HHS Notice of Benefit and Payment Parameters for 2024 Proposed Rule

In the HHS Notice of Benefit and Payment Parameters for 2024 proposed rule released today, the Centers for Medicare & Medicaid Services (CMS) proposed standards for issuers and Marketplaces, as well as requirements for agents, brokers, web-brokers, and assisters that help consumers with enrollment through Marketplaces that use the Federal platform. These changes would further the Biden-Harris Administration’s goals of advancing health equity by addressing the health disparities that underlie our health system. The proposals build on the Affordable Care Act (ACA)’s promise to expand access to quality, affordable health coverage and care by increasing access to health care services, simplifying choice and improving the plan selection process, making it easier to enroll in coverage, strengthening markets, and bolstering program integrity.

Increasing Access to Health Care Services

Network Adequacy and Essential Community Providers

CMS proposes to revise the network adequacy and essential community provider (ECP) standards to provide that all individual market qualified health plans (QHPs), including stand-alone dental plans (SADPs) and all Small Business Health Option Program (SHOP) plans across all Marketplace-types must use a network of providers that complies with the network adequacy and ECP standards in those sections, and to remove the exception that these sections do not apply to plans that do not use a provider network. Requiring that all QHPs use a provider network would better ensure consumer access to a sufficient choice of providers and would guarantee consumers have access to information on the availability of in-network providers.

CMS also proposes to expand access to care for low-income and medically underserved consumers by establishing two additional major ECP categories for Plan Year (PY) 2024 and beyond: 1) Mental Health Facilities; and, 2) Substance Use Disorder (SUD) Treatment Centers. Additionally, for PY2024 and beyond, CMS proposes to retain the overall 35% provider participation threshold, and also extend the 35% threshold to two major ECP categories: Federally Qualified Health Centers (FQHCs) and Family Planning Providers. These changes would increase provider choice and access to care for low-income and medically underserved consumers.

Simplifying Choice and Improving the Plan Selection Process

Standardized Plan Options

CMS proposes to make several minor updates with respect to standardized plan options. Specifically, CMS proposes to no longer include a standardized plan option for the non-expanded bronze metal level. Accordingly, CMS proposes that for PY2024 and subsequent PYs, issuers offering QHPs through the Federally-facilitated Marketplace (FFM) and State-based Marketplaces on the Federal platform (SBM-FP) must offer standardized QHP options designed by CMS at every product network type, at every metal level except the non-expanded bronze level, and throughout every service area that they offer non-standardized QHP options. CMS believes maintaining the highest degree of continuity possible in designing these standardized plan options is critical to reduce the risk of disruption for consumers enrolled in these plans.

In addition, CMS proposes that issuers of standardized plan options must: (1) place all covered generic drugs in the standardized plan options’ generic drug cost-sharing tier, or the specialty drug tier if there is an appropriate and non-discriminatory basis; and, (2) place brand name drugs in either the standardized plan options’ preferred brand or non-preferred brand tiers, or specialty drug tier if there is an appropriate and non-discriminatory basis. CMS proposes this specification to reduce the risk of discriminatory benefit designs, to minimize barriers to access for prescription drugs, and to reduce the risk of consumer confusion for those enrolled in these plans.

CMS also proposes to limit the number of non-standardized plan options that issuers of QHPs can offer through Marketplaces on the Federal platform (including SBM-FPs) to two non-standardized plan options per product network type and metal level (excluding catastrophic plans), in any service area, for PY2024 and beyond, as a condition of QHP certification. The average number of plans available to consumers on the Marketplace has increased from 25.9 in PY2019 to 113.6 in PY2023. Such plan choice overload limits consumers’ ability to make a meaningful selection when comparing plan offerings.

Under this proposed requirement, an issuer would, for example, be limited to offering through a Marketplace two gold health maintenance organization (HMO) and two gold preferred provider organization (PPO) non-standardized plan options in any service area in PY2024 or any subsequent PY.

