On April 2, 2024, the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) issued the final Notice of Benefit and Payment Parameters for 2025 (CMS-9895-F) with a press release and fact sheet.

This rule makes the following changes:

• Changes certain EHB prescription drug benefit requirements,
• Strengthens network adequacy by requiring State Marketplaces and State-Based Marketplace-Facilitated Programs (SBM-FPs) to establish quantitative time and distance qualified health plan (QHP) network adequacy standards,
• Allows states to add routine adult dental services as Essential Health Benefits (EHB),
• Clarifies state-mandated benefits in state EHB-benchmark plans and defrayal,
• Maintains existing approach to state application of income and resources for non-modified adjusted gross income (MAGI) populations,
• Maintains existing approach to standardized and non-standardized plan options while adding a new non-standardized exceptions process,
• Makes changes to the state EHB benchmark update process to reduce state burden,
• Codifies required re-enrollment for enrollees with catastrophic coverage into a new QHP,
• Makes changes to facilitate consumer enrollment in marketplace coverage and establishes standards and requirements for web-brokers and direct enrollment entities,
• Requires state operation as an SBM-FP prior to transition to operating a State Marketplace,
• Codifies and aligns existing requirements around State Marketplaces,
• Establishes marketplace call center standards,
• Increases flexibilities in public notice and public participation requirements for state section 1332 waivers,
• Requires monthly payment from State Marketplaces Medicaid and CHIP agencies for Verify Current Income (VCI) Hub data use,
• Makes changes to risk adjustment policies, including recalibrating the cost-sharing reduction risk adjustment factors for American Indian and Alaska Native (AI/AN) plan variations, and
• Finalizes lower user fee rates.

Note that the final rule does not address the current copay accumulator policy which is from the 2020 NBPP rule and permits plans to exclude manufacturer assistance from counting toward patients’ out-of-pocket limit for only specific prescription brand drugs that have an available and medically appropriate generic equivalent. See pages 3-4 in this summary for additional discussion.

CMS FINALIZES CHANGES TO CERTAIN EHB PRESCRIPTION DRUG BENEFIT REQUIREMENTS

Modifying Pharmacy & Therapeutics Committee Standards

Plans providing EHB are required to establish Pharmacy & Therapeutics (P&T) committees, consisting of physicians, pharmacists, and other healthcare professionals, to review and update plan formularies based on the United States Pharmacopeia (USP) Medicare Model Guidelines (MMG). In the proposed rule, CMS proposed to modify P&T committee standards to include a consumer representative. After considering feedback, CMS will implement this provision with modifications. Instead of a consumer representative, CMS will now mandate P&T committees to include at least one patient representative who must:

• Represent the patient perspective,
• Have relevant experience in patient or community-based organizations,
• Demonstrate the ability to integrate data with practical patient considerations,
• Have no fiduciary obligation to a health facility or other health agency and have no material financial interest in the rendering of health services,
• Understand one or more conditions or diseases, treatment options, and research, and
• Disclose financial interests on their conflict-of-interest statements.

This change aims to ensure that the perspective of individuals experiencing a specific disease or condition is taken into account when designing formulary benefits.

Covering Prescription Drugs as Essential Health Benefits

CMS finalizes its proposal to codify its current policy that prescription drugs in excess of those covered by a state’s EHB-benchmark plan are considered EHB. As a result, these prescription drugs would be subject to requirements including the annual limitation on cost sharing and the restriction on annual and lifetime dollar limits. However, if a state mandates coverage of a drug in addition to EHB, it would not be considered part of EHB.

In response to questions raised by commenters, CMS clarifies that this final rule does not address the application of this policy to large group market health plans and self-insured group health plans. As HHS shares interpretive jurisdiction with the Department of Labor and the Department of Treasury, CMS states the collective departments will be issuing a FAQ to address the applicability of this provision to self-insured group health plans and large group market plans for purposes of the prohibition on lifetime and annual limits under Section 2711 of the Public Health Service (PHS) Act and the annual limitation on cost sharing under Section 2707(b) of the PHS Act.

