HHS Notice of Benefit and Payment Parameters for 2027 Final Rule
Introduction
Today, the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), issued the “HHS Notice of Benefit and Payment Parameters for 2027; Basic Health Program” final rule (the 2027 Payment Notice final rule) that sets standards for the Health Insurance Exchanges, as well as for health insurance issuers, and agents, brokers, and web-brokers who connect millions of consumers to Affordable Care Act (ACA) coverage.
The 2027 Payment Notice final rule contains provisions to improve implementation of the ACA, including payment parameters and provisions related to the HHS-operated risk adjustment and risk adjustment data validation (HHS-RADV) programs, as well as 2027 user fee rates for issuers offering qualified health plans (QHPs) through Federally-facilitated Exchanges (FFEs) and State-based Exchanges on the Federal platform (SBE-FPs).
The final rule also includes provisions related to civil money penalties (CMPs) for noncompliant issuers and other responsible entities; standards governing agents, brokers, and web-brokers; the expansion and codification of hardship exemption eligibility; implementation of the State Exchange Improper Payment Measurement (SEIPM); QHP certification of non-network plans; a prohibition on issuers from including routine non-pediatric dental services as an Essential Health Benefit (EHB); cost-sharing flexibilities for catastrophic and individual market bronze plans; standards for catastrophic plans with plan terms of up to 10 consecutive plan years; state flexibilities for provider access and essential community provider (ECP) certification reviews; ECP standards; discontinuation of standardized plan option requirements and the non-standardized plan option limit and exceptions process; QHP issuer quality improvement strategies (QISs); and revisions affecting which enrollees are included in Federal Basic Health Program (BHP) payment calculations to states. This final rule also includes amendments to implement certain provisions of the Working Families Tax Cut (WFTC) legislation (Public Law 119-21).
The 2027 Payment Notice final rule can be accessed at: https://www.cms.gov/files/document/cms-9883-f-patient-protection.pdf
Strengthening Program Integrity
Expand Regulations on Marketing Practices
CMS is finalizing stronger regulations on marketing practices for agents, brokers, and web-brokers assisting consumers with enrollment in QHPs through the FFEs and SBE-FPs. The final rule 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 always qualify for zero-dollar insurance or zero-dollar premiums; and miscommunicating enrollment timelines and deadlines. CMS is also finalizing requirements for timely production of marketing materials for monitoring, audit, and enforcement purposes. This policy will 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.
Mandating a Standard Eligibility Application Review Form and Consumer Consent Form
CMS is finalizing requiring agents, brokers, and web-brokers to use the HHS-approved and created form to meet the eligibility application review documentation requirements and the consumer consent documentation requirements. Agents, brokers, and web-brokers must use this form for enrollments for plan years beginning on or after January 1, 2028. CMS is also finalizing a clarification of 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 policies will protect consumers enrolling on the Exchanges from agents, brokers, and web-brokers who conduct business without informed consent and safeguard consumers from inaccurate eligibility determinations, getting enrolled in health coverage that does not meet their needs, and unexpected tax liabilities.
Implement and Apply the SEIPM Program
CMS is finalizing implementing a SEIPM program beginning in calendar year 2027 to measure improper payments of advance payments of the premium tax credit (APTC) administered by State Exchanges. CMS currently has a process in place to measure improper payments of APTC for the FFEs, but not one for State Exchanges. This policy will ensure oversight of improper payments across all Exchanges, promoting consistency and parity in program integrity efforts nationwide. CMS is further finalizing permitting State Exchanges to satisfy certain requirements of the independent external programmatic audit by completing the SEIPM process.
Sunsetting the Vendor Training Program
CMS is finalizing the removal of the requirements in § 155.222 that HHS approve vendors to facilitate annual agent and broker training for a given plan year, effectively discontinuing the vendor program. Agents and brokers will still have full access to complete annual Exchange training and registration requirements provided directly by CMS.
