2022 Notice of Benefit & Payment Parameters: Implications for States

Sabrina Corlette, Georgetown University’s Center on Health Insurance Reforms

UPDATE (January 19, 2021): On January 19, 2021, the federal government finalized some, but not all, provisions of the 2022 Notice of Benefit & Payment Parameters (NBPP), the annual rule that governs the Affordable Care Act marketplaces and insurance reforms. Of particular import to states, the final rule includes proposals to (1) allow states to establish a “Direct Enrollment” exchange in lieu of a government-run eligibility and enrollment platform; (2) significantly lower the user fees collected to operate the marketplace; and (3) codifies guidance issued in 2018 that relaxes the standards for approving state 1332 waivers. Each of these is discussed in more detail below. Numerous other provisions of the NBPP have not been finalized, including provisions relating to risk adjustment, special enrollment periods, program integrity, and the Navigator program. It will be left to the Biden administration to finalize these remaining provisions; it is also expected the new administration will revise or reverse a number of policies issued in the 2022 as well as past NBPPs.

Original Post (December 4, 2020):

On November 25, 2020, the U.S. Departments of Health & Human Services (HHS) and Treasury released the proposed 2022 “Notice of Benefit & Payment Parameters” (NBPP), the annual rule governing core provisions of the Affordable Care Act (ACA), including the operation of the marketplaces, standards for insurers, and the risk adjustment program. A complete summary of the NBPP is available via a 3-part Health Affairs blog series here, here, and here. This expert perspective focuses on several provisions that have implications for state oversight of insurance markets and the state-based marketplaces. If this NBPP is finalized as proposed, these provisions may be revised or reversed by a future administration through a formal rulemaking process. Comments on the proposed rule are due by December 30, 2020.

Marketplace Issues

New “Direct Enrollment” Exchanges

HHS’ Centers for Medicare & Medicaid Services (CMS) is proposing to create a new category of health insurance marketplace (referred to as the “exchange” in federal rules), called a “Direct Enrollment” (DE) marketplace. CMS’ asserted goal is to provide states with what it says is a lower cost, private-sector alternative to HealthCare.gov.

The DE marketplace builds on already-existing efforts to expand the use of web-brokers and insurers to facilitate eligibility determinations and enrollment in qualified health plans (QHPs) through the marketplace. According to CMS, fully one-third of HealthCare.gov enrollments are currently conducted through DE.[1]

CMS proposes to establish a process for states to establish a DE marketplace in which one or more private sector entities, such as web-brokers or insurers, would perform almost all of the functions currently performed by the federally facilitated marketplace (FFM). Residents of the state could no longer use the HealthCare.gov platform. Rather, they would enroll through websites run by private sector companies. Either the state or these “approved” private sector companies would need to continue to run a Navigator program and a toll-free telephone hotline. CMS would continue to be responsible for remitting applicable advance premium tax credits (APTCs) to insurers, while the IRS would continue to administer APTC reconciliation on tax returns. HealthCare.gov would remain to provide “supporting functions” such as the processing of data matching, special enrollment period verification, casework, and eligibility appeals. The state would also need to provide a “basic website” that lists “basic QHP information,” but the site could provide links to the privately run websites for eligibility determinations and enrollment.

This is a model similar to that promoted by Georgia in its Section 1332 waiver application and approved by CMS on November 1, 2020. However, if the NBPP’s proposed DE marketplace is finalized, a state would not need to submit a Section 1332 waiver application to replace HealthCare.gov with these alternative pathways to enrollment. CMS predicts that in states choosing the DE marketplace option, the “vast majority” of consumers will enroll through these private sector entities.

CMS is proposing that the new DE marketplace model would not be limited to FFM states, but a state-based marketplace (SBM) using the federal platform (SBM-FP) or its own enrollment platform could also seek to establish a DE marketplace. SBMs would be able to implement such a model beginning in plan year 2022, while states using HeathCare.gov would be able to implement it beginning in plan year 2023.

User Fees

CMS is proposing to significantly reduce the marketplace user fees generated to fund operations, including maintenance of HealthCare.gov, outreach, the Navigator program, and plan management functions. For the FFM, the agency proposes reducing the fee from 3.0 to 2.25 percent of total monthly premiums, while for the SBM-FPs they propose reducing the fee from 2.5 to 1.75 percent. For states that elect the DE marketplace, CMS proposes a user fee of 1.5 percent, noting that the marketplace would no longer be providing many consumer-facing enrollment-related activities. Such user fee reductions, if finalized, could significantly limit future efforts to institute improvements in marketplace functionality, consumer assistance, and marketing.

Additionally, CMS is proposing to end the option currently available to SBM-FP states to have CMS collect an additional user fee on their behalf, and then remit it back to the state to cover the state’s costs, such as plan management and consumer outreach and assistance. CMS argues that this arrangement is too burdensome and costly. Beginning in 2022, the SBM-FP would have to collect the state share of user fees directly from insurers.

New Navigator Program Standards

CMS proposes to allow marketplace Navigators and certified application counselors (CACs) to use web-brokers that meet certain standards instead of HealthCare.gov to assist consumers seeking marketplace coverage. Previously, Navigators and CACs were prohibited from using these sites. SBMs would have the option, but are not required, to similarly lift the prohibition on assisters’ use of web-broker sites.

