DATA-DRIVEN POLICY INITIATIVES

Commonwealth Fund welcomes Massachusetts’ approach to health care sharing ministries oversight

The Commonwealth Fund (CF) continues to urge state governments to increase regulatory oversight for entities known as health care sharing ministries (HCSMs).

By Kevin P. Hennosy

The Commonwealth Fund (CF) continues to urge state governments to increase regulatory oversight for entities known as health care sharing ministries (HCSMs).

As defined by the CF, a think tank focusing on health policy issues, “HCSMs are arrangements in which members who pledge to follow a common set of religious or ethical beliefs agree to make monthly payments to help pay the qualifying medical expenses of other members.”

In a health policy blog posting, the CF welcomed the implementation of a Massachusetts regulation, which provided insight into the operations and finances of HCSMs in the Bay State. The CF researchers observed that data “can inform regulation and oversight of these arrangements, particularly how they’re marketed and their history of paying claims.”

“If states wish to protect consumers from potentially misleading and inadequate coverage, they should collect, analyze, and make public these same data to understand how HCSMs are impacting their markets and consumers,” according to the CF.

One of the more startling findings that the CF highlighted from the Massachusetts data demonstrated that “only half of claims from health care sharing ministries were deemed eligible for payment, and members have no recourse for appeal.”

The CF researchers note that HCSMs offer consumers lower prices for products, which share a superficial likeness to insurance products:

Even though they may be viewed as an alternative to marketplace plans because they have features that closely resemble insurance and may have lower upfront costs than unsubsidized marketplace plans, they don’t follow the same rules or provide any of the protections that insurance plans do.

Bay state report

Massachusetts is in a relatively unique position to initiate regulatory monitoring of HCSMs because of the state’s reaction to the federal Affordable Care Act (ACA) of 2010. A program initially known as “Romney-Care,” had already instituted an individual health insurance mandate in the state. To avoid a tax-penalty for not maintaining insurance, citizens must secure coverage consistent with Minimum Creditable Coverage (MCC) standards.

The standards proved so popular with the public and providers that many individuals feared that the ACA proposal would water-down the high-quality products that they had become accustomed to. When the federal program passed, Massachusetts officials opted to maintain the state mandate and standards.

According to a report on the HCSM data published by Massachusetts Health Connector (the formal name of the oversight agency formed by Romney-Care), Massachusetts officials chose to “maintain its state level individual mandate in large part to maintain the MCC standards.”

Because Massachusetts maintains a state-based mandate and penalty regimen, state officials maintain a clear claim of jurisdiction over setting the MCC standards—including as applied to HCSMs.

Under the Romney-Care enabling statute, the Health Connector Board of Directors holds authority to issue regulatory requirements to achieve the public interest aims of the program. The board has repeatedly used this authority, including adjusting the MCC standards to define compliance with the individual mandate.

Compliance with the mandate does allow for limited deviation from the MCC standards. As the Health Connector report notes, “Employers, unions, plan sponsors, and insurers can apply for MCC certification if they have a comprehensive plan that does not meet all specific MCC requirements but have a robust plan design overall.” In such cases, applicants cannot deviate from select standards, and “applicants must explain the ways in which they do not meet all MCC requirements.”

Often in recognition of areas of competing constitutional jurisdictions (i.e., state chartered vs. federal chartered entities), “MCC regulations automatically deem some categories of coverage to provide MCC such as a plan through the U.S. Veterans Administration Health System, TRICARE, a tribal or Indian Health Service plan, and many others.”

At the time of the launch of the Health Connector in 2007, any “health arrangement provided by established religious organizations comprised of individuals with sincerely held beliefs” was deemed to meet MCC standards. The regulation did not provide any “must have” standards for the waived arrangements.

This assumption of the goodwill of religious ministries opened the door for new entities, which proved less than interested in providing robust coverage of healthcare expenses. (Devotees of the Gonzo Journalist Hunter S. Thompson will remember the writer’s claim to being “an ordained doctor of divinity in the Church of the New Truth.”)

In 2019, at the suggestion of Health Connector staff, the board opened a public comment period on “clarification of standards used to define health arrangements provided by established religious organizations,” according to the Massachusetts report.

