2020 Proposed Notice of Benefit and Payment Parameters: Key Takeaways
By: Eric Gascho, Vice President of Policy and Government Affairs
On February 19, the National Health Council (NHC) submitted comments to the Centers for Medicare & Medicaid Services (CMS) on their annual Notice of Benefit and Payment Parameters (NBPP) for the 2020 benefit year.
The rule proposes regulatory and financial parameters applicable to qualified health plans (QHPs); plans in the individual, small group, and large group markets; and self-funded group health plans. These changes effect core provisions of the Affordable Care Act (ACA), including the operation of marketplaces, benefit standards for health plans, and premium stabilization programs.
CMS notes that changes in the rule would further the Administration’s goals of reducing prescription costs, increasing market stability, reducing regulatory burdens, and lowering premiums.
Compared to CMS’ 2019 payment rule, the 2020 draft includes far fewer significant changes. Here are a few highlights:
The NBPP proposes changes to calculation of the premium adjustment percentage used to determine the annual maximum limit on cost-sharing, the required contribution percentage for exemption eligibility, and employer-shared responsibility payments.
Since 2015, CMS has used projections of the average employer-sponsored insurance premium to set the premium adjustment percentage. CMS proposes updating the premium adjustment percentage to capture increases in individual market premiums in addition to increases in employer-sponsored insurance premiums. This modification would result in a faster premium growth rate and place more cost-sharing responsibility onto the consumer.
HHS predicts that this formula change will decrease federal premium tax credit spending by $1 billion in 2022 and will result in a decline of approximately 100,000 marketplace enrollees in 2020.
The NHC is concerned about its potential impact on individuals with chronic diseases and disabilities, due to a worsening of the Patient Protection and Affordable Care Act (PPACA) risk pool as well as an expected out-of-pocket increase of $400 per year. HHS estimates that the proposed change in formula will result in net premium increases of over $180 million per year and a decline of approximately 100,000 marketplace enrollees in 2020.5The NHC urges CMS to withdraw this proposal or counterbalance it with enhanced protections for individuals with chronic diseases and disabilities.
The NBPP requests comments on how HHS could address “silver loading” in future rulemaking.
In 2017, the Trump Administration stopped making cost-sharing reduction (CSR) payments to marketplace plans. Even though funding was eliminated, insurers were still required to provide CSRs to eligible beneficiaries. In order to cover these costs, insurers raised the premium rate. However, this premium rate was only applied to silver-level plan premiums, since the ACA calculates tax credits based on silver plans. This practice of “silver loading” boosted the size of the premium tax credits available to people with incomes below 400% of the federal poverty level. As a result, many people found that they could receive bargain or nearly-free bronze and gold plans due to the larger premium subsidies that resulted from silver loading.
“The Administration supports a legislative solution that would appropriate CSR payments and end silver loading,” the report states. “In the absence of Congressional action, we seek comment on ways in which [Health and Human Services] might address silver loading, for potential action in future rulemaking applicable not sooner than plan year 2021.”
While an inefficient permanent solution, the NHC supports CMS’ decision to continue to permit silver loading for at least 2020. A future ban on silver loading would result in up to seven million non-subsidized enrollees paying more for no additional benefit. We urge CMS to prioritize direct permanent funding of the CSRs within its set of initiatives to reduce health care costs while improving access to affordable care.
The NBPP proposes several strategies to reduce reliance on higher-cost brand medications in favor of lower-cost alternatives.
One strategy allows issuers to make formulary changes during the year when a generic equivalent becomes available. Under this provision, an issuer could remove the brand drug from its formulary or subject it to a different cost-sharing tier.
The NHC fully supports incentive frameworks to encourage appropriate use of generic prescription drugs, as long as there are sufficient protections to ensure that patients have timely and affordable access to branded drugs when substitution is not medically appropriate. We are concerned that the proposal would have a disproportionate impact on more complex patients for whom generic substitution may not be medically appropriate, so we urge CMS to include specific patient protections if this provision moves forward.
The NBPP proposes to exclude any form of direct manufacturer cost-sharing support from calculations towards applicable annual limitations on out-of-pocket costs when it is offered in connection with a specific prescription brand drug that has a generic equivalent.
According to the proposal, the availability of a coupon may cause physicians and beneficiaries to choose an expensive brand-name drug when a less expensive and equally effective generic or alternative is available. In some cases, manufacturer coupons may be increasing overall drug costs and can lead to unnecessary spending by issuers.
The NHC appreciates this targeted approach to limiting the use of manufacturer coupons. In our comments to the HHS Blueprint, we urged the Administration to “consider nuanced and incremental approaches to eliminate inappropriate use of copay discount cards as opposed to broad policies that impact all uses.” We appreciate that this policy is more nuanced than other proposed approaches that more broadly impact use of cost-sharing assistance.
We recommend specific patient safeguards if this proposal moves forward. It is likely that some copay discount cards are inappropriately implemented, while others are not. For example, there is justification for differentiating between manufacturer support that enables access versus incentives that could encourage inappropriate use of higher-cost branded medications when medically-appropriate generic products are available. We highlight that individual patient response to some generics in certain therapeutic classes may differ from branded products and urge additional patient safeguards to further help distinguish between appropriate and inappropriate use of assistance.
Please read our comment letter, which goes into greater detail on these and other provisions of the NBPP.