State Commercial Insurance Market Strategies to Respond to COVID-19

Barry LeePartner, Manatt, Phelps & Phillips, LLP

The actions in the attached summary are intended to give a broad representative example of state actions on COVID-19 (COVID) to date. Not all actions of all states are necessarily included. Please contact Joel Ario or Troy Oeschner with additions or edits. 

This edition primarily tracks the first wave of state actions. Many states are beginning to take second and third-order actions, often in response to specific market problems and often relying on emergency authority granted by governors and public health departments to waive rules, issue emergency regulations and take other actions to protect public health.

Future actions that states have begun to address or will soon be addressing include:

    • Premium Payment Grace Periods. Qualified Health Plans (QHPs) with Advance Premium Tax Credits (APTCs) have a federal 90-day grace period for payment of premiums. Should states extend a grace period to other QHPs? What about group coverage? 
    • Cost-Sharing Waiver for Treatment, Not Just Testing. Many states, along with Congress, waive cost-sharing for COVID testing. Increasingly, COVID treatment will become an issue.
    • Coverage of alternative treatment settings. COVID treatments will necessitate the use of alternative treatment settings. To what extent will network coverage rules be adapted to cover alternative facilities and costs associated with moving patients from one setting to another to increase capacity to treat COVID cases?
    • Surprise Out-of-Network Billing. If networks are overwhelmed, surprise bills from out-of-network doctors may become an increasing challenge, especially for states without existing consumer protections.
    • Claim Payment Time Frame Extensions. Will consumers and providers, as well as insurers, need more time to submit and adjudicate claims?
    • Premium Rate Increases. COVID may cause increased claim costs not anticipated. To what extent will COVID cost increases be offset by the suspension of nonurgent services and the possibility that COVID treatment costs will be borne disproportionately by seniors enrolled in Medicare rather than commercial insurance?
    • Risk Adjustment. Will federal risk adjustment adequately account for regional differences in COVID cases?
    • Reserves. Will COVID costs impact solvency for some insurers? What flexibility do states have? 
    • Non-ACA-Compliant Products. The lower coverage offered by some non-ACA-compliant plans (e.g., short-term plans) may result in huge consumer debt. The congressional bill to waive cost-sharing for COVID testing does not apply to these plans, as they are not sufficient to be insurance. 

Specific methods of state actions taken in the “State Action Examples” below include those:

    • Required or Directed by Emergency Order/Regulation
    • Requested, Instructed or Advised by Guidance
    • Voluntary Agreement by Insurers

Click here to download our tracker of the first wave of state actions.