On January 31, 2020, CMS issued the Notice of Benefit and Payment Parameters for 2021 proposed rule (“Payment Notice”). The proposed rule introduces updates to the “regulatory and financial standards applied to issuers and Exchanges” and also proposes parameters for the risk adjustment program. The proposed payment rule is available here. CMS also issued the Draft 2021 Letter to Issuers in the Federally-facilitated Exchanges, which provides guidance to issuers offering qualified health plans on a Federally-facilitated Exchange (“FFE”). This is the latest the proposed rule has been issued compared to previous years.
The 2021 Payment Notice proposed rule aims to facilitate efficiency and competition in the market by “lowering premiums, promoting program integrity, stabilizing markets, enhancing the consumer experience, and reducing regulatory burden.” The CMS Fact Sheet describing the proposed payment rule is available here.
The Payment Notice focuses on technical changes for the 2021 benefit year. However, there are some notable proposed changes, including:
Automatic Reenrollment: The most significant proposed change has to do with automatic reenrollment. As a result of the elimination of cost-sharing reimbursements to qualified health plans (QHPs) for the reductions they are required to provide under statute, many insurers (with the explicit assent of state regulators) engaged in so-called “silver loading.” Silver loading is the practice of increasing silver-level premiums to account for the lost reimbursements, thus leading to a direct increase in premium tax credit eligibility. This has had the effect of certain Exchange enrollees being able to enroll in certain plans with a $0 premium. In an attempt to encourage these consumers to return to healthcare.gov and actively shop for a plan the following year, CMS proposes to automatically re-enroll these individuals without all or a portion of their advanced premium tax credit amount. This proposal is notable because (1) In the 2020 Payment Notice, CMS requested comments regarding whether to end automatic reenrollment, and the proposal was sharply panned by commenters; and (2) Section 608 of the Further Consolidated Appropriations Act included an amendment to section 1311(c) of the Affordable Care Act that ensured reenrollment for 2021 (Section 609 prohibited the Secretary of HHS from restricting silver loading).
Annual Reporting of State Mandates: CMS proposes requiring states to annually notify CMS of any state-mandated benefits applicable to QHPs in the individual and small group markets that are in addition to essential health benefits (EHB) beginning in plan year 2021. If a state fails to notify CMS, CMS will instead determine which benefits are in addition to EHB for the applicable plan year. Currently, any state-required benefits other than those required for federal compliance, are considered additional to the EHB required under the Affordable Care Act. CMS voiced concerns that states may not be defraying the costs of their state-required benefits in addition to EHB in accordance with federal requirements. In the preamble of the proposed rule, CMS stated that this reporting requirement would “help to ensure that Federal [advance premium tax credit] dollars are protected and states are appropriately compensating enrollees or issuers for services that are in addition to EHB.”
FFE and SBE-FP User Fees: CMS proposes to maintain the user fees for the FFE and State-based Exchange on the Federal platform (SBE-FP) for the 2021 benefit year. The user fee would remain at 3% of monthly premiums in states with an FFE and 2.5% in states with an SBE-FP.
Promoting Adoption of Value-Based Insurance Designs (VBID): The Payment Notice proposed rule offers a number of options for QHP issuers to implement value-based plan designs. For example, CMS provides a table from the Center for Value-based Insurance Design at the University of Michigan listing higher value services and drugs based on clinical effectiveness evidence. CMS is “considering ways in which consumers could easily identify a ‘value-based’ QHP” and seeks comments on “principles that HHS could adopt to establish what constitutes a value-based plan.” Offering a value-based QHP would be voluntary for issuers, and value-based plans would not be preferentially displayed on Healthcare.gov.
Maximum Annual Limitation on Cost Sharing: The proposed 2021 maximum annual limitation on cost-sharing is $8,550 for self-only coverage and $17,100 for other than self-only coverage, representing a 4.9% increase from the 2020 limits. In addition, the Payment Notice proposed rule details a 2021 reduced annual limitation on cost-sharing for enrollees with incomes between 100%-200% of the Federal Poverty Level of $2,850 for self-only coverage and $5,700 for other than self-only. In 2019, 52% of enrollees received cost-sharing reductions.
Required Contribution: The Payment Notice proposed rule would increase the required contribution percentage to 8.27% in 2021. Previously, this was an important measure as an individual that would need to pay more than the required contribution would receive an exemption from the individual mandate.
Risk Adjustment: The Payment Notice proposes to recalibrate the risk adjustment models in 2021 by completing the shift to using only the 3 most recent benefit years of enrollee-level EDGE data for 2021 and beyond. If finalized as proposed, the risk adjustment program would no longer utilize MarketScan data, which has been used since the first year of the risk adjustment program. CMS anticipates this approach will incorporate the most recent years’ claims data without causing drastic year-to-year changes in risk scores. CMS also believes this approach will continue “efforts to recalibrate the risk adjustment models using actual data from issuers’ individual and small group populations and complete the transition from the MarketScan commercial database,” which merely approximates these numbers. CMS also details the risk adjustment methodology and seeks comments on proposed updates to the risk adjustment models’ Hierarchical Condition Categories (HCCs).
Together with the Proposed 2021 Payment Notice, CMS once again published a bulletin extending the non-enforcement policy for “grandmothered” plans for one additional year. The “grandmothered” policy permits states to allow issuers to continue offering plans that fail to satisfy all ACA market reforms. This policy has remained in place since the 2014 benefit year and is often cited as one of the reasons for the unanticipated challenges of the risk pool in the early years of the Exchanges.
The proposed payment rule is scheduled to be published in the Federal Register on February 6, 2020. The deadline for submitting comments to the 2021 Payment Notice proposed rule is 5:00PM EST on March 2, 2020. Comments may be submitted here.