Feedback on Alternative Prescription Drug Classification Standards

In a December 2022 Request for Information[1], CMS collected feedback on alternative standards for classifying prescription drugs as it was considering a potential shift from the USP MMG to the USP Drug Classification (DC) system for categorizing prescription drugs under EHB Coverage. To provide EHB, a plan must cover either one drug in every USP category and class or match the State’s EHB-benchmark plan’s drug count, with some flexibility. Many commenters favored transitioning to the USP DC, citing its annual updates and broader inclusion of relevant drug classes. However, concerns were raised about potential administrative burdens and patient impacts if issuers were required to cover high-cost drugs with low clinical value.

In the proposed rule, CMS sought additional information on challenges issuers may face in transitioning from USP MMG to USP DC, including administrative burdens, suitable timelines, and strategies for managing prescription benefit costs within the USP DC while ensuring access to affordable, clinically effective medications. In this final rule, CMS does not directly address comments but indicates it will consider them for potential updates in future benefit years through notice and comment rulemaking.

WHILE CMS DOES NOT FINALIZE CHANGES TO ITS COPAY ACCUMULATOR POLICY, THE 2020 POLICY IS IN EFFECT DUE TO AN OCTOBER 2023 FEDERAL COURT RULING

In the proposed rule, CMS did not formally propose any changes to its existing policies regarding the exclusion of direct drug manufacturer support to enrollees for prescription drugs from the enrollee’s annual cost-sharing limits. Additionally, no policies related to this matter were finalized in this final rule.

The policy finalized in the CMS’ 2021 Notice of Benefit and Payment Parameters had made it easier for plans to adopt “copay accumulator” programs[2] and “copay maximizer” programs[3] despite concerns raised by patient groups that such programs increase enrollee out-of-pocket costs and make it harder for enrollees to meet required deductibles. However, due to a recent October 2023 federal district court ruling, the 2021 rule was set aside and a prior 2020 policy that permits co-pay accumulators only for branded drugs with generic equivalents is in effect currently.

While stakeholders have called on CMS to issue guidance on this change, CMS has previously indicated it intends to address some outstanding issues through future rulemaking including whether financial assistance provided to patients by drug manufacturers qualifies as ‘cost sharing’ under the Affordable Care Act. HHS has stated that until the agency engages in future rulemaking, it has no intentions of taking any enforcement action against issuers or plans based on their treatment of such manufacturer assistance.

CMS IMPLEMENTS STRINGENT NETWORK ADEQUACY STANDARDS FOR MARKETPLACES NATIONWIDE

To ensure that individuals enrolled in Marketplaces nationwide have access to healthcare providers within reasonable timeframes, as required by the Affordable Care Act (ACA), CMS finalizes several network adequacy standard provisions. Effective for plan years starting on or after January 1, 2026, State Marketplaces, and State-based Marketplaces on the Federal platform (SBM-FPs) are mandated to implement quantitative time and distance standards for Qualified Health Plans (QHPs). These standards must be at least as rigorous as those set by Federally facilitated Marketplaces (FFMs). However, this requirement excludes stand-alone dental plan (SADP) issuers in states qualifying for the limited SADP exception.

Similar to FFMs, the time and distance standards for State Marketplaces and SBM-FPs will be determined at the county level and will vary based on county designation. They will apply to lists of provider specialties, which must include at least those specified for FFMs. Additionally, starting from January 1, 2026, State Marketplaces and SBM-FPs must conduct network adequacy reviews before certifying any plan as a QHP, as defined by statute.

Like FFMs, issuers unable to meet these standards may submit justifications to their respective State Marketplace or SBM-FP to explain variances. The State Marketplace or SBM-FP will review these justifications to determine if offering such health plans through the Marketplace serves the interests of qualified individuals in the relevant state(s). Factors considered in this determination may include local provider availability and patterns of care.

Additionally, starting from January 1, 2026, HHS may grant exceptions to State Marketplaces or SBM-FPs from certain requirements if evidence-based data demonstrate that alternate quantitative network adequacy standards are effectively ensuring access to providers, comparable to Federal standards. For plan years beginning on or after January 1, 2026, State Marketplaces and SBM-FPs are required to collect information from issuers seeking QHP certification regarding whether network providers offer telehealth services.

