By Sabrina Corlette
The Affordable Care Act (ACA) Marketplaces just experienced another record-breaking enrollment season, with over 21 million people selecting a Marketplace health plan for 2024. The Centers for Medicare & Medicaid Services (CMS) is rightly celebrating that accomplishment while working to build on the progress and improve the consumer experience. In November, CMS and the Treasury Department proposed a new set of standards and requirements for the Marketplaces and health insurers for plan year 2025 through the annual “Notice of Benefit & Payment Parameters” (NBPP). The final rule is expected soon.
The proposed 2025 NBPP received over 200 stakeholder comments during the public comment period. CHIR reviewed a sample of comments from three major stakeholder groups to better understand the potential impact of the proposed rules. This first blog in our three-part series summarizes comments from health insurance companies, their representative associations, and brokers. The next two blog posts will summarize comments from consumer advocacy groups and state departments of insurance and state-based Marketplaces (SBM). For this post, we reviewed comments submitted by:
CVS Health (formerly Aetna)
The proposed 2025 NBPP covers a wide range of issues (a detailed summary of its provisions, in two parts, is available on Health Affairs Forefront here and here). This summary of insurance company and broker feedback focuses on selected CMS proposals: (1) The process and standards for states to transition and maintain an SBM; (2) updates to the essential health benefit (EHB) standards*; (3) special enrollment periods (SEP) for low-income individuals; (4) policies for individuals who fail to reconcile their premium tax credits at tax time; and (5) limits on non-standardized health plans.
New SBM Processes and Standards
By 2026, 20 states and the District of Columbia are expected to operate their own SBM, with Georgia and Illinois soon joining the current 19. Additional states, such as Michigan and Arizona, are considering legislation to run their own SBMs. In this proposed rule, CMS would set new expectations for states undertaking this transition, and new national-level standards for Marketplace plans and operations.
Process for becoming an SBM
In general, the insurers and brokers that commented on proposed process changes, such as the requirement that transitioning states first spend a year as an SBM on the federal platform, were supportive. BCBSA and Cigna observed that such a staged transition would give states adequate time to implement necessary infrastructure changes. HealthSherpa urged CMS to require that transitioning states document how they would make up for enrollment losses, if they decline to use the Enhanced Direct Enrollment (EDE) functionality that now drives much of HealthCare.gov’s enrollment.
Health insurance companies were less welcoming of proposals to raise the bar for Marketplace plans by extending the federal Marketplace’s network adequacy standards to insurers participating in SBMs. Of the comments reviewed, only Cigna expressed any support for establishing a national floor for network adequacy across Marketplace platforms. The company applauded the effort to have “more consistent and uniform requirements” for multi-state issuers. However, Cigna requested that CMS provide an additional year to implement the policy by postponing the effective date to January 1, 2026.
The other insurers and associations in our sample strongly opposed extending federal time and distance standards, arguing that state insurance regulators are best positioned to set those standards. “States have specialized knowledge of local geography, care patterns, and market dynamics,” AHIP commented. The trade association further observed that many states apply their network adequacy standards to the entire commercial market, and having a separate set of federal standards for Marketplace plans would “bifurcate” the market and create administrative headaches. BCBSA had similar concerns, noting that a “one-size-fits-all” approach would lessen insurers’ ability to “differentiate” their networks, making it more difficult to offer a lower cost option for consumers.
Health insurers similarly opposed the idea of extending plans with standardized benefit designs to SBMs. Here again, insurers argued that states are “in the best position” to determine whether standardized plans are appropriate for their residents (AHIP). BCBSA further urged that SBMs be allowed to establish “innovative” policies that meet the needs of their markets.
Web brokers and Direct Enrollment/Enhanced Direct Enrollment Entities
Noting that there is “increased interest” among SBMs in the use of web brokers or direct enrollment (DE)/EDE entities to assist with eligibility and enrollment functions, CMS would extend federal Marketplace standards for these entities to all Marketplaces. Health insurers and brokers were largely supportive of these proposed changes, with a few exceptions.
ACAP applauded the proposal, noting that web-brokers are often headquartered outside of the states in which they are assisting consumers, suggesting a need for a nationwide set of protections. “Standardization is a strong tool to prevent abuses,” the association noted. ACAP also asked CMS to do more to reduce consumer confusion with DE/EDE entities that market non-Marketplace products, such as short-term limited duration insurance.
Conversely, BCBSA objected to the proposal, urging instead stronger CMS oversight of agents and brokers. BCBSA pointed out that, for the plan year 2023 open enrollment period, the federal Marketplace had “large increases in unauthorized enrollments.” BCBSA observed that in many cases those fraudulent enrollments, often executed without a consumer’s knowledge or consent, were driven by web brokers who were out-of-state.