Similar to the approach taken with respect to standardized plan options in the 2023 Payment Notice and in this proposed rule, CMS proposes to not apply this requirement to issuers in State Marketplaces. Further, consistent with the approach taken with respect to standardized plan options in the 2023 Payment Notice and in this proposed rule, since SBM-FPs use the same platform as the FFMs, CMS proposes to apply this requirement equally on FFMs and SBM-FPs. Finally, also in alignment with the approach taken with standardized plan options in the 2023 Payment Notice as well as the approach taken in this proposed rule, CMS proposes that this proposed requirement would not apply to plans offered through the SHOPs or to SADPs.

As an alternative to limiting the number of non-standardized plan options that issuers in FFMs and SBM-FPs can offer through the Marketplaces in order to reduce the risk of plan choice overload, CMS could also apply a meaningful difference standard in PY2024 and subsequent PYs. Under this proposed standard, CMS proposes grouping plans by issuer ID, county, metal level, product network type, and deductible integration type, and then evaluating whether plans within each group are “meaningfully different” based on differences in deductible amounts. With this proposed approach, two plans would need to have deductibles that differ by more than $1,000 to satisfy the new proposed meaningful difference standard. CMS seeks comment on this alternative proposal.

In conjunction with the requirement for issuers to offer standardized plan options, having a more manageable number of plan choices for consumers to select from would further streamline the plan selection process and facilitate more meaningful evaluation of available plan choices, which would also allow consumers to more easily select a health plan that best fits their unique health needs.

Stand-Alone Dental Plans (SADPs)

CMS proposes to require issuers of SADPs, as a condition of Marketplace certification, to use age on effective date as the sole method to calculate an enrollee’s age for rating and eligibility purposes beginning with Marketplace certification for PY2024. CMS proposes that this requirement apply to Marketplace-certified SADPs, whether they are sold on- or off-Marketplace. Requiring SADPs to use the age on effective date methodology to calculate an enrollee’s age as a condition of QHP certification, and consequently removing the less commonly used and more complex age calculation methods, would reduce consumer confusion and promote operational efficiency.

CMS also proposes to require issuers of SADPs, as a condition of Marketplace certification, to submit guaranteed rates beginning with Marketplace certification for PY2024. CMS proposes that this requirement apply to Marketplace-certified SADPs, whether they are sold on- or off-Marketplace. This policy change would help reduce the risk of incorrect advance payments of the premium tax credit (APTC) calculation for the pediatric dental essential health benefit (EHB) portion of premiums, thereby reducing the risk of consumer harm.

Re-enrollment Hierarchy

CMS proposes to allow Marketplaces, beginning for PY2024, to modify their automatic re-enrollment hierarchies such that enrollees who are eligible for cost-sharing reductions (CSRs) and who would otherwise be automatically re-enrolled in a bronze-level QHP without CSRs, to instead be automatically re-enrolled in a silver-level QHP (with CSRs) in the same product with a lower or equivalent premium, provided that certain conditions are met. Furthermore, we propose to amend the Marketplace re-enrollment hierarchy to allow all Marketplaces (Marketplaces on the Federal platform and SBMs) to ensure enrollees whose QHPs are no longer available to them and enrollees who would be re-enrolled into a silver-level QHP in order to receive income-based CSRs are re-enrolled into plans with the most similar network to the plan they had in the previous year, provided that certain conditions are met. We propose that Marketplaces (including Marketplaces on the Federal platform and SBMs) would implement this option beginning with the open enrollment period for plan year 2024 coverage, if operationally feasible, and if not then beginning with the open enrollment period for PY2025 coverage.

Establish Requirements for Qualified Health Plan and Plan Variant Marketing Names

CMS proposes to require that QHP plan and plan variant marketing names include correct information, without omission of material fact, and do not include content that is misleading. This proposal will help consumers applying for coverage to understand references to benefit information in plan and plan variant marketing names, and to use this information to make an informed plan selection.

If finalized as proposed, CMS would review plan and plan variant marketing names during the annual QHP certification process in close collaboration with State regulators in States with Marketplaces on the Federal platform. 