CMS REMOVES REGULATORY PROHIBITION TO ALLOW STATES TO INCLUDE ADULT DENTAL SERVICES AS ESSENTIAL HEALTH BENEFITS

CMS finalizes the elimination of the regulatory restriction on issuers to allow states to classify routine non-pediatric dental services as EHB through updates to their EHB-benchmark plans. This change eliminates barriers to accessing non-pediatric dental benefits, providing states with the opportunity to enhance oral health and overall health outcomes for non-pediatric individuals, particularly benefiting marginalized communities with historically low health outcomes. States may now incorporate routine non-pediatric dental services as EHB into their Alternative Benefit Plans (ABPs) or Basic Health Program (BHP) standard health plans. Further, CMS clarifies that states can implement this policy by updating their EHB-benchmark plans starting in 2025, with the changes taking effect for benefit years beginning on or after January 1, 2027.

CLARIFICATION REGARDING STATE-MANDATED BENEFITS IN STATE EHB-BENCHMARK PLANS AND DEFRAYAL

CMS finalizes that state-mandated benefits will not be deemed “additional to Essential Health Benefits (EHB)” under CMS’s defrayal policy if the mandated benefit is already included as an EHB in the state’s EHB-benchmark plan. This safeguard ensures that existing EHB benefits outlined in states’ EHB-benchmark plans remain compliant with EHB nondiscrimination rules, yearly cost-sharing limitations, and prohibitions on annual or lifetime dollar restrictions. This revision may also impact BHPs and Medicaid ABPs.

NO CHANGES MADE REGARDING STATE FLEXIBILITY TO APPLY INCOME AND RESOURCE DISREGARDS FOR NON-MODIFIED ADJUSTED GROSS INCOME (MAGI) POPULATIONS

Currently, States may apply income and resource methodologies that are less restrictive than what would normally be required when determining an individual’s eligibility for Medicaid. However, these less restrictive methodologies must be applied to all individuals within each category of assistance (aged, or blind, or disabled, or Aid to Families with Dependent Children related) for a given Medicaid eligibility group. Originally, CMS proposed to remove the requirement that less restrictive methodologies be comparable for all members of an eligibility group. The agency believed that this proposal would give states more flexibility to expand Medicaid programs and better target expansion of coverage as opposed to forcing them into an all or nothing approach.

While many commentors supported the intent behind this proposal, they also expressed concerns that the flexibility could be used to narrow existing disregards, decreasing access. In response to these concerns, CMS is not finalizing this proposal, but is rather considering modifications that would prevent the policy from being used to reduce access. It is likely that a version of this policy containing guardrails that prevent states from using flexibilities to reduce access will be proposed in future years.

CMS CONTINUES ITS CURRENT APPROACH TO STANDARDIZED PLAN OPTIONS WITH MINOR UPDATES AND ADDS A NEW NON-STANDARDIZED PLAN EXCEPTIONS PROCESS

For Plan Year (PY) 2025, CMS will generally follow the approach finalized in the 2023 and 2024 Payment Notices 2024 concerning standardized plan options. CMS notes that due to continued plan proliferation such standardized options are important to streamline and simplify the plan selection process for consumers on the Exchanges. CMS indicates it is maintaining the current approach to reduce the risk of disruption and undue burden for all parties, including issuers, agents, brokers, States, and enrollees.

While maintaining continuity with prior policies, CMS is making minor updates to the plan designs for PY 2025 to ensure these plans have actuarial values (AVs) within the permissible de minimis range for each metal level.Updates to plan designs for PY 2025 are detailed in Tables 12 and 13 of the rule.

