Proposed HHS Notice of Benefit and Payment Parameters for 2015

The proposed HHS Notice of Benefit and Payment Parameters released today includes payment parameters applicable to the 2015 benefit year, and proposes, among other topics, standards relating to the premium stabilization programs, advance payments of the premium tax credit, cost-sharing reductions, composite rating, privacy and security standards, the annual open enrollment period for 2015, the actuarial value (AV) calculator, the annual limitation on cost sharing for stand-alone dental plans, patient safety, and the Small Business Health Options Program (SHOP).

Qualified individuals and qualified employers are now able to shop for private health insurance coverage through the Health Insurance Marketplace (Marketplace). Individuals who enroll in a qualified health plan (QHP) through the Marketplace may be eligible to receive premium tax credits to make health insurance more affordable and financial assistance to reduce cost sharing for health care services. In 2014, HHS will also implement the premium stabilization programs, which are intended to promote price stability for health insurance in the individual and small group markets. We believe that these programs, together with other reforms of the Affordable Care Act, will make high-quality health insurance affordable and accessible to millions of Americans. Key policies in today’s proposed rule include:

Promoting Stable Individual Market Premiums: We are proposing to decrease the reinsurance attachment point from $60,000 to $45,000 for the 2014 benefit year due to updated estimates that allow for greater payments from the contribution fund. We are proposing a 2015 annual reinsurance contribution rate of $44 per enrollee to be paid by health insurance issuers and certain self-insured group health plans, which would fund the required $6 billion reinsurance payments pool, $2 billion payable to the U.S. Treasury, and $25.4 million in HHS estimated reinsurance administrative expenses for 2015. We are proposing the following 2015 uniform reinsurance payment parameters: an attachment point of $70,000, a reinsurance cap of $250,000, and a coinsurance rate of 50 percent. We also propose that if reinsurance contributions collected for a benefit year exceed the requests for reinsurance payments for the benefit year, we would increase the coinsurance rate on our reinsurance payments (or make other modifications to reinsurance parameters) to ensure that all of the contributions collected for the 2014 benefit year are expended for claims for that benefit year. These changes maximize the benefits of the reinsurance program in 2014 and 2015 by investing more of the funds collected for the program sooner.

Alleviating the Burden of Reinsurance Contributions: We are proposing to modify our contribution collection schedule for the reinsurance program, so that we would collect from all contributing entities the reinsurance contribution amounts for reinsurance payments and for administrative expenses earlier in the calendar year, but collect the reinsurance contribution amounts for payments to the U.S. Treasury in the last quarter of the calendar year. For example, the $63 per capita reinsurance contribution for 2014 would be collected in two installments: we would collect $52.50 in January 2015, and $10.50 late in the fourth quarter of 2015. In addition, we are proposing to exclude from the obligation to make reinsurance contributions any self-insured group health plan that does not use a third party administrator for claims processing or adjudication, or plan enrollment for 2015 and 2016.

Adjusting for the Transitional Plan Policy: On November 14, 2013, the Federal government announced a policy under which it will it will not consider certain individual and small group health insurance coverage renewed between January 1, 2014, and October 1, 2014, under certain conditions, to be out of compliance with certain 2014 market rules, and requested that States adopt a similar policy. Because issuers’ premium estimates assumed that individuals currently enrolled in the transitional plans described above would participate in the single risk pools applicable to all non-grandfathered individual and small group plans, respectively (or a merged risk pool, if required by the State), pursuant to the single risk pool requirement at 45 CFR 156.80, the transitional policy may lead to unanticipated changes in premium revenue for issuers of plans that comply with the 2014 market rules. We announced that we are considering a number of approaches to potentially mitigate these effects, including a proposal for a State-by-State adjustment to how administrative costs and profits are calculated under the risk corridors program. The adjustment would be larger in States in which enrollment in transitional plans is greater. We seek comments on whether this, or alternative ideas, are warranted.

Amendments to Open Enrollment Period for 2015: We propose changing the annual open enrollment period for the 2015 benefit year such that it would begin on November 15, 2014 and extend through January 15, 2015. This would give issuers additional time before they would need to set their 2015 rates and submit their qualified health plan applications, give States and HHS more time to prepare for open enrollment, and give consumers until January 15, 2015 to shop for coverage.

New Blueprint Timelines: We propose to give States more time to transition into a State-based Marketplace after 2014 by moving the date a State must have an approved or conditionally approved Blueprint in place back from January 1st to June 15th for the following year. The 2015 Blueprint application will be due on June 1, 2014.

