NBPP 2023 Part 5: QIS standards, Risk Adjustment and HHS-RADV

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The Affordable Care Act includes a long list of codified instructions about what's required under the law. However, like any major piece of legislation, many of the specific details are left up to the agency responsible for implementing the law.

While the PPACA is itself a lengthy document, it would have to be several times longer yet in order to cover every conceivable detail involved in operating the ACA exchanges, Medicaid expansion and so forth. The major provisions of the ACA fall under the Department of Health & Human Services (HHS), and within that, the Centers for Medicare & Medicaid (CMS)

Every year, CMS issues a long, wonky document called the Notice of Benefit & Payment Parameters (NBPP) for the Affordable Care Act. This is basically a list of tweaks to some of the specifics of how the ACA is actually implemented.

This morning, CMS issued the final NBPP for the upcoming 2023 Open Enrollment Period. Since there's so many provisions included, this year I've decided to break it into multiple posts which only focus on one or a few of them at a time:

(Note: QHP = Qualified Health Plan...basically, an ACA-compliant major medical policy available on an ACA exchange.)

The next three entries are all areas which I know either nothing or almost nothing about, so I'm just gonna repost the Fact Sheet entries verbatim and leave it at that : QIS standards, Risk Adjustment and HHS-RADV:

Update Quality Improvement Strategy (QIS) Standards to Require Issuers to Address Health and Health Care Disparities

CMS finalizes changes to update the QIS standards beginning in 2023 to require QHP issuers to address health and health care disparities as a specific topic area within their QIS. Currently, QHP issuers participating in a Marketplace for two or more consecutive years are required to implement and report on a QIS that includes at least one topic area defined in section 1311(g)(1) of the ACA (activities to improve health outcomes, prevent hospital readmissions, improve patient safety and reduce medical errors, promote wellness and health and reduce health and health care disparities). In PY2020, an estimated 60% of QHP issuer QIS submissions across the FFM did address health care disparities. CMS is now finalizing the requirement for QHP issuers to address the topic of reducing health and health care disparities in their QIS submissions in addition to at least one other topic area described in section 1311(g)(1) of the ACA beginning in 2023.

Risk Adjustment

CMS finalizes two of the three proposed model specification changes to the risk adjustment models, improving risk prediction for the lowest and highest risk enrollees. Beginning with the 2023 benefit year, CMS finalizes removing the current severity illness factors from the adult models to add an interacted hierarchical condition category (HCC) count model specification to the adult and child models and replacing the current enrollment duration factors in the adult models with HCC-contingent enrollment duration factors to improve prediction for partial-year enrollees. CMS is not finalizing the proposed addition of a two-stage weighted model specification for the adult and child models. CMS believes the model changes finalized in this rule will continue to improve the risk adjustment program’s ability to predict and balance payments for risk across the individual and small group markets.

CMS also finalizes the following changes to model recalibration for the 2023 benefit year risk adjustment models: (1) using the 2017, 2018, and 2019 enrollee-level EDGE data for model recalibration; (2) applying a market pricing adjustment to the plan liability associated with Hepatitis C drugs; and (3) using the fourth quarter (Q4) prescription drug categories (RXC) mapping document for each benefit year of recalibration data, except for 2017 enrollee-level EDGE data.

CMS also finalizes changes to collect and extract through issuers’ EDGE servers five new data elements including ZIP code, race, ethnicity, individual coverage health reimbursement arrangement (ICHRA) indicator, and a subsidy indicator as part of the required risk adjustment data that issuers must make accessible to HHS in states where HHS is operating the risk adjustment program. CMS also finalizes changes to extract three new data elements issuers already provide through their EDGE servers as part of the required risk adjustment data submissions (plan ID, rating area, and subscriber indicator), and to expand the permitted uses of the risk adjustment data and reports. Additionally, CMS finalizes a risk adjustment user fee for the 2023 benefit year of $0.22 per member per month.

Finally, CMS repeals the ability for states to request a reduction in risk adjustment state transfers starting with the 2024 benefit year, with an exception for prior participants that previously requested such flexibility. CMS will limit a prior participant’s ability to request a reduction in risk adjustment transfers to only those that meet the de minimis threshold criteria. In future rulemaking, CMS intends to propose to eliminate the prior participant exception and fully repeal the state flexibility framework beginning with the 2025 benefit year. For the 2023 benefit year, CMS approves Alabama’s request to reduce risk adjustment state transfers, but at lower percentages than requested. CMS approves for the 2023 benefit year a 25% reduction in Alabama’s individual market (including the catastrophic and non-catastrophic risk pools) transfers and a 10% reduction in Alabama’s small group market transfers.

HHS Risk Adjustment Data Validation (HHS-RADV)

CMS finalizes further refinements to the HHS-RADV error rate calculation methodology beginning with the 2021 benefit year and beyond to: (1) extend the application of Super HCCs to also apply coefficient estimation groups throughout the HHS-RADV error rate calculation processes; (2) specify that the Super HCCs will be defined separately according to the age group model to which an enrollee is subject except for where child and adult coefficient estimation groups have identical definitions; and (3) constrain to zero any outlier negative failure rate in a failure rate group, regardless of whether the outlier issuer has a negative or positive error rate. We believe that these changes will better align the calculation and application of error rates with the intent of the HHS-RADV program, thereby enhancing the integrity of HHS-RADV and the HHS-operated risk adjustment program.