACA policy changes. Early rate filings clearly reflect the impact of one shoe dropping–the scheduled expiration of ePTC– and also concern about other shoes that may still drop. Insurers anticipate steep declines in enrollment, increases in morbidity among remaining enrollees, and significant premium increases due to federal policy changes. Additionally, the high degree of uncertainty around proposed policies that could take effect by 2026, has prompted caveats by insurers and state regulators that rates could change at any point. With dire projections of smaller, sicker, and more expensive Marketplaces after federal ACA policy changes, we may see other insurers exit the Marketplaces altogether, on the heels of Aetna’s recent announcement. Even with these early filings, the impact of the policy changes is becoming clear – lower enrollment and higher premiums. Continued monitoring of rate filings over the next couple of months will help to reveal the full scope of how much these federal policies will erode the individual health insurance market.

*Authors’ note: Our review of early 2026 individual market rate filings was largely limited to the narratives in the actuarial memoranda that must accompany each rate filing. These memos explain, in lay language, insurers’ past experience, current assumptions, and predictions for the next plan year. The findings summarized in this blog are not necessarily generalizable to the broader universe of individual market rate filings for plan year 2026, nor do they reflect all of the factors underlying rate requests or differences between insurers filing individual market rates in this set of states. The authors thank Norah C. Ludke and Logan DeLeire for their assistance monitoring and documenting insurers’ rate filings.

By Karen Davenport, Stacey Pogue, and Sabrina Corlette

With the passage of H.R.1, the House of Representatives’ version of the budget reconciliation bill that will advance President Trump’s domestic policy agenda—specifically, extending tax cuts for wealthy individuals and corporations while making massive cuts to food assistance, health coverage and access, and green energy investments—all eyes turned to the Senate. In mid-June, the Senate Finance and Health, Education, Labor, and Pensions Committees released legislative language that will be foundation for Marketplace changes in the Senate’s budget bill.  While the Senate language purports to ease the enrollment barriers to Marketplace coverage that are a hallmark of the House bill, it’s really a case of “second verse, same as the first.” The Senate language would still leave Marketplace enrollees vulnerable to unexpected premium bills and at risk of losing their health insurance coverage. 

Recapping the House Bill: Coverage Losses Driven by Enrollment Barriers

The House-passed bill will reverse the coverage and access gains made possible by the Affordable Care Act health insurance Marketplaces by relying on several key strategies. First, it will increase Marketplace enrollees’ costs for holding health insurance coverage. Second, it will create new paperwork barriers to enrollment, thus ensuring that fewer eligible individual and families are able to enroll in health insurance. And third, it prohibits certain people from enrolling in Marketplace coverage altogether. All in all, the Congressional Budget Office estimates that approximately 4 million people will lose coverage as a direct result of the provisions in the House-passed bill. 

CHIR has previously published on the overall impacts of the House-passed bill, taken a deep-dive into some of its most problematic provisions, examined which enrollees could be lost in a paperwork thicket, considered how the bill hamstrings state-based Marketplaces (SBMs), and identified lost opportunities to deter actual, rather than imagined, enrollment fraud.

Heralded Fixes Fail to Stem Likely Coverage Losses

The Senate Finance Committee changed the House language to try to address acknowledged problems with the House bill. For example, the Finance Committee creates new administrative discretion for the Treasury Secretary to ensure that people who experience a change in family size during the year—such as having a baby—do not lose their premium subsidies and, by extension, their health insurance. Should the Treasury Secretary exercise this discretion, this provision could address an important coverage barrier in the House bill. On the other hand, “missing” provisions in the Senate language, when compared with H.R.1, are also found in the “Marketplace Integrity” rule the Centers for Medicare & Medicaid Services (CMS) proposed on March 19, 2025. In some cases, these provisions would take effect even earlier under the proposed rule. These enrollment barriers—such as shortening the duration of annual Marketplace Open Enrollment—could still be added to the reconciliation bill before it reaches the Senate floor, and the regulatory proposal will presumably be finalized soon. Whether these provisions are implemented through regulation or a statute, consumers will encounter the same red tape and higher costs.

Little Daylight Between House and Senate Legislation

Most importantly, the overall approach of the Senate committees’ reconciliation proposals closely mirror the House reconciliation bill. As seen in the table below, both efforts seek to reduce Marketplace enrollment by creating new and unexpected premium costs, raising new barriers to enrolling in and keeping coverage, and blocking certain individuals from enrolling in Marketplace coverage.

Enrollment Barriers to Marketplace Coverage in Reconciliation Legislation

Takeaway

Like its House companion, the Senate reconciliation bill threatens Marketplace enrollees’ affordable health coverage and the access to care that health insurance coverage makes possible. Under both proposals, Marketplace enrollees will face significant new costs and barriers to coverage.

By Nadia Stovicek and Kennah Watts

While Indiana lawmakers have been working to reduce health care costs for commercial health insurance for more than a decade, this legislative session was particularly productive. A bevy of health care cost reform bills focused on pricing, transparency, and antitrust issues were enacted, and these efforts were complemented by two executive orders from Governor Mike Braun aimed at reining in hospital market power. With these legislative and executive branch actions, Indiana has embarked on a path to improve health care affordability for Hoosiers and set an example for other states. 

Legislative and Administrative Action on Cost Containment in 2025

Indiana had an extraordinary legislative session. Out of ten bills introduced aiming to constrain health care cost growth, the legislature enacted six (see table below). These bills targeted a variety of levers to reduce system wide costs for health insurance, some using novel methods such as::

• HEA 1666 and HEA 1004, which require ownership or financial information reporting from providers, respectively, including information on any private equity affiliation.
• HEA 1004 requires a reference-based price ceiling for any hospital that contracts with an employer health care arrangement, defined as an arrangement between a hospital, hospital system, nonprofit hospital, and narrow network of hospitals.
• SEA 3 requires third-party administrators (TPAs) and pharmacy benefit managers (PBMs) to act as fiduciaries of the health plans with which they contract. The bill defines fiduciary duty to mean operating in the best interest of their clients.

Table. Legislative Action from Indiana’s 125th Legislative Session 

Governor Braun also issued two related executive orders:

• Executive Order 21 requires the state to assess the effectiveness of price transparency measures and develop a penalty for providers and payers that do not comply with transparency requirements.
• Executive Order 22 requires nonprofit hospitals to annually verify that they provide more in charity care than they receive in state tax breaks; hospitals that do not provide this verification will be denied the tax exemption. 

Combined, these efforts mark some of the most significant advances in policies to constrain commercial market cost growth of any state to date. However, these reforms were not enacted overnight—they required years of education, coordination, and advocacy to become law. 

How Transparency, Persistence, and Coalition Building Led to Success

Indiana’s extraordinary 2025 legislative session was a product of years of dedicated advocacy to improve transparency and tackle the root cause of higher health care costs. The story can be traced back to the Employers’ Forum of Indiana, a multi-stakeholder coalition created to improve the value employers receive from their investment in health care benefits. When Gloria Sachdev, a former pharmacist, took the helm of the Employers’ Forum in 2015, she posed a simple question to her coalition of mostly self-insured employers, “what’s your biggest pain point?” The answer came swiftly and unanimously: “health care affordability.”

However, employers could not easily identify how much they paid for medical services. With little to no transparency from hospitals and insurers, employers could not effectively push for the right reforms. Sachdev and the Employers’ Forum therefore piloted the Employer Price Transparency Project to help employers and health care purchasers use hospital pricing data to pursue higher-value healthcare. The project began with RAND 1.0, the first publicly available employer price transparency study in the United States that provided prices alongside the names of the individual hospitals. RAND published the study in 2017 with data from Indiana hospitals and prices paid by self-funded employer plans. The study results were shocking: Indiana employers were paying, on average, 272 percent of Medicare rates. For outpatient care, that number jumped to 358 percent of Medicare. Given these results, employers and—importantly—their elected representatives began to take notice and demand reform.

To refine the data and understand Indiana’s cost environment compared to other states, the RAND studies have expanded nationwide. The most recent iteration, RAND 5.1, includes data on hospital prices across 49 states and DC (Maryland is excluded because of its unique all-payer model). With these findings, the Employer Price Transparency Project launched Sage Transparency, a tool to provide employers, policymakers, and advocates easy access to price and quality data. These two tools have become the foundation not just to understand prices, but to challenge them. 

The data and dashboard were necessary but alone not enough to cultivate change. The Employers’ Forum collected information about pain points from its leading employer members to help educate policy makers on health care pricing issues and build public support. Inspired by Sachdev’s work, former Indiana Republican Party Chair Al Hubbard launched Hoosiers for Affordable Healthcare, a group dedicated to pushing for legislative reform. Sachdev became the vice chair and soon bipartisan advocacy efforts were underway. The group then built consumer support with a media campaign and a simple message: higher hospital prices mean smaller Hoosier paychecks and inflated premiums. 

Spurred by price data and organized advocacy, prior sessions of the Indiana legislature passed bills to ban excess hospital fees, prohibit non-compete clauses for primary care, require merger reporting to the attorney general, and establish a Health Care Cost Oversight Task Force. The process of debating and enacting these bills helped educate lawmakers and the public and set the stage for the successful 2025 legislative session. Other states are also taking notice––Indiana’s strategies to advance cost containment have inspired Texas and Maine to launch their own transparency-driven campaigns.  

Looking Forward 

The problem of high and rising health care costs are by no means solved in Indiana. Much more remains to be done to deliver real price relief to Indiana employers and consumers. However, the state’s considerable progress can serve as an example to other states of how transparency, educated coalitions, and persistent advocacy can create an environment ripe for policy change that bends the price curve.

The authors thank Dave Kelleher and Sara Otte of the Employers’ Forum of Indiana, as well as Luke Thomas from Hallowell Consulting, for their review and thoughtful comments on this blog post. 

In May, we welcomed spring blooms and warm weather, while staying engaged with the latest health policy research. This month we read about potential effects of the reconciliation bill on provider revenue and uncompensated care, Rhode Island’s affordability standards and their effects on hospital prices, and coverage retention and plan switching following changes in premiums.

Reconciliation Bill and End of Enhanced Subsidies Would Cut Health Care Provider Revenue and Spike Uncompensated Care

Fredric Blavin. Urban Institute. May 2025. Available here.

The Urban Institute combined findings from two previous analyses, along with recent Congressional Budget Office (CBO) projections, to determine the impact of the reconciliation bill (HR 1) and elimination of the enhanced premium tax credits (PTCs)  on provider revenue and uncompensated care costs over the next 10 years. 

What it Finds

• The number of uninsured people in the United States is expected to increase dramatically, with CBO projecting almost 16 million people becoming uninsured as a result of the expiration of enhanced PTCs, and the Medicaid and Marketplace provisions in HR 1. 
• If the reconciliation bill passed and enhanced PTCs were allowed to expire, total healthcare expenditures across all payers would fall by approximately $1.03  trillion between 2025 and 2034. 
• If the reconciliation bill were enacted and enhanced PTCs allowed to expire, the volume of uncompensated care would increase by $278 billion between 2025 and 2034, placing disproportionate financial strain on hospitals and clinics, particularly in underserved and rural areas.

Why it Matters

These findings are significant because they underscore the broader systemic consequences of enacting the reconciliation bill and rolling back enhanced subsidies. A sharp increase in the uninsured population would not only reduce access to necessary health services for millions of individuals but also cause financial harm to hospitals and clinicians through reduced utilization and increased uncompensated care. This dynamic threatens the financial stability of hospitals—particularly safety-net and rural providers—and may lead to service cutbacks or closures.

Rhode Island’s Affordability Standards Led To Hospital Price Reductions And Lower Insurance Premiums

Andrew M. Ryan, Christopher M. Whaley, Erin C. Fuse Brown, Nandita Radhakrishnan, and Roslyn C. Murray. Health Affairs. May 2025. Available here.

Researchers for Brown University used a series of national data sources from the period 2006–22 to compare hospital prices, margins, and insurer premiums and fees in Rhode Island and comparison states before and after the initiation of Rhode Island’s affordability standards in 2010. Significantly, these affordability standards include an annual cap on the rate of growth for hospital prices in the commercial insurance market.

What it Finds

• The study found that the state’s affordability standards correlate with substantial decreases in negotiated hospital prices, yielding an average decline of around 9% relative to prices in comparator states.
• Hospital operating margins after implementation of the Rhode Island affordability standards were lower than in comparator states and the standards reduced hospitals’ commercial revenue by nearly $160 million annually.
• Those savings were largely passed onto employers and plan enrollees.The affordability standards reduced aggregate premiums and out-of-pocket spending by an average of $87.7 million annually, with most of the savings derived from fully insured employer premiums (-$64.1 million), followed by enrollee premiums (-$20.8 million) and enrollee cost-sharing (-$2.9 million). Premium reductions for fully insured members exceeded $1,000 per member per year by 2022. 
• Despite the reduction in hospital prices, there was no associated decline in hospital utilization rates or measurable deterioration in quality indicators, suggesting that cost containment did not compromise care delivery.

Why it Matters

These findings are significant as they provide empirical support for the efficacy of state-level hospital price regulation in achieving cost containment without compromising care quality or access. Rhode Island’s affordability standards not only reduced negotiated hospital prices but also contributed to lower private insurance premiums and out-of-pocket spending, demonstrating that targeted regulatory interventions can influence broader market dynamics. Importantly, the absence of negative effects on utilization or quality reinforces the potential for such policies to serve as sustainable mechanisms for improving affordability in other state health systems facing rising healthcare costs. The evidence supports the conclusion that state affordability regulations, when applied to hospital pricing, can effectively curb growth in health care cost while maintaining insurance market stability

Coverage Retention and Plan Switching Following Switches From a Zero- to a Positive-Premium Plan

Coleman Drake, Dylan Nagy, Sarah Avina, Daniel Ludwinski, and David M. Anderson. JAMA Health Forum. May 2025. Available here.

Researchers reviewed HealthCare.gov data from 2022 through 2024 to determine if lower-income Marketplace enrollees lose or change coverage when they are defaulted from a zero-premium silver plan to a silver plan with a premium.

What it Finds

• When enrollees face a transition from a $0 silver plan to a silver plan with a premium, there is a 7% decrease in automatic re-enrollment.
• Although overall active enrollment remained unchanged, turnover from $0 premium silver plans to silver plans with premiums led to 13.4% fewer enrollees re-enrolling in their previous plan and a corresponding 15% increase in enrollees switching to new plans.

Why it Matters

These findings reveal how even modest changes in plan premiums can disrupt coverage continuity for low-income enrollees in the ACA Marketplace. The decline in automatic re-enrollment and increased plan switching suggest that administrative complexity—introduced by shifts from zero- to positive-premium plans—may function as a barrier to stable insurance coverage. Given the high prevalence of such turnover across counties, the potential for widespread disenrollment is significant, particularly if the proposed Marketplace integrity rule is finalized, the budget reconciliation bill is enacted, and/or enhanced subsidies expire in 2026. This study underscores the importance of minimizing administrative friction and reducing financial barriers to preserve equitable access to health insurance.

By Jason Levitis, Christen Linke Young, Sabrina Corlette, Ellen Montz, and Claire O’Brien*

The health insurance provisions of the reconciliation bill passed by the U.S. House of Representatives would eliminate much of the flexibility granted to states over the operations of State-Based Marketplaces (SBMs), impose costly new mandates, and reduce their revenue base. These changes could undermine states’ value proposition for establishing or maintaining an SBM. At the same time, the bill would infringe on states’ long-standing primacy over the regulation of private health insurance by imposing arbitrary new federal rules.

The Bill Eliminates SBM Flexibility and Imposes New Operational Mandates

The Affordable Care Act (ACA) gives SBMs flexibility over numerous operational decisions. For example, the regulations governing Marketplace eligibility determinations permit SBMs to conduct annual redeterminations using either the procedures provided in the CMS rule, alternative procedures specified by CMS for the applicable plan year, or alternative procedures proposed by the SBM and approved by CMS. The ACA also delegates to SBMs authority to establish special enrollment periods (SEPs), rely on their own alternate version of the single streamlined application, and otherwise tailor the SBM to the needs of the state. SBMs have used this flexibility to implement innovative measures to minimize burdens on eligible enrollees, often with the help of electronic data sources and other IT solutions. Doing so has allowed them to expand enrollment and keep premiums low without the prevalence of agent and broker fraud experienced on the federal Marketplace (referred to as the Federally Facilitated Marketplace, or FFM).

The reconciliation bill would eliminate this long-standing flexibility across a wide range of SBM design issues, while also imposing several new and costly operational mandates:

• Eliminates state flexibility to determine open enrollment periods. Current law allows SBMs to extend their open enrollment periods past the federal open enrollment end date of January 15. The bill would require all Marketplaces to shorten their open enrollment periods to just 44 days, from November 1 to December 15. Many SBMs have maintained consistent open enrollment period start and end dates over the last decade that insurers and consumers have come to rely on; requiring SBMs to change these dates could undermine local market stability.
• Eliminates state authority to provide a common special enrollment period. Current law provides SBMs with discretion to establish special enrollment periods (SEPs), which allow enrollment outside the year-end open enrollment period. Using this authority, both the federal Marketplace and all but two SBMs provide a SEP for low-income individuals. The bill would prohibit this SEP and others based on income.
• Requires states to impose additional paperwork burdens on consumers and verify eligibility manually. Current law gives SBMs broad discretion over when, how, and in what format they request additional information to verify eligibility for Marketplace coverage, for a SEP, or to receive advance premium tax credits (APTC). For example, SBMs can generally rely on applicants’ attestations as to their eligibility for SEPs rather than requiring them to manually submit paperwork, such as documentation that they’ve lost previous coverage. The bill would require SBMs to verify SEP eligibility with paperwork from applicants for at least 75 percent of SEP enrollments. The bill would also require Marketplaces to demand additional paperwork from millions of additional applicants when the IRS does not return tax data or when tax data indicates very low income.
• Eliminates state flexibility to shift consumers by default into plans that take advantage of available subsidies. For individuals who are eligible for cost-sharing reductions (CSRs) but enrolled in a bronze plan, current rules permit SBMs to re-enroll them by default in a silver plan for the following year so that they can receive CSRs, as long as the silver plan is similar and no more costly. Several states have taken advantage of this flexibility to ensure eligible consumers benefit from the ACA’s cost-sharing protections and reduce financial barriers to critical health care services. The bill eliminates this flexibility for SBMs. 
• Eliminates passive re-enrollment and state flexibility to rely on trusted data sources. Current rules provide for SBMs to automatically re-enroll current enrollees who do not return to the Marketplace to actively re-enroll, with APTCs adjusted based on electronic data sources. SBMs currently have flexibility over the data sources used to make these determinations, which may include not just federal tax data but also state tax data and state wage filings. The bill would prohibit SBMs from performing re-enrollment with APTC without new information provided by the consumer, effectively eliminating automatic re-enrollment. This runs counter to standard re-enrollment practices for every other form of insurance, including employer-based insurance. We are aware of no precedent for the federal government prohibiting automatic reenrollment for a line of insurance. SBMs have disproportionately leveraged auto-renewal to create stable and competitive markets, with an average of 73% auto-renewal rate for returning customers compared to 46% in the FFM. In addition, for one year before the prohibition on passive re-enrollment takes effect, a separate section of the bill would prohibit automatic re-enrollment with a zero-dollar net premium, by requiring SBMs to reduce APTC in such cases to charge a $5 net premium.
• Prohibits SBMs from providing APTC after asking consumers for additional documentation. Current statute directs Marketplaces to provide APTC when they ask for additional paperwork to verify certain eligibility criteria, if they have determined that the individual is otherwise eligible. The bill would eliminate this “provisional eligibility,” effectively requiring a waiting period of several months for many applicants. Again, we are aware of no precedent for a federal requirement for a months-long waiting period for a line of commercial insurance.
• Requires states to establish a new “pre-enrollment verification” system running from August through October each year. Current rules permit SBMs to rely on similar eligibility and enrollment procedures year-round for active re-enrollment. Eligibility determinations are generally made quickly, so coverage can begin a month or less after the application is submitted. The bill would require SBMs to stand up a new and separate apparatus for “pre-enrollment verification,” under which consumers could submit eligibility information for the following year starting in August, but coverage would still not begin until January. This new system would have to be in place by August 1, 2027.

Reducing flexibility in these ways would make establishing or maintaining an SBM less attractive for states. Flexibility is a key reason cited for interest among states that have recently adopted or considered transitions, including Georgia, Illinois, Texas, Oklahoma, and Oregon, and a key benefit cited by existing SBMs.

It is also notable that a primary justification offered for the bill’s elimination of SBM flexibility is to reduce “fraud.”^a In fact there is no evidence that the agent and broker fraud experienced by the Federal Marketplace is a problem for SBMs. Removing their ability to maintain current best practices will result in millions of eligible individuals losing coverage. The new requirements serve only to force states to adhere to one-size-fits-all federal standards that prevent SBMs from responding to local market conditions and providing an optimal customer experience.

The Bill Would Impose New One-Time and Ongoing Costs on SBMs

The new mandates described above create intensive and costly new work for SBMs. There would be immediate implementation work to change systems, retrain staff, and educate consumers and partners about impending changes, as well as ongoing work to carry out more burdensome enrollment procedures with less ability to rely on electronic data. Switching from automatic checks against third-party data sources to manual processes increases costs and burdens for both SBMs and consumers and reduces the efficiency of the system. These costs will need to be covered by higher user fees, which in turn will raise premiums for all consumers in the individual market, regardless of whether they purchase on or off the Marketplace. These cost include:

• Rebuilding IT architecture. The multiple changes described above will require SBMs to rebuild many aspects of both consumer-facing and back-end eligibility systems. CMS estimated an IT cost of $158.3 million for implementing the Marketplace rule, which the bill would codify.^b That does not include eliminating passive reenrollment and provisional eligibility and the creation of new systems for pre-enrollment verification beginning in August, which are three of the most far-reaching changes in the bill. Some provisions make conflicting changes that would require rebuilding the same architecture twice. For example, SBMs would need to change their systems to impose a $5 premium for automatic re-enrollees starting in the fall of 2026. And then they would need to change their systems again to eliminate automatic re-enrollment starting in the fall of 2027.
• Retraining call center staff, caseworkers, and assisters. SBMs would need to develop and provide new training materials for consumer-facing staff and partners, including call center operators, caseworkers, Navigators, agents and brokers, and certified application counselors.
• Handling additional customer interactions. Eliminating automatic re-enrollment–which accounted for 10.8 million enrollments in 2025–would mean that every applicant would need to interact with the Marketplace each year. The pre-enrollment verification system will also create millions of additional customer interactions. And these interactions will not replace those during the open enrollment period. Individuals will still need to come in then to enroll and choose a plan. And there will still be changes in circumstances after August, which will require reporting those changes and resolving any further inconsistencies that arise. As a result, SBMs won’t just do more verifications, they will do verification multiple times for the same consumer. 
• Processing additional paperwork. The new paperwork required from applicants under the bill would also necessitate a tremendous new effort from SBMs to process the paperwork. For example, CMS estimated that the new income verification rules would require 2.7 million applicants to submit additional paperwork, all of which would need to be processed. The SEP verification requirement would mean 473,000 more applicants providing paperwork to verify their eligibility for an enrollment opportunity. SBMs would need to hire and train new consumer-facing support staff and/or contractors to manually review and confirm eligibility verification documents submitted by consumers. On top of the costs of IT changes, CMS estimated that SBMs will need to spend $60.3 million annually or $603.4 million over 10 years to implement the changes in the rule alone. 
• More customer support staff to address questions and adverse determinations. The additional interactions and paperwork requirements would lead to many more consumers needing help to resolve questions. The elimination of provisional eligibility would raise the stakes for resolving eligibility issues quickly, likely increasing the volume and urgency of these calls.
• Keeping more staff and contractors for more of the year. Currently Marketplace can scale back their operations outside of the open enrollment period. But several elements of the bill will increase costs at other times of the year, including pre-enrollment verification beginning in August and more eligibility verification for SEPs and APTC eligibility year-round.
• Additional communications requirements. SBMs will need to invest in new outreach and communications efforts to educate consumers and partners about their new obligations under the bill and the shortened time periods that consumers will have to meet those obligations.

The Bill Would Reduce SBMs’ Revenue Base

The Affordable Care Act requires the Marketplaces to be financially self-sustaining. Most SBMs rely on premium assessments or per member user fees to generate the revenue to fund their operations. The reconciliation bill would reduce Marketplace enrollment by millions of people, thus reducing SBM revenue. To be financially sustainable, SBMs will need to increase their user fees. This will result in an increase in premiums, which could, in turn, lead to further enrollment losses.

The Bill May Alter States’ Calculus about Establishing (or Maintaining) an SBM

As discussed above, the bill would reduce the flexibility afforded to SBMs, increase their operating costs, and reduce their revenue. Taken together, these changes may undermine the value proposition of states transitioning to or maintaining an SBM. Over the course of the last decade, the number of states with an SBM has grown from 15 in the first year of implementation to 20 states today (Illinois and Oregon will make it 22 in 2026 and Oklahoma’s legislature authorized that state to become the 23rd SBM in a bill enacted in May 2025). State lawmakers have shown increasing interest in transitioning to an SBM to take advantage of the flexibilities that enable them to tailor their Marketplace to meet the needs of state residents. However, under H.R. 1 states will lose that flexibility and are faced with higher costs and a smaller enrollment base from which to finance operations. This makes it less likely that states will choose to transition to a SBM in the future and could result in some current SBMs becoming unsustainable, requiring the federal government to take over their operations. In addition, the bill’s implementation timeline would prevent a state no longer willing to run an SBM from transitioning to the FFM before being required to implement changes.

The Bill Would Infringe on State Regulation of the Individual Health Insurance Market

For decades, states have had primary authority for regulating health insurance markets. Some federal standards were codified in the Public Health Service Act (PHSA) by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the ACA. However, the PHSA requirements address only a relatively small number of issues and generally defer to states on specific implementation choices and on enforcement. The reconciliation bill contains several provisions that infringe on this long-settled vesting of authority, including changes affecting plans outside the Health Insurance Marketplaces.

• Infringes on state authority to define essential health benefits. Currently, each state has authority to establish the essential health benefits (EHB) package, which is applicable to all private health insurance. States have authority to designate as EHBs any service that’s included within 10 broad categories enumerated in the ACA. The bill provides that EHBs may not include specific services related to “gender transition”–even those services that fall squarely within the ACA’s EHB definitions. This would be the first time states are prohibited from including specific services as EHBs. 
• Eliminates state flexibility to permit insurers to provide relief for non-payments of de minimis premiums. Current rules give state insurance regulators flexibility to permit insurers to keep enrollees covered even when they owe small past-due premium balances. The bill would scale back states’ authority to provide such flexibility.
• Denies cost-sharing subsidies payments to insurers that provide certain abortion services–but in a way that rewards states with abortion mandates. The bill provides that issuers that provide certain abortion services may not receive reimbursement for the ACA’s CSRs. As CBO noted in a recent analysis of the bill’s coverage effects, this would unintuitively increase PTC payments in states that require Marketplace plans to cover abortion, and higher PTC would improve the individual market risk pool overall in such states. It would also result in less abortion coverage in Marketplace plans in states that permit but do not require abortion coverage, since insurers that cover abortion would need to increase premiums to account for the lack of CSR payments, which would likely not be a viable option. Notwithstanding these complex repercussions, this abortion language is clearly an effort to infringe on state policy choices regarding the benefits provided by private health insurance.
• Limits enrollment opportunities market-wide. As noted above, the bill limits state flexibility to establish open and special enrollment periods in their SBMs. Crucially, this also affects state regulation of health plans in their entire individual insurance market, because plans sold through the Marketplace are part of a single risk pool with non-Marketplace plans, which means it is important to establish the same enrollment windows on and off Marketplace. Thus, state insurance regulators are constrained in their ability to establish enrollment windows that meet state needs.
• Loosens actuarial value rules market-wide: The bill modifies standards for the actuarial value of all individual market health plans to allow less generous plans, applicable on and off Marketplace pursuant to ACA Section 1311 and PHS Act Section 2707. States could limit the reach of this provision by defining standardized benefit packages. But in many states such rules do not apply outside the Marketplace, so less generous plans will become available in those market segments. 

In addition, the bill would make an additional change to the PHSA. Specifically, it would exempt insurers from the guaranteed availability requirement in cases of past-due premiums, unless state law specified otherwise.

* Jason Levitis is a Senior Fellow, and Claire O’Brien a Research Associate, in the Urban Institute’s Health Policy Division; Christen Linke Young is a Visiting Fellow at the Brookings’ Center on Health Policy; Sabrina Corlette is a research professor and co-director of the Center on Health Insurance Reforms (CHIR) at Georgetown University; Ellen Montz is a Managing Director at Manatt Health. The views expressed in this piece are those of the authors and do not necessarily represent those of their organizations or their boards or funders.

^a In fact, these Marketplace proposals in the bill fall under headers entitled “Addressing waste, fraud, and abuse in the ACA Exchanges” and “Preventing Fraud, Waste, and Abuse.”

^b CMS did not include an estimate for costs to SBMs under the prohibition of SEPs for low-income individuals because it incorrectly claims that no SBMs currently have a SEP of this kind. The $158 million cost includes $7 million for this provision, which is calculated by taking the estimate for the cost of these IT changes to the FFM ($390,000) and multiplying it by the number of SBMs with this SEP (18).

By Stacey Pogue, Justin Giovannelli, and Sabrina Corlette 

In March 2025, the Centers for Medicare and Medicaid Services (CMS) proposed numerous changes that would make it harder for people, particularly those with lower incomes and immigrants, to enroll in and renew Marketplace coverage. CMS justified the proposal as a means to reduce fraudulent and improper enrollments and increase program integrity, yet the actual changes in the proposal belie the stated premise. The proposed rule references a serious Marketplace issue–unscrupulous brokers enrolling people in Marketplace coverage or switching their plans without their permission in the pursuit of commissions from health plans. This broker misconduct has been well-documented through media coverage, a federal lawsuit, and a spike in consumer complaints. Despite its premise, the rule fails to increase oversight or accountability for unethical brokers and ignores straightforward measures to address broker fraud. 

Trying to deter unauthorized enrollments by making it harder for individuals to sign up for coverage is like trying to “prevent car theft by making it harder for people to buy cars.” Yet Congress may nonetheless double down on this approach as it seeks ways to slash federal spending. The House-passed budget bill codifies CMS’ Marketplace integrity rule. In a telling move, the bill enshrines into law every rule provision that makes it harder for people to enroll in or renew Marketplace coverage, yet leaves out the one rule provision that touches on broker oversight. 

Agents, brokers, and web-brokers (collectively referred to here as “brokers”) provide valuable assistance to consumers who need help enrolling in the Marketplace. Given the clear harm bad actors pose to both Marketplace consumers and law-abiding brokers, there is value in identifying common-sense yet overlooked safeguards that would increase oversight and directly address system vulnerabilities that lie at the root of the problem, without making it harder for consumers to enroll in or renew coverage. This blog post explains the single policy clarification related to broker accountability in CMS’ Marketplace integrity proposal and identifies other straightforward, yet thus-far-ignored, ways to curtail broker misconduct.

Apparent role of enhanced direct enrollment platforms

In comments to CMS about the rule proposal, states that operate their own Marketplace widely reported that they do not have issues with broker fraud and improper enrollment; rather, this issue appears limited to states that use the federally facilitated Marketplace, HealthCare.gov. This different outcome appears to be explained in part by the use of enhanced direct enrollment (EDE) in the federal Marketplace. EDE enables approved insurers and web-brokers to enroll consumers in Marketplace coverage using private websites that exchange information with the back-end of HealthCare.gov. The federal Marketplace has allowed EDE since 2019, but it was not used in any state-run marketplaces before Georgia deployed it for 2025 coverage. Agents frequently use EDE to enroll consumers because it can offer a streamlined experience and integrated customer service tools. While brokers enroll millions of consumers in the Marketplace through EDE with no incident, it appears that weaknesses in the interface between EDE platforms and the federal Marketplace allowed unscrupulous brokers to enroll consumers or change coverage without consent. For example, before CMS added safeguards in mid-2024, an unscrupulous broker using an EDE platform could access and make changes to a consumer’s HealthCare.gov coverage using only the consumer’s name, date of birth, and state of residence. In addition, a lawsuit filed last year alleges that a company that runs two EDE platforms was part of a broad scheme in conjunction with upstream marketing companies that generate sales leads (called “lead generators”) and broker call centers that used misleading ads and call-center scripts to enroll consumers without informed consent at high volumes. 

CMS’ initial response

Starting in 2024, CMS under the Biden administration implemented several changes to prevent broker misconduct and protect consumers. These changes fall into three categories: 

• systems changes to increase security,
• increased oversight of brokers, and 
• consumer education and assistance. 

As of July 2024, the Marketplace requires a three-way call with the consumer before a new broker can make coverage changes through enrollment websites. This safeguard, which establishes consumer consent before allowing a broker to take commission-generating actions, brings federal Marketplace safeguards more in line with those in state-run Marketplaces. Following this action, broker-initiated plan changes dropped nearly 70 percent and the redirection of commissions from a consumer’s original broker to a new one (an indicator of potential misconduct) fell almost 90 percent. Additional system security upgrades have helped protect against misuse of broker login credentials and require that brokers enter a consumer’s Social Security Number, which is verified in real-time, before completing an online enrollment. 

CMS also ramped up oversight of brokers. Between June and October 2024, CMS suspended hundreds of brokers suspected of misconduct and revoked the authorizations of two EDE platforms. In addition, CMS deployed IT systems to detect suspicious broker activity, extended its enforcement authority over broker agencies that facilitate misconduct, encouraged insurers to monitor broker activity for red flags, and developed a system to share complaints about broker activity with state departments of insurance that license brokers and can investigate them. CMS also updated its model consumer consent notice and developed a model script to help brokers ensure their clients are fully informed and that consent is adequately documented.

Finally, in 2024, CMS increased outreach to consumers and re-allocated staff to review and resolve consumer complaints about broker misconduct more quickly. 

Shift in CMS’ approach

Thus far under the Trump administration, CMS has reoriented its focus with respect to unauthorized enrollment. As illustrated by the proposed Marketplace integrity rule, CMS’ current approach prioritizes increasing paperwork verifications that consumers must submit to enroll or renew over preventing broker misconduct or holding bad actors accountable.  

The rule proposal does not actually establish any new oversight or safeguards to hold brokers to account for misconduct and unauthorized enrollments. Existing rules already spell out CMS’ authority and process when a broker fails to comply with the law or the terms of their agreement with the Marketplace. The proposed rule tweaks just the transparency of that process. It clarifies that CMS will use a “preponderance of the evidence” standard of proof when assessing potential misconduct by brokers. Beyond this nominal clarification, CMS notes that it may later update guidance to brokers or engage in future rulemaking. 

CMS may already be using the proposed evidentiary standard, even though it is not spelled out in rule today. The preamble notes that the proposal is not expected to have any impact or create any burdens for brokers. Consumers, on the other hand, some of whom have fallen victim to broker misconduct, will be impacted by the rule. CMS anticipates that the proposal will cause 2 million people to lose Marketplace coverage (and that is without accounting for coverage losses that can be reasonably expected from changes that will make it harder for eligible individuals to enroll and renew).

While evidence from CMS indicates security measures adopted in 2024 have helped curtail misconduct, recent massive changes at the agency call into question whether it can maintain that progress. Sweeping layoffs in federal health agencies, including staff that directly address broker fraud will impact the ability of CMS to conduct needed oversight of brokers and assist affected consumers. 

Overlooked steps that directly address broker fraud

In its rule proposal, CMS acknowledges that broker fraud has receded, but argues that further action is warranted. Yet, this very proposal and the House-passed bill to codify it lack any actual steps to prevent and root out broker misconduct. The many common-sense, yet overlooked, policy options to address broker misconduct while protecting consumers include: 

• Surveying state-run Marketplaces and adopting best practices. Given that state-run Marketplaces do not experience the enrollment-related fraud and misconduct seen in the federal Marketplace, CMS could survey state Marketplaces to learn more about their use of effective safeguards and oversight and integrate best practices into the federal Marketplace. 

• Ensuring federal staff capacity to resolve consumer complaints and conduct broker oversight. Sweeping layoffs at federal health agencies included 200 staff who conducted manual casework to resolve consumer complaints about unauthorized broker enrollments and ensure that consumers are held harmless for any subsidies paid towards a plan they did not select. In October, well before current upheavals for federal employees, it took CMS about 52 days to resolve a complaint about unauthorized enrollment. Staffing cuts call into question whether CMS can maintain, much less improve, that timeline and ensure consumers who are victims of fraud or abuse are held harmless.

• Increasing accountability for consumer consent. The Marketplace requires that brokers 1) obtain a consumer’s consent to help them enroll and 2) ensure consumers have reviewed and verified the accuracy of information on their application before it is submitted. Brokers must document consumer review and consent, but do not have to routinely submit proof of it. CMS allows documentation through any format, including a recorded phone call, text message, email, or signed form and makes a voluntary model consent form and script available. CMS could conduct consumer testing on its model consent form and script and, once tested, require their use by brokers. CMS could also require that documentation of consumer consent be submitted and verified by an issuer before a broker receives a commission. 

• Increasing accountability for misleading or fraudulent actions upstream in the enrollment process. As detailed in a federal class action lawsuit, misleading ads and call center scripts deployed upstream from brokers and web-brokers are allegedly driving some unauthorized Marketplace enrollments. While CMS does not have direct oversight of certain third-party entities, like lead generators or field marketing organizations that collect and sell consumers’ information or “leads” to brokers, CMS can leverage its regulations and agreements with issuers, brokers, and web-brokers to help drive upstream accountability. Where CMS needs additional authority to crack down on misleading marketing, as it has, for example, in Medicare Advantage, Congress could step in to require marketers to register with the marketplace and meet standards.

• Improving oversight of EDE. While CMS patched known weaknesses in EDE that appear to have provided the platform for unauthorized enrollments and plan switching at scale, additional oversight may be warranted. The two EDE platforms CMS suspended in 2024 share a parent company that has a long history of noncompliance. It was subject to four suspensions between 2018 and 2024 due to concerns about submitting false Social Security Numbers, failing to verify consumer identity, and sending or allowing access to sensitive consumer information from outside of the U.S. CMS raised concerns about various forms of noncompliance on a “near monthly basis” leading up to the platforms’ 2024 suspension. This history raises questions about whether CMS has sufficient authority and staff capacity to quickly address EDE noncompliance issues that could harm consumers or jeopardize Marketplace integrity.

• Partnering with state departments of insurance.  CMS could more readily share information about troubling patterns of broker behavior with state insurance regulators prior to the final adjudication of a case. State insurance regulators are responsible for the licensure of brokers within their states and can be important partners with CMS in protecting consumers from broker misconduct.

• Establishing a duty to act in the consumer’s best interest. Congress could require brokers who offer marketplace coverage to abide by a federal standard of conduct that obligates them to act in the best interest of the consumer and be held liable if they do not.

• Ensuring victims get the coverage they need. CMS should ensure that victims of fraud or abuse are eligible for an “exceptional circumstances” special enrollment period, beginning when a consumer learns that he or she has been improperly switched to a new plan, to retroactively enroll in the plan of their choice. 

Conclusion

Well-documented broker fraud is a significant program integrity issue for the Marketplace, yet CMS’ proposed Marketplace integrity rule takes no meaningful steps to mitigate it, nor does the House-passed budget bill that would codify the rule. Instead, these policies would roll back recent efforts to streamline enrollment and renewal for consumers and create a thicket of red tape that will make it hard or impossible for millions of people to access Marketplace coverage. Despite raising concerns about ongoing broker misconduct in its proposal, CMS tipped its hand. By its own telling, the rule would cause up to 2 million consumers to lose Marketplace coverage, while it would not have “any impact or burdens” for brokers, even the bad apples. 

Last month, the House of Representatives passed its so-called “One Big, Beautiful Bill” to extend tax cuts to wealthy individuals and corporations while reducing federal support for Medicaid and Marketplace health insurance coverage. This budget reconciliation bill cuts $200 billion in Federal spending for the premium tax credits (PTCs) that support enrollees’ premium payments on the Affordable Care Act (ACA) Marketplaces—although, per the Congressional Budget Office’s practice for policies that mirror pending regulations, the official cost estimate reflects only half of this amount. This cut to PTCs is driven in part by the bill’s new paperwork requirements and financial burdens that would make it harder for eligible individuals and families to enroll in and keep Marketplace coverage; new eligibility rules that prohibit certain immigrants and individuals who do not meet new Medicaid enrollment requirements comprise a second set of spending and coverage cuts. These changes to Marketplace rules would result in approximately 4 million people losing health insurance coverage. This blog profiles some of the Marketplace enrollees who would face new and sometimes unsurmountable obstacles to maintaining their Marketplace coverage if the reconciliation bill becomes law. 

Background

The House-passed reconciliation bill creates new limitations within Marketplace enrollment processes, such as shortening the annual open enrollment window, eliminating automatic re-enrollment and provisional eligibility for PTCs, creating more extensive and harder-to-navigate income verification requirements for PTCs and the cost-sharing reductions (CSRs) that enable enrollees to access care, and shortening the timeframe for resolving verification problems before consumers lose access to PTCs. The net result would be that unless Marketplace enrollees actively shop for and enroll in a new health plan every year, have few (if any) changes in their income or family status year-to-year, can easily verify their prior year income, and can provide sufficient documentation to explain any discrepancies between their expected income and federal tax data, they may risk losing their health insurance.

Marketplace enrollees and new applicants would face a paperwork thicket

The reconciliation bill would leave millions of people eligible for but unenrolled in Marketplace coverage—many of whom would be caught in a morass of new paperwork and verification requirements. In general, people who report changes in income or family status that the Marketplace cannot verify through tax data would risk losing their PTCs until they provide acceptable proof of these changes; people who cannot pay the full premium while they wait for their PTC eligibility to be verified would lose their coverage. Some examples include:

• Families with newborns. Marketplace enrollees must provide Social Security numbers for all family members; failure to provide a Social Security number for a single family member automatically triggers a data matching issue (DMI) with the Marketplace and delays PTC eligibility for the entire family until the family can provide a verified number. 

A family in Richmond, Virginia can expect to wait 6 weeks for the Social Security Administration to mail out their new baby’s Social Security number—even if they apply for the Social Security number at the hospital. If this Virginia family reports the birth to the Marketplace within the 60-day special enrollment period for the baby’s coverage, but before they have the baby’s Social Security number, this would prompt a DMI. In this case, the entire family would lose their PTCs and must pay their full premiums to maintain health insurance coverage. If they can’t pay the full premium, they would lose their coverage and need to wait for the next open enrollment period to have the Marketplace verify their eligibility for PTCs.

Or, if the baby is born shortly before or during open enrollment, the family is unlikely to have the baby’s paperwork in-hand in time for the Marketplace to verify their eligibility for PTCs before the beginning of the plan year. In this case, the family would need to pay the full first month’s premium—known as a “binder payment”—to start their coverage. If they can’t afford this payment, they would be without Marketplace coverage for the next plan year. 

• People who get married. In addition to creating a new family, marriage creates a new tax unit that does not match existing tax data. After a June wedding, for example, a couple would report their new marital status to the Marketplace within the 60-day special enrollment period related to this life event. Their new household information would not be verifiable with previous years’ tax data and would most likely trigger a DMI. At this point, the couple would lose their PTCs and need to provide proof of their marriage and newly combined income for Marketplace verification. Should this chain of events play out, they would need to pay their full premiums, without the help of PTCs, or lose their Marketplace insurance until the next open enrollment.

• People who get divorced. A family breakup through divorce will result in new, smaller household units that are not reflected in prior years’ tax data, as well as income changes that will require a new eligibility determination for PTCs. These changes, once a newly-divorced couple reports them to the Marketplace, would likely result in a DMI. Both households would provide proof of the divorce and their newly-independent income for Marketplace verification, and would need to pay their full Marketplace premiums without PTCs until the DMIs are resolved or else lose their coverage. 

• People who are laid off. When a technology worker in Silicon Valley is part of a company-wide downsizing, or a retail worker is caught in bankruptcy-related layoffs,  the expected income they report on a coverage application will likely be lower than the income on their last tax return. This discrepancy will result in a DMI, which would delay their eligibility for PTCs until the DMI is resolved. They may need to make their full binder payment in order to activate their coverage—even if, after losing their job, they cannot afford this expense. In addition, workers who lose their jobs outside of open enrollment and apply for coverage through a Special Enrollment Period could face even more paperwork to demonstrate their eligibility for PTCs.

• Low-Income Workers. If tax data indicates that a home health worker or certified nursing assistant earns less than the federal poverty level (approximately $32,000 for a family of four) when they apply for Marketplace coverage, these workers would need to provide additional documentation to qualify for PTCs. Even at low income levels, workers would not be considered provisionally eligible for PTCs and would have to make a full premium payment if their income verification issue is not resolved promptly. 

• People with inconsistent income. A wide range of workers can experience considerable year-to-year fluctuations in their income. Some examples include:
  • A self-employed plumber
  • A freelance designer whose client load ebbs and flows
  • A music teacher whose roster of students changes each year
  • An hourly worker who can’t control how many hours they have on each shift
  • An entrepreneur who leaves a larger enterprise to start their own business

If these workers—or people like them—apply for new or renewed Marketplace coverage, their inconsistent income would mean that tax data might not verify their eligibility for PTCs. They would then have to provide additional documentation to the Marketplace, and potentially pay their full premium to maintain coverage while the Marketplace solves this discrepancy. This enrollment barrier could affect more than 3 million small business owners and self-employed workers who hold Marketplace coverage.

Other proposals deepen the paperwork thicket

People such as newlyweds, self-employed workers, and families that welcome new babies are even more likely to end up uninsured thanks to other proposed changes to Marketplace enrollment. For example, a 44-day open enrollment period—rather than the current 76-day timeframe—provides consumers significantly less time to solve DMI problems and provide Marketplaces with the documentation they need to enroll in coverage. When shorter enrollment timeframes are combined with the elimination of provisional eligibility, consumers who experience problems with their enrollment paperwork are less likely to retain their coverage.

Similarly, the Trump Administration’s near-elimination of enrollment assistance and consumer outreach would mean that enrollees may not even know that enrollment processes have changed and would have a hard time finding help with their enrollment paperwork once they know they need to take action.

Finally, the enhanced premium tax credits (ePTCs), which provide greater help with Marketplace premiums to lower- and higher-income families than the original ACA premium subsidies, are slated to expire at the end of 2025. Unless Congress amends this bill to extend ePTCs, or passes other legislation to maintain this higher-level of premium support, Marketplace enrollees will face higher premiums to enroll in coverage comparable to what they hold today.  And because ePTCs induce lower-risk and lower-spending individuals to purchase Marketplace plans, they reduce average total premiums by 5 percent before subsidies are applied. Individuals and families who must pay the full first-month premium to maintain their coverage, thanks to paperwork problems, would therefore face an even higher bill.

Takeaway

Now it’s the Senate’s turn to craft reconciliation legislation. Should Senate policymakers decide to mirror the House’s determination to complicate the Marketplace eligibility and enrollment process, millions of eligible individuals and families, including new families, laid-off workers, and small business owners, could be caught in the resulting paperwork thicket and be left without health coverage. 

By Rachel Swindle, Jalisa Clark, and Justin Giovannelli

One of the first actions by the Centers for Medicare and Medicaid Services under the Trump administration was to announce extreme cuts in funding for Navigators, the Affordable Care Act (ACA) grant program for organizations that provide outreach, education, and enrollment assistance activities.

The 90 percent reduction in program funding could not have come at a worse time. A proposed rule by HHS threatens to cause 2 million Americans to lose coverage, failure to extend the enhanced premium tax credits may increase net premiums 25 to 100 percent, and Congress is considering drastic cuts to Medicaid.  As barriers to coverage access continue to rise, the Navigator funding cuts will make it even more challenging for Americans in the 31 states using HealthCare.gov to enroll in affordable health care coverage. 

While devastating, this announcement is not unexpected. The funding cuts replicate reductions made during the first administration as a broader effort to weaken the ACA, and the harmful impacts are likely to repeat as well. 

In a new post for the Commonwealth Fund’s To the Point blog, CHIR’s Rachel Swindle, Jalisa Clark, and Justin Giovannelli dispute the rationale behind the funding cuts presented by the Trump administration and highlight the gravity of reducing the Navigator program and outreach and enrollment assistance. You can read the full post here.

By Christine H. Monahan, Maanasa Kona, and Madeline O’Brien

As U.S. health care spending continues to spiral up, states are using a variety of tools to push back. This includes both traditional legislative and regulatory action, as well as the government’s market power as a health care purchaser and other contracting authorities.

In a new book of essays, Health Law as Private Law, CHIR faculty members examine the impacts and limitations of three mechanisms — health insurance marketplaces, public option-style plans, and state employee health benefits programs — through which states are leveraging their role as a contractor to lower health care prices in the private health insurance market and advance broader policy goals, such as piloting new payment models or improving the quality of care and coverage. The authors find that these contracting solutions are significantly limited by consolidation in the health care provider market. States are further hamstrung by political pressure to not exercise their market power in a way that would reduce choices for consumers. Yet, contractual approaches can achieve incremental savings if the conditions are right and, given political barriers to more aggressive regulatory reforms, they may be the best option for some states to act in the near term.

You can read the full essay here.

By Sabrina Corlette and Rachel Swindle

In the past few years, the Affordable Care Act (ACA) marketplaces experienced significant enrollment growth, contributing to historically low uninsured rates. This is largely attributable to enhanced premium tax credits enacted in 2021 and to marketplace efforts to reduce barriers to coverage, including the expansion of open-enrollment and special-enrollment opportunities.

In March, the Trump administration released a draft regulation that would limit those enrollment opportunities and increase paperwork requirements for consumers to prove their eligibility for coverage and tax credits. Those policies are slated to be codified in the budget reconciliation package pending before Congress. The administration argues that the current policies have prompted less-healthy people to enroll (this is known as adverse selection), which led to an increase in premiums. However, there is limited evidence that expanded open- and special-enrollment periods have led to adverse selection. In fact, data from several state-based marketplaces suggest that reducing administrative burdens around enrollment and conducting robust consumer outreach can both grow enrollment and improve the health of marketplace risk pools. In a recent article for the Commonwealth Fund, Sabrina Corlette and Rachel Swindle assess the impact of shortened and limited enrollment opportunities. You can read the full article here.

By Karen Handorf, Christine H. Monahan, and Kennah Watts

Pharmacy benefit managers (PBMs) have received significant attention from the White House, members of Congress, federal regulators, and state lawmakers, as well as the media, for exploitative, cost increasing practices. Yet, most employer health care dollars are spent on medical care where another type of corporate middlemen—third-party administrators owned by large insurance companies (TPAs)—operates. In contrast to PBMs, corporate TPA practices remain underscrutinized relative to their importance in the health care system.

While TPAs claim to lower medical costs––similar to PBMs’ assertions that they reduce drug costs––allegations made in litigation suggest this is not often the case. Other lawsuits and investigations raise concerns that TPAs are imposing hidden fees, benefiting from their own form of spread pricing, and otherwise prioritizing their own financial interests over their health plan clients when negotiating contracts and administering claims. Despite provisions in the Consolidated Appropriations Act of 2021 intending to allow employer plans to “look under the hood” at their health care claims data and compensation TPAs and other service providers receive, TPAs continue to obstruct employer efforts to monitor health plan spending and quality of care.

As Americans across the country demand health care price relief, TPAs warrant the same level of attention policy makers have been giving PBMs. Based on the growing anecdotal evidence of abuses and increasing profits for the TPA business lines of the nation’s largest insurers, examining these TPAs’ practices could enable policy makers to pursue reforms that help lower out-of-pocket costs, slow premium growth, and increase wages for workers.

Why Do Employers Contract With TPAs?

Nearly two-thirds of covered workers receive their insurance benefit from a self-funded health plan. Self-funded plans pay employee health care benefits directly, with funds from the plan sponsor (usually the employer) and employee premium contributions. Despite growing interest in direct-contracting models, particularly for services such as primary care, self-funded employers generally do not have the expertise or resources necessary to self-administer all of their employees’ medical claims, negotiate reimbursement rates with providers, or create provider networks. Employers attempting to negotiate directly with medical providers also can be stymied by anticompetitive agreements between health systems and insurers that prohibit network providers from directly contracting with employers. As a result, self-funded employers, guided by health insurance brokers and benefit consultants, typically contract with TPAs for their expertise, for access to the TPAs’ provider network rates, and for claims administration. But to be clear, the health care spending risk is born by the plan sponsor and employees, not by the TPA.  

What Concerns Do TPA Contracts Raise?

A self-funded employer signs an administrative service agreement (ASA) when they first engage the TPA and again at contract renewal. Under the ASA, the TPA primarily charges the plan sponsor a per-employee-per-month fee for its services. The ASA may require the self-funded employer to establish and fund a bank account under the TPA’s control from which the TPA withdraws assets to pay benefit claims and pay itself fees. The ASA also gives the TPA broad authority to administer claims in accordance with plan documents, including the authority to reprice medical claims and collect provider overpayments. The ASA, however, generally does not provide the plan sponsor with the terms of the reimbursement agreement between the TPA and its network providers, nor a clear payment methodology for non-network claims, nor a detailed delineation of the TPA’s administrative practices, including the use of third parties to reprice claims. Like PBMs, TPAs consider their contracts with providers and other third parties to be proprietary and rarely disclose these agreements to self-funded employers. It is “proprietary” documents such as these, however, that determine how much health plans and plan members must pay and how that money is allocated among providers, the TPA, and other intermediaries.

The Illusion Of Negotiated Rates

TPAs historically kept their network provider negotiated rates secret, but this practice ended with implementation of the transparency in coverage regulations––federal rules that require plans to disclose their cost information for in-network rates and out-of-network allowed amounts. But what self-funded plan sponsors are coming to understand, as they compare their TPAs’ posted negotiated rates to their own hard-fought claims data, is that their ASAs may not require TPAs to pay network providers the negotiated rate.

For example, as a Connecticut Bricklayers union found, ASAs may allow TPAs to pay a provider more than the billed charge. One reason this may happen is revenue guarantees, in which the TPA promises to pay certain network providers a minimum amount of revenue per year, regardless of the amount the provider billed for actual services performed. The TPA can opt to tap self-funded plan assets, rather than its company’s own fully insured plan reserves, to meet these guarantees. (Court records show insurance companies similarly leverage self-funded plan assets to the benefit of their fully insured business lines in a practice called cross-plan offsetting.) Lawmakers and stakeholders have called out PBMs for similar pricing gamesmanship for retaining discretion to define and modify drug pricing terms and schedules to their own advantage.

Even when claims are paid based on the negotiated rate, plan sponsors may have cause to question whether they are getting a good deal. The insurance companies that own TPAs increasingly own physician groups and hospitals. UnitedHealth, for example, is the largest employer of physicians nationwide (through its fully owned division, Optum Health), while also covering tens of millions of self- and fully insured lives. Similar to how PBMs increase profits by steering participants to affiliated pharmacies, TPAs increase their parent company profits and drive up plan costs by steering participants to affiliated physicians and hospitals who they often pay considerably more than non-affiliated network providers. Insurance companies also negotiate lower prices for their fully insured products, in which they bear the financial risk for claims, than for the self-funded plans they administer as TPAs. This may be explained both by differences in network size and company financial incentives.

The Disappearance Of Usual, Customary, And Reasonable Rates For Out-Of-Network Care

Most ASAs today are vague on payment methodology for out-of-network providers. ASAs used to promise payment of “usual, customary, and reasonable” (UCR) rates when a negotiated rate did not apply. This concept offered a general benchmark for all stakeholders, including employers and plan members, as to what a plan would contribute for out-of-network care. When New York State investigators accused UnitedHealth of fraudulently determining UCR rates through use of its in-house database, Ingenix, UnitedHealth agreed to pay $50 million to fund a nonprofit claims database called FAIR Health to serve as a benchmark for UCR. Despite availability of this independent database, TPAs are replacing UCR and FAIR Health rates with inscrutable generalities. For example, one ASA contract states that the TPA would price out-of-network claims through “a mix of out-of-network programs that offer varying degrees of discounts, consumer advocacy, and cost controls.” Plans and plan members alike can no longer predict what the plan will pay.

Instead of reference to a benchmark, it is common for TPAs to use “repricers” for non-network claims, which often require providers to accept significant underpayments for claims if they want to be paid at all. (Whether a provider’s acceptance of these payments comes with balance billing protections for plan members varies.) The TPA and the repricer then collect from the employer a potentially substantial fee in “shared savings,” as high as 50 percent of the difference between the provider’s billed charge and ultimate payment. Through these programs, TPAs have adopted their own form of PBM “spread pricing.” Unlike PBMs TPAs and repricers only take a portion of the spread on medical claims, but the approach similarly allows the companies to profit from high provider list prices and incentivizes them to significantly lowball reimbursement.

TPAs argue that repricing saves plans money, even as the “shared savings fee” can sometimes be a multiple of the provider reimbursement amount. Self-funded employers may not know how much they are actually paying the provider and how much is the administrative fee, while plan members (employees and their dependents) may face significant financial liability to the extent balance billing protections are not negotiated during the repricing process. More research is needed to determine whether this “shared savings” approach to paying for out-of-network care is preferable to alternatives such as a return to UCR, more novel reference-based pricing models, or regulatory interventions such as out-of-network price caps, considering both total spending and patient financial exposure.

Claims Payment Gaming

TPA contracts often offer plan sponsors a flurry of other “savings” programs as part of their claims adjudication systems, sometimes for extra fees. These programs can mask misaligned incentives from which TPAs can profit. Perhaps most concerning is TPAs’ discretion over when and how closely to engage in prepayment claims review processes, combined with fee-based overpayment recovery programs. As one lawsuit has alleged, TPAs can increase their “savings” fees by initially allowing improper payments to be made and then collecting recovery fees when correcting the errors post-payment. Employers are unlikely to even recognize that the pre-payment bill review role they expect their TPA to perform is not happening consistently or at all.

Itemized bill review is a specific type of pre-payment review that TPAs use to look for billing errors and overcharges for hospital stays. Some common errors are duplicate charges for the same procedure, upcoding, and using multiple procedure codes for a single procedure. But lawsuits allege at least one major TPA maintains a “skip list” of providers to whom they do not apply such oversight, unbeknownst to plan sponsors. The TPA can, however, collect fees from plan sponsors if they later identify and recover overpayments to these providers after paying claims.

The financial incentives are reversed when TPAs adjudicate the claims of providers owned or affiliated with their parent company. Lax pre-treatment authorization and post-treatment review of these providers’ claims increase the overall revenue of the TPA’s parent at the expense of employers who must pay whatever the affiliated provider bills.

How Can Policy Makers Intervene?

The key to understanding how TPA business models work and how they generate profits requires looking under the hood at their agreements with health care providers and other third-party intermediaries. Congress and regulators are best positioned to require TPAs to produce such documents and give testimony that will help them evaluate whether reform is needed and craft appropriate remedying legislation or regulation. Employers have limited bargaining power to demand access to the claims data and fee disclosures that the Consolidated Appropriations Act of 2021 and the Employee Retirement Income Security Act (ERISA) of 1974 require they obtain, but do not explicitly require TPAs to provide. Self-funded employers have even less bargaining power to demand access to or changes in the TPAs’ third-party agreements that dictate how their plan money is being spent, and plan and participant lawsuits challenging TPA practices have encountered procedural barriers.

The public is becoming increasingly aware of corporate abuses in the insurance industry and requesting public officials take action. Insurance practices not only increase costs but directly affect employees’ access to promised benefits. Employers’ health costs in 2025 are expected to increase by 5.8 percent, the third straight year with an increase of at least 5.0 percent. Increased costs siphon away money that could otherwise be used to reduce employee cost sharing, increase take-home pay, provide additional benefits, or be used for business development. Congressional and regulatory action could improve transparency into, and understanding of, TPA practices so that neither employers nor policy makers are left in the dark as to how employer and worker health care dollars are being spent and to assist them in their cost containment efforts.

Karen Handorf, Christine H. Monahan, and Kennah Watts “Third-Party Administrators – The Middlemen Of Self-Funded Health Insurance” May 16, 2025, https://www.healthaffairs.org/content/forefront/third-party-administrators-middlemen-self-funded-health-insurance. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By Stacey Pogue and Nadia Stovicek

For people who have private health insurance, the prices paid for health care are generally set through negotiations between insurers or employer health plans, typically through their third-party administrators (collectively referred to here as “payers”) and in-network health care providers. These negotiated rates were long considered proprietary until federal Transparency in Coverage (TiC) rules required payers to publicly post them free of charge starting in 2022. TiC rules require payers to post price information in two formats. The first is a consumer-friendly web tool meant to help patients see upfront costs and shop for care. The second format is through detailed machine-readable files (MRFs). While not intended to be directly accessed by consumers, MRFs are nonetheless intended to benefit the public. The TiC rule envisions that MRFs would be accessed by users including researchers, policymakers, state and federal regulators, employers, and app developers, who would leverage the data to deliver “more targeted oversight, better regulations, market reforms to ensure healthy competition, improved benefit designs, and more consumer-friendly price negotiations.”

But the reality has not lived up to the vision. The MRFs available under current guidance and enforcement have proven challenging to access and use, greatly limiting the ability of intended audiences to gain insights from the data and take actions that benefit consumers and markets. However, a renewed focus under the Trump administration aims to improve TiC data.

This blog post catalogs known issues with TiC MRFs raised by independent researchers in published analyses and commentaries, explains the directives to improve the data in a recent executive order, and explores the thorny issues that limit access to publicly available TiC data. 

Data Issues Limit Progress Toward Transparency in Coverage

Since TiC requirements for MRFs took effect in July 2022, stakeholders have identified many issues that make the data hard to access, analyze, and draw meaningful conclusions from. For example, the KFF-Peterson Health System Tracker recently released a detailed analysis that illustrates common structural issues with the TiC data. 

Below, we organized issues raised in analyses and commentaries from independent researchers into five themes: availability, accessibility, standardization, quality, and utility. We assigned specific data issues to just one theme below for simplicity, though several issues could fit into more than one category.

Availability. Data required by the rule are not or may not be posted by payers. 

• Federal agencies that oversee TiC requirements have not indicated that they have assessed payer compliance with posting files, nor announced any mechanism to do so, through audits or other means. In contrast, federal agencies and other organizations have done much more to assess compliance with parallel hospital price transparency requirements. 
• Federal agencies have not implemented requirements for a prescription drug MRF. Payers are waiting on the agency to release needed technical specifications.

Accessibility. Issues with locating the data and obtaining it, either directly or through commercial data vendors.

• Data files can be hard to find. They are hosted on each insurer’s or health plan sponsor’s website, with no central repository for either the data or links to files on payers’ websites.
• One of the most commonly cited issues with the data files is their massive size, which significantly limits access. Payers post a staggering volume of data that can only be directly accessed by entities with specialized and expensive computer processing infrastructure and highly skilled data engineers and programmers. For most stakeholders, the MRFs are simply inaccessible. 
• Several structural features of the data reporting requirements unnecessarily inflate file sizes:
  • Use of an inefficient file format and file structures.
  • Significant redundancy in the data. One analysis found that almost half of price files posted by six large insurers were duplicates. 
  • A large amount of irrelevant data or “ghost rates,” contracted rates from providers who do not perform a specific health care service (e.g., the rate for a cardiology service billed by a podiatrist, or vice versa). One analysis found that among 34,000 Colorado providers shown in the TiC data with a negotiated rate for a colonoscopy, only 300, or about 1%, had actually submitted a claim for a colonoscopy in roughly the two prior years. 
• The cost to license TiC data is a barrier for all but the best-resourced stakeholders. Because few entities can access the raw data directly, many researchers and stakeholders who want access buy the data from commercial vendors that specialize in importing, organizing, and cleaning the massive TiC MRFs. 
• The index file lacks information on which providers or services are in which specific subfiles, requiring users to open, possibly, thousands of huge subfiles to find needed information.

Standardization. Issues with variation allowed in the federal schema (technical specifications for reporting data). 

• Variation is allowed in how payers structure the files that connect rates to a specific provider, and some payers use a structure that makes it significantly harder to collect and process the data. Lack of standardized file labels and file types adds additional challenges. 
• The lack of standardized conventions for the use of numerical provider identifiers makes it hard tolink TiC data to other datasets, a basic step needed to fully leverage TiC data and understand cost drivers:
  • Several payers vary in their use of either an Employer Identification Number (EIN) or a National Provider Identifier (NPI) without contextual information. 
  • Some payers do not report a Taxpayer Identification Number (TIN) for providers, which can make it hard to identify provider groups and link TiC data with claims data. 
• The TiC schema allows payers to identify covered items and services using common billing code types, like Current Procedural Terminology (CPT codes), or unique payer custom codes. Payer use of custom codes, sometimes in place of common billing codes for common services, makes it challenging to compare across payers. 

Quality. Issues with payers posting data in an incomplete or inaccurate manner.

• Some files are incomplete, missing plan identifiers, provider identifiers, and subsets of services.
• Some payers do not update data monthly, as required. 
• Payers commonly report more than one rate for a unique plan-provider-service combination, without a clarifying explanation in the available field, making it hard to determine if or when any of them are correct. 
• Payers sometimes report the same rate for a provider repeatedly across many unrelated services.
• The providers, services, and prices reported by payers in TiC data show varying levels of mismatch or concordance with other data sources, such as hospital-disclosed price transparency data or commercial claims data.

Utility. Issues that limit the usefulness of TiC data.

• Some specific data points lack enough context to be meaningful:
  • Rates set as a percentage of the provider’s billed charges are reported as just the percentage value (e.g., 50%), yielding no useful price information alone. 
  • Payers are not required to post dosage unit information for physician-administered drugs, making it hard to understand and unreliable to compare prices.
• The TiC dataset as a whole lacks certain relevant information that would add substantial value:
  • TiC data lack information on volume—the number of times a plan paid a provider for a specific item or service—which limits the data’s usefulness and prevents users from calculating average prices or other summary information.
  • TiC data also lack negotiated rate information for Medicare Advantage and Medicaid managed care plans offered by insurers that are, in contrast, required by hospital-disclosed price transparency rules. 
  • Payers do not report data aggregations, like standardized service bundles or high-level summaries of price information at the network or market level, that could allow broader audiences to make useful comparisons.

Renewed Federal Agency Attention Could Help Address Issues

The Trump Administration issued an executive order in February that directs the Departments of Health and Human Services, Labor, and Treasury (collectively, the “tri-agencies”) to “rapidly implement and enforce” TiC and parallel hospital price transparency rules to make more meaningful price information available. 

The order directs the tri-agencies to undertake the three enumerated actions below within 90 days (by May 26, 2025). Depending on the tri-agencies’ interpretation and priorities, they could address many of the known TiC data issues under the banner of the executive order’s directives, as shown below: 

1. Require that “actual prices of items and services, not estimates” are posted;

The tri-agencies could address some utility-related issues affecting rates set as a percentage of billed charges and prices per dosage unit for physician-administered drugs.

2. Issue guidance or proposed rules to ensure price data is “standardized and easily comparable across hospitals and health plans,” and

The tri-agencies could further standardize file formats, file structures, conventions for the use of provider identifiers, and the use of custom billing codes.

3. Issue guidance or proposed rules to increase enforcement and improve compliance with the rules.

The tri-agencies could address some availability- and quality-related issues by releasing the needed schema for prescription drug price reporting and developing a system to assess payer compliance issues that affect data quality.

TiC issues categorized above as related to accessibility would not necessarily lend themselves to fixes through the executive order’s focus on actual prices, standardization, and compliance. If steps to improve access—such as using a more efficient file format and structure, removing ghost rates, preventing data redundancy, augmenting index files, and centralizing either the data itself or links to it—are not part of the initial executive order response, then they will need to be part of a longer-term effort in order for TiC data to be as accessible and impactful as envisioned. The TiC rule preamble contrasts TiC data that is “available to the public free of charge” with an example of a proprietary commercial claims dataset that is “costly to purchase” for researchers at $45,000 a year. Yet, anecdotes from several researchers place the cost to license TiC data in the same ballpark, which often renders data cost-prohibitive as implemented, despite the rule’s intention.

Looking ahead

TiC data straddle the line between public and proprietary. By law, insurers must post them publicly and free of charge, yet due to several data issues, few entities outside of commercial data vendors have the costly infrastructure and expertise needed to access the data, which they can parse, organize, and sell as proprietary. Commercial data vendors have greatly increased access to TiC data—there would be very little access without them. Yet access challenges remain for researchers, state and federal regulators, policymakers, and employers—the entities that the TiC rule envisions will leverage the data to benefit consumers.

Despite challenges, researchers are starting to share new insights and tools made possible by TiC data. But given that even research institutions with the resources and expertise to use TiC data still struggle to access and analyze it, it could be quite a while before TiC data can be translated into actionable information for policymakers, regulators, employers, and consumers. With the recent executive order, the tri-agencies have the opportunity to shorten that window, should they choose to do so.

By Amy Killelea and Christine H. Monahan

For any young adult, the transition off of a parent’s health insurance coverage or the aging out of eligibility for Medicaid/CHIP can be a stressful event. Young adults are often just starting out in the working world and may not have access to jobs with robust health insurance benefits. They also are typically at the lowest end of their earning potential, with salaries that may not stretch far enough to cover comprehensive coverage—or the deductible that can go with it.

The Affordable Care Act (ACA) delayed this transition for many, requiring that health insurance plans allow parents to keep their adult kids on their plans up to the age of 26 and enabling states to extend Medicaid coverage to low-income adults. This protection for young adults is coupled with the ACA’s broader expansion of access to private insurance through robust consumer protections for plans sold to individuals, guaranteeing coverage to people with pre-existing conditions. But ongoing efforts by the current administration and Congress to make it harder and more expensive for people to get enrolled and stay enrolled in Medicaid and marketplace plans, coupled with the steady rise in premiums and deductibles for employer-sponsored insurance, will make it harder to find affordable coverage for many Americans. While some young adults may risk going uninsured during this tumultuous period, health coverage is not optional for the many young adults living with a chronic condition, including the hundreds of thousands living with diabetes. For these individuals, coverage transitions are not only stressful; they can also have life and death consequences.

A recently released set of briefs from the Center on Health Insurance Reforms (CHIR) at Georgetown University’s McCourt School of Public Policy highlight policy options states are currently pursuing to improve health insurance coverage, affordability, and access for people living with insulin-requiring diabetes in individual market plans, including marketplace plans. The reforms identified in these briefs can play an important role mitigating problems that young people with diabetes encounter during coverage transitions by reducing variability across plans and, in some instances, introducing continuity protections for prior authorization approvals. Because of states’ limited regulatory authority, however, gaps will remain, putting young adults with diabetes at risk.

