The Notice of Benefit and Payment Parameters for 2022 final rule part two finalizes some of the standards included in the proposed rule for states, exchanges, non-federal governmental plans, issuers in the individual and small-group markets (including those that participate in the federally facilitated exchange direct enrollment program), and web brokers. These changes further the Administration’s efforts on health equity by lowering maximum consumer out-of-pocket costs by $400, improving competition and stability, elevating the consumer experience, expanding transparency, ensuring state flexibility, and promoting program integrity. The Centers for Medicare & Medicaid Services (CMS) anticipates additional rulemaking for the 2022 payment notice later this year.

Lowering Consumers’ Maximum Out-of-Pocket Costs by $400

• Premium Adjustment Percentage Index (PAPI) and Cost-sharing Parameters

Considering the overwhelming comments received, the Department of Health and Human Services (HHS) is not finalizing the proposed PAPI, maximum annual limitation on cost sharing, or the required contribution percentage, which were calculated using National Health Expenditure Accounts (NHEA) projections and estimates of private health insurance premiums (excluding Medigap and the medical portion of property and casualty insurance). Instead, we are finalizing calculation of the PAPI and the cost-sharing parameters using the NHEA projections of average per-enrollee employer-sponsored insurance (ESI) premium, which was the measure used for benefit years 2015 through 2019. Based on the NHEA ESI premium data, the final premium adjustment percentage index for 2022 is 1.3760126457, the final required contribution percentage for 2022 is 8.09%, and the final maximum annual limitation on cost sharing for 2022 is $8,700 for self-only coverage and $17,400 for other-than-self-only coverage. The final 2022 reduced annual limitation on cost sharing for eligible enrollees with incomes between 100% and 200% of the federal poverty level (FPL) is $2,900 for self-only coverage and $5,800 for other-than-self-only coverage. The 2022 reduced annual limitation on cost sharing for eligible enrollees with incomes above 200% and through 250% FPL is $6,950 for self-only coverage and $13,900 for other-than-self-only coverage. The rule finalizes a maximum annual limitation on cost sharing that is $400 below what CMS proposed in November 2020.

Increasing Competition & Stability

• Risk Adjustment (RA) Model Specifications

HHS is not finalizing many of the proposed updates to the RA model specifications that we proposed in the 2022 payment notice proposed rule. Specifically, we proposed changes to the RA models to include a two-stage specification in the adult and child models, to replace the existing severity illness indicators in the adult models with new severity and transplant indicators with hierarchical condition category (HCC) counts factors in the adult and child models, and modify the enrollment duration factors in the adult models. We are not finalizing these changes at this time, and instead intend to release a technical paper in the future with more data and analysis on the impact of the proposed model specification changes on transfers. However, we are finalizing the continuation of the pricing adjustment for hepatitis C drugs that has been in place since the 2020 benefit year.

• RA Reporting and Policies Related to Temporary Premium Credits
  We are also finalizing RA reporting requirements for issuers of risk adjustment covered plans who choose to provide temporary premium credits, if permitted by HHS during a future public health emergency. As finalized, these issuers would be required to report to their EDGE servers the lower, adjusted plan premiums that reflect actual premiums billed to enrollees. We also finalize the clarification regarding calculation of HHS risk adjustment payment and charges in light of these premium credits by specifying that, for states where issuers of risk adjustment covered plans provide temporary premium credits when permitted by HHS, the plan average premium and statewide average premium used in the state payment transfer formula would be calculated using issuers’ adjusted premium amounts.
• Updates to Data Used for RA Model Recalibration
  HHS is finalizing the policy to use the three most recent consecutive years of enrollee-level EDGE data that are available in time for incorporating into the coefficients in the proposed rule and to not update the coefficients for additional years of data between the proposed and final rules if an additional year of enrollee-level EDGE data becomes available. Adoption of this policy results in the use of enrollee-level EDGE data from the 2016, 2017 and 2018 benefit years for the 2022 model recalibration, the same data years used for the 2021 model recalibration.

