On April 17, 2023, the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) issued the final Notice of Benefit and Payment Parameters for 2024. See the Press Release here and the Fact Sheet here. In a statement, HHS Secretary Becerra said that “[t]he Biden-Harris Administration has worked tirelessly to expand access to health insurance and lower health care costs for America’s families. Today’s announcement of the 2024 Notice of Benefit and Payment Parameters Final Rule is a step forward toward creating a health care system which prioritizes equity, access, and affordability.”

This rule makes the following changes:

• Strengthens network adequacy standards by requiring an adequate provider network that meets essential community provider (ECP) standards,
• Establishes two additional ECP categories,
• Sets standardized plan options for certain metal levels,
• Continues using four tiers of prescription drug cost sharing with no changes to generic and brand name tiering,
• Recalibrates 2024 benefit year risk adjustment models,
• Decreases its user fee for insurers to use the Federal platform,
• Establishes an Improper Payment Pre-Testing and Assessment (IPPTA) program,
• Changes agent, broker, and web-broker practices, and
• Receives feedback on a request for information on a potential payment hierarchical condition category (HCC) for gender dysphoria in HHS-operated risk adjustment models for future benefit years.

CMS FINALIZES POLICIES TO STRENGTHEN NETWORK ADEQUACY STANDARDS

Provisions in the Patient Protection and Affordable Care Act (ACA) directed HHS to establish criteria for the certification of health plans as qualified health plans (QHPs), including the requirement that QHPs must “ensure a sufficient choice of providers.”[1] Currently, an issuer of a QHP using a provider network must provide a network with sufficient numbers and types of providers, including mental health and substance use disorder providers.

In this rule, CMS finalized a number of changes to strengthen network adequacy and essential community provider (ECP) standards. ECPs include providers that primarily serve low-income and medically underserved individuals.[2]

Specifically, CMS will require, across all Exchanges, all individual market QHPs and stand-alone dental plans (SADPs), and Small Business Health Options Program (SHOP) plans to use a network adequacy-compliant provider network that meets ECP standards. The majority of commenters supported CMS’ network adequacy proposals, noting their consistency with statutory requirements in the ACA and that it would allow prospective enrollees to more easily compare QHPs. Commenters echoed CMS’ belief that these policies would expand access to care and consumer choice. CMS also finalized its proposal to remove existing exceptions for plans that do not use a provider network, except for a limited exception for certain SADP issuers.

CMS further finalized its proposal to require QHP issuers to send payment delinquency notices promptly and without undue delay. CMS also finalized its proposal to revise the final deadline to report data inaccuracies to be within three years of the end of the applicable plan year related to the inaccuracy in order to be eligible for certain payment adjustments.

For plan year 2024, CMS further finalized its proposals to establish two additional stand-alone ECP categories to facilitate expanded access for low-income and medically underserved consumers. These ECP categories include Mental Health Facilities and Substance Use Disorder (SUD) Treatment Centers. The majority of commenters supported the creation of Mental Health Facilities and SUD Treatment Centers as standalone categories in order to expand access to mental health services and SUD treatment.

CMS will also retain the existing 35 percent provider participation threshold and extend this threshold to Federally Qualified Health Centers (FQHCs) and Family Planning Provider ECP categories.

CMS MAKES CHANGES TO STANDARDIZED PLAN OPTIONS

In this rule, CMS finalizes several updates with respect to standardized plan options. Previously, for plan year 2023, CMS had finalized changes requiring issuers in the Federally-facilitated Exchanges (FFEs) and State-based Exchanges on the Federal platform (SBE-FPs) to offer standardized plan options at every product network type, metal level, and in every service area that offers non-standardized plan options in PY 2023. In this rule, CMS revises its requirements for Plan Year (PY) 2024 and subsequent PYs and will require issuers offering QHPs through the FFEs and SBE-FP 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 will no longer include a standardized plan option for the non-expanded bronze metal level.

In addition, as a condition of QHP certification, CMS will also restrict the amount of non-standardized plan options that issuers of QHPs can offer through Marketplaces on the Federal platform (including SBE-FPs) to four non-standardized plan options per product network type, metal level (excluding catastrophic plans), and inclusion of dental and/or vision benefit coverage, in any service area, for PY 2024 and two for PY 2025 and subsequent plan years. CMS notes the change is aimed at addressing increasing plan proliferation which can result in plan choice overload, suboptimal plan selection, and financial harm for consumers. CMS anticipates that these changes will result in reductions in the weighted average number of total plans (which includes both standardized and non-standardized plan options) available to each consumer from approximately 113.7 in PY 2023 to 90.5 in PY 2024. CMS will permit (for both PY 2024 and PY 2025), CMS will permit additional flexibility specifically for plans with additional dental and/or vision benefit coverage. In the final rule, CMS clarifies the specific dental and/or vision benefit coverage a non-standardized plan option would need to include in order to qualify for this additional flexibility. CMS also notes that this requirement will not apply to issuers in State-based Marketplaces (SBMs) or to plans offered through the SHOPs or to SADPs. As CMS is limiting the number of non-standardized plan options, the agency is not finalizing a meaningful difference standard since it believes that the new limit would be a more effective and straightforward approach to addressing plan proliferation.

