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Final Rule: Notice of Benefit and Payment Parameters for 2014

Posted on May 8, 2013 | Comment (1)

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By Devi Mehta and Taylor Burke

Background

On March 11, 2013, the U.S. Department of Health and Human Services (HHS) released a final rule on the Notice of Benefit and Payment Parameters for 2014.[1] This final rule addresses a variety of issues, including the specific payment parameters for the three premium stabilization programs – the permanent risk adjustment program, the transitional reinsurance program, and the temporary risk corridors program. In addition, the final rule also covers advance payments of the premium tax credit, cost-sharing reductions, and user fees for the federally-facilitated Exchanges, specific requirements related to the federally facilitated Small Business Health Option Program (SHOP), and the medical loss ratio program. This rule finalizes the provisions set forth in HHS’s proposed rule on these topics, December 7, 2012.[2]

The final rule states that for 2014 only, a state must publish its notice of benefit and payment parameters 30 days after this final rule is published, which effectively extends the March 1, 2013 deadline originally proposed.[3]

Overview of the “Triple R”

Much of the final rule contains provisions regarding the “Triple R” regulations: the risk adjustment, transitional reinsurance, and risk corridors programs. The framework for these three programs was finalized in the March 2012 Premium Stabilization Rule,[4] followed by program specifics in the December 2012 HHS Notice of Benefit and Payment Parameters for 2014 proposed rule,[5] and now finalized under the rule described here.

The risk adjustment program under the ACA will lower the impact of adverse selection and stabilize premiums in the individual and small group markets as the insurance market reforms are implemented.[6] The ACA calls for the establishment of a transitional reinsurance program in each state to stabilize premiums in the individual market from 2014 to 2016. The program will equally stabilize premiums in the individual market across the county, and will make purchasing coverage more affordable, lower uncompensated care given by hospitals and other medical facilities, and lower medical expenses and premiums for those with private health insurance.[7] Finally, the temporary risk corridors program allows the federal government and QHPs to share in profits or losses due to inaccurate rate setting from 2014 to 2016.[8]

Provisions and Parameters for the Permanent Risk Adjustment Program

Approval of State-Operated Risk Adjustment

HHS has established an approval process for states that operate their own risk adjustment programs. A state operating a risk adjustment program for a benefit year must administer the program through an entity that meets certain standards demonstrating the entity’s capacity to operate the risk adjustment program and implement the federally certified risk adjustment methodology. The state must show that the risk adjustment entity has systems in place to:[9]

1.  Collect data for individual risk score and issuer payment and charge calculations;

2.  Test the risk adjustment operation before the start of the benefit year;

3.  Ensure that the entity has the legal authority and resources to carry out the risk adjustment program; and

4.  Demonstrate that the entity has individuals or contracts with those who have experience implementing a risk adjustment methodology.

Furthermore, the final rule requires states to ensure that the entity complies with the privacy and security standards in 45 C.F.R. § 153.340,[10] to conduct oversight and monitoring of the entity’s risk adjustment activities,[11] and finally to submit information to HHS that it is in compliance with the above criteria.[12]

Due to timing issues for a state-operated risk adjustment program, HHS has allowed the use of a transitional consultative process for benefit year 2014, rather than a traditional approval process.[13]

Risk Adjustment User Fees

HHS will also begin collecting a user fee from issuers of risk adjustment covered plans in states where HHS is operating the risk adjustment program.[14] The user fee will be collected for HHS to administer the risk adjustment program, which “will mitigate the financial instability associated with adverse selection as other market reforms go into effect.”[15] In order to fund HHS’ risk adjustment operations, the per capita user fee will be calculated by dividing the amount HHS intends to collect over the benefit year by the expected annual enrollment in risk adjustment covered plans. Therefore, the user fees would be assessed on a per-enrollee-per month basis, which would take into account monthly enrollment fluctuations, and would be collected annually in June of the year after the benefit year. For benefit year 2014, HHS establishes a per capita annual user fee of $.96, which would be a per enrollee per month risk adjusted user fee of $.08.

Overview of the Risk Adjustment Methodology HHS Will Implement when Operating Risk Adjustment on Behalf of a State

The risk adjustment methodology described in the previous Premium Stabilization Final Rule consists of:

  • Risk adjustment model, using an individual’s recorded diagnoses, demographic characteristics and other factors to determine a risk score;
  • Calculation of plan average actuarial risk and the calculation of payments and charges as the payment transfer formula;
  • Data collection approach for HHS; and
  • Schedule for the risk adjustment program, which outlines the timeframe.[16]

HHS now clarifies that the definition of a “risk adjustment covered plan” from the Premium Stabilization Rule means health insurance coverage offered in the individual or small group markets, excluding certain plans, including any other plan determined not to be a risk adjustment covered plan in the applicable federally certified risk adjustment methodology.[17] The final rule also describes the treatment of certain other plans that are not subject to the market reforms and the approach to risk pooling for risk adjustment purposes when a state merges markets to have a single risk pool.[18]

HHS treats each plan not subject to the market reforms separately. Only individuals attending a college or university are eligible to participate in student health plans, which are not subject to risk adjustment payments.[19] Due to the unique characteristics of enrollees of catastrophic plans, HHS will establish criteria and methods to risk adjust these plans in separate risk pool from the general metal level risk pool.

HHS will merge the individual and small group markets when HHS operates risk adjustment on behalf of a state if the state merges markets for single risk pool purposes.[20] Furthermore, because risk adjustment is a state-based program, HHS requires that a risk adjustment covered plan be subject to risk adjustment in the state in which the policy is filed and approved.[21] HHS also clarifies that risk adjustment covered plans in the small group market will be subject to risk adjustment in the state in which the employer’s policy is filed and approved.[22]

HHS has established a risk adjustment model, based on a person’s age, sex, and diagnoses, to provide a risk score. There are separate models for adults, children, infants, and individuals over 64. HHS states that it will not use prescription drug use in the initial risk adjustment models, but may use it in the future. HHS will use concurrent risk adjustment modeling approach rather than use a prospective model, as suggested by a number of commenters.[23] HHS also determined it would be beneficial to use a diagnostic classification system, which determines which diagnostic codes should be included, how they should be grouped and how they would relate for risk adjustment purposes. HHS used the HCC classification system for the Medicare risk adjustment program as a basis for its program here.[24] HHS has established the factors to be included in the risk adjustment models, including a revision to the cost sharing reduction adjustment and not adjusting the risk adjustment models for reinsurance payments, which are temporary.[25]

HHS has included stronger privacy protections in the data collection provision for the risk adjustment program regarding the use and disclosure of personally identifiable information that has been collected, stating that such information shall be used only for the purpose for which it was collected.[26] According to the schedule for risk adjustment, HHS must receive claims from issuers used in the risk score calculation by April 30 of the year following the benefit year.

