Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy Benefit Manager Standards; Updates To State Innovation Waiver (Section 1332 Waiver) Implementing Regulations

DEPARTMENT OF THE TREASURY

31 CFR Part 33

RIN 1505-AC72

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147, 150, 153, 155, 156, 158, and 184

[CMS-9914-P]

RIN 0938-AU18

Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy Benefit Manager Standards; Updates To State Innovation Waiver (Section 1332 Waiver) Implementing Regulations

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health & Human Services (HHS), Department of the Treasury.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule sets forth payment parameters and provisions related to the risk adjustment program; cost-sharing parameters and cost-sharing reductions; and user fees for Federally-facilitated Exchanges and State-based Exchanges on the Federal platform. It includes proposed changes related to special enrollment periods; Navigator program standards; direct enrollment entities; the administrative appeals processes with respect to health insurance issuers and non-federal governmental group health plans; the medical loss ratio program; acceptance of payments by issuers of individual market Qualified Health Plans; and other related topics. It proposes clarifications to the regulation imposing network adequacy standards with regard to Qualified Health Plans that do not use provider networks. It proposes changes to the regulation requiring the reporting of certain prescription drug information by qualified health plans or their pharmacy benefit managers. It also proposes a new direct enrollment option for Federally-facilitated Exchanges and State Exchanges. This proposed rule also proposes changes related to section 1332 State Innovation Waivers.

DATES:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on December 30, 2020.

ADDRESSES:

In commenting, please refer to file code CMS-9914-P.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

1.

Electronically.

You may submit electronic comments on this regulation to

http://www.regulations.gov.

Follow the “Submit a comment” instructions.

2.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9914-P, P.O. Box 8016, Baltimore, MD 21244-8016.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3.

By express or overnight mail.

You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9914-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, see the beginning of the

SUPPLEMENTARY INFORMATION

section.

FOR FURTHER INFORMATION CONTACT:

Usree Bandyopadhyay, (410) 786-6650, Grace Bristol, (410) 786-8437, Kiahana Brooks, (301) 492-5229, or Ken Buerger, (410) 786-1190, for general information.

Cam Clemmons, (206) 615-2338, for matters related to health insurance reform requirements for the group and individual insurance markets and administrative appeals for health insurance issuers and non-federal governmental group health plans.

Allison Yadsko, (410) 786-1740, for matters related to risk adjustment.

Aaron Franz, (410) 786- 8027, for matters related to user fees.

Isadora Gil, (410) 786-4532, or Colleen Gravens, (301) 492-4107, for matters related to EDGE discrepancies.

Joshua Paul, (301) 492-4347, Renee O'Neill, (410) 786-8821, or Ruthanne Romero, (410) 786-8757, for matters related to risk adjustment data validation.

Dan Brown, (434) 995-5886, for matters related to web-brokers or direct enrollment, other than the direct enrollment option for Federally-facilitated and State Exchanges.

Robert Yates, (301) 492-5151, for matters related to the direct enrollment option for Federally-facilitated and State Exchanges.

Emily Ames, (301) 492-4246, for matters related to termination notices.

Marisa Beatley, (301) 492-4307, for matters related to employer-sponsored coverage verification.

Carolyn Kraemer, (301) 492-4197, for matters related to special enrollment periods for Exchange enrollment under part 155.

Katherine Bentley, (301) 492-5209, for matters related to special enrollment period verification.

Ken Buerger, (410) 786-1190, for matters related to EHB-benchmark plans, defrayal of state-required benefits, network adequacy standards, and PBM transparency reporting requirements.

Joshua Paul, (301) 492-4347, for matters related to the premium adjustment percentage.

Adrianne Carter, (303) 844-5810, or Amber Bellsdale, (301) 492-4411, for matters related to disputes under 45 CFR 156.1210.

Leigha Basini, (301) 492-4380, for matters related to acceptance of payments by QHP issuers.

Nidhi Singh Shah, (301) 492-5110, for matters related to the Quality Rating System and the Qualified Health Plan Enrollee Experience Survey.

Alper Ozinal, (301) 492-4178, for matters related to financial program audits and civil money penalties.

Adrianne Patterson, 410-786-0696, for matters related to netting of payments under 45 CFR 156.1215 and administrative appeals under 45 CFR 156.1220.

Christina Whitefield, (301) 492-4172, for matters related to the MLR program.

Lina Rashid, (443) 902-2823, Michelle Koltov, (301) 492-4225, or Kimberly Koch, (202) 622-0854 for matters related to State Innovation Waivers.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:

All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received:

http://www.regulations.gov.

Follow the search instructions on that website to view public comments.

Table of Contents

I. Executive Summary

II. Background

A. Legislative and Regulatory Overview

B. Stakeholder Consultation and Input

C. Structure of Proposed Rule

III. Provisions of the Proposed HHS Notice of Benefit and Payment Parameters for 2022

A. Part 147—Health Insurance Reform Requirements for the Group and Individual Health Insurance Markets

B. Part 150—CMS Enforcement in Group and Individual Markets

C. Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment

D. Part 155—Exchange Establishment Standards and Other Related Standards Under the Affordable Care Act

E. Part 156—Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges

F. Part 158—Issuer Use of Premium Revenue: Reporting and Rebate Requirements

G. Part 184—Pharmacy Benefit Manager Standards Under the Affordable Care Act

IV. Provisions of the Proposed Rule for State Innovation Waivers

A. 31 CFR Part 33 and 45 CFR Part 155—State Innovation Waivers

V. Collection of Information Requirements

A. Wage Estimates

B. ICRs Regarding State Flexibility for Risk Adjustment

C. ICRs Regarding Submission of Adjusted Premium Amounts for Risk Adjustment

D. ICRs Regarding Direct Enrollment Agents and Brokers

E. ICRs Regarding Prescription Drug Distribution and Cost Reporting by QHP Issuers and PBMs

F. ICRs Regarding Medical Loss Ratio

G. ICRs Regarding State Innovation Waivers

H. Summary of Annual Burden Estimates for Proposed Requirements

I. Submission of PRA Related Comments

VI. Response to Comments

VII. Regulatory Impact Analysis

A. Statement of Need

B. Overall Impact

C. Impact Estimates of the Payment Notice Provisions and Accounting Table

D. Regulatory Alternatives Considered

E. Regulatory Flexibility Act

F. Unfunded Mandates

G. Federalism

H. Congressional Review Act

I. Reducing Regulation and Controlling Regulatory Costs

I. Executive Summary

American Health Benefit Exchanges, or “Exchanges,” are entities established under the Patient Protection and Affordable Care Act (PPACA)

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through which qualified individuals and qualified employers can purchase health insurance coverage in qualified health plans (QHPs). Many individuals who enroll in QHPs through individual market Exchanges are eligible to receive a premium tax credit (PTC) to reduce their costs for health insurance premiums and to receive reductions in required cost-sharing payments to reduce out-of-pocket expenses for health care services. The PPACA also established the risk adjustment program, which is intended to increase the workability of the PPACA regulatory changes in the individual and small group markets, both on- and off-Exchange.

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The PPACA (Pub. L. 111-148) was enacted on March 23, 2010. The Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised several provisions of the PPACA, was enacted on March 30, 2010. In this proposed rule, we refer to the two statutes collectively as the “Patient Protection and Affordable Care Act” or “PPACA”.

On January 20, 2017, the President issued an Executive Order which stated that, to the maximum extent permitted by law, the Secretary of HHS and heads of all other executive departments and agencies with authorities and responsibilities under the PPACA should exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the PPACA that would impose a fiscal burden on any state or a cost, fee, tax, penalty, or regulatory burden on individuals, families, health care providers, health insurers, patients, recipients of health care services, purchasers of health insurance, or makers of medical devices, products, or medications. In this proposed rule, within the limitations of current law, we propose to reduce fiscal and regulatory burdens across different program areas and to provide stakeholders with greater flexibility.

In previous rulemakings, we established provisions and parameters to implement many PPACA requirements and programs. In this proposed rule, we propose to amend some of these provisions and parameters, with a focus on maintaining a stable regulatory environment. These proposed changes would provide issuers with greater predictability for upcoming plan years, while simultaneously enhancing the role of states in these programs. The proposals would also provide states with additional flexibilities, reduce unnecessary regulatory burdens on stakeholders, empower consumers, ensure program integrity, and improve affordability.

Risk adjustment continues to be a core program in the individual and small group markets both on and off Exchanges, and some of the major proposals in this rule include proposed recalibrated parameters for the HHS-operated risk adjustment methodology. We also propose changes to the risk adjustment models to include a two-stage specification in the adult and child models, add severity and transplant indicators interacted with hierarchical condition category (HCC) counts factors to the adult and child models, and modify the enrollment duration factors in the adult models. Additionally, we propose to allow states to request multi-year state risk adjustment transfer reductions of up to 3 years, as well as clarifications to the process for HHS to audit and conduct compliance reviews of issuers of risk adjustment covered plans and reinsurance-eligible plans.

As we do every year in the HHS notice of benefit and payment parameters, we propose updated parameters applicable in the individual and small group markets. We propose the 2022 benefit year user fee rates for issuers offering plans through the Exchanges using the Federal platform. We propose lowering the Federally-facilitated Exchange (FFE) and State-based Exchange on the Federal platform (SBE-FP) user fees rates to 2.25 and 1.75 percent of total monthly premiums, respectively, in order to reflect enrollment, premium and HHS contract estimates for the 2022 plan year. We also propose user fee rates of 1.5 percent of total monthly premiums for FFE and SBE-FP states that elect the proposed direct enrollment option discussed later in the preamble.

In addition, we propose the 2022 benefit year premium adjustment percentage, required contribution percentage, and maximum annual limitations on cost sharing, including those for cost-sharing reduction (CSR) plan variations. These updates, required by law, will raise the annual limit on cost sharing for 2022 relative to the annual limit on cost sharing for 2021, thereby increasing cost sharing and out-of-pocket spending for consumers who will incur total costs close to the annual cost-sharing limit in the 2022 benefit year. For the 2023 benefit year and beyond, we also propose to publish these parameters in guidance annually, and if not in guidance, in the annual notice of benefit and payment parameters. Additionally, we propose clarifications to the process under which HHS audits QHP issuers related to advance payments of the premium tax credit (APTC), CSRs, and user fees.

We propose changes to the information that FFE-registered web-brokers are required to display on their websites. In addition, we propose amendments to codify more detail describing the operational readiness reviews that must be successfully completed as a prerequisite to a web-broker's non-Exchange website being approved for use by consumers to complete an Exchange eligibility application or a QHP selection. We similarly propose to add additional detail about the operational readiness reviews applicable to direct enrollment entities.

Stable and affordable Exchanges with healthy risk pools are necessary for

ensuring consumers maintain stable access to health insurance options. In order to minimize the potential for adverse selection in the Exchanges, we are sharing our future plans for rulemaking under which we will propose requirements related to Exchange verifications of whether applicants for QHP coverage with APTC or CSR have access to employer sponsored coverage that is affordable and offers minimum value. Until we engage in future rulemaking, we propose to extend our current enforcement posture under which Exchanges may exercise flexibility not to implement risk-based employer sponsored coverage verification and to remove the requirement that Exchanges select a statistically random sample of applicants when no electronic data sources are available.

We propose new rules related to special enrollment periods. In addition, we propose to require Exchanges to conduct special enrollment period verification for at least 75 percent of new enrollments through special enrollment periods granted to consumers not already enrolled in coverage through the applicable Exchange.

We also propose minor procedural changes to provisions regarding administrative hearings in parts 150 and 156 to align with the Departmental Appeals Board's current practices for administrative hearings to appeal civil money penalties (CMPs).

We propose to release additional data from the QHP Enrollee Experience Survey (QHP Enrollee Survey). We also solicit comments on potential changes to the framework for the Quality Rating System (QRS) to support alignment with other CMS quality reporting programs and to further balance the individual survey and clinical quality measures on the overall quality scores. We are considering ways to modify the hierarchical structure for the QRS, which is how the measures are organized together for maximum simplicity and understanding of the quality rating information provided by the QRS.

We propose revisions to the regulations requiring the collection of certain prescription drug data from QHP issuers, and propose to implement a requirement for the reporting of this data from pharmacy benefit managers (PBMs) when a QHP issuer contracts with a PBM to administer its prescription drug benefit.

We propose to further regulate the standards related to QHP issuers' acceptance of payments for premiums and cost sharing. We also propose to make clarifications to the network adequacy rules to reflect that § 156.230 does not apply to indemnity plans seeking QHP certification.

We propose to establish a new direct enrollment option under which a State Exchange, State-based Exchange on the Federal platform or an FFE state (through an agreement with HHS) can leverage the potential of direct enrollment to offer consumers an enhanced QHP shopping experience. Under this option, instead of operating a centralized enrollment website, states could use direct enrollment technology to establish direct pathways to QHP issuers and web-brokers, through which consumers would apply for and enroll in a QHP and receive a determination of eligibility for APTC and CSRs.

We propose to establish the definition of prescription drug rebates and other price concessions that issuers must deduct from incurred claims for medical loss ratio (MLR) reporting and rebate calculation purposes. We additionally propose to explicitly allow issuers the option to prepay a portion or all of the estimated MLR rebate for a given MLR reporting year in advance of the deadlines set forth in §§ 158.240(e) and 158.241(a)(2) and the filing of the MLR Annual Reporting Form, and propose to establish a safe harbor allowing such issuers, under certain conditions, to defer the payment of any remaining rebates owed after prepayment until the following MLR reporting year. We also propose to allow issuers to provide MLR rebates in the form of a premium credit prior to the date that the rules currently provide. Lastly, we propose to clarify MLR reporting and rebate requirements for issuers that choose to offer temporary premium credits during a public health emergency (PHE) declared by the Secretary of HHS in the 2021 benefit year and beyond, when such credits are permitted by HHS.

In this proposed rule, the Secretaries of HHS and the Department of the Treasury propose to reference and incorporate specific guidance published in the

Federal Register

in order to give states certainty regarding the requirements to receive and maintain approval by the Departments for State Innovation Waivers under section 1332 of the PPACA.

II. Background

A. Legislative and Regulatory Overview

Title I of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) added a new title XXVII to the Public Health Service Act (PHS Act) to establish various reforms to the group and individual health insurance markets.

These provisions of the PHS Act were later augmented by other laws, including the PPACA. Subtitles A and C of title I of the PPACA reorganized, amended, and added to the provisions of part A of title XXVII of the PHS Act relating to group health plans

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and health insurance issuers in the group and individual markets. The term “group health plan” includes both insured and self-insured group health plans.

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The term “group health plan” is used in title XXVII of the PHS Act and is distinct from the term “health plan” as used in other provisions of title I of PPACA. The term “health plan” does not include self-insured group health plans.

Section 2702 of the PHS Act, as added by the PPACA, establishes requirements for guaranteed availability of coverage in the group and individual markets, including qualifying events that trigger special enrollment periods under section 2702(b) of the PHS Act.

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Before enactment of the PPACA, HIPAA amended the PHS Act (formerly section 2711) to generally require guaranteed availability of coverage for employers in the small group market.

Section 2718 of the PHS Act, as added by the PPACA, generally requires health insurance issuers to submit an annual MLR report to HHS, and provide rebates to enrollees if the issuers do not achieve specified MLR thresholds.

Section 2723(b) of the PHS Act authorizes the Secretary to impose CMPs as a means of enforcing the individual and group insurance market requirements contained in Part A of title XXVII of the PHS Act with respect to health insurance issuers when a state does not have authority to enforce or fails to substantially enforce these provisions and with respect to group health plans that are non-federal governmental plans.

Section 1301(a)(1)(B) of the PPACA directs all issuers of QHPs to cover the Essential Health Benefit (EHB) package described in section 1302(a) of the PPACA, including coverage of the services described in section 1302(b) of the PPACA, adherence to the cost-sharing limits described in section 1302(c) of the PPACA, and meeting the actuarial value (AV) levels established in section 1302(d) of the PPACA. Section 2707(a) of the PHS Act, which is effective for plan or policy years beginning on or after January 1, 2014, extends the requirement to cover the EHB package to non-grandfathered individual and small group health insurance coverage, irrespective of whether such coverage is offered through an Exchange. In addition, section 2707(b) of the PHS Act directs

non-grandfathered group health plans to ensure that cost sharing under the plan does not exceed the limitations described in sections 1302(c)(1) of the PPACA.

Section 1302 of the PPACA provides for the establishment of an EHB package that includes coverage of EHBs (as defined by the Secretary), cost-sharing limits, and AV requirements. Section 1302(b) of the PPACA directs that EHBs be equal in scope to the benefits provided under a typical employer plan, and that they cover at least the following 10 general categories: Ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

To set cost-sharing limits, section 1302(c)(4) of the PPACA directs the Secretary to determine an annual premium adjustment percentage, a measure of premium growth that is used to set the rate of increase for three parameters: (1) The maximum annual limitation on cost sharing (section 1302(c)(1) of the PPACA); (2) the required contribution percentage used to determine whether an individual can afford minimum essential coverage (MEC) (section 5000A of the Internal Revenue Code of 1986 (the Code), as enacted by section 1501 of the PPACA); and (3) the employer shared responsibility payment amounts (section 4980H of the Code, as enacted by section 1513 of the PPACA).

