NBPP 2024 Part 5: User Fees, Risk Adjustment, Agents, Brokers & Web Brokers

The ACA includes a long list of codified instructions about what's required under the law, but many of the specific details are left up to the agency responsible for implementing it since the legal text itself can't possibly cover every conceivable detail involved. The major provisions of the ACA fall under the Department of Health & Human Services (HHS), and within that, the Centers for Medicare & Medicaid (CMS).

Each year, CMS issues a long, wonky document called the Notice of Benefit & Payment Parameters (NBPP) for the Affordable Care Act. This is basically a list of tweaks to some of the specifics of how the ACA is actually implemented.

Yesterday CMS released their proposed 2024 NBPP, which includes some important changes which, if included in the final version, will go into effect starting next fall (for calendar year 2024). The full proposed 2024 NBPP is actually 370 pages long; yesterday I posted the press release & Fact Sheet. Today I'm breaking it down into smaller chunks since there's a lot to talk about here:

FFM and SBM-FP User Fees

For the 2024 benefit year, CMS proposes to lower the user fee rate from 2.75% to 2.5% of premium for QHPs sold on the FFM, and to lower the user fee rate from 2.25% to 2.0% of premium for QHPs sold on the SBM-FP. We anticipate these user fee rate decreases may exert downward pressure on insurance premiums, resulting in lower costs for consumers.

30 states are "FFM" states; these operate as Federally-Facilitated Marketplaces.. Another 3 states (Arkansas, Oregon and Virginia) are "SBM-FP" states, which means that they operate as their own state-based legal entity (with a board of directors, their own operating budget, etc) but which still utilize HealthCare.Gov as their enrollment platform.

I have mixed feelings about reducing the user fee rates further. On the one hand, the initial costs of establishing and operating HealthCare.Gov were amortized years ago, and as more states split off and create their own state-based ACA exchanges, this should relieve some of the marketing and customer support burden on the federal exchange.

On the other hand, as Wesley Sanders noted, the per unit cost of operating HC.gov increases if it's being absorbed by fewer enrollees. On yet another hand, the enhanced subsidies of the ARP/IRA, as well as the coming influx of enrollees thanks to the Family Glitch being closed, mean that HC.gov enrollment may increase regardless. Finally, on yet another hand, as Ben D'Avanzo notes, "There's really no other federal outreach program that has a dedicated funding source not subject to the whims of Appropriations."

Anyway, it looks like they're gonna knock the user fees down by another quarter point.

HHS-Operated Risk Adjustment Program

For the 2024 benefit year risk adjustment models, CMS proposes to use the 2018, 2019, and 2020 enrollee-level EDGE data for model recalibration, with one exception. For the adult models’ age-sex coefficients, CMS proposes to blend only the 2018 and 2019 enrollee-level EDGE data and to exclude the 2020 enrollee-level EDGE data given CMS’ analysis of the 2020 enrollee-level EDGE data and observed anomalous decreases in the unconstrainted coefficients for the 2020 benefit year enrollee-level EDGE recalibration data for older adult enrollees, especially female enrollees. Additionally, CMS proposes to continue to apply a market pricing adjustment to the plan liability associated with Hepatitis C drugs in the risk adjustment models for the 2024 benefit year. CMS also requests comment on whether to add a new payment HCC for gender dysphoria to the risk adjustment models for future benefit years.

CMS also proposes, beginning with the 2023 benefit year, to collect and extract from issuers’ EDGE servers a new data element, a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) indicator, and to extract plan ID and rating area data elements issuers have submitted to their EDGE servers from certain benefit years prior to the 2021 benefit year. We also propose a risk adjustment user fee for the 2024 benefit year of $0.21 per member per month.

Finally, we propose to repeal the ability of all states, including those prior participant states that had previously submitted a state flexibility request, to request a reduction in risk adjustment state transfers starting with the 2025 benefit year. We also solicit comments on the requests submitted by Alabama to reduce risk adjustment state transfers by 50% in its individual (including catastrophic and non-catastrophic risk pools) and small group markets for the 2024 benefit year.

HHS Risk Adjustment Data Validation

CMS proposes further refinements to HHS Risk Adjustment Data Validation (HHS-RADV) to promote the goals of HHS-RADV and support the timely release of HHS-RADV results. Beginning with the 2021 benefit year, CMS proposes to no longer exempt exiting issuers from adjustments to risk scores and risk adjustment transfers when they are negative error rate outliers in the applicable benefit year’s HHS-RADV results. Additionally, CMS proposes to change the materiality threshold for random and targeted sampling from $15 million in total annual premiums Statewide to 30,000 total billable member months Statewide. CMS proposes to shorten the window to confirm or dispute the findings of the Second Validation Audit to within 15 calendar days of the notification by HHS beginning with the 2022 benefit year. Finally, we solicit comments on discontinuing the use of the lifelong permanent condition list and the use of Non-EDGE Claims in HHS-RADV.

