The Centers for Medicare & Medicaid Services (CMS) released the final 2023 Notice of Benefit and Payment Parameters (NBPP), the annual rule outlining key policies for the individual and group health insurance markets for plan year 2023 and beyond. This year’s notice is the first to be entirely proposed under the Biden Administration’s CMS and reflects the priorities and views of the new leadership. The rule finalizes most provisions included in December’s proposed rule. Notably, the rule will:
- Restore standardized benefit plans on the federally facilitated Marketplaces eliminated during the Trump Administration and require issuers offering a nonstandardized product to also offer a standardized option. These plans are intended to reduce consumer confusion and allow apples-to-apples comparison of plan options. The standardized plans have only copays (instead of coinsurance) for prescription drugs, although deductibles apply in bronze and silver plans.
- Implement stricter network adequacy standards in health plan provider networks, relying on time-and-distance standards and an increased number of essential community providers, and resuming the federal government’s role in reviewing network adequacy in federally facilitated Marketplaces.
- Revise medical loss ratio (MLR) regulations to somewhat restrict the costs that can be reported as incurred claims or quality improvement activities (QIA).
- Require that in order to meet nondiscrimination standards, individual market or small group health insurance benefit designs must be “clinically based” (starting in 2023 or at plan renewal, rather than 60 days after the rule is finalized, as originally proposed). CMS did not finalize the proposal to also require that issuers be able to point to peer-reviewed clinical evidence to demonstrate that their benefit designs are not discriminatory.
Absent from the rule is CMS’ proposal to restore protections against discrimination on the basis of sexual orientation or gender identity. CMS instead says that forthcoming rulemaking under Section 1557 of the Affordable Care Act (ACA) will address the issue.
Select Policies in the Final 2023 NBPP
Standardized Plans. CMS finalized its proposal to reintroduce standardized plan designs in federally facilitated Marketplaces. The federal rules will not apply to state-based Marketplaces, ten of which already offer such plans.
Standardized plans are uniform plan designs offered with the same cost-sharing parameters from issuer to issuer, making plan choice and comparison simpler for enrollees. In the 2017 and 2018 payment notices, CMS defined standardized plan parameters and gave them certain display and filtering advantages in online searches, but issuers were not required to offer them. The Trump Administration discontinued this approach in the 2019 payment notice, but that decision was subsequently struck down in a federal lawsuit. In 2021, CMS indicated that it did not have sufficient time to restore standardized plans for 2022, leaving the issue for this year’s payment notice.
For 2023, CMS is reinstating standardized plans on a mandatory basis. The rule requires qualified health plan (QHP) issuers to offer standardized plans for every product type, metal level, and service area where the insurer offers nonstandardized products.
Network Adequacy. CMS finalized, with few changes, the proposed requirements for the review of QHP networks, reversing a policy of more deference to state regulators during the Trump Administration. The rules do not apply to state-based Marketplaces.
Beginning in plan year 2023, the federal government will resume a more active role in the review of networks for federally facilitated Marketplaces and in determining the standard under which plans are reviewed. The 2019 payment notice deferred to states “provided the State has a sufficient network adequacy review process.” Under the 2023 rule, CMS will resume review of QHP networks in all federally facilitated Marketplace states, except where the state performs plan management functions, and the state applies and enforces quantitative network adequacy standards that are at least as stringent as the federal standard.
In plan year 2023, CMS will evaluate networks using quantitative standards, outlined in the Final Letter to Issuers, that measure time and distance to providers on a county-by-county basis, similar to the metrics used in Medicare Advantage.
Two network adequacy provisions were not finalized as proposed. First, CMS removed the requirement that network adequacy be measured by the providers in the network tier with the lowest cost sharing. And second, the rule finalized the review of appointment wait times but delayed its implementation until plan year 2024.
Medical Loss Ratio. CMS finalized amendments to the MLR regulations to clarify reporting of incurred claims and expenditures for QIA. The MLR rules require issuers of group or individual health insurance coverage to spend a minimum percentage of premium revenue on incurred claims or QIA, or rebate the difference to policyholders. In this rule, CMS amends the regulatory definition of incurred claims to clarify that incentive or bonus payments to health care providers count as incurred claims only if they are “tied to clearly defined, objectively measurable, and well-documented clinical or quality improvement standards that apply to providers.” CMS also clarifies that “indirect” costs are excluded from QIA, including plan overhead that might have been attributed to QIA.
Discriminatory Benefit Designs. CMS is adopting a more comprehensive standard for nondiscrimination in benefit designs for individual market and small-group health insurance coverage, including QHPs sold on the Marketplaces. Prior regulation prohibits these plans from using a benefit design that discriminates based on “an individual’s age, expected length of life, present or predicted disability, degree of medical dependency, quality of life, or other health conditions.” The final rule specifies that in order to meet this standard, a benefit design must be “clinically based,” but CMS did not finalize as proposed the standard for benefit designs to incorporate “evidence-based guidelines into coverage and programmatic decisions,” including “current and relevant peer-reviewed medical journal article(s), practice guidelines, recommendations from reputable governing bodies, or similar sources.”
Health Equity. CMS finalized its proposal to require plans to collect and submit additional information for risk adjustment purposes, including race, ethnicity, ZIP code, and subsidy information. Issuers will be required to report this information using available data sources in 2023 and 2024; in 2025, issuers will be required to make a good faith effort to collect and populate this data if not already collected. CMS also finalized its proposal to require QHP issuers to address health and health care disparities as a specific topic area within their required quality improvement strategies, beginning in 2023.
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