By Rebecca Mayo, J.D.
The proposed plan year 2021 payment notice aims to strengthen and stabilize the insurance market by updating the risk adjustment program.
The risk adjustment program is an important program that seeks to prevent issuers from avoiding high-cost, high-risk individuals. According to CMS, the updates in the proposed payment notice would improve the reliability of the risk adjustment program and thereby strengthen the insurance market. The proposed rule also contains a number of other provisions aimed to lower premiums, protect taxpayer dollars and strengthen the health insurance markets to deliver more competition and choice for consumers (Notice, 85 FR 7088, February 6, 2020).
Premiums. The proposed rule would maintain the Federally-facilitated Exchange (FFE) user fee rate of 3.0 percent of premium and the State-based Exchange on the Federal platform (SBE-FP) user fee rate of 2.5 percent of premium based on the portion of FFE user fee-eligible costs allocated to SBE-FP activities. The rule also proposed detailed options to qualified health plan (QHP) issuers on ways to implement value-based insurance plan designs that would empower consumers to receive high value services at lower costs. Under the proposed rule, the definition of cost sharing would exclude expenditures covered by drug manufacturer coupons. The Medical Loss Ratio (MLR) regulations would also be amended to require issuers to deduct from incurred claims the prescription drug rebates and other price concessions attributable to the issuer’s enrollees and received and retained by an entity providing pharmacy benefit management services to the issuer. Additionally, issuers must report expenses for services outsourced to or provided by other entities in the same manner as issuers’ expenses for non-outsourced services.
Risk Adjustment. Under the proposed rule, the MarketScan data would no longer be incorporated into the recalibration process for the HHS risk adjustment models beginning with the 2021 benefit year. Instead, the three most recent years of available enrollee-level EDGE data would be used. The rule also proposed a number of updates to the HHS risk adjustment models’ Hierarchical Condition Categories (HCCs) based on availability of more recent diagnosis code information and the availability of more recent claims data. Additionally, where an issuer’s HCC count is low, the rule proposed modifications to the application of HHS risk adjustment data validation (RADV) adjustments.
The rule also proposed a premium adjustment percentage for the 2021 benefit year of 1.3542376277, which represents an increase in private health insurance premiums of approximately 35.4 percent over the period from 2013 to 2020. The proposed 2021 maximum annual limitation on cost sharing would be $8,550 for self-only coverage and $17,100 for other than self-only coverage, representing an approximately 4.9 percent increase over the 2020 parameters. The Patient Protection and Affordable Care Act requires an annual calculation to reduce maximum out-of-pocket costs for individuals enrolled in the various cost sharing reduction (CSR) plan variations by the amount prescribed in the statute. The rule proposed a 2021 reduced annual limitation on cost sharing for enrollees with incomes between 100 and 200 percent of the Federal Poverty Level (FPL) of $2,850 for self-only coverage and $5,700 for other than self-only coverage. The proposed required contribution percentage for 2021 would be 8.27392, which represents an increase of approximately 0.04 percentage points from the 2020 parameter.
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