In today’s episode of Regulatory Joe, we’re taking listeners through the 2025 Actuarial Value (AV) calculator, a tool that ensures plans meet standards for each metallic tier.
📌 Key Takeaways:
- Consistent AV ranges for 2025 across all metallic tiers, with no major changes
- Early testing with the draft AV calculator to stay on track with compliance
- Best practices for version control and documentation when running the AV calculator
- And more!
🔔 Subscribe for more regulatory insights and health plan updates!
Welcome to Regulatory Joe. I'm Joe Boyle, President of Regulatory Solutions here at PennStock. And in today's episode, we'll be discussing the actual value calculator, also known as AV Calculator, for Plan Year 2025. So when you ask, what is the AV calculator? This is a tool that's been created and published by CMS since the starting of the ACA. The AV Calculator has established methodology that dictates the metallic tiers outlined in a traditional qualified health plan. Everything from your platinum, your gold, your silver, bronze, even expanded bronze plans are dictated by this tool. For Plan Year 2025, CMS has codified the plus and minus 2% AV ranges for all metallic tiers across the board. They've also retained the 5% differential for expanded bronze, which is as expected. So while CMS retained the plus or minus 2% and retained the 5% differential for the expanded bronze plan, the change for Plan Year 2025 is there is no real change. AV Calculator aside, we have seen CMS stabilize some of their tools and release them on an annual basis with minimal, if not no changes year over year. With the changes that we've reviewed for Plan Year 2025 and the consistency that we have seen from CMS year over year with the AV Calculator, issuers can assume that they will continue to see the plus or minus 2% differential across metallic tiers, as well as the 5% differential specifically for expanded bronze at minimum for 2026. And we do assume this for 2027 as well. From an annual renewal and process perspective, CMS generally releases a draft AV Calculator after the final known sub-benefit payment parameters has been published. We have never seen an AV Calculator released before that time, so issuers can expect and we encourage you to track the release of the MVPP to anticipate the draft tools being provided by CMS. For those close to the process, whether you run the AV Calculator yourself or you work with colleagues internal to your organization that manage the AV Calculator, it's important to know the timeline and delivery of the tool. If you did work on this for Plan Year 2025, you already have the tool in hand, you've already been working with it, testing it, running your plans through the ranges and getting your results. It's important to know that year-over-year timeline is pretty cyclical, so as we already have the tool for this year, we can forward look to next year and anticipate when to get that information. Generally speaking, CMS holds the tool and does not release it until after the final notice of benefit payment parameters is published, because some of those policy changes in the MVPP could dictate some of the methodology changes that CMS is considering changing. Even if CMS does release the draft calculator before the final, we do not believe issuers should wait for the final copy of the tool to start their testing and incorporating the tool into their plan portfolio strategy. It is very important, due to the nature of the tool and the time spent running the calculator on your plan designs, that you start with the draft and use the draft as final until the final is published. One item to pay particular attention to when running the AV Calculator on your plans is the impact to your plan variations, specifically CSR, also known as costure reconciliation variants of your baseline parent plans. You can use your silver as a baseline, just make sure when you are making those 00, 01, and 02 plan variants, that those plans have their own unique AV within the specific metallic tier and range that the tool is seeking, plus or minus 2% between bronze, gold, silver, platinum, or expanded bronze. We do anticipate CMS to release the draft AV calculator for plan year 2026, somewhere around the February timeframe, with a final publication around the end of March. It's very important to use the tool as early as possible to prevent rework, revise templates, incorrect cost shares, or compliance issues right before submission. We've seen one too many times where issuers wait till the 11th hour when the final calculator is completed to validate their plan portfolio, only to put their deadlines at risk to either state divisions of insurance or with the CMS application. So you may be asking yourself, well, what if my plan designs aren't ready by the end of March? What if my plan designs are still in progress? That's okay. We would encourage you if you do have an existing footprint or existing portfolio within a marketplace to take your prior year portfolio, make proposed changes, and actually test scenarios within the tool to see what falls in range or falls out of range of your product strategy, and make adjustments accordingly. It'll be very critical for you to document these steps along the way to understand what changes are being made with your plans internally, so whether it's cost shares or co-pays, as well as what versions of the templates you're using in draft format to run through the tool. I think we can all agree whoever's run the AV calculator. If you've done it once, you've probably done it hundreds of times that it's very easy to lose track of versioning with the materials that you're working with, especially with the small changes that you have to make to fit your plan in the right metallic to your range. And a few other recommendations that we encourage you all to follow are run the tool early, run the tool often, and ensure proper versioning control and naming conventions on your files. It's going to be very important also to organize and aggregate your AV screenshots, so anybody who has personally run the AV calculator or seen the outputs knows that you can actually run the tool inside of the Excel file itself and or you can export the results into AV screenshots. Now, if you are a filer, you do know that AV certification and screenshots are required in the majority of our submissions. That being said, you need to make sure that the AV calculations are completed. The outputs are submitted and validated. We recommend up to five business days ahead of your submission deadline. Now, we do know that that's an aggressive ask, especially for a number of actuarial partners who have to run other models contributing to their AV calculations, but please set up a workgroup. We encourage you to establish a project management plan, wrap a timeline around your deliverables and get these AV screenshots as early and soon as possible. One more operational nuance that we've seen this year through submission and reconciliation with state divisions of insurance and CMS is the key difference between CMS actuarial value and internal issuer actuarial value. Understand the differences between the two columns side by side within your plan and benefit template when you run the AV calculator yourself. What populates within the issuer AV calculation versus what populates in the CMS AV calculation. It'll be important to understand the difference between the columns of when you run the issuer AV calculation versus the CMS AV calculation. We did receive a number of questions from reviewers and regulators this year for differences of those AV calculations, ultimately receiving the same metallic result, but understanding the difference and the actual instructions of how those two values work will be very important internal to your teams. So we all can agree that the AV calculator tool is required to be run on all submissions both to CMS and any state division of insurance. So we encourage all issuers to prioritize this tool when CMS releases all application instructions and templates for plan year 2026 and beyond. Thanks again for listening to us today. Give us a like, give us a share, and we'll see you next time. (upbeat music)
