CMS Proposes Risk Adjustment Changes, Tackles Broker Fraud
The Centers for Medicare & Medicaid Services (CMS) has unveiled a proposed rule for the 2026 plan year that introduces significant updates to the federal risk adjustment program and outlines measures to curb broker fraud in the Affordable Care Act (ACA) marketplace. Released on October 4, 2024, this rule aims to protect beneficiaries, ensure transparency, and improve the effectiveness of health insurance operations.
CMS Proposed Rule for 2026 Plan Year
The newly proposed Notice of Benefit and Payment Parameters for 2026 brings forth a set of changes focused on improving accountability among insurance brokers and revising the risk adjustment program to better reflect healthcare needs and costs.
Broker Fraud Crackdown
One of the key proposals focuses on cracking down on fraudulent practices by insurance brokers. According to the CMS, agents and brokers engaging in inappropriate or fraudulent behavior, such as enrolling individuals in ACA plans without their consent, could face severe penalties, including suspension from the marketplace. The CMS aims to expand its authority to suspend brokers or agents that present a risk to the accuracy of eligibility determinations or the marketplace’s overall functioning.
This move responds to growing pressure from legislators urging CMS to take stronger action against brokers who exploit the system for personal gain. The agency had already implemented guidelines in July to address these concerns, but the proposed rule strengthens enforcement mechanisms to ensure transparency and accountability.
Modifications to Risk Adjustment Program
In addition to addressing broker fraud, the CMS also proposed updates to the risk adjustment program. The changes include using updated data from 2020, 2021, and 2022 to recalibrate the risk adjustment model. One of the key modifications involves adjustments to how Hepatitis C drugs are factored into plan liability, with the CMS beginning to phase out market pricing adjustments for these drugs starting in the 2026 benefit year. This change aims to make the treatment of Hepatitis C drugs consistent with other specialty drugs.
Another notable addition to the risk adjustment model is the inclusion of pre-exposure prophylaxis (PrEP) services in both adult and child models. This move could potentially prevent health plans from restricting coverage of this important HIV prevention medication.
Changes to Hepatitis C Drug Coverage and PrEP
Starting with the 2026 plan year, the CMS plans to model costs associated with Hepatitis C drugs similarly to other specialty drugs, which may prevent health plans from overburdening enrollees with high out-of-pocket costs. Additionally, the inclusion of PrEP services as a factor in risk adjustment models could incentivize health plans to improve access to this essential preventive treatment for HIV.
Criticism and Advocacy Response
While the CMS’s proposed rule addresses several key areas, it has faced criticism from advocacy groups such as the HIV+Hepatitis Policy Institute. According to Carl Schmid, executive director of the institute, the rule falls short of ensuring that patients benefit from copay assistance. Pharmacy benefit managers (PBMs) can still profit from copay assistance programs without having to count these funds toward a patient’s cost-sharing requirements. Schmid expressed disappointment that the proposed rule does not close this loophole, especially given the administration’s emphasis on lowering prescription drug costs.
Silver Loading Concerns and Potential Codification
Another area of concern is silver loading, where insurers raise premiums for silver-tier plans to compensate for potential losses. Silver plans typically have moderate premiums and out-of-pocket costs, making them a popular choice for consumers. The CMS is considering whether to allow certain silver loading practices or introduce regulatory limits on premium hikes. The agency notes that enrollees receiving premium tax credits are often shielded from these increases, but there are still concerns about how the practice impacts overall marketplace dynamics.
Health Equity and Premium Payment Thresholds
In an effort to promote health equity, the CMS has proposed changes to how premium payments are handled, particularly for enrollees with financial constraints. Under the new rule, health plans could adopt a fixed-dollar or percentage-based premium payment threshold, which would allow consumers to maintain coverage even if they fall slightly short of paying their full premium.
Fixed-Dollar Threshold
Under the fixed-dollar threshold, consumers who have paid their first premium but owe $5 or less after applying tax credits would be protected from losing coverage. This provision ensures that small outstanding balances do not result in loss of insurance.
Percentage-Based Thresholds
The CMS is also considering two percentage-based thresholds. The first is the net premium threshold, which would allow consumers to maintain coverage if they pay at least 95% of their net premium after tax credits. The second is the gross premium threshold, which protects enrollees who pay at least 99% of their total premium, as determined by the insurer.
Both thresholds aim to reduce the burden on consumers and minimize the risk of coverage loss due to minimal outstanding balances.
Adjustments to Medical Loss Ratio and Community Provider Networks
The proposed rule also allows certain health plans to adjust how they calculate their medical loss ratio (MLR). This adjustment could be particularly beneficial for insurers serving underserved communities with chronic health conditions, enabling them to better allocate resources toward essential health services.
Furthermore, CMS plans to review whether qualified health plans include an adequate number of essential community providers in their networks. This review ensures that vulnerable populations have access to necessary healthcare services.
Federally Facilitated Marketplace and User Fees
For the federally facilitated marketplace (FFM) and state-based marketplaces on the federal platform (SBM-FP), user fees will increase to 2.5% and 2% of monthly premiums, respectively. However, if ACA subsidies are extended beyond 2025, these rates could be reduced to between 1.8% and 2.2% for FFM fees and 1.4% and 1.8% for SBM-FP fees.
Conclusion
The CMS’s proposed rule for the 2026 plan year introduces vital changes aimed at enhancing transparency, improving risk adjustment calculations, and ensuring health equity in premium payment structures. As the public comment period extends through November 12, 2024, stakeholders will have the opportunity to voice their concerns and shape the final rule.
Discover the latest GovHealth news updates with a single click. Follow DistilINFO GovHealth and stay ahead with updates. Join our community today!
FAQs
1. What is the CMS’s proposed rule for 2026 about?
A. The CMS’s proposed rule focuses on preventing broker fraud, updating the risk adjustment program, and promoting health equity through new premium payment thresholds.
2. How will Hepatitis C drug coverage change?
A. Starting in 2026, the CMS will phase out market pricing adjustments for Hepatitis C drugs, aligning their cost modeling with other specialty medications.
3. What is silver loading?
A. Silver loading refers to the practice of insurers raising premiums for silver-tier plans to offset potential losses, which may be addressed in the proposed rule.
