My first post on the 2018 Notice of Benefit and Payment Parameters focused on changes to the general insurance market reforms and risk adjustment programs. This post focuses on changes to benefit, eligibility, and enrollment standards and requirements, primarily as they pertain to qualified health plans (QHPs) offered through the exchanges. It also reviews the rules governing special enrollment periods (SEPs) and consumer oriented and operated plans (CO-OPs), finalized on December 17, and briefly reviews the final 2018 actuarial value calculator methodology.

The Benefit And Payment Parameters Final Rule

Standardized Plans

The 2017 payment notice established six standardized options (also now referred to as simple choice plans) for the federally facilitated exchanges (FFE), one each for the bronze, silver, gold, and silver cost-sharing variation levels of coverage. These plans were based on the most popular (enrollment-weighted) QHPs in the 2015 individual market FFEs. The standardized plans established by the 2018 payment notice reflect changes in QHP enrollment-weighted data from 2015 to 2016—including data from state-based exchanges using the federal enrollment platform (SBE-FPs)—and are designed to comply with cost-sharing standards of specific states.

The 2018 payment notice establishes three sets each consisting of six standardized plans. Only one set will be available in any one state. The first set is a version of the 2017 standardized plans updated to reflect 2016 enrollment weighted QHPs. The second set of standardized plans is designed to work in states that 1) require that cost sharing for physical, occupational, or speech therapy be no greater than cost sharing for primary care visits; 2) limit the amount charged for each drug tier; or 3) require that drug tiers have copayments rather than coinsurance. These states are Arkansas, Delaware, Iowa, Kentucky, Louisiana, Missouri, Montana, and New Hampshire.

The third set of standardized plans is designed for New Jersey, which has maximum deductible requirements and other cost-sharing standards. (Some states also have oral chemotherapy mandates, but CMS believes that these are consistent with standardized plan options).

The 2018 standardized plans once again have a single provider tier, fixed deductible, fixed annual cost-sharing limit, and fixed copayment or coinsurance obligations for a key group of essential health benefits. The fixed cost-sharing values are for in-network care only. Unlike the 2017 standardized plans, the 2018 silver, silver cost-sharing variation, and gold plans have separate medical and drug deductibles, and the 87 and 94 percent silver cost-sharing variations and gold plans have $0 drug deductibles.

Many commenters complained that the first set of standardized plans permit coinsurance for specialty drugs, which can result in very high expenditures for people who need these drugs. CMS did not change the coinsurance requirement but notes that the separate drug deductible (set at $0 for higher AV plans) should make these drugs somewhat more affordable. In response to comments, the final rule clarifies that the limits on occupational, physical, and speech therapy apply to both rehabilitative and habilitative services, but despite objections leaves these services subject to both deductibles and coinsurance in the first set of plans.

The preface also clarifies that:

  • the pharmacy copayment amounts identified in the standardized plans are for 30-day fills at retail pharmacies,
  • insurers can offer lower cost-sharing for mail-order pharmacy,
  • insurers can offer an additional lower-cost generics tier,
  • standardized cost sharing applies only for a single in-network tier, and
  • insurers cannot impose any cost-sharing on preventive services identified in the preventive services rules.

The 2018 final rule also includes a bronze high-deductible health plan (HDHP) compliant option that will allow an enrollee to qualify for a tax-subsidized health savings account (HSA) under the Internal Revenue Code. The IRS does not set the parameters for HDHPs until the spring of a year, so CMS will establish the parameters of this standardized plan by guidance once the IRS parameters are available, rather than through the payment notice. This HSA compliant plan will be available in all states in the FFE. Going forward, the final rule also allows CMS to change other standardized plan parameters through guidance to comply with the annual limitation on cost-sharing and HHS actuarial value requirements.

Insurers continue to be free to decide whether or not to offer standardized plans. The FFE will differentially display standardized plans and allow consumer to filter plans so that only standardized plans appear. Standardized plans will not, however, automatically sort to the top for 2017 on SBE-FPs can design their own standardized plans, but cannot be customized to display them. SBE-FPs can notify HHS if they wish to display HHS-designed standardized plans for them.

