Each year the Centers for Medicare and Medicaid Services (CMS) releases a letter to issuers (insurers) in the federally facilitated marketplace (FFM) setting out the ground rules for coverage through the FFM for the coming year.  A draft letter is published for comments, followed by the final letter.  The letter addresses insurers that issue qualified health plans (QHPs) in the FFM, including stand-alone dental plans (SADPs), and covers the small business (FF-SHOP) marketplace as well as the individual marketplace.

On December 19, 2014, CMS published the draft 2016 letter which I covered here.  On February 20, 2015, CMS published the final letter to issuers in the federally facilitated marketplace.  Not surprisingly, since it covers the third year of operation of the marketplace, the 2016 letter is quite similar to those of preceding years.   The letter is based on previously published rules governing QHPs and the marketplaces, as well as on the final 2016 Benefit and Payment Parameters Rule, covered here (CITE) and here (CITE), from which it incorporates many provisions.

The Role Of States

The letter notes that insurers are required to comply with state regulatory requirements.  CMS will depend on states to perform rate and form review and ensure compliance with general insurance law requirements, including compliance with essential health benefit (EHB) and actuarial value requirements.

Additionally, a number of states have assumed responsibility for plan management functions. These states will make QHP certification recommendations to CMS.  In several other states, on the other hand, the state has taken no responsibility for ensuring compliance with the Affordable Care Act.  In these states CMS plays a greater regulatory rule.

In any case, any insurer seeking certification or recertification of a QHP in the FFM or FF-SHOP, including a standalone dental plan (SADP), must apply to CMS.  CMS is responsible for all final QHP certification decisions.  In states not performing plan management review, CMS will incorporate state regulatory decisions into its review to the extent they are consistent with federal law and timelines.


Procedures.  The certification procedure will be much the same as for 2015, although on a slightly earlier schedule since open enrollment will begin a half a month earlier for 2016.  Insurers who had a QHP certified for 2015 must be recertified if they seek to offer a QHP for 2016 (although QHPs certified by the FF-SHOP remain certified for a particular employer through the end of that employer’s plan year, which may extend beyond a calendar year).  States will set their own additional procedures and timelines for any reviews conducted under state authority.

Insurers seeking initial certification or recertification of QHPs or SADPs for 2016 must submit applications to CMS between April 15 and May 15, 2015.  CMS will complete an initial review by June 26 and send a correction notice by June 30.  Plans must submit corrections by July 10, and CMS will send a second correction notice by August 14.  The final deadline for state approval and for SADPs or QHPs to send final data to CMS is August 25.  Certification agreements will be finalized between insurers and CMS, with the insurer signing the QHP Privacy and Security Agreement and Senior Officer Acknowledgement by September 25 for a 2016 open enrollment period launch of November 1, 2015.  Insurers must submit the Uniform Rate Review Template (URRT) on the same timeframe.

In states where CMS has primary certification responsibilities, insurers will again submit information through the Health Insurance Oversight System (HIOS), including the URRT.  CMS expects states to review potential QHPs for compliance with market-wide laws, including essential health benefit (EHB) and actuarial value (AV) standards.  In five states that do not have authority for enforcing the ACA (Alabama, Missouri, Oklahoma, Texas, and Wyoming), CMS will exercise rate and form review authority.  CMS will not review plans offered only outside the marketplace, although it will review for approval all SADPs, whether or not offered through the marketplace.

Insurers may make any change they want in their application up until May 15.  Between May 15 and August 25, changes in service area can only be made with CMS approval and no new QHPs can be added.  Other changes can be made with state approval.  Insurers will not be able to withdraw plans or make changes in a plan after August 25, 2015, other than minor data corrections.  It should be noted that this will be after the Supreme Court releases its decision in King v. Burwell, which may affect continued and future insurer participation in the FFM.

In states where the state performs plan management functions, insurers will follow a similar timeline, but will submit their application through the System for Electronic Rate and Form Filing (SERFF).  The state will review certification materials and make a recommendation to CMS, which will make the final certification decision.  The first deadline for data transfer from SERFF will be May 15.  The FFM will review plan data and notify states of needed corrections by June 30.  The second SERFF data transfer will be July 10, with the FFM notifying the states and the insurer of the need for additional corrections by August 14.  Again, the deadline for final SERFF data transfers and for corrections in the plan submission is August 25.  CMS will notify insurers of its certification decisions by September 18

As in previous years, ancillary products, such as standalone vision insurance or life insurance, cannot be sold on the FFM, which will only sell QHPs and SADPs.