For Young Adults With Diabetes, Health Insurance Is Mandatory

In 2021, there were nearly 30 million people in the United States with diagnosed diabetes (either type 1 or type 2). Of this total, the Centers for Disease Control and Prevention estimates that 352,000 children and adolescents younger than age 20 years have diabetes, including 304,000 with type 1 diabetes. These individuals require consistent access to a range of services to stay healthy, including insulin (and sometimes other medications used to regulate blood sugar), monitors to keep track of glucose levels, supplies needed for various diabetes devices to work, and both primary care providers and specialists.

The cost of this care can add up, even for people with private insurance. In 2020, privately insured individuals with diabetes spent nearly twice as much out-of-pocket on care as individuals without diabetes. Unaffordable cost sharing for diabetes services is not only a financial burden, but it can also have major implications for health outcomes, prompting people with diabetes to resort to dangerous measures to stretch their access to insulin and other necessary diabetes services.

Adolescents and young adults living with diabetes must not only navigate treatment for what is often a lifelong chronic condition, but are also confronting major life milestones that could involve moving away from home for the first time, starting school or a job, and confronting the responsibility of finding and using their own health coverage. The transition from pediatric to adult care can be a point at which young people with diabetes fall out of care. One parent of a teenager with insulin-requiring diabetes who participated in a webinar hosted by Georgetown last year expressed anxiety about his child navigating insurance coverage in the future. He wanted to make sure his child had access to comprehensive and affordable coverage after she left the family’s plan and thought that this might impact his child’s employment choices. Assessing insurance coverage options and navigating the complexity of actually using that insurance is difficult for anyone with a chronic or complex condition, especially for younger individuals navigating a lot of other life transitions. 

Variation In Health Insurance Coverage Makes Transitions Harder For Young Adults With Diabetes

Choosing the wrong plan can carry heavy consequences for young adults with diabetes, and private health insurance options in the United States are anything but uniform. There is considerable variation in coverage, cost-sharing, and the “utilization management” policies that private insurance plans use to determine if a patient meets certain criteria for a particular item or service to be covered, including prior authorization. Individuals, especially young adults new to private insurance, can be overwhelmed with the dizzying array of considerations for their coverage.

Consider the following questions someone with diabetes looking at insurance coverage options may have to ask:

• Does the plan cover the type of insulin I’m on right now, or will I have to switch to a different formulation?
• Does the plan cover the type of insulin pump and glucose monitor I’m on, that I’ve been on for years, and that have worked well for me, or do I need to switch to different ones?
• If the specific insulin or diabetes device I’m currently using is covered but my plan requires my provider to prove I need one formulation over another, will my doctor be able to get the plan to approve coverage so I don’t have to switch? How long will that take?
• Will I be able to get the diabetes devices and supplies I need from a retail pharmacy, or will I have to figure out how to navigate a smaller durable medical equipment (DME) distributor network?
• What are the trade-offs if I choose a high deductible plan with a lower premium or a low deductible plan with a high premium?
• The plan I might purchase only lists coinsurance (a percentage of the total negotiated price of the service) for the insulin, devices, and specialty visits I would need. How can I tell how much that will actually cost me when I use these services?

A mid-year plan change that resets a person’s deductible contributions back to $0 can compound the financial burden. These types of scenarios can force young adults to resort to insulin rationing and other dangerous ways to respond to unaffordable care.

States Are Taking Steps That Can Make Coverage Transitions Less Risky For People With Diabetes

The variability in coverage, cost sharing, and utilization management practices across private insurance makes coverage transitions for people with diabetes more difficult. While the ACA did not include a national coverage or cost-sharing standard across all private insurance markets, it did create a far more uniform base for coverage in the individual and small group markets, including through the law’s Essential Health Benefits (EHB) coverage requirements and robust non-discrimination requirements. Subsidies for marketplace coverage (in the form of premium tax credits and cost-sharing reductions) have also made individual market coverage far more accessible for young adults, including those living with diabetes.

State policymakers are building on these federal standards to provide more robust protections where they can, including for marketplace plans and other fully insured policies that are subject to state insurance laws. States, for example, can mandate coverage for diabetes services and devices, something that nearly every state has done. However, many state diabetes coverage mandates were passed decades ago, and some states are working to update them to account for medical advances in diabetes treatment. States can also require plans that cover continuous glucose monitors (CGMs) as a pharmacy benefit, as Virginia has done, which may reduce some administrative barriers to treatment. States can also cap or eliminate cost-sharing not just for insulin, but diabetes devices and services—from lab work, diabetes education and self-management, and mental health care—that are important for people with diabetes. Colorado, the District of Columbia, and Illinois all offer examples other states can follow. Finally, many states are instituting prior authorization reforms, which can help ensure that plan coverage limitations and criteria are consistent with generally accepted standards of care like the American Diabetes Association’s Standards of Care in Diabetes. Some of these laws include requirements intended to ease transitions from one source of coverage to another, such as requiring insurers to honor prior authorization approvals made by a new enrollee’s prior plan for at least ninety days to ease the disruption during a plan change. 

Federal Crosswinds

Even as states take action to ensure the plans they regulate meet the needs of individuals with diabetes, young adults who transition across coverage types that are regulated very differently—such as moving from Medicaid to employer-sponsored coverage or from a parent’s employer-sponsored coverage to the individual market—will likely continue to face significant disruption. The frequency of such transitions and related disruption is likely to increase in light of recent and expected federal policy changes that are projected to undo historic coverage gains under the ACA. 

What’s more, as the current administration and Republican-controlled Congress begin to assert their own vision for health insurance regulation, they may rollback private insurance standardization and regulation, which is something that happened during the first Trump Administration. This could include a loosening of benefits requirements and cost-sharing protections in favor of a “free market” approach to health insurance that allows for a proliferation of “junk plans” that are available at cheaper prices, but do not offer robust coverage. For people with diabetes, especially young adults navigating the complexity of private insurance coverage for the first time, an array of plan options that do not offer comprehensive coverage for diabetes could create a dangerous bait and switch, where someone could inadvertently end up in a plan that does not provide coverage for the diabetes services they need. Unfortunately, young adults with diabetes will need to remain highly vigilant not only regarding their personal health, but also their insurance coverage.

Amy Killelea and Christine Monahan “Health Insurance Transitions For Young People With Diabetes Can Be Life Threatening” May 15, 2025, https://www.healthaffairs.org/content/forefront/health-insurance-transitions-young-people-diabetes-changing-coverage-can-life. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By Jason Levitis and Christen Linke-Young*

The Ways & Means Committee’s provisions on Marketplace coverage in the reconciliation bill include one especially complex section (sec. 112201) that would have major consequences and important interactions with the rest of the package. The provision’s title (“Requiring Exchange Verification of Eligibility for Health Plan”) undersells its importance, since Exchanges–also called Marketplaces–are already required to verify eligibility for health coverage and financial assistance. In fact, this provision would make profound changes to both Marketplace enrollment processes and eligibility for the ACA’s subsidies that help 22.4 million people afford Marketplace coverage.

Sec. 112201 amends the eligibility rules in section 36B of the Tax Code, which created the premium tax credit–the ACA’s primary subsidy to help people purchase coverage. These changes would also carry over to narrow eligibility for cost-sharing reductions (CSRs), the ACA’s primary subsidy to help Marketplace enrollees with deductibles and other cost-sharing.

Sec. 112201 makes two important changes to subsidy eligibility rules. First, it eliminates passive reenrollment, which 10.8 million people relied on to enroll in 2025. Second, it eliminates provisional eligibility, which allows applicants to receive financial assistance for a limited time period while the Marketplace works to confirm they are eligible. These provisions on their own would cause a significant number of people to lose health insurance, but, crucially, they will have even larger impacts if enacted at the same time as other changes being contemplated by the House Energy & Commerce Committee. 

This piece is a deep dive into this section, how it would be implemented, its implications, and its interaction with the other health care provisions of the reconciliation package.

Eliminating Passive Reenrollment

The provision includes extremely consequential language that—in the words of the Joint Committee on Taxation—“prohibits passive reenrollment” into health coverage through the Marketplace with financial assistance. Specifically, under this provision, every Marketplace enrollee who receives APTC must take an active step some time between August 1 and December 15 in order to retain financial assistance (and, in all likelihood, health coverage) for the coming year.

Current Law

Under current law, the Marketplace allows consumers to be automatically reenrolled into health insurance for the coming year, which is similar to how reenrollment works for other types of health insurance. Consumers are encouraged to return to the Marketplace website during the annual Open Enrollment Period (OEP) to update their information and confirm their plan selection. But if they fail to do so, on or around December 15 the Marketplace processes an automatic (or passive) reenrollment effective for January 1, such that their coverage automatically continues for the coming year. APTC for the reenrollment is generally calculated using the same income parameters as the prior year if the consumer has given consent for the Marketplace to access their most recent tax records.^a For 2025, 10.8 million people — 54% of returning consumers — were passively reenrolled into their coverage, the vast majority of them receiving APTC. 

The Proposal 

The legislation would prohibit passive reenrollment for financial assistance. Specifically, the legislation establishes a new system where the Marketplace must use information it obtains from enrollees after August 1 in order to verify their coverage for the coming year. If the enrollee has not provided information after that date, then there is no qualifying information that the Marketplace can use to determine eligibility; therefore, the Marketplace cannot provide APTC. In practice, this means the Marketplace would process a new enrollment for such an individual with APTC removed, such that the individual would owe the full premium for coverage effective January 1.

Implications

If this policy were to become law, Marketplaces would generally be expected to conduct outreach to consumers to encourage them to provide updated eligibility information each year. Many would take action during the OEP (as they do today) and some additional increment of consumers are likely to visit the Marketplace between August 1 and the start of open enrollment to provide the necessary information.

Still, experience to-date suggests millions of consumers could see their APTC stripped for failure to actively reenroll.^b As noted, in 2025 more than 10.8 million consumers were passively reenrolled into coverage. This figure varies by state and type of Marketplace: on average state-based Marketplaces passively reenrolled 73% of enrollees, and the figure was as high as 90% in some states. The federal Marketplace has historically had lower rates of passive reenrollment (46% in 2025), but it experienced a significant increase in the percentage of consumers who were passively reenrolled during this past open enrollment.^c

Certainly, steep new consequences for passive reenrollment would change behavior. However, experimental evidence indicates that there is reason to be cautious about the ability to influence consumers’ propensity towards active reenrollment. Specifically, one state-based Marketplace tested email outreach strategies for a subset of consumers who did not qualify for passive reenrollment without additional action, and found that ongoing email outreach increased active behavior by only two percentage points, with 40 percent of consumers failing to take the needed steps. While there are important differences between this population and the full group targeted by Section 112201, it is nonetheless relevant evidence suggestive of significant coverage losses.

Interactions with Energy & Commerce Policies

This provision has interactions with a proposal from the Energy & Commerce committee that shortens the annual Open Enrollment Period for the Marketplace. Specifically, under current regulations, the OEP runs through January 15 of the calendar year, so individuals have the first two weeks of January to “fix” any issues that came up in the process of reenrollment and select a new plan for coverage effective February 1. 

Consider a situation where the provisions in Section 112201 were to become law with no change to OEP rules: An individual fails to conduct the needed steps prior to December 15, and therefore her coverage for January has no APTC attached. In the second half of December she receives a bill from the insurer for the full premium of, e.g., $620 instead of the $115 she was used to paying after APTC, fails to pay the bill, and loses coverage effective January 1. Fortunately, she has until January 15 to return to the Marketplace, provide the necessary data to prove her eligibility, and start a new enrollment with APTC effective February 1. She has lost one month of coverage but can retain enrollment for the rest of the year.

However, the Energy & Commerce legislation requires that the OEP end on December 15. Therefore, this same hypothetical consumer has no opportunity to trigger a new enrollment for February 1 during the OEP. Further, the loss of coverage she experienced does not trigger a Special Enrollment Period (SEP) under any existing SEP pathways.^d Therefore, in order to have coverage for February and future months (with restarted APTC), she generally must pay the full premium for the month of January. If she cannot make that full January payment — five times larger than her typical monthly payment — she generally will have no coverage at all for the rest of the year. 

Thus, the potential coverage loss associated with this legislative change is far greater when it is paired with legislative changes to the OEP. By shortening the OEP and taking away the most meaningful opportunity to remediate the loss of APTC, the combined policy will mean that most people who are snared on December 15 will ultimately end up without coverage. 

Eliminating Provisional Eligibility

The bill would for the first time deny APTC when the Marketplace needs more time to make an eligibility determination. Many consumers would be unable to avoid this scenario, resulting in attrition from higher premiums.

Current Law

Under the ACA, the Marketplace generally makes real-time eligibility determinations using trusted data sources (e.g. tax data), so that individuals can often apply for and enroll in coverage in a single sitting. Individuals who apply by the 15th of the month can generally start coverage on the first day of the following month. Individuals must =submit eligibility information both when they apply to enroll and also if they experience a “change in circumstances,” such as a change in income or household size, later in the year.

When an applicant attests to eligibility information that is inconsistent with trusted data sources. (for example, because the individual’s income has changed since their most recent tax return), the Marketplace asks for additional information to resolve the inconsistency. Such inconsistencies can happen for several reasons, including changes in income, changes in family composition, and delays in government agencies’ processing forms. This extended and manual verification process–referred to as a “data matching issue” or DMI–can take months to resolve while the applicant acquires the necessary documentation from an employer or other source, submits it to the Marketplace, and  a Marketplace staff person processes and verifies the information provided. More than half of income DMIs take over 60 days to resolve.

While a DMI is being resolved, the ACA provides that applicants are given “provisional eligibility” for enrollment and advance PTC payments (APTC) for a limited time period. Provisional eligibility is generally limited to 90 days.^e In 2022, before the Biden administration implemented operational changes that reduced the total number of DMIs, the federal Marketplace processed 6.3 million DMIs.

The Proposal

The proposal would make applicants ineligible for APTC until the Marketplace makes a final eligibility determination–effectively eliminating provisional eligibility for APTC. As a result, individuals facing DMIs could not receive APTC while the process plays out. The prohibition on APTC applies to both applications for enrollment and also to individuals reporting changes in circumstances. The provision is written to turn off APTC eligibility at the family level (by providing that the month in question is no longer a “coverage month” for the family), so a DMI about the income or immigration status of one family member would deny APTC to the entire family. 

The effects of this change could be mitigated by the new requirement that Marketplaces establish a “pre-enrollment verification process,” which allows applicants to come to the Marketplace as early as August 1 of the prior year to “verify…the applicant’s eligibility.”^f

Implications

By eliminating provisional eligibility for APTC, the proposal would require many Marketplace enrollees to pay the full unsubsidized premium until their DMI is resolved–a process that could take months. New enrollees would face a much larger “binder payment” to enroll. Current enrollees would lose the protection of the ACA’s “grace period” and so could be dropped from coverage. Either way, individuals who can’t afford (or choose not to pay) the larger premium will lose their enrollment opportunity until the next open enrollment period. Paying the full premiums out of pocket for a few months may not be an option for many consumers, as 59% of Americans do not have savings to cover a $1,000 unexpected expense.

The provision would generally affect only individuals whose application information does not match government data sources. However, this includes many millions of enrollees each year.

The pre-enrollment verification process will provide an opportunity to avoid APTC loss for a specific subset of enrollees: those who know in late summer that they want to enroll during the open enrollment period. It would provide no help for anyone enrolling on a different timeline, anyone experiencing a change in circumstances, and those not focused on health insurance enrollment in late summer. For example, consumers in several common scenarios would be certain or highly likely to be denied APTC:

Newborns. The proposal would deny APTC to virtually all families enrolling newborns. That’s because it generally takes 1 to 6 weeks after birth before the Social Security Administration gives newborns a social security number (SSN) and an additional 2 weeks for parents to receive their child’s SSN card in the mail, at which point they would need to submit this information to the Marketplace and wait for it to be processed. Consumers who do not provide an SSN on their application automatically generate a DMI. Since sec. 112201 denies APTC at the family level, such a DMI would cut off any APTC the family was previously receiving.

People getting married or divorced. The proposal would deny APTC to most individuals who get married or divorced during a year and report their change in circumstance to the Marketplace. Marriage and divorce generally lead to income changes requiring the Marketplace to perform a new eligibility verification. And the income of those recently married or divorced can generally not be verified using trusted data sources, since the IRS returns information only when there’s a perfect match of the tax filing unit. As a result, a great many of them will end up in a DMI and thus be denied APTC for some months.

People losing jobs. Individuals losing jobs generally need coverage immediately, and the Marketplaces generally offer a 60-day limited window for them to enroll. But they are likely to face a DMI, since their expected income is often lower than was reported on their most recent tax return. As a result, such individuals (and their families) will often be denied APTC for at least a while when they try to enroll. If their DMI is not resolved during their 60-day enrollment period, they could lose access to coverage until the next plan year. 

People experiencing income changes. Individuals who experience income changes during the year are required to report it to the Exchange. If their newly attested income doesn’t match their recent tax return, that will trigger a DMI, denying them APTC for some months.

Interactions with Energy & Commerce Policies

The Energy & Commerce Committee’s bill includes several provisions that would increase the effects of eliminating provisional eligibility. All of these sections codify regulations proposed by CMS in March, so even if the Energy & Commerce provisions are not included in the final legislative package, they are likely to be implemented. 

First, the Energy & Commerce bill includes two provisions that would substantially increase the prevalence of DMIs, which in turn would directly increase the number of people denied APTC while the Marketplace verifies their eligibility. CMS estimated that the March proposed rule would result in 2.7 million more DMIs with 2.1 million DMIs being created because no tax data is returned^g and 548,000 because tax data returns less than 100% FPL. Creating millions of additional DMIs will also likely slow the process of resolving DMIs, especially given recent staffing cuts. 

Second, the Energy & Commerce bill would scale back special enrollment periods (SEPs) and limit SBMs’ authority to create new ones. As a result, if consumers denied APTC cannot afford their unsubsidized binder payment, they would be less likely to have another opportunity to enroll.

Finally, the Energy & Commerce bill would permit plans to permanently deny coverage to consumers with past-due premiums–a scenario that is far more likely without provisional eligibility for APTC.

Conclusion

The implications of section 112201 would be far-reaching and long-lasting, should it become law. More than 22 million people will face considerable new paperwork burdens in order to maintain their Marketplace coverage at an affordable premium. Combined with recent cuts to Marketplace Navigators and call center caseworkers and shorter enrollment windows, many of these people are likely to lose their coverage; in some cases the coverage loss could be long-term.

* Jason Levitis is a Senior Fellow with the Health Policy Division of the Urban Institute; Christen Linke-Young is a Visiting Fellow at the Brookings’ Center on Health Policy.

Editor’s Note: This blog was updated on May 20, 2025 to make minor editorial changes.

^a Consumers are required to report changes in income and other eligibility parameters that occur during the year, so the information on file with the Marketplace should generally be current.

^b The exact share of this group receiving APTC is not publicly available, but one would expect it to be quite large: 92% of all enrollees receive APTC.

^c Such an increase was likely the result of additional requirements put in place during open enrollment that required new process steps for consumers using new agents and brokers to actively reenroll. This change ensures that agents and brokers are not inappropriately targeting consumers they do not have a prior relationship with, but has also resulted in lower numbers of active reenrollments, a trend that may continue in future years.

^d While there is generally an SEP for loss of minimum essential coverage, that SEP is not available when the coverage loss is the result of “failure to pay premiums,” as it would be in this case. Nor can she qualify under the current SEP for individuals who are newly eligible for premium tax credits, because the Marketplace will consider her “eligible” for PTC in January based on her income and other eligibility factors, even though she cannot actually receive PTC for January because she has failed to provide the necessary information.

^e Current rules provide an automatic extension to 150 days, but that is on track to be revoked by other provisions of the bill and by proposed CMS regulations.

^f This can be understood as “triggering” the DMI in August for January 1 coverage, which allows some time for the DMI to be resolved, but also eliminates passive reenrollment as described above.

^g Massachusetts has reported that the IRS fails to return income information for about 40% of its applicants.

By Sabrina Corlette, Karen Davenport, and Stacey Pogue

In his first presidential campaign, candidate Trump promised to repeal the Affordable Care Act (ACA). He spent 2017 trying to do just that, until the effort was defeated on the Senate floor via the now-famous “thumbs down” from Senator John McCain. The GOP then suffered a major defeat in the 2018 congressional elections, in large part thanks to their efforts to repeal the newly popular ACA.

Fast-forward seven years, and the ACA is more popular than ever. Over 24 million people enrolled in the ACA Marketplaces in 2025—twice the number who enrolled in 2017—thanks in large part to the enhanced premium tax credits Congress authorized in 2021 to make Marketplace coverage more affordable. Over 20 million people also have insurance via the law’s expansion of Medicaid eligibility. The result has been the nation’s lowest uninsured rate in history. 

After a rocky start in 2014, the ACA Marketplaces are stable and vibrant, with high levels of insurer participation and a plethora of plan choices. They cover early retirees, gig economy workers, small business owners, self-employed entrepreneurs, and millions more who work hard but whose employers don’t provide health insurance. But this has not deterred President Trump and some in Congress from what appears to be their ultimate goal of repealing “Obamacare.” They are just finding more subtle ways to do it. The reconciliation bill now heading to the House floor is a key part of that strategy.

The Big Picture: Coordinated Legislative and Regulatory Tactics to Roll Back the ACA

The massive reconciliation bill pending before Congress includes numerous provisions that will lead to millions losing ACA insurance coverage, and increased paperwork and higher costs for those who try to remain insured. Less well known is that, prior to this legislative activity, the Trump administration has taken steps to limit access to low-cost Marketplace plans through a draft regulation (called the “Marketplace Integrity” rule) and a 90 percent reduction in funding for ACA Navigators, individuals who help consumers learn about and enroll in Marketplace coverage. Also, Congress has yet to extend the enhanced premium tax credits, due to expire at the end of 2025. The Congressional Budget Office (CBO) has broken down the coverage losses between 2025 and 2034 as follows:

• 7.7 million more people uninsured from the Medicaid cuts in the Energy & Commerce Committee’s reconciliation bill.
• 1.8 million more people uninsured from adoption of the Marketplace Integrity rule (also in the House reconciliation bill).
• 4.2 million more people uninsured if Congress fails to extend the enhanced premium tax credits.

CBO continues to crunch the numbers on the Medicaid and Marketplace provisions of the reconciliation package, and it is likely that the Ways & Means package will increase the numbers of those losing coverage. The combined cut in funding across Medicaid and Marketplace is likely to approach $1 trillion. Whatever the total number, it is evident that the overall result will be an unprecedented loss of insurance coverage for millions of Americans, causing the nation’s uninsured rate to increase by an estimated 30 percent. 

CBO has also not assessed the effect of these provisions on the stability of the ACA Marketplaces. But it doesn’t take green eyeshades to know that changes that make it harder to enroll in and keep health insurance deters healthy people from enrolling in Marketplace health plans, while people with high medical costs will persevere through these hurdles. This will result in a smaller, sicker pool of enrollees. Insurers will need to raise their premiums to account for a more costly group of people; some may choose to exit the market entirely (as the company Aetna recently decided to do, thanks to the current uncertainty over federal ACA policy).

Breaking It Down: Reconciliation Bills Reverse ACA Coverage Gains and Impose New Costs, Red Tape on Marketplace Enrollees

The ACA’s Medicaid expansion faces the biggest hit—whether counted in dollars or individuals losing coverage—under the GOP’s tax package, as our colleagues at Georgetown University’s Center for Children & Families (CCF) have described here. But the proposals to limit eligibility for Marketplace premium tax credits would also cut millions of hard-working, eligible people off of affordable health insurance, impose new and burdensome paperwork requirements on Marketplace consumers, and increase costs for anyone with commercial health insurance, including those with employer-based coverage. Let’s break it down:

Energy & Commerce Committee Package: Cuts in Coverage, Increased Costs for Private Health Insurance

The E&C bill cuts $715 billion from Medicaid and Marketplace coverage, including through Medicaid “work requirements” as outlined by our CCF colleagues here. It also extends those work requirements to the Marketplaces, by denying eligibility for premium tax credits to anyone who is kicked off Medicaid because of a work requirement. Denying affordable coverage to such people is cruel in its absurdity. Families must have at least some income (a minimum of $15,650/year for an individual, $26,650 for a family of 3) to qualify for premium tax credits, so anyone who qualifies is in a working household. This means that if they were disqualified from Medicaid because of a work requirement, yet have sufficient income to qualify for Marketplace coverage, it’s not because they weren’t working, it’s because they couldn’t navigate the red tape required to prove they were working.

The E&C bill also would put into statute the provisions of the Trump Administration’s Marketplace Integrity draft rule. These provisions raise enrollee costs and limit access to coverage by:

• Modifying the formula for determining an individual or family’s premiums and cost-sharing such that:
  • Insurance companies would be allowed to impose an additional $900 in deductibles and other cost-sharing on families with any private health insurance, including people with employer-based insurance.
  • Increase premiums for Marketplace plans by $313 in 2026 for a typical family.
• Allowing insurers to reduce the generosity of their plans, so that they could cover as little as 66% of costs but still be called a “Silver” plan, even though the ACA requires such plans to cover 70% of costs. This provision allows the bill sponsors to say they are “reducing” premiums, even though they’re doing so mainly by making coverage skimpier.
• Reducing open enrollment periods for all Marketplaces, including state-based Marketplaces (SBMs) from 76 to just 44 days.
• Imposing a $5-month premium penalty on certain low-income enrollees, even though they are eligible for $0 premium coverage.
• Taking away SBMs’ traditional authority to establish special enrollment periods (SEP) to meet the needs of their consumers and markets. The bill would prohibit all Marketplaces from establishing a SEP based on income, eliminating a key pathway for low-income people to access coverage as soon as they learn they are eligible.
• Requiring people enrolling in a SEP to manually submit additional paperwork proving their eligibility before they can get coverage.
• Requiring Marketplaces to deny premium tax credits to people when the IRS doesn’t have a record of them filing the correct tax form. In particularly Kakfa-esque fashion, the Marketplaces are prohibited from informing people why their premium tax credits are being cut off, and the cuts in IRS staffing mean it will be difficult for people to access taxpayer assistance.
• Requiring 2.5 million more people to manually submit documents to prove their income, and shorten the amount of time they have to provide that documentation. This new requirement will be imposed after the federal government has eliminated the jobs of hundreds of Marketplace caseworkers, meaning consumers won’t get the help they’ll need to cut through the red tape.

In addition to the above provisions, the bill would eliminate insurance companies’ flexibility to allow people to maintain coverage if they underpay their premiums by a nominal amount, and allow insurers to deny people coverage if they have unrelated past debt with the insurer. The bill would also prohibit insurers from covering treatment for gender dysphoria as part of the ACA’s essential health benefits package, and would terminate coverage for thousands of people with “Deferred Action for Childhood Arrivals” (DACA) status.

Ways & Means Committee Package: Doubling Down on Coverage Loss and Excess Paperwork

The Ways & Means bill includes several provisions limiting eligibility for affordable Marketplace coverage and adding significant new paperwork for those seeking to enroll in or renew their coverage. These provisions make almost $219 billion in cuts to Marketplace coverage by making more difficult for people to get and maintain health insurance. Some of the provisions in the Ways & Means package overlap with those in the E&C bill (often in confusing ways). But the Ways & Means bill goes much further by:

• Barring most lawfully present immigrants from eligibility for Marketplace premium tax credits. These include legally present refugees, people granted asylum, and others with legal humanitarian status who have fled violence and oppression to work, live, and pay taxes in the U.S.
• Imposing onerous new paperwork requirements on all Marketplace applicants. All Marketplaces, including SBMs, would need to demand additional paperwork from people seeking to enroll. This provision would effectively prohibit automatic re-enrollment in the Marketplaces, a longstanding industry practice across all lines of insurance, including for employer-based coverage. All consumers, whether new or returning, would be required to pay full price until they actively verify, and the Marketplace has confirmed, specific eligibility requirements. If they cannot pay full price, coverage would be cancelled or terminated, leaving them uninsured for a full year until the next open enrollment period. 
• Imposing significant new tax burdens on low-income Marketplace enrollees by requiring them to repay premium tax credits if they under-estimate their income. Currently, Marketplace enrollees must pay back to the IRS excess premium tax credits they received in the prior year, if it turns out their income was higher than they had projected. But federal rules cap the amount that low-income people must pay back to help insulate them from unexpected financial hardship at tax time. The Ways & Means bill would end this policy.

Confoundingly, while the reconciliation package turns the Marketplaces into an inhospitable place for consumers and insurance companies alike, it simultaneously hands employers a new incentive to dump their group health plans and send workers to the Marketplace for coverage. The Ways & Means bill expands on a 2019 regulation creating “Individual Coverage Health Reimbursement Arrangements” (ICHRA). Under that rule, employers can choose to contribute to the ICHRA in lieu of offering a group health plan. Employees can use their ICHRA to help purchase ACA-compliant individual market insurance. However, employers’ interest in ICHRAs has, to date, been modest.

The Ways & Means bill re-names ICHRAs “CHOICE Arrangements,” and offers employers almost $500 million in tax credits to replace their group plan with employee CHOICE arrangements. The bill would enable workers to use those CHOICE arrangements to purchase a Marketplace plan. Many employers, particularly if we enter a recession, will be attracted by the option to shift the financial risk of rising health care costs to their workers. However, those workers are likely to find fewer and less affordable plan choices if the Marketplace changes described above are enacted.

Looking Ahead

The full House is expected to vote on the combined reconciliation bill in just a few weeks; from there it will go to the Senate. Separately, the Trump administration will soon finalize its Marketplace Integrity rule. Taken together, these legislative and regulatory proposals will strangle the Marketplaces by stripping them of enrollees and affordable plan choices. They amount to an effective repeal of the ACA for the millions of Americans who will be left uninsured and the millions more paying more for their health care.

This year enrollment in the Affordable Care Act (ACA) Marketplaces is at an all-time high, hitting 24.3 million during the most recent open enrollment season. This insurance coverage provides a critical source of financial protection and access to care for a wide range of low- and moderate-income people, from entrepreneurs and gig economy workers, to small business owners and early retirees. In March 2025, the Centers for Medicare & Medicaid Services (CMS) released a set of proposals that would change Marketplace benefits, enrollment, and eligibility rules such that, by its own estimates, between 750,000 and 2 million people would lose health insurance. More recently, the U.S. House Energy & Commerce and Ways & Means Committees advanced legislation that would put many of the provisions of this proposed rule into federal statute.

Although CMS offered just 23 days for public comment on its proposed rule, the agency received almost 26,000 comments. To better understand how different stakeholders view the administration’s proposals and how they might be impacted, CHIR reviewed a sample of comments from four major categories of commenters: Health plans and brokers, providers, state-based Marketplaces (SBM) and departments of insurance, and now, consumer advocates. For this finale in our four-part series, we focus on comments submitted by consumer advocate groups. Specifically, we reviewed comments from:

• AARP
• American Cancer Society, Cancer Action Network (ACS CAN)
• Center on Budget and Policy Priorities (CBPP)
• Community Catalyst
• Families USA
• National Health Law Program (NHeLP)
• National Immigration Law Center (NILC)
• Protecting Immigrant Families (PIF) 
• Transgender Law Center (TLC)
• UnidosUS

The proposed Marketplace rule covers a wide range of policies (a detailed summary of its provisions, in two parts, is available on Health Affairs Forefront here and here). This summary of consumer advocate feedback focuses on the following selected provisions: (1) Changes to open and special enrollment periods; (2) Eligibility determination and verification; (3) Essential Health Benefits and gender affirming care; (4) Coverage for DACA recipients; and (5) Premium adjustments and premium debt.

Shared Concerns – Misplaced Burden of Fraud

An overarching theme of the comments submitted by the consumer advocate organizations is the shared concern that CMS is basing its decision making on a flawed analysis and over-estimate of fraud in the ACA Marketplaces. CMS relies heavily on a Paragon Institute report estimating up to 5 million fraudulent enrollments. CBPP and Community Catalyst criticized this analysis as methodologically flawed, relying on mismatched data sets and misinterpreting how income projection in the Marketplace works, thereby exaggerating claims of fraud. 

While advocates acknowledged that fraud undermines the integrity of the Marketplace, they emphasized that honest income fluctuations and a complex enrollment process are more likely sources of alleged discrepancies. They argued CMS is mistakenly focusing its anti-fraud efforts on consumers, instead of trying to address the actions of a relatively small number of unscrupulous brokers and lead generators using Enhanced Direct Enrollment (EDE) systems to exploit consumers. They called for greater oversight of brokers, stricter enforcement against EDE abuse, and a reduction in consumer burdens.

Changes to Open and Special Enrollment Periods

The proposed rule would shorten the annual open enrollment period (OEP) from 76 to just 44 days. CMS further proposes to narrow enrollment opportunities by eliminating a special enrollment period (SEP) that allows low-income individuals (earning below $23,475 per year) to enroll any time during the year. CMS would also require people enrolling in the Marketplace through a SEP to submit extra paperwork to prove their eligibility. In a departure from past practice, CMS would require SBMs to adhere to the federally set timeline and SEP policies.

Shortening OEP & Eliminating the Low-Income SEP

Consumer and patient advocates broadly opposed the proposed reduction of the OEP from 76 to 44 days. For example, Community Catalyst and Families USA argued this would limit access to coverage — especially for low-income individuals, people of color, and those requiring additional time or assistance. NHeLP referenced vulnerable groups navigating complex decisions during the holiday season while AARP acknowledged the intent to reduce adverse selection but shared their fears that these changes may hinder access to coverage, especially amid reduced outreach funding.

UnidosUS, along with ACS-CAN and Community Catalyst, also expressed their concerns about reduced enrollment periods at a time when funding for ACA Navigators and caseworker personnel have been reduced as well, saying that this change, combined with cuts to Navigator funding, would further limit enrollment assistance. Community Catalyst highlighted the vital role that Navigators play in helping underserved communities enroll and urged the restoration and expanded funding of these programs, especially given the need for their services as consumers grapple with the new paperwork requirements under the rule.

Most advocate groups also opposed eliminating the low-income SEP, with Families USA saying that it would disrupt coverage for millions, especially those cycling between Medicaid and Marketplace plans or living in states that haven’t expanded Medicaid. TLC asserted that this move would disproportionately hurt transgender and nonbinary people, who are statistically more likely to live in poverty, along with other marginalized groups such as Black, brown, and disabled communities. NHeLP cited improved enrollment and reduced racial disparities in coverage as a result of this SEP, without evidence of adverse selection. 

Eligibility Determination & Verification

$5 Premium for Passive Re-enrollment

The proposed $5 premium for passively re-enrolled individuals currently eligible for $0 premiums was widely criticized. UnidosUS, CBPP, ACS CAN and NHeLP argued it could lead to unnecessary disenrollment, negatively affect risk pools, and cause confusion and financial hardship for low-income enrollees. They criticized the proposal as confusing, burdensome and expressed concerns that it could trigger coverage terminations and increased premium debt for low-income enrollees.

Income Documentation Requirements

CMS proposes to require consumers to submit documentation proving their income if third-party data sources suggest their income is below 100 percent of the federal poverty level (FPL). Consumers would also be required to submit additional documentation proving their income if the IRS lacks tax data. 

AARP and CBPP criticized the proposal, arguing that income discrepancies are usually the result of unpredictable work conditions, not fraudulent behavior as CMS suggests. CBPP and Families USA further stated that these verification burdens would disproportionately impact those with volatile or low incomes, young people, and communities of color while UnidosUS pointed to gig workers and immigrants with fluctuating incomes at particular risk of losing coverage if this provision goes into effect. Community Catalyst and NHeLP support maintaining automatic 60-day extensions and self-attestation processes, arguing that the proposed reduction in the time period to submit documentation proving eligibility would wrongfully strip over a million individuals of premium tax credits without sufficient justification. 

Essential Health Benefits & Gender-Affirming Care

The proposed rule would prohibit insurers from covering items and services that treat gender dysphoria (referred to in the rule as “sex trait modification”) as part of essential health benefits. States would still be permitted to mandate such coverage, but would need to defray the costs of such coverage using state funds. 

A majority of organizations in our sample condemned this provision, and shared concerns about the implications for not only transgender and nonbinary individuals, but for anyone receiving medical care that could potentially be considered “sex trait modification.” Many organizations, including UnidosUS, NILC, and Families USA, cited the medical consensus that gender-affirming care is necessary and protected under ACA nondiscrimination laws – Section 1557. NHeLP similarly viewed the proposal as discriminatory, medically unsound, and contrary to legal and clinical standards. TLC drew attention to the financial implications this could have for individuals, saying that forcing transgender individuals to pay out-of-pocket for medically necessary care would strip such care of ACA protections (e.g., cost-sharing caps), disproportionately harming low-income transgender people and people of color. AARP voiced their support for the current EHB structure, which they say maintains a consistent quality baseline while allowing state flexibility, and opposed the proposed changes that could restrict this flexibility.

Coverage for DACA Recipients

The proposed rule would exclude DACA recipients — certain undocumented individuals who entered the United States as children and are currently protected from deportation — from the definition of “lawfully present” for purposes of health coverage, thus making DACA recipients in all states ineligible for Marketplace coverage, premium subsidies, and cost-sharing assistance. This proposal reverses a 2024 Biden Administration regulation that extended the definition of “lawfully present” to DACA recipients and enabled these individuals to enroll in Marketplace plans. Litigation against this rule has blocked DACA recipients from enrolling in Marketplace plans in 19 states.  

All organizations in our sample that commented on this proposed policy change (nine out of ten) opposed it. These groups expressed their ongoing support for providing DACA recipients with access to Marketplace plans, premium subsidies, and cost-sharing assistance, while also sharing concerns about the effects of stripping people of coverage eligibility mid-year. PIF argued that DACA recipients have historically been recognized as lawfully present in various health programs, and that reversing the 2024 regulation would harm DACA recipients. PIF further asserted that DACA recipients face disproportionately high uninsured rates, and that removing their eligibility would worsen access to care, increase financial hardship and negatively impact individual and community health. NILC cited research saying many DACA recipients forgo necessary care due to cost, contributing to worse public health outcomes and, along with Families USA, mentioned the potential for higher uncompensated care burdens on the health system due to coverage losses. Community Catalyst, CBPP, ACS-CAN and NHeLP echoed and supported those sentiments, noting the proposal would exacerbate health inequities and harm risk pool stability. Finally, PIF claimed that CMS grossly underestimated the amount of DACA recipients that would be affected – 11,000 – saying that this underestimates the harm due to legal barriers and limited awareness, putting the number closer to 100,000. 

Premium Affordability and Coverage Denials

The proposed rule would adjust the methodology for determining the amount Marketplace enrollees contribute to their premium. This same methodology also determines the maximum annual out-of-pocket cost for people in both individual and employer-based coverage. If finalized as proposed, deductibles and other cost-sharing for the typical family could increase by $900 in 2026 (including for those with employer-sponsored insurance). Families enrolled in the Marketplace could face an additional $313 in premiums. Additionally, CMS proposes to give insurers more flexibility to offer plans at each metal level with lower actuarial values than permitted under current rules.

The proposed rule also includes a provision that would permit insurers to deny an applicant insurance if the person had past-due premiums from a previous policy. This proposal is similar to but stricter than the first Trump Administration’s policy on past due premiums, which also allowed insurers to deny coverage but limited the look-back period for past due premiums to 12 months. In contrast, this proposal permits insurers to deny coverage if the applicant has past-due premiums from any point in time. 

Premium Adjustments

A little over half of our sample organizations shared concerns about the implications of increasing premium and out-of-pocket costs for people in both individual and employer-based coverage. ACS-CAN specifically felt that this would disproportionately affect cancer patients who already face high early-year expenses, and Community Catalyst felt similarly about the effects on people with chronic conditions and those in rural areas. UnidosUS shared specific concerns that this policy would have a disproportionate impact on low-income Latino families, as the resulting increase in costs would push people out of care. 

Premium Debt

Of the organizations that commented on the proposal to allow insurers to deny coverage for past-due premium debt (roughly half our sample), all argued that the provision was punitive and unnecessary. NHeLP further argued that the basis upon which CMS attempts to justify its proposal is flawed, ast premium debt is often due to insurer errors rather than enrollee non-payment.

CBPP and NHeLP argued that allowing insurers to deny coverage on this basis violates the ACA’s guaranteed availability requirement and would disproportionately harm low income enrollees. ACS CAN highlighted that it could disproportionately harm patients with serious illnesses like cancer. Families USA warned that the proposal could push families into medical debt and increase uncompensated care burdens on providers. ACS CAN urged flexibility such as installment payments and forgiveness of minor debts.

Note on Our Methodology

This blog is intended to provide a summary of comments submitted by state departments of insurance, state-based marketplaces, and representative associations. This is not intended to be a comprehensive review of all comments on every provision in the proposed rule, nor does it capture every component of the reviewed comments. To view more stakeholder comments, please visit https://www.regulations.gov/. 

This year, enrollment in the Affordable Care Act (ACA) Marketplaces is at an all-time high, hitting 24.3 million during the most recent open enrollment season. The ACA allows states to use HealthCare.gov or establish their own state-based Marketplace (SBMs). Currently, 20 states operate SBMs, and two more are transitioning to this model. In March 2025, the Centers for Medicare & Medicaid Services (CMS) released a set of proposals that would change Marketplace benefits, enrollment, and eligibility rules such that, by its own estimates, between 750,000 and 2 million people would lose health insurance. 

Although CMS offered just 23 days for public comment on its proposed rule, the agency received almost 26,000 comments. CHIR reviewed a sample of comments from four major categories of stakeholders to better understand how different groups view the administration’s proposals and how they might be impacted. The first two blogs in our series summarized comments from health plans and brokers and providers. An upcoming post will focus on comments from consumer and patient organizations. This third blog in our series examines comments submitted by state departments of insurance (DOIs), state-based marketplaces (SBMs), and their representative associations (referred to collectively here as “states”). Specifically, we reviewed comments from:

California marketplace

Colorado marketplace

Georgia DOI and marketplace

Idaho marketplace

Massachusetts marketplace

New Mexico DOI and marketplace

New York DOI and marketplace

Oregon DOI and marketplace

Pennsylvania DOI

Washington DOI

National Association of Insurance Commissioners (NAIC)

State Marketplace Network

The proposed Marketplace rule covers a wide range of policies (a detailed summary of its provisions, in two parts, is available on Health Affairs Forefront here and here). This summary of feedback from state-based Marketplaces and departments of insurance focuses on overarching comments from states followed by comments on the following selected CMS proposals: (1) Changes to open and special enrollment periods; (2) New $5 premium charge for certain individuals automatically re-enrolled; (3) Cancelling subsidies for failure to reconcile the previous year’s premium tax credits;  (4) Additional documentation requirements for income; (5) Changes to premium and benefit affordability; (6) Eliminating eligibility for DACA recipients; and (7) Coverage of treatment for gender dysphoria.

Overarching comments

Unrealistic Timeline and Added Costs

Some proposed changes in the rule would take effect immediately and others for plan year 2026, requiring SBMs to make significant system and operational changes on a compressed timeline. For plan year 2026 changes, the State Marketplace Network notes the proposal allows about three months to ensure “all necessary system updates are completed by August, at the latest, when several SBMs begin processing their first batch of renewals and notices.” Some states noted that the expedited timeline is “unworkable” for SBMs or would add significant unexpected costs. New Mexico’s SBM, for example, is transitioning to a new enrollment platform for 2026, a major operational undertaking, and would be unable to fully comply with the rule on the timeline proposed due to finite resources and capacity. New York’s SBM uses an eligibility system that is integrated with Medicaid and CHIP, and making changes to it can “take ten to twelve months to implement and cost up to $1 million.”

Some states also expressed concern about the proposal’s timeline given that insurers are currently in the process of setting and submitting rates for 2026. Washington flagged that insurers must submit 2026 rate and form filings by May 15, 2025, likely before the rule is finalized. The NAIC notes that insurers are unable to set appropriate rates without knowing what rules will be in place and expects “rate increases to result from the uncertainty generated by these late rule changes.” 

Across a wide range of proposed provisions, states generally recommended a longer timeline for required changes.

Departure from State Flexibility

The proposal makes many changes for the federally facilitated marketplace (FFM) mandatory for SBMs as well. States consistently raised concerns about the rule’s “unprecedented” departure from long-standing flexibility extended to SBMs, allowing them to deploy innovative approaches that serve their unique markets and populations, as long as they adhered to federal floors. The State Marketplace Network “encourages continued recognition of state authority over markets and marketplaces,” and notes that one-size-fits-all approaches “risk destabilizing markets, increasing inefficiencies, and increasing consumer costs.”  The NAIC objects to the rule’s many “limits to state authority.” 

Across a wide range of proposed provisions, states roundly urged CMS to maintain long-standing flexibility for SBMs. 

Lack of Enrollment-Related Fraud in SBMs

Many states questioned a key justification of the proposal as it relates to SBMs. States widely reported that the broker fraud and improper enrollment issues that the proposal seeks to address are limited to the FFM and are not present in SBMs. They widely recommended that proposed changes thus be made optional for SBMs. Several described “robust” activities to ensure program integrity, mitigate fraud, and safeguard taxpayer dollars. For example, Idaho requires insurers to send a monthly invoice to consumers, even to people with $0 premiums, and its SBM conducts outreach via text and email to all fully subsidized consumers about their enrollment and potential for tax liabilities. Both the Idaho and California SBMs note that only a consumer can initiate an online action to add an agent to their account. The Massachusetts SBM does not use agents or web-brokers for enrollment. 

Changes to Open and Special Enrollment Periods

The proposed rule would shorten the annual FFM open enrollment period (OEP) from 76 to 44 days and eliminate a special enrollment period (SEP) that allows low-income individuals (earning below 150% of the federal poverty level (FPL) or $23,475 per year) to enroll any time during the year. CMS would also require people enrolling in the Marketplace through a SEP to submit extra paperwork. In a departure from past practice, CMS would require SBMs to adhere to the federally set OEP timeline and SEP policies.

Shortening OEP

States roundly oppose applying the shortened OEP to SBMs. Comments from Georgia emphasized the importance of flexibility “to respond to state-specific needs,” and noted that the state extended its 2025 OEP in response to two hurricanes. A few SBMs expressed concern about consumer confusion, noting the length of time their state-specific OEP had been in place, for example, “for over ten years” in California, and “since 2016” in New York. The NAIC notes that “requiring SMBs to abandon existing consistency” provides no tangible benefits for consumers. 

A few states noted that the shorter timeframe would place a “substantial burden” on SBM call centers as well as agents and brokers. For example, Colorado notes agents and brokers would have to try to support “the same volume of enrollees during a truncated timeframe that overlaps” with enrollment in other coverage, like Medicare. Finally, many states argued that shortening the OEP would increase adverse selection, contrary to the proposal’s claims, and several backed their claims up with data. For example, in Massachusetts, just over half of enrollees sign up after December 15. People who enrolled by December 15 were older on average and had total medical expenses that were “10 percent higher compared to people who shopped after December 15.”

Eliminating the Low-income SEP

State commenters in our sample differed on whether the low-income SEP contributes to adverse selection or improper enrollment. The NAIC believes this “SEP creates some risk of adverse selection,” while the Colorado SBM argues that its data shows “younger, healthier individuals make up the large majority of enrollees” who use this SEP, thus “removing this SEP would actually harm the risk pool.”

While Georgia thinks that removing this SEP would “reduce the opportunity for bad actors to commit insurance fraud,” the NAIC does “not believe that the under 150% SEP is a major contributor” to improper enrollment. New Mexico sees no evidence that this SEP is misused and cites its own financial stake in the accurate administration of this SEP given the additional state-funded subsidies it provides. In addition, New Mexico noted that 59% of enrollees who used this SEP in 2024 lived in rural or frontier counties, where reducing uncompensated care to providers is important.  

Other than Georgia, states in our sample that commented on this provision recommend that SBMs maintain the option to offer this SEP. 

Pre-enrollment Verification for SEPs

Most states in our sample that offered comments on this provision urged CMS to maintain existing state flexibility in how to ensure the integrity of SEP verifications. Idaho was the only state in our sample to support the proposed change. It currently verifies 98% of SEPs using a streamlined process and “several forms of auto-verification.” 

A few states argued this provision “would result in significant unfunded costs” (New York). For example, California observed that due to “limited real-time verification data sources,” the proposed change will require additional, unbudgeted staff to conduct “a largely manual process.” Colorado estimated that “initial technology costs” to make needed changes would exceed $330,000, on top of increased staff costs due to the “substantial increase in workload.” 

In addition, a few states flagged concerns about adverse selection. For example, New York noted that “increasing the paperwork burden will likely deter healthier individuals from completing enrollment.” Massachusetts notes that the average age of people who enrolled through a SEP “was three years younger” than all enrollees in 2024, and in California, they have averaged nearly 6 years younger than total enrollees since 2019.

New $5 Premium Charge for Certain Individuals Automatically Re-enrolled

The proposed rule would require Marketplaces to impose a new $5 premium on individuals eligible for a $0 premium, unless they actively update their Marketplace application during open enrollment. 

Most states that commented on this provision objected to it and/or recommended that it be made optional for SBMs. Idaho, however, supported the aim of “requiring fully subsidized consumers to confirm their information,” but proposed a different process that would grant conditional eligibility as opposed to imposing a $5 premium.

States raised concerns that the provision would require costly system changes, lead to loss of coverage, increase adverse selection, and create consumer confusion, all to address a supposed problem that does not exist in SBM states. For example, New York noted that “there is no evidence that consumers in New York have been fraudulently enrolled in $0 plans.” Pennsylvania commented that “forcing an arbitrary five-dollar penalty only on low-income individuals unnecessarily increases barriers to coverage and would lead to consumer confusion.” New Mexico argued that “those most likely to lose coverage due to nominal premiums are healthier, lower-cost enrollees,” which could “contribute to adverse selection, increasing premiums and undermining market stability.” Massachusetts commented on the importance of auto-renewal for its coverage strategies and in “supporting a strong merged market risk pool.”

A couple of states questioned whether the change was legally permissible. Oregon, for example, “questions the legal authority for HHS’s proposal to withhold any amount of [premium subsidy] paid on behalf of a taxpayer who has been determined legally entitled to the entire [subsidy] amount.”

Cancelling Subsidies for Failure to Reconcile

The proposed rule would require the Marketplace to end subsidies sooner—after one year, not two—for enrollees who fail to file their taxes and reconcile their estimated income, on which the subsidy is initially based, with their actual income. 

State commenters had mixed views on this provision. Georgia called it “commonsense,” and Idaho supported the change as well. New Mexico called the change “prudent,” but both New Mexico and Oregon urged a longer lead time to accommodate significant system changes, staff training, and consumer education. 

A few states raised concerns related to known IRS issues with this process. New York notes that the shorter timeframe would create a “significant burden for many consumers” who are flagged as failing to reconcile in error, while the two-year timeframe “provides a balance between program integrity and administrative burden to consumers and SBMs.” Colorado argues that the two-year timeframe is appropriate given the “substantial risk of inappropriate loss of [subsidies]” due to “data quality limitations in the available IRS records.” 

Colorado and Massachusetts reiterated that the broker-fraud justification for this change is not an issue in their states. 

Additional Documentation Requirements for Income

CMS proposes to require consumers to submit documentation proving their income if third-party data sources suggest their income is below 100 percent of the federal poverty level (FPL). Consumers would also be required to submit additional documentation proving their income if the IRS lacks tax data.

Verification When Data Show Income Below the Poverty Line

States in our sample that commented on this provision uniformly questioned the rationale for applying it to states that have expanded Medicaid and recommended state flexibility. Several states argued that there is no incentive in Medicaid-expansion states for individuals or agents to inflate the income of a person under the poverty line in order to qualify for coverage. For example, Idaho does “not believe this change aligns well with expansion-state eligibility thresholds.” In addition, New York commented that the proposal would require Medicaid-expansion states “to expend significant IT system and Customer Service Center costs, without altering resulting consumer eligibility.”

New Documentation When IRS Data is Unavailable

States in our sample that commented on this provision generally objected to its mandatory application in SBM states, with one exception. Idaho generally supports the goal of requiring additional income verification when the IRS lacks tax data, but recommends that CMS allow the use of state income data sources. 

New Mexico argued that it is “reasonable” to accept self-attestation of income when the IRS cannot provide information because enrollees must later reconcile their actual income at tax time. Massachusetts commented that “individuals and families should not have to experience burdensome, unnecessary, and costly consequences to correct for IRS data challenges.” A couple of states noted that the increased burden on applicants would increase adverse selection. For example, Colorado noted that the IRS is less likely to have tax data for younger applicants who “are more likely to be deterred” by additional paperwork, yet “whose participation in the risk pool helps drive down premiums.” A couple of states also commented on the significant additional cost for systems changes and staff to process manual verifications. 

Changes to Premium and Benefit Affordability

The proposed rule would adjust the methodology for determining the amount Marketplace enrollees contribute to their premium. This same methodology also determines the maximum annual out-of-pocket cost for people in both individual and group market health plans, including employer-based coverage. If finalized as proposed, deductibles and other cost-sharing for the typical family could increase by $900 in 2026. Families enrolled in the Marketplace could face an additional $313 in premiums. Additionally, CMS proposes to give insurers more flexibility to offer plans at each metal level with lower actuarial values than permitted under current rules.

Not all the states in our sample expressed views on these provisions, but those that did expressed concerns about their negative effects on consumers and state markets, and a few states registered opposition.

Massachusetts commented that the proposed change in methodology “would increase premiums and out-of-pocket costs for Massachusetts residents, increase state costs, lead to coverage loss, and harm our risk pool, further exacerbating premium increases for all.” Oregon commented that the proposal would exacerbate the “premium shock” consumers will face if enhanced subsidies expire at the end of the year and further “destabilize the individual insurance market.”

States also raised operational challenges due to the timing of the proposed methodology change. Oregon noted that CMS had “already released a final actuarial value calculator and premium adjustment percentage guidance for Plan Year 2026,” and making changes at this point creates “additional work for states and carriers.” Washington noted that, with the proposed change, “issuers would need to develop rates using new assumptions,” due to the state by May 15. It further flagged that, given the late timing of the methodology change for 2026 coverage, insurers are unlikely to offer any catastrophic health plans in Washington next year, so “the most affordable product on the market will no longer be available.” 

States observed that allowing lower actuarial value plans would increase cost sharing for consumers, make plan comparisons harder for shoppers, and increase adverse selection. For example, New York noted that the change “will result in higher deductibles, copayments, and other cost-sharing while rising health care costs continue to be a primary concern for households.” Oregon noted that the current approach “allows for a much more effective ‘apples-to-apples’ comparison of the coverage offered at different metal tiers.”

Eliminating Eligibility for DACA Recipients

The proposed rule would eliminate Marketplace and Basic Health Program eligibility for Deferred Action for Childhood Arrival (DACA) recipients, reversing a rule change made last year. The proposed change would take effect immediately, upon the final rule’s effective date. 

All seven states in our sample that commented on the DACA eligibility change raised concerns. Five explicitly opposed the change, and three urged CMS to delay it until the end of the year if it is finalized.

States raised concerns with the negative impacts on consumers, their markets, and SBM operations, which are exacerbated by the mid-year effective date. Colorado noted that the mid-year change would cause “significant confusion” for consumers, lead to “potential disruptions of medical care,” and “impose a substantial burden” on the SBM. New York commented that changes to its integrated eligibility system needed for a mid-year implementation “could cost up to $1 million.”

Oregon commented that SBMs will “need some time to operationalize this proposal and remove DACA recipients from their rolls because it’s unclear how state exchanges can determine the DACA status of any particular individual.” The state recommended a safe harbor to prevent repayment of subsidies paid “between the effective date of the rule and the termination of their coverage by the relevant exchange.”

Pennsylvania opposed the change and observed that DACA recipients “are generally younger” and “tend to be healthier,” which “positively benefits the risk pool.”

Coverage of Treatment for Gender Dysphoria

The proposed rule would prohibit insurers from covering items and services that treat gender dysphoria (referred to in the rule as “sex trait modification”) as part of essential health benefits (EHBs). States would still be permitted to mandate such coverage, but would need to defray the costs of such coverage using state funds.

Five states in our sample expressed views on this provision, and all urged CMS to preserve the existing regulatory structure in which states have flexibility to determine essential health benefits, within broad federal guardrails. Washington commented that the proposal “contravenes a core tenet of ACA implementation, which gives states the authority to designate their EHB benchmark plan.” It further argued that the standard required of EHBs “is based on the benefits offered by a typical employer plan in a given state.” California, New York, Oregon, and Washington pointed out that all fully insured plans, including employer plans, in their states must cover or cannot exclude gender affirming care. Some states pointed to coverage by large, self-insured employers as well. 

States argued that excluding coverage of “medically necessary care for no reason other than [a person’s] health condition” (Washington) would violate a range of state and federal anti-discrimination laws. They also expressed concern that the proposal would limit access to medically necessary care recommended by major U.S. medical associations. For example, Massachusetts noted that the proposal would “significantly raise [out-of-pocket] costs for people…curtailing their access to needed health care.” 

Comments from California and Washington noted that the handful of existing EHB exclusions in federal rule are all “excepted benefits,” those not generally covered by medical insurance, like vision check-ups for adults or nursing home care. California noted: “CMS’s proposal, for the first time, would exclude benefits that are traditionally embedded within a health plan.” In addition, New York flagged that “treatment for gender dysphoria falls into a number of the EHB categories.”

Note on Our Methodology

This blog is intended to provide a summary of comments submitted by state departments of insurance, state-based marketplaces, and representative associations. This is not intended to be a comprehensive review of all comments on every provision in the proposed rule, nor does it capture every component of the reviewed comments. To view more stakeholder comments, please visit https://www.regulations.gov/. 

The Affordable Care Act (ACA) Marketplaces enable individuals and families who do not have access to employer-sponsored coverage or public health insurance programs to purchase guaranteed, comprehensive health coverage. Marketplace plans currently provide financial protection and facilitate access to critical health services for 24.3 million enrollees.  In March, the Centers for Medicare & Medicaid Services (CMS) released proposed revisions to federal Marketplace standards and insurance rules. These proposals, which CMS estimates would result in 750,000 to 2 million people losing health coverage, would restrict Marketplace eligibility and enrollment processes and change some of the health benefits Marketplace plans must offer.

The CHIR team has reviewed a sample of comments submitted by select stakeholder groups in response to the proposed rule. The first blog in this four-part series focused on comments submitted by health plans and heath insurance brokers. In this second blog, we discuss comments from health care providers. Specifically, we reviewed comments from:

America’s Essential Hospitals

American Academy of Family Physicians (AAFP)

American College of Obstetricians and Gynecologists (ACOG)

American Medical Association (AMA)

American Psychological Association Services (APA Services)

Association of Academic Medical Colleges (AAMC)

Greater New York Hospital Association (GNYHA)

National Association of Community Health Centers (NACHC)

While these organizations offered comments on a broad range of issues, this summary of provider comments focuses on five topics:  1) open enrollment and special enrollment periods; 2) coverage denials for past-due premiums; 3) Marketplace eligibility for Deferred Action for Childhood Arrivals (DACA) recipients; 4) coverage of gender-affirming care; and 5) affordability.  

In general, health care providers shared concerns about or clearly opposed provisions in the proposed rule that would reduce eligibility for, and enrollment in, Marketplace coverage. Provider groups also largely endorsed CMS’s proposal to codify the “preponderance of the evidence” standard of proof for the adjudication of cases involving broker misconduct and urged CMS to take further action to address fraud among agents and brokers. Finally, some provider organizations, such as the American Hospital Association, chose to forgo detailed comments on the proposed rule and instead expressed their deep concern about the anticipated coverage losses that would accrue from the overall regulation, with substantial consequences for individuals’ access to care and providers’ financial stability.

Open and Special Enrollment Periods

The proposed rule would shorten the annual open enrollment period (OEP) for Marketplace coverage. Under current regulations, the OEP runs from November 1 through January 15, with state-based marketplaces (SBMs) allowed to extend the OEP beyond this timeframe. Under this proposal, the OEP would be limited to November 1 through December 15 for all Marketplaces, including SBMs—a reduction of more than 30 days. CMS would also eliminate a special enrollment period (SEP) for individuals and families with annual incomes below 150 percent of the federal poverty level (FPL), or almost $40,000 a year for a family of three. Under current rules, these individuals and families may enroll in Marketplace coverage throughout the year.  

Shortening OEP

Almost all of the provider organization comments we examined opposed CMS’s proposal to shorten the OEP, citing the likely loss of coverage that would result. Providers noted that a 75-day open enrollment period is essential for consumers who need to evaluate new premium prices and understand their coverage options, while several noted that consumers will need additional time to navigate the added verification requirements also included in the proposed rule. In addition, the AMA suggested that a shorter enrollment timeframe would deter healthier individuals from enrolling in Marketplace coverage, thus destabilizing the risk pool. Two hospital groups, GNYHA and America’s Essential Hospitals, also opposed the application of this shorter timeframe to SBMs, suggesting that these states have established enrollment procedures, including OEPs, that best meet their enrollees’ needs and should continue to have this flexibility. The AAFP also noted that new limitations on the OEP timeframe would cost states 4000 hours of employee time and $7.8 million to implement. 

Eliminating the Low-income SEP

Several provider groups—NACHC, ACOG, and the AMA—also shared their concerns about the elimination of the Low-Income SEP for individuals and families with annual incomes below 150 FPL.  For example, ACOG noted that this monthly SEP serves as an “important safety net,” increasing the opportunities to enroll in Marketplace coverage for individuals who lose Medicaid eligibility. The AMA offered alternative approaches to the complete elimination of the Low-Income SEP for CMS’s consideration, such as limiting this SEP to individuals and families who can demonstrate a change in income and a delay in implementation until plan year 2027.

SEP for Pregnancy

ACOG and the AMA also asked CMS to create greater access to Marketplace coverage during pregnancy by making pregnancy a qualifying life event for a SEP. Both organizations note that current regulations can leave pregnant people who are uninsured or lack coverage for maternity care without an avenue to access Marketplace coverage, resulting in delayed prenatal care, greater risk of poor birth outcomes, and significant financial risk for families and the larger health system.

Coverage Denials for Past Due Premiums 

The proposed rule includes a provision that would permit insurers to deny an applicant insurance if the person had past-due premiums from a previous policy. This proposal is similar to but stricter than the first Trump Administration’s policy on past due premiums, which also allowed insurers to deny coverage but limited the look-back period for past due premiums to 12 months. In contrast, this proposal permits insurers to deny coverage if the applicant has past-due premiums from any point in time. 

Several providers noted their concerns with this proposal. NACHC, for example, highlighted that the low-income patient population served by community health centers may face financial barriers to paying their premiums and posited that existing guardrails, such as short grace periods for non-payment prior to cancellation of coverage, already deter consumers from abusing guaranteed issue requirements. Similarly, ACOG argued that prospective enrollees “should not be punished for past hardships when seeking coverage presently.” The AMA raised implementation questions related to this policy that CMS did not address in the proposed rule, such as whether an enrollee would be given a grace period to retrospectively make up premium payments and how health services would be paid during this timeframe.

Marketplace Eligibility for DACA Recipients

The proposed rule would exclude DACA recipients—certain undocumented individuals who entered the United States as children who are protected from deportation—from the definition of “lawfully present” for purposes of health coverage, thus making DACA recipients in all states ineligible for Marketplace coverage, premium subsidies, and cost-sharing assistance. This proposal reverses a 2024 Biden Administration regulation that extended the definition of “lawfully present” to DACA recipients and enabled these individuals to enroll in Marketplace plans. (Litigation against this rule has blocked DACA recipients from enrolling in Marketplace plans in 19 states.)  

All but one provider group in our sample addressed this proposed change in policy. These groups expressed their ongoing support for providing DACA recipients with access to Marketplace plans, premium subsidies, and cost-sharing assistance; some groups specifically and strongly opposed CMS’s proposal to exclude DACA recipients from the definition of “lawfully present.”  APA Services, for example, shared their “unqualified opposition” to this provision, noting that immigrants experience “unique stressors” including trauma, displacement, and cultural adjustment, which can lead to increased vulnerability to chronic medical conditions. ACOG’s comment cites their members’ commitment to supporting all patients seeking obstetric and gynecological care without regard to immigration status as the basis of their opposition to this proposal.

Coverage of Gender-Affirming Care

The proposed rule would prohibit insurers from covering gender-affirming care, such as the items and services that treat gender dysphoria (referred to in the rule as “sex trait modification”), as part of essential health benefits. States would still be permitted to mandate such coverage, but would need to defray the costs of such coverage using state funds.

Several of the organizations in our sample expressed concerns with or opposed this proposal outright, with reasons ranging from the critical nature of gender-affirming care for people with gender dysphoria, to concerns about the scope of services encompassed within this exclusion, to the lack of a clear definition for and clinical specificity of the term “sex trait modification.”  The AAFP, for example, stated that “gender-affirming health care is part of comprehensive primary care for gender-diverse patients,” while ACOG found it “imperative” to note that many services for gender affirming care are also routinely covered for non-transgender people for indications such as endocrine disorders, menopause, and cancer treatment or prevention. While some provider groups noted that CMS’s term “sex trait modification” is “medically inaccurate and clinically meaningless” and asked CMS to “leave such considerations to the scientific and medical communities,” others urged CMS to craft a clear and comprehensive definition of this term should they move forward with this proposal. 

Changes to Premium and Benefit Affordability

The proposed rule would adjust the methodology for determining the amount Marketplace enrollees contribute to their premium. This same methodology also determines the maximum annual out-of-pocket cost for people in both individual and group market health plans, including employer-based coverage. If finalized as proposed, deductibles and other cost-sharing for the typical family could increase by $900 in 2026 (including for those with employer-sponsored insurance). Families enrolled in the Marketplace could face an additional $313 in premiums. Additionally, CMS proposes to give insurers more flexibility to offer plans at each metal level within a wider range of actuarial values (AV) than permitted under current rules.

Two of the provider associations in our sample submitted comments on these provisions.  The AMA expressed strong opposition to proposals that would negatively affect coverage affordability, including greater flexibility on AV ranges and CMS’s proposed revisions to premium contributions. The AMA flagged that both of these proposals would lead to higher out-of-pocket costs for enrollees with chronic conditions and urged CMS to monitor affordability issues and coverage disruptions if CMS finalizes this proposal. NACHC noted that the proposed changes would result in premium contributions that are likely too high for the patients that health centers serve and urged CMS to “reconsider” these proposals.

Note on Our Methodology

This blog is intended to provide a summary of comments submitted by health care providers. This is not intended to be a comprehensive review of all comments on every provision in the proposed rule, nor does it capture every component of the reviewed comments. To view more stakeholder comments, please visit https://www.regulations.gov/. 

Sabrina Corlette

This year enrollment in the Affordable Care Act (ACA) Marketplaces is at an all-time high, hitting 24.3 million during the most recent open enrollment season. This insurance coverage provides a critical source of financial protection and access to care for a wide range of low- and moderate-income people, from entrepreneurs and gig economy workers, to small business owners and early retirees. In March 2025, the Centers for Medicare & Medicaid Services (CMS) released a set of proposals that would change Marketplace benefits, enrollment, and eligibility rules such that, by its own estimates, between 750,000 and 2 million people would lose health insurance.

Although CMS offered just 23 days for public comment on its proposed rule, the agency received almost 26,000 comments. To better understand how different stakeholders view the administration’s proposals and how they might be impacted, CHIR reviewed a sample of comments from four major categories of commenters: health plans and brokers, providers, consumers and patients, and state-based Marketplaces and departments of insurance. For this first in our four-part series, we focus on comments submitted by health plans and brokers. Specifically, we reviewed comments from:

America’s Health Insurance Plans (AHIP)

Association of Community Affiliated Plans (ACAP)

Blue Cross Blue Shield Association (BCBSA)

Cigna

CVS Health

HealthSherpa

National Association of Benefits and Insurance Professionals (NABIP)

Oscar

The proposed Marketplace rule covers a wide range of policies (a detailed summary of its provisions, in two parts, is available on Health Affairs Forefront here and here). This summary of insurance company and broker feedback focuses on selected CMS proposals: (1) Changes to open and special enrollment periods; (2) Coverage denials for failure to pay premiums; (3) Broker fraud; (4) Documentation requirements for data matching issues; (5) New $5 charge for certain enrollees automatically renewed; (6) Coverage of treatment for gender dysphoria; and (7) Changes to coverage affordability via premium adjustment percentages and actuarial value targets.

One overarching recommendation submitted by these carriers is for CMS to slow down its proposed timeline for implementing several of its policy changes. They argue that some of the effective dates are not “workable” given operational limitations. For example, AHIP’s letter observes that, “[w]ithout adequate time for implementation and testing, these policies may result in delayed enrollment, unnecessary coverage terminations, and adverse impacts on consumers.” 

Another consistent recommendation from insurers, applicable to multiple provisions of the proposed rule, is that CMS should retain its traditional deference to state autonomy and refrain from mandating that state-based Marketplaces (SBM) adopt these policy proposals. Oscar, for example, commented that “state regulators and SBMs know their own markets, enrollment patterns, and consumers best.”

Changes to Open and Special Enrollment Periods

The proposed rule would shorten the annual open enrollment period (OEP) from 76 to just 44 days. CMS further proposes to narrow enrollment opportunities by eliminating a special enrollment period (SEP) that allows low-income individuals (earning below $23,475 per year) to enroll any time during the year. CMS would also require people enrolling in the Marketplace through a SEP to submit extra paperwork. In a departure from past practice, CMS would require SBMs to adhere to the federally set timeline and SEP policies.

Shortening OEP

Most of the insurers generally supported a shortened OEP, although those that did urged CMS to delay doing so until the OEP for plan year 2027. AHIP and other carriers noted that uncertainty over the expiration of the enhanced premium tax credits would necessitate a longer OEP so that consumers would have time to understand the impact and adjust their coverage choices. As BCBSA put it: “We are concerned that the expiration of the enhanced tax credits…will be confusing for enrollees and chaotic for other stakeholders. We do not recommend shortening the OEP on top of the…uncertainty and changes that consumers, issuers, and Exchanges will be managing.” These insurers also urged CMS to continue longstanding deference to SBMs in setting OEP dates. 

ACAP was the only insurer in this sample to fully oppose the proposal, noting that in their experience it is healthier consumers that sign up later in the OEP. They argue that shortening OEP risks “degrading the risk pool.”

The brokers in our sample express concerns that the shortened time period would “strain agents” and risk “overloading the distribution channel” (NAPIB). HealthSherpa also notes that many brokers assist both Medicare and Marketplace consumers, and a shorter OEP will “reduce agents’ ability to balance these overlapping enrollment periods.”