Requirements for State-Based Exchanges Using The Federal Platform

The 2017 payment notice recognized SBE-FPs and required SBEs that used to apply QHP standards no less strict than the FFE’s. The 2018 rule goes further and requires SBE-FPs that use the federal SHOP platform to establish standards and policies consistent with certain federally facilitated SHOP (FF-SHOP) requirements when they use the federal platform for various functions. These include, depending on how the SBE-FP uses the federal platform:

  • Premium calculation, payment, and collection requirements;
  • Rate change timelines;
  • Minimum participation rate requirements and calculation methodologies;
  • Employer contribution methodologies;
  • Annual employee open enrollment periods;
  • Initial group enrollment or renewal coverage effective dates; and
  • Termination of SHOP coverage or enrollment rules.

Language Access Requirements

Current federal rules require exchanges, QHP insurers, and web-brokers to include taglines indicating the availability of language services in non-English languages on website content and on documents that are critical for obtaining health insurance coverage or access to health care services through a QHP. The taglines must appear in at least the top 15 languages spoken by the limited English proficient (LEP) population in a relevant state. A similar requirement is found in the rules implementing section 1557 of the ACA, which prohibits discrimination on the basis or national origin, and thus language discrimination, in health programs or activities administered by an exchange or HHS or receiving federal funds through HHS.

The top 15 languages for each state are determined by HHS guidance. However, exchanges, insurers, and web-brokers can reasonably rely on language data sources other than the CMS lists if reliance is reasonable.

The final payment notice amends the language of the current rule to clarify that exchange, QHP insurers (including insurers in a group under common control), or web brokers that serve more than one state have the option of aggregating LEP populations across all states they serve to determine the top 15 languages for which they must provide taglines. This aggregation rule applies explicitly to It only applies, however, to a group of insurers treated as a single employer under the Tax Code, not to associations or federations of insurers that are not treated as a single employer or to contractors that serve multiple exchanges. In allowing aggregation, HHS concluded that the costs to multistate entities of preparing state-specific documents outweighed the reduction in language access for language groups that might be sizeable in some states but not in others.

The state aggregation rule does not apply to summaries of benefits and coverage or internal claims and appeals documents, which still must include taglines for the top 15 languages in states in which they are issued and must include taglines for any non-English language in which 10 percent or more of the residents of a county in the service are solely literate.

The final rule further provides that exchanges, QHP insurers, and web-brokers will satisfy LEP requirements with respect to web content if their home page has a prominent link directing individuals to the full text of taglines indicating how people can get language assistance services, and if taglines are also included in any standalone critical document linked to or embedded in the website. Entities subject to 1557 requirements, however, must also include “in language” web links on their home page directing LEP individuals to the full text of their taglines.

If an entity (such as a QHP insurer) subject to the rule includes the required taglines in a critical document linked or embedded in the website of another entity (such as a web broker), the linking entity can rely on the taglines provided by the entity that provided the document, even though the two entities are not required to provide taglines in the same 15 languages.

The rule recognizes that the language access requirements that apply to exchanges and QHP insurers are largely duplicative of the section 1557 nondiscrimination rule requirements. It thus provides that exchanges and insurers that are in compliance with the 1557 rules are deemed to be in compliance with the marketplace rules. This deeming rule does not apply to web-brokers as they are not generally subject to 1557.

Agents And Brokers

Current rules already govern the role of agents and brokers in assisting qualified individuals, employers, and employees in enrolling in marketplace coverage, subject to state and federal laws. The final rule builds on the current rules to provide new procedures and additional consumer protections with respect to agents and brokers who assist with marketplace enrollment.

The 2018 rule requires web-brokers and QHP insurers to differentially display standardized plans when they facilitate direct enrollment through the FFE or a SBE-FP. Web-brokers do not have to display the plans in exactly the same way that does, but must get HHS approval for a deviation from the approach. If web-brokers do not have details on a standardized plan offered through the marketplace, they must post a plan detail disclaimer as to that plan.

Enhanced Direct Enrollment Process

The final rule states that CMS is developing an “enhanced direct enrollment” process. Under the current direct enrollment process, a consumer begins on the web-broker or insurer website, is then directed to for an eligibility application and determination, and is then redirected to the web-broker or insurer website to enroll in coverage.

The consumer in the enhanced direct enrollment process would remain on the web-broker or insurer website. The web-broker or insurer would collect the information necessary for an eligibility determination and pass the information to, which would make the eligibility determination and pass the determination back to the direct enrollment partner. The consumer would see the eligibility determination on the web-broker or insurer’s website. The exchange would verify eligibility with information received from other government agencies which would not be not shared with the direct enrollment partner. Privacy and security would be protected. CMS continues to explore this option.

