The Final 2024 Notice of Benefit & Payment Parameters: Implications for States

Sabrina Corlette, Georgetown’s Center on Health Insurance Reforms, and Tara Straw, Manatt Health

On April 17, 2023, the Centers for Medicare & Medicaid Services (CMS) released its final Notice of Benefit & Payment Parameters (NBPP) for plan year 2024. This annual regulation governs core provisions of the Affordable Care Act (ACA), including operation of the health insurance Marketplaces, standards for insurers, and the risk adjustment program. This expert perspective focuses on provisions of the final rule most of interest to State-Based Marketplaces (SBMs) and state insurance regulators. A more comprehensive summary of the final rule can be found via Health Affairs Forefront, here, here, and here.

Several provisions place new expectations on SBMs and state departments of insurance (DOIs). Among the policies SBMs must implement are: new rules for applicants who purportedly fail to reconcile their advance premium tax credit; acceptance of attested income when Internal Revenue Service (IRS) data is not available; an extension of time to clear income data matching inconsistencies; incorporating provider networks in plan mapping; and participation in an improper payment assessment. Meanwhile, CMS will seek to collaborate with DOIs on new marketing standards for Marketplace plans, rating rules for stand-alone dental plans, and the oversight of Marketplace agents, brokers, and web-brokers.

Improving the Consumer Experience: Standardized Plans and Marketing Standards

The final rule advances operational and policy changes designed to improve consumers’ experience with Marketplace eligibility and enrollment. A key theme underlying many of these changes is the need to improve health equity.

Standardized Plans

Although the administration will maintain the requirement for issuers to offer standardized plans (called “Easy Pricing” plans) on HealthCare.gov, that will not be extended to issuers in SBM states. For the Easy Pricing plans, the administration has decided to eliminate a requirement that issuers offer a standardized plan at the non-expanded bronze level. With the actuarial value for such plans at only 62%, CMS cannot design a non-expanded bronze plan that includes any pre-deductible coverage. The agency further notes that very few Federally Facilitated Marketplace (FFM) issuers have opted to offer non-expanded bronze plans.

As they did for plan year 2023, CMS will exempt from the standardized plan requirements issuers in Oregon, a State-Based Marketplace on the Federal Platform (SBM-FP) that has its own standardized plan requirements. They have also created a set of standardized plan options that will apply only in Delaware and Louisiana, due to those states’ cost-sharing standards.

Further, although CMS sought comment on whether to allow for more than four tiers in plans’ prescription drug formularies, the agency decided not to do so. Although the agency recognizes that many plans use five or even six tiers, they argue that limiting to just four tiers allows enrollees to have more predictable and understandable coverage.

Limits on Plan Choices

The average HealthCare.gov consumer currently has to choose from 113.7 plans. To reduce “plan choice overload,” which can result in consumers making sub-optimal plan decisions, CMS has finalized a proposal to limit the number of plans issuers can offer for each metal level, product type, and service area. The agency is not extending these limits to issuers in the SBM states at this time.

The proposed rule would have permitted issuers to offer only two non-standardized plans per product network type and metal level (not including catastrophic plans) in any service area in plan year 2024. In response to public comments arguing for a more gradual approach, the final rule places the limit at four non-standardized plans for plan year 2024, dropping to two non-standardized plans beginning in plan year 2025. The final rule also gives issuers that offer additional dental or vision benefits greater flexibility to offer more non-standardized plan options.

Limiting Inaccurate and Deceptive Marketing

CMS, working in partnership with DOIs, has found that many Marketplace issuers are using plan marketing names that do not match the actual plan attributes. For example, some plan marketing names include cost-sharing limits that are lower than the actual cost-sharing limits provided by the plan. Other plans included “HSA” in the name even when the plan does not allow the enrollee to set up a health savings account (HSA). In this rule, CMS finalizes a proposal to require Marketplace issuers in the FFM and SBM states to use plan marketing names that are accurate and not misleading. For the FFM, the agency will collaborate with DOIs to review plan marketing names during the plan certification process.

Additional Improvements to the Consumer Experience

The final rule includes several provisions designed to improve continuity of coverage and reduce consumer confusion.

