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Federal Register / Vol. 86, No. 127 / Wednesday, July 7, 2021 / Rules and Regulations
claims of federal payment amounts based on household reports during the year or data from third-party sources, such adjustments may not fully capture the effects of tax reconciliation that BHP
enrollees would have experienced had they been enrolled in a QHP through an Exchange and received APTC.
Therefore, in accordance with current practice, we are finalizing our proposal to include in Equation 1 an adjustment, the IRF, that will account for the difference between calculating estimated PTC using: a Household income relative to FPL as determined at initial application and potentially revised mid-year under 600.320, for purposes of determining BHP eligibility and claiming federal BHP payments;
and b actual household income relative to FPL received during the plan year, as it would be reflected on individual federal income tax returns.
This adjustment will seek prospectively to capture the average effect of income reconciliation aggregated across the BHP
population had those BHP enrollees been subject to tax reconciliation after receiving APTC for coverage provided through QHPs. Consistent with the methodology used in past years, we will estimate reconciliation effects based on tax data for 2 years, reflecting income and tax unit composition changes over time among BHP-eligible individuals.
The OTA maintains a model that combines detailed tax and other data, including Exchange enrollment and PTC
claimed, to project Exchange premiums, enrollment, and tax credits. For each enrollee, this model compares the APTC
based on household income and family size estimated at the point of enrollment with the PTC based on household income and family size reported at the end of the tax year. The former reflects the determination using enrollee information furnished by the applicant and tax data furnished by the IRS. The latter would reflect the PTC eligibility based on information on the tax return, which would have been determined if the individual had not enrolled in the BHP. Consistent with prior years, we will use the ratio of the reconciled PTC
to the initial estimation of PTC as the IRF in Equation 1 for estimating the PTC portion of the BHP payment rate.
For 2022, OTA previously estimated that the IRF for states that have implemented the Medicaid eligibility expansion to cover adults up to 133
percent of the FPL would be 99.01
percent. However, due to changes made by the ARP, OTA has revised its estimate for the IRF to be 100.63
percent. Specifically, section 9661 of the ARP specifies new applicable percentages of household income for the
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purposes of calculating the PTC for 2021
and 2022. This would lead to an increase in PTC, by reducing the household premium contribution. It also is anticipated to have an effect on the income reconciliation for persons enrolled in QHPs in the Exchanges, as evidenced by the revised estimate.
We believe that it is appropriate to distinguish between the IRF for Medicaid expansion states and nonExpansion states to remove data for those with incomes under 138 percent of FPL for Medicaid expansion states.
This is the same approach that we finalized in the 2021 final BHP Payment Notice. For other factors used in the BHP payment methodology, it may not always be possible to separate the experiences between different types of states and there may not be meaningful differences between the experiences of such states. Therefore, we will set the value of the IRF for states that have expanded Medicaid equal to the value of the IRF for incomes between 138 and 200 percent of FPL and the value of the IRF for states that have not expanded Medicaid equal to the value of the IRF
for incomes between 100 and 200
percent of FPL. This gives an IRF of 100.63 percent for states that have expanded Medicaid and 100.83 percent for states that have not expanded Medicaid for program year 2022.
We will use this value for the IRF in Equations 1 for calculating the PTC
portion of the BHP payment rate.
E. State Option To Use Prior Program Year QHP Premiums for BHP Payments In the interest of allowing states greater certainty in the total BHP federal payments for a given plan year, we have given states the option to have their final federal BHP payment rates calculated using a projected adjusted reference premium that is, using premium data from the prior program year multiplied by the premium trend factor PTF, as described in Equation 2b. We will require states to make their election to have their final federal BHP
payment rates calculated using a projected adjusted reference premium by the later of 1 May 15 of the year preceding the applicable program year or 2 60 days after the publication of the final notice. Therefore, because we are finalizing the 2022 payment methodology after May 15, 2021, states must inform CMS in writing of their election for the 2022 program year by 60
days after the publication of the final notice.
For Equation 2b, we will define the PTF, with minor changes in calculation sources and methods, as follows:

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PTF: In the case of a state that would elect to use the 2021 premiums as the basis for determining the 2022 BHP
payment, it would be appropriate to apply a factor that would account for the change in health care costs between the year of the premium data and the BHP program year. This factor would approximate the change in health care costs per enrollee, which would include, but not be limited to, changes in the price of health care services and changes in the utilization of health care services. This would provide an estimate of the adjusted monthly premium for the applicable second lowest cost silver plan that would be more accurate and reflective of health care costs in the BHP program year.
For the PTF we are finalizing our proposal to use the annual growth rate in private health insurance expenditures per enrollee from the National Health Expenditure NHE projections, developed by the Office of the Actuary in CMS https www.cms.gov/ResearchStatistics-Data-and-Systems/StatisticsTrends-and-Reports/NationalHealth ExpendData/
NationalHealthAccountsProjected.
Based on these projections, we are finalizing our proposal that the PTF be 4.7 percent for BHP program year 2022.
We note that the increase in premiums for QHPs from 1 year to the next may differ from the PTF developed for the BHP funding methodology for several reasons. In particular, we note that the second lowest cost silver plan may be different from one year to the next. This may lead to the PTF being greater than or less than the actual change in the premium of the second lowest cost silver plan.
F. State Option To Include Retrospective State-Specific Health Risk Adjustment in Certified Methodology To determine whether the potential difference in health status between BHP
enrollees and consumers in an Exchange would affect the PTC and risk adjustment payments that would have otherwise been made had BHP enrollees been enrolled in coverage through an Exchange, we will provide states implementing the BHP the option to propose and to implement, as part of the certified methodology, a retrospective adjustment to the federal BHP payments to reflect the actual value that would be assigned to the population health factor or risk adjustment based on data accumulated during that program year for each rate cell.
We acknowledge that there is uncertainty with respect to this factor due to the lack of available data to analyze potential health differences
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