2023 The Year Standardized Coverage Rules Take The Spotlight

In late April, federal health officials released the final Notice of Benefit and Payment Parameters for 2023, the standards that govern insurance issuers in the federal health insurance marketplace.

A notable change in this year’s rule relates to standardized coverage. The change requires issuers in the Federally-facilitated Marketplace and State based Marketplaces that use the federal platform to offer standardized plan options at every product network type, at every metal level, and throughout every service area they offer non-standardized options in 2023 and beyond.

“These standardized plan options expand the availability of coverage for services before consumers meet their deductibles, which will make it easier to access important services,” according to a statement from the U.S. Department of Health & Human Services (HHS). “They also include simpler cost-sharing structures that will allow consumers to more easily understand their coverage.”

For example, if an issuer offers a non-standardized gold HMO plan in a particular service area, the issuer must also offer a standardized gold HMO throughout that same service area.

The change was spurred in part by a study by federal health officials that found that almost three-quarters of HealthCare.gov consumers have more than 60 plan options to choose from, and the average number of plans is over 100.

“Research suggests too many choices can lead to ‘choice overload,’ making it hard for consumers to find plans that best fit their needs,” the study said.

Risk Adjustment

The Affordable Care Act’s risk adjustment model estimates plan liability for an average enrollee based on risk scores. The risk scores are based on each enrollee's age, sex, and diagnosis, also referred to as hierarchical condition categories (HCCs). The methodology uses separate models for adults, children, and infants to account for cost differences.

The rule finalized two changes for risk adjustment models: incorporating an interacted HCC count model specification for both the adult and child risk adjustment models and using HCC-contingent enrollment duration factors instead of current enrollment duration factors.

For 2023, the user fee in the federally-facilitated marketplace platform was set at 2.75% of the premium; the fee for state-based programs was set at 2.25% of the premium. The risk adjustment user fee will be $0.22 per member per month.

“Beginning with the 2023 plan year, the Centers for Medicare & Medicaid Services (CMS) will make several updates to its risk adjustment models with the goal of increasing the predictive power of the models,” wrote Katie Keith in Health Affairs. “Specifically, it will add interacted HCC count factors, remove severity illness indicators from the adult models, and remove current enrollment duration factors for the adult models.”

The new interacted HCC factors for “severity” or a “transplant,” for instance, will help address the underprediction of plan liability for the costliest enrollees, Keith noted.

HHS did not finalize what would have been the most significant change: the addition of a two-stage weighted approach to the adult and child models to reweight the healthier enrollees more heavily.

Network Adequacy

This year’s notice “helps ensure that patients have access to the right provider, at the right time, in an accessible location.” The rule requires Qualified Health Plans (QHPs) on the federal marketplace to ensure that certain classes of providers are available within the required time and distance parameters.

For example, a QHP will be required to ensure that its provider network includes a primary care provider within ten minutes and five miles for enrollees in a large metro county.

The rule also sets a standard, starting in the 2024 plan year, requiring QHPs on HeathCare.gov to ensure that providers meet minimum appointment wait time standards. For example, QHPs will be required to ensure that routine primary care appointments are available within 15 business days of an enrollee’s request. Agency officials will review additional specialties for time and distance, including emergency medicine, outpatient clinical behavioral health, pediatric primary care, and urgent care. OB/GYN parameters also will be aligned with the parameters for primary care.

Nondiscrimination

The final rule aims to protect consumers from, discriminatory practices related to the coverage of the essential health benefits by refining the CMS nondiscrimination policy. Specifically, a benefit design that limits coverage for an essential health benefit on a basis protected from discrimination under this rule (such as age and health condition) must be clinically based to be considered nondiscriminatory.6

To view the final rule fact sheet from CMS, visit https://www.cms.gov/newsroom/fact-sheets/hhs-notice-benefit-and-payment-parameters-2023-final-rule-fact-sheet.