Preventing Mid-Year Terminations for Young Adults Who Turn 26

Group health plans and insurers that offer coverage to dependent children must allow those children to stay on their parents’ plan until age 26. In practice, when a young adult covered on their parent’s plan turns 26 mid-year, HealthCare.gov has been requiring insurers to maintain their coverage through the end of the plan year. CMS has now codified that requirement in federal rules for plans offered through the FFM and SBM-FPs. SBMs have the option of implementing a similar requirement.

Providing Timely Notice of Payment Delinquency

CMS has found that some issuers delay sending enrollees required notices that they are behind in premium payments. In extreme cases, this can mean the enrollee doesn’t have time to remit unpaid premiums and prevent a termination of their coverage. CMS will thus require Marketplace issuers to notify consumers of a delinquency within 10 business days of the date they should have discovered the enrollee was in delinquency. CMS notes that state DOIs may establish a more stringent standard, if they wish.

Standardizing Requirements for Stand-Alone Dental Plans

CMS is adopting two policies to reduce consumer confusion and standardize policies for stand-alone dental plans (SADPs). These policies will apply to SADPs in both FFM and SBM states. First, the agency will require that SADPs determine premium rates and plan eligibility based on an individual’s age at the time their policy is issued or renewed. Second, SADPs, as a condition of Marketplace participation, will be required to submit only guaranteed rates. CMS notes that it has improved its templates for SADP submissions, enabling more standardized rating rules for dental plans.

Improving Access to Services: Network Adequacy

CMS established enhanced network adequacy standards and oversight for plans in the FFM and SBM-FPs for plan year 2023, and had proposed expanding those standards to include maximum appointment wait time standards, beginning in 2024. However, CMS received comments from issuers arguing that they needed additional time and guidance about how CMS would assess compliance with the new requirements. In this final rule the agency decided to delay implementing the appointment wait time standards to plan year 2025. These requirements will not apply to issuers in SBM states.

CMS is also creating two new categories of essential community providers (ECPs), with the goal of expanding access to services for low-income and medically underserved consumers. The current categories are:

• Federally Qualified Health Centers (FQHC)
• Ryan White Program Providers
• Family Planning Providers
• Indian Health Care Providers
• Inpatient Hospitals
• Other ECP Providers (defined to include Substance Use Disorder Treatment Centers, Community Mental Health Centers, Rural Health Clinics, Black Lung Clinics, Hemophilia Treatment Centers, Sexually Transmitted Disease Clinics, and Tuberculosis Clinics).

For plan year 2024, Mental Health Facilities and Substance Use Disorder Treatment Centers will be added to this list, removing them from the “Other ECP Providers” list. CMS is also adding Rural Emergency Hospitals as a provider type in the “Other ECP Providers” category. Marketplace plans in the FFM and SBM-FPs will also be required to contract with at least 35% of available FQHCs and at least 35% of available Family Planning Providers within the plan’s service area.

Reducing Barriers to Financial Assistance and Enrollment

The final rule has various provisions to smoothing administrative burdens and enrollment barriers. Most provisions finalized as previously proposed.

Failure to Reconcile

Under prior regulations, an enrollee was unable to claim an advanced premium tax credit (APTC) if they had not reconciled their APTC for the year for which tax data is used to verify household size and income. CMS issued guidance indicating the FFM would not deny APTC due to failure to file and reconcile (FTR) starting in the 2021 plan year, given IRS processing backlogs that compromised the accuracy of its tax filing data; it continues this policy through 2023. The Center for Consumer Information and Insurance Oversight (CCIIO) has allowed SBMs to use that same flexibility.

Attempting to strike a balance between program integrity and the potential harm to consumers from being denied APTC, the final rule prohibits Marketplaces (including SBMs) from determining consumers ineligible for APTC unless IRS data indicate they have failed to reconcile for two consecutive years. CMS plans to continue the current pause on FTR checks in the FFM until the IRS and Marketplace can implement these changes. The provision goes into effect 60 days after the rule is published in the Federal Register, instead of on January 1, 2024, to allow progress on updating systems to begin, but the FFM won’t implement this policy until plan year 2025. The expectation is that SBMs will institute a similar delay. The Department of Health and Human Services (HHS) will provide at least three months’ notice of its start date on the new policy.

