CMS Announces 60-Day Comment Period On Georgia’s Section 1332 Waiver

On November 9, 2021, the Centers for Medicare and Medicaid Services (CMS) and Department of the Treasury opened a new 60-day comment period to solicit input on Georgia’s waiver under Section 1332 of the Affordable Care Act (ACA). Georgia was notified of the new comment period in a separate letter.

The announcement come after months of negotiation between federal and state officials. CMS and Treasury repeatedly asked Georgia to provide updated actuarial and economic analyses necessary to assess Georgia’s waiver, known as the Georgia Access Model, in light of recent federal legal and policy changes. Georgia rebuffed these requests, and federal officials made clear that the state may be violating the conditions of its waiver approval agreement. Comments are due on January 9, 2022.

Brief Background

Under Section 1332, states may be approved to waive certain ACA requirements if a state demonstrates that their waiver proposal meets statutory “guardrails.” How to interpret these guardrails has been a point of debate, but most approved waivers have been for noncontroversial state-based reinsurance programs.

Georgia is the only state to have been approved for a broad Section 1332 waiver to restructure its individual market. Georgia’s waiver includes two phases: a state-based reinsurance program in 2022 and elimination of HealthCare.gov (without transitioning to a state-based marketplace) in 2023. This second phase of the waiver is known as the Georgia Access Model and would make Georgia the only state without a single one-stop-shop marketplace for consumers in need of private health insurance. Instead of a single marketplace such as HealthCare.gov, consumers would transition to a decentralized enrollment system that uses web-brokers and insurers beginning in 2023. The waiver was approved in November 2020.

Approval of the Georgia Access Model was controversial and challenged in court (although the litigation remains on hold). Prior interpretations of Section 1332 and Georgia’s waiver are described in more detail in prior posts.

In June 2021, CMS issued its first request for updated actuarial and economic analyses of the baseline for Georgia’s waiver. Federal officials wanted to evaluate the waiver in light of changes under the American Rescue Plan Act (ARPA), the broad COVID-19 special enrollment period, and increased federal funding for outreach and marketing. Georgia’s updated analysis would have been posted for a 30-day public comment period. Georgia rejected this request, raising concerns that CMS wanted to “reopen” the waiver approval process.

CMS responded on July 30, noting that federal officials are not trying to reopen approval of the waiver. Rather, CMS is reviewing all approved waivers in light of federal changes and requesting additional information as part of continued monitoring and oversight. The specific terms and conditions (STCs) in Georgia’s waiver approval require Georgia to comply with federal data reporting requirements. This includes submission of “data sufficient to show compliance” with Section 1332’s guardrails and “other information the Departments determine is necessary … to evaluate the waiver.” CMS then extended its deadline, giving Georgia until August 29 to submit the requested data.

On August 26, Georgia again rebuffed CMS’s request and declined to provide updated analyses. In a more forceful response, Georgia argued that the cited federal policy changes did not justify a decision to reopen the waiver approval process. ARPA subsidies are irrelevant, state officials argued, because the enhanced subsidies phase out in 2023 and will thus have no effect when the state’s waiver goes into effect. (While this is true, ARPA subsidies are expected to have some spillover effect on 2023 coverage.) Georgia also suggested that federal officials could not conduct monitoring and oversight of an approved waiver until after that waiver has actually taken effect and offered only a cursory explanation as to why the waiver continues to satisfy Section 1332’s guardrails.

Georgia indicated that it would proceed with implementation of the waiver as approved, leaving CMS and Treasury to decide what to do next.

New Comment Period

On November 9, CMS and Treasury announced a new 60-day comment period and urged Georgia to submit the requested analysis during this period as a way “to demonstrate compliance with the STCs.” Federal officials reiterate the need to assess continued compliance with Section 1332 guardrails in light of increased marketplace enrollment (stemming from recent federal changes). CMS and Treasury reviewed all approved Section 1332 waivers in light of these changes and determined that additional information is needed to assess the Georgia Access Model. The letter to Georgia suggested again that the state may not be in compliance with federal rules or STC 6 in its own waiver agreement. Comments are due on January 9, 2022.

Federal officials request supporting data and analysis of how changes in federal law and policy impact Georgia’s waiver and baseline. They suggest information that would be helpful for their analysis, provide a list of background documents, and provide additional background on Georgia’s waiver. CMS and Treasury will use the comments to inform further evaluation of the Georgia Access Model and whether it continues to meet Section 1332’s guardrails.

The documents also highlight some of the changes that have already occurred (thanks to ARPA and the COVID-19 special enrollment period) since Georgia’s waiver was approved in November 2020. About 356,500 Georgians benefitted from ARPA subsidies, and Georgia marketplace consumers saw a 54 percent reduction in average monthly premiums. Nearly 150,000 of these Georgians signed up for marketplace coverage during the COVID-19 special enrollment period. This is an increase of more than three times the number of consumers who enrolled during the same period in 2020 (about 41,000 plan selections) and 2019 (nearly 26,000 plan selections).

CMS also expects its investments in marketing ($100 million during the COVID-19 special enrollment period plus $150 million during the 2022 open enrollment period) and outreach ($80 million for the navigator program for 2022) to increase enrollment. Georgia will have three navigator grantees supported through $2.54 million for the 2022 plan year, with the expectation that these investments will continue or even increase over time, leading to higher enrollment.

Each of these changes has or will contribute to higher marketplace enrollment and decrease the number of uninsured people in Georgia relative to the data in Georgia’s waiver application. Yet, data on the state’s uninsured rate, CMS and Treasury note, was a “core part” of the state’s actuarial analysis. Overall, federal officials are concerned that Georgia’s analyses are based on now-outdated assumptions that must be revisited to assess compliance with Section 1332’s guardrails.

Why does the uninsured rate matter? With fewer uninsured people relative to when the waiver was approved, private entities may be less motivated to invest in outreach. Indeed, Georgia’s waiver assumed that private sector outreach would offset any coverage losses that might occur as Georgia transitioned away from HealthCare.gov. With more people now enrolled in marketplace coverage, there is a smaller base of uninsured consumers (meaning fewer incentives for private sector investments in outreach) and greater potential for coverage disruption during the transition. Both could lead to fewer individuals with coverage under the waiver compared to the number who would have been covered without the waiver, which would violate the coverage guardrail under Section 1332.

While CMS and Treasury do not name the Build Back Better Act, they recognize the possibility of future legislation that impacts the individual health insurance market and invite commenters to note any potential impact to the waiver and statutory guardrails. If Congress were to pass the draft legislation currently under consideration by the U.S. House of Representatives, two of the major ARPA subsidy enhancements would be extended through the 2025 plan year and could significantly impact Georgia’s waiver assumptions.