Proposed Rule2022-27206
Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2024
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 21, 2022
Issuing agencies
Health and Human Services Department
Abstract
This proposed rule includes proposed payment parameters and provisions related to the HHS-operated risk adjustment and risk adjustment data validation programs, as well as proposed 2024 user fee rates for issuers offering qualified health plans (QHPs) through Federally-facilitated Exchanges (FFEs) and State-based Exchanges on the Federal platform (SBE-FPs). This proposed rule also proposes requirements related to updating standardized plan options and reducing plan choice overload; re-enrollment hierarchy; plan and plan variation marketing name requirements for QHPs; essential community providers (ECPs) and network adequacy; failure to file and reconcile; special enrollment periods (SEPs); the annual household income verification; the deadline for QHP issuers to report enrollment and payment inaccuracies; requirements related to the State Exchange improper payment measurement program; and requirements for agents, brokers, and web-brokers assisting FFE and SBE-FP consumers.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 244 (Wednesday, December 21, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Proposed Rules]
[Pages 78206-78322]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27206]
[[Page 78205]]
Vol. 87
Wednesday,
No. 244
December 21, 2022
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
45 CFR Parts 153, 155, and 156
Patient Protection and Affordable Care Act, HHS Notice of Benefit and
Payment Parameters for 2024; Proposed Rule
Federal Register / Vol. 87, No. 244 / Wednesday, December 21, 2022 /
Proposed Rules
[[Page 78206]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 153, 155, and 156
[CMS-9899-P]
RIN 0938-AU97
Patient Protection and Affordable Care Act, HHS Notice of Benefit
and Payment Parameters for 2024
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule includes proposed payment parameters and
provisions related to the HHS-operated risk adjustment and risk
adjustment data validation programs, as well as proposed 2024 user fee
rates for issuers offering qualified health plans (QHPs) through
Federally-facilitated Exchanges (FFEs) and State-based Exchanges on the
Federal platform (SBE-FPs). This proposed rule also proposes
requirements related to updating standardized plan options and reducing
plan choice overload; re-enrollment hierarchy; plan and plan variation
marketing name requirements for QHPs; essential community providers
(ECPs) and network adequacy; failure to file and reconcile; special
enrollment periods (SEPs); the annual household income verification;
the deadline for QHP issuers to report enrollment and payment
inaccuracies; requirements related to the State Exchange improper
payment measurement program; and requirements for agents, brokers, and
web-brokers assisting FFE and SBE-FP consumers.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by no later than 5 p.m. on January 30,
2023.
ADDRESSES: In commenting, please refer to file code CMS-9899-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9899-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-9899-P, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Jeff Wu, (301) 492-4305, Rogelyn McLean, (301) 492-4229, Grace
Bristol, (410) 786-8437, for general information.
Jacquelyn Rudich, (301) 492-5211, Bryan Kirk, (443) 745-8999, or
Joshua Paul, (301) 492-4347, for matters related to HHS-operated risk
adjustment.
Leanne Klock, (410) 786-1045, or Joshua Paul, (301) 492-4347, for
matters related to risk adjustment data validation (HHS-RADV).
Aaron Franz, (410) 786-8027, or Leanne Klock, (410) 786-1045, for
matters related to FFE and SBE-FP user fees.
Jacob LaGrand, (301) 492-4400, for matters related to actuarial
value (AV).
Brian Gubin, (401) 786-1659, for matters related to agent, broker,
and web-broker guidelines.
Claire Curtin, (301) 492-4400 or Marisa Beatley, (301) 492-4307,
for matters related to failure to file and reconcile.
Grace Bridges, (301) 492-5228, or Natalie Myren, (667) 290-8511,
for matters related to the verification process related to eligibility
for insurance affordability programs.
Zarah Ghiasuddin, (301) 356-3598, for matters related to re-
enrollment in the Exchanges.
Nicholas Eckart, (301) 492-4452, for matters related to enrollment
of qualified individuals into QHPs and termination of Exchange
enrollment or coverage.
Marisa Beatley, (301) 492-4307, or Dena Nelson, (240) 401-3535, for
matters related to qualified individuals losing MEC and qualifying for
SEPs.
Samantha Nguyen Kella, (816) 426-6339, for matters related to plan
display error SEPs.
Eva LaManna, (301) 492-5565, or Ellen Kuhn, (410) 786-1695, for
matters related to the eligibility appeals requirements.
Linus Bicker, (803) 931-6185, for matters related to State Exchange
improper payment measurement.
Alexandra Gribbin, (667) 290-9977, for matters related to stand-
alone dental plans.
Nikolas Berkobien, (667) 290-9903, for matters related to
standardized plan options.
Carolyn Kraemer, (301) 492-4197, for matters related to plan and
plan variation marketing name requirements for QHPs.
Emily Martin, (301) 492-4423, or Deborah Hunter, (443) 386-3651,
for matters related to network adequacy and ECPs.
Zarin Ahmed, (301) 492-4400, for matters related to termination of
coverage or enrollment for qualified individuals.
Nora Simmons, (410) 786-1981 for matters related to reporting
enrollment and payment inaccuracies.
Jenny Chen, (301) 492-5156, or Shilpa Gogna, (301) 492-4257, for
matters related to State Exchange Blueprint approval timelines.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post comments received
before the close of the comment period on the following website as soon
as possible after they have been received: <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
Follow the search instructions on that website to view public comments.
CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public comments that make threats
to individuals or institutions or suggest that the individual will take
actions to harm the individual. CMS continues to encourage individuals
not to submit duplicative comments. We will post acceptable comments
from multiple unique commenters even if the content is identical or
nearly identical to other comments.
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Summary of Major Provisions
III. Provisions of the Proposed Regulations
A. Part 153--Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment
B. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
C. Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding Repeal of Risk Adjustment State Flexibility To
Request a Reduction in Risk Adjustment State Transfers (Sec.
153.320(d))
C. ICRs Regarding Risk Adjustment Issuer Data Submission
Requirements (Sec. Sec. 153.610, 153.700, and 153.710)
[[Page 78207]]
D. ICRs Regarding Risk Adjustment Data Validation Requirements
When HHS Operates Risk Adjustment (HHS-RADV) (Sec. 153.630)
E. ICRs Regarding Navigator, Non-Navigator Assistance Personnel,
and Certified Application Counselor Program Standards (Sec. Sec.
155.210 and 155.225)
F. ICRs Regarding Providing Correct Information to the FFEs
(Sec. 155.220(j))
G. ICRs Regarding Documenting Receipt of Consumer Consent (Sec.
155.220(j))
H. ICRs Regarding Failure To File and Reconcile Process (Sec.
155.305(f))
I. ICRs Regarding Income Inconsistencies (Sec. Sec. 155.315 and
155.320)
J. ICRs Regarding the Improper Payment Pre-Testing and
Assessment (IPPTA) for State Exchanges (Sec. Sec. 155.1500-
155.1515)
K. ICRs Regarding QHP Rate and Benefit Information (Sec.
156.210)
L. ICRs Regarding Establishing a Timeliness Standard for Notices
of Payment Delinquency (Sec. 156.270)
M. Summary of Annual Burden Estimates for Proposed Requirements
N. Submission of PRA-Related Comments
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice Provisions and
Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act (RFA)
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism
I. Executive Summary
We are proposing changes to the provisions and parameters
implemented through prior rulemaking to implement the Patient
Protection and Affordable Care Act (ACA).\1\ These proposals are
published under the authority granted to the Secretary by the ACA and
the Public Health Service (PHS) Act.\2\ In this proposed rule, we
propose changes related to some of these ACA provisions and parameters
we previously implemented and propose to implement new provisions. Our
goal with the proposals is providing quality, affordable coverage to
consumers while minimizing administrative burden and ensuring program
integrity. The changes proposed in this rule are also intended to help
advance health equity and mitigate health disparities.
---------------------------------------------------------------------------
\1\ The Patient Protection and Affordable Care Act (Pub. L. 111-
148) was enacted on March 23, 2010. The Healthcare and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and
revised several provisions of the Patient Protection and Affordable
Care Act, was enacted on March 30, 2010. In this rulemaking, the two
statutes are referred to collectively as the ``Patient Protection
and Affordable Care Act,'' ``Affordable Care Act,'' or ``ACA.''
\2\ See sections 1311, 1312, 1313, 1321, and 1343 of the ACA and
section 2792 of the PHS Act.
---------------------------------------------------------------------------
II. Background
A. Legislative and Regulatory Overview
Title I of the Health Insurance Portability and Accountability Act
of 1996 (HIPAA) added a new title XXVII to the PHS Act to establish
various reforms to the group and individual health insurance markets.
These provisions of the PHS Act were later augmented by other laws,
including the ACA. Subtitles A and C of title I of the ACA reorganized,
amended, and added to the provisions of part A of title XXVII of the
PHS Act relating to group health plans and health insurance issuers in
the group and individual markets. The term ``group health plan''
includes both insured and self-insured group health plans.
Section 2702 of the PHS Act, as added by the ACA, establishes
requirements for guaranteed availability of coverage in the group and
individual markets.
Section 1301(a)(1)(B) of the ACA directs all issuers of QHPs to
cover the essential health benefit (EHB) package described in section
1302(a) of the ACA, including coverage of the services described in
section 1302(b) of the ACA, adherence to the cost-sharing limits
described in section 1302(c) of the ACA, and meeting the AV levels
established in section 1302(d) of the ACA. Section 2707(a) of the PHS
Act, which is effective for plan or policy years beginning on or after
January 1, 2014, extends the requirement to cover the EHB package to
non-grandfathered individual and small group health insurance coverage,
irrespective of whether such coverage is offered through an Exchange.
In addition, section 2707(b) of the PHS Act directs non-grandfathered
group health plans to ensure that cost-sharing under the plan does not
exceed the limitations described in section 1302(c)(1) of the ACA.
Section 1302 of the ACA provides for the establishment of an EHB
package that includes coverage of EHBs (as defined by the Secretary of
HHS), cost-sharing limits, and AV requirements. The law directs that
EHBs be equal in scope to the benefits provided under a typical
employer plan, and that they cover at least the following 10 general
categories: ambulatory patient services; emergency services;
hospitalization; maternity and newborn care; mental health and
substance use disorder services, including behavioral health treatment;
prescription drugs; rehabilitative and habilitative services and
devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral and
vision care. Section 1302(d) of the ACA describes the various levels of
coverage based on their AV. Consistent with section 1302(d)(2)(A) of
the ACA, AV is calculated based on the provision of EHB to a standard
population. Section 1302(d)(3) of the ACA directs the Secretary of HHS
to develop guidelines that allow for de minimis variation in AV
calculations. Sections 1302(b)(4)(A) through (D) of the ACA establish
that the Secretary must define EHB in a manner that: (1) Reflects
appropriate balance among the 10 categories; (2) is not designed in
such a way as to discriminate based on age, disability, or expected
length of life; (3) takes into account the health care needs of diverse
segments of the population; and (4) does not allow denials of EHBs
based on age, life expectancy, disability, degree of medical
dependency, or quality of life.
Section 1311(c) of the ACA provides the Secretary the authority to
issue regulations to establish criteria for the certification of QHPs.
Section 1311(c)(1)(B) of the ACA requires, among the criteria for
certification that the Secretary must establish by regulation that QHPs
ensure a sufficient choice of providers. Section 1311(e)(1) of the ACA
grants the Exchange the authority to certify a health plan as a QHP if
the health plan meets the Secretary's requirements for certification
issued under section 1311(c) of the ACA, and the Exchange determines
that making the plan available through the Exchange is in the interests
of qualified individuals and qualified employers in the State. Section
1311(c)(6)(C) of the ACA directs the Secretary of HHS to require an
Exchange to provide for special enrollment periods and section
1311(c)(6)(D) of the ACA directs the Secretary of HHS to require an
Exchange to provide for a monthly enrollment period for Indians, as
defined by section 4 of the Indian Health Care Improvement Act.
Section 1311(d)(3)(B) of the ACA permits a State, at its option, to
require QHPs to cover benefits in addition to EHB. This section also
requires a State to make payments, either to the individual enrollee or
to the issuer on behalf of the enrollee, to defray the cost of these
additional State-required benefits.
Section 1312(c) of the ACA generally requires a health insurance
issuer to consider all enrollees in all health plans (except
grandfathered health plans) offered by such issuer to be members of a
single risk pool for each of its individual and small group markets.
States have the option to merge the individual and small group market
risk
[[Page 78208]]
pools under section 1312(c)(3) of the ACA.
Section 1312(e) of the ACA provides the Secretary with the
authority to establish procedures under which a State may allow agents
or brokers to (1) enroll qualified individuals and qualified employers
in QHPs offered through Exchanges and (2) assist individuals in
applying for premium tax credits (PTC) and cost-sharing reductions
(CSRs) for QHPs sold through an Exchange.
Sections 1313 and 1321 of the ACA provide the Secretary with the
authority to oversee the financial integrity of State Exchanges, their
compliance with HHS standards, and the efficient and non-discriminatory
administration of State Exchange activities. Section 1313(a)(5)(A) of
the ACA provides the Secretary with the authority to implement any
measure or procedure that the Secretary determines is appropriate to
reduce fraud and abuse in the administration of the Exchanges. Section
1321 of the ACA provides for State flexibility in the operation and
enforcement of Exchanges and related requirements.
Section 1321(a) of the ACA provides broad authority for the
Secretary to establish standards and regulations to implement the
statutory requirements related to Exchanges, QHPs and other components
of title I of the ACA, including such other requirements as the
Secretary determines appropriate. When operating an FFE under section
1321(c)(1) of the ACA, HHS has the authority under sections 1321(c)(1)
and 1311(d)(5)(A) of the ACA to collect and spend user fees. Office of
Management and Budget (OMB) Circular A-25 Revised establishes Federal
policy regarding user fees and specifies that a user charge will be
assessed against each identifiable recipient for special benefits
derived from Federal activities beyond those received by the general
public.
Section 1321(d) of the ACA provides that nothing in title I of the
ACA must be construed to preempt any State law that does not prevent
the application of title I of the ACA. Section 1311(k) of the ACA
specifies that Exchanges may not establish rules that conflict with or
prevent the application of regulations issued by the Secretary.
Section 1343 of the ACA establishes a permanent risk adjustment
program to provide payments to health insurance issuers that attract
higher-than-average risk populations, such as those with chronic
conditions, funded by payments from those that attract lower-than-
average risk populations, thereby reducing incentives for issuers to
avoid higher-risk enrollees. Section 1343(b) of the ACA provides that
the Secretary, in consultation with States, shall establish criteria
and methods to be used in carrying out the risk adjustment activities
under this section. Consistent with section 1321(c) of the ACA, the
Secretary is responsible for operating the risk adjustment program in
any State the fails to do so.\3\
---------------------------------------------------------------------------
\3\ In the 2014 through 2016 benefit years, HHS operated the
risk adjustment program in every State and the District of Columbia,
except Massachusetts. Beginning with the 2017 benefit year, HHS has
operated the risk adjustment program in all 50 States and the
District of Columbia.
---------------------------------------------------------------------------
Section 1401(a) of the ACA added section 36B to the Internal
Revenue Code (the Code), which, among other things, requires that a
taxpayer reconcile APTC for a year of coverage with the amount of the
PTC the taxpayer is allowed for the year.
Section 1402 of the ACA provides for, among other things,
reductions in cost-sharing for EHB for qualified low- and moderate-
income enrollees in silver level QHPs offered through the individual
market Exchanges. This section also provides for reductions in cost-
sharing for Indians enrolled in QHPs at any metal level.
Section 1411(c) of the ACA requires the Secretary to submit certain
information provided by applicants under section 1411(b) of the ACA to
other Federal officials for verification, including income and family
size information to the Secretary of the Treasury. Section 1411(d) of
the ACA provides that the Secretary must verify the accuracy of
information provided by applicants under section 1411(b) of the ACA,
for which section 1411(c) of the ACA does not prescribe a specific
verification procedure, in such manner as the Secretary determines
appropriate.
Section 1411(f) of the ACA requires the Secretary, in consultation
with the Treasury and Homeland Security Department Secretaries and the
Commissioner of Social Security, to establish procedures for hearing
and making decisions governing appeals of Exchange eligibility
determinations. Section 1411(f)(1)(B) of the ACA requires the Secretary
to establish procedures to redetermine eligibility on a periodic basis,
in appropriate circumstances, including eligibility to purchase a QHP
through the Exchange and for advance payments of the premium tax credit
(APTC) and CSRs.
Section 1411(g) of the ACA allows the use of applicant information
only for the limited purposes of, and to the extent necessary to,
ensure the efficient operation of the Exchange, including by verifying
eligibility to enroll through the Exchange and for APTC and CSRs, and
limits the disclosure of such information.
Section 5000A of the Code, as added by section 1501(b) of the ACA,
requires individuals to have minimum essential coverage (MEC) for each
month, qualify for an exemption, or make an individual shared
responsibility payment. Under the Tax Cuts and Jobs Act, which was
enacted on December 22, 2017, the individual shared responsibility
payment is reduced to $0, effective for months beginning after December
31, 2018. Notwithstanding that reduction, certain exemptions are still
relevant to determine whether individuals age 30 and above qualify to
enroll in catastrophic coverage under Sec. Sec. 155.305(h) and
156.155(a)(5).
1. Premium Stabilization Programs
The premium stabilization programs refer to the risk adjustment,
risk corridors, and reinsurance programs established by the ACA.\4\ For
past rulemaking, we refer readers to the following rules:
---------------------------------------------------------------------------
\4\ See ACA section 1341 (transitional reinsurance program), ACA
section 1342 (risk corridors program), and ACA section 1343 (risk
adjustment program).
---------------------------------------------------------------------------
<bullet> In the March 23, 2012 Federal Register (77 FR 17219)
(Premium Stabilization Rule), we implemented the premium stabilization
programs.
<bullet> In the March 11, 2013 Federal Register (78 FR 15409) (2014
Payment Notice), we finalized the benefit and payment parameters for
the 2014 benefit year to expand the provisions related to the premium
stabilization programs and set forth payment parameters in those
programs.
<bullet> In the October 30, 2013 Federal Register (78 FR 65046), we
finalized the modification to the HHS-operated methodology related to
community rating States.
<bullet> In the November 6, 2013 Federal Register (78 FR 66653), we
published a correcting amendment to the 2014 Payment Notice final rule
to address how an enrollee's age for the risk score calculation would
be determined under the HHS-operated risk adjustment methodology.
<bullet> In the March 11, 2014 Federal Register (79 FR 13743) (2015
Payment Notice), we finalized the benefit and payment parameters for
the 2015 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions, and
established payment parameters in those programs.
<bullet> In the May 27, 2014 Federal Register (79 FR 30240), we
announced
[[Page 78209]]
the 2015 fiscal year sequestration rate for the risk adjustment
program.
<bullet> In the February 27, 2015 Federal Register (80 FR 10749)
(2016 Payment Notice), we finalized the benefit and payment parameters
for the 2016 benefit year to expand the provisions related to the
premium stabilization programs, set forth certain oversight provisions,
and established the payment parameters in those programs.
<bullet> In the March 8, 2016 Federal Register (81 FR 12203) (2017
Payment Notice), we finalized the benefit and payment parameters for
the 2017 benefit year to expand the provisions related to the premium
stabilization programs, set forth certain oversight provisions, and
established the payment parameters in those programs.
<bullet> In the December 22, 2016 Federal Register (81 FR 94058)
(2018 Payment Notice), we finalized the benefit and payment parameters
for the 2018 benefit year, added the high-cost risk pool parameters to
the HHS risk adjustment methodology, incorporated prescription drug
factors in the adult models, established enrollment duration factors
for the adult models, and finalized policies related to the collection
and use of enrollee-level External Data Gathering Environment (EDGE)
data.
