On December 28, the U.S. Department of Health and Human Services (HHS) released its proposed Notice of Benefit and Payment Parameters for the 2023 plan year, the annual regulation governing health insurance plans and marketplaces for the upcoming year. This year’s proposed regulations include several potentially significant changes for states, insurers, and the health insurance marketplaces; most effective as of the 2023 plan year (January 1, 2023).
Significant changes proposed under the rule are summarized below. Comments on the rule are due by January 27, 2022.
Revisions to plan design requirements
- Institution of standard plan designs in 2023. HHS proposes to require issuers operating on the federally-facilitated health insurance marketplace (FFM) to offer standard benefit design in every network and at every actuarial metal level for which they offer marketplace coverage. The rule establishes a series of parameters for these plans at each metal level including details for standard deductibles, out-of-pocket costs, and requirements for drug formularies, but notes it will defer to state mandates on benefit design for those states that have adopted standard benefit design prior to January 1, 2020. In addition to general comment on this proposal, HHS is soliciting comments on whether it should consider a limitation on non-standard plan offerings available from insurers and use of differential display in elevating standard options.
- Requiring evidence-based benefit design. The Affordable Care Act (ACA) requires that all qualified health plans (QHPs) include benefits that cover 10 Essential Health Benefit (EHB) categories such as emergency care and maternal coverage. The rule proposes to require that EHB offerings be based on clinical evidence and eliminate non-evidence based, or potentially discriminatory practices in benefit design. The rule cites several examples of prohibited practices including policies that would place age restrictions on certain benefits or benefit restrictions based on gender identity or certain health conditions. The rule further proposes that only provider incentives and bonuses tied to “objectively measurable, and well-documented clinical or quality improvement standards” may be included as part of claims for the purposes of insurer medical loss ratio rebates.
- Revised standards for differentiating between metal tiers. QHPs are assigned metal tiers (bronze, silver, gold, and platinum) based on value of their benefit offerings—otherwise known as actuarial value. Insurers are given some leeway above and below prescribed value standards to allow for some flexibility in plan design, known as de minimis ranges. Citing concerns over blurred distinctions between bronze and silver plans in particular, the proposed rule would reduce current de minimis ranges with the intent of creating clearer distinctions between metal levels, especially between bronze and silver plans. Specifically, the rule would change de minimis ranges from +2/-4 to +2/-2 except in the case of silver plans which would be set to +2/0, and bronze plans which would be set to +5/-2 (bronze plans had previously been set to +5/-4).
- Rescinds flexibility for interchanging EHB categories. The proposed rule eliminates current flexibility for states to substitute benefits within the 10 required EHB benefit categories in setting their EHB standard. No state has taken this option to date.
- Eliminates state benefit reporting requirement. In 2020, HHS proposed a new requirement for states to submit an annual report on state-mandated benefits. The first report was slated to be submitted in June 2021. This proposed rule eliminates the reporting requirement citing administrative burden and lack of evidence justifying need for this level of reporting.
- Permanent EHB filing deadline. The proposal sets the first Wednesday in May, two years prior to the plan effective date, as the standard, permanent deadline for states to request changes to their EHB standard.
Oversight, reporting, and network design requirement for insurers
- Increases required proportion of contracted Essential Community Providers (ECPs). Insurers would be required to increase the proportion of contracted ECPs from 20 percent to 35 percent to meet network adequacy standards. The proposed rule also adds substance use disorder treatment centers to the list of approved ECPs that may participate in a plan’s network.
- Greater oversight over network adequacy. HHS notes that it intends to conduct stricter oversight of insurer compliance with network adequacy requirements. Details of oversight plans will be released in future guidance, some deference afforded in states that conduct active certification of QHPs.
- New data reporting requirements and research permissions. HHS proposes to require insurers to report five new data elements for enrollees—ZIP code, race, ethnicity, individual coverage health reimbursement arrangement (ICHRA) indicators, and subsidy indicators. HHS proposes to use these data to identify risk and cost patterns based on race, ethnicity, or subsidy data, as well as relationships between employers offering ICHRAS and “sicker” enrollee populations. Data on race, ethnicity, ICHRA, and subsidies would also be made available to qualified requestors for the purposes of conducting research. The rule also proposes to expand allowable use of data to not only allow for research related to individual and small group markets (as limited under prior guidance), but for any HHS health-related program.