Section 1302(d) of the PPACA describes the various levels of coverage based on their AV. Consistent with section 1302(d)(2)(A) of the PPACA, AV is calculated based on the provision of EHB to a standard population. Section 1302(d)(3) of the PPACA directs the Secretary to develop guidelines that allow for

de minimis

variation in AV calculations.

Sections 1311(b) and 1321(b) of the PPACA provide that each state has the opportunity to establish an individual market Exchange that facilitates the purchase of insurance coverage by qualified individuals through QHPs and meets other standards specified in the PPACA. Section 1321(c)(1) of the PPACA directs the Secretary to establish and operate such Exchange within states that do not elect to establish an Exchange or, as determined by the Secretary on or before January 1, 2013, will not have an Exchange operable by January 1, 2014.

Section 1311(c)(1) of the PPACA provides the Secretary the authority to issue regulations to establish criteria for the certification of QHPs, including network adequacy standards at section 1311(c)(1)(B) of the PPACA. Section 1311(d) of the PPACA describes the minimum functions of an Exchange. Section 1311(e)(1) of the PPACA grants the Exchange the authority to certify a health plan as a QHP if the health plan meets the Secretary's requirements for certification issued under section 1311(c)(1) of the PPACA, and the Exchange determines that making the plan available through the Exchange is in the interests of qualified individuals and qualified employers in the state. Section 1311(c)(6)(C) of the PPACA establishes special enrollment periods and section 1311(c)(6)(D) of the PPACA establishes the monthly enrollment period for Indians, as defined by section 4 of the Indian Health Care Improvement Act.

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The Indian Health Care Improvement Act (IHCIA), the cornerstone legal authority for the provision of health care to American Indians and Alaska Natives, was made permanent when President Obama signed the bill on March 23, 2010, as part of the PPACA.

Section 1311(c)(3) of the PPACA directs the Secretary to develop a system to rate QHPs offered through an Exchange, based on relative quality and price. Section 1311(c)(4) of the PPACA requires the Secretary to establish an enrollee satisfaction survey that evaluates the level of enrollee satisfaction of members with QHPs offered through an Exchange, for each QHP with more than 500 enrollees in the prior year. Further, sections 1311(c)(3) and 1311(c)(4) of the PPACA require Exchanges to provide this quality rating information

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to individuals and employers on the Exchange's website.

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The term “quality rating information” includes the QRS scores and ratings and the results of the enrollee satisfaction survey (which is also known as the “Qualified Health Plan (QHP) Enrollee Experience Survey”).

Section 1312(c) of the PPACA generally requires a health insurance issuer to consider all enrollees in all health plans (except grandfathered health plans) offered by such issuer to be members of a single risk pool for each of its individual and small group markets. States have the option to merge the individual and small group market risk pools under section 1312(c)(3) of the PPACA.

Section 1312(e) of the PPACA directs the Secretary to establish procedures under which a state may permit agents and brokers to enroll qualified individuals and qualified employers in QHPs through an Exchange and to assist individuals in applying for financial assistance for QHPs sold through an Exchange.

Sections 1313 and 1321 of the PPACA provide the Secretary with the authority to oversee the financial integrity of State Exchanges, their compliance with HHS standards, and the efficient and non-discriminatory administration of State Exchange activities. Section 1321 of the PPACA provides for state flexibility in the operation and enforcement of Exchanges and related requirements.

Section 1321(a) of the PPACA provides broad authority for the Secretary to establish standards and regulations to implement the statutory requirements related to Exchanges, QHPs and other components of title I of the PPACA. Section 1321(a)(1) of the PPACA directs the Secretary to issue regulations that set standards for meeting the requirements of title I of the PPACA for, among other things, the establishment and operation of Exchanges. When operating an FFE under section 1321(c)(1) of the PPACA, HHS has the authority under sections 1321(c)(1) and 1311(d)(5)(A) of the PPACA to collect and spend user fees. Office of Management and Budget (OMB) Circular A-25 establishes federal policy regarding user fees and specifies that a user charge will be assessed against each identifiable recipient for special benefits derived from federal activities beyond those received by the general public.

Section 1321(c)(2) of the PPACA provides that the provisions of section 2723(b) of the PHS Act shall apply to the enforcement of the Federal Exchange standards and authorizes the Secretary to enforce the Exchange standards using CMPs on the same basis as detailed in section 2723(b) of the PHS Act.

Section 1321(d) of the PPACA provides that nothing in title I of the PPACA must be construed to preempt any state law that does not prevent the application of title I of the PPACA. Section 1311(k) of the PPACA specifies that Exchanges may not establish rules that conflict with or prevent the application of regulations issued by the Secretary.

Section 1332 of the PPACA provides the Secretary of HHS and the Secretary of the Treasury (collectively, the Secretaries) with the discretion to approve a state's proposal to waive specific provisions of the PPACA, provided the state's section 1332 waiver plan meets certain requirements. The Department of Health and Human Services and the Department of the

Treasury (collectively, the Departments) finalized implementing regulations on February 27, 2012 (76 FR 13553) and published detailed guidance on the Department's application of section 1332 to proposed state waivers on October 24, 2018 (83 FR 53575).

Section 1343 of the PPACA establishes a permanent risk adjustment program to provide payments to health insurance issuers that attract higher-than-average risk populations, such as those with chronic conditions, funded by payments from those that attract lower-than-average risk populations, thereby reducing incentives for issuers to avoid higher-risk enrollees.

Section 1402 of the PPACA provides for, among other things, reductions in cost sharing for EHB for qualified low- and moderate-income enrollees in silver level QHPs offered through the individual market Exchanges. This section also provides for reductions in cost sharing for American Indians enrolled in QHPs at any metal level.

Section 1411(c) of the PPACA requires the Secretary to submit certain information provided by applicants under section 1411(b) of the PPACA to other federal officials for verification, including income and family size information to the Secretary of the Treasury.

Section 1411(d) of the PPACA provides that the Secretary must verify the accuracy of information provided by applicants under section 1411(b) of the PPACA for which section 1411(c) of the PPACA does not prescribe a specific verification procedure, in such manner as the Secretary determines appropriate.

Section 1411(f) of the PPACA requires the Secretary, in consultation with the Secretary of the Treasury, the Secretary of Homeland Security, and the Commissioner of Social Security, to establish procedures for hearing and making decisions governing appeals of Exchange eligibility determinations.

Section 1411(f)(1)(B) of the PPACA requires the Secretary to establish procedures to redetermine eligibility on a periodic basis, in appropriate circumstances, including eligibility to purchase a QHP through the Exchange and for APTC and CSRs.

Section 1411(g) of the PPACA allows the use or disclosure of applicant information only for the limited purposes of, and to the extent necessary to, ensure the efficient operation of the Exchange, including by verifying eligibility to enroll through the Exchange and for APTC and CSRs.

Section 5000A of the Code, as added by section 1501(b) of the PPACA, requires individuals to have MEC for each month, qualify for an exemption, or make an individual shared responsibility payment. Under the Tax Cuts and Jobs Act (Pub. L. 115-97, December 22, 2017) the individual shared responsibility payment has been reduced to $0, effective for months beginning after December 31, 2018. Notwithstanding that reduction, certain exemptions are still relevant to determine whether individuals age 30 and above qualify to enroll in catastrophic coverage under 45 CFR 155.305(h) or 45 CFR 156.155.

Section 1150A(a) of the Social Security Act (the Act) requires a health benefits plan or PBM that manages prescription drug coverage under a contract with a QHP issuer to provide certain prescription drug information to the Secretary at such times, and in such form and manner, as the Secretary shall specify. HHS will limit disclosure of the information disclosed by a health benefits plan or PBM under this section as required by section 1150A of the Act and may only disclose the information in a form which does not disclose the identity of a specific PBM or plan, or prices charged for specific drugs, except that for limited purposes, HHS may disclose the information to states to carry out section 1311 of the PPACA. An issuer or PBM that fails to provide the information on a timely basis or that knowingly provides false information may be subject to a civil monetary penalty under section 1927(b)(3)(C) of the Act in the same manner as such provisions apply to a manufacturer with an agreement under that section.

1. Premium Stabilization Programs

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The term “premium stabilization programs” refers to the risk adjustment, risk corridors, and reinsurance programs established by the PPACA. See 42 U.S.C. 18061, 18062, and 18063.

In the July 15, 2011

Federal Register

(76 FR 41929), we published a proposed rule outlining the framework for the premium stabilization programs. We implemented the premium stabilization programs in a final rule published in the March 23, 2012

Federal Register

(77 FR 17219) (Premium Stabilization Rule). In the December 7, 2012

Federal Register

(77 FR 73117), we published a proposed rule outlining the benefit and payment parameters for the 2014 benefit year to expand the provisions related to the premium stabilization programs and set forth payment parameters in those programs (proposed 2014 Payment Notice). We published the 2014 Payment Notice final rule in the March 11, 2013

Federal Register

(78 FR 15409). In the June 19, 2013

Federal Register

(78 FR 37032), we proposed a modification to the HHS-operated methodology related to community rating states. In the October 30, 2013

Federal Register

(78 FR 65046), we finalized the proposed modification to the HHS-operated methodology related to community rating states. We published a correcting amendment to the 2014 Payment Notice final rule in the November 6, 2013

Federal Register

(78 FR 66653) to address how an enrollee's age for the risk score calculation would be determined under the HHS-operated risk adjustment methodology.

In the December 2, 2013

Federal Register

(78 FR 72321), we published a proposed rule outlining the benefit and payment parameters for the 2015 benefit year to expand the provisions related to the premium stabilization programs, setting forth certain oversight provisions and establishing the payment parameters in those programs (proposed 2015 Payment Notice). We published the 2015 Payment Notice final rule in the March 11, 2014

Federal Register

(79 FR 13743). In the May 27, 2014

Federal Register

(79 FR 30240), the 2015 fiscal year sequestration rate for the risk adjustment program was announced.

In the November 26, 2014

Federal Register

(79 FR 70673), we published a proposed rule outlining the benefit and payment parameters for the 2016 benefit year to expand the provisions related to the premium stabilization programs, setting forth certain oversight provisions and establishing the payment parameters in those programs (proposed 2016 Payment Notice). We published the 2016 Payment Notice final rule in the February 27, 2015

Federal Register

(80 FR 10749).

In the December 2, 2015

Federal Register

(80 FR 75487), we published a proposed rule outlining the benefit and payment parameters for the 2017 benefit year to expand the provisions related to the premium stabilization programs, setting forth certain oversight provisions and establishing the payment parameters in those programs (proposed 2017 Payment Notice). We published the 2017 Payment Notice final rule in the March 8, 2016

Federal Register

(81 FR 12203).

In the September 6, 2016

Federal Register

(81 FR 61455), we published a proposed rule outlining the benefit and payment parameters for the 2018 benefit year and to further promote stable premiums in the individual and small group markets. We proposed updates to the risk adjustment methodology, new policies around the use of external data for recalibration of our risk adjustment models, and amendments to the HHS-RADV process (proposed 2018 Payment Notice). We published the 2018

Payment Notice final rule in the December 22, 2016

Federal Register

(81 FR 94058).

In the November 2, 2017

Federal Register

(82 FR 51042), we published a proposed rule outlining the benefit and payment parameters for the 2019 benefit year, and to further promote stable premiums in the individual and small group markets. We proposed updates to the risk adjustment methodology and amendments to the HHS-RADV process (proposed 2019 Payment Notice). We published the 2019 Payment Notice final rule in the April 17, 2018

Federal Register

(83 FR 16930). We published a correction to the 2019 risk adjustment coefficients in the 2019 Payment Notice final rule in the May 11, 2018

Federal Register

(83 FR 21925). On July 27, 2018, consistent with 45 CFR 153.320(b)(1)(i), we updated the 2019 benefit year final risk adjustment model coefficients to reflect an additional recalibration related to an update to the 2016 enrollee-level External Data Gathering Environment (EDGE) dataset.

7

7

“Updated 2019 Benefit Year Final HHS Risk Adjustment Model Coefficients,” July 27, 2018. Available at

https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf.

In the July 30, 2018

Federal Register

(83 FR 36456), we published a final rule that adopted the 2017 benefit year risk adjustment methodology as established in the final rules published in the March 23, 2012

Federal Register

(77 FR 17220 through 17252) and in the March 8, 2016

Federal Register

(81 FR 12204 through 12352). This final rule set forth additional explanation of the rationale supporting use of statewide average premium in the HHS-operated risk adjustment state payment transfer formula for the 2017 benefit year, including the reasons why the program is operated in a budget-neutral manner. This final rule permitted HHS to resume 2017 benefit year risk adjustment payments and charges. HHS also provided guidance as to the operation of the HHS-operated risk adjustment program for the 2017 benefit year in light of publication of this final rule.

8

8

“Update on the HHS-operated Risk Adjustment Program for the 2017 Benefit Year,” July 27, 2018. Available at

https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2017-RA-Final-Rule-Resumption-RAOps.pdf.

In the August 10, 2018

Federal Register

(83 FR 39644), we published a proposed rule seeking comment on adopting the 2018 benefit year risk adjustment methodology in the final rules published in the March 23, 2012

Federal Register

(77 FR 17219) and in the December 22, 2016

Federal Register

(81 FR 94058). The proposed rule set forth additional explanation of the rationale supporting use of statewide average premium in the HHS-operated risk adjustment state payment transfer formula for the 2018 benefit year, including the reasons why the program is operated in a budget-neutral manner. In the December 10, 2018

Federal Register

(83 FR 63419), we issued a final rule adopting the 2018 benefit year HHS-operated risk adjustment methodology as established in the final rules published in the March 23, 2012

Federal Register

(77 FR 17219) and the December 22, 2016

Federal Register

(81 FR 94058). This final rule sets forth additional explanation of the rationale supporting use of statewide average premium in the HHS-operated risk adjustment state payment transfer formula for the 2018 benefit year, including the reasons why the program is operated in a budget-neutral manner.

In the January 24, 2019

Federal Register

(84 FR 227), we published a proposed rule outlining updates to the calibration of the risk adjustment methodology, the use of EDGE data for research purposes, and updates to HHS-RADV audits. We published the 2020 Payment Notice final rule in the April 25, 2019

Federal Register

(84 FR 17454).

In the February 6, 2020

Federal Register

(85 FR 7088), we published a proposed rule that included updates to the in the risk adjustment models' HCCs and a modification HHS-RADV error rate calculation methodology. We published the 2021 Payment Notice final rule in the May 14, 2020

Federal Register

(85 FR 29164).

In the June 2, 2020

Federal Register

(85 FR 33595), we published a proposed rule that proposed updates to various aspects of the HHS-RADV methodologies and processes. These updates included revisions to the HCC failure rate grouping algorithm, the introduction of a sliding scale adjustment in HHS-RADV error rate calculation, the introduction of a constraint on risk score adjustments for low-side failure rate outliers, and the transition from the prospective application of HHS-RADV adjustments to an application of HHS-RADV results to risk scores from the same benefit year as that being audited.

In the September 2, 2020

Federal Register

(85 FR 54820), HHS issued an interim final rule containing certain policy and regulatory revisions in response to the COVID-19 PHE, wherein we set forth risk adjustment reporting requirements for issuers offering temporary premium credits in the 2020 benefit year (interim final rule on COVID-19).

2. Program Integrity

In the June 19, 2013

Federal Register

(78 FR 37031), we published a proposed rule that proposed certain program integrity standards related to Exchanges and the premium stabilization programs (proposed Program Integrity Rule). The provisions of that proposed rule were finalized in two rules, the “first Program Integrity Rule” published in the August 30, 2013

Federal Register

(78 FR 54069) and the “second Program Integrity Rule” published in the October 30, 2013

Federal Register

(78 FR 65045). In the December 27, 2019

Federal Register

(84 FR 71674), we published a final rule that revised standards relating to oversight of Exchanges established by states and periodic data matching frequency.

3. Market Rules

An interim final rule relating to the HIPAA health insurance reforms was published in the April 8, 1997

Federal Register

(62 FR 16894). A proposed rule relating to PPACA health insurance market reforms that became effective in 2014 was published in the November 26, 2012

Federal Register

(77 FR 70584). A final rule implementing those provisions was published in the February 27, 2013

Federal Register

(78 FR 13406) (2014 Market Rules).

A proposed rule relating to Exchanges and Insurance Market Standards for 2015 and beyond was published in the March 21, 2014

Federal Register

(79 FR 15808) (2015 Market Standards Proposed Rule). A final rule implementing the Exchange and Insurance Market Standards for 2015 and Beyond was published in the May 27, 2014

Federal Register

(79 FR 30240) (2015 Market Standards Rule). The 2018 Payment Notice final rule in the December 22, 2016

Federal Register

(81 FR 94058) provided additional guidance on guaranteed availability and guaranteed renewability. In the Market Stabilization final rule that was published in the April 18, 2017

Federal Register

(82 FR 18346), we released further guidance related to guaranteed availability. In the 2019 Payment Notice final rule in the April 17, 2018

Federal Register

(83 FR 17058), we clarified that certain exceptions to the special enrollment periods only apply with respect to coverage offered outside of the Exchange in the individual market.