CMS is also finalizing its proposal to add an exceptions process that would allow issuers to offer additional non-standardized plan options (in excess of the limit of two) per product network type, metal level, inclusion of dental and/or vision benefit coverage, and service area for PY 2025 and subsequent plan years, if issuers demonstrate that these additional non-standardized plans have reduced cost sharing of 25 percent or more for benefits pertaining to the treatment of chronic and high-cost conditions relative to an issuer’s other non-standardized plan offerings in the same product network type, metal level, and service area. Issuers would not be limited in the number of exceptions permitted per product network type, metal level, inclusion of dental and/or vision benefit coverage, and service area, so long as they meet specified criteria. CMS anticipates the new exception process will support access to benefits important to patients with chronic and high-cost conditions while continuing to address plan proliferation.

CHANGES TO EHB BENCHMARK UPDATE PROCESS TO REDUCE STATE BURDEN WILL BE IMPLEMENTED FOR PLAN YEARS BEGINNING ON OR AFTER JANUARY 1, 2026

In response to requests from states to reduce the burden of the EHB-benchmark plan update process, for plan years beginning on or after January 1, 2026, CMS finalizes three revisions to the State process for EHB benchmark updates. In the proposed rule, CMS had initially proposed the changes apply to benefit years beginning on or after January 1, 2027, but changed this after consideration of public comments. Comments had noted that an earlier effective date would better align with effective dates for other EHB amendments which would minimize confusion and allow States considering submitting applications to change EHB-benchmark plans to utilize the proposed flexibilities a year earlier and provide consumers with improved EHBs a year earlier.

Changes to the State process for EHB benchmark updates are outlined below:

• Consolidation of options for states to change EHB-benchmark plans such that a State may change its EHB-benchmark plan by selecting a set of benefits that would become the State’s EHB-benchmark plan. Such changes would also apply to States when choosing a benchmark plan used to define EHBs in a Medicaid ABP or BHP standard health plan.
  • CMS indicates that States would only need to perform three actuarial analyses to determine the scope of benefits in the least and most generous plans among the plans and the scope of benefits in the State’s new EHB-benchmark plan. Under current regulation, a State may need to perform an indeterminate number of actuarial analyses of the plans until the State identifies a plan with a scope of benefits equal to the State’s EHB-benchmark plan.
• Removal of the generosity standard and revision of the typicality standard so that, in demonstrating that a State’s new EHB-benchmark plan provides a scope of benefits that is equal to the scope of benefits of a typical employer plan in the State, the scope of benefits of a typical employer plan in the State would be defined as any scope of benefits that is as or more generous than the scope of benefits in the State’s least generous typical employer plan, and as or less generous than the scope of benefits in the State’s most generous typical employer plan.
• Removal of the requirement for states to submit a formulary drug list as part of their documentation to change EHB-benchmark plans unless the State changes its prescription drug EHBs.

EXCHANGES WILL BE REQUIRED TO RE-ENROLL ENROLLEES WITH CATASTROPHIC COVERAGE INTO A NEW QHP

CMS finalizes its proposal to revise its regulations to require Exchanges to re-enroll enrollees with catastrophic coverage into QHP coverage for the coming plan year, to the extent consistent with state law. Enrollees facing the discontinuation of their current plan or loss of eligibility for catastrophic coverage must be re-enrolled in a plan within the same product category as their current QHP. If the current product is no longer available, they will be enrolled in the most similar alternative product with a comparable network. If no bronze plan is available within that product, the Marketplace will enroll the individual in the QHP with the lowest coverage level offered under that product. CMS indicates that this will help ensure continuity of coverage in cases where the issuer does not continue to offer a catastrophic plan for the new plan year, or these individuals are no longer eligible for enrollment.

Though also likely adhered to currently by Exchanges, CMS will also codify that an Exchange may not newly auto re-enroll an enrollee into catastrophic coverage who is currently enrolled in coverage of a metal level as defined in section 1302(d) of the ACA.

All Marketplaces (including Marketplaces on the Federal platform and State Marketplaces) will implement this policy beginning with the open enrollment period for plan year 2025 coverage.

SEVERAL CHANGES FINALIZED TO FACILIATE CONSUMER ENROLLMENT IN MARKETPLACE COVERAGE

Aligning Effective Dates of Coverage for Special Enrollment Periods and Regular Coverage

To prevent gaps in coverage for consumers switching between different marketplaces or from other insurance coverage, CMS finalizes its proposal to align the effective dates of coverage after a consumer selects a plan during a special enrollment period subject to regular coverage effective dates across all Marketplaces. A beneficiary who selects and enrolls in a QHP during a special enrollment period with a regular coverage effective date would receive coverage beginning the first day of the month following plan selection or earlier.