Eliminating the Low-income SEP

All of the commenters in our sample supported CMS’ proposal to eliminate the low-income SEP, although one (Cigna) urged CMS to delay implementation to plan year 2026. The insurers argued that the low-income SEP has increased the risk of adverse selection and fraud. AHIP, for example, wrote: “While well-intentioned…this expansive SEP is easily abused.” ACAP reports that its member plans “have noticed a trend of high utilizers enrolling through an SEP only to shortly thereafter receive a costly procedure, such as an organ transplant, dialysis, cancer treatment, or utilize a high-cost specialty drug.”

Broker commenters also supported jettisoning the low-income SEP. NAPIB points to “clear evidence of misuse, particularly in non-[Medicaid] expansion states.”

Pre-enrollment Verification for SEPs

While the commenters in our sample generally supported requiring consumers to document their eligibility for SEPs, they had several caveats. First, many expressed concerns that the Marketplaces do not have the operational capabilities to make the verification process smooth and efficient for consumers. AHIP noted: “When Exchanges are unable to perform timely verification, issuers often receive complaints of consumer confusion and abrasion.” 

Insurer and broker commenters urged CMS to invest in technologies that would allow for automation of the SEP verification process. Some further asked that CMS give the SBMs greater flexibility over implementation of this requirement. For example, ACAP urged that SBMs be allowed to determine the SEPs most at risk of abuse and set their own verification standards.

Coverage Denials and Terminations

The proposed rule contains a provision that would permit insurers to deny an applicant insurance if the person had past-due premiums from a previous policy. Another provision would require insurers to terminate an enrollee’s coverage if they underpay their premium by a de minimis amount.

Coverage Denials for Failure to Pay Premiums for Prior Coverage

The insurers in our sample generally supported this proposal, and strongly urged that issuers retain flexibility to set payment policies. BCBSA noted that insurers have to weigh the costs and benefits of “chasing past-due premiums, member abrasion, and the risk environment in their area when setting their billing policies.” ACAP also recommended that CMS limit the policy to premiums due from the past 12 months of coverage, noting that “if consumers do experience a significant financial hardship that leaves them unable to pay significant premiums…that should not prevent them from being able to purchase coverage into perpetuity.”

Coverage Terminations for Failure to Meet a Premium Payment Threshold

Insurers had concerns with CMS’ proposal to take away their flexibility to decide when to terminate coverage. AHIP asked CMS “to continue deferring to issuers regarding their billing policies,” noting further that the current policy helps to promote coverage continuity. However, NAPIB supported this proposal, arguing that it would enhance “accountability and program integrity.”

Combatting Broker Fraud

The proposed rule includes a provision to codify a “preponderance of the evidence” standard of proof for CMS’ adjudication of cases involving broker misconduct. In addition, CMS requests commenters to provide recommendations for measures the agency could adopt to further discourage fraud among agent and brokers.

The insurers in our sample supported codifying the preponderance of the evidence standard, but NAPIB did not. The broker association argued it would result in CMS’ adjudications being too subjective, noting that the recent reinstatement of 70 percent of previously suspended brokers was indicative of “major flaws” in CMS’ enforcement efforts.

Commenters also provided several suggestions to better prevent fraud. AHIP recommended using two-factor authentication, standardized consumer consent forms, and creating a centralized hub for brokers to upload those forms. CVS Health similarly encouraged the use of mandatory, standardized consent forms. AHIP also asked CMS to share more information with insurers about SEP triggering events and the numbers of SEPs assisted by brokers. In addition to some technical upgrades, HealthSherpa suggested using identity proofing at the Marketplace call center when it receives a request to change the Agent of Record on a policy. They note that currently, a bad actor can easily impersonate a consumer over the phone. ACAP recommended imposing a requirement that brokers act “in the best interests” of their customers, such as through a fiduciary responsibility.

Documentation Requirements for Data Matching Inconsistencies

CMS proposes to eliminate a 60-day extension of the time period for consumers to resolve an inconsistency between income and other data provided on their application and the data available via third-party data sources. The agency further would require consumers to submit documentation proving their income if third-party data sources suggest their income is below 100 percent of the federal poverty level (FPL). Consumers would also be required to submit additional documentation proving their income if the IRS lacks tax data for them.

The commenters in our sample were generally supportive of these changes, but with some significant exceptions and caveats. AHIP, for example, urged CMS to, at minimum, delay implementing some of the requirements and to make them optional for SBMs. The association observed that requiring people who are very low income to submit additional documentation would create “excessive administrative burden for enrollees…and will be detrimental to the risk pool.”

ACAP also flagged the potential risk pool effects of additional paperwork requirements, which primarily deter healthy people from enrolling. They warn CMS that their plans would “need to adjust premiums accordingly.” Oscar further argued that “this additional administrative barrier will fall onto consumers on the border of poverty and could prevent them from qualifying for affordable coverage because of a good faith projection.”

AHIP expressed concerns about “all the additional verifications” that Marketplaces will be required to conduct, placing strains on IT systems and customer support capacity and leading to delays that could cause eligible people to lose coverage. CVS Health urged CMS to inform insurers before terminating coverage, so that they can intervene to help consumers resolve the issue.

NAPIB opposed CMS’ proposal to lower the threshold for determining a consumer has a data matching inconsistency, arguing that the change would “disproportionately impact small businesses and lawfully present immigrants” who may have uneven, unpredictable income or lack necessary tax data.

New $5 Premium Charge for Certain Individuals Automatically Re-enrolled

The proposed rule would require Marketplace to impose a new $5 premium on individuals eligible for a $0 premium, unless they actively update their Marketplace application during open enrollment.

Insurers and brokers had mixed views about this proposal. AHIP and ACAP expressed significant concerns with both the coverage and operational effects of this policy; BCBSA, NAPIB, CVS Health and Cigna were more supportive, although BCBSA and Cigna urged the agency to delay implementation by a year. Several also encouraged CMS to make this policy optional for the SBMs, with BCBSA for example noting that “there is insufficient justification” for extending the policy to the SBMs, since only FFM states have been the source of improper enrollments. ACAP also emphasized the significant operational costs of this change for insurers, noting that these costs would need to be passed on in the form of higher premiums. The association also urged CMS, if it finalizes the policy, to provide guidance to insurers on consumer notification requirements so that consumers know what they need to do and to discourage some insurers from using it as “a back-door way to cherry-pick enrollees.”

Coverage of Treatment for Gender Dysphoria

The proposed rule would prohibit insurers from covering items and services that treat gender dysphoria (referred to in the rule as “sex trait modification”) as part of essential health benefits. States would still be permitted to mandate such coverage, but would need to defray the costs of such coverage using state funds.

Not all the organizations in our sample expressed views on this provision, but those that did urged CMS to preserve the existing regulatory structure in which states have flexibility to determine essential health benefits, within broad federal guardrails. The proposed federal directive to exclude specific services from the benefit package based on diagnosis is unprecedented. ACAP and BCBSA also noted that many of the items and services used to treat gender dysphoria are also deployed to treat other conditions and diseases, such as cancer, menopause, and other endocrine disorders. It could also affect access to treatments to prevent conception, such as vasectomies and tubal ligations. These insurers noted that prohibiting coverage for these services for one diagnosis but not others would create significant operational burdens for insurers and headaches for many enrollees.

Changes to Premium and Benefit Affordability

The proposed rule would adjust the methodology for determining the amount Marketplace enrollees contribute to their premium. This same methodology also determines the maximum annual out-of-pocket cost for people in both individual and employer-based coverage. If finalized as proposed, deductibles and other cost-sharing for the typical family could increase by $900 in 2026 (including for those with employer-sponsored insurance). Families enrolled in the Marketplace could face an additional $313 in premiums. Additionally, CMS proposes to give insurers more flexibility to offer plans at each metal level with lower actuarial values than permitted under current rules.

ACAP was the only insurer in our sample to oppose the change to the premium adjustment percentage methodology. AHIP and BCBSA did not oppose it but asked CMS to delay it for one year.

The insurers all supported greater flexibility to submit plans with lower actuarial values. They further requested that CMS finalize this policy as quickly as possible to account for product filing deadlines with state insurance departments.

Note on Our Methodology

This blog is intended to provide a summary of comments submitted by insurance companies, representative associations, and brokers. This is not intended to be a comprehensive review of all comments on every provision in the proposed rule, nor does it capture every component of the reviewed comments. To view more stakeholder comments, please visit https://www.regulations.gov/. 

By Zeynep Çelik, Kevin Lucia, JoAnn Volk, Liz Bielic, and Madeline McBride

A new analysis from researchers at the Georgetown University Center on Health Insurance Reforms (CHIR) offers a snapshot of the dental coverage landscape on the ACA Marketplaces in 2024. Using data from the Centers for Medicare and Medicaid Services (CMS), the analysis explores national enrollment trends and examines insurer marketplace participation and premium costs for stand-alone dental plans (SADPs) sold through the Federally Facilitated Marketplaces (FFMs) and State-based Marketplaces. The findings come at a pivotal moment, as states begin to weigh a new federal option to include adult dental benefits as essential health benefits (EHBs) starting in 2027.

Visualizing enrollment and marketplace participation across states reveals variation in SADP availability and costs. While overall marketplace enrollment has surged in recent years, SADP enrollment has grown more slowly. Although SADP premiums are low compared to qualified health plan (QHP) premiums, adult enrollees must typically cover the full cost of premiums without subsidies. The analysis presents insights into why SADP uptake remains limited and what state-specific policy decisions could mean for future dental coverage options. 

Read the full analysis here.

By Leila Sullivan

With infectious diseases such as measles on the rise, many Americans are wondering what they can do to protect themselves and loved ones against illness. Some adults may not have been vaccinated as children but want to protect themselves now. Others past a certain age may be uncertain if vaccines received in childhood still provide adequate immunity. But, as with so many questions about healthcare, many will worry about the costs associated with seeking the care they need. This post walks through what insurers are and are not required to cover under current federal law.

Infectious Disease Cases Rising in the U.S.

As of April 18th, there have been almost 600 cases of measles reported as part of an outbreak in Texas, with cases more recently appearing in Louisiana, Missouri, and Virginia. The Texas Department of State Health Services has shared that almost all the cases have been in individuals either lacking the MMR vaccine or with an unknown MMR vaccine status. So far, two children have died, the first reported measles deaths in the United States since 2015, but officials warn that number could rise, and are encouraging people to get the MMR vaccine. 

Another infectious illness rising over the past few years is whooping cough, otherwise known as pertussis, which can be protected against via the Tetanus, Diphtheria, and acellular Pertussis (TdaP) vaccine and boosters. Louisiana alone has reported 110 cases of pertussis so far this year, with two infant deaths in the last six months. In 2024 there were more than 35,000 cases of pertussis reported nationally – the highest in over a decade – and experts say declining vaccination rates are the main culprit. 

The incidence of these and other infectious diseases is likely to rise in the U.S., fueled not only by declining vaccination rates and increased vaccine hesitancy, but also by the dismantling of USAID and other U.S.-supported efforts to prevent, detect and contain illness abroad. 

At Risk: The Affordable Care Act Guarantee of Free Recommended Vaccines

The Affordable Care Act (ACA) requires non-grandfathered individual and employer-based health insurance plans to cover a wide array of preventive services without cost-sharing, including recommended vaccines. Under the law, the federal Advisory Committee on Immunization Practices (ACIP) within the Centers for Disease Control and Prevention (CDC) recommends the vaccines that plans and insurers are required to cover.

Coverage for preventive services is one of the most popular provisions of the ACA. However, the Supreme Court heard oral arguments April 21st in Kennedy v. Braidwood Management Inc., a case with the potential to substantially weaken the guarantee of no-cost preventive services that millions of Americans have come to depend upon. Regardless of that case’s outcome, Robert Kennedy Jr, now the Secretary of Health & Human Services (HHS) and a longtime skeptic of the science supporting vaccines, has asserted his authority to ratify ACIP recommendations, remove ACIP members at will, and appoint new ACIP members that may share his views. If the Secretary decides to rescind ACIP recommendations of current vaccines, or refuse to ratify recommendations for future vaccines, health plans and insurers would have no obligation under the ACA to maintain coverage and waive patient cost-sharing.

Vaccines, Boosters, and Titer Tests: What Will Health Plans Cover? 

Vaccines teach the body how to fight off specific diseases, and a booster, otherwise referred to as an additional dose, builds upon that by strengthening already existing immunity. Most Americans receive a majority of their vaccines as children, but when people are unsure of their vaccine status or are old enough to be concerned about the level of immunity provided by a vaccine administered in childhood, their doctor may order titer tests. Titer tests, or antibody titers, are tests done to measure the amount of antibodies in a person’s blood to determine their level of immunity to a particular disease.

Titer tests

ACIP does not generally recommend routine titer tests, opting only to recommend them in cases of high risk of exposure such as rabies titers for vets and hepatitis B titers for certain healthcare workers. If a provider recommends a titer test that is not recommended by ACIP, health plans are not required to cover the cost. Individuals should contact their insurers to ask about coverage for their particular circumstance.  

Vaccines

ACIP recommends that children from birth to age 18 receive vaccines for serious diseases such as varicella (chicken pox,) measles, mumps, and rubella (MMR,) rotavirus, and hepatitis A, among others. For adults who lack or have incomplete vaccine records, ACIP recommends providers administer these same vaccines, which in turn triggers health plans to cover, and waive cost-sharing for, vaccination in these circumstances. 

Vaccine Boosters

As people age, vaccine effectiveness wanes, while they also become more susceptible to illness exacerbated by underlying conditions. ACIP thus recommends additional doses or boosters for specific vaccines and different groups. Currently, ACIP recommends an array of additional doses depending on many factors including age, pregnancy status, country of birth, or coexisting conditions. People should speak with their healthcare providers to determine what vaccines and boosters are right for them; if they are on the ACIP recommended list, most commercial insurance plans must cover them without enrollee cost-sharing. For vaccines not on the ACIP recommended list, plans may cover them with or without cost-sharing at their own discretion. 

Coverage for the Un- and Underinsured

For adults without health insurance, local public health departments, federally funded health centers, or charitable organizations may provide free or low-cost vaccine services. However, recent cuts in federal funding have jeopardized many local vaccine programs, such as for flu and COVID-19.

Many people are also enrolled in coverage arrangements that do not have to comply with the ACA, and thus may not cover vaccines, or may require cost sharing. These include products such as short-term health plans, fixed indemnity insurance, and arrangements such as health care sharing ministries (HCSMs). Unless mandated by state law, these plans are not required to cover preventive services. Many may impose cost-sharing or do not cover vaccines at all. 

Takeaways

Infectious disease is on the rise, local public health programs providing preventive services face a loss of federal funding, and the ACA’s guarantee of free preventive care is at risk in the Supreme Court and at HHS. For those who want to protect themselves and stay healthy, now is a good time to talk to your doctor about the potential needs for vaccines or booster shots. However, it’s probably wise to call your health plan and check your coverage at the same time.

By Leila Sullivan

In March, we anticipated sunshine and warmer days while keeping up with the latest health policy research. We read about marketplace plan deductibles, physician turnover in private-equity acquired practices, and estimated savings from prescription drug rebates.

Low Marketplace Premiums Often Reflect High Deductibles

John Holahan, Michael Simpson and Erik Wengle. The Commonwealth Fund. March 2025. Available here. 

Researchers for Urban Institute collected Marketplace data about multiple insurers in urban areas of varying size, available through state and federal online databases, to examine deductibles and out-of-pocket maximums to estimate reform impacts using the Health Insurance Policy Simulation Model.

What it Finds

• Silver and bronze marketplace plans often feature deductibles exceeding $5,000 and $7,500, respectively, which can represent up to 21% of annual income for individuals earning 250% of the federal poverty level.
• While cost-sharing reductions (CSRs) effectively shield those below 200% of the federal poverty level, individuals above 200% of the federal poverty level face limited protections, leading to significant out-of-pocket expenses.
• The “Improving Health Insurance Affordability Act” suggests shifting the marketplace benchmark plan from silver to gold coverage and expanding CSRs, which could reduce out-of-pocket spending by an average of 24% at an estimated annual federal cost of $15 billion.

Why it Matters

These findings reveal a critical gap in health insurance affordability. While premiums for some plans may seem low, many marketplace plans burden consumers — especially those with moderate incomes — with prohibitively high deductibles and out-of-pocket costs. This disconnect can deter people from seeking necessary care or lead to financial hardship when medical needs arise. Yet the Trump administration has proposed a rule that would increase consumers’ annual out-of-pocket costs by $900, for marketplace and employer-sponsored insurance alike. Understanding the challenges associated with high cost-sharing is essential for policymakers and consumers alike, as it highlights the need for reforms that ensure not just coverage, but affordable access to healthcare.

Physician Turnover Increased In Private Equity-Acquired Physician Practices

Yashaswini Singh, Geronimo Bejarano Cardenas, Hamid Torabzadeh, Durga Borkar, and Christopher M Whaley. Health Affairs. March 2025. Available here. 

Researchers for Brown University and Duke University used 2014-2021 data from private equity acquisition of clinics to examine physician employment and turnover in private equity-acquired practices. 

What it Finds

• After private equity acquisition, physician turnover in acquired practices rose by 13 percentage points, representing a 265% increase compared to practices that were not acquired by private equity.
• Following private equity acquisition, the total number of clinicians (including ophthalmologists and optometrists) in the acquired practices increased by 46.8% over a three-year period. This suggests that private equity firms may expand the workforce in these practices as part of their initial operating strategy.

Why it Matters

These findings highlight the significant impact that private equity acquisitions can have on physician turnover and workforce dynamics within healthcare practices, potentially affecting quality of care and patient outcomes. At the same time, the growth in clinician numbers points to a shift in practice operations under private equity, which may influence the structure and functioning of healthcare delivery. Understanding these effects can help policymakers and healthcare leaders better assess the benefits and risks of private equity ownership in healthcare settings.

Estimated Savings From Extending Prescription Drug Inflationary Rebates To All Commercial Plans

Marissa B Reitsma, Stacie B Dusetzina, Jeromie M Ballreich, Antonio J Trujillo, and Michelle M Mello. Health Affairs. March 2025. Available here. 

Researchers for Health Affairs analyzed data from Merative MarketScan Commercial Database for drug prescriptions filled from January 1, 2017, through December 31, 2021 to estimate savings from prescription drug inflationary rebates across commercial plans. 

What it Finds

• The study estimates that applying the Inflation Reduction Act’s (IRA) inflationary rebates to all commercial health plans could have resulted in an approximate savings of $8.1 billion in 2021. These savings would come from imposing inflation-based rebates on approximately 1,100 drugs, which represents a significant reduction in drug spending within the commercial insurance market.
• The research highlights that focusing inflationary rebates on high-cost drugs—defined as those with monthly prices exceeding $830—or on the top 300 drugs by total spending could lead to substantial savings. This approach would reduce the overall number of drugs eligible for rebates, simplifying administration while still achieving considerable savings in drug costs.
• The study further suggests that limiting rebate eligibility to the top 300 drugs, which constitute a significant portion of total drug spending, could capture up to 85% of the total potential savings. This strategy aims to make the policy more administratively feasible, while maintaining the majority of the savings associated with broader rebate application.

Why it Matters

These findings offer a clear and actionable path for reducing prescription drug spending in commercial health plans, which has been a major driver of commercial market premium cost growth. Extending inflationary rebates to the commercial sector would not only generate substantial savings—potentially up to $8.1 billion annually—but also address a growing concern about the affordability of high-cost medications. Additionally, focusing rebates on the highest-cost drugs and limiting the scope to the top 300 drugs by total spending helps streamline the administrative process, making it more feasible for insurers to implement without overwhelming their operations. Overall, these findings highlight how policy adjustments targeting the most expensive drugs could provide significant financial relief for both commercial health plans and consumers.

By Karen Davenport

In recently-proposed regulatory changes to Affordable Care Act (ACA) marketplace coverage, the Trump Administration intends to strip Deferred Action for Childhood Arrivals (DACA) recipients of eligibility for marketplace coverage, premium subsidies, and cost-sharing assistance. This proposal represents the latest twist in the roller coaster of policy changes and litigation DACA recipients have endured and would, if finalized, terminate affordable coverage options for individuals currently living and working in the United States under DACA protection. 

Immigrants experience dips, twists, and turns on DACA and marketplace eligibility 

The ACA limits marketplace enrollment and eligibility for federal premium and cost-sharing subsidies to United States citizens, nationals and “lawfully present” immigrants. Undocumented immigrants have generally been excluded from marketplace plans and Basic Health Program (BHP) coverage authorized under the ACA. (Some states, however, hold federal waivers of these restrictions and allow undocumented immigrants to enroll in their state-based marketplaces.)  However, several groups of non-citizens, including individuals granted deferred action on their immigration status, are considered “lawfully present” for purposes of marketplace enrollment, premium subsidies, and cost-sharing assistance. 

In 2012, the U.S. Department of Homeland Security (DHS) issued its DACA Memorandum, which protects certain undocumented individuals who entered the United States as children from deportation. This executive action also enables these immigrants to receive renewable, two-year authorizations to work. Individuals eligible for DACA must have entered the United States before they turned 16 and before June 15, 2007; be younger than age 31 as of June 15, 2012; be enrolled in school, have completed high school or equivalent education or be a veteran; and have no lawful status as of June 15, 2012. Today, approximately 538,000 individuals, with a median age of 30, living in all 50 states and the District of Columbia, hold DACA status. 

A few months after issuing the DACA Memorandum, which did not address recipients’ eligibility for health coverage, the U.S. Department of Health & Human Services (HHS) amended its previous ACA eligibility policy to exclude DACA recipients from the definition of “lawfully present.” This meant that as the ACA marketplaces launched in January 2014, DACA recipients could not enroll in marketplace plans nor were they eligible for Medicaid coverage or the Children’s Health Insurance Program (CHIP). Similarly, subsequent implementing regulations for the BHP excluded DACA recipients from the definition of “lawfully present” for BHP enrollment eligibility.

For the next ten years, DACA recipients were not able to enroll in ACA marketplaces, secure premium subsidies or cost-sharing reductions, or enroll in BHP coverage. Without access to the ACA marketplaces, or Medicaid or CHIP coverage, DACA recipients were therefore far more likely to lack health insurance than other populations. Individuals who were likely eligible for DACA in 2022, for example, were almost five times more likely to lack health insurance than US-born individuals in their age group. In addition, while some studies suggest that DACA recipients navigate the health care system with greater ease than other immigrant groups, these individuals also experience many of the same barriers to critical health care services, such as affordability, discrimination, or unfair treatment, as other immigrant adults. 

Over this timeframe, the DACA policy roller coaster also started picking up speed. Multiple lawsuits challenged the underlying DACA memorandum’s legality, the Trump Administration sought to rescind the original DACA policy but failed on procedural grounds at the Supreme Court, and DHS under the Biden Administration codified the 2012 DACA memorandum into federal regulation. Legal challenges to this regulation continue to work through the federal court system.

In 2024, a turn in the roller coaster track also led to new coverage options for DACA recipients. To align with the DHS final rule and equalize eligibility across all individuals deferred action, HHS finalized new rules that included DACA recipients in the definition of “lawfully present,” thus enabling DACA recipients to enroll in marketplace plans and access premium tax credits and cost-sharing subsidies, depending on their income eligibility. This regulation also extended eligibility for BHP programs to DACA recipients if they live in a state with this option, and confirmed that DACA recipients with incomes below the federal poverty level can qualify for marketplace premium and cost-sharing subsidies, as they remain ineligible for Medicaid and CHIP coverage. HHS estimated that 100,000 individuals would newly enroll in coverage with this policy change. In another dip of the roller coaster, 19 states challenged this coverage expansion; after a decision in the North Dakota federal court and a rapid round of court orders, DACA recipients in these states could not enroll in marketplace coverage for the 2025 plan year, although DACA recipients living in other states could do so.

Reversing the Roller Coaster: Terminating Coverage for DACA Recipients

Last month, the roller coaster went into reverse, with a  proposed rule that would once again exclude DACA recipients from the definition of “lawfully present” for purposes of health coverage, thus making DACA recipients in all states ineligible for marketplace coverage, premium subsidies, and cost-sharing assistance as well as BHP programs. In the preamble, HHS notes that two early Trump Administration Executive Orders related to border security and the provision of public benefits to immigrants have prompted the Department to reconsider the arguments it relied on when it extended the definition of “lawfully present” to DACA recipients in the 2024 final rule. 

If the Administration finalizes this proposal, marketplaces in states where DACA recipients have enrolled in health insurance would need to terminate their coverage mid-year. Under the Biden Administration, HHS estimated that 100,000 individuals would newly enroll in marketplace or BHP coverage, but HHS now estimates that only 10,000 people would lose their health insurance under this proposal. HHS also acknowledges that removing DACA recipients from marketplace coverage could lead to higher marketplace premiums in the future, since DACA recipients are younger and healthier than the general risk profile of marketplace enrollees.

Takeaways

DACA recipients have experienced unexpected twists, turns, and drops on the public policy roller coaster. It appears they now will come to a screeching halt. Should the Trump Administration finalize this proposed rule, DACA recipients who have only recently acquired marketplace or BHP coverage will lose their health insurance, while others will be precluded from future enrollment. This will cause significant disruptions in the form of interrupted and canceled health care services, increased exposure to catastrophic medical bills for many members of this financially vulnerable population, and greater uncompensated care costs for providers. Some current Marketplace or BHP enrollees could lose coverage while in the middle of a course of treatment.      

By Karen Davenport

In recently-proposed regulatory changes to Affordable Care Act (ACA) marketplace coverage, the Trump Administration intends to strip Deferred Action for Childhood Arrivals (DACA) recipients of eligibility for marketplace coverage, premium subsidies, and cost-sharing assistance. This proposal represents the latest twist in the roller coaster of policy changes and litigation DACA recipients have endured and would, if finalized, terminate affordable coverage options for individuals currently living and working in the United States under DACA protection. 

Immigrants experience dips, twists, and turns on DACA and marketplace eligibility 

The ACA limits marketplace enrollment and eligibility for federal premium and cost-sharing subsidies to United States citizens, nationals and “lawfully present” immigrants. Undocumented immigrants have generally been excluded from marketplace plans and Basic Health Program (BHP) coverage authorized under the ACA. (Some states, however, hold federal waivers of these restrictions and allow undocumented immigrants to enroll in their state-based marketplaces.)  However, several groups of non-citizens, including individuals granted deferred action on their immigration status, are considered “lawfully present” for purposes of marketplace enrollment, premium subsidies, and cost-sharing assistance. 

In 2012, the U.S. Department of Homeland Security (DHS) issued its DACA Memorandum, which protects certain undocumented individuals who entered the United States as children from deportation. This executive action also enables these immigrants to receive renewable, two-year authorizations to work. Individuals eligible for DACA must have entered the United States before they turned 16 and before June 15, 2007; be younger than age 31 as of June 15, 2012; be enrolled in school, have completed high school or equivalent education or be a veteran; and have no lawful status as of June 15, 2012. Today, approximately 538,000 individuals, with a median age of 30, living in all 50 states and the District of Columbia, hold DACA status. 

A few months after issuing the DACA Memorandum, which did not address recipients’ eligibility for health coverage, the U.S. Department of Health & Human Services (HHS) amended its previous ACA eligibility policy to exclude DACA recipients from the definition of “lawfully present.” This meant that as the ACA marketplaces launched in January 2014, DACA recipients could not enroll in marketplace plans nor were they eligible for Medicaid coverage or the Children’s Health Insurance Program (CHIP). Similarly, subsequent implementing regulations for the BHP excluded DACA recipients from the definition of “lawfully present” for BHP enrollment eligibility.

For the next ten years, DACA recipients were not able to enroll in ACA marketplaces, secure premium subsidies or cost-sharing reductions, or enroll in BHP coverage. Without access to the ACA marketplaces, or Medicaid or CHIP coverage, DACA recipients were therefore far more likely to lack health insurance than other populations. Individuals who were likely eligible for DACA in 2022, for example, were almost five times more likely to lack health insurance than US-born individuals in their age group. In addition, while some studies suggest that DACA recipients navigate the health care system with greater ease than other immigrant groups, these individuals also experience many of the same barriers to critical health care services, such as affordability, discrimination, or unfair treatment, as other immigrant adults. 

Over this timeframe, the DACA policy roller coaster also started picking up speed. Multiple lawsuits challenged the underlying DACA memorandum’s legality, the Trump Administration sought to rescind the original DACA policy but failed on procedural grounds at the Supreme Court, and DHS under the Biden Administration codified the 2012 DACA memorandum into federal regulation. Legal challenges to this regulation continue to work through the federal court system.

In 2024, a turn in the roller coaster track also led to new coverage options for DACA recipients. To align with the DHS final rule and equalize eligibility across all individuals deferred action, HHS finalized new rules that included DACA recipients in the definition of “lawfully present,” thus enabling DACA recipients to enroll in marketplace plans and access premium tax credits and cost-sharing subsidies, depending on their income eligibility. This regulation also extended eligibility for BHP programs to DACA recipients if they live in a state with this option, and confirmed that DACA recipients with incomes below the federal poverty level can qualify for marketplace premium and cost-sharing subsidies, as they remain ineligible for Medicaid and CHIP coverage. HHS estimated that 100,000 individuals would newly enroll in coverage with this policy change. In another dip of the roller coaster, 19 states challenged this coverage expansion; after a decision in the North Dakota federal court and a rapid round of court orders, DACA recipients in these states could not enroll in marketplace coverage for the 2025 plan year, although DACA recipients living in other states could do so.

Reversing the Roller Coaster: Terminating Coverage for DACA Recipients

Last month, the roller coaster went into reverse, with a  proposed rule that would once again exclude DACA recipients from the definition of “lawfully present” for purposes of health coverage, thus making DACA recipients in all states ineligible for marketplace coverage, premium subsidies, and cost-sharing assistance as well as BHP programs. In the preamble, HHS notes that two early Trump Administration Executive Orders related to border security and the provision of public benefits to immigrants have prompted the Department to reconsider the arguments it relied on when it extended the definition of “lawfully present” to DACA recipients in the 2024 final rule. 

If the Administration finalizes this proposal, marketplaces in states where DACA recipients have enrolled in health insurance would need to terminate their coverage mid-year. Under the Biden Administration, HHS estimated that 100,000 individuals would newly enroll in marketplace or BHP coverage, but HHS now estimates that only 10,000 people would lose their health insurance under this proposal. HHS also acknowledges that removing DACA recipients from marketplace coverage could lead to higher marketplace premiums in the future, since DACA recipients are younger and healthier than the general risk profile of marketplace enrollees.

Takeaways

DACA recipients have experienced unexpected twists, turns, and drops on the public policy roller coaster. It appears they now will come to a screeching halt. Should the Trump Administration finalize this proposed rule, DACA recipients who have only recently acquired marketplace or BHP coverage will lose their health insurance, while others will be precluded from future enrollment. This will cause significant disruptions in the form of interrupted and canceled health care services, increased exposure to catastrophic medical bills for many members of this financially vulnerable population, and greater uncompensated care costs for providers. Some current Marketplace or BHP enrollees could lose coverage while in the middle of a course of treatment.      

By Madeline McBride, Elizabeth Bielic, Zeynep Celik, JoAnn Volk, and Kevin Lucia

The Affordable Care Act (ACA) recognized the importance of oral health for child development by including pediatric dental services as an essential health benefit (EHB). However, the law did not mention adult dental coverage. In the 2025 Notice of Benefit and Payment Parameters, the Centers for Medicare & Medicaid Services (CMS) finalized a change to federal rules, granting states the flexibility to update EHB benchmark plans to require coverage of routine adult dental services, effective for plan years beginning on or after January 1, 2027. 

This final rule also streamlines the EHB benchmark plan selection process beginning in plan year 2026. To help states modernize their EHB benchmark plans and support a better updating process, CMS has offered multiple rounds of grants and hosted a technical assistance webinar in November 2024. This post summarizes recent state action on EHB updates and adult dental coverage and discusses some of the operational considerations states must contend with in order to make adult dental coverage feasible for their marketplaces. 

Kentucky Invites Public Comment on Its Plan To Make Adult Dental Services An Essential Health Benefit 

In February of this year, the Kentucky Department of Insurance (DOI) issued a memorandum announcing that it will be seeking to amend its EHB benchmark plan to include routine adult dental coverage along with a number of other benefits. The proposal expands the dental coverage in the existing EHB benchmark, which now only covers adult dental treatment when required due to accidental injury, to include “class 1” routine dental services as shown below:  

While state legislation required consideration of all other proposed additions, the DOI opted to include adult dental benefits in response to the new flexibility granted to states. The proposed updates were informed by an actuarial report which estimates the dollar value of adding each benefit compared to the dollar value of all covered services in a typical employer plan. Under federal rules, the overall value of the proposed benchmark plan, including additional benefits, must fall within the range between the most and least generous among a set of typical employer plans. The actuarial report concluded that the addition of adult dental benefits would increase the expected value of the benchmark plan by the equivalent of $20 per member per month, and that including adult dental coverage and the other proposed additions was within the generosity range allowed by federal rules. The Kentucky DOI accepted public comments through April 5, 2025. Following the public comment period, the state has 30 days to review comments and make any changes to the proposed EHB benchmark update before submitting the state’s final version to CMS on May 7, the federal deadline for submitting proposed changes that would take effect in 2027. 

As States Assess EHB Updates, A Few Consider Adult Dental Services

Other states are also considering leveraging the new flexibility to include adult dental services in their EHB benchmark plan. In California, Senate Bill 1290 mandates a review and update of the state’s EHB benchmark plan by 2027. California is moving forward with a proposed EHB benchmark update, ultimately deciding to add a less extensive set of benefits than had been originally considered. Adult dental care and other services were not adopted because they would have prompted the benchmark update to exceed the total value of the most generous employer plan. In addition, legislators expressed concern about the cost of adding adult dental care. 

Virginia is also reviewing its EHB benchmark plan, as required by state statute, which mandates an EHB benchmark review every five years beginning in 2025. In preparation for the 2025 EHB benchmark review, Virginia’s Bureau of Insurance convened a workgroup in 2024 to explore potential changes for plan-year 2028. The Bureau of Insurance submitted a report on March 31, 2025, to Virginia’s Health Insurance Reform Commission detailing the work group’s findings, recommendations, and any assessments of proposed mandates.

Finally, Maine’s Bureau of Insurance is considering EHB benchmark updates for the 2027 plan year. The Bureau has assembled a team, engaged with advocacy groups, and hired an actuary to perform an analysis of benefits. Although proposed changes have not been made public, stakeholders have suggested that Maine might include adult dental as an EHB, highlighting the growing momentum for expanding dental coverage across multiple states.   

The Decision To Add Adult Dental As An EHB Is Only The First Step for States

The decision to add adult dental as an EHB is only the first step in the process of ensuring coverage of routine adult dental services. States have additional considerations regarding the availability of enhanced coverage and what that means for their markets and consumers. For example, adult dental as an EHB could potentially increase premiums. While premium increases may be offset by premium tax credits in the individual market, this would not be the case in the small group market. States must also weigh the potential tradeoffs in how such a change would affect cost-sharing. Currently, adult dental coverage is often purchased through stand-alone dental plans (SADPs) in which beneficiaries may have to meet a deductible, but services are subject to dollar limits on what the plan will pay. While pediatric dental services can either be embedded in qualified health plans (QHPs) or provided through SADPs to meet EHB requirements, the federal rule states that adult dental services must be embedded in QHPs. As such, adult dental care may be subject to the plan deductible, unless a state requires some services be covered without meeting the deductible. Requiring coverage of adult dental services as an EHB may mean that some beneficiaries could lose first dollar coverage in exchange for removing benefit limits. In addition, qualified health plans may have to build a network of dental providers to meet network adequacy standards and embedding adult dental coverage into QHPs would likely affect the SADP markets. 

Looking Forward 

Policymakers at the federal and state levels are increasingly recognizing the importance of oral health and its connection to overall health. States expressed support for the flexibility to add routine adult dental coverage to EHB benchmark plans in comments submitted on the proposed rule, reflecting the increased attention to oral health. Some states have already indicated that they are considering using this new flexibility as a part of broader EHB updates, though it is still early, and more work is needed to help states understand the impact of these changes and to make informed decisions. Finally, although the Trump Administration has yet to indicate its position on routine adult dental as an EHB, the Administration’s general threats to the ACA and rollback of many Biden-era regulations may give some states pause in moving forward with this flexibility that could have broader implications for their marketplaces. 

By Madeline McBride, Elizabeth Bielic, Zeynep Celik, JoAnn Volk, and Kevin Lucia

The Affordable Care Act (ACA) recognized the importance of oral health for child development by including pediatric dental services as an essential health benefit (EHB). However, the law did not mention adult dental coverage. In the 2025 Notice of Benefit and Payment Parameters, the Centers for Medicare & Medicaid Services (CMS) finalized a change to federal rules, granting states the flexibility to update EHB benchmark plans to require coverage of routine adult dental services, effective for plan years beginning on or after January 1, 2027. 

This final rule also streamlines the EHB benchmark plan selection process beginning in plan year 2026. To help states modernize their EHB benchmark plans and support a better updating process, CMS has offered multiple rounds of grants and hosted a technical assistance webinar in November 2024. This post summarizes recent state action on EHB updates and adult dental coverage and discusses some of the operational considerations states must contend with in order to make adult dental coverage feasible for their marketplaces. 

Kentucky Invites Public Comment on Its Plan To Make Adult Dental Services An Essential Health Benefit 

In February of this year, the Kentucky Department of Insurance (DOI) issued a memorandum announcing that it will be seeking to amend its EHB benchmark plan to include routine adult dental coverage along with a number of other benefits. The proposal expands the dental coverage in the existing EHB benchmark, which now only covers adult dental treatment when required due to accidental injury, to include “class 1” routine dental services as shown below:  

While state legislation required consideration of all other proposed additions, the DOI opted to include adult dental benefits in response to the new flexibility granted to states. The proposed updates were informed by an actuarial report which estimates the dollar value of adding each benefit compared to the dollar value of all covered services in a typical employer plan. Under federal rules, the overall value of the proposed benchmark plan, including additional benefits, must fall within the range between the most and least generous among a set of typical employer plans. The actuarial report concluded that the addition of adult dental benefits would increase the expected value of the benchmark plan by the equivalent of $20 per member per month, and that including adult dental coverage and the other proposed additions was within the generosity range allowed by federal rules. The Kentucky DOI accepted public comments through April 5, 2025. Following the public comment period, the state has 30 days to review comments and make any changes to the proposed EHB benchmark update before submitting the state’s final version to CMS on May 7, the federal deadline for submitting proposed changes that would take effect in 2027. 

As States Assess EHB Updates, A Few Consider Adult Dental Services

Other states are also considering leveraging the new flexibility to include adult dental services in their EHB benchmark plan. In California, Senate Bill 1290 mandates a review and update of the state’s EHB benchmark plan by 2027. California is moving forward with a proposed EHB benchmark update, ultimately deciding to add a less extensive set of benefits than had been originally considered. Adult dental care and other services were not adopted because they would have prompted the benchmark update to exceed the total value of the most generous employer plan. In addition, legislators expressed concern about the cost of adding adult dental care. 

Virginia is also reviewing its EHB benchmark plan, as required by state statute, which mandates an EHB benchmark review every five years beginning in 2025. In preparation for the 2025 EHB benchmark review, Virginia’s Bureau of Insurance convened a workgroup in 2024 to explore potential changes for plan-year 2028. The Bureau of Insurance submitted a report on March 31, 2025, to Virginia’s Health Insurance Reform Commission detailing the work group’s findings, recommendations, and any assessments of proposed mandates.

Finally, Maine’s Bureau of Insurance is considering EHB benchmark updates for the 2027 plan year. The Bureau has assembled a team, engaged with advocacy groups, and hired an actuary to perform an analysis of benefits. Although proposed changes have not been made public, stakeholders have suggested that Maine might include adult dental as an EHB, highlighting the growing momentum for expanding dental coverage across multiple states.   

The Decision To Add Adult Dental As An EHB Is Only The First Step for States

The decision to add adult dental as an EHB is only the first step in the process of ensuring coverage of routine adult dental services. States have additional considerations regarding the availability of enhanced coverage and what that means for their markets and consumers. For example, adult dental as an EHB could potentially increase premiums. While premium increases may be offset by premium tax credits in the individual market, this would not be the case in the small group market. States must also weigh the potential tradeoffs in how such a change would affect cost-sharing. Currently, adult dental coverage is often purchased through stand-alone dental plans (SADPs) in which beneficiaries may have to meet a deductible, but services are subject to dollar limits on what the plan will pay. While pediatric dental services can either be embedded in qualified health plans (QHPs) or provided through SADPs to meet EHB requirements, the federal rule states that adult dental services must be embedded in QHPs. As such, adult dental care may be subject to the plan deductible, unless a state requires some services be covered without meeting the deductible. Requiring coverage of adult dental services as an EHB may mean that some beneficiaries could lose first dollar coverage in exchange for removing benefit limits. In addition, qualified health plans may have to build a network of dental providers to meet network adequacy standards and embedding adult dental coverage into QHPs would likely affect the SADP markets. 

Looking Forward 

Policymakers at the federal and state levels are increasingly recognizing the importance of oral health and its connection to overall health. States expressed support for the flexibility to add routine adult dental coverage to EHB benchmark plans in comments submitted on the proposed rule, reflecting the increased attention to oral health. Some states have already indicated that they are considering using this new flexibility as a part of broader EHB updates, though it is still early, and more work is needed to help states understand the impact of these changes and to make informed decisions. Finally, although the Trump Administration has yet to indicate its position on routine adult dental as an EHB, the Administration’s general threats to the ACA and rollback of many Biden-era regulations may give some states pause in moving forward with this flexibility that could have broader implications for their marketplaces. 

Last fall, the Biden Administration finalized a rule updating standards for the Mental Health Parity and Addiction Equity Act (MHPAEA), the primary federal law that aims to safeguard access to behavioral health treatment for those with private health insurance. The new rule requires insurers to collect and analyze outcome data to assess whether their treatment limits make it harder for consumers to get behavioral health care. The changes reflect the approach a growing number of states are taking to implement MHPAEA, and strengthen regulators’ ability to oversee and enforce parity.

In a new blog for the Commonwealth Fund, JoAnn Volk and Billy Dering discuss the new requirements for use of “non-quantitative treatment limits” (NQTLs): treatment limits that cannot be easily measured yet can impose significant barriers to getting care. They also look at how states are already using outcome data to ensure parity.

You can read the full blog post here.

We are delighted to welcome two new faculty members and one new staff member: Karen Handorf, Julia Burleson, and Amanda Gabrielle Concepcion.

Karen Handorf, Full Professor of the Practice

Karen L. Handorf, J.D. is a Full Professor of the Practice at CHIR, focusing on the application of ERISA to employer sponsored health insurance, including fiduciary status of service providers, application of ERISA’s fiduciary standards to health plan fiduciaries, cost containment, service provider claims payment, service provider fee transparency, and plan participant protections. 

From 1982 until 2007, she worked for the U.S. Department of Labor (DOL), providing ERISA litigation and counseling support to the Employee Benefit Security Administration (EBSA). In 2007, she entered private practice where, among other things, she represented health plan participants and fiduciaries in litigation challenging the fiduciary status of third-party administrators (“TPAs”) and TPA practices relating to plan claims data access, undisclosed fees, cross-plan offsetting, claims adjudication and mental health parity. Ms. Handorf also advised employers and other plan sponsors on their ERISA fiduciary duties with respect to their administrative service agreements and ongoing duty to monitor their service providers. 

Ms. Handorf has testified before the U.S. House of Representatives Committee on Education & the Workforce, Subcommittee on Health, Employment, Labor and Pensions on “ERISA’s 50th Anniversary: The Path to Higher Quality, Lower Cost Health Care.” She has also testified before the DOL ERISA Advisory Council on the impact of TPA practices on health insurance claims. 

Ms. Handorf received her J.D. from the University of Wisconsin at Madison and her undergraduate degree from the University of Wisconsin – River Falls.

Julia Burleson, Research Fellow

Julia Burleson, MSPH is a Research Fellow at CHIR focusing on access to health care services, provider billing practices, and the affordability of health insurance coverage.

Before joining CHIR, Julia worked as a Social Science Research Analyst through the Presidential Management Fellow program at the Center for Consumer Information and Insurance Oversight (CCIIO) within the Centers for Medicare and Medicaid Services. There, she primarily conducted research to help develop regulations for provisions of the No Surprises Act related to consumer protections. Julia has previously worked on research projects with the Johns Hopkins Bloomberg School of Public Health focusing on HIV prevention in Sub-Saharan Africa, vaccine messaging in India, and the validity and reliability of adherence measures for nutrition, HIV, and diabetes medications.

She received B.A.s in Public Health and Economics from Johns Hopkins University, and a Masters of Science in International Health from Johns Hopkins Bloomberg School of Public Health.

Amanda Gabrielle Concepcion, Research Assistant

Amanda Gabrielle Concepcion is a Research Assistant at CHIR where she supports three separate grants focusing on Medicare Advantage, facility fees, and rapid federal policy analysis.

Amanda recently earned a B.S. in Data Science from American University, with a minor in Public Health and a Certificate in Advanced Leadership Studies. Throughout her undergraduate career, she applied data-driven approaches to advance public health initiatives and health policy, with a focus on historically marginalized communities. 

As a Policy and Quality Intern at the Association for Community Affiliated Plans, Amanda contributed to quality management initiatives aimed at strengthening Medicare, Medicaid, and Marketplace programs while advancing their health equity agenda. She has also served as a John R. Lewis Undergraduate Public Health Scholar at the Centers for Disease Control and Prevention (CDC) in collaboration with Columbia University and worked as a Data Science Intern at the University of Southern California.

The Trump administration issued an executive order on February 25, 2025 to signal its ongoing interest in enhancing health care price transparency and outline steps federal agencies should take to further implement and enforce existing federal price transparency rules. These rules, established during the first Trump administration and strengthened under the Biden administration, aim to spur competition and drive down costs by arming patients, employers, and policymakers with long-hidden health care prices.

Although hospitals and health plans have posted a massive amount of health care price data, actionable information on prices is still not readily and widely available, partly due to ongoing issues with the usability and quality of the data. The executive order sets up the next steps in an iterative process to improve the usability of health care price data and compliance among hospitals and health plans.

Background On Price Transparency Rules

The first Trump administration established federal rules that require hospitals and health plans to post their prices, including previously proprietary rates negotiated between payers and providers. They must post prices in two different formats: 1) a consumer-friendly format meant to help patients see costs upfront and shop for care, and 2) machine-readable files (MRFs). MRF requirements are meant to give researchers, analysts, and app developers ready access to raw data, allowing them to translate it into actionable insights for consumers, employers, regulators, and policymakers.

The Hospital Price Transparency (HPT) rules took effect in January 2021. They require hospitals to post “standard charges,” including payer-specific negotiated rates, gross charges, discounted cash prices, and minimum and maximum negotiated rates for each item or service provided. The Transparency in Coverage (TiC) rules, which apply to health insurers and group health plans, took effect in July 2022. They require health plans to post MRFs that contain 1) in-network negotiated rates for all covered items and services, 2) out-of-network allowed amounts and billed charges for all covered items and services, and 3) negotiated rates and historical net prices for covered prescription drugs.

Status Of Hospital Price Transparency

Hospitals unsuccessfully sued to block HPT rules days after they were adopted. Rule updates in subsequent years require hospitals to post price data in a more uniform way, include additional context on price data, and make online price files easy to find.

The Centers for Medicare and Medicaid Services (CMS) also stepped up enforcement actions and increased the maximum civil monetary penalty for non-compliance from roughly $110,000 per year to $2 million per year. Hospital compliance improved after CMS increased penalties. CMS has assessed financial penalties on 18 hospitals to date. In addition, from 2021-2023, CMS took nearly 1,300 enforcement actions against hospitals, such as sending warning letters or requiring a corrective action plan.

Both data quality and hospital compliance remain ongoing issues. A 2024 Government Accountability report found that hospital data quality issues have prevented large-scale, systematic use of the data, though analysts anticipated some improvements in light of new CMS requirements for more standardized reporting formats and additional data elements phased in on July 1, 2024, and January 1, 2025. Furthermore, based on a data audit of a sample of hospitals, the Department of Health and Human Services Office of Inspector General estimated that 46 percent of hospitals were not fully compliant with requirements for MRFs, consumer-friendly shoppable service displays, or both.

Status Of Health Plan Price Transparency

The prescription drug MRF requirement from the TiC rules has not been implemented. After industry groups sued to block prescription drug price transparency, CMS deferred enforcement of this provision in August 2021, citing potential overlap with similar prescription drug reporting requirements that Congress enacted after the TiC rules were adopted but before they took effect. More than a year later, a conservative think tank sued CMS to jump-start implementation, and in September 2023, CMS rescinded its deferred enforcement approach, though it has not yet released technical specifications for the prescription drug price data.

TiC rules have followed a different trajectory than the HPT rules; CMS has not refined and strengthened them over time. At the outset, TiC rules required more standardization and were subject to higher penalties for noncompliance, compared to HPT rules. In addition, health plans appear to have complied more readily, though oversight is challenging. Oversight responsibility for health plan data is spread across multiple state and federal agencies. In addition, there is no publicly available list of all the self-insured employer health plans required to post price data, much less an accounting of whether they actually do so. Federal agencies have not released information on audits or enforcement of health plan price transparency data, as CMS has for hospital data.

TiC data are especially hard to access and use, limiting their reach. The TiC rules have made a staggering volume of health care pricing data available. Collectively, monthly health plan MRFs exceed a petabyte in size and contain more than 1 trillion prices, limiting access to entities with substantial computing resources. Unwieldy MRFs are inflated by redundant and irrelevant data, including implausible “ghost rates” for providers who do not perform a specific health care service (e.g. the rate for a cardiology code billed by a podiatrist, or vice versa). A range of other well-documented data issues make it challenging to analyze the data, make comparisons, and draw meaningful conclusions.

Researchers and stakeholders who want access to these complex data often rely on commercial data vendors that specialize in ingesting and parsing massive TiC MRFs. These vendors reportedly charge hefty fees and can place limits on how the data are displayed or shared. Accordingly, while the best-resourced stakeholders can access these data, actionable information from the data isn’t widely and readily available to consumers, employers, and policymakers.

Executive Order Directives

The order broadly signals the Trump Administration’s ongoing commitment to increasing health care price transparency and directs specific actions to further implement and enforce existing TiC and HPT rules. Specifically, the order directs that by May 26, 2025, the Departments of Health and Human Services, Labor, and Treasury (collectively, the “tri-agencies”) take action with respect to the TiC and HPT rules to:

1. Require that “actual prices of items and services, not estimates” are posted;
2. Issue guidance or proposed rules to ensure price data are “standardized and easily comparable across hospitals and health plans;” and
3. Issue guidance or proposed rules to increase enforcement and improve compliance with the rules.

The order does not explain what exactly is meant by actual prices versus estimates, and it will be up to the tri-agencies to interpret it. HPT rules point to price estimates in at least two places. First, the rule, as adopted in 2019, allows CMS to deem a hospital compliant with posting prices of shoppable services in a consumer-friendly manner if it has a “price estimator tool” on its website. Second, the most recent update to the rule requires a new data element—an “estimated allowed amount”—as of January 1, 2025. This element is required when a hospital’s negotiated rate is determined by an algorithm that results in variable dollar amounts as opposed to a simple or static dollar price. The estimated allowed amount must be expressed in dollars and cents using historical data to estimate what the hospital has been reimbursed on average for a service, and it must be included along with a description of the algorithm itself.

The order explicitly directs further data standardization and more enforcement. The tri-agencies have an opportunity to make the TiC data more accessible and useable—needed precursors for the data to have the desired impact—and further standardization is a starting point. The tri-agencies could act by updating TiC technical specifications, regulations, or both.

CMS has tools and processes in place for hospital-focused enforcement and could step up its oversight efforts. This groundwork could inform any subsequent tri-agency effort to enforce TiC requirements, though that would be an inherently more challenging task with more reporting entities, more regulatory agencies, and more complex data.

Beyond the three specific directives above, the order broadly instructs the tri-agencies to “rapidly implement and enforce” existing price transparency rules. Although not specifically enumerated, this may prompt CMS to produce stalled TiC technical guidance outlining how payers must post negotiated rates and historical net prices of covered prescription drugs.

Looking Forward

Increasing price transparency is expected to have a minimal impact on making health care more affordable overall, but it is nonetheless important to give patients needed information and help employers, regulators, and policymakers better target cost-containment efforts. The impact of the rules thus far is hard to measure. An initial analysis from a commercial vendor of price transparency data found signs that the significant variation in prices for hospital services is converging, with some of the highest prices dropping and some of the lowest prices climbing.

This executive order does not break any new ground on price transparency. Rather, it refocuses federal agency attention on making already-required price data easier to get and use, which is a needed precursor to making meaningful and actionable price information readily available to consumers, employers, and policymakers. Congress has also shown interest in improving and expanding health care price transparency and could take the lead on any needed steps that would exceed existing statutory authority. 

The tri-agencies tasked with carrying out the order have an opportunity to address the many known issues that limit the usability of price transparency data. The inherent scale and complexity of the price transparency data, particularly the TiC data, limit direct access to researchers and commercial data vendors with specialized knowledge and technology. Today, the best-resourced stakeholders can buy data extracts and insights. Tri-agency efforts to reduce irrelevant and redundant data, increase standardization, and improve data quality could ultimately help open up access to price transparency data and insights from it.

Ramping up oversight and enforcement of price transparency requires sufficient staff capacity at federal agencies where the Trump administration is purging workers. Fifteen percent of the workforce within the Center for Consumer Information and Insurance Oversight – the division within CMS responsible for enforcing price transparency rules – were laid off in February alone, and additional large-scale layoffs may be on the horizon. Squaring the directives in the executive order with the federal employees left to implement them may hinder envisioned progress on price transparency.

Stacey Pogue “New Executive Order Outlines Next Steps For Health Care Price Transparency” March 19, 2025, https://www.healthaffairs.org/content/forefront/new-executive-order-outlines-next-steps-health-care-price-transparency. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

When he was working at a Minnesota-based think tank last year, Peter Nelson wrote a report on Section 1333 Health Care Choice Compacts, a small and mostly forgotten provision in the Affordable Care Act. Now, he’s the new director of the Center for Consumer Information and Insurance Oversight (CCIIO), the federal office that oversees the ACA, among other tasks. In addition, a workgroup at the National Association of Insurance Commissioners (NAIC) plans to research “state flexibility options through the ACA” this year, which could include Section 1333 compacts along with its better-known neighbor, Section 1332 waivers. Will this long-dormant ACA provision resurface in health care policy discussions this year? It’s possible. So let’s dust off Section 1333 and refresh our memories on Health Care Choice Compacts.

ACA Section 1333 compacts

Section 1333 of the ACA authorizes Health Care Choice Compacts, a framework for a regulatory agreement among states to facilitate sales of health insurance across state lines. These 1333 compacts would let health insurers sell individual market “qualified health plans” (plans certified as ACA-complaint) in any compact state, without having to comply with each state’s laws and standards. Instead, the plans would be subject just to the laws of the state where the policy was issued, with a few exceptions. Insurers would still need to comply with certain laws of the state where the purchaser resides, including laws on market conduct, unfair trade practices, network adequacy, and consumer protection standards, including rating standards and addressing disputes under the policy contract. But the insurer could bypass many state laws, including more generous benefit requirements. Insurers must be licensed in each compact state where they sell plans and notify consumers that plans may not comply with all state laws

The ACA directs the Secretary of Health and Human Services (HHS), in consultation with the NAIC, to issue rules for 1333 compacts by July 1, 2013 (this has not been done, as discussed below). To join a 1333 compact, a state must enact a law explicitly authorizing the state to do so. 

1333 compacts must be approved by the HHS Secretary and are subject to “guardrails,” similar to 1332 waivers, to ensure compacts are consistent with the goals of the ACA. As with 1332 waivers, guardrails require coverage under a 1333 compact to have benefits that are at least as comprehensive, and out-of-pocket costs that are at least as affordable as they would be absent the compact. In addition, the compact must cover a comparable number of state residents and cannot increase the federal deficit. Finally, a compact cannot weaken the laws and consumer protections listed above that remain applicable in the purchasing consumer’s state. 

Unlike with 1332 waivers, the ACA does not authorize any federal funding, including pass-through funds, to support 1333 compacts. 

Selling across state lines has not increased choices or lowered premiums

Private health insurance has historically been regulated at the state level, and states vary in the rules they apply to health insurance above the federal floor. Proponents of allowing health insurance to be sold “across state lines” seek to let insurers sell products in multiple states without having to comply with differing laws in every state. They theorize that with the flexibility to bypass state regulations or benefit requirements, insurers will offer products in new markets that cost less. 

The concept is not new. It dates back three decades and was first introduced at the federal level in 2005. Even before Section 1333 was adopted, nothing in federal law prevented a state from allowing sales of out-of-state products or developing multi-state compacts for health insurance. In fact, a few states have tried, though none have made it work. Four states – Georgia, Maine, Oklahoma, and Wyoming – allow the sale of out-of-state health insurance, yet no insurers have opted to sell such products. In addition, three states – Kentucky, Rhode Island, and Washington – passed laws to evaluate the feasibility of allowing cross-state sales. These states found there were too many roadblocks and not enough interest to make an across-state-lines approach viable, and none of them took further action. 

Ultimately, the vision does not pan out because it does not address the real drivers of health insurance premium costs nor barriers for an insurer to enter a new state. The key cost driver for health insurance premiums is the local cost of health care. Even if a policy originates in a state with low health care costs, consumers in high-cost states will still get high-cost care, and won’t pay less. In fact, they may have to pay more. Without any local market share, out-of-state insurers will lack the leverage to get network discounts from local providers.

Furthermore, cross-state arrangements do not meaningfully reduce the significant investments insurers must make to enter new states, like building a local provider network, establishing a local distribution channel, and marketing. These barriers to entry far outweigh minimal savings from reduced paperwork or fewer benefit requirements. 

Selling across state lines poses risks for consumers and markets

Allowing the sale of policies that do not abide by all state laws creates an unlevel playing field for insurers and could lead to adverse selection. Insurers would have the incentive to set up shop in a state with relatively few consumer protections or benefit requirements and could attract the healthiest consumers from other states. With the market segmented, premiums would rise for consumers who rely on comprehensive benefits or robust consumer protections.

The ACA’s federal consumer protections, if in place, would help guard against adverse selection. The ultimate impact of selling health insurance across state lines would depend upon which protections – state and federal – remain in place. 

Section 1333 (non)implementation

HHS has not proposed regulations for 1333 compacts, and no state has enacted a law to establish a 1333 compact. The only progress to point to is an HHS Request for Information (RFI) released in March 2019. The RFI catalogs the cross-state efforts that all failed to yield results and seeks input on actions that could facilitate interstate sales, including through 1333 compacts.

HHS received about 200 responses. Entities, including insurers, actuaries, state insurance regulators, provider organizations, and patient and consumer groups, widely expressed skepticism that interstate health insurance sales would increase options or reduce premiums for consumers. Many voiced concerns that it would actually have the opposite effect. 

Comments from insurers and actuaries confirm that 1333 compacts will not reduce the operational complexity or cost for insurers to make plans available in a new state. They also raise a few thorny issues that didn’t exist in pre-ACA discussions of cross-state sales. The ACA requires risk-adjustment at the state level that cannot be waived in a 1332 waiver. Whether a consumer is counted in the risk pool of the state where the policy is issued or the state where the consumer lives will have implications for premiums and insurer solvency in both states. In addition, 17 states operate state-based reinsurance programs through a 1332 waiver. 1333 compacts would introduce questions about how out-of-state policies are assessed for or participate in state-based reinsurance and how resulting changes to a state’s risk pool would affect federal pass-through funding.

NAIC comments express concern that allowing out-of-state insurers to compete on an unlevel playing field will harm the stability of state insurance markets and leave consumers vulnerable. They note that “consumers would have to hope that the regulator in a distant jurisdiction has the ability and resources to assist consumers nationwide, which is uncertain due to funding and staff limitations.”

Looking ahead

It has been 15 years since the ACA passed. Aside from the RFI, there has been no movement on Section 1333 compacts, while issues that would make cross-state health insurance sales vexing have only grown. The fact that none of the states that have pursued sales across state lines have made it work has not stopped the idea from coming back up every few years. 

In his report, Peter Nelson argues that 1333 compacts could be a vehicle for much broader changes to health insurance markets than what a plain-language reading of the statute implies. Nelson lays out the possibility that 1333 compacts could function like a waiver that not only allows states to essentially waive federal ACA protections but could also wrap in items not mentioned in Section 1333, like pass-through funding and the regulation of short-term, limited duration insurance. Regardless of whether this expansive reading is supported by statute, he notes that even a simple compact would take a significant effort by states to put together. The takeaway from past cross-state efforts is the juice isn’t worth the squeeze. If CCIIO reaches a different conclusion, the statute lays out the process for issuing regulations, starting with the NAIC.

I was appointed as a consumer representative to the NAIC shortly before the ACA passed. In the ensuing years, the NAIC focused heavily on providing input to HHS on a wide range of ACA implementation steps for which the statute explicitly directs an NAIC role. I can report firsthand that NAIC’s process to make recommendations to HHS is a lengthy and deliberative one. The NAIC has a long-standing skepticism of selling health insurance across state lines and, I suspect, would give due consideration to thorny issues of consumer protection, market stability, reinsurance, risk adjustment, and more. 

Eight dollars for a carton of eggs. Recession warnings. Massive proposed cuts to Medicaid. When things look particularly grim, it helps to take a moment and reflect on what’s going right in the world. And one of those things is the 15^th anniversary of the Affordable Care Act (ACA). That landmark health law was signed by President Obama on March 23, 2010, and fundamentally changed the health insurance landscape. Here are some of the ACA’s reforms that have led to the lowest uninsured rate in history, and protect people in this time of great uncertainty:

Preventing Discriminatory Practices

One of the fundamental goals of the ACA was to make it so that everyone, no matter their health status, could access quality and affordable health insurance. Prior to the ACA, health insurers could discriminate against people deemed “risky” for high health costs (such as women of childbearing age) by charging higher premiums, refusing to cover treatment for preexisting health conditions, or even denying coverage based on health status.

The ACA prohibited these practices through federal standards such as guaranteed issue of coverage, a ban on preexisting condition exclusions, and rating rules that stop insurers from charging higher premiums to sick people. An estimated 27 percent of adults under age 65 have the kind of pre-existing condition that, before the ACA was passed, would have led an insurer to deny them coverage, such as diabetes, a cardiac condition, or a history of cancer within the last 10 years.

Providing Comprehensive Coverage

Before the ACA, even people who were healthy enough to obtain insurance were not necessarily able to buy comprehensive coverage; individual insurance policies often excluded or limited coverage for services like prescription drugs, mental health, and maternity care.

Under the ACA, most individual and small group health plans have to cover a set of services deemed “Essential Health Benefits.” These coverage requirements, which include benefits such as laboratory services, prescription drugs, mental health, maternity and pediatric care, and hospitalization, ensure that consumers have insurance policies that provide pathways, not road blocks, when they need health services. The ACA also requires health plans to cover recommended preventive services, such as child well visits, mammograms, and colonoscopies without cost-sharing. 

Banning Coverage Limits

Before 2010, health insurance enrollees could “use up” their coverage, hitting either an annual or lifetime dollar limit. In 2009, the year before the ACA’s enactment, 89 percent of individual market enrollees and 59 percent of workers enrolled in employer coverage were subject to lifetime dollar limits on their benefits. If enrollees hit their limits, they could be exposed to exorbitant medical bills. In 2013, we met Martin A., a hemophiliac whose blood disorder treatment cost $60,000 each month. Before the ACA, Martin hit the lifetime coverage limit on three separate health plans. While he waited for his Medicare coverage to kick in, he had to resort to an older, less effective drug and delayed critical surgery. The ACA prohibited insurers from setting lifetime or annual dollar limits on coverage for people like Martin.

The numbers of people reporting problems paying medical bills declined dramatically after the ACA’s reforms went into effect. Although we still have a long way to go to eliminate medical debt and medical bankruptcy in this country, the ACA’s ban on coverage limits ensures that, in the event of expensive treatment regimens or a long hospital stay, consumers won’t have to worry about “capping out” their health insurance.

Reducing the Financial Strain of Premiums and Out-of-Pocket Costs

The ACA established health insurance Marketplaces for people without an offer of affordable employer coverage to find comprehensive health insurance. To make that insurance more affordable, it established income-based tax credits for premiums and cost sharing subsidies, as well as an expansion of Medicaid, which has been implemented on a state-by-state basis. In addition to financial assistance, the ACA limits the amount of annual out-of-pocket costs, such as copayments, coinsurance and deductibles, that a plan can impose on consumers. In 2021, Congress enhanced the premium tax credits, resulting in average premium savings of $700 per enrollee in 2024 and significantly boosting Marketplace enrollment. 

Purchasing insurance and paying out-of-pocket costs can pose huge obstacles to obtaining health care services. Unfortunately, price inflation among consolidated provider systems is rampant, leading to higher premiums and cost-sharing for millions of Americans with private health insurance. However, the ACA’s Medicaid expansion, financial subsidies, and out-of-pocket maximum are helping millions of consumers afford the coverage and care that they need.

Reversing Historic Inequities in Health Care Access

Prior to enactment of the ACA, Black and Hispanic individuals were significantly more likely to be uninsured than white people. In 2013, before the full suite of ACA reforms was in effect, the uninsured rate for Black adults was 24.4 percent; for Hispanic adults it was 40.2 percent. White adults had a 14.5 percent uninsured rate. While a gap in coverage rates remains, the ACA has helped it to shrink considerably. Between 2013 and 2021, the coverage gap between Black and white adults dropped from 9.9 to 5.3 percentage points and the gap between Hispanic and white adults dropped from 25.7 to 16.3 points.

The Next 15 Years?

On its 15th anniversary, the ACA is hard at work, protecting consumers, setting minimum coverage standards, and providing premium tax credits and expanding Medicaid eligibility. These are the pillars of a system that has enabled access to affordable, comprehensive health insurance that simply didn’t exist in 2010. However, the ACA is facing a crucial test: Congress has proposed steep cuts that would result in millions losing Medicaid, the enhanced premium tax credits are slated to expire at the end of 2025, causing a projected 4 million people tp lose their health coverage, and the Trump administration is advancing policies that, by its own estimate, would kick up to 2 million Marketplace enrollees off their coverage. A lawsuit would, if successful, roll back consumers’ right to free preventive care. The ACA has faced similar challenges before, but they have been consistently beaten back because the American people have shown, again and again, that they value health coverage and they do not want it ripped away.

Over the last two months, CHIR hosted the webinar series The Corporate Transformation of Health Care. This three-part series provided legislators, regulators, advocates, and other health care stakeholders with insights into the problems caused by increased corporatization, discussed the reasons for this corporate trend, and offered policy opportunities to mitigate cost and quality harms to patients. In particular, the series examined how health care mergers and acquisitions have ramped up, how more corporate entities have entered the market, and how maximizing profit has risen as a priority in health care.

Alongside the webinars, CHIR published several resources to help policymakers and stakeholders support consumers confronted with problematic billing practices, examine the extent of corporatization and consolidation in a state or district, and consider a range of policy options to improve affordability and promote competition. 

The series was moderated by CHIR’s Sabrina Corlette, and each webinar included a unique panel of researchers, advocates, state regulators, and other experts. The webinar recordings and the panelist affiliations can be found on CHIR’s Events page. 

Throughout the series, we received a number of questions related to price caps, transparency, and rural hospitals. Time constraints prevented live answers to these questions, so we provide further insights here.

Do provider price caps work? What can we learn from other states?

Reference pricing, or price caps, set an established maximum rate that a plan will pay participating providers for certain medical services, often in reference to a percentage of rates paid by Medicare. Rather than negotiate rates based on provider’s list prices – the common pricing process – price caps mitigate the effect of a provider’s market power. For this reason, price caps can offer an opportunity to curtail the price increases caused by greater corporatization and consolidation. On the continuum of policy options to improve affordability, enhance competition, and curtail excessive charges, price caps and reference pricing are estimated to have a moderate to large impact on price reductions. 

As of June 2023, a CHIR survey found that nine states have implemented variations of reference pricing for their state employee health plans (SEHPs) in efforts to contain health care costs. Research on Oregon and Montana’s SEHP reference pricing programs have found millions in savings: Oregon’s SEHP saved $107.5 million in the first 27 months of the program and Montana SEHP saw approximately $48 million in savings in the two years following its implementation. Similarly, as CHIR faculty find, price caps for SEHPs in South Carolina and Oklahoma have high rates of hospital participation (99.3 percent and 100 percent respectively), and have not negatively impacted enrollee access to care. While implementing reference pricing in SEHPs is not without its challenges, price caps can contain costs, maintain access to and value of care, and generate savings for consumers. 

How does transparency affect corporatization and consolidation?

Transparency in healthcare can relate to prices, ownership, and/or billing – all of which can shed light on various parts of an often opaque and complicated health care system. Within the realm of transparency, policymakers have a menu of options: publishing reports, establishing all-payer claims databases, requiring ownership reporting and  billing transparency, and enforcing or building on federal transparency rules. As a standalone policy, price transparency has very small price reductions, but transparency tends to have bipartisan support, require relatively low government intervention, and can serve as an incremental step to greater reform.

States with the most robust transparency policies can be better positioned to understand the extent of corporatization and consolidation in their communities. For example, states can require facilities to provide periodic ownership data and/or require ownership filings prior to a material change transaction. Massachusetts has led the way in annual ownership reporting with the Massachusetts Registration of Provider Organization (MA-RPO) program. Through collected data, the state can identify a provider’s corporate parent entity, ownership or control entity, and other corporate affiliations. Massachusetts recently bolstered its oversight of ownership with a new law tailored to private investment transactions. While Massachusetts is the first state with such reporting requirements, at least 35 states require notification of certain proposed transactions to increase ownership transparency and monitor consolidation that could harm competition. To dive into consolidation and corporatization in your state, review our guide on available tools and state laws. 

Can private equity investment be a viable option for rural hospitals and other financially distressed health care providers?

With increased rural hospital closures and nearly one third (30 percent) of rural hospitals at risk of closure in the near or immediate future, many webinar participants wondered if corporate buyouts and private equity investment could be viable options for these financially distressed providers. For hospitals and health systems on the brink of bankruptcy or closure, the financial infusion from corporate buyers may offer an opportunity to keep the facility and service lines open, which can make these transactions feel, at times, necessary. 

