By Maanasa Kona and Rachel Schwab
In November, the Biden administration released the proposed Notice of Benefits and Payment Parameters (NBPP) for plan year 2025, an annual rule setting standards for the Affordable Care Act (ACA) Marketplaces and health insurers. A detailed two-part summary of NBPP 2025 can be found on Health Affairs Forefront here and here. The final rule is expected soon.
To better understand the impact of these proposed policies, CHIR reviewed comments submitted by select stakeholder groups in response to the proposed rule. The first blog post in this series reviewed comments from health insurers and brokers and the second blog reviewed comments submitted by consumer advocacy groups. This third and final blog post reviews the comments from a sample of state departments of insurance (DOIs) and state-based Marketplaces (Marketplaces):
While the proposed rule covered many issue areas, this blog post focuses on comments related to state-based Marketplace (SBM) transitions, new standards for SBMs, updates to essential health benefit standards,* special enrollment periods (SEP) for low-income individuals, failure to reconcile premium tax credits, and limits on non-standardized plans.
New Standards for State-Based Marketplaces
Many of the proposed changes for 2025 are directed at SBMs.
New Rules for Transitioning to a State-Based Marketplace
The proposed rule would update requirements for states seeking to run an SBM. Specifically, the Centers for Medicare & Medicaid Services (CMS) have proposed that states first spend at least one year as an SBM using the federal eligibility and enrollment platform, HealthCare.gov (SBM-FP) prior to achieving full SBM status. CMS also proposed changes to the “Blueprint” process for receiving federal approval to operate an SBM, including new documentation requirements and policies to increase transparency and public engagement.
Most of the states in our sample already operate SBMs, so only two letters commented on the SBM transition proposals. Georgia and Oregon—current SBM-FPs planning transitions to full SBMs—both opposed the requirement for states to spend a year on HealthCare.gov. In Georgia, the DOI and Marketplace argued that this more gradual transition is unnecessary, unsupported by evidence, and would deter states from running SBMs. The DOI and Marketplace in Oregon noted how shifting between SBM and SBM-FP standards twice in two years would be “inefficient and burdensome.”
However, Oregon and Georgia had differing views on the Blueprint process proposals. While Georgia’s DOI and Marketplace described the documentation and public engagement requirements as unnecessarily onerous and vague, Oregon officials supported changes to the Blueprint process, indicating they would foster open communication between states and the federal government. However, given the additional burden on states, Oregon asked that federal officials provide adequate assistance for states to meet these requirements while sticking to a transition timeline.
Updated Requirements for New and Existing State-Based Marketplaces
CMS has also proposed a number of new requirements for all SBMs. Every comment letter in our sample touched on at least one of these proposals, but three provisions received the most comments: (1) requiring quantitative network adequacy standards for SBMs, (2) aligning open enrollment period deadlines and SEP effective dates across Marketplaces, and (3) new requirements for Marketplace call centers.
Quantitative network adequacy standards. Plans offered on the FFM must comply with quantitative network adequacy standards that stipulate the maximum time and distance enrollees must travel to reach certain providers—a more stringent requirement than the qualitative standards that apply in some SBMs and SBM-FPs. For plan year 2025, CMS is proposing to bolster network adequacy standards in SBMs and SBM-FPs, including a requirement that state-run Marketplaces establish time and distance standards “at least as stringent” as the FFM’s standards. The proposed rule also outlines an exceptions process for SBMs and SBM-FPs.
Every DOI and Marketplace in our sample commented on the proposed changes to SBM network adequacy standards. While several comments praised the effort to protect consumers’ access to care, virtually all states asked for changes, clarifications, delayed implementation, or reconsideration of the proposal. States frequently raised concerns regarding the implications for states that rely on the DOI for network adequacy oversight. Although the ACA’s requirement applies to Marketplaces, many states depend on insurance regulators to monitor and enforce network adequacy standards. A joint letter by 20 SBMs asked CMS to clarify that states will preserve states’ ability to rely on DOI regulation of network adequacy, and other state comments, citing similar concerns, pointed to their aim of aligning network adequacy standards on- and off-Marketplace. Georgia, calling the proposal a “one-size-fits-all approach,” urged CMS to continue giving SBMs flexibility with network adequacy standards. States also expressed concern that the year-long implementation timeline would be insufficient, and several asked for the rule to be delayed—Oregon’s DOI and Marketplace, for example, suggested pushing implementation until 2026, while the California Marketplace requested implementation as late as plan year 2027.
