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States get offer of federal money to boost insurer compliance with Obamacare

Affordable Care Act supporters
Mark Wilson | Getty Images

Here's some cash to help health insurers stay on the straight and narrow when it comes to Obamacare.

The Obama administration Wednesday said it would offer state insurance regulators a total of $22 million in funding to use to make sure that health insurers are complying with key consumer protections under the Affordable Care Act.

Those protections include certain minimum essential health benefits that must be offered by health plans, such as preventative services, as well as treatment for mental health conditions and substance use disorder. The money also is supposed to help state insurance regulators.

Wednesday's announcement came a week after a report that found that insurance plans across the United States are not offering necessary services for people suffering from addiction, and that two-thirds of certain key "benchmark" Obamacare plans violate the ACA in that regard. Benchmark plans are ones whose monthly premium rate affect the value of subsidies that most Obamacare customers receive if they buy a plan on a government-run marketplace.

"Our findings reveal that people with addiction may not be receiving effective treatment because insurance plans aren't covering the full range of evidence-based care," said Lindsey Vuolo, associate director of Health Law and Policy at The National Center on Addiction and Substance Abuse and lead author of the report last week.

"For example, our review did not find a single state that covers all of the approved medications used to treat opioid addiction," she said.

On Wednesday, in response to the grant announcement, Vuolo said, "The states are primarily responsible for enforcing the Essential Health Benefits and parity requirements, so it is encouraging to see the federal government providing financial assistance to help the states carry out their obligations."

"This is a good start. We hope it will help correct some of the problems we identified in our review of the 2017 EHB benchmark plans," Vuolo said. "We also hope it will lead to better addiction treatment coverage for patients insured by ACA plans."

In addition to preventative services, mental health and substance abuse disorders, the ACA requires health plans to cover ambulatory patient services, emergency services, hospitalization, maternity and newborn care, prescription drugs, rehabilitative services, lab services and pediatric services.

The grant announcement comes as insurers continue filing their proposed rates for Obamacare plans for 2017 with state regulators. Many of those plans are subject to rate review from regulators, who can either negotiate with insurers over adjusting their rates downward or upward from their initial proposals, or can decide the final rates on their own.

The federal Centers for Medicare and Medicaid Services, which announced the additional grants, said they are "part of the $250 million in state rate review grants the Affordable Care Act provided to improve the process for how states review proposed health insurance rate increases and hold insurance companies accountable for unjustified hikes."

The $22 million is rate review money that went unobligated in prior years.

Kevin Counihan, CEO of the federal Obamacare marketplace, said the grants "will continue our partnership with states to help support their efforts to enforce consumer protections guaranteed by the Affordable Care Act."

CMS said Wednesday's announcement is the second of three planned this month about efforts to work with insurers and regulators, increase outreach to potential Obamacare customers and strengthen the so-called risk pool of customers enrolled in ACA plans. A strong risk pool is one in which the benefits paid out to sicker enrollees are more than balanced out by the premiums paid into the plan by all customers, so that the plans are not running at a financial loss.

A number of Obamacare insurers have said they are losing money on the plans because their risk pools are sicker than they had anticipated when they set prices for previous years. Those losses have in turn led many insurers to request double-digit percentage rate hikes for premiums in 2017.

Last week, federal health regulators said they wanted to significantly curb the use of short-term health insurance that is not compliant with ACA standards, a move that could drive healthy customers of such plans into Obamacare coverage. Another move regulators are making to strengthen the risk pool is to implement tighter rules on people enrolling in Obamacare plans outside of the narrow open-enrollment window, and helping people who are turning 65 transition into the federal Medicare health coverage program.