Despite the one-time financial influx from a transaction, research indicates that over time, private equity acquisition of rural hospitals can contribute to a hospital’s financial distress, rather than mitigate it, even while generating large returns for investors. Private investors in rural and financially distressed hospitals often employ a tactic known as a “sale-leaseback.” In this arrangement, the new owner sells the hospital’s real estate assets to a real estate investment trust (REIT) and then leases the land back to the hospital. This tactic was used in the recent Steward Health Care debacle, and contributed to Steward’s eventual bankruptcy. While Steward operated primarily in urban areas, a recent bipartisan report from the Senate Budget Committee investigated Lifepoint Health, a predominantly rural hospital system owned by Apollo Global Management. Given the dangerous practices uncovered in the investigation, the report urged stakeholders to view Lifepoint Health as “a cautionary tale about the ability of rural hospitals to sustain themselves and serve their patients in the face of underinvestment by their private equity owners.” While private equity investment can be appealing to rural hospitals in financial distress, evidence indicates that private investments do not benefit rural hospitals in the long term. 

Takeaways

The corporate transformation of health care is a complex and nuanced trend, one which has led to changes in competition, costs, and access to care. To learn more, watch the recorded webinars and review the accompanying publications.  

By Sabrina Corlette and Jason Levitis*

On March 10, 2025, the Centers for Medicare & Medicaid Services released a proposed regulation that makes several policy and operational changes to the Affordable Care Act (ACA) Marketplaces and insurance rules. A central tenet of the proposed rule is that Biden-era policies to improve Marketplace premium affordability and ease administrative hurdles to enrollment have contributed to widespread fraudulent or otherwise improper enrollments. CMS uses this argument to justify changes that would reduce Marketplace premium tax credits, increase paperwork requirements for applicants and enrollees, and roll back eligibility. The proposed rule does not, however, acknowledge that improper enrollments are concentrated in the Federally Facilitated Marketplace, even though most State-Based Marketplaces (SBMs) adopted, and in many cases expanded upon, the policies in question. Further, while CMS recognizes that broker-driven fraud is a key cause of improper enrollment, the proposed rule does not include provisions that would impose limits on brokers’ behavior or exert authority over lead generators and other actors driving fraudulent enrollments.

In their latest Expert Perspective for the State Health & Value Strategies program, CHIR’s Sabrina Corlette and the Urban Institute’s Jason Levitis provide an assessment of what the proposed rule means for SBMs and state insurance regulators. The full post can be found here.

*Jason Levitis is a Senior Fellow in the Health Policy Division at the Urban Institute.

In February we stayed out of the cold and bundled up with the latest in health policy research. We read about salary and utilization changes in hospitals acquired by private equity, challenges with price transparency requirements, and changes to hospital community benefit rules in Oregon.

Variation In Hospital Salary Expenditures And Utilization Changes After Private Equity Acquisition, 2005-19

Sneha Kannan and Zirui Song. Health Affairs. February 2025. Available here.

Researchers for University of Pittsburgh and Harvard University looked at data from the 2005-2019 Medicare hospital cost reports to compare 242 US hospitals acquired by private equity (PE) firms with 870 matched control hospitals not acquired by PE firms to determine differences in salary expenditures associated with acquisition. 

What it Finds

• PE firms used different strategies to generate returns with most focusing on cost-cutting through significant reductions in salary expenditures, while a few firms emphasized increasing revenue by raising charges to commercial payers, without cutting staffing.
• Hospitals acquired by PE firms generally experienced reductions in staffing, reflected by cuts in salary expenditures, which correspond to decreased service utilization. This reduction in capacity could compromise the hospital’s ability to deliver care, contributing to poorer patient outcomes, including increased hospital-acquired adverse events.
• There was a variation in the impact of salary cuts across departments. Some PE firms focused more on reducing staffing in high-cost, labor-intensive areas like operating rooms and outpatient clinics, while others maintained higher staffing levels in certain departments like obstetrics. 

Why it Matters

These findings are important because they highlight the variability in how private equity (PE) firms manage acquired hospitals, with implications for both financial outcomes and patient care. Understanding that some PE firms focus on cost-cutting through staffing reductions, while others prioritize revenue generation through price increases, provides a more nuanced view of PE’s impact on healthcare. This variation in strategies could explain differences in patient outcomes, such as increased adverse events and decreased service utilization, which may compromise care quality. Policymakers and healthcare providers can use this insight to make informed decisions about regulating and managing the effects of PE acquisitions on hospitals and the communities they serve. 

Challenges with effective price transparency analyses

Gary Claxton, Lynne Cotter, and Shameek Rakshit. Peterson-KFF. February 2025. Available here.

In this brief, researchers for Peterson-KFF examined the challenges that users may encounter when accessing the price data reported under the federal Transparency in Coverage (TiC) regulations. 

What it Finds

• Many hospitals report prices for services providers do not offer, such as listing prices for procedures like heart surgeries that aren’t performed at the hospital. These “unlikely rates” or “ghost” rates can distort the transparency data and confuse consumers.
• Hospitals and insurers report different prices for the same services based on factors like the payer, insurance type, or whether the service is in-network. For example, an MRI at the same facility(?) may cost significantly different amounts for patients with different insurance plans, leading to complications in comparing costs across different providers. 
• There is no uniform method for reporting prices across hospitals or insurers, and these methods can change over time. Some hospitals combine charges for various services into one lump sum, while others separate them, making it difficult for patients to understand the full cost or compare prices across institutions. 

Why it Matters

In February, President Trump issued an Executive Order calling for improvements to the TiC and hospital price transparency data. The findings in the Peterson-KFF report are consistent with other reports concluding that the TiC rules, which have cost insurers and plans an estimated $3 billion to implement, are not meeting the desired policy goals. With improvements, these data can be a critical source of information for researchers, policymakers, and regulators to identify cost drivers in the health care system and effectively target, develop, implement, and monitor potential policy solutions.

Oregon Community Benefit Reform Influenced Not-For-Profit Hospitals’ Charity Care And Medical Debt Write-Off

Tatiane Santos, Richard C. Lindrooth, Shoou-Yih Daniel Lee, Kelsey Owsley and Gary J. Young. Health Affairs. February 2025. Available here.

Researchers for Health Affairs examined charity care spending and rates of medical debt to determine the impact of a new Oregon policy on patient financial assistance and bad debt.

What it Finds

• The Oregon community benefit policy led to higher charity care spending in some hospitals, particularly those in the middle range of pre-policy charity care spending. However, hospitals also incurred more bad debt, likely due to expanded medical debt protections, which are a key aspect of the policy.
• The policy’s medical debt protections, which restrict hospitals from referring unpaid bills to collections before assessing financial assistance eligibility, led to an increase in bad debt write-offs. This suggests that the protections reduced aggressive billing and collections practices, helping patients avoid financial hardship. 
• While the policy increased charity care spending and improved medical debt protections, there were implementation challenges. Hospitals, particularly smaller ones, struggled with the administrative burden of meeting the expanded patient financial assistance requirements, which may have limited the overall impact on charity care.

Why it Matters

These findings are significant because they demonstrate how policy interventions, such as Oregon’s community benefit requirements, can enhance patient access to financial assistance and mitigate the burden of medical debt, particularly for economically disadvantaged populations. The increase in charity care and reduction in aggressive billing practices reflect the potential for such policies to alleviate financial hardship and improve healthcare equity. However, the challenges associated with policy implementation highlight the need for clearer guidelines and more robust enforcement mechanisms to ensure that hospitals fulfill their community benefit obligations. These results have broader implications for the design and effectiveness of healthcare policies aimed at protecting vulnerable patients and promoting accountability within the healthcare system.

Last year, reports emerged of unscrupulous health insurance brokers enrolling people in marketplace coverage or switching enrollees to different plans without permission. These scams netted commissions for the perpetrators, while exposing consumers to unexpected costs and jeopardizing their access to care. Federal regulators have since adopted countermeasures to directly tamp down on the abuses, though more could be done.

In a new blog post for the Commonwealth Fund, CHIR’s Justin Giovannelli and Stacey Pogue explore the common-sense responses policymakers can take to further address broker misconduct without making it harder for people to afford marketplace coverage. 

You can read the full blog post here. 

By Stacey Pogue and Kennah Watts

Massachusetts has demonstrated a long-standing commitment to increasing transparency in its health care system, constraining health care cost growth, and fostering access to high-quality, affordable care. Last year, Massachusetts was at the epicenter of Steward Health Care’s collapse that stemmed, in part, from destabilizing private-equity tactics. The crisis provided a stress test for the state’s programs to monitor its health care system. In January of 2025, Massachusetts enacted a law that aims to address the blind spots exposed by Steward’s collapse and better equip the state to pursue its health care access and cost containment goals within a period of growing health care corporatization and private equity control of health care entities.

In recent years, private equity investment has significantly increased in the health care sector. This growth, coupled with evidence of quality, access, and cost concerns following private equity acquisitions, has spurred scrutiny by policymakers, including a recent bipartisan investigation and report from the U.S. Senate Budget Committee. Policymakers in several states have considered approaches to overseeing private equity in health care in recent years, though bills have only made it across the finish line in a handful of states. Massachusetts’ approach may serve as a model for other states seeking to enhance transparency and oversight of their health care system in this rapidly changing landscape.  

Massachusetts Responded to Significant Patient, Worker, and Community Harms from Private Equity Practices

Massachusetts’ legislative action and increased oversight of private equity come in the wake of the bankruptcy of a major health system with private-equity ties, Steward Health Care. In the fallout from Steward’s collapse, two hospitals in the state closed, the state took on hundreds of millions of dollars in expenses to keep other struggling hospitals open, thousands of workers lost their jobs, and patient access plummeted.    

Steward, which originally operated an 11-hospital system in Massachusetts under the ownership of private equity firm Cerberus Capital Management, exploited profit-driven tactics to expand the health system’s reach. Over the course of a decade, Steward partnered with Medical Properties Trust, a real estate investment trust (REIT), to finance hospital purchases across the country, with lease back and mortgage payment deals instated at the newly Steward-owned hospitals. These deals were unsustainable, as the facilities lost their land and facility assets while paying increasingly unaffordable rent. While Medical Properties Trust helped Steward become the largest for-profit private hospital chain in the US, this expansion was fueled by massive debt accumulation. Meanwhile, Cerberus Capital Management collected millions in dividends. In 2020, as Steward’s debt continued to climb and pandemic concerns rose, Medical Properties Trust financed a sale of Steward to the system’s doctors, and Cerberus exited the arrangement with over $800 million in profits from their decade of ownership. The sale did little to improve Steward’s financial situation. Stripped of its assets and loaded with debt, the health system struggled to pay rent, stopped payments to vendors, closed emergency departments, reduced staff, minimized medical equipment purchases, and more. In early 2024, Medical Properties Trust claimed Steward owed months of rent, and shortly thereafter, the health system filed for bankruptcy. At the time, Steward operated 33 hospitals across ten states, but Massachusetts, with eight Steward-owned hospitals, was particularly hard-hit by financial shortcomings and mismanagement. 

New Massachusetts Law Increases Transparency and Oversight of Private Equity in Health Care

On January 8th, 2025, Governor Maura Healey signed into law House Bill 5159, An Act Enhancing the Market Review Process. The law is designed to close loopholes that effectively exempted many private entities–like private equity, REITs, and management services organizations (MSOs)–and their health care-related transactions from the state’s long-standing infrastructure to monitor and improve its health care system. The law expands annual provider financial and ownership reporting requirements to include new information related to private equity, REITs, and MSOs, and increases the penalties for failing to report information from $1,000 per week to $25,000 per week. In addition, hospitals that fail to report required information will not be able to renew their state license to operate.

The law also subjects private equity firms, REITs, MSOs, and certain associated transactions to the states’ existing oversight processes. For example, these entities will be required to participate in the state’s annual Health Care Cost Trends Hearing that examines the drivers of increasing health care costs. In addition, specific transactions – such as private equity taking ownership or control of a provider group and a significant transfer of assets, including the sale and subsequent lease-back of a health care provider’s real estate – were added to the state’s list of changes that require 60-days advance notice and trigger state review of their expected impact on health care costs, quality, and access. Moving forward, the law also prohibits the main campus of a hospital from leasing from a REIT, though arrangements in existence prior to April 2024 are grandfathered. 

Other Provisions in the New Law

In addition to updates focused on private equity, the new law takes several steps to enhance access to high-quality care while also constraining the drivers of health care costs. It directs the state Department of Insurance to consider affordability for consumers and employers when reviewing health insurance rates, increasing the Department’s authority to conduct “enhanced” rate review. The law also bolsters the state’s health care resource planning in several ways. First, the law creates a new task force to study and make recommendations for improving primary care access, delivery, and payments. Second, the law charges a new Office of Health Resources Planning with developing a statewide Health Resource Plan. The plan will forecast needs for health care services and facilities, catalog existing resources, and make recommendations to improve the supply and distribution of health care facilities and workforce over a five-year planning period. The initial plan is due by January 1, 2027. Finally, the law ensures the state’s Determination of Need process, which evaluates whether the expansion of a health care facility aligns with the state’s goals for access and cost containment, is informed by the new Health Resource Plan and input from state agencies that collect provider financial data, review health care transactions, and monitor health care cost drivers. 

Looking Ahead

Private equity practices that prioritize short-term profits are often at odds with the goals of long-term health care system stability, quality care, and patient access, creating the need for checks and balances. As Steward illustrates, these practices can harm patients and taxpayers as shareholders pocket millions of dollars in dividends. Massachusetts’ swift state action is designed to prevent future catastrophes of this nature. 

As private investment in health care markets grows, other states may consider similar action to mitigate negative outcomes and protect patients through increased oversight and regulation of  private investors. This may be especially true in light of the bankruptcy of the private equity-backed health system Prospect Medical Holdings, which operates in  California, Rhode Island, Connecticut, and Pennsylvania. These states may have greater incentives to place additional regulation on private equity and other investors. States that are interested in greater oversight of private equity may consider other states’ approaches or look to model legislation from the National Academy for State Health Policy (NASHP). Massachusetts now offers one additional model of a state response to private investment, and other states could experiment within their own regulatory and market contexts to best protect consumers from the risks associated with increased corporatization and private equity investment.

As the federal budget reconciliation process heats up, Congressional committees will soon be drafting legislation that spells out the program cuts Congress will need to offset the cost of extending existing tax cuts. Given that non-defense discretionary spending represents less than 18 percent of the federal budget, and the Administration has pledged to protect Social Security and Medicare spending in the budget debate, federal spending on private and public health insurance—specifically Marketplace coverage and the Medicaid program—is one of the very few sources policymakers can turn to for significant budget savings. At the same time, some conservative and industry voices have argued that individuals and families would be better off without health insurance. In fact, a mountain of evidence demonstrates that health coverage confers improved health outcomes and significant financial security on health insurance enrollees.

Could Americans Be Better Off Without Health Insurance?

Right-of-center health policy analysts, libertarian think tanks, and self-interested stakeholders have recently argued that health insurance drives up prices for health care services while failing to improve population health. These thinkers and entrepreneurs advocate for a narrow range of solutions – for example, a “retail model” that requires patients to pay for care on their own, without the financial support of a health insurance plan, or calling for a government role limited to encouraging healthy behaviors and technical innovations.

The American health care system is demonstrably flawed—market consolidation among health plans and health systems has driven up insurance premiums and provider prices, patients experience significant waits for appointments with primary care, behavioral health, and other providers of critically needed care, and patients must endure time-consuming prior authorization requirements and fail-first policies to see the providers and access the medications they need. These problems demand solutions—but that solution isn’t to rip away the access to care, improved health outcomes, and financial security that health insurance facilitates for more than 300 million people in the United States.

What We Know From the Evidence

Over the decades, a plethora of studies have examined the impact health insurance coverage and coverage expansions have had on individuals’ health care and health status. A 2017 synthesis of existing evidence, for example, considered more than 25 studies within that decade that examined the relationship between health insurance and financial security, access to care, chronic disease outcomes, self-reported health, and mortality for nonelderly adults. The authors determined that health coverage expansions significantly increase patients’ access to care and use of multiple types of care (e.g., preventive care, primary care, medications, and surgery), and produce “significant, multifaceted, and nuanced benefits to health.” Nearly a decade earlier, a similar review concluded that coverage matters most for older and sicker individuals and for those with health-care amenable conditions. While aging adults are more likely to experience conditions such as cancer and heart disease, this analysis also noted that the health consequences of insurance are particularly significant for conditions such as hypertension, diabetes, and HIV infection.

In the time since these reviews, further studies have demonstrated the impact health coverage has on access, health outcomes, and financial security. We consider findings from some classic studies and newer research along these dimensions below.

Access to timely care: Health coverage improves access to primary care, preventive care, and timely care for emerging health conditions. For example, evidence demonstrates that newly covered individuals enjoy increased utilization of primary care, preventive visits, and care for chronic conditions—all of which improve health outcomes and population health. State-specific coverage expansions that pre-date the Affordable Care Act (ACA), for example, have been shown to improve utilization of preventive visits in Massachusetts and access to critical cancer screenings in Oregon. The ACA’s coverage expansions have also improved access to preventive care and other health care services. For example, one study found improved screening, staging, and treatment for cervical cancer among young women with coverage under the ACA’s extension of dependent coverage to young adults under age 26. Studies of the ACA’s coverage expansions have also found improved access to health services for all in tandem with additional benefits to traditionally underserved communities, such as people of color. For example, ACA implementation led to larger reductions in the share of blacks and Hispanics who report forgoing care because of cost compared to white individuals.

Improved health outcomes: In addition to improving access to primary and preventive care—which help people maintain and improve their health status—evidence demonstrates that health coverage influences other measures of improved health. For example, one recent study found that uninsured patients are more likely to experience an unplanned surgery for access-sensitive conditions, such as colectomy for colon cancer, suffer worse clinical outcomes, and have longer hospital stays than patients with private insurance. Numerous older studies have found significant reductions in all-cause mortality and mortality related to health-care amenable conditions for insured patients, compared to uninsured patients. Recent studies have found mortality reductions among newly insured older adults and determined that insured patients with life-threatening conditions, such as traumatic brain injury, experience lower in-hospital mortality rates than uninsured patients. Recent research has also confirmed that the ACA’s Medicaid coverage expansion reduces mortality among enrollees—for example, among near-elderly enrollees,  for individuals who experience cardiovascular events, and for health-care amenable causes of death—compared to non-expansion states.  

Improvements for Vulnerable Populations: Health coverage is notably associated with improved health outcomes among vulnerable population groups, such as patients with chronic disease, people with a history of uninsurance, and children who live in immigrant families. For example, insured patients with HIV infection are more likely to obtain an undetectable viral load and less likely to miss critical health care visits than uninsured patients, while transgender individuals with health insurance self-report greater improvement in physical and mental health than those without health coverage. In addition, children in immigrant families who live in states that have expanded health insurance coverage are more likely to access needed care and preventive visits than children in similar families who live in less generous states. 

Financial Security: A significant secondary role for health insurance is to protect individuals and families from the high and unpredictable cost of health care services. Individuals who develop a life-threatening disease or experience a catastrophic accident can quickly incur health care bills that threaten their family’s financial health.  More than half of adult Americans, for example, report they have acquired debt related to medical or dental bills. While coverage is imperfect—high deductibles and cost-sharing requirements leave patients with significant financial exposure—health insurance largely protects families from the financial risk of serious health needs. For example, multiple studies have found that health coverage reduces the probability of unpaid medical bills for Medicaid enrollees, young adults with dependent coverage, and individuals with subsidized private coverage.  In addition, recent studies have found that fewer patients incurred catastrophic health expenses following the ACA’s coverage expansions. In an examination of California trauma patients, individuals’ probability of facing catastrophic bills—defined as more than 40 percent of their income after food and housing costs—fell by 74 percent following ACA implementation, with even greater risk reduction for Black and Hispanic patients. Similarly, the proportion of adults incurring catastrophic health care spending fell from 7.4 percent in 2010 to 5.9 percent in 2017.  Before implementation of the ACA, seven in ten uninsured trauma patients, particularly those with low-incomes and those who experienced severe injury, were at risk of incurring catastrophic health care bills. 

Key Takeaways

A large body of research has established the important role health insurance plays in securing access to care, improving health outcomes, and shoring-up families’ financial security. Much of this research examines the ACA’s coverage expansions, which are also enduringly popular with the American public.  Efforts to cut federal support for health coverage, reduce Marketplace enrollment, or otherwise compromise the gains the US has made since our last national policy debate on health coverage will undermine the health and financial status of American families.

By Sabrina Corlette and Karen Davenport

High and rising health care costs for commercial insurance in the United States are attributed in large part to the high and rising prices for hospital care. These high prices are a result of increasing consolidation among hospitals and health systems, which use their market power to demand higher reimbursement rates from commercial health insurers. 

States have pursued a range of strategies to try to constrain health care prices. Two challenges for states seeking to constrain rising provider prices in the commercial insurance markets have been (1) enforcing industry adherence and (2) ensuring that savings are passed on to consumers. An “enhanced” form of premium rate review addresses both challenges. In a new report published in partnership with the Milbank Memorial Fund and supported by the Peterson Center on Healthcare, we provide a roadmap for states to design, build support for, implement, and maintain a successful enhanced rate review program.

While all states operate a traditional rate review program, few consider whether insurance companies are doing a good job securing the best possible prices from their contracted providers. While in theory, insurers should be negotiating with providers over reimbursement rates, in practice, consolidation in the health care system often means that health systems can demand – and get – prices well above the actual cost of delivering services.

Drawing on the lessons from states that have successfully implemented such programs and generated significant savings for consumers, the report provides a step-by-step guide to:

• Identifying program goals;
• Socializing the program with stakeholders and gaining legislative authority, if needed;
• Planning and addressing the concerns of plans, providers, and other key healthcare actors;
• Ensuring cross-agency coordination;
• Building and maintaining program capacity; and
• Sustaining the program and stakeholder engagement over time.

Health care costs in the United States are on an unsustainable trajectory. Our employer-based system of health insurance coverage—upon which most Americans under age 65 rely—is under increasing stress, burdened by high premiums and deductibles, depressed wages, and reduced competitiveness. Despite the urgent need for action, federal lawmakers are unlikely to enact cost containment measures in the near term. Enhanced rate review is one of several innovative state strategies to improve affordability for consumers. It has been proven to work in Rhode Island, and it is showing promise in Colorado. 

Our new state roadmap is intended to help states work through the policy and programmatic considerations necessary, within each state’s unique market and political environment, to build and maintain an effective and impactful enhanced rate review program.

Download the full report here.

In early January, the Supreme Court agreed to hear a case, Becerra v. Braidwood Management, Inc. that could substantially weaken the Affordable Care Act’s (ACA) guarantee of no-cost preventive services in private insurance. Specifically, the federal government, under the Biden administration, challenged the Fifth Circuit’s ruling that the recommendations of the U.S. Preventive Services Task Force (USPSTF) are unenforceable because the manner in which the USPSTF members are selected violates the Appointments Clause of the U.S. Constitution. With the change in administration, there are concerns that the federal government may no longer defend the law or, through administrative actions, may stop enforcement of the ACA’s preventive services coverage provision, or otherwise weaken the preventive services requirements. 

Free access to life-saving care has been a core protection of the ACA and remains one of the most popular provisions of the law. In a recent article for the Robert Wood Johnson Foundation’s State Health & Value Strategies program, Sabrina Corlette of Georgetown’s Center on Health Insurance Reforms and Tara Straw from Manatt Health discuss the actions states can take to preserve no-cost preventive services coverage in their regulated markets through legislative or administrative means. 

Read the full article here.

Private equity is not new to the health care sector, but recent growth in private equity investment has sparked a plethora of research studies, media attention, and political investigation. For example, my colleague Linda Blumberg and I, as well as a growing number of other researchers, have published and highlighted a slew of research that demonstrates private equity’s connection to higher costs and lower quality health care. Outside of academia, media attention surrounding large private equity-backed health care bankruptcies, such as Steward Health Care and Prospect Medical Holdings, have raised public awareness of these concerns. Over the last year, policymakers have also shown bipartisan interest in investigating and reforming private equity’s role in health care with Senate hearings and proposed legislation. Recent reports from the Senate Budget Committee and the Department of Health and Human Services (HHS) further demonstrate a growing bipartisan commitment to increase oversight of private equity’s profit-driven involvement in health care and recognition of the need for expedient action.

Bipartisan Senate Budget Committee Report Details the Harms to Cost and Quality Caused by Major Private Equity Firms’ Investment in Health Care 

On January 7, 2025, the Senate Budget Committee released a bipartisan report with findings from an investigation of two private equity firms with majority stakes in large health systems. The firms include Leonard Green & Partners (LGP) – a majority stakeholder in Prospect Medical Holdings (PMH), which operates urban hospitals in four states (CT, RI, PA, CA) – and Apollo Global Management (Apollo) – a majority stakeholder in Lifepoint Health, which operates rural hospitals nationwide. Through document requests from the firms, the Committee revealed how private equity-owned hospitals make financial and operational decisions, and the implications of these decisions for the quality of patient care. The report “uncovered troubling patterns of prioritizing profits over patients” and detailed harmful changes in quality of care. In both health systems, the report uncovered dangerous practices, including safety violations, significant understaffing, hospital closures, and decreased service availability, all while investors pocketed substantial profits. 

In fact, before defaulting on loans and declaring bankruptcy, PMH paid out $645 million in dividends and preferred stock redemption to its investors, $424 million of which went to LGP shareholders. Similarly, the Senate report underscored that while private equity investment can be appealing to rural hospitals in financial straits, the report urged stakeholders to view Lifepoint Health as “a cautionary tale about the ability of rural hospitals to sustain themselves and serve their patients in the face of underinvestment by their private equity owners.”

While the report covers the Committee’s in-depth investigation of two private equity firms, these examples are indicative of greater trends in private equity-backed hospitals and health systems in both rural and urban settings. The report demonstrates bipartisan interest in protecting consumers from increased corporatization and the consequent reductions in quality of care and access.

HHS Report Calls for Policy Reform and Underscores the Negative Impact of Private Equity on Costs, Access, and Quality

On January 14, 2025, HHS released a report that synthesized more than 2,000 public comments in response to a tri-agency (the Federal Trade Commission, the Department of Justice, and HHS) request for information on the “impacts of corporate ownership trend in health care.” A broad range of stakeholders across the health care sector – patients, clinicians, health systems, insurers, industry organizations, labor unions, and researchers – submitted comments on consolidation and corporatization in healthcare. 

From these comments, HHS identified several themes related to private equity’s role in growing consolidation of the healthcare industry. First, HHS reported evidence that consolidation increases costs and decreases access to services. The agency also found that private equity transactions lead to cost-cutting operational changes that compromise the quality of patient care. In particular, comments from physicians highlighted how health care professionals working in private equity-owned practices and facilities felt pressured to prioritize financial objectives over patient care. Likewise, patient advocacy groups expressed frustration with a lack of accessibility and reduced high value services after private equity acquisition. Across the board, respondents were also concerned by private health insurers purchasing physician practices. Respondents called this vertical integration, profiteering, and corporatization “dangerous,” and HHS reported that these behaviors have “[shifted] health care markets away from prioritizing patient care toward maximizing profits alone.” 

In addition to comment synthesis and background research, HHS’ report included two real-world case studies on the impact of private equity. The first case study explored how the bankruptcy of Steward Health Care, owned by Cerberus Capital Management, led to significant declines in patient quality and access for community hospitals in Massachusetts. The second examined Apollo Global Management’s ownership of 222 hospitals across 36 states, with 71 in rural locations. Similar to the Senate Budget Committee report that also studied Apollo, the HHS case study found harmful effects of these private equity acquisitions across all locations.

In their comment letters, stakeholders broadly called for policy reform to increase oversight of private equity and broader corporate business practices in health care. These policies included greater transparency, increased reporting requirements, “vigorous” enforcement action against industry roll ups, and improved collaboration across agencies, Congress, and state governments to promote competition.

Given the Irrefutable Evidence of Private Equity’s Harms, There Is Bipartisan Support For Policy Action

The recent Congressional investigation and agency report add to a long list of research providing strong evidence of private equity’s dangerous impact on health care costs, quality, and access to care, while generating enormous profits for shareholders. In the wake of major health systems’ bankruptcies, with patients and taxpayers facing the repercussions, there is growing bipartisan support for prompt action. State and federal policymakers interested in protecting patients could leverage the mounting evidence into policy reform that mitigates the harms of private equity and corporatization in the health care sector.

By Sabrina Corlette and Jason Levitis

On January 13, 2025, the Centers for Medicare & Medicaid Services (CMS) released its final Notice of Benefit & Payment Parameters (NBPP) for plan year 2026. This annual regulation, referred to informally as the “Payment Rule” or “Payment Notice,” prescribes standards and rules that govern insurers and health insurance Marketplaces under the Patient Protection & Affordable Care Act (ACA). The regulation, the last Payment Rule issued by the Biden administration, went into effect on January 15, 2025.

In addition to the final Payment Notice, CMS released a fact sheet and a final 2026 Letter to Issuers.

The 2026 Payment Notice represents a final set of Marketplace and health insurance policies from the Biden administration. The administration describes its goals with these policies as providing “quality, affordable coverage” to consumers while minimizing administrative burden and advancing health equity.

In this Forefront article, we focus on policies related to Marketplaces, insurance reforms, and Advance Premium Tax Credits (APTC). An article by Matthew Fiedler will review CMS’ changes to the ACA’s risk adjustment program.

Reducing Fraudulent Enrollments And Improving Program Integrity

In 2024, the federally facilitated marketplace (FFM) confronted a significant increase in enrollments and plan changes made without consumers’ knowledge or consent, driven by unscrupulous health insurance brokers seeking to profit from commissions. These unauthorized enrollments have caused significant harm, resulting in consumers enrolled in plans they didn’t sign up for, moved to plans with higher cost-sharing, and at risk for unexpected tax liabilities when they file their 2024 tax return. In response, CMS has made a number of programmatic and policy changes, addressing security lapses in the system and verifying consumer consent when a new broker is listed on an account.

In its draft 2026 Payment Notice, CMS proposed amending their oversight authority to better respond to cases of unauthorized enrollment or plan switching, and to hold brokers, agents, and web-brokers (collectively “brokers”) accountable for wrongdoing. In its final rule, CMS has adopted these changes as proposed. Specifically, the changes clarify CMS’ authority to (1) pursue enforcement actions against both the individual broker or agent committing fraud and the owners or executives in a leadership position at the agency where that broker or agent works (referred to as “lead agents”), and (2) suspend a broker or agency’s ability to conduct transactions with the health insurance Marketplace when CMS identifies an “unacceptable risk.” However, such a system suspension does not terminate the broker’s contract with the Marketplace; brokers who are suspended may continue to enroll consumers using the Marketplace call center or by having the consumer included in the transaction (referred to as the “side-by-side” pathway).

CMS particularly sought comments from state insurance regulators on this proposal, asking for input on how best to define “lead agent.” After reviewing that input, CMS has finalized a definition of lead agent to include persons who register and/or maintain a business with a state and/or any person who registers as a business with the Marketplaces.

Many commenters supported the proposed clarifications to CMS’ authority, noting that the changes would help protect consumers. However, one commenter noted that taking action against “lead agents” could have negative consequences for downline brokers who have not committed fraud. While CMS acknowledges this potential, it argues that the ability to go after lead agents is necessary to protect consumers and the integrity of the Marketplaces.

Some commenters expressed concerns that the data CMS’ uses to identify brokers committing fraud could have an adverse impact on minority groups and minority brokers. CMS responded by noting that their data have shown that minority or disadvantaged groups are more likely to be targeted by brokers who commit fraud. For example, CMS noted that such brokers may target a population that does not speak English as a first language and use the language barrier to their advantage. This can result in system suspensions against brokers who work with these groups. CMS notes that brokers should be able to quickly resolve a system suspension by providing documentation of consent or explaining the steps they’re taking to address the risks identified by CMS.

Some commenters recommended that CMS report system suspensions to state insurance departments, Marketplace insurers, and the public, and require suspended brokers to disclose their status to clients. CMS declined to adopt these recommendations, noting that their current regulatory framework does not allow them to share information about system suspensions. The agency also disagreed that brokers should be required to disclose their suspension to consumers, stating that it could “confuse consumers.”

Other commenters argued that suspended brokers should also not be allowed to use the system of a state-based Marketplace (SBM). CMS declined to adopt this recommendation, instead encouraging SBMs that operate a direct enrollment program to adopt a system suspension enforcement framework of their own.

CMS is also finalizing updates to the Model Consent Notices that brokers use to document consumers’ consent. The new model notices will include a section where the broker can document a consumer’s confirmation of the accuracy of the information being submitted on their behalf. CMS will also be providing brokers with scripts that they can use when obtaining consent via an audio recording. Commenters generally supported these updates, noting they would provide brokers with more clarity on how to ensure compliance.

Clarifying Timelines For Resolving Enrollment Data Corrections

CMS finalizes its proposal to codify guidance clarifying the timeline for state Marketplaces to adjudicate and report enrollment corrections to CMS. Under August 2024 guidance, state Marketplaces have 60 days from when they receive a complete report of the inaccuracy from an insurer to assess and resolve the case and report any correction to CMS. Enrollment reporting by Marketplaces to CMS is the basis for payment of advanceable PTCs to insurers, so accurate and up-to-date data is important for program integrity and effective operations. In response to some commenters’ concerns that the deadline would require state-based Marketplaces to adjudicate cases before they have received all needed information, the final rule emphasizes that the 60-day timeline begins only when the insurer has provided “all the information that the State Exchange requires or requests to properly assess the inaccuracy.”

Publishing State Marketplace Operational Reporting

CMS finalizes in modified form its proposal to release information collected from state Marketplaces about their operations and performance. The proposed regulations called for state Marketplaces to publicly release information provided to CMS using the State Marketplace Annual Reporting Tool (SMART), as well as key performance metrics like website and call center traffic. CMS uses this information to identify risks, provide technical assistance and corrective actions, and inform policy development.

Comments to the proposal generally supported the goal of increasing transparency. But state Marketplaces expressed concerns that the SMART reports include sensitive information about measures to support program integrity and combat fraud, such as procedures to verify consumer information. Releasing this information could provide a roadmap for evading program integrity tools. State Marketplaces also noted that removing this information from the SMART would diminish its value as an oversight tool.

In response to these concerns, CMS has decided not to release the SMART reporting but instead to focus on releasing a wider range of metrics about Marketplace operations and performance. At a minimum, CMS will publish the following data elements that it currently collects from State Exchanges:

• Expenditures on consumer marketing, education, and outreach
• Expenditures on the Navigator program
• Call center metrics, including, calls received, average wait time, call terminations while waiting, and average call duration
• Exchange website metrics, including website and mobile application visits and unique visitors

Supporting Consumer Decision-Making And Improved Plan Choices

CMS is finalizing changes to standardized plans on the FFM and making adjustments to the limits on non-standardized plans, in order to help consumers make informed plan choices. The agency has also clarified its authority to decline to certify plans for Marketplace participation and will be moving forward with increased oversight of essential community provider standards and the publication of plans’ quality improvement strategies.

Standardized Benefit Designs

CMS has made only modest changes to the standardized plans that insurers in the FFM and state-based Marketplaces that use the federal platform (SBM-FPs) must offer in 2026. Since the agency unveiled standardized plan options in 2023 to support consumers’ plan comparisons, it has made only small adjustments to the plan designs, so that they can continue to have an actuarial value within the permissible de minimis range for each metal level (bronze, silver, gold, and platinum).

However, for plan year 2026, CMS will require insurers that offer multiple standardized plans within the same product network type, metal level, and service area to ensure that there is a “meaningful difference” among these plans in terms of benefits, provider networks, and/or formularies. The agency has observed that several insurers have been offering “indistinguishable” standardized plan options, resulting in the unnecessary proliferation of plans and increased consumer confusion.

In CMS’ draft 2026 Payment Notice, the agency proposed that an insurers’ standardized plans would be considered meaningfully different if they had different covered benefits, provider networks, and/or formularies. In finalizing this requirement, CMS has slightly modified the standard so that instead of calling for a “difference in formularies,” it instead calls for a “difference in included prescription drugs.” The agency made this modification to ensure that minor differences in prescription drug cost-sharing, which would be reflected by differences in formulary IDs, would not constitute a meaningful difference.

CMS received many comments supporting the requirement that insurers offer standardized plans, noting that they help consumers draw meaningful comparisons between plan options. However, a few commenters argued that standardized plans reduce consumers choices. In response, CMS noted that insurers can continue to offer non-standardized plans in the FFM and SBM-FPs that allow them to offer innovative plan designs and meet consumers’ needs.

Some commenters also encouraged CMS to design standardized plans that further limit the use of coinsurance and provide pre-deductible coverage for essential health care services. CMS generally agreed that coinsurance and deductibles can increase consumer uncertainty about how much health care services will cost them, but the agency noted that the actuarial value constraints of the prescribed metal levels prevent the agency from significantly expanding pre-deductible coverage or reducing the use of coinsurance.

Many commenters also supported adopting the meaningful difference standard, noting their appreciation for CMS’ efforts to reduce duplicative plan offerings. CMS generally agreed with these comments and noted that if it finds that insurers are attempting to circumvent the standard, or that the standard is not strict enough, it will consider tightening the standard in future rulemaking.

Limits On Non-Standardized Plan Options

In 2024, CMS required insurers to limit the number of non-standardized plans they offered in the FFM and SBM-FPs to four plans in each the following four categories:

• product network type;
• metal level;
• inclusion of dental and/or vision benefits; and
• service area

For 2025 and subsequent years, the limit was reduced to two plans per category. At the same time, CMS created an exceptions process, allowing insurers in the FFM and SBM-FP to offer more than two non-standardized plan options per category if they could demonstrate that the additional plans had specific design features that would “substantially benefit consumers with chronic and high-cost conditions.” Under the non-standardized plan limits, if an insurer wanted to offer the maximum number of non-standardized plans, and offered plans with two network types (like HMO and PPO), they could theoretically offer a maximum of 32 plans in a given metal level and service area.

However, in its 2026 draft Payment Notice, CMS noted that in establishing these limits, it “failed to properly distinguish” between adult and pediatric dental benefits. Therefore, it proposed, and now finalizes, an amendment to its rules such that insurers are limited to offering two non-standard plan options per product network type, metal level, and inclusion of adult dental coverage, pediatric dental benefit coverage, and adult vision benefit coverage, in any service area.

Several commenters supported this change, and many others expressed general support for limiting the number of non-standardized plans that insurers can offer. These commenters observed that consumers have in recent years been confronted with too many plan choices, resulting in “choice overload” that can lead to suboptimal plan selections. However, several commenters objected to creating a distinction between pediatric and adult dental coverage, arguing that doing so would undermine the goal of reducing plan proliferation and increase consumer confusion. CMS disagreed, concluding that the inclusion of dental and vision benefit coverage represents “meaningful coverage variations.”

Some commenters argued that CMS should allow for more state flexibility, noting that not all states have the same excess of plan options. CMS responded that the operational cost and burden of tailoring the HealthCare.gov platform to different state needs outweighs the potential benefits of state flexibility.

Certification Standards For Marketplace Health Plans

Under the ACA, the Marketplaces have authority to certify health plans for participation (referred to as a “qualified health plan” or QHP) if the plan meets certification requirements and if the Marketplace determines that the plan’s inclusion is “in the interests of” consumers. In its proposed rule, CMS noted that although the ACA makes clear that this means Marketplaces have authority to deny certification to a plan, that authority is not explicit in implementing regulations. CMS therefore proposed, and is finalizing, an amendment to those regulations specifying that the Marketplaces may deny certification of any plan that does not meet the certification criteria or whose inclusion would not be in the interests of Marketplace enrollees. Most commenters supported this proposal.

CMS is also finalizing a revision to the process for insurers to request reconsideration if their certification is denied. As finalized, an insurer seeking reconsideration would have the burden of providing “clear and convincing” evidence that CMS’ determination to deny certification was in error. Most commentators agreed with this provision of the proposed rule.

Reducing The Risk Of Insurer Insolvency

In its proposed rule, CMS sought comment on how the agency could better coordinate with state insurance departments and the National Association of Insurance Commissioners (NAIC) to identify and respond to the risk that a Marketplace insurer could become insolvent. The agency will take these comments into consideration as it develops future rulemaking.

Federal Review Of Compliance With Essential Community Provider Standards

The ACA requires Marketplace health plans to include in their networks “essential community providers” (ECPs) that serve predominantly low-income, medically underserved individuals. Due to inadequacies with CMS’s information technology (IT) systems, the agency has had to rely on states that conduct Marketplace plan management functions to perform oversight of insurers to ensure that they are meeting the ECP standards. In its proposed 2026 Payment Notice, CMS noted that it has recently improved its IT systems, and can now collect the necessary ECP data from insurers. Therefore, the agency proposed to conduct its own evaluations of insurers’ networks to assess compliance with ECP requirements.

CMS is finalizing this policy as proposed. Many commenters supported greater CMS review of plans’ inclusion of ECPs in their networks, noting that the proposal would allow for more consistency across plans and improve consumer access to ECPs. A few commenters suggested that CMS does not have the authority to conduct these reviews, but CMS responded that the ACA allocates to the FFM clear responsibility to conduct the reviews necessary to determine whether an insurer has met the QHP certification criteria.

Publicizing Insurers’ Quality Improvement Strategies

CMS is also finalizing a proposal to publish aggregated, summary-level information about Marketplace insurers’ quality improvement strategies (QIS). Under the ACA, Marketplace health plans are required to implement a QIS that aims to improve health outcomes, reduce hospital readmissions, improve patient safety, reduce medical errors, promote wellness, and reduce health disparities. Many commenters supported publishing insurers’ QIS information, noting that it advances CMS’s goals of promoting transparency and learning from best practices for quality improvement.

Efforts To Improve Consumers’ Experiences Obtaining And Maintaining Affordable Coverage

The 2026 Payment Notice finalizes several proposals designed to ease administrative burdens, improve communications with consumers, and help ensure coverage affordability.

Flexibility On Premium Payment Thresholds

CMS finalizes with some modifications its proposal to give insurers additional options to avoid terminating coverage when enrollees under-pay premiums by a de minimis amount. The modifications provide some additional flexibility, though less than some commenters requested.

The ACA generally requires payment of the full premium to effectuate enrollment (referred to as a “binder payment”) or avoid triggering a three-month grace period or termination. Long-standing regulations permit insurers to set a minimum percentage of the consumer’s premium share that they will accept for these purposes (a “net premium percentage threshold”). For example, if a consumer’s full premium is $400, of which APTC covers $300, and the issuer permits a net premium threshold of 95 percent, and then the consumer satisfies the threshold so long as they pay at least $95 (95 percent of the $100 net premium).

This threshold provides relief where a consumer makes a nearly complete payment. But it doesn’t help if the consumer owes only a minimal amount and pays a smaller share. For example, if the premium was $400, APTC was $398, and the consumer paid none (or even $1.50) of their $2 share, a net premium threshold of 95% would not protect the consumer, since they would not have paid 95 percent of their $2 net premium.

To address such situations, the proposed regulations offered two additional threshold options. First, insurers could set a threshold of no less than 99 percent for the combined premium paid by APTC and the consumer (a “gross premium percentage threshold”). Second, insurers could set a dollar value for permissible non-payment (a “fixed-dollar threshold”), which must be no more than $5. CMS also proposed to clarify that, for the existing threshold option, a threshold of at least 95 percent of the net premium would be considered reasonable.

The proposed rule included some tight constraints on the new options. Both would apply for purposes of triggering grace periods and coverage loss, but not for binder payments. And insurers could choose only one of the three threshold options. Furthermore, all of the options would be based on the accumulated non-payment. For example, if the insurer has a dollar-value threshold of $5 and a consumer underpays by $3 for two consecutive months, the threshold would offer no protection in the second month, since the total shortfall of $6 exceeds the $5 threshold.

Commenters were generally supportive of the new options while suggesting greater flexibility. Commenters noted that, under the constraints described above, if an insurer used either of the new options, consumers that very slightly underpaid a binder payment could not have coverage effectuated. Commenters also questioned why the new options wouldn’t apply to binder payments, requested broader boundaries for the options, and suggested that the new options disregard accumulated non-payments.

In the final rule, CMS provides additional flexibility, though less than some commenters suggested. First, CMS expands the range of permissible thresholds for both new options: gross premium percentage thresholds must be at least 98 percent (instead of 99 percent), and the fixed-dollar thresholds must be no more than $10 (instead of $5). The final rule also permits insurers to offer both a fixed-dollar threshold and either one of the percentage-based thresholds. As a result, an insurer that provides both a net premium percentage threshold and a fixed-dollar threshold could offer relief both with respect to binder payments and to consumers who pay a smaller amount of minimal premium. But CMS does not extend the new threshold options to binder payments, which denies relief to consumers who pay a smaller amount of a minimal binder payment. CMS also still requires the consideration of accumulated shortfalls.

On a related note, the Treasury Department and the IRS recently finalized regulations under the premium tax credit (PTC), clarifying that a consumer who pays less than the full premium may still be eligible for PTC so long as they maintain coverage, including pursuant to a permissible premium payment threshold. This addresses potential situations where a consumer who is unable to pay a small share of the premium may be deemed ineligible for PTC and therefore owe back substantial APTC at reconciliation.

Leveraging Consumer Assisters To Connect Consumers With Medical Debt Relief

Millions of Americans experience medical debt, including an estimated 33 percent of people enrolled in Marketplace health plans. The burden of medical debt falls disproportionately on vulnerable and underserved individuals, including young adults, women, those with low incomes, and Black and Hispanic families.

Hospitals and health systems are the primary sources of medical debt. Many of these entities have staff who serve as Certified Application Counselors or non-Navigator consumer assisters to help people enroll in Marketplace coverage. CMS sought comment on whether these assister personnel could, within the bounds of the ACA, be asked to refer consumers to programs designed to reduce medical debt. The agency notes that it will take these comments into account in future rulemaking.

Cost-Sharing Reduction (CSR) Loading

CMS adopts regulatory language codifying its long-standing policy deferring to state insurance regulators on how premiums account for cost-sharing reductions (CSRs) in the absence of federal CSR payments. The ACA’s CSR rules require insurers to reduce cost-sharing in silver plans for certain eligible individuals. The ACA envisions CMS reimbursing insurers for the cost of CSRs, but in 2017 the Department of Justice determined that there was not a valid appropriation for these payments, and CMS halted them. To satisfy the requirements for actuarially justified rates, CMS then permitted states—beginning with plan year 2018—to instruct insurers to increase premiums to account for the cost of CSRs, generally by “loading” the cost onto silver plans, so long as these adjustments are reasonable and actuarially justified.

CMS has repeatedly affirmed that this “silver loading” or “CSR loading” is permissible without codifying it in regulations. In the proposed rule, CMS once again affirmed this position and requested comments on codifying the rule, noting it continues to receive questions about permissible CSR loading practices. Commenters generally supported the proposal, and CMS now codifies that CSR loading is permissible “if permitted by the applicable State authority.” A few commenters expressed concern that CMS’s regulatory language might depart from its traditional deference to states on how to account for unpaid CSRs in an actuarially justified manner. The final rule emphasizes that the codified language does not change its deference to states and is not expected to change state practices.

Further Clarity On FTR Notices

CMS finalizes language clarifying Marketplaces’ options for notifying enrollees about potential eligibility loss due to failure to comply with the requirement that APTC recipients file a tax return and reconcile their APTC, a set of rules known as “failure to reconcile,” or FTR. The proposed rule clarified that Marketplaces have two options for notifying consumers who have failed to file and reconcile for two years and whose APTC eligibility is thus in immediate jeopardy: through a direct notice to the tax filer clearly indicating FTR status (if they can do so in keeping with tax privacy rules), or through a more general notice that explains FTR rules and warns of potential APTC loss without specifying the reason. These are the same options that Marketplaces have with respect to consumers who have failed to file and reconcile for one year.

Comments were generally supportive, and CMS finalizes the proposed language without change. The federal notices, which SBMs may use as a model, are posted on the CMS website.

Easing The Appeals Process

Under previous CMS rules, family members or authorized representatives could apply for coverage on behalf of an individual, but they could not seek an appeal of an eligibility determination on that person’s behalf without going through extra administrative steps. In this final 2026 Payment Notice, CMS has amended its regulations, finalizing language in the proposed rule allowing application filers to submit appeal requests on behalf of applicants and enrollees, for both FFM and SBMs.

Most commenters supported this proposal, noting that it would reduce the burden on applicants while bringing more consistency to the process. One commenter suggested that CMS allow brokers to file appeals on behalf of consumers, but CMS declined, noting that doing so would run counter to its recent efforts to combat misconduct and fraud among Marketplace brokers.

Other Proposals

The 2026 Payment Notice also establishes a contingent user fee policy in light of the potential expiration of the enhanced PTCs in 2026, provides more time to access and use the Actuarial Value Calculator, and clarifies CMS’ payment methodology under the ACA’s Basic Health Program.

User Fee Uncertainty

CMS finalizes its proposal to increase the user fees for Marketplaces on the federal platform, in large part to account for lower enrollment that is expected if Marketplace subsidy enhancements expire after 2025. PTC enhancements were enacted in the American Rescue Plan Act of 2021 and extended in the Inflation Reduction Act of 2022. The enhancements are now scheduled to expire at end of the 2025, but there are efforts underway to extend them. Expiration of the enhancements is widely expected to substantially reduce enrollment, which in turn would require higher a higher user fee to provide sufficient revenue to support federal platform operations.

If the enhancements expire as scheduled, the FFM user fee would increase from 1.5 percent in 2025 to 2.5 percent in 2026, and the SBM-FP user fee would increase from 1.2 in 2025 percent to 2.0 percent in 2026. CMS also finalizes a lower set of user fee rates that would take effect if subsidy enhancements are extended by July 31, 2025. If Congress acts by July 31, 2025 to extend the enhancements through 2026, the 2026 user fees would be 2.2 percent in the FFM and 1.8 in the SBM-FP. These figures are generally consistent with those outlined in the proposed rule, though CMS had then suggested a deadline of March 31, 2025.

User fees are paid by Marketplace insurers to support the operations of the FFM and federal platform. The fee is calculated as a percentage of Marketplace premiums collected. The fee supports Marketplace activities that benefit insurers on the federal platform, including eligibility and enrollment processes; outreach and education; managing navigators, agents, and brokers; consumer assistance tools; and certification and oversight of Marketplace plans.

Streamlining The Release Of The Actuarial Value Calculator

The actuarial value (AV) calculator, published by CMS each year, is used by health insurers to determine whether their health plans meet the prescribed metal level of coverage (bronze, silver, gold, and platinum). Since 2015, CMS has initially released a draft version of the AV calculator, solicited comments on it, and then released a final version.

In its proposed rule, CMS noted that users have provided feedback that they would prefer the AV calculator to be released earlier in the year, to allow insurers to prepare for state filing deadlines. In response to this feedback, CMS proposed, and is finalizing, a process by which the agency will release only a single, final version of the AV calculator for the next plan year. The public will still be given an opportunity to comment on it, but any feedback will be incorporated into the development of the AV calculator for the following year. This change will allow CMS to release the AV calculator earlier in the year.

Many commenters supported this proposal, with state commenters noting that it would help them finalize their state-specific standardized benefit designs. Others applauded the reduced administrative burden for insurers. Those interested in commenting on the AV calculator may do so via email at PMPolicy@cms.hhs.gov.

BHP Payment Methodology Clarifications

CMS finalizes two proposals to clarify the payment rules that apply in some rare situations under the Basic Health Program (BHP).

The ACA gives states the option to establish a BHP to cover relatively low-income residents (those with incomes up to 200 percent of FPL) who would otherwise be eligible for the PTC. States have flexibility over BHP design so long as it is generally no less generous or affordable than Marketplace coverage at the same income level. BHP coverage is funded through federal payments to the state that are generally equal to 95 percent of the PTC enrollees would have otherwise received.

The first change addresses situations where a state partially implements the BHP in the first year. A state can generally choose whether the BHP payment calculation is based on current-year or prior-year premiums. Because CSR loading is typically minimal in BHP states, the BHP payment regulations include an adjustment intended to capture the forgone impact of CSR loading on PTC. In a state transitioning to a BHP, this adjustment applies to the first BHP year if the payment is based on current-year premiums, but not if is based on prior year-incomes, since silver loading still had its full impact in that year.

While this rule generally avoids both underpayment and double-counting, it does not account for cases where a state partially implements the BHP in the first year and thus silver loading is only partially reduced. The proposed rule permitted the silver loading adjustment to be applied in part in such cases, and the final rule adopts the proposal without change. This rule appears aimed at Oregon, which is undergoing a phased transition to a BHP.

CMS also finalizes its proposal to clarify how the BHP methodology addresses cases where there are multiple benchmark silver premiums within a county. Codifying its long-standing practice, CMS proposes to clarify that, in such cases, the payment calculation uses the benchmark premium appliable to the largest fraction of county residents.

Authors’ Note

Sabrina Corlette and Jason Levitis received support for their time and work on this piece from the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation, the Urban Institute, or Georgetown University.

Sabrina Corlette and Jason Levitis “Final 2026 Notice of Benefit & Payment Parameters: Marketplace Standards And Insurance Reforms,” February 4, 2025, https://www.healthaffairs.org/content/forefront/final-2026-notice-benefit-payment-parameters-marketplace-standards-and-insurance. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Since the snow shows no sign of stopping, we might as well stay cozy inside and read up on the latest health policy research from January! This month we read about patient care after private equity acquisition of hospitals, and how to improve risk-adjustment accuracy in Medicare Advantage. 

Changes in Patient Care Experience After Private Equity Acquisition of US Hospitals

Anjali Bhatla, Victoria L. Bartlett, Michael Liu, ZhaoNian Zheng, Rishi Wadhera. JAMA. January 2025. Available here.

Researchers funded by the American Heart Association used data from Irving Levin Associates and Pitchbook, the American Hospital Association, and CMS Impact Files to evaluate whether the acquisition of hospitals by private equity (PE) firms was associated with changes in the quality of patient care, when compared with non-PE hospitals selected as controls.

What it Finds

• Following acquisition of a hospital there was a decrease in patient-reported staff responsiveness at PE hospitals compared with control hospitals. 
• Global measures of patient care experience worsened after a hospitals’ acquisition by private equity, and the difference in overall patient care experience measures between PE hospitals and non-PE hospitals grew each year following acquisition reaching around five percentage points by year three post-acquisition.
  • These changes exceeded the national 3.6% decline in patient care experience scores observed during the COVID-19 pandemic. 

Why it Matters

Improving patient-centered care is a national priority, and these findings highlight how patient care experience may decline with private equity ownership, raising questions about the quality of clinical care, staffing levels, and patient outcomes. This analysis found that the decrease in patient experience scores at PE hospitals compared with control hospitals grew each year following acquisition, suggesting that the effects of organizational changes implemented by PE may compound over time. The findings suggest that private equity strategies may prioritize financial returns over patient care, which could have long-term consequences on health outcomes and clinical quality. Policymakers need to consider the implications of private equity ownership on patient care and explore options for oversight to safeguard patient interests.

Combining Patient Survey Data With Diagnosis Codes Improved Medicare Advantage Risk-Adjustment Accuracy

Meghan Bellerose, Hannah O. James, Jay Shroff, Andrew M. Ryan, David J. Meyers. Health Affairs. January 2025. Available here.

A research team at Brown University linked  2016-2019 medical and pharmaceutical claims to Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey responses of Medicare Advantage (MA) enrollees to compare the predictive accuracy of different risk-adjustment strategies versus the standard Hierarchical Condition Categories (HCC) approach. 

What it Finds

• Survey-based models, particularly when combined with HCC scores (which CMS estimates from beneficiaries’ diagnosis codes and demographic characteristics), were found to improve prediction of MA utilization, especially for beneficiaries with the highest and lowest predicted healthcare use.
• The exclusion of diagnosis codes from health risk assessments (HRAs) and chart reviews resulted in slightly less predictive accuracy compared to standard HCC scores, though adding survey data enhanced model performance.

Why it Matters

Improving risk-adjustment models is crucial to ensuring that Medicare Advantage plans are reimbursed fairly for managing their enrollees’ care while reducing incentives for discretionary diagnosis coding or upcoding. Better risk adjustment could also improve the financial sustainability of the Medicare program. Integrating health survey responses into risk adjustment could help counteract risk-score inflation and ensure that higher payments are directed to plans covering sicker populations. If CMS excludes diagnoses most prone to upcoding, surveys could fill in gaps of important health information and improve fairness in payments to plans serving high-need beneficiaries.

By Sabrina Corlette and Karen Davenport

State employee health plans (SEHPs) have wrapped up their open enrollment periods for plan year 2025. Many state workers got some bad news about hefty premium hikes in the process. Like other employer health plans across the commercial insurance market, SEHPs are facing significant increases in health care costs. These increases force states to choose between drawing more heavily on tax revenue to cover these costs and shifting more costs to state workers and their families.

SEHPs can pursue a variety of avenues to constrain cost growth, and one strategy—often referred to as “provider-based reference pricing”—has been gaining traction. A recent study estimates that the use of this type of reference pricing would have saved up to $7.1 billion across all SEHPs in 2022. This year, Washington State’s Office of the Insurance Commissioner recommended provider-based reference pricing for that state’s SEHP, following similar—and successful—recent initiatives in Oregon and Montana.

In our surveys of SEHPs’ cost containment efforts, we found that nine state plans use some form of provider-based reference pricing to establish reimbursement rates for health care providers. In this article, we focus on the lessons learned from the SEHPs in Oklahoma and South Carolina, both of which have long used government-set fee schedules to pay participating providers.

Defining Terms: What Is Provider-Based Reference Pricing?

When it comes to health insurance, there are different forms of “reference pricing.” One form is a benefit design strategy to steer policyholders to lower-price in-network services. The state employee health plan of California (CalPERS) is well-known for pioneering this strategy. The plan surveys prices for specific elective services within geographic regions and determines a cap or “reference price” as the maximum it will pay for that service. Plan enrollees who choose to receive services from a provider that charges a higher price than the reference price must pay the difference. This form of benefit design-based reference pricing is not the focus of this post.

Rather, we zoom in here on provider-based reference pricing: The plan pays participating providers a non-negotiable, established rate that is equal to or a percentage of a reference rate, such as the price Medicare pays for the same service. This approach is quite different from plans’ common method for establishing provider reimbursement levels, which is to negotiate a discount off the provider’s list prices. There is broad consensus in the economic literature that those list prices are dictated more by a provider’s market power than by the cost or quality of those services.

A plan can implement provider-based reference pricing by determining an upper limit or cap on the rates the health plan will pay for specified health care services. This is the approach of Oregon’s SEHP, which caps in-network hospital rates at 200 percent of the Medicare rate. It can also be implemented via a government-set fee schedule for provider services, as is the approach of SEHPs of Oklahoma and South Carolina.

Reviewing The Evidence: Cost Savings From Provider-Based Reference Pricing

Of the nine SEHPs in our survey that have provider-based reference pricing, only two have benefited from public-facing analyses of their cost impact. A recent peer-reviewed study of the Oregon SEHP’s reference pricing program for hospital services found that it saved the plan $107.5 million in the first 27 months of the program. Similarly, an independent study on Montana’s reference pricing program concluded that this initiative saved the SEHP nearly $48 million from state fiscal year (SFY) 2017 through SFY 2019, following its 2016 implementation. However, in 2022, the state moved to adjust the program to allow Blue Cross Blue Shield of Montana, the newly contracted plan administrator, to exceed the reference pricing cap in certain circumstances (although what those circumstances might be has not been publicized). It is not clear whether that move will affect future spending growth. This year, Washington State’s insurance department has projected that if the state’s SEHP implemented a reference price of 160 percent of the Medicare rate for provider services, it would reduce medical spending between 3 percent and 19 percent.

Spotlight On South Carolina and Oklahoma And Considerations For Other States

South Carolina and Oklahoma reported in our 2022 survey of SEHPs that they set the prices for the providers with whom they contract. Both states report that their prices fall between Medicare’s fee schedule and the prevailing commercial rate. Although there have been no external evaluations of the use of provider-based reference pricing in these states, both SEHPs report that the strategy has generated significant savings for the plan, its members, and state taxpayers.

These savings do not appear to have affected enrollee access to care, as administrators in both states describe networks with broad provider participation. Thanks to both plans’ large memberships, they are able to use their market power to convince hospitals and physicians to participate. Additionally, officials observed that because they cover schoolteachers and other public servants, providers in their state have been generally sympathetic about the need for lower rates. Indeed, in Oklahoma, officials reported that 99.3 percent of hospitals and 80.0 percent of physicians participate in the SEHPs’ network. South Carolina’s plan has 100 percent hospital participation and more than 99 percent of physicians (although they do not directly contract with behavioral health providers). South Carolina officials noted that providers like working with the SEHP because it is a “prompt payer” and provides generous coverage.

South Carolina and Oklahoma officials have also found that reference pricing is relatively easy to administer. As one administrator put it, “When a new hospital opens, we reach out and provide our fee schedules. Because we don’t have a negotiation process, there really isn’t anything to negotiate.” Another observed that the use of a fee schedule makes it very easy to for the plan to calibrate its spending over time and to help keep cost growth in check.

Plan enrollees also benefit from these SEHPs’ success in constraining provider price growth, as these states have less need to shift costs to workers through higher premiums and deductibles. State employees in North Carolina, Montana, and Oregon have been vocal proponents of reference pricing proposals.

Potential Challenges

Despite the benefits, SEHPs seeking to adopt reference pricing can face several challenges. First, a number of states have diluted their market power by separating different groups of state workers into different plans. For example, many states have separate plans for government workers and school employees. Others have separate plans for state and municipal workers. These states may need to consolidate these plans into one, or work in tandem on purchasing strategies, to effectively counter the inevitable resistance from hospitals and other providers.

Second, even in states where the SEHP is consolidated and the largest employer in the state, SEHPs may face challenges getting hospitals to agree to the reference price. Montana’s effort encountered stiff resistance from hospitals and required a public relations pressure campaign to convince holdout hospitals to sign network contracts. The proposal from North Carolina’s SEHP to establish reference pricing foundered when hospital lobbyists convinced legislators to reject it. However, recent news that the SEHP is facing a loss of more than $106 million has prompted some advocates to revive calls for a reference pricing program.

Third, the third-party administrators (TPAs) that many states use to design and administer their provider networks and process claims may oppose or obstruct a move to reference pricing, particularly since it effectively reduces the TPA’s role in network design. The Montana SEHP, for example, had to sever its relationship with its long-standing TPA to move forward with its reference pricing program. SEHP officials responding to our survey report experiencing foot-dragging and resistance from TPAs over other cost-control strategies they have tried to implement; they may encounter similar reactions to a reference pricing initiative, requiring a shift to more agile and willing partners for this effort.

Finally, a trade-off that SEHP administrators may need to consider is whether, or to what extent, a reference pricing program and its reliance on a fee-for-service reimbursement chassis inhibits the use of alternative or innovative payment models. Such models can promote population health management, quality improvement, and whole-person care. Reference pricing should not preclude such efforts, but plan administrators will have to consider how the two types of payment methods can coexist.

Looking Ahead

The cost of employer-based insurance is rising at an unsustainable pace, and SEHPs are not immune from cost pressures. The primary driver of these cost increases is high and rising provider reimbursement rates. The inability to keep these rates down is forcing difficult choices for employers, leading to higher deductibles and cost sharing and an epidemic of underinsurance. Indeed, 23 percent of people with year-round health insurance are considered underinsured; 66 percent of these individuals are covered through an employer-based plan.

For SEHPs, provider-based reference pricing can be a viable strategy to constrain cost growth, maintain the value of coverage for workers, and generate savings for taxpayers. The success of reference pricing in states as diverse as Montana, Oklahoma, Oregon, and South Carolina suggests that it can be replicated in a wide range of states. Furthermore, a state-led reference pricing program holds the potential to be leveraged by private-sector employer purchasers, who are equally desperate for a way to keep costs in check and maintain affordable coverage for workers and their families.

Author’s Note: The authors’ time drafting this post was supported by a grant from Arnold Ventures.

Sabrina Corlette and Karen Davenport “State Spotlight: The Use Of Provider-Based Reference Pricing In Oklahoma And South Carolina,” January 28, 2025, https://www.healthaffairs.org/content/forefront/state-spotlight-use-provider-based-reference-pricing-oklahoma-and-south-carolina. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By Nadia Stovicek and Jack Hoadley

Three years after implementation, the No Surprises Act (NSA) has provided comprehensive protections from the most prevalent forms of surprise medical billing. This law protects consumers from unexpectedly high out-of-network costs and establishes a framework for the reimbursement rate that providers can charge and carriers expect to pay. 

Three sources of information can help us evaluate the law’s success: the NSA compliance and enforcement reports, the first published audit of a carrier’s adherence to the reimbursement rate, and federal market conduct examination reports. The Centers for Medicare & Medicaid Services (CMS) is one of the agencies responsible for NSA enforcement and has been tracking issues with NSA compliance since 2023. The most recent quarterly complaint update came out in November 2024 and includes a high-level summary of NSA-related complaints from consumers, providers, payors, and others—along with some non-NSA complaints relating to the Affordable Care Act or mental health parity. The NSA also requires audits of plans’ qualifying payment amounts (QPAs) defined as the median in-network rate. CMS, through the Center for Consumer Information and Insurance Oversight (CCIIO), released a report in the spring on its first audit of QPA calculations by the carrier Aetna Health Inc. of Texas for its out-of-network air ambulance services. CMS also conducted federal market conduct reviews of complaints of certain insurers related to NSA compliance process issues. 

The updated complaints data report, QPA audit, and federal market reviews show that compliance with NSA is working overall, even if room for improvement still exists. 

Background on the NSA

The NSA protects consumers from balance billing by out-of-network providers and facilities in emergency, air ambulance, and in-network hospital settings, and it establishes a process to resolve payment disputes in these situations. When providers challenge payors’ initial payments as insufficient, the NSA first requires open negotiations between the parties and then allows binding arbitration, known as an independent dispute resolution (IDR). In IDR, an independent dispute resolution entity selects between the payment amounts offered by each party. As part of IDR, Congress assigned a market-driven rate, the QPA, as a key criterion in the process, rather than a government-set rate or the provider’s billed charges. This process is meant to contain spending and, ultimately, premiums. 
While consumers are already seeing savings, process and legalchallenges have hampered smooth implementation of IDR procedures, stalling the law’s objective of protecting consumers in a way that contains costs.

Complaint data continue to show the NSA’s effectiveness, but more information is needed

Compared to the total numbers of claims for NSA-eligible out-of-network services, relatively few complaints have been filed. In the first 34 months since implementation, CMS reported only an estimated 14,576 complaints specifically related to NSA compliance. For comparison, two trade groups representing insurers estimate that one million claims are submitted each month for care protected by the NSA. This low complaint volume could indicate that the NSA is protecting patients from the vast majority of balance bills.

Similar to previous trends, most complaints concern provider behavior. According to the CMS data, 82 percent of NSA compliance complaints were filed against providers, facilities, and air ambulance entities. About 40 percent of these provider-based complaints arise from surprise billing for a non-emergency out-of-network service at an in-network facility. We interpret these complaints as allegations that providers sent balance bills prohibited by the NSA. Another 25 percent of the provider-based complaints are similar complaints with regard to emergency services. Notably, of the total closed complaints (against either providers or plans) where a determination was made about whether a violation occurred, violations were identified for about one in five complaints. 

The report also notes that these violations led to more than $11 million in “monetary relief” since 2022. Ultimately, this monetary relief means that providers who incorrectly balanced billed refunded the money they charged their patients. CCIIO also instructs the providers in these situations to review past cases and rectify any more instances of illegal balance bills. 
Another takeaway from the November 2024 complaint data report is that far fewer complaints were filed against payors. These fewer complaints may be skewed by regulatory authority, as CMS jurisdiction includes only non-federal governmental plans – such as state or local employee health plans, and insurers – while self-funded plans fall under Department of Labor (DOL) jurisdiction, and fully insured commercial plans typically fall under state jurisdiction. The most common complaints against payors—likely from providers—allege non-compliance with QPA requirements. More than 60 percent of the complaints directed at plans addressed late payments after an IDR determination, a major source of frustration among providers, compared to just one-fourth from the first report.

Complaint data support prior research suggesting the NSA is protecting consumers from surprise medical bills

The latest data from CMS bolster findings from a Georgetown and Urban Institute report examining the effectiveness of federal protections against balance billing, particularly in protecting consumers from balance billing and taking consumers “out of the middle” of payment disputes between providers and insurers. That said, stakeholders generally cautioned against declaring complete victory over surprise balance bills simply because of a low number of complaints. In interviews for that report, some stakeholders suggested the low volume of consumer complaints may partially reflect either a lack of public awareness about the NSA or consumers’ lack of health coverage literacy, particularly regarding cost-sharing obligations.

Federal regulators are also reviewing QPA calculations and other process measures

The first audit of a carrier’s compliance with QPA requirements, released in July 2024, provides a modest understanding of how QPA compliance could be affecting cost containment goals. While more audits are under way and will provide more complete insights on industry trends, some initial takeaways exist. When conducting the audit, CCIIO found three issues with Aetna: 

1. Incorrect calculation of the QPA. 

2. Failure to disclose to providers that they may initiate the IDR process within four days after the open negotiation period. 

3. Failure to provide the QPA in conjunction with an initial payment or notice of denial of payment. 

The latter two issues focus mostly on process errors, but the first might be a more substantial concern about the accuracy of QPAs with potential implications for increasing health care costs and premiums. Still, the audit showed that Aetna incorrectly calculated the QPA five times, which is only two percent of cases. In each circumstance, Aetna took corrective actions. While this is still something to be taken seriously, overall Aetna is adhering to the QPA guidelines. 
In addition to auditing, CMS conducts federal market conduct examination reports based on some of the complaints submitted by affected parties. One of the provisions they review is enforcement of the NSA. Out of the eight reports posted in 2024, five of them relate to NSA violations. These violations are largely based on the failure of the insurance company to provide the initial payment or notice of denial of payment for an NSA-protected claim within the allotted timeframe, or failure to share QPA disclosures. The corrective action that CMS imposes is not overly burdensome because these are mainly process violations.

Looking forward

Collectively, these reports offer evidence that CMS is committed to successful implementation of the NSA. Although the low number of cases and violations points to reasonably good compliance with the law, it would be useful to have a more detailed breakdown to see which types of complaints were most likely to involve underlying violations and other patterns of noncompliance. The CMS complaint reports also lack more detailed information on the source, timing, and resolution of NSA complaints, as well as information about grievances referred to other agencies – such as states, the Office of Personnel Management, or DOL – with jurisdiction over different types of plans.