The final rule requires web-brokers to prominently display on their websites information provided by HHS pertaining to advance premium tax credit and cost-sharing reduction payment eligibility. Web-brokers must also permit enrollees to accept less than the full amount of tax credits for which they are eligible. It may be to the advantage of a tax-filer to receive less than the full amount, for example when an applicant suspects that his or her income might increase or wants an additional tax refund. CMS believes that some web-brokers have not consistently been allowing this. Direct enrollment partners are also required to obtain necessary attestations from tax filers.

Under the proposed rules, agents and brokers who assisted consumers with enrollment through the exchange would also have had to support post-enrollment activities necessary to effectuate enrollment or resolve enrollment issues, such as data matching issues related to eligibility. In light of the burden this requirement would impose on brokers (and the fact that some insurers are no longer offering brokers’ commissions for marketplace enrollments), CMS decided not to finalize this requirement.

Web-brokers will be required under the final rule to demonstrate operational readiness before they can access the direct enrollment pathway, including implementation of required privacy and security measures. They must also cooperate with audits and supply requested information in a timely fashion.

The final rule will allow HHS to immediately suspend an agent or broker’s access to direct enrollment if HHS discovers circumstances posing unacceptable risks to the exchange or its information technology systems. This includes using enrollment processes not approved by HHS. Web-brokers who allow other agents and brokers to use their websites must ensure that downstream third-party websites are compliant with federal requirements.

HHS is establishing a process under which approved third-party auditors will test and audit web-broker compliance with regulatory requirements. HHS will also create a process for evaluating and approving third party auditors. The auditors will be required to collect, store, and share data with HHS and to comply with HHS data protection standards. Auditors will be subject to monitoring and periodic recertification by HHS. Their services will be paid for by agents or brokers who use their services.

Agents and brokers that facilitate enrollment through the FFE or SBE-FP must refrain from having a website that might mislead consumers into believing that they are applying through Consumer confusion could be created by names or URLs similar to or by combinations of text sizes, colors, fonts, or layouts too similar to CMS will apply a totality of the circumstances test in determining whether a website is misleading.

Finally, a frequently asked question published by CMS simultaneously with the payment rule reminds insurers that federal rules prohibit marketing practices that have the effect of discouraging the enrollment of individual with significant health needs both inside and outside the marketplace. Broker and agent commission arrangements, therefore, that are structured to discourage the enrollment of individuals with high health needs—such as paying less for enrollment in higher metal-level (gold or platinum) plans than for lower metal-level plans—are illegal. It would seem that the same argument could apply for plans that refuse to pay commissions for special enrollments. CMS is delaying the enforcement of this guidance until plans can next incorporate the requirement into their rate (2018 in the individual market and April 2017 in the small group market).

Electronic Appeals, Notices, And Funds Transfers

The final rule once again puts off the requirement that exchanges establish electronic appeal processes. Recognizing that some exchanges are still not able to handle electronic appeal processes for individual market eligibility appeals, employer appeals, or SHOP appeals, the rule continues to allow the use of secure and expedient paper-based processes. Implementation of the electronic appeals processes requirement has been delayed several times and the final rule will delay it indefinitely. The preface to the final rule includes an extended discussion of employer appeals.

The final rule makes electronic notices the default for SHOP exchange notices, although mailed paper notices will continue to be available to employers or employees who select this method of communication. Individual and SHOP exchanges, however, retain the flexibility to send paper notices by mail when technical limitations prevent them from electronic communication, even when an individual, employee, or employer would prefer electronic communication.

The proposed rule preface identified a potential problem when consumers have arranged for payment of their premiums by electronic funds transfer (EFT) and then lose premium tax credits, for example because of a data matching issue. In this situation the withdrawal of a larger amount than anticipated from a consumer’s bank account could result in financial hardship for the consumer. CMS received comments on this issue but decided not to take action on it at this time.

Exchange Operations

Current rules allow the exchanges to periodically examine available data sources for eligibility determinations for certain government programs such as Medicare, Medicaid and CHIP. Amendments in the final rule give exchanges more flexibility in carrying out this function.

