Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2016, 10749-10877 [2015-03751]
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Vol. 80
Friday,
No. 39
February 27, 2015
Part II
Department of Health and Human Services
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45 CFR Parts 144, 147, 153, et al.
Patient Protection and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2016; Final Rule
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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Parts 144, 147, 153, 154, 155,
156 and 158
[CMS–9944–F]
RIN 0938–AS19
Patient Protection and Affordable Care
Act; HHS Notice of Benefit and
Payment Parameters for 2016
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
This final rule sets forth
payment parameters and provisions
related to the risk adjustment,
reinsurance, and risk corridors
programs; cost sharing parameters and
cost-sharing reductions; and user fees
for Federally-facilitated Exchanges. It
also finalizes additional standards for
the individual market annual open
enrollment period for the 2016 benefit
year, essential health benefits, qualified
health plans, network adequacy, quality
improvement strategies, the Small
Business Health Options Program,
guaranteed availability, guaranteed
renewability, minimum essential
coverage, the rate review program, the
medical loss ratio program, and other
related topics.
DATES: These regulations are effective
on April 28, 2015 except the
amendments to §§ 156.235,
156.285(d)(1)(ii), and 158.162 are
effective on January 1, 2016.
FOR FURTHER INFORMATION CONTACT:
For general information: Jeff Wu,
(301) 492–4305.
For matters related to guaranteed
availability, guaranteed renewability,
rate review, or the applicability of Title
I of the Affordable Care Act in the U.S.
Territories: Jacob Ackerman, (301) 492–
4179.
For matters related to risk adjustment
or the methodology for determining the
reinsurance contribution rate and
payment parameters: Kelly Horney,
(410) 786–0558.
For matters related to reinsurance
generally, distributed data collection
good faith compliance policy, or
administrative appeals: Adrianne
Glasgow, (410) 786–0686.
For matters related to the definition of
common ownership for purposes of
reinsurance contributions: Adam Shaw,
(410) 786–1019.
For matters related to risk corridors:
Jaya Ghildiyal, (301) 492–5149.
For matters related to essential health
benefits, network adequacy, essential
community providers, or other
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SUMMARY:
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standards for QHP issuers: Leigha
Basini, (301) 492–4380.
For matters related to the qualified
health plan good faith compliance
policy: Cindy Yen, (301) 492–5142.
For matters related to the Small
Business Health Options Program:
Christelle Jang, (410) 786–8438.
For matters related to the Federallyfacilitated Exchange user fee or
minimum value: Krutika Amin, (301)
492–5153.
For matters related to cost-sharing
reductions or the premium adjustment
percentage: Pat Meisol, (410) 786–1917.
For matters related to re-enrollment,
open enrollment periods, or exemptions
from the individual shared
responsibility payment: Christine
Hammer, (301) 492–4431.
For matters related to special
enrollment periods: Rachel Arguello,
(301) 492–4263.
For matters related to minimum
essential coverage: Cam Moultrie
Clemmons, (206) 615–2338.
For matters related to quality
improvement strategies: Marsha Smith,
(410) 786–6614.
For matters related to the medical loss
ratio program: Julie McCune, (301) 492–
4196.
For matters related to meaningful
access to QHP information, consumer
assistance tools and programs of an
Exchange, or cost-sharing reduction
notices: Tricia Beckmann, (301) 492–
4328.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
III. Provisions of the Final Regulations and
Analysis and Responses to Public
Comments
A. Part 144—Requirements Relating to
Health Insurance Coverage
1. Definitions (§ 144.103)
a. Plan
b. State
B. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
1. Guaranteed Availability of Coverage
(§ 147.104)
2. Guaranteed Renewability of Coverage
(§ 147.106)
C. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment Under the Affordable Care
Act
1. Provisions for the State Notice of Benefit
and Payment Parameters (§ 153.100)
2. Provisions and Parameters for the
Permanent Risk Adjustment Program
a. Risk Adjustment User Fee (§ 153.610(f))
b. Overview of the HHS Risk Adjustment
Model (§ 153.320)
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c. Proposed Updates to Risk Adjustment
Model (§ 153.320)
d. List of Factors To Be Employed in the
Model (§ 153.320)
e. Cost-Sharing Reductions Adjustments
(§ 153.320)
f. Model Performance Statistics (§ 153.320)
g. Overview of the Payment Transfer
Formula (§ 153.320)
h. HHS Risk Adjustment Methodology
Considerations (§ 153.320)
i. State-Submitted Alternate Risk
Adjustment Methodology (§ 153.330)
3. Provisions and Parameters for the
Transitional Reinsurance Program
a. Common Ownership Clarification
b. Reinsurance Contributing Entities and
Minimum Value
c. Self-Insured Expatriate Plans
(§ 153.400(a)(1)(iii))
d. Determination of Debt (§ 153.400(c))
e. Reinsurance Contribution Submission
Process
f. Consistency in Counting Methods for
Health Insurance Issuers (§ 153.405(d))
g. Snapshot Count and Snapshot Factor
Counting Methods (§§ 153.405(d)(2) and
(e)(2))
h. Uniform Reinsurance Contribution Rate
for 2016
i. Uniform Reinsurance Payment
Parameters for 2016
j. Uniform Reinsurance Payment
Parameters for 2015
k. Deducting Cost-Sharing Reduction
Amounts From Reinsurance Payments
4. Provisions for the Temporary Risk
