On May 15, 2026, the U.S. Department of Health and Human Services (“HHS”), through the Centers for Medicare & Medicaid Services (“CMS”), released the final “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2027; and Basic Health Program” (2027 NBPP final rule). CMS also published a fact sheet summarizing major provisions from the 2027 NBPP final rule. The 2027 NBPP final rule was published in the Federal Register on May 20 and is effective on July 20, 2026.
GROOM INSIGHT: This may be the latest that a final Notice of Benefit and Payment Parameters rule has been issued. Because the 2027 NBPP final rule includes many requirements that affect benefit design and rating, some issuers may need to redesign and refile their products to conform with the 2027 NBPP final rule.
Overview
The 2027 NBPP final rule implements aspects of the Affordable Care Act (“ACA”) for issuers offering qualified health plans (QHPs) through Federally-facilitated Exchanges (“FFEs”), State-based Exchanges on the Federal platform (“SBE-FPs”), and State-based Exchanges (“SBEs”). It contains provisions on 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. The 2027 NBPP final rule also includes changes to Essential Health Benefits (EHBs); civil money penalties (“CMPs”); QHPs; removes the requirement to offer standardized plans; and increases enforcement standards for agents, brokers, and web-brokers. It also includes updates to align regulations with changes made in the Working Families Tax Cut (“WFTC”) legislation (Public Law (Pub. L.) 119-21).
Litigation
On June 3, 2026, plaintiffs City of Columbus et al. (including municipalities, local governments, and advocacy organizations) filed a complaint alleging that several policies in the 2027 NBPP final rule are unlawful and violate the Administrative Procedure Act. The plaintiffs seek declaratory and injunctive relief in the U.S. District Court for the District of Maryland. See City of Columbus et al. v. Kennedy et al. (Columbus II), No. 26-cv-2215, ECF No. 1 (D. Md. June 3, 2026). On June 15, 2026, the court granted the joint motion to enter a briefing schedule on Plaintiffs’ motion for preliminary relief (Stay Motion). As such, the Defendants must file an opposition by June 22, 2026, the Plaintiffs must reply by July 2, 2026, and the Court will hear arguments on July 8, 2026. A ruling is expected around July 20, 2026. Groom published a high-level summary of the complaint “City of Columbus et al. Challenge Provisions of the HHS 2027 Payment Notice Final Rule”.
City of Columbus et al. v. Kennedy et al. (Columbus I), No. 1:25-cv-02114 (D. Md.) is a separate, but related case, where the same plaintiffs as Columbus II challenged several provisions of the Marketplace Integrity and Affordability Final Rule, 90 Fed. Reg. 27074 (Jun. 25, 2025) in the U.S. District Court for the District of Maryland. On August 22, 2025, the court stayed several major components of the Market Integrity Final Rule on a nationwide basis in response to Columbus I. On June 12, 2026 (clarified order on June 16, 2026), the court in Columbus I vacated several provisions from the Integrity and Affordability Final rule. Although the 2027 NBPP re-proposed and adopted substantially similar provisions to those vacated in the Marketplace Integrity and Affordability Final Rule, the court in Columbus II will need to evaluate the 2027 NBPP’s administrative record and notice-and-comment to determine whether HHS has acted contrary to law or arbitrarily and capriciously.
The Columbus II litigation introduces more uncertainty as issuers are filing rates for the 2027 plan year. Open lines of communication with the state regulator are critical to ensuring that designs and rates can be filed later, or modified, if necessary to comply with any potential court decision in this case and the 2027 NBPP final rule.
The following highlights a few specific policies that may be of particular interest. In addition, we are following the Columbus II litigation closely and the highlights below notes policies that are subject to the ongoing litigation. For additional questions about these or any other policies included in the 2027 NBPP final rule, please contact any of the authors or your Groom attorney.
Essential Health Benefits
Routine non-Pediatric Dental Services
CMS finalized its proposal to prohibit issuers from including routine non-pediatric dental services as EHB. Routine non-pediatric dental services include cleanings, diagnostic X-rays, and restorative services like fillings and root canals.
These changes are effective upon the effective date of the 2027 NBPP final rule, July 20, 2026 and, therefore, the flexibility that would have been available for issuers beginning on or after January 1, 2027 will no longer apply.
State-Mandated Benefits and Defrayal
As finalized, States that have added state-mandated benefits “in addition to EHB” will have to defray their cost by making payments to individual enrollees or to the QHP issuer on behalf of enrollees beginning in PY 2028.