HealthSherpa and eHealth both generally supported the web broker and DE/EDE proposals. eHealth noted that uniform standards for web brokers and DE entities help “ensure a level playing field and oversight to ensure enrollees are treated equally.” They also suggested that consistent standards would give consumers more confidence in these entities as trusted sources of eligibility and enrollment help. HealthSherpa also supported new requirements that would help prevent consumers from inadvertently enrolling in non-Marketplace plans.
HealthSherpa and eHealth further observed that web brokers and DE/EDE entities now drive much of HealthCare.gov enrollment. In 2022, these channels accounted for 57 percent of enrollment, and likely contributed to the significant gains of the 2024 enrollment season. To better illuminate this impact, eHealth urged CMS to publicly release plan selection and enrollment data for EDE and DE channels on a more regular basis.
Updates to Essential Health Benefit (EHB) Standards
The ACA requires states to bear the costs of any state benefit mandates that are enacted after December 31, 2011 that are in addition to the EHB. At the same time, states can select a new or revised EHB-benchmark plan without facing an obligation to defray the cost of additional benefits so long as the plan meets certain standards. CMS has received feedback from states that they have struggled to operationalize the “defrayal” policy, and that some state efforts to mandate certain benefits could unintentionally be removing EHB protections from benefits already included in the state’s EHB-benchmark plan. States have also expressed concern about the standards under which they are able to change their EHB-benchmark plan. Rules promulgated for 2019 require states to meet two scope of benefit standards:
- The typicality standard. The plan must provide benefits equal to those provided under a typical employer plan.
- The generosity standard. The plan must provide benefits that do not exceed the generosity of the most generous plan among a set of comparison plans.
In this draft rule, CMS proposed adjustments to the EHB defrayal policy and the standards adopted in 2019 that govern updates to the EHB-benchmark plan. In addition, the agency proposed changes to how prescription drugs are covered in the EHB.*
Defrayal and EHB update changes
Health insurer comments in our sample unanimously opposed the proposal to allow state benefit mandates that, if already covered by the EHB benchmark plan, would not trigger a defrayal obligation. They also recommended against finalizing the proposal to eliminate the generosity test when assessing states’ proposed changes to their EHB benchmark plans. Insurers argued that both changes would result in premium increases. AHIP and BCBSA also decried the proposals as regulatory overreach inconsistent with the text of the ACA’s defrayal provision; AHIP argued that the changes would render the ACA’s “cost defrayal obligation a nullity,” while BCBSA asserted that they were “inconsistent with [c]ongressional intent.” CVS Health also flagged that the proposals would create “significant financial costs with no guardrails,” and an “unprecedented level of annual volatility in EHBs.” The company lamented the impact on employers in particular, asserting that they will be faced with the difficult choice to pay higher costs or remove some benefit offerings.
Prescription drugs in excess of EHB
CMS has proposed that if a plan covers prescription drugs in excess of those covered by a state’s EHB benchmark plan, they would be considered EHB. This would require health plans and insurers to count the cost of those drugs towards enrollees’ annual maximum out-of-pocket costs and the ACA’s ban on annual and lifetime dollar limits on benefits. The health insurers in our sample generally opposed this proposal in their comments. BCBSA urged CMS to further study the impact of such a policy, noting that many third-party administrators for employer-based plans use “copay maximizer programs” to capture patient assistance dollars provided by drug manufacturers. BCBSA notes that under such programs, enrollees can access drugs outside of EHB, often without cost-sharing. If CMS’ proposal is finalized, health plans would need to expand the number of drugs that are considered EHB, making them ineligible for a copay maximizer program.
Determining what drugs to cover: proposed change in U.S. Pharmacopeia systems
To meet EHB standards, insurers must cover at least the same number of drugs in every category and class as defined under the United States Pharmacopeia (USP) Medicare Model Guidelines (MMG), or one drug in every category and class—whichever is greater. CMS has received stakeholder feedback that the USP MMG has gaps in coverage, particularly for obesity, infertility, and sexual disorders, and is updated infrequently. Therefore, in this proposed rule the agency sought comments on whether to replace the USP MMG with the USP Drug Classification system (DC) to classify the prescription drugs required to be covered as EHB.
Health insurers generally opposed switching to the USP DC system. Comments noted that the more granular USP DC system would require insurers to cover drugs with, according to AHIP, “weak or poor evidence” of clinical benefit. Cigna supported switching to a new classification system, but the insurer argued that the USP DC could require coverage of infertility drugs, sexual dysfunction drugs, and weight loss drugs that currently fall outside the EHB. Should CMS move forward with this proposal, Cigna urged the agency to carve out these categories as “non-EHB.”
