Providing Qualified Health Plans, or QHPs, that meet the requirements of the Affordable Care Act has become an integral part of many health plans’ offerings. Now that numerous calls for repeal and legal challenges brought against the ACA over the years have failed, health plans can finally invest confidently in this line of business.
As healthcare costs continue to rise, Americans need QHPs. With 35 million people enrolled in coverage related to the ACA and rapid growth of enrollments, QHP plans present an incredible growth opportunity for participating health plans. Here’s what health plans need to know to navigate this market successfully.
Regulatory filing is key — and inflexible
QHPs can be lucrative for health plans, but this particular revenue stream comes with unique responsibilities. Regulatory filing for the purpose of maintaining compliance can be a cumbersome burden and tedious task — there are myriad changes each year — but even the simplest of mistakes can result in millions of dollars in lost revenue.
For example, Tufts Health missed a Rhode Island regulatory filing deadline by two minutes — which Tufts attributed to traffic and construction — and it may have caused them to lose a $400 million Medicaid contract. The snafu disqualified Tufts from bidding on Rhode Island’s $7 billion contract for five years. The rejection of Tufts’ appeal cited avoiding setting a precedent that would allow the acceptance of proposals that were submitted late. In other words, if you can’t file on time, you can’t be trusted to offer a health plan in the marketplace.
In addition to high-stakes examples like this with long-term repercussions, the Center for Medicaid and Medicare Services scores and rates health plans based on the quality of their QHPs on an annual basis. Ratings are based on a number of measures using CMS methodology and criteria such as enrollee experience, plan efficiency, affordability and management on a national and health plan-specific basis.
While the health insurance business is highly regulated, investing in offering QHPs comes with an additional level of scrutiny and complexity for which health plans have to be ready. Noncompliance can lead to federal fines, withdrawal from federal and state exchanges for years, or other penalties. Some states will impose thousand-dollar-a-day fines for missing a deadline.
A seasonal specialization
Every state releases updates to their guidance, often hundreds of pages in length, which dictates changes to benefit coverage — changes in cost shares, copays, filing deadlines, etc. — during the first quarter of the year. So, for large health plans who offer QHPs in a dozen or more states, that’s a lot to intake, interpret, document and process in order to maintain compliance. Simply tracking regulatory changes and making recommendations to the organization could be a full-time job.
For instance, the Department of Health and Human Services recently extended the Covid-19 public health emergency through December 31, 2024. This will have a big impact on how QHP member subsidies are determined and may result in large shifts between carriers. Any health plan offering QHPs has likely tracked and projected how this plays out.
While guidelines and information can change any time, Q2 is the time for filing. This takes an extraordinary effort from the health plan employees dedicated to completing this task. But as we move into the second half of the year, those responsibilities slow down tremendously. The people who handle regulatory filing usually find their responsibilities allocated elsewhere.
Despite this inherently being treated as a hybrid position, it is crucial for these employees to be experts in this area. Given the unforgiving nature of the regulatory process, the health plan’s bottom line — or a big chunk of it — is in the hands of those making these filings, even if they have other duties at other times of year.
The QHP market can be volatile
The massive job loss in 2020 as a result of the pandemic meant that many Americans who previously were insured through their employer were suddenly in need of QHPs. They turned to the state and federal exchanges. But when those same people went back to work in 2021, they left their QHP for employer-sponsored plans.
While an event like Covid-19 is quite rare, the demand for QHPs can fluctuate. For health plans — some of which earn half their revenue from QHPs — it takes careful business planning to navigate this ebb and flow.
While the demand can shift some, there’s no doubt that there is a need for this type of plan. Since the threat of an ACA repeal that would wipe out the QHP market has abated, that demand will continue for the foreseeable future. Health plans can finally offer these products with confidence — provided they navigate the regulatory landscape effectively.
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