<bullet> In the April 17, 2018 Federal Register (83 FR 16930) (2019
Payment Notice), we finalized the benefit and payment parameters for
2019 benefit year, created the State flexibility framework permitting
States to request a reduction in risk adjustment State transfers
calculated by HHS, and adopted a new methodology for HHS-RADV
adjustments to transfers.
<bullet> In the May 11, 2018 Federal Register (83 FR 21925), we
published a correction to the 2019 risk adjustment coefficients in the
2019 Payment Notice final rule.
<bullet> On July 27, 2018, consistent with 45 CFR 153.320(b)(1)(i),
we updated the 2019 benefit year final risk adjustment model
coefficients to reflect an additional recalibration related to an
update to the 2016 enrollee-level EDGE dataset.\5\
---------------------------------------------------------------------------
\5\ CMS. (2018, July 27). Updated 2019 Benefit Year Final HHS
Risk Adjustment Model Coefficients. <a href="https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf">https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf</a>.
---------------------------------------------------------------------------
<bullet> In the July 30, 2018 Federal Register (83 FR 36456), we
adopted the 2017 benefit year risk adjustment methodology as
established in the final rules published in the March 23, 2012 (77 FR
17220 through 17252) and March 8, 2016 editions of the Federal Register
(81 FR 12204 through 12352). The final rule set forth an additional
explanation of the rationale supporting the use of Statewide average
premium in the HHS-operated risk adjustment State payment transfer
formula for the 2017 benefit year, including the reasons why the
program is operated in a budget-neutral manner. The final rule also
permitted HHS to resume 2017 benefit year risk adjustment payments and
charges. HHS also provided guidance as to the operation of the HHS-
operated risk adjustment program for the 2017 benefit year in light of
the publication of the final rule.
<bullet> In the December 10, 2018 Federal Register (83 FR 63419),
we adopted the 2018 benefit year HHS-operated risk adjustment
methodology as established in the final rules published in the March
23, 2012 (77 FR 17219) and the December 22, 2016 (81 FR 94058) editions
of the Federal Register. In the rule, we set forth an additional
explanation of the rationale supporting the use of Statewide average
premium in the HHS-operated risk adjustment State payment transfer
formula for the 2018 benefit year, including the reasons why the
program is operated in a budget-neutral manner.
<bullet> In the April 25, 2019 Federal Register (84 FR 17454) (2020
Payment Notice), we finalized the benefit and payment parameters for
2020 benefit year, as well as the policies related to making the
enrollee-level EDGE data available as a limited data set for research
purposes and expanding the HHS uses of the enrollee-level EDGE data,
approval of the request from Alabama to reduce risk adjustment
transfers by 50 percent in the small group market for the 2020 benefit
year, and updates to HHS-RADV program requirements.
<bullet> On May 12, 2020, consistent with 153.320(b)(1)(i), we
published the 2021 Benefit Year Final HHS Risk Adjustment Model
Coefficients on the CCIIO website.\6\
---------------------------------------------------------------------------
\6\ CMS. (2020, May 12). Final 2021 Benefit Year Final HHS Risk
Adjustment Model Coefficients. <a href="https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf">https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf</a>.
---------------------------------------------------------------------------
<bullet> In the May 14, 2020 Federal Register (85 FR 29164) (2021
Payment Notice), we finalized the benefit and payment parameters for
2021 benefit year, as well as adopted updates to the risk adjustment
models' hierarchical condition categories (HCCs) to transition to ICD-
10 codes, approved the request from Alabama to reduce risk adjustment
transfers by 50 percent in small group market for the 2021 benefit
year, and modified the outlier identification process under the HHS-
RADV program.
<bullet> In the December 1, 2020 Federal Register (85 FR 76979)
(Amendments to the HHS-Operated Risk Adjustment Data Validation Under
the Patient Protection and Affordable Care Act's HHS-Operated Risk
Adjustment Program (2020 HHS-RADV Amendments Rule)), we adopted the
creation and application of Super HCCs in the sorting step that assigns
HCCs to failure rate groups, finalized a sliding scale adjustment in
HHS-RADV error rate calculation, and added a constraint for negative
error rate outliers with a negative error rate. We also established a
transition from the prospective application of HHS-RADV adjustments to
apply HHS-RADV results to risk scores from the same benefit year as
that being audited.
<bullet> In the September 2, 2020 Federal Register (85 FR 54820),
we issued an interim final rule containing certain policy and
regulatory revisions in response to the COVID-19 public health
emergency (PHE), wherein we set forth risk adjustment reporting
requirements for issuers offering temporary premium credits in the 2020
benefit year.
<bullet> In the May 5, 2021 Federal Register (86 FR 24140), we
issued part 2 of the 2022 Payment Notice final rule (2022 Payment
Notice) finalizing a subset of proposals from the 2022 Payment Notice
proposed rule, including policy and regulatory revisions related to the
risk adjustment program, finalization of the benefit and payment
parameters for the 2022 benefit year, and approval of the request from
Alabama to reduce risk adjustment transfers by 50 percent in the
individual and small group markets for the 2022 benefit year. In
addition, this final rule established a revised schedule of collections
for HHS-RADV and updated the provisions regulating second validation
audit (SVA) and initial validation audit (IVA) entities.
<bullet> On July 19, 2021, consistent with Sec. 153.320(b)(1)(i),
we released Updated 2022 Benefit Year Final HHS Risk Adjustment Model
Coefficients on the CCIIO website, announcing some minor revisions to
the 2022 benefit year final risk adjustment adult model
coefficients.\7\
---------------------------------------------------------------------------
\7\ See CMS. (2021, July 19). 2022 Benefit Year Final HHS Risk
Adjustment Model Coefficients. <a href="https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf">https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf</a>.
---------------------------------------------------------------------------
<bullet> In the May 6, 2022 Federal Register (87 FR 27208) (2023
Payment Notice), we finalized revisions related to the risk adjustment
program, including the benefit and payment parameters for the 2023
benefit year, risk adjustment model recalibration, and collection and
extraction of enrollee-level EDGE data.
[[Page 78210]]
We also finalized the adoption of the interacted HCC count
specification for the adult and child models, along with modified
enrollment duration factors for the adult model models, beginning with
the 2023 benefit year.\8\ We also repealed the ability for States,
other than prior participants, to request a reduction in risk
adjustment State transfers starting with the 2024 benefit year. In
addition, we approved a 25 percent reduction to 2023 benefit year
transfers in Alabama's individual market and a 10 percent reduction to
2023 benefit year transfers in Alabama's small group market. We also
finalized further refinements to the HHS-RADV error rate calculation
methodology beginning with the 2021 benefit year and beyond.
---------------------------------------------------------------------------
\8\ On May 6, 2022, we also published the 2023 Benefit Year
Final HHS Risk Adjustment Model Coefficients at <a href="https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf">https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf</a>.
---------------------------------------------------------------------------
2. Program Integrity
We have finalized program integrity standards related to the
Exchanges and premium stabilization programs in two rules: the ``first
Program Integrity Rule'' published in the August 30, 2013 Federal
Register (78 FR 54069), and the ``second Program Integrity Rule''
published in the October 30, 2013 Federal Register (78 FR 65045). We
also refer readers to the 2019 Patient Protection and Affordable Care
Act; Exchange Program Integrity rule published in the December 27, 2019
Federal Register (84 FR 71674).
3. Market Rules
For past rulemaking related to the market rules, we refer readers
to the following rules:
<bullet> In the April 8, 1997 Federal Register (62 FR 16894), HHS,
with the Department of Labor and Department of the Treasury, published
an interim final rule relating to the HIPAA health insurance reforms.
In the February 27, 2013 Federal Register (78 FR 13406) (2014 Market
Rules), we published the health insurance market rules.
<bullet> In the May 27, 2014 Federal Register (79 FR 30240) (2015
Market Standards Rule), we published the Exchange and Insurance Market
Standards for 2015 and Beyond.
<bullet> In the December 22, 2016 Federal Register (81 FR 94058),
we provided additional guidance on guaranteed availability and
guaranteed renewability.
<bullet> In the April 18, 2017 Federal Register (82 FR 18346)
(Market Stabilization final rule), we further interpreted the
guaranteed availability provision.
<bullet> In the April 17, 2018 Federal Register (83 FR 17058) (2019
Payment Notice final rule), we clarified that certain exceptions to the
special enrollment periods only apply to coverage offered outside of
the Exchange in the individual market.
<bullet> In the June 19, 2020 Federal Register (85 FR 37160) (2020
section 1557 final rule), in which HHS discussed section 1557 of the
ACA, HHS removed nondiscrimination protections based on gender identity
and sexual orientation from the guaranteed availability regulation.
<bullet> In part 2 of the 2022 Payment Notice final rule in the May
5, 2021 Federal Register (86 FR 24140), we made additional amendments
to the guaranteed availability regulation regarding special enrollment
periods and finalized new special enrollment periods related to
untimely notice of triggering events, cessation of employer
contributions or government subsidies to COBRA continuation coverage,
and loss of APTC eligibility.
<bullet> In the September 27, 2021 Federal Register (86 FR 53412)
(part 3 of the 2022 Payment Notice final rule), which was published by
HHS and the Department of the Treasury, we finalized additional
amendments to the guaranteed availability regulations regarding special
enrollment periods.
<bullet> In the May 6, 2022 Federal Register (87 FR 27208), we
finalized a revision to our interpretation of the guaranteed
availability requirement to prohibit issuers from applying a premium
payment to an individual's or employer's past debt owed for coverage
and refusing to effectuate enrollment in new coverage.
4. Exchanges
We published a request for comment relating to Exchanges in the
August 3, 2010 Federal Register (75 FR 45584). We issued initial
guidance to States on Exchanges on November 18, 2010. In the March 27,
2012 Federal Register (77 FR 18309) (Exchange Establishment Rule), we
implemented the Affordable Insurance Exchanges (``Exchanges''),
consistent with title I of the ACA, to provide competitive marketplaces
for individuals and small employers to directly compare available
private health insurance options on the basis of price, quality, and
other factors. This included implementation of components of the
Exchanges and standards for eligibility for Exchanges, as well as
network adequacy and ECP certification standards.
In the 2014 Payment Notice and the Amendments to the HHS Notice of
Benefit and Payment Parameters for 2014 interim final rule, published
in the March 11, 2013 Federal Register (78 FR 15541), we set forth
standards related to Exchange user fees. We established an adjustment
to the FFE user fee in the Coverage of Certain Preventive Services
under the Affordable Care Act final rule, published in the July 2, 2013
Federal Register (78 FR 39869) (Preventive Services Rule).
In the 2016 Payment Notice, we also set forth the ECP certification
standard at Sec. 156.235, with revisions in the 2017 Payment Notice in
the March 8, 2016 Federal Register (81 FR 12203) and the 2018 Payment
Notice in the December 22, 2016 Federal Register (81 FR 94058).
In an interim final rule, published in the May 11, 2016 Federal
Register (81 FR 29146), we made amendments to the parameters of certain
special enrollment periods (2016 Interim Final Rule). We finalized
these in the 2018 Payment Notice final rule, published in the December
22, 2016 Federal Register (81 FR 94058).
In the April 18, 2017 Market Stabilization final rule Federal
Register (82 FR 18346), we amended standards relating to special
enrollment periods and QHP certification. In the 2019 Payment Notice
final rule, published in the April 17, 2018 Federal Register (83 FR
16930), we modified parameters around certain special enrollment
periods. In the April 25, 2019 Federal Register (84 FR 17454), the
final 2020 Payment Notice established a new special enrollment period.
We published the final rule in the May 14, 2020 Federal Register
(85 FR 29164) (2021 Payment Notice).
In the January 19, 2021 Federal Register (86 FR 6138), we finalized
part 1 of the 2022 Payment Notice final rule that finalized only a
subset of the proposals in the 2022 Payment Notice proposed rule. In
the May 5, 2021 Federal Register (86 FR 24140), we published part 2 of
the 2022 Payment Notice final rule. In the September 27, 2021 Federal
Register (86 FR 53412) part 3 of the 2022 Payment Notice final rule, in
conjunction with the Department of the Treasury, we finalized
amendments to certain policies in part 1 of the 2022 Payment Notice
final rule.
In the May 6, 2022 Federal Register (87 FR 27208), we finalized
changes to maintain the user fee rate for issuers offering plans
through the FFEs and maintain the user fee rate for issuers offering
plans through the SBE-FPs. We also finalized various policies to
address certain agent, broker, and web-broker practices and conduct. We
also finalized updates to the requirement that all
[[Page 78211]]
Exchanges conduct special enrollment period verifications.
5. Essential Health Benefits
On December 16, 2011, HHS released a bulletin that outlined an
intended regulatory approach for defining EHB, including a benchmark-
based framework. We established requirements relating to EHBs in the
Standards Related to Essential Health Benefits, Actuarial Value, and
Accreditation Final Rule, which was published in the February 25, 2013
Federal Register (78 FR 12833) (EHB Rule). In the 2019 Payment Notice,
published in the April 17, 2018 Federal Register (83 FR 16930), we
added Sec. 156.111 to provide States with additional options from
which to select an EHB-benchmark plan for plan years (PYs) 2020 and
beyond.
B. Summary of Major Provisions
The regulations outlined in this proposed rule would be codified in
45 CFR parts 153, 155, and 156.
1. 45 CFR Part 153
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2023, the permanent risk
adjustment program is subject to the fiscal year 2023 sequestration.\9\
Therefore, the risk adjustment program will be sequestered at a rate of
5.7 percent for payments made from fiscal year 2023 resources (that is,
funds collected during the 2023 fiscal year). The funds that are
sequestered in fiscal year 2023 from the risk adjustment program will
become available for payment to issuers in fiscal year 2024 without
further Congressional action. HHS did not receive any requests from
States to operate risk adjustment for the 2024 benefit year; therefore,
HHS will operate risk adjustment in every State and the District of
Columbia for the 2024 benefit year.
---------------------------------------------------------------------------
\9\ OMB. (2022, March 28). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2023. <a href="https://www.whitehouse.gov/wpcontent/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf">https://www.whitehouse.gov/wpcontent/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf</a>.
---------------------------------------------------------------------------
We propose to recalibrate the 2024 benefit year risk adjustment
models using the 2018, 2019, and 2020 benefit year enrollee-level EDGE
data, with an exception for the use of the 2020 benefit year to
recalibrate the adult model age-sex coefficients. We propose to use
only 2018 and 2019 benefit year enrollee-level EDGE data in the
recalibration of the adult age-sex coefficients to account for the
observed anomalies in the 2020 benefit year enrollee-level EDGE data
for older adult enrollees, especially older adult female enrollees.
For the 2024 benefit year, we propose to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs in the risk adjustment models (see, for example, 84 FR 17463
through 17466). In addition, we are soliciting comment on whether to
consider adding a new payment HCC for gender dysphoria to the risk
adjustment models for future years.
We propose under Sec. 153.320(d) to repeal the flexibility for
States to request reductions of risk adjustment State transfers
calculated by HHS under the State payment transfer formula in all State
market risk pools, including prior participant States that previously
requested a reduction, for the 2025 benefit year and beyond. We also
seek comment on the requests from Alabama to reduce risk adjustment
State transfers in its individual and small group markets by 50 percent
for the 2024 benefit year.
Additionally, we propose, beginning with the 2023 benefit year, to
collect and extract from issuers' EDGE servers through issuers' EDGE
Server Enrollment Submission (ESES) files and risk adjustment
recalibration enrollment files a new data element, a Qualified Small
Employer Health Reimbursement Arrangement (QSEHRA) indicator. In
addition, we propose to extract the plan identifier and rating area
data elements from issuers' EDGE servers for benefit years prior to the
2021 benefit year. We also propose a risk adjustment user fee for the
2024 benefit year of $0.21 per member per month (PMPM).
Beginning with the 2022 benefit year HHS-RADV, we propose to change
the materiality threshold established under Sec. 153.630(g)(2) for
random and targeted sampling from $15 million in total annual premiums
Statewide to 30,000 total billable member months (BMM) Statewide,
calculated by combining an issuer's enrollment in a State's individual
non-catastrophic, catastrophic, small group, and merged markets, as
applicable, in the benefit year being audited.
Beginning with the 2021 benefit year HHS-RADV, we propose to no
longer exempt exiting issuers from adjustments to risk scores and risk
adjustment transfers when they are negative error rate outliers in the
applicable benefit year's HHS-RADV. Thus, HHS would apply HHS-RADV
results to adjust the plan liability risk scores and State transfers of
all issuers. We also solicit comments on discontinuing the use of the
lifelong permanent condition list and the use of Non-EDGE Claims in
HHS-RADV.
We propose to shorten the window to confirm the findings of the
second validation audit (SVA) (if applicable),\10\ or file a
discrepancy report to dispute the SVA findings, to within 15 calendar
days of the notification by HHS, beginning with the 2022 benefit year
HHS-RADV.
---------------------------------------------------------------------------
\10\ Only those issuers who have insufficient pairwise agreement
between the Initial Validation Audit (IVA) and SVA receive SVA
findings. See 84 FR 17495; 86 FR 24201.
---------------------------------------------------------------------------
We propose to amend the EDGE discrepancy materiality threshold set
forth at Sec. 153.710(e) to align with and mirror the policy finalized
in preamble in part 2 of the 2022 Payment Notice (86 FR 24194 through
24195). That is, the materiality threshold at Sec. 153.710(e) would be
revised to provide that the amount in dispute must equal or exceed
$100,000 or one percent of the total estimated transfer amount in the
applicable State market risk pool, whichever is less.
2. 45 CFR Part 155
In part 155, we propose to revise the Exchange Blueprint approval
timelines for States transitioning from either a FFE to a SBE-FP or to
a State-based Exchange (SBE), or from a SBE-FP to a SBE. We propose to
remove the deadlines for when HHS provides approval, or conditional
approval, on an Exchange Blueprint, and instead propose to require that
such approval is provided at some point prior to the date on which the
Exchange proposes to begin open enrollment either as an SBE or SBE-FP.
We propose a change to address the standards applicable to
Navigators and other assisters and their consumer service functions. At
Sec. 155.210(d)(8), we propose to remove the prohibition on Navigators
from going door-to-door or using other unsolicited means of direct
contact to help provide consumers with enrollment assistance. The
proposal would also apply to non-Navigator assistance personnel in FFEs
and in State Exchanges if funded with section 1311(a) Exchange
Establishment grants, through the reference to Sec. 155.210(d) in
Sec. 155.215(a)(2)(i). In Sec. 155.225(g)(5), we propose to remove
the prohibition on certified application counselors from going door-to-
door or using unsolicited means of direct contact to help consumers
fill out applications or enroll in health coverage. We believe that
these proposals would allow Navigators and other assisters in the FFEs
to help more consumers.
In part 155, we propose changes to address certain agent, broker,
and web-
[[Page 78212]]
broker practices. We propose to allow HHS up to an additional 15
calendar days to review evidence submitted by agents, brokers, or web-
brokers to rebut allegations that led to suspension of their Exchange
agreement(s). We also propose to allow HHS up to an additional 30
calendar days to review evidence submitted by agents, brokers, or web-
brokers that led to termination of their Exchange agreement(s). The
proposal would provide HHS with up to 45 or 60 calendar days to review
and respond to such evidence or requests for reconsideration submitted
by agents, brokers, or web-brokers stemming from the suspension or
termination of their Exchange agreement(s), respectively.
Further, we propose to require agents, brokers, or web-brokers
assisting consumers with completing eligibility applications through
the FFEs and SBE-FPs or assisting an individual with applying for APTC
and CSRs for QHPs to document that eligibility application information
has been reviewed by and confirmed to be accurate by the consumer or
their authorized representative prior to application submission. We
propose that the documentation would be required to 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. Furthermore, the documentation would be
required to be maintained by the agent, broker, or web-broker for a
minimum of 10 years and produced upon request in response to
monitoring, audit, and enforcement activities.