State Alternate Methodology

According to the Premium Stabilization Rule, states may establish their own risk adjustment programs if they operate an Exchange in the state and are approved to operate risk adjustment. In order to be federally certified to operate a risk adjustment program, with an alternate methodology, a state must submit a complete description of:[27]

1.  The risk adjustment model;

2.  Calculation of the plan average actuarial risk;

3.  Calculation of the payments and charges;

4.  Risk adjustment data approach;

5.  Schedule for the risk adjustment program;

6.  Calibration methodology and frequency (for alternate methodology); and

7.  Statistical performance metrics (for alternate methodology).

HHS will consider whether the alternate methodology meets certain criteria specified in the final rule.[28] Specifically, HHS will consider whether the alternate methodology complies with the following requirements:

  • Schedule to provide annual notification to issuers of risk adjustment covered plans of payments and charges by June 30;[29]
  • Data collection under risk adjustment, including privacy and security standards;[30]
  • Accounts for payment transfers across metal levels in order to share risk across metal levels;[31] and
  • The elements of the alternate methodology should align with each other.[32]

In the Premium Stabilization Rule, HHS noted that it would establish a national method for calculating payments and charges. HHS has designated areas allowing for state flexibility within the national method for calculating payments and charges.

Risk Adjustment Data Validation

In the final rule, HHS has delineated its data validation process in six stages when HHS operates a risk adjustment program on behalf of a state. However, HHS notes that states are not required to adopt this data validation process.[33] The six stages are:

1.  Sample selection

2.  Initial validation audit

3.  Second validation audit

4.  Error estimation

5.  Appeals

6.  Payment adjustments[34]

HHS will impose data security and transmission requirements on issuers with regard to the data validation process.[35] It should be noted that HHS will not adjust payments and charges based on the data validation process for benefit years 2014 and 2015, due to the complexity of the risk adjustment and data validation programs and the uncertainty in the market that will likely exist in 2014. However, HHS points out that other remedies, such as the False Claims Act, may apply to those issuers not in compliance with the risk adjustment program requirements.

Provisions and Parameters for the Transitional Reinsurance Program

State Standards Related to the Reinsurance Program

The final rule outlines the reinsurance contribution and payment process, the uniform contribution rate, and reinsurance payment parameters that would apply to all states in the 2014 benefit year. The final rule allows a state that establishes a reinsurance program to modify the data requirements for health insurance issuers to receive their reinsurance payments as long as the state publishes a notice of benefit and payment parameters that specifies that modifications were made.[36] States are also required to publish supplemental state reinsurance payment parameters if states collect additional reinsurance contributions to make supplemental reinsurance payments or use additional funds for this purpose.[37] The final rule also explains that in order to create the most effective reinsurance program, HHS will collect reinsurance payments from health insurance issuers and self-insured group health plans on behalf of states, and will distribute the reinsurance payments based on a state’s need for reinsurance payments.[38] Because HHS cannot attribute additional funds for administrative purposes back to the state, HHS further clarifies that any additional contributions collected for administrative expenses must be collected by the state operating reinsurance. In addition, the Final Rule clarifies that a state’s obligation to ensure that each reinsurance entity operates within a distinct geographical area applies regardless of whether the state establishes or contracts with applicable reinsurance entities.[39]

States establishing the reinsurance program will have to provide HHS with information regarding all requests for reinsurance payments received from all reinsurance-eligible plans for each quarter during the benefit year.[40] Additionally, HHS or the state must provide to an issuer of a reinsurance-eligible plan the calculation of the total reinsurance payments requested under the national reinsurance payment parameters and the state supplemental reinsurance payment parameters, on a quarterly basis during the benefit year.[41]

According to HHS, states operating reinsurance may opt to collect additional amounts than what is required under the national contribution rate set forth in the annual HHS notice and of benefit and payment parameters for administrative expenses or for additional reinsurance payments.[42] These additional contributions must be set forth in the state notice of benefit and payment parameters. HHS notes in the final rule that states do not have the authority to collect any funds, under the national contribution rate or an additional state contribution rate, from ERISA covered self-insured group health plans.[43]

For states that establish a reinsurance program, HHS will collect reinsurance contributions under a national contribution rate.[44] The final rule clarifies that HHS will collect reinsurance contributions from health insurance issuers and self-insured group health plans in all states, including states that operate the reinsurance programs.[45] States may use additional funds that were not collected as additional reinsurance contributions to make supplemental reinsurance payments under the state supplemental reinsurance payment parameters.[46] This allows states to use other revenue sources and ensures that additional state collections for reinsurance payments would lower premiums.

While the ACA requires a state to eliminate or modify its high-risk pool to the extent necessary to carry out the transitional reinsurance program, a state is permitted to coordinate its high-risk pool with the reinsurance program as long as it is not inconsistent with the law.[47] The final rule clarifies that states that have established a reinsurance program may use state-designated money for the high-risk pool toward the reinsurance program. A state may also designate its high-risk pool as the applicable reinsurance entity, as long as it meets all of the requirements for an applicable reinsurance entity. However, the rule notes that state high-risk pools are not eligible to receive reinsurance payments for their high-risk enrollees because that is different than individual market coverage.

Contributing Entities and Excluded Entities

Under the ACA, health insurance issuers and third party administrators on behalf of group health plans must make payments to an applicable reinsurance entity.[48] The final rule defines “contributing entity” as a health insurance issuer or a self-insured group health plan which is ultimately responsible for the reinsurance contribution even if the group health plan chooses to use a third party administrator or administrative services-only contractor to make the reinsurance contributions.[49]

The final rule also emphasizes that reinsurance contribution amounts must reflect a health insurance issuer’s “fully insured commercial book of business for all major medical products.”[50] HHS clarifies that reinsurance contributions are not required for coverage that is not “major medical” or non-commercial, and expatriate coverage.[51] The final rule codifies the Medicare coordination rule, which allows employer-provided group health coverage that is considered secondary to a person’s Medicare coverage under the Medicare Secondary Payer (MSP) rules to be counted for purposes of reinsurance contributions if the group health coverage was the primary payer of medical expenses and is thus considered major medical coverage.[52] The final rule also sets forth how a contributing entity may calculate a number or percentage of its enrollees for purposes of the Medicare coordination provision.[53] The final rule excludes coverage that is limited to prescription drug benefits because it is not major medical coverage.[54] HHS also clarifies the commercial book of business exception to reinsurance contributions applies to issuers under Medicare Parts C or D and coverage offered by a Tribe to Tribal members.[55] However, coverage offered to federal, state or tribal employees is considered part of an issuer’s commercial book of business.[56] Finally, HHS excludes expatriate coverage from reinsurance contributions. In addition to the items listed above, HHS also excludes the following entities from reinsurance contributions, as they are not part of a commercial book of business or do not provide major medical coverage:[57]

  • Excepted benefits;
  • Managed care Medicare and Medicaid plans;
  • CHIP;
  • Federal and state high-risk pools (including the Pre-existing Condition Insurance Plan Program);
  • Basic Health Plans;
  • Health Reimbursement Arrangements (HRAs) integrated with a group health plan;
  • Health Saving Accounts (HSAs);
  • Health Flexible Spending Arrangements (FSAs);
  • Employee assistance plans, disease management programs and wellness programs;
  • Stop-loss and indemnity reinsurance policies;
  • Military health benefits/TRICARE;
  • Tribal coverage.