Improving Access to Coverage and Encouraging Plan Innovation
QHP Certification of Non-Network Plans
CMS is finalizing, effective beginning in PY 2028, to allow issuers offering non-network plans to receive certification to be offered as a QHP through the FFE by demonstrating a sufficient choice of providers in a manner consistent with sections 1311(c)(1)(B) and (C) of the ACA. Unlike network-based plans, non-network plans do not rely on a contracted set of providers with whom the plans directly negotiate payment rates, nor do non-network plans condition or differentiate benefits to enrollees based on whether the issuer has a network participation contractual 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 policy, non-network plans will 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. In addition, under finalized standards for non-network plans at § 156.236, non-network plans must report certain information to the FFE to ensure the plan provides access to a sufficient choice of providers and promotes consumer protections. This information includes but is not limited to: methodologies to determine benefit amounts and validate providers that accept those benefit amounts, strategies for making benefit amounts publicly available, strategies to provide consumer-friendly information on costs and locating providers, and the availability of exceptions processes. This 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.
Expansion of Hardship Exemption Eligibility
CMS is finalizing allowing individuals who are ineligible for APTC or CSRs due to projected household income below 100% or above 250% of the FPL to qualify for a hardship exemption to enroll in catastrophic coverage when they experience change in their household income. HHS published guidance on September 4, 2025, that expanded eligibility for a hardship exemption to individuals ineligible for APTC or CSRs due to projected household income for consumers in FFE States, SBE-FP States, and State Exchange States that delegate their exemption processing to HHS. This policy will expand hardship exemption eligibility to individuals in all states so all individuals eligible for the exemption may enroll in catastrophic coverage, if otherwise eligible. This policy will improve consumers’ access to affordable coverage when they experience change in their household income.
Further Align Affordability and Coverage Incentives between Catastrophic and Metal Level Health Plans
CMS is finalizing standards under which catastrophic plans may have terms of multiple consecutive plan years of up to 10 plan years. Multi-year catastrophic plans will also be allowed to provide pre-deductible coverage through value-based insurance designs that incentivize consumers to receive higher-value services at lower cost, pursuant to guidelines issued by HHS and the Departments of Labor and the Treasury. Additionally, to address an issue that has arisen in the implementation of section 1302(c) through (e) of the ACA, CMS is finalizing a change to the permissible cost-sharing parameters for individual market bronze plans beginning in PY 2027, and an update to the cost-sharing requirements for catastrophic plans beginning in PY 2028. These policies will improve consumers’ access to affordable health care coverage and provide consumers the flexibility to tailor their coverage to their needs.
Promote Issuer Flexibility and Innovation by Discontinuing Requirement to Offer Standardized Plan Options and Limits on Non-Standardized Plan Options
CMS is finalizing the proposal to discontinue (1) the requirement for FFE and SBE-FP issuers to offer standardized plan options in the individual market, (2) the differential display of these plans on HealthCare.gov and Direct Enrollment (DE) platforms, (3) the limit on the number of non-standardized plan options that may be offered by FFE and SBE-FP issuers, and (4) the related non-standardized plan option limit exceptions process. To minimize potential disruption related to this policy, CMS is finalizing permitting issuers to choose whether to discontinue existing standardized plan options and the chronic and high-cost condition plans originally offered through the non-standardized plan option limit exceptions process altogether or continue offering them with either the same or modified cost sharing. These policies will reduce issuer and HHS burden and regulatory complexity, enhance flexibility for issuers to innovate in plan design, and increase the degree of consumer choice.
2027 FFE and SBE-FP User Fee
Per section 1311(d)(5)(A) of the ACA, CMS charges user fees to participating issuers as a means of generating funding to support its FFE and SBE-FP operations. For the 2027 benefit year, CMS is finalizing an FFE user fee rate of 1.9% of monthly premiums and an SBE-FP user fee rate of 1.5% of monthly premiums, which are lower than the current benefit year 2026 user fee rates.
Empowering States and Enhancing Qualified Health Plan Certification Flexibilities
Provider Access and Essential Community Provider (ECP) Certification Reviews
CMS is finalizing 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 FFE 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. An FFE State will have the choice to elect to conduct their own provider access certification reviews, ECP certification reviews, or both reviews, provided the FFE State satisfies the applicable criteria for each effective review program it wishes to administer. CMS is also finalizing to continue collection of provider access and ECP data from all issuers, with or without a provider network, across FFE States, regardless of whether the FFE State or CMS is conducting certification reviews. This continued data collection aims to extend our existing infrastructure to monitor consumer access to a sufficient choice of providers across the FFE and to provide technical assistance to states, including FFE States that seek to expand their own technical capacity to conduct their own reviews in future plan years. If an FFE State does not elect to conduct its own reviews or is not determined by CMS to have an Effective Provider Access Review Program and/or Effective ECP Review Program, as applicable, then CMS will continue to perform such reviews of QHP issuers with and without a provider network. Consistent with our decision to delay certification of non-network plans as QHPs in FFE States to PY 2028, we will delay implementation of FFE States with an Effective Provider Access Review Program and/or Effective ECP Review Program conducting certification reviews of non-network plans to PY 2028.