We also propose to require agents, brokers, or web-brokers
assisting consumers with applying and enrolling through FFEs and SBE-
FPs, making updates to an existing application, or assisting an
individual with applying for APTC and CSRs for QHPs to document the
receipt of consent from the consumer or their authorized representative
seeking assistance prior to providing assistance, which would include
the consumer taking an action that produces a record of consent and the
maintenance of that record by the agent, broker, or web-broker. We also
propose standards for the content of the documentation of consent,
including that it would be required to include a description of the
scope, purpose, and duration of the consent provided by the consumer or
their authorized representative, the date consent was given, name of
the consumer or their authorized representative, and the name of the
agent, broker, web-broker, or agency being granted consent, as well as
the process by which the consumer or their authorized representative
may rescind consent. Further, we propose that agents, brokers, or web-
brokers would be required to maintain the consent documentation for a
minimum of 10 years and produced upon request in response to
monitoring, audit, and enforcement activities.
We propose to revise the failure to file and reconcile (FTR)
process at Sec. 155.305(f)(4). First, we are proposing codify CMS's
guidance that, for plan year 2023 coverage, the Exchanges on the
Federal platform would not act on data from the IRS for consumers who
have failed to file tax returns and reconcile a previous year's APTC
with the PTC allowed for the year. Second, we propose to provide that,
beginning on January 1, 2024, Exchanges must once again determine
enrollees ineligible for APTC when HHS notifies the Exchange that a
taxpayer (or a taxpayer's spouse, if married) has failed to file a
Federal income tax return and reconcile their past APTC. However, we
propose that an Exchange may only determine enrollees ineligible for
APTC after a taxpayer (or a taxpayer's spouse, if married) has failed
to file a Federal income tax return and reconcile their past APTC for
two consecutive years. We also propose a technical correction to Sec.
155.305(f)(4) to clarify that HHS receives data from the IRS for
consumers who have failed to file tax returns and reconcile a previous
year's APTC.
We propose to amend Sec. 155.320 to require Exchanges to accept an
applicant's attestation of projected annual household income when the
Exchange requests tax return data from the IRS to verify attested
projected annual household income, but the IRS confirms there is no
such tax return data available. Further, we propose to revise Sec.
155.315 to add that an enrollee with income inconsistencies must
receive a 60-day extension in addition to the 90 days currently
provided in Sec. 155.315(f)(2)(ii). These changes would ensure
consumers are treated equitably, ensure continuous coverage, and
strengthen the risk pool.
In the 2023 Payment Notice proposed rule (87 FR 584, 652), we
solicited comments on revising the re-enrollment hierarchy at Sec.
155.335(j) at a later date, and, after considering comments, we now
propose amending and adding several provisions to this regulation to
provide Exchanges (including Exchanges on the Federal platform and
SBEs) with the option to make certain changes to the re-enrollment
hierarchy beginning for PY 2024. Specifically, we propose to allow
Exchanges to direct re-enrollment for CSR-eligible enrollees from a
bronze QHP to a silver QHP with a lower or equivalent net premium under
the same product and QHP issuer, regardless of whether the enrollee's
current plan is available. We believe directing re-enrollment into
lower or same cost, high generosity plans would place enrollees in more
affordable plans with lower out-of-pocket costs, which would lower
health insurance costs for those lower-income (CSR-eligible)
individuals. We also propose to allow the Exchange to incorporate
provider network considerations into the Exchange re-enrollment
hierarchy.
We are proposing changes related to SEPs at Sec. 155.420. First,
we propose two technical corrections to Sec. 155.420(a)(4)(ii)(A) and
(B) to align the text with Sec. 155.420(a)(d)(6)(i) and (ii). The
proposed revisions would clarify that only one person in a tax
household applying for coverage or financial assistance through the
Exchange must qualify for an SEP in order for the entire tax household
to qualify for the SEP. Second, we propose to change the current
coverage effective date requirements at Sec. 155.420(b)(2)(iv) to
permit Exchanges to offer earlier coverage effective start dates for
consumers attesting to a future loss of MEC. These changes would ensure
qualifying individuals are able to seamlessly transition from other
forms of coverage to Exchange coverage as quickly as possible with
minimal coverage gaps.
Third, to mitigate coverage gaps, we are proposing to add Sec.
155.420(c)(6) in which Exchanges would have the option to implement a
new special rule for consumers eligible for a SEP under Sec.
155.420(d)(1) due to loss of Medicaid or CHIP coverage which would give
consumers up to 90 days after their loss of Medicaid or CHIP coverage
to select a plan for Exchange coverage. Fourth, we are proposing to
revise Sec. 155.420(d)(12) to align the policy of the Exchanges on the
Federal platform for granting SEPs to persons who are adversely
affected by a plan display error with current plan display error SEP
operations. The proposal would remove the burden from the consumer to
solely demonstrate to the Exchange that a material plan display error
has influenced the consumer's decision to purchase a QHP through the
Exchange.
We propose to add Sec. 155.430(b)(3) to explicitly prohibit
issuers participating in Exchanges on the Federal platform from
terminating coverage for a dependent child prior to the end of the plan
year because the dependent child has reached the applicable maximum
[[Page 78213]]
age. This change would provide clarity to issuers participating in
Exchanges on the Federal platform regarding their obligation to
maintain coverage for dependent children, as well as to enrollees
regarding their ability to maintain coverage for dependent children.
This proposal would be optional for State Exchanges.
We propose to revise Sec. 155.505(g) to acknowledge the ability of
the CMS Administrator to review Exchange eligibility appeals decisions
prior to judicial review. This change would provide appellants and
other parties with accurate information about the availability of
administrative review by the CMS Administrator if they are dissatisfied
with their eligibility appeal decision.
HHS proposes to implement a new Improper Payment Pre-Testing and
Assessment (IPPTA) program under which State Exchanges will be required
to participate in pre-audit activities that will prepare State
Exchanges for complying with audits required under the Payment
Integrity Information Act of 2019 (PIIA). Activities under the proposed
IPPTA program would provide State Exchanges experience helpful to
preparing for future PIIA audits and will help HHS design and refine
appropriate requirements for future PIIA audits of State Exchanges.
3. 45 CFR Part 156
In part 156, we propose user fee rates for the 2024 benefit year
for all issuers participating on the Exchanges using the Federal
platform. For the 2024 benefit year, we propose an FFE user fee rate of
2.5 percent of total monthly premiums and an SBE-FP user fee rate of
2.0 percent of total monthly premiums. HHS will issue the 2024 benefit
year premium adjustment percentage index and related payment parameters
in guidance, consistent with the policy finalized in part 2 of the 2022
Payment Notice.
For PY 2024 and subsequent PYs, HHS would maintain a large degree
of continuity with the approach to standardized plan options finalized
in the 2023 Payment Notice and proposes only minor updates in this
proposed rule. In particular, in contrast to the policy finalized in
the 2023 Payment Notice, we are proposing to no longer include a
standardized plan option for the non-expanded bronze metal level,
mainly due to AV constraints. Thus, for PY 2024 and subsequent PYs, we
propose standardized plan options for the following metal levels: one
bronze plan that meets the requirement to have an AV up to five
percentage points above the 60 percent standard, as specified in Sec.
156.140(c) (known as an expanded bronze plan); one standard silver
plan; one version of each of the three income-based silver CSR plan
variations; one gold plan; and one platinum plan. We would continue to
differentially display standardized plan options, including those
standardized plan options required under State action that took place
on or before January 1, 2020, on <a href="http://HealthCare.gov">HealthCare.gov</a>, and would continue
enforcement of the standardized plan options display requirements for
approved web-brokers and QHP issuers using a direct enrollment pathway
to facilitate enrollment through an FFE or SBE-FP-- including both the
Classic Direct Enrollment (DE) and Enhanced Direct Enrollment (EDE)
Pathways.
To mitigate the risk of choice overload, HHS proposes to limit the
number of non-standardized plan options that QHP issuers may offer
through the Exchanges using the Federal platform to two non-
standardized plan options per product network type and metal level
(excluding catastrophic plans), in any service area for PY 2024 and
beyond. In addition, HHS proposes, as an alternative to the proposal to
limit the number of non-standardized plan options that an FFE or SBE-FP
issuer may offer on the Exchange, to apply a meaningful difference
standard which would be more stringent than the previous standard. HHS
proposes to strengthen the standard by modifying the criteria and
difference thresholds used to determine whether plans are
``meaningfully different'' from one another.
We propose to require stand-alone dental plan (SADP) issuers to use
age on effective date as the sole method to calculate an enrollee's age
for rating and eligibility purposes beginning with Exchange
certification for PY 2024. Requiring SADPs to use the age on effective
date methodology to calculate an enrollee's age as a condition of QHP
certification, and consequently removing the less commonly used and
more complex age calculation methods, would reduce consumer confusion
and promote operational efficiency. We propose that this policy would
apply to Exchange-certified SADPs as a requirement of certification,
whether they are sold on- or off-Exchange.
In addition, we propose to require Exchange-certified SADP issuers
to submit guaranteed rates as a condition of QHP certification
beginning with Exchange certification for PY 2024. This change would
help reduce the risk of incorrect APTC calculation for the pediatric
dental EHB portion of premiums, thereby reducing the risk of consumer
harm. We propose that this policy would apply to Exchange-certified
SADPs as a requirement of certification, whether they are sold on- or
off-Exchange.
We propose at Sec. 156.225 to require that plan and plan variation
marketing names for QHPs offered through Exchanges on the Federal
platform include correct information, without omission of material
fact, and not include content that is misleading. If finalized as
proposed, CMS would review plan and plan variation marketing names
during the annual QHP certification process in close collaboration with
State regulators.
We propose to revise the network adequacy and ECP standards at
Sec. Sec. 156.230 and 156.235 to provide that all individual market
QHPs and SADPs and all Small Business Health Options Program (SHOP)
QHPs across all Exchanges must use a network of providers that complies
with the network adequacy and ECP standards in those sections, and to
remove the exception that these sections do not apply to plans that do
not use a provider network.
To expand access to care for low-income and medically underserved
consumers, we propose to establish two additional stand-alone ECP
categories at Sec. 156.235(a)(2)(ii)(B) for PY 2024 and subsequent
PYs, Mental Health Facilities and Substance Use Disorder Treatment
Centers. HHS also proposes to require QHP issuers to contract with at
least 35 percent of available FQHCs and at least 35 percent of
available Family Planning Providers that qualify as an ECP in the
plan's service area, in addition to meeting the current overall 35
percent ECP threshold requirement in the plan's service area.
We propose to add a timeliness standard to the requirement at Sec.
156.270(f) for QHP issuers to send enrollees a notice of payment
delinquency. Specifically, we propose to require issuers to send
notices of payment delinquency promptly and without undue delay. This
proposed revision will help ensure that enrollees are aware they are at
risk of losing coverage and can avoid losing coverage by paying any
outstanding premium amounts promptly.
We propose to revise the final deadline in Sec. 156.1210(c) for
issuers to report data inaccuracies identified in payment and
collections reports for discovered underpayments of APTC to the issuer
and user fee overpayments to HHS. Specifically, we propose to remove
the deadline set forth at Sec. 156.1210(c)(2). Under this proposal, we
would retain only the deadline at
[[Page 78214]]
Sec. 156.1210(c)(1), which requires that issuers describe all
inaccuracies identified in a payment and collections report within
three years of the end of the applicable plan year to which the
inaccuracy relates to be eligible to receive an adjustment to correct
an underpayment of APTC to the issuer and user fee overpayments to HHS.
Under this proposal, beginning with the 2020 plan year coverage, HHS
would not pay additional APTC payments or reimburse user fee payments
for FFE, SBE-FP, and SBE issuers for data inaccuracies reported after
the 3-year deadline. Further, we propose that HHS would not accept or
take action that results in an outgoing payment on data inaccuracies or
payment errors (except those identifying an overpayment by HHS) for the
2015 through 2019 plan year coverage that are reported after December
31, 2023. This proposal would better align with the existing IRS
limitation on filing corrected Federal tax returns and reduce
administrative and operational burden on issuers, State Exchanges, and
HHS when handling payment and enrollment dispute.
III. Provisions of the Proposed Regulations
A. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment
In subparts A, D, G, and H of part 153, we established standards
for the administration of the risk adjustment program. The risk
adjustment program is a permanent program created by section 1343 of
the ACA that transfers funds from lower-than-average risk, risk
adjustment covered plans to higher-than-average risk, risk adjustment
covered plans in the individual, small group markets, or merged
markets, inside and outside the Exchanges. In accordance with Sec.
153.310(a), a State that is approved or conditionally approved by the
Secretary to operate an Exchange may establish a risk adjustment
program, or have HHS do so on its behalf.\11\ HHS did not receive any
requests from States to operate risk adjustment for the 2024 benefit
year. Therefore, HHS will operate risk adjustment in every State and
the District of Columbia for the 2024 benefit year.
---------------------------------------------------------------------------
\11\ See also 42 U.S.C. 18041(c)(1).
---------------------------------------------------------------------------
1. Sequestration
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2023, the permanent risk
adjustment program is subject to the fiscal year 2023
sequestration.\12\ The Federal Government's 2023 fiscal year began on
October 1, 2022. Therefore, the risk adjustment program will be
sequestered at a rate of 5.7 percent for payments made from fiscal year
2023 resources (that is, funds collected during the 2023 fiscal year).
---------------------------------------------------------------------------
\12\ OMB. (2022, March 28). OMB Report to the Congress on the
BBEDCA 251A Sequestration for Fiscal Year 2023. <a href="https://www.whitehouse.gov/wp-content/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf">https://www.whitehouse.gov/wp-content/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf</a>.
---------------------------------------------------------------------------
HHS, in coordination with OMB, has determined that, under section
256(k)(6) of the Balanced Budget and Emergency Deficit Control Act of
1985,\13\ as amended, and the underlying authority for the risk
adjustment program, the funds that are sequestered in fiscal year 2023
from the risk adjustment program will become available for payment to
issuers in fiscal year 2024 without further Congressional action. If
Congress does not enact deficit reduction provisions that replace the
Joint Committee reductions, the program would be sequestered in future
fiscal years, and any sequestered funding would become available in the
fiscal year following that in which it was sequestered.
---------------------------------------------------------------------------
\13\ Public Law 99-177 (1985).
---------------------------------------------------------------------------
Additionally, we note that the Infrastructure Investment and Jobs
Act \14\ amended section 251A(6) of the Balanced Budget and Emergency
Deficit Control Act of 1985 and extended sequestration for the risk
adjustment program through fiscal year 2031 at a rate of 5.7 percent
per fiscal year.<SUP>15</SUP> <SUP>16</SUP>
---------------------------------------------------------------------------
\14\ Public Law 117-58, 135 Stat. 429 (2021).
\15\ 2 U.S.C. 901a.
\16\ The Coronavirus Aid, Relief, and Economic Security (CARES)
Act previously amended section 251A(6) of the Balanced Budget and
Emergency Deficit Control Act of 1985 and extended sequestration for
the risk adjustment program through fiscal year 2023 at a rate of
5.7 percent per fiscal year. Section 4408 of the CARES Act, Public
Law 116-136, 134 Stat. 281 (2020).
---------------------------------------------------------------------------
2. HHS Risk Adjustment (Sec. 153.320)
The HHS risk adjustment models predict plan liability for an
average enrollee based on that person's age, sex, and diagnoses (also
referred to as hierarchical condition categories (HCCs)), producing a
risk score. The HHS risk adjustment methodology utilizes separate
models for adults, children, and infants to account for clinical and
cost differences in each age group. In the adult and child models, the
relative risk assigned to an individual's age, sex, and diagnoses are
added together to produce an individual risk score. Additionally, to
calculate enrollee risk scores in the adult models, we added enrollment
duration factors beginning with the 2017 benefit year,\17\ and
prescription drug categories (RXCs) beginning with the 2018 benefit
year.\18\ Infant risk scores are determined by inclusion in one of 25
mutually exclusive groups, based on the infant's maturity and the
severity of diagnoses. If applicable, the risk score for adults,
children, or infants is multiplied by a cost-sharing reduction (CSR)
factor. The enrollment-weighted average risk score of all enrollees in
a particular risk adjustment covered plan (also referred to as the plan
liability risk score (PLRS)) within a geographic rating area is one of
the inputs into the risk adjustment State payment transfer formula,\19\
which determines the State transfer payment or charge that an issuer
will receive or be required to pay for that plan for the applicable
State market risk pool. Thus, the HHS risk adjustment models predict
average group costs to account for risk across plans, in keeping with
the Actuarial Standards Board's Actuarial Standards of Practice for
risk classification.
---------------------------------------------------------------------------
\17\ For the 2017 through 2022 benefit years, there is a set of
11 binary enrollment duration factors in the adult models that
decrease monotonically from one to 11 months, reflecting the
increased annualized costs associated with fewer months of
enrollments. See, for example, 81 FR 94071 through 94074. These
enrollment duration factors were replaced beginning with the 2023
benefit year with HCC-contingent enrollment duration factors for up
to 6 months in the adult models. See, for example, 87 FR 27228
through 27230.
\18\ For the 2018 benefit year, there were 12 RXCs, but starting
with the 2019 benefit year, the two severity-only RXCs were removed
from the adult risk adjustment models. See, for example, 83 FR
16941.
\19\ 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, for example, 81 FR 94080.
---------------------------------------------------------------------------
a. Data for Risk Adjustment Model Recalibration for 2024 Benefit Year
We propose to use 2018, 2019 and 2020 benefit year enrollee-level
EDGE data to recalibrate the 2024 benefit year risk adjustment models
with an exception to exclude the 2020 benefit year data from the
blending of the age-sex coefficients for the adult models.
In accordance with Sec. 153.320, HHS develops and publishes the
risk adjustment methodology applicable in States where HHS operates the
program, including the draft factors to be employed in the models for
the benefit year. This includes information related to the annual
recalibration of the risk adjustment models using data from the most
recent available prior benefit years trended forwarded to reflect the
[[Page 78215]]
applicable benefit year of risk adjustment.
Our proposed approach for 2024 recalibration aligns with the
approach finalized in the 2022 Payment Notice (86 FR 24151 through
24155) and reiterated in the 2023 Payment Notice (87 FR 27220 through
27221), that involves use of the 3 most recent consecutive years of
enrollee-level EDGE data that are available at the time we incorporate
the data in the draft recalibrated coefficients published in the
proposed rule for the applicable benefit year, and not updating the
coefficients between the proposed and final rules if an additional year
of enrollee-level EDGE data becomes available for incorporation. We
continue to believe this approach promotes stability, better meets the
goal of the risk adjustment program, and allows issuers more time to
incorporate this information when pricing their plans for the upcoming
benefit year than the previous approach which allowed for updates to
the data used for recalibration if more data became available between
the proposed and final rules.
As such, we propose to determine coefficients for the 2024 benefit
year based on a blend of separately solved coefficients from the 2018,
2019, and 2020 benefit years of enrollee-level EDGE data, with an
exception to exclude the 2020 benefit year data from the blending of
the age-sex coefficients for the adult models. For all adult model age-
sex coefficients, we propose to use only 2018 and 2019 benefit year
enrollee-level EDGE data in recalibration to account for the observed
anomalous decreases in the unconstrained coefficients \20\ for the 2020
benefit year enrollee-level EDGE data for older adult enrollees,
especially older adult female enrollees.
---------------------------------------------------------------------------
\20\ HHS constrains the risk adjustment models in multiple
distinct ways during model recalibration. These include (1)
coefficient estimation groups, also referred to as G-Groups in the
Risk Adjustment Do It Yourself (DIY) Software, (2) a priori
stability constraints, and (3) hierarchy violation constraints. Of
these, coefficient estimation groups and a priori stability
constraints are applied prior to model fitting. The hierarchy
violation constraints are applied after the initial estimates of
coefficients are produced. We refer to the models and coefficients
prior to the application of hierarchy violation constraints as the
``unconstrained models'' and ``unconstrained coefficients,''
respectively. For a description of the various constraints we apply
to the risk adjustment models, see, CMS' ``Potential Updates to HHS-
HCCs for the HHS-operated Risk Adjustment Program'' (the ``2019
White Paper'') (June 17, 2019). <a href="https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf">https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf</a>.