4. Administrative Appeals Process Related to Federal Enforcement in Group and Individual Health Insurance Markets and Non-Federal Governmental Group Health Plans

On April 8, 1997 an interim final rule with comment period was published in the

Federal Register

(62 FR 16894) that implemented the HIPAA health insurance reforms by adding 45 CFR parts 144, 146, and 148. Included in those regulations were enforcement provisions. In the June 10, 1997

Federal Register

(62 FR 31669), we published technical corrections to these interim final rules. After gaining some experience with direct federal enforcement in some states, we determined that it was necessary to provide more detail on the procedures that will be used to enforce HIPAA when a state does not do so. On August 20, 1999, an interim final rule with comment period was published in the

Federal Register

(64 FR 45786) that provided more detail on the procedures for enforcing title XXVII of the PHS Act, as added by HIPAA, and as amended by the Mental Health Parity Act of 1996 (Pub. L. 104-204, September 26, 1996), the Newborns' and Mothers' Health Protection Act of 1996 (Pub. L. 104-204, September 26, 1996), and the Women's Health and Cancer Rights Act of 1998 (Pub. L. 105-277, October 21, 1998), when a state does not enforce such laws. We published a final rule on November 25, 2005 in the

Federal Register

(70 FR 71020) that finalized this interim final rule, and made non-substantive amendments to the regulations detailing procedures for enforcing title XXVII of the PHS Act.

5. Exchanges

We published a request for comment relating to Exchanges in the August 3, 2010

Federal Register

(75 FR 45584). We issued initial guidance to states on Exchanges on November 18, 2010. In the July 15, 2011

Federal Register

(76 FR 41865), we published a proposed rule with proposals to implement components of the Exchanges, and a rule in the August 17, 2011

Federal Register

(76 FR 51201) regarding Exchange functions in the individual market and Small Business Health Options Program (SHOP), eligibility determinations, and Exchange standards for employers. A final rule implementing components of the Exchanges and setting forth standards for eligibility for Exchanges was published in the March 27, 2012

Federal Register

(77 FR 18309) (Exchange Establishment Rule).

In the 2014 Payment Notice and in the Amendments to the HHS Notice of Benefit and Payment Parameters for 2014 interim final rule, published in the March 11, 2013

Federal Register

(78 FR 15541), we set forth standards related to Exchange user fees. We established an adjustment to the FFE user fee in the Coverage of Certain Preventive Services under the Affordable Care Act final rule, published in the July 2, 2013

Federal Register

(78 FR 39869) (Preventive Services Rule).

In the May 11, 2016

Federal Register

(81 FR 29146), we published an interim final rule with amendments to the parameters of certain special enrollment periods (2016 Interim Final Rule). We finalized these in the 2018 Payment Notice final rule, published in the December 22, 2016

Federal Register

(81 FR 94058). In the March 8, 2016

Federal Register

(81 FR 12203), the final 2017 Payment Notice codified State Exchanges on the Federal platform along with relevant requirements. In the April 18, 2017 Market Stabilization final rule

Federal Register

(82 FR 18346), we amended standards relating to special enrollment periods and QHP certification. In the 2019 Payment Notice final rule, published in the April 17, 2018

Federal Register

(83 FR 16930), we modified parameters around certain special enrollment periods. In the April 25, 2019

Federal Register

(84 FR 17454), the final 2020 Payment Notice established a new special enrollment period. In the May 14, 2020

Federal Register

(85 FR 29204), the 2021 Payment Notice final rule made certain changes to plan category limitations and special enrollment period coverage effective date rules, allowed individuals provided a non-calendar year qualified small employer health reimbursement arrangement (QSEHRA) to qualify for an existing special enrollment period, and discussed plans for future rulemaking for employer-sponsored coverage verification and non-enforcement discretion for Exchanges that do not conduct random sampling until plan year 2021.

6. Essential Health Benefits

On December 16, 2011, HHS released a bulletin

9

that outlined an intended regulatory approach for defining EHB, including a benchmark-based framework. A proposed rule relating to EHBs was published in the November 26, 2012

Federal Register

(77 FR 70643). We established requirements relating to EHBs in the Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation Final Rule, which was published in the February 25, 2013

Federal Register

(78 FR 12833) (EHB Rule). In the 2019 Payment Notice, published in the April 17, 2018

Federal Register

(83 FR 16930), we added § 156.111 to provide states with additional options from which to select an EHB-benchmark plan for plan years 2020 and beyond.

9

“Essential Health Benefits Bulletin,” December 16, 2011. Available at

https://www.cms.gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.pdf.

The 2015 Payment Notice final rule, established a methodology for estimating the average per capita premium for purposes of calculating the premium adjustment percentage. Beginning with the 2015 benefit year, the premium adjustment percentage was calculated based on the estimates and projections of average per enrollee employer-sponsored insurance premiums from the National Health Expenditure Accounts (NHEA), which are calculated by the CMS Office of the Actuary. In the 2020 Payment Notice final rule, we amended the methodology for calculating the premium adjustment percentage by estimating per capita insurance premiums as private health insurance premiums, minus premiums paid for Medigap insurance and property and casualty insurance, divided by the unrounded number of unique private health insurance enrollees, excluding all Medigap enrollees. Additionally, in response to public comments to the proposed 2021 Payment Notice, the 2021 Payment Notice final rule included a policy stating that we will finalize payment parameters that depend on NHEA data, including the premium adjustment percentage, based on the data that are available as of the publication of the proposed rule for that benefit year, even if NHEA data are updated between the proposed and final rules.

In a proposed rule published in the July 15, 2020

Federal Register

(85 FR 42782), HHS, along with the Departments of Labor and the Treasury, proposed using the premium adjustment percentage as one alternative in setting the parameters for permissible increases in fixed-amount cost-sharing requirements for grandfathered group health plans.

7. Medical Loss Ratio (MLR)

We published a request for comment on section 2718 of the PHS Act in the April 14, 2010

Federal Register

(75 FR 19297), and published an interim final rule with a 60-day comment period relating to the MLR program on December 1, 2010 (75 FR 74863). A final rule with a 30-day comment period was

published in the December 7, 2011

Federal Register

(76 FR 76573). An interim final rule with a 60-day comment period was published in the December 7, 2011

Federal Register

(76 FR 76595). A final rule was published in the

Federal Register

on May 16, 2012 (77 FR 28790). The MLR program requirements were amended in final rules published in the March 11, 2014

Federal Register

(79 FR 13743), the May 27, 2014

Federal Register

(79 FR 30339), the February 27, 2015

Federal Register

(80 FR 10749), the March 8, 2016

Federal Register

(81 FR 12203), the December 22, 2016

Federal Register

(81 FR 94183), the April 17, 2018

Federal Register

(83 FR 16930), the May 14, 2020

Federal Register

(85 FR 29164) and an interim final rule was published in the September 2, 2020

Federal Register

(85 FR 54820).

8. Quality Rating System and Enrollee Satisfaction Survey

The overall framework and elements of the rating methodology for the QRS were published in the November 19, 2013

Federal Register

(78 FR 69418). Consistent with statutory provisions, in May 2014, HHS issued regulations at §§ 155.1400 and 155.1405 to establish the QRS and the QHP Enrollee Experience Survey display requirements for Exchanges and has worked towards requiring nationwide the prominent display of quality rating information on Exchange websites.

10

As a condition of certification and participation in the Exchanges, HHS requires that QHP issuers submit QRS clinical measure data and QHP Enrollee Survey response data for their respective QHPs offered through an Exchange in accordance with HHS guidance, which has been issued annually for each forthcoming plan year.

11

10

Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond, Final Rule, 79 FR 30240 at 30352 (May 27, 2014). Also see the “CMS Bulletin on display of QRS star ratings and Qualified Health Plan (QHP) Enrollee Survey results for QHPs offered through Exchanges,” August 15, 2019. Available at

https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/QualityRatingInformationBulletinforPlanYear2020.pdf.

11

See, for example, “Center for Clinical Standards & Quality, CMS, The Quality Rating System and Qualified Health Plan Enrollee Experience Survey: Technical Guidance for 2021,” September 2020. Available at

https://www.cms.gov/files/document/quality-rating-system-and-qualified-health-plan-enrollee-experience-survey-technical-guidance-2021.pdf.

9. State Innovation Waivers

Section 1332(a)(4)(B) of the PPACA requires the Secretaries to issue regulations regarding procedures for State Innovation Waivers. On March 14, 2011, the Departments published the “Application, Review, and Reporting Process for Waivers for State Innovation” proposed rule

12

in the

Federal Register

(76 FR 13553) to implement section 1332(a)(4)(B) of the PPACA. On February 27, 2012, the Departments published the “Application, Review, and Reporting Process for Waivers for State Innovation” final rule

13

in the

Federal Register

(77 FR 11700) (hereinafter referred to as the “2012 Final Rule”). On October 24, 2018, the Departments issued the “State Relief and Empowerment Waivers” guidance

14

in the

Federal Register

(83 FR 53575) (hereinafter referred to as the “2018 Guidance”), which superseded the previous guidance

15

published on December 16, 2015 in the

Federal Register

(80 FR 78131) and provided additional information about the requirements that states must meet for waiver proposals, the Secretaries' application review procedures, pass-through funding determinations, certain analytical requirements, and operational considerations. On November 6, 2020, the Departments issued an interim final rule

16

in the

Federal Register

(85 FR 71142), which revises regulations to set forth flexibilities in the public notice requirements and post-award public participation requirements for State Innovation Waivers under section 1332 of the PPACA during the COVID-19 PHE.

12

https://www.govinfo.gov/content/pkg/FR-2011-03-14/pdf/2011-5583.pdf.

13

https://www.govinfo.gov/content/pkg/FR-2012-02-27/pdf/2012-4395.pdf.

14

https://www.govinfo.gov/content/pkg/FR-2018-10-24/pdf/2018-23182.pdf.

15

https://www.govinfo.gov/content/pkg/FR-2015-12-16/pdf/2015-31563.pdf.

16

https://www.federalregister.gov/documents/2020/11/06/2020-24332/additional-policy-and-regulatory-revisions-in-response-to-the-covid-19-public-health-emergency.

B. Stakeholder Consultation and Input

HHS has consulted with stakeholders on policies related to the operation of Exchanges and the risk adjustment and HHS-RADV programs. We have held a number of listening sessions with consumers, providers, employers, health plans, advocacy groups and the actuarial community to gather public input. We have solicited input from state representatives on numerous topics, particularly risk adjustment and the direct enrollment option for FFEs and State Exchanges.

We consulted with stakeholders through regular meetings with the National Association of Insurance Commissioners (NAIC), regular contact with states, and health insurance issuers, trade groups, consumer advocates, employers, and other interested parties. We considered all public input we received as we developed the policies in this proposed rule.

C. Structure of Proposed Rule

The regulations outlined in this proposed rule would be codified in 45 CFR parts 147, 150, 153, 155, 156, 158, and 184. In addition, the regulations outlined in this proposed rule governing State Innovation Waivers under section 1332 of the PPACA at 45 CFR part 155 subpart N would also be codified in 31 CFR part 33.

The proposed changes to 45 CFR part 147 would make technical and conforming amendments regarding limited and special enrollment periods in the individual market.

The proposed changes to 45 CFR part 150 would make minor procedural changes to the requirements for administrative appeals of CMPs by health insurance issuers and non-federal governmental group health plans to align with current practices for the Departmental Appeals Board. We propose to make parallel changes to the requirements for administrative appeals of CMPs by QHP issuers under 45 CFR part 156, subpart J.

The proposed changes to 45 CFR part 153 would recalibrate the HHS risk adjustment models consistent with the approach outlined in the 2020 Payment Notice to transition away from the use of MarketScan® data. However, we propose to use the enrollee-level EDGE data from 2016, 2017 and 2018, the same data used for the 2021 model recalibration. We also propose changes to the HHS risk adjustment models to include a two-stage specification in the adult and child models, add severity and transplant indicators interacted with HCC counts factors in the adult and child models, and modify the enrollment duration factors in the adult models. In addition, we propose to clarify risk adjustment reporting requirements for issuers that choose to offer premium credits, if permitted by HHS for future benefit years. In order to provide greater market predictability, we propose to allow states to request a reduction of risk adjustment transfers for multiple years and set forth the request from Alabama to reduce risk adjustment transfers for the 2022 benefit year. Additionally, we propose clarifications to the process for HHS to audit issuers of risk adjustment covered plans and reinsurance-eligible plans and also propose to establish authority for HHS to conduct compliance reviews of these issuers. The proposals in part 153

also relate to the risk adjustment user fee for the 2022 benefit year. We also propose to revise the schedule for the collection of HHS-RADV charges and disbursement of payments such that these charges and disbursements will occur in the same calendar year in which HHS-RADV results are released. Finally, the proposals regarding part 153 include a proposal to shorten the discrepancy reporting windows for HHS-RADV, update the applicable regulations regarding when second validation audit (SVA) findings can be disputed or appealed, expand the conflict of interest standard for IVA Entities, and codify two previously established exemptions from the requirement to participate in HHS-RADV.

We propose to amend the definition of direct enrollment technology provider and add a definition of QHP issuer direct enrollment technology provider in part 155 to recognize that QHP issuers may also use QHP issuer direct enrollment technology providers to facilitate participation in direct enrollment under §§ 155.221 and 156.1230, and make conforming amendments to the definition of web-broker. We also propose changes to web-broker website display requirements, and propose to codify more specific operational readiness review requirements for web-brokers and direct enrollment entities. In addition, we propose allowing Navigators and certified application counselors (CACs) to assist consumers with applying for eligibility for insurance affordability programs and QHP enrollment through web-broker non-Exchange websites under certain circumstances. We also propose to amend the marketing and display requirements for direct enrollment entities.

We also propose to establish a new direct enrollment option for State Exchanges, SBE-FPs and FFE states to use direct enrollment technology and non-Exchange websites developed by approved web brokers, issuers and other direct enrollment partners to enroll qualified individuals in QHPs offered through the Exchange.

We also propose several amendments to special enrollment period policy. Specifically, we propose: To add a new flexibility to allow current Exchange enrollees and their dependents to change to a QHP of a lower metal level if they qualify for a special enrollment period due to becoming newly ineligible for APTC; to allow a qualified individual, enrollee, or dependent who did not receive timely notice of a triggering event and otherwise was reasonably unaware that a triggering event occurred to select a plan within 60 days of the date that he or she knew, or reasonably should have known, of the occurrence of the triggering event; and to clarify that a special enrollment period is triggered when a qualified individual or his or her dependent is enrolled in COBRA continuation coverage, and the employer contributions for such coverage completely cease. We also propose to require Exchanges to verify eligibility for at least 75 percent of special enrollments for consumers newly enrolling in Exchange coverage.

As we do every year in the annual HHS notice of benefit and payment parameters, we propose to update the required contribution percentage, the maximum annual limitation on cost sharing, and the reduced maximum annual limitation on cost sharing based on the premium adjustment percentage. Additionally, we propose to amend part 156 to establish that for the 2023 benefit year and beyond, we will publish the annual updates to the premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitation on cost sharing and required contribution percentage in guidance in January of the benefit year prior to the applicable benefit year, rather than in the applicable benefit year's annual HHS notice of benefit and payment parameters, as long as no change to the methodologies to calculate these amounts are proposed. We also propose a methodology for analyzing the impact of preliminary values of the reduced annual maximum limitations on cost sharing on the AVs of silver plan variations. Additionally, we propose clarifications to the process for HHS to audit QHP issuers related to APTC, CSRs, and user fees and propose to establish authority for HHS to conduct compliance reviews to ensure compliance with Federal APTC, CSRs, and user fee standards. We propose to update the user fee rates for the 2022 benefit year for all issuers participating on the Exchanges using the Federal platform. We also propose modifications to the regulations addressing network adequacy standards for non-network plans and payments accepted by QHP issuers. Finally, we propose to require QHP issuers to accept premium payments made on behalf of an enrollee from an individual coverage health reimbursement arrangement (individual coverage HRA) or QSEHRA.

The proposed changes to part 158 would establish the definition of prescription drug rebates and other price concessions that issuers must deduct from incurred claims for MLR reporting and rebate calculation purposes. The proposed changes to part 158 would also explicitly allow issuers the option to prepay a portion or all of the estimated MLR rebate for a given MLR reporting year in advance of the deadlines set forth in §§ 158.240(e) and 158.241(a)(2) and filing the MLR Annual Reporting Form, and establish a safe harbor allowing such issuers, under certain conditions, to defer the payment of rebates remaining after prepayment until the following MLR reporting year. In addition, the proposed changes to part 158 would allow issuers to provide MLR rebates in the form of a premium credit prior to the date that the rules currently provide. Lastly, we propose to clarify MLR reporting and rebate requirements for issuers that choose to offer temporary premium credits during a PHE declared by the Secretary of HHS in the 2021 benefit year and beyond when such credits are permitted by HHS.