National Contribution Rate

The Premium Stabilization Rule requires HHS to publish the national per capita reinsurance contribution rate for the upcoming benefit year in the annual HHS notice of benefit and payment parameters. The ACA has specified the amounts to be collected from the contributing entities as $10 billion for 2014, $6 billion for 2015, and $4 billion for 2016. The ACA also directs the collection of funds to go to the U.S. Treasury in the amounts of $2 billion for 2-14, $2 billion for 2015, and $1 billion for 2016. According to the final rule, HHS will set the proportion of contributions collected under the national contribution rate to be allocated to reinsurance payments, payments to the U.S. Treasury, and administrative expenses within the HHS annual notice of benefit and payment parameters.[58] HHS has calculated that for benefit year 2014, the annual per capita contribution rate would be $63, or $5.25 per month.[59]

The federal administrative expenses of operating reinsurance for 2014 have been calculated to be a national per capita contribution rate of $.11 annually.[60] The final rule apportions the $.11 per capita amount of administrative expenses as:[61]

  • $.055 of the total amount collected per capita to be allocated to administrative expenses incurred in the collection of contributions from health insurance issuers and self-insured group health plans;
  • $.055 of the total amount collected per capita to be allocated to administrative expenses incurred for activities administering payments to issuers of reinsurance-eligible plans;
  • If a state operates reinsurance, HHS could retain the $.055 to offset costs of contribution collections and would allocate $.055 toward administrative expenses for reinsurance payments;
  • The total amount allocated for administrative expenses for reinsurance payments would be distributed to the states operating reinsurance in proportion to the state-by-state requests for reinsurance payments made under the uniform payment parameters.

Calculation of Reinsurance Contribution Amount and Timeframe for Collections

HHS intends to administer the reinsurance program in the least burdensome way for health insurance issuers and self-insured group health plans, so HHS will collect and pay out reinsurance funds annually.[62] The final rule outlines the process for calculating a contributing entity’s reinsurance contribution as a per capita assessment. A contributing entity is required to submit information regarding the number of covered lives on reinsurance enrollees to HHS by November 15 of each benefit year from 2014 to 2016.[63] HHS will notify each contributing entity of its contribution amounts within 15 days from the submission of enrollment or by December 15, whichever is later. The contributing entity then has 30 days after receiving notification from HHS to remit contributions. As noted above, each contributing entity will make annual reinsurance contributions at the national rate as well as at additional state supplemental contribution rates.[64]

The final rule outlines several methods that health insurance issuers and self-insured group health plans may use to determine the number of covered lives of reinsurance contribution enrollees in order to provide HHS with an annual enrollment count. These methods are listed below, and further detail may be found in the final rule:[65]

  • Actual count method;
  • Snapshot count method (add total number of lives covered on a certain date quarterly);
  • Member months method or State form method (use data from the NAIC Supplemental Health exhibit or similar data from other state forms);

Counting methods for Self-insured group health plans:[66]

  • Actual count method;
  • Snapshot factor method;
  • Form 5500 method (use data from the Annual Return/report of Employee Benefit Plan filed with the Department of Labor);

The final rule also outlines counting methods for plans with self-insured and insured options,[67] aggregated self-insured group health plans and health insurance plans,[68] and multiple plans.[69]

HHS will issue future rulemaking on three restrictions on the use of reinsurance contributions for administrative purposes:[70]

1.  Apply the prohibitions in the ACA prohibiting the use of Exchange administrative and operational funds for staff retreats, excessive executive compensation and promotional giveaways to the reinsurance program;

2.  Reinsurance funds may not be used for any expense not necessary to the operation or administration of the reinsurance program;

3.  Reinsurance entity must allocated costs between reinsurance related and other state expenses based on a consistent application of generally accepted accounting principles.

Eligibility of Reinsurance Payments under the Health Insurance Market Reform Rules

HHS clarifies that a reinsurance-eligible plan’s covered claims costs for an enrollee that are incurred before the application of the 2014 market reform rules (fair health insurance premiums, guaranteed coverage availability, guaranteed renewability, single risk pool, and essential health benefits package) would not be eligible for reinsurance payments.[71]

Reinsurance Payment Parameters

The final rule delineates the 2014 uniform reinsurance payment parameters as:[72]

  • An attachment point of $60,000, when reinsurance payments would begin;
  • National reinsurance cap of $250,000, when reinsurance would stop paying claims for a high-cost individual;
  • Uniform coinsurance rate of 80%, which is the reimbursement percentage applied to the issuer’s aggregated paid claims amounts on an enrollee.

Uniform Adjustment to Reinsurance Payments

HHS will adjust reinsurance payments by a uniform, pro-rata rate if HHS determines that the total requests for reinsurance payments will exceed the reinsurance contributions collected during a benefit year. The total amount of contributions to be considered would include contributions that have been collected but unused under the national contribution rate during any previous benefit year.[73] Therefore, before any funds have been disbursed to states operating reinsurance, HHS would uniformly adjust the reinsurance payments, if applicable.[74]

Supplemental State Reinsurance Payment Parameters

States that establish a reinsurance program may modify the uniform reinsurance payment parameters only by establishing state supplemental payment parameters that cover an issuer’s claims costs beyond the uniform payment parameters. Furthermore, reinsurance payments under state supplemental payment parameters may only be made with the additional funds a state collects for reinsurance payments under § 153.220(d)(1)(ii) or (d)(2). States that establish supplemental reinsurance payment parameters must adjust the uniform reinsurance payment parameters either by decreasing the national attachment point, increasing the national reinsurance cap, or increasing the national coinsurance rate. States must also ensure that additional funds collected for reinsurance payments cover additional reinsurance payments that are projected to be made under the supplemental reinsurance payment parameters for a benefit year.[75] These additional funds collected must be applied toward requests for reinsurance payments under the state supplemental reinsurance payment parameters for benefit year 2014 to 2016.[76]

A reinsurance-eligible plan will be eligible for a reinsurance payment under the state’s supplemental reinsurance parameters if the claims costs incurred for an individual’s covered benefits during a benefit year exceed the state supplemental attachment point, the national reinsurance cap, or the national attachment point.[77] This allows reinsurance payments made under the state supplemental payment parameters to “wrap around” the uniform parameters so the state could apply additional contributions it collects to reinsurance payments beyond the uniform payment parameters.[78] The state may also be required to come up with a uniform, pro-rata adjustment to be applied to all reinsurance payment requests if all reinsurance payments under the supplemental reinsurance parameters exceed the additional funds collected by the state.[79] Finally, the state must ensure that reinsurance payments made to issuers under the supplemental reinsurance parameters do not exceed the issuer’s total paid amount for the reinsurance-eligible claims, and additional funds collected be used for reinsurance payments under the state’s supplemental parameters in future years.[80]

Allocation and Distribution of Reinsurance Contributions

HHS will allocate and distribute to each state operating reinsurance (or directly to issuers if HHS is operating reinsurance within a state) the applicable reinsurance contributions collected from contributing entities under the national contribution rate for reinsurance payments.[81] The final rule also states that even if a state establishes a reinsurance program, HHS would directly collect the reinsurance contributions for enrollees who live in that state from both health insurance issuers and self-insured group health plans.[82]

Reinsurance Data Collection Standards

A state’s applicable reinsurance entity may collect data needed to determine reinsurance payments from an issuer of a reinsurance-eligible plan through either a distributed data collection approach (using HHS or the state to give access to issuer data) or direct collection of data form issuers. States are also required to establish a process by which a reinsurance-eligible plan issuer that does not have individual enrollee claims normally (e.g. capitated plans), can request reinsurance payments or submit data for reinsurance payments. This may be done through a data validation program that is designed to be state-specific.[83]

