Center on Budget & Policy Priorities Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, Oct. 23 -- Tara Straw, director for health insurance and marketplace policy at the Center on Budget and Policy Priorities, has issued a public comment on the Centers for Medicare and Medicaid Services proposed rule entitled "Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement". The comment was written on Oct. 18, 2021, and posted on Oct. 19, 2021:

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The Center on Budget and Policy Priorities is a nonpartisan research and policy organization based in Washington, D.C. Founded in 1981, the Center conducts research and analysis to inform public debates and policymakers about a range of budget, tax, and programmatic issues affecting individuals and families with low or moderate incomes. We appreciate the opportunity to comment on the proposed rules on "Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement," as issued by the Office of Personnel Management, Internal Revenue Service, Employee Benefits Security Administration, and Centers for Medicare & Medicaid Services.

The Consolidated Appropriations Act for 2021 (CAA) enacted the No Surprises Act (NSA) which, in part, requires reporting of certain information related to air ambulance services. Air ambulance services are notoriously expensive, even for privately insured people, since roughly two-thirds of transports are out-of-network, according to a 2019 Government Accountability Office report./1

A recent report by FAIR Health found that charges increased by more than 20 percent between 2017 and 2020./2

The proposed rule outlines the submission of information required by air ambulance providers, group health plans, insurers, and Federal Employee Health Benefits (FEHB) carriers. These reporting requirements are an important step toward rationalizing air ambulance billing.

The proposed rule also focuses on the process the Department of Health and Human Services (HHS) will take to investigate and enforce violations of federal insurance law. Most NSA provisions rely on state enforcement with a federal backstop; in limited cases, such as with provisions with federal reporting requirements, HHS will be the primary enforcement authority. These rules generally extend current practices to apply to NSA enforcement.

Finally, the proposed rule implements provisions of the CAA, administered by HHS, that require the disclosure of agent and broker commissions. This is intended to make consumers aware of direct and indirect agent and broker compensation and give them the information they need to understand potential motivations behind certain plan recommendations. Further comments on these provisions appear below.

Disclosure Requirements

The statute requires that disclosures of direct and indirect compensation be "made prior to the individual finalizing plan selections" and "included on any documentation confirming the individual's enrollment." The intent of these requirements was to make compensation structures as transparent as possible. This provision follows a revealing year-long House report in 2020 on the anti-consumer practices of short-term limited-duration insurance that undermine ACA-compliant coverage and can leave enrollees saddled with medical debt./3

In 2020, such policies spent 57 percent of premiums on medical care, on average, compared to the requirement to spend at least 80 percent in the individual market./4

They are presented to consumers in a misleading or deceptive manner./5

In addition, they provide brokers up to ten times the compensation overall compared to ACA compliant plans./6

The CAA provision addressed the need for greater consumer awareness of these compensation arrangements, one element of a greater effort needed to address these problematic plans.

Definition of Direct and Indirect Compensation

The proposed rule would require individual market and short-term limited-duration issuers to report all types of direct and indirect agent and broker compensation, in accordance with the statute. The broad definition of consideration ― to include direct compensation and indirect compensation like finders' fees, bonuses, awards, volume-based incentives, and a wide range of other forms of payment ― is necessary to prevent compensation from shifting to an unspecified incentive category to escape disclosure. We support including this comprehensive articulation of various forms of compensation in the proposed regulation.

Format of Disclosures

The preamble states the Department's view that the costs of implementation outweigh the value of requiring a standardized format for the disclosure of commission schedules. We strongly disagree. This is contrary to the intent of the statute and fails to meet the Department's own goal of helping policyholders understand compensation and make informed purchasing decisions. The Office of Management and Budget estimates that each commission schedule would be four pages long, on average, with an additional two pages of supplementary documentation related to compensation outside the commission schedule. This proves the variety and complexity of these payment arrangements and is clear evidence of the high likelihood that consumers will be overwhelmed and confused by the information, virtually nullifying the statute's intent to make commissions transparent. Elsewhere in the rule, the Department states that "HHS is of the view that individuals cannot receive meaningful disclosure if they cannot understand the information provided in the disclosure documents." This is true in context (related to linguistic and other accessibility requirements of the disclosures) but is also true in the larger scheme of commission disclosures.

Not only would the disclosures not be understandable, but, owing to their complexity, they also wouldn't be comparable. Even if a consumer does take the time to probe the documents to understand the commission structure for a single plan, comparing across plans would be incredibly challenging and time-consuming without some framework. In addition, consumers are unlikely to have a point of reference to distinguish a standard commission structure from an excessive one.

The only way to make these disclosures usable for consumers is to standardize them. The Summary of Benefits and Coverage (SBC) is a good model for this, in that it makes complex insurance information comparable, even though it is necessarily lengthy. SBCs must use plain language, have at least a 12-point font, and use uniform terms and definitions. In contrast, the proposed rule implies the issuers can use the same commission schedule documentation given to agents and brokers, a completely different audience more accustomed to technical terms and industry jargon than the general public.

