01.15.19

By: Staff
Source: Inside Health Policy

Dems Seeks Details On How CMS Spends Marketplace User Fees

House and Senate Democratic leaders continued their expected oversight efforts on Thursday (Jan. 10) by demanding CMS explain why it continues to charge states using the federal technology a user fee of up to 3.5 percent of premiums even as the agency has slashed money for exchange advertising and outreach services that those funds are meant to support.

The letter was signed by Energy & Commerce Chair Frank Pallone (D-NJ), Ways & Means Chair Richard Neal (D-MA), Education & Labor Chair Bobby Scott (D-VA), Senate Finance ranking Democrat Ron Wyden (OR) and Senate health committee ranking Democrat Patty Murray (WA).

“The Administration’s record of undermining enrollment in the Marketplaces, including by cutting funding for vital functions such as marketing and outreach, as well as spending agency funds on ‘repeal and replace’ propaganda, raises questions about whether the dedicated funding is being spent effectively, legally, and appropriately to enhance Americans’ access to comprehensive health insurance,” the lawmakers wrote. “Congress and the American public are entitled to understand how CMS is spending these funds, which likely represent billions of dollars in federal spending, and whether the agency is using them solely for the purpose of supporting the functions of the Federal Marketplace.”

The lawmakers point out that the administration has cut funding for advertising by 90 percent and for navigators by a total of 84 percent since 2016.

Further, for the 2019 open enrollment season, CMS required navigators inform consumers about non-ACA compliant products, including short-term health plans or association health plans that do not have to cover essential benefits. Such products could not only leave consumers saddled with medical debt, but could also increase premiums for comprehensive coverage.

While CMS charges states that are fully reliant upon the agency for all exchange functions a user fee of 3.5 percent of the premiums sold through the marketplace, the agency also charges a 3 percent fee to the five states that function largely as state-based exchanges yet use the federal government’s technology.

Exchange directors in those states, called state-based marketplaces using the federal platform (SBM-FP), have said the fee is far too high for those services and have unsuccessfully urged the agency to lower it. They also want to agency to explain how their money is spent. The high fees and limited control of data are major reasons that two SBM-FP states, Nevada and New Mexico, opted to transition to fully state-based marketplaces for future years. Oregon is also considering a transition.

Transparency is key, said one exchange official. CMS should publish what each state has paid in user fees since 2014, and follow up with an explanation of what services, exactly, states have gotten in return.

The official also pointed to the estimated user fees paid by the states that the lawmakers represent. Massachusetts and Washington are state-based exchanges so they paid no user fees to the federal government. But, New Jersey, Oregon and Virginia can expect to see their user fee amounts paid in 2018, which the source estimates were about $53 million, $15 million and $87 million, respectively, to more than double by 2025.

Meanwhile, New Jersey received $400,000 to fund navigators for the 2019 plan year, Virginia received $525,000, and Oregon received none since it is an SBM-FP and supports its own assisters.

Another source also stressed that there is a good reason for lawmakers and state officials to wonder how the fees are being used considering the agency has slashed not only the advertising and navigator budget, but also stopped administering the Small Business Health Options Program, all of which likely saved around $120 million. However, the source said that while stakeholders have reason to be suspicious about Trump administration’s efforts to undermine the exchanges, there is likely nothing scandalous happening with the user fee funding. The money has probably been directed toward legitimate investments, including the work to set up the new Enhanced Direct Enrollment pathway, as well as staff training and other maintenance efforts that are often more expensive than expected, the source said.

The lawmakers ask CMS to provide by Jan. 24 the overall amount of fees collected and an overview of expenditures for the 2017 and 2018. That overview should be broken down into categories that include: exchange related technology, eligibility and enrollment, consumer information and outreach and quality review. They also seek details on capital investments made to the exchange in those years, any future investment plans and a description of each contract that supports marketplace activity.

The lawmakers also ask the officials for a briefing on 2019 outreach and enrollment spending for the exchanges, including an itemized list of spending related to advertising, marketing, communications and outreach, call centers and other contracts. They also asked for details and a copy of all contracts in force for such activities as well as any and all agreements with web brokers. -- Amy Lotven (alotven@iwpnews.com)