Most experts recognize that it is simply too early to understand the full impact of the NSA on provider prices, provider networks, overall health costs, and premiums. Ongoing provider-driven litigation over the IDR process and calculation of the QPA has led to several pauses by the federal agencies in accepting new IDR cases and adjudicating cases in the pipeline, as well as changes to the rules under which IDR operates. As a result, we have an incomplete picture of IDR decision-making. The federal government has faced challenges in responding to numerous legal actions, and court decisions have required significant technical changes to the underlying IDR processes. A recent proposed rule lays out various process-related improvements, but this rule has yet been finalized. Finalizing this rule could play an important role in helping the IDR process run more smoothly.

The NSA is a landmark law that holds substantial promise for driving down costs and protecting consumers. While the CMS reports on complaint data support the general notion that the NSA is preventing unfair balance billing, the significant amount of IDR activity and the ongoing litigation should not distract from the law’s original cost containment goals. The release of more data, including ongoing complaint data, more audits, and granular data related to IDR outcomes, would help policymakers assess the impact of the NSA and whether further action to protect consumers and reduce system costs will be needed.

One of the first directives issued by President Trump targets rising prices, including in the health care system. In particular, the price relief Presidential Memorandum calls on relevant agencies to “eliminate unnecessary administrative expenses and rent-seeking practices that increase healthcare costs.” The memorandum requires updates from a deputy every thirty days on agency progress. What falls within the purview of this memorandum remains for relevant agencies, including the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Labor (DOL), to determine. A thorough investigation into the various intermediaries profiting from our country’s opaque, convoluted commercial health care system would be a welcome start and likely yield significant opportunities for cost containment intervention in the months and years to come. 

Administrative Waste and Rent-Seeking in Health Care

If you work in health policy, the first industry actors you may think of when reading this memorandum are pharmacy benefit managers (PBMs). PBMs are facing accusations left and right — from President Trump, to the Federal Trade Commission, to federal and state lawmakers, to state Attorney General offices — that they are raking in excessive profits at the expense of patients, employers, and government programs, as well as independent pharmacies. 

If you do not work in health policy, you likely are thinking about big health insurers denying coverage for needed care or, at least, forcing you or a loved one to jump through an array of bureaucratic hoops before they will agree to reimburse you for needed services.

The reality of the problem is much deeper. There is an immense web of profit-seeking companies that stand between patients and their doctors,  increasing the cost of health care. CHIRblog has previously covered alleged questionable conduct by insurance companies acting as third-party administrators (TPAs) for self-funded employer health plans. Like PBMs, TPAs negotiate complex and often-hidden contracts with the suppliers of health care services and can dictate terms in their favor, at the employer’s expense. CHIR experts Linda Blumberg and Kennah Watts have written about other “profit-enhancing middlemen” who maximize margins for insurers and health care providers while generating their own profits. These include entities like revenue cycle and claims denial management companies, claims repricers, and independent dispute resolution (IDR) service providers. As Blumberg and Watts explain, we effectively have an arms race between health care providers and insurers fighting over claims, with a growing multitude of companies taking a cut along the way and producing unnecessary administrative costs. 

As health care costs continue to rise, consumers and employer sponsors of insurance cannot afford to have their precious dollars siphoned off in this exploitative manner. 

HHS and DOL Have Authority to Demand Information About These Practices

Federal agencies currently have the authority to investigate the various financial arrangements undergirding the commercial health care system and can leverage this authority as a first step in complying with the recent price relief memorandum.

Under existing law, 42 U.S.C. §§ 18031(e)(3) and 300gg–15a, state and federal officials have the authority to request a wide swathe of information from health insurers and group health plans. This includes claims payment policies and practices, periodic financial disclosures, and other information that officials determine appropriate. The Trump Administration previously tapped these authorities to institute the Transparency in Coverage rules and require insurers to publicly release price information. The agencies can similarly take advantage of these authorities today to get a wide range of information about insurer contracts affecting claims payment and related data. For example, the agencies could seek insurer contracts with claims repricers and denial management companies, examine data about the fees they collect, and request information about overpayment recovery. The agencies could also request provider contracts that reveal any revenue neutrality agreements that guarantee providers a certain amount of reimbursement per year, or “skip lists” that protect some hospitals from itemized bill review. Special scrutiny should be given to any agreements between insurers and their affiliated providers.

DOL also has broad research and investigative authorities under ERISA Sections 504 and 513.  The Secretary of Labor can undertake studies they deem appropriate or necessary relating to employee benefit plans. The Secretary also can launch investigations, requiring those under investigation to submit records, file data, and testify under oath to determine whether any violations of ERISA have occurred. DOL recently used this authority to investigate certain TPAs for collecting undisclosed fees and cross-plan offsetting. Once it further lifts the hood, DOL may find other examples of conflicts of interest, self-dealing, and other prohibited transactions that cost employers and plan members money.    

Looking Ahead to Future Reforms

Although rising health care prices remain the leading driver of health care spending in the United States and warrant direct action, shedding light on this complex web of intermediaries can help eliminate unnecessary administrative bloat in the system and achieve the goals of President Trump’s price relief memorandum. Information generated from these investigations can enable federal agencies, as well as Congress, to target and prioritize future reform initiatives to reduce wasteful spending and rent-seeking behavior and help private employers better protect themselves from exploitative contracts. These efforts, in turn, also may create clearer pathways to address monopolistic pricing by corporate health care systems, whether through government action or private market interventions.

Newly-inaugurated President Trump has issued a flurry of executive orders in his first 48 hours in office, including an order reversing President Biden’s directive that federal agencies identify and implement strategies for increasing enrollment in health insurance. Through this action, the Trump Administration highlighted their intention to make coverage less accessible, although they will need to write new regulations, through the regular rulemaking process, to truly change federal policy. They could make further executive decrees on coverage policy in the coming days.

At the same time, policymakers at the other end of Pennsylvania Avenue are considering other destructive changes to federal health insurance programs. Merely a week after being sworn in, the House Budget Committee circulated a list of dramatic potential cuts to key federal programs. A week later, the Committee followed up with an even longer, more detailed wish-list of possible budget cuts. The policy options  outlined in these memos echo many of the proposals found in Project 2025 and provide glimpses of how the Congressional majority, in concert with the Trump Administration, might finance an extension of expiring tax cuts for wealthy individuals and corporations, or to raise the funds they need for other purposes. And while Medicaid would experience particularly deep cuts should Congress adhere to some or all of these plans, the lists also target marketplace health insurance created by the Affordable Care Act (ACA). In sum, Congressional leadership is clearly planning to make health care more expensive for millions of low- and moderate-income families while undermining key ACA guarantees in the process.

House Committee Proposals to Cut ACA Funding

The two budget wish-lists include proposals that would pull billions of dollars out of ACA coverage. The most recent list of policy options from the House Budget Committee includes:

• Cutting premium tax credits by eliminating repayment caps. Premium tax credits support health insurance coverage for the vast majority of the more than 24 million individuals who have already enrolled in marketplace coverage for 2025. The Budget Committee document suggests ‘recapturing” $46 billion in premium tax credits over ten years by eliminating a key protection for enrollees who use premium tax credits to purchase marketplace coverage and whose income changes during the plan year. This provision limits the dollar amount most enrollees would pay back if their annual income ends up being more than they projected when enrolling in coverage. This protection applies to enrollees with incomes below 400 percent of the federal poverty line (FPL); higher-income enrollees must pay back the entire difference between the tax credit they received and the tax credit they were ultimately eligible for.

• Cutting premium tax credits for families with unaffordable premiums for employer coverage. In 2022, the Biden Administration fixed the so-called “family glitch,” a legal and regulatory misinterpretation that determined eligibility for premium tax credits, even for family members, based on the affordability of employee contributions for worker-only coverage, rather than the cost of family coverage. At the time, the Biden Administration noted that 200,000 uninsured individuals would gain coverage and nearly 1 million people would pay less for health insurance. If the House Budget Committee chooses to reinstate the glitch—thus cutting premium tax credit spending by $35 billion over ten years—families offered unaffordable employer coverage would once again be forced to choose between paying very high premiums for employer coverage, purchasing unsubsidized marketplace coverage, or leaving family members uninsured.

• Limiting eligibility for affordable health insurance for non-citizens. The House Budget Committee also proposes saving $35 billion over ten years by restricting eligibility for federal health insurance based on citizenship status. The language in the most recent options paper suggests a focus on restricting coverage for undocumented individuals. However, a reference to “specified classes of noncitizens” indicates Committee leadership may also propose eliminating marketplace subsidies for some groups lawfully present immigrants. The Committee’s options paper also envisions cutting $6 billion by prohibiting adults with Deferred Action Status as a Deferred Action for Childhood Arrivals (DACA) recipient from enrolling in marketplace coverage and receiving premium tax credits. (In general, DACA recipients may enroll in marketplace coverage and receive premium tax credits under a new rule, with the exception of individuals living in 19 states affected by a recent court order.)

• Undermining ACA guarantees. The Budget Committee also includes a trio of proposals that would undermine the ACA’s patient protections, including benefit requirements and premiums that do not vary based on gender or health status. These proposals would loosen rules for Association Health Plans (AHPs), eliminate state oversight of stop-loss plans, thus encouraging greater use of self-funded plans with this protection against high expenses (known as level funded products) among small employers instead of state-regulated insurance plans, and permit employers to offer telehealth as an excepted benefit—that is, without complying with federal standards for health insurance, including consumer protections. AHPs are not required to offer comprehensive coverage or Essential Health Benefits (EHBs) and may also charge higher premiums based on occupation, which provides a mechanism for gender-rating. Similarly, insurers selling excepted benefits may charge higher premiums to enrollees with pre- existing conditions, impose annual or lifetime caps on benefits, and require cost-sharing for preventive services. Level-funded products are also exempt from consumer protections such as EHBs. These three proposals would also make it easier for insurers (whether health insurers or stop-loss insurers) to sell their products to healthy employer groups, siphoning healthy enrollees out of other insurance markets and driving up premiums for those employers and enrollees who remain.

Beyond these relatively specific proposals, the House Budget Committee appears to be considering other changes that could fundamentally alter the ACA’s design and impact, including changes to the Marketplaces’ “market design” and eligibility rules and others that focus on “reforming” premium tax credits. These changes may include creating lower-value plans, limiting open enrollment periods, and reducing eligibility for – or the value of — premium tax credits. All of these policies could significantly reduce marketplace enrollment and increase costs for marketplace enrollees.

Implications for ACA Marketplaces

In their search for spending cuts to finance the majority’s policy priorities, including extending the 2017 tax cuts, House Budget Committee leadership have identified policy changes that would reap federal savings but also result in higher premiums, reduced financial protections, and fewer consumer protections for low- and moderate-income individuals who purchase health coverage through the ACA marketplaces. These cuts are also likely to reduce marketplace enrollment and increase the number of people without health insurance. Changes to the repayment caps, for example, could leave enrollees with variable incomes with unexpected and unmanageable tax bills because estimating their annual income can be so complex. Some individuals may be reluctant to take this risk and forego coverage altogether. In addition, legislative action to reverse the Biden Administration’s “glitch fix” would mean that families with affordable offers of employer coverage for worker-only policies, but not for full family coverage, would face new increases in health insurance premiums and the agonizing choice of doing without health insurance for other family members. And should Congress reduce or eliminate health insurance supports for broad range of non-citizens, marketplace coverage will become unaffordable or hard to access for a variety of lawfully-present non-citizens who currently rely on premium tax credits to purchase health insurance. Because current law already creates significant barriers to health coverage for non-citizens, 18 percent of lawfully present immigrant adults are uninsured, compared to eight percent of US-born adult citizens and six percent of naturalized adult citizens. This disparity in coverage will increase if the nearly 1 million non-citizen, non-elderly adults who purchase coverage on the ACA marketplaces no longer qualify for premium tax credits or become wary of enrolling in coverage.

Finally, efforts to reduce regulatory requirements for AHPs and level funded plans and create a new excepted benefit for telehealth could increase premiums for many while leaving enrollees without critical ACA consumer protections. Marketplace enrollees and people enrolled in fully-insured employer health benefits may experience higher premiums as the insurance plans selling these products lure healthy groups out of the fully-insured market, and drop them back into this market as employees or dependents develop high-cost conditions.

Takeaway

While Congressional action on budget legislation may be some weeks or months away, Budget Committee leadership is shopping a conglomeration of spending cuts that will severely damage the affordability of health insurance and health care services for marketplace enrollees. If Congress combines these changes with draconian cuts to Medicaid, as described in the Committee’s latest wish-list, low and middle-class working families will finance a significant share of continued tax cuts for wealthy people and corporations. The early executive order on coverage gave an early signal of health policy priorities for the new Administration and their allies, with potentially more to come. When combined with these daunting proposed cuts for budget reconciliation legislation, we have further indication that 2025 will be an important year in coverage policy.

A snowy first week of January gave us plenty of time to read some of the last research from 2024. This month we read about prescription drug pricing and the impacts of rebates on consumers, as well as market shares of Medicare Advantage carriers.

Prescription Drug Prices, Rebates and Insurance Premiums 

Andrew W. Mulcahy, Preethi Rao, Lindsey Patterson, Annetta Zhou, Jonathan S. Levin, Rachel O. Reid, Sarah Junghee Kang, Zetianyu Wang, Susan L. Lovejoy. RAND. December 2024. Available here.

Researchers for RAND and the Office of the Assistant Secretary for Planning and Evaluation (ASPE) looked at data collected under the RxDC (Prescription Drug Data Collection) and publicly available sources including the Medical Expenditure Panel Survey (MEPS,) National Health Expenditure Accounts (NHEA) and KFF to analyze prescription drug spending, pricing trends, and the impact of rebates on insurance premiums and consumer costs.

What it Finds

• Employer-sponsored and marketplace health plans are shifting toward tiered formularies and higher deductibles, increasing the financial exposure for patients needing high-cost or specialty medications.
• Patients are increasingly responsible for paying coinsurance, leading to higher out-of-pocket expenses despite insurers benefiting from rebates.
  • For group plan enrollees, average annual out-of-pocket spending on retail-dispensed drugs remained relatively stable (e.g., $125 in 2014 vs. $109 in 2019), but this conceals significant variation across therapeutic classes
• Spending increases were especially significant for certain drug classes like oncology medications, with patient out-of-pocket costs nearly doubling for some categories between 2014 and 2020. Rebates for on-patent, brand-name drugs often reduce net prices by substantial margins (e.g., up to 80% for some therapeutic classes like insulins), but these savings primarily benefit insurers rather than lowering patients’ costs at the point of sale. 

Why it Matters

Understanding the dynamics of prescription drug pricing and spending is crucial for addressing rising healthcare costs and ensuring equitable access to medications. High list prices, even when offset by rebates, disproportionately impact patients through higher out-of-pocket costs, particularly for those in plans with coinsurance or high deductibles. Transparent data, like that collected through RxDC, can help policymakers design more effective interventions to reduce drug prices, improve benefit design, and ensure that cost savings from rebates benefit consumers rather than intermediaries. This is especially timely given ongoing debates over healthcare affordability and the role of Pharmacy Benefit Managers (PBMs) in the pharmaceutical supply chain.

Medicare Advantage: National Carriers Expand Market Share While Regional Carriers Without Affiliation Decline, 2012-23

Joseph G. P. Hnath, J Michael McWilliams, and Michael E. Chernew. Health Affairs. December 2024. Available here.

Researchers at Harvard examined national enrollment and acquisition trends by type of carrier through publicly available data from CMS to analyze trends in Medicare Advantage (MA) market competition from 2012 to 2023. They analyzed national carrier consolidation, local market dynamics, and their implications for competition and policy reforms.

What it Finds

• From 2012 to 2023, the market share of five major national MA carriers grew from 46% to 66%, primarily due to acquisitions, while the share held by regional carriers without affiliations (the primary target of acquisitions) declined from 25% to 6%. 
• Local market concentration (measured at the county level) decreased moderately, with the average Herfindahl-Hirschman Index (weighted by county Medicare population) declining from 4,300 to 3,000. However, most local markets remain highly concentrated.
• Growth in MA was driven by service expansions into new counties and states, with national carriers entering more markets. Startups and smaller players remained marginal contributors, holding just 2% of market share collectively by 2023.
• Increased competition at the local level has largely plateaued in areas where MA penetration exceeds 20%, suggesting future MA growth may not significantly enhance local market competition.

Why it Matters

Examining the market dynamics of the expanding MA program is vital, as national-level consolidation risks diminishing competition, potentially driving up costs and reducing benefits for beneficiaries. Although some local markets have experienced greater competition, the majority remain highly concentrated, highlighting concerns about equitable access to competitive plan choices. These findings are particularly significant for policymakers, as payment reforms based on competitive bidding may not deliver the desired cost savings or benefit enhancements without tackling consolidation and market imbalances.

Interactive 50-state Media Guide Helps Journalists Navigate Complexities of U.S. Health Care System

The. U.S. health care system is a patchwork quilt of federal and state programs, laws and market forces, and recent events have shone a spotlight on Americans’ frustration with our health insurance system. Health care journalists provide a critical service by reporting on the policies, practices, and market forces that shape that system, but reporting on consumers’ experiences with health coverage can be a real challenge.

The Association of Health Care Journalists has just released a new and improved Guide to Health Insurance Across the U.S, first released in December 2023. Developed in partnership with Georgetown University’s Center on Health Insurance Reforms (CHIR) and supported by a grant from the Robert Wood Johnson Foundation, the Guide includes a national-level overview as well as guides to health coverage in all 50 states and the District of Columbia. Each state guide provides data on residents’ sources of coverage, federal and state programs and policies that affect how that coverage works, and key data sources on health insurers and health plans.

The updated 50-state, interactive Media Guide provides a comprehensive overview of health insurance coverage and the federal and state policies, and regulatory agencies that govern the behavior of insurance companies and impact consumers’ experiences. It is designed to assist journalists reporting on issues consumers face navigating their health insurance coverage and access to services. The Media Guide includes:

• A national overview with key data on health insurance coverage, information about consumers’ rights, and links to national data sources about insurance companies and plans.
• An interactive state map with guides for all 50 states and the District of Columbia. Each state guide contains key data about coverage sources, state regulatory agencies and officers, and links to local data sources about insurance companies and plans.
• A Glossary of key health insurance terms.
• A 2024 federal poverty level table denoting coverage eligibility levels under programs such as Medicaid and the Affordable Care Act Marketplace premium tax credits. 

The 50-state Media Guide on Health Insurance is available on the Association of Health Care Journalists’ website. The Guide was supported by a grant from the Robert Wood Johnson Foundation.

Additional work by CHIR researchers can be found here. CHIR is composed of a team of nationally recognized experts on private health insurance and health reform. For more on our work, please see our website, blog, and follow Georgetown CHIR on LinkedIn and @GtownCHIR on X (formerly Twitter).

As the second Trump administration begins to take shape, top health officials must soon allocate resources and select policy priorities. While new administration officials will likely have a different approach to health policy than those preceding them, there is one area where President Trump, the Biden administration, and lawmakers from both parties have agreed in recent years: increasing consumer choice and competition in the healthcare market.

This commitment to pro-competition reforms was demonstrated in the first Trump administration, which took important steps  to lower prescription drug prices, draw on untapped authorities in the Affordable Care Act to promote price transparency, and protect consumers from some unfair billing practices. President Trump’s first term also brought firm antitrust enforcement, as the FTC challenged several significant health care mergers. In early 2024, the outgoing Biden administration continued this important work and promoted further action through the appointment of the Chief Competition Officer within the Department of Health and Human Services (HHS). Complementary parallel appointments were also made for health care counsels and task forces at the Federal Trade Commission (FTC) and the Antitrust Division within the Department of Justice (DOJ-ATR). If President Trump aims to provide tangible benefits for workers and consumers struggling to afford needed health care, then his second administration should maintain these competition-focused positions and provide them greater resources to further improve pro-competition policies. 

Why Competition Policy Is and Should Remain a Bipartisan Priority 

Health care costs in the United States have long concerned policymakers and constituents alike. With health care costs accounting for roughly 17 percent ($4.5 billion) of total gross domestic product, and with the average family premium for an employer group health plan costing $25,572 a year, U.S. per capita health care spending far exceeds that of comparably developed countries. Time and again, researchers have demonstrated the cause of this high spending: high health care provider and drug prices, driven in large degree by increased vertical and horizontal consolidation and other anti-competitive business practices. Americans do not use more medical services than do people in other countries, they simply pay a lot more for services.

In attempts to lower health care costs and increase consumer choice, policymakers on both sides of the aisle have long supported various pro-competition reforms. In addition to cost containment opportunities, competition can also improve efficiency, as organizations must optimize their operations in order to stay ahead of competitors. Furthermore, competition can incentivize innovation and improve quality, as competitors jockey to create better value services and goods for their customers. Competition may also improve access to health care services, as stakeholders enter new markets and offer more services to attract additional consumers. All of these competitive outcomes – lower costs, increased consumer choice, improved efficiency, greater innovation, and expanded access – align with the health care agenda of President Trump’s first term.

The Chief Competition Officer Has Laid a Foundation for Pro-Competition Reform

The Chief Competition Officer’s mandate is to identify, coordinate, and elevate opportunities within HHS and across agencies to promote competition in health care markets—in other words, to make health care a “good deal for the American people.” 

Since their appointment in January of 2024, the Chief Competition Officer and the HHS competition team has gathered information and established cross-agency lines of communication to support future pro-competition policy reforms, oversight, and enforcement. To better understand current barriers to competition and anticompetitive conduct in the health care marketplace, HHS and the FTC issued a request for information (RFI) in February 2024 on group purchasing organizations (GPOs) and drug wholesalers. These agencies, along with DOJ-ATR, then released a joint RFI on health care consolidation in March. These RFIs received immense public participation, with thousands of individual and group stakeholders submitting comments. (These comments are available to the public: comments on GPO RFI and comments on consolidation RFI). 

The health care competition tri-agencies – HHS, DOJ-ATR, and FTC – also solicited complaints and tips about health care competition and fairness through a new portal, available at HealthyCompetition.gov. The portal offers users examples to help identify anticompetitive conduct, including contract terms that block price transparency or restrict competition, different forms of price-fixing, and collusive behavior among purported competitors. 

In addition to these public information collection efforts, the HHS Competition Officer has taken critical steps to establish data sharing agreements and processes between the three agencies to facilitate effective enforcement of antitrust laws in the health care market. Beyond internal information sharing and pro-competition work, the HHS competition team also supports the education of employers, consumers, and other stakeholders, and can weigh in on policy development within the agency to ensure competitive effects are considered. 

By Leveraging the HHS Competition Officer and Fostering Collaboration Across Agencies, the Trump Administration Could Reduce Health Care Costs and Empower Consumers

The foundation for pro-competition reform has been laid, and the incoming administration can and should leverage this foundation. The Trump administration should continue to operate and fund the HHS Competition Officer, as well as the health care leads within DOJ-ATR and FTC, to deploy the collected information and translate this knowledge into evidence-based policy reforms and enforcement actions to lower prices for consumers. 

To further spur pro-competition reform in the commercial health care market and benefit millions of workers and their families nationwide, the administration could also support collaboration with the Department of Labor (DOL). With oversight authority over the health care purchasers for Americans with employer-sponsored insurance, more than half of the US population, DOL is well-positioned to investigate barriers employers and workers face in health care markets. DOL could also help educate employers about how to be better shoppers (consistent with their fiduciary duties), as well as educate employers about where to file tips and complaints when they encounter anticompetitive conduct or lack choice due to consolidation. 

A continued commitment to the HHS Competition Officer and similar engagement across other agencies would align with President Trump’s previous policy agenda and could effectuate Republicans’ long-standing objective to lower health care costs and increase choices for health care consumers. 

By Kennah Watts and Leila Sullivan

In November, CHIR was thankful for the latest health policy research. We read about charity care provided by non-profit hospitals, Marketplace coverage for small business and self-employed workers, and out-of-pocket costs of traditional fee-for-service Medicare versus Medicare Advantage.

US Nonprofit Hospitals Have Widely Varying Criteria To Decide Who Qualifies For Free And Discounted Charity Care

Luke Messac, Alexander T. Janke, Lisa Herrup Rogers, Imani Fonfield, Jared Walker, Elijah Rushbanks, Nora V. Becker, and Ge Bai. Health Affairs. November 2024. Available here.

Academic researchers from Brown, Harvard, Johns Hopkins, and University of Michigan collaborated with data experts from Dollar For – a nonprofit that reviews and catalogs hospital financial assistance policies – to analyze the Dollar For database and examine restrictions on charity care eligibility, including minimum bills, asset investigations, and citizenship requirements at non-profit acute care hospitals, as defined by the American Hospital Association Annual Survey. 

What it Finds

• Of the hospitals successfully linked between the survey and database, nearly 93 percent documented their charity care eligibility requirements.
• Almost 90 percent of the study hospitals specified the income limit to receive free charity care. The median income limit among these hospitals was 216 percent of the federal poverty level (FPL).
• Approximately three-fourths (77 percent) of the analyzed hospitals documented an income limit for discounted charity care, with a median income limit of 400 percent FPL.
  • Over 260 hospitals (8.8 percent) did not offer any discounted care.

• The median income limits for charity care varied by state: the median income limit in the lowest state (Montana, median income of 130 percent FPL) was less than half the limit in the highest states (California, Alaska, Oregon, and Washington with a median income of 300 percent FPL).
• Hospitals in wealthier areas and with favorable payer mixes offered more generous charity care: at the county level, the income limit for charity care increased as the share of the population below 150 percent FPL or the rate of uninsured people decreased.
• Insured patients can qualify for charity care at roughly one in ten (11.7 percent) of non-profit acute care hospitals, and of these hospitals, 4.1 percent required patients to meet some hardship criteria.
• Almost one in ten (8.4 percent) hospitals required documentation of citizens for patients to receive charity care.
• Two-thirds of hospitals (64 percent) included asset determinations in patient eligibility.

Why It Matters

Non-profit hospitals, which receive tax exemptions to offset the cost of providing community benefits, are expected to offer free or discounted care to low-income patients to help prevent large bills for hospital services and medical debt. While the Affordable Care Act (ACA) mandates that non-profit hospitals make their financial assistance policies public, it does not require specific provisions for charity care or define eligibility criteria. As a result, some hospitals may offer minimal charity care, which is not often proportional to the tax-exempt benefits they receive. In the absence of federal regulation, hospitals have significant discretion over who qualifies for assistance, and these policies are often opaque and difficult for patients to navigate. There has been increasing state and federal interest in particularly in relation to low charity care spending and the continued tax exemptions for non-profit hospitals. Policymakers should consider reforms to charity care limits and provisions to alleviate medical debt among consumers and promote cost containment.  

Marketplace Coverage of Small Business Owners and Self-Employed Workers

Assistant Secretary for Planning and Evaluation (ASPE), Office of Health Policy. November 1, 2024. Available here.

Researchers from ASPE used Department of Treasury tax data and national survey data to determine coverage rates among self-employed adults and small business owners in 2022.

What it Finds

• In 2022, 3.3 million small business owners and self-employed individuals received coverage through the Marketplace.
  • Small business owners and self-employed individuals represent more than a quarter (28 percent) of total Marketplace enrollment for adults aged 21 to 64.
• Enrollment in the Marketplace varied by state: only 20 percent of small business owners and self-employed adults in Rhode Island enrolled in the Marketplace, compared to 41 percent in Hawaii.
• Marketplace enrollment for these groups is correlated to decreases in the uninsured rate: from 2011 to 2022, the uninsured rate for self-employed workers dropped by 9 percent.
• Approximately 82 percent of small business owners and self-employed adults received a premium tax credit in 2022.

Why It Matters

More than half of Americans receive health coverage through employer-sponsored insurance. Small employers are less likely to find affordable group insurance than large employers due to their size and lack of bargaining power. This has led to lower rates of coverage for both groups. The ACA helped address these challenges by creating new coverage options through the Marketplace for small business owners and self-employed individuals, resulting in gains in coverage. These improvements were further bolstered by the enhanced premium tax credit provisions of the American Rescue Plan and the Inflation Reduction Act. As a result, insurance rates have increased, and the coverage gap between wage and salary workers has been reduced. As the new administration considers health policy action, policymakers should remain mindful of the coverage gains that could be lost by repealing the ACA and not extending the enhanced premium tax credits. 

Expected Out-Of-Pocket Costs: Comparing Medicare Advantage With Fee-For-Service Medicare

Benedic Ippolito, Erin Trish, and Boris Vabson. Health Affairs. November 2024. Available here.

Researchers from the American Enterprise Institute, University of Southern California, and Harvard used data from the Centers on Medicare and Medicaid Services (CMS) on projected out-of-pocket (OOP) costs from 2014 to 2020 to compare the generosity of fee-for-service (FFS) Medicare and Medicare Advantage.

What if Finds

• OOP costs for a typical MA enrollee are considerably lower than under FFS Medicare enrollees, and this difference is economically meaningful to beneficiaries.
  • Average monthly OOP costs were approximately 18-24 percent lower for beneficiaries in MA compared to beneficiaries in FFS Medicare. For example, in 2019 MA mean monthly OOP costs were $440, compared with $579 for FFS Medicare.
• Across all categories of health status, OOP costs were lower in MA compared with FFS Medicare without Medigap.
  • OOP costs for beneficiaries in FFS Medicare without Medigap who were in poor health were about $202 and $286 higher per month compared to enrollees in MA-PPOs and MA-HMOs, respectively.
  • For those in poor or fair health, OOP costs were lower in FFS Medicare with Medigap coverage than those without Medigap. 

Why it Matters

These results illustrate a key reason why beneficiaries may find MA more attractive than FFS Medicare–lower OOP spending. Research has found that there are a few known reasons behind lower OOP costs for MA enrollees, including the use of utilization management tools such as prior authorization. These tools are used to reduce costs, which then allows the plans to reallocate part of the savings towards things like reducing premiums or increasing supplemental benefits. However, the Medicare Payment Advisory Committee (MedPAC) estimated payments to MA plans in 2019 to be around 17 percent higher per beneficiary than the equivalent FFS beneficiary. The OOP cost reductions that this study quantified under MA, compared to FFS Medicare, accounted for about 75 percent of this excess spending. Although their results do not endorse higher MA spending, they show that beneficiaries are benefitting through lower OOP costs. The researchers suggest that OOP costs for MA enrollees may rise if MA payments are reduced to match FFS Medicare payment levels.

Spending on outpatient care—the care patients receive in a hospital outpatient department (HOPD), ambulatory surgical center (ASC), or a free-standing physician office—is one of the fastest growing components of health care costs. A new proposal in New York State seeks to rein in this spending for commercial payers, employers, and the millions of consumers they insure.

Background

One reason for increased spending on outpatient care is the vertical integration of health care markets, which occurs when hospitals acquire independent physician practices or other outpatient providers. Once acquired, these newly affiliated practices effectively become off-campus HOPDs which can charge significantly higher prices for the same services, as the health system they now belong to can leverage its market power in rate negotiations with insurers. These higher rates are typically split between two bills for standard office visits, with one bill covering the health care professional’s fee and another bill purportedly covering the hospital’s overhead, which can include intensive resources that these patients are unlikely to need. These combined charges are considerably higher than the bill for an office visit at a free-standing practice and drive up spending on outpatient care.

Policymakers have identified site-neutral payment as a possible solution to this dynamic. The underlying principle of site-neutral payment is that insurance companies, public programs, and other payers would pay the same rate regardless of whether the patient receives care at an HOPD, an ASC, or a free-standing physician’s office. This single payment amount for a given service is based on the amount insurers pay for care in the most-efficient, lowest-price setting and therefore reflects the resources providers need to provide safe and appropriate care, but not the higher overhead costs or pricing power emblematic of hospital-affiliated settings. Among major health insurance programs, only Medicare uses site-neutral payment in limited circumstances—but new legislation in the New York State Senate would introduce site-neutral payment to the New York commercial market  for a subset of outpatient care.

New York’s Legislation

As introduced by State Senator Liz Krueger, S 9952 would require health care providers, including hospitals, physician offices, and urgent care clinics, to bill no more than 150 percent of what Medicare would pay for a defined set of outpatient services that are safe and appropriate to provide in lower-cost settings, such as a physician’s office or ASC. (Providers would bill at the rate they have negotiated with commercial payers if this rate is less than 150 percent of Medicare’s payment level.) The bill would also prohibit providers from charging an additional facility fee for covered services. These billing limits apply to in- and out-of-network care and to care provided to people without health insurance. 

Services identified for site-neutral payment include evaluation and management services, wellness visits, and the 66 ambulatory payment classifications (APCs) the Medicare Payment Advisory Commission (MedPAC) identified in a 2023 report as appropriate for site-neutral payment. APCs, which group services based on clinical and cost similarity with a single payment rate assigned to each APC, are the foundation for Medicare’s outpatient prospective payment system (OPPS). The bill also anticipates that should New York State, the federal government, or MedPAC identify additional services that are safe and appropriate to provide in lower-cost settings, these services would be enfolded into the state’s site-neutral payment requirement. 

This proposal also stipulates that network contracts between health care providers and health benefit plans—defined in the bill as a plan offered by an insurance carrier, a third-party administrator acting on behalf of a plan sponsor, such as an employer or a labor union, or a nonfederal public plan such as a state employee health benefit plan—must specify that plans will not pay higher rates for this defined set of outpatient services. Payers also would not be allowed to pay facility fees for covered services. To ensure that hospitals cannot shift these charges to patients, S 9952 would require network contracts to prohibit providers from collecting uncovered charges related to the facility fee prohibition and site-neutral payment requirements from patients themselves.

A common concern with facility fee bans or other reimbursement changes for outpatient care is the impact these policy changes may have on the viability of rural and safety-net hospitals and other providers who may depend on revenue from institutional charges for HOPD-based office visits to remain solvent. Under this proposal, new site-neutral billing and payment requirements would not apply to public hospitals, sole community hospitals, critical access hospitals, rural emergency hospitals, and safety-net hospitals, nor to federally qualified health centers. 

Potential for Consumer, Employer, and Health Plan Savings

As introduced, the bill is likely to generate savings for commercial insurers and New York employers and provide important protections for consumers. According to an analysis by RAND, prices for outpatient services in New York State averaged 304 percent relative to Medicare in 2022. A payment cap of 150 percent of Medicare rates is therefore likely to reduce commercial spending on the outpatient services targeted by this proposal, although actual savings will depend on both current negotiated rates for this set of services, and whether negotiated rates for other services, not included in this reform, ultimately increase in response. These savings would accrue to insurance plans, employers, and other plan sponsors. For example, 32BJ Health Fund, a union-sponsored benefit plan, estimates that it would have saved $31 million, or two percent of its total health benefit expenditures, in 2022 if this rate cap had been in place.

This proposal could also provide real financial protection to consumers. Consumers with high-deductible health plans, who can be responsible for all allowed charges before they reach their deductible, would directly benefit from the proposal’s cap on payments for these outpatient services as well as the ban on facility fee charges. Similarly, patients with plan designs that include separate cost-sharing obligations for outpatient hospital charges would no longer owe that payment given the prohibition on facility fees. Consumers may also see reductions in their health insurance premiums should this reform result in significant reductions in outpatient spending. Post-implementation analysis of this proposal’s savings effects on insurers, employers, and consumers would inform future site-neutral payment efforts.

Monitoring Effects on Health Care Providers

Similarly, enactment and implementation of S 9952 would provide important insights on site-neutral payment’s effect on hospitals and health systems. As introduced, the proposal exempts rural and financially vulnerable providers from site-neutral payment requirements, while applying these requirements to the types of health systems that have driven vertical integration of the delivery system. The bill’s reporting requirements for pricing and utilization data, and its related call to the state that these data be made publicly available, will help answer questions about how these entities respond to site-neutral payment and what impact it may have on facility finances. 

Takeaway

If enacted into law, S 9952—the first detailed state-level site-neutral payment proposal for the commercial market—would not only create a new model for other states to consider but would also provide significant real-world experience with site-neutral payment. While it is too early to know whether S 9952 will pass the New York legislature, and what changes it might go through before enactment, it creates an important marker for other states grappling with increased spending on outpatient services. Should this proposal be implemented, employers, health plans, and consumers may realize savings and new financial protections.

By Leila Sullivan and Amy Killelea

In late October, the Departments of Health and Human Services, Labor and Treasury (the “tri-agencies”) published a proposed rule that would expand coverage of preventive services without cost sharing in the commercial market. Specifically, the proposed rule aims to reduce barriers to contraceptive services, including over-the-counter (OTC) contraceptives, and clarify allowable medical management techniques to better ensure consumers receive recommended preventive services without cost-sharing. Group health plans and health insurers would have to provide their enrollees with more choices of covered contraceptives, and for the first time ever, many health insurers and group health plans would be required to cover OTC contraceptives without a prescription or cost sharing. Furthermore, this proposed rule emphasizes the responsibility of plans and insurers to cover birth control methods without cost sharing at a time where many consumers report facing barriers to contraceptive coverage, including step therapy protocols and overly burdensome administrative processes. 
In addition to the proposed rule, the tri-agencies also released new guidance for health plans and insurers, aimed at strengthening preventive services protections and increasing plan compliance. Together, the proposed rule and the guidance signal a strong commitment to increasing access to preventive services without cost sharing. However, whether the next Administration will continue this push – particularly given the political discourse surrounding reproductive health – is unclear. Legal challenges to the ACA’s preventive services requirements are also making their way through the courts, with potential to undercut the entire preventive services mandate, including any expansion to OTC coverage.

Background

The Affordable Care Act (ACA) requires group health plans and insurers to provide coverage for preventive services that have been recommended by the United States Preventive Services Task Force (USPSTF), the Health Resources and Services Administration (HRSA), and the Advisory Committee on Immunization Practices (ACIP), without consumer cost sharing. Many of the covered preventive services for women relate to contraception, sterilization procedures, and “patient education and counseling for women with reproductive capacity, as prescribed by a health care provider.” 

More than ten years later, the impact of the ACA’s preventive services provision has been dramatic. In 2020, the Assistant Secretary for Planning and Evaluation (ASPE) estimated that almost 152 million people in the United States were enrolled in private health insurance plans covering preventive services with no cost-sharing, and several studies have found that the contraceptive coverage requirement substantially reduced out of pocket (OOP) spending for consumers obtaining contraceptives. Utilization of long-acting reversible contraception (intrauterine devices, arm implants, etc.) has increased, along with short-term birth control methods such as birth control pills and patches. However, the tri-agencies have received complaints that some plans and insurers are failing to provide required coverage. At the same time, since the ACA was enacted, the Food & Drug Administration has approved innovative new contraceptive medications and devices that can help people gain and maintain control over their reproductive health. This, in turn, has prompted the tri-agencies to propose further amended regulations and guidance. 

What’s new with the proposed rule?

First, these proposed rules would require plans and insurers to cover recommended OTC contraception without cost sharing or a prescription. Currently, health plans and insurers must cover OTC products without cost sharing when prescribed; this proposed rule would remove the prescription requirement. The tri-agencies cite recent developments in the reproductive health care realm as their reasoning for focusing on contraception, but state that they have not forgotten other preventive services. The tri-agencies are requesting comment on whether to limit the OTC coverage mandate to contraceptives or to apply the policy to all preventive services that have OTC options, including tobacco cessation products and breastfeeding supplies, among others. The Preamble to the rule also raises a number of logistical hurdles that could hinder access to OTC preventive services without cost sharing, including how to ensure that consumers do not have to foot the bill for the OTC product upfront and submit for reimbursement later (as was the case with COVID-19 at-home test kits).  

Second, the Departments are proposing that guidance on the use of “reasonable medical management techniques” by insurers be codified, and that these techniques, when used with respect to recommended preventive services, be easily accessible, transparent, and expedient throughout the exceptions process, allowing individuals to use products and services without cost sharing that their provider deems medically necessary for them, even if it is not usually covered by their plan. 

Third, these rules would require plans and insurers to disclose that contraceptives are covered without cost sharing, OTC or otherwise, through a self-service tool, and provide a phone number and internet page where enrollees can learn more about the specifics of their coverage. 

Billing and coding guidance to increase plan compliance with preventive services mandate

On the same day the tri-agencies released the proposed rule expanding coverage of OTC preventive services, they also released guidance (in the form of Frequently Asked Questions) aimed at improving compliance with the ACA’s preventive services coverage and cost-sharing requirements. The guidance addresses a growing challenge hidden in the billing and coding nuances of how insurance plans determine that a claim is, in fact, preventive. To get paid, providers and labs must submit a set of procedure and diagnosis codes to the insurance plan. The plan then reviews the codes to determine if the service meets coverage requirements, including whether the service qualifies as preventive. This process can get tricky when plans review services that are sometimes covered as preventive (no cost sharing) and sometimes as diagnostic (with cost sharing). For instance, a colonoscopy is considered preventive for people ages 45 years and older and therefore has to be provided free of cost sharing. But for individuals under 45, a colonoscopy is diagnostic and does not have to be covered without cost sharing. Similarly, there are a range of lab services that need to be provided for someone to be prescribed a pre-exposure prophylaxis (PrEP) medication to prevent acquisition of HIV. Those labs (which include sexually transmitted infection and kidney function tests) are free when they are provided as part of a PrEP prescription, but often have cost sharing if they are provided outside of a PrEP prescription. The process by which plans determine when a service is indeed preventive is anything but uniform, which means that many people are getting surprise cost sharing bills for services that should be coded as preventive.

In publishing the FAQ, the tri-agencies recognize and try to correct two related compliance challenges: 1) Providers must code claims correctly for a payer to know if a service is preventive or diagnostic, and 2) payers have variable rules and criteria for determining what constellation of procedure and diagnosis codes will be accepted to adjudicate a claim as preventive with zero cost sharing. The FAQ spells out the obligations plans have to accept industry coding standards that define a service as preventive (e.g., recognizing a modifier appended to a code to flag it as preventive). It also places the onus on a payer to request additional information if it cannot adjudicate a claim as preventive, rather than automatically denying the claim. Finally, the FAQ goes through a number of illustrative examples – including for PrEP, colonoscopies, contraceptives, and mammograms – to indicate the appropriate approach to evaluating claims as preventive. 

Conclusion

The proposed rule has the potential to further reduce barriers to access and cost of care for people enrolled in health insurance, and the FAQ is welcome news for consumers who are fed up with getting surprise bills for services they thought would be free. This proposed rule, if finalized, would be the largest expansion of contraception coverage under the ACA since its inception, but only time will tell if this rule and the accompanying guidance will solve the widespread compliance challenges for the ACA preventive services requirements. Furthermore, the political environment surrounding reproductive health and the change in Administration introduce uncertainty into whether the rule will be finalized as written, or at all. However, state regulators can play a role, particularly through oversight of insurers to ensure that plans are complying with these important consumer protections. 

Comments on the proposed rule must be submitted by December 27, 2024.

By Stacey Pogue, Vrudhia Raimugia, Justin Giovannelli, Kevin Lucia

To address longstanding gaps in coverage, the Affordable Care Act requires plans sold in the individual and small-group health insurance markets to cover a comprehensive set of “essential health benefits” (EHB) that reflect typical employer-based coverage. States define the exact scope of these benefits within federal parameters by designating an EHB “benchmark” plan. Federal rules effective in 2020 and 2026 give states additional flexibility to update their EHB benchmark plans, so coverage can keep pace with consumer needs and medical advances.

In a new issue brief for the Commonwealth Fund, CHIR’s Stacey Pogue, Vrudhi Raimugia, Justin Giovannelli, and Kevin Lucia explore how states have used this flexibility to expand EHB to address consumers’ needs or advance state health policy goals. The brief describes how recent rules changes and grant awards will help states and what challenges remain for states and consumers.  You can read the full issue brief here.

By Jack Hoadley, Rachel Schmidt, and Leila Sullivan

For the first time in 2023, over half of all Medicare beneficiaries were enrolled in a Medicare Advantage (MA) plan – the alternative to traditional Medicare, under which Medicare pays sponsors of private health plans to deliver Medicare benefits to enrollees. Medicare beneficiaries have an extensive choice among MA options that use networks of providers and often limit the use of care by requiring prior authorization for certain services or medications. The vast majority of beneficiaries who participate in traditional Medicare are enrolled in stand-alone private plans to receive prescription drug benefits through Part D (MA enrollees receive drug benefits through their MA plan). 

Private plans thus are an integral part of Medicare with 34 million beneficiaries enrolled in MA plans and another 23 million enrolled in Part D drug plans. In 2023, 58 percent of just over $1 trillion in total Medicare spending was used to fund the MA ($467 billion) and Part D programs (​$131 billion​).  

Compendium of Policy Proposals 

Overall support for the Medicare program is strong, and similar proportions of beneficiaries in traditional Medicare and in MA plans say their coverage fully meets their expectations. But there is more debate over how MA plans are paid, whether some plans constrain both low-value and high-value care, and whether the provision of supplemental benefits only to MA enrollees is inequitable or a tradeoff that beneficiaries make when accepting plans’ limited provider networks and use of prior authorization for some services.  

While the promise of Medicare Advantage is that care will be delivered more efficiently and thus at a lower cost, it remains unclear whether that promise is fulfilled, given studies showing that Medicare pays MA plans more per beneficiary than in traditional Medicare. For Part D, the redesign of the benefit structure that is fully implemented in 2025 may alter the trajectory of higher drug spending, but it is too early to have that answer. Cost concerns are heightened in light of projections that the Medicare Part A trust fund will have a shortfall as of 2036 and that rising Part B expenditures draw increasingly on individual and corporate income tax dollars. 

Many players in the Medicare policy world have ideas about how to improve the program, yet no one source has presented them all. With support from The Commonwealth Fund and Arnold Ventures, researchers with the Medicare Policy Initiative at Georgetown’s Center on Health Insurance Reforms (CHIR) created a comprehensive and timely ​​web-based compendium of legislative and administrative proposals with the goal of supporting members of Congress, executive branch officials, their staff, and others in the policy community as they consider improvements to the MA and Part D programs. 

The Georgetown team conducted a comprehensive review of recent congressional proposals, congressional and executive branch reports, and policy research and publications from stakeholders to identify policy proposals that reflect the range of ideas for transforming how private plans are used in Medicare. Using this literature review, we developed exclusion and inclusion criteria to create a set of policy proposals organized by related topics.  

Proposals are included in the compendium if: 

The compendium includes 70 proposals for both smaller-scale changes to how Medicare currently pays and oversees private plans, as well as larger-scale ideas that would take more time and political capital to put in place.  

How to Use the Compendium 

The web-based ​​compendium is divided into domains for Medicare Advantage and the Part D drug benefit. Under each domain, proposals are grouped into subject categories. Users are able to look at a summary of the proposals in each category and then view specific details about any individual proposal, including links to original source materials.  

For each subject category, we display a table with effects on beneficiaries in terms of access to plans, enrollee costs, supplemental benefits, and Part B premiums. This table also gives users a sense of the expected magnitude of federal savings or costs and identifies other affected stakeholders. Once navigating to the details page for each proposal, users will find more information, presented in a concise format.  

Looking Forward 

It is unclear whether Medicare will be high on the legislative agenda in 2025. The urgency of fiscal pressures or the desire to consider program improvements, however, may force action sooner than later. If so, our compendium offers policymakers and others a place to consider the range of policy proposals that affect Medicare Advantage and Medicare Part D. The compendium will be updated quarterly during 2025 to reflect new proposed ideas and any updated information about the listed policy options. 

View the compendium here.

Learn more about CHIR’s Medicare Policy Initiative here.

An estimated 41 percent of adults in the US are in medical debt because of unpaid medical or dental bills. Medical debt can profoundly disrupt lives; it can lead to bankruptcies and loss of homes or wages and force difficult choices between basic needs and medical bills. As of 2023, 19 states and the District of Columbia have stepped in to establish standards for hospital financial assistance programs, but even with standards in place, patients can have a difficult time accessing assistance. First, patients are not always aware of the financial assistance available to them. Second, even when patients are aware of the existence of a financial assistance program, their ability to access this benefit can be limited by the complexity of the application process.

In a recently published article on JAMA Internal Medicine, CHIR faculty member, Maanasa Kona, discusses the steps states can take to move the onus of accessing financial assistance away from patients and onto hospitals. The article also discusses the need for state regulation of predictive analytic tools that many hospitals now lean on to make financial assistance eligibility decisions.

On Wednesday, November 20, Georgetown University’s Center on Health Insurance Reforms (CHIR) hosted a presentation and panel discussion exploring how increased transparency in health care can be leveraged by consumers, employers, researchers, and states in support of cost-containment efforts. The event was part of an ongoing series focused on policy approaches to increase affordability of private health insurance coverage and health care services. 

Corey Ensslin of the House Energy and Commerce Committee provided context on the House-passed Lower Costs, More Transparency Act, and Stacey Pogue with CHIR provided an overview of transparency-focused policy approaches. The panel engaged in a lively discussion on the benefits of and limits to transparency. Panelists included Dr. Ge Bai of Johns Hopkins University, Gloria Sachdev, CEO of  Employers’ Forum of Indiana, Hemi Tewarson, Executive Director of the National Academy for State Health Policy, and Anthony Wright, Executive Director of Families USA. The panel was moderated by Reed Ableson of the New York Times.

Speakers explored several approaches to increase transparency with the goal of bending the cost curve, including by targeting opaque prices, ownership, sites of service, and more. Improving access to health care price data is a priority on the federal level as reflected in the House-passed Lower Costs, More Transparency Act, and states have led the efforts to make ownership of health systems more transparent. Speakers explained both why consumers and employers need additional transparency from health care industries, and how policymakers, regulators, and researchers can leverage transform to inform larger reform goals.

A recording of the event is available on CHIR’s YouTube channel. 

By JoAnn Volk and Tara Straw*

In the final 2025 Notice of Benefit and Payment Parameters, the Centers for Medicare & Medicaid Services (CMS) offered a new option for states to update their essential health benefits (EHB) benchmark plan to require coverage of routine adult dental benefits. Research has highlighted significant disparities in oral health outcomes for adults depending on their insurance status, race and income. For example, Black adults are twice as likely to have untreated dental caries as White adults. While there are multiple drivers of inequities in oral health, including limited access to dental providers, a primary barrier to accessing dental services is the cost of care, a barrier that can be reduced with dental insurance. 

In their latest Expert Perspective for the State Health & Value Strategies program, CHIR’s JoAnn Volk and Manatt Health’s Tara Straw provide an overview of the newly available flexibility and discuss considerations for states weighing whether to add a requirement that plans subject to EHB cover routine adult dental care.

You can read the full article here.

*Tara Straw is a Senior Advisor at Manatt Health.

American voters have just registered their dissatisfaction with increases in living expenses in the most direct way possible—at the ballot box. As policymakers consider a range of responses to this clear message from the American public, they can take concrete steps to address health care affordability for millions of Affordable Care Act (ACA) Marketplace enrollees. Critical enhancements to the premium tax credits (PTCs) that support enrollees’ premium payments on the ACA Marketplaces have resulted in significant savings for Marketplace enrollees and record-breaking health plan enrollment. These additional subsidies, which Congress first authorized in the American Rescue Plan Act (ARPA) of 2021 and extended in the Inflation Reduction Act (IRA) of 2022, will sunset at the end of 2025. If  Congress fails to make enhanced PTCs a permanent feature of the ACA, health insurance premiums will become less affordable for millions of Americans beginning with the 2026 plan year, and even Marketplace enrollees who do not qualify for PTCs will experience higher premiums in their absence.

Background

The vast majority of Marketplace enrollees—92 percent of enrollees in 2024—use PTCs to pay their health insurance premiums. The ACA makes PTCs available on an income-related sliding scale, with lower-income enrollees receiving more generous subsidies and paying a smaller proportion of their income for marketplace coverage. Under the original design, this support zeroed-out for enrollees with family incomes over 400 percent of the federal poverty level (FPL), which meant that no matter how high premiums climbed in their local market, these families did not receive help with their health insurance costs. Critics also noted that PTCs for lower-income families still left many facing significant premium expenses and out-of-pocket costs for needed health care.

Under ARPA and the IRA, Congress addressed these issues by extending PTCs to higher-income families whose premiums would otherwise exceed 8.5 percent of their annual income and by providing greater PTC support for lower-income families. These changes resulted in estimated average premium savings of $700 per enrollee in 2024 and dramatic enrollment increases in Marketplace plans. More than 7 million additional people are projected to enroll in 2025 plans using PTCs compared to likely Marketplace enrollment without these enhanced supports—a 71 percent increase in likely enrollment. Four million of these individuals would otherwise be uninsured. 

Critical Help with Health Care Costs

The ARPA enhancements to PTCs notably helped older adults and enrollees with incomes above the original ACA eligibility threshold. As originally passed, the ACA does not provide any financial help with Marketplace premiums for families with annual incomes over 400 percent FPL, or a little more than $80,000 a year for a two-person household. At the same time, health plans in most states may charge older enrollees up to three times more than they charge young adults for Marketplace coverage. Historically, this meant that older adults with incomes over 400 percent FPL could face premiums well over 8.5 percent of their income without any premium assistance from PTCs.  Since ARPA, however, enhanced PTCs have helped older individuals facing high premiums due to age-rating, with these subsidies lowering premiums for 60-year old Marketplace enrollees by an average of 57 percent and for 64-year-old enrollees by 60 percent.

Similarly, prior to ARPA, individuals and families who live in states with high health care costs, and therefore higher insurance premiums, could face unaffordable health insurance bills without any help from PTCs. PTC availability for those with family incomes over 400 percent FPL helps the residents of states with high benchmark premiums, such as West Virginia, Wyoming, Alaska, and Vermont.  

Enhanced PTCs have also helped millions of lower-income Marketplace enrollees by not only increasing premium affordability but also by making health care services more affordable. With more generous PTCs providing more help with health insurance premiums, enrollment in plans with lower enrollee cost-sharing has also increased. In particular, enrollment in plans with very low deductibles and other reduced cost sharing designs grew by 91 percent—from 5.6 million to 10.6 million enrollees—from 2020 to 2024.  

Enrollment Gains with Enhanced PTCs

Among the 7 million additional enrollees credited to enhanced PTCs are people who have historically been less likely to hold health insurance and faced significant affordability barriers to coverage. For example, coverage gains under enhanced PTCs include increased enrollment among people of color and among residents of states that have not expanded Medicaid eligibility as authorized by the ACA. Overall, researchers project that Black enrollment in 2025 will be 79 percent higher than it would have been under original ACA subsidy levels and estimate that Hispanic enrollment will be 61 percent higher. In addition, non-expansion states have seen notable increases in health coverage as health care premiums have become more affordable through more generous premium subsidies. For 2025, Black and Hispanic enrollment in Marketplace plans is expected to be 116 percent and 104 percent higher, respectively, than it would have been without enhanced PTCs. Similarly, White enrollment in Marketplace coverage will be 78 percent higher and enrollment among other racial and ethnic groups, including Asians and Pacific Islanders, Indigenous people, and multi-racial individuals, will be 70 percent higher in states that have not yet expanded Medicaid eligibility. 

Enhanced PTCs Reduce Prices for All Marketplace Enrollees

Beyond providing new and expanded help with Marketplace premiums, enhanced PTCs have held down premiums for all Marketplace enrollees. When help with premiums was less generous, and coverage therefore less affordable, healthier individuals were less likely to purchase coverage; upon implementation of ARPA’s enhanced PTCs, these lower-risk and lower-spending people were more likely to enroll in Marketplace coverage. These new enrollees, in turn, improved the overall risk pool and reduced per person health spending for Marketplace enrollees. Enhanced PTCs, according to one estimate, reduce average total premiums by 5 percent before subsidies are applied—thus also lowering premiums and improving affordability for individuals who do not qualify for premium support.

Affordability and Coverage Risks if Congress does not Extend Enhanced PTCs

Millions of Marketplace enrollees will face higher premiums and, in some cases, cost-sharing responsibilities, should enhanced PTCs sunset as envisioned by current law. A  recent analysis of states using the federally-facilitated Marketplace (i.e., HealthCare.gov) determined that enrollees in 12 states would see their out-of-pocket premium payments more than double without the additional support of enhanced PTCs. Premium increases could be significantly higher, depending on the enrollee’s age, income, and state of residence. On average, premiums for 50-year-old, middle-income enrollees in the second-lowest cost silver plan in West Virginia, for example, could increase by 179 percent. In the face of significant premium increases, Marketplace enrollees will also be less able to afford plans with reduced consumer cost-sharing at the point of service. (See this zip-code level map for more information on likely premium increases.)

In the face of these increased costs, many Marketplace enrollees will go without health insurance altogether. The  number of subsidized Marketplace enrollees is likely to drop by one-third, from 21 million to 14 million individuals, by plan year 2027; approximately 4 million will become uninsured, with the greatest declines in coverage occurring in states that have not expanded Medicaid eligibility, among Black and Hispanic enrollees. And while states currently use their own funds to buy-down deductibles, ensure that critical workers can obtain zero-premium coverage, offer additional premium subsidies to young adults, and further reduce premiums for lower-income residents, these state affordability initiatives currently complement, and cannot take the place of, enhanced federal premium supports. 

Takeaway

Enhanced PTCs have made Marketplace coverage more affordable and accessible to millions of low- and moderate-income enrollees, but the looming sunset of these more generous premium subsidies threatens family budgets and economic security, while foreshadowing dramatic coverage losses and higher premiums for enrollees who do not receive PTCs. Permanently authorizing enhanced PTCs is an immediate and impactful step on affordability that policymakers of all persuasions can make a shared priority.

By Leila Sullivan and Samantha Hagberg

The leaves are falling but the latest health policy research is evergreen! Last month we read about health system competition in metropolitan areas, health care affordability prior to the American Rescue Plan (ARPA,) how high deductible health insurance can exacerbate racial and ethnic wealth disparities, and about unmet dental, vision and hearing needs among low-income Medicare Advantage beneficiaries.

One or Two Health Systems Controlled the Entire Market for Inpatient Hospital Care in Nearly Half of Metropolitan Areas in 2022

Jamie Godwin, Zachary Levinson, and Tricia Neuman. KFF. October 1, 2024. Available here.

This KFF article analyzed health system market competitiveness using RAND hospital data from 2022 and the American Hospital Association’s (AHA) Annual Survey Database. Researchers measured competition in three ways: The share of metropolitan statistical area (MSAs) controlled by a small number off health systems, the level of market concentration in MSAs based on the Herfindahl-Hirschman Index (HHI), and the share of hospitals affiliated with health systems over a span of time. 

What it Finds

• Between 1-2 health systems controlled the entire market for inpatient hospital care in nearly half (47%) of metropolitan areas in 2022.
• In more than 4-5 metropolitan areas (82%), 1-2 health systems controlled more than 75% of the market; these markets have met the definition of highly concentrated markets.
• In 79% of MSAs (with populations less than 200,000), 1-2 health systems controlled the entire market for in-patient hospital care in 2022.
• Nearly all (97%) metropolitan areas had highly concentrated markets for inpatient hospital care when applying HHI thresholds from antitrust guidelines to MSAs.
• For example, in Austin, TX, (2.4 million residents) two systems (HCA Healthcare and Ascension Health) controlled 85% of the inpatient hospital care market, though Austin is home to more than four health systems.

Why it Matters

National health spending rose to $4.5 trillion in 2022 and is projected to grow faster than GDP through 2032. Not only is this causing a rise in healthcare costs for individuals, but also employers, states, and the federal government. Almost one third of healthcare spending is funneled into hospitals. This analysis makes plain the extent to which hospitals in the U.S. have consolidated their market power, which they then use to demand higher prices from commercial insurers and health plans.

Health Care Affordability in Employer versus Private Nongroup Coverage before ARPA

Michael Karpman, Fredric Blavin, Jessica Banthin, and Vincent Pancini. Urban Institute. October 15, 2024. Available here.

This Urban Institute report compares health care affordability between families with employer-sponsored insurance (ESI) and those with private non-group coverage received through or outside of the health insurance Marketplaces. Using Medical Expenditure Panel Survey Data from 2016-2019, before the enhanced premium tax credits in the American Rescue Plan Act (ARPA) of 2021 were enacted, researchers analyze affordability measures among nonelderly adults in families where every individual had continuous full-year ESI coverage or a non-group plan.

What it Finds

• Adults with non-group coverage reported larger average per-person out-of-pocket (OOP) premiums ($2,912 vs $1,126) and health care costs ($1,010 vs $825) than adults with ESI. 
• Non-group enrollees were more than twice as likely as those with ESI to report paying at least 10% of family income towards health care costs (10.5% vs 3.8%). Among low-income adults, 24% of those with non-group coverage reported OOP health care costs exceeding 10% of income. 
• More than 1 in 3 adults with non-group coverage (36.4%) and over 1 in 5 adults with ESI (21.8%) reported delayed or forgone medical care, dental care, or prescription drugs they needed in the past 12 months because of high costs. In families with income below 400% of the federal poverty level, 27% experienced delayed or forgone care with ESI, while 41.7% experienced the same effects with non-group coverage. 
• Adults with non-group coverage were more likely than those with ESI to report problems with paying family medical bills in the past 12 months (10.2% vs 6.9%).
• Non-group enrollees had lower average incomes and greater health needs than those with ESI; the higher prevalence of affordability challenges among non-group enrollees may reflect their greater likelihood of choosing high-deductible health plans (44.6% vs 36%) and lower rates of dental coverage (24.4% vs 76.8%).

Why it Matters

This analysis shows that families with commercial health insurance face significant affordability challenges. People with individual market (non-group) insurance have had particular challenges paying for and accessing health care, compared to people with ESI. However, the enhancement of Marketplace premium tax credits enacted in ARPA, and later extended through 2025 in the Inflation Reduction Act, significantly improved affordability for non-group market enrollees. As reported, ARPA subsidies reduced out-of-pocket silver plan premiums by an average of about $1,000 for low- and moderate-income Marketplace enrollees. Over the next year, Congress must decide whether to extend the ARPA/IRA subsidies beyond 2025. If Congress fails to extend these subsidies, most of the 21.4 million current Marketplace enrollees will experience an increase in premiums, and the Congressional Budget Office has projected that millions will lose their coverage.

High-Deductible Health Insurance May Exacerbate Racial And Ethnic Wealth Disparities

Naomi Zewde, Sergio Rodriguez, and Sherry Glied. Health Affairs. October 2024. Available here. 

This Health Affairs study analyzes the impact of high-deductible health plans through the lens of racial and ethnic wealth disparities. Using Medical Expenditure Panel Survey data, researchers evaluate the net worth (from 2011-2018) and financial assets (from 2011-2016) of families with private insurance and those in high-deductible health plans (HDHP). 

What it Finds

• Low-income households had little in financial holdings; financial assets were less than $1,000 for both Black and Hispanic families in the first income quartile.
• White families ($4,100) in the lowest income quartile held financial assets that were approximately 350% greater than those held by Black ($2,200) or Hispanic ($2,000) families at a comparable level of income.
• Black and Hispanic families held substantially less wealth than White families. Black households held $68,500 in net worth at the median — approximately half the median wealth of White households ($126,200). Hispanic households fell between the two, at $88,700.
• Across all income levels, Black and Hispanic households with an HDHP and a health care savings account (HSA) held between $34,000 and $40,000 in financial assets; on the other hand, White households with an HDHP and HSA had just over $55,000 in median financial assets.

Why it Matters

This study indicates that low-income Black and Hispanic families with HDHPs and without the disposable income to contribute to HSAs, are particularly financially vulnerable. Among people with private insurance, underlying Black-White and Hispanic-White wealth gaps create structural disparities in the affordability of health services. Policy initiatives, such as the Inflation Reduction Act’s enhanced premium tax credits, may reduce out-of-pocket liabilities. This in turn can mitigate households’ need to rely on accumulated wealth to cover healthcare expenses. At the same time, proposals to expand HSAs primarily benefit higher income, White households. Policymakers should consider initiatives that reduce the need for families to maintain significant financial assets in order to access care.

Cost-Associated Unmet Dental, Vision, And Hearing Needs Among Low-Income Medicare Advantage Beneficiaries

Avni Gupta, Kenton J. Johnston, Diana Silver, David J. Meyers, Sherry A. Glied, Jose A. Pagan. Health Affairs. October 2024. Available here.

This Health Affairs study looked at data from the 2018-19 Medicare Current Beneficiary Survey (MCBS) to determine the likelihood that low-income beneficiaries report unmet needs because of cost for dental, vision, and hearing services, as well as whether a plan’s star ratings are an indicating metric in income-based disparities.

What it Finds

• Overall, 11%, 4%, and 2% of beneficiaries reported unmet dental, vision, and hearing need, respectively, due to cost considerations.
• Regardless of plan benefit generosity, low-income beneficiaries were more likely than high-income beneficiaries to report an unmet need because of cost. After adjustment, beneficiaries with incomes of 200% of poverty or less were 6.2, 1.8, and 1.9 percentage points more likely to report a dental, vision, or hearing unmet need, respectively, because of cost.
• The authors found no evidence that higher star ratings were consistently associated with lower unmet need because of cost, and more beneficiaries with an unmet dental need because of cost were enrolled in low-star plans compared to those without unmet dental need because of cost.
• The authors found that dental unmet needs due to cost, but not vision or hearing unmet needs, were lower among beneficiaries enrolled in higher star-rated plans. However, this result did not seem to result from larger quality bonuses that were paid based on previous-year ratings.

Why it Matters

A reason for the popularity of Medicare Advantage (MA) among low-income beneficiaries is that  plans often offer supplemental benefits at minimal or no premiums. However, data are not available about enrollees’ access to and use of these supplemental benefits, or the quality of those benefits. Supplemental benefits for dental, vision, or hearing services might not be contributing to equitable access for beneficiaries across income levels. Enrollment in plans, rated highly in the previous year and therefore receiving higher quality bonuses, does not lower the incidence of dental, vision, or hearing unmet needs because of cost. Currently, supplemental benefits are not standardized, contributing to Medicare beneficiary confusion amid an already complex choice landscape. Similar to the ACA Marketplaces, the percentage of MA beneficiaries who report comparing plans and benefits is lower among low-income beneficiaries, leading to them to remain in their existing plan, despite better options potentially being available.

By Stacey Pogue and Nadia Stovicek

Many Americans struggle to access health care due to high and rising costs. Half of adults in the U.S. find it difficult to afford health care, and one in four skipped or put off needed care in the last year due to cost. As health care has become less affordable for families and employers, state policymakers have become more focused on strategies to lower commercial health care prices, including by increasing transparency of prices and shining a light on other opaque features of the health care system.  

Transparency approaches have often targeted consumer health care decisionmaking, though evidence suggests that transparency efforts to encourage smarter consumer shopping have minimal impact on costs. States are also pioneering ways to increase transparency that can be leveraged more broadly by employers, researchers, regulators, and policymakers, to help them identify the drivers of health care cost growth and better target solutions. While transparency-focused approaches are a relatively weak cost-containment tool, they can serve as a means, not an end, informing more robust policy actions. Transparency-focused approaches also tend to have bipartisan support and often require less state investment or infrastructure than other strategies, making progress possible in many state political environments.

This blog post reviews a set of options for state policymakers seeking to advance health care transparency–of prices, ownership, and billing–including options that better equip employers, researchers, regulators, and policymakers to rein in commercial health care prices.

Ownership Transparency

Rampant consolidation and the growing corporatization of health care providers, including hospitals and physician practices, has reduced competition and led to higher prices. State policymakers and regulators who want to understand consolidation or encourage competition need accurate information on the ownership and control of provider entities, but it is often hard to come by. 

A physician’s practice today could be owned by a health system, an insurance conglomerate, a private equity firm, or other corporate entities, and ultimate ownership or control can be obscured by a complex web of interrelated corporate entities. There are incomplete, yet publicly available sources of ownership information for hospitals, but not for physician practices, making it hard for states to understand or respond to trends that can drive prices higher, like vertical integration and private equity acquisitions.

States seeking to understand their health care markets or encourage competition have increased ownership transparency through two routes. First, several states require health care entities to notify the state of certain material changes, like mergers and acquisitions, allowing the state to foresee changes to competition. 

Second, states can require providers to annually or periodically report ownership information. This approach can help states understand the entities and dynamics across the health care market today and track changes over time. Massachusetts uses both approaches, and its program to systematically collect and publicly post ownership, contracting, and clinical relationships of large provider organizations serves as a state model. The Indiana House of Representatives passed a bill this year, which later died in the Senate, that would have required health care organizations to annually disclose entities that have an ownership or controlling stake, including private equity firms. The information would have been publicly available on a state website. 
The National Academy for State Health Policy (NASHP) recently updated its state model law for health care merger oversight. This comprehensive model contains a range of provisions, including requirements for notifying state entities of proposed material changes and establishing an annual ownership reporting mechanism.

Billing Location Transparency

Often when patients get care at a hospital, they get two bills: one from the physician(s) who provided care and another from the hospital to cover the overhead of running 24/7 hospital operations (the “facility fee”). As hospitals buy up physician practices and rebrand them as hospital outpatient departments, patients are increasingly exposed to facility fees for routine outpatient care. (The physician bill also may increase in these scenarios because health systems have greater leverage to negotiate higher prices from insurers than independent practices.)
States have a variety of approaches to reform facility fees: banning them for certain settings or services, limiting how much consumers must pay out-of-pocket, and requiring greater transparency in hospital billing or patient communications. Four states– Colorado, Maine, Nebraska, and Nevada–use a billing transparency approach. They require off-campus outpatient departments to indicate the location where care was provided on medical claims forms, often by using a unique national provider identifier (NPI) number that differs from the main hospital campus’ NPI. This approach creates a paper trail to allow payers, employers, researchers, and policymakers to better understand where and in what contexts patients are charged facility fees. In addition, 12 states require providers to increase transparency by notifying patients who may or will be charged a facility fee through on-site signage or other means, while six states have adopted annual reporting requirements to shed more light on facility fee billing.

Building on Federal Price Transparency

Congress and federal agencies have taken several steps in recent years to increase transparency of health care prices, but price information is often still elusive. As the primary regulator of both hospitals and health insurers, states can play a key role in facilitating price transparency, by enforcing federal requirements in their state or by building on them to make them more effective.

Federal Price Transparency Rules

Federal rules have required hospitals (since 2021) and health plans (since 2022) to post their prices, including previously proprietary negotiated rates. Hospitals and payers must produce price information in a consumer-friendly format meant to help patients shop. They both must also publicly post price data in machine-readable files, including data pertaining to self-funded employer plans that have historically fallen outside states’ regulatory power. These files are meant to give researchers, analysts, and app developers ready access to raw data, so they can translate it into actionable insights for consumers, employers, regulators, and policymakers. This vision is still largely unrealized because health plan files are unwieldy and inaccessible to all but a few users, and hospital files are often incomplete and, until very recently, not standardized.