A state, or HHS acting on behalf of a state, must notify issuers of the total amount of reinsurance payments to be made by June 30 of the year following the applicable benefit year. This date corresponds to the date for notification to issues of risk adjustment payments and charges. Furthermore, states should provide quarterly notifications to reinsurance-eligible plans of the expected requests for reinsurance payments in order to provide issuers with information regarding future premiums and rates.[84]

States establishing reinsurance programs must also ensure that the reinsurance entity’s collection of personally identifiable information is limited to what is necessary to calculate reinsurance payments and that the use and disclosure of such information is limited to the purposes for which the information was collected. Reinsurance entities must also implement specific privacy and security standards to ensure enrollee privacy and protect sensitive information.[85]

Issuers of reinsurance-eligible plans seeking reinsurance payments must submit or make accessible data by April 30 of the year following the end of the applicable benefit year based on the data collection approach established by either the state or HHS acting on behalf of a state.[86]

Provisions for the Temporary Risk Corridors Program

Definitions

HHS has made minor revisions to key definitions in the risk corridors program. Most notably, HHS adds “taxes and regulatory fees” to the definition of taxes. This addition was done for consistency with the terms used in the MLR calculation. Reinsurance contributions will be treated as regulatory fees and allowable community expenses will be treated like taxes, according to the rule. The final rule also sets forth the risk corridors profits calculation to include “after-tax” premiums.”[87]

Risk Corridors Establishment and Payment Methodology

The risk corridors program allows HHS to reallocate funds when a QHP’s ratio of allowable costs to the target exceeds a certain percentage. HHS requires QHP issuers to submit risk corridors information to HHS by July 31 of the year following the applicable benefit year.[88] Based on several comments suggesting that risk corridors being calculated at the issuer level rather than the QHP level is inconsistent with the single risk pool requirement, HHS published an Interim Final Rule addressing this alignment of the risk corridors calculation with the single risk pool requirement.[89]

Risk Corridors Data Requirements

The Premium Stabilization Rule outlines data a QHP issuer must submit to support risk corridors program calculations. Risk adjustment and reinsurance payments would be regarded as after-the-fact adjustments to allowable costs in determining risk corridors amounts, and allowable costs would be reduced by the amount of any cost-sharing reductions received from HHS by the QHP issuer.[90] HHS will issue further guidance on the issue of the manner of submitting required risk corridors data.[91]

Provisions for the Advance Payments of the Premium Tax Credit and Cost-Sharing Reductions

Exchange Responsibilities Regarding Advance Payments of the Premium Tax Credit and Cost-Sharing Reductions

The final rule sets forth provisions related to an Exchange’s obligation to re-determine an enrollee’s eligibility for advance payments of the premium tax credit and cost-sharing reductions. If the Exchange has to re-determine an enrollee’s eligibility during a benefit year based on new information that affects the enrollee’s eligibility for advance payments of the premium tax credit and cost-sharing reduction, the Exchange must account for any advance payments already made on behalf of an individual in order to minimize discrepancies between the advance payment and the individual’s projected premium tax credit for the benefit year. The recalculation will only include the months that the individual has been determined to be eligible for advance payments of the premium tax credit. When re-determining eligibility for cost-sharing reductions, the Exchange must determine an individual eligible for the category of cost-sharing reductions corresponding to the individual’s expected household income for the benefit year.[92]

The final rule also sets forth HHS’ policy on how advance payments of the premium tax credit will be allocated if individuals (eligible for the advance payment of the premium tax credit) in the tax filer’s household are collectively enrolled in more than one QHP or stand-alone dental plan through the Exchange. HHS also explains the methodology for allocation of advance payment of the premium tax credit for Federally-facilitated Exchanges, in which the advance payment of the premium tax credit is allocated based on the number of enrollees covered under the QHP, weighted by the age of the enrollees, using the uniform age rating curve. The final rule allows state-based Exchanges to either adopt the methodology for Federally-facilitated Exchanges or to adopt a reasonable allocated method. HHS notes that this methodology will be implemented in order to ensure that the Exchange is consumer-friendly and transparent.[93]

Exchange Functions: Certification of Qualified Health Plans

The Exchange must ensure that each QHP issuer submits the required plan variations for each of its health plans, and certify that the submitted health plans meet the requirements set forth in § 156.420. The Exchange must collect information necessary to demonstrate that the issuer meets the requirements for silver plan variations and for zero and limited cost sharing plan variations. The Exchange must also provide the actuarial values of the QHPs and silver plan variations to HHS, which would be used to determine the advance payments for the cost-sharing reductions and the premium tax credit. Further, the Exchange must annually collect estimates and supporting documentation that a QHP issuer submits to receive advance payments for cost-sharing reductions, which will be submitted and reviewed by HHS.[94] An issuer of a QHP must provide to the Exchange for annual approval, for each metal health plan, a rate allocation and the expected allowed claims costs for the plan, including an actuarial memorandum with a description of the methods used to perform the allocations. The final rule sets forth the standards used to evaluate the rate allocation. HHS has also established premium allocation standards for stand-alone dental plans.[95] Finally, HHS clarifies that the above provisions also apply to Multi-state plans.[96]

QHP Minimum Certification Standards Relating to Advance Payments of the Premium Tax Credit and Cost-Sharing Reductions

The final rule notes that QHP certification includes the requirement that a QHP issuer meet the requirements of Subpart E of part 156 relating to administration of advance payments of the premium tax credit and cost-sharing reductions.[97]

Health Insurance Issuer Responsibilities Regarding Advance Payments of the Premium Tax Credit and Cost-Sharing Reductions

The final rule sets forth how cost-sharing reductions will work for eligible enrollees. The QHP issuer must ensure that an eligible individual is assigned to a particular plan variation, pays only the cost-sharing amount required for a particular service, and that the individual receive the cost-sharing reduction when the cost-sharing is collected.[98]

QHP issuers are required to submit health plan variations, including required levels of cost-sharing reductions for all plans they seek to offer in the individual market on the Exchange for certification and approval by the Exchange. OPM will determine the form and manner for Multi-state plans to submit silver plan variations and zero and limited cost sharing plan variations for certification. In order for issuers to reduce cost-sharing for EHB for eligible individuals enrolled in silver plans with household incomes between 100 and 400% of FPL, issuers can reduce the maximum annual limitation on cost-sharing. For individuals with household incomes between 250 and 400% of FPL, there will be no reduction on the maximum annual limitation on cost sharing. The final rule also establishes a three step process for designing cost-sharing structures in silver plan variations for individuals with household incomes of 100 to 250% of FPL. Furthermore, the final rule states that issuers submit silver plan variations annually to the Exchange for certification, prior to the benefit year, even if the standard plan does not change, because the reduced maximum limitation on cost sharing may change annually.[99]

The final rule explains that silver plan variations must cover the same benefits and include the same providers as the standard silver plan, must require the same out-of-pocket spending for non-EHB benefits, and be subject to the same requirements that apply to the standard silver plan.[100] The cost-sharing for enrollees under any silver plan variation for an EHB must not exceed the corresponding cost sharing in a standard silver plan or a silver plan variation with a lower AV. This standard would apply to all types of cost-sharing, including reductions to deductibles, coinsurance, and co-payments.[101]

HHS also makes clear that if the Exchange notifies a QHP issuer of a change in an enrollee’s eligibility for cost-sharing reductions, the QHP issuer must change the plan to which the individual is assigned. If there is a change in plan assignment to a different plan variation of the same QHP during the course of a benefit year, the QHP issuer must take into account previous cost-sharing that has been paid into the calculation of deductibles and annual limitations on cost-sharing under the new plan.[102]