In addition, CMS will continue displaying standardized plan options on HealthCare.gov. The Agency will also continue to enforce display requirements for approved web-brokers and QHP issuers who use a direct enrollment pathway to facilitate enrollment through an FFE or SBE-FP.

CMS CONTINUES USING FOUR TIERS OF PRESCRIPTION DRUG COST SHARING WITH NO CHANGES TO GENERIC AND BRAND NAME TIERING

Consistent with the Agency’s approach to plan designs in the 2023 Payment Notice, CMS will continue using four tiers of prescription drug cost sharing, including generic, preferred brand, non-preferred brand, and specialty drugs. CMS believes this will help to inform consumer decision-making by permitting more accessible comparisons between plans.

Given comments voicing concerns regarding the need for plan issuer flexibility in designing formularies to manage increasing costs, the changing nature of the relative costs of generic and brand name drugs, and the potential risk of decreased medication adherence from tiering changes, CMS is not finalizing its proposal that issuers of standardized plan options must:

• 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
• Place all covered brand name drugs in either the standardized plan options’ preferred brand or non-preferred brand drug cost-sharing tiers, or the specialty drug cost-sharing tier if there is an appropriate and non-discriminatory basis.

CMS plans to further investigate the potential impact of this proposal before implementing in future rulemaking.

CMS DECREASES FFM AND SBM-FP USER FEES

CMS decreases its user fee for insurers to use the Federal platform in 2024 from 2023:

• FFE – user fee of 2.2 percent of total monthly premiums (this is a decrease from 2.75 percent in 2023); and
• SBE-FP- user fee of 1.8 percent of total monthly premiums based on the portion of FFE user fee-eligible costs allocated to SBE-FP activities (this is a decrease from 2.25 percent in 2023).

CMS anticipates these user fee rate decreases may exert downward pressure on insurance premiums for consumers.

Consistent with the policy finalized in Part 2 of the 2022 Payment Notice, HHS will issue the 2024 benefit year premium adjustment percentage index and related payment parameters in separate guidance.

CMS RECALIBRATES RISK ADJUSTMENT MODELS

The risk adjustment program, included in the ACA, is a stabilization program which transfers funds from lower-risk to higher-risk plans, to balance out plans with healthier populations versus more costly populations. Risk scores are used to predict plan liability for the average enrollee in a plan, and are based off each enrollee’s age, sex, and diagnoses or HCC. There are different models for children, adults, and infants.

In response to stakeholder feedback, CMS finalizes its proposal with modification to recalibrate the 2024 benefit year risk adjustment models using 2018, 2019 and 2020 enrollee-level External Data Gathering Environment (EDGE) data, with no exceptions. In the proposed rule, CMS proposed to blend only 2018 and 2019 enrollee-level EDGE but exclude 2020 enrollee-level EDGE data for adult models’ age-sex coefficients.

CMS also finalizes several changes to the HHS Risk Adjustment Data Validation (HHS-RADV) in the goal to better align the timely calculation and application of error rates with the intent of the program. The RADV process validates data collected from insurers to ensure that risk adjustment transfers are accurate.

Effective for the 2021 benefit year and thereafter, CMS finalizes its proposal to no longer exempt existing issuers from risk score and risk adjustment transfer adjustments when deemed as negative error rate outliers in the HHS-RADV results for the applicable benefit year. Detailed information about finalized 2024 benefit year risk adjustment model factors can be found in Tables 1 through 6 of the final rule.

CMS Continues Cost-Sharing Reduction Adjustments in All 50 States and the District of Columbia

For the 2024 Benefit Year, CMS finalizes its proposal to continue including cost-sharing reductions (CSRs) in risk adjustment models. This would apply in all 50 States and the District of Columbia. CMS also finalizes its proposal to maintain CSR adjustment factors previously adopted in the 2019, 2020, 2021, 2022 and 2023 Payment Notices.[3] See Table 1 below for finalized CSR adjustment factors.

Table 1. Final Cost-Sharing Reduction Adjustment Factors for the 2024 Benefit Year[4]

Household Income	Plan Actuarial Value	Adjustment Factor
Silver Plan Variant Recipients
100-150% of Federal Poverty Line (FPL)	Plan Variation 94%	1.12
150-200% of FPL	Plan Variation 87%	1.12
200-250% of FPL	Plan Variation 73%	1.00
>250% of FPL	Standard plan 70%	1.00
Zero Cost Sharing Recipients
<300% of FPL	Platinum (90%)	1.00
<300% of FPL	Gold (80%)	1.07
<300% of FPL	Silver (70%)	1.12
<300% of FPL	Bronze (60%)	1.15
Limited Cost Sharing Recipients
>300% of FPL	Platinum (90%)	1.0
>300% of FPL	Gold (80%)	1.07
>300% of FPL	Silver (70%)	1.12
>300% of FPL	Bronze (60%)	1.15

Further, CMS finalizes its proposal to continue using a CSR adjustment factor of 1.12 for all Massachusetts wrap-around plans in the calculation of the risk adjustment plan liability risk score.

