Earlier this year, a number of organizations raised concerns about the lack of flexible payment methods in the new health insurance marketplaces that would provide a way for the “unbanked,” – people without checking or savings accounts – to make their premium payments. Our friend, Julie Silas, at Consumers Union, authored this helpful brief to inform the issue in California: Fair Premium Payment Policies and Practices in Covered California.

CMS responded with a proposed rule that seemed promising in how it was described in the preamble but wasn’t quite explicit enough to satisfy most advocates. The preamble indicated that QHP issuers, at a minimum, would need to “accept a variety of payment formats, including, but not limited to, paper checks, cashier’s checks, money orders, and replenishable pre-paid debit cards, so that individuals without a bank account will have readily available options for making monthly premium payments. Issuers may also offer electronic funds transfer from a bank account and automatic deduction from a credit or debit card as payment options.” However, the actual proposed rule at 45 CFR 156.1240 was much more generic and only required that issuers “offer method of payment options that do not discriminate against individuals without bank accounts or credit cards. “

Thankfully, CMS responded to the numerous comments they received from stakeholders and advocates, and strengthened the requirement in the final rule released just this week. It requires QHP issuers to “at a minimum, for all payments in the individual market, accept paper checks, cashier’s checks, money orders, EFT, and all general-purpose pre-paid debit cards as methods of payment and present all payment method options equally for a consumer to select their preferred payment method.”

While the rule does require that issuers accept payment by electronic funds transfers (EFT), which automatically deducts the payment from a bank account, it stopped short of requiring issuers to also set up automatic deductions from credit or debit cards. However, issuers should consider doing so because it will reduce the likelihood that someone forgets to make their payment on time, and save the administrative cost of sending payment reminder notices.

Some other key points about the final rule:

• The rule applies to both initial and ongoing payments.
• It clarifies that the payment policy applies only to the individual marketplace products.
• The rule allows for the use of general-purpose debit cards. This will help ensure that vendors don’t profit from marketing specialized cards used only for premium payments.
• Issuers must also make sure that consumers are presented with all of the payment options so they may selected their desired payment method.

I was disappointed that issuers and exchanges are not required to accommodate cash payments at convenient locations near public transportation. Most of the methods that facilitate payments for the unbanked also carry fees, like money orders or debit cards. If you’re interested in learning more about the latter subject, Consumers Union has a good brief on how prepaid debit cards rate. We could also take a lesson from how developing countries, where at least half of the population do not have bank accounts, are accommodating the unbanked through a variety of mobile payment concepts. So there is yet more work to be done on this issue.

By the way, the final rule also outlines marketplace standards with respect to eligibility appeals, agents and brokers, privacy and security, issuer direct enrollment, and the handling of consumer cases. It also sets forth standards with respect to a state’s operation of the Exchange and Small Business Health Options Program (SHOP). It generally finalizes previously proposed policies without change, but we’ll be looking for key elements to write about in Say Ahhh!

And stay tuned for more from CCF on premium administration in Medicaid, CHIP and the new marketplaces. I’m getting close to finishing that brief I started months ago.