A State-required benefit would be considered “in addition to EHB” if it is:
- Required by a State action taking place after December 31, 2011;
- Applicable to the small group and individual markets;
- Specific to required care, treatment or services; and
- Not required by State action for purposes of compliance with Federal requirements.
Such State-required benefits would be considered “in addition to EHB” regardless of whether the required benefits are embedded in the State’s EHB benchmark plan. In addition, these State-added benefits will no longer be subject to the requirements applicable to EHBs—including the prohibition on discrimination, the annual limitation on cost-sharing, and the prohibition on annual or lifetime dollar limits.
In the proposed rule, CMS also indicated that it is pausing review of State applications to select EHB-benchmark plans. CMS noted that it is reviewing ACA Section 1302 and is considering future rulemaking to revise EHB standards more broadly. Consistent with such statement, on June 15, 2026, CMS published a Request for Information (RFI) to solicit public comment on a variety of topics related to EHB, including the regulatory framework and the statutory requirement under the ACA that the scope of EHB be equal to the scope of benefits provided under a typical employer plan.
GROOM INSIGHT: The final policy may impact health plans that are not directly required to provide EHB, such as self-insured group health plans and large-group market fully insured plans that must follow the annual and lifetime dollar-limit restrictions on EHB and annual cost-sharing limitation requirements. To the extent that a plan sponsor selects a certain State’s EHB-benchmark plan for purposes of complying with the annual and lifetime dollar-limit restrictions on EHB and annual cost-sharing limitation requirements, any State changes to benefits in its EHB-benchmark plan should be reviewed.
Risk Adjustment
For the 2027 benefit year, CMS stated that it will continue to operate the risk adjustment program applicable to the individual, small group, and merged markets (applicable inside and outside the Exchanges) in every State and the District of Columbia.
Risk Adjustment Transfer Calculations for Individual Catastrophic Plans and Individual Non-Catastrophic Plans Under the State Payment Transfer Formula
CMS finalized the provision to recalibrate the 2027 benefit year HHS risk adjustment models using the 2021, 2022, and 2023 benefit year enrollee-level EDGE data. In addition, CMS revised the proposed risk adjustment user fee rate for the 2027 benefit year from $0.20 to $0.18 per member per month (“PMPM”), which is lower than the rate for the 2026 benefit year ($0.20 PMPM). These policies are effective for the 2027 benefit year.
Enforcement
Civil Money Penalties (CMP)
In the 2027 NBPP final rule, CMS reiterated, that in determining a CMP amount, CMS will identify the lawful purpose(s) of the penalty and take into account certain factors as appropriate for the circumstances. CMS finalized its proposal that HHS has the authority to impose CMPs against issuers in SBEs 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 finalized its proposal to 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 changes are effective on the effective date of the 2027 NBPP final rule, July 20, 2026. As proposed, CMS will provide the option for an administrative law judge to issue subpoenas, upon his or her own motion or at the request of a party, if reasonably necessary for the full presentation of a case and to add procedures governing the process for issuing subpoenas. Furthermore, CMS will not apply the discovery provisions set forth in the CMP discovery regulations to administrative appeals of proposed CMPs for violations identified through audits of the APTC, CSR, or user fee programs. Relatedly, as proposed, CMS may conduct a compliance review to assess issuers’ compliance with APTC, CSR, and user fee programs as needed or on an annual basis, rather than only on an ad hoc basis.
GROOM INSIGHT: The changes in the 2027 NBPP final rule reiterate the need for issuers to evaluate their ACA compliance strategies. Recently, CMS has begun to issue CMPs in response to audits and other instances of issuer noncompliance with ACA requirements. For several years following the establishment of the Exchanges, CMS had sought voluntary compliance and corrective actions without resorting to CMPs. But as the Exchanges have matured, CMS has begun to wield a broader array of enforcement tools as part of its oversight of issuers. CMS has also stated that it is committed to ensuring program integrity and combating fraud. These goals, along with the policies in the 2027 NBPP final rule, signal that CMS will continue to utilize CMPs as part of its enforcement efforts.
Qualified Health Plans
QHP Certification of Non-Network Plans
CMS finalized, with modifications, several policies to allow plans that do not use a network, i.e., non-network plans, to receive QHP certification by demonstrating that they ensure a sufficient choice of providers. CMS finalized that a non-network QHP must ensure access to a range of providers that accept the non-network plan’s benefit amount as payment in full, including essential community providers (“ECPs”) and providers that specialize in mental health and substance use disorder services, to ensure that services will be accessible without unreasonable delay. Non-network plans will still be subject to and required to demonstrate that they meet all of the general QHP certification criteria. These general certification criteria include: compliance with benefit design standards (including providing EHB and the associated EHB cost-sharing requirements); and compliance with consumer protections that apply to individual and small group health coverage.