Several states have codified, and even built on, federal price transparency requirements aiming to improve hospital compliance. Some states have extended federal hospital price transparency requirements to additional provider types. For example, Florida and Minnesota have both extended certain price transparency requirements to ambulatory surgical centers, and Minnesota went further, extending requirements to large practices that provide lab, imaging, oncology, anesthesia, dental, and certain surgical services.  
Colorado has built on federal price transparency requirements in several ways. It requires hospitals to add Medicare prices to their machine-readable files, conducts audits of hospitals’ data and posts information on compliance, and prohibits hospitals that are out of compliance from pursuing medical debt collection against patients. Earlier this year, Colorado enacted a law requiring health insurers to submit price transparency files to the state’s department of insurance twice a year using a standardized template. The department oversees several initiatives to lower costs for health care and coverage that could be informed by price data. Colorado has also created the first state-sponsored web-based tool in the nation to make federal hospital price transparency data available free-of-charge. The tool displays hospital prices by service and payer, including charges, discounted cash prices, negotiated rates, and Medicare rates, that are otherwise hard to access directly and expensive to buy from commercial data aggregators.

Consolidated Appropriations Act of 2021 Transparency Provisions

States have also taken action to enforce or build on various federal provisions from the Consolidated Appropriations Act (CAA) of 2021 intended to shed more light on health care prices. Three states passed laws this year that provide examples of possible state approaches.

The CAA prohibited the use of “gag clauses” that have historically restricted employers’ access to their own medical claims data, limiting their ability to evaluate their plan’s performance on cost and quality. Despite this ban, employers report ongoing barriers getting needed information from third party administrators (TPAs). Indiana passed a law earlier this year that ensures an employer can request an annual audit of its TPA contract and requires the TPA to provide unfettered access to information, including prices billed by and paid to providers as well as fees charged by the TPA. 

A new Colorado law requires health insurers to submit data on prescription drug and health care spending–referred to as the RxDC report–to the state department of insurance. The CAA established the RxDC report and requires health insurers and health plan sponsors to annually submit it to federal agencies that will use the information to inform upcoming federal reports on prescription drug cost trends.
Florida passed a bill this year that strengthens a requirement that facilities give patients a good faith estimate of charges shortly after services are scheduled, and requires health insurers, in turn, to use that estimate to produce an “advanced explanation of benefits,” or AEOB. An AEOB, established in the CAA, will give consumers upfront information about their expected out-of-pocket costs for a medical service by combining information from providers about their charges and from health plans about the consumer’s coverage. Florida requirements will take effect once delayed federal regulations are finalized.

All-Payer Claims Databases

Another state transparency approach is to create an all-payer claims database (APCD) that captures data on health care prices and utilization within a state from medical claims paid by commercial health insurers, public payers, and some employer health plans. Claims data differs from price transparency data, though there is overlap. Price transparency data focuses on negotiated rates for services while claims data collected in APCDs sheds light on prices actually paid in practice, the volume of each service delivered, and even certain quality indicators. APCDs are powerful tools to help policymakers, researchers, and other stakeholders understand how a state’s health care system performs and advance cost containment goals. The 2016 Supreme Court ruling in Gobeille v. Liberty Mutual Insurance Company, struck a blow to the utility of state APCDs, exempting self-funded employer plans, which cover the majority of workers, from state requirements to report data to APCDs. 
Currently, 25 states have or are implementing an APCD, and they use their APCDs to increase transparency and target policies in a variety of ways. For example, both Utah and Colorado use their APCDs to track trends in low-value or wasteful health care spending.

Takeaways

While transparency is not the strongest lever available to states seeking to contain health care cost growth, it is a source of rare bipartisan agreement and can be advanced in various state political environments. Transparency also provides the foundation needed for more robust policy and regulatory approaches. States have been innovative in their approaches to increasing transparency of health care prices, ownership, and billing, outlining a menu of options for policymakers, advocates, and stakeholders to consider as they prepare for 2025 state legislative sessions.

By Stacey Pogue and Nadia Stovicek

In recent years, Congress and federal agencies have taken several steps to increase transparency of health care prices, but price information is often still elusive. Health care price transparency is one of the rare areas of bipartisan agreement among policy makers. It enjoys strong public support too. The vast majority of Americans–95 percent–think it is important for Congress to make health care prices more transparent. 

In the waning weeks of the 118th Congress, this blog post reviews existing federal price transparency rules and proposals in front of Congress to codify them, with a focus on how legislative proposals could make already-required price data more accessible and usable for employers, regulators, and policymakers seeking to hold down health care costs. 

Federal price transparency rules

For the last few years, federal rules have required hospitals and health plans to post health care price information in two different formats: 1) a consumer-friendly format meant to help patients see costs upfront and shop for care, and 2) in machine-readable files (MRFs). Hospital Price Transparency rules took effect in January 2021. They require hospitals to publicly post payer-specific negotiated rates, gross charges, discounted cash prices, and minimum and maximum negotiated rates. Transparency in Coverage (TiC) rules took effect in July 2022. They require health insurers and group health plans to publicly post MRFs with prices for all covered items and services, including in-network negotiated rates, out-of-network allowed amounts and billed charges, and prescription drug negotiated rates and historical net prices. 

Challenges with price transparency data

Machine-readable file requirements are meant to give researchers, analysts, and app developers ready access to raw data, allowing them to translate it into actionable insights for consumers, employers, regulators, and policymakers. Yet now, a few years down the road, this vision is still largely unrealized. Actionable information that could inform cost-containment efforts is not readily and widely available. 

Health plan MRFs are unwieldy, inflated by irrelevant and redundant data, and inaccessible to all but a few users. Hospital files are often incomplete and, until very recently, not standardized. While several commercial data vendors specialize in ingesting and parsing this huge quantity of data, they reportedly charge hefty fees, limiting access to all but the best-resourced stakeholders. 

Status of related bills in Congress

On the Congressional level, two bills work to codify and improve price transparency rules through stronger enforcement, standardization of data, and other strategies. In December 2023, the House overwhelmingly passed the bipartisan Lower Costs, More Transparency (LCMT) Act, which includes price transparency among many other provisions. Around the same time, Senator Mike Braun (R-IN) introduced the Health Care PRICE Transparency Act 2.0 (PRICE Act 2.0), with Chairman of the Senate Health, Education, Labor, and Pensions Committee Bernie Sanders (I-VT) and other bipartisan co-sponsors. While the Senate bill has not been heard in committee, it has continued to gain cosponsors. It is clear that bicameral and bipartisan support exists for making progress on health care price transparency. 

Vetted, bipartisan transparency-related provisions from these bills were considered for inclusion in a March funding bill to avert a partial government shutdown, but ultimately they did not make the cut. Now, as Congress returns for a lame-duck session, it will presumably turn to items that it must pass before the end of the year. Supporters may try again to advance vetted transparency provisions on must-pass year-end bills. Given the level of both Congressional and public support for price transparency, if it is not ultimately taken up by this Congress, it may reemerge in the next one.  

Legislation builds on existing rules

Relevant provisions of the House LCMT Act and Senate PRICE Act 2.0 codify rule requirements that hospitals and health plans post prices in both machine-readable files and a consumer-friendly format. 

Both bills also build on existing price transparency requirements in somewhat different ways. A side-by-side summary of select provisions in federal rules and the House and Senate bills is available here. 

Building on Transparency in Coverage rules

Beyond codifying TiC rules, both the LCMT Act and PRICE Act 2.0 require some changes recommended by experts to make data in TiC MRFs easier to access and use. Both bills direct relevant federal agencies to limit MRF file sizes, which are generally enormous today. On top of that, the House bill directs federal agencies to reduce data redundancy, and the Senate bill removes “ghost codes,” rates from providers who have not submitted any claims for a specific item or service (e.g. the rate for a cardiology code billed by a podiatrist, or vice versa). 

The House bill requires health plans to take reasonable steps to put price transparency information in plain language and make it accessible to people with limited English proficiency or disabilities. 

Both bills also seek to improve compliance. They require health plans to attest that information is accurate and complete. The House bill also directs the Government Accountability Office (GAO) to report on TiC compliance and enforcement efforts. The Senate has more rigorous oversight. It requires the Department of Health and Human Services and Department of Labor to audit MRFs from at least 20 issuers and 200 group health plans, respectively, and report findings to Congress annually.

Building on Hospital Price Transparency rules

Beyond codifying Hospital Price Transparency rules, both the House and Senate bills direct further data standardization. They both require the Centers for Medicare and Medicaid Services (CMS) to establish uniform methods and formats for both consumer-facing information and MRFs that ensure accessibility and usability. They require CMS to determine how hospitals must report prices for bundled services and alternative payment arrangements. They also both require prices to be expressed in dollar amounts, even when they are set as a percentage of charges, for example.

The Senate bill requires hospitals to update price information monthly, as opposed to annually. The Senate bill also explicitly prohibits a current rule provision that deems hospitals compliant with posting prices of shoppable services if they provide a web-based “price estimator tool” instead.

Both the House and Senate bills seek to give self-pay patients more useful information. Today, if a hospital does not offer a discounted cash price, it must instead post the gross charge. The House bill directs these hospitals to post the median amount charged to self-pay patients, while the Senate bill directs them to post the minimum amount accepted from self-pay patients. The Senate bill requires hospitals to accept their discounted cash price as payment in full from any patient that chooses to pay in cash, regardless of whether they have coverage. The House bill directs hospitals to take reasonable steps to make price information accessible to people with limited English proficiency. 

Both the House and Senate bills include more rigorous monitoring and enforcement actions to increase hospital compliance. They both require CMS to review hospital compliance, annually in the Senate bill and every three years in the House bill. They also both significantly increase financial penalties for noncompliance. Currently, a hospital with 550 beds that is out-of-compliance for a full year could face a $2 million penalty. The same hospital under the House and Senate bills could face a $5 million penalty and could be subject to an additional $5-$10 million in penalties if CMS determines that the hospital was knowingly and willfully noncompliant multiple times during the year. 

Both the House and Senate bills extend certain price transparency requirements to ambulatory surgical centers (ASCs), labs, and imaging centers. ASC posting requirements generally mirror those of hospitals, including prices in both a consumer-friendly format and a MRF. Labs and imaging centers must post certain prices for CMS-specified shoppable services. CMS can levy penalties for noncompliance of up to $300 per day.   

Looking ahead 

While price transparency is a relatively weak cost-containment strategy, it is nonetheless important. It gives basic and long-overdue information to consumers who must navigate a fractured health care system and shoulder increasing out-of-pocket costs. It can also allow employers, researchers, regulators, and policymakers to identify the drivers of health care cost growth and better target solutions.

Federal price transparency rules have withstood legal challenges and been embraced by both the Trump and Biden administrations. While it’s possible that industry stakeholders could try to leverage the Supreme Court’s recent ruling overturning the Chevron doctrine to mount new legal challenges against price transparency rules, it is not clear that any potential challenger stands to benefit from that ruling. Even if these rules do not appear at particular risk today, enshrining them into law increases certainty and consistency for stakeholders. Perhaps even more valuable are bill provisions that would make already-required data more accessible and usable for payers and policymakers. 

CMS has strengthened the Hospital Price Transparency rules over time to improve data standardization and hospital compliance, but room for improvement still exists. The TiC rules have followed a different trajectory. They have not been refined over time. The TiC rules required far more standardization at the outset, and payers appear to have complied more readily, though oversight is challenging. To date, TiC data have been largely a missed opportunity, inaccessible to all but the best-resourced health care stakeholders. 

The price transparency provisions in the LCMT Act and PRICE Act 2.0 continue and strengthen existing efforts. They are not groundbreaking, as initial federal price transparency rules were, but neither are they a mere codification of existing rules. Both bills contain a commitment to, and needed direction for, making price data even more accessible and usable to a wide range of audiences. The bills would take the next step in an iterative process to increase transparency in ways that could ultimately be better leveraged by employers, policymakers, regulators, and consumers to help contain health care prices.

They say that health care wasn’t on the ballot this election. Political scientists will write dissertations about what Americans were voting for (or against) at the polls this year, but by most accounts, health care was not high on the list of priorities. And yet, when it comes to health care access, equity, and affordability, there is so much to lose. In light of the election results, it will require concerted and aggressive efforts among policymakers and advocates to preserve gains in insurance coverage, improvements in health equity, and enhanced health care affordability. At CHIR, our mission has always been, and will remain, to support those efforts through balanced, evidence-based research, analysis, and strategic advice.

Health Access, Equity, and Affordability: Ending on a High Note

The Biden administration will leave office with a record of unprecedented progress in health coverage and affordability. The numbers of people who are uninsured is at an all-time low. Coverage through the Affordable Care Act (ACA) Marketplaces is at an all-time high, thanks in large part to the enhanced premium tax credits (PTCs) enacted in 2021 and extended through 2025 in the Inflation Reduction Act. The enhanced PTCs have dramatically improved coverage affordability for millions of people, saving the average Marketplace enrollee $700 per year.

We’ve also seen significant progress reducing historic inequities in health coverage access for people of color. Under the Biden administration, the number of Latino enrollees in the Marketplaces increased 185 percent, the number of Black enrollees grew 204 percent, and enrollment for American Indian/Alaska Native communities doubled. These gains are attributable to the enhanced PTCs, but also to the significant investments the Biden administration has made in Marketplace outreach and assistance, as well as reductions in paperwork burdens that disproportionately hinder enrollment among people of color. In a recent regulation, the Administration opened the doors for “Dreamers” – Deferred Action for Childhood Arrivals (DACA) recipients – to obtain affordable Marketplace coverage.

This administration ushered in dramatic improvements in affordability for Medicare enrollees, including an annual cap on prescription drug costs, access to vaccines without cost-sharing, and a $35 limit on monthly insulin prescriptions. The Inflation Reduction Act also gave Medicare new powers to negotiate prices with pharmaceutical manufacturers, which is projected to save enrollees $1.5 billion in personal out-of-pocket costs in 2026 alone.

The Biden administration has also consistently defended the ACA’s protections for people with pre-existing conditions, cracking down on “junk plans” that won’t cover people in less-than-perfect health. The current U.S. Department of Justice is also defending in court the ACA’s requirement that insurance companies cover, without cost-sharing, recommended preventive services and life-saving vaccines.

Finally, the administration’s implementation of the No Surprises Act has protected millions of Americans from unexpected medical bills from out-of-network providers. And they continue efforts to ensure that the law’s dispute resolution process does not result in higher overall premiums for consumers, despite legal challenges.

The Work to Come: Navigating Uncertainty, Protecting the Progress Made

The exact health care agenda of the incoming Trump administration is unclear, but policy proposals from the Heritage Foundation’s “Project 2025” and the Republican Study Committee have called for significant cuts in funding for health insurance coverage and a roll back of the ACA’s pre-existing condition protections, as well as the elimination of critical protections for LGBTQ+ people, pregnant individuals, and those who have had abortions or miscarriages. These proposals, if implemented, would result in a significant loss of health care access and an increase in health care costs for millions of Americans.

Over the coming weeks and months we will learn more about the new administration’s health care agenda. For CHIR, we stand ready to work with policymakers and advocates of all political persuasions to preserve the historic gains made in the past four years and build on that progress, at both the federal level and in the states. In acknowledgment of the uncertainty wrought by last night’s election results, and the tremendous amount of work ahead, we share below a quote from the late Senator Edward Kennedy. The Senator was a key architect of the ACA and the most tireless advocate for universal, equitable health coverage in our lifetimes:

“For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives, and the dream shall never die.”

By Linda J. Blumberg and Kennah Watts

The U.S. health care system, by and large, does not regulate the prices providers charge in the commercial market, nor oversee private insurer claims decisions, particularly denials. Combined with the accelerating corporatization of health care delivery, this regulatory vacuum has fostered an ever-growing market for intermediary businesses to help clinicians navigate the processes of filing claims and maximizing reimbursements. At the same time, insurers increasingly contract with intermediary businesses in an effort to manage utilization and up their own margins. These competing “profit-enhancing middlemen” are likely increasing costs for consumers and spending in the private sector health system as a whole.

These for-profit businesses charge overhead fees or percentages on the services they provide, which can generate tremendous profits when compounded over billions of claims and payments. While some of these middlemen receive much public attention, such as pharmacy benefit managers (PBMs) and third-party administrators (TPAs), this article focuses on three other lesser known but equally concerning profit-enhancing industries: revenue cycle management, claims management, and claims repricing.

Providers Use Profit-Enhancing Middlemen To Maximize Reimbursements Per Claim

Providers and provider systems increasingly use revenue cycle management (RCM) companies to manage patient encounters – from preregistration through claims submission and collection – to maximize reimbursement and increase practice cash flow. Outsourcing these services with RCM companies also reduces individual practice and system needs to hire specific personnel to perform an array of administrative tasks. Handling these responsibilities directly can often feel onerous, particularly for modest size providers, given the complexities and variability of private insurance billing.  RCM companies promise to increase the efficiency of these operations. RCM software and management services leverage coding, marketing, insurance verification, claims filing and management, and payment collections processes to achieve maximum reimbursement and cash flow. However, in some instances, these services can lead to upcoding of claims, a practice where providers submit claims to insurers for services of greater intensity than those actually performed.

Of course, increased revenue through increased code intensity and more aggressive collections efforts results in higher spending on claims by insurers and patients. These services also carry administrative costs. RCM companies can be paid in an array of ways, from flat fees per patient or claim, percentage of collections (typically 5 percent to 10 percent), to monthly subscription fees. Some may receive bonuses or incentive payments for exceeding revenue or collection expectations. RCM approaches, therefore, both increase provider payments and may increase provider costs that must be incorporated in some respect into clinical service charges. Ultimately, these higher costs are certain to be reflected in higher premiums to consumers.

These costs are not insubstantial: by one estimate, in 2023, the U.S. RCM market was estimated at $155.6 billion, and is expected to grow 10 percent by 2030. Another estimate suggests that global RCM outsourcing will grow by 17 percent annually between 2022 and 20. More than a quarter (27 percent) of surveyed US providers have outsourced revenue cycle management. And these estimates only include payments to the RCM firms; they do not include higher spending that RCM activities generate for the health care providers that contract with them.

The concentration of RCM companies also poses risk to consumers beyond cost increases. For example, the RCM Change Healthcare recently experienced an enormous data breach. This cyberattack incident, referred to as being of “unprecedented magnitude” by the U.S. Department of Health and Human Services, compromised confidential financial information for “a substantial portion of people in America,” according to statements by Change itself. This concentration of huge amounts of data in a single corporate entity without regulatory oversight or protections highlights yet another danger inherent with such profit-enhancing middlemen.

Profit-Enhancing Middlemen Make Money On Both Sides Of Post Claims Insurance Claims Denials

Commercial insurers deny enrollee claims at astonishingly high rates, as post-claims utilization management remains the primary tool they wield to contain health care spending. A KFF survey found that, in the last 12 months, 20 percent of adults with private health insurance experienced a claims denial for care they thought was covered by their insurer. This is twice the denial rate of those with Medicare coverage. In a separate study of 2021 data from insurers participating in the Affordable Care Act nongroup insurance Marketplaces, claims denial rates ranged from a low of 2 percent to a high of 49 percent, with 10 percent of insurers denying at least 30 percent of claims (17 percent of total claims were denied).

Some denials are certainly legitimate, and some claims review tools likely reduce fraud to some extent. However, the large variation in denials across insurers and variation within insurer over time suggest a substantial degree of arbitrary denials. While we do not currently have estimates of appropriate versus inappropriate denials, the Center for Consumer Information and Insurance Oversight and the Department of Labor have authority to collect data that would make it much easier to assess this.

High claims denials reduce the insurer cost associated with providing coverage in the nongroup and employer markets, allowing insurers to offer prospective purchasers lower premiums and potentially increase insurers’ profits. These same denials, however, lower the value of the coverage to enrollees, as they are likely to be burdened with higher-than-expected out-of-pocket costs, since providers will turn to them to seek reimbursement for provided services. Concerns about denials may also create barriers to necessary future care, to the extent that enrollees avoid seeking care in fear of additional denials and provider collection actions.

While some insurers use on staff clinicians to deny claims, others – as an investigation of Cigna revealed – use their own or contractor created AI-based systems. Research indicates that these AI-based programs are often missing important information, and they are highly likely to reflect societal biases and perpetuate existing inequities as they incorporate the particular values and incentives of the systems’ designers.

In turn, many providers hire firms to limit their financial losses from such high denial rates. Some companies sell software solutions designed to minimize denials and recover the largest denied payments. The cost of their services and products are incorporated in clinician overhead and thus prices for care.

Claims denial management is often one component of a broader suite of services, including RCM services, that profit-enhancing middlemen provide. Indeed, some of these middlemen work both sides of the system, serving both providers and insurers. Given these overlapping business lines, it is challenging to estimate costs specifically associated with claims denial management and its impacts on consumers. However, the companies involved are highly valued, financially speaking, with the market estimated to reach almost $6 billion in revenue by 2027.

Profit-Enhancing Middlemen Battle Over Out-of-Network Reimbursement Rates

In addition to engaging in aggressive claims denial practices, some insurers seek to reduce provider reimbursements while increasing their own revenue by engaging affiliated or external middlemen to “reprice” out-of-network claims. These repricers, including companies such as MultiPlan, determine how much to pay for a service and act as the insurers’ proxy in negotiations with out-of-network clinicians. In theory, this repricing could reduce total spending. In practice, the repricer and insurer (often acting as a TPA for self-insured employer plans) share a percentage of the difference between a provider’s charge and the plan’s ultimate payment. This shared “savings fee,” according to a New York Times investigation, can be upwards of 30-45 percent. As a consequence, paying less for an out-of-network service results in more revenue for the repricer and the insurer, and higher billing by clinicians increases the amount repricers and insurers can take home. Even on small claims amounts, these fees become substantial given the large number of claims MultiPlan’s market share. In fact, the market strength of MultiPlan’s contracted plans has led to allegations of “collusion” and has spurred legal accusations of a re-pricing “cartel.” 

As the New York Times investigation and other exposés have shown, the fees accruing to repricers and insurers can sometimes significantly exceed the amounts paid to the providers who delivered the service. Employer health plans are paying less than they would have if they paid billed charges, but much of their spending is going to corporate profits for their administrators rather than the provider. And, in at least some instances, providers may still balance bill patients in order to recoup their full fees—meaning total spending could exceed what the employer and employee collectively would have spent without repricing.

Insurers are not alone in leveraging intermediaries to maximize their revenue from out-of-network claims. The No Surprises Act protects consumers from surprise out-of-network billing for certain services, including emergency care and anesthesiology, while directing insurers and providers to work out how much insurers should pay in these circumstances through the Independent Dispute Resolution (IDR) process. A cottage industry of IDR-specific services has developed around this process. HaloMD, for example, offers “independent dispute resolution services” to optimize “revenue recovery for out-of-network healthcare providers.” These new companies and new services lines at RCMs are not only for providers, but for payers as well. Other profit-enhancing middlemen have also created new lines of service specific to the provider side of the IDR process. While only 10 percent of claims are adjudicated through the IDR process, these claims can lead to much higher reimbursements for the medical practices, with some providers winning 800 percent of an insurer’s median in-network rate or 655 percent of the Medicare rate.

Conclusions

Over the last 15 years, health care consolidation has accelerated, and corporate players such as private equity have broadened their involvement in health care, seeking large and fast returns on investment. These developments have catalyzed a complex web of profit-enhancing middlemen, which in turn create demand for more counter-balancing middlemen. The end-result is a vicious cycle of repeated third-party claims adjudication.

The complex billing and administrative systems used in much of the health care sector make outsourcing such responsibilities attractive to providers for many reasons, including hopes for improved administrative efficiency. The effects of the entities performing such work goes beyond simply taking over challenging administrative tasks. The complexity inherent in the health care industry – dominated by large entities comprised of hospitals, outpatient facilities, and/or multiple physician practices – makes it difficult to obtain a clear picture of all of the intermediaries and strategies at play. Consequently, it will be difficult to accurately estimate the additional costs that these players impose on the system overall and on consumers in particular. Yet, it is reasonable to assume that these entities, and the health care systems and insurers employing them, are having cost-increasing effects that may impinge on access to care, particularly for people with the highest health care needs. The lack of oversight in private sector health care prices, insurance denials, and payment practices in general has left a large opening for abuse. If we watch closely, we can see stakeholders and their profit-seeking contractors running to jump through it. More policy attention and analysis are called for to limit the resulting damage.

Authors’ Note

The authors are appreciative of helpful comments from Chris Deacon, Jack Hoadley, Kevin Lucia, Christine Monahan, and Zirui Song.

Linda J. Blumberg and Kennah Watts “The Incursion Of Profit-Enhancing Middlemen In US Health Care,” October 22, 2024, https://www.healthaffairs.org/content/forefront/incursion-profit-enhancing-middlemen-us-health-care. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By Sabrina Corlette and Jason Levitis

On October 4, 2024 the Centers for Medicare & Medicaid Services (CMS) released its draft Notice of Benefit & Payment Parameters (NBPP) for plan year 2026. This annual regulation, referred to informally as the “Payment Rule” or “Payment Notice,” prescribes standards and rules that govern insurers and health insurance Marketplaces under the Patient Protection & Affordable Care Act (ACA).

In addition to the draft Payment Notice, CMS released a fact sheet and draft 2026 Letter to Issuers. Comments on the proposed Payment Notice are due within 30 days of its publication in the Federal Register, and comments on the draft Letter to Issuers are due on November 4, 2024.

The 2026 Payment Notice is expected to be the Biden Administration’s last significant rulemaking on the ACA, and a final rule is likely to be issued by January, before a new Administration takes office. The proposal builds on the Biden Administration’s efforts to expand access to affordable, comprehensive health insurance while reducing administrative burdens and advancing health equity. It also attempts to reduce the incidences of broker-driven unauthorized enrollments and plan switching, a problem that has increasingly plagued the federally run Marketplaces.

In this Forefront article, we focus on policies related to Marketplaces, insurance reforms, and Advance Premium Tax Credits (APTC). An article by Matthew Fiedler will review CMS’ changes to the ACA’s risk adjustment program.

Reducing Fraudulent Enrollments And Improving Program Integrity

In the first six months of 2024, CMS received over 200,000 complaints from consumers about unauthorized Marketplace enrollments or plan switches. These transactions are driven by unscrupulous brokers and agents who receive insurance company commissions when they enroll someone in a new plan. Although CMS has suspended hundreds of brokers and agents and at least two enrollment platforms from conducting Marketplace enrollments, members of Congress and others have called upon the agency to do more to crack down on these fraudulent enrollments.

CMS proposes several changes to boost their ability to identify and respond to unauthorized enrollment and plan switching, and to hold brokers, agents, and web-brokers accountable for such fraud. These include clarifying CMS’ authority to (1) pursue enforcement actions against both the individual broker or agent committing the fraud and the agency where that broker or agent works, and (2) suspend a broker or agency’s ability to conduct transactions with the health insurance Marketplace in instances where CMS identifies “unacceptable risk.” In addition, CMS proposes to update the Model Consent Notices that brokers, agents, and web-brokers may use to document consumers’ consent. CMS also proposes provisions that aim to improve the timeliness of Marketplace reporting on enrollment data corrections and the transparency of Marketplace data on key performance metrics.

Agency-Level Enforcement

CMS proposes to clarify its authority to hold “lead agents”—the directors or officers of a broker agency—accountable for the behavior of the agents or brokers who work at their agency. Many enrollments in the federally facilitated Marketplaces (FFM) and state Marketplaces on the federal platform (SBM-FP) are facilitated by an individual agent or broker that works for an agency. CMS finds that in approximately 4 percent of Marketplace enrollments, it is the agency’s “National Producer Number” (NPN) that is recorded on the consumer’s eligibility application.

CMS proposes to use the same authorities and tools it currently uses to conduct oversight of and enforcement against individual agents, brokers, and web-brokers and apply them to the lead agents that direct or oversee the work of the brokers, agents, or web-brokers that they employ or contract with. Just as with individual agents, brokers, or web-brokers, CMS proposes that lead agents face suspension or termination when there are (1) specific findings or patterns of noncompliance, (2) failures to maintain proper state licensure, and (3) fraud or abusive conduct.

To determine if an enforcement action should be taken against a lead agent, CMS would first determine whether there has been agency-level endorsement of or involvement in the misconduct. CMS notes that explicit agency endorsement could include written directives to engage in non-compliant behavior, while implicit endorsement would involve, for example, the agency continuing to employ an agent, broker, or web-broker whom they know has submitted consumer applications without first obtaining and documenting consent. In addition to reviewing data metrics and monitoring their systems to identify potential misconduct, CMS reviews agency resources for brokers, agents, and web-brokers, such as company directives, training manuals, and marketing materials. For example, CMS notes that it has found agencies instructing their agents and brokers to fabricate enrollee incomes and advising them not to speak to consumers before enrolling them in a plan.

CMS requests comment on these provisions, particularly from the state insurance departments that license insurance agents and brokers. CMS also asks for input on how states define the term “lead agent” as well as suggestions from states on ways to enhance federal-state collaboration on oversight of and enforcement against the agencies that facilitate Marketplace enrollments.

System Suspension Authority

CMS proposes to clarify its authority to suspend an agent or broker’s ability to conduct Marketplace transactions when CMS discovers circumstances that pose an “unacceptable risk.” This risk could be to the accuracy of eligibility determinations, Marketplace operations, applicants, or enrollees, or to Marketplace information technology systems, including risks related to data privacy and security. Of note, such a suspension, by itself, does not pause or terminate the agent or broker’s agreement with the Marketplace. A broker or agent under system suspension could continue to assist with enrollments using the Marketplace call center or by supporting a consumer with their HealthCare.gov application (referred to as the “Side-by-Side” Marketplace pathway).

CMS uses several different factors to assess whether the broker or agent deserves system suspension, or whether he or she is simply in need of technical assistance. These factors include the number of times data indicate that an agent or broker has engaged in misconduct, the number of consumers impacted by the suspected misconduct, and the severity of the alleged misconduct. If suspension is warranted, CMS would notify the agent or broker, who would than have an opportunity to submit evidence or otherwise demonstrate that the suspension should be lifted. If the agent or broker cannot provide such evidence, then CMS would pursue a suspension or termination of their Marketplace agreement.

Model Consent Form Updates

In 2023, CMS released a Model Consent Form for agents, brokers, and web-brokers to use to document consumer consent. Use of this form is voluntary and is intended to make it easier for brokers, web-brokers, and agents to comply with consent documentation requirements. The draft 2026 Payment Notice proposes updates to the Model Consent Form, including a section for brokers, agents, and web-brokers to document a consumer’s review and confirmation of the accuracy of the information submitted on their application, as well as scripts that brokers, agents, and web-brokers can use when communicating with consumers about the consent requirements. CMS argues that these updates will help ensure that agents, brokers, and web-brokers are following regulatory requirements and reduce unauthorized enrollments.

Clarifying Timelines For Resolving Enrollment Data Corrections

CMS proposes to codify recent guidance clarifying the timeline for state Marketplaces to adjudicate and report enrollment corrections to CMS. Under this guidance, which was released in August 2024, state Marketplaces have 60 days from when they receive a complete report of the inaccuracy from an insurer to assess and resolve the case and report any correction to CMS. Such corrections may arise due to a range of situations where the Marketplace may not have been initially aware of an individual’s enrollment status, or this status changed retroactively. Enrollment reporting by Marketplaces to CMS is the basis for payment of advanceable PTCs to insurers, so accurate and up-to-date data is crucial for program integrity and effective operations.

Publishing State Marketplace Operational Reporting

CMS proposes to release information collected from state Marketplaces about their operations and performance. Long-standing regulations require state Marketplaces to annually provide CMS with detailed information about their functioning and compliance using the State Marketplace Annual Reporting Tool (SMART). They must also provide annual financial and programmatic audits. In addition, state Marketplace regularly report to CMS on key performance metrics like website and call center traffic. CMS uses this information to identify risks, provide technical assistance and corrective actions, and inform policy development. But this information has not generally been released publicly. CMS now proposes to release this information, as well as documentation of corrective actions or open findings. CMS would begin releasing information in the spring of 2025 with the SMART reports for plan year 2023.

Supporting Consumer Decision-Making And Improved Plan Choices

CMS proposes changes to standardized plans and limits on the number of non-standardized plans to help consumers make more informed decisions when selecting a Marketplace plan. The agency is also clarifying its authority to decline to certify plans for Marketplace participation, seeking comment on ways to mitigate the risk of insurer insolvencies, proposing improvements to its oversight of essential community provider standards, and proposing to publish more information about plans’ quality improvement strategies.

Standardized benefit designs

In 2023, CMS unveiled standardized plan options for the FFM and SBM-FPs to ease the comparability of plan options. Each year since then, CMS has made only minor changes to the standardized plans to ensure that they continue to have an actuarial value within the permissible de minimis range for each metal level (bronze, silver, gold, and platinum). CMS has refrained from more significant plan design changes to maintain continuity and avoid consumer disruption. For the 2026 draft Payment Notice, CMS once again proposes only modest changes to the standardized plans.

However, CMS proposes to require insurers that offer multiple standardized plan options within the same product network type, metal level, and service area to ensure that there is a “meaningful difference” among these plans in terms of benefits, provider networks, and/or formularies. The meaningful difference standard was introduced in 2015 and intended to reduce consumer confusion by preventing a proliferation of duplicative plan offerings. The Trump administration discontinued the meaningful difference standard in 2019.

Since then, CMS has observed that several insurers are offering “indistinguishable” standardized plan options, leading to significant consumer confusion and unnecessary plan proliferation. The agency is therefore proposing to re-introduce the meaningful difference standard. A plan will be considered meaningfully different from other plans in the same service area and metal level if the plan has at least one of the following characteristics:

• A different provider network;
• A different formulary;
• A different maximum out-of-pocket cap (specifically, an integrated medical and drug maximum out-of-pocket cap versus a separate medical and drug maximum out-of-pocket cap);
• A different deductible type (specifically, an integrated medical and drug deductible versus a separate medical and drug deductible);
• A difference in the number of in-network tiers;
• A $500 or more difference in the maximum out-of-pocket cap;
• A $250 or more difference in deductible; or
• A difference in benefit coverage.

If finalized, CMS would monitor insurers’ plan designs to assess whether they are offering plans that technically meet the meaningful difference standard but are nearly identical. If so, then CMS would pursue future rulemaking to require greater variation among plans.

Limits On Non-Standardized Plan Options

In 2024, insurers were required to limit the number of non-standardized plans they offered in the FFM and SBM-FPs to four plans in each the following four categories:

• product network type;
• metal level;
• inclusion of dental and/or vision benefits; and
• service area

For 2025 and subsequent years, the limit was reduced to two plans per category. At the same time, CMS created an exceptions process, allowing insurers in the FFM and SBM-FP to offer more than two non-standardized plan options per category if they could demonstrate that the additional plans had specific design features that would “substantially benefit consumers with chronic and high-cost conditions.” Under the non-standardized plan limits, if an insurer wanted to offer the maximum number of non-standardized plans, and offered plans with two network types (like HMO and PPO), they could theoretically offer a maximum of 32 plans in a given metal level and service area.

In describing the four categories above, CMS notes that it “failed to properly distinguish” between adult and pediatric dental benefits. In this proposed rule CMS would allow insurers to make that distinction. Thus, insurers would be limited to offering two non-standardized plans per product network type, metal level, and inclusion of adult dental, pediatric dental, and/or adult vision benefit coverage. CMS argues that, operationally, such distinctions have already been permitted.

Certification Standards For Marketplace Health Plans

The ACA provides the Marketplaces with the authority to certify a plan for Marketplace participation (referred to as a “qualified health plan” or QHP) if the plan meets certification requirements and if the Marketplace determines that its inclusion is “in the interests of” consumers. However, even though a plain reading of the ACA makes clear that the Marketplaces have the authority to deny certification to a plan, that authority is not made explicit in the current Marketplace regulations. CMS would therefore revise its current rules to more fully and accurately state that Marketplaces may deny certification of any plan that does not meet the required certification criteria or whose participation would not be in the interests of enrollees.

To date, CMS has denied certification to only a small number of insurers. These insurers are permitted to seek a reconsideration of the denial, and in this proposed rule CMS states that it would be helpful to provide more “structure” to that process. Specifically, CMS proposes to clarify that the burden is on the insurer receiving the denial to provide “clear and convincing” evidence that CMS’ determination was in error.

Reducing The Risk Of Insurer Insolvency

In 2023, consumers in several Marketplaces were informed that two insurance companies—Bright Health and Friday Health Plans—were facing insolvency and would no longer be a coverage option. Such insolvencies cause significant disruption for consumers who must find a new coverage option, as well as for providers and patients who may find themselves with unpaid bills. State insurance departments serve as the frontline protection against insurance company insolvency, but here CMS seeks comment on how it can better partner with state regulators to mitigate the risk that an insurer’s insolvency poses to the integrity of the FFM.

CMS seeks comment on how to increase their coordination with state insurance departments and the National Association of Insurance Commissioners (NAIC), particularly for multi-state insurers. For example, CMS could review insurers’ QHP applications in FFM states to identify those at risk of solvency-related difficulties. Insurers’ financial data is included in annual filings to the NAIC that are available to CMS. For insurers that may be insufficiently capitalized, CMS would work with relevant state regulators to impose regulatory interventions, such as suppressing the insurer’s plans on HealthCare.gov, capping enrollment, denying QHP certification, or decertifying existing QHPs.

Additionally, CMS notes that it could partner with states to identify insurers that are experiencing levels of enrollment growth that risk exceeding their capitalization rates. This often happens when an insurer has set its premiums too low relative to the market. One contributing factor in past insurer insolvencies has been that the low-cost insurers attracted comparatively low-risk enrollees. As a result, these insurers owed higher-than-expected risk adjustment charges that they did not have the funds to pay. Going forward, CMS could work with state regulators to discuss whether or not such insurers should have plans certified for the FFM, and whether the financial capacity exception to the ACA’s guaranteed issue requirement should be invoked.

CMS notes that it would engage in the above-described activities only for insurers operating in the FFM, not for insurers in the SBMs or SBM-FPs. The agency argues that SBMs and SBM-FPs are best positioned to understand their respective markets and may have policies that differ from the FFM, which CMS would not want to impede.

In seeking comment on expanding CMS’ role in the oversight and mitigation of insolvency risk, CMS notes that states are “best positioned” to exercise these responsibilities, but that as the operator of the FFM and the ACA’s risk adjustment program, CMS can serve a useful role partnering with state regulators about the advisability of certifying plans that could be at risk.

Federal Review Of Compliance With Essential Community Provider Standards

Under the ACA, Marketplace health plans must include as part of their networks “essential community providers” (ECPs) that serve predominantly low-income, medically underserved individuals. To date, due to systems limitations, CMS has had to rely on states that perform Marketplace plan management functions to assess whether insurers are complying with ECP requirements. However, CMS has recently been able to improve its information technology systems and is now able to collect ECP data directly from insurers in states that perform plan management functions. This allows CMS to conduct its own evaluations of plan networks.

CMS therefore proposes to conduct federal reviews of plan compliance with ECP standards for the FFM, including in FFM states that perform plan management functions. The agency argues that doing so would ensure more consistent oversight of ECP data and strengthen data integrity across the FFM.

Publicizing Insurers’ Quality Improvement Strategies

The ACA requires Marketplace health plans to implement a quality improvement strategy (QIS). A QIS can be a payment structure or other incentives designed to improve health outcomes for enrollees, and/or activities to prevent hospital readmissions, improve patient safety, reduce medical errors, promote wellness, and reduce health disparities. Of note, CMS operates quality programs and initiatives across Medicare, Medicaid, and the Marketplaces, and has promoted publicizing health care quality information relevant to all three coverage programs.

CMS proposes in the 2026 Payment Notice to share aggregated, summary-level QIS information publicly. The agency argues that doing so would promote transparency and help drive innovation, as well as support alignment efforts across coverage programs. The QIS data would be shared in annual reports that include:

• Value-based payment models used by the QHP insurer;
• QIS topic area;
• QIS market-based incentive types;
• Clinical areas addressed by the QIS;
• QIS activities; and
• Measures used in the QIS.

CMS does not receive QIS information from the SBMs or SBM-FPs, so these reports would reflect only QIS information for insurers in the FFM. The agency seeks comment on the types of QIS data to release in an annual report, the timeline for releasing such reports, and other potential mechanisms to present QIS information publicly.

Efforts To Improve Consumers’ Experiences Obtaining And Maintaining Affordable Coverage

The proposed 2026 Payment Notice includes several proposals designed to ease administrative burdens, improve communications with consumers, and help ensure coverage affordability.

More Flexibility On Premium Payment Thresholds

CMS proposes to give insurers additional options to avoid terminating coverage when enrollees under-pay premiums by a de minimis amount, while also clarifying what thresholds are permissible under the existing option. The ACA generally requires payment of the full premium to effectuate enrollment (referred to as a “binder payment”) or avoid triggering a 3-month grace period or termination. Under existing regulations, insurers may set a minimum percentage of the consumer’s premium share that they will accept for these purposes (a “net premium percentage threshold”). For example, if the net premium threshold is 95 percent and the full premium is $400, of which APTC covers $300, then the consumer satisfies the threshold so long as they pay at least $95 (95% of the $100 net premium).

A threshold must be applied uniformly and must be reasonable. CMS has not previously defined “reasonable” for this purpose but has indicated that 95 percent is reasonable. The threshold may be applied for purposes of a binder payment, for triggering a grace period, and for triggering coverage loss.

CMS now proposes to allow two other options for thresholds, while also defining “reasonable” for all three options. For the existing option, a threshold of at least 95 percent of the net premium would be considered reasonable. CMS proposes to also allow thresholds based on the percentage of the total premium paid by APTC and the consumer (a “gross premium percentage threshold”). These thresholds would need to be at least 99 percent. For example, with a 99 percent gross premium threshold, if the total premium was $400 and APTC was $300, the consumer would need to pay at least $96, since $396 is 99 percent of $400. CMS also proposes to allow insurers to set a dollar value of permissible non-payment threshold (a “fixed-dollar threshold”), which must be no more than $5. The two new options would apply for purposes of triggering grace periods and coverage loss, but not for binder payments. CMS proposes to allow insurers to choose any of the three threshold options, but not to use more than one.

All of these options would be based on the accumulated non-payment. For example, if the insurer has a dollar-value threshold of $5 and a consumer under-pays by $3 for two consecutive months, the consumer would fall outside the threshold in the second month, since the total shortfall of $6 exceeds the $5 threshold.

CMS explains that that it proposes adding the new options to address situations where the consumer owes only a minimal amount even though have not met the 95 percent net premium threshold. For example, if the premium was $400, APTC was $398, and the consumer paid none (or even $1.50) of their $2 share, a net premium threshold of 95 percent would not protect the consumer, since they would not have paid 95 percent of their $2 net premium. The new options could cover this situation.

While these new options may be helpful, making them not apply to binder payments is an important limitation. Under the requirement to use only one of the three threshold options, using either of the new options would mean that a consumer that very slightly underpays a binder payment could not have coverage effectuated. CMS specifically requests comments on these issues, raising the prospect that the final regulations may be less limiting in this respect.

On a related note, the Treasury Department and the IRS recently proposed regulations under the premium tax credit (PTC), clarifying that a consumer who pays less than the full premium may still be eligible for PTC so long as they maintain coverage, including pursuant to a permissible premium payment threshold. This addresses potential situations where a consumer who is unable to pay a small share of the premium may be deemed ineligible for PTC and therefore owe back substantial APTC at reconciliation.

Leveraging Consumer Assisters To Connect Consumers With Medical Debt Relief

The Consumer Financial Protection Bureau estimates that $88 billion worth of outstanding medical debt is currently in collections, affecting one in five Americans. This debt can be devastating, resulting in financial distress, personal bankruptcy, and delayed or forgone medical care. In this proposed rule, CMS notes that the burden of medical debt falls disproportionately on vulnerable and underserved individuals, including young adults, veterans, those with low incomes, and Black and Hispanic families.

Hospitals and health systems are the primary sources of medical debt; at the same time, these entities often have staff who serve as Certified Application Counselors (CACs) or non-Navigator consumer assisters to help people enroll in Marketplace coverage. CMS seeks comment on whether these assister personnel could, within the bounds of the ACA, be asked to refer consumers to programs designed to reduce medical debt.

Request For Comments On Silver Loading Codification

CMS requests comments on whether and how to clarify in regulations that insurers may increase silver premiums to account for their costs for cost-sharing reductions (CSRs), so long as these adjustments are reasonable and actuarially justified. The ACA’s CSR rules require insurers to reduce cost-sharing in silver plans for certain eligible individuals. The ACA calls for CMS to reimburse insurers for the cost of CSRs, but in 2017 the Department of Justice determined that there was not a valid appropriation for these payments, and CMS halted them. To satisfy the requirements for actuarially justified rates, CMS then permitted insurers to increase premiums to account for the cost of CSRs, generally by “loading” the cost onto silver plans. CMS has repeatedly affirmed that this is permissible but has never codified this rule into regulations. CMS now once again affirms this position, indicates that it is considering codifying the rule, and requests comments on whether and how to do so.

Further Clarity On FTR Notices

CMS proposes to clarify Marketplaces’ options for notifying enrollees about potential eligibility loss due to failure to comply with the requirement that APTC recipients file a tax return and reconcile their APTC, a set of rules referred to as “failure to reconcile,” or FTR. The 2024 Payment Notice modified FTR rules to deny APTC only after two consecutive years of receiving APTC and then failing to reconcile them on the tax return. The 2025 Payment Notice clarified that Marketplaces have two options for notifying consumers who have failed to file and reconcile for one year: a direct notice to the tax filer clearly indicating FTR status (if they can do so in keeping with tax privacy rules), or a more general notice that explains FTR rules and warns of potential APTC loss without specifying the reason—an approach that sidesteps tax privacy rules because such notices do not count as protected tax information.

The proposed rule provides the same clarity with respect to consumers who have failed to file and reconcile for two years. Again, the Marketplace may provide a notice to the taxpayer warning of immediate eligibility loss and explaining the reason, or a more general notice warning of potential eligibility loss for one of several reasons and explaining FTR rules, without specifying the reason.

The proposed rule also notes that Marketplaces on the federal platform will, and state-based Marketplaces are encouraged to, provide additional communications beyond the ones required by this rule. The federal notices, which SBMs may use as a model, have been posted on the CMS website.

Easing The Appeals Process

CMS regulations permit a family member or authorized representative to apply for coverage on behalf of an individual seeking coverage. But where the application filer is not seeking coverage for themselves, current regulations prohibit the application filer from appealing an eligibility determination without additional administrative steps by the individual(s) seeking coverage.

This limitation puts a burden on consumers. When the application filer submits the appeal, they may be dismissed based on lack of standing, requiring the applicant or enrollee to resubmit the appeal or to designate the application filer as their authorized representative. Under the proposed change, application filers would be allowed to submit appeal requests on behalf of applicants and enrollees, which would streamline the appeals process. This change would be applied across the FFM and SBMs. CMS does not anticipate that it would increase administrative burdens for the SBMs.

Other Proposals

The 2026 draft Payment Notice also highlights CMS’ challenges setting Marketplace user fees in light of the potential expiration of the enhanced PTCs in 2026, proposes to provide insurers more time to access and use the Actuarial Value Calculator, and clarifies CMS’ payment methodology under the ACA’s Basic Health Program.

User Fee Uncertainty

CMS proposes to increase the user fees for Marketplaces on the federal platform. However, the size of increases depends on developments related to the PTC enhancements that were enacted in the American Rescue Plan Act of 2021 and extended in the Inflation Reduction Act of 2022. The enhancements are scheduled to expire at end of the 2025, but there are efforts underway to extend them. If the enhancements expire as scheduled, CMS projects that resulting enrollment declines would require it to raise the FFM user fee from 1.5 percent in 2025 to 2.5 percent in 2026, and the SBM-FP user fee from 1.2 percent to 2.0 percent. If Congress acts by March 31, 2025 to extend the enhancements through 2026, CMS expects that it would set the FFM user fee somewhere between 1.8 percent and 2.2 percent, and the SBM-FP user fee somewhere between 1.4 and 1.8. However, CMS emphasizes that there is substantial uncertainty about enrollment and premiums under both scenarios and that the user fee rates could depart from these forecasts.

User fees are paid by Marketplace insurers to support the operations of the FFM and federal platform. The fee is calculated as a percentage of Marketplace premiums collected. The fee supports Marketplace activities that benefit insurers on the federal platform, including eligibility and enrollment processes; outreach and education; managing navigators, agents, and brokers; consumer assistance tools; and certification and oversight of Marketplace plans.

CMS notes several reasons for likely user fee rate increases and attendant uncertainty. User fee rates are likely to increase even if the PTC enhancements are quickly extended due to factors like states transitioning from FFEs to SBM-FPs and SBMs, lower premium projections, and increased costs for oversight of agents and brokers. However, the most important factor is the potential expiration of the enhancements. CMS describes the enrollment projections as “uniquely uncertain” due to the potential expiration or belated extension of the PTC enhancements, which could affect everything from insurers’ premium filings and consumer behavior to pass-through funding under section 1332 waivers and program parameters under Basic Health Programs.

CMS requests comments on the March 31 deadline for extension of the PTC enhancements to move forward with the lower user free rates.

Streamlining The Release Of The Actuarial Value Calculator

Under the ACA, non-grandfathered individual and small-group market health insurance must adhere to prescribed levels of coverage, referred to as the metal levels (bronze, silver, gold, and platinum). Each level of coverage is determined based on the actuarial value (AV) of the plan, which reflects the percentage of total average costs for benefits covered by the plan. To implement this provision of the ACA, CMS created an AV Calculator, and insurers are required to use it to determine the AV of their health plans.

Beginning in 2015, CMS annually released a draft version of the AV Calculator and its methodology and sought public comment before releasing the final version. However, CMS has received feedback from some stakeholders that they would prefer it if the AV Calculator could be released earlier in the year, in anticipation of state filing deadlines. CMS also notes that it receives only a few comments each year on the draft AV Calculator and methodology. Therefore, the agency is proposing to only release the single, final version of the AV Calculator for the next plan year. There would still be an opportunity for the public to comment on the AV Calculator, but any feedback would only be incorporated in the development of the following year’s AV Calculator. This would allow CMS to release the final AV Calculator earlier in the year.

BHP Payment Methodology Clarifications

CMS proposes to clarify the Basic Health Program (BHP) payment rules for situations where a state partially implements the BHP in the first year.

The ACA give states the option to establish a BHP to cover relatively low-income residents (those with incomes up to 200 percent of FPL) who would otherwise be eligible for the PTC. States have flexibility over BHP design so long as it is generally no less generous or affordable than Marketplace coverage at the same income level. BHP coverage is funded through federal payments to the state that are generally equal to 95 percent of the PTC enrollees would have otherwise received. A state can generally choose whether this calculation is based on current-year or prior-year premiums.

Since the 2017 termination of federal CSR payments, insurers generally increase silver premium to account for the cost of CSRs—a practice referred to as “silver loading.” This generally increases PTC amounts, which are tied to silver premiums. However, silver loading is typically minimal in BHP states, since virtually everyone with income that would normally make them eligible for substantial CSRs is instead eligible for the BHP. As a result, silver premiums and PTC are depressed in BHP states, all else equal.

To prevent this discrepancy from depressing BHP payments, the BHP payment regulations include an adjustment intended to capture the impact of silver loading on PTC in other states. In a state transitioning to a BHP, this adjustment applies to the first BHP year if the payment is based on current-year premiums, but not if is based on prior year-incomes, since silver loading still had its full impact in that year. This rule generally avoids both underpayment and double-counting. But this rule does not account for cases where a state partially implements the BHP in the first year and thus silver loading is only partially reduced. The proposed regulations permit the silver loading adjustment to be applied in part in such cases. This change appears aimed at Oregon, which is undergoing a phased transition to a BHP.

The proposed regulations also clarify how the BHP methodology addresses cases where there are multiple benchmark silver premiums within a county. Codifying its long-standing practice, CMS proposes to clarify that, in such cases, the payment calculations uses the benchmark premium appliable to the largest fraction of county residents.

Authors’ Note

Sabrina Corlette and Jason Levitis received support for their time and work on this piece from the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation, the Urban Institute, or Georgetown University.

Sabrina Corlette and Jason Levitis “Proposed 2026 Payment Notice: Marketplace Standards And Insurance Reforms,” October 8, 2024, https://www.healthaffairs.org/content/forefront/proposed-2026-payment-notice-marketplace-standards-and-insurance-reforms. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By Rachel Swindle and Justin Giovannelli

The uninsured rate reached a record low in 2023, in part because of record enrollment in the Affordable Care Act (ACA) marketplaces. The 2021 expansion of federal premium tax credits (PTCs) drove much of these coverage gains, but this critical financial assistance will expire after 2025 unless Congress acts. Meanwhile, states have invested in unique programs that build on the expanded federal subsidies to make coverage even more affordable. These states are deploying a variety of strategies to reduce cost barriers to enrolling in and using health coverage. For example, some states with limited resources have developed highly targeted programs that have lowered cost-sharing burdens and boosted enrollment among eligible but previously unenrolled residents. Other states provide state-subsidized coverage for broader groups of Marketplace enrollees. In a new issue brief for the Commonwealth Fund, CHIR’s Rachel Swindle and Justin Giovannelli explore these state affordability programs in the context of the looming expiration of expanded federal PTCs. The issue brief describes how none of these programs are a substitute for the expanded PTCs and no state will be insulated from coverage losses should the expanded federal credits expire, nor would states be shielded from premium increases as their risk pools worsen.

You can read the full issue brief here.

As the Affordable Care Act Marketplaces enter their 12th year, enrollment is at an unprecedented high, insurer competition is robust, and four out of five Marketplace enrollees can find a plan for $10 per month or less. This has also been a year of relative stability, without dramatic policy reforms or market disruptions. However, there are several important policies and programmatic changes that could impact Marketplace consumers next year.

New Coverage Options for the Dreamers

“Dreamers” are individuals who came to the U.S. as children without documentation. Many have received “Deferred Action for Childhood Arrivals” or DACA status from the U.S. Department of Homeland Security, which provides temporary protection from deportation and authorization to work in the U.S. In May 2024, the Biden Administration finalized a rule allowing DACA recipients to sign up for subsidized Marketplace and Basic Health Program coverage (sometimes referred to as the “ACA DACA” rule). While the administration declined to adopt a similar policy for Medicaid and the Children’s Health Insurance Program (CHIP), DACA recipients who would be otherwise eligible for Medicaid and CHIP may qualify for Marketplace financial assistance.

Beginning November 1, DACA recipients will be eligible to enroll in one month of coverage for December 2024 and/or coverage for plan year 2025. However, several state attorneys general have sued to block the ACA DACA rule, and a federal court is considering their request.

A Standard Open Enrollment Period

The federally facilitated Marketplace (FFM) and State-based Marketplaces (SBMs) must now adhere to a standardized open enrollment period, from November 1 to January 15, with one exception. The Centers for Medicare & Medicaid Services (CMS) granted an exception to Idaho’s SBM, which begins its open enrollment period on October 15. Under federal rules, Idaho’s open enrollment period must last for a minimum of 11 weeks.

New Efforts to Crack Down on Broker-Driven Fraud

In the past year, the FFM has experienced an increase in unauthorized enrollment and plan switching. Between January and August, 90,000 Marketplace enrollees reported that they were switched to a new plan without their consent, and over 180,000 consumers reported that they were enrolled in a Marketplace plan without authorization. These enrollments are driven by unscrupulous agents and brokers who receive a financial commission from insurers when they enroll someone in a new plan. CMS has taken several steps to protect consumers. In particular, if a broker or agent is not associated with a consumer’s previous enrollment, they must participate in a 3-way call with the Marketplace before they can switch the consumer to a new plan. CMS has also been working to unwind the coverage of consumers who were fraudulently enrolled, protecting them from potential financial or tax liability. The agency has further blocked 850 agents and brokers from facilitating Marketplace enrollments. Consumers who believe they may have been fraudulently enrolled in a plan should call the Marketplace call center at 1-800-318-2596.

Maximum Appointment Wait Times

Beginning in 2025, insurers in the FFM will be required to meet new standards to ensure that their enrollees can obtain health care appointments within reasonable time frames. Specifically, insurers must demonstrate that they can meet the below wait time standards at least 90 percent of the time:

New State-Based Marketplaces

The state of Georgia has transitioned from a state-based Marketplace (SBM) using the federal enrollment platform to a fully state-run Marketplace, Georgia Access. Consumers will no longer use HealthCare.gov to enroll, and instead can sign up through GeorgiaAccess.gov.

Illinois and Oregon are in the midst of their own transitions to state-based Marketplaces. For this open enrollment, Illinois will operate a state-based Marketplace on the federal platform (HealthCare.gov), shifting to a full SBM for plan year 2026. Oregon’s transition will follow one year later, for plan year 2027.

Limits on Non-Standardized Plans

Beginning in 2025, insurers in the FFM are limited to offering two non-standardized plans in each of the following four categories:

• product network type;
• metal level;
• inclusion of dental and/or vision benefits; and
• service area

However, insurers can obtain an exception to this limit if they can demonstrate that they’re offering plans with specific design features that benefit people with chronic and high-cost conditions. Specifically, insurers must show that their plans provide a 25 percent reduction in cost-sharing for benefits pertaining to the treatment of a chronic and high-cost condition.

Advance Notice of Failure to Reconcile

Beginning November 1, all Marketplaces are required to implement a policy that bars consumers from receiving future advance premium tax credits (APTCs) if they have failed to file taxes and reconcile (FTR) their APTCs for two years in a row. Beginning 2025, the Marketplaces must notify consumers after one year if they are at risk of losing APTCs due to their FTR status.

By Rachel Swindle, Jalisa Clark, Christine Monahan and Justin Giovannelli

The Affordable Care Act (ACA) marketplaces are a critical source of health coverage for millions of people. Marketplaces help connect individuals and families to comprehensive individual market policies and, for many, federal financial assistance to significantly reduce their premiums. They also can serve as an access point for the Medicaid program for those who are eligible.  

Marketplaces have been particularly beneficial for communities of color. Black, Hispanic, and American Indian/Alaskan Native (AI/AIN) populations historically and still today are less likely to be enrolled in employer-sponsored insurance and thus are more dependent on individual market coverage. With implementation of the ACA marketplaces, we’ve seen the uninsured rate drop and marketplace enrollment surge for these communities, and racial disparities narrow.  

Yet the role of the marketplaces in the coverage landscape fluctuates greatly in response to the priorities of the president and members of Congress. After trying and failing to repeal the ACA in 2017, the Trump Administration instead sought to undermine the law through funding cuts, neglect, and rule changes. These actions corresponded with an increase in the uninsured rate and a decrease in the number of Black enrollees in the ACA’s federal marketplace. By contrast, under the current Biden-Harris administration, the uninsured rate has fallen considerably (from 10.3% in 2020 to 7.7% in 2023); the number of Latino enrollees in the marketplaces increased 185 percent, and the number of Black enrollees grew 204 percent. Enrollment among AI/AN communities also doubled. 

The winners of the 2024 Presidential and Congressional elections will have a significant impact on health insurance coverage, particularly for communities of color. Below are some of the key policies at stake. 

Expanded Federal Subsidies

Expanded federal premium tax credits (PTCs) are due to expire after 2025, and must be extended by Congress soon to avoid significant disruption. The Harris-Walz campaign supports making the policy permanent, while members of the Trump campaign and key advisors to the former president have repeatedly called for expanded PTCs to end. 

Federal financial assistance for marketplace plans was a core part of the ACA’s framework. The 2021 expansion made the original PTCs far more generous and widely available, which drove up enrollment. Marketplace plan selections increased by 88 percent nationwide from 2020 to 2024, by which time 70 percent of consumers using HealthCare.gov selected a plan for which they owed a monthly premium of $50 or less with PTCs. 

Coverage gains have been especially large among people of color. Recent analysis suggests that Black enrollment increased 79 percent and Hispanic enrollment increased 61 percent nationally due to the PTC expansion (compared to a 42 percent increase among white enrollees). These trends are more pronounced in states that have not expanded Medicaid – several of which have large numbers of Black residents. 

States have built on expanded federal financial assistance by investing state funds in new marketplace affordability programs, many of which have helped further close the coverage gap. Enrollees through Maryland’s Young Adult Subsidy program in Maryland, for example, are more likely to be Black or Hispanic compared to marketplace enrollees in the same age cohort who are not eligible for the subsidy. The success of state programs like the one in Maryland is inextricably linked to and dependent on an ongoing federal commitment to coverage affordability, including the expanded PTC. 

Outreach and Assistance

The Navigator program was designed to reach out to and support underserved and vulnerable communities who have disproportionately lacked access to health coverage and health care, including rural communities, individuals with HIV, and immigrant populations, on behalf of marketplaces. They fill a critical gap left by brokers and agents, who are paid commissions by insurance companies to enroll people and employers in coverage, but do not reach everyone. For example, Navigators are more likely than brokers to assist people who are currently uninsured or are enrolled in Medicaid. They also more frequently serve individuals who identify as Hispanic, need help with immigration issues, or require language assistance. 

Despite the important and unique role Navigators play, the Trump administration reduced funding for the federal Navigator program by 85 percent, lowering it from $63 million in 2016 to a shocking $10 million in 2018 through 2020. After the funding announcement, many community organizations scaled back operations, while others ended services entirely. 

The fallout of the Trump administration’s decision fell disproportionately on people of color and immigrant communities. For example, in response to the cuts, most Navigators reported they were likely to reduce services to consumers with limited English proficiency (LEP). Subsequent research has found that defunding the Navigator program was associated with a significant decrease in health coverage among low-income adults, Hispanic adults, and the LEP population.

The Biden-Harris administration took a far different approach, reinvesting in Navigators and emphasizing the role they play in reaching and assisting underserved communities. In July 2024, the administration announced $500 million in funding allocated to the Navigator program over the next five years. While a Harris presidency can be expected to maintain this commitment, there can be little doubt a second Trump administration would return to its past practices.

Eligibility, Enrollment, and Nondiscrimination Policies

The Biden-Harris administration has taken numerous other steps to expand marketplace coverage and improve affordability that are at stake this election:

• Fixing the “Family Glitch” to enable millions of people without access to affordable employer coverage (disproportionately low-income women and children) to access PTCs.
• Opening up eligibility to PTCs to DACA recipients.
• Creating new, extended open enrollment periods (SEPs), including for people who lost Medicaid at the end of the pandemic and those with incomes below 150% of the poverty level. 
• Ensuring meaningful access for individuals with LEP through the Nondiscrimination in Health Programs and Activities final rule.
• Reducing bureaucratic burdens to renew coverage.

Looking Forward 

Political threats to the ACA and its marketplaces this election season could lead to sizable coverage losses and decreased access to care across the country, and these deleterious impacts will disproportionately hit communities of color. Both Congress and the new president will determine whether the expanded PTCs should continue after 2025, and the executive branch’s administration of the law will play a major role in how ACA marketplaces work for consumers. Consistent federal commitment from both is key to sustaining and building on the progress made to date. Whether that comes to fruition will depend on who voters choose. 

Support for this work was provided by the Commonwealth Fund. The views expressed here do not necessarily reflect the views of the Fund.

By Leila Sullivan and Samantha Hagberg

While the weather may be cooling down, the research is not! This month we read about Medicare Advantage quality bonus payments, out-of-pocket drug costs for consumers, effects of enhanced premium tax credits on older adults, and strategies to increase eligibility verification and receipt of Marketplace subsidies.

Enhanced PTCs Help Older Adults and Those in High-Premium States Afford Coverage

Jessica Banthin, Laura Skopec, and Michael Simpson. Urban Institute. September 2024. Available here.

In March of 2021, as part of the American Rescue Plan Act (ARPA), Congress passed enhanced premium tax credits (PTCs) and later extended them through 2025 in the Inflation Reduction Act. In this analysis, researchers examined the anticipated distribution of enhanced PTCs among nonelderly people with incomes over 400% of the FPL by age, income, and state. This report focuses on illustrative adults aged 30, 60, and 64 and income groups by state. Using the Urban Institute’s Health Insurance Policy Simulation Model, researchers estimated the effects of the enhanced PTCs on coverage in 2025 and out-of-pocket premium spending in 2024. 

What it Finds

• Less than 10% of the 17.4 million Marketplace enrollees who will receive an enhanced PTC in 2025 have income above 400% of FPL.
• Enhanced PTCs reduce net premiums for older adults; the most impacted are those ages 50 (35% reduction in net premiums with enhanced PTCs), 60 (57% reduction in net premiums), and 64 (60% reduction in net premiums).
• Enhanced PTCs also reduce net premiums for people living in high-premium states; in six states with the highest total premiums in 2024, for 60-year-olds with income just above 400% FPL, enhanced PTCs reduced net premiums by 65% or more.
• If a 60-year-old with income just above 400% FPL did not have access to enhanced PTCs, they would pay, on average, $986 per month for a Marketplace plan in 2024.
• Among adults with individual incomes just above 400% of FPL, enhanced PTCs lower average out-of-pocket premiums by 11% for 40-year-olds and 57% for 60-year-olds.

Why it Matters

The enhanced PTCs are scheduled to expire in 2026 if Congress does not act to extend them. This study demonstrates how the enhanced PTCs have improved coverage affordability for older adults, those living in high-premium areas, and for middle-income people who, prior to ARPA, would not have been eligible for PTCs. If Congress does not act in a timely manner to extend enhanced PTCs, these individuals could be forced out of coverage. Older individuals in particular will face high premiums for coverage without enhanced PTCs. For example, a 60-year-old couple with a household income of $81,761 (just above 400% of FPL) would have to pay more than 30% of their income to maintain health insurance in 20 states.

Medicare Advantage Quality Bonus Payments Will Total at Least $11.8 Billion in 2024

Jeannie Fugleston Biniek, Meredith Freed, and Tricia Neuman. KFF. September 2024. Available here.

The Affordable Care Act established a quality bonus program that increases Medicare payments to Medicare Advantage (MA) plans that have higher quality rankings based on a five-star rating system. These star ratings are intended to help consumers make more informed decisions based on plan quality, but the Medicare Payment Advisory Commission and others contend that the stars are not useful indicators of plan quality. Spending on MA quality bonus payments has grown dramatically in recent years. In this study, researchers at KFF looked at publicly available information to examine trends in bonus payments to MA plans, enrollment in plans with bonus status, and how these measures vary across plans.

What it Finds

• Total spending on MA plan bonuses is higher in 2024 than in every year between 2015 ($3B) and 2022 ($10B). Payments increased to $12.8B in 2023 due to pandemic-era policies, which have now expired, bringing this spending down to $11.8B in 2024. This estimate is a lower bound because bonus payments are risk adjusted, which is likely to increase the amount.
• In 2024, a large majority of MA enrollees (72%) are in plans that are receiving bonus payments. This is a marked increase from 2015, when just 55% of MA enrollees were in plans receiving bonuses, but it is lower than in 2023 when 85% of plans did so.
• The average annual bonus paid to plans per MA enrollee increased dramatically from $184 in 2015 to $417 in 2023, before declining to $361 in 2024. 
• Bonuses per enrollee vary by plan, with bonuses for enrollees in group employer- or union-sponsored MA plans averaging $456 compared to $345 for individual plans, and $330 for special needs plans (SNPs) (all 2024 data). This inconsistent distribution raises questions about the implications of the quality bonus program for equity.

Why it Matters

The quality bonus program is significant because it directly influences payments to MA plans based on CMS’s five-star rating system. As of 2024, over 72% of MA enrollees are in plans receiving these bonuses, impacting the benefits they receive including reduced cost sharing and additional services not covered by traditional Medicare. However, disparities are becoming more apparent, with employer-sponsored plans receiving higher average bonuses compared to SNPs, which cater to more vulnerable populations. With MA spending projected to reach $462 billion in 2024, understanding how different funds are allocated is critical in addressing equity issues and managing the program’s sustainability.

Email Nudges Increased Eligibility Verification And Subsidy Receipt In California’s ACA Marketplace

Rebecca Myerson and Andrew Feher. Health Affairs. September 2024. Available here.

In the Affordable Care Act (ACA) Marketplaces, health insurance premiums for households with income below certain thresholds can be reduced or eliminated through premium tax credits, but the household must demonstrate eligibility by verifying income and other relevant personal information. Researchers for Health Affairs conducted a randomized experiment to determine the percentage of households that did not update their consent for edibility verification in Covered California after the standard email reminder, to determine whether sending additional reminders would lead to higher rates of consent updating.

What it Finds

• Under the standard procedure of sending one email reminder to update consent, 41% of households did not update their consent by the end of the open enrollment period. 
• When one email was sent (standard procedure) 26% of households opened it. When two or three emails were sent the open rate increased by 11.3% and 19%, respectively. 
• Consent verification significantly increased (+2.4 percentage points) for consumers receiving two email nudges, and by +5.7 percentage points for consumers receiving three email nudges.
• When compared with those who updated consent, consumers who did not update consent were nearly five times as likely to have received no premium tax credits at baseline, and more than twice as likely to have income higher than 250% of poverty at baseline. Consumers who did not update consent were also more likely to identify as non-Hispanic White, were more likely to prefer communications in English, and were on average younger than those who did update consent.
• In each iteration of the intervention, the proportion of households updating their consent increased on days when email nudges were sent.

Why it Matters

In 2022, about 80% of Marketplace enrollees received premium tax credits, and as premiums have risen over time, so has the generosity of the tax credits. This study demonstrates that a minor administrative task such as renewing consent for eligibility verification can cause eligible people to lose their premium tax credits. This study found that reminders not only increased the percentage of consumers who updated consent but also caused some consumers to do so earlier than they would have under the standard procedure of one email. Like many Americans, Marketplace enrollees lead busy lives and can be inundated with email and other communications. This study suggests that Marketplaces can retain more enrollment—and more people can hang onto their subsidies—through the simple, low-cost step of sending multiple reminder emails.

Consumer Out-of-Pocket Drug Prices Grew Faster Than Prices Faced By Insurers After Accounting For Rebates, 2007-20

Justine Mallatt, Abe Dunn, and Lasanthi Fernando. Health Affairs. September 2024. Available here.

In this article published by Health Affairs, researchers from the Bureau of Economic Analysis analyzed the intricacies of pharmaceutical drug pricing, focusing on manufacturer rebates, negotiated prices, and consumers’ out-of-pocket (OOP) costs. The goal of this study was to increase public understanding of price trends in the branded prescription drug market for the commercially insured population. Combining prescription claims data from the Merative MarketScan Research Commercial Database and rebate estimates using SSR Health LCC’s US Brand Rx Net Pricing Tool, researchers set new price index measures based on pharmacy prices, negotiated prices, and out-of-pocket costs for the commercially insured population during 2007-2020. 

