Policy and Regulation News

Senators Oppose CMS Promoting Short Term, Limited Duration Plans

Senators say these not ACA-compliant short-term, limited duration plans are being advertised as ACA-compliant and that brokers are incentivized to sell them.

Affordable Care Act, short-term, limited uration health plans, brokers, healthcare.gov

Source: Thinkstock

By Kelsey Waddill

- Twenty-three senators are concerned about the administration's promotion of short term, limited duration plans that may not meet the ACA’s coverage and pre-existing condition protection standards, according to a letter to the Center for Consumer Information and Insurance Oversight of CMS and the Acting Inspector General of the HHS.

“We are concerned that the Centers for Medicare and Medicaid Services (CMS) is not only failing to conduct sufficient oversight to protect customers, but is actively emailing consumers to encourage them to obtain coverage through third-party agents and brokers instead of the HealthCare.gov website,” the letter stated.

The senators called these plans by their colloquial name, “junk plans,” so called because the they do not provide the same comprehensive coverage that long-term plans do, making them ineffective for certain medical circumstances.

The senators explained that, by promoting these plans, CMS directed enrollees to pursue coverage outside of HealthCare.gov, sending them to brokers and agents. These brokers and agents are highly incentivized to sell plans that are not ACA-compliant as they can receive up to four times as high as the commissions that brokers would receive for enrolling individuals in ACA-compliant plans.

The senators said they were extremely concerned that CMS may be misleading consumers.

If CMS is influencing consumers toward short-term, limited-duration plans, enrollees may think they have signed up for an ACA-compliant plan. Instead, they will have a plan with less comprehensive coverage and higher out-of-pocket healthcare spending. To complicate the issue further, these plans can be subsidized by ACA premium tax credits, even though they do not have to meet the same standards as ACA-compliant plans.

To opponents of the extension, short-term, limited-duration health plans represent a return to pre-ACA health insurance, when healthcare payers could deny coverage to individuals with pre-existing conditions. The plans were not intended to provide long-term coverage, although the administration has extended the duration to three years.

A study conducted by the Urban Institute and funded by the Robert Wood Johnson Foundation found that brokers use lead-generating sites and paid advertisements to market short-term, limited duration health plans year round—not just during open enrollment. Brokers’ marketing strategies include characterizing short-term, limited-duration health plans as replacements for ACA-compliant, comprehensive coverage.

According to the senators, consumers may also encounter advertisements and links to short-term, limited-duration brokers’ sites through links on HealthCare.gov.

“Consumers should be able to trust that when using a government-operated platform such as HealthCare.gov, they will not be subject to aggressive or misleading marketing techniques by third-parties that are incentivized to steer individuals to a substandard product,” the senators wrote.

“Not only has CMS failed to make consumers aware of the commission payment incentives that exist for brokers to enroll customers in junk plans, but it is also uncertain whether the agency has procedures in place to track what happens to customers who are re-directed to third-party broker sites.”

The senators also disputed CMS’s decision to permit brokers to advertise on HealthCare.gov when their platforms support both ACA-compliant and short-term, limited-duration health plans. They pointed to a section of the ACA that disallows Exchange platforms from proffering plans that do not fit within the ACA’s coverage policy and could be held responsible for mismanaging program management funds and user fees, per the ACA.

The senators attached an email that CMS sent to consumers which supports the recipients using Help On Demand, a third-party platform that uses health payers’ agents and brokers to guide consumers toward the plan that is best for them.

“The agents and brokers are usually paid by the insurance companies whose plans they sell,” the email reads, “however, they are required in many states to act in the consumer’s best interest.”

CMS has not denied using third-party platforms to sell ACA exchange health plans.

Known as enhanced direct enrollments (EDE), these third-party partnerships are intended to decrease the volume of users on HealthCare.gov, which has more than once buckled under the high traffic. The agency audits the five private companies approved to engage in EDEs, in order to ensure proper security standards.

CMS increased the number of vendors it partners with for 2020 and is allowing consumers to use these alternate portals through the entire open enrollment season.

The senators required a response by December 4, 2019, outlining budgetary and statutory context as well as detailing broker oversight, among other demands.