DraftMedicarePolicy CMS-9937-P

Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017 (proposed rule)

Proposed HHS rule setting payment parameters and standards for Exchanges, risk programs (risk adjustment, reinsurance, risk corridors), consumer protections, network adequacy, standardized plan options, enrollment periods, and related Exchange operations for the 2017 benefit year; affects CMS, State Exchanges, QHP issuers, agents/brokers, Navigators, and other stakeholders participating in Federally-facilitated and State-based Exchanges.

Policy Summary

PayerMedicare

PolicyPatient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017 (proposed rule)

Policy CodePolicy CMS-9937-P

Change TypeProposed rule with multiple additions, revisions, and clarifications

Effective Date

Next Review Date

Key ActionAgents and brokers assisting with Exchange enrollment must register, execute privacy/security agreements, receive training, and ensure completion of eligibility verification and enrollment through the Exchange.

SourceLink

POLICY UPDATE CHANGES

Proposes to revise definitions of large and small employer to conform to Pub. L. 114-60 (51/50 employee thresholds with State opt‑ins for 101/100).

Proposes adding an exception to guaranteed availability when an issuer discontinues a product or withdraws from a market during the specified notice periods (90 or 180 days).

Proposes that student health insurance coverage be subject to the single risk pool index rate setting methodology beginning plan years on/after 2017, while permitting separate bona fide school-related risk pools.

Interprets 'plan year' to mean a period no longer than 12 months for grandfathered and non-grandfathered group health plans.

Amend §153.405(i) to extend audit cooperation requirements to third-party administrators and similar entities assisting contributing entities.

Add §153.510(g) to allow HHS to adjust 2015 risk corridors payments/charges by the full difference between certified estimates of 2014 CSR and actual CSRs.

Amend §153.530 to require issuers to adjust reported CSR amounts on 2015 risk corridors and MLR forms by the difference between prior reported amounts and actual CSRs as calculated under §156.430(c).

Add §153.530(b)(2)(iv) to require truing up estimates of unpaid claims when calculating allowable costs for 2015 and later benefit years.

Propose deletion of §153.710(d) (interim dedicated distributed data environment discrepancy reporting) effective for 2016 benefit year.

Add §153.710(f) to codify evaluation of EDGE data submissions for quantity and quality and to authorize default risk adjustment charges based on analyses.

Amend §153.710(g) to provide HHS authority to modify reporting instructions via guidance and to require reporting of CSR amounts calculated under §156.430(c).

Clarify MLR reporting should reflect risk corridors payment/charge as under §153.510.

Do not extend good-faith safe harbor beyond 2015; CMPs may be imposed starting 2016 for failures related to dedicated distributed data environment and related submissions.

Propose increasing default risk adjustment PMPM charge percentile from 75th to 90th for 2015 benefit year calculation.

For very small issuers (<=500 billable member months statewide in combined markets), propose alternative PMPM default charge equal to 14% of premium for 2016 benefit year.

Proposes a 14 percent of premium PMPM default risk adjustment charge option for issuers with 500 or fewer statewide billable member months.

Clarifies that an acquiring entity or State guaranty fund may accrue prior months' claims experience for risk adjustment and reinsurance when taking over substantially the same plan from an insolvent issuer.

Proposes that rate increase thresholds for review be measured using average increase weighted by premium volume for each plan within a product (plan-level measurement) including premium rating factors.

Requires submission of the Unified Rate Review Template for all single risk pool coverage products regardless of whether any plan in the product has a rate increase.

Proposes uniform public posting timelines for rate information for single risk pool coverage beginning for coverage on/after Jan 1, 2017, and intends to publish timeline for comment.

Codifies that State actions (statute, regulation, guidance) on or before Dec 31, 2011 making benefits State-required can be considered EHB; benefits required after that date are not EHB unless enacted to comply with Federal requirements.

Designates the State (rather than the Exchange) to identify State-required benefits that are in addition to EHB and to receive issuer cost calculations for those benefits.

Proposes SBE-FP framework allowing States to operate Exchanges while relying on HHS Federal services under a Federal platform agreement.

Requires SBE-FPs to adopt FFE-equivalent standards for certain QHP issuer requirements (formulary posting, network adequacy, ECPs, meaningful difference, change of ownership, compliance and casework standards).

Proposes amendments to Navigator duties to require targeted outreach to underserved/vulnerable populations and expanded post-enrollment assistance including appeals, Exchange-granted exemption assistance, and help with premium tax credit reconciliation materials.

Authority for HHS to suspend an agent's or broker's FFE agreement up to 90 calendar days without advance notice if HHS reasonably suspects fraud or abusive conduct involving PII, with opportunity to rebut during suspension.