Making It Easier to Enroll in Coverage

Special Enrollment Periods

CMS proposes that beginning January 1, 2024, that Marketplaces have the option to implement a new special rule for consumers losing Medicaid or Children’s Health Insurance Program (CHIP) coverage that is also considered minimum essential coverage (MEC). This special rule would mean that consumers would have 60 days before, or 90 days after, their loss of Medicaid or CHIP coverage to select a plan for Marketplace coverage via a special enrollment period (SEP). Marketplaces would have additional flexibilities to decide whether to offer this special rule or not, depending on eligibility and/or enrollment trends for their respective populations. CMS believes that this new proposed special rule would help mitigate coverage gaps when consumers lose Medicaid or CHIP while allowing for a more seamless transition into Marketplace coverage. 

CMS also proposes to change the current coverage effective date requirements so that Marketplaces have the option to offer earlier coverage effective start dates for consumers attesting to a future loss of MEC and who would otherwise experience gaps in coverage effective as of the date of the final rule. CMS believes that these changes would ensure qualifying individuals are able to seamlessly transition from other forms of coverage to Marketplace coverage as quickly as possible with no coverage gaps. For example, if this proposal is finalized as proposed, when a consumer attests between May 16 and June 30 that they will lose other MEC on July 15 and selects a plan on or before June 30, coverage would be effective on July 1. If that consumer selects a plan after June 30, coverage would be effective as of August 1.

CMS also proposes removing consumer burden by aligning the regulations with the policy and operations of the Marketplaces on the Federal platform for granting special enrollment periods (SEPs) to qualified consumers who are affected by a material plan display error with current plan display error SEP operations. Currently, the regulation requires the qualified individual or enrollee, or their dependent, to adequately demonstrate to the Marketplace that a material error related to plan benefits, service area, or premium influenced their decision to purchase a QHP through the Marketplace. However, we have found that consumers may benefit when other interested parties can demonstrate to the Marketplace that a material plan error influenced the enrollment decision to purchase a QHP through the Marketplace.

Income Data Matching Issues

CMS proposes to accept the household’s income attestation when HHS requests tax return data from the Internal Revenue Service (IRS) but such data is not available. Such cases often occur when household composition changes across tax years (marriage, divorce, birth of a child) or if individuals were previously below the filing threshold and did not receive advance payments of the premium tax credits. All individuals receiving advance payments of the premium tax credits are required to file taxes and to reconcile those payments with final annual income. These proposed changes would reduce administrative burden, increase access, and have a positive impact on health equity.

Allow Door to Door Enrollment by Navigators and other Assisters

CMS proposes to permit assisters^[1] to conduct door-to-door enrollment to increase consumer engagement and advance health equity. Assisters currently conduct door-to-door outreach, education, and schedule follow-up appointments, but are prohibited from providing enrollment assistance upon an initial interaction at the consumers’ residence. The prohibition on door-to-door enrollment during the first contact burdens the consumer and assisters and creates access barriers for consumers to receive timely enrollment assistance.

Strengthening Markets

FFM and SBM-FP User Fees

For the 2024 benefit year, CMS proposes to lower the user fee rate from 2.75% to 2.5% of premium for QHPs sold on the FFM, and to lower the user fee rate from 2.25% to 2.0% of premium for QHPs sold on the SBM-FP. We anticipate these user fee rate decreases may exert downward pressure on insurance premiums, resulting in lower costs for consumers.

HHS-Operated Risk Adjustment Program

For the 2024 benefit year risk adjustment models, CMS proposes to use the 2018, 2019, and 2020 enrollee-level EDGE data for model recalibration, with one exception. For the adult models’ age-sex coefficients, CMS proposes to blend only the 2018 and 2019 enrollee-level EDGE data and to exclude the 2020 enrollee-level EDGE data given CMS’ analysis of the 2020 enrollee-level EDGE data and observed anomalous decreases in the unconstrainted coefficients for the 2020 benefit year enrollee-level EDGE recalibration data for older adult enrollees, especially female enrollees. Additionally, CMS proposes to continue to apply a market pricing adjustment to the plan liability associated with Hepatitis C drugs in the risk adjustment models for the 2024 benefit year. CMS also requests comment on whether to add a new payment HCC for gender dysphoria to the risk adjustment models for future benefit years.