Another amendment gives exchanges greater flexibility for dealing with information regarding compliance with tax filing and reconciliation requirements. Exchanges must not terminate tax credit eligibility for failure to file taxes and reconcile tax credits without notice. Consumers may attest to having filed and reconciled or submit documentary proof of filing, such as a copy of their tax return. Exchanges will also be granted flexibility in recalculating the application of advance premium tax credits (APTC) when a consumer’s eligibility for APTC changes during a benefit year.

The final rule gives exchanges the discretion to allow insurers experiencing billing or enrollment problems due to high volume to implement a reasonable extension of the binder payment deadlines set under current rules. In the preface to the proposed rule CMS considered stipulating that a binder payment is not needed when an enrollee actively reenrolls or is passively reenrolled in coverage, but it decided not to finalize this policy at this point.

Insurers denied FFE QHP certification may request reconsideration within 7 days of the date of written notice of certification denial. The reconsideration decision of HHS is a final decision and not appealable.

Special Enrollment Periods

CMS notes in the final rule preface that it continues to hear complaints from insurers about abuse of special enrollment periods (SEPS) and insurer requests for additional verification of eligibility. In June CMS began requiring documentary confirmation for some SEP applications and in early December it announced that it is launching a pilot project to require pre-enrollment verification for some SEPS.  CMS also notes, however, that some believe that a bigger problem is very low take-up of special enrollment by healthy eligible individuals, and that additional verification processes worsen this problem by discouraging healthier and less motivated consumers from enrollment.

CMS also acknowledges insurer complaints that consumers are gaming ACA grace periods to drop coverage once they have been treated for high cost conditions. CMS reports:

We examined attrition rates in our enrollment data. We have found that the attrition rate for any particular cohort is no different at the end of the year than at points earlier in the year, suggesting that any such gaming [of grace periods], if it is occurring, does not appear to be occurring at sufficient scale to produce statistically measurable effects.

The final rule preface discusses the new SEP verification pilot and acknowledges that it may delay enrollment pending verification. Although enrollment will normally be retroactive to the date of plan selection, the final rule will allow exchanges to provide consumers with a later effective date if the consumer’s ability to enroll was delayed so that he or she would owe two or more months of premium for retroactive enrolment

The rule codifies a number of special enrollment periods previously recognized only in guidance to improve transparency and ensure appropriate utilization. These include special enrollment periods for:

  • dependents of Indians enrolled or enrolling in a QHP through an exchange at the same time as the Indian;
  • victims of domestic abuse or spousal abandonment and their dependents who are enrolled in coverage but seek to enroll in coverage separately from their abuser or abandoner;
  • consumers and their dependents who apply for coverage during the open enrollment period but are incorrectly denied APTC because they were determined eligible for Medicaid or CHIP, and are later determined ineligible for Medicaid or CHIP;
  • consumers disadvantaged by material plan or benefit display errors, including errors related to service areas, covered services, or premiums that were displayed by the exchange at the time they enrolled in a plan and that affected their decision to enroll in a particular plan (not including provider network directory or formulary list errors); and
  • consumers who resolve data matching issues after the expiration of an inconsistency period or have income below 100 percent of the federal poverty level and did not enroll in coverage while waiting for HHS to verify lawful status.

Special enrollment periods that are not specific to the exchanges apply throughout the individual and small group markets.

The payment notice also finalizes SEP regulations promulgated on an interim final basis in May. One of the subjects of these rules was the permanent move SEP. Under prior rules, if a consumer or his or her dependent gained access to new QHPs because of a permanent move, the consumer had up to sixty days to enroll in a new QHP. This was true whether or not the consumer was previously enrolled in marketplace coverage. Insurers objected that this SEP gave consumers who failed to enroll in coverage during open enrollment and then found that they were in need of medical care the opportunity to establish eligibility for coverage simply by moving to a new address (or claiming to have done so).

Under the amended SEP, most individuals who move are eligible for an SEP only if they were enrolled in coverage for at least one day during the previous sixty days. In other words, consumers who had already enrolled in coverage and then moved can enroll in marketplace plans available at their new residence, but consumers who were not enrolled before the move will have to wait until the next open enrollment period.