Authority for HHS to immediately and permanently terminate an agent's or broker's FFE agreements for cause upon reasonable confirmation of fraud or abusive conduct or notification by State/law enforcement.

New standards of conduct (§155.220(j)) for agents and brokers to provide correct, non-misleading information, obtain consent, protect PII, and comply with federal/state law; violations may result in termination or other penalties.

Proposal to eliminate vendor requirements to perform information verification (identity proofing and State licensure verification) in §155.222.

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Coverage and Risk Adjustment Criteria

Proposed Exchange and QHP coverage provisions

Proposed coverage- and program-related provisions for Exchanges and QHPs for 2017 include:

Codify State-based Exchange on the Federal platform (SBE-FP) model with Federal platform agreements and application of certain FFE requirements to SBE-FP QHPs.

Establish standardized plan options with specified cost-sharing structures at bronze, silver (including CSR variations), and gold metal levels to simplify consumer plan comparison; issuers may continue to offer nonstandard plans.

Propose quantitative network adequacy thresholds (State‑selected with a Federal default), standardize network depth categories and provider transition provisions, and set a standard for when an enrollee receives an EHB in-network from an out-of-network provider.

Authorize FFEs to selectively contract with issuers to strengthen short-term oversight and improve consumer shopping displays on HealthCare.gov.

Propose user fees for QHPs offered through SBE-FPs to offset Federal platform costs and require SBE-FPs to enter Federal platform agreements specifying services and fees.

Set the proposed individual market open enrollment period for the 2017 benefit year as Nov 1, 2016 through Jan 31, 2017.

Propose risk program changes including recalibration of the HHS risk adjustment model (using updated MarketScan data), potential adjustment of the reinsurance 2016 attachment point if residual contributions remain, and changes to risk corridors and MLR reporting/truing for 2014–2016.

Amend assister and certified application counselor program requirements to require training, Exchange certification, expanded post-enrollment assistance, gift restrictions, and reporting by designated organizations.

Propose operational and technical changes affecting SHOP (vertical choice model for 2017 plan years), acceptance of third-party payments, and other definitional/administrative clarifications (e.g., plan year length, employer-size definitions, AV treatment for student plans).

Coverage-related provisions

Proposed rules and existing statutes set coverage expectations for QHPs including EHBs, cost-sharing limits, AV levels, and programmatic provisions (reinsurance, risk corridors, risk adjustment).

EHB coverage: QHP issuers must cover essential health benefits across the 10 statutory categories and comply with ACA cost‑sharing limits and actuarial value requirements.

Premium stabilization programs: Transitional reinsurance (2014–2016), temporary risk corridors (2014–2016), and permanent risk adjustment operate to stabilize premiums and reallocate payments across issuers.

Actuarial Value and EHB policy: HHS guidance and rules (EHB Bulletin; EHB Rule) and proposed updates govern AV calculations and EHB policies for benefit years including 2017.

Network adequacy and cost sharing: Proposals amend network adequacy requirements, apply out-of-network costs to EHB annual limits in certain markets, establish standardized cost-sharing structures, and propose maximum annual limitation on cost sharing for 2017.

Proposed coverage criteria

Coverage stance and criteria summarized from proposed regulatory changes.

Product discontinuance exception: Issuers may deny new enrollments during product discontinuance or market withdrawal notice periods (90 or 180 days) provided denials are applied uniformly and obligations to existing enrollees (e.g., special enrollment rights) remain unaffected.

Student health plans: For plan years beginning on or after Jan 1, 2017, student health insurance coverage would be subject to the single risk pool index rate methodology; student plans would be exempt from metal-level AV requirements but must provide at least 60% AV certified by an AAE actuary; issuers may maintain bona fide school‑related separate risk pools.

Risk adjustment recalibration and modeling rules

Proposed methodological updates and considerations for recalibrating the HHS risk adjustment models for 2017.

Recalibration data: Recalculate HHS risk adjustment factors for 2017 using more recent MarketScan claims data (proposed: 2012–2014) to reflect updated treatment patterns and costs.

Preventive services incorporation: Incorporate preventive services into simulated plan liability by adding 100% of preventive covered charges and re‑estimating models by metal level, applying standard benefit cost‑sharing to non‑preventive services.

Prescription drug evaluation: Evaluate incorporation of prescription drug data as severity indicators or proxies for diagnoses while assessing risks of creating prescribing incentives.

Partial-year enrollment: Explore methodological adjustments to better predict costs and diagnosis capture for partial‑year enrollees and solicit data/comments.

Model factors and estimation: Use age/sex categories and HHS HCCs with dollar coefficients estimated via weighted least squares (weight = fraction of year enrolled); present factors by metal level and model (adult/child/infant).

