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CMS considers ending silver-loading in 2020 proposed payment rule

Agency instead offers insurers a reduction in user fees for participating in the Affordable Care Act market.

Susan Morse, Senior Editor

In a 2020 payment rule, the Centers for Medicare and Medicaid Services is soliciting public input on the possibility of ending the practice of silver-loading that has allowed insurers to offer lower premiums for 2019 in the Affordable Care Act marketplace.

Under silver-loading, insurers apply the full premium increase to silver marketplace plans. The government, and not most consumers, ends up paying the bill as the majority of ACA consumers get federal subsidies for coverage.

Health and Human Services Secretary Alex Azar allowed silver loading, at least for 2019, to help insurers make up for the loss of cost-sharing reduction payments, which ended under the Trump Administration.

CMS said it is not proposing any regulatory changes at this time, but wants to better understand the issue because states have addressed silver-loading in different ways. This process will help inform whether there are better options for potential future rulemaking, CMS said.


While CMS says it is continuing to make changes to stabilize the market - as shown in lower premiums and more issuers selling ACA plans this year - silver loading has been a stabilizing factor for insurers.

CMS is proposing instead to help lower premium prices by reducing by one half of 1 percent, the user fee rates insurers pay for participating in the Affordable Care Act marketplace.

CMS has made these proposals in the 2020 payment notice. The rule proposes regulatory and financial parameters applicable to qualified health plans on the exchanges, plans in the individual, small group, and large group markets, and self-funded group health plans.


To lower drug costs, the rule proposes allowing individual, small group, and large group market health insurers to adopt mid-year formulary changes. This is aimed at incentivizing greater enrollee use of lower-cost generic drugs.

The rule also proposes changes related to requirements for how such issuers and self-insured group health plans treat cost-sharing for brand drugs when a generic equivalent is available.

The rule updates the risk adjustment program by reducing incentives for insurers to avoid high-cost, high-risk individuals.

The rule also proposes allowing consumers to buy qualified health plans outside of CMS referred to QHPs covering abortion services. The proposed rule would require plans to provide consumers with access to a "mirrored QHP" that omits these abortion services, where permitted by state law.


The implementation of the Affordable Care Act's main provisions in 2014 severely disrupted the individual health insurance market, CMS said. Between 2013 and 2017, the average premium more than doubled in the states using the federal exchange and, in 2017, the number of issuers participating in these markets began to decline.

CMS said it has stabilized the market by improving risk pools by encouraging individuals to maintain continuous coverage and approving seven reinsurance waivers for states. 


"Following the first-ever drop in premiums for plans sold on the federal exchange for 2019, in another first CMS is proposing to reduce the exchange user fee charged to insurers to fund exchange operations," said CMS Administrator Seema Verma. "Reducing this user fee will reduce the premium each consumer pays in 2020. Under President Trump's leadership, we're finally moving the exchange and the market in a new and positive direction."

Twitter: @SusanJMorse
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