- Addressing disparities through quality improvement strategies (QIS). The proposed rule would add a new requirement that insurers include actions to address healthcare disparities as part of their requisite QIS. Pursuant to this requirement, HHS will collect and review information submitted by insurers to meet this requirement with the goal of enabling better information to inform how HHS might align with private sector efforts in the future.
- Extension of oversight authority over “downstream” entities. The proposed rule would add requirements that all insurers must allow the relevant health insurance marketplace authority to conduct investigations of any delegated entities contracted with the insurer. Specifically, the contract language must allow for marketplaces to collect records from these entities.
Easing enrollment and verifications for special consumer circumstances
- Guaranteed issue in the case of past-due premiums. The proposal requires that insurers enroll individuals and employers in coverage regardless of whether that consumer or employer owes past-due premiums for coverage. Current regulations allow insurers to apply premiums payments for new coverage to past-due payments before enrollment into new coverage. The proposed rule states that current policies disproportionately impact lower-income enrollees by prohibiting their ability to procure and retain needed coverage.
- Enabling pre-enrollment verifications in the case of special enrollment periods (SEPs). The changes would allow greater flexibility for marketplaces to conduct pre-enrollment verifications for SEPs such that marketplaces could allow for greater exceptions for strict verification requirements in the case of special circumstances (ex. in the case of natural disasters or public health emergencies). Additionally, HHS proposed to only require pre-enrollment verification in the case of individuals who report loss of minimum essential coverage.
- State flexibility on employer sponsored coverage verifications. Currently, marketplaces must establish oversight for enrollees who claim their employer sponsored coverage does not meet requirements to qualify as minimum essential coverage. Oversight is conducted via a random sampling methodology prescribed under prior regulations. Based on recent evidence indicating low incidence of inappropriate enrollments due to inaccurate reporting (less than 2%), HHS is proposing to eliminate the current verification process requirement and defer to state marketplaces to develop and implement their own risk assessment strategy for oversight. The FFM intends to accept consumers’ self-attestation of lack of qualified employer without further verification against other data sources.
- Required prorating of premium calculations. The proposal requires that state based marketplaces prorate premiums in the case of enrollments that take place mid-month. This policy is intended to mitigate any overpayments of advanced premium tax credits and is in-line with current policies in place for plans sold through the FFM.
Marketplace oversight and administration
- Enhancing protections based on sexual orientation and gender identity. The rule reinstates a prohibition on the insurance marketplaces, states, insurance issuers, agents, brokers, or insurer representatives from discriminating on the basis of sexual orientation or gender identity. Specifically, the proposal prohibits marketing practices and benefit design that may be discriminatory based on sexual orientation or gender factors. The changes would be effective as of 30 days after publication of the final rule.
- Maintains FFM user fee. Proposal maintains the current user fee, or assessment charged on QHPs to operate the FFM. The fee currently stands at 2.75 percent in states that utilize the full FFM, and 2.25 percent in state-based marketplaces that use the federal platform (SBM-FPs).
- Establishes the State Exchange Improper Payment Measurement (SEIPM) program. This proposed new program gives HHS greater oversight authority over the state-based marketplaces (SBM) beyond their initial implementation period. The program requires enhanced reporting by the SBMs on eligibility determinations, enrollment, financial statements, overall compliance, and performance monitoring. The program gives HHS authority to develop and enforce corrective action plans in the case of marketplaces with improper APTC distribution. Completion of the SEIPM could be used in lieu of a marketplace’s currently required annual independent external audit. The oversight program would be implemented for the 2023 plan year. In addition, HHS plans to increase its oversight of APTC distribution and will be developing an annual report of improper payment estimates while also facilitating corrective actions.
Increased requirements on web-brokers and direct enrollment entities
- Increased QHP display and disclaimer requirements. The proposed rule requires all web-broker websites to display all standard QHP comparative information required by the marketplaces including premium and cost-sharing information, a summary of benefits, metal level, enrollee satisfaction survey data, quality ratings, and provider directories. Where web-brokers do not have this data available (e.g., because they do not contract with a QHP), they must prominently display a standard disclaimer directing the consumer to the relevant insurance marketplace for more information.
