Biden EO Directs HHS To Create Standardized Health Plan Option

Inside Health Policy

July 9, 2021 2:59 pm

President Joe Biden’s sweeping executive order to boost competition in health care and other markets directs HHS to create a standardized plan option that would be sold in the federal exchange and help people to more easily compare plans.

“Consolidation in the health insurance industry has meant that many consumers have little choice when it comes to selecting insurers. And even when there is some choice, comparison shopping is hard because plans offered on the exchanges are complicated–with different services covered or different deductibles,” the executive order says. It then directs HHS to create the standardized option.

Numerous state-based exchanges, including Covered California, have had standardized plans in place since launching in 2014. All plans provide the same benefits and cost-sharing and deductibles so that consumers get an “apples to apples” comparison and avoid surprises, according to Covered California.

CMS does not have authority to require insurers sell standardized plans, but the Obama administration did encourage adoption by displaying those plans more prominently on The policy went into effect for 2017, but the Trump administration scrapped the option in the fiscal 2019 exchange rule.

Meanwhile, a group of cities, represented by Democracy Forward, sued HHS over several provisions in the 2019 rule, arguing that they violated the Administrative Procedure Act.

In March, a federal district court in Maryland ruled in favor of the cities on four of nine provisions they’d challenged, including the standardized option, a change to medical loss ratio reporting, increased document verification for low-income consumers, and deferring review of network adequacy to the states.

CMS acknowledged the case in the third installment of the fiscal 2022 Notice of Benefit and Payment Parameters out in late June. The agency said it intended to implement the court’s decision as soon as possible. But it added the agency needed to design and propose new options — which would then need to be adopted by insurers and approved by regulators — and said that wasn’t feasible for the fiscal 2022 plan year. CMS said many of the variables used to craft the most recent iteration of the standardized options, including state cost-sharing laws, have changed considerably since they were finalized in 2018, and there’s not enough time to conducted needed analysis.

The agency said it would restart the standardized option designation and propose specific plan designs in the fiscal 2023 payment notice. “As such, we seek the views of stakeholders regarding issues related to the proposal of new standardized options, including specifically the views of states with FFEs or SBE-FPs regarding how unique state cost-sharing laws could affect standardized option plan designs to assist in our development,” the agency said.

Maura Caslyn, managing director of health policy for the Center for American Progress (CAP), says that CMS is taking the right approach to crafting the new options since so much more information is out now compared to in 2016.

As far as plan designs, Caslyn says that CAP supports efforts to encourage the use of high-value, lower-cost services. For example, policies could require very low cost-sharing for primary care or out-patient treatments. Allowing coverage pre-deductible for primary care could also make a huge difference to many families, particularly parents with young children, she adds.

Standardized plans can also form the foundation for other policies, like an auto-enrollment mechanism that could place eligible enrollees into those plans.

The insurance lobby says it’s too early to comment on specific pieces of the executive order, but in general AHIP reiterated its position that the best way to achieve high quality, affordable care is through market competition.