Several DOIs and Marketplaces noted their approval of the exceptions process, but some comments also asked for increased opportunity to tailor network adequacy requirements to state circumstances. In New Mexico’s letter, for example, the DOI recommended adding the option for states to adhere to their Medicaid program’s quantitative network adequacy standards, rather than relying on federally determined standards.
Aligning dates for open and special enrollment periods. The open enrollment period (OEP) on HealthCare.gov runs from November 1 until January 15. SBMs can set their own OEP dates, so long as the annual enrollment window does not end before December 15 of the year preceding the plan year. The proposed rule would align OEP dates across Marketplaces by requiring SBM OEPs to begin on November 1 and last until at least January 15 (with the option for SBMs to extend the deadline beyond mid-January).
In addition to aligning OEP dates, CMS is proposing to standardize the effective dates of SEPs by requiring that SBMs effectuate coverage the first of the month following plan selection. The preamble to the proposed rule notes that in some SBMs, current delays in SEP effective dates expose consumers to coverage gaps.
States in our sample provided mixed feedback on the OEP proposal. While some of the comments supported the proposal to extend the minimum OEP duration while maintaining SBMs’ ability to set a later deadline, others lamented the reduced flexibility. The NAIC asked CMS to continue permitting SBMs to establish OEP dates, suggesting this authority allows states to respond to the needs of their residents and markets. And among its numerous calls to withdraw proposed requirements for SBMs, Georgia’s DOI and Marketplace asserted that prescribing OEP dates in this manner would restrict SBMs’ ability to set policies in the interest of consumers, such as ending the OEP before the first of the year to provide consumers with a full 12 months of coverage or decrease the adverse selection risk.
States in our sample were more supportive of the proposal to standardize SEP effective dates. With the exception of Georgia, comments on this provision generally applauded the provision as a policy to prevent coverage gaps. The NAIC, while neither approving or rejecting the proposal, asked for evidence of the need for this requirement (in addition to other new SBM standards). New Jersey’s DOI and Marketplace, while approving of the proposal, asked for continued state flexibility to allow for retroactive eligibility in some circumstances.
Minimum call center standards. The proposed rule would set new minimum standards for Marketplace call centers, including requiring access to live representatives during hours of operation and that representatives help consumers with Marketplace applications (such as providing information about subsidy eligibility), understanding plan options, and selecting a plan, among other tasks.
Almost every state in our sample that commented on this proposal voiced support. The New York Marketplace highlighted how minimum standards would “ensure consumers have access to help when they need it,” and the California Marketplace underscored the importance of live assistance. The Connecticut Marketplace, though generally supportive of new minimum call center standards, rejected the requirement that representatives help consumers select a Marketplace plan, alleging it would violate a state law prohibiting anyone besides a licensed broker from recommending or selling such a plan. And like other minimum SBM standards, Georgia opposed the proposed requirements, and the NAIC again asked for evidence that the new standards were necessary.
Updates to EHB Standards
Under the ACA, health insurers are required to provide coverage for ten “essential health benefits” (EHBs), currently defined by state-selected benchmark plans. States can require insurers to cover benefits beyond EHBs but must “defray” the cost of associated premium increases. States can avoid their defrayal obligation by updating their EHB benchmark plan to include additional benefits, as long as the new plan is (1) at least as generous as the typical employer plan (typicality standard) and (2) is not more generous than the most generous plan among a set of comparison plans (generosity standard). In practice, states have found the defrayal policy to be confusing, and only seven states have gone through the complicated benchmark updating process to add benefits since 2019.
To make it easier for states to add to their EHB requirements, CMS proposed simplifying the EHB benchmark selection process in certain ways, such as removing the generosity standard and streamlining the typicality standard. CMS has also clarified that a state-mandated benefit will not trigger defrayal obligations as long as it’s included in the benchmark plan, and has proposed counting any prescription drugs covered by a plan beyond the minimum requirement to be considered as an EHB, subjecting these drugs to annual limits on cost-sharing and annual/lifetime dollar limits.
Simplifying the EHB Benchmark Selection Process
Every state in our sample that commented on this policy supported it. Oregon, which has gone through the benchmark updating process in the past, said the proposed changes would reduce the burden of “unnecessarily stringent actuarial standards,” allowing more states to update their benchmark plans. The NAIC welcomed the proposed changes, but the state regulators expressed concern that the proposed revision to the typicality standard might not go far enough to meaningfully reduce the burden of actuarial analyses, and sought more guidance on how to meet the typicality standard as proposed.