For both of the two items above, I'm going to once again state that I don't know nearly enough about how ACA risk adjustment works to comment, so I'm just posting them as is.

Premium Adjustment Percentage and Payment Parameters

CMS will issue the 2024 benefit year premium adjustment percentage, the maximum annual limitation on cost sharing, reduced maximum annual limitation on cost sharing, and the required contribution percentage (payment parameters) in guidance by January 2023, consistent with policy finalized in the 2022 Payment Notice.

I wrote an explainer about the Premium Adjustment Percentage Index (PAPI) in 2021. Basically, this is a complex formula which modifies how generous ACA exchange premium subsidies are, and which also impacts the maximum out-of-pocket expense ceiling for ACA enrollees each year. The PAPI increases or decreases slightly every year.

Establish Improper Payment Pre-Testing and Assessment for State Marketplaces

To comply with the Payment Integrity Information Act of 2019 (PIIA), CMS proposes to establish and implement a required Improper Payment Pre-Testing and Assessment (IPPTA) program in calendar years 2024 - 2025. The proposed IPPTA would prepare State Marketplaces for the planned measurement of improper payments of APTC by testing processes and procedures that support HHS’s review of determinations of APTC. IPPTA would also provide a mechanism for HHS and State Marketplaces to share information that would aid in developing a measurement process in future years.

I wrote about this last month:

...the amount of financial assistance ACA exchange enrollees receive in the form of premium tax credits is based on several factors, including the price of the benchmark Silver plan available to the enrollee, the household size, and especially the annual household Modified Adjusted Gross Income.

...the bottom line is that when you have upwards of 13 million people enrolling every year, some number of them are going to miscalculate how much they earn...and in most cases this is not deliberate. The vast majority of enrollees sign up before the end of December, which means for the vast majority of them, the MAGI income estimate refers to the upcoming calendar year, not the current one...This means that a lot of people simply get it wrong on either the high or low end...This occasionally results in the U.S. Treasury Dept. either under- or overestimating the amount of Advance Premium Tax Credits (APTC) to some degree.

It sounds to me like CMS has nailed how to track improper payments consistently for the federal exchange and is now setting up a similar system for the 18 (and growing) state-based exchanges as well. Good.

New Requirements Related to Agents, Brokers, or Web-brokers

CMS proposes to allow HHS additional time to review evidence submitted by agents, brokers, or web-brokers to rebut allegations that led to suspension of their Marketplace agreements or to request reconsideration of termination of their Marketplace agreements. For suspensions, HHS would receive an additional 15 calendar days, or a total of up to 45 calendar days, to review evidence and notify the submitting agents, brokers, or web-brokers of HHS’s determination regarding the suspension of their Marketplace agreements. For terminations, HHS would receive an additional 30 calendar days, or a total of up to 60 calendar days to review reconsideration requests and notify the submitting agents, brokers, or web-brokers of HHS' reconsideration decision related to the termination of their Marketplace agreements. These additional days are needed as the review process can involve parsing complex technical information and data, revisiting consumer complaints, and reaching out to consumers individually.

CMS also proposes to require agents, brokers, and web-brokers to document that eligibility application information has been reviewed by and confirmed to be accurate by the application filer prior to application submission. This proposal would help with enforcement activities related to agents, brokers, and web-brokers and help expedite the adjudication of consumer complaints related to the provision of incorrect information of their eligibility applications. We are proposing that this documentation be retained by the agent, broker, or web-broker for a minimum 10 years and be produced upon request in response to monitoring, audit, and enforcement activities.

It looks like CMS is tightening up their enforcement of agents, brokers and authorized 3rd-party web brokers (a couple of which advertise on this site) to make sure they're on the up & up.

In addition, CMS proposes to require agents, brokers, or web-brokers to document the receipt of consent from the qualified individuals, or the individuals’ authorized representatives, qualified employers, or qualified employees they are assisting. This proposal would help with enforcement and help resolve disputes between enrolling entities and consumers, or between multiple enrolling entities. We are proposing that this documentation be retained by the agent, broker, or web-broker for a minimum of 10 years and be produced upon request in response to monitoring, audit, and enforcement activities.