The Proposed 2020 Notice of Benefit and Payment Parameters: Summary and Implications for States

On January 17, 2019 the U.S. Department of Health & Human Services (HHS) released its annual draft rule governing core provisions of the Affordable Care Act (ACA), including the operation of the marketplaces, benefit standards for health plans, and premium stabilization programs. Referred to as the “Notice of Benefit and Payment Parameters” or NBPP, the regulation contains several policies with significant implications for state insurance laws and the state-based marketplaces. Comments on the rule are due February 19, 2019.

When No News is Good News: No Ban on Silver Loading or End to Auto Re-enrollment

Prior to the release of the proposed rule, administration officials indicated it could include policies that would significantly increase premiums and reduce enrollment in the ACA’s marketplaces. First, the administration signaled it may prohibit a practice called “silver loading,” in which state insurance regulators permit or require insurers to concentrate the premium increase associated with the termination of cost-sharing reduction payments onto silver-level plans offered through the marketplaces. Because the ACA’s premium tax credit is pegged to a benchmark silver level plan in each market, silver loading allowed subsidized consumers to draw down a larger tax credit, while protecting unsubsidized individuals from a premium hike. Banning the practice would result in premium increases for individual market enrollees. The proposed rule refrains from do so, at least for the 2020 plan year. However, HHS suggests it may prohibit silver loading in 2021, if Congress doesn’t act first.

State Action Needed?
None, although states may wish to comment on the effect a silver loading ban would have on their individual market consumers.

Second, HHS has – at least for now – decided not to end the automatic re-enrollment of eligible marketplace enrollees. Approximately 1.8 million federally facilitated marketplace (FFM) enrollees who did not actively dis-enroll or switch plans were automatically renewed into coverage, with premium subsidies if eligible, for the 2019 plan year. If the FFM discontinued auto-renewal, many of these individuals could become uninsured or experience an unexpected gap in coverage. In lieu of discontinuing auto re-enrollment, HHS is asking for comments on processes or policies to implement in 2021 that would reduce eligibility errors and potential government “misspending” with respect to people who are auto re-enrolled. It is not clear whether state-based marketplaces (SBMs) would be given flexibility over auto re-enrollment if the practice is ended or modified in the FFM.

State Action Needed?
None, although states may wish to comment on the effect terminating auto re-enrollment will have on their individual market consumers.

Technical Change, Big Impact: Calculation of the ACA’s ‘Premium Adjustment Factor’

HHS is proposing to change the formula for determining the ACA’s premium adjustment factor. This is the factor that HHS uses to determine the annual adjustment in the amount subsidized marketplace enrollees contribute to plan premiums, the cap on annual out-of-pocket spending, the amount insurers pay via the health insurance tax, and the fine for employers who fail to offer affordable coverage to their employees. HHS estimates the proposed change in formula will result in net premium increases of over $180 million per year and a decline of approximately 100,000 marketplace enrollees in 2020. Those with high cost health conditions or injuries could face an additional $400 in out of pocket spending next year. The premium increases will affect subsidized enrollees in both FFM and SBM states, while the increase in annual out-of-pocket spending will apply not just to marketplace enrollees but those with employer-based coverage as well.

State Action Needed?
None, although states may wish to comment on the effect of higher premiums and cost-sharing on their residents.

Benefit Design Issues: New Deadlines, Encouraging Generic Use, Opioid Use Treatment, Abortion Services

EHB Benchmark Plan Selection: New Deadline

In its 2019 NBPP, HHS gave states new flexibility to select the benchmark plan that determines the scope of essential health benefits (EHB) covered by individual and small-group market insurers. States were also given new flexibility to allow insurers to substitute benefits between the ACA’s ten prescribed benefit categories. Last year, states were required to submit their new benchmark plan selection or decision to allow cross-category substitution to HHS by July 2, 2018 in order to be effective in 2020. HHS is proposing to move that deadline up to May 6, 2019 for a 2021 effective date and by May 8, 2020 for a 2022 effective date.

State Action Needed?
States considering a change to their benchmark selection for 2021 will need to accelerate their decision-making process. The requirement that states engage in a “reasonable” public notice and comment period remains.

Encouraging the Use of Generic Drugs

HHS is proposing three strategies to encourage enrollees to switch from brand name to generic prescription drugs. These include:

Allowing mid-year formulary changes

If a generic version of a brand name drug becomes available, HHS proposes to allow insurers to drop the brand name drug from their formularies or to move it to a higher cost-sharing tier. HHS is proposing that insurers provide enrollees with at least 60 days’ notice of the formulary change, and asks for comment on whether a 90- or 120-day notice period would be more appropriate.

State Action Needed?
States should review their insurance code to determine whether it limits or prohibits mid-year formulary changes. This federal proposal will not preempt such state laws.

Allowing brand name drugs to be excluded from EHB

If an insurer covers both a brand name drug and its generic equivalent, HHS proposes to allow the insurer to exclude the brand name product from EHB. Plans could then subject such brand name drugs to annual or lifetime dollar limits, and patients’ cost-sharing towards these drugs would not count towards their annual cap on out-of-pocket spending. Insurers would still be required to allow patients to seek exceptions if only the brand name product is medically appropriate. HHS asks for comment on whether this policy should preempt any state laws that could conflict with its application. They further seek comment on whether an insurer’s decision regarding the exclusion of a drug from EHB should be considered an adverse benefit determination that would trigger an enrollee’s right to appeal.

State Action Needed?
States should review their insurance code to determine whether it limits or prohibits insurers from excluding a brand name drug from EHB. States may wish to comment on whether the federal rule should preempt state law in this area.

