The Centers for Medicare & Medicaid Services (CMS) published its annual changes to benefit and payment parameters for federal health care marketplaces and state-based exchanges on the federal platform (SBE-FP).
This year, CMS added several proposals governing state-based marketplaces, including network adequacy requirements and provisions that will impact state Medicaid programs. The agency also aims to align open enrollment periods across marketplaces.
Medicaid Provisions
Access to Income Verification Data
Beginning July 1, 2024, CMS will charge states for Federal Data Services Hub income data — now available to them at no cost — to determine state marketplace, Medicaid, and Children’s Health Insurance Program (CHIP) eligibility. The change reflects CMS’ position that states are responsible for eligibility determinations and, in turn, this cost. CMS modified its proposal so that the agency will invoice states monthly for their actual utilization, along with an administrative fee, rather than have states pay an advance annual fee.
The federal government will provide a 75 percent Federal Medical Assistance Percentage (FMAP) match of state expenditures for Medicaid system operations costs for data exchange between state systems and the hub; and the regular CHIP enhanced FMAP for such costs.
States are not required to use the hub and may use other data services. Currently, 34 states use the hub to verify income for Medicaid and CHIP eligibility, and 10 states use it for qualified health plan (QHP) eligibility.
Non-MAGI Disregards
Currently, states use modified adjusted gross income (MAGI) to determine Medicaid eligibility, with exceptions for certain populations, such as those 65 and older or who have blindness or a disability. For non-MAGI populations, states must choose an eligibility methodology less restrictive than that for non-excepted groups and can disregard income and other resources. The agency decided against finalizing a proposal that would have allowed states to further ease eligibility restrictions to expand coverage to subpopulations of non-MAGI groups, such as individuals 65 and older with a diagnosed cognitive impairment. Before granting states more coverage expansion flexibility, CMS will consider guardrails to ensure changes do not permit states to narrow eligibility.
BHP Effective Date
Currently, to set the effective date of a Basic Health Plan (BHP), states may choose to follow the Medicaid process (when the individual becomes eligible) or the marketplace standard (on a future date determined by when enrollment occurs). This rule finalizes a third option: allowing states operating a BHP to elect an effective eligibility date for all enrollees on the first day of the month following that in which BHP eligibility is determined.
State Marketplaces and SBE-FP
CMS added several requirements for state marketplaces and SBE-FP, including requirements for switching to a state-based marketplace, network adequacy standards, essential health benefits (EHB), and state web-brokers.
State-Based Marketplace
CMS will require a state to operate an SBE-FP for at least one plan year before operating a state marketplace. CMS argues this will allow states to invest time and resources to engage partners and develop consumer-facing content and outreach strategies.
Network Adequacy for State Marketplaces and SBE-FP
For plan year 2025 and future years, CMS will require state marketplaces and SBE-FP to establish network adequacy standards. These marketplaces must impose quantitative time and distance network standards that are at least as stringent as federal marketplace time and distance standards for QHPs. State marketplaces and SBE-FP will have to include all the same specialties on the federal specialty provider list and time and distance parameters at least as short as federal parameters.
For plan years beginning on or after Jan. 1, 2026, CMS will require that state marketplaces and SBE-FPs conduct quantitative network adequacy reviews, consistent with those for the federal marketplace, before QHP certification. State marketplaces and SBE-FP will be prohibited from accepting an issuer’s attestation as the only means for plan compliance. For issuers that cannot meet the standards, state marketplaces and SBE-FP will be required to provide a justification process after initial data submission to account for provider shortages, topographic barriers, or other variances.
Also, for plans beginning on or after Jan. 1, 2026, CMS will require state marketplaces and SBE-FP to require all issuers seeking QHP certification to submit information regarding telehealth service offerings. This data is intended to inform future development of telehealth standards.
EHB
CMS codified that “a covered benefit in the state’s EHB-benchmark plan” is considered an essential health benefit. Current policy considers a benefit mandated after Dec. 31, 2011, other than for compliance with federal requirements, as being in addition to EHB, without regard to whether the mandated benefit is in the state’s EHB-benchmark plan. States must currently defray the costs of additional EHB.
CMS aims to reduce burden on states wishing to change EHB-benchmark plans, beginning in plan year 2026. First, CMS will consolidate functionally identical choices in the process states use to select a new EHB-benchmark plan. Second, CMS will require a state’s new EHB-benchmark plan to provide a scope of benefits equal to that of a typical employer plan in the state, generally meaning the EHB-benchmark plan will be more generous than the least generous employer plan and less generous than the most generous employer plan in the state. Third, CMS will require states to submit a formulary drug list as part of the documentation to change EHB-benchmark plans only if the state is seeking to change its prescription drug EHB.
Web-Brokers
CMS will apply its existing standards for web-brokers assisting consumers and applicants on the federal platform and SBE-FP to those assisting consumers on state marketplaces. These standards include those for:
- Web-broker nonmarketplace website display of standardized QHP information.
- Disclaimer language.
- Information on eligibility for advanced premium tax credits and cost-sharing reductions.
- Operational readiness.
- Standards of conduct.
Marketplace Enrollment
CMS will require state marketplaces to adopt an open enrollment period that begins Nov. 1 and ends no earlier than Jan. 15, with the option to extend open enrollment beyond Jan. 15. CMS has grandfathered in open enrollment periods on a state marketplace that begin before Nov. 1 and end before Jan. 15 if the period is at least 11 continuous weeks.
To eliminate gaps in coverage, CMS finalized a provision to align the effective dates of coverage selected during certain special enrollment periods (SEPs) across all marketplaces. Coverage for enrollees who select and enroll in a QHP during the SEP will start on the first day of the following month. This applies to SEPs due to a life event or when transitioning between marketplaces, such as transitioning between an SBE-FP to a state marketplace.
CMS also will permit enrollees on the federal platform to retroactively terminate their enrollment in a QHP when they enroll in Medicare parts A or B. Termination will occur the day before Medicare coverage begins. This will be optional for state marketplaces.
Other Issues
Nonstandardized Plan Options
In the 2024 Payment Notice, CMS limited the number of nonstandardized plan options for consumers to four per product network type, metal level, and service area per issuer, which will be reduced to two in plan year 2025. CMS finalized an exception so that issuers can offer additional nonstandardized plans if they benefit consumers with chronic and high-cost conditions. Specifically, the additional nonstandardized plans must reduce cost sharing for benefits pertaining to the treatment of chronic and high-cost conditions by at least 25 percent. Further, for these purposes, chronic conditions are those that have an average duration of at least one year and require ongoing medical attention or that limit activities of daily living, as well as account for a disproportionately high portion of total federal health expenditures.
Incarceration Status
CMS finalized the provision to permit all marketplaces to accept consumer attestation of incarceration status without further electronic verification. CMS notes requiring electronic verification is costly and burdensome and often produces inaccurate information. Further, few currently incarcerated individuals apply for coverage on the marketplaces. CMS will allow marketplaces to verify incarceration status using a CMS-approved source that is current and accurate and that minimizes administrative costs and burden.
Reenrollment Hierarchies
CMS finalized a provision to add catastrophic plans to reenrollment hierarchies on the federal platform. Enrollees will be automatically reenrolled in a catastrophic QHP unless they no longer qualify for a catastrophic plan or a catastrophic plan is no longer available. Enrollees will be reenrolled in a bronze-level plan or, if that is not available, a QHP with the lowest coverage level offered.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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