In addition, CMS is restoring aspects of network adequacy authority back to the State Exchanges and SBE-FPs through the removal of requirements for State Exchanges 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. Instead, states will be required to ensure that each QHP applying for certification to be offered through a State Exchange or SBE-FP provides a sufficient choice 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, if such plans are allowed to be offered through the Exchange, as applicable.
These finalized policies recognize that states often possess unique knowledge of local factors including market conditions, geographic constraints, provider shortages, and population demographics. In addition, these policies recognize state certification reviews may benefit from using the provider access data CMS currently collects. Empowering FFE States to tailor their certification reviews to the needs of consumers in their state with this data resource may strengthen reviews and improve the consumer experience. The policy will also reduce regulatory burden on issuers participating in the Exchange and address concerns raised about duplicative state and federal oversight processes.
ECP Standards and Requirements
CMS is not finalizing the proposal to revise 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% to 20%. Instead, issuers must continue to contract with at least 35% of ECPs in each plan’s service area, applicable to the overall ECP threshold and, separately, to the federally qualified health center (FQHC) and family planning provider thresholds. CMS is finalizing removing the narrative justification requirement to be consistent with systems changes and existing QHP issuer ECP data submission requirements as part of ECP certification reviews. This finalized policy will potentially reduce regulatory burden on QHP issuers by removing narrative justification requirements, while ensuring access to ECPs is adequately maintained within an issuer’s provider network consistent with the requirements of the ACA.
Refining the HHS-operated Risk Adjustment Program
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 is finalizing its proposal 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.
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 that improves the precision of the HHS-RADV error estimation methodology, CMS is finalizing that starting with 2025 benefit year HHS-RADV, it will add an additional scaling factor to the calculation of the HHS-RADV error rates. This scaling factor will allow the HHS-RADV error estimation methodology to appropriately estimate the proportion of each 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.
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 is finalizing a risk adjustment user fee of $0.18 per member per month, which is lower than the 2026 benefit year risk adjustment user fee rate.
Promoting State Flexibility to Establish and Operate Exchanges
Approval of an Exchange
For states that elect to transition directly from the FFE to an SBE, CMS is finalizing removing the requirement that a state operate for one year as an SBE-FP prior to its full transition to operating an SBE. This finalized policy will eliminate unnecessary barriers for states that are well-prepared to operate a State Exchange more immediately.
Exchange Blueprint Submission Activities
CMS is finalizing rescinding a requirement that a state, as part of its activities for establishing an 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.
State Exchange Enhanced Direct Enrollment Option
CMS is not finalizing at this time the proposal to establish a new optional Exchange model known as the State Exchange Enhanced Direct Enrollment option. CMS is also not finalizing the proposal to remove the requirement that State Exchanges must operate a centralized consumer-facing eligibility and enrollment website on their State Exchanges’ websites. CMS plans to consider finalizing this proposal, with or without modifications, in the 2028 Payment Notice rulemaking or in another appropriate rulemaking, in which we would address comments received in response to this proposal and further engage with stakeholders as needed.
Maintaining EHB Alignment and Increasing State Accountability
Prohibit Issuers from Including Routine Non-Pediatric Dental Services as an EHB
CMS is finalizing a prohibition on issuers from including routine non-pediatric (adult) dental services as an EHB. CMS believes this reversal of the policy finalized in the 2025 Payment Notice better aligns with statutory requirements under section 1302(b)(2)(A) of the ACA, which directs that the scope of EHB be equal to the scope of benefits provided under a typical employer plan.
