In a Thanksgiving eve surprise on November 25, 2020, the Centers for Medicare and Medicaid Services (CMS) released a 395-page proposed 2022 Notice of Benefit and Payment Parameters rule. The proposed rule was accompanied by a fact sheet and a press release. The “payment notice” is issued on an annual basis to adopt major changes for the next plan year in areas such as the exchanges and the risk adjustment program. Other materials, such as the draft letter to insurers in the federal exchange, key dates, and the actuarial value (AV) calculator are presumably coming but, unlike prior years, were not released alongside the proposed rule.
CMS is accepting comments for 30 days after the rule has been filed for public inspection. Assuming that date is November 27, comments will presumably be due on December 28, 2020. It strikes me as unusual to tie the comment deadline to the filing date since most comment periods are tied to the date of actual publication in the Federal Register. The comment period typically begins after publication in case the rule changes between filing date and actual publication (as CMS acknowledges in a disclaimer).
If the comment deadline is in fact linked to the date of publication in the Federal Register, commenters will have slightly more time to weigh in, and CMS will have slightly less time to review and respond to comments. While only a slight difference, CMS is presumably trying to finalize the rule before the end of the Trump administration’s term. With Inauguration Day on January 20, 2021, mere days can be the difference between the Trump administration finalizing the rule—or an incoming Biden administration opting to significantly revise the rule. Even if these changes are finalized, a Biden administration could delay the rule’s effective date and then issue subsequent rules to roll back the changes it does not think are justified. But doing so could take time and likely another round of notice and comment. (For context, the outgoing Obama administration finalized the 2018 payment notice in December 2016; the Trump administration almost immediately made changes to some of those and other policies in its market stabilization rule in early 2017.)
This timeline is also aggressive relative to prior payment rules issued by the Trump administration. Historically, the payment rule has been issued in the fall and finalized in early spring to give insurers, states, and other stakeholders time to understand and adjust to the rules for the next year. The Trump administration’s first payment notice (for 2019) was issued in late October 2017 but, since then, the proposed payment notices have been released very late—in mid- to late January.
The proposed 2022 payment rule includes what would be several major changes. CMS would allow other states to follow in Georgia’s footsteps by letting states transition away from a centralized marketplace like HealthCare.gov to decentralized enrollment via insurers and web-brokers. But, as proposed, CMS would allow other states to do so without having to apply for a Section 1332 waiver as Georgia did. States would still have to seek federal approval but would not have to prepare or submit a full Section 1332 waiver to do so.
CMS and the Department of Treasury would also incorporate into regulations 2018 guidance that interpreted the Section 1332 guardrails. The Trump administration wants to lock in its interpretation of those guardrails, which has been criticized as inconsistent with the statute. Other proposed changes include lower exchange user fees, heightened verification requirements for special enrollment periods, the prescription drug reporting requirements, and more direct enrollment (DE) display standards.
This post addresses changes that generally apply to the exchanges. A second post addresses changes regarding medical loss ratio requirements, the coverage of essential health benefits, special enrollment periods, and reporting of prescription drug information by pharmacy benefit managers (PBMs). A third post considers the proposed changes to the risk adjustment program.
State Exchange Direct Enrollment Options
In the proposed rule’s most dramatic change, CMS would allow states to opt into an Exchange Direct Enrollment (Exchange DE) option where states could transition away from a single, centralized exchange (HealthCare.gov) to enrollment via private sector entities (insurers, web-brokers, and agents and brokers). The exchange—whether the federally facilitated exchange (FFE), a state-based exchange that uses the federal platform (SBE-FP), or a state-based exchange (SBE)—would implement a DE pathway by linking its back-end eligibility system to the private DE entities. These private entities would then operate the enrollment pathways where consumers would shop, select a plan, and enroll in coverage.
This proposal was clearly inspired by a recently approved Section 1332 waiver for Georgia, which will eliminate the use of HealthCare.gov and replace it with a decentralized enrollment system of web-brokers and insurers. In the proposed rule, CMS attempts to extend this option to other states without the need for a waiver—even though many of the procedures outlined below are reminiscent of a waiver. Indeed, CMS appears to be authorizing a mini-state waiver process in everything but name.
