CMS expands state waiver rules for account-based approach

States will have more flexibility to introduce new healthcare options to residents under a new policy from CMS that impacts waivers.

The options, which the agency has said are “alternatives to the Affordable Care Act (ACA) that improve health insurance options,” allow states to divert funds toward a health savings account-based approach and three other waiver concepts.

“Seeing the problems the ACA created and seeing the lack of federal action to address these problems should be proof enough for why it was such a mistake to federalize so much of health care policy under the ACA,” CMS Administrator Seema Verma said in a statement.

The initiative specifically takes aim at section 1332 waivers, which the agency calls State Relief and Empowerment Waivers. The policy also allows states to divert subsidies toward plans that do not meet ACA guidelines, including short-term healthcare plans, which often aren’t comprehensive but come at a lower cost. The plans have come under fire by some lawmakers who call them “junk insurance.”

CMS previously issued a guidance on the initiative and expanded permissible 1332 waivers in October. Under the latest waiver change, states could make a contribution to accounts to subsidize healthcare expenses, similar to a health savings plan.

“The account-based approach would allow a state to provide a cash contribution to an account that people can use to pay both premiums and any out-of-pocket health expenses,” the announcement reads.

In addition to the account-based approach, CMS will allow states to apply for waivers to:

  • Develop a new premium subsidy structure and decide how those premiums should be targeted.
  • Set the rule for what type of health plan is eligible for state premium subsidies.
  • Implement risk stabilization strategies to address the costs of high-risk individuals.

Read the policy here.