Defrayal of Cost of State-Mandated Benefits
CMS is finalizing revisions to states’ responsibilities when mandating benefits that are “in addition to EHB.” CMS is finalizing that, beginning with PY 2028, any state-required benefit will be considered “in addition to EHB”—and thus not EHB—if it is required by state action after December 31, 2011, applies to the small group and/or individual markets, is specific to required care, treatment, or services, and is not mandated for compliance with federal requirements. Under this policy, states will be required to defray the cost of these additional benefits for enrollees in QHPs, regardless of whether the benefit is embedded in the state’s EHB-benchmark plan.
This policy will return to previously established standards and restore the integrity of the statutory defrayal requirement by requiring that the costs of state-required benefits in addition to EHB are defrayed by states — not passed on to consumers through higher premiums, a burden that falls disproportionately on unsubsidized enrollees, or to the Federal government through increased APTC outlays.
Bolstering Consumer Protections and Reducing Improper Enrollments
Fixed-Dollar and Gross Percentage-Based Premium Payment Thresholds
To decrease the risk that consumers are improperly enrolled in coverage, CMS is finalizing permanently rescinding the option for issuers to implement both the fixed-dollar and gross percentage-based premium payment thresholds for PY 2027 and beyond. This change will enhance program integrity by better ensuring that consumers are aware of their enrollments, mitigating risk that consumers are enrolled in coverage improperly or without their knowledge, and increasing transparency and accountability in premium payments.
Extending the Removal of the 150% FPL Special Enrollment Period (SEP) Beyond PY 2026
To align Exchange regulations with section 71304 of the WFTC legislation, CMS is finalizing amending the regulations such that Exchanges will continue to be prohibited from offering the 150% FPL SEP after PY 2026. This policy will help to reduce opportunities for unauthorized enrollments and unauthorized plan switching.
Pre-Enrollment SEP Verification
CMS is finalizing the pre-enrollment SEP verification requirement for Exchanges on the Federal platform, which was initially finalized in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074) and then stayed by the court in City of Columbus et. al. v. Kennedy et. al., 25-cv-2114-BAH (D. Md.). This newly finalized policy reflects changes in circumstances and new supporting information since the original policy was established in June 2025 and will allow for Exchanges on the Federal platform to conduct verification for additional SEPs beyond loss of minimum essential coverage and require Exchanges on the Federal platform to conduct verification for at least 75% of new enrollments through SEPs. This policy will ensure more consistent application of eligibility criteria and reduce instances of improper enrollments, which can lead to a more balanced risk pool and potentially lower premiums, benefiting consumers.
Aligning APTC Eligibility with the WFTC Legislation
Limit APTC Eligibility to “Eligible Noncitizens”
CMS is finalizing updating its regulations to align with section 71301 of the WFTC legislation which requires an individual to be an “eligible alien” to be allowed a PTC, and therefore APTC and CSRs, and requires Exchanges to verify applicants’ “eligible alien” status. CMS is also finalizing conforming updates to the Basic Health Program (BHP) regulations to define “eligible noncitizen” and specify that an individual must be a citizen or eligible noncitizen for that individual to be included in the calculation of federal BHP payments to states in states that operate BHPs, beginning with plan years starting on or after January 1, 2027.
Disallow APTC for Individuals Who are Ineligible for Medicaid Due to Their Immigration Status and Have Income Below 100% of the Federal Poverty Level (FPL)
To align Exchange regulations with section 71302 of the WFTC legislation, CMS is finalizing removal of the requirement that, if all other APTC eligibility criteria are met, an Exchange must determine a tax filer eligible for APTC if the Exchange determines that they are expected to have an annual household income of less than 100% of the FPL for the benefit year for which coverage is requested and they are a noncitizen who is lawfully present and ineligible for Medicaid due to their immigration status. Because federal BHP payments to states are tied to the amount of PTC a BHP enrolled individual will have received had they instead enrolled in a QHP, BHP enrollees in this population will no longer be included in the calculation of federal BHP payments beginning January 1, 2026. This policy will align with statutory requirements and ensure that subsidies are reserved for eligible individuals.
Verifying Consumer Income Eligibility for Insurance Affordability Programs
Income Verification When Data Sources Indicate Income Less Than 100% of the FPL
CMS is finalizing the requirement for Exchanges to do additional verification to verify an applicant’s annual household income when data sources indicate household income is under 100% of the FPL, which was initially finalized in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074) and then stayed by the court in City of Columbus et. al. v. Kennedy et. al. This requirement originally included a “sunset” date, and CMS is now finalizing the removal of the sunset language. This updated policy will improve program integrity, reduce the burden of excess APTC on the federal taxpayer, and benefit federal taxpayers by ensuring subsidies are appropriately allocated.
