The Proposed 2024 Notice of Benefit & Payment Parameters: Implications for States
Sabrina Corlette, Georgetown’s Center on Health Insurance Reforms and Tara Straw, Manatt Health
On December 12, 2022, the Centers for Medicare & Medicaid Services (CMS) released its proposed Notice of Benefit & Payment Parameters 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 proposed rule that would be of interest to state based marketplaces (SBM) and state insurance regulators. Comments on the proposed rule are due on January 30, 2023. A more comprehensive summary of the proposed rule can be found via Health Affairs Forefront, here, here, and here.
Improving the Consumer Experience: Standardized Plans and Marketing Standards
The proposed rule includes several provisions designed to try to improve consumers’ experience throughout the process of determining eligibility, choosing a plan, and completing enrollment. A key rationale for many of the proposed policy and operational changes is to enhance health equity and reduce disparities in health coverage and access.
CMS is proposing only minor changes to the standardized health plans (called “Easy Pricing” plans) now available via HealthCare.gov. Notably, they intend to continue to exempt insurers in SBM states from the requirement to offer standardized plans. Eight SBM states have established standardized plans of their own, and CMS does not want to create duplicative or conflicting requirements for insurers in those states.
Beginning in 2024, CMS is proposing to eliminate the requirement that insurers in the federally facilitated marketplaces (FFM) and SBMs on the federal platform (SBM-FP) offer a standardized plan at the non-expanded Bronze metal level. CMS has concluded that it cannot design a non-expanded Bronze plan that includes any pre-deductible coverage, given that the maximum actuarial value for such plans is only 62 percent.
The agency is also seeking comment on whether they should allow more than four tiers in plans’ prescription drug formularies. In addition, CMS reports that some insurers are not placing certain drugs at the appropriate cost-sharing tiers. For example, some are placing generic drugs at tiers that require higher cost-sharing, such as a tier designed for brand name drugs. CMS is proposing to require that insurers place covered drugs at the appropriate formulary tier, unless there is a non-discriminatory basis for placing the drug in a higher cost-sharing tier.
Streamlining Consumer Plan Choices
The number of plans available to the average marketplace consumer has grown from 25.9 in 2019 to 113.6 in 2023. After seeking public comment and consulting with a range of stakeholders, CMS has concluded that such a huge number of plan choices leads to “consumer choice overload,” causing consumer confusion, frustration, and suboptimal plan selection. They are proposing two alternative policies to reduce the number of duplicative or very similar plans currently being displayed to marketplace consumers. The agency is not proposing to extend either of these policies to insurers in SBM states at this time.
As one option, CMS proposes to limit to two the number of plans insurers can offer at each metal level, product type, and service area. For example, in any given service area, insurers would be limited to offering no more than two Gold HMO and two Gold PPO non-standardized plans.
As an alternative, CMS proposes to reinstate a requirement that there be a “meaningful difference” among plans offered on the FFM and SBM-FPs. As originally conceived under Obama administration rules, the meaningful difference standard meant that a consumer had to be able to identify material differences between plan characteristics such as cost-sharing, network, and plan type. However, in practice, this standard did little to prevent insurers from offering multiple duplicative or look-alike plans. As a result, CMS proposes a new standard for meaningful difference, in which it would group plans by issuer ID, county, metal level, product network type, and deductible integration type, and then evaluate whether plans within each grouping are meaningfully different, based on deductible amounts. Deductibles would have to differ by more than $1000 to satisfy the new standard. CMS is asking for public comments on the benefits and risks of either limiting the number of plans or reinstating the meaningful difference standard for plans.
Limiting Inaccurate and Deceptive Marketing
Insurers have increasingly been using plan marketing names that include cost-sharing or other benefit details. In response to consumer complaints, a CMS investigation of plans sold through the FFM found that often, the information in the plan name does not match the actual plan benefits. 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 an HSA. CMS proposes to require marketplace insurers in FFM and SBM states to use plan marketing names that are accurate and not misleading. For the FFM, they intend to collaborate with insurance regulators in FFM states to review plan marketing names during the annual plan certification process.
Additional Improvements to the Consumer Experience
CMS proposes several other changes 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 is now proposing to codify that requirement in federal rules for plans offered through the FFM and SBM-FPs. SBMs would 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 is thus proposing to establish a timeliness standard for insurers to send notices of payment delinquency, and seeks comment on an appropriate timeframe.
