Federal Officers Threaten To Droop Georgia’s 1332 Waiver

On April 29, 2022, the Department of Health and Human Services (HHS) and the Department of the Treasury informed officials in Georgia that the state’s waiver under Section 1332 of the Affordable Care Act (ACA)—known as the Georgia Access Model—is at risk of being suspended. Georgia has until July 28, 2022 to submit a corrective action plan that explains how state officials will bring the waiver into compliance with federal statutory requirements. If Georgia fails to provide this information, HHS and Treasury will suspend implementation and Georgians would continue to enroll in marketplace coverage through HealthCare.gov. Alternatively, Georgia can formally challenge this determination.

The letter was accompanied by a new analysis from Acumen that projects that enrollment in Georgia’s individual market would decline by 4.4 to 8.3 percent in 2023 and by 8.4 percent annually from 2024 to 2027. These enrollment losses would stem from lower advertising levels and attrition as some consumers get lost in the shuffle transitioning away from HealthCare.gov. Coverage losses would not be offset by increased enrollment from Georgia’s reinsurance program, which is expected to increase enrollment by about 0.5 percent.

The April 29 letter and new data come after HHS and Treasury repeatedly asked Georgia to provide updated actuarial and economic analyses to help assess the waiver. Georgia rebuffed each of these requests, and federal officials made clear in July 2021 that the state may be violating its waiver approval agreement. In November 2021, HHS and Treasury held a 60-day comment period to solicit input on Georgia’s waiver with comments due on January 9, 2022. The April 29 letter and analysis followed.

It is not clear how Georgia will respond. Gov. Kemp’s office is reportedly reviewing the determination. In the meantime, state officials appear to be moving forward with implementation-like activities. On April 29, the insurance department announced a “post-award” public hearing on June 1, 2022 to accept public comment on the progress under the waiver.

History Of Georgia’s Waiver

Under Section 1332, states may be approved to waive certain ACA requirements if a state demonstrates that their waiver proposal meets statutory “guardrails.” These guardrails have been a point of debate, but most approved waivers have been for noncontroversial state-based reinsurance programs.

Georgia is the only state to have been approved for a broad waiver to restructure its individual market. The waiver includes two phases: a state-based reinsurance program that began in 2022 and elimination of HealthCare.gov (without transitioning to a state-based marketplace) that would begin in 2023. This second phase, the Georgia Access Model, would make Georgia the only state without a single one-stop-shop marketplace for consumers in need of private health insurance. Consumers would instead use decentralized enrollment that relies entirely on web-brokers and insurers.

Georgia’s waiver was approved in November 2020. Approval was controversial and challenged in court (although the litigation remains on hold). Prior interpretations of Section 1332 and Georgia’s waiver are described in more detail in prior posts.

Rebuffed Requests In 2021

In June 2021, HHS issued its first request for updated actuarial and economic analyses of the baseline for Georgia’s waiver. Federal officials wanted to evaluate the waiver in light of changes under ARPA, the six-month COVID-19 special enrollment period, and increased federal funding for outreach and marketing. Georgia rejected this request, raising concerns that HHS wanted to “reopen” the waiver approval process.

HHS responded on July 30, 2021, noting that federal officials are not trying to reopen approval of the waiver. Rather, HHS reviewed all approved waivers in light of federal changes and requested additional information as part of its continued monitoring and oversight. The specific terms and conditions (STCs) in Georgia’s waiver approval require Georgia to comply with federal data reporting requirements. This includes submission of “data sufficient to show compliance” with Section 1332’s guardrails and “other information the Departments determine is necessary … to evaluate the waiver.” HHS then extended its deadline, giving Georgia until August 29, 2021 to submit the requested data.

On August 26, 2021, Georgia again rebuffed HHS’s request and declined to provide updated analyses. In a more forceful response, Georgia argued that the cited federal policy changes did not justify a decision to reopen the waiver approval process. ARPA subsidies are irrelevant, state officials argued, because the enhanced subsidies phase out in 2023 and will thus have no effect when the state’s waiver goes into effect. (Though this is true, ARPA subsidies are expected to have some spillover effect on 2023 coverage.) Georgia also suggested that federal officials could not conduct monitoring and oversight of an approved waiver until after that waiver has actually taken effect and offered only a cursory explanation as to why the waiver continues to satisfy Section 1332’s guardrails. Georgia indicated that it would proceed with implementation of the waiver as approved.