Corridors Program
a. Application of the Transitional Policy
Adjustment in Early Renewal States
b. Risk Corridors Payments for 2016
5. Distributed Data Collection for the HHSOperated Risk Adjustment and
Reinsurance Programs
a. Good Faith Safe Harbor (§ 153.740(a))
b. Default Risk Adjustment Charge
(§ 153.740(b))
c. Information Sharing (§ 153.740(c))
D. Part 154—Health Insurance Issuer Rate
Increases: Disclosure and Review
Requirements
1. General Provisions
a. Definitions (§ 154.102)
2. Disclosure and Review Provisions
a. Rate Increases Subject to Review
(§ 154.200)
b. Submission of Rate Filing Justification
(§ 154.215)
c. Timing of Providing the Rate Filing
Justification (§ 154.220)
d. CMS’s Determinations of Effective Rate
Review Programs (§ 154.301)
E. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. General Provisions
a. Definitions (§ 155.20)
2. General Functions of an Exchange
a. Consumer Assistance Tools and
Programs of an Exchange (§ 155.205)
b. Standards Applicable to Navigators and
Non-Navigator Assistance Personnel
Carrying Out Consumer Assistance
Functions Under §§ 155.205(d) and (e)
and 155.210 in a Federally-Facilitated
Exchange and to Non-Navigator
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Assistance Personnel Funded Through
an Exchange Establishment Grant
(§ 155.215)
c. Ability of States To Permit Agents and
Brokers To Assist Qualified Individuals,
Qualified Employers, or Qualified
Employees Enrolling in QHPs (§ 155.220)
d. Standards for HHS-Approved Vendors of
Federally-Facilitated Exchange Training
for Agents and Brokers (§ 155.222)
3. Exchange Functions in the Individual
Market: Eligibility Determinations for
Exchange Participation and Insurance
Affordability Programs
a. Annual Eligibility Redetermination
(§ 155.335)
4. Exchange Functions in the Individual
Market: Enrollment in Qualified Health
Plans
a. Enrollment of Qualified Individuals Into
QHPs (§ 155.400)
b. Annual Open Enrollment Period
(§ 155.410)
c. Special Enrollment Periods (§ 155.420)
d. Termination of Exchange Enrollment or
Coverage (§ 155.430)
5. Exchange Functions in the Individual
Market: Eligibility Determinations for
Exemptions
a. Eligibility Standards for Exemptions
(§ 155.605)
b. Required Contribution Percentage
(§ 155.605)
6. Exchange Functions: Small Business
Health Options Program (SHOP)
a. Standards for the Establishment of a
SHOP (§ 155.700)
b. Functions of a SHOP (§ 155.705)
c. Eligibility Standards for SHOP
(§ 155.710)
d. Enrollment of Employees Into QHPs
Under SHOP (§ 155.720 and § 156.285)
e. Enrollment Periods Under SHOP
(§ 155.725 and § 156.285)
f. Termination of SHOP Enrollment or
Coverage (§ 155.735 and § 156.285)
7. Exchange Functions: Certification of
Qualified Health Plans
a. Certification Standards for QHPs
(§ 155.1000)
b. Recertification of QHPs (§ 155.1075)
F. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
1. General Provisions
a. Definitions (§ 156.20)
b. FFE User Fee for the 2016 Benefit Year
(§ 156.50(c))
2. Essential Health Benefits Package
a. State Selection of Benchmark (§ 156.100)
b. Provision of EHB (§ 156.115)
c. Collection of Data To Define Essential
Health Benefits (§ 156.120)
d. Prescription Drug Benefits (§ 156.122)
e. Prohibition on Discrimination
(§ 156.125)
f. Cost-Sharing Requirements (§ 156.130)
g. Premium Adjustment Percentage
(§ 156.130)
h. Reduced Maximum Annual Limitation
On Cost Sharing (§ 156.130)
i. Minimum Value (§ 156.145)
3. Qualified Health Plan Minimum
Certification Standards
a. QHP Issuer Participation Standards
(§ 156.200)
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b. Transparency in Coverage (§ 156.220)
c. Network Adequacy Standards
(§ 156.230)
d. Essential Community Providers
(§ 156.235)
e. Meaningful Access to Qualified Health
Plan Information (§ 156.250)
f. Enrollment Process for Qualified
Individuals (§ 156.265)
g. Termination of Coverage or Enrollment
for Qualified Individuals (§ 156.270)
h. Segregation of Funds for Abortion
Services (§ 156.280)
i. Non-Renewal and decertification of
QHPs (§ 156.290)
4. Health Insurance Issuer Responsibility
for Advance Payments of the Premium
Tax Credit and Cost-Sharing Reductions
a. Plan Variations (§ 156.420)
b. Changes in Eligibility for Cost-Sharing
Reductions (§ 156.425)
c. Cost-Sharing Reductions Reconciliation
(§ 156.430)
5. Minimum Essential Coverage
a. Other Coverage That Qualifies as
Minimum Essential Coverage (§ 156.602)
6. Enforcement Remedies in FederallyFacilitated Exchanges
a. Available Remedies; Scope (§ 156.800)
b. Plan Suppression (§ 156.815)
7. Quality Standards
a. Quality Improvement Strategy
(§ 156.1130)
8. Qualified Health Plan Issuer
Responsibilities
a. Administrative Appeals (§ 156.1220(c))
G. Part 158—Issuer Use of Premium
Revenue: Reporting and Rebate
Requirements
1. Treatment of Cost-Sharing Reductions in
MLR Calculation (§ 158.140)
2. Reporting of Federal and State Taxes
(§ 158.162)
3. Distribution of Rebates to Group
Enrollees in Non-Federal Governmental
Plans (§ 158.242)
IV. Collection of Information Requirements
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice
Provisions and Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act
F. Unfunded Mandates
G. Federalism
H. Congressional Review Act Regulations
Text
Acronyms
Affordable Care Act The collective term for
the Patient Protection and Affordable Care
Act (Pub. L. 111–148) and the Health Care
and Education Reconciliation Act of 2010
(Pub. L. 111–152), as amended
AHFS American hospital formulary system
AV Actuarial value
CFR Code of Federal Regulations
CMS Centers for Medicare & Medicaid
Services
COBRA Consolidated Omnibus Budget
Reconciliation Act of 1985 (Pub. L. 99–272)
(29 U.S.C. 1161, et seq.)