The payment approach outlined in the final rule requires HHS to make monthly advance payments to issuers to cover projected cost-sharing reductions, which would then be reconciled with the actual cost-sharing amounts at the end of the benefit year. QHP issuers must provide annual estimates of the cost-sharing reductions to be provided over the benefit year, prior to the start of that year. The final rule outlines the methodology to be used to develop estimates of the cost-sharing reductions for silver plan variations for benefit year 2014, which is unique to that benefit year. An Interim Final Rule published concurrently to the Final Rule outlines a simplified methodology that issuers may use to calculate cost-sharing reductions.[103] However, HHS notes that Multi-state plans must provide these estimates to OPM. HHS may also adjust the advance payments during a benefit year, based on issuer data submitted to HHS that the estimate would be substantially different than originally provided.[104] QHP issuers are required to submit the actual amount of cost-sharing reductions provided to HHS. If the QHP issuer compensates a provider in whole or part on a fee-for-service basis, the issuer must submit the total allowed costs broken down by:[105]

  • The amount the issuer paid;
  • The amount the enrollee paid;
  • The amount the enrollee would have paid under the standard plan without cost-sharing reductions.

The final rule also includes provisions on the reimbursement of advance cost-sharing reduction shortfalls by HHS to an issuer as well as issuer repayment of extra advance cost-sharing reductions to HHS.[106]

In general, advance payments of the premium tax credit and cost-sharing reductions apply to QHPs offered on the individual market and child only plans. The advance payments do not apply to catastrophic plans. Advance payments of the premium tax credits apply to stand-alone dental plans, but the advance payments of the cost-sharing reductions do not.[107]

The final rule requires QHP issuers to reduce the portion of the premium charged to the enrollee by the amount of the advance payment of the premium tax credit for the particular month. The QHP issuer must also:

  • Notify HHS of any reduction in the premium charged to the individual enrollee.
  • Display the advance payment of the premium tax credit amount on the enrollee’s billing statement.
  • QHP issuers are prohibited from terminating or initiating coverage if there is a delay in the payment of an advance premium tax credit.[108]

There are similar standards for when an Exchange is facilitating the collection and payment of premiums to QHP issuers and stand-alone dental plans.[109]

HHS has issued its interpretation of the ACA provisions dealing with cost-sharing reduction rules for Indians in the Final Rule. Specifically, HHS notes that cost-sharing reductions under §§ 1402(a) and 1402(d)(1) of the ACA only apply to individuals who are eligible for premium tax credits. Additionally, HHS notes that cost-sharing reductions under § 1402(d) of the ACA would be available to Indians regardless of their eligibility for premium tax credits. However, cost-sharing reductions under § 1402(d)(2) apply to only those Indians purchasing coverage in the individual market Exchange.[110] HHS also explains how Indians would pay only limited or even none of the total cost sharing required, with the federal government bearing the remaining cost-sharing obligation, using the plan variation concept.[111]

Provisions on User Fees for a Federally-Facilitated Exchange (FFE)

The final rule calls for issuers offering plans through the FFE to remit a user fee of 3.5 percent of the premium monthly to HHS for benefit year 2014. This user fee applies to individual and SHOP exchanges that are federally run. The user fee will be calculated as a percentage of the premium, and will be charged on each policy with enrollment through the FFE.[112]

Distributed Data Collection for the HHS-operated Risk Adjustment and Reinsurance Programs

HHS has adopted a distributed data approach to data collection for the risk adjustment and reinsurance programs when HHS operates those programs within a state.[113]

Issuer Data Collection and Submission Requirements

Issuers of risk adjustment covered plans or reinsurance-eligible plans must establish a dedicated data environment, and provide data access to HHS. The final rule states that HHS will issue further guidance on the specific technical requirements that issuers must fulfill. Issuers must establish the dedicated data environment three months before the first day of full operation, however testing will be permitted beforehand.[114] Issuers must give HHS access to their enrollee-level plan enrollment data, enrollee claims data, and enrollee encounter data by April 30 of the year following the end of the applicable benefit year. HHS will also issue further guidance on data storage requirements for reinsurance-eligible and risk adjustment covered plans.[115] The types of data eligible for reinsurance payments are medical and pharmacy claims with discharge dates or through dates of service. Institutional and medical claims and encounter data with discharge dates or through dates would be eligible for risk adjustment payments and charges.[116] The claims data submitted by reinsurance-eligible and risk adjustment covered plans must have resulted in payment by the issuer and must include data related to cost-sharing reductions. All data must be provided at the aggregate level to HHS.[117] The final rule also requires reinsurance-eligible and risk adjustment covered plans to establish a unique masked enrollee identification number for an enrollee across enrollments and plans with the issuer within a state during a benefit year. The issuers must not include personally identifiable information in the identification number. Capitated plans must derive cost data by implementing a methodology to price encounters in order to participate in the reinsurance and risk adjustment programs.

Small Business Health Options Program

Employee Choice in the Federally-Facilitated SHOP

The final rule notes that each Federally-facilitated SHOP (FF-SHOP) should allow employers the choice to offer employees either a single QHP or all QHPs at a single level of coverage, but that implementation of employee choice in the FF-SHOP will not be possible for 2014. Therefore, the effective date of the employee choice requirements and premium aggregation requirements will be pushed back to January 1, 2015. While SHOP Exchanges may offer employee choice and premium aggregation for plans on January 1, 2014, FF-SHOP will not offer these until January 1, 2015.[118] The final rule also adopts a specific, standardized method for employer contribution in the FF-SHOPs. This method reflects meaningful employee choice and conforms to existing federal law.[119] Additionally, HHS makes clear that employers participating in the FF-SHOP may not contribute different percentages for different employee categories.[120]

HHS has also established a “tying provision” which leverages issuers’ participation in the FFE to ensure participation in the FF-SHOP to enhance employer and employee choice in the FF-SHOPs. The “tying provision” only applies to the issuer itself or a member of the same issuer group that has a 20% market share of the small group market in the state.[121] However, HHS notes that the “tying provision” does not require any issuer to start to offer products in the small group market. The final rule allows an FFE to certify a QHP in the individual market of the FFE if:[122]

  • The QHP issuer offers at least one small group market QHP at the silver level and one gold level plan in the FF-SHOP covering that state; or
  • The QHP issuer does not offer small group market plans in that state, but another issuer in the same issuer group (defined as common ownership and control) offers at least one small group market QHP at the silver and gold levels in the FF-SHOP in that state; or
  • Neither the issuer nor any issuer in the same issuer group offers a small group product in the state.

