CMS issues the proposed Payment Notice for the 2020 coverage year
User fees for plans using the federal enrollment platform are lowered under 2020 proposal
The Centers for Medicare & Medicaid Services (CMS) today issued the proposed annual Notice of Benefit and Payment Parameters for the 2020 benefit year (proposed 2020 Payment Notice). This rule proposes regulatory and financial parameters applicable to qualified health plans (QHPs) on the Exchanges, plans in the individual, small group, and large group markets, and self-funded group health plans. These changes proposed in the rule would further the Trump Administration’s goals of lowering premiums, enhancing the consumer experience, increasing market stability, reducing regulatory burdens, and protecting taxpayers.
“Following the first-ever drop in premiums for plans sold on the Federal Exchange for 2019, in another first CMS is proposing to reduce the Exchange user fee charged to insurers to fund Exchange operations,” said CMS Administrator Seema Verma. “Reducing this user fee will reduce the premium each consumer pays in 2020. Under President Trump’s leadership, we’re finally moving the Exchange and the market in a new and positive direction.”
The 2020 Payment Notice represents the Trump Administration’s ongoing commitment to improve access to more affordable health coverage options. The implementation of the Affordable Care Act’s (ACA) main provisions in 2014 severely disrupted the individual health insurance market. Between 2013 and 2017, the average premium more than doubled in the states using the Federal Exchange’s eligibility and enrollment platform, and, in 2017, the number of issuers participating in these markets began to decline. Last year, half of the counties in America had only one individual health insurance market issuer available to consumers.
Upon taking office, CMS took immediate action to address problems in the individual health insurance market, and less than three months after taking office, we finalized the Market Stabilization Rule to improve risk pools by encouraging individuals to maintain continuous coverage. Building on this initial rule, CMS issued the 2019 Payment Notice rule to give states new tools to stabilize their health insurance markets. The agency also approved seven reinsurance waivers for states, all of which resulted in lower premiums in those states. These efforts helped reverse prior negative trends and, in 2019, the Federal Exchange is seeing premiums decrease and issuers return.
The proposed 2020 Payment Notice continues to build on these prior rulemakings to further strengthen America’s health insurance markets. Specifically, due to successful efforts to operate the Federal Exchange more efficiently, including efforts to better target outreach and streamline the Navigator program, the rule proposes to reduce by one half of one percentage point the user fee rates that issuers participating on the Federal Exchange and on State-based Exchanges on the Federal Platform (SBE-FPs) would be required to pay to CMS. The savings from this reduction in fees will be passed along through lower premiums for consumers.
To further reduce costs and advance the President’s American Patients First blueprint, the rule proposes allowing individual, small group, and large group market health insurance issuers to adopt mid-year formulary changes to incentivize greater enrollee use of lower-cost generic drugs, consistent with the agency’s approach to Medicare Part D. The rule also proposes changes related to requirements for how such issuers and self-insured group health plans treat cost-sharing for brand drugs when a generic equivalent is available.
The rule also includes proposals to enhance the consumer experience for individuals shopping for coverage. One proposal would streamline and update the direct enrollment regulations to accommodate further innovations for consumers to buy QHPs outside of HealthCare.gov.
In response to President Trump’s first Executive Order, the proposed rule would also continue CMS’ work to eliminate overly burdensome regulations. For example, the rule proposes processes to allow individuals to more easily claim a hardship exemption from the individual mandate penalty directly on their tax return for the 2018 tax year.
Today’s proposal also aims to increase market stability with updates to the risk adjustment program, an important program that helps stabilize and balance the market by reducing incentives for insurers to avoid high-cost, high-risk individuals.
To improve accuracy the proposed rule considers modifying the premium index to incorporate changes to individual market premiums, in addition to the group health plan premiums used today. The premium index is a figure that drives several other calculations, such as the maximum annual limitation on cost sharing.
In addition, the rule invites a public discussion on the practice of silver loading and the auto-reenrollment process through the Exchange. CMS is not proposing any regulatory changes regarding these practices at this time, but we are soliciting public comment to better understand the issues because states have addressed silver-loading in different ways. This process will help inform whether there are better options for potential future rulemaking.
Today CMS also issued the 2020 Letter to Issuers in the Federal Exchange which provides guidance to issuers that want to offer QHPs on the Federal Exchange, as well as the Proposed Key Dates Charts for the 2019 Calendar Year, the Draft 2019 Filing Year Rate Review Timeline Bulletin, and the Draft 2020 Plan Year Actuarial Value (AV) Calculator.
To view the Proposed Rule click here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2019-00077.pdf
To view a Fact Sheet about this rule click here: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Proposed-2020-HHS-Fact-Sheet.PDF
To view the 2020 Letter to Issuers click here: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-2020-Letter-to-Issuers-in-the-Federally-facilitated-Exchanges.pdf
To view the 2019 Rate Review Timeline Bulletin click here: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Proposed-Rate-Review-Timeline-CY2019.pdf
To view Proposed Key Dates for Calendar Year 2019: QHP Certification in the FFEs; Rate Review; Risk Adjustment click here: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Key-Dates-Table-for-CY2019.pdf
To view the 2020 Actuarial Value (AV) Calculator documents click here:
- Draft 2020 Actuarial Value Calculator: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-2020-AV-Calculator.xlsm
- Draft 2020 Actuarial Value Calculator Methodology: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-2020-AV-Calculator-Methodology.pdf
To view the documents associated with the Alabama Small Group Market Risk Adjustment State Flexibility Request click here: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/index.html
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