On November 15, 2023, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule titled “HHS Notice of Benefit and Payment Parameters for 2025” (link) and accompanying fact sheet (link). Comments on the proposed rule are due 45 days from the date of publication in the Federal Register.

The annual NBPP issues standards for insurance companies and the state and federal Marketplaces. This year’s proposed payment notice addresses prescription drug provisions, network adequacy, standardized plan options, special enrollment periods, and premium adjustment percentage and payment parameters. Notably, CMS is proposing that unless mandated as additional required benefits by a state, any drugs covered by a health plan are considered an Essential Health Benefit (EHB) and are subject to annual cost-sharing limits.

Prescription Drug Provisions

Prescription Drugs as EHB
Notably, CMS is proposing to codify that prescription drugs in excess of those covered by a State’s EHB-benchmark plan are considered EHB. Accordingly, these drugs would be subject to annual cost-sharing limits, unless a state mandates coverage of the drug as an “additional required benefit”.
This proposal appears to address copay maximizer practices, where insurers categorize drugs as non-EHBs and set cost-sharing equal to the value of manufacturer copay assistance programs, but do not count any of that amount towards the patient’s deductible or out-of-pocket maximum.
CMS noted the agency believed this EHB protection was clear until it received comments that plans have developed “non-EHB” drug programs, and states that it does “not believe that there are a large number of plans that offer these types of programs”; CMS is seeking comment on how widespread these practices are.
ADVI is still reviewing the extent of commercial plan applicability with this proposal; specifically, whether this proposed change would affect large group plans.
Drug Classification system for EHB
CMS is seeking comment on the risks and benefits associated with replacing the United States Pharmacopeia (USP) Medicare Model Guidelines (MMG) with the USP Drug Classification system (DC) to classify prescriptions drugs required to be covered as EHB.
Plans are required to cover the greater of:
the same number of prescription drugs in every USP category and class in a State’s EHB-benchmark plan, or
one drug per class.
CMS previously solicited feedback on replacing USP MMG with the American Hospital Formulary Service (AHFS) or another drug classification system, including the USP DC which was developed to assist with formulary support beyond Part D. Comments in favor of the switch to USP DC noted its update frequency and more inclusive drug classes (e.g., anti-obesity medications); critics were concerned about the administrative burden of a switch.
CMS concluded that the USP DC would be better suited for the health needs of populations subject to EHB requirements.
Specifically, CMS is seeking public comment:
to confirm or expand the understanding of risks and benefits associated with replacing USP MMG with USP DC,
on challenges that issuers may experience transitioning from USP MMG to USP DC,
on a reasonable timeline to potentially migrate from USP MMG to USP DC, and
on implications for issuers who would be required to cover drugs in additional categories or classes.
Pharmacy and Therapeutics (P&T) Committee Standards
CMS proposes to provide that, for plan years beginning on or after January 1, 2026, the P&T committee must include a consumer representative. The representative would:
Represent the consumer perspective as a member of the P&T committee and would be required to have an affiliation with and/or demonstrate active participation in consumer or community-based organizations.
Assume responsibility for highlighting and addressing any potential risks and benefits observed that could have a direct impact on consumers as a result of issues and actions before the P&T committee.
The selected consumer representative must have experience in the analysis and interpretation of complex data and be able to understand its public health significance, and have no fiduciary obligation to a health facility or other health agency and have no material financial interest in the rendering of health care services.
CMS is seeking comment on these proposals.

