In the HHS Notice of Benefit and Payment Parameters (Payment Notice) for 2025 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, direct enrollment entities, and assisters that help Marketplace consumers. This proposed rule also includes several proposals impacting the Medicaid program, Children’s Health Insurance Program (CHIP), and the Basic Health Program (BHP). 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’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, enhancing standards and guaranteed consumer protections, reinterpreting the authority to access certain data through Medicaid, CHIP, and Marketplace Hub services, and strengthening markets.
Increasing Access to Health Care Services
Network Adequacy
To help ensure that Marketplace enrollees across the nation have reasonable, timely access to health care providers as mandated by the ACA, CMS proposes that, for plan years beginning on or after January 1, 2025, State Marketplaces and SBM-FPs establish and impose quantitative time and distance qualified health plan (QHP) network adequacy standards that are at least as stringent as the Federally-facilitated Marketplaces’ (FFMs) time and distance standards established for QHPs under § 156.230, excluding stand-alone dental plan (SADP) issuers operating in states that qualify for the limited SADP exception as described under § 156.230(a)(4). Consistent with the standards for the FFMs, the time and distance standards for State Marketplaces and SBM-FPs would be calculated at the county level and vary by county designation, and would apply to lists of provider specialties that include at least those used for the FFMs. Similar to the process for the FFMs, issuers that are unable to meet the specified standards would be able to submit a justification to their State Marketplace or SBM-FP to account for variance(s) as described under § 156.230(a)(2)(ii). State Marketplaces and SBM-FPs would be required to review the issuer’s justification to determine whether making such health plan available through the Marketplace is in the interests of qualified individuals in the State or States in which such Marketplace operates as specified under § 156.230(a)(3). In making this determination, State Marketplaces and SBM-FPs would consider whether the exception is reasonable based on circumstances such as the local availability of providers and variables reflected in local patterns of care. The State Marketplace or SBM-FP could then certify a QHP that failed to meet the specified standards but provided a justification that the State Marketplaces or SBM-FP deemed reasonable. CMS also proposes that before QHP certification, State Marketplaces and SBM-FPs conduct quantitative network adequacy reviews that are consistent with the reviews performed by the FFMs under § 156.230. In addition, CMS proposes that State Marketplaces and SBM-FPs collect information from QHP issuers about whether their providers offer telehealth services to assist in informing network adequacy and provider access standards for future plan years. At this time, CMS is not proposing that State Marketplaces and SBM-FPs establish and impose appointment wait time standards or that they ensure that the provider network of each QHP meets applicable standards specified in § 156.230(a)(1)(i), (b), (c), (d) and (e).
Allowing States to Add Routine Adult Dental Benefits as Essential Health Benefits (EHBs)
CMS proposes to remove the regulatory prohibition on issuers from including routine non-pediatric dental services as an EHB, which would allow states to add routine adult dental services as an EHB by updating their EHB-benchmark plans. Removing the prohibition on routine non-pediatric dental services as an EHB would remove regulatory and coverage barriers to expanding access to adult dental benefits. This proposal would also give states the opportunity to improve adult oral health and overall health outcomes, which could help reduce health disparities and advance health equity since these health outcomes are disproportionately low among marginalized communities. Under this proposal, states would be permitted to include routine non-pediatric dental services as EHB for purposes of their ABPs or BHP standard health plans.
Prescription Drug Benefits
CMS proposes revisions to certain EHB prescription drug benefit requirements. First, CMS proposes to revise the minimum membership standards for pharmacy & therapeutics (P&T) committees to include a consumer representative, as CMS believes that a variety of perspectives and expertise on P&T committees is crucial to ensure committee members review the evidence for formulary decisions unbiasedly. Second, CMS proposes to codify its current policy that prescription drugs in excess of those covered by a state’s EHB-benchmark plan are considered EHBs such that they are subject to EHB protections, including the annual limitation on cost sharing and the restriction on annual and lifetime dollar limits, unless the coverage of the drug is mandated by state action and is in addition to EHB (in which case the drug would not be considered EHB).
Increase State Flexibility in the Use of Income and Resource Disregards for Non- Modified Adjusted Gross Income (MAGI) Populations
CMS proposes to provide states with greater flexibility to adopt income and/or resource disregards in determining financial eligibility for Medicaid under section 1902(r)(2) of the Social Security Act for individuals excepted from application of the MAGI financial methodologies. Under this proposal, states would be allowed to target income and/or resource disregards at discrete individuals in the same Medicaid eligibility group, provided the targeting criteria are reasonable (e.g., individuals in an area of a state with higher shelter costs). This proposal would enable states to achieve targeted expansions of Medicaid coverage, in contrast to the all-or-nothing approach required by the current regulation.