The exchange (whether HealthCare.gov or an SBE) would still have to maintain a website listing basic information about qualified health plans (QHPs) for comparison purposes. But the exchange would only link to approved partner websites for the full enrollment process. Exchanges would have to show comparative plan information using a standardized format, include the summary of benefits and coverage, and show information regarding quality ratings. The exchange would still be responsible for 1) meeting (and ensuring that DE partners meet) all statutory and regulatory requirements related to QHP applications and enrollment; 2) conducting eligibility determinations; 3) verifying applicant information; and 4) issuing advance premium tax credit (APTC) to insurers. The IRS would continue to administer APTC reconciliation on individual tax returns. States would be required to comply with other parts of the ACA by granting exemption certifications, developing an electronic subsidy calculator, establishing a navigator program, and operating a consumer hotline.
CMS suggests that exchanges would still be responsible for conducting Medicaid and CHIP eligibility assessments or determinations and referring individuals to state Medicaid agencies. But if DE and EDE entities are the only enrollment mechanism, ensuring that eligible beneficiaries actually know they are eligible for Medicaid or CHIP could be challenging. One analysis suggested that Medicaid-eligible individuals faced additional barriers to enrolling when relying on a DE website.
States with an SBE could pursue this “SBE-DE” option beginning with the 2022 plan year while states with the FFE or SBE-FP could pursue an “FFE-DE” or “SBE-FP-DE” option beginning with the 2023 plan year. States with their own exchange would need to update their exchange blueprint and have at least one approved DE entity that meets federal DE requirements for the FFE. All states would have to coordinate with CMS on an implementation and transition plan and execute a federal agreement with terms and conditions. CMS makes clear that the implementation plan and timeline would be developed at its discretion in consultation with the state.
A Flawed Rationale?
CMS puts a tremendous amount of faith in the power of DE entities even though DE and EDE pathways have been allowed for years and still only account for one-third of all FFE enrollment. If these DE options were as attractive as CMS seems to believe they are, consumers would have already shopped with their feet and moved from HealthCare.gov to DE or EDE options. Though CMS previously touted the benefits of DE and EDE regarding enrolling new consumers, these pathways have also not increased overall exchange enrollment, which has remained flat since 2016. It is perplexing that CMS would let states fully eliminate HealthCare.gov (or another consumer-facing enrollment website) as an enrollment pathway when most consumers are enrolled that way. Doing so elevates DE entities—which already exist alongside HealthCare.gov—over HealthCare.gov, a trusted source of coverage for millions of Americans.
CMS’s faith appears to come from its belief that the Exchange DE option has several advantages over states establishing their own exchanges. CMS believes that SBEs are costly and burdensome to establish, result in “choke points” when too many consumers try to use the website at the same time, and face challenges in innovating. CMS also cites savings to the federal government (through reduced use of the HealthCare.gov website and call center) and the need to let consumers see “a broader array of plan options,” including on- and off-exchange plans as well as ancillary products.
Legal Questions
Although this issue warrants further consideration beyond this post, CMS may not have the authority to allow states to waive the exchange enrollment pathway. At a minimum, the proposal violates the spirit and intent of the ACA.
Sections 1311 and 1103 of the ACA could not be clearer that the Secretary must “continue to operate, maintain, and update the internet portal … and to assist states in developing and maintaining their own portal.” This internet portal must be established by the Secretary and serve as “a mechanism, including an internet website, through which a resident of, or small business in, any state may identify affordable health insurance coverage options in that state” and “receive information” on certain coverage options. Maintaining “an internet website through which enrollees and prospective enrollees of qualified health plans may obtain standardized comparative information on such plans” is a core, minimum function of the exchange, which is also statutorily required to “make available qualified health plans to qualified individuals and qualified employers.”
These statutory limits are precisely why Georgia applied for a Section 1332 waiver to accomplish this goal. In its approval of Georgia’s waiver less than one month ago, CMS explicitly waived Section 1311(b), (c), (d), (e), and (i) of the ACA. While it possible to waive these provisions under Section 1332, a waiver seems required since the Exchange DE option otherwise conflicts with statutory requirements that require the exchange to, at a minimum, make QHPs available to qualified enrollees. That subsection of the statute is even titled “offering of coverage.”
CMS acknowledges that it considered requiring states to submit a Section 1332 waiver request to pursue an Exchange DE option but did not do so, concluding instead that “there is no requirement” in the ACA that must be waived to allow a state to implement the DE option. CMS asserts this even though it quite literally just approved such a waiver and only did so after multiple public comment periods, many months of negotiation, and multiple application revisions.