• Alabama’s 2022 State Flexibility Request

HHS is approving the 2022 benefit year requests submitted by the state of Alabama to reduce RA state transfers by 50% for both the individual market (including both the catastrophic and non-catastrophic risk pools) and the small-group market. HHS reviewed the data submitted by Alabama as part of its requests, in addition to other data and information available to HHS, along with timely submitted public comments, and determined that the requests meet the de minimis standard in both markets as set forth in 45 CFR § 153.320(d). As such, HHS will reduce individual and small group market RA state transfers for Alabama issuers by 50% for the 2022 benefit year.

• Collection and Payment of HHS Risk Adjustment Data Validation (HHS-RADV) Adjustments

HHS is finalizing the policy to revert to the previous schedule for the collection of HHS-RADV charges and disbursement of payments in the calendar year in which HHS-RADV results are released (for example, collection and disbursement of 2021 benefit year HHS-RADV adjustments would begin in summer or fall of 2023).

Elevating the Consumer Experience

• Special Enrollment Period (SEP) Verification

HHS is not finalizing the provision to require all exchanges to conduct SEP verification for at least 75% of new enrollments for consumers not already enrolled in coverage through the relevant exchange. HHS agreed with commenters’ concerns around imposing additional administrative burden on consumers, and administrative and financial burden on states at this time.

• SEPs

We are finalizing a policy to permit exchange enrollees who qualify for an SEP because they lose advance payment of premium tax credit (APTC) eligibility to change to a new plan at any metal level, and a policy to allow an individual who did not receive timely notice of an SEP triggering event, and was otherwise reasonably unaware that a triggering event occurred, to select a new qualified health plan (QHP) within 60 days of the date that he or she knew, or reasonably should have known, of the occurrence of the triggering event. Also, we are finalizing a policy to codify that individuals with COBRA coverage may qualify for an SEP to enroll in individual health insurance coverage on- or off-exchange based on the cessation of employer contributions or government subsidies (such as those provided for under the American Rescue Plan Act of 2021) to COBRA continuation coverage. Finally, we are finalizing a minor clarifying amendment related to the market-wide application of the SEP that is triggered upon an error of an exchange.

• Web Broker Display Requirements

HHS is not finalizing the proposal to create an exception to existing requirements related to the QHP comparative information that web broker non-exchange websites are required to display. We agreed with commenters that the display of more QHP comparative information on web broker non-exchange websites is in the best interest of consumers to aid them in comparing QHP options without having to potentially navigate to multiple websites. Instead, we communicated our intention to clarify these display requirements in future rulemaking and limit our current use of enforcement discretion that permits web brokers to only display issuer marketing name, plan marketing name, plan type, and metal level for all available QHPs so that web broker non-exchange websites will be required to display all QHP information consistent with § 155.205(b)(1) and (c), with the exception of medical loss ratio information and transparency of coverage measures under § 155.205(b)(1)(vi) and (vii), for all available QHPs beginning with the start of the 2022 open enrollment period. We explained that this interim enforcement approach applicable beginning with the start of the plan year 2022 open enrollment period does not establish new requirements and instead represents a change in the exercise of enforcement discretion, and that the effect of this approach is that web broker non-exchange websites will be required to display QHP comparative information consistent with existing rules (which will align the QHP information displayed on web broker websites with the QHP information displayed on HealthCare.gov). We believe this approach is reasonable, given that QHP information has been more readily accessible for some time, both through public use files and the marketplace application programming interface.

• Direct Enrollment (DE) Entity Plan Display Requirements

HHS is finalizing the policy to update website display requirements for DE entities. Specifically, DE entity websites will be required to display and market the following three categories of plans or products across at least three distinct website pages, with certain narrow exceptions: QHPs offered through the exchange, individual health insurance coverage subject to Affordable Care Act (ACA) market-wide rules offered outside the exchange (including QHPs and non-QHPs other than excepted benefits), and all other products, such as excepted benefits not subject to ACA market-wide rules. The first exception to these requirements allows plans from the first two categories (all of which are subject to ACA market-wide rules) to be displayed on the same website page when a consumer has received an offer of an individual coverage health reimbursement arrangement (HRA), subject to certain conditions. The second exception to these requirements allows DE entities to display and market stand-alone dental plans certified by an exchange but offered outside the exchange and non-certified stand-alone dental plans on the same off-exchange dental plan shopping website pages.

