HHS Proposes Benefit and Payment Parameters for 2022 | Practical Law

HHS Proposes Benefit and Payment Parameters for 2022 | Practical Law

The Department of Health and Human Services (HHS) has issued proposed benefit and payment parameters for the 2022 plan year. Among other topics, the proposals address Affordable Care Act (ACA) cost-sharing requirements, pharmacy benefit managers (PBMs), essential health benefits (EHBs), and a special enrollment period in the individual market relating to COBRA continuation coverage.

HHS Proposes Benefit and Payment Parameters for 2022

Practical Law Legal Update w-028-5912 (Approx. 5 pages)

HHS Proposes Benefit and Payment Parameters for 2022

by Practical Law Employee Benefits & Executive Compensation
Published on 01 Dec 2020USA (National/Federal)
The Department of Health and Human Services (HHS) has issued proposed benefit and payment parameters for the 2022 plan year. Among other topics, the proposals address Affordable Care Act (ACA) cost-sharing requirements, pharmacy benefit managers (PBMs), essential health benefits (EHBs), and a special enrollment period in the individual market relating to COBRA continuation coverage.
HHS has issued proposed regulations that contain the agency's benefit and payment parameters for the 2022 plan year (along with a related fact sheet and CMS press release). Though many of the proposals address the Affordable Care Act's (ACA's) health insurance exchanges, some also involve employer-sponsored health plans. Comments regarding the proposals must be submitted no later than 60 days after the proposed regulations are published in the Federal Register.

Annual Cost-Sharing Limits Increased

HHS's proposals would increase the maximum annual cost-sharing limit for 2022 to:
  • $9,100 for self-only coverage (versus $8,550 for 2021).
  • $18,200 for non-self-only coverage (versus $17,100 for 2021).
These revised limits represent a 6.4% increase over the 2021 parameters. HHS seeks comments on these proposals.

Disclosure Requirements for PBMs

The proposed regulations would add several data disclosure requirements for pharmacy benefit managers (PBMs) that contract with qualified health plan (QHP) issuers regarding prescription drug benefits under the ACA health exchanges. Required data to be collected would include:
  • The percentage of all prescriptions provided through retail pharmacies compared to mail order pharmacies.
  • The percentage of prescriptions for which a generic drug was available and dispensed (generic dispensing rate) that is paid by the health benefits plan or PBM under the contract.
  • The aggregate amount and type of rebates, discounts, or price concessions (excluding certain service fees, such as distribution service fees, inventory management fees, and product stocking allowances) that are attributable to patient utilization under a QHP.
  • The aggregate amount of rebates, discounts, or price concessions that are passed through to the plan sponsor.
  • The aggregate amount of the difference between how much a QHP issuer pays its contracted PBM and the amounts that the PBM pays retail pharmacies, and mail order pharmacies, and the total number of prescriptions dispensed.

COBRA Coverage and Special Enrollment Period in the Individual Market

The proposed regulations would amend existing regulations to provide that the complete cessation of employer contributions for health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) triggers eligibility for a special enrollment period in the individual market (see Practice Note, COBRA Overview). The triggering event would occur as of the last day of the period for which COBRA coverage was fully or partially paid for by the employer. Examples in the preamble to the proposed regulations illustrate this proposal.
HHS also is considering a provision under which a reduction (but not complete cessation) of employer contributions for COBRA coverage would trigger a special enrollment period in the individual market. HHS sought comments on adding such a provision.

Deadlines for States to Report on Essential Health Benefits (EHBs)

Under existing regulations, states must timely notify HHS each year of any state-required benefits applicable to QHPs in the individual or small group markets that are considered in addition to EHBs (see Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA).
Under prior guidance, states must submit to HHS their first complete reporting of required benefits by July 1, 2021. Under the proposed regulations, the deadline for states to submit to HHS their complete reporting package for the second year of reporting would be July 1, 2022.
In addition, the proposed regulations would set May 6, 2022 as the deadline for states to:
  • Submit required documents for the state's EHB benchmark plan selection for the 2023 plan year.
  • Inform HHS that they want to permit between-category substitution for the 2023 plan year.

Other Provisions

Additionally, the proposed regulations:

Practical Impact

The proposed regulations' PBM-related provisions reflect an emphasis on price transparency that also is reflected in recently finalized tri-agency regulations that impose extensive cost-sharing disclosures on health plans and insurers (85 Fed. Reg. 72158 (Nov. 12, 2020)). HHS acknowledges in the preamble to its proposed regulations that the role of PBMs in the prescription drug market, including their potential impact on the increasing cost of prescription drugs, is not well understood. The new disclosure requirements for PBMs presumably are intended, at least in part, to foster a greater understanding of that role.