The proposed addition of part 184 would require PBMs under contract with an issuer of QHPs to report prescription drug data required by section 1150A of the Act.

The proposed changes in 31 CFR part 33 and 45 CFR part 155 related to State Innovation Waivers would reference and incorporate the existing 2018 Guidance into regulations in order to give states certainty regarding the requirements to receive and maintain approval by the Departments.

III. Provisions of the Proposed HHS Notice of Benefit and Payment Parameters for 2022—Department of Health and Human Services

A. Part 147—Health Insurance Reform Requirements for the Group and Individual Health Insurance Markets

1. Guaranteed Availability of Coverage (§ 147.104)

Section 147.104(b)(2) incorporates by reference certain Exchange special enrollment periods described in § 155.420, making those special enrollment periods applicable to non-grandfathered coverage offered in the individual market through or outside of an Exchange. We propose amendments to § 147.104(b)(2) to clarify that paragraph (b)(2)(ii) does not apply to references in § 155.420(d)(4) (relating to errors of the Exchange), and to make a conforming amendment consistent with the proposal in § 155.420(c)(5) relating to special enrollment period availability for individuals who do not receive timely notice of a triggering event.

Section 155.420(d)(4) establishes an Exchange special enrollment period for a qualified individual or their

dependent if their enrollment or non-enrollment in a QHP is unintentional, inadvertent, or erroneous and is the result of the error, misrepresentation, misconduct, or inaction of an officer, employee, or agent of the Exchange or HHS, its instrumentalities, or a non-Exchange entity providing enrollment assistance or conducting enrollment activities. Section 147.104(b)(2)(ii) states that, when determining the application of a special enrollment period for individual market coverage offered outside the Exchange, a reference in § 155.420 to a “QHP” is deemed to refer to a plan, a reference to “the Exchange” is deemed to refer to the applicable state authority, and a reference to a “qualified individual” is deemed to refer to an individual in the individual market.

However, this paragraph was not intended to apply to § 155.420(d)(4), which is specific to errors of the Exchange, not the applicable state authority. It would be inappropriate for the triggering event in this case to apply to errors of the applicable state authority because the state does not perform the same functions as the Exchange. For example, the state authority does not perform an enrollment function. Thus, basing the triggering event on errors of the state is inappropriate and could create different special enrollment periods in the individual market on and off of the Exchange.

Therefore, we propose to clarify that § 147.104(b)(2)(ii) does not apply to references in § 155.420(d)(4). As a result, issuers offering health insurance coverage in the individual market must provide a limited open enrollment period under the same circumstances as described in § 155.420(d)(4).

In addition, we propose a conforming amendment to § 147.104(b)(4)(ii), consistent with the proposal in § 155.420(c)(5), to establish that if an individual did not receive timely notice of a triggering event described in paragraph (b)(2) or (3) of § 147.104, and otherwise was reasonably unaware that such a triggering event occurred, an issuer of non-grandfathered coverage in the individual market, whether inside or outside an Exchange, must assign the date the individual knew, or reasonably should have known, of the occurrence of the triggering event as the date of the triggering event for a special enrollment period. Consistent with §§ 147.104(b)(5) and 155.420(b), this proposal would allow the individual or dependent to choose the earliest effective date that would have been available if he or she had received timely notice of the triggering event or another effective date that would otherwise be available pursuant to § 155.420(b). We solicit comments on this approach. We note that this rule would not apply for special enrollment periods in the group market, and seek comment on whether we should exclude the reference to the triggering events in § 147.104(b)(3) in the amended § 147.104(b)(4)(ii) in order to retain alignment of the individual and group market special enrollment periods required under § 147.104(b)(3).

B. Part 150—CMS Enforcement in Group and Individual Markets

1. Technical Corrections

Part 150 sets forth our enforcement processes for all the requirements of title XXVII of the PHS Act with respect to health insurance issuers and non-federal governmental group health plans. This proposed rule would make technical corrections to multiple sections of part 150. Specifically, we propose removing all references to “HIPAA” and replacing them with “PHS Act” to clarify that the part 150 processes are used for enforcing not only the requirements emanating from HIPAA, but also the PPACA and other legislation enacted subsequent to HIPAA. These proposed wording changes were made in the February 27, 2013

Federal Register

final rule entitled “Patient Protection and Affordable Care Act; Health Insurance Market Rules; Rate Review” (78 FR 13406). However, because of an oversight, some references were not updated at that time. In this rule, we propose this change to the definition of “Complaint” in § 150.103; the introductory text to § 150.303(a), as well as to §§ 150.205(e)(2); 150.213(b); 150.305(a)(1), (a)(2), (b)(1) and (c)(1); 150.311(g) and 150.313(b).

2. Administrative Hearings

Additionally, we propose certain procedural changes to part 150 sections regarding administrative hearings. These proposed changes are intended to align with the Departmental Appeals Board's current practices for administrative hearings to appeal CMPs. Specifically, we propose changes that would remove requirements to file submissions in triplicate and instead require electronic filing. This change is reflected in the proposed amendments to the definition of “Filing date” in § 150.401, to the introductory text in § 150.427(a), and to the service of submission requirements captured in § 150.427(b). We also propose amendments to several provisions in part 150 to allow for the option of video conferencing as a form of administrative hearing in part 150 in addition to the forms already allowed. To capture this flexibility, we propose amendments to the definition of “Hearing” in § 150.401 and to the requirements outlined in § 150.419(a) related to the forms for the hearing, § 150.441(e) related to prehearing conferences, and § 150.447(a) related to the record of the hearing. Finally, we propose to update § 150.431 to allow the Administrative Law Judge (ALJ) to communicate the next steps for a hearing in either the acknowledgement of a request for hearing or on a later date. We propose parallel amendments to the administrative hearings requirements under subpart J of part 156. We seek comment on these proposals.

C. Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment

In subparts A, B, D, G, and H of part 153, we established standards for the administration of the risk adjustment program. The risk adjustment program is a permanent program created by section 1343 of the PPACA that transfers funds from lower-than-average risk, risk adjustment covered plans to higher-than-average risk, risk adjustment covered plans in the individual and small group markets (including merged markets), inside and outside the Exchanges.

17

In accordance with § 153.310(a), a state that is approved or conditionally approved by the Secretary to operate an Exchange may establish a risk adjustment program, or have HHS do so on its behalf.

18

We did not receive any requests from states to operate risk adjustment for the 2022 benefit year; therefore, HHS will operate risk adjustment in every state and the District of Columbia for the 2022 benefit year.

17

42 U.S.C. 18063.

18

Also see 42 U.S.C. 18041(c)(1).

We propose changes in this rule to the identification of the 3 benefit years of enrollee-level EDGE data that would be used for purposes of the annual recalibration of the risk adjustment models. We also propose modeling updates to improve the models' predictive power for certain subgroups of enrollees, as well as proposed changes to the enrollment duration factors for the adult models, and we propose to continue a pricing adjustment related to the Hepatitis C drugs. We propose to allow states to submit multi-year requests for reductions to transfer calculations under the state payment transfer formula and we outline the 2022 benefit year reduction request submitted by Alabama. Additionally, we propose to clarify risk adjustment reporting requirements for issuers that choose to

offer premium credits, if permitted by HHS for future benefit years. We propose the risk adjustment user fee for the 2022 benefit year and propose to codify in regulation the previously established exemptions from HHS-RADV requirements for issuers with only small group market carryover coverage in the benefit year being audited and for sole issuers in a state market risk pool during the benefit year being audited. We also propose to revise the schedule for the collection of HHS-RADV charges and disbursement of payments such that these charges and disbursements will occur in the same calendar year in which HHS-RADV results are released. Finally, we propose to shorten the discrepancy reporting windows during HHS-RADV, clarify and expand the conflict of interest standards that will be applied to initial validation audit (IVA) entities, and update the risk adjustment regulations to more clearly reflect the limitations on the ability to dispute or appeal SVA findings.

1. HHS Risk Adjustment (§ 153.320)

The HHS risk adjustment models predict plan liability for an average enrollee based on that person's age, sex, and diagnoses (also referred to as hierarchical condition categories (HCCs)), producing a risk score. The HHS risk adjustment methodology utilizes separate models for adults, children, and infants to account for clinical and cost differences in each age group. In the adult and child models, the relative risk assigned to an individual's age, sex, and diagnoses are added together to produce an individual risk score. Additionally, to calculate enrollee risk scores in the adult models, we added enrollment duration factors beginning with the 2017 benefit year, and prescription drug categories (RXCs) beginning with the 2018 benefit year.

19

Infant risk scores are determined by inclusion in one of 25 mutually exclusive groups, based on the infant's maturity and the severity of diagnoses. If applicable, the risk score for adults, children, or infants is multiplied by a CSR adjustment that accounts for differences in induced demand at various levels of cost sharing.

19

For the 2018 benefit year, there were 12 RXCs, but starting with the 2019 benefit year, the two severity-only RXCs were removed from the adult risk adjustment models. See, for example, 83 FR 16941.

The enrollment-weighted average risk score of all enrollees in a particular risk adjustment covered plan (also referred to as the plan liability risk score) within a geographic rating area is one of the inputs into the risk adjustment state payment transfer formula, which determines the state transfer payment or charge that an issuer will receive or be required to pay for that plan for the applicable state market risk pool. Thus, the HHS risk adjustment models predict average group costs to account for risk across plans, in keeping with the Actuarial Standards Board's Actuarial Standards of Practice for risk classification.

a. Updates to Data Used for Risk Adjustment Model Recalibration

Consistent with the approach outlined in the 2020 Payment Notice to no longer rely upon MarketScan® data

20

for recalibrating the risk adjustment models, we propose to continue to recalibrate the risk adjustment models for the 2022 benefit year using only enrollee-level EDGE data. However, rather than using 2017, 2018 and 2019 enrollee-level EDGE data, we propose to use the 2016, 2017, and 2018 enrollee-level EDGE data (the same years' data used to recalibrate the 2021 risk adjustment models) to recalibrate the risk adjustment models for the 2022 benefit year. We also propose to continue to use blended, or averaged, coefficients from the 3 years of separately solved models for the 2022 benefit year model recalibration.

20

84 FR 17463 through 17466.

Previously, we used the 3 most recent years of MarketScan® data available to recalibrate the 2016, 2017, and 2018 benefit year risk adjustment models. Then, starting with the 2019 benefit year, we began transitioning from using the MarketScan® data to using the enrollee-level EDGE data to recalibrate the risk adjustment models. The 2021 benefit year was the first year that we recalibrated the risk adjustment models using 3 years of enrollee-level EDGE data.

21

Specifically, for the 2021 benefit year, we used the 2016, 2017, and 2018 benefit years of enrollee-level EDGE data to recalibrate the risk adjustment models. During prior recalibrations, we implemented an approach that used blended, or averaged, coefficients from 3 years of separately solved models to provide stability for the risk adjustment coefficients year-to-year, while reflecting the most recent years' claims experience available. In some prior years, this approach resulted in reliance on data that could not be incorporated into the coefficients until after the publication of the applicable benefit year's Payment Notice, because the associated data was not available in time to incorporate into the models in time for publication in the Payment Notice.

22

For example, due to the timing of the proposed 2021 Payment Notice, we were unable to incorporate the 2018 benefit year enrollee-level EDGE data into the proposed coefficients in the proposed 2021 Payment Notice, and instead included draft coefficients in the proposed rule reflecting only 2016 and 2017 benefit years' enrollee-level EDGE data.

23

We were also unable to incorporate the 2018 benefit year enrollee-level EDGE data in the final coefficients in the 2021 Payment Notice; therefore, consistent with § 153.320(b)(1)(i), we released the final 2021 benefit year coefficients in guidance after publication of the 2021 Payment Notice.

24

We followed a similar approach in other benefit years when we were unable to incorporate the most recent year of available data in the applicable benefit year's Payment Notice.

25

21

85 FR 29173 through 29175.

22

See, for example, the 2018 Payment Notice final rule, 81 FR 94058; and the 2021 Payment Notice final rule, 85 FR 29173 through 29175.

23

See 85 FR 7097 through 7098 and 7104 through 7112.

24

See 85 FR 29173 through 29175. Also see

https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf.

25

See, for example, the 2018 Payment Notice rule, 81 FR 94084. Also see

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/2018-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf.

Some commenters to the proposed 2021 Payment Notice expressed concern about when the final blended coefficients would be available, asking that final coefficients be made available earlier. Having the risk adjustment coefficients for the upcoming benefit year available earlier allows issuers more time to incorporate this information when pricing their plans for the upcoming benefit year. Commenters offered suggestions for ways HHS could propose coefficients using all of the data years that HHS would use for the final coefficients. Stakeholders submitted similar comments in prior years when the final coefficients were released in guidance after publication of the applicable benefit year's Payment Notice.

26

We have continued to consider these comments and, in this rulemaking, we propose to change our approach for identifying the 3 most recent years of enrollee-level EDGE data that would be used to recalibrate the risk adjustment models. Previously, we used the three most recent years of data that are available in time for publication in the final rule or soon thereafter in guidance. However, beginning with the 2022 benefit year, we are proposing to

use the 3 most recent consecutive years of enrollee-level EDGE data that are available in time for incorporating the data in the draft recalibrated coefficients published in the proposed rule and we propose to not update the coefficients between the proposed and final rules if an additional year of enrollee-level EDGE data becomes available for incorporation. The purpose of this proposed change is to respond to stakeholders' request to provide the proposed coefficients in the proposed rule while continuing to use the 3 most recent consecutive years of enrollee-level EDGE data available to recalibrate the risk adjustment models. We believe this approach promotes stability and avoids the delays in publication of the coefficients while continuing to develop blended, or averaged, coefficients from the 3 years of separately solved models for model recalibration. This proposed approach also would continue to use actual data from issuers' individual and small group (or merged) market populations, as well as maintain year-to-year stability in risk scores as the recalibration would continue to use at least two years of enrollee-level EDGE data that were used in the previous year's models.

27

26

See, for example, 81 FR 94084 through 94085.

27

As detailed earlier, the 2022 benefit year recalibration would rely on the same 3 years of enrollee-level EDGE data that were used in the 2021 benefit year. For the 2023 benefit year and beyond, the recalibration would rely on 2 years of the enrollee-level data that were used in the prior year.

For these reasons, we propose to use 2016, 2017, and 2018 benefit years' enrollee-level EDGE data for the 2022 benefit year model recalibration. We seek comment on our proposal to determine coefficients for the 2022 benefit year based on a blend of separately solved coefficients from the 2016, 2017, and 2018 benefit years' enrollee-level EDGE data and our proposed approach to identify the 3 most recent years of data available for the annual recalibration of the risk adjustment models moving forward. Additionally, we seek comment on whether we should instead maintain the approach that would use the 2017, 2018, and 2019 benefit years' data to recalibrate the risk adjustment models for the 2022 benefit year.

The draft coefficients listed below in Tables 1 through 6 reflect the use of 2016, 2017, and 2018 benefit year enrollee-level EDGE data, as well as other risk adjustment model updates proposed in this proposed rule (including changes to the model specifications, changes to the enrollment duration factors and the pricing adjustment to Hepatitis C drugs). However, we note that the coefficients could change if the proposed recalibration policies, or other proposed modeling parameters, are not finalized or are modified in response to comments. In addition, consistent with § 153.320(b)(1)(i), if we are unable to finalize the final coefficients in time for the final rule, we would publish the final coefficients for the 2022 benefit year in guidance soon after the publication of the final rule.

b. Risk Adjustment Model Updates

Beginning with the 2022 benefit year, we are proposing two modeling updates to the risk adjustment models. These proposed updates include changes to the model specifications for the adult and child models and to the enrollment duration factors in the adult models to improve the models' prediction. We are also proposing to continue the market pricing adjustment for the Hepatitis C drugs that has been in place since the 2020 benefit year.

(1) Changes to the Model Specifications

Beginning with the 2022 benefit year, we are proposing to modify the adult and child models specifications to improve prediction for enrollees at both the low and highest ends of expected expenditures. The current HHS-HCC models are estimated by a weighted least squares regression.

28

The dependent variable is annualized simulated plan liability expenditures, and the weight is the person-specific sample eligibility fraction. The effective outcome is that the models predict per member per month (PMPM) expenditures.

28

See, for example, 78 FR 15420 and Section 3.7 of the “March 31, 2016 HHS-Operated Risk Adjustment Methodology Meeting Discussion Paper,” March 24, 2016. Available at

https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf.

As described in the 2021 Payment Notice, the current HHS-HCC models, which are linear models, modestly underpredict plan liability for enrollees without HCCs (enrollees with low expected expenditures) and modestly underpredict plan liability for enrollees with the highest HCC counts.

