CMS posts Proposed 2027 NBPP. Be afraid; be very afraid (Part 1)

Non-networked plans, fully-privatized exchanges and other slippery slopes

UPDATE: Someone correctly pointed out that it’s a bit unfair to tell people to “be afraid” without giving them any action items to try and stave off the uglier changes being proposed. You have until March 13th to submit a comment to CMS. It may not make any difference but believe it or not sometimes it does, even under the Trump regime.

The Patient Protection & 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).

The HHS Dept. is currently run by RFK Jr., an anti-vaxxer nutjob who just today stated--and this is a verbatim quote:

“I’m not scared of a germ. I used to snort cocaine off of toilet seats.”

The CMS, meanwhile, is currently run by modern day snake oil salesman Dr. Mehmet Oz, who doesn’t know what Cost Sharing Reduction subsidies are.

With this as prologue:

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 proposed changes to some of the specifics of how the ACA is actually implemented for the upcoming year. Some of the changes are minor tweaks; some are major. Some are fairly simple to understand; some get extremely technical & wonky.

The proposed 2027 NBPP was just released by CMS. The full official document is 577 pages long..over 200,000 words total. For comparison, the first volume of the Lord of the Rings trilogy, The Fellowship of the Ring, runs around 187,000 words. Thankfully, even under the Trump Regime, CMS does at least provide a summary of the main provisions, so let’s take a look.

The summary includes descriptions (using language to put a positive spin on all of them, of course) of 34 different policy areas. In cases where they get into areas which I’m not knowledgable enough about to comment on, I’ll just note that and provide CMS’s phrasing as is, or I’ll lean on folks more knowledgable about that area than I am (I’ll especially be cribbing heavily on Katie Keith, who’s the Director of Health Policy & the Law Initiative at the O’Neill Institute for National & Global Health Law at Georgetown University Law Center), from her even wonkier explainers at Health Affairs (part 1, part 2, part 3).

I should note that while there’s a lot of ugly changes below, not every policy change being proposed by the Trump regime is necessarily negative. In some cases they may be genuinely good ideas; in others they’re good ideas originally proposed under the Biden Administration which are being implemented now; in still others they may mostly be positive but could have some negative provisions buried within them.

With that in mind...

1. Expand Regulations on Marketing Practices

CMS proposes to strengthen regulations on marketing practices for QHPs offered through Exchanges, as well as for agents, brokers, and web-brokers assisting consumers with enrollment in QHPs through the FFEs and SBE-FPs. This proposal includes examples of prohibited marketing practices, such as providing cash, monetary rebates, or cash equivalents to induce consumers to enroll; falsely asserting or suggesting that consumers will qualify for zero-dollar insurance or zero-dollar premiums; and miscommunicating enrollment timelines and deadlines. CMS also proposes requirements for timely production of marketing materials for monitoring, audit, or enforcement purposes. This proposal would ensure consumers are provided accurate information about the Exchange prior to enrollment, maintain the integrity of the Exchanges, and foster trust between consumers and agents, brokers, and web-brokers.

For the most part, this sounds perfectly reasonable, and lord knows there’s a lot of misleading and/or fraudulent marketing of so-called “Obamacare” policies from unscrupulous parties.

On the other hand, digging through the details of the “marketing practices” section, I came across this bit:

“We also propose to remove language from § 155.220(j)(2)(i) that defines the term “sex” to include sex characteristics, including intersex traits; pregnancy or related conditions; sexual orientation; gender identity; and sex stereotypes. This proposed change would recognize a person’s sex as referring to an individual’s immutable biological classification as either male or female, consistent with Executive Order 14168 (90 FR 8615) that reflects the current policy of the United States. HHS is of the view that because the sexes are not changeable and one’s sex is grounded in fundamental and incontrovertible reality, it is not necessary to address ancillary issues of gender ideology in a regulation governing the activities of State-licensed agents, brokers, and web-brokers.

🚨 DANGER, WILL ROBINSON.

Yep, like every other are of society, the Trump regime is doing everything it can to completely erase transgender people from existence.

2. Mandating a Standard Eligibility Application Review Form and Consumer Consent Form

CMS proposes to require agents, brokers, and web-brokers to use the HHS-approved and created form to meet the eligibility application review documentation requirements and consent documentation requirements. CMS also proposes to clarify what types of actions constitute a consumer “taking an action” to review and confirm the accuracy of their information on their eligibility application and consent documentation. These proposals would protect consumers enrolling on the Exchanges from noncompliant agents, brokers, and web-brokers and protect consumers from inaccurate eligibility determinations, being enrolled in health coverage that does not meet their needs, and unexpected tax liabilities.