---------------------------------------------------------------------------
To further explain, due to the potential impact of the COVID-19 PHE
on costs and utilization of services in 2020, HHS considered whether
the 2020 enrollee-level EDGE data was appropriate for use in the annual
model recalibration for the HHS-operated risk adjustment program
applicable to the individual and small group (including merged)
markets. As part of this analysis, we considered comments received in
response to the 2023 Payment Notice proposed rule (87 FR 598), wherein
we sought comments on the future use of the 2020 enrollee-level EDGE
data due to the potential impact of the COVID-19 PHE. The current
policy that involves using the 3 most recent years of EDGE data
available as of the proposed rule for the annual risk adjustment model
recalibration promotes stability and ensures the models reflect the
year-over-year changes to the markets' patterns of utilization and
spending without over-relying on any factors unique to one particular
year. This approach was put in place based on feedback from issuers and
other interested parties and our experience operating the program since
the 2014 benefit year. Furthermore, we know from our experience that
every year of data can be unique and therefore some level of deviation
from year to year is expected.\21\ These general considerations all
weigh in favor of including the 2020 benefit year data in the
recalibration of the risk adjustment models.
---------------------------------------------------------------------------
\21\ Every year we expect some shifting in treatment and cost
patterns, for example as new drugs come to market. Our goal in using
multiple years of data for model calibration is to capture some
degree of year-to-year cost shifting without over-relying on any
factors unique to one particular year.
---------------------------------------------------------------------------
However, we recognize that if a benefit year has significant
changes that differentially impact certain conditions or populations
relative to others, or is sufficiently anomalous relative to expected
future patterns of care, we should carefully consider what impact that
benefit year of data could have if it is used in the annual model
recalibration for the HHS-operated risk adjustment program. This
includes consideration of whether to exclude or adjust that benefit
year of data to increase the models' predictive validity or otherwise
limit the impact of anomalous trends. The situation presented by the
COVID-19 PHE and its potential impact on utilization and costs in the
2020 benefit year is an example \22\ of a situation that requires this
additional consideration. Thus, to help further inform HHS' decision on
whether it is appropriate to use 2020 enrollee-level EDGE data to
calibrate the risk adjustment coefficients, HHS analyzed the 2020
benefit year enrollee-level EDGE recalibration data to assess how it
compares to 2019 benefit year enrollee-level EDGE recalibration data.
Our results found:
---------------------------------------------------------------------------
\22\ In the 10 years since the start of HHS model calibration
for benefit year 2014, the COVID-19 PHE has been the only such
situation to date. Other events and policy changes have not risen to
the same level of uniqueness or impact.
---------------------------------------------------------------------------
<bullet> The total sample size in the recalibration data set was
similar between the 2019 and 2020 benefit years, with the individual
market at the national level seeing an increase in enrollment in the
2020 benefit year and the small group market at the national level
seeing a slight decrease in enrollment in the 2020 benefit year.
<bullet> In the 2020 EDGE enrollee-level recalibration data set,
even though PMPM spending dropped substantially between March and April
2020, the total PMPM spending in the 2020 benefit year was similar to
the 2019 benefit year, with the institutional and professional services
PMPM slightly decreasing, preventive services PMPM notably decreasing,
and the drug PMPM increasing. This represents a departure from
historical medical costs trends, which have generally seen increases
year-over-year in all cost categories.
<bullet> Across all data submitted through issuer's EDGE servers
for the 2020 benefit year, we observed a large increase in telehealth
paid claims amounts when compared to all data submitted through
issuer's EDGE servers for the 2019 benefit year.
<bullet> The number of enrollees with one or more HCC was
relatively stable between the 2019 and 2020 benefit year enrollee-level
EDGE recalibration data sets in both the recalibration and full data
sets.\23\
---------------------------------------------------------------------------
\23\ CMS. (2021, June 30). Summary Report on Permanent Risk
Adjustment Transfers for the 2020 Benefit Year. <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf</a>.
---------------------------------------------------------------------------
<bullet> Individual HCC frequencies and costs generally remained
constant between the 2019 and 2020 benefit year enrollee-level EDGE
recalibration data sets, even for the HCCs related to the severe
manifestations of COVID-19. An exception was a notable increase in
frequency for HCC 127 Cardio-Respiratory Failure and Shock, Including
Respiratory Distress Syndromes, which was likely coded for cases in
which acute respiratory distress syndrome (ARDS) was a manifestation of
COVID-19, but relative allowed charges, and therefore, risk adjustment
model coefficients, for HCC 127 remained similar in 2020 compared to
2019.
[[Page 78216]]
<bullet> RXC frequencies and costs were generally stable between
the 2019 and 2020 benefit year enrollee-level EDGE recalibration data
sets, with the exception of RXC 10 Cystic Fibrosis Agents, for which a
new drug was introduced that increased costs in the 2020 data compared
to the 2019 data.
<bullet> The unconstrained coefficients for the 2020 benefit year
enrollee-level EDGE recalibration data are similar to the 2019 benefit
year's unconstrainted coefficients with one exception. The exception
exists within the age-sex coefficients in the adult models where we
found decreases among coefficients for older enrollees, especially
female enrollees, which are likely due to decreases in discretionary
spending among this age group in the 2020 benefit year.
In short, on many key dimensions, HHS found that the 2019 benefit
year and 2020 benefit year enrollee-level EDGE data recalibration were
largely comparable.
With this analysis in mind, and based on the comments received in
response to the 2023 Payment Notice proposed rule,\24\ HHS considered
six different options for handling the 2020 benefit year enrollee-level
EDGE recalibration data for purposes of the annual recalibration of the
HHS risk adjustment models for the 2024 benefit year.\25\ Four options
involve the use of 2020 benefit year enrollee-level EDGE recalibration
data in the risk adjustment model recalibration, and two involve the
exclusion of the 2020 benefit year data. These six options are as
follows:
---------------------------------------------------------------------------
\24\ These comments offered a variety of perspectives with some
commenters stating that 2020 enrollee-level EDGE data should be used
for model recalibration as normal, a few commenters suggesting that
2020 enrollee-level EDGE data should be excluded entirely, one
commenter recommending that 2020 enrollee-level EDGE data should be
used with a different weight assigned, and several commenters
suggesting HHS release a technical paper on the use of 2020
enrollee-level EDGE data, with several suggesting HHS do a
comparison of coefficients with and without the 2020 enrollee-level
EDGE data to review relative changes in coefficients, and evaluate
changes for clinical reasonability and consistency with 2018 and
2019 enrollee-level EDGE data. See 87 FR 27220 through 27221.
\25\ The proposals related to the use of 2020 benefit year
enrollee-level EDGE data in this rule for model recalibration
purposes are focused on the 2024 benefit year models. Consistent
with the approach finalized in part 2 of the 2022 Payment Notice (86
FR 24151 through 24155), any changes to the use of the 3 most recent
consecutive years of enrollee-level EDGE data, including proposals
related to the use of 2020 benefit year data, for recalibration of
the 2025 and 2026 benefit year HHS risk adjustment models would be
addressed and proposed in a future rulemaking.
---------------------------------------------------------------------------
<bullet> Option 1: Maintain the current policy, recalibrating the
2024 benefit year risk adjustment models using 2018, 2019, and 2020
enrollee-level EDGE data with no exceptions or modifications.
<bullet> Option 2: Maintain the current policy, recalibrating the
2024 benefit year risk adjustment models using 2018, 2019, and 2020
benefit year enrollee-level EDGE recalibration data, but assign a lower
weight to 2020 data. Assigning a lower weight to the 2020 data would
dampen its impact on the models while continuing to capture in part the
utilization and spending patterns underlying the data.
<bullet> Option 3: Utilize 4 years of enrollee-level EDGE data,
instead of three, to recalibrate the 2024 benefit year risk adjustment
models using 2017, 2018, 2019, and 2020 benefit year data. This would
serve the purpose of dampening the effect of the 2020 data on the
models by incorporating an extra year of data from a prior benefit year
that was not impacted by the COVID-19 PHE.
<bullet> Option 4: Maintain the current policy, recalibrating the
2024 benefit year risk adjustment models using 2018, 2019, and 2020
enrollee-level EDGE recalibration data with an exception to exclude the
2020 benefit year data from the blending of the age-sex coefficients
for the adult models. Under this option, we would determine
coefficients for the 2024 benefit year based on a blend of separately
solved coefficients from the 2018, 2019, and 2020 benefit years of
enrollee-level EDGE recalibration data and would exclude the 2020
benefit year from the recalibration of the adult models' age-sex
coefficients. Instead, only 2018 and 2019 benefit year enrollee-level
EDGE recalibration data would be used to recalibrate the adult risk
adjustment models age-sex coefficients.\26\
---------------------------------------------------------------------------
\26\ This is a similar approach to that taken in part 2 of the
2022 Payment Notice, where we only used 2016 and 2017 enrollee-level
EDGE data for the limited purpose of developing the RXC 09
coefficients, RXC 09 HCC related coefficients, and RXC 09
interaction term coefficients for the 2022 benefit year adult
models, given concerns regarding unrepresentative expenditures and
off-label prescribing of hydroxychloroquine during the COVID-19 PHE
relative to drugs that enrollees with HCC 048, 056, or 057 may take.
See 86 FR 24180.
---------------------------------------------------------------------------
<bullet> Option 5: Exclude the 2020 benefit year enrollee-level
EDGE recalibration data and instead use the 2017, 2018, and 2019
benefit year enrollee-level EDGE recalibration data, trended forward to
the 2024 benefit year, in recalibration of the risk adjustment models
for the 2024 benefit year, or use the final 2023 risk adjustment model
coefficients for the 2024 benefit year without trending the data to
account for inflation and changes in costs and utilization between the
2023 and 2024 benefit years.
<bullet> Option 6: Exclude the 2020 benefit year enrollee-level
EDGE recalibration data and instead use only 2 years of enrollee-level
EDGE data for recalibration--that is, use only 2018 and 2019 benefit
year data to recalibrate the 2024 risk adjustment models.
Although it is true our analyses found that the 2019 and 2020
benefit year enrollee-level EDGE recalibration data were largely
comparable, there were observed anomalous decreases in the
unconstrained age-sex coefficients for the 2020 benefit year enrollee-
level EDGE recalibration data for older adult enrollees, especially
older female enrollees. We are therefore concerned that not making any
adjustments with respect to the use of 2020 enrollee-level EDGE
recalibration data could have an undue impact on the risk captured by
the age-sex factors in the adult models such that these factors would
less accurately reflect the expected spending patterns for the 2024
benefit year. Option 1 would not address the identified anomalous trend
that is not expected to continue in future benefit years. Option 2
represents a middle ground between those commenters who expressed
support for including 2020 benefit year data in model recalibration and
those who expressed support for excluding the data, by capturing the
utilization and spending patterns underlying the 2020 data while
dampening its effects in the models. However, we are concerned this
approach would require identifying an appropriate weighting methodology
other than the equal weighting that we generally use to blend the
factors from the 3 data years, and we do not believe there is a self-
evident method of weighting 2020 data differently for this purpose.
Furthermore, we are concerned that dampening the effect of the 2020
benefit year data in all of the models for all factors (as opposed to
just the age-sex factors in the adult models) defeats the purpose of
using the next available benefit year of data to recalibrate the
models, because doing so would prevent the models from reflecting
changes in utilization and cost of care that are unrelated to the
impact of the COVID-19 PHE. There are similar concerns with option 3
and the inclusion of an additional prior benefit year (that is, 2017)
to recalibrate the 2024 benefit year models to dampen the impact of the
2020 benefit year data. We do not believe that such a broad dampening
is necessary since the anomalous coefficient changes identified from
the 2020 benefit year data were largely limited to the adult model age-
sex coefficients and incorporating an
[[Page 78217]]
additional prior benefit year of data would dampen the impact of the
2020 benefit year data on other factors (for example, HCCs, RXCs, and
interaction factors) and would prevent the models from reflecting
changes in utilization and cost of care that are unrelated to the
impact of the COVID-19 PHE. Furthermore, option 3 would use older data
to fit the 2024 benefit year risk adjustment models than options 1 and
2 (that is, 2017 benefit year data), which may impact the risk
adjustment models such that they reflect older cost and utilization
trends than would be desirable.
We are similarly concerned about options 5 and 6, which would
involve the complete exclusion of 2020 benefit year data. With respect
to option 5, although using the same data years for 2024 benefit year
model recalibration as 2023 benefit year model recalibration or using
the 2023 benefit year models for the 2024 benefit year would likely
yield the same or similar coefficients \27\ to those published for the
2023 benefit year, thereby providing stability that issuers may find
desirable, we are concerned this approach would also involve the use of
older data as with option 3, which may not be the data set that would
best reflect current utilization and spending trends including changes
in drug prescribing patterns. In addition, our analyses of the 2020
benefit year enrollee-level EDGE recalibration data found that it was
largely comparable with the 2019 benefit year data set and we did not
identify other major anomalous trends in our comparison of the
unconstrained HCC coefficients in the 2019 and 2020 enrollee-level EDGE
recalibration data sets, which raises the question about whether there
is a sufficient justification to completely exclude 2020 benefit year
enrollee-level EDGE recalibration data in the recalibration of the risk
adjustment models.
---------------------------------------------------------------------------
\27\ We expect that the trending of the prior benefit year data
to reflect the anticipated costs and spending trends in the
applicable future benefit year of risk adjustment that occurs as
part of the annual model recalibration effort would impact the 2024
risk adjustment model coefficients.
---------------------------------------------------------------------------
Option 6 has the same drawbacks as option 5--that is, it would not
use the most recently available data for the applicable benefit year
model recalibration, which may be the data set that would best reflect
current utilization and spending trends, and raises the same question
about whether there is a sufficient justification to completely exclude
the 2020 benefit year data for model recalibration purposes. This
option has the additional drawback of decreasing the stabilizing effect
of using multiple years of data, as our goal in using multiple years of
data for model calibration is to capture some degree of year-to-year
cost shifting without over-relying on any factors unique to one
particular year. When using 2 years of data, each year is weighted at
50 percent, but with 3 years of data, each year is weighted at 33.3
percent. As such, a change in a coefficient occurring in 1 year of the
data that is actually included in recalibration would have a greater
impact on the risk adjustment model coefficients if only using 2 years
of data rather than 3 years, due to the increase in the reliance of the
blended coefficients on the remaining 2 years of data.\28\
---------------------------------------------------------------------------
\28\ We do not have the same concerns with respect to using only
2 years of data for recalibration of the adult model age-sex
coefficients because age-sex coefficients tend to contribute less to
enrollees' risk scores than HCC, RXC, and interaction coefficients,
so changes in a single age-sex coefficient in one of the remaining
years of data is less likely to have an undue impact. Additionally,
the age-sex coefficients are derived from substantially larger
samples of enrollees and are therefore theoretically more stable
than HCC, RXC, enrollment duration and interaction coefficients.
Furthermore, the anomalies seen in the age-sex coefficients fit with
the 2020 EDGE data systematically impact a wide range of enrollees.
As such, we believe the risks of including 2020 EDGE data in
blending of the age-sex coefficients outweighs the risks of only
using the 2018 and 2019 benefit years of EDGE data to blend the age-
sex coefficients for the 2024 benefit year adult models.
---------------------------------------------------------------------------
After consideration of these different options, we propose option
4--that is, maintain the current policy of using the 3 most recent
consecutive benefit year data sets that are available at the time of
publication of this proposed rule, with a narrowly tailored exception
to exclude the 2020 benefit year data from the blending of the age-sex
coefficients for the adult models. Under this proposal, we would
determine coefficients for the 2024 benefit year based on a blend of
separately solved coefficients from the 2018, 2019, and 2020 benefit
years of enrollee-level EDGE recalibration data except for the
coefficients for the adult age-sex factors, which would instead be
based on a blend of separately solved coefficients from only the 2018
and 2019 benefit year enrollee-level EDGE recalibration. This approach
preserves the current policy and use of the 3 most recent consecutive
years of data available for the majority of the risk adjustment model
coefficients, allowing for the use of the next available benefit year
of data to recalibrate models that appears to be largely comparable
with 2019 benefit year data to reflect changes in cost and utilization
patterns for payment HCCs, RXCs, enrollment duration factors and
interaction factors. At the same time, it includes an exception
narrowly tailored to account for the observed anomalous decreases in
the unconstrainted coefficients for the 2020 benefit year enrollee-
level EDGE recalibration data for older adult enrollees, especially
female enrollees. Thus, we believe that this offers a balanced approach
to the use of 2020 benefit year enrollee-level EDGE recalibration data
for model recalibration purposes while also addressing the limited
observed anomalous trends in the 2020 benefit year enrollee-level EDGE
recalibration data.
Our proposal to adopt option 4 is narrowly tailored to only address
the observed trend in the unconstrained age-sex coefficients for the
2020 benefit year enrollee-level EDGE recalibration data for older
adult enrollees, especially older adult female enrollees, which are
likely due to decreases in discretionary spending among this age group
in the 2020 benefit year. We are not proposing adjustments in response
to the other trends observed in the 2020 benefit year enrollee-level
EDGE recalibration data, such as the decrease in PMPM spending that
occurred in March and April 2020,\29\ because we generally found that
the 2020 benefit year data and trends were otherwise largely comparable
with the 2019 benefit year data and we did not identify other anomalous
trends in our comparison of the unconstrained HCC coefficients in the
2019 and 2020 benefit year enrollee-level EDGE recalibration data sets.
We further note that the coefficients fit by the risk adjustment models
reflect the cost of treatment rather than the number of enrollees
accessing treatment or when during the year the treatment is accessed.
Therefore, even though there was some observed decreased utilization in
the 2020 benefit year enrollee-level EDGE recalibration data, the lack
of change in diagnosis-related coefficients between the models fit with
prior years of enrollee-level EDGE recalibration data and the models
fit with 2020 enrollee-level EDGE recalibration data indicates that
when an enrollee was able to access care and a diagnosis was recorded
on EDGE for the benefit year, the cost of treatment of their diagnosed
conditions was similar to that experienced in previous benefit years.
As such, we believe the 2020 enrollee-level EDGE recalibration data is
sufficiently similar to prior years of enrollee level EDGE
recalibration data to
[[Page 78218]]
use in the fitting of coefficients for HCCs, RXCs, their interactions,
and enrollment duration factors. We also do not believe that any 2020
enrollee-level EDGE recalibration data exceptions are needed for the
child or infant risk adjustment models because among those models we
did not observe anomalous trends between age-sex groups analogous to
those trends observed that differentially impacted age-sex factors in
the adult models. The draft coefficients listed in Tables 2 through 7
of this proposed rule reflect the use of 2018, 2019, and 2020 benefit
year enrollee-level EDGE recalibration data, with an exception to
exclude the 2020 benefit year data from the blending of the age-sex
coefficients for the adult models, as well as the other risk adjustment
model updates proposed in this proposed rule.\30\
---------------------------------------------------------------------------
\29\ As noted above, even though PMPM spending dropped
substantially between March and April 2020, our analysis found that
total PMPM spending in the 2020 benefit year was generally similar
to the 2019 benefit year.
\30\ Similar to recalibration of the 2023 risk adjustment adult
models and consistent with the policies adopted in the 2023 Payment
Notice, the draft factors in this rule also reflect the removal of
the mapping of hydroxychloroquine sulfate to RXC 09 (Immune
Suppressants and Immunomodulators) and the related RXC 09
interactions (RXC 09 x HCC056 or 057 and 048 or 041; RXC 09 x
HCC056; RXC 09 x HCC 057; RXC 09 x HCC048, 041) from the 2018 and
2019 benefit year enrollee-level EDGE data sets for purposes of
recalibrating the 2024 benefit year adult models. See 87 FR 27232
through 27235. Additionally, the draft factors for the adult models
reflect the use of the final, fourth quarter (Q4) RXC mapping
document that was applicable for each benefit year of data included
in the current year's model recalibration (except under extenuating
circumstances that can result in targeted changes to RXC mappings).