Simplifying Choice and Improving the Plan Selection Process
Standardized and Non-Standardized Plan Options
CMS proposes to follow the approach finalized in the 2024 Payment Notice concerning standardized plan option metal levels and to otherwise maintain continuity with the approach to standardized plan options finalized in the 2023 and 2024 Payment Notices. CMS proposes to make only minor updates to the plan designs for PY 2025, such as modifying the maximum out-of-pocket (MOOP) and deductible values, to ensure these plans have actuarial values (AVs) within the permissible de minimis range for each metal level. CMS believes these standardized plan options continue to play a meaningful role in simplifying and streamlining the plan selection process by reducing the number of variables consumers must consider when selecting a plan option, making it easier for consumers to compare available plan options and reducing the risk of sub-optimal plan selection. CMS further believes these standardized plan options include several distinctive features, such as enhanced pre-deductible coverage for several benefit categories and copayments instead of coinsurance rates for a greater number of benefit categories, that will continue to play an important role in reducing barriers to access, combatting discriminatory benefit designs, and advancing health equity.
In addition, CMS proposes an exceptions process to the limitation on the number of non-standardized plan options that issuers can offer in order to promote consumer access to plans with design features that facilitate the treatment of chronic and high-cost conditions, while continuing to reduce the risk of plan choice overload. Under this proposal, issuers would be permitted to offer additional non-standardized plan options beyond the two-plan limit for PY 2025 and subsequent years if they demonstrate that these additional plans have reduced cost sharing of 25 percent or more for benefits pertaining to the treatment of chronic and high-cost conditions, relative to an issuer’s other non-standardized plan offerings in the same product network type, metal level, and service area. Under this proposal, issuers would not be limited in the number of exceptions permitted per product network type, metal level, inclusion of dental and/or vision benefit coverage, and service area, so long as the required criteria are met. Reduced cost sharing for these benefits would reduce barriers to access to benefits important to consumers with chronic and high-cost conditions. This could play an important role in combatting health disparities and advancing health equity since many of these chronic and high-cost conditions disproportionately impact disadvantaged populations.
EHB Benchmark Update Process Improvements
For plan years beginning on or after January 1, 2027, CMS proposes three revisions to the standards for state selection of EHB-benchmark plans to address long-standing requests from states to improve, and reduce the burden of, the EHB-benchmark plan update process. First, CMS proposes to consolidate the options for states to change EHB-benchmark plans such that a state may change its EHB-benchmark plan by selecting a set of benefits that would become the state’s EHB-benchmark plan. If finalized as proposed, any changes to State EHB-benchmark plan options would also be applicable to States when choosing a benchmark plan used to define EHBs in a Medicaid ABP or BHP standard health plan. Second, CMS proposes to remove the generosity standard and to revise the typicality standard so that, in demonstrating that a state’s new EHB-benchmark plan provides a scope of benefits that is equal to the scope of benefits of a typical employer plan in the state, the scope of benefits of a typical employer plan in the state would be defined as any scope of benefits that is as or more generous than the scope of benefits in the state’s least generous typical employer plan, and as or less generous than the scope of benefits in the state’s most generous typical employer plan. Third, CMS proposes to remove the requirement for states to submit a formulary drug list as part of their documentation to change EHB-benchmark plans unless the state changes its prescription drug EHBs.
Re-enrollment Hierarchy
CMS proposes to amend the Marketplace re-enrollment hierarchy to require all Marketplaces (Marketplaces on the Federal platform and State Marketplaces) to re-enroll enrollees with catastrophic coverage, including enrollees who will lose eligibility for catastrophic coverage, into a new QHP for the coming plan year. This policy would codify the current re-enrollment process for Marketplaces on the Federal platform. CMS proposes that all Marketplaces (including Marketplaces on the Federal platform and State Marketplaces) would implement this policy beginning with the open enrollment period for plan year 2025 coverage.