Finally, HHS requires that for QHP certification by an FFE and the FF-SHOP, the QHP issuer must provide similar broker compensation as would be paid for similar health plans offered outside the FFE or FF-SHOP.[123] Additionally, the Final Rule would allow listing only those brokers and agents registered with the Exchange or SHOP on the website.[124]

Minimum Participation Rate in the FF-SHOPs

HHS sets the minimum participation rate for an FF-SHOP at 70%, which is calculated as the level of participation of employees of a qualified employer. The final rule also allows an FF-SHOP to adopt different minimum participation rates in a state if it can be shown that a state law that sets the rate or a higher/lower rate is usually used by the majority of QHP issuers in that state for non-SHOP small group market products. The final rule also requires employees with alternative coverage be excluded from the minimum participation coverage.[125]

Determining Employer Size for Purposes of SHOP Participation/Full-Time Employment

The final rule will require employers to take into account part-time employees, but will exclude certain seasonal employees to determine whether an employer has more than 50 employees.[126] The final rule also adopts the definition of a full time employee as one who is employed an average of at least 30 hours per week.[127]

Transitional Policies

During 2014 and 2105, HHS will defer to state methods for determining small employer size in state-operated Exchanges. However, in the FF-SHOP, starting in 2014, HHS will use the FTE method of determining employer size even though states will retain their choice of 50 or 100 employees.[128]

Medical Loss Ratio Requirements under the Patient Protection and Affordable Care Act

Treatment of Premium Stabilization Payments and Timing of Annual MLR Reports and Rebates

The final rule adopts a formula for calculating the MLR with risk corridor amounts, risk adjustment amounts, and reinsurance payments as being adjustments to the MLR numerator. Reinsurance contributions as well as the Exchange user fees can be deducted from the denominator. Furthermore, the final rule requires issuers to provide rebates if the MLR falls short of their applicable MLR standard for the reporting year.[129] The final rule also sets forth that the deadlines for the annual MLR reporting and distribution of rebates will be September 30 to account for additional time needed for determining premium stability payments under the final rule.[130]

Deduction of Community Benefit Expenditures

The final rule also implements a community benefit expenditure cap of the highest of either 3% of the premium or the highest premium tax rate charged in the state for tax exempt issuers. This will balance the availability of such a deduction with the potential for abuse, and will promote a level playing field.[131]

For information on cost-sharing reduction payments and risk corridor calculation, please see this companion piece.