- Prohibits QHP advertising. The proposed rule prohibits QHP advertisements on QHP websites. The change would be consistent with current regulations which restrict web-brokers from showing any preferential display for plans for which they receive compensation. Advertisements for which the web-broker receives compensation are considered a means of showing preferential treatment of a specific plan.
- Clarified explanations for plan recommendations and selections. Related to the above issue, in the case where web-brokers “rank” QHP recommendations, they would be required to clearly display an explanation for why plans are presented or recommended to consumers in a certain fashion or order. This is intended to mitigate consumer confusion as to why plans are recommended to them.
- Reinforcement of reporting standards for agents, brokers, and web-brokers. Citing “frequent observations” of incorrect information submitted to the FFM, the proposal requires agents, brokers, and web-brokers to submit accurate, and non disposable (ex. non-temporary mobile or e-mail) data from enrollees or their designated representatives such as email addresses, phone numbers, and address. The proposed rule further clarifies that agents and others cannot use their own information as proxy data. The rule also requires that income information only be submitted if authorized and confirmed by the consumer or consumer representative, as well as a requirement that consumer identity information only be used for operations related to that consumer’s account.
- Prohibition on “scripting” or certain automation. To ease enrollment processes, agents, brokers, and web-brokers are granted access to certain CMS systems including healthcare.gov. The rule proposes new conduct standards in relation to “automated” interactions that may be conducted between agents and these CMS systems that have led to enrollments, applications, or access to information that was not directly authorized by a consumer, often putting consumers at risk of penalty for unauthorized actions like enrollments that were never actually approved by the consumer. The new standards would require consumer consent for all such interactions. The proposal also specifies that consumer consent is required for any SEP enrollment carried out by the agent, broker, or web-broker.
Modifications to the risk adjustment program
- Continued use of multi-year EDGE data for risk adjustment; requesting comments on COVID-19 impacts. Risk adjustment for the 2023 plan year will be calculated based on blended data from 2017, 2018, and 2019 plan years as reported through the Enrollee-Level External Data Gathering Environment (EDGE) data set. The rule also proposes adding a two-stage weighting model to risk calculations, modifying severity and transplant factors considered as part of models, modifying enrollment duration standards to one based on hierarchical condition categories, and continuing to apply market pricing adjustments related to Hepatitis C drugs. HHS released a technical paper with further details on the proposed changes here.
- Looking ahead, HHS solicits comments on future use of EDGE data from the 2020 plan year for risk adjustment considering impacts of the COVID-19 pandemic on insurance markets. 2020 data would be used for risk adjustment models calibrated for plan years 2024, 2025, and 2026. HHS also proposes repealing state flexibility to request reductions in risk adjustment transfers beginning in 2024, except in the case of states that have previously requested adjustments. To date, Alabama is the only state to have done so.
- Use of audit funds for a high-cost risk pool. HHS proposes that any recouped funds from high-cost risk-pool audits would be used to reduce charges in that high-cost risk pool during the current or future benefit year (depending on whether or not payments had yet be calculated for that year).
Eliciting comments on future plan design and enrollment options
- Designing hierarchy for QHP autoenrollment. Unless proactive action is taken by a consumer, the majority of FFM enrollees are automatically enrolled in the same or a similar plan for the next coverage year. HHS solicits comments on whether or how other factors should be accounted for in determining what plan an individual should be automatically enrolled into including deductible and out-of-pocket cost estimates, potential benefits of moving from bronze to silver including lower net premiums or increased “plan generosity”.
- Strategies to address plan “overload.” HHS is considering revisions to the standards for plan display and availability of number and variety of plans sold through the marketplaces. The agency requests comments related to criteria that could be used to reduce redundant plan offerings including new standards related to metal-specific offerings and reinforcement of “meaningful difference” standards for QHPs.
- Inquiry regarding leveraging marketplaces and QHPs to address equity. HHS is interested in exploring options designed to address equity through insurance markets. Examples include how it might leverage available data or QHP requirements and oversight to advance equity policy.
- Inquiry regarding leveraging marketplaces and QHPs to address climate change. Similar to above, HHS also is seeking comments on how it may leverage its authority or available resources related to QHPs and marketplaces to address climate change.