Income Verification When Tax Data Is Unavailable
CMS is finalizing the policy to remove the requirement for Exchanges to accept a household’s income attestation when IRS returns no data for the household, which was initially finalized in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074) and then stayed by the court in City of Columbus et. al. v. Kennedy et. al. This policy originally included a sunset date by which Exchanges would again be required to accept a household’s income attestation when IRS returns no data for the household, and CMS is finalizing removal of that requirement permanently. This updated policy will reduce the risk of improper enrollments, protect consumers from surprise tax liabilities, and reduce APTC overpayments and expenditures.
Failure to File and Reconcile
CMS is finalizing codifying the requirement that, beginning PY 2028, an Exchange must determine a tax filer or their enrollee ineligible for APTC if: (1) HHS notifies the Exchange that the tax filer (or either spouse if the tax filer is a married couple) received APTC for a prior year for which tax data will be utilized for verification of income, and (2) the tax filer did not comply with the requirement to file a federal income tax return and reconcile APTC for that year. For PY 2027, Exchanges will have the option to implement this policy or continue the current two-year FTR policy. This policy will provide Exchanges an option to adopt the new one-year policy in 2027 or 2028 so that Exchanges can ensure PTCs are made available only to eligible consumers in PY 2028. Exchanges on the Federal platform will adopt the one-year FTR policy for PY 2027. This change will minimize improper enrollments and protect consumers from accumulating tax liabilities.
Expanding Issuer Accountability
Audit and Compliance Review Authority Changes
To further protect federal funds, CMS is clarifying that HHS has the authority to audit or conduct a compliance review of an issuer offering a QHP through an Exchange to assess its compliance with all applicable requirements pertaining to the APTC, cost-sharing reduction (CSR), and user fee programs, and that compliance reviews may be conducted on an as needed or annual basis rather than only on an ad hoc basis, as determined necessary by HHS.
Civil Money Penalty (CMP) Changes
CMS is finalizing that in determining a CMP amount, HHS will identify the lawful purpose or purposes of the CMP. CMS is clarifying that HHS has the authority to impose CMPs against issuers in State Exchanges and SBE-FPs for identified violations of any Exchange requirements applicable to issuers offering a QHP in an Exchange when a state notifies HHS that it is not enforcing these requirements or when HHS determines that a state is failing to substantially enforce these requirements. Lastly, CMS is finalizing that it will net payments owed to issuers and their affiliates under the same tax identification number against certain payments and CMPs owed to the federal government. These policies will increase transparency into the CMP process, increase HHS’ enforcement authority, and support HHS’ continued ability to recover federal debts owed by issuers.
Administrative Review of QHP Issuer Sanctions
CMS is finalizing providing an administrative law judge that presides over an appeal of a sanction imposed against a QHP issuer, such as a CMP, the option to issue subpoenas and is finalizing the procedures governing the process for issuing subpoenas. CMS is also finalizing revisions to the application of discovery provisions, so they do not apply to administrative appeals of proposed CMPs for violations identified through audits of the APTC, CSR, or user fee programs. These policies will improve the accuracy of hearing decisions and increase hearing efficiency.
Quality Improvement Strategy (QIS)
CMS is finalizing its proposal to require QHP issuers to submit QISs addressing any two of the five topic areas listed in section 1311(g)(1) of the ACA, without mandating which specific topic areas a QHP issuer must address to meet the QIS statutory certification requirement beginning with PY 2027. QHP issuers will no longer be required to submit a QIS that addresses health and health care disparities as a specific topic area within their QIS, which will allow issuers to target quality efforts to the most pressing health outcome needs of their own enrollees and potentially yield more meaningful quality improvements. This change does not impact publicly reported quality ratings.
Additional CSR Data in Rate Filings
CMS is finalizing its proposal to require issuers that load rates to account for unreimbursed CSRs for the applicable rating year to submit certain information related to CSR loading in the Unified Rate Review Template and the Actuarial Memorandum for each year in which CSRs are not funded, beginning with PY 2027 rate filings.
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See 90 FR 4449 through 4458.