29

In the 2021 Payment Notice, we described options that we were considering to address these issues, such as adding a non-linear term or HCC counts terms to the risk adjustment models.

30

For the non-linear model option, we considered adding a coefficient-weighted sum of payment HCCs raised to a power that could be interpreted as a measure of overall disease burden. For the HCC counts model option, we considered adding eight indicator variables corresponding to 1 to 8-or-more payment HCCs, similar to the CMS-HCC risk adjustment counts models used for Medicare Advantage.

31

We have further evaluated the performance of these options, their potential for improved prediction, and considered other alternatives to improve the HHS risk adjustment models' prediction.

29

85 FR 29188 and 29189.

30

Ibid.

31

“Advance Notice of Methodological Changes for Calendar Year (CY) 2020 for the Medicare Advantage (MA) CMS-HCC Risk Adjustment Model,” December 20, 2018. Available at

https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part1.pdf.

Our initial analyses showed that the non-linear and HCC counts models would yield considerable gains in predictive accuracy in the adult models across several groups when compared to the current linear models.

32

We tested both the count and non-linear models' impact on the adult silver risk adjustment models and found that the enrollees in the lowest cost deciles had better predictive ratios under either the HCC counts or non-linear model specification than under the current linear model specification. However, both models had shortcomings that prompted us to consider alternate model options. For the HCC counts model, we were concerned that the presence of counts across all HCCs may promote gaming in coding practices. We explored ways to assure modeling convergence across all metals and data years, and found that the non-linear models did not consistently converge in all testing scenarios, and that convergence could not reliably be assured without constraining model factors and revising those techniques with each metal and data year model run. Therefore, we continued to explore additional types of model specifications refinements that could balance the goals of improving the models' prediction with mitigating modeling complexity and gaming concerns. Specifically, as described later in this section, we explored a two-stage specification with additional weighting in the second stage based on the inverse capped prediction from the first stage (“two-stage specification”), a specification with HCC counts included for a small number of severe and transplant HCCs (“interacted HCC counts factors”), and an approach combining the two-stage specification with the interacted HCC counts factors.

32

85 FR 7101 through 7104.

For the two-stage specification, we explored calibrating the adult and child models in two stages: In the first-stage

estimation, the model coefficients would be estimated using the current model specifications; and in the second stage, we would re-estimate the model weighted by the reciprocal of the predicted values of relative expenditures from the first step estimation with the same model specification.

33

The first stage of the weighted estimation method involves a linear regression (weighted by the person-specific eligibility fraction of the number of months enrolled divided by 12) of simulated plan liability on age-sex factors, payment HCC factors, the enrollment duration factors,

34

and RXCs for the adult models. For the child models, the first stage of the weighted estimation method involves a linear regression of simulated plan liability on age-sex factors and payment HCC factors. The second stage involves using the reciprocal of first-stage predictions as weights for a second linear regression.

35

To stabilize the weights for the second stage estimation, we imposed lower and upper bound caps on the first-stage predictions at the 2.5th and 97.5th percentiles in the adult models, and the 2.5th and 99.5th percentiles in the child models. We tested various caps for the weights based on the distribution of costs, and found these lower and upper bound caps achieved better prediction on average. This approach has the material effect of weighting the healthier enrollees, who represent a majority of enrollees in the individual and small group (including merged) markets but who are underpredicted by the current models, more heavily so that the statistical model predicts their expenditures more accurately. On the other hand, this approach systematically underweights, and therefore underpredicts, very expensive enrollees. However, the capped weighting approach mitigated the potential to underpredict at the high end for expensive enrollees, as well as any possible low-end overprediction. In our consideration of this option, we tested various weights, including reciprocals of square root of prediction, log of prediction, and residuals from first step estimation, but the reciprocal of the capped predictions resulted in better predictive ratios for low-cost enrollees compared to any of these alternative weighting functions.

33

This weighted approach is similar to the weighted least squares approach with the weight equal to the reciprocal of the estimated variance that is often used to correct for heteroskedasticity. However, in our proposed approach, we would use the reciprocal of predictions from the first step as weights to correct for underprediction of low-valued coefficients.

34

We are proposing to modify the enrollment duration factors in the adult models, as described elsewhere in this proposed rule.

35

Under the two-stage specification and interacted HCC counts model proposal described later in this section, we are proposing to replace the severity illness indicators in the adult risk adjustment models with the interacted HCC counts.

We also explored how the addition of severe and transplant indicators interacted with HCC counts, wherein an indicator flagging the presence of at least one severe or transplant payment HCC is being interacted with counts of the enrollee's payment HCCs.

36

The goals for this approach were to: (1) Address the non-linearity in costs between enrollees with no or very low costs and enrollees with high costs; (2) empirically incorporate the cost impact of multiple complex diseases; and (3) mitigate the gaming concerns with the HCC counts model. We tested different types of severity and transplant indicators interacted with HCC counts with the goal of improving prediction for enrollees with the highest costs and multiple HCCs to counter balance the reciprocal prediction weights that relatively underpredicted costs for these enrollees. For this approach, we assessed the HCCs for enrollees with extremely high costs, and HCCs that were being underpredicted in the current risk adjustment models. We found that many of the HCCs that were flagged as being underpredicted were those HCCs in the severe illness indicators, the transplant HCCs, and other HCCs related to severity of disease; therefore, we considered dropping the current severity illness indicators in the adult models and replacing them with severity and transplant indicators interacted with HCC counts factors in the adult and child models. Table 3 lists the HCCs that were selected for the severity and transplant indicators for the adult and child models for purposes of exploring this option. The severity and transplant indicators were then interacted with HCC counts factors, which are described below.

36

For HCCs in a group, the group is counted at most once. These groups of HCCs in the risk adjustment models are typically detailed in the Tables 6 and 7 of the HHS-Developed Risk Adjustment Model Algorithm “Do It Yourself (DIY)” Software.

The purpose of adding severity and transplant indicators interacted with HCC counts factors is to account for the fact that costs of certain HCCs rise significantly when they occur with multiple other HCCs. However, in order to mitigate the incentive to upcode multiple HCCs, we only increased incremental risk scores in the presence of at least one of the selected HCCs in the severity or transplant indicator groups in Table 3. That is, an enrollee must have at least one HCC in the “severity” or “transplant” indicator groups in Table 3 to receive the interacted HCC counts coefficient toward their risk score.

Under this approach, when an enrollee has a severity indicator HCC in Table 3, the enrollee's risk score includes the sum of: (1) Severity HCC variable coefficient;

37

and (2) applicable severity HCC counts variable coefficient. The HCC counts factors, which indicate the counts of all payment HCCs for an enrollee with at least one HCC, interacted with the severity indicator in Table 3, range from one, two, to 10+ payment HCCs (1, 2, . . . , 10+) for the adult models, and from one, two, to 5, then 6 or 7, and 8+ payment HCCs for the child models. To implement the severity indicator HCC counts factors and further explore this option, we removed the current severe illness indicators in the adult models, and added severity indicator interacted HCC counts variables for the adult and child models.

37

This is in addition to the HCC coefficients for any other HCCs that the enrollee has, as well other risk adjustment factors that the enrollee has (such as demographic factors). If an enrollee has no severe HCCs the severe count interaction term coefficients are not applicable.

For the transplant-related HCCs within the severity indicator HCC counts in Table 3,

38

we found separating out transplant HCCs into their own additional indicator to interact HCC counts factors improved prediction for these high-cost enrollees. Therefore, for the transplant HCCs, we created a separate transplant indicator to interact with payment HCC counts of 4, 5, 6, 7, or 8+ for the adult models, and a single indicator variable of payment HCC counts of 4+ for the child models. For example, an adult enrollee with a transplant HCC 34 “Liver Transplant Status/Complications” in the transplant indicator group and three other payment HCCs received the following factors toward their risk score in the adult models: (1) The four coefficients for their individual HCCs (the three non-transplant HCCs and the HCC 34 transplant HCC coefficient), (2) severity interacted HCC counts of 4 coefficient, and (3) transplant interacted HCC

counts of 4 coefficient.

39

The child model operated similarly. For a child enrollee with a transplant HCC in the transplant indicator group and three other payment HCCs, the following was used to calculate the enrollee's risk score: (1) Coefficients for all four HCCs, (including the transplant HCC coefficient), (2) severity interacted HCC counts of 4 coefficient, and (3) transplant interacted HCC counts of 4 coefficient.

38

We note that one transplant HCC (HCC 18 Pancreas Transplant) is not included on the list in Table 3. HCC 18 has a much lower coefficient than any of the other transplant HCCs in the adult models and was not underpredicted by the models. Therefore, we propose to exclude it from the list in Table 3 and solicit comments on the proposed treatment of HCC 18.

39

This is in addition to other risk adjustment factors that the enrollee has (such as demographic factors).

As an alternative, we explored interacting the HCC counts factors with each selected severity and transplant HCC, but found it was sufficient to interact the HCC counts factors with a variable indicating the presence of at least one of the selected HCCs in each group to improve prediction for enrollees with these HCCs. We also explored different combinations of HCC counts to identify the counts factors for both indicator groups in the adult and child models that provided the best balance of reasonable sample sizes and relative cost differences between each counts factor. More specifically, in the adult models, we found that starting with 4+ HCCs for the transplant interacted factors improved predictions of enrollees at the very high end in terms of risk and cost and ending at 8+ HCCs instead of 10+ HCCs addressed the small sample sizes of enrollees with a transplant and 9 or more payment HCCs. For the child models, we found having one variable for 4+ payment HCCs provided more stable estimates given the smaller sample sizes for children than those for adults.

Lastly, we tested combining these specifications into an alternative approach that incorporated both the two-stage specification and the severity and transplant indicators interacted HCC counts factors described above. We found this combined approach generally improved prediction for enrollees at both the low and highest ends of expected expenditures. Specifically, even though we found that the age-sex factors and some HCCs might have slightly worse predictive ratios under the proposed combined approach than the current linear models, we found that this combined approach improves predictive ratios in comparison to the current models in each decile of predicted plan liability. We also found that this combined approach improves R-squared in comparison to the current model and that even though the coefficients for the model factors that are most impacted by the combined approach (the age-sex factors and the severe and transplant HCCs) are changing under the 2022 benefit year models compared to the 2021 benefit year models, the average enrollee's adult risk score in the recalibration sample in the silver metal level is only increasing slightly between 2021 benefit year models to 2022 benefit year models. Therefore, we propose to modify the HHS risk adjustment model specifications for the adult and child models by combining a two-stage specification and adding interacted HCC counts factors. For the two-stage specification, we propose calibrating the adult and child models in two stages. The first stage of the weighted estimation method would involve a linear regression of simulated plan liability on age-sex factors and payment HCC factors for the adult and child models, with the addition of the enrollment duration and RXCs factors for the adult models. The second stage would use the reciprocal of prediction as weights from the first step as a second stage linear regression. To stabilize the weights from the first stage predictions, we propose lower and upper bound caps on the predictions at the 2.5th and 97.5th percentiles in the adult models and the 2.5th and 99.5th percentiles in the child models. This two-stage specification would be combined with the severity and transplant indicators from the interacted HCC counts factors. For the severity indicator group, we propose to add separate count factors for one to 10+ payment HCCs counts factors (1, 2, . . . , 10+) for the adult models and one to 5, 6 or 7, and 8+ payment HCCs (1, 2, . . . 5, 6 or 7, 8+) for the child models. The HCCs that flag the severity indicator are listed in Table 3. For the transplant HCCs, we propose to incorporate variables for 4 to 8+ payment HCCs (4, 5, 6, 7, 8+) for the adult models and one variable for 4+ payment HCCs for the child models. All variables, including the severity and transplant indicators interacted in the interacted HCC counts factors, would be included in both stages of the regressions. We propose to incorporate these model specification updates beginning with the 2022 benefit year HHS risk adjustment adult and child models. We also propose to remove the current severity illness indicators in the adult models beginning with the 2022 benefit year.

The coefficients presented in Tables 1 and 2 incorporate these proposed changes and Table 3 provides the list of severity and transplant HCCs that apply for the interacted HCC counts factors. We seek comment on these proposals, including on the HCCs selected for flagging as severity and transplant indicators listed in Table 3 such as whether we should include HCC 18 Pancreas Transplant in the transplant indicator group, and the alternatives described above. We also request comment on whether we should pursue both the interacted HCC counts factors and the two-stage specification beginning with the 2022 benefit year (as proposed), if we should implement one of the two approaches beginning with the 2022 benefit year (and if so, which one), or if we should wait to implement the proposed changes that combines the proposed model specification updates until the 2023 benefit year.

c. Changes to the Enrollment Duration Factors

In this rule, we propose changes to the enrollment duration factors in the adult risk adjustment models to improve the prediction for partial year enrollees with HCCs. As described in the proposed 2021 Payment Notice, we have been considering potential adjustments to the enrollment duration factors and previously analyzed the current factors using the 2016 and 2017 enrollee-level EDGE data.

40

We explored heterogeneity (variations) of costs for partial year enrollees in the presence of certain diagnosis codes, by market (individual or small group),

41

and under various enrollment circumstances, such as enrollment beginning later in the year or ending before the end of the year. Our preliminary analysis of 2017 enrollee-level EDGE data found that the current enrollment duration factors are driven by enrollees with HCCs. That is, partial year enrollees with HCCs had higher PMPM expenditures on average as compared to full year enrollees with HCCs. On the other hand, partial year enrollees without HCCs were not significantly different in PMPM expenditures compared to full year enrollees without HCCs. In the 2021 Payment Notice, we also explained that our preliminary analysis found that, in comparison to the effect of the presence of HCCs on enrollment duration factors, enrollment timing (for example, enrollment at the beginning of the year compared to enrollment after open enrollment period, or drop in enrollment before the end of the year) did not appear to affect PMPM expenditures on average. While we did not make changes to the enrollment

duration factors in the 2021 Payment Notice, we stated that we were considering eliminating the monthly enrollment duration factors up to 11 months and replacing them with monthly enrollment duration factors up to 6 months for enrollees with HCCs. We also stated that we intended to review the trends observed in our preliminary analysis using an additional year's data before proposing changes.

40

See 85 FR 7103 and 7104.

41

In the enrollee-level EDGE data, merged market enrollees are assigned to the individual or small group market indicator based on their plan.

Since the publication of the 2021 Payment Notice, we have reassessed enrollment duration factors for adults using the 2018 benefit year enrollee-level EDGE data. The additional data year's findings were consistent with our prior finding that partial year enrollees without HCCs do not have PMPM expenditures that are significantly different compared to full year enrollees without HCCs. We also found that the current enrollment duration factors underpredict plan liability for partial year adult enrollees with HCCs, and overpredict plan liability for partial year adult enrollees without HCCs. Therefore, beginning with the 2022 benefit year, we are proposing to remove the current 11 enrollment duration factors of up to 11 months for all enrollees in the adult models, and add new monthly enrollment duration factors of up to 6 months to the adult models that would only apply for enrollees with payment HCCs. If finalized as proposed, this would mean there would be no enrollment duration factors for adult enrollees without payment HCCs starting with the 2022 benefit year adult models. As part of this analysis, we also considered adoption of enrollment duration factors by market, but we did not find a meaningful distinction in relative costs between markets on average once we implemented the proposed enrollment duration factors of up to 6 months for adult enrollees with payment HCCs. Therefore, we are not proposing enrollment duration factors for the adult models by market type at this time. We are also proposing to continue to incorporate enrollment duration factors only in the adult models.

42

We solicit comment on the proposed changes to the enrollment duration factors for the adult models. We also seek comment on whether we should implement these model changes starting with the 2022 benefit year, whether we should delay implementation until the 2023 benefit year, or whether we should create the enrollment duration factors for different lengths, such as up to 9 months of enrollment, instead of up to 6 months, as proposed.

42

As explained in the 2021 Payment Notice proposed rule, we found that partial year enrollees in the child models did not have the same risk differences as partial year enrollees in the adult models and they tended to have similar risk to full year enrollees in the child models. In the infant models, we found that partial year infants had higher expenditures on average compared to their full year counterparts; however, the incorporation of enrollment duration factors created interaction issues with the current severity and maturity factors and did not have a meaningful impact on the general predictive accuracy of the infant models. See 85 FR 7103 and 7104.

d. Pricing Adjustment for the Hepatitis C Drugs

For the 2022 benefit year models, we propose to continue applying the market pricing adjustment to the plan liability associated with Hepatitis C drugs that has been in place beginning with the 2020 benefit year final risk adjustment models.

43

We continue to believe this market pricing adjustment is necessary to account for the significant pricing changes associated with the introduction of new and generic Hepatitis C drugs between the data years used for recalibrating the models and the applicable recalibration benefit year. We also continue to be cognizant that issuers might seek to influence provider prescribing patterns if a drug claim can trigger a large increase in an enrollee's risk score that is higher than the actual plan liability of the drug claim, and therefore, make the risk adjustment transfer results more favorable for the issuer. We previously stated that we intended to reassess this pricing adjustment with future benefit years' enrollee-level EDGE data.