• QHP Enrollee Experience Survey Results and Quality Rating System (QRS) Framework

HHS is finalizing the proposal to post an annual QHP enrollee experience survey public use file (PUF) to further support transparency of QHP quality data and provide consumers, states, issuers, and researchers with valuable enrollee experience data. In addition, we are finalizing the removal of the composite and domain levels of the QRS hierarchy to simplify the QRS framework, to align with other CMS quality reporting programs, and to help improve balancing the influence of individual measures on the overall quality score.

• Employer-sponsored Coverage (ESC) Verification

We will not take enforcement action against exchanges that do not perform random sampling as required by 45 CFR 155.320(d)(4) for plan years 2020 and 2021, and extend this to plan year 2022. HHS will exercise such discretion in anticipation of finalizing its evaluation of the results of the employer verification study to (1) determine the unique characteristics of the population with offers of employer-sponsored coverage that meets minimum value and affordability standards, (2) compare premium and out-of-pocket costs for consumers enrolled in affordable employer-sponsored coverage to exchange coverage, and (3) identify the incentives, if any, that drive consumers to enroll in exchange coverage rather than coverage offered through their current employer. 

Expanding Transparency

• Pharmacy Benefit Management (PBM) Transparency

HHS is finalizing a rule to provide for collecting prescription drug data directly from PBMs. The data will be used to enhance our understanding of the true cost of prescription drugs provided in exchange plans, and shed light on the role that PBMs play in their cost. The data collected is required to be kept confidential and may only be disclosed for limited purposes outlined in statute.

Ensuring State Flexibility

• States’ Essential Health Benefit (EHB) Benchmark Plan Options

HHS is finalizing May 6, 2022 as the deadline for states submitting EHB benchmark plan selections for the 2024 plan year and for states reporting whether they will permit between-category substitution for the 2024 plan year.

Promoting Program Integrity

• HHS Audits, Compliance Reviews, and Civil Money Penalties (CMPs) Authority
  HHS is finalizing the proposals related to its audit and compliance review authority to further protect the integrity of federal funds. Specifically, HHS finalizes several amendments to provide more clarity on HHS’s audit procedures regarding the APTC, cost-sharing reduction (CSR), and user fee programs. We also finalize regulations to provide HHS authority to conduct compliance review to ensure compliance with federal APTC, CSR, and user fee requirements. Additionally, we finalize the extension of these authorities to QHP issuers in state-based exchanges using the federal platform to align with our existing authority over issuers in federally facilitated exchange and state-exchange states. HHS also finalizes the proposals to codify similar audit processes and compliance review authority for the transitional reinsurance program operated by HHS from 2014-2016 benefit years, as well as the HHS-operated risk adjustment program (including high-cost risk pool audits). In addition, HHS finalizes the amendments to clarify that HHS has the ability to impose CMPs when it is enforcing the applicable federal APTC, CSR, and user-fee requirements in any exchange, regardless of whether the exchange is established and operated by HHS or a state. Additionally, HHS is finalizing minor procedural changes to the requirements for administrative appeals of CMPs by health insurance issuers and non-federal governmental plans to align with current practices for the Departmental Appeals Board.

• Annual Reporting of State-required Benefits

HHS is finalizing July 1, 2022 as the deadline for states to submit to HHS their annual reports for 2022 on state-required benefits pursuant to 45 CFR 156.111(d) and (f). However, we are also announcing that we intend to exercise enforcement discretion with regard to the first annual reporting submission deadline of July 1, 2021 under current regulation. Pursuant to this enforcement posture, we will not take enforcement action against states that do not submit an annual report in 2021. As such, states are required to notify HHS of their state-required benefits in the manner specified at § 156.111(d) and (f) by July 1, 2022.

To view the press release on the second 2022 Notice of Benefit and Payment Parameters final rule (also known as the “2022 payment notice”, please visit: https://www.cms.gov/newsroom/press-releases/cms-adopt-rules-lower-health-care-costs-2022-federal-health-insurance-marketplace-plans

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