See 87 FR at 27231 through 27232.
---------------------------------------------------------------------------
To aid interested parties in their consideration of the proposed
option, we are providing in Table 1 the values for the adult age-sex
coefficients under option 1, which blends the age-sex coefficients
using all three benefit years (2018, 2019 and 2020). Interested parties
may compare the coefficients in Table 1 (reflecting option 1) to those
in Table 2 (reflecting proposed option 4) to understand the impact of
the 2020 enrollee-level EDGE data on the blended age-sex coefficients
for the 2024 benefit year.
[GRAPHIC] [TIFF OMITTED] TP21DE22.000
In addition to considering alternative options to recalibration in
this section, we note that the coefficients could change if we identify
an error after publication of this rule or if some or all of the
proposed model changes are not finalized or are modified in response to
comments. In addition, consistent with Sec. 153.320(b)(1)(i), if we
are unable to finalize the final coefficients in time for publication
in the final rule, we would publish the final coefficients for the 2024
benefit year in guidance soon after the publication of the final rule.
---------------------------------------------------------------------------
\31\ All coefficients in Table 2 except for the adult age-sex
factors are blended using all three benefit years of enrollee-level
EDGE data (2018, 2019, and 2020). Option 1 and proposed option 4
only differ in the values of the adult age-sex coefficients. As
such, in Table 1, we only provide the adult age-sex coefficients for
option 1.
---------------------------------------------------------------------------
We seek comment on the proposal to determine 2024 benefit year
coefficients based on a blend of separately solved coefficients from
the 2018, 2019, and 2020 enrollee-level EDGE recalibration data, with
an exception to exclude the 2020 benefit year data from the blending of
the age-sex coefficients for the adult models. We also seek comment on
all of the alternative approaches outlined above.
b. Pricing Adjustment for the Hepatitis C Drugs
For the 2024 benefit year, we propose to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs in the risk adjustment models.\32\ Since the 2020 benefit year
risk adjustment models, we have been making a market pricing adjustment
to the plan liability associated with Hepatitis C drugs to reflect
future market pricing prior to solving for coefficients for the
models.\33\ The purpose of this market pricing adjustment is to account
for significant pricing changes associated with the introduction of new
and generic Hepatitis C drugs between the data years used for
recalibrating the models and the applicable recalibration benefit
year.\34\
---------------------------------------------------------------------------
\32\ See for example, 84 FR 17463 through 17466.
\33\ The Hepatitis C drugs market pricing adjustment to plan
liability is applied for all enrollees taking Hepatitis C drugs in
the data used for recalibration.
\34\ Silseth, S., & Shaw, H. (2021). Analysis of prescription
drugs for the treatment of hepatitis C in the United States.
Milliman White Paper. <a href="https://www.milliman.com/-/media/milliman/pdfs/2021-articles/6-11-21-analysis-prescription-drugs-treatment-hepatitis-c-us.ashx">https://www.milliman.com/-/media/milliman/pdfs/2021-articles/6-11-21-analysis-prescription-drugs-treatment-hepatitis-c-us.ashx</a>.
---------------------------------------------------------------------------
We have committed to reassessing this pricing adjustment with
additional years of enrollee-level EDGE data, as data become available.
As part of the 2024 benefit year model recalibration, we reassessed the
cost trend for Hepatitis C drugs using available
[[Page 78219]]
enrollee-level EDGE data (including 2020 benefit year data) to consider
whether the adjustment was still needed and if it is still needed,
whether it should be modified. We found that the data for the Hepatitis
C RXC that would be used for the 2024 benefit year recalibration \35\
still do not account for the significant pricing changes due to the
introduction of new Hepatitis C drugs, and therefore, do not precisely
reflect the average cost of Hepatitis C treatments applicable to the
benefit year in question.
---------------------------------------------------------------------------
\35\ As detailed above, we propose to use 2018, 2019 and 2020
enrollee-level EDGE data for recalibration of the 2024 benefit year
HHS risk adjustment models, with an exception to exclude 2020 data
from recalibration of the age-sex factors for the adult models.
However, for purposes of assessing whether this pricing adjustment
was still needed and, if so, if it should be modified, we also
assessed 2017 enrollee-level EDGE data in the event one of the
alternative proposals regarding use of 2020 enrollee-level EDGE data
is adopted.
---------------------------------------------------------------------------
Specifically, generic Hepatitis C drugs did not become available on
the market until 2019, and we propose to use 2018 benefit year EDGE
data in the 2024 benefit year model recalibration.\36\ Due to the lag
between the data years used to recalibrate the risk adjustment models
and the applicable benefit year of risk adjustment, as well as the
expectation that the costs for Hepatitis C drugs will not increase at
the same rate as other drug costs between the data year and the
applicable benefit year of risk adjustment, we do not believe that the
trends used to reflect growth in the cost of prescription drugs due to
inflation and related factors for recalibrating the models will
appropriately reflect the average cost of Hepatitis C treatments
expected in the 2024 benefit year. Therefore, we continue to believe a
market pricing adjustment specific to Hepatitis C drugs in our models
for the 2024 benefit year is necessary to account for the significant
pricing changes associated with the introduction of new and generic
Hepatitis C drugs between the data years used for recalibrating the
models and the applicable recalibration benefit year. We intend to
continue to assess this pricing adjustment in future benefit year
recalibrations using additional years of enrollee-level EDGE data.
---------------------------------------------------------------------------
\36\ See Miligan, J, (2018). A perspective from our CEO: Gilead
Subsidiary to Launch Authorized Generics to Treat HCV. Gilead.
<a href="https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv">https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv</a>. See also AbbVie. (2017). AbbVie Receives U.S. FDA
Approval of MAVYRET<SUP>TM</SUP> (glecaprevir/pibrentasvir) for the
Treatment of Chronic Hepatitis C in All Major Genotypes (GT 1-6) in
as Short as 8 Weeks. Abbvie. <a href="https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm">https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm</a>.
---------------------------------------------------------------------------
We seek comment on our proposal to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs for the 2024 benefit year.
c. Request for Information: Payment HCC for Gender Dysphoria
HHS requests information on adding a payment HCC for gender
dysphoria to the HHS-operated risk adjustment models for future benefit
years. As part of the ongoing assessment of improvements to the HHS-
operated risk adjustment program, HHS considers whether adjustments are
needed to the payment HCCs in the risk adjustment models.\37\ In light
of Executive Order (E.O.) 13985 ``Advancing Racial Equity and Support
for Underserved Communities Through the Federal Government,'' \38\ E.O.
13988 ``Preventing and Combating Discrimination on the Basis of Gender
Identity or Sexual Orientation,'' \39\ and a comment received in
response to the 2023 Payment Notice proposed rule, HHS is soliciting
comment on whether to consider adding a new payment HCC for gender
dysphoria to the risk adjustment models for future benefit years.
---------------------------------------------------------------------------
\37\ See, for example, the 2019 White Paper. <a href="https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf">https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf</a>.
\38\ 86 FR 7009.
\39\ 86 FR 7023.
---------------------------------------------------------------------------
In considering the inclusion of a new payment HCC for gender
dysphoria, we evaluated this potential payment HCC against the 10
Principles of HHS-Operated Risk Adjustment and determined that a new
payment HCC for gender dysphoria would satisfy some but not all of
these principles (77 FR 73128).
To further consider whether we should add a payment HCC for gender
dysphoria to the HHS-operated risk adjustment models, we request
feedback on the following questions:
<bullet> 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''
\40\ for the naming and inclusion of this diagnosis or payment HCC in
the HHS risk adjustment models.
---------------------------------------------------------------------------
\40\ World Health Organization. (n.d.). Gender incongruence and
transgender health in the ICD. <a href="https://www.who.int/standards/classifications/frequently-asked-questions/gender-incongruence-and-transgender-health-in-the-icd">https://www.who.int/standards/classifications/frequently-asked-questions/gender-incongruence-and-transgender-health-in-the-icd</a>.
---------------------------------------------------------------------------
<bullet> 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.\41\
---------------------------------------------------------------------------
\41\ Gender dysphoria codes are currently mapped to HCC 93 Other
Psychiatric Disorders, a non-payment HCC that is not currently
included in the HHS-operated risk adjustment models.
---------------------------------------------------------------------------
<bullet> 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.
While we are not proposing to add a payment HCC for gender
dysphoria to the HHS risk adjustment models at this time, we solicit
comments to inform our continued consideration of potential risk
adjustment model updates for future benefit years.
d. List of Factors To Be Employed in the Risk Adjustment Models (Sec.
153.320)
The proposed 2024 benefit year risk adjustment model factors
resulting from the equally weighted (averaged) blended factors from
separately solved models using the 2018, 2019, and 2020 enrollee-level
EDGE data, with an exception to exclude the 2020 data from
recalibration of the age-sex factors for the adult models, are shown in
Tables 1 through 6. The adult, child, and infant models have been
truncated to account for the high-cost risk pool payment parameters by
removing 60 percent of costs above the $1 million threshold.\42\ Table
2 contains factors for each adult model, including the age-sex, HCCs,
RXCs, RXC-HCC interactions, interacted HCC counts, and enrollment
duration coefficients. Table 3 contains the factors for each child
model, including the age-sex, HCCs, and interacted HCC counts
coefficients. Table 4 lists the HHS-HCCs selected for the interacted
HCC counts factors that apply to the adult and child models. Table 5
contains the factors for each infant model. Tables 6 and 7 contain the
HCCs included in the infant models' maturity and severity categories,
respectively.
---------------------------------------------------------------------------
\42\ We are not proposing changes to the high-cost risk pool
parameters for the 2024 benefit year. Therefore, we would maintain
the $1 million threshold and 60 percent coinsurance rate.
---------------------------------------------------------------------------
BILLING CODE 4120-01-P
[[Page 78220]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.001
[[Page 78221]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.002
[[Page 78222]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.003
[[Page 78223]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.004
[[Page 78224]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.005
[[Page 78225]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.006
[[Page 78226]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.007
[[Page 78227]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.008
[[Page 78228]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.009
[[Page 78229]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.010
[[Page 78230]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.011
[[Page 78231]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.012
[[Page 78232]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.013
[GRAPHIC] [TIFF OMITTED] TP21DE22.014
[[Page 78233]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.015
[[Page 78234]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.016
[[Page 78235]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.017
BILLING CODE 4120-01-C
e. CSR Adjustments<SUP>43</SUP> <SUP>44</SUP> <SUP>45</SUP>
<SUP>46 47</SUP><SUP>48</SUP>
---------------------------------------------------------------------------
\43\ Starting with the 2024 risk adjustment adult models, HHS
will group HCC 18 Pancreas Transplant Status and HCC 183 Kidney
Transplant Status/Complications to reflect that these transplants
frequently co-occur for clinical reasons and to reduce volatility of
coefficients across benefit years due to the small sample size of
HCC 18. This change will also be reflected in the DIY Software for
the 2024 benefit year.
\44\ HCC numbers that appear with an underscore in this document
will appear without the underscore in the DIY software. For example,
HCC 35_1 in this table will appear as HCC 351 in the DIY software.
\45\ Starting with the 2024 risk adjustment adult models, HHS
will group HCC 18 Pancreas Transplant Status and HCC 183 Kidney
Transplant Status/Complications to reflect that these transplants
frequently co-occur for clinical reasons and to reduce volatility of
coefficients across benefit years due to the small sample size of
HCC 18. This change will also be reflected in the DIY Software for
the 2024 benefit year.
\46\ As a note, we constrain RXC 03 to be equal to average plan
liability for RXC 03 drugs, RXC 04 to be equal to the average plan
liability for RXC 04 drugs, and we constrain RXC 03 x HCC142 and RXC
04 x HCC184, 183, 187, 188 to be equal to 0. See CMS. (2016, March
24). March 2016 Risk Adjustment Methodology Discussion Paper.
<a href="https://www.cms.gov/cciio/resources/forms-reports-and-other-resources/downloads/ra-march-31-white-paper-032416.pdf">https://www.cms.gov/cciio/resources/forms-reports-and-other-resources/downloads/ra-march-31-white-paper-032416.pdf</a> (where we
previously discussed the use of constraints in the risk adjustment
models).
\47\ Similar to recalibration of the 2023 risk adjustment adult
models and consistent with the final policies adopted in the 2023
Payment Notice, the draft factors in this rule reflect the removal
of the mapping of hydroxychloroquine sulfate to RXC 09 (Immune
Suppressants and Immunomodulators) and the related RXC 09
interactions (RXC 09 x HCC056 or 057 and 048 or 041; RXC 09 x
HCC056; RXC 09 x HCC 057; RXC 09x HCC048, 041) from the 2018 and
2019 benefit year enrollee-level EDGE data sets for purposes of
recalibrating the 2024 benefit year adult models. See 87 FR 27232
through 27235. Additionally, the draft factors for the adult models
reflect the use of the final, fourth quarter (Q4) RXC mapping
document that was applicable for each benefit year of data included
in the current year's model recalibration (except under extenuating
circumstances that can result in targeted changes to RXC mappings),
while continuing to engage in annual and quarterly review processes.
See 87 FR 27231 through 27232.
\48\ Starting with the 2024 risk adjustment adult models, HHS
will group HCC 18 Pancreas Transplant Status and HCC 183 Kidney
Transplant Status/Complications to reflect that these transplants
frequently co-occur for clinical reasons and to reduce volatility of
coefficients across benefit years due to the small sample size of
HCC 18. This change will also be reflected in the DIY Software for
the 2024 benefit year and will be applied to the adult models only.
In the child models, HCC 18 and HCC 183 are subject to an a priori
constraint (S1) with HCC 34, also for sample size reasons. See
Section 4.2.2 of the 2019 White Paper. (June 17, 2019.) <a href="https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf">https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf</a>. Nevertheless, in both the adult and child models, the
presence of one of these HCCs either alone or in a group will
trigger a severity illness indicator and/or a transplant indicator
for the interacted counts model specification depending on the total
number of HCCs the enrollee has.
---------------------------------------------------------------------------
We propose to continue including an adjustment for the receipt of
CSRs in the risk adjustment models in all 50 States and the District of
Columbia. While we continue to study and explore a range of options to
update the CSR adjustments to improve prediction for CSR enrollees and
whether changes are needed to the risk adjustment transfer formula to
account for CSR plans,\49\ to maintain stability and certainty for
issuers for the 2024 benefit year, we are proposing to maintain the CSR
adjustment factors finalized in the 2019, 2020, 2021, 2022, and 2023
Payment Notices.\50\ See Table 8. We also propose to continue to use a
CSR adjustment factor of 1.12 for all Massachusetts wrap-around plans
in the risk adjustment plan liability risk score calculation, as all of
Massachusetts' cost-sharing plan variations have AVs above 94 percent
(81 FR 12228).
---------------------------------------------------------------------------
\49\ See CMS. (2021, October 26). HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes. Appendix A. <a href="https://www.cms.gov/files/document/2021-ra-technical-paper.pdf">https://www.cms.gov/files/document/2021-ra-technical-paper.pdf</a>. We are also
considering a letter recently published by the American Academy of
Actuaries regarding accounting for the receipt of CSRs in risk
adjustment and plan rating and are continuing to monitor changes
related to these issues. Bohl, J., Novak, D., & Karcher, J. (2022,
September 8). Comment Letter on Cost-Sharing Reduction Premium Load
Factors. American Academy of Actuaries. <a href="https://www.actuary.org/sites/default/files/202209/Academy_CSR_Load_Letter_09.08.22.pdf">https://www.actuary.org/sites/default/files/202209/Academy_CSR_Load_Letter_09.08.22.pdf</a>.
\50\ See 83 FR 16930 at 16953; 84 FR 17478 through 17479; 85 FR
29190; 86 FR 24181; and 87 FR 27235 through 27236.
---------------------------------------------------------------------------
We seek comment on these proposals.
[[Page 78236]]
[GRAPHIC] [TIFF OMITTED] TP21DE22.018
f. Model Performance Statistics
Each benefit year, to evaluate risk adjustment model performance,
we examine each model's R-squared statistic and predictive ratios
(PRs). The R-squared statistic, which calculates the percentage of
individual variation explained by a model, measures the predictive
accuracy of the model overall. The PR for each of the HHS risk
adjustment model is the ratio of the weighted mean predicted plan
liability for the model sample population to the weighted mean actual
plan liability for the model sample population. The PR represents how
well the model does on average at predicting plan liability for that
subpopulation.
A subpopulation that is predicted perfectly would have a PR of 1.0.
For each of the current and proposed HHS risk adjustment models, the R-
squared statistic and the PRs are in the range of published estimates
for concurrent risk adjustment models.\51\ Because we propose to blend
the coefficients from separately solved models based on the 2018, 2019,
and 2020 benefit years' enrollee-level EDGE data, with an exception to
exclude 2020 benefit year data from the recalibration of the age-sex
factors for the adult models, we are publishing the R-squared statistic
for each model separately to verify their statistical validity. The R-
squared statistics for the proposed 2024 benefit models are shown in
Table 9.
---------------------------------------------------------------------------
\51\ Hileman, G., & Steele, S. (2016). Accuracy of Claims-Based
Risk Scoring Models. Society of Actuaries. <a href="https://www.soa.org/4937b5/globalassets/assets/files/research/research-2016-accuracy-claims-based-risk-scoring-models.pdf">https://www.soa.org/4937b5/globalassets/assets/files/research/research-2016-accuracy-claims-based-risk-scoring-models.pdf</a>.
[GRAPHIC] [TIFF OMITTED] TP21DE22.019
[[Page 78237]]
3. Overview of the HHS Risk Adjustment Methodology (Sec. 153.320)
In part 2 of the 2022 Payment Notice (86 FR 24183 through 24186),
we finalized the proposal to continue to use the State payment transfer
formula finalized in the 2021 Payment Notice for the 2022 benefit year
and beyond, unless changed through notice-and-comment rulemaking. We
explained that under this approach, we will no longer republish these
formulas in future annual HHS notice of benefit and payment parameter
rules unless changes are being proposed. We are not proposing any
changes to the formula in this rule, and therefore, are not
republishing the formulas in this rule. We would continue to apply the
formula as finalized in the 2021 Payment Notice (86 FR 24183 through
24186) \52\ in the States where HHS operates the risk adjustment
program in the 2024 benefit year. Additionally, as finalized in the
2020 Payment Notice (84 FR 17466 through 17468), we will maintain the
high-cost risk pool parameters for the 2020 benefit year and beyond,
unless amended through notice-and-comment rulemaking. We are not
proposing any changes to the high-cost risk pool parameters for the
2024 benefit year; therefore, we would maintain the $1 million
threshold and 60 percent coinsurance rate.
---------------------------------------------------------------------------
\52\ Discussion provided an illustration and further details on
the State payment transfer formula.
---------------------------------------------------------------------------
4. Repeal of Risk Adjustment State Flexibility To Request a Reduction
in Risk Adjustment State Transfers (Sec. 153.320(d))
We propose to repeal the flexibility under Sec. 153.320(d) for
States to request reductions of risk adjustment State transfers under
the State payment transfer formula in all State market risk pools,
including those prior participant States that previously requested a
reduction,\53\ for the 2025 benefit year and beyond. We also solicit
comment on Alabama's requests to reduce risk adjustment State transfers
in the individual (including the catastrophic and non-catastrophic risk
pools) and small group markets for the 2024 benefit year.
---------------------------------------------------------------------------
\53\ Alabama is the only State that has previously requested a
reduction in risk adjustment transfers through this flexibility and
therefore is the only State considered a ``prior participant
State''.
---------------------------------------------------------------------------
a. Repeal of State Flexibility To Request Transfer Reductions
We propose to amend Sec. 153.320(d) to repeal the ability for any
State to request a reduction in risk adjustment State transfers
beginning with the 2025 benefit year. As part of this repeal, we
propose conforming amendments to the introductory text of Sec.