CMS Continues Market Pricing Adjustment for Hepatitis C Drugs

CMS finalizes its proposal to continue applying a Hepatitis C drug market pricing adjustment to plan liability in risk adjusted models in the 2024 benefit year. CMS believes this will address the need to account for new and generic Hepatitis C significant drug pricing changes.

CMS Repeals State Flexibilities to Request Reductions of Risk Adjustment State Transfers

For the 2025 Benefit Year, CMS finalizes its proposal to prohibit states from requesting a reduction in risk adjustment state transfers, a flexibility provided in the 2019 payment rule. This means that no state may request a risk adjustment transfer reduction under the State payment transfer formula as calculated by HHS effective for the 2025 benefit year.[5] CMS restricted this flexibility to only prior participants with more limited options for the 2024 benefit year. CMS also approves Alabama’s request to reduce risk adjustment state transfers in individual and small group markets by 50 percent for the 2024 benefit year.

CMS FINALIZES IMPROPER PAYMENT PRE-TESTING AND ASSESSMENT (IPPTA) PROGRAM

In order to bolster program integrity, CMS finalizes its proposal to establish the Improper Payment Pre-Testing and Assessment (IPPTA) program to measure improper payment of advance payments of the premium tax credit (APTC). Under the program, State-based Exchanges (SBEs) will be required to participate in pre-audit activities that will prepare them for complying with audit requirements.[6] The IPPTA will prepare SBEs for the planned measurement of improper payments of APTC, test processes, and procedures that support CMS review of determinations of APTC made by SBEs, and provide a mechanism for CMS and SBEs to share information to aid in developing an efficient measurement process. The pre-testing and assessment period for each IPPTA group will be two years, beginning in either 2024 or 2025. CMS extended the pre-testing and assessment period from one calendar year as proposed to two calendar years in response to comments regarding burden and resources.

NEW MANDATES FOR MARKETPLACE AGENTS, BROKERS, AND WEB-BROKERS

In the final rule, CMS issues new mandates for marketplace agents, brokers, and web-brokers. These mandates include requiring agents, brokers, and web-brokers to document that eligibility application information has been reviewed and confirmed for accuracy by the consumer or their authorized representative before submitting eligibility applications through the FFEs and SBE-FPs. The same requirement applies to agents, brokers, and web-brokers assisting an individual with applying for advance payments of the APTC and CSRs for qualified health plans. The documentation must be kept by these parties for at least ten years and be produced upon request in response to monitoring, audit, and enforcement activities.

Documentation must include:

• the date the information was reviewed,
• the name of the consumer or their authorized representative,
• an explanation of the attestations at the end of the eligibility application, and
• the name of the assisting agent, broker, or web-broker.

Additionally, CMS finalizes its proposal to allow the HHS additional time to review evidence submitted by agents, brokers, or web-brokers to rebut allegations that led to the suspension or termination of their Marketplace agreement(s) or to request reconsideration of termination of their Marketplace agreement(s). HHS will have additional review windows of up to 45 and 60 calendar days for suspension and termination cases, respectively. These extended review periods are aimed at facilitating the review process which can involve parsing complex technical information and data, revisiting consumer complaints, and conducting outreach to consumers.

REQUEST FOR INFORMATION

In the proposed rule, CMS solicited comment on whether a payment HCC for gender dysphoria should be added to HHS-operated risk adjustment models in future benefit years. Specifically, CMS sought feedback on several questions:

• The implications of using the changing clinical concepts and labels from the ICD-10-CM diagnosis of “gender identity disorder” compared to the draft ICD-11-CM diagnosis of “gender incongruence” for the naming and inclusion of this diagnosis or payment HCC in the HHS risk adjustment models,
• Whether a gender dysphoria HCC should be a separate and standalone payment HCC, or if gender dysphoria could be combined with any other diagnoses to form a broader payment HCC, and
• Any other factors HHS should consider when determining whether to add a gender dysphoria HCC to the HHS risk adjustment models as a payment HCC.

CMS noted it would consider comments received for future rulemaking.

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This Applied Policy® Summary was prepared by Stephanie Lomas with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at slomas@appliedpolicy.com or at (202) 558-5272.

[1] See 1311(c)(1)(B) of the ACA. Pub. L. 111–148.

[2] These providers are described section 340B(a)(4) of the Public Health Service Act and section 1927(c)(1)(D)(i)(IV) of the Social Security Act (the Act).

[3] See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR 29190; 86 FR 24181; and 87 FR 27235 through 27236.

[4] See Table 7 in the final rule.

[5] “The State payment transfer formula refers to the part of the HHS risk adjustment methodology that calculates payments and charges at the State market risk pool level prior to the calculation of the high-cost risk pool payment and charge terms that apply beginning with the 2018 BY.” See page 36 of the unpublished rule.

[6] Audits are required under the Payment Integrity Information Act of 2019 (PIIA), which requires Federal agencies to annually identify, review, measure, and report on the programs they administer that are considered susceptible to significant improper payments. CMS has determined that APTC are susceptible to significant improper payments and are subject to additional oversight.