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May 18, 2020

The Department of Health and Human Services issued its final rule on 2021 benefit and payment parameters under the Affordable Care Act (“ACA”) late last week. The final rule makes primarily technical changes to the framework outlined in the proposed rule.

Most of the changes made to the proposed framework generally result from efforts to extend effective dates, implementation deadlines, and filing timeframes to give insurers and the exchanges additional time to ensure compliance in the wake of the COVID-19 pandemic. In light of this pandemic-related uncertainty, HHS also published guidance extending the rate submission deadlines for insurers in certain circumstances.

While the final rule does not directly address many of The Council’s core interests related to the ACA, it does touch some of the more tangential topics and policy issues that we have been following. Specifically, the final rule:

  • Despite concerns raised by commenters on the establishment of an annual reporting obligation on essential health benefits (“EHB”) and the associated defrayal requirement, beginning July 1, 2021, requires states to submit annual reports to HHS identifying (1) the benefits mandated by state law that are not in addition to EHB (i.e., do not require defrayal), and (2) those that exceed EHB (i.e., do require defrayal);
  • Sets a May 7, 2021 submission deadline for states seeking to implement changes to their EHB benchmark plans or select a new benchmark plan;
  • Provides that insurers are permitted—but not required—to count coupons and other forms of direct support offered by drug manufacturers towards a consumer’s maximum out-of-pocket limit, regardless of whether the coupon is for a brand-name or generic drug;
  • Implements a series of changes to the medical loss ratio (“MLR”) standards (e.g., clarifies insurer reporting requirements for expenses spent on functions outsourced to/services provided by third-party entities, requires insurers to deduct prescription drug rebates and other drug-related price concessions—whether received by the insurer directly or by a pharmacy benefit manager or similar entity—from incurred claims; requires that such rebates and concessions be reported as a non-claims cost; and allows insurers in the individual market to include the cost of certain wellness incentives as a quality improvement activity in their MLR calculation); and
  • Establishes notice requirements for excepted benefit health reimbursement arrangements offered by non-federal governmental plan sponsors for plan years beginning on or after January 11, 2021.
  • The final rule includes other ACA- and exchange-related topics, which may be of more general interest to Council members, including:

    –  Not modifying the automatic reenrollment process for individuals who qualify for $0 premium plans as a result of advanced premium tax credits (“APTC”)

    –  Not changing the agency’s interpretation of “cost-sharing” to exclude expenditures from drug manufacturer coupons;

    –  Fully deleting the regulations associated with the Early Retiree Reinsurance Program;

    –  Recalibrating the risk adjustment models for the 2021 plan year; and

    –  Revising the premium adjust percentage to approximately 1.35%; adjusting the maximum out-of-pocket limit on cost sharing for self-only coverage to $8,550 (and $17,100 for other than self-only coverage); and setting the required contribution percentage at 8.27% for the 2021 plan year.

The final rule can be found here.