153.320(d), which currently provides that prior participant States may
request to reduce risk adjustment transfers in all State market risk
pools by up to 50 percent beginning with the 2024 benefit year, to
remove this flexibility for the 2025 benefit year and beyond and limit
the timeframe available for prior participants to request reductions to
the 2024 benefit year only. Similarly, we propose conforming amendments
to paragraphs (d)(1)(iv) and (d)(4)(i)(B), which describe the
conditions for a prior participant State to request a reduction
beginning with the 2024 benefit year, to also limit these requests to
the 2024 benefit year only and to eliminate the ability for prior
participant States to request a reduction for the 2025 benefit year and
beyond.
In the 2019 Payment Notice (83 FR 16955 through 16960), we amended
Sec. 153.320 to add paragraph (d) to provide States the flexibility to
request a reduction to the applicable risk adjustment State transfers
calculated by HHS using the State payment transfer formula for the
State's individual (catastrophic or non-catastrophic risk pools), small
group, or merged market risk pool by up to 50 percent in States where
HHS operates the risk adjustment program to more precisely account for
differences in actuarial risk in the applicable State's markets
beginning with the 2020 benefit year. We finalized that any requests we
received would be published in the applicable benefit year's proposed
HHS notice of benefit and payment parameters, and the supporting
evidence provided by the State in support of its request would be made
available for public comment.\54\
---------------------------------------------------------------------------
\54\ If the State requests that HHS not make publicly available
certain supporting evidence and analysis because it contains trade
secrets or confidential commercial or financial information within
the meaning of HHS' Freedom of Information Act regulations at 45 CFR
5.31(d), HHS will only make available on the CMS website the
supporting evidence submitted by the State that is not a trade
secret or confidential commercial or financial information by
posting a redacted version of the State's supporting evidence. See
Sec. 153.320(d)(3).
---------------------------------------------------------------------------
In the 2023 Payment Notice (87 FR 27236), HHS limited this
flexibility by finalizing amendments to Sec. 153.320(d) that repealed
the State flexibility framework for States to request reductions in
risk adjustment State transfer payments for the 2024 benefit year and
beyond, with an exception for prior participants.\55\ We also limited
the options for prior participants to request reductions by finalizing
that beginning with the 2024 benefit year, States submitting reduction
requests must demonstrate that the requested reduction satisfies the de
minimis standard--that is, the premium increase necessary to cover the
affected issuer's or issuers' reduced risk adjustment payments does not
exceed 1 percent in the relevant State market risk pool.\56\ In the
2023 Payment Notice (87 FR 27239 through 27241), we also finalized the
conforming amendments to the HHS approval framework in Sec.
153.320(d)(4) to reflect the changes to the applicable criteria (that
is, only retaining the de minimis criterion) beginning with the 2024
benefit year, and we finalized the proposed definition of ``prior
participant'' in Sec. 153.320(d)(5). In addition, HHS indicated our
intention to propose in future rulemaking to repeal the exception for
prior participants beginning with the 2025 benefit year.\57\
---------------------------------------------------------------------------
\55\ Section 153.320(d)(5) defines prior participants as States
that submitted a State reduction request in the State's individual
catastrophic, individual non-catastrophic, small group, or merged
market risk pool in the 2020, 2021, 2022, or 2023 benefit year.
\56\ 87 FR 27239 through 27241. See also 83 FR 16957.
\57\ 87 FR 27239 through 27241. See also 83 FR 16957.
---------------------------------------------------------------------------
Since finalizing the ability for States to request a reduction of
risk adjustment transfers in the 2019 Payment Notice (83 FR 16955
through 16960), we received public comments on subsequent proposed
rulemakings requesting that HHS repeal this policy, with several
commenters noting that reducing risk adjustment transfers to plans with
higher-risk enrollees could create incentives for issuers to avoid
enrolling high-risk enrollees in the future by distorting plan
offerings and designs, including by avoiding broad network plans, not
offering platinum plans at all, and only offering limited gold plans.
Commenters further stated that issuers could also distort plan designs
by excluding coverage or imposing high cost-sharing for certain drugs
or services. For example, one commenter stated that the risk adjustment
State payment transfer formula already adjusts for differences in types
of individuals enrolled in different States and aggregate differences
in prices and utilization by using the Statewide average premium as a
scaling factor, so State flexibility to account for State-specific
factors is unnecessary.\58\ In addition, since establishing this
framework, we have observed a lack of
[[Page 78238]]
interest from States in using this policy. Only one State (Alabama) has
exercised this flexibility and requested reductions to transfers in its
individual and/or small group markets.\59\
---------------------------------------------------------------------------
\58\ See Fielder, M, & Layton, T. (2020, December 30). Comment
Letter on 2022 Payment Notice Proposed Rule. Brookings. <a href="https://www.brookings.edu/wp-content/uploads/2020/12/FiedlerLaytonCommentLetterNBPP2022.pdf">https://www.brookings.edu/wp-content/uploads/2020/12/FiedlerLaytonCommentLetterNBPP2022.pdf</a>.
\59\ For the 2020 and 2021 benefit years, Alabama submitted a 50
percent risk adjustment transfer reduction request for its small
group market, which HHS approved in the 2020 Payment Notice (84 FR
17454) and in the 2021 Payment Notice (85 FR 29164). For the 2022
and 2023 benefit years, Alabama submitted 50 percent risk adjustment
transfer reduction requests for its individual and small group
markets. HHS approved the State's requests for the 2022 benefit year
in part 2 of the 2022 Payment Notice final rule (86 FR 24140) and
approved a 25 percent reduction for Alabama's individual market
State transfers (including the catastrophic and non-catastrophic
risk pools) and a 10 percent reduction for the State's small group
market transfers for the 2023 benefit year in the 2023 Payment
Notice (87 FR 27208).
---------------------------------------------------------------------------
HHS believes this proposal to completely repeal the option for
States to request reductions in risk adjustment State transfers would
align HHS policy with Section 1 of E.O. 14009 (86 FR 7793), which
prioritizes protecting and strengthening the ACA and making high-
quality health care accessible and affordable for all individuals.
Section 3 of E.O. 14009 directs HHS, and the heads of all other
executive departments and agencies with authorities and
responsibilities related to Medicaid and the ACA, to review all
existing regulations, orders, guidance documents, policies, and any
other similar agency actions to determine whether they are inconsistent
with policy priorities described in Section 1 of E.O. 14009. Consistent
with this directive, HHS reviewed the risk adjustment State flexibility
under Sec. 153.320(d) and determined it is inconsistent with policies
described in sections 1 and 3 of E.O. 14009. We believe that a complete
repeal of Sec. 153.320(d) would prevent the potential negative
outcomes of risk adjustment State flexibility identified through public
comment, including the possibility of risk selection, market
destabilization, increased premiums, smaller networks, and less-
comprehensive plan options, the prevention of which would protect and
strengthen the ACA and make health care more accessible and affordable.
For all of these reasons, we propose to amend Sec. 153.320(d) to fully
repeal the flexibility for States, including prior participants, to
request reductions of risk adjustment State transfers calculated by HHS
under the State payment transfer formula in all State market risk pools
beginning with the 2025 benefit year. If these amendments are
finalized, no State would be able to request a reduction in risk
adjustment transfers calculated by HHS under the State payment transfer
formula starting with the 2025 benefit year.
We seek comment on this proposal.
b. Requests To Reduce Risk Adjustment Transfers for the 2024 Benefit
Year
In accordance with Sec. 153.320(d)(2), beginning with the 2020
benefit year, States requesting a reduction in the transfers calculated
by HHS under the State payment transfer formula must submit their
requests with the supporting evidence and analysis outlined under Sec.
153.320(d)(1) by August 1 of the calendar year that is 2 calendar years
prior to the beginning of the applicable benefit year. As finalized in
the 2023 Payment Notice (87 FR 27239 through 27241), under Sec.
153.320(d)(1)(iv), State requests for a reduction to transfers must
include a justification for the reduction requested demonstrating the
requested reduction would have de minimis impact on the necessary
premium increase to cover the transfers for issuers that would receive
reduced transfer payments beginning with the 2024 benefit year. In
accordance with Sec. 153.320(d)(4)(i)(B), HHS will approve State
reduction requests if HHS determines, based on the review of the
information submitted as part of the State's request, along with other
relevant factors, including the premium impact of the transfer
reduction for the State market risk pool, and relevant public comments,
that the requested reduction would have de minimis impact on the
necessary premium increase to cover the transfers for issuers that
would receive reduced transfer payments beginning with the 2024 benefit
year. In addition, pursuant to Sec. 153.320(d)(4)(ii), HHS may approve
a reduction amount that is lower than the amount requested by the State
if the supporting evidence and analysis do not fully support the
requested reduction amount. If approved by HHS, State reduction
requests are applied to the plan PMPM payment or charge State payment
transfer amount (Ti in the State payment transfer formula).
For the 2024 benefit year, HHS received requests from Alabama to
reduce risk adjustment State transfers for its individual \60\ and
small group markets by 50 percent. As Alabama has stated in previous
years, Alabama asserts that the HHS-operated risk adjustment program
does not work precisely in the Alabama market, clarifying that they do
not assert that the risk adjustment formula is flawed, only that it
produces imprecise results in Alabama which has an ``extremely
unbalanced market share.'' The State reports that its review of the
issuers' 2021 financial data suggested that any premium increase
resulting from a reduction of 50 percent to the 2024 benefit year risk
adjustment payments for the individual market would not exceed one
percent, the de minimis premium increase threshold set forth in Sec.
153.320(d)(1)(iv) and (d)(4)(i)(B). Additionally, the State reports
that its review of the issuers' 2021 financial data also suggested that
any premium increase resulting from a 50 percent reduction to risk
adjustment payments in the small group market for the 2024 benefit year
would not exceed the de minimis threshold of one percent.
---------------------------------------------------------------------------
\60\ Alabama's individual market request is for a 50 percent
reduction to risk adjustment transfers for its individual market
non-catastrophic and catastrophic risk pools.
---------------------------------------------------------------------------
At this time, to make HHS's approval determination under Sec.
153.320(d)(4), we seek comment on Alabama's requests to reduce risk
adjustment State transfers in their individual and small group markets
by 50 percent for the 2024 benefit year. The request and additional
documentation submitted by Alabama are posted under the ``State
Flexibility Requests'' heading at <a href="https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs">https://www.cms.gov/cciio/programs-and-initiatives/premium-stabilization-programs</a>.
5. Risk Adjustment Issuer Data Requirements (Sec. Sec. 153.610,
153.700, and 153.710)
We propose, beginning with the 2023 benefit year, to collect and
extract from issuers' EDGE servers through issuers' EDGE Server
Enrollment Submission (ESES) files and risk adjustment recalibration
enrollment files a new data element, a QSEHRA indicator. We also
propose to extract plan ID and rating area data elements issuers have
submitted to their EDGE servers from certain benefit years prior to
2021.
45 CFR 153.610(a) requires that health insurance issuers of risk
adjustment covered plans submit or make accessible all required risk
adjustment data in accordance with the data collection approach
established by HHS \61\ in States where HHS operates the program on
behalf of a State.\62\ In the 2014 Payment Notice (78 FR 15497 through
15500; Sec. 153.720), HHS established an approach for obtaining the
necessary data for risk adjustment calculations in States where HHS
operates the program
[[Page 78239]]
through a distributed data collection model that prevented the transfer
of individuals' personally identifiable information (PII). Then, in
several subsequent rulemakings,\63\ we finalized policies for the
extraction and use of enrollee-level EDGE data. The purpose of
collecting and extracting enrollee-level data is to provide HHS with
more granular data to use for recalibrating the HHS risk adjustment
models, informing updates to the AV Calculator, conducting policy
analysis, and calibrating HHS programs in the individual and small
group (including merged) markets and the PHS Act requirements enforced
by HHS that are applicable market-wide,\64\ as well as informing policy
and improving the integrity of other HHS Federal health-related
programs.\65\ The use of enrollee-level data extracted from issuers'
EDGE servers and summary level reports produced from remote command and
ad hoc queries enhances HHS' ability to develop and set policy and
limits the need to pursue alternative burdensome data collections from
issuers. We also previously finalized policies related to creating on
an annual basis an enrollee-level EDGE Limited Data Set (LDS) using
masked enrollee-level data submitted to EDGE servers by issuers of risk
adjustment covered plans in the individual and small group (including
merged) markets and making this LDS available to requestors who seek
the data for research purposes.<SUP>66 67</SUP>
---------------------------------------------------------------------------
\61\ Also see 45 CFR 153.700-153.740.
\62\ The full list of required data elements can be found in
Appendix A of OMB Control Number 0938-1155/CMS-10401. (2022, May
26). Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment. <a href="https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing">https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing</a>-Items/CMS-10401.
\63\ See the 2018 Payment Notice, 81 FR 94101; the 2020 Payment
Notice, 84 FR 17488; and the 2023 Payment Notice, 87 FR 27241.
\64\ See, for example, 42 U.S.C. 300gg-300gg-28.
\65\ As detailed in the 2023 Payment Notice, the finalized
policies related to the permitted uses of EDGE data and reports make
clear that HHS can use this information to inform policy analyses
and improve the integrity of other HHS Federal health-related
programs outside the commercial individual and small group
(including merged) markets, such as the programs in certain States
to provide wrap-around QHP coverage through Exchanges to Medicaid
expansion populations and coverage offered by non-Federal
Governmental plans. See 87 FR 27243; 87 FR 630 through 631.
\66\ See the 2020 Payment Notice, 84 FR 17486 through 17490 and
the 2023 Payment Notice, 87 FR 27243. Also see CMS. (2022, August
15). Enrollee-Level External Data Gathering Environment (EDGE)
Limited Data Set (LDS). <a href="https://www.cms.gov/research-statistics-data-systems/limited-data-set-lds-files/enrollee-level-external-data-gathering-environment-edge-limited-data-set-lds">https://www.cms.gov/research-statistics-data-systems/limited-data-set-lds-files/enrollee-level-external-data-gathering-environment-edge-limited-data-set-lds</a>.
\67\ As explained in the 2020 Payment Notice, we do not
currently make the EDGE LDS available to requestors for public
health or health care operation activities. See 84 FR 17488.
---------------------------------------------------------------------------
a. Collection and Extraction of the QSEHRA Indicator
In the 2023 Payment Notice (87 FR 27241 through 27252), we
finalized that we will collect and extract an individual coverage
Health Reimbursement Arrangement (ICHRA) indicator and that we will
make this indicator available in the enrollee-level EDGE LDS beginning
with the 2023 benefit year. The primary purpose of collecting and
extracting ICHRA indicator data is to allow HHS to conduct analyses to
examine whether there are any unique actuarial characteristics of the
ICHRA population (such as the health status of enrollees with ICHRAs),
and to investigate what impact (if any) ICHRA enrollment is having on
State individual and small group (or merged) market risk pools. The
additional information collected through the ICHRA indicator will be
used to further analyze if any refinements to the HHS risk adjustment
methodology should be examined or proposed through notice and comment
rulemaking, and similarly may also be used to inform policy analysis
and potential updates to the AV Calculator, other HHS individual or
small group (including merged) market programs, or other HHS Federal
health-related programs.
Since finalizing the collection of the ICHRA indicator as part of
the enrollee-level EDGE data extracted from issuers' EDGE servers, we
determined that also collecting and extracting a QSEHRA indicator would
provide a more thorough picture of the actuarial characteristics of the
Health Reimbursement Arrangement (HRA) population and how or whether
HRA enrollment is impacting State individual and small group (including
merged) market risk pools. HHS needs QSEHRA data in order to conduct a
comprehensive assessment of the HRA markets. A QSEHRA indicator would
also allow HHS to investigate whether the risk profile of enrollees in
QSEHRAs, which differ from ICHRAs with respect to standards related to
employer eligibility, employee eligibility, restrictions on allowance
amounts, and eligibility for PTCs, differ from enrollees in ICHRAs.\68\
While we acknowledge that FFEs, SBE-FPs, and SBEs collect information
about the provision of QSEHRAs, we note that adding a QSEHRA indicator
to the required risk adjustment EDGE data submissions would provide
more uniform and comprehensive information than what is submitted by
Exchange enrollees, as it would capture information on both Exchange
and non-Exchange enrollment. It also would provide HHS the ability to
extract and aggregate the QSEHRA indicator alongside other claims and
enrollment data accessible through issuers' EDGE servers, which would
not be possible with the data collection from consumers through other
processes since the EDGE data is masked \69\ and therefore cannot be
linked with other enrollment data sources.\70\
---------------------------------------------------------------------------
\68\ Rosso, R. (2022, May 7). Health Reimbursement Arrangements
(HRAs): Overview and Related History. Congressional Research
Service. <a href="https://crsreports.congress.gov/product/pdf/R/R47041">https://crsreports.congress.gov/product/pdf/R/R47041</a>.
\69\ 45 CFR 153.720.
\70\ For information on the challenges associated with linking
the extracted enrollee-level EDGE data to other sources, see 87 FR
631 through 632.
---------------------------------------------------------------------------
We therefore propose that, beginning with the 2023 benefit year,
issuers would be required to collect and submit a QSEHRA indicator as
part of the required risk adjustment data that issuers make accessible
to HHS from their respective EDGE servers in States where HHS operates
the risk adjustment program. This new data element would be included as
part of the enrollee-level EDGE data extracted from issuers' EDGE
servers and summary level reports produced from remote command and ad
hoc queries beginning with the 2023 benefit year.\71\ We also propose
to include this indicator in the enrollee-level EDGE LDS made available
to qualified researchers upon request once available (that is,
beginning with 2023 benefit year data).
---------------------------------------------------------------------------
\71\ The deadline for submission of 2023 benefit year risk
adjustment data is April 30, 2024. See 45 CFR 153.730.
---------------------------------------------------------------------------
In the 2023 Payment Notice (87 FR at 27248), we acknowledged that
ICHRA information is collected by HHS from FFE or SBE-FP enrollees
through the eligibility application process and from SBE enrollees
through the State Exchange enrollment and payment files, as well as
collected directly by issuers and their affiliated agents and brokers.
We also noted the ICHRA indicator was intended to capture whether a
particular enrollee's health care coverage involves (or does not
involve) an ICHRA and that we would structure this data element for
EDGE data submissions similar to current collections, where possible.
Additionally, we explained that the collection and extraction of an
ICHRA indicator as part of the required risk adjustment data
submissions issuers make accessible to HHS through their respective
EDGE servers provides more uniform and comprehensive information than
what is submitted by FFE and SBE-FP enrollees on a QHP application and
by SBE enrollees through enrollment and payment files, as it would
capture both on and off Exchange enrollees.
The same is also true for QSEHRA information and we therefore
propose to apply the same approach for the QSEHRA indicator. Currently,
the FFEs and SBE-FPs collect information about
[[Page 78240]]
QSEHRA provision from all applicants to determine whether they are
eligible for a special enrollment period (SEP), as individuals and
their dependents who become newly eligible for a QSEHRA may be eligible
for a SEP. SBEs also collect similar information from their applicants
to determine SEP eligibility. This data may also be provided directly
to issuers by consumers who seek to enroll in coverage directly with
the issuer. In addition, an issuer may currently have or collect
information that could be used to populate the QSEHRA indicator in
situations where the issuer is being paid directly by the employer
through the QSEHRA for the individual market coverage. We therefore
propose to generally permit issuers to populate the required QSEHRA
indicator with information from the FFE or SBE-FP enrollees or
enrollees through SBEs, or from other sources for collecting this
information. The QSEHRA indicator would be used to capture whether a
particular enrollee's health care coverage involves (or does not
involve) a QSEHRA, and we propose to structure this data element for
EDGE data submissions similar to current collections, where possible.