Income Inconsistencies

The rule finalizes two provisions to reduce and resolve data matching issues (DMIs) based on income, both of which CCIIO claims will help address equity issues they have identified under current operations. First, it requires Marketplaces, including SBMs, to accept an applicant’s attestation of annual household income when the Marketplace requests information from the federal data hub but the IRS has no tax filing data for the applicant. Today, when an applicant has no IRS data for the last two years, the Marketplace generates an income DMI requiring the applicant to submit information to verify their attested household income. The rule instead requires Marketplaces to accept the income attestation on the application. But income DMIs won’t disappear: if the Marketplace is missing information needed to query the IRS, such as a social security number, or when tax data indicate income that is higher than and not reasonably compatible with the attested income, an income DMI would still be generated. Some SBMs have federal approval to use other income data sources when no IRS data is available, or in other circumstances. States may continue to use this secondary data source, but if full income data isn’t returned, the consumer’s attestation must be accepted.

Second, all Marketplaces are now required to give applicants with an income DMI a 60-day extension to provide supporting information, in addition to the 90 days currently provided. 

Plan Re-Enrollment Hierarchies

Some enrollees who are eligible for rich cost-sharing reductions in a silver qualified health plan (QHP) instead enroll in bronze plans without cost-sharing help. The NBPP addresses that with a new “bronze to silver crosswalk” policy to transition people to a more affordable plan. Under the rule, at the Marketplace option, an eligible enrollee who would otherwise be automatically re-enrolled in a bronze plan could instead be moved to a silver plan with a cost-sharing reduction (CSR), as long as it is within the same product, has the same provider network, and has a lower or equivalent premium after APTC. People who are either not CSR-eligible or who are CSR-eligible but not enrolled in a bronze plan would be re-enrolled in their current plan, if it is available.

The second finalized provision changes the plan mapping waterfall when an enrollee’s plan is no longer available, to now include the provider network. All Marketplaces, including SBMs, will re-enroll the enrollee in a QHP within the same product at the same metal tier with the most similar provider network. Provider networks are also a consideration in the rest of the plan re-enrollment hierarchy.

Special Enrollment Periods

CMS broadened special enrollment periods (SEPs) in a few ways. First, to help people avoid gaps in coverage, the rule gives Marketplaces the option to offer earlier coverage effective dates for consumers attesting to a future loss of minimum essential coverage (MEC), or in certain other limited circumstances. Currently, enrollees can report a loss of MEC up to 60 days before or 60 days after the coverage loss. The earliest Marketplace coverage could start for someone who selected a plan prior to loss of MEC is the first day of the month following loss of coverage. While sufficient for most people, starting coverage on the first day of the following month would still leave a gap in coverage for people who lose coverage mid-month, such as after some Medicaid terminations. Under the proposal, if a plan selection is made before the end of the month before the triggering event, a Marketplace could make coverage effective on the first day of the month in which the triggering event occurs. (So, for example, if a consumer attests between May 16 and June 30 that they will lose MEC on July 15, and they select a plan by June 30, coverage would be effective on July 1 under the new rule, at the option of the Marketplace, versus August 1 under existing rules.) While this would lead to some days of duplicate coverage, it doesn’t affect APTC eligibility for the month.

Second, the rule gives Marketplaces the option to implement a special rule giving people who lose Medicaid or Children’s Health Insurance Program (CHIP) coverage 90 days (instead of the typical 60 days) to enroll in a QHP, or even longer in some cases. This would align the loss of Medicaid or CHIP SEP with the 90-day reconsideration period available to Medicaid enrollees, during which they can provide information to the Medicaid agency to reinstate their enrollment. States that have longer reconsideration periods can also choose to extend their SEP for its duration. This provision takes effect 60 days after the rule’s display in the Federal Register to allow Marketplaces that choose to take up this option to act swiftly. 

Finally, a modification to the SEP for material errors in plan display takes the onus off of applicants or enrollees to prove the plan error and would also allow others (such as the insurer or a state regulator) to identify the display error. This applies to all Marketplaces.

Eligibility Appeals

The proposed rule clarifies that the CMS Administrator can review Marketplace eligibility appeals prior to judicial review. This includes decisions made by an HHS appeals entity that originated from an appeal to an SBM.  

Oversight of Marketplace Operations

The rule finalizes several mandatory changes to Marketplace oversight and operations.

