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This annual rule finalizes payment parameters and provisions related to the risk adjustment and risk adjustment data validation programs; cost-sharing parameters; and user fees for issuers offering plans on Federally-facilitated Exchanges and State-based Exchanges using the Federal Platform. It also provides additional standards for several other Affordable Care Act programs.

Statement of Need:

This annual rule finalizes policies for the functioning of the individual market exchanges and is vital to industry, consumers, and other stakeholders in the healthcare sector.  Health issuers and states use this rule as the basis for plan design, exchange updates, and rate setting, which must be completed by spring of 2021 to be operational for open enrollment for plan year 2022.

Summary of the Legal Basis:

This rule addresses multiple sections of the Patient Protection and Affordable Care Act (Pub. L. 111148) and the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111152), which amended and revised several provisions of the Patient Protection and Affordable Care Act.

Alternatives:

In developing the policies contained in this rule, we considered numerous alternatives to the presented proposals.  These alternatives will be included in the rule.

Anticipated Costs and Benefits:

The provisions in this rule aim to ensure taxpayer money is more appropriately spent and that states have flexibility and control over their insurance markets. The rule is expected to reduce regulatory burden, reduce administrative costs for issuers and states, promote program integrity to protect taxpayer funds, and lower net premiums for consumers. Through the reduction in financial uncertainty for issuers and increased affordability for consumers, the provisions are expected to increase access to affordable health coverage. Affected entities may incur some initial costs; however, we believe that the benefits of this regulatory action will justify any costs.  As we move toward publication, estimates of the cost and benefits of these provisions will be included in the rule.

Risks:

Although there is some uncertainty regarding the net effect on premiums, we anticipate that the provisions of this rule would help further HHS’s goal of ensuring that all consumers have access to quality and affordable health care and are able to make informed choices, that the insurance market offers choices, and that states have more control and flexibility over the operation and establishment of Exchanges.