Each fall the Centers for Medicare and Medicaid Services (CMS) publishes a rule — called the Notice of Benefit and Payment Parameters (NBPP) — that governs the individual and small-group health insurance markets and the Affordable Care Act (ACA) health insurance marketplaces. On December 12, CMS published a proposed NBPP for 2024 with a fact sheet.
The ACA’s health insurance markets have been in place for a decade and are functioning well. As of January 11, almost 16 million people had signed up for 2023 coverage, a 13 percent increase over 2022. Most of the changes in the 2024 proposed rule are tweaks to keep the system running smoothly rather than radical innovations. Despite this, the proposal runs to 117 federal register pages. This post covers some of the proposed changes most important for health insurance consumers.
Simplifying Consumer Choice
The biggest changes proposed for 2024 aim to simplify consumer choice and improve the plan selection process in the ACA marketplaces, including the way in which standardized plans are displayed to make them readily identifiable on the marketplace website. The 2023 NBPP required insurers that offer qualified health plans through the federal marketplaces to offer standardized plans that conform to a model established by CMS for each product type (e.g., HMOs) in each metal tier and every service area in which they offer nonstandardized options. The 2024 NBPP will continue this requirement, but additionally require standardized plans to have four drug tiers and include all generic drugs in a generic drug tier and all brand-name drugs in a brand-drug tier, better aligning drug coverage with the reasonable expectations of consumers.
The NBPP’s most significant proposed change deals with nonstandardized plans. Insurers are currently not restricted in the number of plans they can offer on the marketplaces, leading to a proliferation of plans with only tiny differences. The average number of plans available to marketplace consumers has increased from about 26 in 2019 to 114 in 2023, leading to consumer confusion. CMS proposes two solutions. The first would limit insurers to offering two nonstandardized plans on federal marketplaces in each network category and metal tier in a service area, cutting the average number of nonstandardized plans available from more than 100 to about three dozen. An alternative approach would require nonstandardized plans offered by insurers to be “meaningfully different” than other plans offered by the insurer. Specifically, they would need to have deductibles that differ by at least $1,000 from other similar nonstandardized plan alternatives offered by the same insurer.
Another significant proposal would allow marketplaces to change the hierarchy they use for assigning enrollees to plans during reenrollment, which may happen if consumers don’t actively choose a plan during reenrollment. Enrollees financially eligible for cost-sharing reduction would be assigned to silver plans that have cost-sharing reductions available (if such a reassignment does not increase their premiums) rather than being reenrolled in bronze plans, for which reduced cost sharing reductions are not available. Enrollees who are reassigned, as well as enrollees whose prior-year plans are no longer available, would be reassigned to the plan with the most similar network to their prior plan.
Some proposed changes are directed at easing the transition from Medicaid and the Children’s Health Insurance Program (CHIP) to marketplace coverage. This will be particularly important when the current public health emergency ends that requires states to provide continuous Medicaid enrollment. At that point, states will restart eligibility redeterminations, leaving millions without Medicaid coverage. The NBPP would permit a special-enrollment period for those losing coverage that would allow them to select marketplace coverage up to 60 days before and 90 days after loss of Medicaid and CHIP coverage. People who lose Medicaid coverage in the middle of a month will be able to transition to marketplace coverage without a coverage gap.
A couple of proposed changes address current problems in health insurance marketing. Navigators and consumer assisters would be permitted to conduct door-to-door enrollment drives to increase consumer engagement and advance health equity. Agents and brokers will be required by the 2024 regulation to obtain written or recorded oral consent from all individuals they enroll in coverage and also document that an applicant reviewed and confirmed the accuracy of eligibility information submitted in an application, reducing the possibility that people will be enrolled without their consent.
CMS proposes changes in how it verifies income eligibility for premium tax credits to reduce the burden on consumers and improve access and health equity. An individual for whom the IRS has no prior-year tax returns available will be able to self-attest income. Enrollees will not lose tax credits unless they fail to file tax returns accounting for their premium tax credits for two consecutive years.
The proposed rule would enhance marketplace health plan coverage of “essential community providers” that provide care for lower-income and medically underserved consumers. Marketplace health plans would have to cover at least one mental health facility and one substance use disorder treatment facility and more than 35 percent of available federally qualified health centers and family planning providers in their service area.
The proposed rule reduces the amount insurers must pay to market plans on the federally facilitated marketplace from 2.75 percent to 2.5 percent of premiums. Accompanying guidance increases the maximum out-of-pocket limit for individual health insurance coverage for 2024 to $9,460 for an individual (and twice that for a family) for people who do not qualify for cost-sharing reductions.
In sum, although the 2024 NBPP proposed rule does not recommend major changes, it should simplify consumer choice and enrollment in the maturing ACA insurance marketplaces and markets.