44

We remain committed to doing so. However, we are proposing to use the same 3 years of enrollee-level EDGE data for the 2022 benefit year model recalibration as those used for the 2021 benefit year. Therefore, we propose to continue making the market pricing adjustment to the plan liability associated with Hepatitis C drugs to reflect future market pricing prior to solving for coefficients for the 2022 benefit year models.

45

We intend to reassess this pricing adjustment in future recalibrations with additional years of enrollee-level EDGE data. We seek comment on this proposal.

43

84 FR 17463 through 17466.

44

85 FR 29185.

45

The Hepatitis C drugs market pricing adjustment to plan liability is applied for all enrollees taking Hepatitis C drugs in the data used for recalibration.

e. List of Factors To Be Employed in the Risk Adjustment Models (§ 153.320)

The proposed 2022 benefit year risk adjustment model factors resulting from the equally weighted (averaged) blended factors from separately solved models using the 2016, 2017, and 2018 enrollee-level EDGE data, including all of the proposed model changes detailed above, are shown in Tables 1 through 6. The adult, child, and infant models have been truncated to account for the high-cost risk pool payment parameters by removing 60 percent of costs above the $1 million threshold.

46

Table 1 contains factors for each adult model, including the age-sex, HCCs, RXCs, RXC-HCC interactions, interacted HCC counts, and enrollment duration coefficients. Table 2 contains the factors for each child model. Table 3 lists the HHS-HCCs in the proposed severity and transplant indicator flags selected for the interacted HCC counts factors that would apply to the adult and child models beginning with the 2022 benefit year. Table 4 contains the factors for each infant model. Tables 5 and 6 contain the HCCs included in the infant models' maturity and severity categories, respectively.

46

As detailed below, we are not proposing changes to the high-cost risk pool parameters for the 2022 benefit year. Therefore, as proposed, we would maintain the $1 million threshold and 60 percent coinsurance rate.

Table 1—Proposed Adult Risk Adjustment Model Factors for 2022 Benefit Year

HCC or RXC No.

Factor

Platinum

Gold

Silver

Bronze

Catastrophic

Demographic Factors

Age 21-24, Male

0.179

0.134

0.098

0.070

0.068

Age 25-29, Male

0.184

0.138

0.102

0.074

0.073

Age 30-34, Male

0.214

0.162

0.120

0.087

0.085

Age 35-39, Male

0.248

0.188

0.140

0.100

0.097

Age 40-44, Male

0.277

0.213

0.159

0.114

0.111

Age 45-49, Male

0.310

0.240

0.182

0.131

0.128

Age 50-54, Male

0.393

0.316

0.249

0.191

0.188

Age 55-59, Male

0.446

0.359

0.285

0.221

0.217

Age 60-64, Male

0.524

0.427

0.343

0.270

0.265

Age 21-24, Female

0.292

0.223

0.167

0.125

0.123

Age 25-29, Female

0.319

0.244

0.183

0.138

0.136

Age 30-34, Female

0.375

0.290

0.221

0.165

0.162

Age 35-39, Female

0.428

0.336

0.258

0.194

0.190

Age 40-44, Female

0.484

0.383

0.297

0.223

0.218

Age 45-49, Female

0.507

0.401

0.309

0.229

0.225

Age 50-54, Female

0.565

0.459

0.364

0.281

0.276

Age 55-59, Female

0.569

0.461

0.366

0.283

0.278

Age 60-64, Female

0.616

0.505

0.405

0.320

0.315

Diagnosis Factors

HCC001

HIV/AIDS

1.372

1.241

1.148

1.066

1.062

HCC002

Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock

9.748

9.526

9.394

9.265

9.261

HCC003

Central Nervous System Infections, Except Viral Meningitis

8.571

8.427

8.323

8.202

8.195

HCC004

Viral or Unspecified Meningitis

8.571

8.427

8.323

8.202

8.195

HCC006

Opportunistic Infections

8.171

8.081

7.987

7.849

7.840

HCC008

Metastatic Cancer

24.079

23.695

23.536

23.460

23.461

HCC009

Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia

14.384

14.117

13.991

13.897

13.896

HCC010

Non-Hodgkin Lymphomas and Other Cancers and Tumors

5.887

5.722

5.626

5.532

5.528

HCC011

Colorectal, Breast (Age <50), Kidney, and Other Cancers

3.865

3.677

3.547

3.410

3.404

HCC012

Breast (Age 50+) and Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors

2.559

2.414

2.305

2.185

2.180

HCC013

Thyroid Cancer, Melanoma, Neurofibromatosis, and Other Cancers and Tumors

1.134

1.018

0.893

0.744

0.735

HCC018

Pancreas Transplant Status

0.875

0.813

0.806

1.044

1.021

HCC019

Diabetes with Acute Complications

0.385

0.323

0.262

0.202

0.198

HCC020

Diabetes with Chronic Complications

0.385

0.323

0.262

0.202

0.198

HCC021

Diabetes without Complication

0.385

0.323

0.262

0.202

0.198

HCC022

Type 1 Diabetes Mellitus, add-on to Diabetes HCCs 19-21

0.311

0.276

0.242

0.173

0.169

HCC023

Protein-Calorie Malnutrition

10.875

10.752

10.670

10.587

10.582

HCC026

Mucopolysaccharidosis

28.668

28.458

28.362

28.308

28.309

HCC027

Lipidoses and Glycogenosis

28.668

28.458

28.362

28.308

28.309

HCC029

Amyloidosis, Porphyria, and Other Metabolic Disorders

7.531

7.405

7.319

7.244

7.242

HCC030

Adrenal, Pituitary, and Other Significant Endocrine Disorders

1.328

1.224

1.125

1.007

1.001

HCC034

Liver Transplant Status/Complications

8.038

7.973

7.884

7.864

7.853

HCC035_1

47

Acute Liver Failure/Disease, Including Neonatal Hepatitis

7.063

6.914

6.849

6.800

6.798

HCC035_2

Chronic Liver Failure/End-Stage Liver Disorders

2.906

2.734

2.630

2.520

2.516

HCC036

Cirrhosis of Liver

1.283

1.180

1.078

0.946

0.938

HCC037_1

Chronic Viral Hepatitis C

0.830

0.731

0.637

0.529

0.523

HCC037_2

Chronic Hepatitis, Except Chronic Viral Hepatitis C

0.830

0.731

0.637

0.529

0.523

HCC041

Intestine Transplant Status/Complications

23.291

23.157

23.033

22.817

22.812

HCC042

Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis

11.657

11.449

11.339

11.253

11.250

HCC045

Intestinal Obstruction

4.859

4.672

4.585

4.484

4.482

HCC046

Chronic Pancreatitis

3.262

3.088

3.000

2.913

2.912

HCC047

Acute Pancreatitis

2.933

2.727

2.593

2.418

2.412

HCC048

Inflammatory Bowel Disease

0.820

0.731

0.626

0.488

0.479

HCC054

Necrotizing Fasciitis

8.872

8.708

8.632

8.596

8.595

HCC055

Bone/Joint/Muscle Infections/Necrosis

4.708

4.536

4.467

4.432

4.432

HCC056

Rheumatoid Arthritis and Specified Autoimmune Disorders

1.340

1.230

1.121

1.001

0.994

HCC057

Systemic Lupus Erythematosus and Other Autoimmune Disorders

0.878

0.782

0.664

0.514

0.505

HCC061

Osteogenesis Imperfecta and Other Osteodystrophies

2.463

2.304

2.185

2.051

2.044

HCC062

Congenital/Developmental Skeletal and Connective Tissue Disorders

2.463

2.304

2.185

2.051

2.044

HCC063

Cleft Lip/Cleft Palate

1.676

1.544

1.437

1.309

1.303

HCC066

Hemophilia

69.981

69.651

69.503

69.435

69.435

HCC067

Myelodysplastic Syndromes and Myelofibrosis

13.285

13.162

13.096

13.039

13.036

HCC068

Aplastic Anemia

13.285

13.162

13.096

13.039

13.036

HCC069

Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn

13.285

13.162

13.096

13.039

13.036

HCC070

Sickle Cell Anemia (Hb-SS)

2.395

2.283

2.191

2.082

2.077

HCC071

Beta Thalassemia Major

2.395

2.283

2.191

2.082

2.077

HCC073

Combined and Other Severe Immunodeficiencies

4.039

3.936

3.888

3.840

3.839

HCC074

Disorders of the Immune Mechanism

4.039

3.936

3.888

3.840

3.839

HCC075

Coagulation Defects and Other Specified Hematological Disorders

1.763

1.672

1.594

1.499

1.495

HCC081

Drug Use with Psychotic Complications

2.438

2.264

2.108

1.897

1.885

HCC082

Drug Use Disorder, Moderate/Severe, or Drug Use with Non-Psychotic Complications

2.438

2.264

2.108

1.897

1.885

HCC083

Alcohol Use with Psychotic Complications

1.296

1.171

1.057

0.911

0.903

HCC084

Alcohol Use Disorder, Moderate/Severe, or Alcohol Use with Specified Non-Psychotic Complications

1.296

1.171

1.057

0.911

0.903

HCC087_1

Schizophrenia

2.445

2.260

2.121

1.961

1.954

HCC087_2

Delusional and Other Specified Psychotic Disorders, Unspecified Psychosis

2.372

2.199

2.067

1.894

1.886

HCC088

Major Depressive Disorder, Severe, and Bipolar Disorders

1.271

1.141

1.008

0.838

0.829

HCC090

Personality Disorders

0.856

0.742

0.606

0.446

0.435

HCC094

Anorexia/Bulimia Nervosa

2.223

2.099

1.993

1.875

1.869

HCC096

Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes

8.930

8.904

8.869

8.785

8.778

HCC097

Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes

1.051

0.965

0.880

0.783

0.777

HCC102

Autistic Disorder

0.974

0.865

0.741

0.602

0.593

HCC103

Pervasive Developmental Disorders, Except Autistic Disorder

0.856

0.742

0.606

0.446

0.435

HCC106

Traumatic Complete Lesion Cervical Spinal Cord

10.321

10.159

10.050

9.940

9.936

HCC107

Quadriplegia

10.321

10.159

10.050

9.940

9.936

HCC108

Traumatic Complete Lesion Dorsal Spinal Cord

7.300

7.190

7.148

7.079

7.076

HCC109

Paraplegia

7.300

7.190

7.148

7.079

7.076

HCC110

Spinal Cord Disorders/Injuries

5.109

4.928

4.832

4.737

4.734

HCC111

Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease

3.983

3.791

3.637

3.454

3.445

HCC112

Quadriplegic Cerebral Palsy

2.457

2.306

2.196

2.073

2.070

HCC113

Cerebral Palsy, Except Quadriplegic

0.911

0.825

0.739

0.628

0.621

HCC114

Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies

1.633

1.516

1.406

1.273

1.266

HCC115

Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy

5.117

5.042

5.019

4.999

4.999

HCC117

Muscular Dystrophy

1.717

1.593

1.473

1.307

1.298

HCC118

Multiple Sclerosis

3.304

3.144

3.019

2.877

2.870

HCC119

Parkinson's, Huntington's, and Spinocerebellar Disease, and Other Neurodegenerative Disorders

1.717

1.593

1.473

1.307

1.298

HCC120

Seizure Disorders and Convulsions

1.262

1.142

1.028

0.887

0.879

HCC121

Hydrocephalus

10.147

10.050

9.987

9.914

9.910

HCC122

Coma, Brain Compression/Anoxic Damage

10.005

9.852

9.745

9.624

9.618

HCC123

Narcolepsy and Cataplexy

5.856

5.690

5.554

5.405

5.397

HCC125

Respirator Dependence/Tracheostomy Status

21.425

21.213

21.080

20.954

20.949

HCC126

Respiratory Arrest

8.941

8.754

8.635

8.523

8.520

HCC127

Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes

8.941

8.754

8.635

8.523

8.520

HCC128

Heart Assistive Device/Artificial Heart

21.035

20.838

20.709

20.586

20.580

HCC129

Heart Transplant Status/Complications

21.035

20.838

20.709

20.586

20.580

HCC130

Heart Failure

2.046

1.947

1.874

1.792

1.788

HCC131

Acute Myocardial Infarction

6.142

5.902

5.813

5.777

5.781

HCC132

Unstable Angina and Other Acute Ischemic Heart Disease

4.704

4.470

4.361

4.250

4.250

HCC135

Heart Infection/Inflammation, Except Rheumatic

8.866

8.749

8.645

8.507

8.499

HCC137

Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders

1.910

1.809

1.715

1.613

1.608

HCC138

Major Congenital Heart/Circulatory Disorders

1.910

1.809

1.715

1.613

1.608

HCC139

Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital Heart/Circulatory Disorders

1.910

1.809

1.715

1.613

1.608

HCC142

Specified Heart Arrhythmias

1.838

1.717

1.608

1.473

1.469

HCC145

Intracranial Hemorrhage

11.065

10.884

10.774

10.662

10.658

HCC146

Ischemic or Unspecified Stroke

1.590

1.463

1.368

1.236

1.231

HCC149

Cerebral Aneurysm and Arteriovenous Malformation

2.570

2.429

2.321

2.184

2.178

HCC150

Hemiplegia/Hemiparesis

3.409

3.301

3.271

3.263

3.266

HCC151

Monoplegia, Other Paralytic Syndromes

2.405

2.286

2.199

2.086

2.081

HCC153

Atherosclerosis of the Extremities with Ulceration or Gangrene

7.875

7.759

7.732

7.746

7.750

HCC154

Vascular Disease with Complications

5.620

5.504

5.463

5.427

5.427

HCC156

Pulmonary Embolism and Deep Vein Thrombosis

7.977

7.859

7.751

7.617

7.608

HCC158

Lung Transplant Status/Complications

12.435

12.247

12.124

12.008

11.999

HCC159

Cystic Fibrosis

5.177

5.040

4.976

4.910

4.908

HCC160

Chronic Obstructive Pulmonary Disease, Including Bronchiectasis

0.824

0.726

0.617

0.488

0.481

HCC161_1

Severe Asthma

0.824

0.726

0.617

0.488

0.481

HCC161_2

Asthma, Except Severe

0.824

0.726

0.617

0.488

0.481

HCC162

Fibrosis of Lung and Other Lung Disorders

1.742

1.631

1.532

1.403

1.396

HCC163

Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections

7.455

7.417

7.378

7.350

7.349

HCC174

Exudative Macular Degeneration

1.438

1.298

1.167

0.991

0.982

HCC183

Kidney Transplant Status/Complications

8.681

8.609

8.503

8.269

8.263

HCC184

End Stage Renal Disease

22.696

22.390

22.310

22.358

22.400

HCC187

Chronic Kidney Disease, Stage 5

0.863

0.794

0.736

0.668

0.665

HCC188

Chronic Kidney Disease, Severe (Stage 4)

