On December 16, 2016, CMS released its Affordable Care Act (ACA) Notice of Benefit and Payment Parameters final rule and the final Annual Letter to Issuers for the 2018 plan year. Notably, the final rule revises the risk adjustment methodology to “further promote stable premiums in the individual and small group markets.” The final risk adjustment changes address: use of prescription drug utilization data; transfers to better account for the risk of high-cost enrollees; a reduction in the statewide average premium in the transfer formula by a portion of administrative costs; and, beginning in 2017, a refinement in the estimate of risk associated with enrollees who are not enrolled for a full 12 months. CMS also adopted provisions related to, among many other things: the risk adjustment data validation process; the premium adjustment percentage; limits on cost-sharing; standardized plan options; enrollment periods and options; oversight; changes to child age rating; revisions to the guaranteed renewability regulations related to market withdrawals; and medical loss ratio reporting and rebates.

According to CMS Acting Administrator Andy Slavitt, the “Administration will leave the Marketplace on a stable path that, when fully implemented, will ensure quality coverage is available for all Americans well into the future.” Whether these changes are in fact fully implemented, however, will depend on the contours of Republican efforts to “repeal and replace” the ACA, including the details of any transition period adopted to unwind the current insurance Marketplace framework.