Table 1 excerpt - Adult risk adjustment model factors

Table entries (conditions and corresponding numeric factors) — no coverage criteria provided in this excerpt.

Table excerpt: Adult risk adjustment model factors listing numerous HCC condition categories and numeric factor values by benefit level (Platinum, Gold, Silver, Bronze, Catastrophic).

Sample factor entries

Risk-adjustment factor table entries (partial):

Table entry: End Stage Renal Disease — Platinum = 40.683; Gold = 40.431; Silver = 40.270; Bronze = 40.401; Catastrophic = 40.403.

Table entry: Congestive Heart Failure — Platinum = 3.387; Gold = 3.271; Silver = 3.190; Bronze = 3.186; Catastrophic = 3.186.

Selected factor entries

Table entries mapping conditions and demographic groups to numeric factor weights (by plan tier).

Demographic factor: Age 15–20, Male — Platinum = 0.290; Gold = 0.216; Silver = 0.134; Bronze = 0.084; Catastrophic = 0.083.

Diagnosis factor: Septicemia/Sepsis — Platinum = 18.093; Gold = 17.932; Silver = 17.830; Bronze = 17.855; Catastrophic = 17.856.

Diagnosis factor: Metastatic Cancer — Platinum = 38.499; Gold = 38.239; Silver = 38.029; Bronze = 38.030; Catastrophic = 38.030.

Diagnosis factor: Pancreas Transplant Status/Complications — Platinum = 33.115; Gold = 32.960; Silver = 32.863; Bronze = 32.876; Catastrophic = 32.877.

Diagnosis factor: Protein‑Calorie Malnutrition — Platinum = 14.811; Gold = 14.720; Silver = 14.655; Bronze = 14.683; Catastrophic = 14.683.

Table 3 (continued)

Table entries only — numeric factors per condition and benefit level.

Continuation of child model factors: additional numeric factor entries for pediatric condition categories by plan tier (see Table 3 continuation).

Risk Adjustment Tables (informational)

Risk adjustment factor tables and HCC mappings included in this excerpt (informational for actuarial/risk processes).

Child and infant model factors: Child model factors (Table 3) and infant model factors (Table 4) list maturity/severity categories and associated numeric factor values by plan tier; infant HCC mappings to maturity categories are in Tables 5–6.

Risk adjustment / Reinsurance program criteria

Risk adjustment and payment methodology provisions and parameters reflected in these excerpts include:

CSR adjustment: Cost‑sharing reduction adjustment factors are applied multiplicatively to demographic, diagnosis, and interaction factors for risk adjustment (Table 7).

Model performance: Evaluate models using R‑squared and predictive ratios; published R‑squared statistics for multiple metal levels and years are provided (Table 8).

Payment transfer formula: Payment transfers computed as difference between plan premium estimates reflecting and not reflecting risk selection; transfers are PMPM and calculated at rating area and risk pool levels (catastrophic separate).

Administrative costs and user fee: HHS estimates program administration costs and a per‑enrollee user fee (2017 estimate: ~$52M total cost; $1.80 per enrollee/year).

Reinsurance parameters: For transitional reinsurance, HHS may lower the 2016 attachment point ($90,000) to expend remaining contributions after increasing coinsurance to 100% if residual funds remain.

Data reporting and reconciliation criteria

Reporting and adjustment requirements

CSR reporting/truing: If an issuer reported a certified estimate of 2014 CSRs lower than actual CSRs, HHS would adjust the issuer's 2015 risk corridors payment/charge by the full difference; issuers must adjust reported CSR amounts accordingly for 2015 reporting cycles.

Unpaid claims true‑up: For 2015 and later benefit years, issuers must true up estimates of unpaid claims used in allowable costs by the difference between prior estimates and actual subsequent payments when calculating later benefit year allowable costs.

Reporting adjustments: Issuers must report any HHS‑made or approved adjustments to risk adjustment payments/charges, reinsurance payments, CSR amounts, or risk corridors amounts in the next MLR and risk corridors reporting cycle unless notified during an open reporting period.

Baseline and anomaly process: HHS will evaluate EDGE data submissions for quantity/quality and may provide a 10‑day window for issuers to explain anomalies; default risk adjustment charges may be applied based on analyses.

State-required benefits and EHB

State-required benefits and essential health benefits (EHB) treatment

State‑required benefits enacted on or before Dec 31, 2011 may be considered EHB; State need not defray costs in that circumstance.

State‑required benefits enacted after Dec 31, 2011 are not considered EHB unless enacted specifically to comply with Federal requirements; the State must defray costs for such additional benefits.

Identification responsibility: The State (not the Exchange) will identify which State‑required benefits are in addition to EHB and will receive issuer cost calculations for those benefits.