Making It Easier to Enroll in Coverage
Special Enrollment Periods
CMS proposes to align the effective dates of coverage after a consumer selects a plan during a special enrollment period subject to regular coverage effective dates across all Marketplaces, including State Marketplaces, beginning January 1, 2025, or an earlier date at the option of the Marketplaces. For ease of consumer experience and to prevent coverage gaps for consumers transitioning between different Marketplaces or from other insurance coverage, CMS proposes that consumers who select and enroll in a QHP during a special enrollment period with a regular coverage effective date receive coverage beginning the first day of the month after the consumer selects a QHP.
CMS also proposes to amend the parameters around the availability of a special enrollment period that is granted to advance payment of the premium tax credit (APTC)-eligible, qualified individuals with a projected household income at or below 150 percent of the Federal Poverty Level (FPL). CMS proposes to remove the limitation that this special enrollment period is only available when APTC is available such that the applicable taxpayer’s tax percentage is set to zero. This special enrollment period would continue to be offered at the option of the Marketplace.
Failure to File and Reconcile Process
CMS proposes to require State Marketplaces to check failure-to-reconcile status at least annually and send consumer notices to tax filers found to have failed-to-reconcile, prior to determining a tax filer or their household ineligible for APTC. This proposal would codify the procedures of Marketplaces on the Federal platform and impose the obligation on State Marketplace so that tax filers enrolled in a State Marketplace would have more adequate notice to correct potential failed tax reconciliation. Nothing in this proposal relieves the consumer of their requirement to file and reconcile taxes after the receipt of APTC.
Improving Incarceration Status Check for the Purposes of QHP Eligibility Verification
CMS proposes that all Marketplaces accept consumer attestation of incarceration status without further verification. CMS found that connecting to an alternative incarceration data source would be costly, and the rate of incarcerated individuals applying for coverage is very low. Continuing to use electronic data sources to verify incarceration status would add to current costs and health equity challenges because incarceration Data Matching Issues (DMIs), which are costly and burdensome to applicants, would continue to be generated. CMS proposes that State Marketplaces that wish to verify incarceration status using an alternative electronic data source should submit their proposed alternative data source for HHS approval if they have not already done so. If HHS approves their use of an alternative electronic data source, they would be required to continue to generate DMIs whenever a mismatch is present between the applicant’s attestation and the data source or other information provided by the applicant or in the records of the Marketplace.
Effective Date of Coverage in the Basic Health Program
CMS proposes to provide states that operate the Basic Health Program (BHP) additional flexibility in establishing an effective date of eligibility for enrollment in a standard health plan. The proposal would allow a state to select a standard in which all applicants who meet all requirements are eligible to enroll in a standard health plan in the BHP effective the first day of the month following the month of application or eligibility determination regardless of when they apply or are found eligible to enroll in a standard health plan in the BHP.
Enhancing Standards and Guaranteed Consumer Protections
State-Mandated Benefits and Defrayal
CMS proposes that state-mandated benefits would not be considered “in addition to EHB” under CMS’ defrayal policy if the mandated benefit is an EHB in the state’s EHB-benchmark plan. This proposal would help protect consumers by ensuring that existing EHB benefits in states’ EHB-benchmark plans remain subject to EHB nondiscrimination rules, the annual limitation on cost sharing, and restrictions on annual or lifetime dollar limits. This change may also impact State Basic Health Programs (BHPs) established under section 1331 of the ACA and Medicaid Alternative Benefit Plans (ABPs) implemented pursuant to section 1937 of the Act.
At Least One Year of Operation as SBM-FP Before State Marketplace Transition
CMS proposes to require a state to operate for at least one year, including its open enrollment period, a State-based Marketplace on the Federal Platform (“SBM-FP”) prior to transitioning to operating a State Marketplace. This proposal would give States sufficient time to create, staff, and structure a State Marketplace organization that could transition to operating its own eligibility and enrollment platform, build Navigator and consumer outreach programs, assume plan management responsibilities, and communicate effectively with consumers to support enrollment and avoid health care coverage gaps. Further, a year operating an SBM-FP provides the state time to familiarize consumers, consumer assisters, partners in the coordination of eligibility functions, and other interested parties with the operations of the new State Marketplace organization ahead of engaging with that Marketplace.