Modifying Policies Related to the Advance Payment of the Premium Tax Credit (APTC)

CMS finalizes its proposal to require State Marketplaces to check failure-to-reconcile status at least annually and send notices to tax filers who have failed-to-reconcile, before determining a person or household is ineligible for the advance payment of the premium tax credit (APTC). This policy aims to provide consumers with more notice to correct potential failed tax reconciliation. In the final rule, CMS has clarified that an Exchange must send either a direct notice to a tax filer or a more general notice to an enrollee or their tax filer explaining that they are at risk of losing the APTC. As regulation does not detail notification procedures for tax filers who have failed to reconcile for one year, CMS will provide State Marketplaces with additional guidance and technical assistance, including sample notices.

CMS also finalizes its proposal to revise the availability of the special enrollment period for APTC-eligible individuals by removing the limitation that this special enrollment period is only available when a consumer’s applicable taxpayer’s applicable percentage is at zero, in order to expand coverage and enrollment access for people who are uninsured or low-income.

Improving Incarceration Status Checks

CMS finalizes its proposal to permit all Marketplaces to accept consumer attestation of incarceration status without additional electronic verification. Additionally, CMS finalizes its proposal that State Marketplaces that want to verify incarceration status using an alternative electronic data source may do so but must submit a proposal to HHS for approval. States with approved plans will be required to follow specific data matching issue processes whenever there is a mismatch between the consumer’s attestation and other data source. CMS believes these policies will improve enrollment processes and reduce applicant burden while maintaining program integrity.

Expanding State Flexibility in Establishing Effective Dates for States Operating a Basic Health Program

CMS finalizes its proposal to allow states operating a BHP additional flexibility in establishing an effective eligibility date for enrollment in a standard health plan. Currently, only Minnesota is implementing a BHP, though Oregon has submitted a Blueprint with a proposed BHP implementation date of July 1, 2024. States will be permitted to select a standard in which applicants who meet all eligibility requirements can receive coverage effective the first day of the month following the month in which their BHP eligibility is determined. This policy will expedite how quickly consumers can access coverage and reduce coverage gaps.

Requiring State Exchanges to Adopt a Minimum Open Enrollment Period

To ensure a consistent minimum open enrollment plan across Marketplaces, CMS finalizes its proposal that State Marketplaces not utilizing the Federal platform provide an open enrollment period that begins on November 1 and extends until at least January 15, with the option to extend beyond this date. For State Exchanges that held an open enrollment period that began before November 1, 2023, and ended before January 15, 2024, CMS is modifying this policy to allow these states to continue to begin open enrollment before November 1 for future consecutive benefit years, provided the open enrollment period continues uninterrupted for at least eleven weeks. CMS believes this policy will increase access to health coverage, decrease consumer confusion, and provide states with more flexibility.

ADDITIONAL STANDARDS AND REQUIREMENTS IMPLEMENTED FOR WEB-BROKERS AND DIRECT ENROLLMENT ENTITIES

CMS finalizes its proposals to apply certain standards applicable in the FFE and SBE-FPs to web-brokers and Direct Enrollment (DE) entities.

For web-brokers, this includes standards related to:

• Web-broker website display of standardized QHP information;
• Display of information regarding consumer eligibility for APTC or cost-sharing reductions (CSRs);
• Disclaimers;
• Providing consumers with accurate information;
• Refraining from certain conduct;
• Access by downstream agents and brokers; and
• Operational readiness.

For DE entities, this includes standards related to:

• Displaying QHPs and non-QHPs;
• Disclaimers;
• Application assisters;
• Providing consumers with accurate information; and
• Operational readiness.

CMS also finalizes additional requirements for DE entity websites, including requiring DE entities to reflect HealthCare.gov changes on their websites within a period determined by HHS, and to display changes in a manner consistent with HHS’s own display. CMS believes these website changes will improve the consumer experience, streamline the plan selection process, and better inform consumers of plan benefits.