CMS insists that the ACA does not require the federal government or states to operate an enrollment website. CMS takes the position that Section 1311(d)(4) of the ACA does not require an exchange to host a single, consumer-facing website to receive applications or support plan shopping and selection. This may be true of Section 1311(d)(4), which requires an exchange to maintain an internet website where consumers “may obtain standardized comparative information on such plans.” But this ignores the other provisions noted above. CMS suggests it can satisfy other ACA requirements by simply directing consumers to private DE entities.
Although CMS does not propose to formally revise the current definition of “exchanges,” it suggests that “exchanges” in the proposed rule collectively refers to SBEs, FFEs, SBE-FPs, and the new DE options (FFE-DEs, SBE-FP-DEs, and SBE-DEs). The current regulatory definition defines an exchange as a governmental agency or nonprofit entity that complies with federal ACA requirements and makes QHPs available to those who qualify.
Section 1332 Waivers
CMS and the Treasury Department propose to codify certain parts of the Trump administration’s guidance interpreting Section 1332 of the ACA. Section 1332 allows states, with federal approval, to waive certain ACA requirements if a state demonstrates that their proposal meets certain statutory procedural and substantive “guardrails.”
CMS and Treasury adopted prior regulations on procedural requirements under Section 1332 but interpreted the statute’s substantive guardrails in guidance only. Guidance was initially issued by the Obama administration in 2015 and then rescinded and replaced by the Trump administration in 2018. Despite CMS’s urging, only one state—Georgia—has been approved for a broad waiver under the 2018 guidance. Of the other 15 states with a Section 1332 waiver, all but one is for a reinsurance program.
Citing the need to give states certainty about the future of Section 1332 waivers, CMS and Treasury would incorporate the 2018 guidance into regulations. The proposed regulatory text makes clear that the Trump administration wants to incorporate its interpretation of Section 1332’s substantive guardrails. In the proposed section on “application procedures,” for instance, the rule would require states to submit analyses and data so federal officials could assess whether the proposal meets the substantive guardrails “consistent with the [2018 guidance].” Federal officials would also tie in the 2018 guidance to standards on monitoring and compliance and periodic evaluation. If the federal government approved a state’s waiver, the state would have to comply with “interpretive policy statements, as well as [the 2018 guidance], unless expressly waived.” And federal officials would have to evaluate waiver implementation consistent with the 2018 guidance and the approval’s terms and conditions.
These changes are unlikely to remain in place under a Biden administration which, in the absence of this new proposed rule, could have rescinded and replaced the 2018 guidance. If the 2022 payment rule is finalized as proposed, a Biden administration will likely need to use notice and comment rulemaking to undo these changes. One potential silver lining for the new administration? In doing so, it could codify its own interpretation of Section 1332’s procedural and substantive guardrails. (It is ironic that CMS is proposing to directly incorporate references to non-binding guidance at a time when HHS is actively trying to make it harder for the agency to issue future guidance.)
DE And EDE Standards
Definitional Changes
CMS continues to amend its definitions for DE entities and expand the scope of DE. As DE and enhanced direct enrollment (EDE) has evolved, the technical requirements and expertise needed to participate in DE have become substantially more complex, leaving DE entities increasingly reliant on tech companies to develop, host, manage, and customize technical DE platforms. Given this development, CMS wants to capture the full array of potential arrangements between tech companies and DE entities.
First, CMS proposes to adopt a new definition for a “QHP issuer DE technology provider.” Because the current definition does not reference QHP insurers, CMS wants to confirm that DE tech providers can assist QHP insurers with DE. The QHP DE tech provider would be a downstream or delegated entity of a QHP insurer. Thus, QHP DE tech providers would be subject to rules that apply to QHP insurers when performing activities on behalf of a QHP insurer.
CMS would also separately clarify its definition of DE tech provider to refer to “agent or broker DE technology providers.” And CMS would replace references in current regulations to “an agent or broker subject to § 155.200(c)(3)(i)” with “web-broker,” which is separately defined in regulations.
Delay In Compliance With Translation Requirements For EDE Websites.