CMS also sought comments on the coverage of anti-obesity drugs, particularly the new GLP-1 class of medications. The health insurance companies in our sample were uniformly opposed to requirements to cover GLP-1s. ACAP argued that the financial costs of covering those drugs would “disproportionately disadvantage” small, local plans that serve areas with a high incidence of obesity. BCBSA suggested that mandates to cover these drugs should not go into effect without more evidence of their long-term clinical effectiveness and medical necessity.
Consumer representation on P&T Committees
CMS has proposed to require, beginning in plan year 2026, that insurers’ Pharmacy & Therapeutics (P&T) Committees include at least one consumer representative. Health insurers unanimously expressed reservations about this proposal, citing two primary concerns: (1) consumer representatives would lack the required clinical and technical expertise required to meaningfully participate on a P&T Committee, and (2) many so-called “consumer representatives” are in fact financially supported by the pharmaceutical industry. If the proposal moves forward, insurers argued that “robust conflict of interest protections” and clinical expertise should be required.
SEPs for Low-Income Individuals
The 2022 NBPP created a monthly special enrollment opportunity for individuals at or below 150 percent of the federal poverty level (or $21,870 in annual income for a single individual in 2023), but only if the consumer can enroll with a 0 percent premium contribution after premium subsidies. In effect, this SEP is only available because of temporarily enhanced premium tax credits authorized under the Inflation Reduction Act (IRA). With those subsidies slated to expire at the end of 2025, CMS is proposing to make this low-income SEP permanent by lifting the requirement that enrollees have a 0 percent premium contribution.
Health insurers in our sample opposed this policy, arguing that making the low-income SEP permanent would result in, as ACAP put it, “changed behavior” that would prompt adverse selection and increased premiums. AHIP predicted that this SEP, if finalized would result in “constant enrollments and disenrollments,” and Cigna argued that this volatility, combined with “the inadequacies of risk adjustment,” would deteriorate the risk pool and destabilize the Marketplaces.
Failure to Reconcile Advance Premium Tax Credits (APTCs)
CMS has proposed to require that Marketplaces give enrollees advance notice if they are at risk of losing premium tax credit eligibility because they failed to file and reconcile those tax credits on their tax return. Marketplaces would have to notify enrollees of this risk after one year of failing to reconcile premium tax credits (a year in advance of losing those premium tax credits). The insurers in our sample were largely supportive of this proposal. BCBSA, for example, observed that consumers are more likely to stay enrolled if they are notified before they lose premium tax credits, rather than after the fact, because they still have an opportunity to update their eligibility and retain financial assistance.
Limits on Non-Standardized Plans
Currently, Marketplace insurers on the HealthCare.gov platform can offer only four non-standardized plan options per service area in each of the following categories:
- Product network type;
- Metal level (excluding catastrophic plans); and
- Inclusion of dental and/or vision coverage.
This four-plan limit will drop to two for each category for plan year 2025 and beyond. In the proposed 2025 NBPP, CMS would offer an exceptions process to allow additional non-standardized plan options for plans with lower cost-sharing for services that treat chronic or high cost conditions.
Health insurers urged CMS to not move forward with the two-plan limit in 2025, arguing that doing so would be disruptive to enrollees and stifle innovation. AHIP also asked CMS to delay the two-plan limit until they could evaluate and publish data on the impact of the current four-plan limit, including data on how many consumers enrolled or re-enrolled in standardized plan options, how many consumers were required to switch to a new plan, consumer satisfaction scores, and agent and broker feedback on the plan limits. Oscar similarly expressed concern about the impact of the two-plan limit, arguing that “crosswalking”—the process of enrolling a consumer in a new plan when their old one is discontinued—is disruptive to members. The company argued that consumers need variety in plan choice to account for different health needs and demographic factors.
The carriers generally appreciated the proposed exceptions process but found it too narrow. For example, while ACAP agreed with CMS concerns about the risk of “choice paralysis” for consumers confronted with too many plans, they urged CMS to broaden the criteria under which carriers could request an exception. Several of the insurers in our sample suggested exceptions for plans based on factors such as different provider networks or formularies, HSA eligibility, reduced cost-sharing for telehealth, or virtual primary care.
*Stakeholder comments on another CMS proposal to ease states’ ability to add adult dental services to the EHB benchmark plan, will be discussed in a separate, forthcoming blog post.
A Note on Our Methodology
This blog is intended to provide a summary of comments submitted by insurance companies, representative associations, and brokers. This is not intended to be a comprehensive review of all comments on every provision in the proposed 2025 NBPP, nor does it capture every component of the reviewed comments. To view more stakeholder comments, please visit https://www.regulations.gov/.