Beginning with the 2023 benefit year, HHS would provide additional
operational and technical guidance on how issuers should submit this
new data element to HHS through issuer EDGE servers via the applicable
benefit year's EDGE Server Business Rules and the EDGE Server Interface
Control Document, as may be necessary.
We are also proposing, similar to the transitional approach for the
ICHRA indicator finalized in the 2023 Payment Notice (87 FR 27241
through 27252), a transitional approach for the collection and
extraction of the QSEHRA indicator. For the 2023 and 2024 benefit
years, issuers would be required to populate the QSEHRA indicator using
only data they already collect or have accessible regarding their
enrollees. For example, when an FFE enrollee is using an SEP,
information about QSEHRA provision is collected by the FFE, and the FFE
may make these data available to issuers. In addition, as noted above,
there may be situations where an issuer has or collects information
that could be used to populate the QSEHRA indicator. Then, beginning
with the 2025 benefit year, we propose that the transitional approach
would end, and issuers would be required to populate the QSEHRA field
using available sources (for example, information from Exchanges, and
requesting information directly from enrollees) and, in the absence of
an existing source for particular enrollees, to make a good faith
effort to ensure collection and submission of the QSEHRA indictor for
these enrollees. HHS would provide additional details on what
constitutes a good faith effort to ensure collection and submission of
the QSEHRA indicator in the future. HHS intends to seek input from
issuers and other interested parties to inform development of the good
faith standard and determine the most feasible methods for issuers to
collect the information used to populate this data field.\72\
---------------------------------------------------------------------------
\72\ If the burden estimate for collection of QSEHRA indicator
changes beginning with the 2025 benefit year (after the transitional
approach ends), the information collection under OMB control number
0938-1155 would be revised accordingly and interested parties would
be provided the opportunity to comment through that process.
---------------------------------------------------------------------------
We believe this transitional approach is necessary as the burden
associated with the collection of this data would be similar to that of
the collection of the ICHRA indicator, as finalized in the 2023 Payment
Notice (87 FR 27241 through 27252). Much like the ICHRA indicator data,
we believe that some issuers already collect the relevant QSEHRA data.
However, we do not believe the information to populate the QSEHRA
indicator is routinely collected by all issuers at this time;
therefore, we anticipate that there may be administrative burden for
some issuers in developing processes for collection, validation, and
submission of this new data element. In recognition of the burden that
collection of this new data element potentially would pose for some
issuers, we propose to adopt a transitional approach for the 2023 and
2024 benefit years. This transitional approach for the QSEHRA indicator
would be the same as the approach finalized for the ICHRA indicator in
the 2023 Payment Notice and is also similar to how we have handled
other new data collection requirements.\73\ Further details regarding
the estimated burden may be found below in the ICRs Regarding Risk
Adjustment Issuer Data Submission Requirements (Sec. Sec. 153.610,
153.700, and 153.710).
---------------------------------------------------------------------------
\73\ For example, HHS did not penalize issuers for temporarily
submitting a default value for the in/out-of-network indictor for
the 2018 benefit year in order to give issuers time to make the
necessary changes to their operations and systems to comply with the
new data collection requirement, but required issuers to provide
full and accurate information for the in/out-of-network indicator
beginning with the 2019 benefit year.
---------------------------------------------------------------------------
Consistent with the policy adopted in the 2020 Payment Notice (84
FR 17488 through 17490) regarding HHS' use of data and reports
extracted from issuers EDGE servers (including data reports and ad hoc
query reports), and the policy adopted in the 2023 Payment Notice (87
FR 27243) to expand the permissible uses of such data and reports,
beyond the risk adjustment program, we would also use the QSEHRA
indicator once it is available to conduct policy analysis;
operationalize and calibrate other HHS programs in the individual and
small group (including merged) markets; and to inform policy analysis
and improve the integrity of other HHS Federal health-related programs
to the extent such use is otherwise authorized by, required under, or
not inconsistent with applicable Federal law. We would not use the
QSEHRA indicator or any analysis that relied upon the indictor to
pursue changes to our policies until we conduct data quality checks and
ensure the response rate is adequate to support any analytical
conclusions. These data quality and reliability checks would generally
be consistent with other data standard checks that HHS performs related
to data collected through issuers' EDGE servers.
In conjunction with the proposal to collect and extract this new
data element, we also propose to include the QSEHRA indicator in the
LDS containing enrollee-level EDGE data that HHS makes available to
qualified researchers upon request once the QSEHRA indicator is
available, beginning with the 2023 benefit year. We propose to include
the new indicator as part of the LDS because it would enhance the
usefulness of the data set for qualified researchers by making
available additional data to increase understanding of these markets,
particularly the impact QSEHRA provision may have on the individual and
small group (including merged) markets, and contribute to greater
transparency. We further note that similar to the ICHRA indicator, the
proposed QSEHRA indicator would not be a direct identifier that must be
excluded from an LDS under the HIPAA Privacy Rule and thus would not
add to the risk of enrollees being identified. As noted in the 2023
Payment Notice (87 FR at 27245), only an LDS of certain masked
enrollee-level EDGE data elements is made available and this LDS is
available only to qualified researchers if they meet the requirements
for access to such file(s), including entering into a data use
agreement that establishes the permitted uses or disclosures of the
information and prohibits the recipient from identifying the
information.<SUP>74 75</SUP> In
[[Page 78241]]
addition, consistent with how we created the LDS in prior years, HHS
will continue to exclude data from the LDS that could lead to
identification of certain enrollees.\76\
---------------------------------------------------------------------------
\74\ See CMS. (2020, June). Data Use Agreement. (Form CMS-R-
0235L).<a href="https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf">https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf</a>. See also 84 FR 17486 through 17490.
\75\ CMS. (2020, June). Data Use Agreement. (Form CMS-R-0235L).
<a href="https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf">https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS-R-0235L.pdf</a>.
\76\ See, for example, CMS. (2021, August 25). Creation of the
2019 Benefit Year Enrollee-Level EDGE Limited Data Sets: Methods,
Decisions and Notes on Data Use. <a href="https://www.cms.gov/files/document/2019-data-use-guide.pdf">https://www.cms.gov/files/document/2019-data-use-guide.pdf</a>.
---------------------------------------------------------------------------
b. Extracting Plan ID and Rating Area
Finally, in addition to collecting and extracting a QSEHRA
indicator, we propose to extract the plan ID \77\ and rating area data
elements from the 2017, 2018, 2019 and 2020 benefit year data
submissions that issuers already made accessible to HHS. In the 2023
Payment Notice (87 FR 27249), we finalized the proposal to extract
these data elements beginning with the 2021 benefit year. However, HHS
has determined that to aid in annual model recalibration, as well as
HHS' analyses of risk adjustment data, it would be beneficial to also
include these two data elements as part of the enrollee-level EDGE data
and reports extracted from issuers' EDGE servers for the 2017, 2018,
2019 and 2020 benefit years. Inclusion of plan ID and rating area in
extractions of these additional benefit year data sets would also
support analysis of other HHS individual and small group (including
merged) market programs, as well as other HHS Federal health-related
programs.
---------------------------------------------------------------------------
\77\ For details on the plan ID and its components, see p. 42 of
the following: CMS. (2013, March 22). CMS Standard Companion Guide
Transaction Information: Instructions related to the ASC X12 Benefit
Enrollment and Maintenance (834) transaction, based on the
005010X220 Implementation Guide and its associated 005010X220A1
addenda for the FFE. <a href="https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/companion-guide-for-ffe-enrollment-transaction-v15.pdf">https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/companion-guide-for-ffe-enrollment-transaction-v15.pdf</a>.
---------------------------------------------------------------------------
Moreover, since finalizing the 2023 Payment Notice, we have found
that the analysis of risk adjustment data would be more valuable if we
could compare historical trends, and access to these data elements for
past years would further our ability to analyze and improve the risk
adjustment program. For example, in assessing the 2020 enrollee-level
EDGE data set for inclusion in the 2024 benefit year model
recalibration, having access to plan ID and rating area would have
allowed us to consider the different patterns of utilization and costs
at a more granular level (for example, the State market risk pool
level). Since issuers already collected and made available these data
elements to HHS for the 2017, 2018, 2019 and 2020 benefit years,\78\ we
do not believe that this proposal would increase burden on issuers. We
are also not proposing any changes to the accompanying policies
finalized in the 2023 Payment Notice with respect to these data
elements and the enrollee-level EDGE LDS. Although we recognize that
including plan ID and rating area would enhance the usefulness of the
LDS, we continue to believe it is appropriate to exclude these data
elements from the LDS to mitigate the risk that entities that receive
the LDS file could identify issuers based on these identifiers,
particularly in areas with a small number of issuers. As such, HHS
would not include these data elements (plan ID and rating area) in the
LDS files made available to qualified researchers upon request.
---------------------------------------------------------------------------
\78\ As detailed in the 2023 Payment Notice, issuers have been
required to submit these two data elements as part of the required
risk adjustment data submissions to their respective EDGE servers to
support HHS' calculation of risk adjustment transfers since the 2014
benefit year. See 87 FR 27243.
---------------------------------------------------------------------------
We seek comment on these proposals.
6. Risk Adjustment User Fee for 2024 Benefit Year (Sec. 153.610(f))
We propose a risk adjustment user fee for the 2024 benefit year of
$0.21 PMPM. Under Sec. 153.310, if a State is not approved to operate,
or chooses to forgo operating, its own risk adjustment program, HHS
will operate risk adjustment on its behalf. As noted previously in this
proposed rule, for the 2024 benefit year, HHS will operate the risk
adjustment program in every State and the District of Columbia. As
described in the 2014 Payment Notice (78 FR 15416 through 15417), HHS'
operation of risk adjustment on behalf of States is funded through a
risk adjustment user fee. Section 153.610(f)(2) provides that, where
HHS operates a risk adjustment program on behalf of a State, an issuer
of a risk adjustment covered plan must remit a user fee to HHS equal to
the product of its monthly billable member enrollment in the plan and
the PMPM risk adjustment user fee specified in the annual HHS notice of
benefit and payment parameters for the applicable benefit year.
OMB Circular No. A-25 established Federal policy regarding user
fees, and specifies that a user charge will be assessed against each
identifiable recipient for special benefits derived from Federal
activities beyond those received by the general public.\79\ The HHS-
operated risk adjustment program provides special benefits as defined
in section 6(a)(1)(B) of OMB Circular No. A-25 to issuers of risk
adjustment covered plans because it mitigates the financial instability
associated with potential adverse risk selection.\80\ The risk
adjustment program also contributes to consumer confidence in the
health insurance industry by helping to stabilize premiums across the
individual, merged, and small group markets.
---------------------------------------------------------------------------
\79\ OMB. (1993). OMB Circular No. A-25 Revised, Transmittal
Memorandum No. <a href="https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf">https://www.whitehouse.gov/wp-content/uploads/2017/11/Circular-025.pdf</a>.
\80\ Ibid.
---------------------------------------------------------------------------
In the 2023 Payment Notice (87 FR 27252), we calculated the Federal
administrative expenses of operating the risk adjustment program for
the 2023 benefit year to result in a risk adjustment user fee rate of
$0.22 PMPM based on our estimated costs for risk adjustment operations
and estimated BMM for individuals enrolled in risk adjustment covered
plans. For the 2024 benefit year, HHS proposes to use the same
methodology to estimate our administrative expenses to operate the risk
adjustment program. These costs cover development of the models and
methodology, collections, payments, account management, data
collection, data validation, program integrity and audit functions,
operational and fraud analytics, interested parties training,
operational support, and administrative and personnel costs dedicated
to risk adjustment program activities. To calculate the risk adjustment
user fee, we divided HHS' projected total costs for administering the
risk adjustment program on behalf of States by the expected number of
BMM in risk adjustment covered plans in States where the HHS-operated
risk adjustment program will apply in the 2024 benefit year.
We estimate that the total cost for HHS to operate the risk
adjustment program on behalf of States for the 2024 benefit year will
be approximately $60 million, which remains stable with the
approximately $60 million estimated for the 2023 benefit year. We also
project higher enrollment than our prior estimates in the individual
and small group (including merged) markets in the 2023 and 2024 benefit
years based on the increased enrollment between the 2020 and 2021
benefit years, likely due to the increased PTC subsidies provided for
in the American Rescue Plan Act of 2021 (ARP).<SUP>81 82</SUP> In light
of the passage
[[Page 78242]]
of the Inflation Reduction Act of 2022 (IRA), in which Section 12001
extended the enhanced PTC subsidies in section 9661 of the ARP through
the 2025 benefit year, we project increased 2021 enrollment levels to
remain steady through the 2025 benefit year.\83\ Because this provision
of the IRA is expected to continue higher enrollment, we propose a
slightly lower risk adjustment user fee of $0.21 PMPM.
---------------------------------------------------------------------------
\81\ ARP. Public Law 117-2 (2021).
\82\ CMS. (2022, July 19). Summary Report on Permanent Risk
Adjustment Transfers for the 2021 Benefit Year. (p. 9). <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2021.pdf</a>.
\83\ Inflation Reduction Act. Public Law 1217-169 (2022).
---------------------------------------------------------------------------
We seek comment on the proposed risk adjustment user fee for the
2024 benefit year.
7. Risk Adjustment Data Validation Requirements When HHS Operates Risk
Adjustment (HHS-RADV) (Sec. Sec. 153.350 and 153.630)
HHS will conduct risk adjustment data validation under Sec. Sec.
153.350 and 153.630 in any State where HHS is operating risk adjustment
on a State's behalf.\84\ The purpose of risk adjustment data validation
is to ensure issuers are providing accurate high-quality information to
HHS, which is crucial for the proper functioning of the HHS-operated
risk adjustment program. HHS-RADV also ensures that risk adjustment
transfers reflect verifiable actuarial risk differences among issuers,
rather than risk score calculations that are based on poor quality
data, thereby helping to ensure that the HHS-operated risk adjustment
program assesses charges to issuers with plans with lower-than-average
actuarial risk while making payments to issuers with plans with higher-
than-average actuarial risk. HHS-RADV consists of an initial validation
audit (IVA) and a second validation audit (SVA). Under Sec. 153.630,
each issuer of a risk adjustment covered plan must engage an
independent initial validation audit entity. The issuer provides
demographic, enrollment, and medical record documentation for a sample
of enrollees selected by HHS to its initial validation auditor for data
validation. Each issuer's IVA is followed by an SVA, which is conducted
by an entity HHS retains to verify the accuracy of the findings of the
IVA. Based on the findings from the IVA, or SVA (as applicable), HHS
conducts error estimation to calculate an HHS-RADV error rate. The HHS-
RADV error rate is then applied to adjust the plan liability risk
scores of outlier issuers, as well as the risk adjustment transfers
calculated under the State payment transfer formula for the applicable
State market risk pools, for the benefit year being audited.
---------------------------------------------------------------------------
\84\ HHS has operated the risk adjustment program in all 50
States the District of Columbia since the 2017 benefit year.
---------------------------------------------------------------------------
a. Materiality Threshold for Risk Adjustment Data Validation
Beginning with 2022 benefit year HHS-RADV, we propose to change the
HHS-RADV materiality threshold definition, first implemented in the
2018 Payment Notice (81 FR 94104 through 94105), from $15 million in
total annual premiums Statewide to 30,000 total BMM Statewide,
calculated by combining an issuer's enrollment in a State's individual
non-catastrophic, catastrophic, small group, and merged markets, as
applicable, in the benefit year being audited.\85\ Consistent with the
application of the current materiality threshold definition and
accompanying exemption under Sec. 153.630(g)(2), issuers that fall
below the new proposed materiality threshold would not be subject to
the annual IVA (and SVA) audit requirements, but may be selected to
participate in a given benefit year of HHS-RADV based on random
sampling or targeted sampling due to the identification of any risk-
based triggers that warrant more frequent audits.
---------------------------------------------------------------------------
\85\ Activities related to the 2022 benefit year of HHS-RADV
will generally begin in March 2023, when issuers can start selecting
their IVA entity, and IVA entities can start electing to participate
in HHS-RADV for the 2022 benefit year. See, for example, the 2021
Benefit Year HHS-RADV Activities Timeline (May 3, 2022), available
at: <a href="https://regtap.cms.gov/uploads/library/HRADV_2021Timeline_5CR_050322.pdf">https://regtap.cms.gov/uploads/library/HRADV_2021Timeline_5CR_050322.pdf</a>.
---------------------------------------------------------------------------
In the 2020 Payment Notice (84 FR 17508 through 17511), HHS
established Sec. 153.630(g) to codify exemptions to HHS-RADV
requirements, including an exemption for issuers that fell below a
materiality threshold, as defined by HHS, to ease the burden of annual
audit requirements for smaller issuers of risk adjustment covered plans
that do not materially impact risk adjustment transfers.\86\ This
materiality threshold was first implemented and defined in the 2018
Payment Notice (81 FR 94104 through 94105), where HHS finalized a
policy that issuers with total annual premiums at or below $15 million
(calculated based on the Statewide premiums of the benefit year being
validated) would not be subject to annual IVA requirements, but would
still be subject to random and targeted sampling.\87\ Under this
approach, issuers below the materiality threshold are subject to an IVA
approximately every 3 years, barring any risk-based triggers that would
warrant more frequent audits.
---------------------------------------------------------------------------
\86\ Additionally, in the 2019 Payment Notice (83 FR 16966), we
finalized an exemption from HHS-RADV for issuers with 500 or fewer
BMM Statewide in the benefit year being audited. This very small
issuer exemption is codified at 45 CFR 153.630(g)(1). Issuers with
500 or fewer BMM Statewide are not subject to random or targeted
sampling.
\87\ While the 2018 Payment Notice (81 FR 94104 through 94105)
provided an applicability date for the materiality threshold that
began with the 2017 benefit year of HHS-RADV, we postponed the
application of the materiality threshold to the 2018 benefit year in
the 2019 Payment Notice (83 FR 16966 through 16967).
---------------------------------------------------------------------------
We implemented the materiality threshold based on an evaluation of
the burden associated with HHS-RADV, particularly the fixed costs
associated with hiring an initial validation auditor and submitting IVA
results to HHS on an annual basis, which may be a large portion of some
issuers' administrative costs.\88\ To ease the burden of annual audit
requirements for smaller issuers of risk adjustment covered plans that
do not materially impact risk adjustment transfers, we finalized a
threshold of $15 million in total annual premiums Statewide--a
threshold at which 1 percent of an issuer's premiums would cover the
estimated $150,000 cost of the IVA.\89\ When defining this threshold,
we also considered the impact of the exemption on risk adjustment
transfers and data validation activities, and estimated issuers above
this threshold represented approximately 98.5 percent of enrollment in
risk adjustment covered plans nationally. As such, we determined the
annual audit of issuers at or below the threshold of total annual
premiums Statewide of $15 million was not material.\90\ We committed to
continue to monitor this threshold and further noted we may propose
adjustments in the future to maintain this balance.\91\
---------------------------------------------------------------------------
\88\ See 81 FR 94104 through 94105. Also see 81 FR 61490.
\89\ See 81 FR 94104 through 94105.
\90\ See 81 FR 94104 through 94105. Also see 81 FR 61490.
\91\ See 81 FR 94105.
---------------------------------------------------------------------------
Since we established the materiality threshold definition, the
estimated costs to complete the IVA have increased, especially with the
addition of prescription drug categories to the adult models starting
with the 2018 benefit year, and our current estimate of the cost of the
IVA is approximately $170,000 per an issuer. To maintain the same
general framework and effectively limit the proportion of an issuer's
premiums that would be used to cover IVA costs to 1 percent, we would
need to adjust the current materiality threshold definition and
increase it to
[[Page 78243]]
$17 million in total annual premiums Statewide. We estimate that 30,000
BMM Statewide translates to approximately $17 million in total annual
premiums Statewide on average across markets, and this proposed
threshold would maintain that issuers of risk adjustment covered plans
below this threshold would represent no more than 1.5 percent of
enrollment in risk adjustment covered plans nationally. We therefore
propose to change the HHS definition of the materiality threshold under
Sec. 153.630(g)(2) to 30,000 BMM Statewide in the benefit year being
audited beginning with the 2022 benefit year of HHS-RADV.
