The Biden administration finalized a rule making it easier for regulators to punish insurance agents and brokers for violating rules when selling Affordable Care Act (ACA) plans. The rule expands the CMS’ ability to immediately suspend a broker from the marketplace if they pose a risk to eligibility determinations, operations or enrollees. It also updates consent forms to ensure applications for plans are accurate and to prevent unauthorized changes to ACA coverage. The rule also notifies consumers who have failed to reconcile government subsidies for ACA plans in annual income tax filings that they’re at risk of losing the financial assistance, and makes it harder for insurers to disenroll consumers who struggle to pay premiums.
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The annual Notice of Benefit and Payment Parameters (NBPP) rule updates the ACA and health insurer standards, as well as risk adjustment payment methodologies. In this rule, the Biden administration finalized many changes. For example, under current regulations, CMS holds the authority to address agency-level misconduct or noncompliance through compliance reviews of and enforcement action against agents or web-brokers that assist with enrollment through the Exchange. To this end, CMS proposed, and is subsequently finalizing, a provision to utilize this authority to hold an insurance agency’s “lead agent(s)” accountable for any misconduct or noncompliance violations of Exchange standards and requirements.
The agency is also finalizing its proposal to amend regulations to expand HHS’ existing authority to suspend an agent’s or broker’s ability to transact information with the Exchange. As finalized, HHS’ suspension authority would be expanded to permit immediate system suspensions when circumstances are identified that pose “unacceptable risk” to the accuracy of Exchange eligibility determinations, operations, applicants, enrollees, or Exchange information technology systems.
The 2024 payment notice established a requirement for agents, brokers, and web-brokers to document that consumers have confirmed the accuracy of their eligibility application information before submission. To support this, CMS also introduced a Model Consent Form that can be used as is or as a template for these entities to create their own consent documentation. In response to requests for a more comprehensive resource, CMS proposed, and is finalizing, updates to the Model Consent Form that would: (1) include a standardized form to document eligibility review and confirmation; and (2) create appendices with scripts that entities can use when fulfilling these requirements through audio recordings.
HHS imposed a requirement in the 2024 payment notice that Exchanges may only determine an enrollee ineligible for advanced premium tax credits (APTC) after they have failed to file their federal income tax return and reconcile their APTC for two consecutive years. The 2025 payment notice subsequently required Exchanges to issue a notice to the tax filer after the first year of failure to file and reconcile. HHS is now finalizing its proposal for benefit year 2026 to revise the previous regulation and require Exchanges to notify both the enrollee or their tax filers who have not filed their federal income tax return and reconciled their APTC for two consecutive years that they are at risk of losing APTC.
Furthermore, regarding risk adjustment, the permanent risk adjustment program is subject to FY 2025 sequestration. Under this methodology, FY 2025 funds sequestered at a rate of 5.7 percent will become available to pay issuers in FY 2026. Following stakeholder feedback, CMS is finalizing, as proposed, to recalibrate the 2026 benefit year risk adjustment models using a combination of the 2020, 2021, and 2022 benefit years’ enrollee-level External Data Gathering Environment (EDGE) data. The agency is additionally finalizing its proposal to begin gradually phasing out the Hepatitis C market pricing adjustment to the plan liability beginning with the 2026 benefit year, as well as its proposal to include pre-exposure prophylaxis (PrEP) as a separate, new type of factor called an Affiliated Cost Factor (ACF) within HHS risk adjustments.
CMS is finalizing, with modifications, to maintain the risk adjustment user fee at $0.20 per member per month (PMPM) for the 2026 benefit year, a $.02 increase from the proposal. This fee is paid by states to HHS when they either cannot or choose not to operate their own risk adjustment program. For the 2026 benefit year, HHS will operate a risk adjustment program in all states and the District of Columbia, with a total projected cost of approximately $65 million — roughly the same as the amount estimated for benefit year 2025.
Additionally, to ensure issuers are providing accurate and high-quality information, HHS conducts risk adjustment data validation (HHS-RADV) consisting of an initial validation audit (IVA) and a second validation audit (SVA) as part of its risk adjustment program. Following public comment and in efforts to enhance the accuracy of the HHS-RADV results, CMS is finalizing multiple changes to the IVA sampling methodology, including: (1) excluding enrollees without hierarchical condition categories (HCC); (2) removing the finite population correction (FPC); and (3) using HHS-RADV data as the source of the Neyman allocation data rather than Medicare Advantage RADV (MA-RADV) data, starting in benefit year 2025. The agency is also finalizing the proposal to increase the SVA subsample size to 24 enrollees and modify the current methodology from a paired sample t-test to a bootstrapping methodology, beginning with the 2024 benefit year HHS-RADV.