CMS would provide QHP insurers with an EDE website with up to 12 months to comply with the requirement to translate website content into a language spoken by a limited English proficient (LEP) population that makes up 10 percent or more of the state’s total population. The 12-month period would be triggered by operation of the approved EDE website. This safe harbor also extends to any website content added to a QHP insurer’s website as a condition of participating in EDE. (CMS would not provide any additional time to comply with translation requirements for QHP website content that is not related to DE).
CMS believes that delaying translation requirements would somehow incentivize web-brokers and insurers to offer DE in markets with a high number of LEP individuals. The agency asks for comment on whether this flexibility would foster investment, impact access to coverage for LEP communities, or otherwise negatively impact consumer access to exchanges.
Note that the proposed change would not alter other accessibility requirements, including oral interpretation services, written translations, and tagline requirements. States that opt to use the Exchange DE option would not be able to delay compliance with the translation requirements. Website content on those sites would have to be translated as soon as the web-broker or QHP insurer began operating in that state.
Assisters Could Use Some DE And EDE Websites
CMS proposes allowing (but not requiring) assisters—navigators and certified application counselors—to use qualifying web-broker websites for DE and EDE to help consumers enroll in coverage. CMS had considered a similar policy in the 2020 payment notice but did not finalize this proposal. Because web-brokers can recommend specific products to clients, CMS previously concluded that assisters would be unable to use a web-broker website consistent with an assister’s duty to provide fair, accurate, and impartial information.
But now that CMS has imposed additional standards on web-brokers and EDE functionality has become more user-friendly, federal officials believe it is appropriate to authorize assisters to use web-broker websites. To be used by assisters, web-broker websites would have to display all QHP data provided by the exchange and could not display QHP recommendations based on compensation level from insurers. Web-brokers would also need a mechanism to capture information about assisters (i.e., the assister ID number) and then transmit that data to the exchange. Other web-broker standards for DE and EDE—such as a ban on misleading, coercive, or discriminatory marketing or conduct—would still apply. Assisters would still be prohibited from receiving consideration from an insurer, meaning assisters still could not receive compensation or a commission for enrollment assistance. States with SBEs could extend the same policy to their assisters or preserve the ban on assister use of web-broker websites.
CMS is considering use of an optional annual certification process during which a web-broker could attest to meeting these requirements and be certified by the exchange. This certification process could be integrated into the current web-broker registration process or occur during another time of the year.
New QHP Information Display Standards
In the meantime, CMS would give even more flexibility to web-brokers on the display of QHPs. Current rules require web-brokers to disclose and display all QHP information provided by the exchange or directly by QHP insurers. If not all QHP information is displayed, web-brokers must prominently display a standardized disclaimer that identifies those QHPs and refers consumers to the exchange.
CMS proposes an exception to these requirements: web-brokers would not be required to list as much information about a QHP that it cannot sell. If a web-broker does not support enrollment in a specific QHP (because, say, the broker does not have an agreement with that insurer to enroll consumers in its products), it could limit the display information for that QHP to the name of the insurer and the plan, the metal level, and premium and cost-sharing information. For that QHP, the web-broker would no longer have to display a summary of benefits and coverage, quality ratings, or other information. The web-broker would still have to refer consumers to the exchange website, but CMS intends to provide additional guidance on the disclaimer and solicits comment on how the disclaimer should be displayed.
Web-brokers that were to take advantage of this flexibility could not be used by assisters.
Separate Webpage Requirements
CMS proposes that DE entities that want to display and market QHPs and non-QHPs must do so on at least three separate webpages. DE entities would have to provide separate webpages for 1) on-exchange QHPs; 2) individual health insurance coverage offered outside the exchange (including off-exchange QHPs and non-QHPs); and 3) all other products (such as excepted benefits).
CMS believes this policy would help minimize consumer confusion while providing flexibility and opportunities for innovation. In the 2020 payment rule, CMS allowed DE entities to display QHPs and non-QHPs on the same webpage so long as it made clear that subsidies were only available for on-exchange QHPs. However, CMS notes that “even good faith efforts” by DE entities to inform consumers about the distinctions among QHP types can cause confusion and lead consumers not to select an on-exchange QHP even when they qualify for APTC.
CMS believes that the separate webpage requirement would provide a more precise delineation between these categories of products, which have substantially different characteristics. This may be helpful for subsidy-eligible consumers to the extent that they are enrolling through DE entities. But CMS would also allow DE entities to blur the lines between off-exchange QHPs and non-QHP individual health insurance coverage by allowing those products to all be sold on the same webpage. CMS believes this is important to enable comparison shopping among major medical products, especially for those with an individual coverage health reimbursement arrangement (HRA).
