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CMS reduces exchange user fees, changes coupon policy for brand name drugs in 2020 final rule

Rule proposes no changes to practice of silver loading as insurers start to set rates for 2020.

Susan Morse, Managing Editor

The Centers for Medicare and Medicaid Services today finalized payment, risk adjustment and drug policies in its annual Notice of Benefit and Payment Parameters for the 2020 benefit year.

The 2020 payment notice is aimed at encouraging the use of generic drugs and to lower the cost of Affordable Care Act premiums, CMS said.


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The final rule makes changes to the prescription drug benefit that allows individual, small group, large group and self-insured group health plans to use drug manufacturer coupons against the maximum out-of-pocket limit cost so consumers will have an incentive to buy brand name drugs.

Under the final rule, when a drug has an appropriate, generic equivalent, the coupons can no longer be applied towards an enrollee's maximum out-of-pocket costs.

This is to support the promotion of lower-cost generic drugs, CMS said.


The final rule lowers the user fee rate for plans sold on the Affordable Care Act federal exchanges from 3.5 to 3 percent of premiums. It also lowers the user fee rate for plans on state-based exchanges that use the federal platform from 3 to 2.5 percent.

Exchange user fees are passed directly on to the consumer in the form of higher premiums, and this reduction allows issuers to pass along savings to consumers in 2020, CMS said.

"The 0.5 percent reduction in the user fee rate comes as a result of CMS' focus on reducing costs through increased operational efficiency, including successful efforts to upgrade IT functionality, a more efficient approach to outreach, and investments focused on proven methods to achieve a seamless enrollment experience and high consumer satisfaction," CMS said.

Over the past two enrollment seasons, CMS had cut marketing and advertising for the ACA by about 90 percent, and also reduced money for Navigators, agencies that help consumers to enroll. CMS has concentrated its enrollment efforts through emails and texts and has said this has worked effectively.

The lower user fee rates follow the first ever 1.5 percent drop in average premiums for plans selected through for the 2019 coverage year, CMS said.

Premiums rose after President Trump ended cost-sharing reduction payments for insurers that offset the higher cost of enrolling high-risk beneficiaries.

Premium decreases in 2019 were aided by the government's policy on silver loading, which allowed plans to put rate increases into their silver level plans. Since most consumers get subsidies to buy plans, the federal government has borne the cost of silver loading.

Absent Congressional action on the CSRs, CMS proposes no changes to silver loading in the proposed rule.


The final rule refines the risk adjustment program to improve the accuracy of the data used to calculate the program's charges and payments to issuers, CMS said.

This program is designed to reduce incentives for insurers to avoid enrolling people with expensive health conditions. 

The rule finalizes several proposals regarding the validation of the accuracy of the diagnosis codes, prescription drug data and codifies a number of exemptions.

Further, the rule finalizes a technical change to the premium index for the 2020 benefit year to better align its premium adjustment percentage methodology with the experience of the individual markets and premiums overall.

Under the new methodology, CMS would use the CMS Office of the Actuary  estimates of projected health insurance premiums for both the private individual and group market, excluding expenditures for Medigap and property and casualty insurance.

This change would replace the current methodology which uses only employer-sponsored group market insurance premiums, which do not reflect the situation of the individual market premiums. This technical change in the premium adjustment percentage methodology will provide a more comprehensive and accurate measure of private market premiums, CMS said. 


Last fall CMS successfully launched Enhanced Direct Enrollment, which allows consumers to shop for and enroll in the exchange plan of their choice through an approved partner website. 

The final rule streamlines and updates regulations to accommodate future innovation and improve the consumer experience, CMS said.

The EDE pathway allows CMS to partner with the private sector to provide a more user-friendly and seamless enrollment experience for consumers by allowing them to apply for, and enroll in, an exchange plan directly through an approved issuer or web-broker without the need to be redirected to

In recognition of the new pathway, the final rule increases transparency as well as the privacy and security of consumer data by allowing CMS to require web-brokers to provide lists of the agents and brokers who use their websites.

The rule allows CMS to more easily suspend or terminate agents, brokers and web-brokers that violate applicable marketplace requirements.


"The rule issued today will give consumers immediate premium relief for 2020 by reducing the federal exchange user fees thanks to successful efforts to improve the efficiency of the exchange," said CMS Administrator Seema Verma.  "At CMS we have improved the operations of the exchange to deliver a better consumer experience at a lower cost."

Twitter: @SusanJMorse
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