Orienting the consumer to routine versus excessive commissions is also necessary. This could be done using the wealth of information to be reported to HHS to calculate a prior-year average commission for both short-term limited-duration and individual market coverage. To further help people put information in context, key information should be displayed in plain language in such a way that people can understand what various data points mean. For example, a disclosure for short-term limited-duration coverage could say, "This agent or broker earns X amount per month in direct compensation if you enroll in this plan, compared to an industry average of Y for similar short-term coverage and Z for comprehensive individual market coverage." The proposed regulation provides for a "default disclosure" at the time the first premium is invoiced for individual market and short-term limited-duration plans that are not subject to any documentation requirements under state or federal law. We presume that short-term limited-duration plans are most likely to fall into that category. These are the plans most likely to have excessive commissions, therefore consumers should have more time, not less, to review the disclosures. As such, the proposed time for the disclosure is too late to fulfill the statute's goals. Instead, the issuer should be required to send the disclosure in advance of the end of the policy's coverage period, even if no other enrollment documents are sent at that time and the issuer bears an additional cost.

Also troubling is the implication in the ICR that the pre-enrollment disclosure could occur verbally. If true, this would be clearly insufficient and unenforceable. This is especially worrisome since so much short-term limited-duration insurance is sold over the phone, where people already aren't presented with the fine print of their policies. The regulation should specify that all disclosures are in writing. In addition, the requirements should not be satisfied by only including an electronic link on another policy document. That obscures the information, which Congress intended to be transparent and accessible. If providing a link is permitted, the purpose of the disclosure should be clearly defined alongside it with a required statement, such as, "Agent and broker compensation must be provided under federal law to help consumers understand and compare payment structures and help consumers make informed enrollment decisions." Contributing to the ineffectiveness of commission disclosures as proposed, the rule doesn't specify how far in advance of enrollment a consumer must be given the initial documentation. The likelihood is that it will be presented immediately before the enrollment, again lessening the usability of the information presented and consumers' ability to compare plans. The Department should consider a 24-hour waiting period to give consumers a chance to read the information. To the extent consumers want this information when they shop, particularly online, they should be able to access it without first providing any personal information, which is likely to subject them to marketing calls.

In addition to providing a pre-enrollment commission disclosure, we support the statute's requirement that the disclosure accompany "any documentation" confirming the individual's enrollment and urge the Department to define that documentation as broadly as possible.

All disclosures should be linguistically appropriate and accessible to people with disabilities or with limited English proficiency. While this is stated clearly in the preamble, it should be incorporated into the regulation explicitly or the appropriate existing federal regulations requiring these accommodations should be cited.

HHS Reporting Requirements

We support the requirement for issuers to report comprehensive information to HHS, including information related to intermediary organizations. The reports should distinguish between commissions paid for short-term limited-duration insurance and qualified health plans sold on or off the marketplace. The report to HHS is designed to capture commission information from the prior year at the end of July. This is a significant lag. The statute requires such information be provided "prior to the beginning of open enrollment." This implies that the statute envisioned reporting commissions prospectively. We urge the reporting requirement to be expanded to include both prospective and actual retrospective commissions to HHS (in the event that commissions change during the year and to collect aggregate commission data). This information should be publicly posted in a useable, readable format.

In specifying the information to be provided by issuers, HHS should include commissions at both open and special enrollment periods. Individual market commissions often plummet outside of open enrollment, which could be a further pull toward the sale of short-term limited-duration coverage. It should also require reporting of add-on, or stacked, products, such as fixed indemnity or specified disease plans.

Thank you for your work to implement these important rules.

Sincerely,

Tara Straw

Director, Health Insurance and Marketplace Policy

cc: Laurie Bodenheimer, Associate Director, Healthcare and Insurance, Office of Personnel Management 1900 E Street NW, Washington, DC 20415-1000

Douglas W. O'Donnell, Deputy Commissioner for Services and Enforcement, Internal Revenue Service, 1111 Constitution Ave, NW, Washington, DC 20224

Ali Khawar, Acting Assistant Secretary, Employee Benefits Security Administration, Department of Labor, 200 Constitution Ave, NW, Washington, DC 20210

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Footnotes:

1/ "Air Ambulance: Available Data Show Privately-Insured Patients Are at Financial Risk," Government Accountability Office, March 2019, https://www.gao.gov/assets/gao-19-292.pdf.

2/ FAIR Health, "Air Ambulance Services in the United States: A Study of Private and Medicare Claims," September 28, 2021, https://www.fairhealth.org/publications/whitepapers.

3/ House Energy and Commerce Committee, Democratic Members, "Short-Changed: How the Trump Administration's Expansion of Junk Short-Term Health Insurance Plan is Putting Americans at Risk," June 2020, https://drive.google.com/file/d/1uiL3Bi9XV0mYnxpyaIMeg_Q-BJaURXX3/view.

4/ National Association of Insurance Commissioners, "2020 Accident and Policy Experience Report," July 2021, https://content.naic.org/sites/default/files/publication-ahp-lr-accident-health-report.pdf.

5/ House Energy and Commerce Committee, Democratic Members.

6/ Ibid.

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The proposed rule can be viewed at: https://www.regulations.gov/document/CMS-2021-0147-0001

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