STATE OPERATION AS AN SBM-FP FOR AT LEAST ONE PLAN YEAR WILL BE REQUIRED PRIOR TO TRANSITIONING TO OPERATING A STATE MARKETPLACE

CMS is requiring states operate as an SBM-FP, meeting all requirements under § 155.200(f), for at least one plan year, including its open enrollment period, prior to transitioning to a State Marketplace. This requirement would provide States time to build relevant infrastructure while at the same time familiarize consumers, consumer assisters, partners in the coordination of eligibility functions, and other interested parties with the operations of the new State Marketplace organization ahead of engaging with that Marketplace.

CMS CODIFIES AND ALIGNS EXISTING REQUIREMENTS AROUND STATE MARKETPLACES

There are a variety of regulations that currently govern the eligibility and enrollment platform for State Marketplaces. Exchanges must maintain an up-to-date website allowing consumers to receive eligibility determinations for QHPs and insurance affordability programs, provide comparative information on each QHP and a calculator to facilitate comparisons, and develop a secure interface allowing consumers to apply for and receive eligibility determinations for health insurance coverage online. However, there is no requirement that Exchanges “operate a centralized eligibility and enrollment platform on their website for performing all eligibility determinations for QHPs and insurance affordability programs[4].”

To fix this problem, CMS finalizes as proposed its policy requiring that Exchanges operate a centralized eligibility and enrollment platform on their websites that allows for the “submission of the single, streamlined application for enrollment in a QHP and insurance affordability programs by consumers.[5]” CMS will require that the Exchange is the entity responsible for making all QHP and insurance affordability program eligibility determinations, even if an individual filed this application on a non-exchange website. Only private vendors or State entities that contract with the Exchange to operate the centralized eligibility and enrollment platform will be able to make eligibility determinations on behalf of the Exchange.

CMS expects the impact of this proposal to be minimal, as all Exchanges already provide access to centralized eligibility and enrollment platform and perform all eligibility determinations. This policy ensures that states transitioning to a state-run Exchange in the future will be held to these standards.

CMS ESTABLISHES ADDITIONAL MINIMUM MARKETPLACE CALL CENTER STANDARDS

CMS finalizes its proposal to establish additional minimum standards for Exchange call center operations. Sections 1311(d)(4)(B) and 1321 of the ACA require that Exchanges provide for the operation of a toll-free telephone hotline to respond to requests for assistance, and section 1413(b)(1)(A)(ii) of the ACA requires that a consumer’s application for QHP coverage can be filed by telephone. To support the intent of these statutory requirements, CMS will require that all Exchanges, other than State-based Exchange-Federal Platforms and Small Business Health Options Program (SHOP) Exchanges that do not provide enrollment in SHOP coverage through an online SHOP enrollment platform, must provide consumers with access to a live call center representative during the Exchanges’ published hours of operation. The Marketplace’s live call center representatives must also be able to assist consumers with their QHP application, which includes providing consumers information on their APTC and CSR eligibility and helping consumers understand their QHP options, select a QHP, and submit QHP enrollment applications to the Marketplace.

HHS AND DEPARTMENT OF THE TREASURY INCREASE FLEXIBILITIES IN PUBLIC NOTICE AND PUBLIC PARTICIPATION REQUIREMENTS FOR STATE SECTION 1332 WAIVERS

Section 1332 of the ACA permits States to apply for a section 1332 waiver to pursue innovative strategies for providing their residents with access to higher value, more affordable health insurance coverage.

To allow for greater flexibilities in the public notice requirements and post-award public participation requirements for section 1332 waivers, HHS and the Department of the Treasury (collectively, the Departments) are finalizing their proposal to allow States applying for section 1332 waivers to conduct public hearings in a virtual or hybrid format in lieu of an in-person meeting to satisfy state public notice requirements. States must still hold two hearings in distinct locations. A hearing held virtually and in-person at the same time will not count as two hearings.