There are important exceptions to this changed rule, recognizing that some consumers who move would not previously have had an opportunity to enroll in coverage. First, individuals who moved to the United States from outside the U.S. or from a United States territory still have be able to enroll through an SEP. Second, individuals who gain access to coverage because they are released from incarceration will be granted an SEP. Finally, individuals who lived in a state that did not expand Medicaid and were ineligible for marketplace coverage because their income was below 100 percent of poverty, but who become eligible for marketplace coverage when they move to another state (presumably because of increased income), would also eligible for an SEP.

The interim final SEP rule (now the final rule) also removed a requirement imposed by the 2016 Benefit and Payment Parameters rule that mandated that marketplaces be ready by January 1, 2017 to provide 60 days’ advance availability of an SEP for individuals who experience a permanent move, or who lose a dependent or are no longer considered a dependent because of divorce, legal separation, or death. The timing of implementation of advance availability will now be at the option of the marketplaces. Presumably the federally facilitated marketplace will delay implementation of advance availability, although this is not explicitly stated.


The final rule requires QHP insurers that wish to rescind coverage for an enrollee for fraud or material misrepresentation (the only grounds permitted for rescission under the ACA) to establish to the satisfaction of the exchange that rescission is appropriate, if required to do so by the exchange.

Updating Limits And Thresholds

An individual is exempt from the shared responsibility tax if the amount the individual or household would have to pay for minimum essential coverage exceeds a “required contribution percentage.” This percentage is equal to 8 percent adjusted for the excess in the rate of premium growth between the preceding calendar year and 2013 over the rate of income growth for that period. For 2018 the required contribution percentage, determined by applying this formula, will be 8.05 percent. Because income growth has been so brisk, this number is down 0.11 percent from 2017, when it was 8.16 percent. This means fewer individuals will be able to claim an exemption from the individual mandate for unaffordability.

Another parameter that HHS determines annually in the payment notice is the premium adjustment percentage. This parameter is used to adjust annually the maximum annual out-of-pocket limit for cost sharing, the required contribution percentage that individuals must meet to qualify for the hardship exemption from the individual responsibility requirement, and the tax that employers must pay for failing to meet the employer responsibility requirements. The premium adjustment percentage equals the percentage by which the average per capita premium for health insurance coverage in the preceding year exceeds the average capita premium for health insurance in 2013.

Based on this formula, the maximum annual limit for cost-sharing will be increased for 2018 to $7,350 for self-only coverage and $14,700 for other than self-only coverage, a 2.8 percent increase over 2017. These amounts will be reduced by the cost-sharing reductions to $2,450 for self-only coverage and $4,900 for other than self-only coverage for individuals with incomes below 200 percent of the federal poverty level, and to $5,850 and $11,700 for individuals and families with incomes between 200 and 250 percent of the federal poverty level. The annual limit on cost sharing for standalone dental plans if $350 for one child or $700 for two or more children.

Enrollment Effective Dates for SHOP

Under current rules, the enrollment period for an employee who becomes a qualified employee outside of the initial or annual open enrollment period starts on the first day of becoming a newly qualified employee. The employee must have at least 30 days from that date to make a plan selection. The enrollment period must end no sooner than 15 days prior to the date that any applicable employee waiting period longer than 45 days would end if the employee made a plan selection on the first day of becoming eligible. State SHOP marketplaces remain subject to these rules.

This provision is problematic, however, if employees do not learn of their eligibility until the 30 days has expired. Under the final rule, the 30-day period will not begin to run for employees covered by the federally facilitated SHOP and state-based exchanges using the federal SHOP platform until the employer notifies the SHOP of the employee’s eligibility. Qualified employers will be required to notify the exchange of the employee’s eligibility within 30 days of the employee becoming eligible for coverage. This changed rule only applies, however, to the federally facilitated SHOP and SBE-FP SHOPs.

The final rule also clarifies when enrollment of employees covered through the FF-SHOP or SBE-FP SHOP becomes effective. Waiting periods in the FF-SHOP and SBE-FP SHOPs may not exceed 60 days, beginning with the date an employee becomes eligible. Waiting periods must be 0, 15, 30, 45, or 60 days in length. The measurement period for a variable hour employee eligible for SHOP coverage cannot exceed 10 months. The maximum time that a variable-hour employee who is determined to be a full-time employee can be denied SHOP coverage will be 13 months from the employee’s start date (plus the time remaining until the first day of the next calendar month if the employee did not start on the first day of a month.)

Waiting periods in all SHOPs begin on the date that am employer becomes a qualified employee otherwise eligible for coverage regardless of when the employer notifies the SHOP about the newly qualified employee.