State Marketplaces to Operate a Centralized Eligibility and Enrollment Platform on the State Marketplace’s Website
CMS proposes to require a State Marketplace to operate a centralized eligibility and enrollment platform on the State Marketplace’s website (or, for an SBM-FP, on the Federal platform), allowing for the submission of the single, streamlined application for enrollment in a QHP and insurance affordability programs by consumers through the State Marketplace’s website (or, for an SBM-FP, on the Federal platform). This proposal codifies and ties together existing requirements that the Marketplace is the entity responsible for making all determinations regarding eligibility for QHP coverage and insurance affordability programs through the Marketplace’s operation of a centralized eligibility platform, regardless of whether an individual files an application for enrollment in a QHP on the State Marketplace’s website or a non-Marketplace website operated by an entity such as a web-broker, a direct enrollment entity, or QHP issuer. This proposal would also require that only State entities or other eligible contracting entities that a State Marketplace contracts with to operate its centralized eligibility and enrollment platform, can perform the eligibility determination function on behalf of the State Marketplace.
Establishing Marketplace Call Center Standards
CMS proposes establishing call center standards to require that all Marketplace call centers provide consumer access to a live call center representative during a Marketplace's published hours of operation. Marketplace call centers for SBM-FPs and Small Business Health Options Program (SHOP) Marketplaces that do not provide for enrollment in SHOP coverage through an online SHOP enrollment platform would be exempt. CMS proposes that the Marketplace’s live call center representatives would be required to be able to assist consumers with their QHP application, which includes providing consumers information on their APTC and cost-sharing reduction (CSR) eligibility, helping consumers understand their QHP options, helping consumers select a QHP, and helping consumers submit QHP enrollment applications to the Marketplace.
Annual Open Enrollment Dates for States Not Utilizing the Federal Platform
CMS proposes to require State Marketplaces not utilizing the Federal platform to provide an annual open enrollment period that starts on November 1 and ends no earlier than January 15. This would ensure a minimum open enrollment period consistent across all Marketplaces while maintaining the flexibility for State Marketplaces not utilizing the Federal platform to hold a lengthier open enrollment period.
Ensure Web-brokers and Direct Enrollment Entities Operating in State Marketplaces Meet Certain HHS Standards Applicable in the FFMs and SBM-FPs
CMS proposes to extend certain existing HHS standards for Marketplaces that use the Federal platform that apply to web-brokers and direct enrollment entities assisting consumers on those Marketplaces to newly apply to web-brokers and direct enrollment entities assisting consumers on Individual Marketplaces and SHOPs in State Marketplaces. CMS proposes that minimum federal standards governing web-broker website display of standardized comparative QHP information, display of information pertaining to a consumer’s eligibility for APTC or CSRs, disclaimer language, providing consumers with correct information, and refraining from certain conduct, access by downstream agents and brokers, and operational readiness would apply to web-brokers across all Marketplaces. CMS also proposes minimum federal standards governing direct enrollment entity marketing and displaying QHPs and non-QHPs, website disclaimer language, application assisters, providing consumers with correct information and refraining from certain conduct, and operational readiness would apply across all Marketplaces. Under these proposals, State Marketplaces that do not use the Federal platform would retain some flexibility to customize certain processes to best meet their needs consistent with these minimum requirements.
Require HealthCare.gov Changes be Reflected on Direct Enrollment Entity Non-Marketplace Websites within a Notice Period Set by HHS
CMS proposes to require that HealthCare.gov changes be reflected and prominently displayed on direct enrollment entity non-Marketplace websites in FFM and SBM-FP states within a specific notice period set by HHS unless HHS approves a deviation request. CMS also proposes to extend this requirement to require that State Marketplace website changes be reflected and prominently displayed on direct enrollment entity non-Marketplace websites in SBM states within a specific notice period set by the State Marketplace unless the State Marketplace approves a deviation request. The changes that CMS proposes to require direct enrollment entities to make to their non-Marketplace websites include changes that would enhance the consumer experience, simplify the plan selection process, and increase consumer understanding of plan benefits, cost-sharing responsibilities, and eligibility for financial assistance.
Section 1332 Waiver Public Notice Requirements
The Department of Health & Human Services (HHS) and the Department of the Treasury (collectively, the Departments) propose to modify regulations to set forth flexibilities in the public notice requirements and post-award public participation requirements for section 1332 waivers. Specifically, the Departments propose to permit States applying for section 1332 waivers to conduct public hearings in a virtual (that is, one that uses telephonic, digital, and/or web-based platforms) or hybrid (that is, one that provides for both in-person and virtual attendance) format in lieu of conducting an in-person meeting as part of state public notice requirements. The Departments also propose to provide that for a State’s annual post-award forum, the public forum shall be conducted in an in-person, virtual, or hybrid format. By allowing States the opportunity to hold post-award forums and public hearings virtually and through digital platforms, States would be able to continue facilitating attendance and participation, remove barriers, and enhance public participation from interested parties and the public to provide meaningful input in the section 1332 waiver review and monitoring process.