CMS also proposes two exceptions to its separate webpage requirement. First, DE entities could combine on-exchange QHPs, off-exchange QHPs, and other individual health insurance coverage options on the same webpage if a consumer indicates they have an offer of an individual coverage HRA. DE entities would still have to distinguish between the different product options and communicate that subsidies are only available for on-exchange QHPs (plus information about how an individual coverage HRA could affect subsidy eligibility). Second, DE entities could use the same webpage to display different types of stand-alone dental plans, whether exchange-certified or not. CMS wants to enable a consumer-friendly shopping experience with the full range of stand-alone dental plans on one webpage.
Operational Readiness Review Requirements
CMS would clarify operational readiness requirements for web-brokers and other DE entities. These provisions would codify existing program requirements that are already captured in guidance and agreements with DE entities. The operational readiness requirements for DE entities would be in addition to similar requirements for web-brokers. And the web-broker requirements would not be extended to QHP insurers who offer DE. Those insurers, CMS reasons, are subject to HIPAA and other federal and state requirements so do not need to satisfy the same requirements as web-brokers.
Special Enrollment Verification Requirements
CMS proposes that all exchanges must conduct eligibility verification for at least 75 percent of new enrollments through SEPs for consumers who were not already enrolled in exchange coverage. Exchanges would not have to verify eligibility for all SEPs but would have flexibility to decide which SEP types to verify and how to conduct that verification. Exchanges would have flexibility to propose alternative methods for conducting the required verifications and have until plan year 2024 to implement this requirement. CMS estimates that SBEs would incur one-time costs of about $108 million (over 2021 to 2023) in addition to ongoing annual costs to implement and operationalize SEP verification requirements. CMS asks for comment about the 75 percent threshold and whether it should be assessed based on prior years or current year SEP enrollments.
Premium Adjustment Percentage
The annual premium adjustment percentage is a measure of premium growth used to set the rate of increase for the maximum annual limit on cost-sharing, the required contribution percentage for exemption eligibility, and the employer mandate penalty amounts. The percentage must be determined by the Secretary of HHS on an annual basis.
Beginning with the 2015 plan year, CMS adopted a methodology that determined the premium adjustment percentage based on projections of average per enrollee employer-sponsored insurance premiums from the National Health Expenditure Account (NHEA). CMS used employer-sponsored premium data because it reflected health care cost trends without being skewed by individual market premium fluctuations.
CMS updated this methodology beginning with the 2020 plan year to additionally include increases in individual market premiums. The shift resulted in a higher premium adjustment percentage and thus a higher annual limit on out-of-pocket costs, a higher required contribution from subsidy-eligible consumers, and higher employer mandate penalties relative to 2019. Given concerns that the change raised costs for millions of consumers, Democratic members of Congress introduced legislation to reverse this change in the methodology, with bills pending in the Senate and the House.
CMS proposes to maintain the same methodology for the 2022 plan year. This results in a slightly higher premium adjustment percentage for 2022 of 1.4409174688, which is an increase of more than 6 percent over the premium adjustment percentage for 2021. As can be seen in the increases in the other parameters noted below, the inflated premium adjustment percentage would continue to impact premiums and out-of-pocket costs.
For the 2023 benefit year and beyond, CMS proposes to publish the premium adjustment percentage and payment parameters in annual guidance in January (unless CMS proposes changes to the methodology which would then be published through the rulemaking process). Stakeholders urged CMS to publish these parameters in guidance to help insurers develop products and rates without having to wait for the annual payment notice.
Maximum Annual Out-of-Pocket Limit On Cost-Sharing
The proposed maximum annual out-of-pocket limit on cost-sharing for 2022 is $9,100 for self-only coverage and $18,200 for other than self-only coverage. This is a 6.4 percent increase over 2021 (when the limits were $8,550 for self-only coverage and $17,100 for other than self-only coverage).
CMS also proposed cost-sharing reduction plan variations to ensure that these plans continue to meet their specific AV levels. As proposed, these amounts would be reduced by the cost-sharing reductions to a $3,000 cost-sharing limit for self-only coverage and a $6,000 cost-sharing limit for other than self-only coverage for individuals with incomes below 200 percent FPL, and to $7,250 and $14,500 cost-sharing limits for individuals and families, respectively, with incomes between 201 and 250 percent FPL. States could have requested state-specific datasets for use as the standard population to calculate actuarial value; no state submitted a dataset by the September 1, 2020 deadline.