A State’s annual post-award public forum will also be allowed to be conducted in an in-person, virtual, or hybrid format. The Departments believe these changes will support continued attendance and participation, remove barriers to participation, and enhance public participation. However, the Departments note that states still must have a process through which the public can request an in-person meeting for the post-award forum or hearings, and that the state should accommodate these requests if possible.

These changes will go into effect upon publication of the final rule.

STATE MARKETPLACES MEDICAID AND CHIP AGENCIES TO PAY MONTHLY FOR VCI HUB DATA USE

The Verify Current Income (VCI) Hub service is used in the eligibility determination process by most State Exchanges, and Medicaid and CHIP agencies. Because this optional service is used by states to implement eligibility requirements, CMS finalizes that the use of the VCI Hub service will be characterized as a function of State Exchanges and Medicaid and CHIP agencies, as opposed to HHS, starting on July 1, 2024. HHS will continue to maintain the contracts necessary to make this service available to states.

Under the original proposal, states would be required to pay in advance to use Current Sources of Income (CSI) data from the VCI Hub. However, in this final rule, CMS modifies the proposal such that HHS will invoice states monthly for their data use. In addition to the cost of utilizing the data (which will be priced per transaction), this invoice will include an administrative fee to cover the cost of making the data available.

These costs would, where applicable, be eligible for Federal matching funds (75 percent of costs for State Medicaid agencies and the State’s enhanced Federal Medical Assistance Percentage (FMAP) for CHIP agencies).

CMS FINALIZES RISK ADJUSTMENT POLICIES, INCLUDING RECALIBATING THE COST-SHARING REDUCTION RISK ADJUSTMENT FACTORS FOR AI/AN PLAN VARIATIONS

CMS finalizes its proposal to use 2019, 2020, and 2021 enrollee-level external data gathering environment (EDGE) data to recalibrate HHS risk adjustment models. Consistent with prior year benefit model recalibrations, 2019, 2020, and 2021 provide the most recent consecutive years of enrollee-level EDGE data at the time CMS calculated risk-adjustment coefficients for the proposed rule. Using this data improves stability in changes to risk scores.

CMS finalizes its proposal to recalibrate the CSR adjustment factors for American Indian and Alaska Native (AI/AN) zero cost sharing and limited cost sharing plan variant enrollees and will retain these adjustment factors for future benefit years unless changed through rulemaking. Aligned with CMS’s health equity goals, CMS believes that this policy will improve the prediction of plan liability more accurately for AI/AN beneficiaries and increase incentives for plan issuers to engage the AI/AN community, who have been historically underserved. CMS finalizes a similar policy for silver plan variant enrollees.

LOWER USER FEE RATES APPLY FOR 2025

CMS finalizes FFM and SBM-FP user fee rates that are lower than the 2024 benefit year rates, at 1.5 percent and 1.2 percent of total monthly premiums, respectively. Proposed rates were 2.2 percent and 1.8 percent of total monthly premiums, respectively.

CMS will decrease the risk adjustment user fee for the 2025 benefit year to $0.18 per member per month, a decrease of three cents from the 2024 benefit year, and a decrease from the proposed $0.20 risk adjustment user fee. These fees cover a broad range of costs related to risk adjustment operations, including model development, data validation, and program integrity.

The 2025 benefit year premium adjustment percentage index and related payment parameters were issued by CMS in guidance released on November 15, 2023[6], aligned with policies finalized in the 2022 Payment Notice.

********

This Applied Policy® Summary was prepared by Stephanie Lomas with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at slomas@appliedpolicy.com or at (202) 558-5272.

 

[1] 87 FR 74097

[2] Programs under which plans exclude the value of manufacturer copay assistance from counting toward an enrollee’s deductible or annual cost-sharing limit.

[3] Programs under which plans align an enrollee’s copay obligation with available copay assistance from manufacturers and then apply manufacturer assistance to the enrollee’s copay obligation but not toward the enrollee’s deductible or annual cost-sharing limit.

[4] Pg 82555 of the proposed rule

[5] Pg 82631 of the proposed rule

[6] https://www.cms.gov/files/document/2025-papi-parameters-guidance-2023-11-15.pdf