Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2026; and Basic Health Program

Summary

This final rule includes payment parameters and provisions related to the HHS-operated risk adjustment and risk adjustment data validation (HHS-RADV) programs, as well as 2026 benefit year user fee rates for issuers that participate in the HHS-operated risk adjustment program and the 2026 benefit year user fee rates for issuers offering qualified health plans (QHPs) through Federally-facilitated Exchanges (FFEs) and State-based Exchanges on the Federal platform (SBE-FPs). This final rule also includes requirements related to modifications to the calculation of the Basic Health Program (BHP) payment; and changes to the Initial Validation Audit (IVA) sampling approach and Second Validation Audit (SVA) pairwise means test for HHS-RADV. It also addresses HHS' authority to engage in compliance reviews of and take enforcement action against lead agents of insurance agencies for violations of HHS' Exchange standards and requirements; HHS' system suspension authority to address noncompliance by agents and brokers; an optional fixed-dollar premium payment threshold; permissible plan-level adjustment to the index rate to account for cost-sharing reductions (CSRs); reconsideration standards for certification denials; changes to the approach for conducting Essential Community Provider (ECP) certification reviews; a policy to publicly share aggregated, summary- level Quality Improvement Strategy (QIS) information on an annual basis; and revisions to the medical loss ratio (MLR) reporting and rebate requirements for qualifying issuers that meet certain standards.

Compliance Requirements

1. #1

   Issuers must remit an HHS risk adjustment user fee equal to the product of its monthly billable member enrollment in the plan and $0.20 per member per month for the 2026 benefit year.; Issuers must submit accurate high-quality information to HHS for the HHS-operated risk adjustment program, subject to risk adjustment data validation (HHS-RADV) under §§153.350 and 153.630.; Beginning with the 2025 benefit year HHS-RADV, issuers must exclude enrollees without HCCs from the initial validation audit (IVA) sample, remove the finite population correction (FPC) from the IVA sampling methodology, and use the most recent 3 consecutive years of HHS-RADV data for Neyman allocation.; Beginning with the 2024 benefit year HHS-RADV, issuers must use a bootstrapped 90 percent confidence interval methodology for the second validation audit (SVA) pairwise means test and increase the initial SVA subsample size from 12 enrollees to 24 enrollees.; Issuers must incorporate pre-exposure prophylaxis (PrEP) as an affiliated cost factor (ACF) in the HHS risk adjustment adult and child models starting with the 2026 benefit year, excluding generic versions of PrEP medication and placing the PrEP ACF in hierarchy below RXC 1 (Anti-HIV Agents) in adult models and below HCC 1 (HIV/AIDS) in child models.; Issuers must begin phasing out the market pricing adjustment for Hepatitis C drugs in the HHS risk adjustment models starting with the 2026 benefit year, applying the specialty drug trend to 1 year of trending Hepatitis C treatment costs for all 3 years of enrollee-level EDGE data used in recalibration.; Issuers must use the 2020, 2021, and 2022 enrollee-level EDGE data to calculate the 2026 benefit year coefficients for the HHS risk adjustment models.; The HHS-operated risk adjustment program must sequester payments made from fiscal year 2025 resources at a rate of 5.7 percent in accordance with the OMB Report to Congress on the Joint Committee Reductions for Fiscal Year 2025.; Basic Health Program (BHP) States must calculate the premium adjustment factor (PAF) as follows: if fully implemented BHP using SLCSP premiums from a fully implemented year, PAF=1.188; if first year implementing BHP using prior year premiums, PAF=1.00; if using SLCSP premiums from a year when BHP was not fully implemented, report CSR adjustments to CMS and calculate PAF as 1.20 divided by 1 plus the adjustment.; BHP States must use the premium of the second lowest cost silver plan applicable to the largest portion of the county as measured by total population when there are multiple second lowest cost silver plans in a county.

Market Impacts

• HHS will operate risk adjustment program in all states and DC for 2026 benefit year, maintaining federal oversight of risk transfer calculations; HHS-operated risk adjustment program subject to 5.7% sequestration on payments made from FY2025 resources under BBEDCA; Phase-out of Hepatitis C drugs market pricing adjustment beginning with 2026 benefit year, transitioning to specialty drug trending methodology; Incorporation of PrEP (pre-exposure prophylaxis) as new Affiliated Cost Factor in risk adjustment models with exclusion of generic versions; FFE user fee rate of 2.5% and SBE-FP user fee rate of 2.0% of total monthly premiums, with alternative rates of 2.2% and 1.8% respectively if enhanced PTC subsidies extended through 2026; Modified premium adjustment factor calculation for states not fully implementing BHP, allowing more accurate payment calculations during partial implementation; Exclusion of enrollees without HCCs from Initial Validation Audit sampling, removal of Finite Population Correction, and updated Neyman allocation methodology; Modified SVA pairwise means test using bootstrapped 90% confidence interval methodology and increased initial SVA subsample size from 12 to 24 enrollees; Public sharing of aggregated, summary-level Quality Improvement Strategy information from QHP issuers; Qualifying issuers may opt to not adjust incurred claims by net risk adjustment program payments/receipts for MLR reporting

Estimated Monetary Impact

Basis: Based on specific regulatory requirements including HHS-RADV sampling methodology changes, risk adjustment user fee of $0.20 PMPM, and implementation requirements for PrEP ACF factors. Costs estimated based on typical healthcare compliance implementation complexity. No explicit penalty amounts specified in regulation text.; Action items: No action items provided in regulatory document content for cost estimationConfidence: 60%

Validated Company Impacts