CMS also finalized, with modification, its proposal to restore network adequacy authority, including review of ECPs, to SBEs and SBE-FPs. CMS also finalized the provision allowing FFE States, including States performing plan management, to elect to conduct their own ECP certification reviews of an issuer’s plans with or without a provider network applying for certification as a QHP to be offered through an FFE in their State.
These changes are effective January 1, 2028 for QHPs seeking certification to be offered on the FFE. CMS is not requiring FFE States to offer non-network plans on the FFE within their State. While CMS delayed implementation of allowing non-network plans to receive certification to be offered as QHPs through the FFE beginning PY 2028, SBEs and SBE-FPs retain full discretion and authority to determine the appropriate implementation timeline for their States if allowing non-network plans to be offered through SBEs or SBE-FPs. Accordingly, SBEs and SBE-FPs may allow non-network plans to be offered through the Exchange for plan years beginning on or after January 1, 2027, as applicable.
Non-network plans will be required to report an assessed percentage of providers that agree to accept the benefit amount as payment in full as part of data submission during the QHP certification cycle. Additionally, CMS confirmed that non-network plans will not be exempt from market requirements applicable to network plans and must provide all the same consumer protections that apply to individual and small group health insurance coverage. These requirements include, but are not limited to, those specified in PHS Act title XXVII parts A through D, including MHPAEA and advanced explanation of benefits reporting requirements, and the requirement to provide coverage for preventive services consistent with the PHS Act, including by demonstrating a sufficient choice of providers that accept the plan’s benefit amount as payment in full for all the required categories of preventive services.
GROOM INSIGHT: The final policy is consistent with CMS’ desire to provide the “regulatory framework” for innovation, without mandating it. The policy does not require issuers or Exchanges to offer non-network plans as QHPs. CMS also acknowledges the concerns raised by commenters regarding how these plans would comply with other requirements, such as the No Surprises Act. However, these policies are subject to litigation in Columbus II. In the complaint, the plaintiffs argue that non-network plans and the changes to network adequacy reviews are unlawful.
Bronze Plans Offering higher then MOOP
CMS also finalized, with modification, the proposal to allow issuers to offer bronze plans with out-of-pocket maximums that exceed the statutory limit, with the stated goal of ensuring that it remains feasible to offer a plan with an AV low enough to qualify for the bronze tier.
CMS finalized the provision that if an issuer offers a bronze plan in the individual market that complies with the cost-sharing and the levels of coverage requirements, it may also offer, within the same service area, bronze plans that utilize a cost-sharing design that exceeds the maximum annual limitation on cost sharing by amounts in increments of $50 in order to achieve an AV within the standard bronze de minimis variation.
These changes are effective beginning in PY 2027. Under the 2027 NBPP final rule, CMS narrowed the flexibility such that the higher than maximum annual limitation on cost sharing bronze plans are permitted to exceed the standard annual limitation on cost sharing by up to 130 percent rounded down to the nearest $50 increment. For PY 2027, that is $15,600 for self-only coverage and $31,200 for other than self-only coverage.
GROOM INSIGHT: The policy does not require issuers to offer bronze plans that exceed the standard annual limitation on cost sharing. Additionally, under the 2027 NBPP final rule States, including those with an SBE, could prohibit issuers from offering bronze plans that exceed the standard annual limitation on cost sharing. In addition, this policy is subject to litigation in Columbus II. In the complaint, the plaintiffs argue the higher than MOOP plans are unlawful.
Catastrophic Plans
CMS also finalized, with modification, the proposal to specify that a catastrophic plan has a term of either one year, or of multiple consecutive years up to 10 years, and, if finalized and depending on issuer and enrollee reaction, CMS would consider similar standards for individual market metal level plans in the future.
Furthermore, CMS finalized amendments to require catastrophic plans to provide no benefits for any plan year until an amount equal to 130 percent of the maximum annual limitation on cost sharing, rounded down to the next lowest multiple of $50, is reached. CMS argued that this higher cost-sharing limit for catastrophic plans would allow for a more meaningful difference between the cost sharing typically expected for catastrophic and bronze plans and would allow issuers to more aggressively price catastrophic rates lower so that cheaper catastrophic plans would appeal to the kinds of consumers that CMS believes tend to be enrolled in catastrophic plans—especially the healthy, non-subsidized enrollees who may be disincentivized from enrolling in a QHP due to the rise in costs.