Exchange User Fee

The 2018 payment notice again sets the user fee for QHPs for exchange participation at 3.5 percent of premiums charged for coverage issued through the FFE, as it has been since 2014. This rate will continue until it is changed by rule. CMS had proposed charging SBE-FPs 3 percent, but in the final rule settled on 2 percent. CMS is establishing a policy of using at least three percent of FFE user fees for outreach and education.

Actuarial Value Variations For Bronze Plans

The ACA requires the actuarial value of health plans in the individual and small group market to be set at 60, 70, 80, and 90 percent but allows “de minimis” variations. CMS has defined de minimis to mean plus or minus two2 percentage points. This variation severely limits the ability of bronze (60 percent actuarial value) plans to provide any services other than preventive services before the deductible is met. Indeed, it may be difficult to design an HSA-eligible bronze plan meeting future payment parameters because the annual out-of-pocket limit for HDHPs set by the IRS is likely to be lower than projected out-of-pocket limits for bronze plans. Catastrophic plans, which must cover three primary care visits without cost sharing, may also be more generous than permissible bronze plans.

To provide more flexibility for insurers to design plans meeting bronze plan requirements, the rule redefines de minimis for bronze plans only to allow variance from the 60 percent actuarial value requirement by minus two percentage points or, at the option of the insurer, by plus five percentage points when the positive variance is used to cover major services before the deductible or to establish HDHP eligibility. Insurers could use this flexibility to cover primary care visits; specialist visits; inpatient hospital services; generic, specialty, or preferred branded drugs; and emergency room visits before the deductible with reasonable cost sharing (with coinsurance not exceeding 50 percent). Bronze plans that covered three primary care visits before the deductible would comply with this requirement.

Plan Offering Requirements

The ACA requires QHP insurers to provide at least one silver and one gold level plan as a condition for QHP certification. The final rule clarifies that this requirement applies at the service coverage area level and not at the exchange level. That is, a QHP insurer must offer both a silver and gold plan in each service area in which it offers coverage through the exchange. A QHP insurer is not in compliance if it offers a silver plan throughout an exchange but a gold plan only in one limited service area somewhere in the exchange.

Under current rules, the FFE will only certify a QHP to offer coverage in the individual market if the issuer (or another issuer in the same issuer group) offers through the SHOP at least one silver and one gold plan when the insurer has at least a 20 percent share of the small group market in the state measured by earned premium. This policy is not required of state-based SHOPs and none have apparently instituted such a policy. CMS is eliminating the requirement as of 2018.

CMS suggested in the preface to the proposed rule that it was considering the possibility of terminating enrollment through the FF-SHOP website and using alternative pathways such as web-brokers or third party administrators for SHOP enrollment. This would effectively mean giving up on the SHOP as an online entity. CMS is not proceeding with this proposal at this time.

The final rule reiterates that all individual plans and all small group plans must be in a single risk pool for which an index rate must be established at least annually. The final rule explains how plan-adjusted index rates must be calibrated considering age, geography, and tobacco rating factors.

Measuring Network Breadth

Beginning with 2017, CMS is pilot testing a policy to provide information on network breadth in six states through The results of this pilot will determine whether CMS expands it to other states. One problem it has encountered is how to deal with integrated delivery systems, which may have narrow networks but offer much better access to care than other narrow network plans.

CMS intends to incorporate identification of integrated delivery systems into the information displayed in 2018 in states that display network breadth information. Integrated delivery systems will be defined to mean plans that deliver a majority of covered professional services through their employees or through a single contracted medical group. CMS will allow insures that do not meet this definition to be classified as integrated delivery systems if they provide a justification for this classification in accordance with criteria laid out in the 2018 letter to issuers.

Notice Of Potential Out-Of-Network Billing

The preface to the final rule reaffirms the requirement in the 2017 payment notice that QHP insurers must as of 2018 notify enrollees at least 48 hours before the provision of a service at an in-network facility that the enrollee might receive a service from an out-of-network ancillary provider who might balance bill and whose charges are not subject to the in-network cost sharing limit. If the insurer fails to do so, and the enrollee is charged for out-of-network cost sharing by the ancillary provider, the insurer must count the cost-sharing against the enrollee’s annual out-of-pocket limit.