0.863

0.794

0.736

0.668

0.665

HCC203

Ectopic and Molar Pregnancy

2.155

1.952

1.753

1.433

1.416

HCC204

Miscarriage with Complications

0.924

0.813

0.657

0.430

0.413

HCC205

Miscarriage with No or Minor Complications

0.924

0.813

0.657

0.430

0.413

HCC207

Pregnancy with Delivery with Major Complications

4.064

3.783

3.551

3.135

3.118

HCC208

Pregnancy with Delivery with Complications

4.064

3.783

3.551

3.135

3.118

HCC209

Pregnancy with Delivery with No or Minor Complications

2.847

2.639

2.414

1.955

1.928

HCC210

(Ongoing) Pregnancy without Delivery with Major Complications

1.280

1.141

0.959

0.726

0.711

HCC211

(Ongoing) Pregnancy without Delivery with Complications

0.879

0.766

0.607

0.438

0.427

HCC212

(Ongoing) Pregnancy without Delivery with No or Minor Complications

0.352

0.280

0.190

0.123

0.119

HCC217

Chronic Ulcer of Skin, Except Pressure

1.533

1.420

1.330

1.220

1.215

HCC218

Extensive Third Degree Burns

23.966

23.738

23.617

23.538

23.536

HCC219

Major Skin Burn or Condition

2.364

2.241

2.145

2.041

2.036

HCC223

Severe Head Injury

17.030

16.895

16.771

16.632

16.624

HCC226

Hip and Pelvic Fractures

8.337

8.132

8.048

7.995

7.996

HCC228

Vertebral Fractures without Spinal Cord Injury

4.358

4.194

4.090

3.962

3.956

HCC234

Traumatic Amputations and Amputation Complications

4.952

4.795

4.736

4.696

4.697

HCC251

Stem Cell, Including Bone Marrow, Transplant Status/Complications

22.648

22.602

22.510

22.387

22.377

HCC253

Artificial Openings for Feeding or Elimination

6.513

6.413

6.376

6.352

6.352

HCC254

Amputation Status, Upper Limb or Lower Limb

1.806

1.671

1.574

1.456

1.451

Interacted HCC Counts Factors

Severe illness, 1 payment HCC

−6.091

−6.125

−6.181

−6.267

−6.271

Severe illness, 2 payment HCCs

−5.758

−5.804

−5.824

−5.883

−5.886

Severe illness, 3 payment HCCs

−4.600

−4.607

−4.526

−4.404

−4.393

Severe illness, 4 payment HCCs

−3.648

−3.586

−3.415

−3.138

−3.118

Severe illness, 5 payment HCCs

−2.965

−2.815

−2.554

−2.137

−2.110

Severe illness, 6 payment HCCs

−2.718

−2.456

−2.103

−1.561

−1.528

Severe illness, 7 payment HCCs

−1.848

−1.445

−0.987

−0.319

−0.281

Severe illness, 8 payment HCCs

−1.328

−0.842

−0.328

0.405

0.446

Severe illness, 9 payment HCCs

0.191

0.836

1.458

2.310

2.355

Severe illness, 10 or more payment HCCs

8.579

9.578

10.431

11.526

11.579

Transplant severe illness, 4 payment HCCs

3.559

3.502

3.483

3.483

3.487

Transplant severe illness, 5 payment HCCs

7.420

7.365

7.353

7.363

7.368

Transplant severe illness, 6 payment HCCs

12.674

12.625

12.622

12.645

12.652

Transplant severe illness, 7 payment HCCs

18.766

18.696

18.688

18.707

18.715

Transplant severe illness, 8 or more payment HCCs

33.796

33.788

33.829

33.905

33.916

Enrollment Duration Factors

Enrolled for 1 month, at least one payment HCC

9.287

7.981

6.876

5.547

5.462

Enrolled for 2 months, at least one payment HCC

3.618

2.896

2.336

1.799

1.768

Enrolled for 3 months, at least one payment HCC

2.088

1.641

1.282

0.965

0.947

Enrolled for 4 months, at least one payment HCC

1.105

0.816

0.572

0.376

0.366

Enrolled for 5 months, at least one payment HCC

0.770

0.563

0.380

0.235

0.226

Enrolled for 6 months, at least one payment HCC

0.499

0.351

0.215

0.123

0.120

Prescription Drug Factors

RXC 01

Anti-HIV Agents

8.499

7.914

7.511

7.007

6.990

RXC 02

Anti-Hepatitis C (HCV) Agents, Direct Acting Agents

6.593

6.146

5.958

5.830

5.835

RXC 03

Antiarrhythmics

0.117

0.107

0.103

0.069

0.050

RXC 04

Phosphate Binders

2.009

2.016

2.007

1.953

1.880

RXC 05

Inflammatory Bowel Disease Agents

1.519

1.374

1.206

0.941

0.924

RXC 06

Insulin

1.227

1.005

0.762

0.500

0.483

RXC 07

Anti-Diabetic Agents, Except Insulin and Metformin Only

0.671

0.570

0.463

0.346

0.339

RXC 08

Multiple Sclerosis Agents

23.184

22.318

21.874

21.467

21.466

RXC 09

Immune Suppressants and Immunomodulators

12.774

12.347

12.139

11.992

11.988

RXC 10

Cystic Fibrosis Agents

17.803

17.474

17.358

17.299

17.304

RXC 01 x HCC001

Additional effect for enrollees with RXC 01 and HCC 001

2.316

2.503

2.790

3.284

3.310

RXC 02 x HCC 37_1, 36_035_s_34

Additional effect for enrollees with RXC 02 and (HCC 037_1 or 036 or 035_2 or 035_1 or 034)

−0.678

−0.555

−0.433

−0.264

−0.256

RXC_03_x_HCC142

Additional effect for enrollees with RXC 03 and HCC 142

0.000

0.000

0.000

0.000

0.000

RXC_04_x_HCC184_183_187_188

Additional effect for enrollees with RXC 04 and (HCC 184 or 183 or 187 or 188)

0.000

0.000

0.000

0.000

0.000

RXC_05_x_HCC048_041

Additional effect for enrollees with RXC 05 and (HCC 048 or 041)

−0.381

−0.341

−0.282

−0.235

−0.231

RXC_06_x_HCC018_019_020_021

Additional effect for enrollees with RXC 06 and (HCC 018 or 019 or 020 or 021)

0.560

0.647

0.761

0.781

0.784

RXC_07_x_HCC018_019_020_021

Additional effect for enrollees with RXC 07 and (HCC 018 or 019 or 020 or 021)

−0.204

−0.151

−0.117

−0.134

−0.136

RXC_08_x_HCC118

Additional effect for enrollees with RXC 08 and HCC 118

−0.539

−0.056

0.316

0.813

0.827

RXC_09_x_HCC056_057_and_048_041

Additional effect for enrollees with RXC 09 and (HCC 048 or 041) and (HCC 056 or 057)

0.693

0.764

0.827

0.909

0.915

RXC_09_x_HCC056

Additional effect for enrollees with RXC 09 and HCC 056

0.757

0.824

0.959

1.153

1.166

RXC_09_x_HCC057

Additional effect for enrollees with RXC 09 and HCC 057

−0.878

−0.782

−0.664

−0.514

−0.505

RXC_09_x_HCC048_041

Additional effect for enrollees with RXC 09 and (HCC 048 or 041)

3.331

3.335

3.439

3.648

3.664

RXC_10_x_HCC159_158

Additional effect for enrollees with RXC 10 and (HCC 159 or 158)

46.175

46.175

46.180

46.278

46.282

47

HCC numbers that appear with an underscore in this document will appear without the underscore in the DIY software. For example, HCC 35_1 in this table will appear as HCC 351 in the DIY software.

Table 2—Proposed Child Risk Adjustment Model Factors for 2022 Benefit Year

Factor

Platinum

Gold

Silver

Bronze

Catastrophic

Demographic Factors

Age 2-4, Male

0.267

0.201

0.153

0.116

0.113

Age 5-9, Male

0.192

0.135

0.097

0.070

0.068

Age 10-14, Male

0.223

0.164

0.120

0.093

0.091

Age 15-20, Male

0.271

0.208

0.156

0.117

0.115

Age 2-4, Female

0.221

0.163

0.126

0.100

0.098

Age 5-9, Female

0.163

0.112

0.080

0.060

0.058

Age 10-14, Female

0.212

0.155

0.116

0.091

0.089

Age 15-20, Female

0.336

0.258

0.195

0.147

0.144

Diagnosis Factors

HIV/AIDS

5.961

5.577

5.357

5.139

5.133

Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock

16.453

16.237

16.111

15.962

15.955

Central Nervous System Infections, Except Viral Meningitis

14.787

14.627

14.548

14.496

14.493

Viral or Unspecified Meningitis

12.890

12.778

12.672

12.532

12.528

Opportunistic Infections

18.089

18.031

17.967

17.889

17.881

Metastatic Cancer

33.956

33.679

33.535

33.432

33.430

Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia

9.363

9.131

8.985

8.839

8.833

Non-Hodgkin Lymphomas and Other Cancers and Tumors

7.171

6.961

6.817

6.657

6.649

Colorectal, Breast (Age <50), Kidney, and Other Cancers

3.764

3.582

3.413

3.207

3.192

Breast (Age 50+) and Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors

3.764

3.582

3.413

3.207

3.192

Thyroid Cancer, Melanoma, Neurofibromatosis, and Other Cancers and Tumors

1.098

0.968

0.841

0.678

0.675

Pancreas Transplant Status

14.723

14.594

14.579

14.489

14.535

Diabetes with Acute Complications

2.527

2.261

2.012

1.649

1.685

Diabetes with Chronic Complications

2.527

2.261

2.012

1.649

1.685

Diabetes without Complication

2.527

2.261

2.012

1.649

1.685

Protein-Calorie Malnutrition

18.838

18.721

18.666

18.639

18.634

Mucopolysaccharidosis

39.199

38.932

38.800

38.702

38.699

Lipidoses and Glycogenosis

39.199

38.932

38.800

38.702

38.699

Congenital Metabolic Disorders, Not Elsewhere Classified

5.406

5.282

5.186

5.086

5.081

Amyloidosis, Porphyria, and Other Metabolic Disorders

5.406

5.282

5.186

5.086

5.081

Adrenal, Pituitary, and Other Significant Endocrine Disorders

6.355

6.124

5.993

5.896

5.892

Liver Transplant Status/Complications

14.723

14.594

14.579

14.489

14.535

Acute Liver Failure/Disease, Including Neonatal Hepatitis

11.829

11.676

11.608

11.560

11.558

Chronic Liver Failure/End-Stage Liver Disorders

11.044

10.886

10.801

10.710

10.707

Cirrhosis of Liver

3.402

3.311

3.228

3.084

3.080

Chronic Viral Hepatitis C

2.086

1.923

1.815

1.753

1.754

Chronic Hepatitis, Except Chronic Viral Hepatitis C

0.755

0.637

0.542

0.431

0.422

Intestine Transplant Status/Complications

16.105

16.018

15.984

15.983

15.990

Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis

18.426

18.175

18.075

18.044

18.045

Intestinal Obstruction

3.900

3.703

3.548

3.358

3.348

Chronic Pancreatitis

10.399

10.199

10.109

10.054

10.048

Acute Pancreatitis

5.156

4.921

4.757

4.537

4.524

Inflammatory Bowel Disease

9.409

9.061

8.862

8.668

8.661

Necrotizing Fasciitis

3.086

2.881

2.730

2.580

2.572

Bone/Joint/Muscle Infections/Necrosis

3.086

2.881

2.730

2.580

2.572

Rheumatoid Arthritis and Specified Autoimmune Disorders

4.935

4.699

4.541

4.399

4.393

Systemic Lupus Erythematosus and Other Autoimmune Disorders

1.271

1.141

1.004

0.853

0.841

Osteogenesis Imperfecta and Other Osteodystrophies

1.247

1.140

1.045

0.942

0.936

Congenital/Developmental Skeletal and Connective Tissue Disorders

1.247

1.140

1.045

0.942

0.936

Cleft Lip/Cleft Palate

1.394

1.228

1.039

0.852

0.840

Hemophilia

71.996

71.523

71.295

71.146

71.145

Myelodysplastic Syndromes and Myelofibrosis

13.679

13.505

13.401

13.301

13.296

Aplastic Anemia

13.679

13.505

13.401

13.301

13.296

Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn

13.679

13.505

13.401

13.301

13.296

Sickle Cell Anemia (Hb-SS)

5.557

5.356

5.213

5.061

5.056

Beta Thalassemia Major

5.557

5.356

5.213

5.061

5.056

Combined and Other Severe Immunodeficiencies

4.311

4.157

4.042

3.914

3.904

Disorders of the Immune Mechanism

4.311

4.157

4.042

3.914

3.904

Coagulation Defects and Other Specified Hematological Disorders

3.342

3.212

3.096

2.963

2.955

Drug Use with Psychotic Complications

2.473

2.289

2.136

1.945

1.934

Drug Use Disorder, Moderate/Severe, or Drug Use with Non-Psychotic Complications

2.473

2.289

2.136

1.945

1.934

Alcohol Use with Psychotic Complications

1.387

1.245

1.107

0.925

0.913

Alcohol Use Disorder, Moderate/Severe, or Alcohol Use with Specified Non-Psychotic Complications

1.387

1.245

1.107

0.925

0.913

Schizophrenia

4.545

4.264

4.068

3.841

3.830

Delusional and Other Specified Psychotic Disorders, Unspecified Psychosis

3.056

2.824

2.627

2.376

2.362

Major Depressive Disorder, Severe, and Bipolar Disorders

2.587

2.379

2.188

1.947

1.935

Personality Disorders

0.612

0.515

0.397

0.272

0.265

Anorexia/Bulimia Nervosa

2.511

2.348

2.211

2.071

2.063

Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes

12.839

12.760

12.707

12.664

12.658

Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes

1.547

1.401

1.266

1.082

1.063

Autistic Disorder

2.587

2.379

2.188

1.947

1.935

Pervasive Developmental Disorders, Except Autistic Disorder

0.612

0.515

0.404

0.304

0.299

Traumatic Complete Lesion Cervical Spinal Cord

9.556

9.348

9.228

9.121

9.119

Quadriplegia

9.556

9.348

9.228

9.121

9.119

Traumatic Complete Lesion Dorsal Spinal Cord

8.665

8.452

8.339

8.216

8.212

Paraplegia

8.665

8.452

8.339

8.216

8.212

Spinal Cord Disorders/Injuries

3.428

3.241

3.094

2.912

2.898

Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease

32.864

32.642

32.500

32.372

32.367

Quadriplegic Cerebral Palsy

3.270

3.108

3.041

3.010

3.014

Cerebral Palsy, Except Quadriplegic

1.319

1.156

1.018

0.836

0.823

Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies

1.890

1.769

1.676

1.566

1.559

Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy

9.947

9.789

9.713

9.665

9.664

Muscular Dystrophy

4.361

4.165

3.981

3.767

3.751

Multiple Sclerosis

12.642

12.278

12.119

12.017

12.015

Parkinson's, Huntington's, and Spinocerebellar Disease, and Other Neurodegenerative Disorders

4.361

4.165

3.981

3.767

3.751

Seizure Disorders and Convulsions

1.619

1.477

1.313

1.130

1.119

Hydrocephalus

12.782

12.747

12.714

12.712

12.717

Coma, Brain Compression/Anoxic Damage

12.827

12.750

12.666

12.598

12.595

Narcolepsy and Cataplexy

5.101

4.922

4.761

4.563

4.549

Respirator Dependence/Tracheostomy Status

30.364

30.125

30.016

29.935

29.930

Respiratory Arrest

15.552

15.311

15.186

15.055

15.047

Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes

15.552

15.311

15.186

15.055

15.047

Heart Assistive Device/Artificial Heart

16.105

16.018

15.984

15.983

15.990

Heart Transplant Status/Complications

16.105

16.018

15.984

15.983

15.990

Heart Failure

4.636

4.513

4.419

4.297

4.290

Acute Myocardial Infarction

1.745

1.578

1.435

1.332

1.336

Unstable Angina and Other Acute Ischemic Heart Disease

1.745

1.578

1.435

1.332

1.336

Heart Infection/Inflammation, Except Rheumatic

15.639

15.486

15.366

15.212

15.200

Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders

3.058

2.842

2.650

2.438

2.418

Major Congenital Heart/Circulatory Disorders

0.999

0.865

0.721

0.605

0.596

Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital Heart/Circulatory Disorders

0.747

0.646

0.546

0.467

0.461

Specified Heart Arrhythmias

2.745

2.562

2.384

2.227

2.217

Intracranial Hemorrhage

14.578

14.462

14.366

14.264

14.261

Ischemic or Unspecified Stroke

1.440

1.361

1.277

1.198

1.197

Cerebral Aneurysm and Arteriovenous Malformation

2.668

2.517

2.365

2.101

2.085

Hemiplegia/Hemiparesis

4.576

4.442

4.359

4.245

4.236

Monoplegia, Other Paralytic Syndromes

3.018

2.871

2.758

2.618

2.610

Atherosclerosis of the Extremities with Ulceration or Gangrene

11.183

10.985

10.861

10.737

10.734

Vascular Disease with Complications

6.308

6.163

6.068

5.980

5.976

Pulmonary Embolism and Deep Vein Thrombosis

20.304

20.162

20.087

20.027

20.021

Lung Transplant Status/Complications

16.105

16.018

15.984

15.983

15.990

Cystic Fibrosis

48.367

47.908

47.701

47.590

47.584

Chronic Obstructive Pulmonary Disease, Including Bronchiectasis

2.003

1.844

1.699

1.518

1.508

Severe Asthma

1.185

1.018

0.827

0.633

0.622

Asthma, Except Severe

0.382

0.297

0.203

0.123

0.119

Fibrosis of Lung and Other Lung Disorders

1.185

1.018

0.827

0.633

0.622

Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections

12.351

12.306

12.275

12.298

12.298

Kidney Transplant Status/Complications

14.723

14.594

14.579

14.489

14.535

End Stage Renal Disease

37.215

37.008

36.936

36.933

36.936

Chronic Kidney Disease, Stage 5

3.859

3.728

3.618

3.482

3.475

Chronic Kidney Disease, Severe (Stage 4)