Discouraging the use of manufacturers’ drug coupons

HHS is proposing that if a generic equivalent is available and a consumer uses a manufacturer’s coupon to cover the copayment or coinsurance towards a brand name drug, the insurer would not be required to count that cost-sharing towards the consumer’s annual cap on out-of-pocket spending.

State Action Needed?
States should review their insurance code to determine whether it would prevent the application of this policy. Further, HHS is seeking comment on whether this policy should preempt state law on how drug coupons are treated.

Coverage of Medication Assisted Treatment for Opioid Use Disorder

The proposed rule encourages, but does not require, insurers to cover medication assisted treatment (MAT) for opioid use disorder. However, HHS notes that if a plan excludes MAT for opioid use treatment, but covers it for other medically necessary purposes, the insurer must justify the exclusion and explain how the benefit design is not discriminatory under the ACA’s non-discrimination rules.

State Action Needed?
States may need to publish new instructions or guidance to insurers about the coverage of MAT and how the department of insurance will review plans under the ACA’s non-discrimination rules.

Coverage of Abortion Services

HHS proposes to require insurers that cover abortion services in marketplace health plans to offer “mirrored” plans that do not cover such services.

State Action Needed?
States may wish to review their statutes to determine whether their law would prevent the application of this policy; HHS’ proposal would not preempt state requirements for insurers to cover abortion services. Departments of insurance may need to publish new guidance or instructions to insurers and prepare for a potential increase in the number of plans subject to pre-market review.

Lowering the Marketplace User Fee

HHS proposes to reduce the assessment on insurers for the operation of the marketplaces from 3.5 to 3.0 percent for the FFM and from 3.0 to 2.5 percent for the SBMs that use the federal IT platform

State Action Needed?
SBMs that have pegged their user fee assessments to the federal assessment level may need to change their budget forecasting or determine ways to make up lost revenue. SBMs operating on the federal platform may also need to adjust their budgets to reflect the lower assessments.

Navigator Program Changes

In light of recent cuts in the Navigator programs operating in FFM states, HHS proposes to eliminate the requirement that Navigators provide consumers with post-enrollment assistance. HHS further proposes to “streamline” Navigator training materials by consolidating the 20 existing training topics to four broad categories. Lastly, HHS seeks to encourage Navigators and other assisters to enroll clients through web-brokers that meet certain standards. Web brokers that want to work with assisters would need to receive a certification from HHS that they meet these standards, which include: (1) displaying all of the plan data they receive from the marketplace; and (2) identifying for assisters those plans for whom the web broker does not facilitate enrollment and providing a link to the marketplace for consumers who want to enroll in those plans. HHS acknowledges that such web brokers would still be permitted to use preferential displays to make implicit plan recommendations, and seeks comment on whether web brokers, when used by assisters, should be prohibited from making plan recommendations or reflecting a preference.

State Action Needed?
SBMs retain flexibility to determine Navigator duties and training materials and may prohibit assisters from using web brokers for marketplace eligibility determinations and enrollment. SBMs may also permit assisters to use web broker sites, so long as they meet the standards outlined by HHS.

New Special Enrollment Period Opportunity

HHS proposes to provide a new special enrollment period (SEP) opportunity for individuals enrolled in off-marketplace individual market coverage who become eligible for the ACA’s premium tax credits due to reduced income. Previously only those already enrolled in a marketplace plan or in employer-sponsored coverage would qualify for such a SEP. Eligible individuals would have a 60-day window to enroll in a marketplace plan and would have to provide proof of their change in income and prior coverage status.

State Action Needed?
This SEP may be implemented at the discretion of the SBMs. Those wishing to adopt this SEP will need to implement operational and IT changes.

Encouraging Enrollment through Web Brokers Instead of

HHS is continuing its efforts to promote the use of private web brokers instead of the official government website ( for FFM enrollment. Previous HHS guidance and operational changes have allowed consumers to receive a determination of eligibility for premium subsidies and enroll in a marketplace plan through approved web brokers. The proposed rule would formalize the definition and role of “web brokers” in federal regulations, and delineates certain standards that web brokers wishing to facilitate marketplace enrollments must meet. For example, HHS proposes prohibiting web brokers from displaying recommendations for plans based on the compensation they receive from insurers. However, at the same time HHS acknowledges that web brokers could implicitly make recommendations based on the way plans are displayed on their sites.

State Action Needed?
HHS oversight of web brokers requires coordination with state insurance regulators, such as an exchange of information on an agent or broker’s licensed status. SBMs may choose not to use web brokers for marketplace enrollment.

The ACA’s Risk Adjustment Program – State Issues

State Flexibility over Payment Transfers

HHS runs the ACA’s risk adjustment program, which provides that insurers that enroll a relatively larger share of high-risk enrollees receive payments from insurers with a relatively low share of high-risk enrollees. However, in the 2019 NBPP, HHS allowed states to request an up to 50 percent reduction in risk adjustment payment transfers. To date, Alabama is the only state to have requested an adjustment, for its small-group market. States seeking one in the future must apply by August 1, 2019 in order for the reduction to be implemented in the 2021 calendar year. HHS is further proposing that states can request certain trade secret or confidential commercial information in the application to be kept out of the public domain and not subject to Freedom of Information Act (FOIA) requests.

State Action Needed?
States must apply for risk adjustment transfer adjustments by August 1 of the year two calendar years prior to the adjustment going into effect. States may request that certain materials in the application be kept confidential.

This blog was originally posted on the CHIRBlog