What it Finds

• There is a positive relationship between rebates and out-of-pocket (OOP) consumer expenses.
• Pharmacy list prices experienced an average annual growth rate of 9.1%, while negotiated prices grew 4.3%, and OOP costs rose by 5.8% during the period 2007-2020. Growth in overall OOP costs seems to have been driven by large increases in consumers’ coinsurance and deductible payments.
• Both insurer and negotiated prices began to decrease in 2016; this divergence in price raises concern about the disconnect between estimates of negotiated prices and the actual costs borne by consumers. These results suggest that rebates drive down negotiated prices and increasing pharmacy prices drive up OOP costs.
• OOP payments constituted a minority share of the total cost in 2020, accounting for 14% of net sales. New drugs made up most of the sales, accounting for approximately 75% of sales. These drugs have high list prices and high rebates ($117 billion in 2020) that continue to grow over time.

Why it Matters

This study highlights the influence of rebates on branded prescription drug prices. This research indicates that rebates lead to a gap between negotiated prices and consumers’ OOP costs since rebates decrease negotiated prices but raise pharmacy prices, which, in turn, increases OOP consumer cost. This study also implies that consumer OOP expenses depend on the structure of individual plans, since OOP expenses rise due to increased deductibles and coinsurance payments. Therefore, consumers with high deductible plans may be at greater risk of experiencing higher OOP spending compared to those with low deductible plans. This can result in coverage inequities, particularly for lower income who choose high-deductible plans and cannot afford higher OOP costs. The study highlights that, when it comes to understanding prescription drug pricing and designing policies to address high costs, rebates need to be taken into account.

In early September, CHIR Assistant Research Professor Christine Monahan testified before the Texas House Insurance Committee on outpatient facility fee billing and potential reforms. The Texas legislature is currently preparing for its 89^th legislative session next spring, and the recent hearing will play a critical role in shaping legislation to come.

Christine’s comments to the committee follow. A corresponding slide deck is available here.

At CHIR, we study private health insurance and health care markets, conduct legal and policy analysis, and provide technical assistance to federal and state policymakers, regulators and stakeholders on a range of topics. With the support of West Health, I and several members of the CHIR team have been studying outpatient facility fee billing for the past two years. We have conducted several dozen interviews with on the ground stakeholders, reviewed existing laws and pending legislation at both the state and federal levels, written multiple analyses, and, most recently, published a suite of maps reporting on our review of the laws in all 50 states and the District of Columbia related to outpatient facility fee billing. 

The first step to understanding facility fee billing is to understand that there are two types of claims typically used to bill for medical services: a professional bill (the CMS-1500) and the facility bill (the UB-04). If you receive care at an independent provider practice, the provider who treated you will submit a professional bill to your insurer. This bill, in theory, covers their time and labor as well as any practice overhead costs, like nursing staff, rent, and equipment and supplies. On the other hand, if you receive care at a hospital outpatient department, generally speaking any professional who treated you, as well as the hospital, will each submit separate bills. Any professional bills should just cover the provider’s time and labor, while the hospital bill – or facility fee – ostensibly covers overhead costs. 

What counts as hospital overhead and what else goes into a facility fee is complicated, however. As you would expect, a facility fee generally will cover the overhead costs related to the patient visit for which it is being billed, including the nurses or support staff involved and any equipment and supplies. Because hospital outpatient departments need to meet extra licensure and regulatory requirements, they likely also have some additional costs that do not apply to independent settings. 

In addition, a facility fee is likely to cover other hospital overhead costs. Some of these are necessary and desirable services at the population level, but not related to the care delivered to the patient who is getting billed. For example, facility fees might help fund things like hospital emergency services, or 24/7 staffing and security at the hospital, even though the patient was at the facility during normal business hours and didn’t need any emergency care or they went to a totally separate, off-campus facility ten miles from the hospital campus and emergency room. Hospital overhead costs can also include things of more debatable value – from high CEO salaries, to expensive artwork or gourmet food services, to, I kid you not, movie production studios. All of these things may be considered hospital “costs” that patients can be asked to pay through a facility fee.

It is also important to know that other factors, unrelated to the cost of care or other expenses a hospital has, also play a big role in determining how much a hospital bills for and gets paid by insurers, including historical billing patterns and market power. Particularly as hospitals and health systems get bigger, and vertically integrate, they have much more power than your solo physician or independent group practice to demand higher reimbursement when negotiating with insurers. 

So, when economic experts compare the prices paid for the same services at hospital outpatient departments and independent physician offices, they find much higher prices in hospital settings. Chemotherapy is one example from the Committee for a Responsible Federal Budget. A patient going for weekly chemotherapy visits would see, on average, a 2.7-fold difference in price if they switched from an independent practice to a hospital outpatient department. And, of course, they’re often not the ones making that choice to switch – rather, one day in the middle of treatment they may go into the same office building as always, for the same care as always, and come away with a bill that’s more than $400 higher than what they’re used to because a hospital acquired their practice and converted it to a hospital outpatient department. 

It is this recent history of aggressive hospital acquisition of outpatient practices that is driving the issue today. Facility fee billing is not a novel practice, but it is more common than it used to be following years of vertical integration where hospitals are acquiring or building their own outpatient physician practices and clinics. Indeed, one of the reasons hospitals and health systems have significantly expanded their ownership and control over outpatient physician practices over the past decade or so, is so they could charge this second bill and increase their revenues.

Another likely reason we are hearing about facility fee billing more now are inadequacies in insurance coverage. As the hospital industry will emphasize, patients increasingly are coming in with high deductible health plans which leave them exposed to more charges, including facility fees. The hospitals are not wrong in pointing out this gap, but it is best understood as a symptom of the greater problem of rising prices. 

Higher spending on outpatient care from facility fee charges is increasing the cost of health insurance for all of us: patients and consumers who enroll in health insurance, employers who are sponsoring insurance for their workers and paying more than 70-80% of their health plan premiums, and taxpayers who heavily subsidize the private health insurance market. Economist Stephen Parente, who served on the White House Council of Economic Advisers in the Trump Administration, recently released a study finding that employer plan premiums could go down more than 5% annually if insurers paid the same amount for care in a hospital outpatient department as they do an independent physician’s office. This in turn would result in $140 billion in savings to the federal government over ten years through reduced tax subsidies for employer plans. While not the only factor, outpatient facility fee billing is contributing to the growing unaffordability of health insurance today. 

At the same time, insurers are responding to these price increases largely by increasing cost-sharing and otherwise limiting benefits. As the hospital industry points out, health insurance deductibles are increasing in size and prevalence. Many of those $200, $300, $400+ facility fees are going straight to the patient. Consumers also can face higher cost-sharing for care provided at a hospital outpatient department even when their deductible doesn’t apply. This can be because the facility fee is carrying its own distinct cost-sharing obligation from the professional bill or because insurers set higher cost-sharing rates for services provided at hospital outpatient departments to try to discourage patients from going to them. Additionally, some insurers may simply not cover a service when it is provided at a hospital outpatient department, in an effort to contain their own spending while potentially opening up patients to balance billing. 

In sum, inadequacies in insurance coverage are playing a role in exposing consumers to high medical bills which is driving media attention. But if insurance covered these charges without any cost-sharing, consumers as well as employers and taxpayers would still be paying for it through their premium dollars – it just would be less visible. 

What, then, can be done to address these concerns? One option is to continue to wait to see if the private market will fix it. But there are barriers to private reforms, including a lack of information, a lack of leverage, and a lack of motivation. 

With respect to information, one of the refrains we consistently hear from stakeholders is that there are significant gaps in claims data that make it challenging for private payers and regulators alike to understand the full scope and impact of facility fee billing. Specifically, they reported that it can be very difficult if not impossible to identify the actual brick and mortar location where care was provided on a claims form or in a claims database. The address line may just refer to the main campus of a hospital that owns the practice, or even an out-of-state billing office for the health system. 

In terms of leverage, dominant hospitals frequently have the upper-hand in negotiations with insurance companies as a key selling point for insurers is that they have the name brand hospital or physician group in their network. In Massachusetts, one of the major insurers proactively sought to eliminate outpatient facility fee billing by in-network providers, but could only do this in a budget neutral manner (agreeing to raise rates elsewhere to make up the difference) and still one major health system has refused to play ball and continues to bill facility fees today. Reforms like prohibiting anticompetitive contracting clauses, as Texas has enacted, may begin to chip away at factors contributing to hospitals’ dominance in negotiations however.  

Regarding motivation, insurers generally don’t benefit from lowering health care costs as they take home a percentage of spending. But public scrutiny on egregious facility fees in Massachusetts motivated the insurer I previously mentioned to act, and could encourage other insurers elsewhere to follow suit. Additionally, large employers increasingly are engaging on this and other health care spending issues, and they may be able to pressure insurers to eliminate facility fee billing in their contracts with providers. Indeed, I know of at least two state employee health plans that have done so.   

Ultimately, though, facility fee billing and other aggressive hospital pricing and billing practices are an uphill battle for the private market to tackle alone. Accordingly, we are seeing states across the country, reflecting broad geographic and political diversity, begin to pursue legislative reforms. By our count, twenty states nationwide have enacted one or more of the six potential solutions our team has identified: site neutral payment reforms, facility fee billing bans, billing transparency requirements, public reporting requirements, cost-sharing protections, and consumer notification requirements. I’m going to focus on just the first three I mentioned right now, but we have additional information on others and I’m happy to discuss any of them. Importantly, none of these reforms are mutually exclusive. They simply tackle the issues from different, but complementary angles. 

First, states are beginning to tackle the transparency issues I just raised. Notably Colorado, Nebraska, and Nevada now require off-campus hospital outpatient departments to acquire a unique, location-specific provider identifier number – known as an NPI – and include it on claims forms. This is a simple and minimally burdensome reform that would greatly enhance claims data. As Colorado has learned, pairing this data with a system for tracking which NPI belongs to which health system can make it even more useful, as it would give visibility into both the location of care and who owns that setting. This information could help private payers or regulators and policymakers rein in outpatient facility fee billing. It also could be valuable in helping payers adopt tiered provider networks or otherwise steer patients towards or away from different provider locations based on the quality or cost of care they provide. 

A state seeking to go further than that could prohibit hospital outpatient departments from charging facility fees for specified services. Texas, of course, has already done this very narrowly for services like Covid-19 tests and vaccinations when performed at drive-through clinics at free-standing emergency departments. States like Connecticut, Maine, and Indiana, however, have more broadly prohibited hospitals and health systems from charging facility fees for outpatient evaluation and management services or other office-based care in certain settings. 

By prohibiting facility fees for specified services, policymakers protect patients from potentially bearing the cost-sharing brunt of two bills. For example, rather than owing a $30 copay on the physician’s bill and a 40% coinsurance charge on the facility fee, the patient will go back to owing just a $30 copay, as if they had received care in an independent setting. For the large percentage of the population who do not have enough cash to pay typical private plan cost-sharing amounts, this is a really big deal. At the same time, the system-wide savings from such a reform likely will be relatively muted in the longer term, as market powerful hospitals renegotiate their contracts and increase other prices to make up for the loss of revenue from facility fees, as we saw happen in Massachusetts. 

Finally, policymakers who are feeling particularly ambitious may want to consider site-neutral payment reforms, which is what Stephen Parente was studying. These reforms call for insurers to pay the same amount for the same service, regardless of whether the service was provided at a hospital outpatient department or an independent practice. 

How this works, and how big of an effect it would have, depend on a number of design decisions. As with facility fee bans, one of the critical choices will be what services are covered and this could be broad or narrow. Just as important is who determines how much insurers pay for a service and how this payment level compares to existing prices. Under the most hands-off version of a site-neutral policy, lawmakers could simply require that insurers adopt site-neutral payments without specifying a payment level and leaving that to private market negotiations. Alternatively, lawmakers could identify, or task regulators with identifying, a benchmark level be it tied to existing commercial rates or a public fee schedule, such as a percentage of Medicare. The more services covered and the lower the payment level, the greater the savings. 

No state at this point has enacted a site-neutral policy in the commercial sector to date, but there is growing interest and I anticipate that we will see some site-neutral bills introduced in the coming year. 

Thank you for having me.

By Jason Levitis, Sabrina Corlette, and Claire O’Brien

Reinsurance is a long-standing tool for stabilizing health insurance markets and reducing premiums. It has played an important role in the success of the Affordable Care Act’s (ACA) individual market as part of section 1332 state innovation waivers. By reducing premiums, reinsurance increases affordability for consumers ineligible for the premium tax credit (PTC). However, the effects on PTC recipients are smaller, mixed, and have received little attention. A study recently published in Health Affairs finds that reinsurance programs can reduce affordability and enrollment for low-income people. In a new article for the State Health & Value Strategies program, Jason Levitis, Sabrina Corlette, and Claire O’Brien assess the findings in the Health Affairs piece and review considerations for states seeking to adopt or extend a reinsurance program. Read the full article here.

Since the early 1990s, many states’ health care markets have seen a significant increase in provider consolidation, including in Oregon. Consolidation in health care markets can lead to higher prices, reduced access to services, diminished quality of care, and deeper health inequities. Between 2013 and 2019 health care spending in Oregon rose by 49%, which outpaced national growth in health spending, income, and inflation over the same time period. Oregon’s response to these trends has included novel efforts to curb provider consolidation through state oversight of health system transactions. While this strategy is still in the early stages of implementation and has some challenges, other states can learn from Oregon’s efforts.

Oregon creates new oversight authority to counter consolidation 

The Oregon Legislature created the Health Care Market Oversight Program (HCMO) under the Oregon Health Authority (OHA) in 2022. The HCMO program has the authority to review material change transactions, which are mergers, acquisitions, affiliations, sales, leases, or other business deals that change control of a health care entity. OHA reviews these transactions when at least one entity has had $25 million or more in average revenue in the past three fiscal years and another party has realized $10 million or more in average revenue in the past three fiscal years or is projected to generate this level of revenue in its first year. OHA can approve these transactions if the relevant parties show that their business agreement will adhere to the goals of OHA: reducing consumers’ cost of care, increasing quality of care, and improving access to historically underserved patients.

If OHA determines that a transaction threatens one or more of these goals and requires a more comprehensive review, it will assess the potential transaction’s likely effects and seek input from community members. OHA can approve a transaction that requires a comprehensive review if it achieves at least one of the following requirements: reduces spending growth, increases access to care in underserved areas, or improves health outcomes.  

So far, the new oversight authority has not rejected any transactions 

To date, OHA has approved the majority of the transactions it has examined after a preliminary review, while rarely requiring a comprehensive review. Since 2022, the HCMO program evaluated 22 transactions and conducted reviews on 20, approving six outright and approving five more with conditions attached. OHA is still reviewing four other transactions, and the rest either withdrew or received special emergency status. Only two of 20 transactions triggered a comprehensive review. OHA also reviews transactions one, two, and five years afterwards to ensure that the transaction continues to meet OHA’s goals. During these follow-up reviews, OHA can impose penalties, including a financial penalty of no more than $10,000 for each offense, such as failing to comply with transaction agreements, adding to cost growth, or increasing spending for the health care entity. 

While OHA has not rejected any transaction to date, parties in two potential mergers have withdrawn their applications during the review process – one in a preliminary review, and one after OHA determined the transaction needed a comprehensive review. The presence of the state review process itself may discourage questionable mergers and acquisitions from moving ahead. 

For the transactions approved with conditions, OHA monitors the entities’ behavior over time to ensure that they abide by the conditions and mitigate potential negative side effects. One example is the acquisition of KeiperSpine, a physician practice, by Agility MSO, a management services organization that offers non-clinical management services to physician-owned clinics and is majority owned by a private equity firm. OHA approved this transaction with the stipulations that providers keep their control of clinical decisions and employment contracts and continue serving patients with Medicare, among other requirements.

States can learn from the strengths and weaknesses of Oregon’s law 

As the first state health care oversight agency with the authority to deny transactions, HCMO has served as a model for other states seeking to control provider consolidation. During its 2024 legislative session, New Mexico enacted a law that empowers their Health Care Authority to approve or disapprove transactions. California’s Office of Health Care Affordability (OHCA) can review material change transactions but not prevent them. Massachusetts’ Health Policy Commission (HPC) transaction review process predates Oregon’s law, but like California’s OHCA, cannot prevent transactions. The Massachusetts HPC also still does not have the authority to review private equity-backed transactions despite the rise of private equity investments in health care and the most recent debacle associated with the private equity-backed acquisition of the Steward hospital chain and its subsequent bankruptcy.

Other states also grapple with increasingly consolidated health systems, with policymakers introducing bills to check provider consolidation in about a third of state legislatures. The majority of these bills target material change transactions in some way. In support of these efforts, the National Academy of State Health Policy recently updated their model bill on transaction review. 

With only two years of experience, a full assessment of Oregon’s merger review law is premature. Agency officials have expressed concerns about the program’s current resources and long-term financing. Although the entities seeking a transaction must pay fees to the review program, they do not cover all the expenses of its operation.

An additional critique of Oregon’s HCMO program is the lack of transparency for emergency exemptions. For example, OHA approved a request for an emergency exemption from review submitted by Optum Oregon, owned by United Health Care, and the Corvallis Clinic, an Oregon-based medical group. Some of the transaction materials they used to justify the exemption are redacted on OHA’s website. With these redactions, the public cannot determine why this transaction deserved an emergency exemption.

Finally, some argue that the profit thresholds for triggering a transaction review, specified in the statute, are too high. Consolidation in health care markets is not limited to firms that have profits equal to or exceeding $25 million and $10 million: a large company buying up much smaller companies can still result in a more consolidated market – and higher prices for consumers – over time. 

Takeaways

Oregon’s merger review law is not perfect, but the benefits for consumers who struggle to afford the increasing cost of health care likely outweigh the growing pains. For other states considering their own merger review laws, policymakers could consider establishing, and adequately resourcing, similar programs designed to mitigate industry consolidation and protect consumers from the resulting cost increases. 

More hot days mean more hot research! This month we read about the growing divergence between Medicare Advantage bids and payments, the impact of enhanced premium tax credits by race and ethnicity, and about how narrow or broad ACA marketplace physician networks really are.

Growing divergence between Medicare Advantage plan bids and payments to plans

Grace McCormack and Erin Trish. University of Southern California, Price School of Public Policy, Schaeffer Center. August 2024. Available here.

Researchers from the Schaeffer Center at the University of Southern California evaluated market and policy factors that affect payments to Medicare Advantage (MA) plans to characterize how these factors impact payment trends. They analyzed benchmarks, bids and payments to MA plans compared to Traditional Medicare (TM) costs using data published annually by MedPAC. For their analysis of nominal benchmarks, bids, and payments, they used Plan Payment and Plan Benefits Package files from 2010 to 2021 matched to enrollment and benchmark data from the CMS Landscape and ratebook files.

What it Finds

• In 2023, MedPAC estimated that MA plans were paid up to 6% more per enrollee than they would have had the beneficiary been enrolled in TM. However, since 2010, bids for MA plans have been decreasing, averaging 17% less than TM costs in 2023.
• Under MA, baseline payments and rebates are risk-adjusted to more accurately indicate the health status of a beneficiary. This financially incentivizes plans to document conditions and health events more aggressively than in TM.
• Between 2012 and 2021, the average beneficiary was enrolled in a plan consistently receiving between 3% to 5% in quality bonus payments (QBPs) and by 2021, 81.9% of MA enrollees were in a plan eligible to receive a 5% QBP benchmark increase.
• Risk-adjusted plan bids increased between 2015 and 2021, resulting in average monthly rebates growing from $82 per enrollee in 2015 to $142 per enrollee in 2021.

Why it Matters

Risk-adjusted MA bids have decreased relative to risk-adjusted TM spending since 2010, but total payments to MA plans have increased since 2015. This difference in trends can be attributed in part to the increasing influence of adjustments to MA payments such as quality bonuses. At this time, plans can bid below the benchmark and still receive payments higher than what the Centers for Medicare and Medicaid Services (CMS) pays for the average TM beneficiary. The authors’ findings suggest that MA plans being paid more per enrollee than TM is at least partially the result of the payment policy itself. MA bids are increasingly lower than TM spending, but instead of reducing payments to MA plans, and to the federal government overall, this difference has resulted in increased rebates to plans and more generous supplemental benefits.

The Impact of Enhanced Premium Tax Credits on Coverage by Race and Ethnicity

Jessica Banthin, Michael Simpson, and Mohammed Akel. Urban Institute. August 2024. Available here.

In March of 2021, as part of the American Rescue Plan Act, Congress passed enhanced premium tax credits (PTCs) and later extended them through 2025 in the Inflation Reduction Act. In this report, Urban Institute researchers estimated coverage of the nonelderly population in 2025 with and without enhanced premium tax credits by race and ethnicity to project the impact of more generous credits.

What it Finds

• With enhanced PTCs, enrollment increases among Black and Hispanic people (79% and 61%, respectively) are greater than enrollment increases among White people (42%).
• In Medicaid expansion states, 40% more Black people are projected to enroll in the nongroup market with enhanced PTCs compared to Hispanic and White people (25% and 24% respectively).
• In states that did not expand Medicaid, enrollment for Black and Hispanic people is projected to more than double at 116% and 104% increases. White people are also projected to increase enrollment but at a lower rate of 78%.
• In Medicaid expansion states, the authors predict that enhanced PTCs will have a narrow impact on the uninsured rates by race and ethnicity in 2025. Conversely, they project that enhanced PTCs will dramatically reduce uninsurance rates in nonexpansion states by over 4 percentage points for Black and Hispanic populations.

Why it Matters

If Congress does not act in a timely manner to extend the ARPA/IRA enhanced premium tax credits, they will expire at the end of 2025, reversing several years of coverage gains. Enhanced premium tax credits have contributed to a lower uninsured population regardless of race or ethnicity, but the differences for Black and Hispanic populations are greater than for White populations. For Black and Hispanic people, uninsured rates are consistently about 2 percentage points lower with enhanced PTCs. Looking forward, if the enhanced PTCs are extended, Black and Hispanic people will see more noticeable reductions in the percent of uninsured people relative to White people, reducing historic racial and ethnic disparities in health insurance coverage.

How Narrow or Broad Are ACA Marketplace Physician Networks?

Matthew Rae, Karen Pollitz, Kaye Pestaina, Michelle Long, Justin Lo, and Cynthia Cox. Kaiser Family Foundation (KFF). August 2024. Available here.

Researchers at KFF estimated the share of physicians included in individual Marketplace plans in 2021 by examining data from CMS and the National Plan and Provider Enumeration System (NPPES).

What it Finds

• One in five consumers with Marketplace plans reported that in the past year, a provider they needed was not covered by their insurance and about one in four said a covered provider they needed to see did not have appointments available. Enrollees with Marketplace coverage were more likely than those with employer sponsored insurance (ESI) to face these challenges.
• Marketplace enrollees, on average, had access to 40% of the doctors near their home through their network, with only 4% of enrollees in a plan that included more than three quarters of their area doctors in their network.
• Some of the most narrow network plans were found in large metro counties, where, on average, enrollees had access to 34% of doctors through their plan networks. Plans in rural counties tended to include a larger share of the doctors in the area, but this is not surprising as rural counties overall have fewer doctors relative to the population when compared to large metro counties.
  • Most Marketplace enrollees lived in either a metro county (48%) or a large metro county (38%).
• While there is no formal definition of a “narrow network plan,” researchers have labeled plans covering fewer than 25% of the physicians in an area as narrow. Following this definition, 23% of Marketplace enrollees were in a narrow network plan in 2021.
• The 30 counties with the highest enrollment in the Marketplaces, predominantly urban and disproportionately in states that have not expanded Medicaid under the ACA, represented 34% of all Marketplace enrollees and 21% of the U.S. population.

Why it Matters

People enrolled in a plan with a narrow provider network are more likely to receive care out-of-network care, exposing them to higher cost sharing and balance billing. Out of adults with Marketplace coverage, 20% said that in the past year, a particular doctor or hospital they needed was not covered by their insurance. Among Marketplace enrollees who experienced this problem, 34% said necessary care was delayed, 34% said they were unable to get needed care, and 25% reported experiencing a decline in their health status. While the Biden administration has worked to improve Marketplace network adequacy through expanded federal rules, there remain strong incentives for insurers to keep their networks narrow. Further, insurers and providers are not held sufficiently accountable for inaccurate and out-of-date provider directories. Policymakers will need to continue to monitor consumers’ access to health care services and ensure adequate enforcement of federal and state standards.

Earlier this summer, the Biden administration announced updated guidance on medical debt. In addition to a proposed federal rule to prevent medical bills from being included in credit reports, the administration recommended that states take action to prevent accumulation of medical debt, limit coercive debt collections practices, and purchase and eliminate medical debt. Since publishing our report on state laws governing medical debt, at least 12 states have taken further action to strengthen protections for consumers.

In a new blog post for the Commonwealth Fund, CHIR faculty, Maanasa Kona, reviews recent state action on medical debt. The blog finds that most states have not yet enacted laws preventing the accrual of medical debt, but many have implemented protections for people who already have accumulated debt.

You can read the full post here.

What’s old is…old again. In the world of health policy, it doesn’t take long for old ideas to cycle back, even ideas that are just plain bad. J.D. Vance, candidate for Vice President of the United States, has recently called for a return to the “high-risk pools” that existed prior to the Affordable Care Act (ACA) for people with pre-existing conditions. Similarly, when Congress debated repealing the ACA in 2017, several members of Congress advanced the idea of replacing the ACA’s insurance reforms with high-risk insurance pools. Unfortunately, high-risk pools didn’t work before the ACA, they wouldn’t have worked in 2017, and they won’t work now.

It’s been over 10 years since the ACA’s insurance market reforms and consumer protections were adopted. Once insurers were no longer allowed to deny people insurance or charge them more based on their health status, there was no longer much need for high-risk pools. But before the ACA, 35 states had high-risk pools. They were basically health insurance ghettos for people with pre-existing conditions – and expensive, poor quality ghettos at that. On the eve of the ACA market reforms, they enrolled 226,615 people, a tiny fraction of those potentially eligible. Here’s why:

1)      Coverage was unaffordable. Nearly all of the high-risk pools had to set premiums at higher-than-market rates. Even though the high-risk pools were government-subsidized, those subsidies couldn’t cover the actual costs of this high-need population.

2)      Coverage didn’t cover the care needed. To keep costs in check, nearly all the high-risk pools imposed pre-existing condition exclusions, meaning that even if you could afford the premiums, the insurer could refuse to cover any costs for your pre-existing condition for as many as 12 months.

3)      Coverage was limited. All but two of the pools imposed lifetime dollar limits on coverage, usually between $1-2 million. Others imposed annual dollar limits on coverage, or limits on specific items or services, such a prescription drugs or rehabilitative services.

4)      High out-of-pocket costs. Many of the pools offered plans with high deductibles, requiring people to spend considerable amounts out-of-pocket before coverage kicked in.

Even with these efforts to constrain costs, many states were forced to cap or close enrollment in their high-risk pools in order to limit losses. And all of them experienced losses, even though they received billions in government subsidies. In 2011, net losses for the 35 state high-risk pools were over $1.2 billion.

There is no question that high-risk pools provided a source of coverage to a set of very vulnerable, high-need people in the days before the ACA, when the traditional insurance market was closed to them. However, they left millions of people out, the coverage was unaffordable and inadequate, and they were not cost-effective. Significant government subsidies would be needed – far more than proponents of high-risk pools have proposed – to ensure that all eligible for such a pool would be able to enroll in affordable coverage that meets their health care needs.

In early September, the U.S. House Education and Workforce Committee voted in favor of H.R. 9457, the Transparency Telehealth Bills Act. The bill, introduced by Rep. Aaron Bean (R-FL-04), received unanimous, bipartisan support from committee members following adoption of an amendment from Rep. Jahana Hayes (D-CT-05) that Bean welcomed as an “extra blanket of protection” for consumers. 

What Does the Transparency Telehealth Bills Act Do? 

The Transparency Telehealth Bills Act limits telehealth billing in two key ways: 

First, the bill imposes a site-neutral billing requirement for telehealth services paid for by group health plans. Regardless of whether a health care provider is practicing out of a hospital or an independent setting, the plan must pay the same amount. 

Second, thanks to the Hayes amendment, the bill prohibits hospitals from billing a separate facility fee when the health care provider is authorized to bill independently for the professional services they rendered. This means telehealth services can result in only one bill. 

Together, these provisions mean group health plans and their plan members would receive just one bill for telehealth services and the plan will pay the same amount no matter the provider’s location.

How Would This Affect Consumer Out-of-Pocket Costs and Total Spending?

For in-network care, consumers should be protected from the extra out-of-pocket costs that facility fees often can generate. They may still face the risk of balance billing for out-of-network care if providers seek greater reimbursement than their plan pays (whether they’re based at a hospital or not), as is standard today for any services not protected under the No Surprises Act. 

Total spending by group health plans may also go down, but whether and how much will depend on the level at which plans pay for telehealth services. The greatest benefit will come if plans set their reimbursement level at the amount they have been paying for telehealth services from independent clinicians, rather than hospital-controlled providers that often negotiate higher rates. Because the law does not cap reimbursement at this amount, plans must negotiate for it.

How Does This Bill Compare to Other Commercial Facility Fee-Related Reforms in Congress?

The Transparency Telehealth Bills Act is more narrowly focused than the other commercial facility fee ban proposed in Congress, both with respect to its limitation to telehealth services and group health plans only. Senator Sanders and Marshalls’ Bipartisan Primary Care and Health Workforce Act would prohibit facility fee billing for evaluation and management services and outpatient behavioral health services, in addition to telehealth services. This bill also does not include a unique provider identifier requirement, which has appeared in both House and Senate bills over the past year or so, and seeks to increase transparency regarding the location of care in health care claims.

At the same time, this bill is notable as the first legislation formally introduced in Congress to bring the concept of site-neutral payments to the commercial sector. Senator Sanders floated a commercial site-neutral proposal in 2023, but ultimately introduced his bill with Senator Marshall that instead prohibited facility fee billing for the services identified without requiring that the amount insurers pay for the same services be the same in different settings. (Even if facility fees are prohibited, hospitals with market power could negotiate greater reimbursement for bills submitted by their providers.)

Where Will the Bill Go from Here?

While it is getting late in the year to see new legislation move, it is possible this language (or something similar) could get incorporated into an end-of-year health care package or a telehealth extender bill. If it does, we will be watching to see whether its scope is expanded from only group health plans to include the rest of the commercial market, such as policies purchased through Affordable Care Act marketplaces, or any other changes are made. To better understand the different policy options lawmakers seeking to address outpatient facility fee billing may consider, check out our Cheat Sheet for Policymakers. You can also examine our nationwide maps, detailing outpatient facility fee billing laws across the country which can serve as a model for federal lawmakers.

By Jason Levitis , Sabrina Corlette, and Claire O’Brien*

The Affordable Care Act (ACA) Marketplaces have seen unprecedented enrollment growth in recent years, reaching 21.4 million in 2024—nearly double the 2020 total. A key reason is enhancements to the premium tax credit (PTC) that were enacted in the American Rescue Plan Act (ARPA) of 2021 and extended in the Inflation Reduction Act (IRA) of 2022. The enhancements are now set to expire after 2025.

It has been widely reported that expiration jeopardizes health coverage for millions of Americans. But there has been less discussion of when the enhancements must be extended to avert these losses.

Given that Congress commonly extends tax rules just before or even after expiration, observers may believe that extending the enhancements to 2026 and beyond can wait until late 2025 or even 2026. But that is not the case. Congress’s real deadline to avert 2026 premium increases and coverage losses is in the spring of 2025. That’s because most consumers will make 2026 coverage decisions in the fall of 2025, with their options determined by steps that come months earlier: insurance rate-setting, eligibility system updates, and Marketplace communications with enrollees.

Background

ARPA included the largest improvements to premium affordability since the enactment of the ACA. The PTC as originally enacted was widely seen as having two key shortcomings: It was too small to make coverage affordable for some who were eligible; and eligibility ended in a cliff at 400 percent of the federal poverty line (or about $51,000 for a single person for 2021 coverage), leaving some middle-income people ineligible for assistance regardless of their out-of-pocket premium. The ARPA PTC enhancements addressed both issues, increasing PTC for everyone eligible and eliminating the cliff so that no one need pay more than 8.5 percent of income for a benchmark plan.

The enhancements have been widely credited with reducing consumer costs, expanding insurance, and increasing access to health care. The Urban Institute estimates that the enhanced PTCs will lead to 7.2 million more people receiving subsidized Marketplace coverage and 4.0 million fewer people being uninsured in 2025, as compared to if the original PTCs were still in place. The Centers for Medicare and Medicaid Services estimates that the enhancements save the average Marketplace enrollee more than $700 on premiums in 2024. These savings have translated to enrollment gains, with record-high Marketplace enrollment for three straight years from 2022 to 2024. Without an extension, virtually all of the 21.4 million Marketplace enrollees will see premiums rise.

The PTC enhancements have also contributed to insurer competition in the Marketplaces and more consumer choice. Between 2021, when ARPA’s enhanced subsidies were first implemented, and 2023, the number of insurers participating in the Marketplaces increased by more than 25 percent, according to an Urban Institute analysis of 43 rating regions in 28 states. Many insurers already participating in the Marketplaces expanded into new service areas. Greater competition helps keep premiums down, as insurers vie for price-sensitive consumers.

The ARPA provided the enhancements only for calendar years 2021 and 2022. In a July 2022 Forefront piece, we noted that the front-loaded timeline for rate-setting and reenrollment meant that averting coverage losses required Congress to act well before the expiration date. Congress did just that, passing the IRA in August 2022 to extend the enhancements through the end of 2025. Congress now faces a similar deadline.

Congress often can and does wait until after tax provisions have technically expired before extending them, without serious harms to taxpayers. For example, many of the tax cuts signed into law by President George W. Bush were scheduled to expire on January 1, 2012, and were extended in the American Taxpayer Relief Act of 2012, which was signed into law on January 2, 2013. Forms and instructions were quickly updated, allowing taxpayers to pay the lower rates during the 2013 filing season. But the structure of the PTC—which is paid to insurers monthly during the tax year to reduce consumers’ premiums—requires a much faster timeline.

A Timeline Of Harms Caused By Delaying Extension

The timeline for setting rates and renewing coverage means that the harms from delaying extension would start to accumulate in the spring of 2025 and then quickly grow.

Insurer Participation Decisions, Higher Rates Set By Spring 2025

The annual timeline for developing and finalizing individual market premiums starts well before the plan year begins. In the first quarter of the previous calendar year, insurers are making decisions about whether and where to offer Marketplace plans, and at what price. Most states require insurers to submit their proposed rates for the next year by mid-July (in some states, as early as May or June). Insurers must submit their final plan and rate changes to federal officials by mid-August for the federally run Marketplace. Once approved by regulators, these rates are soon locked in place by contracts with Marketplaces, operational steps to upload plans and rates to Marketplaces, enrollment contracts with consumers, and federal regulations prohibiting rates from changing more than once per year.

Unless Congress acts by the spring of 2025, insurers will submit their proposed 2026 rates assuming that the ARPA PTC enhancements expire on December 31, 2025, resulting in higher net premiums. Insurance company actuaries assume that those willing to pay higher net premiums are sicker, on average, than those who would drop coverage. Insurers will make Marketplace participation decisions and set their 2026 rates in anticipation of this smaller, sicker risk pool.

Some state regulators could require insurers to submit two sets of proposed rates—one assuming the enhancements are extended, one assuming they are not—to allow lower rates to be swapped later in 2025. But not all states would require this, and doing so would impose additional costs on insurers and insurance departments.

Higher premiums will mean higher costs for consumers ineligible for PTC, since those ineligible for PTC—unlike their counterparts who receive PTC—are not insulated from list premiums. They will also increase costs for federal taxpayers, as premium tax credits rise with increases in premiums.

On the other hand, if insurers are confident that the enhanced subsidies will be extended, they will be more likely to maintain, or even expand, their Marketplace service areas and submit lower proposed rates. The Urban Institute estimates that, in 2025, the 7.2 million increase in Marketplace enrollment stemming from the IRA’s enhanced PTCs will reduce insurer premium rates by 5 percent on average.

Rate Shock And Opt-Outs From Renewal Notices By September 2025

Late summer 2025 is the deadline to prevent Marketplaces from sending renewal notices to enrollees reflecting both higher premiums and smaller tax credits. Such notices could cause current enrollees to opt out of auto-reenrollment, greatly reducing the likelihood of keeping them covered even if the enhancements are later extended.

While the annual reenrollment process is often thought of as beginning with the open enrollment period on November 1, it begins sooner. In August or September, Marketplaces run calculations to determine each consumer’s default plan, expected PTC eligibility, and net premium—a process called “batch redetermination.” This requires first updating information technology (IT) systems’ PTC parameters and plan assignment algorithms. Then in September or October, Marketplaces send enrollees renewal notices with information about their eligibility for the coming year—a process that may be spread over days or weeks given vendor capacity and the importance of pacing call center demand.

Unless the enhancements are extended before these steps, notices would reflect both the higher rates for 2026 and the un-enhanced APTC. (In some states, these notices detail enrollees’ default plan, estimated PTC, and estimated premium. In other states, the notices are less specific, providing warnings if financial assistance is likely to decline.) Lower-income consumers with low or zero premiums may experience “rate shock” at net premiums returning to pre-ARPA levels. Middle-income consumers who are receiving financial help due to the enhancements will again have no protection against high premiums—a particular concern for older enrollees and those in high-price states such as Alaska, West Virginia, and Wyoming.

Telling consumers to expect premium increases could lead to substantial coverage losses, even if Congress later acts to extend the PTC expansion. Consumers may opt out of automatic reenrollment, which is responsible for a substantial share of renewals. Consumers may stop opening Marketplace mail or reading electronic communications—meaning they won’t find out if an extension is later enacted. They may remove the premium from their budget planning for the following year and commit those funds to other purposes. Others may lose trust in the Marketplace. Marketplaces could attempt to send new notices if the enhancements are extended during this process, but doing so would take substantial time and resources given the process described above.

Open Enrollment Subsidy Levels Locked In By Late October 2025

Unless an extension passes a week or more before the end of October, Marketplaces will be unable to update eligibility systems to reflect the expanded PTC when current enrollees and new customers come into shop at the start of open enrollment, which is generally November 1. Showing higher premiums could have several repercussions:

1. Some consumers will choose not to enroll and go uninsured. Such attrition will be difficult to reverse if extension comes later. Current enrollees will lose the benefit of auto-reenrollment, and new customers may be impossible to reach because window shopping tools don’t generally collect contact information; both may tune out future communications.
2. Some consumers will choose a plan they would not want with the PTC expansion extended. Since the enhancements made silver plans inexpensive or free for many consumers, bronze enrollment has fallen by more than 10 percent and more consumers chose silver or gold plans. If bronze enrollment climbs again, it would expose consumers to significantly higher deductibles and other out-of-pocket costs. Others might enroll in a short-term plan or similar coverage that lacks the ACA’s consumer protections, exposing them to preexisting condition exclusions and caps on coverage.
3. Some consumers will still enroll but will be more likely to disenroll later due to higher out-of-pocket costs. Marketplaces may try to adjust enrollees’ APTC later, as many of them did when ARPA passed mid-year. But this may come too late and may not be possible for some enrollees.

These issues will continue to ensnare additional consumers even after an extension passes—until Marketplaces can update their systems. This will take time and may require taking down the Marketplace application during open enrollment for updating and testing, resulting in additional coverage losses and consumer confusion. Marketplaces will also lose the opportunity to do pre-open-enrollment marketing campaigns touting highly affordable premiums.

Operational Costs For Insurers, Insurance Departments, And Marketplaces

Modifying PTC rules late in the game would impose operational costs on insurers, which could be required to prepare and submit multiple rate filings, and on the insurance departments that would be tasked with reviewing those rates. The Marketplaces would also face additional costs, including last-minute re-programming of IT systems, revising communications materials, re-training customer support staff and navigators, sending corrected outreach notices, and booking additional advertising.

These costs could strain resources that cannot be readily scaled up, even if Congress were to provide implementation funding, as they did in the ARPA. Many Marketplaces have a fixed IT capacity, so adding new work means accomplishing less elsewhere. Last-minute changes also create more demand for call centers.

Conclusion

It will never be “too late” to extend the PTC enhancements—extending them will always expand coverage and save consumers money. But delaying enactment would begin to harm consumers sooner than many people realize—by the spring of 2025. Coverage losses in 2026 could not be fully reversed even if the PTC expansion were later restored. As a result, waiting to enact an extension would provide substantially less benefit than the exact same legislation passed earlier.

*Authors’ Note

Jason Levitis is a Senior Fellow and Claire O’Brien is a research analyst at the Urban Institute. Support for this article was provided by the Robert Wood Johnson Foundation. The views expressed do not necessarily reflect the views of the Foundation, the Urban Institute, or Georgetown University.

Jason Levitis, Sabrina Corlette, and Claire O’Brien, “Delays Extending Enhanced Marketplace Subsidies Would Raise Premiums and Reduce Coverage,” September 6, 2024, https://www.healthaffairs.org/content/forefront/delays-extending-enhanced-marketplace-subsidies-would-raise-premiums-and-reduce. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

To reduce the risk that Californians may experience a coverage gap when transitioning from Medi-Cal, the state’s Medicaid program, to Covered California, its health insurance Marketplace, the state enacted Senate Bill 260. The law instructs Covered California to create a streamlined pathway to insurance for individuals who are found ineligible for Medi-Cal but likely eligible for Marketplace subsidies by selecting for them a subsidized health plan through Covered California. The program launched in May 2023, with initial enrollments taking effect in July 2023. 

In a report funded by the California Health Care Foundation, experts at Georgetown University’s Center on Health Insurance Reforms describe the critical policy and operational decisions state and Covered California officials made to implement SB260 and how these choices have affected consumers’ coverage transitions. The report aims to inform future efforts to build on SB260’s framework and to guide policymakers and stakeholders in other states considering whether and how to establish their own facilitated enrollment programs.

Key findings include: 

• By March 2024, the program had facilitated the enrollment of about 112,000 Medi-Cal transitioners into Marketplace coverage. Most informants reported that implementation had gone well and were optimistic that the program is reducing burdens on consumers and meaningfully increasing take-up of Marketplace coverage.

• Any state implementing a facilitated enrollment program will face two critical policy questions that will influence the numbers of consumers that enroll in a Marketplace plan and the experience they subsequently have, post-enrollment. The first is whether to enable transitioning individuals to opt in or opt out of the selected Marketplace health plan. The second is to decide what that selected plan (the “default plan”) should be.
• States will need to conduct robust consumer education and outreach, informed by consumer testing and research, and collect, analyze, and publicly report data about the experiences of transitioning individuals and their coverage status. 
• Although an integrated Medicaid-Marketplace eligibility system is not required for a state to operate a facilitated enrollment program, such a program demands extensive and ongoing coordination between a state’s Medicaid agency and its Marketplace. 

You can read the full issue brief here.

As Medicaid unwinding draws to a close, millions of people have had to find new health coverage options, many of them through the Affordable Care Act (ACA) Marketplaces. What do we know about how they have fared, and whether state efforts to smooth coverage transitions have been successful?

Background

Following the April 2023 end of pandemic-era continuous coverage requirements, and with state Medicaid agencies resuming eligibility renewals and terminations, more than 25 million people across the country have been disenrolled from Medicaid coverage. For those that no longer qualify for Medicaid (for example, because they are over the income limit), the health insurance Marketplaces are a critical source of affordable coverage. 

Apples to Oranges: Comparing Unwinding Data

Accessible data on unwinding coverage transitions is key to ensuring that Marketplace-eligible consumers are not going uninsured after losing Medicaid. The federal government requires state-based Marketplaces (SBMs) to report data on a monthly basis detailing the number of individuals disenrolled from Medicaid who are determined eligible for Marketplace or Basic Health Program (BHP) coverage during the unwinding period, as well as the number of individuals who select either a qualified health plan (QHP) through the Marketplace or a BHP plan.* 

The latest SBM data published online by CMS includes unwinding activity through March 2024. Since this dataset includes the same metrics for each SBM state, it is useful for researchers looking to evaluate any one metric—such as the percentage of individuals who have selected a QHP—across all SBMs.

However, as CMS notes, variability in this data can occur for multiple reasons: States have different processes for conducting Marketplace and Medicaid eligibility determinations, and many are following different timelines for initiating Medicaid renewals, which can limit the comparabilityaccuracy of data reporting. Moreover, not only did states go into the unwinding with operational differences in their Marketplace and Medicaid programs, but eligibility, enrollment, and data reporting policies within states have evolved in response to frequently updated rules and guidance. As a result, it is very difficult to account for the numerous factors that impact coverage transitions in each state at any given time. 

In addition to the federally mandated data reporting, many SBM states are reporting their own unwinding data, which often provides more current and detailed information than the CMS data. Some states (such as Pennsylvania) have published interactive unwinding data trackers on their websites, while others have relayed updates in less accessible formats, such as SBM board meeting materials. As such, there is no standardized reporting template or system that all SBMs use to report their data, making it challenging to compare metrics across states. 

Integrated versus Account Transfer Eligibility Systems 

How states conduct Medicaid and Marketplace eligibility determinations can impact coverage transitions between the two programs. In some states, Medicaid and the Marketplace use a single system to determine an individual’s eligibility for both programs; in other states, the two entities use separate systems, requiring Medicaid to send a terminated beneficiary’s information to the Marketplace before they can be determined eligible for QHP coverage. 

CMS acknowledges this distinction by breaking down their SBM data into two groups: states with “integrated” systems and states with “account transfer” systems. Currently, 8 SBMs use an account transfer process and 11 have integrated systems. Comparing coverage transition rates between these two groups requires caution because the denominators—the population of people who are ultimately selecting a QHP or not in each type of state—are different. 

In most integrated states, the denominator is Marketplace applications associated with a Medicaid termination. In account transfer states, the denominator is, predictably, account transfers to the Marketplace associated with a Medicaid termination. Since account transfers occur before a Marketplace eligibility determination, many of these consumers may be eligible for an alternate form of coverage, whereas people who apply for Marketplace coverage in integrated states have already been determined eligible for a Marketplace plan and may be more likely to complete QHP selection.

With this caveat in mind, Medicaid to Marketplace transition rates appear quite similar in the aggregated data for integrated and account transfer SBM states. Over 15 percent of consumers in integrated states who were terminated from Medicaid during the April 2023 through March 2024 unwinding period ultimately selected a Marketplace plan (or had one selected for them via an auto-enrollment program). A slightly lower percentage—13.5 percent—of consumers who had their accounts transferred from Medicaid to the Marketplace following Medicaid termination during the same time period selected a plan.

New SBM Programs Show Promising Results

As discussed above, some SBMs are reporting more extensive unwinding data that includes QHP enrollments, demographic breakdowns, and enrollee use of financial assistance. Among the SBMs reporting their own unwinding data, some have implemented new programs to boost coverage transitions by easing administrative and financial barriers that consumers may face. States that have implemented facilitated enrollment and premium assistance programs—including California and Rhode Island—have some of the highest QHP effectuation rates (although because states report data differently, effectuation rates in California and Rhode Island are not a one-to-one comparison)..

In May 2023 California launched an “automatic plan selection” program to streamline coverage transitions by enrolling eligible individuals into subsidized Marketplace coverage after they are terminated from Medi-Cal (California’s Medicaid program). Data published by Covered California (the state’s Marketplace) capturing Medi-Cal transitions from July 2023 through April 2024, show that 33 percent of eligible Californians effectuated coverage into their automatically selected plan. Consumers must “opt in” to effectuate coverage by affirming they want the plan selected for them.

Rhode Island has implemented a similar program to automatically enroll eligible residents into a silver plan through the state’s Marketplace, HealthSource RI, after being terminated from Medicaid. Contrary to California, Rhode Island uses an “opt out” approach in which auto-enrolled consumers have 60 days to disenroll or switch plans. Rhode Island also covers the first two months of premium payments for consumers that are auto-enrolled into a plan with a premium. From May 2023 through June 2024, 25.4 percent of all all Medicaid terminated individuals in Rhode Island have enrolled in a QHP, and over half (50.2 percent) of those who are eligible for premium tax credits have enrolled. 

BHP is a Boon

The two states that have operated a BHP throughout the unwinding—New York** and Minnesota—have seen robust enrollment among those losing Medicaid. In Minnesota, according to the CMS data, 50.7 percent of consumers eligible for the state’s BHP (MinnesotaCare) enrolled. New York’s Essential Plan saw an even higher conversion rate, with 92 percent of eligible consumers enrolling. 

A potential reason for this is that BHP coverage is generally quite similar to Medicaid, making transitions between the two programs less of a hurdle for consumers (especially financially—the Essential Plan, for instance, has no premiums). New York and Minnesota’s state Medicaid agencies also administer their respective BHPs and are used to handling churn between the two programs. Minnesota automatically determines eligibility for MinnesotaCare when an individual is determined ineligible for Medicaid. In New York, someone who becomes eligible for the Essential Plan upon losing Medicaid is auto-enrolled into their previous insurers’ equivalent Essential Plan product. 

In addition to these factors, recently implemented state policies also likely played a role in high BHP enrollment rates. Starting April 1^st of this year, New York expanded Essential Plan eligibility to include consumers with incomes between 200 and 250 percent of the federal poverty level—previously, this population was eligible for Marketplace coverage. MinnesotaCare temporarily waived premiums during the unwinding, easing financial burdens for those transitioning from Medicaid.

Takeaways

Consumers have faced difficulty transitioning from Medicaid to Marketplace coverage prior to the unwinding. In 2018, for instance, only 3 percent of people who lost Medicaid successfully transitioned to the Marketplace. A much higher percentage of people losing Medicaid selected a QHP during the unwinding period, likely due to a combination of factors such as increased outreach and enhanced premium assistance. While it’s difficult to definitively conclude why some SBMs have fared better than others, it’s clear that states that have gone above and beyond to facilitate coverage transitions have seen returns. Despite the many challenges the unwinding brought, it gave states the opportunity to innovate with new programs that serve as a model to ease coverage transitions in the future.

*Though this post focuses on SBM data, data is also available for states that use the federal Marketplace platform (HealthCare.gov).).

**Because New York’s coverage program is now operated under a 1332 waiver, it is technically no longer a BHP.

Special thanks to CHIR’s Rachel Swindle and Elizabeth Lukanen of SHADAC for their assistance with this post.

By, Jack Hoadley, Kennah Watts, and Zachary Baron

The No Surprises Act (NSA) protects consumers from surprise out-of-network (OON) billing by banning providers and facilities from sending consumers balance bills for certain services in amounts beyond normal in-network costs. Many facility-based OON medical services are subject to the law, including most emergency services, non-emergency services from OON providers at in-network facilities, and services from OON air ambulance providers. (The NSA does not apply to ground ambulance services nor services that would not be covered by an individual’s insurance when in network.)

Before the NSA took effect on January 1, 2022, patients were often asked to cover the cost difference between the provider’s billed charge and the amount paid by the insurer. Under the NSA, providers and payers must reach a payment agreement for the types of services listed above and are not permitted to engage in balance billing. This negotiation process can trigger an independent dispute resolution (IDR) if the parties do not privately reach an agreement. In this case, a third-party arbitrator (IDR entity) selects either the plan or provider offer, and binds both parties to this amount.

The IDR process began in 2022. Regulations to implement it have faced substantial litigation, and associated court decisions have contributed to operational challenges over the course of its implementation. On February 15, 2024, in compliance with requirements in the NSA, the federal agencies (the Departments of Health and Human Services, Treasury, and Labor, and the Office of Personnel Management) released public use files with data on all the resolved IDR cases for the first half of 2023. On June 15, 2024, the agencies released additional public use files covering the remainder of 2023.

These files include information on the provider and payer and the offer amounts from each party––expressed as a percentage of a qualifying payment amount (QPA), which is the inflation-adjusted median rate paid by a specific insurer in 2019 to its contracted in-network providers, based on insurance type and geographic location. The files also include information on the prevailing offer, as determined by the IDR entity. In addition to the public use files that include information on IDR cases resolved in 2023, the federal agencies also released supplemental tables reporting on cases filed during 2023 (but not yet resolved).

In this article, we share key findings from the 2023 data and their implications for future use of the IDR process. Our analysis, which builds on our earlier discussion of IDR use in the first two quarters, illustrates trends in the IDR process across provider and payer types, offer amounts, geographic locations, and more.  As relevant, our analysis reports on cases both filed and resolved in 2023.

Providers Continued To File New Cases At Rapid Rates

The number of newly initiated cases grew more than fourfold from 69,000 in the third quarter of 2022 to 318,000 in the fourth quarter of 2023. The vast majority of claims were filed by provider groups, with health plans as the responding party. The rate of new cases dipped in the third quarter of 2023, likely in part because of the district court decision in one of the lawsuits brought by the Texas Medical Association and the subsequent closing of the government’s portal for filing new cases. That case vacated several regulatory provisions nationwide concerning the methodology used to determine the QPA.

Throughout 2023, more than one-third of filed cases were challenged by health plans as potentially ineligible. Cases might be ineligible for IDR if they do not fall under the NSA’s scope, are not filed on a timely basis, or are required under the law to be resolved by a state payment determination process.

Filings Were Heavily Dominated By A Few Provider Groups In A Few States

There were 657,040 newly initiated cases filed in 2023, about 70 percent of which came from just four organizations, all backed by private equity: Team Health, SCP Health, Radiology Partners, and Envision. Team Health (backed by the Blackstone Group) and SCP Health (backed by Onex) are revenue cycle management companies that work with affiliated physician groups to file cases and otherwise help physicians maximize their revenues. Radiology Partners (backed by Starr Investment Holdings and New Enterprise Associates) and Envision (backed by KKR) are large physician practice companies. Radiology Partners, as the name suggests, concentrates in radiology medicine, while Envision is a multispecialty practice organization with a large presence in emergency medicine.

The concentrated use of IDR by just a few physician organizations is one factor that drove a geographic concentration in filed cases. Other factors may include the fact that the NSA directs certain cases to state processes. About half of all newly filed cases in 2023 were from just four states: Texas, Florida, Tennessee, and Georgia—all states where the four noted organizations are active. By contrast, another four populous states (Connecticut, Maryland, Massachusetts, and Washington) each had fewer than 1,500 cases filed in all of 2023.

Providers Won More Often And At Higher Rates Than Plans

The rate of resolving cases grew steadily, reaching a high point of 104,000 cases resolved in the fourth quarter of 2023—and payment determinations were made in 73,000 of those cases. Across the year, about 22 percent of all resolved cases were deemed ineligible.

As seen in the first data release, providers won the vast majority of resolved IDR disputes, and their win rate crept upward throughout the year. From the first to last quarter of 2023, the provider win rate grew from 72 percent to 85 percent. When providers won, they continued to win payments at a median rate of more than three times the QPA—322 percent to 350 percent, depending on the quarter. By contrast, plan offers in the IDR process adhered closely to the QPA. As further context, an analysis by researchers at the Brookings Institution found that the prevailing payments coming out of IDR proceedings in the first two quarters of 2023 were between 3.7 and 5.1 times Medicare rates for three types of services commonly contested in IDR proceedings (emergency care, imaging, and neonatal/pediatric critical care) and even higher in the past two quarters.

In a subset of cases, providers won much higher amounts. In about one-fourth of resolved cases, the prevailing rate decided by the IDR entities was at least five times the QPA. In the fourth quarter of 2023, 9 percent of resolved cases had a prevailing rate of more than 10 times the QPA. While providers were requesting these higher amounts, the plan offers were nearly always at or below the QPA. In the fourth quarter, only about 10 percent of plan offers were higher than the QPA—more than in any previous quarter.

Some Provider Groups And Specialties Were Especially Successful In The IDR Process

Two of the organizations contesting the most IDR cases were among the most successful. Both Team Health and Singleton Associates won more than 90 percent of their cases in the past three quarters of 2023, although the amounts won differed significantly between these provider groups. Team Health typically won an amount double the QPA across all quarters. Singleton Associates, a subsidiary of Radiology Partners, won almost fivefold of QPA in the first quarter, and in the past three quarters received median payments up to eight times QPA.

Overall, radiology providers using the IDR system were especially successful. In their contested cases, the median prevailing offer was more than 500 percent of the QPA in the past two quarters of 2023. Surgeons and neurologists did even better, with prevailing offers of 800 percent or more of the QPA. By contrast, institutional providers (hospitals) won less frequently than physician providers, and their winning offers were at a lower level (no more than 250 percent of the QPA throughout 2023).

What Does It All Mean?

The data release for two additional quarters of 2023 provides a broader look at how the IDR process under the NSA is working and confirms that the story emerging from the early months was not a fluke. The volume of cases entering the IDR process remained high, and providers continued to maintain a high rate of success. Data from the most recent available quarter (the fourth quarter of 2023) suggest that case volume was growing from already high levels and providers were winning more often and with higher amounts.

It remains early, however, to draw firm conclusions about future trends in the IDR process. Litigation over the process and the calculation of the QPA remains active, and the resolution of various cases on appeal could have significant ramifications for the IDR process, patient cost-sharing exposure, and health costs more broadly. A Fifth Circuit panel recently issued a decision upholding the lower court’s ruling that blocked the fairly modest guardrails the administration sought to put in place that would guide how IDR entities consider the relevant statutory standards in weighing offer amounts from each party (maintaining the status quo). A separate Fifth Circuit appeal remains pending (briefing is complete and oral argument will occur on September 3, 2024) concerning the regulations outlining the methodology used to calculate the QPA. Enforcement discretion mitigating the fallout from a district court decision vacating multiple regulatory provisions related to the QPA methodology has been extended, for now, until November 2024.

Additional lawsuits in which providers sought to sue IDR entities directly to overturn arbitration awards are also winding their way through the appeals processes in the Fifth and Eleventh Circuits. The administration previously warned that if IDR entities could be exposed to such litigation frequently, “the viability of the Act’s IDR process would be placed at risk.”

Depending on how these cases are resolved, the ground rules for the IDR process and calculation of the QPA could still change. Stakeholders are gaining experience in what works for them and what does not, but data releases made in 2024 can only affect behavior going forward. It could be well into 2025 before the process stabilizes and stakeholders reconsider their strategic approaches to the IDR system.

The evidence to date suggests that strategies of using IDR are not uniform across the provider community. System use is dominated by a handful of organizations, especially those backed by private equity. There is little evidence that rank-and-file emergency physicians, radiologists, and anesthesiologists are using the system. A key policy question is whether the projection by the Congressional Budget Office (CBO) that the NSA would have a modest dampening effect on health costs and premiums paid by consumers will prove accurate. The evidence to date points in the other direction, but it will take more time and experience to offer a definitive answer. In particular, the CBO estimate relied on the idea that future rounds of in-network fee negotiations between plans and providers would be influenced by IDR outcomes. It remains too early to know whether and how the early trends in IDR decisions—occurring in a small minority of all health care claims—may affect these negotiations.

Looking Forward

In the interim, policy makers and researchers will look forward to future data releases to see if the trends are changing at all in 2024. At this point, the biggest open question is to understand why the decision trends show high provider win rates. The NSA makes no requirement that IDR entities offer reasons for their payment determinations, nor have they opted to offer explanations. An attempt in regulation to include such a requirement is one of the provisions nullified in the courts.

Some observers have speculated that contracted rates for OON providers when they were previously in network—a factor explicitly identified in statute—may play a key role in the high provider win rates, in some cases. Others have suggested that rates previously paid for OON services may be influential, even though it is not one of the NSA’s specified factors. Still others have wondered whether physicians are more aggressive than insurers in making their cases to the IDR entities. Ideally, more information is needed on the types of evidence being submitted to the IDR entities by providers and plans and on the reasons given by IDR entities for their decisions.

Jack Hoadley, Kennah Watts, Zachary Baron, “2023 Data From The Independent Dispute Resolution Process: Select Providers Win Big,” Health Affairs Forefront, August 19th, 2024, https://www.healthaffairs.org/content/forefront/2023-data-independent-dispute-resolution-process-select-providers-win-big. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By, Sheela Ranganathan and Maanasa Kona

Amidst the growing interest among policymakers to protect patients from medical debt and its negative downstream effects, in April 2023, the three credit reporting agencies (CRAs)—Equifax, Experian, and TransUnion—voluntarily agreed to stop reporting any medical debt under $500. This April, the Consumer Financial Protection Bureau (CFPB) found that, despite these changes, 15 million Americans still have $49 billion worth of medical bills on their credit reports. In particular, CFPB found that medical debt disproportionately burdens older Americans as well as low-income and rural communities.

In an effort to protect these patients, CFPB issued a proposed rule in June 2024 seeking to ban medical debt from certain credit reports. If finalized, the rule would also stop creditors from relying on medical bills for underwriting decisions and stop debt collectors from engaging in certain coercive collection practices.

In a press release accompanying the proposed rule, Vice President Kamala Harris and CFPB Director Rohit Chopra highlighted the importance of ensuring that getting sick or taking care of loved ones does not result in financial hardship. The proposed rule is aimed at protecting consumers from repercussions of medical debt like restricted access to loans and increased risk of bankruptcy, many of which disproportionately burden Black, Hispanic, and low-income communities.

The Impact Of Medical Debt On Credit Reports And Policy Responses To Date

Medical debt is a leading cause of bankruptcy in the United States and affects about 100 million Americans. Medical debt can impact patients’ well-being, making them less likely to seek future medical care and negatively affecting their financial stability. One of ways in which medical debt can negatively affect a patient’s financial health is through its impact on their credit report. Hospitals and debt collectors often provide information about medical debt to credit reporting agencies, which then include this information in the credit reports they provide to prospective lenders, employers, and landlords. This practice can make it much harder for patients to obtain loans, employment, and housing. 

At the federal level, the tax code defines the practice of non-profit hospitals reporting medical debt to credit reporting agencies as an “extraordinary collections action.” Before taking this action, federal law requires non-profit hospitals to wait at least 120 days from the day of providing the first post-discharge bill, and to notify patients at least 30 days before reporting that debt to credit reporting agencies. This requirement only applies to non-profit hospitals and falls far short of actually prohibiting the practice entirely.

Further, at the federal level, the CFPB has additional oversight authority over credit reporting through the Fair Credit Reporting Act (FCRA). Under FCRA, CFPB oversees credit reporting agencies, entities that provide information to them (debt collectors and hospitals), and entities that use credit reports in their decision making (creditors, employers, landlords). In 2003, FCRA was amended to prohibit creditors from using medical information in their decision making, but subsequent regulations created an exemption that allows the consideration of financial medical information or information related to medical debt, a subcategory of medical information.

States have been active in this space as well. In the past year alone, a number of states have enacted legislation that will prevent medical debt from harming patient credit reports. For example, Rhode Island implemented a “belt-and-suspenders” approach, which (1) prohibits providers from reporting medical debt to credit reporting agencies, and (2) prohibits credit reporting agencies from retaining or reporting on any medical debt information.

New CFPB Rule Seeks To Remove Medical Debt Data From Certain Credit Reports

In the preamble to the proposed rule, CFPB notes that medical debt has limited predictive value for credit underwriting purposes given the unique circumstances that cause an individual to go into medical debt. Further, CFPB finds that medical debt information can be riddled with inaccuracies. According to the agency, many industry participants have stopped or reduced their reliance on medical debt information, “casting doubt on its value.”

Given the limited utility of using medical debt to make credit decisions, CFPB’s proposed rule would amend Regulation V, which implements FCRA, to incorporate three main changes. First, it would remove the financial information exception that currently allows creditors to use medical information related to medical debt when making credit eligibility determinations. The preamble explains:

Medical information related to medical debt includes, for example, “[t]he dollar amount, repayment terms, repayment history, and similar information regarding medical debts to calculate, measure, or verify the repayment ability of the consumer, the use of proceeds, or the terms for granting credit” and “[t]he identity of creditors to whom outstanding medical debts are owed in connection with an application for credit, including but not limited to, a transaction involving the consolidation of medical debts.” 

CFPB would apply this requirement to any medical debt owed directly to a health care provider, sold to a debt buyer, assigned to a third-party debt collector who has been assigned the debt by a health care provider, or that is the subject of a civil judgment related to a debt collection action.

Second, the proposed rule would prohibit consumer reporting agencies from including medical debt information in credit reports provided to creditors, when it believes that creditors are prohibited from considering it. CFPB states that it intends for this requirement “to operate alongside Federal and State-level efforts to increase consumer protections around medical debt consumer reporting.” While the proposed rule falls short of a full prohibition, it would significantly limit the appearance of medical debt on credit reports.

Lastly, the proposal would ban repossession of medical devices. For example, CFPB provides that lenders would be prohibited from “taking medical devices as collateral for a loan” and “repossessing medical devices, like wheelchairs or prosthetic limbs, if people are unable to repay the loan.” If finalized, the rule would be effective 60 days after publication in the Federal Register.

While this proposed regulation represents a significant step forward in protecting patients from the negative downstream effects of medical debt, there are some gaps in the proposed rule that are worth noting. First, the proposed rule only prohibits the inclusion of medical debt information in credit reports generated for creditors making lending decisions. It does not prohibit credit reporting agencies from including information about medical debt in credit reports issued to others who use credit report information, such as prospective employers or landlords. Second, the proposed rule’s protections would not extend to patients who pay for their medical bills through either general purpose or medical credit cards.

Recent Litigation Allays Concerns About CFPB’s Constitutionality

CFPB’s ability to issue rules like the proposed rule on medical debt hinges on its authority and funding to do so. In 2020 and again this term, the Supreme Court considered broad constitutional attacks seeking to stop CFPB from conducting its work, ultimately rejecting such claims and permitting the agency to continue to issue regulations and bring enforcement actions.

The first existential lawsuit threatening CFPB was decided in 2020. That case was brought by a law firm in California that was being investigated by CFPB for alleged violations of telemarketing laws. The law firm asserted that CFPB’s demand for certain documents in its investigation process was invalid because CFPB’s leadership structure was unconstitutional under separation of powers principles. In a 5-4 opinion, the Court held that the agency’s single-Director configuration was incompatible with the Constitution, especially because the Director was not removable at will by the President. However, finding that CFPB’s leadership structure provisions were severable from the rest of the statute granting CFPB its authority, the Court found that the agency could continue to exercise its authority under a Director that was removable at the President’s discretion.

Again in its most recent term, the Court considered whether the structure of CFPB was constitutional—this time, evaluating whether the agency’s funding mechanism—separate from the annual appropriations process by Congress, though consistent with the model used for the Federal Reserve and other financial regulators—violated the Appropriations Clause. In May 2024, in a 7-2 decision written by Justice Clarence Thomas, the Court held that CFPB’s funding structure did not violate the Appropriations Clause because a valid appropriation only needed to identify a source of public funds and authorize the expenditure of those funds for designated purposes. In a press release following the decision, Director Rohit Chopra stated that the ruling “makes clear that the CFPB is here to stay,” noting that the agency would resume its enforcement actions and rulemakings that were on pause while the case was heard. 

Takeaways

Whether the CFPB issues a final rule on medical debt may depend on the upcoming presidential election and potential shifts in policy that could result from a change in administration. Under the Trump administration, CFPB was less engaged in both rulemaking and enforcement, consistent with the administration’s overall deregulatory efforts. In referring to the CFPB’s strategic plan for 2018 to 2022, the agency’s acting director at the time stated that the administration was “committed to fulfill the Bureau’s statutory responsibilities, but go no further.” Further, even if the rule is finalized, it might have to face and survive legal challenges.

Given the repeated challenges to CFPB’s authority, the uncertainty around the upcoming election, and the high probability of litigation if the rule is finalized, further state action could ensure that at least some patients are protected from the impact of medical debt on their credit reports. Even if the rule is finalized as proposed and survives legal challenges, state action can address some key gaps in the rule. Notably, the rule does not limit the use of medical debt information in employment and tenant screening or protect patients who pay for medical care using general purpose or medical credit cards. State action prohibiting providers from supplying information about medical debt to credit reporting agencies in the first place, or prohibiting credit reporting agencies from including medical debt information on any credit report they generate, could significantly expand protections for patients.

Sheela Ranganathan, Maanasa Kona, “Biden Administration Proposes Rule to Ban Medical Debt from Credit Reporting,” Health Affairs Forefront, August 9th, 2024, https://www.healthaffairs.org/content/forefront/biden-administration-proposes-rule-ban-medical-debt-credit-reporting. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By, JoAnn Volk, Emma Walsh-Alker, and Chrstina L. Goe

The United States is facing a behavioral health crisis, but many people struggling with mental health or substance use disorder are unable to access treatment—even if they have health insurance. The 2008 Mental Health Parity and Addiction Equity Act (MHPAEA) is the primary federal law that aims to protect access to behavioral health care for privately insured Americans. But enforcing the law’s protections can be challenging, and recent analyses have found that many health insurers are still not fully compliant with MHPAEA.

In a new issue brief for the Commonwealth Fund, CHIR experts interviewed insurance
regulators in ten states to identify the tools state regulators are using for MHPAEA oversight and enforcement, as well as the barriers they are facing. The brief outlines state approaches to improving access to behavioral health care by leveraging MHPAEA, in addition to other important consumer protections such as network adequacy standards.

You can read the full issue brief here.

With the mid-summer humidity and heat, CHIR stayed cool indoors to catch up on the latest in health policy research. In July, we read studies that proposed policies to increase insurance coverage rates and forecasted insurance coverage and health expenditures for the next decade. 

Uninsurance Rates Have Fallen Significantly Following the Affordable Care Act – Several Policy Changes Could Further Increase Coverage

Primus, Wendell et al. Brookings. July 22, 2024. Available here.

Researchers from Brookings conducted a landscape assessment of major health reforms from the past century to examine the policies’ effects on insurance rates, then proposed additional policy reforms to sustain and further reduce the uninsurance rate. 

What it Finds

• The Affordable Care Act (ACA) cut uninsurance rates in half, from 20.8 percent in 2013 to 11.6 percent in 2022.
  • The greatest insurance coverage rates are in Medicaid expansion states, where only 5.1 percent of working-age citizens are uninsured.
• Recent policies have built on the success of the ACA and further expanded access to affordable health insurance, notable policies include extended premium subsidies and continuous Medicaid enrollment.
• Despite gains in coverage for citizens, uninsurance rates are three and half times higher for non-citizens (32.9 percent) and evidence demonstrates that providing public coverage for non-citizens is half as costly as providing public insurance to US-born adults. 
• The authors find evidence of several policies that could sustain and increase insurance coverage: extended premium subsidies, expanded Medicaid or expanded Marketplace eligibility, reinstated uninsurance penalties, and improved enrollment strategies. 
• There are various tradeoffs that policymakers can consider when determining whether and how to move forward with the proposed options.
  • Some of the proposed policies – extended premium subsidies, expanded Medicaid, expanded Marketplace eligibility– are estimated to increase the federal deficit over the next decade, but could provide an essential safety net for millions of people.
  • Restoring the tax penalty to purchase insurance could result in an increase in enrollment and decrease in premiums, but policymakers could make improvements to ensure the mandate is appropriately targeted and effective.
  • Improved enrollment strategies and 12-month continuous Medicaid enrollment could decrease insurance disparities for marginalized communities and produce $1.8 billion of savings.