ECP Essential community provider
EHB Essential health benefits
ERISA Employee Retirement Income
Security Act of 1974 (Pub. L. 93–406)
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FFE Federally-facilitated Exchange
FF–SHOP Federally-facilitated Small
Business Health Options Program
FPL Federal Poverty Level
FQHC Federally qualified health center
HCC Hierarchical condition category
HHS United States Department of Health
and Human Services
HIPAA Health Insurance Portability and
Accountability Act of 1996 (Pub. L. 104–
191)
IRS Internal Revenue Service
LEP Limited English proficient/proficiency
MLR Medical loss ratio
MV Minimum value
NAIC National Association of Insurance
Commissioners
OMB Office of Management and Budget
OPM United States Office of Personnel
Management
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1995
P&T committee Pharmacy and therapeutics
committee
QHP Qualified health plan
QIS Quality improvement strategy
SADP Stand-alone Dental Plan
SEP Special enrollment period
SHOP Small Business Health Options
Program
The Code Internal Revenue Code of 1986
TPA Third-party administrator
URL Uniform resource locator
USP United States Pharmacopeia
I. Executive Summary
Qualified individuals and qualified
employers are now able to purchase
private health insurance coverage
through competitive marketplaces
called Affordable Insurance Exchanges,
or ‘‘Exchanges’’ (also called Health
Insurance Marketplaces, or
‘‘Marketplaces’’). Individuals who enroll
in qualified health plans (QHPs)
through individual market Exchanges
may be eligible to receive a premium tax
credit to make health insurance more
affordable and for cost-sharing
reductions to reduce out-of-pocket
expenses for health care services.
Additionally, in 2014, HHS began
operationalizing the premium
stabilization programs established by
the Affordable Care Act. These
programs—the risk adjustment,
reinsurance, and risk corridors
programs—are intended to mitigate the
potential impact of adverse selection
and stabilize the price of health
insurance in the individual and small
group markets. These programs, together
with other reforms of the Affordable
Care Act, are making high-quality health
insurance affordable and accessible to
millions of Americans.
We have previously outlined the
major provisions and parameters related
to the advance payments of the
premium tax credit, cost-sharing
reductions, and premium stabilization
programs. This rule finalizes additional
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provisions and modifications related to
the implementation of the premium
stabilization programs, as well as key
payment parameters for the 2016 benefit
year.
The HHS Notice of Benefit and
Payment Parameters for 2014 (78 FR
15410) (2014 Payment Notice) finalized
the risk adjustment methodology that
HHS will use when it operates the risk
adjustment program on behalf of a State.
Risk adjustment factors reflect enrollee
health risk and the costs of a given
disease relative to average spending.
This final rule recalibrates the HHS risk
adjustment models for the 2016 benefit
year by using 2011, 2012, and 2013
claims data from the Truven Health
Analytics 2010 MarketScan®
Commercial Claims and Encounters
database (MarketScan) to develop
updated risk factors.
Using the same methodology as set
forth in the 2014 Payment Notice and
the HHS Notice of Benefit and Payment
Parameters for 2015 (79 FR 13744) (2015
Payment Notice), we finalize a 2016
uniform reinsurance contribution rate of
$27 annually per enrollee, and the 2016
uniform reinsurance payment
parameters—a $90,000 attachment
point, a $250,000 reinsurance cap, and
a 50 percent coinsurance rate. We are
decreasing the attachment point for the
2015 benefit year from $70,000 to
$45,000, while retaining the $250,000
reinsurance cap and a 50 percent
coinsurance rate. In this rule, we also
finalize the definition of ‘‘common
ownership’’ for purposes of determining
whether a contributing entity uses a
third-party administrator for core
administrative functions. In addition,
this final rule discusses the reinsurance
contribution payment schedule and
accompanying notifications. We also
extend the good faith safe harbor for
non-compliance with the HHS-operated
risk adjustment and reinsurance data
requirements through the 2015 calendar
year.
We are finalizing a clarification and a
modification to the risk corridors
program. We clarify that the risk
corridors transitional adjustment policy
established in the 2015 Payment Notice,
which makes an adjustment to a QHP
issuer’s risk corridors calculation based
on Statewide enrollment in transitional
plans, does not include in that
calculation enrollment in so-called
‘‘early renewal plans’’ (plans that
renewed before January 1, 2014 and
before the end of their 12-month terms)
unless and until the plans renew in
2014 and become transitional plans.
Additionally, for the 2016 benefit year,
we are finalizing an approach for the
treatment of risk corridors collections
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under the policy set forth in our April
11, 2014, FAQ on Risk Corridors and
Budget Neutrality,1 in the event that risk
corridors collections available in 2016
exceed risk corridors payment requests
from QHP issuers.