This provision does not apply to balance billing as such—billing for the difference between the provider’s charge and the amount the insurer is willing to pay. The insurer is not responsible for balance bills (although the balance bills may not be legally enforceable against the consumer). The rule does apply to QHPs both on and off the exchange and regardless of whether the QHP covers out-of-network services. It also does not preempt state laws that are more protective of the consumer.

Other Provisions

The final rule continues the current requirement that QHP issuers cover a percentage of essential community providers in their service area with a single location including multiple providers counting as a single essential community provider. It also continues the 2017 ECP calculation and counting methodologies.

The final rule requires QHP insurers as a condition of participation to make their QHPs available for enrollment for the full year. They cannot enroll members only during the open enrollment period. Violation of this requirement will be grounds for a civil money penalty and exclusion from the FFE and FF-SHOP for two succeeding plan years. The rule recognizes an exception to this requirement when there is grounds for plan suppression, such as lack of financial capacity.

QHPs that are denied certification for a subsequent, consecutive, certification cycle are required under the final rule to give their enrollees 30 days’ notice of the denial to give enrollees the opportunity to seek other coverage.

The preface to the rule confirms that QHPs are permitted to offer participatory wellness programs that comply with state law and are available to all similarly situated individuals. Participatory wellness programs are programs that do not condition a reward on an individual satisfying a standard related to a health factor.

The final rule requires QHP insurers in SBE-FPs to comply with FFE enrollment reconciliation process, timeline, and file format requirements. It also requires all QHP insurers that identify a discrepancy in their cost sharing reduction advance payments to notify HHS of the discrepancy within 60 days as a prerequisite of being able to appeal the discrepancy. QHP insurers are subject to compliance reviews. If they fail to submit requested documentation on time or repeatedly delay providing requested documentation, they are potentially subject to civil money penalties, decertification, and plan suppression.

The final rule requires health insurers in the FFEs and SBE-FPs to give notice to enrollees of material plan or benefit display errors and of the availability of a special enrollment period.

Finally, the final rule finalizes unchanged the interim final rule on CO-OPs published in May.

Actuarial Value Calculator

On December 16, 2016, CMS also published, in conjunction with the final payment notice, its final actuarial value (AV) calculator for 2018 and AV calculator methodology. The AV calculator is used to determine the AV of health plans in the individual and small group market. It represents, in the words of CMS, “an empirical estimate of the AV calculated in a manner that provides a close approximation to the actual average spending by a wide range of consumers in a standard population.” Insurers input the cost-sharing and benefit parameters of their plans and the AV calculator identifies the plan’s AV.

The draft methodology describes in detail the calculator’s methodology and operation. I will not attempt to address that here. The draft also describes how the final 2018 version varies from earlier versions. Major changes in the 2018 draft AV calculator methodology include:

  • The use of 2015 claims data rather than pre-ACA claims data used in earlier AV calculators;
  • The use of data from HMO and EPO type plans; earlier AV calculators only used data from PPO and POS plans;
  • Inclusion of claims by enrollees with at least four months’ enrollment; earlier calculators only included claims for enrollees enrolled for at least 12 months;
  • The removal of adjustments for less common essential health benefits, such as pediatric dental;
  • Modified trend factors for trending forward 2015 claims, using a 3.25 percent annual trend factor for medical claims and a 11.5 percent factor for drug claims;
  • Adjustment of the enrollment demographic distribution to better match projected 2018 enrollment;
  • An update for the 2018 maximum out of pocket limit;
  • The ability to enter a plan design with a copayment for an outpatient facility fee and outpatient physician/surgical services;
  • A more accurate approach to calculating the effect of coinsurance and the maximum out-of-pocket limit;
  • An updated approach to calculating the effect of two-tier network designs;
  • A modification to improve the functionality of calculation of plans with separate deductibles and combined maximum out-of-pocket limits; and
  • The possibility of including bronze plans with the expanded de minimis range allowed by the 2018 payment rule.

CMS considered but did not adopt changes:

  • to augment the model for specific services such as habilitative or pediatric dental services;
  • to allow for adjustments for wellness incentives;
  • to recognize urgent care cost sharing;
  • expanding the drug tiers available under the calculator;
  • to allow for beginning mental health/behavioral health and substance abuse service cost sharing or deductible/coinsurance after a set number of visits or copayments; and
  • to permit separate AV calculations for family plans.