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Insurers, hospitals agree in telling CMS to keep 'silver-loading'


The CMS should allow states to continue the practice known as “silver-loading” or risk destabilizing the Affordable Care Act’s insurance exchanges, according to comments from insurers, state regulators, hospitals and patient groups.

The ending of silver-loading, which occurs when an insurer raises premiums on a silver-level exchange plan to make up for the 2017 loss of cost-sharing reduction payments, would cause major problems for the viability of the exchanges, they argue in comment letters.

The CMS last month issued the proposed notice of benefit and payment parameters for Affordable Care Act exchanges, and asked for comments on ways the federal government could address silver-loading in a future rule no sooner than 2021.

Some of healthcare’s most powerful lobbying groups came out in favor of keeping the practice if the CSR payments remain dormant. “Absent an appropriation by Congress, there needs to be a solution to allow health insurance providers to continue providing this benefit,” according to comments from America’s Health Insurance Plans, the insurance industry’s top lobbying group.

The Blue Cross and Blue Shield Association, which represents 36 insurers, said in comments that it is “imperative that CMS continue to defer to states on how issuers should address the loss of CSR funding.”

But it wasn’t just insurers who want silver-loading to stick around; their state-level overseers do too. “Removing the state option for actuarial loading would destabilize insurance markets that have otherwise recently achieved a beneficial equilibrium,” according to comments from the National Association of Insurance Commissioners. “Such destabilization reduces insurer participation, reduces choice, increases costs, and would raise costs for many Americans who obtain coverage through the individual market.”

The American Hospital Association was also concerned about any attempt to nix silver-loading without Congress appropriating funds for CSRs.

“Without these payments, health plans face an additional cost that ultimately gets passed back to the consumer through higher premiums,” the AHA said in comments. “Today, health plans in states that allow silver-loading are able to protect consumers by limiting the premium increases to silver plans.”

An exchange insurer is required to lower out-of-pocket costs for low-income customers. Insurers used to get reimbursed for providing cost-sharing reductions, but President Donald Trump cut off those payments, calling them subsidies for Obamacare.

To compensate for the loss of the payments, a majority of states allowed insurers to tack the costs of CSRs onto the second-cheapest silver plan. The CMS sets its income-based subsidies to the cost of the second-cheapest silver plan, so exchange customers who qualify for the subsidies can get more of them because of the high cost of the benchmark plan.

The CMS has started to hint that it is concerned about “silver-loading” because it in part raises federal spending due to the higher subsidies. But insurers were happy with several parts of the proposed rule, which applies to ACA exchange and individual market insurers and insurers in the small and large group and self-funded health plans.

The proposed rule would reduce the 2020 user fee that insurers pay to participate on the exchanges from 3.5% to 3% for plans sold on the federally run exchanges. The rate would be lowered from 3% to 2.5% for plans on state-based exchanges.

But insurer groups were concerned about changes to the premium adjustment percentage that is used to determine the level at which exchange customers get premium subsidies. The CMS proposes to redefine the premium adjustment percentage to include an increase in individual premiums from 2013.

“The last two benefit years have seen dramatic changes in business climate and shifting ground rules,” the Association for Community Affiliated Plans said in its comments. “Adding another variable to the marketplace environment when there are already so many in the air is a choice we urge CMS to reconsider.”

The Blue Cross and Blue Shield Association said that the change to the percentage is expected to decrease premium tax credits, “increase the health insurance tax and increase the maximum out-of-pocket requirement.” The association called for the CMS to retain the current methodology for calculating the percentage.