Final Rule: The Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017

The anticipation is finally over — the “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017 Final Rule” has arrived. This annual document provides health plan issuers the rules and requirements to develop plans and operational processes for the upcoming year. Since the Affordable Care Act (ACA) was enacted, health plans have been feeling the pressure regarding the premiums allocated to the Marketplace plans, coupled with staggering losses for this line of business with the elimination of the underwriting process, health plans have been receiving negative feedback from all angles. Now to layer onto that pressure, for 2017, two of the three stabilization programs — reinsurance and risk corridor — will no longer be included to provide health plans financial relief since the applicable timing for these programs has expired. To enhance the existing stabilization program, the risk adjustment model will be recalibrated using more recent data to reflect more closely with the commercial market risks experienced.

Some of the high-level changes reflected in the Final Rule are the following:

• Open Enrollment Period for 2017 and 2018 will continue to have the same dates as 2016, which is November 1 through January 31 of the following year. Starting in 2019, the open enrollment period will be shortened to start on November 1 and end on December 15 of the same year.
• Standardized plans have been introduced as an option for 2017. Issuers are not required at this point to utilize these standardized plans and are allowed to offer non-standardized plans if they choose, however, it is encouraged that issuers offer the standardized silver plans. Standardized plans are preferred by the Centers for Medicare & Medicaid Services (CMS) to allow the enrollee to have a better shopping experience on the Marketplace. It allows for a more apples-to-apples comparison of the plans offered. Therefore, because of the ease to enrollees, the Marketplace will arrange the plans to be found more easily. There are 6 standardized plans available to choose from. One for each metal level with the exclusion of platinum. The standard or “base” silver plan also has benefits aligned for each of the actuarial value (AV) plans that are utilized for the members that are eligible for the cost sharing subsidy. In total the silver plan ends up with 4 standardized plans and then 1 plan each for gold and bronze.

Each plan has a fixed deductible, fixed annual limitation on cost-sharing, and fixed copayment or coinsurance for the Essential Health Benefits (EHBs) that are a part of the actuarial value (AV) calculator, with the addition of urgent care. These benefits represent a large percentage of the total allowable costs for an average enrollee.

• Cost-sharing maximum out-of-pocket limit has increased from $6,500 to $7,150 for an individual and from $13,000 to $14,300 for a family.
• Network Adequacy proposed requirements were partially accepted in the final rule. Probably the biggest requirement that was not accepted was the time and distance standard.
• “Surprise Bills” are a concern of members, which has been addressed in this notice.
• Federally-Facilitated Marketplace (FFM) user fees will stay at 3.5% for issuers utilizing the (FFM). Issuers who are part of a State-Based Marketplace (SBM) that utilized the FFM platform will see some relief with a reduction in their user fee for 2017, from 3% to 1.5% of premium.
• Medical Loss Ratio (MLR) will not be allowed to include fraud prevention expenses as part of the numerator as proposed in the Notice of Proposed Rulemaking (NPRM).

A detailed analysis of the Final Rule including health plan impacts, will be provided in the coming week.

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