Proposed Rules on Cost-Sharing and Benefits

On February 22, CMS issued proposed regulations to implement the provisions in the Deficit Reduction Act (DRA) regarding cost-sharing and flexibility in providing benefits through "benchmark plans." Unlike the array of regulations proposed by CMS over the past year, which have either gone off in a direction Congress has not authorized or gone well beyond Congress's intent, these regulations are for the most part consistent with the DRA and prior guidance that CMS has issued.

However, there are some issues with both proposed rules.

On cost-sharing, the rules establish a method of indexing the maximum (otherwise known as "nominal") cost-sharing amounts that would allow cost-sharing to rise each year by a greater amount than Congress intended. In addition, the rules would allow higher cost-sharing for people with income below the poverty line who are enrolled in managed care than in fee-for-service. Yesterday, Senators Baucus and Grassley wrote to HHS Secretary Leavitt expressing their concerns about these aspects of the proposed rule.

The Center on Budget and Policy Priorities also issued comments on benefits. The comments discuss two issues:

1. the protections that are needed when a state provides benchmark benefits to beneficiaries who cannot be required to enroll in a benchmark plan (the DRA exempted seniors and people with disabilities, children in foster care) on a voluntary basis; and
2. a need for a change in the process that the proposed rule establishes for families seeking wrap-around coverage for children (the DRA allows states to require most children to enroll in benchmark coverage but requires that any benefits not provided through the benchmark plan be provided through wrap-around coverage.) The proposed rule requires that families always seek coverage through the benchmark plan first, which could cause a delay in care or even cause children to go without necessary health care services.