3.859

3.728

3.618

3.482

3.475

Ectopic and Molar Pregnancy

2.067

1.842

1.626

1.295

1.279

Miscarriage with Complications

0.912

0.778

0.597

0.346

0.329

Miscarriage with No or Minor Complications

0.912

0.778

0.597

0.346

0.329

Pregnancy with Delivery with Major Complications

3.751

3.463

3.195

2.691

2.661

Pregnancy with Delivery with Complications

3.751

3.463

3.195

2.691

2.661

Pregnancy with Delivery with No or Minor Complications

2.650

2.428

2.165

1.661

1.624

(Ongoing) Pregnancy without Delivery with Major Complications

0.977

0.822

0.619

0.388

0.374

(Ongoing) Pregnancy without Delivery with Complications

0.977

0.822

0.619

0.388

0.374

(Ongoing) Pregnancy without Delivery with No or Minor Complications

0.485

0.378

0.252

0.147

0.142

Chronic Ulcer of Skin, Except Pressure

1.504

1.383

1.263

1.141

1.135

Extensive Third Degree Burns

20.205

19.995

19.885

19.821

19.818

Major Skin Burn or Condition

1.867

1.723

1.600

1.455

1.447

Severe Head Injury

20.205

19.995

19.885

19.821

19.818

Hip and Pelvic Fractures

3.665

3.439

3.263

3.101

3.095

Vertebral Fractures without Spinal Cord Injury

3.353

3.148

2.963

2.739

2.726

Traumatic Amputations and Amputation Complications

3.936

3.723

3.565

3.352

3.338

Stem Cell, Including Bone Marrow, Transplant Status/Complications

16.105

16.018

15.984

15.983

15.990

Artificial Openings for Feeding or Elimination

7.197

7.036

6.985

6.947

6.949

Amputation Status, Upper Limb or Lower Limb

3.936

3.723

3.565

3.352

3.338

Interacted HCC Counts Factors

Severe illness, 1 payment HCC

−11.292

−11.358

−11.441

−11.583

−11.595

Severe illness, 2 payment HCCs

−11.146

−11.138

−11.169

−11.269

−11.257

Severe illness, 3 payment HCCs

−9.366

−9.392

−9.391

−9.345

−9.341

Severe illness, 4 payment HCCs

−8.988

−8.982

−8.891

−8.710

−8.694

Severe illness, 5 payment HCCs

−7.182

−7.013

−6.744

−6.377

−6.349

Severe illness, 6 or 7 payment HCCs

−1.583

−1.238

−0.827

−0.285

−0.249

Severe illness, 8 or more payment HCCs

18.271

19.100

19.861

20.772

20.830

Transplant severe illness, 4 or more payment HCCs

17.085

17.121

17.096

17.068

17.040

Table 3—HCCs Selected for the Proposed HCC Interacted Counts Variables for the Adult and Child Models Beginning With the 2022 Benefit Year

Payment HCC

Severity illness

indicator

Transplant

indicator

48

HCC 2 Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock

X

HCC 3 Central Nervous System Infections, Except Viral Meningitis

X

HCC 4 Viral or Unspecified Meningitis

X

HCC 6 Opportunistic Infections

X

HCC 23 Protein-Calorie Malnutrition

X

HCC 34 Liver Transplant Status/Complications

X

X

HCC 41 Intestine Transplant Status/Complications

X

X

HCC 42 Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis

X

HCC 96 Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes

X

HCC 121 Hydrocephalus

X

HCC 122 Coma, Brain Compression/Anoxic Damage

X

HCC 125 Respirator Dependence/Tracheostomy Status

X

HCC 135 Heart Infection/Inflammation, Except Rheumatic

X

HCC 145 Intracranial Hemorrhage

X

HCC 156 Pulmonary Embolism and Deep Vein Thrombosis

X

HCC 158 Lung Transplant Status/Complications

X

X

HCC 163 Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections

X

HCC 183 Kidney Transplant Status/Complications

X

X

HCC 218 Extensive Third Degree Burns

X

HCC 223 Severe Head Injury

X

HCC 251 Stem Cell, Including Bone Marrow, Transplant Status/Complications

X

X

G13 (Includes HCC 126 Respiratory Arrest and HCC 127 Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes)

X

G14 (Includes HCC 128 Heart Assistive Device/Artificial Heart and HCC 129 Heart Transplant Status/Complications)

X

X

48

We note that one transplant HCC (HCC 18 Pancreas Transplant) is not included on this list. HCC 18 had a much lower coefficient than any of the other transplant HCCs in the adult models and was not underpredicted by the models. However, we are considering whether we should add HCC 18 to the interacted HCC counts model specifications.

Table 4—Proposed Infant Risk Adjustment Model Factors for 2022 Benefit Year

Group

Platinum

Gold

Silver

Bronze

Catastrophic

Extremely Immature * Severity Level 5 (Highest)

228.512

227.071

226.378

225.986

225.985

Extremely Immature * Severity Level 4

143.939

142.392

141.573

140.987

140.976

Extremely Immature * Severity Level 3

32.833

31.691

31.019

30.471

30.451

Extremely Immature * Severity Level 2

32.833

31.691

31.019

30.471

30.451

Extremely Immature * Severity Level 1 (Lowest)

32.833

31.691

31.019

30.471

30.451

Immature * Severity Level 5 (Highest)

132.085

130.648

129.935

129.486

129.480

Immature * Severity Level 4

69.277

67.949

67.232

66.691

66.675

Immature * Severity Level 3

32.833

31.691

31.019

30.471

30.451

Immature * Severity Level 2

28.029

26.918

26.246

25.672

25.650

Immature * Severity Level 1 (Lowest)

25.390

24.329

23.673

23.095

23.072

Premature/Multiples * Severity Level 5 (Highest)

109.526

108.295

107.661

107.236

107.227

Premature/Multiples * Severity Level 4

28.669

27.553

26.884

26.312

26.294

Premature/Multiples * Severity Level 3

14.196

13.345

12.721

12.054

12.022

Premature/Multiples * Severity Level 2

8.093

7.463

6.897

6.212

6.173

Premature/Multiples * Severity Level 1 (Lowest)

5.774

5.254

4.759

4.243

4.214

Term * Severity Level 5 (Highest)

82.605

81.544

80.955

80.511

80.498

Term * Severity Level 4

15.976

15.156

14.564

13.941

13.916

Term * Severity Level 3

6.071

5.541

5.020

4.437

4.404

Term * Severity Level 2

3.634

3.194

2.696

2.144

2.111

Term * Severity Level 1 (Lowest)

1.853

1.534

1.163

0.917

0.905

Age 1 * Severity Level 5 (Highest)

63.472

62.803

62.434

62.174

62.167

Age 1 * Severity Level 4

12.474

12.010

11.689

11.375

11.362

Age 1 * Severity Level 3

3.139

2.867

2.637

2.419

2.408

Age 1 * Severity Level 2

1.980

1.751

1.529

1.304

1.291

Age 1 * Severity Level 1 (Lowest)

0.573

0.496

0.442

0.403

0.401

Age 0 Male

0.608

0.566

0.525

0.459

0.455

Age 1 Male

0.106

0.090

0.072

0.051

0.050

Table 5—HHS HCCs Included in Infant Model Maturity Categories

Maturity category

HCC/Description

Extremely Immature

Extremely Immature Newborns, Birth weight <500 Grams.

Extremely Immature

Extremely Immature Newborns, Including Birth weight 500-749 Grams.

Extremely Immature

Extremely Immature Newborns, Including Birth weight 750-999 Grams.

Immature

Premature Newborns, Including Birth weight 1000-1499 Grams.

Immature

Premature Newborns, Including Birth weight 1500-1999 Grams.

Premature/Multiples

Premature Newborns, Including Birth weight 2000-2499 Grams.

Premature/Multiples

Other Premature, Low Birth weight, Malnourished, or Multiple Birth Newborns.

Term

Term or Post-Term Singleton Newborn, Normal or High Birth weight.

Age 1

All age 1 infants.

Table 6—HHS HCCs Included in Infant Model Severity Categories

Severity category

HCC/Description

Severity Level 5 (Highest)

Metastatic Cancer.

Severity Level 5

Pancreas Transplant Status.

Severity Level 5

Liver Transplant Status/Complications.

Severity Level 5

Intestine Transplant Status/Complications.

Severity Level 5

Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis.

Severity Level 5

Respirator Dependence/Tracheostomy Status.

Severity Level 5

Heart Assistive Device/Artificial Heart.

Severity Level 5

Heart Transplant Status/Complications.

Severity Level 5

Heart Failure.

Severity Level 5

Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders.

Severity Level 5

Lung Transplant Status/Complications.

Severity Level 5

Kidney Transplant Status/Complications.

Severity Level 5

End Stage Renal Disease.

Severity Level 5

Stem Cell, Including Bone Marrow, Transplant Status/Complications.

Severity Level 4

Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.

Severity Level 4

Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia.

Severity Level 4

Mucopolysaccharidosis.

Severity Level 4

Adrenal, Pituitary, and Other Significant Endocrine Disorders.

Severity Level 4

Acute Liver Failure/Disease, Including Neonatal Hepatitis.

Severity Level 4

Chronic Liver Failure/End-Stage Liver Disorders.

Severity Level 4

Major Congenital Anomalies of Diaphragm, Abdominal Wall, and Esophagus, Age <2.

Severity Level 4

Myelodysplastic Syndromes and Myelofibrosis.

Severity Level 4

Aplastic Anemia.

Severity Level 4

Combined and Other Severe Immunodeficiencies.

Severity Level 4

Traumatic Complete Lesion Cervical Spinal Cord.

Severity Level 4

Quadriplegia.

Severity Level 4

Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease.

Severity Level 4

Quadriplegic Cerebral Palsy.

Severity Level 4

Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy.

Severity Level 4

Coma, Brain Compression/Anoxic Damage.

Severity Level 4

Respiratory Arrest.

Severity Level 4

Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes.

Severity Level 4

Acute Myocardial Infarction.

Severity Level 4

Heart Infection/Inflammation, Except Rheumatic.

Severity Level 4

Major Congenital Heart/Circulatory Disorders.

Severity Level 4

Intracranial Hemorrhage.

Severity Level 4

Ischemic or Unspecified Stroke.

Severity Level 4

Vascular Disease with Complications.

Severity Level 4

Pulmonary Embolism and Deep Vein Thrombosis.

Severity Level 4

Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections.

Severity Level 4

Chronic Kidney Disease, Stage 5.

Severity Level 4

Artificial Openings for Feeding or Elimination.

Severity Level 3

HIV/AIDS.

Severity Level 3

Central Nervous System Infections, Except Viral Meningitis.

Severity Level 3

Opportunistic Infections.

Severity Level 3

Non-Hodgkin Lymphomas and Other Cancers and Tumors.

Severity Level 3

Colorectal, Breast (Age < 50), Kidney and Other Cancers.

Severity Level 3

Breast (Age 50+) and Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors.

Severity Level 3

Lipidoses and Glycogenosis.

Severity Level 3

Intestinal Obstruction.

Severity Level 3

Necrotizing Fasciitis.

Severity Level 3

Bone/Joint/Muscle Infections/Necrosis.

Severity Level 3

Osteogenesis Imperfecta and Other Osteodystrophies.

Severity Level 3

Cleft Lip/Cleft Palate.

Severity Level 3

Hemophilia.

Severity Level 3

Disorders of the Immune Mechanism.

Severity Level 3

Coagulation Defects and Other Specified Hematological Disorders.

Severity Level 3

Drug Use with Psychotic Complications.

Severity Level 3

Drug Use Disorder, Moderate/Severe, or Drug Use with Non-Psychotic Complications.

Severity Level 3

Alcohol Use with Psychotic Complications.

Severity Level 3

Alcohol Use Disorder, Moderate/Severe, or Alcohol Use with Specified Non-Psychotic Complications.

Severity Level 3

Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes.

Severity Level 3

Traumatic Complete Lesion Dorsal Spinal Cord.

Severity Level 3

Paraplegia.

Severity Level 3

Spinal Cord Disorders/Injuries.

Severity Level 3

Cerebral Palsy, Except Quadriplegic.

Severity Level 3

Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies.

Severity Level 3

Muscular Dystrophy.

Severity Level 3

Parkinson's, Huntington's, and Spinocerebellar Disease, and Other Neurodegenerative Disorders.

Severity Level 3

Hydrocephalus.

Severity Level 3

Unstable Angina and Other Acute Ischemic Heart Disease.

Severity Level 3

Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital Heart/Circulatory Disorders.

Severity Level 3

Specified Heart Arrhythmias.

Severity Level 3

Cerebral Aneurysm and Arteriovenous Malformation.

Severity Level 3

Hemiplegia/Hemiparesis.

Severity Level 3

Cystic Fibrosis.

Severity Level 3

Extensive Third Degree Burns.

Severity Level 3

Severe Head Injury.

Severity Level 3

Hip and Pelvic Fractures.

Severity Level 3

Vertebral Fractures without Spinal Cord Injury.

Severity Level 2

Viral or Unspecified Meningitis.

Severity Level 2

Thyroid Cancer, Melanoma, Neurofibromatosis, and Other Cancers and Tumors.

Severity Level 2

Diabetes with Acute Complications.

Severity Level 2

Diabetes with Chronic Complications.

Severity Level 2

Diabetes without Complication.

Severity Level 2

Protein-Calorie Malnutrition.

Severity Level 2

Congenital Metabolic Disorders, Not Elsewhere Classified.

Severity Level 2

Amyloidosis, Porphyria, and Other Metabolic Disorders.

Severity Level 2

Cirrhosis of Liver.

Severity Level 2

Chronic Pancreatitis.

Severity Level 2

Acute Pancreatitis.

Severity Level 2

Inflammatory Bowel Disease.

Severity Level 2

Rheumatoid Arthritis and Specified Autoimmune Disorders.

Severity Level 2

Systemic Lupus Erythematosus and Other Autoimmune Disorders.

Severity Level 2

Congenital/Developmental Skeletal and Connective Tissue Disorders.

Severity Level 2

Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn.

Severity Level 2

Sickle Cell Anemia (Hb-SS).

Severity Level 2

Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes.

Severity Level 2

Seizure Disorders and Convulsions.

Severity Level 2

Monoplegia, Other Paralytic Syndromes.

Severity Level 2

Atherosclerosis of the Extremities with Ulceration or Gangrene.

Severity Level 2

Chronic Obstructive Pulmonary Disease, Including Bronchiectasis.

Severity Level 2

Severe Asthma.

Severity Level 2

Fibrosis of Lung and Other Lung Disorders.

Severity Level 2

Chronic Kidney Disease, Severe (Stage 4).

Severity Level 2

Chronic Ulcer of Skin, Except Pressure.

Severity Level 2

Major Skin Burn or Condition.

Severity Level 1 (Lowest)

Chronic Viral Hepatitis C.

Severity Level 1

Chronic Hepatitis, Except Chronic Viral Hepatitis C.

Severity Level 1

Beta Thalassemia Major.

Severity Level 1

Autistic Disorder.

Severity Level 1

Pervasive Developmental Disorders, Except Autistic Disorder.

Severity Level 1

Multiple Sclerosis.

Severity Level 1

Asthma, Except Severe.

Severity Level 1

Traumatic Amputations and Amputation Complications.

Severity Level 1

Amputation Status, Upper Limb or Lower Limb.

f. Cost-Sharing Reduction Adjustments

We propose to continue including an adjustment for the receipt of CSRs in the risk adjustment models to account for increased plan liability due to increased utilization of health care services by enrollees receiving CSRs in all 50 states and the District of Columbia. For the 2022 benefit year, to maintain stability and certainty for issuers, we are proposing to maintain the CSR factors finalized in the 2019, 2020, and 2021 Payment Notices.

49

See Table 7.

49

See 83 FR 16930 at 16953; 84 FR 17454 at 17478 through 17479; and 85 FR 29164 at 29190.

Consistent with the approach finalized in the 2017 Payment Notice,

50

we propose to continue to use a CSR adjustment factor of 1.12 for all Massachusetts wrap-around plans in the risk adjustment plan liability risk score calculation, as all of Massachusetts' cost-sharing plan variations have AVs above 94 percent.

50

See 81 FR 12203 at 12228.

We seek comment on these proposals.

Table 7—Cost-Sharing Reduction Adjustment

Household income

Plan AV

Induced

utilization

factor

Silver Plan Variant Recipients

100-150% of Federal Poverty Line (FPL)

Plan Variation 94%

1.12

150-200% of FPL

Plan Variation 87%

1.12

200-250% of FPL

Plan Variation 73%

1.00

>250% of FPL

Standard Plan 70%

1.00

Zero Cost Sharing Recipients

<300% of FPL

Platinum (90%)

1.00

<300% of FPL

Gold (80%)

1.07

<300% of FPL

Silver (70%)

1.12

<300% of FPL

Bronze (60%)

1.15

Limited Cost Sharing Recipients

>300% of FPL

Platinum (90%)

1.00

>300% of FPL

Gold (80%)

1.07

>300% of FPL

Silver (70%)

1.12

>300% of FPL

Bronze (60%)

1.15

g. Model Performance Statistics

To evaluate risk adjustment model performance, we examined each model's R-squared statistic and predictive ratios. The R-squared statistic, which calculates the percentage of individual variation explained by a model, measures the predictive accuracy of the model overall. The predictive ratio for each of the HHS risk adjustment models is the ratio of the weighted mean predicted plan liability for the model sample population to the weighted mean actual plan liability for the model sample population. The predictive ratio represents how well the model does on average at predicting plan liability for that subpopulation.

A subpopulation that is predicted perfectly would have a predictive ratio of 1.0. For each of the HHS risk adjustment models, the R-squared statistic and the predictive ratios are in the range of published estimates for concurrent risk adjustment models.

51

We note that the proposed model spec

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