We also finalize several provisions
related to cost sharing. First, we
establish the premium adjustment
percentage for 2016, which is used to set
the rate of increase for several
parameters detailed in the Affordable
Care Act, including the maximum
annual limitation on cost sharing for
2016. We establish the maximum
annual limitations on cost sharing for
the 2016 benefit year for cost-sharing
reduction plan variations. For
reconciliation of 2014 cost-sharing
reductions, we are finalizing and
expanding our proposal to permit
issuers whose plan variations meet
certain criteria to estimate the portion of
claims attributable to non-essential
health benefits to calculate cost-sharing
reductions provided.
For 2016, we finalize a Federallyfacilitated Exchange (FFE) user fee rate
of 3.5 percent of premium, the same rate
as for 2015. This rule also finalizes
provisions to enhance the transparency
and effectiveness of the rate review
program and standards related to
minimum essential coverage, the
individual market annual open
enrollment period for the 2016 benefit
year, and amendments to a number of
Small Business Health Options Program
(SHOP) provisions, including minimum
participation rates. This final rule
amends the medical loss ratio (MLR)
provisions relating to the treatment of
cost-sharing reductions and certain
taxes in MLR and rebate calculations, as
well as the distribution of rebates by
group health plans not subject to the
Employee Retirement Income Security
Act of 1974 (Pub. L. 93–406) (ERISA).
This final rule provides more specificity
about the meaningful access
requirements applicable to Exchanges,
to QHP issuers, and to agents and
brokers subject to § 155.220(c)(3)(i),
related to access for individuals with
limited English proficiency (LEP). This
final rule requires issuers to provide a
summary of benefits and coverage (SBC)
for each plan variation of the standard
QHP and to provide adequate notice to
enrollees of changes in cost-sharing
reduction eligibility. This final rule also
includes additional quality
improvement strategy reporting
provisions for QHP issuers, specifies the
circumstances that may lead an
1 Available at: https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/Downloads/faqrisk-corridors-04-11-2014.pdf.
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Exchange to suppress a QHP from being
offered to new enrollees through an
Exchange, and extends the good faith
compliance policy for QHP issuers in
the FFEs through the 2015 calendar
year.
In this final rule, we are finalizing a
number of standards relating to essential
health benefits (EHBs), including a
definition of habilitative services,
coverage of pediatric services, and
coverage of prescription drugs. This
final rule also provides examples of
discriminatory plan designs and amends
requirements for essential community
providers (ECPs).
II. Background
A. Legislative and Regulatory Overview
The Patient Protection and Affordable
Care Act (Pub. L. 111–148) was enacted
on March 23, 2010. The Health Care and
Education Reconciliation Act of 2010
(Pub. L. 111–152), which amended and
revised several provisions of the Patient
Protection and Affordable Care Act, was
enacted on March 30, 2010. In this final
rule, we refer to the two statutes
collectively as the ‘‘Affordable Care
Act.’’
Subtitles A and C of title I of the
Affordable Care Act reorganized,
amended, and added to the provisions
of part A of title XXVII of the Public
Health Service Act (PHS Act) relating to
group health plans and health insurance
issuers in the group and individual
markets.
Section 2701 of the PHS Act, as added
by the Affordable Care Act, restricts the
variation in premium rates that may be
charged by a health insurance issuer for
non-grandfathered health insurance
coverage in the individual or small
group market to certain specified
factors. The factors are: Family size,
rating area, age, and tobacco use (within
specified limits).
Section 2701 of the PHS Act operates
in coordination with section 1312(c) of
the Affordable Care Act. Section 1312(c)
of the Affordable Care Act generally
requires a health insurance issuer to
consider all enrollees in all health plans
(except for grandfathered health plans)
offered by such issuer to be members of
a single risk pool for each of its
individual and small group markets.
States have the option to merge the
individual market and small group
market risk pools under section
1312(c)(3) of the Affordable Care Act.
Section 2702 of the PHS Act, as added
by the Affordable Care Act, requires
health insurance issuers that offer
health insurance coverage in the group
or individual market in a State to offer
coverage to and accept every employer
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and individual in the State that applies
for such coverage unless an exception
applies.
Section 2703 of the PHS Act, as added
by the Affordable Care Act, requires
health insurance issuers that offer
health insurance coverage in the group
or individual market to renew or
continue in force such coverage at the
option of the plan sponsor or individual
unless an exception applies.
Section 2718 of the PHS Act, as added
by the Affordable Care Act, generally
requires health insurance issuers to
submit an annual MLR report to HHS
and provide rebates to enrollees if they
do not achieve specified MLR
thresholds.
Section 2794 of the PHS Act, as added
by the Affordable Care Act, directs the
Secretary of HHS (the Secretary), in
conjunction with the States, to establish
a process for the annual review of
‘‘unreasonable increases in premiums
for health insurance coverage.’’ 2 The
law also requires health insurance
issuers to submit justifications to the
Secretary and the applicable State
entities for unreasonable premium
increases prior to the implementation of
the increases. Section 2794(b)(2) of the
PHS Act further specifies that,
beginning in 2014, the Secretary, in
conjunction with the States, will
monitor premium increases of health
insurance coverage offered through an
Exchange and outside of an Exchange.
Section 1302 of the Affordable Care
Act provides for the establishment of an
essential health benefits (EHB) package
that includes coverage of EHB (as
defined by the Secretary) and costsharing limits, and meets statutorily
defined actuarial value (AV)
requirements. The law directs that EHBs
be equal in scope to the benefits covered
by a typical employer plan and that they
cover at least the following 10 general
categories: Ambulatory patient services;
emergency services; hospitalization;
maternity and newborn care; mental
health and substance use disorder
services, including behavioral health
treatment; prescription drugs;
rehabilitative and habilitative services
and devices; laboratory services;
preventive and wellness services and
chronic disease management; and
pediatric services, including oral and
vision care.