Again, on paper this seems total reasonable, especially given the legitimate issues of broker fraud which expanded dramatically over the past few years (although measures had already been taken to crack down on them over the summer & fall of 2024 under the Biden Administration). I didn’t find anything in the proposed rule itself which set off any red flags here.

3. Implement and Apply the SEIPM Program

CMS proposes implementing a SEIPM program in calendar year 2027 to measure improper payments of advance payments of the premium tax credit (APTC) administered by State-based Exchanges (SBEs). CMS currently has a process in place to measure improper payments of APTC for the FFEs, but not one for SBEs. This proposal would ensure oversight of improper payments across all Exchanges, promoting consistency and parity in program integrity efforts nationwide. CMS further proposes to permit SBEs to satisfy certain requirements of the independent external programmatic audit by completing the SEIPM process.

SEIPM stands for State Exchange Improper Payment Measurement. Basically, it’s a program requiring ACA exchanges to track and report cases where premium subsidies were paid out which weren’t supposed to be; apparently there’s already such a program in place for the ~30 states operating on the federal ACA exchange (HealthCare.Gov) but not for the other 20 (+DC) which operate their own state-based exchanges.

Ramping up this program was actually originally proposed during the Biden Administration back in 2023, but implementation of it was bumped out by a couple of years:

...we proposed in the 2023 Payment Notice proposed rule (87 FR 584) to establish the SEIPM program, which would have required State Exchanges to submit certain information to HHS so that HHS could report an improper payment estimate of APTC administered by State Exchanges. We proposed that it would begin in calendar year 2024, but a significant volume of public comments stating that State Exchanges would need additional time and guidance to prepare for SEIPM persuaded us not to finalize that proposal.

Again, the devil is in the details, but on the surface this seems harmless enough...

4. Provider Access and Essential Community Provider (ECP) Certification Reviews

CMS proposes that FFE states may elect to conduct their own provider access reviews and/or ECP certification reviews of issuers’ plans, with or without a provider network, that apply for QHP certification to be offered through a FFE(including states that perform plan management), provided that CMS determines the state has sufficient authority and the technical capacity to conduct such reviews by satisfying the applicable criteria to be considered to have an Effective Provider Access Review Program for provider access certification reviews, and/or an Effective ECP Review Program for ECP certification reviews.

...In addition, CMS proposes to restore aspects of network adequacy authority back to the SBEs and SBE-FPs through the removal of requirements for SBEs and SBE-FPs to establish and implement quantitative time and distance standards that are at least as stringent as those for QHPs participating in the FFEs by 2026. Instead, states would be required to ensure that each QHP applying for certification to be offered through a SBE or SBE-FP provides sufficient choices of providers in a manner that meets applicable standards specified in § 156.230(a)(1)(ii) and (iii) for network plans, or § 156.236(a) for non-network plans.

5. ECP Standards and Requirements

CMS proposes revising the minimum percentage of ECPs that issuers must contract with in each plan’s service area to participate in the plan’s provider network from 35 percent to 20 percent, applicable to the overall ECP threshold and, separately, to the federally qualified health center (FQHC) and family planning provider thresholds. CMS also proposes to remove the narrative justification requirement to be consistent with systems changes and existing QHP issuer ECP data submission requirements as part of ECP certification reviews.

Essential Community Providers (ECPs) are healthcare providers who serve low-income and/or medically underserved communities; they include Federally Qualified Health Centers (FQHCs), Indian Health Service providers, Community Health Centers, Family Planning Clinics and so forth.

In 2025, insurance carriers had to contract with at least 30% of ECPs in their area in order to qualify for being listed on the ACA exchange. Trump 1.0 dropped this down to 20%. The Biden Administration beefed it up to 35%...and now Trump 2.0 is cutting it back to 20% again.

In addition, they’re proposing to let most states conduct their own certification of ECPs, presumably based on whatever criteria they wish, instead of having the HHS Dept. do so, which isn’t a great idea in some states.

In addition, the Trump regime is removing time & distance requirements which are currently in place to “ensure a sufficient choice of providers” (that is, carriers are currently required to prove that a certain number of in-network healthcare providers of various types are included within a certain physical distance of anyone living in the coverage area, and that enrollees are able to secure appointments with those providers within a given time frame.

As Katie Keith puts it:

Beginning with the 2027 plan year, HHS would eliminate uniform federal network adequacy standards and instead defer to state review of network adequacy. Complicating things further, HHS would resume allowing non-network plans to be certified as qualified health plans, subject to exchange approval.