Protecting Individuals from Excessive Out-of-Pocket Expenses: The Affordable Care Act sets limits on cost sharing to protect individuals from excessive out-of-pocket expenses. The statute requires that these limits be updated annually based on the percent increase in average per capita premiums for health insurance coverage. We propose to calculate this percent increase using the projections of average per enrollee private health insurance premiums from the National Health Expenditure Accounts (NHEA), which is calculated by the CMS Office of the Actuary. We believe these figures are the most comprehensive, accurate, and transparent figures available in the timeframe we require to set this percentage each year. We propose a premium adjustment percentage for 2015 of 6.0 percent, which would result in a maximum annual limitation on cost sharing for 2015 for self-only coverage of $6,750, and a maximum annual limitation on deductibles for 2015 for health plans in the small group market for self-only coverage of $2,150. We also propose to update the AV Calculator and Methodology for 2015 and propose parameters under which the AV Calculator could be updated in future plan years. Both the proposed 2015 AV Calculator and Methodology are accessible through CCIIO’s website.

Annual Limitation on Cost Sharing for Stand-alone Dental Plans (SADPs): We propose setting a national stand-alone dental plan maximum out-of-pocket (MOOP). The policy would reduce the MOOP to $300 for one covered child and $400 for two or more covered children. Given the limited cost sharing variations possible with decreased annual limits on cost sharing, the rule proposes that the AV standard be removed for stand-alone dental plans.

Small Group Participation in Risk Adjustment and Risk Corridors: We propose that a plan be classified as a small group plan for purposes of risk adjustment according to the employee counting method applicable under State law, as long as the method accounts for part-time employees. If the State counting method does not take into account part-time employees, we will apply the full-time equivalent method described in section 4980H(c)(2)(E) of the Internal Revenue Code, which is the method used for the Federally-facilitated SHOP. We are also proposing that a plan be classified as a small group plan for purposes of risk corridors according to the employee counting method applicable under State law even if the State definition does not take non-full-time employees into account.

Simplifying Composite Rating: We propose that beginning in 2015, if an issuer in the small group market (including the SHOP) offers a composite (average enrollee) premium, the composite premium would not change during the plan year, even if the composition of the group changes.

Protecting Personally Identifiable Information (PII): We propose additional Marketplace flexibility regarding applicant eligibility and enrollment information to promote the efficient operations of the Marketplace. The proposed use and disclosure would be subject to review and approval criteria, consent from the individual providing the information, and to the strict privacy and security standards in §155.260(b). We also propose to allow Exchanges to adjust privacy and security standards for non-Exchange entities so that the standards align more closely to the functions and operating environment under which the non-Exchange entity is performing – so long as these standards provide the same level of protection as current §155.260 affords.

Protecting Enrollees in QHPs: We propose to implement patient safety standards over time to provide consumers with access to health care that meets adequate safety and quality standards. For the initial two years, we propose to align QHP issuer standards with the Medicare Hospital Condition of Participation requirements for a quality assessment and performance improvement program and discharge planning. Additionally, as a means of ensuring that all QHPs offered through the Federally-facilitated Marketplace (FFM) are in the interest of qualified individuals and qualified employers, we propose that in order to be certified as a QHP in the FFM, a plan generally must be considered “meaningfully different” from all other plans offered by the same issuer.

Protecting Federal Funds: We are proposing oversight provisions applicable to the premium stabilization programs, including authority for HHS to conduct audits of issuers and entities in the HHS-operated risk adjustment and reinsurance programs, as well as audits of State-operated reinsurance programs and standards regarding risk adjustment data validation. We also propose to clarify that HHS has the authority to net payments to issuers against amounts owed to HHS by the issuer or any related entity streamlining operations. We are proposing a dispute resolution and appeals process to address any disputes regarding such payments or charges.

Fully Implementing Employee Choice in the Federally-facilitated SHOPs (FF-SHOPs): We propose several provisions that would take effect after employee choice and premium aggregation become available in FF-SHOPs. We propose that employers in the FF-SHOPs would make premium payments according to a timeline and process set by HHS. We propose setting a standard premium prorating methodology for the FF-SHOPs such that groups would be charged only for the portion of the month for which they are enrolled, and a policy that FF-SHOP issuers must effectuate coverage for a group unless the FF-SHOP sends a cancellation notice to the issuer. We propose allowing employers in the FF-SHOPs to offer employees either a single stand-alone dental plan or a choice of all stand-alone dental plans available in an FF-SHOP, and we propose allowing FF-SHOPs to permit employers to contribute differently to the premiums of full-time and non-full-time employees. We propose to not allow composite rating in the FF-SHOPs when an employer elects to offer employees a choice of plans at one AV level since having employees spread across multiple plans would make composite rating complex.

Comments on the proposed Notice of Benefit and Payment Parameters for 2015 are invited from the general public, consumers, States, industry, and other stakeholders.

The proposed 2015 AV Calculator and Methodology can be accessed here.