Insurers that intend to offer the same QHP for 2016 that they offered for 2015 can apply to have the QHP recertified and reenroll individuals in the plan.  Insurers must complete crosswalk between their 2015 and 2016 plans to permit passive reenrollment of 2015 enrollees who do not opt for active reenrollment in the same or similar 2016 plans.  CMS will also support passive reenrollment in SADPs.  Insurers that intend to participate in the multi-state plan program will apply to the Office of Personnel Management, which will work with CMS in the certification process.

Standards.  Certification standards for 2016 are also similar to 2015 standards.  QHP insurers must have a state license and be in good standing with states in which they intend to issue plans.  Plans must have service areas that serve at least a county or group of counties unless CMS determines that serving a smaller area is necessary; will not cause discrimination in terms of racial, ethic, or health-related factors; and is in the best interests of qualified individuals and employers.

Network Adequacy And Provider Directories

QHP insurers must meet network adequacy standards assessed, as in 2015, on a “reasonable access” standard.  Insurers must submit detailed network provider data, including information on physicians, facilities, and pharmacies.  CMS expects that its review will focus on hospital systems, mental health providers, oncology providers, primary care providers, and dental providers, where applicable.

CMS will notify insurers when it sees problems with networks in the review process and expects the insurers to address the issue by adding providers.  CMS will also coordinate with states that review network adequacy.  CMS expects insurers to continue to meet network adequacy standards throughout the year as providers enter and leave plan networks and will monitor continuing network adequacy through complaints and otherwise.  CMS will evaluate expected forthcoming recommendations of the National Association of Insurance Commissioners on network adequacy for consideration in future rulemaking.

CMS is strengthening its provider directory standards for 2016 as set out in the final 2016 Benefits and Payment Parameters Rule.  A QHP insurer must publish a current, accurate, and complete provider directory including information regarding providers accepting new patients, the provider’s location, contact information, specialty, medical group, and any institutional affiliations.  The directory must be easily accessible to enrollees and prospective enrollees, the state, the FFM, HHS, and OPM.  The provider directory must be updated at least monthly and the provider directory for each specific QHP must be viewable on the plan’s public website without the need to create or access an account or enter a policy number.  Provider directory information must be made available in machine-readable format to promote aggregation of information by third parties.

Essential Community Providers

For 2016 as for 2015, QHP insurers must contract with at least 30 percent of available essential community providers (ECPs) in their service area, offer contracts in good faith to all available Indian health providers, and offer a contract in good faith to at least one ECP in each ECP category.  An insurer must offer a contract should with terms that a willing, similarly-situated, non-ECP provider would accept or has accepted to meet the good faith offer standard. CMS has again published a non-exhaustive list of ECPs http://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/Description-and-Purpose-of-Draft-HHS-List-of-ECPs-for-PY-2016_12-24-14.pdf to assist with compliance.  Insurers can “write-in” ECP providers not on the list to meet their required quota of providers.  Multiple providers at a single street address will be treated as a single provider.

QHP insurers that do not meet ECP requirements must submit a narrative justification explaining in detail the efforts they have made to contract with providers, their contingency plans if their current network will not provide adequate services to ECP target populations, and continuing efforts to sign up ECPs.  As in earlier years, QHP insurers that provide services through their own employees or contracted groups must meet an alternative standard, including contracting with out-of-network providers if necessary.  SADPs will be reviewed for satisfaction of the similar dental ECP standard.


The ACA requires QHPs to be accredited.  CMS has been phasing in accreditation requirements. QHPs in their second or third year must be accredited by a recognized accrediting entity either under marketplace accreditation standards or under Medicaid or commercial health plan standards in the same state under administrative policies and procedures that are the same or similar to those used in connection with QHP accreditation. QHP insurers seeking certification for their first year of participation must have scheduled or planned to schedule an accreditation review. The NCQA, URAC, and the Accreditation Association for Ambulatory Health Care are recognized accreditation agencies.  SADPs do not need to be accredited.

Patient Safety And Enrollee Satisfaction

QHP insurers must demonstrate compliance with patient safety standards by verifying that any hospitals with which they contract with more than 50 beds are Medicare- or Medicaid-certified and are subject to Medicare quality assessment and improvement and discharge planning standards.

