On May 15, the Centers for Medicare and Medicaid Services (CMS) released a new final rule that allows low-premium, high-deductible health plans (catastrophic plans) purchased through Affordable Care Act (ACA) exchanges to last up to 10 years. The rule also allows for certifying plans with no traditional doctor network.

The rule also reinstates measures to fight fraud, like pre-enrollment verifications. It also contains rules that, the agency said, strengthen eligibility checks to ensure dollars go to people who truly qualify. The rule also codifies previous guidance expanding eligibility for catastrophic plans and requires states to offset the cost of any benefits they mandate in addition to federal essential health benefits.

CMS Administrator Dr. Mehmet Oz said, “This rule strengthens eligibility checks, cracks down on abuse, and gives insurers more flexibility to offer affordable, consumer-focused coverage options.”

Plans without a provider network would offer those who buy such plans a preset reimbursement amount for specific services. Cost-sharing in these catastrophic plans would vary, based on the length of the term of coverage. And, the rule follows the amended ACA language that expands catastrophic plan eligibility to people who do not qualify for financial assistance. As originally written in the ACA, catastrophic plans were limited to purchasers under age 30 or who qualified for a specified hardship exemption. The CMS rule also requires states to offset the cost of any benefits they mandate that go beyond federal essential benefits.

Prospects: Industry experts predict that the rule’s “novel concepts” may trigger lawsuits. They say that the rule raises issues regarding how a purchaser can verify a health provider’s prices and question whether many insurers would actually offer these kinds of plans.

NAIFA Staff Contact: Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org