Proposed operational and assistance criteria

Requirements and expectations proposed for States, SBE-FPs, QHP issuers, and Navigators.

State responsibilities: State designates which State‑required benefits are in addition to EHB and receives issuer cost calculations; State may need to defray costs per statute.

SBE‑FP Federal platform agreements: SBE‑FPs must enter Federal platform agreements specifying Federal services relied upon, user fees, data transfer obligations, and must apply FFE‑equivalent standards for specified issuer requirements; HHS may enforce or suppress plans if SBE‑FP enforcement is inadequate.

QHP standards: Require SBE‑FP QHP issuers to meet no‑less‑strict standards than FFEs (formulary posting, network adequacy, ECPs, meaningful difference, changes of ownership, compliance and casework standards).

Navigator requirements: Require Navigators to provide targeted outreach to underserved/vulnerable populations and expanded post‑enrollment assistance (appeals, Exchange exemptions, premium tax credit reconciliation assistance).

Assister and agent/broker coverage criteria

Assister duties and permitted activities

Premium tax credit reconciliation assistance: Navigators must help consumers obtain Forms 1095‑A and 8962, provide general information consistent with IRS guidance, explain how to report errors on Form 1095‑A, help locate silver plan premiums, and explain differences between advance payments and premium tax credit.

Tax advice prohibition: Navigators may not provide tax advice or interpret tax rules/forms; they must refer tax law questions to IRS resources or licensed tax preparers and are encouraged to provide a disclaimer that they are not tax advisers.

Coverage literacy and post‑enrollment assistance: Navigators must help consumers understand basic coverage concepts (deductible, coinsurance, in‑network providers, preventive services) and may assist with updating applications, reporting changes, and submitting information for eligibility redeterminations.

Training and certification: Require all assisters (Navigators, non‑Navigator personnel, certified application counselor orgs) to complete Exchange training and obtain certification prior to performing outreach, education, or application/enrollment assistance.

Proposed operational criteria

Operational criteria and conditions proposed for agents, brokers, vendors, and certified application counselor organizations:

Temporary suspension for suspected fraud/abusive conduct: If HHS reasonably suspects fraud or abusive conduct involving PII or Exchange enrollment, HHS may suspend an agent/broker's FFE agreement and registration for up to 90 calendar days (effective on notice); the agent/broker may submit rebuttal evidence during suspension.

Immediate termination for confirmed fraud: If HHS reasonably confirms fraud/abusive conduct or receives State/law enforcement notification, HHS may immediately and permanently terminate the agent/broker's FFE agreements without 30 days' advance notice; reconsideration rights preserved per process.

Standards of conduct: Agents and brokers assisting with FFE enrollments must execute required FFE agreements, register with FFEs, provide correct non‑misleading information, obtain consent, protect PII, comply with Federal and State laws, and refrain from misleading/coercive/discriminatory conduct; violations may result in denial of future agreements, CMPs, suspension, or termination.

Vendor identity verification: Propose eliminating vendor duties to perform identity proofing and State licensure verification; FFE will continue to provide identity proofing for registration and QHP issuers are expected to ensure delegate compliance.

Operational Requirements and Actions for Stakeholders

Documentation Required

Agent/broker and SBE‑FP requirements

Agents, brokers, and SBE-FP requirements: Agents and brokers who assist with enrollments through an SBE-FP must comply with FFE registration, execute the required FFE agreements (including applicable privacy/security agreements), complete Exchange-required training and certification prior to performing any assister duties (including outreach and education), and follow FFE standards of conduct. States retain primary licensing authority, but HHS may enforce FFE standards directly against SBE‑FP issuers or plans if the SBE‑FP is not substantially enforcing those requirements.

Agents/brokers must register with the FFE and execute §155.260(b)(2) agreements prior to assisting with enrollments.
Assisters (Navigators, non-Navigator assistance personnel, certified application counselors) must complete training before outreach, education, application, or enrollment assistance.
Agents/brokers must protect PII per §155.260(b)(3) and maintain obligations after any suspension/termination.

Key Terms and Abbreviations

inv-62: Acronyms and abbreviations

EHBEssential Health Benefits (EHB).

FFEFederally‑facilitated Exchange (FFE).

SBE‑FPState‑based Exchange on the Federal platform (SBE‑FP).

CSRCost‑sharing reduction (CSR).

PMPMPer member per month (PMPM).

inv-63: Affordable Care Act

Affordable Care Act (ACA)Collective reference to the Patient Protection and Affordable Care Act (Pub. L. 111‑148) and the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111‑152).

OpenPayer

Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017 (proposed rule)

Coverage and Risk Adjustment Criteria

Definitions, Tables, and Coding Parameters

Operational Requirements and Actions for Stakeholders

Key Terms and Abbreviations