CMS is phasing in QHP quality and enrollee satisfaction reporting.  It is conducting beta testing of reporting in 2015 with a view toward reporting of quality and enrollee satisfaction data in 2016.  QHPs that meet minimum enrollment criteria must participate in this data collection effort.  The FFMs will display quality and enrollee satisfaction scores and ratings in 2016 for the 2017 open enrolment period.

Rate Review

As in 2015, CMS will review all rate increases in FFM plans.  CMS does not plan to duplicate state rate reviews and will integrate state rate review into its process as long as states perform effective and timely review.  CMS review will focus on rate outliers.

Discriminatory Benefit Design

As noted in the preface to the 2016 Benefit and Payment Parameters rule, CMS intends to focus more on EHB discriminatory benefit design for 2016.  Non-discrimination is a market-wide requirement and does not just apply to QHPs and is primarily enforced by the states, but CMS intends to monitor compliance as well, including review of marketing practices.

Just because an insurer offers a benchmark plan does not mean its benefit design is acceptable.  In particular, CMS cautions against benefit designs that limit access by age or for individuals with chronic health needs.  CMS offers other examples of suspect benefit designs as well.  An insurer that refuses to cover a single-tablet or extended-release product customarily prescribed as a covered multiple-tablet regimen might effectively discourage enrollment by or discriminate against individuals who could benefit from such treatment.  Insurers that place all drugs that treat a particular condition on a higher-cost tier may also discriminate against high-cost enrollees.  Insurers should provide services to individuals under age 65 with end-stage renal disease rather than expect them to sign up for Medicare.

CMS will require an attestation of non-discrimination but will also assess compliance through monitoring of appeals and complaints and will perform outlier analysis of benefit packages and cost-sharing.  It is considering review to identify outliers based on out-of-pocket costs for standard treatments of specific conditions, including bipolar disorder, diabetes, HIV, rheumatoid arthritis, and schizophrenia.  It will review benefit plans and templates for discriminatory explanations or exclusions and for reduction in the generosity of benefits to some subset of individuals not based on clinically indicated, reasonable medical management practices.  Limitations and exclusions must be based on clinical guidelines and medical evidence for reasonable medical management.

Drug Formularies

Drug formularies will also be monitored more closely for 2016.  CMS will review formularies to identify outlier plans with unusually large numbers of drugs subject to prior authorization or step therapy.  It will also review formularies to ensure access to clinically appropriate drugs for treatment of bipolar disorder, diabetes, rheumatoid arthritis, and schizophrenia.  Other conditions, including HIV, may be considered for future reviews.

Insurers’ formularies must be up-to-date, complete, and describe any tiering structure or restrictions on the manner in which drugs can be obtained.  Formularies must be easily accessible online without requiring the creation or accessing of an account or entering of a policy number. Formulary information must be available in machine-readable form to facilitate aggregation, or the entry of information on an HHS-designed standardized template.  CMS discourages QHPs from mid-year changes in their formularies, while recognizing that changes related to the availability of drugs may be necessary.

The Benefit and Payment Parameters Rule requires the creation of a standardized exceptions process for the 2016 plan year under which insurers must respond to exception requests within 72 hours, with an independent external review for exception denials.  If an exception is granted under either the current expedited exception or the new standard exception process, the plan must treat the drug as EHB subject to EHB cost sharing and cover the drug for the duration of the current prescription, including refills.   Finally, CMS encourages plans to continue to cover non-formulary drugs for new enrollees for a 30 day transition period.

Other Requirements And Compliance Monitoring

CMS will review insurer certification requests to ensure that proposed QHPs are meaningfully different from other QHPs submitted by the same issuer.  CMS will ensure that QHP insurers accept premium payment from Ryan White AIDS/HIV and Indian health programs.  CMS will review insurer cost-sharing reduction proposals to ensure that they meet actuarial value requirements.  CMS expects insurers to use its data integrity tool to ensure that their submissions are in the correct format and are subject to CMS validity checks.

The letter to insurers specifies which of the provisions apply to SADPs and which do not.  QHPs are permitted to omit pediatric dental coverage in states where SADPs are available.  On February 19, 2015, CMS published a list of states in which SADPs are available.

The letter to issuers describes how CMS intends to deal with account management and to monitor insurer compliance for 2016. Each issuer in the FFM and in state-operated exchanges that use Healthcare.gov will have an account manager.  CO-OP plans will in addition have a CO-OP Program Account Manager.  CMS reiterates that its 2014 good faith compliance rule will be extended to 2015, but not to 2016; under this rule, CMS has agreed not to impose civil money penalties or decertification on QHPs that have made good faith efforts to comply with program requirements.

