HHS issues guidance on ACA State Innovation Waivers: 5 key takeaways

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HHS and the Department of the Treasury issued guidance Dec. 11 for states interested in seeking an innovation waiver under the Affordable Care Act.

Section 1332 of the ACA allows states to request five-year renewable waivers of some of the ACA's key coverage provisions, including those related to the exchanges and subsidies. State Innovation Waivers, which may take effect as early as Jan. 1, 2017, authorize states to implement alternative models of healthcare coverage as long as states show that coverage will remain as comprehensive, accessible and affordable as before the waiver, according to a Commonwealth Fund report. In addition, for a State Innovation Waiver to be approved, a state's alternative model must not increase the federal deficit.

Here are five key takeaways from the guidance on State Innovation Waivers provided by HHS and the Department of the Treasury.

1. To qualify for a State Innovation Waiver, a state must show the alternative model proposed provides coverage to a comparable number of residents as would be provided absent the waiver. "The impact on all state residents is considered, regardless of the type of coverage they would have absent the waiver," according to HHS.

2. Healthcare coverage provided under a State Innovation Waiver must be forecast to be as affordable overall for state residents as coverage absent the waiver. "Affordability refers to state residents' net out-of-pocket spending for health coverage and services…to their incomes," according to HHS. Out-of-pocket spending includes premiums, deductibles, copayments and coinsurance.

3. To qualify for a State Innovation Waiver, healthcare coverage offered under the waiver must be forecast to be at least as comprehensive overall for residents of the state as coverage absent the waiver. The extent to which coverage meets the requirements for essential health benefits as defined in section 1302(b) of the ACA or Medicaid and/or the Children's Health Insurance Program standards will be used to determine the comprehensiveness of the alternative model.

4. "The projected federal spending net of federal revenues under the waiver must be equal to or lower than projected spending net of federal revenues in the absence of the waiver," according to HHS. Changes in income, payroll or excise tax revenue as well as any other forms of revenue that would result from the proposed waiver will be used calculate the estimated effect on federal revenue.

5. The minimum length of public notice and comment periods for waiver applications is 30 days.

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