Sections 1302(b)(4)(A) through (D)
establish that the Secretary must define
EHB in a manner that: (1) Reflects
appropriate balance among the 10
categories; (2) is not designed in such a
way as to discriminate based on age,
disability, or expected length of life; (3)
takes into account the health care needs
of diverse segments of the population;
and (4) does not allow denials of EHBs
based on age, life expectancy, disability,
degree of medical dependency, or
quality of life.
Section 1302(d) of the Affordable Care
Act describes the various levels of
coverage based on AV. Consistent with
section 1302(d)(2)(A) of the Affordable
Care Act, AV is calculated based on the
provision of EHB to a standard
population. Section 1302(d)(3) of the
Affordable Care Act directs the
Secretary to develop guidelines that
allow for de minimis variation in AV
calculations.
Section 1311(b)(1)(B) of the
Affordable Care Act directs the SHOP to
assist qualified small employers in
facilitating the enrollment of their
employees in QHPs offered in the small
group market. Sections 1312(f)(1) and
(2) of the Affordable Care Act define
qualified individuals and qualified
employers. Under section 1312(f)(2)(B)
of the Affordable Care Act, beginning in
2017, States will have the option to
allow issuers to offer QHPs in the large
group market through the SHOP.3
Section 1311(c)(1)(B) of the
Affordable Care Act requires the
Secretary to establish minimum criteria
for provider network adequacy that a
health plan must meet to be certified as
a QHP. Section 1311(c)(1)(E) of the
Affordable Care Act specifies that, to be
certified as a QHP participating in
Exchanges, each health plan must
implement a quality improvement
strategy (QIS), which is described in
section 1311(g)(1) of the Affordable Care
Act.
Section 1311(c)(5) of the Affordable
Care Act requires the Secretary to
continue to operate, maintain, and
update the Internet portal developed
under section 1103 of the Affordable
Care Act to provide information to
consumers and small businesses on
affordable health insurance coverage
options.
Section 1311(c)(6)(B) of the
Affordable Care Act states that the
Secretary is to set annual open
enrollment periods for Exchanges for
2 The implementing regulations in part 154 limit
the scope of the requirements under section 2794
of the PHS Act to health insurance issuers offering
health insurance coverage in the individual market
or small group market. See Rate Increase Disclosure
and Review; Final Rule, 76 FR 29964, 29966 (May
23, 2011).
3 If a State elects to offer QHPs in the large group
market through the SHOP, the rating rules in
section 2701 of the PHS Act and its implementing
regulations will apply to all coverage offered in
such State’s large group market (except for selfinsured group health plans) under section
2701(a)(5) of the PHS Act.
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calendar years after the initial
enrollment period.
Section 1301(a)(1)(B) of the
Affordable Care Act directs all issuers of
QHPs to cover the EHB package
described in section 1302(a) of the
Affordable Care Act, including the
services described in section 1302(b) of
the Affordable Care Act, to adhere to the
cost-sharing limits described in section
1302(c) of the Affordable Care Act, and
to meet the AV levels established in
section 1302(d) of the Affordable Care
Act. Section 2707(a) of the PHS Act,
which is effective for plan or policy
years beginning on or after January 1,
2014, extends the coverage of the EHB
package to non-grandfathered
individual and small group coverage,
irrespective of whether such coverage is
offered through an Exchange. In
addition, section 2707(b) of the PHS Act
directs non-grandfathered group health
plans to ensure that cost sharing under
the plan does not exceed the limitations
described in sections 1302(c)(1) and (2)
of the Affordable Care Act.
Sections 1313 and 1321 of the
Affordable Care Act provide the
Secretary with the authority to oversee
the financial integrity of State
Exchanges, their compliance with HHS
standards, and the efficient and nondiscriminatory administration of State
Exchange activities. Section 1321 of the
Affordable Care Act provides for State
flexibility in the operation and
enforcement of Exchanges and related
requirements.
Section 1321(a) of the Affordable Care
Act provides the Secretary with broad
authority to establish standards and
regulations to implement statutory
requirements related to Exchanges,
QHPs, and other components of title I of
the Affordable Care Act. Under the
authority established in section
1321(a)(1) of the Affordable Care Act,
the Secretary promulgated the
regulations at § 155.205(d) and (e).
Section 155.205 authorizes Exchanges to
perform certain consumer service
functions. Section 155.205(d) provides
that each Exchange must conduct
consumer assistance activities,
including the Navigator program
described in § 155.210, and § 155.205(e)
provides that each Exchange must
conduct outreach and education
activities to inform consumers about the
Exchange and insurance affordability
programs to encourage participation.
Sections 155.205(d) and (e) also allow
for the establishment of a non-Navigator
consumer assistance program. Section
155.215 establishes standards for
Navigators and non-Navigator assistance
personnel in FFEs and for nonNavigator assistance personnel that are
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funded with Exchange establishment
grant funds under section 1311(a) of the
Affordable Care Act.
When operating an FFE under section
1321(c)(1) of the Affordable Care Act,
HHS has the authority under sections
1321(c)(1) and 1311(d)(5)(A) of the
Affordable Care Act to collect and spend
user fees. In addition, 31 U.S.C. 9701
permits a Federal agency to establish a
charge for a service provided by the
agency. Office of Management and
Budget (OMB) Circular No. A–25
Revised establishes Federal policy
regarding user fees and specifies that a
user charge will be assessed against
each identifiable recipient for special
benefits derived from Federal activities
beyond those received by the general
public.