...Insurers in FFE states that are deemed to have an “effective provider access review program” would no longer need to comply with federal quantitative time and distance standards or appointment wait time standards. For network plans, states would be required to ensure that a plan meets ECP requirements and includes a sufficient number and types of providers, including those that specialize in mental health and substance use disorder services, to ensure that all services will be accessible without unreasonable delay. For non-network plans, states would ensure that the plan meets the same substantive standard as plans with a network but, to do so, would have to ascertain whether a sufficient choice of providers, including ECPs, would accept the benefit amount as payment in full. States would have to review both network and non-network plans to have an effective provider access review program—unless a state opted not to certify non-network plans at all.

In other words, there would still have to be some level of network adequacy and data collection/reporting, but they’d be a lot less stringent than they are now...which could mean having to drive a lot further to get to your specialist or having to wait a lot longer to get an appointment.

6. QHP Certification of Non-Network Plans

CMS proposes to allow non-network plans to receive QHP certification beginning with plan year 2027 by demonstrating a sufficient choice of providers in a manner consistent with sections 1311(c)(1)(B) and (C) of with the ACA. Unlike network-based plans, non-network plans do not rely on a contracted set of providers that agree in advance to specific terms and negotiated payment rates, nor do they condition or differentiate benefits to enrollees based on whether the issuer has a network participating agreement with a provider that furnishes covered services.

Instead, these plans set specific benefit amounts for covered services and communicate those benefit amounts to enrollees who may then seek covered services from any provider. Under this proposal, non-network plans would be required to ensure access to a range of providers that accept the non-network plan’s benefit amount as payment in full, including ECPs and providers that specialize in mental health and substance use disorder services, to ensure that services will be accessible without unreasonable delay. This proposed policy aims to reduce overall health care costs by (1) empowering enrollees to utilize price transparency information to shop for lower prices and negotiate directly with providers, thus fostering increased competition, and (2) eliminating substantial administrative overhead associated with traditional network management, potentially resulting in lower premiums.

🚨 DANGER, WILL ROBINSON.

With networked plans, healthcare providers are locked into charging specific prices for specific services. With non-network plans, they can charge pretty much whatever the hell they want, but the insurance plan will only cover a certain amount of that, leaving the enrollee to foot the balance of the bill, whatever it is.

Traditional networked plans include specific providers. Non-networked plans mean that it’s up to you to hunt down the provider on your own. This is touted by the Trump regime as “empowering enrollees” to “shop for lower prices,” because everyone knows that when you’re having your gall bladder removed you want to go with the lowest bidder, and who doesn’t like spending hours on the phone trying to decide on the best place to have your kidney dialysis? In addition, without a network, your Ear, Nose & Throat specialist may not have any coordination or record sharing agreement with your internist.

The rule says that some of the providers would have to accept whatever the plan agrees to pay, but not all of them, so that’s always fun to try & figure out.

I’m not issuing a blanket condemnation of non-networked plans in every conceivable situation, but allowing them to be certified as ACA-compliant Qualified Health Plans (QHPs) strikes me as a terrible idea on the “slippery slope” scale.

7. Recalibrating the 2027 Benefit Year HHS Risk Adjustment Models

To continue keeping the HHS risk adjustment models up to date while promoting model stability, CMS proposes to recalibrate the HHS risk adjustment models for the 2027 benefit year using 2021, 2022, and 2023 benefit year enrollee-level External Data Gathering Environment (EDGE) data.

8. Reflecting HHS-RADV Sampling Changes in the HHS-RADV Error Estimation Methodology

To align with the HHS-RADV sampling policy finalized in the 2026 Payment Notice [1] that improves the precision of HHS-RADV error estimation methodology, CMS proposes that starting with 2025 benefit year HHS-RADV, it would add an additional scaling factor to the calculation of the HHS-RADV error rates. This scaling factor would allow the HHS-RADV error estimation methodology to appropriately estimate the proportion of the issuer’s total plan liability risk score that is hierarchical condition category (HCC)-related after the removal of no-HCC enrollees from the initial validation audit HHS-RADV sample.

9. 2027 Risk Adjustment User Fee

CMS, on behalf of HHS, is responsible for operating risk adjustment in every state and the District of Columbia for the 2027 benefit year. For the 2027 benefit year, CMS proposes a risk adjustment user fee of $0.20 per member per month, the same user fee rate used for the 2026 benefit year.

Every year I issue a mea culpa when it comes to all things Risk Adjustment related, since it’s an area of the ACA which I’ve never been able to wrap my head around; instead, I’m going to simply quote Keith’s post on the topic:

The risk adjustment programs rely on models that assign risk scores to enrollees based on the enrollee’s plan type and personal characteristics, including age, sex, and health conditions. Each year, HHS updates the data used to calibrate these models.

