The Final 2022 Notice of Benefit & Payment Parameters: Implications for States
Sabrina Corlette, Georgetown University Center on Health Insurance Reforms
On April 30, 2021, the U.S. Departments of Health & Human Services (HHS) and Treasury released the final 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. This rule finalizes the majority of provisions included in a proposed rule published on November 25, 2020, although several proposals were finalized in a rule published on January 19, 2021. A detailed summary of the final 2022 NBPP can be found via the Health Affairs blog, here. This post reviews provisions of the final rule of particular import to the state-based marketplaces (SBMs) and state insurance regulators.
Future Rulemaking: Provisions of January 19 Final Rule to be Revisited
The NBPP rule issued on January 19, 2021 finalized 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) codify guidance issued in 2018 that relaxes the standards for approving state Section 1332 waivers. In its April 30 rulemaking, HHS announced that, “due to a change in Administration priorities,” it would issue a rule later this spring to increase the marketplace user fees from 2.25 to 2.75 percent of premiums for insurers in the federally facilitated marketplaces (FFM) and from 1.75 to 2.25 percent of premiums for insurers in the SBMs that use the federal platform. HHS also indicated that it will revisit the Direct Enrollment option for SBMs and the changes to the regulations governing 1332 waivers. For more information on the January 19 final rule and the proposed rule, see this SHVS expert perspective.
Improvements to Affordability: Adjusting Premium Contribution and Maximum Out-of-Pocket Cost Methodology
In its 2020 NBPP, the administration changed the methodology used to calculate annual changes in the percentage of income that subsidized marketplace enrollees must contribute to premiums, as well as the maximum out-of-pocket amount. Because a majority of commenters have expressed concern that this methodology increased the rate of growth of the premium contribution percentage and maximum out-of-pocket cap, the administration will revert to the methodology it adopted in 2015. In the short term, this will not affect premium contributions because the American Rescue Plan capped them for plan years 2021 and 2022. However, the final rule reduces the maximum annual limitation on cost sharing in 2022 to $8,700 for self-only coverage and $17,400 for family coverage, $400 less than what it would have been under the proposed rule. In addition, to ensure that marketplaces and insurers have information in a timely fashion, HHS announced that, beginning in January of 2022, they will publish the premium adjustment percentage, required contribution percentage, and maximum out-of-pocket cap via sub-regulatory guidance instead of notice and comment rulemaking.
Expanding Access to Coverage via Special Enrollment Periods
The final rule includes three changes to policy on special enrollment periods (SEPs). In particular, individuals enrolled in a Consolidated Omnibus Budget Reconciliation Act (COBRA) plan, who receive subsidies via the American Rescue Plan will qualify for a SEP when those subsidies expire on September 30, 2021. HHS also codified a SEP for individuals whose employer subsidies for COBRA benefits cease.
HHS has also added new flexibility for marketplace enrollees and their dependents to switch to a plan at a different metal level (i.e., from Gold to Silver or Bronze), if they become newly ineligible for premium tax credit. The SBMs will be required to implement this change by no later than January 1, 2024.
The rule further allows individuals to qualify for a SEP if they did not receive timely notice of a triggering event, and provides 60 days from the date that the individual becomes aware of the triggering event to enroll or change plans. Those who qualify for this SEP will be allowed to choose the earliest effective date that would have been available if he or she had received timely notice of the triggering event. This and the COBRA SEP are effective within 60 days of the publication of the final rule.
Easing Some Program Integrity Requirements
Federal rules require the SBMs to conduct audits to ensure that individuals who have an affordable offer of employer-sponsored insurance are not improperly receiving premium tax credits. However, this verification process is administratively burdensome for the SBMs and employers’ response rates have been low. In this final rule HHS announced that it will refrain from taking enforcement action against any SBMs that do not perform the random sample audits required.
HHS has also chosen not to finalize a proposal to require all the SBMs to conduct verification of eligibility for SEPs. Most commenters opposed this requirement due to the administrative burdens for both the SBMs and consumers. Additionally, HHS noted that there are currently only four SBMs that have a more limited program of SEP verification than the federal marketplace, all of which report that there is no evidence to suggest any misuse of SEPs.
The final rule also codifies a proposal for HHS to step in and conduct audits of insurers regarding premium tax credits, cost-sharing reduction payments, and user fees in situations where a state “fails to substantially enforce” ACA standards. HHS notes that it will follow a process that mirrors the determination of whether a state is substantially enforcing standards under the Public Health Service Act.
Essential Health Benefits: Updates and Reporting Requirements
In the 2021 NBPP, HHS announced that it would require states to submit an annual report on any state benefit mandates that are in addition to those covered by the essential health benefit (EHB) benchmark plan, thus triggering a potential requirement that the state defray any additional premium costs. The first such annual report was due July 1, 2021. In this final rule, HHS announced that it will exercise “enforcement discretion” and refrain from penalizing any state that does not submit the report this year. However, HHS indicates that it will begin enforcing this requirement in 2022. It further clarifies that it will not impose the defrayal requirement retroactively. The final rule also clarifies that states must submit updates to their EHB benchmark plans by May 6, 2022 to apply for the 2024 plan year.
State Flexibility on Risk Adjustment
As in past years, no state has requested authority to operate a risk adjustment program, so HHS will continue to operate it in every state and the District of Columbia. In its proposed rule, HHS had floated allowing states to request changes to the risk adjustment transfers for up to three years. This was not finalized, but states may continue to submit annual requests to change the transfer formula for both the individual and small-group markets. Alabama is the only state to have done so, and in this rule HHS approved its request for plan year 2022.
Displays of Quality Rating Information
In response to requests for greater state flexibility over the display of marketplace plans’ star ratings, HHS clarifies that the SBMs may customize the display for quality rating information to “best reflect local priorities.”
City of Columbus v. Trump: Federal Court Ruling on Network Adequacy, Plan Standardization, and Other Provisions
In March 2021, a federal court ruled that several provisions of the 2019 NBPP must be vacated. Of particular note, the court found that HHS could no longer defer to states in the conduct of network adequacy reviews, and that it must reinstate the standardized plan options that had previously been offered on HealthCare.gov. In this final rule, HHS notes that it will take some time to come into compliance with the court’s order, but that it intends to do so in time for plan year 2023.
Shifting Federal Policy on Web-brokers and Enhanced Direct Enrollment
HHS has declined to finalize three proposals affecting web brokers and enhanced direct enrollment (EDE) providers. First, HHS had proposed giving EDE providers an additional 12 months to provide translations of their website content for limited English proficient consumers. The “vast majority” of comments opposed this proposal, and therefore HHS will not be granting EDE providers any extra time to come into compliance.
Second, HHS had proposed allowing Navigators and certified application counselors (CACs) to use web-broker websites and EDE providers as they assist consumers with marketplace eligibility and enrollment. A majority of comments opposed this proposal, and HHS decided not to finalize it, meaning that Navigators and CACs in states using HealthCare.gov may not use web-broker websites to facilitate enrollment.
Third, HHS had proposed granting web-brokers greater flexibility regarding the amount and type of information they must display about marketplace plans with whom they do not support enrollment. Because “almost all” commenters urged HHS to require web-brokers to display sufficient information about plans for consumers to make informed comparisons, HHS decided not to finalize this proposal. Thus, beginning with the open enrollment period starting November 1, 2021, web-brokers must display all plan information that they receive from the marketplace or directly from marketplace insurers.
HHS is finalizing a proposal requiring EDE providers that sell off-marketplace or non-ACA compliant policies to display these plans on separate web pages.