Required Contribution Percentage
CMS proposes to set the required contribution percentage at 8.47 percent for 2022, a slight increase from 8.27 percent for 2021. The required contribution was used to assess whether an individual was exempt from the requirement to enroll in minimum essential coverage: if an individual had to pay more of their household income towards health insurance than the required contribution, they were exempt from the individual mandate. Now that the individual mandate penalty has been set to $0, this requirement is a less relevant but still used for determining whether individuals over the age of 30 qualify to enroll in a catastrophic plan.
User Fee For Federally Facilitated Exchange
CMS proposes to reduce its user fee for the 2022 plan year. The FFE would charge insurers a user fee of 2.25 percent (down from the current 3 percent) of total monthly premiums for 2021. In states with an SBE-FP, insurers would pay a slightly lower user fee of 1.75 percent (down from the current 2.5 percent) of total monthly premiums for 2022. These current user fee amounts were, themselves, a reduction from prior user fee levels beginning with the 2020 plan year; the FFE user fee was 3.5 percent for 2014 through 2019. CMS estimates that the reduced user fee (combined with transitions to SBE-FPs or SBEs) would result in savings to insurers of about $270 million in 2022 and about $400 million in 2023 (although some of those costs might still be borne by insurers if states elect to use the Exchange DE option).
To the extent that FFE or SBE-FP states adopt the proposed Exchange DE option, the user fee in those states would be 1.5 percent of total monthly premiums. This proposed user fee is lower because the exchange would no longer be providing consumer-facing enrollment-related activities (such as the call center and website). CMS solicits comment on whether this user fee rate should be lower or higher.
CMS also proposes to eliminate flexibility for the collection of state user fees. Under this policy, CMS would, based on a state’s request, collect an additional user fee from insurers on behalf of the SBE-FP. Those funds would be used to cover costs incurred by the state. CMS proposes eliminating this option following internal analysis that shows the process of collecting a state user fee and then remitting it to the state increases CMS’s operational burdens and costs. SBE-FPs can still ask that CMS collect the equivalent of the user fee from the state (rather than insurers) if the state prefers that mechanism.
CMS would also extend its current FFE user fee adjustment rules for contraceptive claims to SBE-FPs. As proposed, SBE-FP insurers would be eligible to have their user fee amounts adjusted to reflect the value of contraceptive claims that they reimburse to third-party administrators for contraceptive coverage.
Finally, CMS asks for comment on whether it should adopt alternatives to user fees altogether. CMS is interested in alternative revenue sources to ensure that exchanges can cover operating costs. CMS appears to be soliciting comment on this issue in response to one commenter on the 2021 payment notice. That commenter questioned the basis of the user fee and asserted that the exchanges offer no special benefit to insurers, meaning a user fee is not justified. CMS notes that exchanges provide special benefits in the form of regulatory and sales services but compares those services to those provided by agents and brokers. The preamble also includes an extended discussion about why user fees are unfair to unsubsidized consumers, taxpayers, and agents and brokers.
Verifying Eligibility For Job-Based Coverage
Consumers who are eligible to enroll in employer-sponsored coverage are generally not eligible for APTC unless the plan’s coverage is unaffordable or does not provide minimum value. Thus, when determining eligibility for APTC, exchanges must assess whether an applicant is enrolled in or eligible for qualifying employer-sponsored coverage. To verify this information, exchanges have historically used electronic verification data. If sufficient data does not exist, exchanges can select a random sample of applicants and then contact the enrollee’s employer to verify that they qualify for APTC and CSRs.
Consistent with prior rules, CMS remains concerned about low employer response rates and the burdens of a manual verification process. As such, CMS proposes not to take enforcement action against exchanges that fail to perform this random sampling process for plan years through 2022. CMS expects that this decision would save exchanges an estimated $113 million in 2022.
CMS conducted a study in 2019 to better understand the characteristics of the population with job-based coverage that meets minimum value and affordability standards, compare job-based coverage to exchange coverage, and identify incentives that might drive applicants to enroll in a QHP over their employer’s coverage. CMS is still evaluating the results of this study and will use it to inform any changes to the verification process that may be addressed in future rulemaking.