CMS also proposes, beginning with the 2023 benefit year, to collect and extract from issuers’ EDGE servers a new data element, a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) indicator, and to extract plan ID and rating area data elements issuers have submitted to their EDGE servers from certain benefit years prior to the 2021 benefit year. We also propose a risk adjustment user fee for the 2024 benefit year of $0.21 per member per month.

Finally, we propose to repeal the ability of all states, including those prior participant states that had previously submitted a state flexibility request, to request a reduction in risk adjustment state transfers starting with the 2025 benefit year. We also solicit comments on the requests submitted by Alabama to reduce risk adjustment state transfers by 50% in its individual (including catastrophic and non-catastrophic risk pools) and small group markets for the 2024 benefit year.

HHS Risk Adjustment Data Validation

CMS proposes further refinements to HHS Risk Adjustment Data Validation (HHS-RADV) to promote the goals of HHS-RADV and support the timely release of HHS-RADV results. Beginning with the 2021 benefit year, CMS proposes to no longer exempt exiting issuers from adjustments to risk scores and risk adjustment transfers when they are negative error rate outliers in the applicable benefit year’s HHS-RADV results. Additionally, CMS proposes to change the materiality threshold for random and targeted sampling from $15 million in total annual premiums Statewide to 30,000 total billable member months Statewide. CMS proposes to shorten the window to confirm or dispute the findings of the Second Validation Audit to within 15 calendar days of the notification by HHS beginning with the 2022 benefit year. Finally, we solicit comments on discontinuing the use of the lifelong permanent condition list and the use of Non-EDGE Claims in HHS-RADV. 

Premium Adjustment Percentage and Payment Parameters

With the release of the proposed rule, CMS is issuing the 2024 benefit year premium adjustment percentage, the maximum annual limitation on cost sharing, reduced maximum annual limitation on cost sharing, and the required contribution percentage (payment parameters) in guidance by January 2023, consistent with policy finalized in the 2022 Payment Notice.

Bolstering Program Integrity

Establish Improper Payment Pre-Testing and Assessment for State Marketplaces

To comply with the Payment Integrity Information Act of 2019 (PIIA), CMS proposes to establish and implement a required Improper Payment Pre-Testing and Assessment (IPPTA) program in calendar years 2024 - 2025. The proposed IPPTA would prepare State Marketplaces for the planned measurement of improper payments of APTC by testing processes and procedures that support HHS’s review of determinations of APTC. IPPTA would also provide a mechanism for HHS and State Marketplaces to share information that would aid in developing a measurement process in future years.

New Requirements Related to Agents, Brokers, or Web-brokers

CMS proposes to allow HHS additional time to review evidence submitted by agents, brokers, or web-brokers to rebut allegations that led to suspension of their Marketplace agreements or to request reconsideration of termination of their Marketplace agreements. For suspensions, HHS would receive an additional 15 calendar days, or a total of up to 45 calendar days, to review evidence and notify the submitting agents, brokers, or web-brokers of HHS’ determination regarding the suspension of their Marketplace agreements. For terminations, HHS would receive an additional 30 calendar days, or a total of up to 60 calendar days to review reconsideration requests and notify the submitting agents, brokers, or web-brokers of HHS’ reconsideration decision related to the termination of their Marketplace agreements. These additional days are needed as the review process can involve parsing complex technical information and data, revisiting consumer complaints, and reaching out to consumers individually.

CMS also proposes to require agents, brokers, and web-brokers to document that eligibility application information has been reviewed by and confirmed to be accurate by the consumer prior to application submission. This proposal would help with enforcement activities related to agents, brokers, and web-brokers and help expedite the adjudication of consumer complaints related to the provision of incorrect information of their eligibility applications. We are proposing that this documentation be retained by the agent, broker, or web-broker for a minimum 10 years and be produced upon request in response to monitoring, audit, and enforcement activities.

In addition, CMS proposes to require agents, brokers, or web-brokers to document the receipt of consent from the consumers they are assisting. This proposal would help with enforcement and help resolve disputes between enrolling entities and consumers, or between multiple enrolling entities. We are proposing that this documentation be retained by the agent, broker, or web-broker for a minimum of 10 years and be produced upon request in response to monitoring, audit, and enforcement activities.

This communication was printed, published, or produced and disseminated at U.S. taxpayer expense

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