Standardizing Requirements for Stand-Alone Dental Plans
CMS is proposing two policies to reduce consumer confusion and standardize policies for stand-alone dental plans (SADP). These policies would apply to SADPs in both FFM and SBM states. First, the agency proposes to require that SADPs determine premium rates and plan eligibility based on an individual’s age at the time their policy is issued or renewed. Under current rules, SADPs have flexibility to decide when an applicant or enrollee’s age is determined, leading to varying practices and contributing to consumer confusion. Second, CMS proposes to require SADPs, as a condition of marketplace participation, to submit only guaranteed rates. Currently, SADPs have the option of submitting either guaranteed or estimated rates. In the latter case, the enrollee must contact their SADP issuer to find out their final rate. 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 has implemented enhanced network adequacy standards and oversight for plans sold through the FFM and SBM-FPs, effective for plan year 2023. In the 2024 proposed rule, the agency is proposing changes that build on these standards. These will not apply to insurers in SBM states.
First, in its rulemaking for 2023, CMS put FFM and SBM-FP insurers on notice that it would be implementing minimum appointment wait time standards in plan year 2024, as detailed in the 2023 Letter to Issuers. In the preamble to the 2024 proposed rule, the agency reminds insurers that they will begin assessing compliance with these wait time standards during the plan certification process. Insurers need to start working with their network providers to collect the data needed to assess appointment wait times and determine if they meet the standards.
Second, CMS is proposing two new categories of essential community providers. 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).
With the goal of expanding access to services for low-income and medically underserved consumers, CMS would add to this list Mental Health Facilities and Substance Use Disorder (SUD) Treatment Centers. They would also add Rural Emergency Hospitals as a provider type in the “Other ECP Providers” category. CMS further seeks to require marketplace plans in the FFM and SBM-FPs 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
Failure to Reconcile (FTR)
Under existing regulations, an enrollee is unable to claim advanced premium tax credit (APTC) if they have not reconciled their APTC for a prior year (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 reconcile starting in the 2021 plan year, given massive Internal Revenue Service (IRS) processing backlogs that compromised the accuracy of its tax filing data; the Center for Consumer Information and Insurance Oversight (CCIIO) has allowed SBMs to use that same flexibility. Attempting to strike a balance between the harm to consumers from being denied APTC and the need to support program integrity, the proposed rule prohibits marketplaces (including SBMs) from determining consumers ineligible for APTC unless IRS data indicate they have failed to reconcile for two consecutive years. The preamble acknowledges the IRS might be unable to immediately update its systems to reflect this new policy, so CMS would continue the current pause on FTR checks until it can be implemented.
The proposed rule takes two actions to reduce and resolve data matching issues (DMIs) based on income. First, it would require marketplaces 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 verifying their attested household income. The proposed NBPP would instead require marketplaces to accept the income attestation on the application. (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.)
Second, marketplaces would be 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
The proposed NBPP introduces a new policy to help more people eligible for cost-sharing reduction (CSR) assistance who are enrolled in bronze plans transition 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-level qualified health plan (QHP) could instead be moved to a silver-level plan with a cost-sharing reduction (CSR), as long as it is within the same product with 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 proposal also makes other changes to the hierarchy of plan-mapping decisions when an enrollee’s QHP is no longer available through the marketplace.
Comment is sought on several potential extensions of this proposal that CMS could consider in future years, such as whether net premium and total out-of-pocket costs should be incorporated in the re-enrollment hierarchy and whether people in 73% CSR plan variation-eligible enrollees should be re-enrolled in silver plans or moved to more generous gold plans. CMS also seeks comment on auto-enrollment, including whether people should be auto-enrolled in QHPs with zero net premium when they have delinquent premiums or fail to make a binder payment.
Special Enrollment Periods
CMS proposes to broaden special enrollment periods (SEP) in a few ways. First, the proposed rule gives marketplaces the option to offer earlier coverage effective dates for consumers attesting to a future loss of minimum essential coverage (MEC). 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, this would still leave a gap in coverage for people who lose coverage mid-month, such as when Medicaid is terminated mid-month, but who could not gain marketplace coverage until the first day of the following month. Under the proposal, if a plan selection is made before the end of the month before the triggering event, a marketplace (at state option) 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 August 1 under the current rule, or July 1 under the proposed rule, at the option of the marketplace.)
Also, the proposed NBPP gives marketplaces the option to implement a special rule giving people who lose Medicaid or CHIP 90 days (instead of the typical 60 days) to enroll in a QHP. This would align the loss of Medicaid or Children’s Health Insurance Program (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. Notably, SBMs can already do this using the “exceptional circumstances” SEP, but this change would make that option explicit, beginning in 2024.
Finally, a modification to the SEP for plan display errors would take the onus off of qualified individuals and enrollees to prove the existence of plan errors and would also allow others (such as the insurer or a state regulator) to identify the display error. This would apply to all marketplaces.