Reinterpreting the Authority to Access Certain Data through Medicaid, CHIP, and Marketplace Hub Services
Requiring State Marketplaces and State Medicaid and CHIP Agencies to Pay to Access Income Data via the Verify Current Income Hub Service
CMS is proposing to reinterpret State Marketplace and State Medicaid/Children’s Health Insurance Program (CHIP) agency use of the Federal Data Services Hub (Hub) to access and use the income data provided by the optional Verify Current Income (VCI) Hub service as a State Marketplace or a State Medicaid/CHIP agency function because these State entities use this optional service to implement eligibility verification requirements applicable to them. While CMS proposes to redesignate use of the VCI Hub service by State Marketplaces and State Medicaid/CHIP agencies as a State function, HHS would continue to maintain contracts that make this service available through the Hub for State Marketplace and State Medicaid/CHIP agency use as part of its ongoing implementation of sections 1411 and 1413 of the ACA. Under this proposal, States would pay annually in advance for the State Marketplaces and Medicaid/CHIP agencies' anticipated utilization of the optional VCI Hub service. However, State Medicaid and CHIP agencies could request federal financial participation for their share of the costs. In addition, states may receive a 75 percent Federal match for their Medicaid system operational costs to obtain CSI income data via the VCI Hub service. State Medicaid agencies would submit an Advance Planning Document (APD) to request the 75 percent Federal match.
Strengthening Markets
FFM and SBM-FP User Fees
For the 2025 benefit year, CMS proposes an FFM user fee rate of 2.2 percent of total monthly premiums and an SBM-FP user fee rate of 1.8 percent of total monthly premiums, which are the same user fee rates as for the 2024 benefit year.
HHS-Operated Risk Adjustment Program
For the 2025 benefit year, CMS proposes to use the 2019, 2020, and 2021 enrollee-level EDGE data for recalibration of the HHS risk adjustment models. Consistent with prior benefit year model recalibrations, this involves the use of the three most recent consecutive years of enrollee-level EDGE data that were available at the time CMS incorporated the data in the draft recalibrated coefficients published in the proposed rule for the applicable benefit year. Using the three most recent consecutive years to recalibrate the HHS risk adjustment models provides stability. It minimizes volatility in changes to risk scores between benefit years due to differences in the dataset’s underlying populations, while reflecting the most recent years’ claims experience available.
CMS also proposes to recalibrate the CSR adjustment factors for American Indian and Alaska Native (AI/AN) zero cost sharing and limited cost sharing plan variant enrollees for the 2025 benefit year and to retain these proposed AI/AN CSR adjustment factors if finalized, for future benefit years unless changed through notice-and-comment rulemaking. CMS believes these proposed changes to AI/AN CSR adjustment factors align with CMS’s efforts to continuously improve the HHS risk adjustment models with incremental changes to improve model prediction by updating the AI/AN adjustment factors to predict plan liability more accurately for this subpopulation. CMS also believes that these proposed changes would increase the incentives for issuers to engage the AI/AN population, whose communities have been historically underserved and face significant health disparities. In addition, CMS proposes to retain the current CSR adjustment factors for silver plan variant enrollees for the 2025 benefit year and beyond unless changed through notice-and-comment rulemaking.
Risk Adjustment User Fee for the 2025 Benefit Year
CMS proposes a risk adjustment user fee for the 2025 benefit year of $0.20 per member per month, which is a decrease from the 2024 benefit year risk adjustment user fee rate of $0.21 per member per month. For the 2025 benefit year, HHS will operate risk adjustment in every state and the District of Columbia. These costs cover development of the models and methodology, collections, payments, account management, data collection, data validation, program integrity and audit functions, operational and fraud analytics, interested parties training, operational support, and administrative and personnel costs dedicated to HHS-operated risk adjustment program activities.
Premium Adjustment Percentage and Payment Parameters
Alongside this proposed rule, CMS is issuing the 2025 benefit year premium adjustment percentage index and related payment parameters in guidance before January 1, 2024, consistent with policy finalized in the 2022 Payment Notice (86 FR 24140).
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