HHS’ proposed approach for the 2027 benefit year closely follows its approach in prior years. Specifically, it will use the most recent three years of data available from the External Data Gathering Environment (EDGE), the system that HHS uses to collect risk adjustment data from issuers. In this case, that means using data for 2021, 2022, and 2023, with payment amounts trended forward to reflect the expected prices of services in 2027. HHS proposes to run separate calibration regressions using each year’s data and then average the resulting coefficient estimates. HHS also reports reviewing the 2023 EDGE data (which would be used for calibration for the first time this year) for anomalies and finding none.

It doesn’t sound like they’re planning anything too neferious here.

10. Approval of an Exchange

For states that elect to transition directly from the FFE to a SBE, CMS proposes to remove the requirement that a state operate for one year as an SBE-FP prior to its full transition to operating an SBE. This proposed policy would eliminate unnecessary barriers for states that are well-prepared to implement a SBE more immediately.

This is the culmination of a multi-year dustup between the Biden Administration and Georgia Governor Kemp. The short version is that several years ago the state of Georgia, which had previously (during Trump 1.0) been on the verge of scrapping ANY official government-run ACA exchange of any sort (see #12 below), pulled a complete 180 and instead decided to implement their own state-based exchange IMMEDIATELY.

At the time, CMS was requiring any state which wanted to transition away from a federally-facilitated exchange (FFE) onto their own state-based exchange (SBE) platform had to spend at least one year in a sort of “halfway house” status, in which they operate as an SBE legally, fiscally, administratively etc...but the technical platform is still hosted by HealthCare.Gov.

Georgia insisted that they had all their own separate website (Georgia Access) ducks in a row and that there was no need to twiddle their thumbs for an extra year before launching it, but the Biden Administration told them to cool their jets and forced them to wait until the following year before making the move.

Trump 2.0 plans on formally removing the one-year transition period, which, if it happens, means that any other states which want to split off from HealthCare.Gov onto their own platform will be able to do so a year sooner. Whether this is a good or bad idea remains to be seen...

11. Exchange Blueprint Submission Activities

CMS proposes to rescind a requirement that a state, as part of its activities for establishing a SBE, provide to HHS upon its request supplemental documentation detailing the state’s progress towards meeting milestones outlined in its “Blueprint for Approval of State-Based Health Insurance Exchanges”, which currently already sets forth how the state will meet Exchange approval standards and demonstrate operational readiness.

12. State Exchange Enhanced Direct Enrollment Option

CMS proposes to establish a new optional Exchange model known as the State Exchange Enhanced Direct Enrollment option. If adopted, this proposal would permit an SBE to adopt a private sector-based approach for consumers seeking coverage through an SBE, whereby an SBE may rely exclusively on web-brokers to operate the consumer-facing websites that facilitate the applicant eligibility and enrollment process. This proposed approach would be an alternative to the SBE operating a centralized, consumer-facing eligibility application and enrollment website on its own SBE website. Accordingly, CMS also proposes to remove the requirement that SBEs must operate a centralized consumer-facing eligibility and enrollment website on their SBE websites, allowing the SBEs to elect to implement this proposed State Exchange Enhanced Direct Enrollment option model.

🚨 DANGER, WILL ROBINSON.

This is, again, something which Georgia tried to push through several years ago: Scrapping using either the FEDERAL ACA exchange (HealthCare.Gov) or their own STATE-BASED ACA exchange (such as Covered California, MNsure, NY State of Health, etc) and instead completely outsourcing ACA exchange enrollment to private 3rd-party web brokers.

Thankfully, at the time the Biden Administration was able to stop Georgia from doing so, leading the Peach State to go completely the other way and set up their own state-based ACA exchange, Georgia Access, which, as I understand it, seems to be working reasonably well for the most part.

TO BE CLEAR: I have no problem with 3rd-party web brokers enrolling people into ACA plans as long as they’re properly certified, etc. After all, the largest of these, Health Sherpa, has actually been one of (full disclosure) the main sponsors of this website for years now. They do a great job, and are already responsible for over HALF of all federal exchange ACA enrollments.

HOWEVER, there’s still a big difference between allowing private companies to also enroll people into ACA plans in addition to a government-operated exchange and completely turning everything over to them. As much as I respect and trust the folks at Sherpa, it would set a terrible precedent to completely privatize the process.

Unfortunately, I have no idea whether there would be any legal recourse for preventing Trump’s CMS from implementing this change if they go ahead and do so.

That’s the first 12 of 34 policy areas. I’ll tackle the second batch in Part 2.

UPDATE: Someone correctly pointed out that it’s a bit unfair to tell people to “be afraid” without giving them any action items to try and stave off the uglier changes being proposed. You have until March 13th to submit a comment to CMS. It may not make any difference but believe it or not sometimes it does, even under the Trump regime.