The proposed rule would revise appeals rules to clarify that the CMS Administrator can review marketplace eligibility appeals prior to judicial review.
Oversight of Marketplace Operations
Exchange (Marketplace) Blueprint Flexibility
The proposed rule would change the time by which states seeking to establish their own marketplace must have their Exchange Blueprint approved, beginning in 2024. 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 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 (three months in the case of a state moving to a SBM-FP), but the preamble indicates the need for flexibility to give states more time to work with the agency on developing an approvable Blueprint.
Improper Payment Pre-Testing and Assessment for State Exchanges
The proposed rule would establish the Improper Payment Pre-Testing and Assessment (IPPTA) program to prepare SBMs 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; the Department of Health and Human Services (HHS) determined that APTC was one such program. The FFM and SBM-FPs are measuring and reporting their improper payments as of 2022, but SBMs only have a voluntary evaluation process, with 10 of 18 SBMs having participated. The IPPTA program would be mandatory for SBMs. Through the program, SBMs would 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 would participate for one calendar year in either 2024 or 2025.
Reduction in User Fees
The proposed rule would reduce the user fee charged to health plans to 2.5% of total monthly premiums for the FFM (from 2.75% in 2023) and 2.0% for SBM-FPs (from 2.25%). CCIIO recommends this reduction due to increased collections resulting from record-high enrollment.
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 proposes to modify 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 proposed NBPP includes provisions to improve the ability of navigators to conduct community outreach, and to protect consumers from inappropriate or fraudulent enrollment activity.
Under federal marketplace rules, navigators and certified application counselors (“assisters”) are currently prohibited from going door-to-door or making unsolicited contacts with consumers to provide enrollment assistance. CMS notes that this policy requires consumers to make appointments with assisters. This creates barriers to enrollment help, particularly for people whose ability to travel is restricted due to mobility issues or challenges accessing affordable transportation, as well as for individuals who are immunocompromised. The agency is therefore proposing to repeal this prohibition.
Rules for Brokers and Agents
CMS reports that it 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. However, upon investigating these complaints, the agency often finds that there is inadequate documentation of the transaction to determine which party to believe. Therefore, the agency is proposing to require 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 would need to maintain this documentation for at least 10 years and be able to produce it upon CMS’ request.
Indexing of Payment Parameters
In related guidance, CMS updated other key payment calculations that are based on the premium adjustment percentage for 2024. The premium adjustment percentage is the percentage by which the projected value of per-enrollee employer-sponsored insurance (ESI) premiums for 2023 exceeds that measure for 2013. Using this formula, the premium adjustment percentage for the 2024 benefit year is 1.4899877401, which represents an increase in ESI premiums of approximately 48.9 percent over the period from 2013 to 2023. This factor is used to index key consumer measures:
- Maximum out-of-pocket (MOOP) spending: The 2024 MOOP is $9,450 for self-only coverage and $18,900 for other coverage. This represents an approximately 3.8% increase above the 2023 amounts. This establishes the limit for annual in-network essential health benefit cost-sharing for non-group and non-grandfathered group health plans for 2024.
- MOOP spending for cost-sharing reduction variations: Enrollees with income between 100 and 150% of the federal poverty level (FPL) or 150 and 200% FPL will have a MOOP of $3,150 for self-only coverage (and double that amount for other coverage); enrollees with income between 200 and 250% FPL will have a MOOP of $7,550 (double for other coverage).
- Required contribution percentage: Section 5000A of the ACA established the individual shared responsibility payment for people without MEC or an exemption. The required contribution percentage is the maximum percentage of income a person must pay, over which coverage is considered unaffordable, making someone eligible for an exemption. The federal mandate penalty is $0, but the required contribution percentage is still used to determine whether someone age 30 or older is offered coverage that is unaffordable and therefore is eligible to purchase catastrophic coverage. The required contribution percentage is 7.97% in 2024, the first time it has dipped below its statutory 8%.
State Risk Adjustment Flexibility
In last year’s payment notice, CMS rescinded the option for states to request reductions in risk adjustment transfers in their individual and small-group markets, beginning with plan year 2024. They carved out an exception for one state–Alabama–that has previously used this option. CMS is now proposing to eliminate the exception for Alabama, effective for plan year 2025. The agency is also seeking public comment on Alabama’s current request to reduce risk adjustment transfers by 50% in the individual and small-group markets for plan year 2024.
Related Tools and Guidance
Also on December 12, CMS released a Fact Sheet about its proposed 2024 NBPP, the 2024 Draft Letter to Issuers, the 2024 Actuarial Value Calculator and Methodology, guidance on payment parameters, and Alabama’s request for risk adjustment flexibility.