CMS Issues Proposed Rule on the ACA 2023 Benefit and Payment Parameters

On December 28, 2021, HHS issued the proposed Notice of Benefit and Payment Parameters Rule for 2023. This notice is issued annually preceding the applicable benefit year and, once final, adopts certain changes. While the proposed rule primarily impacts the individual market and the Exchange, it also addresses certain ACA provisions and related topics that impact employer-sponsored group health plans. Highlights include:

• Annual Cost-Sharing Limits: As background, the ACA requires non-grandfathered group health plans to comply with an out-of-pocket maximum on expenses for essential health benefits. This maximum annual limitation on cost-sharing for 2023 is proposed to be $9,100 for self-only coverage and $18,200 for family coverage (an increase from $8,700 and $17,400 for self-only/family coverage respectively in 2022).
• Medical Loss Ratio Rebates: HHS proposes to clarify that Quality Improvement Activity (QIA) expenses that may be included for MLR reporting and rebate calculation are only those expenses that are directly related to activities that improve health care quality. The appropriate QIA expenses include salaries of the staff actually performing QIA functions. On the other hand, indirect expenses, such as a portion of overhead (e.g., holding group overhead), marketing office space, IT infrastructure and vendor profits that have no direct connection to QIA should not be included in QIA expenses.
• Premium Adjustment Percentage and Payment Parameters: HHS announced the premium adjustment percentage for the 2023 benefit year as 1.4408219719, which indicates an increase in employer-sponsored insurance premiums of approximately 44.1% over the period from 2013 to 2022. This premium adjustment percentage will also be used to index the Employer Mandate provision’s penalty amounts for the 2023 benefit year.
• Enhancing Options & Health Equity at Exchanges: HHS plans to conduct network adequacy reviews of plans in all federally facilitated Exchanges prospectively during the Qualified Health Plan (QHP) certification process. Moreover, HHS proposes to require issuers in the Exchanges to offer standardized plan options at every product network type, metal level, and throughout service area when insurers offer non-standardized options in plan year 2023. Additionally, HHS proposes to prohibit Exchanges, issuers, agents and brokers from discriminating against consumers based on sexual orientation and gender identity to increase access to health care, and align with the Executive Order released from the Biden Administration last January.

Once the regulations are finalized, employers should review them and implement any changes needed for the 2023 plan year.

Proposed Rules »
Fact Sheet »
2023 PAPI Parameters Guidance »