Program Integrity and Verification

Special Enrollment Periods

In 2018, the FFM began requiring consumers to provide pre-enrollment verification of their eligibility for a special enrollment period (SEP). These documentation requirements can be burdensome for many consumers and inhibit legitimate enrollment. However, in this rule, the administration proposes requiring the SBMs to conduct such pre-enrollment verifications. Specifically, they would require SBMs to conduct SEP verification for at least 75 percent of new enrollments for consumers not already enrolled in a marketplace plan. However, recognizing that some SBMs may need additional time to implement this requirement, they propose delaying implementation until 2024.

Audit Authority

The administration proposes to expand HHS’ audit authority over insurers participating in the FFM and SBM-FP regarding proper payment of premium tax credits and user fees. They further propose that, in a SBM state that fails to “substantially enforce” federal standards with respect to premium tax credits and user fees, HHS would enforce compliance, including the ability to impose civil monetary penalties on insurers. The administration is seeking comment on how best to coordinate with SBMs, SBM-FPs, and state departments of insurance with respect to the oversight of insurer compliance on these issues.

Section 1332 “State Innovation” Waivers

The Trump administration issued guidance in October 2018 that gave states new flexibilities to pursue applications to waive provisions of the ACA. This guidance changed the way CMS reviews section 1332 waiver applications and loosened the ACA’s statutory “guardrails,” which require that any state waiver proposal (1) provide coverage at least as comprehensive as under the ACA, (2) provide coverage at least as affordable as under the ACA, (3) provide coverage to at least comparable number of state residents as under the ACA, and (4) not increase the federal deficit. For example, under the 2018 guidance, CMS would no longer assess a state waiver application based on projected actual enrollment in affordable, comprehensive coverage, but on whether a comparable number of people would have access to such coverage, whether they enroll or not.

The proposed rule attempts to incorporate these new flexibilities into federal regulations.

Special Enrollment Periods

Newly ineligible for APTCs

The administration is proposing to allow individuals currently enrolled in a marketplace plan to switch to a new QHP at a lower metal level if they become newly ineligible for APTCs. For example, an individual enrolled in a Gold-level plan who experienced a change in income or household size that rendered them ineligible for APTCs would be able to switch to a lower-premium Bronze-level plan. The administration is seeking comment from SBMs in particular to ascertain whether this new policy would impose “significant” additional burdens. They also ask for comment on whether this additional flexibility for enrollees could increase the risk of adverse selection.

Lack of timely notice

The administration is proposing to allow individuals who did not receive timely notice of a triggering event to have a SEP window within 60 days of the date that he or she knew, or reasonably should have known, of the triggering event. This SEP would also apply for off-marketplace enrollment.

Cessation of employer contributions to COBRA premiums

The administration is proposing to clarify that, if an employer ceases to contribute to an individual’s premiums for COBRA continuation coverage, it would serve as a SEP triggering event for both on- and off-marketplace individual coverage. CMS is also considering whether an employer’s reduction in COBRA premium contributions should also constitute a triggering event. In such a case, the administration seeks comment on whether it should adopt a threshold for the level of reduction in employer contributions that would trigger the SEP.

Insurance Reform Issues

Risk Adjustment

In 2019, the administration began allowing states to annually request a reduction in the amounts transferred among insurers under the ACA’s risk adjustment program. To date, the only state to request such an adjustment is Alabama. For 2022, HHS is proposing to allow states to submit requests to reduce these transfer amounts for up to three years at a time. HHS argues that such multi-year requests will promote “greater predictability and stability” in state markets, and reduce the burden on states having to submit annual requests. However, recognizing that market conditions can change from year to year, HHS would reserve the right to require states to submit supplemental evidence supporting the request, after the initial approval. HHS also would retain the ability to terminate or modify the request at any point.

Annual Reporting of State Benefit Mandates

In last year’s NBPP, HHS imposed a requirement that states submit an annual report documenting any state-mandated benefits for QHPs that are in addition to those required under the essential health benefits (EHB) benchmark plan. Under the ACA, states must defray any additional premium costs associated with these additional benefits. States are also required to report to HHS state-mandated benefits that are not in addition to EHB. The 2022 proposed rule maintains this requirement, and maintains July 1 as the deadline for submitting the report.

Changes to the EHB Benchmark Plan

The proposed rule sets a deadline of May 6, 2022 for states to submit a request to change its EHB benchmark plan for the 2023 plan year. However, HHS encourages states to submit this application at least 30 days prior to the submission deadline, and to ensure they’ve completed the required public comment period before the May 6^th deadline.

HHS has also released its draft annual Letter to Issuers in the FFM, with public comments due by December 23, 2020, a 2021 calendar with key dates QHP insurers, and a draft bulletin with timelines for 2022 single risk pool rate filings.

[1] There are two forms of DE. “Classic” DE enables a consumer to start a marketplace application through an approved web-broker or issuer, but the user is redirected to HealthCare.gov for the determination of eligibility for APTCs or other subsidized coverage. “Enhanced” DE allows consumers to complete all steps in the application, including the eligibility determination and enrollment, via an approved web-broker or issuer.