Exchange (Marketplace) Blueprint Flexibility

The final rule extends the time by which states seeking to establish their own Marketplace must have their Exchange Blueprint approved in order to leave more time for the iterative process of waiver submission. Currently, an Exchange Blueprint must be approved 14 months prior to open enrollment for a state moving from an SBM-FP to an SBM or three months prior to open enrollment for a state converting from the FFM to an SBM-FP. Under the proposed rule, a state could have its Blueprint approved or conditionally approved at any point prior to the open enrollment period. As under the current regulation, a state seeking to convert to an SBM would still be required to submit its Blueprint 15 months before open enrollment, or three months in the case of a state moving to an SBM-FP.

Improper Payment Pre-Testing and Assessment for State Exchanges

The rule requires all SBMs to participate in the Improper Payment Pre-Testing and Assessment program to prepare them for the future measurement of improper payments of APTC. Under a 2019 law, federal agencies are required to evaluate whether the programs they administer are considered susceptible to significant improper payment; HHS determined that APTC was one such program. The FFM and SBM-FPs are measuring and reporting their improper payments as of 2022 (which found only a 1% improper payment rate). The SBM evaluation process has been voluntary, with 10 of 18 SBMs having participated. Through the program, SBMs will submit their eligibility determination business rules and data elements for HHS review, along with data and information from at least 10 tax households to demonstrate various application scenarios (e.g., household composition, data matching inconsistencies, special enrollment period applications). SBMs can begin their participation in either 2024 or 2025, but, in a change to the proposed rule, they will have two years (instead of one) to complete all evaluation elements. SBMs that have participated in the voluntary program, which will terminate at the end of 2023, will be deemed to have satisfied certain duplicative testing elements.  

Reduction in User Fees

The rule substantially cuts user fees, dipping even lower than the proposed rule. The rule reduces the user fee charged to health plans to 2.2% of total monthly premiums for the FFM (from 2.75% in 2023) and 1.8% for SBM-FPs (from 2.25%).

HHS cites two reasons for reducing the user fee below the levels proposed in December. First, a record-breaking 16.3 million people signed up for ACA coverage for plan year 2023, exceeding enrollment estimates and changing 2024 enrollment projections. Second, there is now certainty that the unwinding of the Medicaid continuous coverage requirement begins in 2023. HHS estimates that, nationwide, 2.7 million people losing Medicaid coverage will be eligible for a premium tax credit, 60% of whom will be eligible for a zero-premium plan.

Deadline for Error Reporting

Currently, issuers can report inaccuracies in monthly collection of APTC or in the payment of user fees by the later of (1) the end of the three-year period beginning at the end of the plan year to which the inaccuracy relates or (2) the date by which HHS notifies issuers that the HHS audit process for that plan year has been completed. HHS is modifying this rule to require inaccuracies to be reported to the FFM or SBMs within three years after the end of the plan year to which they relate. Inaccuracies for plan years 2015 to 2019 must be reported by the end of 2023, with all subsequent years following the three-year rule.

Expanding Personalized Assistance and Protecting Consumers

The final NBPP includes provisions to improve the ability of Marketplace assisters to conduct community outreach, particularly during the Medicaid unwinding, and to protect consumers from inappropriate or fraudulent enrollment activity.

Door-to-Door Assistance

The final rule lifts the current prohibition on Navigators and certified application counselors (assisters) going door-to-door or making unsolicited contacts with consumers to provide enrollment assistance. CMS believes that allowing such direct contact will remove barriers to timely and relevant enrollment assistance, and will allow assisters to reach more potentially eligible consumers, including those who have difficulty traveling due to lack of mobility or transportation, or who are immunocompromised.

Documentation Requirements for Brokers and Agents

CMS has received consumer complaints about agents, brokers, or web-brokers that have submitted incorrect application information on their behalf, or even enrolled them into a Marketplace plan without their consent. This rule requires agents, brokers, and web-brokers that facilitate FFM and SBM-FP enrollments to obtain documentation (1) that they have received the consumer’s (or authorized representative’s) consent to assist them and (2) that the consumer (or authorized representative) has reviewed and confirmed the accuracy of their eligibility information prior to submission of an application. Brokers and agents will need to maintain this documentation for at least 10 years and be able to produce it upon CMS’ request.