This section applies to all nongrandfathered individual and small group health plans for plan years beginning on or after January 1, 2027.
(1) The allowed underlying rate development components of the "actuarial value and cost-sharing design of the plan" adjustment are:
(a) AV pricing value;
(b) Induced demand factor;
(c) Cost-sharing reduction silver load (if applicable); and
(d) Exclusion of funds for abortion services per 45 C.F.R. § 156.280(e) (if applicable).
(2) To ensure consistency in rate development, align rating methodology with the federal risk adjustment model and development of cost-sharing reduction silver load, and promote fair competition, the induced demand factors used in the individual and small group health plan rate filings may vary by plan design but must be consistent with the federal risk transfer formula published by the United States Centers for Medicare and Medicaid Services.
(3) Except to the extent provided otherwise in this subsection, to promote fair competition and ensure consumers can compare plans based on consistent metal level categories and pricing methodologies, the AV pricing value must be within ±2% of a plan's designated AV metal value. The allowable range of AV pricing value may be increased or decreased by 1% and must not result in a total adjustment exceeding ±3%, if the plan has significant features that are not considered in the AV metal value calculation. Applicable plan features may include, but are not limited to, an embedded pediatric dental benefit, an aggregate family deductible, or significant out-of-network utilization. The actuarial memorandum in the rate filing must include each plan's AV metal value, AV pricing value, and the method used to develop AV pricing values.
(4) The methodology used to develop the AV pricing value must be based on a standardized population. The carrier must identify all material changes in the AV pricing value development from the prior year's rate filing and quantify their impacts.