Inside CMS' final rule for 2020 exchange plans

CMS on Thursday released its final Notice of Benefit and Payment Parameters for the 2020 coverage year, which sets rules for health plans sold through the Affordable Care Act's (ACA) exchanges.

Final rule details

While the 401-page final rule includes some routine updates for exchange plans, it also includes some changes that could affect enrollees, according to Modern Healthcare.

CMS alters formula to reduce premium assistance

For example, CMS finalized changes to how it calculates premium assistance for lower-income enrollees. Currently, CMS bases the annual premium adjustment percentage—which is used to calculate cost-sharing limits, required contribution limits, and affordability exemptions, among other things—on premiums for employer-sponsored health plans. But the agency under the final rule will base the calculations on a blend of individual market and employer-sponsored plan premiums for the 2020 coverage year. CMS under the final rule set the required contribution percentage for 2020 to 8.24%, representing a 0.07 percentage-point decrease from about 8.3% in 2019.

CMS projected the change would lower the total amount of financial assistance provided by $900 million, when compared with 2019, and result in 100,000 fewer exchange enrollees in 2020. CMS said the change would help offset the spikes in federal subsidies that occurred after the Trump administration halted cost-sharing reduction payments to insurers, and insurers in turn began a practice known as "silver-loading" to stem the effects of steep premium increases. It was widely rumored that CMS was considering banning silver-loading for the 2020 coverage, but the final rule did not finalize any changes related to the practice.

CMS finalizes changes to encourage generic drug use

CMS under the final rule will allow exchange insurers to make mid-year changes to their plans' drug formularies. The change is intended to incentivize the use of generic drugs, CMS said. When consistent with state law, the rule permits plans to implement cost-sharing requirements if enrollees choose a brand-name drug when a medically appropriate generic version of the drug is available. Insurers could implement the cost-sharing requirements even if the enrollee already has reached the plan's out-of-pocket spending maximum.

The final rule also will allow exchange insurers to implement so-called copayment accumulator programs, which allow insurers to exempt drug manufacturer coupons for brand-name drugs from counting toward enrollees' annual out-of-pocket maximums if the enrollee chooses a brand-name drug over an available generic version. CMS said the change aims to promote the use of generic drugs.

Other changes for 2020 coverage year

In addition, CMS under the final rule will lower user fees for the 2020 coverage year by half a percentage point, from 3.5% to 3%, for insurers participating in the federal exchange, and from 3% to 2.5% for insurers participating in state-run exchanges that rely on the federal exchange for enrollment. CMS said the reduction in user fees will allow insurers to lower exchange plan premiums.

CMS for the 2020 coverage year also will:

  • Change the ACA's risk-adjustment program to improve the process for validating the accuracy of diagnosis codes and prescription drug data;
  • Consolidate training topics for ACA navigators and allow navigators to have duties that are "permissible, but not required" after the ACA's annual open enrollment period ends;
  • Establish a special enrollment period for U.S. residents who become newly eligible for ACA subsidies outside of the regular open enrollment period;
  • Have greater authority to remove insurance agents, brokers, and web-brokers that violate exchange market requirements;
  • Increase maximum out-of-pocket spending limits by 3.2%, from $7,900 to $8,150 for individual plans and from $15,800 to $16,300 for family plans;
  • Lower risk-adjustment transfers in Alabama's small-group market by 50% for the 2020 coverage year; and
  • Streamline Enhanced Direct Enrollment, which took effect during the last open enrollment period and allows CMS to collaborate with approved insurance agents and brokers to enroll consumers in exchange coverage without being redirected to HealthCare.gov.

CMS did not finalize proposals to increase the sample size the agency uses for risk-adjustment data audits and to require exchange insurers offering health plans with coverage for abortion care to also offer an identical policy without the abortion care coverage. The agency also did not finalize any changes to its re-enrollment process for exchange plans.

How insurers can apply for the 2020 coverage year

CMS in a letter accompanying the final rule included an outline of application deadlines for qualified health plans (QHPs) interested in participating in the exchanges. The application cycle under the calendar would begin on April 25 and end on June 19. QHPs have until Aug. 21 to change an application, and CMS will send contracts to QHPs in early October (Owens, "Vitals," Axios, 4/19; Livingston, Modern Healthcare, 4/18; Morse, Healthcare Finance News, 4/18; CMS release, 4/18; CMS fact sheet, 4/18).

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The Patient Protection and Affordable Care Act, otherwise known as the ACA, is the comprehensive health care reform bill passed by Congress in March, 2010. The law reshapes the way health care is delivered and financed by transitioning providers from a volume-based fee-for-service system toward value-based care.

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