Defrayal of State-Mandated Benefits
States commenting on this proposed change voiced unanimous support. Massachusetts, which is currently defraying the cost of three additional benefits, strongly supported the proposal because it would “eliminate administrative costs for issuers and state agencies.” Both Massachusetts and Oregon indicated this change would protect consumers by ensuring additional benefits remain subject to nondiscrimination rules, annual limits on cost-sharing, and restrictions on annual and lifetime dollar limits. While supporting the change, state regulators, through the NAIC, requested additional guidance on what would be considered a “new mandate” subject to defrayal and how existing EHBs can be redefined to include coverage for new and emerging procedures without triggering defrayal.
Prescription Drugs in Excess of EHBs
Both states that commented on this issue—Oregon and Pennsylvania—supported the proposed change. Pennsylvania welcomed the clarification while sharing its experience with insurers categorizing certain prescription drugs as “non-EHB” and therefore not subject to the annual limitation on cost-sharing. Oregon said the new policy will help ensure that insurers administer the prescription drug EHB consistently across states and markets.
SEP for Low-Income Individuals
Individuals at or below 150% of the federal poverty level are currently eligible for a monthly SEP as long as they can enroll in a 0 percent premium contribution plan, which are only available due to temporarily enhanced federal subsidies which are set to expire at the end of 2025. CMS proposed making the SEP permanently available to low-income individuals irrespective of the availability of enhanced subsidies. All sampled states commenting on this proposal supported it. New Jersey, which has implemented this SEP for low-income individuals at or below 200% of the federal poverty level, said that the proposal would benefit those with the highest need for coverage and prevent extended coverage gaps for consumers transitioning from Medicaid.
Failure to Reconcile Advance Premium Tax Credits
The federal government proposes requiring health insurance Marketplaces to warn consumers who fail to reconcile advance premium tax credits (APTCs) while filing taxes that they are at the risk of losing their APTCs if they fail to reconcile them for a second consecutive year. Though sampled states generally agreed with the intent behind this proposal, many of them expressed significant concerns about implementing it. They claim that these notices are likely to include “Federal Tax Information” (FTI), which is subject to significant privacy protections under federal law. New Jersey, which opposes the proposal, says that implementing it would require them to take burdensome additional precautions, such as conducting criminal background checks, providing additional training to staff, and using special printing facilities. New Jersey and Oregon further suggested that the Internal Revenue Service might be better positioned than Marketplaces to send these notices.
Connecticut, one of the two sampled states to actually support this proposal, said that it has already implemented a similar policy with the approval of both the IRS and CMS; their consumer notice features “nonspecific language” generally warning primary household contacts that their household’s eligibility for APTCs might be at risk while providing them with information about how to fix the issue. However, a couple of states worried that scrubbing these notices clean of potentially sensitive and personalized information in order to make them easier to operationalize could end up making the notices too vague to be effective. States requested additional guidance, such as sample notices, to help them implement this proposal if it is finalized.
Limiting Non-Standardized Plan Options
To simplify consumer choice, the federal government currently allows insurers to offer only four non-standardized plans in each of the following categories: product network type; metal level; and inclusion of dental or vision benefits. Starting in plan year 2025, they will be further limited to offering only two non-standardized plans in each category. In the NBPP, the federal government proposes establishing an exceptions process that would allow insurers to propose additional plans with lower cost-sharing for those with chronic or high-cost conditions.
States differed in their response to this proposal. Oregon “strongly opposed” the proposal, noting that insurers in the state tend to offer plans with “significant differences,” and the two-plan limit would “arbitrarily limit consumer choice” and may force insurers to “reduce benefits and increase premiums.” The NAIC letter described mixed reactions from state regulators, who were split on the proposal to further limit non-standardized plan options; however, the NAIC comments noted regulators generally supported the flexibility that an exceptions process would offer, requesting that the federal government consult with state regulators before approving or denying a request for an exception.
*Stakeholder comments on another CMS proposal to ease states’ ability to add adult dental services to the EHB benchmark plan will be discussed in a separate, forthcoming blog post.
A Note on Our Methodology
This blog is intended to provide a summary of comments submitted by state DOIs and Marketplaces. This is not intended to be a comprehensive review of all comments on every provision in the proposed 2025 NBPP, nor does it capture every component of the reviewed comments. To view more stakeholder comments, please visit https://www.regulations.gov/.