[1] Patient Protection and Affordable Care Act: HHS Notice of Benefit and Payment Parameters for 2014 Final Rule, 78 Federal Register 15410 (March 11, 2013) (to be codified at 45 C.F.R. Parts 153, 155, 156, 157 and 158). Available at: http://www.gpo.gov/fdsys/pkg/FR-2013-03-11/pdf/2013-04902.pdf.
[2] Patient Protection and Affordable Care Act: HHS Notice of Benefit and Payment Parameters for 2014 Proposed Rule, 77 Federal Register 73118 (December 7, 2012) (to be codified at 45 C.F.R. Parts 153, 155, 156, 157 and 158). Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-12-07/pdf/2012-29184.pdf.
[3] 45 C.F.R. § 153.100(c); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15415.
[4] Patient Protection and Affordable Care Act: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment, 77 Federal Register 17220 (March 23, 2012) (to be codified at 45 C.F.R. Part 153). Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-03-23/pdf/2012-6594.pdf.
[5] Patient Protection and Affordable Care Act: HHS Notice of Benefit and Payment Parameters for 2014 Proposed Rule, 77 Federal Register 73118 (December 7, 2012).
[6] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15412.
[7] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15452.
[8] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15412.
[9] 45 C.F.R. § 153.310(c)(1).
[10] 45 C.F.R. § 153.310(c)(2).
[11] 45 C.F.R. § 153.310(c)(3).
[12] 45 C.F.R. § 153.310(d).
[13] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15416.
[14] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15416; ACA §§ 1321(c)(1), 1343.
[15] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15416.
[16] 45 C.F.R. § 153.20.
[17] 45 C.F.R. § 153.20; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15418.
[18] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15418.
[19] 45 C.F.R. § 147.145; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15418.
[20] ACA § 1312(c); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15419.
[21] 45 C.F.R. § 153.360.
[22] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15419.
[23] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15419-20.
[24] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15420.
[25] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15420-21.
[26] 45 C.F.R. § 153.340(b)(3).
[27] 45 C.F.R. § 153.330(a).
[28] 45 C.F.R. § 153.330(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15435.
[29] 45 C.F.R. § 153.330(b)(2), seeking compliance with § 153.310(e).
[30] 45 C.F.R. § 153.330(b)(2), seeking compliance with § 153.340(b)(1).
[31] 45 C.F.R. § 153.330(b)(3).
[32] 45 C.F.R. § 153.330(b)(4).
[33] 45 C.F.R. § 153.630; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15436.
[34] 45 C.F.R. § 153.630(b)-(e).
[35] 45 C.F.R. § 153.630(f).
[36] 45 C.F.R. § 153.100(a)(1).
[37] 45 C.F.R. § 153.100(a)(2).
[38] Id.
[39] 45 C.F.R. § 153.210(a)(2).
[40] 45 C.F.R. § 153.210(e).
[41] 45 C.F.R. § 153.240(b)(2).
[42] 45 C.F.R. § 153.220(d).
[43] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15454-55.
[44] 45 C.F.R. § 153.220(a).
[45] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15455.
[46] 45 C.F.R. § 153.220(d)(2).
[47] ACA § 1341(d); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15455.
[48] ACA § 1341; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15455.
[49] 45 C.F.R. § 153.20.
[50] ACA § 1341(b)(3)(B)(i); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456.
[51] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456; 45 C.F.R. § 153.400(a)(1)(iii) (excludes expatriate health coverage from reinsurance contributions).
[52] 45 C.F.R. 153.400(a)(1)(iv); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456.
[53] 45 C.F.R. § 153.405; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456.
[54] 45 C.F.R. § 153.400(a)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15457.
[55] 45 C.F.R. § 153.400(a)(1)(ii).
[56] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15457.
[57] 45 C.F.R. § 153.400(a)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15457-59.
[58] 45 C.F.R. § 153.220(c).
[59] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15460.
[60] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15461.
[61] Id.
[62] 45 C.F.R. §§ 153.400(a), 153.240(b)(1); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15461.
[63] 45 C.F.R. § 153.405(b).
[64] 45 C.F.R. § 153.400(a).
[65] 45 C.F.R. § 153.405(d)-(e); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15462-63.
[66] 45 C.F.R. § 153.405(e); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15463.
[67] 45 C.F.R. § 153.405(f).
[68] 45 C.F.R. § 153.405(g)(1); 153.405(g)(3) (explains exceptions to this method).
[69] 45 C.F.R. § 153.405(g)(4) (includes explanation of multiple group health plans including an insured plan and not including an insured plan). Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15463-64.
[70] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15466.
[71] 45 C.F.R. § 153.234; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15466.
[72] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15467.
[73] 45 C.F.R. § 153.230(d).
[74] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15468.
[75] 45 C.F.R. § 153.232(a); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15468.
[76] 45 C.F.R. § 153.232(b).
[77] 45 C.F.R. § 153.232(c).
[78] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15469.
[79] 45 C.F.R. § 153.232(e).
[80] 45 C.F.R. § 153.232(f).
[81] 45 C.F.R. § 153.235(a).
[82] 45 C.F.R. § 153.220(a).
[83] 45 C.F.R. § 153.240(a); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15470.
[84] 45 C.F.R. § 153.240(b)(1)-(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 154671.
[85] 45 C.F.R. § 153.240(d)(1)-(2); 45 C.F.R. §§ 164.308, 310, 312, describing privacy standards applying to issuers/providers.
[86] 45 C.F.R. § 153.420(a)-(b).
[87] 45 C.F.R. §§ 153.500, 153.530(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15472.
[88] 45 C.F.R. § 153.530(d); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15473.
[89] 45 C.F.R. § 153.500; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15474; See Health Reform GPS Article on this topic.
[90] 45 C.F.R. § 153.530(b)(2)(iii); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15474.
[91] 45 C.F.R. §§ 153.530(a)-(c).
[92] 45 C.F.R. § 155.330(g); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15475.
[93] 45 C.F.R. § 155.340(e)-(f); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15476.
[94] 45 C.F.R. § 155.1030.
[95] 45 C.F.R. § 156.470(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15477-78.
[96] 45 C.F.R. §§ 155.1030(c), 156.470(f).
[97] 45 C.F.R. § 156.215.
[98] 45 C.F.R. § 156.410.
[99] 45 C.F.R. § 156.420; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15481-83.
[100] 45 C.F.R. § 156.420(c).
[101] 45 C.F.R. § 156.420(e).
[102] 45 C.F.R. § 156.425(a)-(b).
[103] 45 C.F.R. § 156.430(c)(3)-(4); See Health Reform GPS Article on this.
[104] 45 C.F.R. § 156.430; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15486-87.
[105] 45 C.F.R. § 156.430(c)(1).
[106] 45 C.F.R. § 156.430(e).
[107] 45 C.F.R. § 156.440.
[108] 45 C.F.R. § 156.460(a).
[109] 45 C.F.R. § 155.340(g).
[110] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15492.
[111] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15492-96.
[112] 45 C.F.R. § 156.50(c); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15496-97.
[113] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15497.
[114] 45 C.F.R. § 153.700(a)-(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15497-98.
[115] 45 C.F.R. § 153.710(a); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15498-99.
[116] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15499.
[117] 45 C.F.R. § 153.710(b).
[118] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15501.
[119] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15501; Preamble Notice of Benefit and Payment Parameters Proposed Rule, 77 Fed. Reg. p. 73184-85, for detailed explanation of the method.
[120] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15502.
[121] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15502.
[122] 45 C.F.R. § 156.200(g); Preamble Notice of Benefit and Payment Parameters Proposed Rule, 77 Fed. Reg. p.73185.
[123] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15502-03.
[124] 45 C.F.R. § 155.220(b).
[125] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15503.
[126] Id.
[127] 45 C.F.R. § 155.20.
[128] Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15504.
[129] 45 C.F.R. § 158.240(c)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15505.
[130] 45 C.F.R. §§ 158.110(b); 158.240(d); 158.241(a)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15505-06.
[131] 45 C.F.R. § 156.162(b)(1)(vii); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15506.
Patient Protection and Affordable Care Act: HHS Notice of Benefit and Payment Parameters for 2014 Final Rule, 78 Federal Register 15410 (March 11, 2013) (to be codified at 45 C.F.R. Parts 153, 155, 156, 157 and 158). Available at: http://www.gpo.gov/fdsys/pkg/FR-2013-03-11/pdf/2013-04902.pdf.
Patient Protection and Affordable Care Act: HHS Notice of Benefit and Payment Parameters for 2014 Proposed Rule, 77 Federal Register 73118 (December 7, 2012) (to be codified at 45 C.F.R. Parts 153, 155, 156, 157 and 158). Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-12-07/pdf/2012-29184.pdf.
45 C.F.R. § 153.100(c); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15415.
Patient Protection and Affordable Care Act: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment, 77 Federal Register 17220 (March 23, 2012) (to be codified at 45 C.F.R. Part 153). Available at: http://www.gpo.gov/fdsys/pkg/FR-2012-03-23/pdf/2012-6594.pdf.
Patient Protection and Affordable Care Act: HHS Notice of Benefit and Payment Parameters for 2014 Proposed Rule, 77 Federal Register 73118 (December 7, 2012).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15412.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15452.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15412.
45 C.F.R. § 153.310(c)(1).
45 C.F.R. § 153.310(c)(2).
45 C.F.R. § 153.310(c)(3).
45 C.F.R. § 153.310(d).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15416.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15416; ACA §§ 1321(c)(1), 1343.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15416.
45 C.F.R. § 153.20.
45 C.F.R. § 153.20; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15418.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15418.
45 C.F.R. § 147.145; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15418.
ACA § 1312(c); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15419.
45 C.F.R. § 153.360.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15419.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15419-20.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15420.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15420-21.
45 C.F.R. § 153.340(b)(3).
45 C.F.R. § 153.330(a).
45 C.F.R. § 153.330(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15435.
45 C.F.R. § 153.330(b)(2), seeking compliance with § 153.310(e).
45 C.F.R. § 153.330(b)(2), seeking compliance with § 153.340(b)(1).
45 C.F.R. § 153.330(b)(3).
45 C.F.R. § 153.330(b)(4).
45 C.F.R. § 153.630; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15436.
45 C.F.R. § 153.630(b)-(e).
45 C.F.R. § 153.630(f).
45 C.F.R. § 153.100(a)(1).
45 C.F.R. § 153.100(a)(2).
Id.
45 C.F.R. § 153.210(a)(2).
45 C.F.R. § 153.210(e).
45 C.F.R. § 153.240(b)(2).
45 C.F.R. § 153.220(d).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15454-55.
45 C.F.R. § 153.220(a).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15455.
45 C.F.R. § 153.220(d)(2).
ACA § 1341(d); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15455.
ACA § 1341; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15455.
45 C.F.R. § 153.20.
ACA § 1341(b)(3)(B)(i); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456; 45 C.F.R. § 153.400(a)(1)(iii) (excludes expatriate health coverage from reinsurance contributions).
45 C.F.R. 153.400(a)(1)(iv); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456.
45 C.F.R. § 153.405; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15456.
45 C.F.R. § 153.400(a)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15457.
45 C.F.R. § 153.400(a)(1)(ii).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15457.
45 C.F.R. § 153.400(a)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15457-59.
45 C.F.R. § 153.220(c).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15460.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15461.
Id.
45 C.F.R. §§ 153.400(a), 153.240(b)(1); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15461.
45 C.F.R. § 153.405(b).
45 C.F.R. § 153.400(a).
45 C.F.R. § 153.405(d)-(e); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15462-63.
45 C.F.R. § 153.405(e); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15463.
45 C.F.R. § 153.405(f).
45 C.F.R. § 153.405(g)(1); 153.405(g)(3) (explains exceptions to this method).
45 C.F.R. § 153.405(g)(4) (includes explanation of multiple group health plans including an insured plan and not including an insured plan). Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15463-64.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15466.
45 C.F.R. § 153.234; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15466.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15467.
45 C.F.R. § 153.230(d).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15468.
45 C.F.R. § 153.232(a); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15468.
45 C.F.R. § 153.232(b).
45 C.F.R. § 153.232(c).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15469.
45 C.F.R. § 153.232(e).
45 C.F.R. § 153.232(f).
45 C.F.R. § 153.235(a).
45 C.F.R. § 153.220(a).
45 C.F.R. § 153.240(a); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15470.
45 C.F.R. § 153.240(b)(1)-(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 154671.
45 C.F.R. § 153.240(d)(1)-(2); 45 C.F.R. §§ 164.308, 310, 312, describing privacy standards applying to issuers/providers.
45 C.F.R. § 153.420(a)-(b).
45 C.F.R. §§ 153.500, 153.530(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15472.
45 C.F.R. § 153.530(d); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15473.
45 C.F.R. § 153.500; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15474; See Health Reform GPS Article on this topic.
45 C.F.R. § 153.530(b)(2)(iii); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15474.
45 C.F.R. §§ 153.530(a)-(c).
45 C.F.R. § 155.330(g); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15475.
45 C.F.R. § 155.340(e)-(f); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15476.
45 C.F.R. § 155.1030.
45 C.F.R. § 156.470(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15477-78.
45 C.F.R. §§ 155.1030(c), 156.470(f).
45 C.F.R. § 156.215.
45 C.F.R. § 156.410.
45 C.F.R. § 156.420; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15481-83.
45 C.F.R. § 156.420(c).
45 C.F.R. § 156.420(e).
45 C.F.R. § 156.425(a)-(b).
45 C.F.R. § 156.430(c)(3)-(4); See Health Reform GPS Article on this.
45 C.F.R. § 156.430; Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15486-87.
45 C.F.R. § 156.430(c)(1).
45 C.F.R. § 156.430(e).
45 C.F.R. § 156.440.
45 C.F.R. § 156.460(a).
45 C.F.R. § 155.340(g).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15492.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15492-96.
45 C.F.R. § 156.50(c); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15496-97.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15497.
45 C.F.R. § 153.700(a)-(b); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15497-98.
45 C.F.R. § 153.710(a); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15498-99.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15499.
45 C.F.R. § 153.710(b).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15501.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15501; Preamble Notice of Benefit and Payment Parameters Proposed Rule, 77 Fed. Reg. p. 73184-85, for detailed explanation of the method.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15502.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15502.
45 C.F.R. § 156.200(g); Preamble Notice of Benefit and Payment Parameters Proposed Rule, 77 Fed. Reg. p.73185.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15502-03.
45 C.F.R. § 155.220(b).
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15503.
Id.
45 C.F.R. § 155.20.
Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15504.
45 C.F.R. § 158.240(c)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15505.
45 C.F.R. §§ 158.110(b); 158.240(d); 158.241(a)(2); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15505-06.
45 C.F.R. § 156.162(b)(1)(vii); Preamble Notice of Benefit and Payment Parameters Final Rule, 78 Fed. Reg. p. 15506.