We propose shifting the exemption from a dollar threshold to BMM
threshold because a BMM threshold would continue to exempt small
issuers that face a disproportionally higher burden even in situations
where PMPM premiums grow overtime. Shifting the materiality threshold
under Sec. 153.630(g)(2) to a BMM basis would also align with the
threshold established in Sec. 153.630(g)(1), which exempts issuers
with 500 or fewer BMM Statewide in the benefit year being audited from
HHS-RADV requirements, including random and targeted sampling. We do
not anticipate that this proposal would change the current estimated
burdens of the annual HHS-RADV requirements on issuers as the pool of
issuers falling below a 30,000 BMM Statewide threshold does not
significantly differ from the pool of issuers falling below a $15
million total annual premiums Statewide threshold. On average, between
the 2017 and 2021 benefit years, there were 197 issuers of risk
adjustment covered plans with total annual premiums Statewide below $15
million and 201 issuers of risk adjustment covered plans with total BMM
Statewide below 30,000. The proposed changes should also have a minimal
impact on data validation activities as issuers of risk adjustment
covered plans below this proposed threshold are estimated to represent
no more than 1.5 percent of enrollment in risk adjustment covered plans
nationally. We continue to believe that setting this 1.5 percent of
enrollment threshold promotes the goals of the HHS-RADV process, while
also considering the burden of the process on smaller plans, and
therefore represents the appropriate balance.
We are not proposing any changes to the regulatory text at Sec.
153.630(g)(2) or to the other accompanying policies. As such, beginning
with the 2022 benefit year of HHS-RADV, issuers below the proposed
30,000 BMM Statewide threshold would be exempt from participating in
the annual HHS-RADV IVA and SVA requirements if not otherwise selected
by HHS to participate under random and targeted sampling conducted
approximately every 3 years (barring any risk-based triggers based on
experience that would warrant more frequent audits). To determine
whether an issuer falls under the materiality threshold, its BMM would
be calculated Statewide, that is, by combining an issuer's enrollment
in a State's individual non-catastrophic, catastrophic, small group,
and merged markets, as applicable, in the benefit year being audited.
Issuers that qualify for the exemption under Sec. 153.630(g)(2) from
HHS-RADV requirements for a particular benefit year must continue to
maintain their risk adjustment documents and records consistent with
Sec. 153.620(b) and may be required to make those documents and
records available for review or to comply with an audit by the Federal
Government.\92\ We further note that if an issuer of a risk adjustment
covered plan that falls within the materiality threshold is not exempt
from HHS-RADV for a given benefit year (that is, the issuer is selected
as part of random or targeted sampling), and fails to engage an IVA or
submit IVA results to HHS, the issuer would be subject to the default
data validation charge in accordance with Sec. 153.630(b)(10) and may
be subject to other enforcement action. Lastly, we affirm that an
issuer that qualifies for an exemption under Sec. 153.630(g)(2) from
HHS-RADV requirements for a particular benefit year would not have its
risk scores and State transfers adjusted due to its own risk score
error rate(s), but its risk scores and State transfers could be
adjusted if other issuers in the applicable State market risk pools
were outliers in that benefit year of HHS-RADV.
---------------------------------------------------------------------------
\92\ See 45 CFR 153.620(b) and (c).
---------------------------------------------------------------------------
We solicit comments on this proposal as well as comments on whether
we should increase the materiality threshold to $17 million in total
annual premiums Statewide instead of switching to 30,000 BMM Statewide
and on the applicability date for when a new HHS-RADV materiality
threshold should begin to apply.
b. HHS-RADV Adjustments for Issuers That Have Exited the Market
Beginning with 2021 benefit year HHS-RADV, we propose to remove the
policy to only apply an exiting issuer's HHS-RADV results if that
issuer is a positive error rate outlier.\93\ We are proposing to change
this policy because it is no longer necessary to treat exiting issuers
differently from non-exiting issuers when they are negative error rate
outliers in the applicable benefit year's HHS-RADV given the transition
to the concurrent application of HHS-RADV results for all issuers.
---------------------------------------------------------------------------
\93\ To qualify as an exiting issuer, an issuer must exit all of
the market risk pools in the State (that is, not selling or offering
any new plans in the State). If an issuer only exits some markets or
risk pools in the State, but continues to sell or offer new plans in
others, it is not considered an exiting issuer. A small group market
issuer with off-calendar year coverage who exits the market but has
only carry-over coverage that ends in the next benefit year (that
is, carry-over of run out claims for individuals or groups enrolled
in the previous benefit year, with no new coverage being offered or
sold) is considered an exiting issuer. See the 2020 Payment Notice,
84 FR 17503 through 17504.
---------------------------------------------------------------------------
Consistent with 45 CFR 153.350(b) and (c), adjustments are made to
risk scores and risk adjustment State transfers based on the errors
discovered in HHS-RADV. In the 2015 Payment Notice (79 FR 13768 through
13769), HHS established a prospective approach to adjust risk scores
and risk adjustment State transfers based on the results of HHS-RADV.
Under the prospective approach, an issuer's HHS-RADV error rate for a
given benefit year is applied to the following benefit year's risk
scores and risk adjustment State transfers. However, an issuer that
exits all market risk pools in the State during or at the end of the
benefit year being audited would not have risk scores and State
transfers to adjust in the next applicable benefit year. As such, the
2019 Payment Notice (83 FR 16965 through 16966) created an exception to
the prospective approach for exiting issuers that provides for the
concurrent application of HHS-RADV results for exiting issuers
identified as outliers. Under this exception, the HHS-RADV error rate
of an outlier exiting issuer is used to adjust the exiting issuer's
prior year risk scores and State transfers for the applicable State
market risk pool(s). Due to the budget neutral nature of the HHS-
operated risk adjustment program, including HHS-RADV, the application
of an outlier exiting issuer's HHS-RADV error rate would also impact
other issuers in the applicable State market risk pool(s). Recognizing
the impact on non-exiting issuers, we further refined the exiting
issuer HHS-RADV policies in the 2020 Payment Notice (84 FR 17503
through 17504) to limit the re-opening of risk pools to make HHS-RADV
adjustments to non-exiting issuers' risk adjustment State transfers in
certain situations. More specifically, HHS finalized a policy to only
make risk score and risk adjustment State transfer adjustments to
reflect an exiting issuer's HHS-RADV results if that issuer is a
[[Page 78244]]
positive error rate outlier in the benefit year being audited,
beginning with the 2018 benefit year.\94\ This policy makes adjustments
for positive error rate outliers because those HHS-RADV results
indicate there was an undercharge or overpayment in the initial
calculation of the exiting issuer's State transfer amount(s).\95\
Adjustments were not made if an exiting issuer was found to be a
negative error rate outlier.\96\ This policy was designed to ensure
that other issuers in a State market risk pool are made whole when an
issuer with a positive error rate exits the State and to remove the
additional burden of having transfers adjusted (including the potential
for additional charges to be assessed to other issuers) for a prior
benefit year when a negative error rate outlier exits the State.
---------------------------------------------------------------------------
\94\ In adjusting exiting issuers with positive error rates, HHS
collects funds (either increasing the charge amount or reducing the
payment amount) from the exiting issuer and redistributes these
funds to the other issuers who participated in that State market
risk pool in the prior benefit year. See 84 FR 17503 through 17504.
\95\ A positive error rate generally has the effect of
decreasing an issuer's risk score and thereby decreasing its risk
adjustment State transfer payment amount or increasing its risk
adjustment State transfer charge amount.
\96\ A negative error rate generally has the effect of
increasing an issuer's risk score and thereby increasing its risk
adjustment State transfer payment amount or decreasing its risk
adjustment State transfer charge amount.
---------------------------------------------------------------------------
Subsequently, in the 2020 HHS-RADV Amendments Rule (85 FR 76979),
HHS finalized a transition to the concurrent application of HHS-RADV
results for all issuers, including non-exiting issuers, beginning with
the 2020 benefit year HHS-RADV, and has continued the policy to only
make risk scores and risk adjustment State transfers adjustments for
exiting issuers if they are positive error rate outliers. However, in
light of this shift to the concurrent application of HHS-RADV
adjustments for all issuers, there is no longer a reason to treat
exiting issuers differently than non-exiting issuers. We therefore
propose, beginning with 2021 HHS-RADV, to modify this policy and apply
HHS-RADV results to adjust the plan liability risk scores of the
benefit year being audited for all positive and negative error rate
outlier issuers.\97\
---------------------------------------------------------------------------
\97\ Due to the budget neutral nature of the HHS-operated risk
adjustment program, including HHS-RADV, the application of an
outlier issuer's HHS-RADV error rate would also impact other issuers
in the applicable State market risk pool(s). As such, non-outlier
and exempt issuers may also see their State transfers adjusted as a
result of the application of HHS-RADV results if there are one or
more outliers in the State market risk pool(s).
---------------------------------------------------------------------------
We are not proposing any other changes to the policies regarding
HHS-RADV adjustments for issuers that exit the market and therefore
would maintain the existing framework for determining whether an issuer
is an exiting issuer. As such, the issuer would have to exit all of the
market risk pools in the State (that is, not selling or offering any
new plan in the State) to be considered an exiting issuer. If an issuer
only exits some of the markets or risk pools in the State, but
continues to sell or offer new plans in others, it would not be
considered an exiting issuer. We also affirm that small group market
issuers with off-calendar year coverage who exit the market and only
have carry-over coverage that ends in the next benefit year (that is,
carry-over of run out claims for individuals enrolled in the previous
benefit year, with no new coverage being offered or sold) would be
considered an exiting issuer and would be exempt from HHS-RADV under
Sec. 153.630(g)(4). Individual market issuers offering or selling any
new individual market coverage in the subsequent benefit year would be
required to participate in HHS-RADV, unless another exemption applies.
We solicit comments on this proposal.
c. Discontinue Lifelong Permanent Conditions List and Use of Non-EDGE
Claims in HHS-RADV
We seek comment on discontinuing the use of the Lifelong Permanent
Conditions (LLPC) list \98\ and the use of non-EDGE claims starting
with the 2022 benefit year of HHS-RADV.
---------------------------------------------------------------------------
\98\ See, for example, Appendix C: Lifelong Permanent Conditions
in the 2021 Benefit Year PPACA HHS Risk Adjustment Data Validation
(HHS-RADV) Protocols (November 9, 2022) available at <a href="https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf">https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_5CR_110922.pdf</a>. Also see, for
example, Appendix E: Lifelong Permanent Conditions in the 2018
Benefit Year PPACA HHS Risk Adjustment Data Validation (HHS-RADV)
Protocols (June 24, 2019) available at <a href="https://regtap.cms.gov/uploads/library/HRADV_2018Protocols_070319_RETIRED_5CR_070519.pdf">https://regtap.cms.gov/uploads/library/HRADV_2018Protocols_070319_RETIRED_5CR_070519.pdf</a>.
---------------------------------------------------------------------------
The LLPC list was developed for HHS-RADV medical record abstraction
purposes beginning with the 2016 benefit year, when issuers were first
learning the HHS-RADV protocols and still gaining experience with EDGE
data submissions.\99\ The intention of the LLPC list was to balance the
burdens and costs of HHS-RADV with the program integrity goals of
validating the actuarial risk of enrollees in risk adjustment covered
plans to ensure that the HHS-operated risk adjustment program
accurately assesses charges to issuers with plans with lower-than-
average actuarial risk while making payments to issuers with plans with
higher-than-average actuarial risk. The LLPC list was designed to ease
the burden of medical record retrieval for lifelong conditions by
simplifying and standardizing coding abstraction for IVA and SVA
entities that may have different interpretations of standard coding
guidelines. Conditions on the LLPC list can be abstracted by IVA and
SVA entities and validated in HHS-RADV if present anywhere on an
enrollee's valid and authenticated medical record, even if the
associated diagnosis is not present on a claim that meets EDGE server
data submission requirements for the applicable benefit year.\100\ The
associated diagnoses for the health conditions selected by HHS are
considered to be lifelong, permanent conditions which last for multiple
years, require ongoing medical attention, and are typically unresolved
once diagnosed.\101\
---------------------------------------------------------------------------
\99\ CMS first published the ``Chronic Condition HCCs'' list in
the 2016 Benefit Year PPACA HHS Risk Adjustment Data Validation
(HHS-RADV) Protocols (October 20, 2017) available at <a href="https://regtap.cms.gov/uploads/library/HRADV_2016Protocols_v1_5CR_052218.pdf">https://regtap.cms.gov/uploads/library/HRADV_2016Protocols_v1_5CR_052218.pdf</a>. Beginning with 2018 benefit
year, CMS has provided the ``Lifelong Permanent Conditions'' list, a
simplified list of health conditions which share similar
characteristics as those on the ``Chronic Condition HCCs'' list. See
supra note 93.
\100\ Ibid.
\101\ See, for example, Appendix C: Lifelong Permanent
Conditions in the 2021 Benefit Year PPACA HHS Risk Adjustment Data
Validation (HHS-RADV) Protocols (August 17, 2022) available at
<a href="https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_v1_5CR_081722.pdf">https://regtap.cms.gov/uploads/library/HRADV_2021_Benefit_Year_Protocols_v1_5CR_081722.pdf</a>.
---------------------------------------------------------------------------
While the LLPC list was developed for HHS-RADV medical record
abstraction purposes, the EDGE Server Business Rules for risk
adjustment EDGE data submissions direct that EDGE server data
submissions are claim-based and follow standard coding principles and
guidelines. EDGE Server Business Rules require that diagnoses codes
submitted to the EDGE server be related to medical services performed
during the patient's visit, be performed by a State licensed medical
provider, be associated with a paid claim submitted to the issuer's
EDGE server, and be associated with an active enrollment period with
the issuer for the applicable risk adjustment benefit year.\102\ Some
issuers have raised concerns that the LLPC list may incentivize issuers
to submit EDGE supplemental diagnosis files containing LLPC diagnoses
even though those diagnoses may not have been addressed in the claim
submitted to the EDGE server for that encounter. While we allowed the
use of the LLPC list for the last several years of HHS-RADV, we
continued to consider these issues and
[[Page 78245]]
are now soliciting comments on the discontinuance of the use of the
LLPC list beginning with the 2022 benefit year of HHS-RADV.
---------------------------------------------------------------------------
\102\ See, for example, Section 8.1 Guidance on Diagnosis
Code(s) Derived from Health Assessments of the EDGE Server Business
Rules (ESBR) (November 1, 2022) available at <a href="https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf">https://regtap.cms.gov/uploads/library/DDC-ESBR-110122-5CR-110122.pdf</a>.
---------------------------------------------------------------------------
We believe that discontinuing the use of the LLPC list in HHS-RADV,
beginning with the 2022 benefit year, would better align HHS-RADV
guidance with the EDGE Server Business Rules and would eliminate some
situations where an issuer may receive risk score credit for conditions
that did not require treatment during an active enrollment period with
the issuer for the applicable risk adjustment benefit year. In
addition, we also believe that issuers have now gained sufficient
experience with the EDGE data submission process and HHS-RADV protocols
that it may not be necessary to continue use of the LLPC list. For
example, while nearly half the States subject to the HHS-operated risk
adjustment program for the 2015 benefit year \103\ were not eligible to
receive an interim risk adjustment summary report,\104\ this trend has
not continued. In fact, all States have received an interim risk
adjustment summary report since the 2017 benefit year of the HHS-
operated risk adjustment program \105\ and only one State where HHS was
responsible for operating the risk adjustment program failed to receive
an interim risk adjustment summary report for the 2016 benefit
year.\106\ Further, after several pilot years of HHS-RADV, issuers also
have now gained several years of experience with HHS-RADV and HHS-RADV
protocols.\107\ Therefore, we solicit comment on all aspects of this
potential change, including the applicability date for the
discontinuance of the LLPC list. We also request comment on the extent
that issuers and their IVA entities have relied on the LLPC list to
document diagnoses when official coding guidance was unclear or the
medical record lacked documentation to support diagnosis of a lifelong,
permanent condition.
---------------------------------------------------------------------------
\103\ See the Interim Summary Report on Risk Adjustment for the
2015 Benefit Year (March 18, 2016), available at: <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/InterimRAReport_BY2015_5CR_032816.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/InterimRAReport_BY2015_5CR_032816.pdf</a>.
\104\ Since the 2015 benefit year of the HHS-operated risk
adjustment program, in order for a State to receive the interim risk
adjustment summary report, all issuers with 0.5 percent of market
share must successfully submit at least 90 percent of full year
enrollment and 90 percent of three quarters of medical claims to
their EDGE servers by the applicable deadline, as well as pass EDGE
quality checks. Details of EDGE quantity and quality assessment can
be found in the ``Evaluation of EDGE Data Submissions'' guidance
published every year. See, for example, the Evaluation of EDGE Data
Submissions for 2015 Benefit Year EDGE Server Data Bulletin (March
18, 2016), available at: <a href="https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Part-2-EDGE-Q_Q-Guidance_03182016.pdf">https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Part-2-EDGE-Q_Q-Guidance_03182016.pdf</a>. Also see, for example, the Evaluation of EDGE
Data Submissions for 2022 Benefit Year EDGE Server Data Bulletin
(October 25, 2022), available at: <a href="https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/edge_2022_qq_guidance.pdf">https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/edge_2022_qq_guidance.pdf</a>.
\105\ See the Interim Summary Report on Risk Adjustment for the
2017 Benefit Year (April 27, 2018), available at: <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2017.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2017.pdf</a>. Also see, for
example, the Interim Summary Report on Risk Adjustment for the 2018
Benefit Year (March 22, 2019), available at: <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2018.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2018.pdf</a>. Also see, for example, the
Interim Summary Report on Risk Adjustment for the 2019 Benefit Year
(March 25, 2020), available at: <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2019.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2019.pdf</a>. Also see, for example, the Interim Summary Report
on Risk Adjustment for the 2020 Benefit Year (March 31, 2021),
available at: <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2020.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Interim-RA-Report-BY2020.pdf</a>. Also see, for example, the Interim Summary Report on
Risk Adjustment for the 2021 Benefit Year (March 22, 2022),
available at: <a href="https://www.cms.gov/files/document/interim-ra-report-by2021.pdf">https://www.cms.gov/files/document/interim-ra-report-by2021.pdf</a>.
\106\ See the Interim Summary Report on Risk Adjustment for the
2016 Benefit Year (April 11, 2017), available at: <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/InterimRAReport_BY2016_5CR_033117.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/InterimRAReport_BY2016_5CR_033117.pdf</a>.
\107\ CMS conducted two (2) pilot years for HHS-RADV for the
2015 and 2016 benefit years. The results of 2015 and 2016 benefit
year HHS-RADV were not applied to adjust plan liability risk scores
or risk adjustment transfers. In addition, 2017 benefit year HHS-
RADV was a pilot year for Massachusetts issuers; therefore, these
issuers' 2017 benefit year HHS-RADV results were not applied to risk
scores or transfers. Except for Massachusetts issuers, the 2017
benefit year was the first non-pilot year where HHS-RADV results
were used to adjust risk scores and risk adjustment transfers. See
84 FR at 17508 (April 25, 2019). Also see the Summary Report of 2017
Benefit Year HHS-RADV Adjustments to Risk Adjustment Transfers
(August 1, 2019), available at: <a href="https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/BY2017-HHSRADV-Adjustments-to-RA-Transfers-Summary-Report.pdf">https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/BY2017-HHSRADV-Adjustments-to-RA-Transfers-Summary-Report.pdf</a>.
---------------------------------------------------------------------------
Similarly, we seek comments on discontinuing the current policy
that permits the use of non-EDGE claims in HHS-RADV beginning with the
2022 HH
[…truncated; see source link]Indexed from Federal Register on December 21, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.