Section 1321(c)(2) of the Affordable
Care Act authorizes the Secretary to
enforce the Exchange standards using
civil money penalties (CMPs) on the
same basis as detailed in section 2723(b)
of the PHS Act. Section 2723(b) of the
PHS Act authorizes the Secretary to
impose CMPs as a means of enforcing
the individual and group market
reforms contained in Part A of title
XXVII of the PHS Act when a State fails
to substantially enforce these
provisions.
Section 1321(d) of the Affordable Care
Act provides that nothing in title I of the
Affordable Care Act should be
construed to preempt any State law that
does not prevent the application of title
I of the Affordable Care Act. Section
1311(k) of the Affordable Care Act
specifies that Exchanges may not
establish rules that conflict with or
prevent the application of regulations
issued by the Secretary.
Section 1341 of the Affordable Care
Act provides for the establishment of a
transitional reinsurance program in each
State to help pay the cost of treating
high-cost enrollees in the individual
market in the 2014 through 2016 benefit
years. Section 1342 of the Affordable
Care Act directs the Secretary to
establish a temporary risk corridors
program that protects against inaccurate
rate setting in the 2014 through 2016
benefit years. Section 1343 of the
Affordable Care Act establishes a
permanent risk adjustment program that
is intended to provide increased
payments to health insurance issuers
that attract higher-risk populations,
such as those with chronic conditions,
funded by payments from those that
attract lower-risk populations, thereby
reducing incentives for issuers to avoid
higher-risk enrollees.
Sections 1402 and 1412 of the
Affordable Care Act provide for
reductions in cost sharing for EHBs for
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qualified low- and moderate-income
enrollees in silver level health plans
offered through the individual market
Exchanges. These sections also provide
for reductions in cost sharing for
Indians enrolled in Exchange plans at
any metal level.
Section 5000A of the Internal
Revenue Code (the Code), as added by
section 1501(b) of the Affordable Care
Act, requires an individual to have
minimum essential coverage for each
month, qualify for an exemption, or
make a shared responsibility payment
with his or her Federal income tax
return. Section 5000A(f) of the Code
defines minimum essential coverage as
any of the following: (1) Coverage under
a specified government sponsored
program; (2) coverage under an eligible
employer-sponsored plan; (3) coverage
under a health plan offered in the
individual market within a State; or (4)
coverage under a grandfathered health
plan. Section 5000A(f)(1)(E) of the Code
authorizes the Secretary, in
coordination with the Secretary of the
Treasury, to designate other health
benefits coverage as minimum essential
coverage.
1. Premium Stabilization Programs
In the July 15, 2011 Federal Register
(76 FR 41930), we published a proposed
rule outlining the framework for the
premium stabilization programs. We
implemented the premium stabilization
programs in a final rule, published in
the March 23, 2012 Federal Register (77
FR 17220) (Premium Stabilization Rule).
In the December 7, 2012 Federal
Register (77 FR 73118), we published a
proposed rule outlining the benefit and
payment parameters for the 2014 benefit
year to expand the provisions related to
the premium stabilization programs,
and establish payment parameters for
those programs (proposed 2014 Payment
Notice). We published the 2014
Payment Notice final rule in the March
11, 2013 Federal Register (78 FR
15410).
In the December 2, 2013 Federal
Register (78 FR 72322), we published a
proposed rule outlining the benefit and
payment parameters for the 2015 benefit
year to expand upon the provisions
related to the premium stabilization
programs, setting forth certain oversight
provisions, and establishing the 2015
payment parameters for those programs
(proposed 2015 Payment Notice). We
published the 2015 Payment Notice
final rule in the March 11, 2014 Federal
Register (79 FR 13744).
2. Program Integrity
In the June 19, 2013 Federal Register
(78 FR 37032), we published a proposed
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rule that proposed certain program
integrity standards related to Exchanges
and the premium stabilization programs
(proposed Program Integrity Rule). The
provisions of that proposed rule were
finalized in two rules, the ‘‘first Program
Integrity Rule’’ published in the August
30, 2013 Federal Register (78 FR 54070)
and the ‘‘second Program Integrity
Rule’’ published in the October 30, 2013
Federal Register (78 FR 65046).
3. Exchanges
We published a request for comment
relating to Exchanges in the August 3,
2010 Federal Register (75 FR 45584).
We issued initial guidance to States on
Exchanges on November 18, 2010. We
proposed a rule in the July 15, 2011
Federal Register (76 FR 41866) to
implement components of the
Exchange, and a rule in the August 17,
2011 Federal Register (76 FR 51202)
regarding Exchange functions in the
individual market, eligibility
determinations, and Exchange standards
for employers. A final rule
implementing components of the
Exchanges and setting forth standards
for eligibility for Exchanges was
published in the March 27, 2012
Federal Register (77 FR 18310)
(Exchange Establishment Rule).
We established standards for the
administration and payment of costsharing reductions and the SHOP in the
2014 Payment Notice and in the
Amendments to the HHS Notice of
Benefit and Payment Parameters for
2014 interim final rule, published in the
March 11, 2013 Federal Register (78 FR
15541). The provisions established in
the interim final rule were finalized in
the second Program Integrity Rule. We
also set forth standards related to
Exchange user fees in the 2014 Payment
Notice. We also established an
adjustment to the FFE user fee in the
Coverage of Certain Preventive Services
Under the Affordable Care Act final
rule, published in the July 2, 2013
Federal Register (78 FR 39870)
(Preventive Services Rule).
