Electronic Health Reporter

The Centers for Medicare & Medicaid Services (CMS) released the final annual Notice of Benefit and Payment Parameters for the 2020 benefit year, also known as the 2020 Payment Notice.  The rule reduces user fees for plans offered on HealthCare.gov, and encourages the use of lower-cost generic drugs, while improving market stability and consumer choice.

“The rule issued today will give consumers immediate premium relief for 2020 by reducing the federal Exchange user fees thanks to successful efforts to improve the efficiency of the Exchange,” said CMS Administrator Seema Verma. “At CMS we have improved the operations of the Exchange to deliver a better consumer experience at a lower cost.”

Generally, Exchange user fees are passed directly on to the consumer in the form of higher premiums, and this reduction in the user fee allows issuers to pass along savings to consumers in 2020.  The 0.5 percent reduction in the user fee rate comes as a result of CMS’ focus on reducing costs through increased operational efficiency, including successful efforts to upgrade IT functionality, a more efficient approach to outreach, and investments focused on proven methods to achieve a seamless enrollment experience and high consumer satisfaction.

This follows the first ever 1.5 percent drop in average premiums for plans selected through HealthCare.gov for the 2019 coverage year. With consumers facing rising premiums and limited choice in their health coverage leading up to 2017, the Trump Administration introduced a series of actions to encourage competition and bring down the price of healthcare for people in the individual market.  The final 2020 Payment Notice builds on these prior actions to further strengthen America’s health insurance markets.

Building on the President’s American Patients First blueprint, the final rule also supports lower premiums by promoting the use of lower-cost generic drugs.  Drug companies can offer consumers coupons to incentivize them to purchase the company’s brand name drugs even when an appropriate, less-expensive generic medication is available.  This rule allows issuers to stop applying the value of these coupons towards an enrollee’s maximum-out-of-pocket costs in situations where a generic medication is available and medically appropriate, in order to encourage generic use and result in lower drug spending.

To improve market stability, a key element of this final rule refines the risk adjustment program to improve the accuracy of the data used to calculate the program’s charges and payments to issuers.  This program is designed to reduce incentives for insurers to avoid enrolling people with expensive health conditions.  The rule finalizes several proposals regarding the validation of the accuracy of the diagnosis codes, prescription drug data and codifies a number of exemptions to lessen burden on small issuers.

This rule also aims to increase the choices available to consumers for trusted enrollment pathways.  Last fall CMS successfully launched Enhanced Direct Enrollment (EDE), which allows consumers to shop for and enroll in the Exchange plan of their choice through an approved partner website.  In regards to enrollment, the final rule streamlines and updates regulations to accommodate future innovation and improve the consumer experience.

The EDE pathway allows CMS to partner with the private sector to provide a more user-friendly and seamless enrollment experience for consumers by allowing them to apply for, and enroll in, an Exchange plan directly through an approved issuer or web-broker without the need to be redirected to HealthCare.gov. In recognition of the new pathway, the final rule increases transparency as well as the privacy and security of consumer data by allowing CMS to require web-brokers to provide lists of the agents and brokers who use their websites.

The rule also enhances consumer protections and improves program integrity by allowing CMS to more easily suspend or terminate agents, brokers and web-brokers that violate applicable Marketplace requirements. As EDE continues to expand, to guarantee consumers continue to receive a high level of service, being able to more easily suspend or terminate agents, brokers and web-brokers that violate rules will better enable CMS to ensure agent/broker and web-broker compliance, respond to cases of noncompliance, and to protect sensitive Exchange data and systems.

Further, the rule finalizes a technical change to the premium index for the 2020 benefit year in order to better align our premium adjustment percentage methodology with the experience of the individual markets and premiums overall. Under the new methodology, CMS would use the CMS Office of the Actuary (OACT) estimates of projected health insurance premiums for both the private individual and group market (excluding expenditures for Medigap and property and casualty insurance). This change would replace the current methodology which utilizes only employer-sponsored group market insurance (ESI) premiums, which do not reflect the situation of the individual market premiums. This technical change in the premium adjustment percentage methodology will provide a more comprehensive and accurate measure of private market premiums.

Today, CMS also issued the Final 2020 Letter to Issuers in the FFE which provides guidance to issuers that want to offer Qualified Health Plans (QHPs) on the FFE, as well as the Key Dates Charts for the 2019 Calendar Year.

To view the Final Rule, click here: https://www.federalregister.gov/documents/2019/04/25/2019-08017/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2020

To view a Fact Sheet about this rule, click here: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/CMS-9926-F-Fact-Sheet.pdf

To view the Final 2020 Letter to Issuers, click here: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2020-Letter-to-Issuers-in-the-Federally-facilitated-Exchanges.pdf

To view the Key Dates Charts for the 2019 Calendar Year, click here: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/FInal-Key-Dates-Table-for-CY2019.pdf