However, CMS intends to continue to provide technical assistance to insurers to ensure compliance and to use a risk-based process for compliance monitoring.  It will also review insurers where there are specific issues of potential noncompliance. Reviews may be desk or on-site, and may be expedited where there is the potential of harm to consumers.

QHP insurers are required to investigate and resolve consumer complaints in accordance with state law and FFM casework procedures.  QHP insurers must also comply with coverage appeal requirements.  QHP insurers must comply with language access requirements imposed through the 2016 Benefit and Payment Parameters Rule, including oral translation in 150 languages for 2016 and tagline and website translation requirements for critical documents and content for 2017.

QHP insurers must comply with summary of benefit and coverage requirements, including requirements that SBCs be provided for cost-sharing reduction plan variations beginning no later than November 1, 2015.  Insurers must also comply with data collection requirements that may be promulgated for 2016.  Finally, QHP insurers must comply with requirements for contacting with and paying Indian health care providers.

Agents And Brokers

The FFM will continue to monitor agents and brokers to ensure they are licensed; fulfill applicable FFM registration and training requirements; and have executed and comply with a FFM or FF-SHOP Privacy/Security Agreement, a General FFM Marketplace Agreement, and, if applicable, a Web-Broker Agreement.  CMS will work with the states in overseeing the activities of brokers and agents in the FFM and FF-SHOP.

Web-brokers are subject to additional requirements.  These requirements include, for web brokers who have been registered with the FFM for at least a year, a new requirement of providing telephonic oral interpretation services in 150 languages for 2015 and 2016, and for 2017 taglines on critical documents in the 15 top languages spoken by limited English proficiency residents of the state served by the web-broker and translation of all web content into any language of an LEP group that makes up at least 10 percent of the state population.

QHP insurers are also responsible for ensuring their affiliated agents and brokers meet registration and training requirements and comply with federal requirements.

CMS may terminate an agent or broker’s agreement with the FFM for a severe act of noncompliance, a pattern of noncompliance, or a material breach of applicable agreements.  If an agreement is terminated, brokers and agents cease to be able to assist enrollment, but must still protect the security and privacy of personally identifiable information they retain.  CMS may also impose penalties of up to $25,000 for failure to provide correct information to the marketplace or improper use or disclosure of consumer information, and of up to $250,000 for knowingly and willfully providing false information to the marketplace.

Brokers and agents are compensated directly by QHP insurers. The FFM does not set compensation levels or pay commissions.  The ACA requires insures to pay brokers and agents the same compensation for QHPs sold through the marketplaces as for similar coverage sold outside the marketplace.  Insurers must withhold compensation from brokers and agents who fail to comply with federal registration and other requirements to demonstrate good faith compliance with federal requirements. Brokers and agents must be actively registered with the FFM to assist with an active enrollment but need not be to be registered as a broker for a passive enrollment.

QHP insurers are prohibited from discriminating in the marketing of QHPs.  CMS largely defers to the states for providing oversight of marketing practices and does not intend to review marketing materials.  The letter again, however, strongly discourages insurers, agents, brokers, or web-brokers from using the words “marketplace” or “exchange” in the name of their websites or businesses.  CMS will forward complaints received about discriminatory marketing practices, false advertising or false information, or privacy/security violations to the states for investigation, although it retains residual enforcement authority.

The Federally Facilitated SHOP Exchange

The letter contains a section of the FF-SHOP that will not be reviewed in detail here.   As of 2016, SHOP coverage will be available for groups of up to 100 full-time-equivalent employees.  As of 2016, employee choice will be available in all states — employers may either offer employees a single plan through the SHOP or a choice of all available QHPs at a single metal level of coverage.  Insurers can offer employers who decide to offer a single plan through the SHOP — rather than employee choice — an average per enrollee premium amount (separately calculated for adults and minors) instead of per-member individual premiums (although tobacco surcharges are added on an individual basis).

Employers must provide their employees with an open enrollment period of at least one week to decide on whether or not to accept coverage.  Covered employers and employees will be automatically renewed from year to year if both the employer and employee remain eligible and no action is taken to terminate or change coverage.

Beginning in 2015, employers can offer dental coverage through the FF-SHOP without offering medical coverage.  Medical and dental coverage will only be available to an employee’s dependents through the FF-SHOP where the employee is covered by medical and dental coverage.