Comment (1)

  • JSmith says:

    I think the two clauses in the summary above may be reversed. Your text, “Advance payments of the cost-sharing reductions apply to stand-alone dental plans, but the advance payments of the premium tax credit do not.” is reversed from what it actually should be.

    Pulled from preamble of final rule –

    “We proposed in §156.440(b) that the provisions of subpart E, to the extent related to cost-sharing reductions, not apply to stand-alone dental plans.”

    ** You’re exactly right. We accidentally reversed it, but it’s fixed now. Thanks so much for the heads up.

A new set of Frequently Asked Questions (FAQs) issued by the Centers for Medicare and Medicaid Services (CMS) answers several questions concerning the risk corridor provision of the Affordable Care Act (ACA). Pursuant to the Notice of Benefit and Payment Parameters for 2015 final rule, CMS stated that the risk corridor provisions would be implemented in a budget neutral manner. The new FAQ stated how the administration will address various issues that may arise in providing risk corridor payments, including sufficiency and medical loss ratio (MLR) determinations.
Yesterday, the Centers for Medicare and Medicaid Services issued the final rule on the Notice of Benefit and Payment Parameters for 2015. Several of the notable components of the rule include:
  • Extending the transitional policy from November 2013, which says that individuals may retain their insurance coverage even if it does not meet the Affordable Care Act (ACA) standards, through October 2016.
  • Finalizing that open enrollment for 2015 will being on November 15th, 2014 and conclude on January 15th, 2015.
  • Stabilizing the transitional reinsurance program by raising the attachment point and setting a reinsurance cap.
  • Refining the risk adjustment and risk corridor programs.
  • Implementing enrollee protections such as out-of-pocket limits and patient safety standards.
  • Finalizing provisions of the Small Business Health Options Program (SHOP) that address employee choice and premium aggregation.
In addition to the rule, Gary Cohen, the Director for the Center for Consumer Information and Insurance Oversight (CCIIO) released a letter explaining the extension of plans that do not meet the ACA meaningful coverage requirements. The letter further describes how states that did not implement this extension back in November may do so now.
Today, the Centers for Medicare and Medicaid Services (CMS) published a final rule concerning financial integrity and oversight for Marketplaces and qualified health plans (QHP). Some of the key components addressed in this rule include: clarifications and amendments to market reform rules, standards for special enrollment periods, and standards for survey vendors that may conduct enrollee satisfaction surveys for QHP issuers. One specific amendment in the rule enables QHP issuers to use a "simplified methodology" in determining cost-sharing reductions for qualifying plan enrollees, which CMS states will protect federal funds and minimize administrative burden.
New guidance released by the Internal Revenue Service (IRS) explains Affordable Care Act (ACA) market interactions on health reimbursement arrangements (HRA), flexible savings accounts (FSA), and other employer-related options. The guidance states that group health plans used to purchase coverage on the Marketplaces, such as HRA and FSA, will not be considered as integrated for the purposes of determining annual dollar limits or preventive service requirements. Moreover, the IRS guidance states that employers not offering insurance coverage may try to use "excepted only benefits" HRA plans to count toward employee compensation.
The Centers for Medicare and Medicaid Services (CMS) released a final rule today implementing a multitude of provisions within the Affordable Care Act (ACA). The final rule, which has remained largely unchanged from the program integrity proposed rule published in June, provides policies designed to protect consumer information and ensure appropriate usage of federal funds. Specifically, the rule requires oversight of qualified health plan (QHP) issuers on federally-facilitated Marketplaces and oversight of privacy and security measures instituted on state-based Marketplaces. The rule also covers eligibility appeals for the individual and small business health options program (SHOP) markets. The Center for Consumer Information and Insurance Oversight (CCIIO) within CMS concurrently released a fact sheet that outlines the key provisions discusses in the final rule.
The US Department of Health and Human Services (HHS) is currently finalizing the Notice of Benefit and Payment Parameters for 2015 , a rule that proposes, among other things, to tweak the cost-sharing limits and eliminate the actuarial value (AV) standards for dental plans offering pediatric dental coverage in the marketplaces.
The US Department of Health and Human Services (HHS) is currently finalizing the Notice of Benefit and Payment Parameters for 2015 , a rule that proposes, among other things, to tweak the cost-sharing limits and eliminate the actuarial value (AV) standards for dental plans offering pediatric dental coverage in the marketplaces.
Section 1411(f) of the Affordable Care Act requires the HHS Secretary to establish a federal appeals process covering appeals related to certain determinations made by Health Insurance Marketplaces: eligibility for enrollment in a QHP sold in the Marketplace; eligibility for premium tax credits and cost-sharing reductions; exemptions from individual responsibility to maintain minimum essential coverage; citizenship and lawful presence; the affordability of employer coverage; and inconsistencies involving information.
A report issued in May 2013 by Jackson Hewitt Tax Service found that 27% of the uninsured, non-elderly population with household incomes in premium tax credit eligibility range are “unbanked” (that is, they lack either credit cards or bank accounts). Because many insurance companies require that premiums be paid with a credit card, by check, or by other electronic means, the unbanked uninsured effectively would be barred from coverage as well as from the premium tax credits whose purpose is to make coverage affordable. The problem is expected to fall most heavily on people already at risk for disparities in health and health care: African American and Latino families, families headed by unmarried adults and adults with low education levels, unemployed persons, and the poor...