On May 15, the Center for Medicare and Medicaid Services (CMS) issued a final rule regarding the Notice of Benefits and Payments Parameters (NBPP). The rule represents a dramatic shift in the way the federal government will begin reviewing state-based health insurance mandates.

Under the Affordable Care Act, the federal government is empowered to review any state-based mandate adopted after the ACA’s enactment. If the state-based mandate did not qualify as an Essential Health Benefit, the respective state must cover the cost of the mandate, commonly referred to as “defrayal.”  These payments could either take the form of a direct rebate to the consumer or a payment to insurance companies to prevent premium increases.

Although the ACA allows for the defrayal mechanism, the federal government has never utilized this authority.  However, the new rule makes it clear that under the current administration, the federal government could review mandates going back to December 2011 for potential defrayal.

Moving forward, we must clearly recognize the impact current and future insurance mandates could have on our constituents, the taxpayers of this Commonwealth. While benefit mandates may be very well intended, the Commonwealth may now hold a financial obligation to pay for these mandates from the General Fund.

In order to determine the exposure and potential liability health insurance mandates might impose on our budget, I will be introducing a resolution directing the Legislative Budget and Finance Committee to review every mandate adopted over the past 15 years.   

The resolution requires that LBFC review each mandate to determine whether it is subject to defrayal, the cost defrayal would have on the Commonwealth, along with the impact the mandate has on small group and individual insurance plans.

Please join me in supporting this important analysis, as it examines the impact insurance mandates have on the state’s budget and in the marketplace.