The 2023 Notice of Benefits and Payment Parameters Final Rule (final 2023 Payment Notice) finalizes many of the changes announced in the proposed rule.

The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) today issued the final payment notice for the individual and small group health insurance markets for the 2023 plan year.

The Final 2023 Payment Notice establishes standardized plan options for insurers that offer qualified health plans on The notice finalizes many of the changes announced in the proposed payment notice. CMS and HHS said that these changes will make it easier for consumers to compare plans by standardizing maximum out-of-pocket limitations, deductibles, and cost-sharing features. Consumers can then compare other plan benefits, such as premiums, provider networks, prescription drug coverage, and quality ratings.

RELATED: 2023 Proposed Payment Notice for the ACA marketplace: What you need to know

Here are the major changes in the final notice:

Standardizes plan options: Insurers that offer qualified health plans on the ACA marketplace must offer standardized plan options at every network type and at every metal level (bronze, silver, gold, and platinum) and throughout every service area where non-standardized options are offered starting in 2023.

Implements new network adequacy requirements: Plans must ensure that patients have access to providers based on time and distance standards. For example, plans on the federal marketplace must ensure that their provider network includes a primary care provider within 10 minutes and five miles for enrollees in a large metro county. In addition, beginning in the 2024 plan year, plans must ensure that providers meet minimum appointment wait time standards. This means plans must ensure that routine primary care appointments are available within 15 business days of an enrollee’s request. HHS will also review additional specialties for time, such as the time it takes the enrollee to get an appointment, and distance, such as the distance between the provider and enrollee–including emergency medicine, outpatient clinical behavioral health, pediatric primary care, and urgent care. OB/GYN standards will align with the parameters for primary care.

Increases value of coverage levels: Under the final rule, CMS updates the allowable range in metal coverage levels for non-grandfathered individual and small group market plans. This change will require some plans to increase the generosity of their coverage, making it more comprehensive, and lower costs for many consumers. CMS said that the changes will make it easier for consumers to compare plans at the various coverage metal levels (bronze, silver, gold, and platinum) and distinguish between the plan offerings.

Removes barriers to increase access to coverage: CMS and HHS said the final rule aims to protect consumers from discriminatory practices related to the coverage of the essential health benefits (EHB) by refining the CMS nondiscrimination policy. Specifically, a benefit design that limits coverage for an EHB on a basis protected from discrimination under this rule (such as age and health condition) must be clinically-based to be considered nondiscriminatory. The rule also updates Quality Improvement Strategy Standards to require insurers to address health and health care disparities.

Expands access to essential community providers: CMS will increase the Essential Community Provider (ECP) threshold from 20 percent to 35 percent of available ECPs in each plan’s service area to participate in the plan’s provider network. The higher ECP threshold will increase access to a variety of providers for consumers who are low-income or medically underserved. CMS expects that most insurers will easily meet the 35 percent threshold because in 2021, 80 percent of the qualified health plans on the federal marketplace already met this standard.

Keeps user fees at the same level as this year: For the 2023 benefit year, user fees for 2023 will be at the same level as 2022. The rule sets the federal marketplace user fee rate of 2.75 percent of premium and the state-based marketplace on the federal platform at 2.25 percent of premium. Maintaining user fee levels will ensure adequate funding for essential marketplace functions such as consumer outreach and education, eligibility determinations, and enrollment process activities.

Finalizes two model specification changes to risk adjustment models: CMS originally proposed three model specification changes to risk adjustment but finalized two of them, improving risk prediction for the lowest and highest risk enrollees.

Beginning with the 2023 benefit year, CMS will remove 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 abandoned plans to add a two-stage weighted model specification for the adult and child models. The other two model changes finalized in the rule will improve the risk adjustment program’s ability to predict and balance payments for risk across the individual and small group markets.

CMS will make the following changes to model recalibration for the 2023 benefit year risk adjustment models:

  • Will use the 2017, 2018, and 2019 enrollee-level EDGE data for model recalibration
  • Will apply a market pricing adjustment to the plan liability associated with Hepatitis C drugs
  • Will use the fourth quarter 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 insurers’ EDGE servers five new data elements including ZIP code, race, ethnicity, individual coverage health reimbursement arrangement indicator, and a subsidy indicator as part of the required risk adjustment data that insurers must make accessible to HHS in states where HHS is operating the risk adjustment program.

CMS will extract three new data elements insurers already provide through their EDGE servers as part of the required risk adjustment data submissions (plan ID, rating area, and subscriber indicator) to expand the permitted uses of the risk adjustment data and reports.

The risk adjustment user fee for the 2023 benefit year will be $0.22 per member per month.

CMS will also repeal 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.

CMS said that in future rulemaking it 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 percent reduction in Alabama’s individual market (including the catastrophic and non-catastrophic risk pools) transfers and a 10 percent reduction in Alabama’s small group market transfers.

Changes to HHS Risk Adjustment Data Validation (HHS-RADV): CMS will make further refinements to the HHS-RADV error rate calculation methodology beginning with the 2021 benefit year and beyond to:

  • Extend the application of Super HCCs to also apply coefficient estimation groups throughout the HHS-RADV error rate calculation processes
  • 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
  • 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

CMS said the changes will better align the calculation and application of error rates with the intent of the HHS-RADV program, which will enhance the integrity of HHS-RADV and the HHS-operated risk adjustment program.

To learn more, click here for the announcement, here for a fact sheet, and here to read the entire final rule.