Network Adequacy

For plan years beginning on or after January 1, 2025, CMS proposes that State Marketplaces and State-Based Marketplace Federal Platforms (SBM-FPs) establish and impose quantitative time and distance qualified health plan (QHP) network adequacy standards that are at least as stringent as the Federally-facilitated Marketplaces’ (FFMs) standards, excluding stand-alone dental plan (SADP) issuers operating in states that qualify for the limited SADP exception.
Time and distance standards would be calculated at the county level and vary by county designation.
Issuers that can’t meet the standards can submit a justification to their State Marketplace or SBM-FP to account for variances.
State Marketplaces and SBM-FPs would be required to review the issuer’s justification to determine whether making the health plan available through the Marketplace is in the interests of qualified individuals.
CMS also proposes that before QHP certification, State Marketplaces and SBM-FPs conduct quantitative network adequacy reviews that are consistent with the reviews performed by the FFMs.
CMS also proposes State Marketplaces and SBM-FPs collect information from QHP issuers about whether their providers offer telehealth services to assist in informing network adequacy and provider access standards for future plan years.
CMS is not currently proposing State Marketplaces and SBM-FPs establish and impose appointment wait time standards or that they ensure that the provider network of each QHP meets applicable standards.

Standardized Plan Options

CMS is proposing to continue using the majority of approaches finalized in the 2024 Payment Notice around standardized plan option metal levels.
CMS is proposing changes to plan designs, including adjusting the maximum out-of-pocket (MOOP) and deductible values, so that the plans have actuarial values within the de minimis range for each metal level.
CMS is seeking comment on requiring issuers offering QHPs in individual market State Exchanges to offer, in a future plan year, some version of standardized plan options.
Non-Standardized Plan Options: CMS is proposing an exceptions process to the limitation on the number of non-standardized plan options that issuers can offer.
As previously finalized, for 2025 and subsequent years, issuers can offer two non-standardized plan options. Under this proposal, issuers would be allowed to offer additional non-standardized plan options, so long as they demonstrate that the additional plans have reduced cost sharing of 25 percent or more for benefits related to the treatment of “chronic and high-cost conditions,” including benefits in the form of prescription drugs. The reduced cost sharing of 25 percent or more would be in comparison to the issuer’s other non-standardized plan offerings in the same product network type, metal level, and service area.
CMS defines chronic conditions as “those that have an average duration of one year or more and require ongoing medical attention or limit activities of daily living, or both.” Examples of chronic and high-cost conditions include hepatitis C virus, HIV, multiple sclerosis, and rheumatoid arthritis.
As long as the required criteria are met, issuers would not be limited in the number of permitted exceptions. Issuers would be required to submit a written justification to describe how the plan would substantially benefit consumers with chronic and high-cost conditions.

EHB-Benchmark Update Process Improvements

For plan years beginning on or after January 1, 2027, CMS is proposing the following changes:

Consolidate the options for states to change EHB-benchmark plans so states would select a set of benefits that would become the state’s EHB-benchmark plan.
CMS notes this does not substantially change the options for states to change their EHB-benchmark plans.
Remove the generosity standard and revise the typicality standard, such that a state’s new EHB-benchmark plan would be required to provide a scope of benefits that is equal to the scope of benefits of a typical employer plan in the state.
CMS notes that, if finalized, this proposal would increase flexibility for states to select a new EHB-benchmark plan while reducing the burden of actuarial analysis.
Remove the requirement for states to submit a formulary drug list as part of their documentation to change EHB-benchmark plans, unless the state changes its prescription drug EHBs.

Special Enrollment Periods

CMS proposes to align effective dates of coverage after selecting a plan during certain special enrollment periods across all Exchanges, including State Exchanges, beginning January 1, 2025, or an earlier date at the option of the Exchange.
CMS would require all State Exchanges to provide coverage effective on the first day of the month following plan selection if a consumer enrolls in a QHP during certain special enrollment periods.
CMS also proposes to revise the parameters around the availability of a special enrollment period for APTC-eligible qualified individuals with a projected household income no greater than 150% of the Federal Poverty Level (FPL).
Specifically, CMS is proposing to remove the limitation that this special enrollment period is only available during periods when advance premium tax credit benefits are available such that the applicable taxpayers’ applicable percentage is set to zero.
Exchanges have the option to permanently provide this special enrollment period.
CMS is seeking comment on this proposal.

ADVI will continue monitoring developments and the next steps. This is a delayed release. ADVI Instant content is distributed in real-time for retainer clients. Get in touch to learn more about how we can support your commercialization, market access, and policy needs.