In a final rule published in the July
17, 2013 Federal Register (78 FR
42859), we established standards for
Navigators and non-Navigator assistance
personnel in FFEs and for nonNavigator assistance personnel funded
through an Exchange establishment
grant.
4. Essential Health Benefits and
Actuarial Value
We initially established requirements
relating to EHBs and AVs in the
Standards Related to Essential Health
Benefits, Actuarial Value, and
Accreditation Final Rule, which was
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published in the February 25, 2013
Federal Register (78 FR 12834) (EHB
Rule). We established standards for
updating the AV Calculator for future
plan years in the 2015 Payment Notice
and established an expedited
prescription drug exception process
based on exigent circumstances for
plans providing EHB in the Exchange
and Insurance Market Standards for
2015 and Beyond Final Rule (2015
Market Standards Rule) that was
published in the May 27, 2014 Federal
Register (79 FR 30240).
5. Market Rules
A proposed rule relating to the Health
Insurance Market Rules was published
in the November 26, 2012 Federal
Register (77 FR 70584). A final rule
implementing the Health Insurance
Market Rules was published in the
February 27, 2013 Federal Register (78
FR 13406) (2014 Market Rules).
A proposed rule relating to Exchanges
and Insurance Market Standards for
2015 and Beyond was published in the
March 21, 2014 Federal Register (79 FR
15808) (2015 Market Standards
Proposed Rule). The 2015 Market
Standards Rule was published in the
May 27, 2014 Federal Register (79 FR
30240).
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6. Rate Review
We published a proposed rule to
establish the rate review program in the
December 23, 2010 Federal Register (75
FR 81004). We implemented the rate
review program in a final rule published
in the May 23, 2011 Federal Register
(76 FR 26694). We subsequently
amended the rate review provisions in
a final rule published in the September
6, 2011 Federal Register (76 FR 54969)
and in the 2014 Market Rules.
7. Medical Loss Ratio (MLR)
We published a request for comment
on section 2718 of the PHS Act in the
April 14, 2010 Federal Register (75 FR
19297), and published an interim final
rule with a 60-day comment period
relating to the MLR program on
December 1, 2010 (75 FR 74864). A final
rule with a 30-day comment period was
published in the December 7, 2011
Federal Register (76 FR 76574). An
interim final rule with a 60-day
comment period was published in the
December 7, 2011 Federal Register (76
FR 76596). A final rule was published
in the Federal Register on May 16, 2012
(77 FR 28790).
B. Stakeholder Consultation and Input
HHS has consulted with stakeholders
on policies related to the operation of
Exchanges, including the SHOP and the
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premium stabilization programs. HHS
has held a number of listening sessions
with consumers, providers, employers,
health plans, the actuarial community,
and State representatives to gather
public input. HHS consulted with
stakeholders through regular meetings
with the National Association of
Insurance Commissioners (NAIC),
regular contact with States through the
Exchange Establishment grant and
Exchange Blueprint approval processes,
and meetings with Tribal leaders and
representatives, health insurance
issuers, trade groups, consumer
advocates, employers, and other
interested parties. We considered all of
the public input as we developed the
policies in this final rule.
III. Provisions of the Final Regulations
and Analysis and Responses to Public
Comments
In the November 26, 2014 Federal
Register (79 FR 70674), we published
the ‘‘Patient Protection and Affordable
Care Act; HHS Notice of Benefit and
Payment Parameters for 2016’’ proposed
rule. We received 313 comments from
various stakeholders, including States,
health insurance issuers, consumer
groups, labor entities, industry groups,
provider groups, patient safety groups,
national interest groups, and other
stakeholders. The comments ranged
from general support of or opposition to
the proposed provisions to very specific
questions or comments regarding
proposed changes. We received a
number of comments and suggestions
that were outside the scope of the
proposed rule and therefore will not be
addressed in this final rule.
In this final rule, we provide a
summary of each proposed provision, a
summary of the public comments
received and our responses to them, and
the provisions we are finalizing.
Comment: We received a number of
comments requesting that the comment
period be extended to 60 days. Several
commenters asked that HHS develop a
standard timeline for issuance of the
proposed and final Payment Notices,
one commenter asked that the final
Payment Notice be published by midJanuary each year, and another asked
that it be published by February 1st
each year.
Response: The timeline for
publication of this final rule
accommodates issuer filing deadlines
for the 2016 benefit year. We appreciate
the deadlines that States, Exchanges,
issuers, and other entities face in
implementing these rules.
Comment: We received one comment
disapproving of the wide array of topics
covered in the rule.
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Response: Many of the programs
covered by this final rule are closely
linked. To simplify the regulatory
process, facilitate public comment, and
provide the information needed to meet
statutory deadlines, we elected to
propose and finalize these regulatory
provisions in one rule.
Comment: One commenter asked that
HHS allow States to continue their
oversight of their insurance markets and
defer to the NAIC for the development
of important industry-wide, State-based
standards.
Response: Title XXVII of the PHS Act
contemplates that States will exercise
primary enforcement authority over
health insurance issuers in the group
and individual markets to ensure
compliance with the Federal market
reforms. HHS has the responsibility to
enforce these provisions in the event
that a State notifies HHS that it does not
have the statutory authority to enforce
or that it is not otherwise enforcing, or
if HHS determines that a State is not
substantially enforcing, these
requirements. This enforcement
framework, in place since 1996, ensures
that all consumers in all States have the
protections of the Affordable Care Act
and other parts of the PHS Act. We aim
to establish Federal oversight standards
that complement State standards while
meeting Federal obligations, and intend
to continue to coordinate with State
authorities to address compliance issues
and to reduce the burden on
stakeholders.