Why it Matters

Evidence has shown that health insurance coverage is vital to individual and public health. Concerns about affording and accessing coverage are front of mind for many Americans. Major health insurance reforms and policies in recent decades have created dramatic gains in health insurance access and quality, leading to a historic low in uninsurance. This progress is substantial, and further policies could sustain or even increase these gains, including permanent extensions of premium tax credits, targeted investment and outreach for Marketplace enrollees, and continuous Medicaid eligibility.

Health Insurance Coverage Projections For The US Population And Sources Of Coverage, By Age, 2024–34

Hale, Jessica et al. Health Affairs. July 2024. Available here.

The Congressional Budget Office (CBO) Coverage Team analyzed recent survey and administrative enrollment data to approximate changes in health insurance rates for the next decade (2024 to 2034), if current policies and regulations remain in place.

What it Finds

• By 2034, the uninsurance rate is estimated to be 8.9 percent, a 2.7 percent increase from the 2023 rate, with the highest rates for immigrants and adults aged 19-44.
• The share of the population with multiple forms of coverage will decline by 27.6 percent (29 million in 2023 to 21 million in 2034). 
• Marketplace enrollment is expected to reach an enrollment high of 23 million individuals in 2025, but then decline by 7 to 8 million following the expiration of enhanced subsidies.
• Enrollment trends will vary across coverage types and reflect scheduled policy changes such as the expiration of enhanced subsidies for Marketplace plans, Medicaid continuous eligibility and redeterminations, and Children’s Health Insurance Program (CHIP) funding provisions.
  • Employer-based coverage is expected to expand after enhanced subsidies expire, which will also reduce enrollment in Marketplace plans.
  • With the affordability benefits of enhanced premium tax credits, CBO estimates that Marketplace enrollment will reach a historic high in 2025, with 23 million enrollees, but following the expiration of those subsidies, enrollment is expected to drop to 14 million individuals by 2034.
  • As states resume Medicaid eligibility redeterminations, CBO projects that Medicaid and CHIP enrollment will decline from 92 million to 78 million by 2026, and grow modestly until 2032.
• Demographic changes, such as an aging population and increased immigration, will also impact coverage and likely increase Medicare enrollment and the uninsurance rate, respectively.
  • CBO projects Medicare enrollment to reach 74 million individuals by 2034, a 21.3 percent increase from 61 million enrollees in 2023. 
  • The uninsurance rate for immigrants is expected to be four times the rate of the overall population. 

Why it Matters

Despite a historic low in the uninsured rate, the CBO estimates that insurance coverage could decline in the next decade as policies expire and change, in particular those related to the COVID-19 pandemic and the enhanced premium tax credits for Marketplace coverage. These projections are not destiny, and policymakers should be mindful of how policy reform and investment can further reduce uninsurance. In fact, the ability to influence coverage is evidence by the historic low in uninsurance, as concerted efforts to expand and improve the ACA led to affordable coverage options for millions of Americans. Policymakers should consider several additional actions that could maintain current coverage rates, if not increase them: Medicaid expansion, permanent extensions of premium tax credits, investment in targeted Marketplace outreach, continuous Medicaid eligibility, and others. Unless action is taken, the CBO’s projection may come to fruition, and millions of people could lose critical coverage.

National Health Expenditure Projections, 2023–32: Payer Trends Diverge As Pandemic- Related Policies Fade

Fiore, Jacqueline A. et al. Health Affairs. July 2024. Available here.

Researchers from the Centers for Medicare and Medicaid Services (CMS) used the Medicare Trustees Report and macroeconomic data to conduct actuarial and econometric modeling to forecast national health expenditures for the next decade (2023-2032).

What it Finds

• The growth in health care spending is projected to grow more rapidly than the gross domestic product (GDP), with health costs approaching 20 percent of the GDP by 2032.
  • Several factors are attributable to this increase: growth in personal and sector-wide prices, continued aging of the population, and increased demand for health care services.
• In 2023, spending for private health insurance is projected to increase 11.1 percent and total $1.14 trillion, which far exceeds projects for Medicare (growth of 8.4 percent and total of $1.0 trillion) and Medicaid (growth of 5.7 percent and total spending of $852 billion).
• Growth in spending by payer type will fluctuate over the next decade, as policies and demographic factors influence enrollment rates.
  • Medicare is expected to be the highest spender of the next decade, with an average growth rate of 7.4 percent, attributed mostly to increases in the aging population with slight spending offsets from the drug negotiation provision of the Inflation Reduction Act.
  • Following the resumption of state Medicaid eligibility redeterminations, enrollment is estimated to decline by 10.2 million (11.2 percent), though Medicaid spending will level out to an average growth rate of 6.2 percent by 2032.
  • Of the coverage options, private insurance enrollment and spending is projected to have the most variation: enrollment is expected to rise between 2023 and 2025, later dropping by over 7.3 million enrollees (19.2 percent) in 2026 after enhanced Marketplace subsidies expire. From 2027 to 2032, private insurance spending is projected to average 4.8 percent.
• Major services and goods, such as hospital services, physician services, and prescription drugs, are anticipated to have similar, stable growth rates until 2032.

Why it Matters

Health care spending in the United States is already enormous, and is expected to continue to grow exponentially in the next decade, outpacing even the growth of the GDP. While these spending trends are influenced by various factors, including enrollment and demographic changes, evidence indicates that high costs are attributable to high prices. These prices are not fixed, but can be changed through a variety of regulations and policy reforms. For example, research has shown that health system consolidation leads to significant price increases (with unclear, if any quality gains). Consequently, to mitigate price increases from consolidation, policymakers could strengthen anti-trust oversight, with support for state and federal regulatory agencies. Consolidation and anti-trust enforcement is merely one option among many – numerous reforms have been proposed to reduce healthcare prices and subsequently, spending. If policymakers aim to curb healthcare spending growth, they should consider proposals to regulate prices and act accordingly, rather than passively watch costs inevitably rise.   

Health insurers’ use of prior authorization – a medical management tool requiring providers to seek the insurer’s approval before their patient receives a healthcare item or service – appears to be on the rise. While providers and patients raise concerns that prior authorization can inhibit patient care and increase administrative burdens for clinicians, insurers argue that prior authorization is a critical tool to curb costs and inappropriate service utilization.

To learn more about how policymakers are responding to these concerns, we looked at four states’ prior authorization policies for the commercial market: Arkansas, Illinois, Texas, and Washington. Through qualitative interviews, surveys, and policy analysis, we examined a range of state-level prior authorization reforms, and provide an assessment of how they are affecting patients, providers, and insurers.

We find that there is no single “silver bullet” reform of prior authorization policies or practices that can ease provider burden and improve patient access without also increasing insurers’ costs, but several reforms discussed in this study show potential, including:

• Requiring greater transparency of services subject to prior authorization, clinical review standards, and the reasons for denying prior authorization requests;
• Setting maximum time periods for insurers to respond to prior authorization requests;
•  Standardizing the form and method for exchanging prior authorization requests, decisions, and related information; and
• Establishing expectations for peer-to-peer review of prior authorization requests and the use of accepted and transparent clinical review standards.

Ultimately, the effect of state-level prior authorization reforms depends on their design, implementation, ad enforcement, and should be coupled with federal action to extend reforms to employer plans that fall outside state regulation.

Read the full report here.

Funding for this research and report was provided by the Robert Wood Johnson Foundation. Additional publications by CHIR researchers can be found here. CHIR is composed of a team of nationally recognized experts on private health insurance and health reform. For more on our work, please see our website, blog, and follow @GtownCHIR on X (formerly Twitter).

By Stacey Pogue and Nadia Stovicek

Steward Health Care, the nation’s largest private, for-profit hospital chain, filed for bankruptcy in May 2024, resulting in one of the largest health care provider bankruptcies in decades. This action has left patients and employees of Steward’s 31 hospitals in communities across eight states worried about hospital closures and disruptions to care. Steward’s financial distress stems in part from destabilizing private-equity tactics that stripped hospitals of assets and loaded them with debt. Steward’s financial collapse prompted recent hearings in both the Massachusetts Legislature and US Senate. A key theme across both hearings was the need for more transparency of entities that own health care providers.

As explained in a previous Health Affairs Forefront article, the nature of ownership or control of doctors’ practices, hospitals, and other providers can have profound effects on price, use, quality, and access to care, yet it can be hard or impossible to know which entities own or control a health care provider. A web of complex corporate structures among interrelated entities can obscure ownership or controlling interests. Existing Centers for Medicare and Medicaid Services (CMS) data sources on hospital and nursing home ownership and control have gaps, although recent CMS efforts will increase information on nursing homes. In addition, there is no complete, publicly available data source with ownership information for physician practices.

The lack of good data on ownership and control limits the ability of policy makers to target policies aimed at lowering prices, encouraging competition, and improving quality. It also hinders researchers’ ability to study the impacts of various types of ownership and controlling interests on health care markets. For example, although Optum, owned by UnitedHealth Group, now employs or affiliates with one in ten US physicians, researchers have limited ability to identify Optum-linked physicians in relevant databases, understand the degree of Optum’s control, or study the impact of that control. Most of Optum’s physicians are not employees but are linked by an affiliation or contract, and key CMS data do not capture information on such relationships. Data on private-equity ownership and control is also limited. To study its effects, researchers must conduct tedious manual research, supplemented by proprietary databases that are both expensive and incomplete. This research has produced accumulating evidence showing private-equity investment in health care is rapidly increasing, frequently leads to higher prices, and can compromise quality.

While transparency alone is insufficient to mitigate price increases and other harms from growing consolidation in health care markets, it forms a crucial foundation for further action. This article reviews recent ownership transparency efforts at the federal level and in two example states: Indiana and Massachusetts. It further explores how Massachusetts is applying lessons from Steward to strengthen its long-standing provider transparency programs in light of increasingly obscure ownership structures and controlling interests. 

Recent Efforts In Congress

House Of Representatives

At the end of last year, the House of Representatives passed the bipartisan Lower Costs, More Transparency Act that, among many other provisions, requires Medicare Advantage plans to periodically report on health care provider practices they own or with which they share a parent company to the Department of Health and Human Services. This provision increases ownership transparency with respect to one type of vertical integration, when private insurers offering Medicare Advantage or Medicare drug coverage buy up physician practices, pharmacies, or other providers. More broadly applicable provider ownership transparency provisions with bipartisan backing were considered, but ultimately not included in the House-passed Lower Costs, More Transparency Act.

Senate

In recent months, concerns about patient safety at private-equity–backed medical facilities prompted Senators from both parties to inquire about provider governance, staffing, and transactions. Senators Charles Grassley (R-IA) and Sheldon Whitehouse (D-RI) are seeking information from private-equity–backed hospitals, and Senator Gary Peters (D-MI) is seeking information from private-equity–backed emergency departments.

On April 3, 2024, a subcommittee of the Senate Health, Education, Labor, and Pensions Committee held a field hearing on the impact of private equity in health care with a focus on Steward. At the hearing, Subcommittee Chairman Senator Ed Markey (D-MA) released a discussion draft of his Health over Wealth Act, which, among other provisions, would improve transparency of ownership and control of private-equity–backed or corporate-owned hospitals, physician practices, hospices, behavioral health providers, and other provider types.

State Efforts On Ownership Transparency

Given the degree of deadlock in Congress, states may be better positioned to advance health care ownership transparency policies. States generally require facilities, such as hospitals and nursing homes, to file some ownership-related information as part of state licensure. Broader provider ownership data collection efforts in states, where they exist, have taken two different forms: annual or periodic filings, and filings triggered by transactions or material changes, such as proposed mergers and acquisitions. States differ in what information they make public. Here, we focus on Indiana and Massachusetts, two states with differing political contexts that have considered or established both types of ownership data collection. Indiana considered policies in its 2024 legislative session, while Massachusetts reports to have the longest-standing systematic collection of provider relationship information, including ownership data.

Indiana

• Annual filing: The Indiana legislature considered a bill this year that would have required a range of health care entities, including hospitals, physician groups, health insurance companies, third-party administrators, and pharmacy benefit managers, to annually disclose entities that have an ownership or controlling stake, including private-equity firms. Notably, the bill would have required ownership information be publicly posted on the state Department of Health website. The bill passed the House and died in the Senate.
• At merger: Indiana’s Legislature passed a bill this year that requires health care entities including medical providers, insurers, pharmacy benefit managers, and private-equity partnerships to give 90-days’ notice to the state’s attorney general before mergers or acquisitions with assets totaling more than $10 million. The bill explicitly makes this information confidential. The bill stems from a recommendation of Indiana’s Health Care Cost Oversight Task Force.

Massachusetts

• Annual filing: In 2012, the Massachusetts legislature established the Massachusetts Registration of Provider Organizations (MA-RPO) program, the first-of-its-kind state program to systematically collect information on corporate, contracting, and clinical relationships of provider organizations that meet certain revenue and patient thresholds. The MA-RPO program requires the uppermost entity in a provider’s ownership hierarchy that has a primary purpose of health care delivery or management to annually file information with Massachusetts’ Health Policy Commission (HPC) and the Center for Health Information and Analysis.

These data provide a baseline map of ownership structures, interrelated entities, and system-level financial performance that informs the agency’s market oversight and analysis functions. The HPC publicly posts data sets that identify a provider’s corporate parent entity, levels of ownership or control, corporate affiliations, and financial performance, as well as corporate organizational charts. The data set includes provider identifier fields, allowing the data to be readily linked to other sources for analysis. The MA-RPO program aims to publicly provide information sufficient to allow policy makers, researchers, and market participants to understand and improve the state’s health care system.

• At material change: Most provider organizations that must register with the MA-RPO program also must file a notice of material change 60 days before certain changes to operations or governance. The HPC publicly posts the filings. Providers must report proposed transactions that increase patient revenues by $10 million or more a year, such as the proposed acquisition of Steward’s physician network by Optum. Examples of other reportable changes include acquisition of or by a hospital or insurer and mergers that result in a near-majority market share.

Even States With Robust Ownership Transparency Efforts May Need Updates

With nine Steward-owned hospitals in the state, Steward’s financial crisis provided a stress test for Massachusetts’ long-standing programs to monitor its health care system, and a few cracks have emerged. Massachusetts’ provider registry and notice of material change programs were designed with vertical and horizontal mergers between health care entities in mind. They are not well equipped to respond to the recent, rapid increase of private-equity acquisitions and other types of financial-sector control of health care providers. For example, Steward’s sale of its hospitals’ property to a real estate investment trust in 2016 and subsequent leaseback did not require a notice of material change under current rules, which today, only capture transactions between two health care providers or a provider and health insurer.

An HPC analysis shows that private-equity transactions have greatly accelerated in the decade since the MA-RPO program was established. To conduct its analysis, the agency had to supplement its own provider ownership and transaction data with information from proprietary databases that, the HPC acknowledges, may lack complete data. As Erin Fuse Brown, a professor at Brown University, summed up in testimony at a recent Massachusetts legislative hearing, “even the state officials and researchers with the greatest access to data often find themselves using manual Google searches and expensive proprietary databases to try to get a sense of the degree of private-equity penetration in the state.”

Lessons From Massachusetts

Massachusetts is considering fixes to the blind spots Steward exposed, ranging from increased transparency to enhanced oversight. The Massachusetts House of Representatives recently passed a bill that incorporates HPC recommendations to bolster the state’s provider transparency systems.

Transparency-related bill provisions would require large providers to disclose additional information, both at annual registration and prior to a material change. Providers would have to disclose controlling interests, financial information, and actions that are obscured today, including private-equity and other financial investment, the sale and subsequent leaseback of a provider’s property, and affiliations with management services organizations. The bill would also substantially increase penalties for entities that fail to submit required data from $1,000 to $25,000 per week. Steward has refused to file its parent-company-level financial data with Massachusetts since 2017 and sued the state.

Looking Forward

Transparency of health care-entity ownership is a crucial foundation, whether a patient wants to know if their doctor’s office is owned by a corporate entity or a policy maker wants to encourage quality and competition in increasingly consolidated health care markets. Congressional observers note that bipartisan health care transparency-related policies could be up for negotiation in any year-end legislative package. If included, broadly applicable ownership transparency provisions could yield valuable information and enable targeted policy responses to consolidation-driven rising health care prices. Yet, states need not wait. States can increase ownership transparency so they can better understand their own health care markets. Lessons from Massachusetts may be instructive to future efforts, and accelerating private-equity investment in health care and increasing complexity in provider ownership interests can serve as a catalyst for reforms.

Author’s Note

Arnold Ventures provided support for the authors’ time drafting this article.

Stacey Pogue, Nadia Stovicek, “State and Federal Efforts to Improve Ownership Transparency,” Health Affairs Forefront, July 31st, 2024, https://www.healthaffairs.org/content/forefront/state-and-federal-efforts-improve-ownership-transparency. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

By Sabrina Corlette

July is rate review season for state insurance departments—the annual process of collecting proposed health insurance premiums from insurance carriers, assessing whether they are reasonable and justified, and, in many states, approving or disapproving them. In a few states, regulators require that insurers submit their rate filings in May or June, before the July federal deadline. They also publish proposed rates and supporting documentation on their websites.

For the past several years, CHIR has dug into these early filings because they can help reveal how insurers are responding to market trends, policy changes, and underlying drivers of health care cost growth. This year, unlike in past years, insurers’ proposed 2025 premium rates do not appear to be significantly affected by national-level policies or trends. Federal insurance market policy has been relatively stable, and the effects of the COVID-19 pandemic are waning. However, this hasn’t inhibited some insurers from proposing rate hikes well above the rate of inflation for 2025. In this blog, we dig into the assumptions and justifications behind those premium increases, for individual and small-group market health plans, in the District of Columbia (DC), Maine, Maryland, Oregon, and Vermont.

Insurers’ Rate Filings Seek Premium Increases For 2025

Notably, some state insurance departments do a better job than others providing the public with access to rate filing materials. Among our selected states, Maryland stands out for its lack of transparency—insurers there are permitted to redact from public view large portions of each rate filing. However, the limited transparency in Maryland is still better than in many other states, such as Illinois, where the vast majority of insurers’ actuarial memoranda is redacted, or Virginia, which doesn’t publish proposed rate filings at all.

Across the board, insurers in the individual market in our selected states are seeking to increase rates for 2025, although the size of the increase varies quite a bit across companies and products. See Table 1.

Table 1. Average Proposed Individual Market Rate Changes in Selected States (Plan Year 2025)

*Source: Authors’ analysis of individual market rate filings.

Insurers in the small-group market are also requesting price hikes, with significant variation across our selected states and among the companies. See Table 2.

Table 2. Average Proposed Small-Group Market Rate Changes in Selected States (Plan Year 2025)

*Source: Author’s analysis of small-group market rate filings.

An examination of the assumptions and projections underlying the proposed rate increases reveals several factors and trends.

Insurers’ top cost driver is “medical trend,” a combination of the projected changes in unit costs (the prices insurers pay for health care goods and services) and changes in service utilization (the number and intensity of services enrollees receive). Several insurers point in particular to increasing pharmacy costs. For example, Blue Cross Blue Shield of Vermont predicts a year-over-year trend of 14.8% for just the GLP-1 category of drugs (i.e., Wegovy and Ozempic).

In the individual market, insurers appear to be shrugging off the disenrollment of almost 14 million people from Medicaid, at least in our selected states. One Vermont insurer (BlueCross BlueShield) believes that the people transitioning from Medicaid to the Marketplace have contributed to a larger, healthier risk pool, but an Oregon insurer (BridgeSpan) predicts that Medicaid transitioners will make the individual market risk pool sicker. Overall, however, most insurers are projecting little, if any, change in the health status of the individual market risk pool in 2025.

It’s (Still) the Prices, Stupid

Although most insurers are projecting the cost of specialty drugs to rise more steeply than any other factor, they also are projecting that hospital costs – particularly the growth in hospitals’ contracted rates – will be the largest contributor to consumer and small employers’ 2025 premiums. There are a few exceptions; CareFirst BlueChoice in the District of Columbia predicts that health care utilization will grow faster than its provider prices. For the most part, however, the growth in provider prices, not utilization, is the primary driver behind rise in medical trend. Or, as put by renowned health economist Uwe Reinhardt and colleagues, “It’s the Prices, Stupid.”

A Blind Spot? While Unit Prices Rise, Carriers Focus on Utilization

Although rising unit prices are the biggest factor driving rate increases for most insurers, in their filings they point to utilization management as their primary strategy for containing costs. For example, Oregon requires insurers to submit narrative reports detailing their efforts to constrain cost growth. Almost universally, Oregon insurers are focusing their efforts on programs that reduce the use of health care services, such as through more aggressive prior authorization, claims auditing, and case management for enrollees with complex care needs.

The filings revealed very few efforts to reduce unit prices. These include a program by BridgeSpan in Oregon to encourage enrollees to seek care at ambulatory surgery centers instead of full-service hospitals. Another insurer (MODA) reports that they were able to generate $4 million in savings in air ambulance costs alone, thanks to the federal No Surprises Act (NSA), stating: “Implementation [of the NSA] resulted in improvements in contractual terms with in-network providers and a reduction in costs with the application of the Qualified Payment Amount (QPA) for out-of-network claims.” In Maryland, Aetna reports that they are “working to reduce the ability of out-of-network providers to collect unreasonably excessive payments,” although they do not describe how they intend to accomplish this.

Local Factors Driving Rate Changes

State-based policy and market changes are also driving some rate changes. For example, the Vermont legislature recently enacted restrictions on insurers’ ability to conduct prior authorization. Vermont insurers are predicting significant cost increases as a result of that bill. MVP health plan, for example, predicts it will result in an 8-10 percent increase in premium rates.

In Maryland, the increased shift towards level-funded health plans among small employers is likely contributing to rate increases for the state-regulated small-group market. For example, Aetna, which is seeking a 21.7 percent average increase for its small-group market PPO product, notes that the “movement of [small-group] business between the ACA market and other options,” such as level-funded plans, is prompting increases in average premiums and a less healthy risk pool.

Looking Ahead

Health insurers in the ACA-compliant individual market have benefited from several years of relative stability and growth. However, as with the rest of the commercial insurance market, they are confronting increased provider consolidation and ever-rising provider costs, which they are in turn passing onto consumers through higher premiums. Thanks to the ACA, Marketplace enrollees eligible for premium tax credits are largely insulated from these price increases, and the enhanced subsidies provided in the Inflation Reduction Act have significantly improved the affordability of Marketplace plans. However, these enhanced subsidies will expire at the end of 2025. If Congress does not extend the subsidy enhancements or do more to constrain health care prices, more individuals will be ineligible for subsidies and will bear the brunt of rising health care costs.

Premiums are also rising for many small employers, due to both rising provider costs and the shift of healthy employer groups into level-funded plan options. States have a number of options to preserve and protect the ACA-compliant small-group market, including but not limited to a Maine-style reinsurance program, a Colorado-style public option, and Rhode Island-style enhanced rate review.

By Kennah Watts and Sloane Daly

Last month, CHIR soaked up the sun and the latest in health policy research. In June, we read studies that examined hospital mergers’ impact on the economy, reviewed insurance coverage rates during various policy periods, and analyzed the benefits of enhanced premium tax credits.

Who Pays for Rising Health Care Prices? Evidence from Hospital Mergers

Brot-Goldberg, Zarek et al. National Bureau of Economic Research. June 2024. Available here.

Researchers from the University of Chicago, Yale, Harvard, the University of Wisconsin–Madison, and the US Department of Treasury combined data on privately insured healthcare prices and utilization to investigate how price increases following hospital mergers negatively impact premiums, payrolls, employment, federal tax revenue, and mortality. 

What it Finds

• In a healthcare market of predominantly employer-sponsored insurance (ESI), insurers pass rising costs to their customers, ESI employers and employees, tying together the healthcare and labor markets.
• As health care prices increase, so do insurance premiums, which employers then mitigate by laying off middle-to-low-income workers (salaries <$100,000).
  • A one percent increase in healthcare prices leads to a one percent increase in unemployment.
  • Unemployment then leads to reductions in collected federal income tax: for every one percent rise in healthcare prices there is 0.4 percent decline in tax revenue.
• Hospital mergers are a primary driver of healthcare costs, and have severe implications for insurance premiums, job and wage losses, and federal tax revenue.
  • One anticompetitive hospital merger – defined by the researchers as a merger that raises prices by five percent or more – produces an estimated $32 million in lost wages, 203 job losses, and $6.8 million in federal tax revenue.
• Rising healthcare prices and unemployment also have consequences for employees’ overall health and well-being.
  • One in every 140 individuals laid off due to healthcare spending increases will die due to suicide, drug overdose, or liver disease. 
  • A year of anticompetitive, unblocked hospital mergers leads to 12 to 25 deaths.

Why It Matters

Almost two-thirds of Americans rely on ESI for healthcare coverage, inextricably tying the healthcare and labor markets together. Accordingly, when healthcare prices rise, the consequences for the labor market can be severe. Hospital mergers raise cost containment concerns, as the hospital sector accounts for almost a third of healthcare prices, and causes more cost growth than almost any other sector. This analysis suggests that increased efforts to block or unravel anticompetitive mergers could prevent financial harms, both for individuals and the national economy, as well as save lives. Though the FTC has some regulatory power over hospital mergers, there is bipartisan support for increased oversight and allocation of resources to bolster the FTC’s enforcement capabilities. State policies can also prevent consolidation and strengthen oversight of provider mergers, with states like Oregon, California, and New York leading the way.

Improving Access to Affordable and Equitable Health Coverage: A Review from 2010 to 2024

Buchmueller, Thomas et al. Assistant Secretary for Planning and Evaluation (ASPE), Office of Health Policy. June 7, 2024. Available here. 

ASPE researchers conducted a review of policies related to the Affordable Care Act (ACA) to analyze how policy change can improve or hinder insurance coverage for non-elderly adults.

What it Finds

• The ACA implementation period (2010-2016) saw significant insurance coverage gains among non-elderly adults, with the greatest gains for young adults (<26 years old) and lower-income Americans.
  • By 2016 the uninsured rate for adults had fallen by 10 percent, from 22.3 to 12.4 percent.
• Between 2017 and 2020, some gains in insurance coverage were lost as policies attempted to roll back key ACA reforms.
  • From 2017 to 2020, the rate of uninsured adults increased by 2 percentage points (9.1 percent to 11 percent).
  • While some federal policies during the 2016-2020 period increased uninsurance rates, states that adopted Medicaid expansion during that time period (Virginia, Maine, Idaho, Utah, and Nebraska) mitigated these coverage losses.
• Since 2021, policy efforts to improve the health care system and address health-related needs have created a historic low in the rate of uninsurance, recorded as 7.7 percent in Q4 of 2023.
  • From 2020 to 2024, policies related to premium tax credits, enrollment, and affordability have nearly doubled the number of people who enrolled in the Marketplace from 11.4 million to 21.4 million.
  • In this period, continuous enrollment permitted more than 7 million adults to retain eligibility for Medicaid.
  • As of 2024, more than 45 million Americans have ACA-related coverage through the Marketplace, Basic Health Programs, or Medicaid expansion.
• Policies that produced insurance coverage gains were also correlated with improved access to care and increased preventive care, as well as broader financial and equity benefits.

Why It Matters

State and federal policies not only fundamentally impact health insurance coverage, but also the overall well-being of the American people. Just as the ACA provided significant increases in coverage, policies that hindered the ACA reduced access to healthcare. Following the end of the COVID-19 Public Health Emergency, policymakers are faced with many ACA-related policy choices, such as expanding continuous enrollment, maintaining Special Enrollment periods, extending advanced premium tax credits, and instating Medicaid expansion in 10 states. Given revived discussions about repealing the ACA and the approaching deadline to extend premium tax credits, policymakers should consider how these policies will impact insurance coverage and access to affordable health care services.

Who Benefits from Enhanced Premium Tax Credits in the Marketplace?

Banthin, Jessica et al. Urban Institute, June 2024. Available here.

Researchers from the Urban Institute used the Health Insurance Policy Simulation Model and open enrollment data to predict the impacts of enhanced premium tax credits (PTCs) on Marketplace enrollment and affordability in 2025. 

What It Finds 

• Enhanced PTCs decreased rates of uninsurance and increased Marketplace enrollment.
  • Based on previous trends, enhanced PTCs are estimated to increase Marketplace enrollment by 7.2 million people in 2025. 
  • The total nongroup market will cover 46 percent more people under the enhanced PTC policies than the original PTC policy.
• In 2025, Marketplace enrollment will likely rise across all income categories because of the financial incentives provided by enhanced PTCs.
  • Populations with incomes below 150 percent of the federal poverty level (FPL) are expected to experience a 59 percent increase in Marketplace enrollment in 2025. 
  • Individuals with incomes above 400 percent of the FPL became eligible for enhanced PTCs for the first time under American Rescue Plan Act’s (ARPA), which will lead to substantial enrollment gains in the subsidized Marketplace (approximately 1.5 million enrollees for this income group in 2025).
• Enhanced PTCs improve the affordability of Marketplace premiums across all income categories.
  • Under enhanced PTCs, average total Marketplace premiums will be 5 percent lower across all states in 2025. 
  • The majority of individuals with incomes below 150 percent of the FPL will pay no premiums.
• Enhanced PTCs allow some people to switch to plans with improved cost-sharing obligations: 1.8 million more Marketplace enrollees are expected to choose gold plans in 2025 relative to plan selection under original PTCs. 
• Enhanced PTCs have the greatest coverages affects in states without other options for subsidized insurance, such as Medicaid expansion, a Basic Health Program, or other subsidies. 

Why It Matters 

Enhanced PTCs, as enacted through the ARPA, have led to significant improvements in Marketplace insurance affordability and increased enrollment. As enrollment in the Marketplace grows, the risk pool expands and creates more predictable and stable premiums for all enrollees. Greater Marketplace enrollment also increases competition amongst insurers, which can further reduce costs, improve care access, and provide a stable market. Despite these gains, if Congress does not extend PTCs beyond their 2025 expiration date, almost all (92 percent) of Marketplace enrollees will face higher premiums.   

By Hanan Rakine

Two large, publicly traded insurance companies recently revealed to investors an intent to invest in new employer-based health reimbursement accounts as a potential growth area for their business. Called Individual Coverage Health Reimbursement Arrangements (ICHRAs), these tax advantaged accounts enable employers to make a defined contribution to employees’ premiums for an individual market insurance policy. Should this strategy bear fruit, and large numbers of workers move to the individual market for their health coverage, it could have a significant impact on workers’ exposure to health care costs as well as for insurance markets.

Background

In 2019, federal rules allowed employers to provide an ICHRA instead of a group health plan for employees to purchase Affordable Care Act (ACA)-compliant individual market insurance. Employees with an ICHRA may be eligible for Marketplace premium tax credits (PTCs), depending on their employer’s contribution, but they cannot use both the ICHRA and PTCs to purchase a Marketplace health plan. In addition, in order for an employer’s ICHRA contributions to be made on a pre-tax basis, the employee may only purchase an ACA-compliant individual market plan off-Marketplace. Employers who choose ICHRAs can vary the amount they contribute to the ICHRA based on employees’ age, giving older workers up to three times the amount contributed for younger workers, if they want to account for allowable age rating in the individual market.

ICHRAs may be attractive to employers that want to control and limit their contribution to their employees’ health coverage, and particularly to small employers that have struggled to keep pace with rising health care costs. However, ICHRAs have been slow to gain traction. This is due in part to tax and administrative complexities, but also to some employers’ perceptions that the individual market offers lower quality health insurance than the group market.

There are signs that ICHRA enrollment is growing. The HRA Council, an industry group, reports that ICHRA adoption grew 29 percent between 2023 and 2024, with an estimated 5,000 firms offering ICHRAs in 2024.

Health Insurers – and Some States – See Potential Growth Area

In recent calls with investors, two large publicly traded insurance companies—Oscar Health and Centene—are banking on continued ICHRA growth. Oscar Health CEO Mark Bertolini stated: “We believe ICHRA’s time has come,” noting that many employers will see ICHRAs as a “hedge” against rising health care inflation.

Centene CEO Sarah London touted her company’s strategy of marketing ICHRAs to small employers, using the health benefits platform Take Command. Both of these companies have a significant presence in the individual market, and wishful thinking may underlie their strategies. However, if their bet on ICHRAs pays off, it could significantly change the way many employees obtain health insurance, particularly for small business workers.

At the same time, some state lawmakers may view ICHRAs as a way to expand coverage options for small businesses. For example, in 2023 Indiana enacted legislation giving small employers a tax credit if they switch their employees from a group plan to ICHRAs; Texas legislators have considered similar ICHRA-boosting proposals.

How would greater ICHRA adoption impact workers?

Workers shifted to ICHRAs who are not eligible for PTCs could be more vulnerable to rising premiums. Employers’ contributions to ICHRAs are not required to rise in accordance with annual premium increases, or to reflect higher premium costs for some employees. While some employers may choose to increase their contributions to keep up with medical inflation or variations in their employees’ premium costs, others may not.

ICHRAs can be particularly risky for low-wage and older workers. Low-wage workers may be financially better off with PTCs and cost-sharing reductions in a Marketplace plan than in employer-sponsored insurance, but an ICHRA offer that is deemed affordable under the ACA will make them ineligible for Marketplace subsidies. Older workers may bear a greater share of the non-ICHRA funded premium due to individual market age rating.

Additionally, because many employers will want to make pre-tax contributions to ICHRAs, employees will need to purchase their plans off-Marketplace. Navigating the many plan choices available, including many that are not ACA-compliant, puts employees at risk of inadvertently buying a plan that fails to meet the requirements of an ICHRA. Those shifted from group health plans to individual market plans could also face higher deductibles and less robust provider networks.

What would wider ICHRA adoption mean for insurance markets?

The percentage of small businesses that offer health insurance has been declining over the past decade. In 2021, 31.9 percent of all small employers offered health insurance to their employees compared to 43 percent in 2008.

Many small employers appear to be switching from ACA-compliant group plans to level-funded health plans. These quasi self-funded plans are the “highest growth area” for insurers in the small-group market and an increasing number of group health plan sponsors are using level-funding plan arrangements. According to the Kaiser Family Foundation, the percentage of small employers that have level-funded health plans increased from 13 percent in 2020 to roughly 40 percent in 2023.

Insurers are barred from using health status to set the price for state-regulated ACA small-group market plans, but they can do so for level-funded plans. This allows them to siphon away healthy risk from the state-regulated small-group market, leaving behind a smaller and sicker risk pool, and thus higher premiums for the small employers who remain. Each year, as prices rise for state-regulated small-group insurance, more employers with relatively healthy workers will shift to level-funded plans, a classic adverse selection “death spiral.”

Some small employers may not qualify for level-funded plans because of the age or health status of their workers. In their case, the choices are then to (a) absorb premium increases by shifting costs to workers or trimming wages, (b) drop coverage entirely, or (c) transition to ICHRAs. To the extent small business employers choose ICHRAs, it could result in further erosion of the small-group market, threatening its stability. At the same time, the expanded use of ICHRAs among employers, large and small, would boost individual market enrollment, with the potential to impact individual market premiums and insurer participation.

Conclusion

It is far from clear that employers are ready in significant numbers to move their employees into ICHRAs. While two major carriers are betting that they will, questions about the affordability and adequacy of individual market coverage, as well as administrative complexities, are likely to cause many employers to hesitate before making such a change. However, as premiums continue to rise faster than inflation for many small businesses, some employers may decide they must offer an ICHRA or drop coverage entirely. If they adopt an ICHRA, there are financial risks for employees and their families, as well as potential market impacts that policymakers and regulators will need to monitor and address.

This spring, as millions of people prepared their taxes, an increasing number of states were using the tax-filing process to connect those who are eligible but uninsured with comprehensive, affordable health insurance. These “easy-enrollment programs” allow filers to check a box on forms they file with the state (e.g., income tax returns) to indicate that they do not have health insurance and are interested in receiving information about coverage options, including subsidized Affordable Care Act (ACA) marketplace plans and Medicaid. If a person is eligible, the marketplace provides a dedicated special-enrollment period (SEP) to enroll outside the ACA’s annual open-enrollment period.

Just as these programs simplify some of the administrative burdens for consumers seeking health coverage, easy-enrollment programs can also help states streamline their outreach and ultimately boost enrollment. Easy-enrollment programs are one of the lower-cost and potentially even budget-neutral ways to increase insurance coverage.

In 2020, Maryland became the first state to roll out easy enrollment; since then, interest has grown substantially. By 2025, 10 states (all of which operate their own ACA marketplaces) will operate programs and at least two will have expanded them to reach uninsured residents filing for unemployment insurance. In a recent article for the Commonwealth Fund, CHIR researchers review state efforts and effective strategies for improving easy enrollment programs and boosting healthcare enrollment. 

Read the full article here.

As hospitals and health systems expand their ownership and control of ambulatory care practices and physician offices, they frequently charge new facility fees for routine medical services delivered in outpatient settings. These additional bills drive up premiums and health expenditures for consumers, employers, and, ultimately, taxpayers. Consumers also face growing financial exposure to these facility charges as insurance deductibles increase and payers apply benefit designs that increase patients’ exposure to out-of-pocket costs, particularly in hospital outpatient settings. With support from and working in partnership with West Health, experts at Georgetown University’s Center on Health Insurance Reforms (CHIR) have identified and classified state laws regulating outpatient facility fee billing nationwide and have just released our findings in a set of maps available here.

Twenty States Have Adopted At Least One Reform Strategy as of July 1, 2024

Twenty states, stretching across the country and representing a diversity of political orientations, have adopted at least one reform strategy as of July 1, 2024. These reforms include:

• Prohibitions on outpatient facility fee billing;
• Billing transparency laws;
• Public reporting and other oversight laws;
• Out-of-pocket cost protections; and
• Consumer notification requirements.

While their choice of tool varies, the broad array of states taking action is consistent with survey data showing widespread, bipartisan support for outpatient facility fee regulation.

Connecticut, Colorado, Maine, and Indiana Remain at the Forefront of Reforms

CHIR and West Health previously dug into how 11 study states have been approaching outpatient facility fee reforms. That effort identified Connecticut, Colorado, Maine, and Indiana as states at the forefront of regulation outpatient facility fee billing. Our new nationwide analysis confirms that these states have enacted the most comprehensive reforms to date. 

Connecticut, Maine, and Indiana each have prohibited outpatient facility fee billing for routine medical services in certain hospital-owned settings. Colorado was the first state in the nation to require commercial claims forms to specify the actual office where care was delivered, with Maine, among other states, following in its footsteps more recently. All four states have also enacted between one and three other types of reforms, including public reporting or study requirements in all four states, consumer notification requirements in three, and out-of-pocket cost protections in two.

Incrementalism Is the Name of the Game

As the collection of laws in the above flagship states demonstrate, the various strategies for reforming outpatient facility fee billing are not mutually exclusive. But states typically tackle reform in an incremental fashion. The new maps reveal that most states have enacted only one type of reform for outpatient facility fee billing and most of these efforts are relatively modest: consumer notification requirements, study or reporting requirements, or prohibitions on facility fees limited to telehealth services. And no state in the nation has adopted site-neutral reforms in the commercial health insurance market, which would address the underlying incentives driving the growth of facility fees. 

Nonetheless Connecticut—where lawmakers have gradually expanded their reforms over the past decade, including in the most recent legislative session—demonstrates that incremental steps can transform a state into a national leader. 

Momentum Is Building, Despite Robust Industry Opposition

A few states, like Connecticut, Maine, and New Hampshire, began addressing this issue ten or more years ago, but most states with facility fee laws in effect enacted or amended their laws since 2021. Indeed, seven states passed facility fee reform legislation in the past 18 months alone. And more action appears on the horizon after an active 2024 legislative session, with several states launching task forces to study facility fees and potential reforms.

As happened with surprise billing reforms, state activity may well pave the way for federal reforms. Even in today’s polarized political atmosphere, there is bipartisan interest in Congress to enact “honest billing” requirements, facility fee prohibitions, and site-neutral payment reforms. These efforts are strongly supported by a wide variety of stakeholder groups itching for action. CHIR will continue to monitor and periodically update our maps to reflect ongoing developments in this area. Policymakers and advocates considering facility fee reforms are encouraged to contact CHIR experts for technical assistance at FacilityFeeTA@georgetown.edu.

Over the past 30 years, hospitals and physician practices have been merging at an accelerated pace, and as a result, they have been able to command higher prices for their services. The top ten largest health systems in the country control almost a quarter of the national hospital market, and over 70 percent of hospital markets around the country have been categorized as “highly concentrated.” Hospitals have also been steadily acquiring physician practices. As of 2018, hospitals owned almost half the physician practices, and as of 2020, hospitals employed more than half the physicians in the country.

Provider consolidation can have a significant negative impact on patients. Evidence shows that consolidation raises health care prices, and can also worsen health care outcomes, quality of care, and access to services. Federal and state regulators can play a role in pushing back against provider consolidation. 

To explore the effectiveness of federal and state tools that promote market competition and mitigate provider consolidation, CHIR experts interviewed federal- and state-level policy experts, with a particular focus on three states with local markets that have experienced some of the largest increases in hospital consolidation between 2017 and 2021: Indiana (Evansville); New Hampshire (Manchester); and West Virginia (Huntington). 

Drawing from background research and findings from these interviews, the report discusses the strengths and weaknesses of the tools currently available to federal and state policymakers to address provider consolidation, and provides recommendations for how they can strengthen their oversight of health care markets.

Read the full issue brief here.

Funding for the writing and research of this report was provided by The Leukemia & Lymphoma Society, and LLS received partial support for this report from Arnold Ventures. Additional publications by CHIR researchers can be found here. CHIR is composed of a team of nationally recognized experts on health reform. For more on our work, please see our website, blog, and follow @GtownCHIR on X (formerly Twitter.)

By Maanasa Kona and Sabrina Corlette

Research has consistently shown that investing in the development of a robust primary care system can significantly improve health outcomes, reduce mortality, and even reduce overall health care spending. However, the U.S. only invests about 5 to 7 percent of its total medical expenses on primary care, which falls far short of the 13 percent that other high-income countries dedicate to primary care.

Recognizing the value of primary care, both federal and state governments have implemented several initiatives to enhance access to and the quality of primary care. However, a significant factor limiting the impact of these interventions is that private insurance plans, which account for 29 percent of the national spending on health care, are not always required to participate in reform efforts. Some states are using their power as insurance regulators to push insurers to invest more in primary care. While these efforts have shown promise in some states, insurers have been slower to comply with these requirements in other states.

Promoting Primary Care Investment In Commercial Insurance

State departments of insurance (DOIs) are the primary regulators of private health plans. They set their own standards and enforce federal ACA standards against plans sold in the individual market and fully insured group health plans sold to employers. Every year, DOIs conduct “rate review,” which examines the premium rates proposed by private health insurers for the upcoming year and ensures that they are not excessive. Some states, such as Colorado, Delaware, and Rhode Island have further established affordability standards, requiring their DOIs to evaluate whether insurers are implementing effective strategies to improve the value of health insurance for plan enrollees. These policies include requirements that insurers increase their spending on primary care services.

Setting a Primary Care Spending Target

A key element in the affordability standards set by all three states is the establishment of a minimum primary care spending target for all state-regulated commercial insurers. Rhode Island, which was one of the first states to propose and implement such a target, required its insurers to gradually increase their primary care investment between 2010 and 2014, and today, the state requires insurers to invest at least 10.7 percent of their total medical expenses in primary care.

In 2021, Delaware enacted legislation establishing the following primary care spending targets in statute: 7 percent by 2022; 8.5 percent by 2023; 10 percent by 2024; 11.5 percent by 2025. Delaware additionally requires its private insurers to, at a minimum, match Medicare reimbursement rates for primary care.

Instead of setting a specific target, in 2021, Colorado required insurers to increase their primary care investment by 2 percent by the end of 2023 (by 1 percentage point in 2022 and 1 additional percentage point in 2023). Colorado further prohibits insurers from raising their premiums to account for their increased spending in primary care.

Measuring Progress Towards the Target

Rhode Island, Delaware, and Colorado enforce compliance with their respective primary care spending targets through their rate review processes. For example, Colorado requires its insurers to submit a template as part of their annual rate filing demonstrating their compliance with the requirement. Insurers are also required to demonstrate their primary care and total medical spending through submission of claims and non-claims payment data to the state all-payer claims database. Under the state’s law, failure to comply with its minimum primary care spending requirement can result in civil penalties, issuance of cease-and-desist orders, or revocation of licenses.

In all three states, the agencies responsible for enforcing these targets periodically produce reports assessing insurers’ compliance. In Rhode Island and Delaware, insurers have been found to be generally compliant with the requirement, and have significantly boosted their spending on primary care. However, in Colorado, despite the state’s more modest target and provisions that would allow the state to penalize noncompliance, private insurers have not achieved the target set for 2022. Private insurers’ investment in primary care has hovered around 5 percent between 2020 and 2022.*

Promoting Primary Care Investment Through Other State Agencies

California and Connecticut have created offices, outside of their DOIs, to monitor their health care markets and promote reforms that will improve the quality and affordability of health care. In 2018, Connecticut created an Office of Health Strategy within its Department of Public Health, which is responsible for “developing and implementing a comprehensive and cohesive health care vision for the state.” In 2020, the Connecticut governor issued an executive order requiring the Office to set a 10 percent target for primary care spending that public and private insurers would be required to meet by 2025. The latest report on progress towards this benchmark assesses payer performance in 2022 and found that only one of the five commercial insurers had met the interim target value for 2022 set at 5.3 percent.

In 2022, California created the Office of Health Care Affordability within its Department of Health Care Access and Information, which is responsible for slowing down health care spending growth, enforcing spending targets, promoting high-value health system performance, and assessing provider market consolidation. As part of its focus on promoting high-value health system performance, California plans to establish a primary care investment benchmark. In April 2024, the Office published recommendations, which if implemented, would require insurers to gradually increase their primary care spending until they are investing at least 15 percent of their total medical expenses on primary care, which would make it one of the most progressive targets established in the country. Recognizing the heavy lift that this requirement would impose on insurers, OHCA proposes giving them until 2034 to come into compliance. The Health Care Affordability Board, which has the authority to approve or reject this proposal, held a public hearing on the proposed benchmark in May 2024 and is in the process of making a decision.

However, the OHCA does not have the legal authority to enforce the benchmark even once it is approved. OHCA plans to “promote, measure, and report primary care investment,” and if finalized, will produce an annual report providing updates on the progress towards the benchmark by each payer in the state.

Looking Ahead

While the states discussed above have made the most progress in setting primary care investment targets, several other states are focusing on this issue as well. For example, Maine, Maryland, Minnesota, Nebraska, New Mexico, North Carolina, and Washington have enacted legislation requiring state agencies to study, and in some cases, publicly report on, primary care spending. The intention in some of these states may be the development of their own primary care spending requirements.

As more states consider establishing these targets, there are a few key points to keep in mind. First, states that have established targets have taken different paths in terms of defining primary care, and establishing methodologies for calculating primary care spending. The process of developing these definitions and methodologies can be difficult, and measuring true progress can depend on how broadly or narrowly states define primary care. In November 2023, the federal government announced its intention to develop a definition of primary care that could standardize measurements across states. Second, given the different needs of populations across different life stages, states might want to consider developing age-adjusted spending targets to ensure that high need populations like children or older individuals are benefiting from the increased investment. Third, these spending requirements only work if there’s a robust enforcement mechanism in place to create accountability. Establishing mechanisms to mandate reporting by insurers and to penalize non-compliant insurers could be key to successful implementation.

Finally, while improving access to and the quality of primary care is vital to improving population health, it is unlikely that any one policy alone will create the system-wide transformation necessary to achieve these goals. Increasing primary care investment must be part of a broader strategy that includes expanding the primary care workforce, reimbursing primary care appropriately, developing and testing models to improve delivery of and payment for primary care, and making sure health care coverage is affordable and accessible.

* This excludes the investments in primary care made by Kaiser Permanente and Denver Health, which are currently not subject to the required targets for primary care investment because of their unique integrated payer-provider systems.

On June 18, the Congressional Budget Office (CBO) released a report describing its predicted trends in health insurance coverage for the next decade. The CBO serves as an independent, non-partisan source of budget analysis for the U.S. Congress. Its projections for future enrollment in health coverage programs provide a benchmark for the agency’s estimates of how proposed legislation will impact the federal budget and national coverage levels.

In its latest report, the CBO projects that the all-time-high rate of insurance coverage in 2023 represents a peak, and significant numbers of people will become uninsured between 2024 and 2034. However, these projections are not our destiny; several policy actions and investments in the Affordable Care Act (ACA) can help sustain 2023’s low uninsurance rate, and even bring it lower.

The CBO’s Projections

The CBO estimates that just 7.2 percent of the U.S. population was uninsured in 2023—an all-time low. However, they do not project that number to be repeated. The agency expects our uninsured rate to rise to 9.2 percent in 2028 and fall again only slightly in the out-years, to 8.9 percent by 2034. The agency identifies several factors driving the increase in our uninsured rate, in particular:

• The Medicaid “Unwind”: States resumed eligibility redeterminations for Medicaid and the Children’s Health Insurance Program (CHIP) in 2023, after pandemic-related continuous coverage requirements expired. Between 2023 and 2024, the CBO projects that this will result in a loss of 13 million people from Medicaid and CHIP, including 5 million children.
• Expiration of Enhanced Premium Tax Credits: The CBO projects that enrollment in the ACA’s health insurance Marketplaces will peak at 23 million in 2025 but drop to 16 million by 2027. This decline is largely because enhanced premium tax credits, initially funded by Congress in 2021, are slated to expire at the end of 2025.
• Immigration “surge”: The CBO is incorporating into its estimates a surge in immigration between 2022 and 2026, The agency estimates that recent immigrants will be four times as likely as the general population to be uninsured.

Countering these trends, the CBO projects a modest increase in enrollment in employer-sponsored insurance (ESI), which it expects to increase from 164 million in 2023 to 170 million in 2034, largely due to greater levels of employment. In addition, as the population ages, Medicare enrollment is expected to rise, from 60 million in 2023 to 74 million in 2034.

Coverage Loss Is Not Inevitable: Timely Policy Action Can Build On Recent Gains

Our national all-time-low uninsured rate in 2023 did not arise by accident—it was the result of concerted efforts over the last few years to build on and improve the ACA.

Enhanced Premium Tax Credits

In 2021, Congress enacted a temporary expansion of the ACA’s premium tax credits to reduce the cost of Marketplace health plans; these were extended in the Inflation Reduction Act of 2022 to last through the end of 2025. Thanks to the enhanced premium tax credits, Marketplace enrollment exceeded 21 million in 2024, and four out of five enrollees were able to purchase a plan for $10 or less.

Investments In Marketplace Outreach And Enrollment Assistance

In the last few years, the Biden administration has significantly increased spending to build consumer awareness about Marketplace coverage and provide tailored consumer assistance to those who need help with the enrollment process. These strategies have been demonstrated to help increase enrollment.

Fixing The ‘Family Glitch’

In 2022, the Biden administration issued a rule eliminating a restriction preventing an estimated 5 million family members of people with employer-sponsored insurance from accessing premium tax credits on the ACA Marketplaces. The rule, CBO estimates, has enabled one million people to gain coverage.

Medicaid Continuous Coverage Requirement

In response to the COVID-19 pandemic, Congress provided states with a temporary boost in Medicaid funding. In return, states were required to provide Medicaid and CHIP enrollees with continuous coverage throughout the public health emergency. When states resumed eligibility redeterminations in the spring of 2023, over 94 million people were covered in either Medicaid or CHIP.

State Medicaid Expansions

Since 2021, four new states—Oklahoma, Missouri, South Dakota, and North Carolina—have taken up the option to expand Medicaid eligibility to nearly all adults under 138 percent of the federal poverty level. Forty states plus the District of Columbia have now adopted Medicaid expansion under the ACA, covering an estimated 18 million people in 2023.

Continuous Eligibility For Children

About half the states have previously taken up the option to provide 12 months of continuous eligibility for children in Medicaid and/or CHIP, regardless of household income changes. In 2023, Congress required all states to implement continuous eligibility for children in their Medicaid and CHIP programs, beginning January 1, 2024.

Reducing Paperwork Burdens

Through regulations and operational changes, the Biden administration has reduced the bureaucratic hoops that people must jump through to enroll in and renew their Marketplace, Medicaid, and CHIP coverage.

These efforts have collectively led to our nation’s lowest-ever uninsured rate. However, critical policies enacted to build on and sustain the ACA’s coverage gains have or are slated to expire, prompting the CBO to project significant coverage losses.

Looking Ahead

Policymakers do not need to accept these projected losses as pre-ordained. Several crucial policies and investments can help keep people in insurance coverage and continue to reduce the ranks of the uninsured. Examples include:

• Expanding Medicaid in the remaining 10 states;
• Permanently extending the enhanced Marketplace premium tax credits before they expire in 2025;
• Enabling and supporting affordable coverage options for non-citizens;
• Continuing to invest in and support Marketplace outreach and consumer assistance;
• Conducting targeted outreach to re-enroll low-income people, including children, who remain eligible for Medicaid and CHIP but were disenrolled for procedural reasons during Medicaid unwinding; and
• Continuing to reduce administrative burdens for people enrolling in Medicaid and Marketplace coverage, including through widespread adoption of automated transitions between the two coverage programs, further state take up of multi-year continuous eligibility in Medicaid and CHIP for young children, and adding 12 months of continuous eligibility for adults.

In the last few years, the US has made tremendous progress providing more people with access to affordable, comprehensive health insurance coverage. Coverage not only improves families’ financial security, it is proven to improve access to primary and preventive care, health outcomes, and the management of chronic disease. The CBO’s projections demonstrate the harm that will arise without policy action: 32 million people uninsured and lacking access to affordable health care. Policymakers have a clear roadmap to prevent the projected coverage losses and build on coverage gains—they just need to take it.

Author’s Note

The Robert Wood Johnson Foundation provided support for the author’s time drafting this article.

Sabrina Corlette, “CBO Projections Are Not Destiny: Policies, ACA Investments Can Change Trajectory,” Health Affairs Forefront, June 20, 2024, https://www.healthaffairs.org/content/forefront/cbo-projections-not-destiny-policies-aca-investments-can-change-trajectory. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Over the last several months, CHIR hosted the webinar series Understanding Hospital Financing. This three-part series provided lawmakers and other health care stakeholders with insight into what drives hospital finances, how hospitals are funded, and the policy challenges and opportunities to control hospital costs. The series was moderated by CHIR’s Sabrina Corlette, and presenters included Tyler Brannen, an economist at BerryDunn, and CHIR’s Christine Monahan, as well as several state legislators and regulators: Colorado Representative Kyle Brown, Washington State Representative Nicole Macri, and Kim Cammarata of the Maryland Office of the Attorney General. A recording of each webinar and the accompanying slide decks can be found here. 

Throughout the series, we received a number of questions related to hospital margins, financial data, facility fees, community benefit, and the Maryland All-Payer model. Time constraints prevented live answers to these questions, so we provide further insights here.

How can hospital financial health be assessed? What are the strengths and weaknesses of publicly available data on hospital financials?

Hospital financial health encompasses multiple financial measures: margins, liquidity, debt capacity and solvency, capital investment, and financial burden. When broken down into operation and total margins, these measures can provide a general sense of how the hospital or health system spends its dollars. Operating margins reflect spending typically associated with hospitals, such as patient services (care provided) and non-patient services (cafeteria sales, rental facilities, etc.). Total margins encompass patient and non-patient services as well as other revenue and expenses, like investments which can include capital investments (facilities), stock portfolios, and private equity funds. For the most accurate appraisal of a health system’s financial health, margins should be examined across multiple years of data, be reviewed alongside other measures, and be analyzed across facilities within the system.

Similarly, for the most accurate assessment of financial health, multiple sources of data should be examined and include several years of data to gain. Data can be found in several public sources, including but not limited to Medicare Cost Reports, IRS Form 990, and Audited Financial Statements (AFS). Each source has benefits and shortcomings. AFS are considered the gold standard because they require external audits and include detailed information on multiple financial measures. Publicly available tools – the National Academy of State Health Policy’s (NASHP) Hospital Cost Tool and Sage Transparency 2.0 – can also help to analyze hospital spending and financial measures. 

For more information on financial measures and data sources, refer to CHIR’s recent one-pager, Five Key Questions About Hospital Finances.

What are facility fees? What action have states taken to reform facility fees?

Facility fees are billed charges that cover the operation expenses of health care services in a facility. Facilities submit these fees separately from professional service fees for providers. Evidence indicates that facility fees vary by geography and increase spending, premiums, and out-of-pocket (OOP) costs for consumers, without commensurate gains in quality. Furthermore, separate hospital and professional bills can lead to separate cost-sharing for patients, which can cause confusion and lead to higher costs depending on the patients’ insurance carrier and type.
Consequently, many policymakers are concerned by facility fees. To shield consumers from these unnecessary costs, several states have implemented novel reforms, such as facility fee billing prohibitions, increased transparency (billing, ownership, reporting disclosures), and cost-sharing protections. These reforms have varying impacts on patients’ OOP costs, overall system costs, and government oversight. Colorado, Connecticut, and Indiana are leading the way in facility fee reform.

How are finances different for non-profit and for-profit hospitals? What is the role of community benefit?

As opposed to for-profit hospitals and health systems, non-profit hospitals receive tax exemptions for their obligation to provide community benefits. To receive this exemption, non-profit hospitals must file the IRS Form 990 to demonstrate their compliance with the community benefit criteria, which can include community health needs assessments, financial assistance, and/or charity care. These requirements are set at the federal level, though half of states have imposed additional criteria. 

Too often, hospitals are not meeting community benefit or charity care requirements, nor are they fully complying with the expectation to accurately complete and submit the IRS Form 990. Furthermore, charity care only represents 1.4 percent of operating expenses for non-profit hospitals. As more than half of community-based hospitals are non-profit, the paucity of investment in community benefits provided by hospitals raises concerns that non-profits may be taking advantage of their tax exempt status. With an estimated $30 billion a year in tax exemptions, improper use of these financial advantages poses significant risk to cost containment.

Though there is variation across non-profit hospitals and health systems, these dynamics are important to keep in mind when evaluating the financial health of non-profit and for-profit providers.

What is the Maryland All-Payer Model? Has it successfully contained costs?

Maryland has taken a unique approach to hospital payments with an All-Payer Model, which was succeeded by the Maryland Total Cost of Care Model (TCOC). The Maryland model set rates for all payers across hospital services, holds the state fully at risk for the cost of Medicare beneficiaries’ care, and establishes a global budget that limits all-payer per capita hospital growth to 3.58 percent.

Maryland has the only all-payer hospital rate regulation in the country. Evaluations of its successes and shortcomings are mixed. Some evidence indicates that Maryland’s total spending has decreased, but Maryland remains on the higher end of spending compared to other states. Maryland’s Health Services Cost Review Commission noted success in reducing expenditures and revenue growth, but CMS has recognized that there is still room for improvement. The all-payer model poses an interesting option for states to consider, though feasibility will vary among states.

To learn more from experts on the dynamics in hospital finances and policy reform, be sure to watch the recorded webinars, available here.

The days are heating up and so is the summer research! This month we read about the effects of health risk assessments on Medicare Advantage payments, how the Affordable Care Act transformed the healthcare landscape in this country, and finally, about hospital pricing and the values of transparency.

Medicare Advantage Health Risk Assessments Contribute Up To $12 Billion Per Year To Risk-Adjusted Payments

Hannah O. James, et al. Health Affairs. May 2024. Available here.

Researchers from Brown University quantified the impact of health risk assessments (HRAs) on Hierarchical Condition Categories (HCC) risk scores, to determine how HRAs increase Medicare Advantage (MA) beneficiaries’ adjusted risk, and subsequent increases in payment rates. 

What it Finds 

• HRA diagnoses and medical chart reviews influence risk score calculations, which in turn influence plan payments. Both of these tools have resulted in higher payments to MA plans.
  • HRAs alone lead to more than a 5 percent increase in coding intensity.
• Almost half of MA beneficiaries (44.4 percent) had at least one HRA in 2019.
  • Among beneficiaries with at least one HRA, HCC scores increased by 12.8 percent.
• Risk scores are significantly impacted by HRAs, with HRAs increasing overall beneficiary-level risk scores by an average of 5.7 percent in 2019.
  • One in five beneficiaries (21.3 percent) with at least one HRA had elevated HCC scores as a result of diagnoses reported in HRAs, but not in other encounter records.
  • Coding intensity varies by insurance carrier: Cigna, UnitedHealth Group and Humana all had noticeably higher increases in coding intensity attributed to HRAs compared with other MA insurers, with these three insurers representing 80 percent of all MA spending.

Why it Matters

MA enrollees make up more than half of all Medicare beneficiaries and constitute a large share of overall Medicare spending. Upcoding practices in Medicare have received much criticism, as it leads to the same quality of care at much higher costs. HRAs contribute to upcoding by increasing patients’ HCCs, often without cause. Recognition of this has prompted recent calls for MA reforms from federal lawmakers. Policymakers should consider addressing this increased coding intensity due to HRAs to improve the value of spending under Medicare, and to ensure appropriate payments in the Medicare Advantage program. 

The ACA’s Transformation of Private Health Insurance

Linda J. Blumberg and John Holahan. Urban Institute. May 3, 2024. Available here.

Urban Institute researchers conducted a landscape assessment of current evidence on the ACA to demonstrate how the ACA altered the private insurance market, considering changes in enrollment, insurer participation, and premiums.

What it Finds 

• Since the passage of the ACA, uninsurance rates have been halved, leading to a historic low in the uninsured rate.
  • In 2023, 23.7 million Americans were uninsured, compared to 46.3 million in 2009, prior to implementation of the ACA.
  • Researchers attribute a portion of these gains to increased opportunities for private insurance through the Marketplace, which covers the majority of adults and children in the United States.
  • Enrollment in the ACA Marketplace non-group insurance has almost tripled since 2014 (8 million enrollees compared to 21.3 million in 2023). 
• Affordability and access to care have improved, and the impact on private non-group insurance markets has created competition based on price and quality of care.
  • Premium tax credits have made coverage more affordable and therefore attainable. However, higher premium tax credits covered under the Inflation Reduction Act expire at the end of 2025.
  • The number of insurers in the Marketplaces has grown: Aetna increased from zero markets in 2020 to 17 rating regions in 2024, and UnitedHealth Group has increased from three regions in 2020 to 26 rating regions in 2024.
• Marketplace premiums are lower than premiums in other markets.
  • A 2016 analysis showed that, on average, Marketplace premiums were 10 percent below premiums for employer-sponsored insurance, and that average Marketplace premiums were lower in 39 of 50 states.
  • Adjusted Marketplace premiums in 2022 were 28 percent below premiums in the small-group market and 23 percent below premiums in the large-group market. 

Why it Matters

It has been ten years since implementation of the Affordable Care Act (ACA). The law has mitigated many failings of the American healthcare system by increasing coverage, transparency, and controlling costs for consumers. The historic high in health insurance coverage and improved affordability have been achieved through changes to insurance market rules, increasing consumer protections, the provision of premium and cost-sharing subsidies, and expansions of the Medicaid program in most states. Insurer participation in the non-group Marketplaces has also increased in the years since implementing the ACA, which has given consumers access to more options for comprehensive health insurance coverage. The ACA has successfully established a functional non-group market that gives consumers choice of insurers and controls spending. 

Prices Paid to Hospitals by Private Health Plans: Findings from Round 5 of an Employer-Led Transparency Initiative

Christopher M. Whaley, et al. RAND Corporation. May 13, 2024. Available here.

RAND researchers analyzed 2020-2022 medical claims data to examine geographic variation in negotiated prices for commercial insurance enrollees, as compared to Medicare rates. 

What it Finds 

• In the past ten years, premiums for employer-sponsored insurance have increased by nearly 50 percent and one of the largest reasons for this is hospital price increases.
  • In 2022, 42 percent of total personal health care spending for privately insured individuals was spent on hospital services.
  • Also in 2022, employer-sponsored insurance was responsible for $1.3 trillion in spending. $486 billion of that was spent on or in hospitals.
  • Hospital facility fees in 2022 accounted for about 80 percent of outpatient spending and 91 percent of inpatient spending. (Read more from CHIR on facility fees here and here.)
• On average, employers and private insurers are paying more than double (254 percent) what Medicare pays for the same services at the same facilities.
  • In 2022, relative prices for inpatient hospital facility services averaged 255 percent of Medicare prices, outpatient hospital facility services averaged 289 percent, and all associated professional services averaged 188 percent.
  • Commercial insurance prices for drugs administered by a provider in a hospital setting averaged 278 percent of the average sales price (ASP), which is more than double what Medicare pays (106 percent ASP). 
• Since January 2021, federal transparency requirements necessitate clear and accessible pricing information about the items and services they provide to be posted online. CMS has been reluctant to enforce these requirements, and as a result, 64 percent of hospitals are largely noncompliant.
• There is significant variation in the prices of items and services paid for by employers and private insurers for hospital care and this study did not find a clear link between hospital pricing and quality.

Why it Matters 

Around 160 million Americans maintain health insurance coverage through private, employer sponsored insurance. The prices paid to hospitals for these enrollees is significantly higher than the prices paid by Medicare. When the variation in hospital prices is not tied to commensurate differences in quality, then a part of the prices that employers pay to high priced hospitals is wasteful spending. Price transparency alone will not create meaningful change if employers do not or cannot act upon the price information to reformulate or negotiate their contracts with health insurance and care providers. Unfortunately, many healthcare markets are so highly consolidated, there is little to no competitive pressure to keep commercial prices in check. 

By Sabrina Corlette and Julian Polaris*

On May 3, 2024, the U.S. Department of Health and Human Services (HHS) released a final regulation that allows people who receive Deferred Action for Childhood Arrivals (DACA) to sign up for subsidized Marketplace or Basic Health Program (BHP) coverage. The new policy goes into effect on November 1, 2024 and is expected to enable 100,000 DACA recipients to enroll in health insurance coverage. Notably, HHS did not finalize its proposal to make DACA recipients eligible for Medicaid or the Children’s Health Insurance Program (CHIP) in states that have extended coverage to lawfully residing children and pregnant people, citing concerns about state administrative burdens in light of ongoing unwinding activities. In their latest Expert Perspective for the State Health & Value Strategies program, CHIR’s Sabrina Corlette and Manatt Health’s Julian Polaris summarize the provisions of the new regulation and discuss their implications for states.

Read the full article here.

*Julian Polaris is a Partner at Manatt Health.

With more outpatient care being delivered in hospital outpatient departments (HOPDs) than in previous years due to vertical consolidation, consumers increasingly face high hospital facility fee charges on top of their provider’s bill for routine medical care. These facility fees are a lucrative revenue stream for hospitals, but they place a large financial burden on consumers.  

Increasing awareness about the growth in the amount and prevalence of these charges has driven many states to address this issue in their state legislatures. Several states pursued reforms that would limit hospitals’ ability to charge outpatient facility fees and better protect consumers from such charges. States also sought to build their internal capacity to tackle these topics by requiring greater transparency and commissioning studies. Hospitals’ opposition to facility fee reforms has been fierce, however, and only a handful of states have brought their bills over the finish line during the 2024 legislative session. 

State Legislation to Regulate Outpatient Facility Fees

States Across the Finish Line

Maine, Maryland, and Connecticut successfully passed legislation regarding facility fees this session. Notably, each of these states has enacted some facility fee reforms in the past, as documented in CHIR’s 2023 report and issue brief on state regulation of outpatient facility fees. Passage of the latest legislation in these states emphasizes the incremental nature of reform in this area.

As CHIR reported last year, Maryland currently requires hospitals to provide written and oral notices to consumers when charging a facility fee for outpatient clinic services, supplies, or equipment, excluding emergency department services. This year, Maryland legislators considered bills that would expand these notification requirements to more services and providers. Legislators, facing pushback, ultimately passed a bill that does not change existing requirements for hospitals, but tasks the Maryland Health Services Cost Review Commission to study outpatient facility fee billing and related reforms with the goal of convening a multi-stakeholder workgroup on expanding notice requirements. These efforts are expected to generate recommendations to the legislature for future action later this year and in 2025.

Both Connecticut and Maine have prohibitions on outpatient facility fee billing already on their books. Connecticut prohibits off-campus HOPDs (excluding freestanding emergency departments) from charging such fees for evaluation and management (E&M) and assessment and management (A&M) services, and will extend this prohibition to on-campus facilities in July (subject to some exclusions). Connecticut also has a soon-to-expire prohibition on facility fees for telehealth services that dates to the COVID-19 pandemic. This session, the Connecticut legislature extended its prohibition on facility fees for telehealth services that dates to the COVID-19 pandemic and had been set to expire at the end of June 2024.

Maine has limited facility fee billing for care provided in office settings for nearly two decades. Following news reports on patients facing unexpected facility fee charges, state legislators revisited the topic last year, ultimately creating a task force to evaluate facility fee billing and make legislative recommendations. This law also required Maine’s all payer claims database to produce annual reports on facility fee charges. Based on the task force’s report, Maine lawmakers passed legislation requiring health care entities to post facility fee notices on their website and on-site. These notices must advise patients whether the entity is a hospital-based facility, and if so, identify the hospital or health system that owns or operates the entity and whether or not it charges facility fees. The notice must also direct consumers to a state agency website with more information about the circumstances in which facility fee charges are permitted. Maine legislators also enacted a bill requiring that health care facility claims identify the physical location where a service was provided, including hospital off-campus locations. 

Notable Efforts

Additional legislators across the country introduced a range of measures to reform or shed light on facility fee billing, but their bills failed to pass before their state’s legislative sessions ended. 

Lawmakers in Washington sought to prohibit off-campus facility fee billing, in addition to expanding the state’s consumer notification requirements and introducing transparent billing requirements on claims forms. Other states introduced proposals prohibiting providers from charging facility fees for a more narrowly tailored set of procedures and care settings. Legislators in Connecticut sought to expand facility fee prohibitions to off-campus drug administration and injection and infusion services, and require off-campus HOPDs to acquire a unique national provider identifier and use this on all claims. Vermont legislators proposed to limit certain outpatient facility fee billing, but did not specify which items or services should be affected.