New Comment Period

On November 9, 2021, HHS and Treasury announced a 60-day comment period and urged Georgia to submit the requested analysis during this period as a way “to demonstrate compliance with the STCs.” Federal officials reiterated the need to assess continued compliance with Section 1332 guardrails in light of increased marketplace enrollment. HHS suggested again that Georgia may not be in compliance with federal rules or STC 6 in its own waiver agreement. Comments were due on January 9, 2022.

Georgia’s Waiver May Be Suspended

The April 29 letter confirms that HHS and Treasury will suspend implementation of the Georgia Access Model unless Georgia responds with a corrective action plan or a written challenge to this determination. This response is due before July 28, 2022 pursuant to a process outlined in STC 17 and federal regulations. Under this process (used to suspend or terminate a state’s waiver), federal officials must promptly notify the state of the determination and effective date and provide 90 days to provide a corrective action plan along with “an opportunity to be heard” and challenge the determination.

The corrective action plan must explain how Georgia will change the Georgia Access Model to meet statutory requirements and respond to concerns raised by HHS and Treasury. In particular, Georgia must provide 1) a revised outreach and communications plan; and 2) successful system integration and readiness reviews. These requirements are discussed in more detail below. Federal officials ask for a response as soon as possible to allow time to consider any changes and new information.

The first phase of the waiver, for Georgia’s state-based reinsurance program, is undisturbed. As with other states with waivers for state-based reinsurance programs, there is no indication that this component of the waiver fails to meet Section 1332’s statutory guardrails.

Rationale To Suspend The Waiver

HHS and Treasury are taking this action for two independent reasons: a material failure to comply with the STCs and violation of the “coverage” guardrail under Section 1332. Either reason, on its own, is a sufficient basis to suspend implementation of the Georgia Access Model. Even so, federal officials commit to working with Georgia to make appropriate changes. This, HHS and Treasury explain, is why federal officials have asked for a corrective action plan pursuant to the STCs (rather than terminating the Georgia Access Model outright).

HHS and Treasury also considered public comments, noting that a majority of commenters opposed the Georgia Access Model and raised concerns that the waiver does not comply with Section 1332. (The public comments are summarized in an appendix at the end of the April 29 letter.) A minority of commenters objected to the requests for updated analysis, took issue with the process, and echoed arguments made by Georgia in prior responses. In response to criticism of the process used by federal officials, HHS and Treasury note that 219 days elapsed from their first request for updated analysis to the end of the 60-day public comment period. Georgia could have submitted its analysis at any point during this time or asked for an extension. Instead, the state ignored the request.

Some commenters argued that the Georgia Access Model failed to meet other statutory guardrails—such as the “affordability,” “comprehensiveness,” and “deficit neutrality” guardrails. But HHS and Treasury do not reach those conclusions here. While some commenters noted that consumers could be steered into non-ACA plans (such as short-term plans), HHS and Treasury note that there have been no changes in federal law or policy relevant to this issue that would warrant a new determination. As such, the analysis above is limited to Georgia’s failure to satisfy the “coverage” guardrail under Section 1332.

Failure To Comply With The Waiver Agreement

As the first reason for suspending the waiver, Georgia has failed to provide requested information needed to monitor and oversee implementation and compliance with the statutory guardrails. By refusing to provide this information, Georgia has violated the STCs in its waiver agreement—namely STCs 15 (on federal evaluation) and 6 (on compliance with federal laws)—and materially failed to comply with federal requirements. Per HHS and Treasury, Georgia “materially failed to comply with the STCs” and this “failure to provide the requested updated analysis constitutes a material breach of the STCs because it significantly impeded our ability to conduct oversight and monitoring responsibilities.”

Failure To Satisfy The Statutory Guardrails

Second, the Georgia Access Model will no longer meet statutory guardrails as is required under Section 1332. Given new developments in federal law and policy since approval of the waiver in November 2020, the Georgia Access Model is now projected by Acumen to result in coverage losses (even after accounting for any coverage gains due to reinsurance), relative to no waiver. These coverage losses will result primarily from lower levels of advertising and the absence of HealthCare.gov. Given these projections, the waiver no longer satisfies the “coverage” guardrail because it will not provide coverage to at least a comparable number of residents as without the waiver.

Consistent with three prior letters on this issue, HHS and Treasury highlighted a range of changes that have contributed to higher marketplace enrollment and decreased the number of uninsured people relative to the data in Georgia’s waiver application. These policies include a six-month special enrollment period during 2021, ARPA subsidies, and federal investments in marketing and outreach. These changes contributed to a 36 percent increase in marketplace enrollment during the 2022 open enrollment period (relative to the 2021 open enrollment period). In addition to $100 million in national investments in outreach, Georgia had three navigator grantees supported through $2.54 million for the 2022 plan year (with the expectation that these investments will continue or even increase over time, leading to higher enrollment).