Oversight Requirements
CMS proposes to improve its oversight of QHP insurers by consolidating its audit authority regarding APTC, cost-sharing reductions (CSR), and user fees. The goal of these audits is to promote program integrity and ensure that insurers receive proper APTC and CSR amounts and pay proper user fee amounts. The proposed rule would provide more clarity around insurer obligations to comply with audits and authorize CMS to conduct compliance reviews of QHP insurers regarding APTC, CSR, and user fee standards. CMS would also impose consequences for failure to comply with an audit. The proposed rule more specifically outlines the rules and procedures that CMS and insurers would have to follow for audits and compliance reviews.
CMS would also create an enforcement framework for the APTC, CSRs, and user fee standards where an SBE or SBE-FP fails to substantially enforce those standards. SBEs and SBE-FPs have the primary enforcement authority over QHP insurers and ensuring compliance with APTC, CSR, and user fee standards. However, if the Secretary determined that an SBE or SBE-FP has failed to substantially enforce these requirements, CMS would step in to do so. This enforcement power includes the ability to impose civil monetary penalties for noncompliance with federal exchange requirements (including noncompliance regarding APTC, CSRs, and user fee standards); this authority exists regardless of whether the exchange is operated by the federal government or a state.
CMS does not expect to need to step in to enforce these requirements but wants to clarify its authority to do so. CMS seeks comment on this approach and ways to balance enforcement by SBEs and SBE-FPs while ensuring proper oversight of federal funds. CMS would also amend its rules regarding administrative appeals of civil monetary penalties. The proposed changes to the filing and hearing process would align with current practices for the Departmental Appeals Board.
Odds And Ends
Coverage Termination
CMS does not propose any changes to its rules on termination notices but includes further justification for the changes adopted in the 2021 payment rule. In the preamble to that rule, CMS had suggested that all commenters supported the proposal. But the agency inadvertently omitted two comments that opposed the proposal, citing consumer confusion and administrative costs. Recognizing that some insurers needed to build IT systems to implement this policy, CMS gave FFE insurers until February 1, 2021 to implement the new termination notice requirement. CMS is not amending its policy in response to the two comments but did note that complaints about terminations are one of the largest sources of its casework. CMS believes that more consistent communication about terminations will help address this issue.
Quality Rating System
CMS does not propose changes to the quality rating system methodology or QHP enrollee survey. However, CMS asks for comment on whether it should remove one or more levels of the quality rating system hierarchy and, if so, which level or levels (e.g., the composite level or the domain level). CMS suggests that a simplified hierarchy would be aligned with other CMS quality reporting programs and help ensure that the overall quality score is more reflective of the performance of individual survey and clinical quality measures. CMS also proposes to make the full QHP enrollee survey results publicly available in an annual public use file. That requirement would begin with the 2021 survey results and would be in addition to the quality rating system public use file that is already posted annually.
Payments From HRAs And QSEHRAs
QHP insurers must accept a variety of payment methods so individuals without a bank account or credit card can pay their premiums. Here, CMS proposes to require individual market QHP insurers to additionally accept payments on behalf of an enrollee from an individual coverage HRA or QSEHRA. This could include employee-initiated payments made through pre-paid debit cards or direct payments from an employer or other plan sponsor. QHP insurers would have to accept premium payment for an individual coverage HRA or QSEHRA when made using a method described in current regulations.
Issuer Reporting Inaccuracies
Under current rules, insurers must reconcile enrollment with the exchange at least once per month. While much of this data exchange is ongoing, CMS requires insurers to report payment errors and inaccuracies within 90 days. But CMS has learned that some data inaccuracies will not be identified until after the 90-day reporting window. Given this, CMS proposes to establish a process for insurers to report enrollment or payment data changes after the 90-day window for up to three years after the end of the relevant plan year. Insurers must still operate in good faith and their failure to identify an inaccuracy in a timely manner cannot be due to misconduct or negligence. These requirements would apply to all insurers who receive APTC, including those who offer coverage through SBEs and SBE-FPs.
Network Adequacy
CMS proposes to confirm that QHP insurers are not required to use a provider network but those that do must meet federal network adequacy standards. The regulations on network adequacy standards do not impose a certification requirement to the extent that a QHP does not use a provider network.
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The 2022 Proposed Payment Notice, Part 1: Exchange Provisions - Health Affairs
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