The Centers for Medicare and Medicaid Services (CMS) released the draft 2026 Notice for Benefit Payment and Parameters (NBPP-2026) last Friday. It is a hefty document that is also really meaty with behind the scenes policy and operational updates that the nerds have been asking about for years now. One of the big changes is that CMS is engaged in a substantial rethinking of how the risk adjustment program has dynamic effects in the marketplace for the ACA individual and small group markets.
Insurers can and will look at all sorts of data to identify areas where they think they are likely to be profitable and areas where they are likely to not be profitable. This information will inform macro-decisions such as the decision to offer anything in a given county to micro decisions such as where to advertise on buses or which brokers to recruit. Risk adjustment is intended to reduce if not eliminate selection incentives. Risk adjustment moves money from insurers that have populations that code as having below average predictable costs to insurers that have populations that code as having above average predictable costs. Right now, we think that on average, risk adjustment underpays for folks with very high expected costs. Insurers respond to that incentive by trying to not cover those folks or by reducing their liability for that population if they still have to cover them. Risk adjustment originally was diagnosis code based, but in 2018, CMS added some prescription drug codes to improve the model. CMS has not used procedure codes to risk adjust populations.
CMS is proposing to a massive philosophical change with Pre-Exposure Prophylatic (PrEP) treatment for AIDS/HIV prevention. PrEP is a required preventive benefit. Currently, the cost of prep is integrated into the demographic co-efficienct of the risk adjustment model. Mostly men in certain age buckets get a generic point boost now. However we know that PrEP use is not uniformly distributed. To be crude, we expect a lot more PrEP use in San Francisco than in Bakerfield California. An individual taking PrEP is highly likely a money losing member for an insurer. Offering PrEP is a “Have-To” and not a “Want-To” problem right now.
CMS is changing this:
Because of PrEP’s high costs relative to other preventive services, and in contrast to our initial assumptions about pricing decreases, our analysis of 2022 benefit year enrollee-level data found that PrEP services can pose a unique risk of adverse selection to the extent that utilization of PrEP services differs between plans. More specifically, our analysis found that there are statistically significant, substantial differences in PrEP prevalence between issuers in rating areas where PrEP use is most common, indicating that the addition of a PrEP factor in the adult and child risk adjustment models would be appropriate and would have a meaningful impact on risk adjustment State transfers…
We solicit comments on our proposal to create a new ACF category of model factors for incorporation into the HHS risk adjustment models to account for unique medical expenses or services (such as PrEP) that do not meet the criteria to qualify as HCC or RXC factors, but impact the actuarial risk presented to issuers of risk adjustment covered plans. In addition, we solicit comments on our proposal to modify the treatment of PrEP in the HHS risk adjustment adult and child models beginning with the 2026 benefit year, as well as how to methodologically define a potential ACF category of model factors that accounts for PrEP (or other unique medical expenses or services) and what other considerations should be part of the analysis and modeling for this proposed new category of model factors (such as the availability of drug rebates or differences in medication adherence for PrEP).
This is a huge conceptual change.
It is also a huge boost for health equity. CMS is proposing a risk adjustment factor of over 2x standard premium to pay for PrEP. This makes individuals who are likely to use PrEP to go from definite money losers to likely break even or money makers. Insurers will chase profits by removing barriers to access for PrEP and potentially marketing in PrEP likely communities more aggressively.
Fixing risk adjustment is one of several ways to improve health equity as the incentives matter a lot.
narya
Fascinating–and exciting. There are also two new Gilead clinical trials for injectable PrEP every six months (instead of every two months), targeting cisgender women and injection drug users, especially women of color, all of whom are underrepresented in HIV clinical trials. IIUC, they were doing a trial in Africa and it was so successful that they stopped it early. The whole landscape is changing so rapidly; I’m glad CMS is getting in there, too.
David Anderson
@narya: Yeah, the clinical and policy sides are evolving rapidly and both in very positive directions on reducing HIV infection risk.
Ruviana
Are you safe? I’ve been reading too many scary post-hurricane reports.
JKC
@narya: That first trial phase was called PURPOSE-1, and as you said looked at cisgender women in South Africa and Uganda. The lenacapavir arm had NO breakthrough infections. This is huge. The next phase will be looking at cisgender men and gender-diverse people whose partners were assigned male at birth. If this phase produces similar results, it’s going to be a huge breakthrough in HIV prevention.
David Anderson
@Ruviana: Yep, all good.
Currently in Chapel Hill where Helene was a lot of water. The wind wasn’t bad, and we took down trees that were risky after Debby broke our roof. My family is on high to locally very high ground so the water went elsewhere. Columbia SC where I work and I have a crash pad had flooding that was a few feet short of needing to find a new apartment.
Milton will not impact me in either location.
Ruviana
@David Anderson: Thanks!
Burnspbesq
Paxton will undoubtedly sue, because anything that makes Their lives better must be un-con-sumpin-sumpin.
Planetjanet
Sounds like it is good to have people in charge who actually care about public service.
caphilldcne
So this is my primary work in public health right now and it has been incredibly frustrating from a policy perspective. In addition to the geographical disparities David mentioned there are unconscionable disparities in PrEP access based on gender, race and ethnicity. So African American and Latino men access PrEP at rates much lower than white men. Given that this is prevention those disparities only grow so that these populations have higher rates of new HIV infections, are diagnosed later with worse health and ultimately mortality outcomes. This is also true that women who are at risk for HIV access PrEP at much lower rates than men (they are not effectively screened for their health risks) and then the same disparities apply there. Organizations in the HIV community (notably PrEP4All) are requesting a National PrEP Program. The Biden administration agrees but has said it should be a mandatory program which it’s hard to see congress funding so we also should try to get bridge funding til we can reach that program. Additionally CDC is creating a pilot program in 5 jurisdictions that has one time funding. We need to keep that going and enhance it. Finally Harris as a Senator introduced a PrEP bill and Walz signed a PrEP bill as governor. This is an area they could really push and make a big difference. At the end of the day we would save lives and funding if we can get the incentives to line up to ensure everyone at risk for HIV has access to PrEP.
Maxim
OT: David, I have a friend in Florida who had an ACA Silver policy this year, and she says it was uniformly awful — “the kind of silver that turns your finger green,” as she put it.
I couldn’t remember if you’d ever made any comments specific to the Florida market and how to choose a policy. I do remember you saying to check every year rather than just renewing the existing policy (in any location), because there’s a good chance your current policy will no longer be the best one. But finding specific posts, even when limited to you as author, is not very easy.
Is there anything I can tell her to help her reduce the chances of having an awful policy next year? I don’t mean to put you on the spot; she’s just had some distressing experiences that I would like to spare her. Her current policy was recommended by someone working for whatever Florida has for ACA enrollment. Thanks for any insights you can offer, and no worries if there’s not really anything I can tell her.
I’m relieved to hear that you are safe.