With more people now enrolled in marketplace coverage, private entities may be less motivated to invest in outreach. This is because there is a smaller base of uninsured consumers (meaning fewer incentives for private sector investments in outreach) and greater potential for coverage disruption during the transition. Although Georgia assumed that private sector outreach would offset any coverage losses that might occur as Georgia transitioned away from HealthCare.gov, commenters noted that cuts to, for instance, navigator funding were not associated with an increase in private sector advertising.

Enrollment trends and outreach by private entities were a key part of the state’s actuarial analysis. These prior analyses are based on now-outdated assumptions that must be revisited to ensure compliance with Section 1332’s guardrails. In its updated analysis, Acumen projects that these changes will lead to fewer individuals with coverage under the waiver.

Commenters highlighted additional changes in federal law and policy, including a continuous coverage requirement for Medicaid and a recently implemented special enrollment period for low-income people. Others noted that Georgia’s prediction that only 2 percent of consumers would lose coverage due to the transition aa from HealthCare.gov to another platform is inconsistent with the experience of other states that recently transitioned to their own state-based marketplace. Kentucky and Nevada, for instance, saw attrition rates of 13 percent and 7 percent, respectively.

Corrective Action Plan Requirements

As noted above, Georgia must submit a corrective action plan within 90 days to prevent suspension of the Georgia Access Model. This information is needed to enable a full analysis and evaluation by HHS and Treasury. The appendix also describes some of the implementation concerns raised by commenters that were echoed by HHS and Treasury.

Outreach And Communications Plan

Georgia must first submit a revised outreach and communications plan. Although the document is not publicly available, Georgia submitted this plan on November 1, 2021 pursuant to STC 3. Under STC 3, Georgia was required to provide a communications strategy on how the public can find a list of insurers and web-brokers, how Georgia will inform the public about open enrollment dates, and how state officials will notify current enrollees about auto reenrollment and the discontinuation of HealthCare.gov.

In the April 29 letter, HHS and Treasury request a revised outreach and communications plan that shows that the waiver can overcome the coverage losses projected by Acumen. Specifically, Georgia must explain how state and private outreach efforts will replace the loss of federal spending on outreach and detail (via a spend plan) any other enrollment activities. Acumen suggests that at least $8 million is needed in additional outreach spending for 2023 beyond the $4 million that Georgia intends to spend.

HHS and Treasury also request additional detail on how Georgia will engage underserved communities since the prior outreach and communications plan did not include detailed information on this issue. In concerns echoed by commenters, federal officials are concerned that a lack of engagement with underserved communities and community partners will undermine a smooth transition to the Georgia Access Model. Additional outreach to underserved communities could help increase enrollment, and HHS and Treasury ask for specific details about additional outreach and engagement plans.

As just one example, insurers and web-brokers that use enhanced direct enrollment are not required to have a Spanish-language website (whereas HealthCare.gov does have a Spanish-language site) unless 10 percent of the population speaks Spanish. This could lead to fewer ways for Spanish speakers to enroll in coverage, leading to coverage losses. Despite this concern, Georgia has not addressed any outreach or communications plans for non-English speakers. As such, HHS and Treasury request examples of tools, resources, and a spend plan on reaching Spanish speakers and community organizations. 

Readiness Reviews

Georgia already submitted an implementation timeline and milestones pursuant to STC 12. However, state officials have not yet passed operational or open enrollment readiness reviews. These readiness reviews are critical to ensuring that appropriate testing takes place before implementation of the Georgia Access Model. HHS and Treasury believe this is especially important in light of projected coverage losses. Specifically, Georgia must demonstrate its ability to perform live eligibility determinations, ensure operational continuity, develop a contingency plan if policies are changed, and update its existing implementation timeline and milestones to prevent projected coverage losses.

Eligibility determinations must be able to account for complex eligibility scenarios (where, say, some family members are eligible for different coverage programs) and Medicaid and CHIP referrals. This functionality should be akin to the live eligibility determinations that HHS currently provides. Operational continuity must include the ability to offer a single-streamlined application, auto reenrollment, and account transfer functionality (including end-to-end testing for partners). The contingency plan and documentation must show Georgia’s ability to respond to policy changes (e.g., the extension of ARPA subsidies) and how state officials will address the unwinding of the Medicaid and CHIP continuous coverage requirement at the end of the declared public health emergency.