The policies related to multi-year catastrophic plans are effective on or after January 1, 2027. Under the 2027 NBPP final rule, a catastrophic plan has a plan term of either one plan year, or of multiple consecutive plan years not to exceed ten plan years. Furthermore, CMS finalized that catastrophic plans with terms of at least two consecutive plan years may utilize value-based insurance designs to provide benefits before reaching the deductible, pursuant to guidelines issued by the Secretaries of HHS, Labor, and the Treasury under section 2713(c) of the PHS Act.
CMS is finalizing implementation of the policy to not provide coverage for benefits until 130 percent of maximum annual limitation on cost sharing beginning in PY 2028. CMS states that this policy is intended to provide a meaningful distinction between catastrophic plans and bronze plans. Based on this policy, catastrophic plans will result in an AV of approximately 55 percent.
CMS did not finalize the proposal to permit issuers of multi-year catastrophic plans to make a plan-level adjustment to the index rate that reflects the length of the entire plan term because CMS regulations already allow for this type of adjustment. In addition, CMS did not finalize the proposal to allow the annual limitation on cost sharing for the initial plan year of the contract to apply on an annual basis, or on average over the life of the contract for catastrophic plans with a consecutive multi-year term.
GROOM INSIGHT: The Administration’s objective with this proposal is to offer additional alternatives for individuals—particularly unsubsidized enrollees—to enroll in coverage with lower premiums. However, these policies are subject to litigation in Columbus II. The plaintiffs argue that the higher than MOOP plans and the multi-year catastrophic plans are unlawful.
Medical Loss Ratio (“MLR”)
CMS did not make any changes to the MLR standards. CMS had solicited comment on the impact of the Federal MLR standard on individual market stability and whether HHS should adjust the MLR standard in a State to promote individual market stability.
As background, in the 2019 Payment Notice, CMS finalized a policy to allow for adjustments to the individual market MLR standard in any State that demonstrates a reasonable likelihood that a different MLR standard will help stabilize its individual market, and to streamline the process for applying for such adjustments to reduce burdens for States and HHS. However, CMS has not received any requests from States to help stabilize their individual market by adjusting the MLR standard. As such, CMS solicited comment on whether and how to amend regulations to allow States to request an adjustment to the MLR standard in their individual market to reduce burden and encourage States to request adjustments as appropriate in their State markets.
CMS notes in the 2027 NBPP final rule that it will take the comments received into consideration for future changes and rulemaking.
Health Insurance Issuer Rate Increases: Disclosure and Review Requirements
Submission of Rate Filing Justification
CMS finalized its proposal to codify filing instructions included in a Bulletin issued on May 2, 2025 (PY26 Rate Filing Guidance). This policy required issuers that make a plan-level adjustment to account for unreimbursed CSRs to submit certain information specified in the PY26 Rate Filing Guidance in their Unified Rate Review Templates (“URRTs”) and actuarial memoranda for each plan year in which CSRs are not funded. In the URRT for the upcoming plan year, issuers will report CSR amounts paid on behalf of enrollees and the additional revenue collected from the previously applied CSR load using the most recent annual data that is available prior to the applicable filing year, using the standard methodology. In most cases, the most recent annual CSR data would reflect the plan year that is two years before the upcoming plan year (for example, CSRs paid for eligible enrollees and the additional revenue collected from the CSR load applied in PY 2025 would be reported during the 2026 filing year on rate filings for PY 2027). Therefore, starting with rate filings for the PY 2027, CMS will collect as part of the rate filing justification information on adjustments to the index rate to account for unreimbursed CSRs.
Issuers that intend to load rates to account for unpaid CSRs for the applicable rating year are required to submit certain information related to CSR loading in their URRTs and the Actuarial Memoranda for each filing year in which CSRs are not funded beginning with PY 2027 rate filings. These changes are effective for PY 2027.
CMS understands that some States have already begun collection of rates as early as April, but CMS believes that the initial rate filings are proposed and States typically provide issuers with the opportunity to adjust their rate filings before finalizing them several months later. The deadlines for submitting proposed rate changes to CMS are June 1 (for States without an Effective Rate Review Program) or July 15 (for States that have an Effective Rate Review Program). Final rate filings are not due to CMS until August 12 (for filings that contain a QHP in States with Exchanges served by the HealthCare.gov platform) or October 15. Issuers in States with earlier deadlines should refer to the 2026 Rate Review Timeline Bulletin for deadlines for revising their initial rate submissions.