Furthermore, the report writers found that prior to the implementation of the ACA, HCSMs operated by established religious organizations tended to comply with the MCC Standards:

Since ACA implementation began, there has been a nationwide increase in the number of HCSMs and the number of people who join them. Estimates indicate HCSM participation has grown since passage of the ACA from fewer than 200,000 enrollees before 2010 to about 1 million today.

The Massachusetts data filing requirements demonstrate real-world examples of where the HCSMs can fall short of providing healthcare financing envisioned by MCC standards. For example, in 2020, six out of the seven HCSMs reported charging members extra fees or said they issued penalties in certain circumstances, most of which were tied to “violations of lifestyle agreements” or “pre-existing conditions.”

In addition, the data also demonstrated that the HCSM sector in Massachusetts consists of national business firms, which operate in “either all or nearly all states.”

Based on this growing experience, the Massachusetts Health Connector established a list of defining requirements for HCSM entities.

The HCSMs must operate on a not-for-profit basis. The entities may “not make any direct or indirect representation” concerning whether the HCSM holds funds sufficient to meet members claims or has a history of the same—with the notable exception of statutory financial statements.

Nor may the HCSM “use compensated sales agents, sales tactics, or deceptive marketing practices to solicit or enroll members, including that it does not use common insurance terms, such as ‘health plan,’ ‘coverage,’ ‘copay,’ ‘copayment,’ ‘deductible,’ ‘premium,’ and ‘open enrollment,’ or refer to itself as ‘licensed’ in advertisements, marketing material, brochures, or other materials related to the arrangement.”

Beyond not presenting the appearance of being an insurance company, Massachusetts HCSMs must affirmatively disclose to potential members that the entity is not an insurance company and does not guarantee the ability to pay claims. Furthermore, HCSMs may not use for administrative expenses member payments tendered for medical claims.

Finally, the Health Connector established the data filing requirement and recognized the agency’s statutory authority to amend regulations deemed advisable by the board of directors.

Financial risk

The CF researchers drew a clear line between the operations of HCSMs and insurance companies with respect to the cost to members and covered individuals. The CF blog post notes that under the ACA nationally, insurers must meet an 80% medical loss ratio—the percentage of premiums going to medical claims expenses. In Massachusetts, insurers must achieve an 88% loss ratio. The CF cites HCSM data filed with the Health Connector concerning members’ monthly contributions “ranged from 16% to 70% in 2019 and from 28% to 111% in 2020.”

The CF researchers contend that the “non-guaranteed” nature of the HCSM business model, coupled with marketing practices that tend to equate the arrangement with insurance in most jurisdictions, present significant financial risk for the public.

The Massachusetts data expose the financial risk for consumers who opt for an HCSM rather than enrolling in an ACA-regulated plan. If states wish to protect consumers from potentially misleading and inadequate coverage, they should collect, analyze, and make public these same data to understand how HCSMs are impacting their markets and consumers.

Sector growth

Both the blog post by the CF and the report by the Massachusetts Health Connector make note of the growth inthe HCSM sector since the ACA nation-ally established an individual mandate to secure health insurance. The report continues: “This increased prevalence has led state regulators to be more vigilant in their review of such organizations.” This more vigilant review resulted in “the National Association of Insurance Commissioners and at least 15 states, including Massachusetts, [issuing] alerts about the risks posed to consumers by HCSMs.”

The CF blog post calls attention to the concentration of the non-guaranteed HCSM model in select states:

Conservative estimates conclude that HCSM enrollment in Wyoming has grown to nearly a quarter the size of the state’s ACA-compliant individual market. In Idaho, the HCSM market is more than one-third the size of its ACA-compliant counterpart, while in Alaska, it’s more than half.

Without coming right out and saying it, both statements leave the reader with the feeling that the growth in the HCSM sector is questionable.

Neither group, the CF nor the HealthConnector, disqualifies the ethical use of the arrangements, but the growth appears tied to the desire of some members of the public to obtain plausible documentation to fulfill the individual mandate under ACA—without buying insurance. The Massachusetts data on monthly contributions and claims denial suggests that this effort to save money can prove to be expensive.

The two reports noted above will probably not be words written on HCSMs and healthcare financing.

The author

Kevin P. Hennosy is an insurance writer who specializes in the history and politics of insurance regulation. He began his insurance career in the regulatory compliance office of Nationwide and then served as public affairs manager for the National Association of Insurance Commissioners (NAIC). Since leaving the NAIC staff, he has written extensively on insurance regulation and testified before the NAIC as a consumer advocate.