Comment: One commenter urged HHS
to ensure that all regulatory information
related to the premium stabilization
programs be presented in a transparent
and timely fashion.
Response: We strive to publicize and
present all information related to the
premium stabilization programs in a
transparent and timely fashion.
A. Part 144—Requirements Relating to
Health Insurance Coverage
1. Definitions (§ 144.103)
Section 144.103 sets forth definitions
of terms that are used throughout parts
146 through 150. In the proposed rule,
we proposed to amend the definitions of
‘‘plan’’ and ‘‘State.’’
a. Plan
We proposed to make the definition of
‘‘plan’’ more specific by clarifying that
the term means the pairing of the health
insurance coverage benefits under a
‘‘product’’ with a particular cost-sharing
structure, provider network, and service
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area.4 The same definition would be
used for purposes of part 154, rate
review, and part 156, health insurance
issuer standards.
We noted that issuers can modify the
health insurance coverage for a product
upon coverage renewal and sought
comment on standards for determining
when a plan that has been modified
should be considered to be the ‘‘same
plan’’ for purposes of rate review, plan
identification in the Health Insurance
Oversight System (HIOS), and other
programs. In particular, we sought
comment on whether these standards
should be similar to those applicable at
the product level under the uniform
modification provision at § 147.106(e).
We are finalizing the amendments to
the definition of ‘‘plan’’ as proposed.
We are also specifying standards for
determining when a plan that has been
modified will be considered to be the
‘‘same plan.’’
Comment: Many commenters were
supportive of the proposed definition of
‘‘plan’’ stating it more closely aligns
with issuer operations and consumer
expectations. However, some
commenters believed that parts of the
definition were too vague, such as the
references to ‘‘cost-sharing structure’’
and ‘‘provider network.’’ For example,
one commenter stated that the reference
to a ‘‘particular’’ cost-sharing structure
could mean that each cost-sharing
reduction plan variation of the standard
QHP would constitute a separate
‘‘plan.’’ One commenter recommended
adding the prescription drug formulary
as a distinct plan characteristic. Other
commenters cautioned HHS to be
mindful of the operational impacts of
changing the definition of ‘‘plan.’’
Response: We believe the proposed
definition accurately reflects the key
features of a plan: a package of benefits
paired with a cost-sharing structure and
provider network that operates within a
service area. By ‘‘provider network,’’ we
mean the defined set of providers under
contract with the issuer for the delivery
of medical care (including items and
services paid for as medical care), if
applicable. We recognize that the
prescription drug formulary is an
important element of plan coverage, but
do not specifically include it in the
definition, because each aspect of the
formulary—the covered drugs and the
4 Under § 144.103, the term ‘‘product’’ means a
discrete package of health insurance coverage
benefits that a health insurance issuer offers using
a particular product network type within a service
area. Examples of product network types include
health maintenance organization (HMO), preferred
provider organization (PPO), exclusive provider
organization (EPO), point of service (POS), and
indemnity.
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tiering design—are represented by the
plan’s benefits and cost-sharing
structure. Further, we clarify that each
plan variation of a standard QHP would
not constitute a ‘‘particular cost-sharing
structure’’ for purposes of the definition
and thus would not constitute a separate
plan.
The final rule adopts the definition of
‘‘plan’’ as proposed. We believe many
issuers already distinguish their plans
according to these characteristics, and
we do not anticipate significant
downstream issues as a result of these
clarifications. Nevertheless, we will
work with States and issuers to make
any necessary adjustments to plan
identifiers in Federal systems.
Comment: We received some
comments addressing when a plan
should be considered to be the ‘‘same
plan’’ following modifications at the
plan level. Several commenters agreed
with the option we presented in the
preamble to the proposed rule of using
standards similar to those for uniform
modification of a product for identifying
modifications to a plan that would
result in the plan remaining the ‘‘same
plan.’’ Commenters stated that we
should permit changes to cost sharing
designed to maintain the same metal
level and modifications attributable to
Federal or State legal requirements to
constitute the same plan. Two
commenters recommended standards
regarding provider network and service
area.
Response: In this final rule, we
specify when a plan that has been
modified will be considered to be the
‘‘same plan.’’ Based on the comments
received, the final rule generally adopts
the standards for uniform modification
at the product level for changes made at
the plan level. These standards reflect
characteristics relevant to the definition
of ‘‘plan,’’ including provider network,
an additional characteristic not reflected
in the uniform modification provision.
We specifically omit those standards at
§ 147.106(e)(3) related to issuer, product
network type, and covered benefits,
which are relevant only at the product
level. We note that modifications to
these characteristics in a manner that
exceeds the standards for uniform
modification would result in a new
product and, consequently, new plans
within the product.
The final rule provides that a plan
that has been modified at the time of
coverage renewal in accordance with
§ 147.106 will be considered to be the
same plan if it meets the following
conditions:
• Has the same cost-sharing structure
as before the modification, or any
variation in cost sharing is solely related
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to changes in cost or utilization of
medical care (that is, medical inflation
or demand for services based on
inflationary increases in the cost of
medical care), or is to maintain the same
metal tier level described in sections
1302(d) and (e) of the Affordable Care
Act (that is, bronze, silver, gold,
platinum, or catastrophic).
• Continues to cover a majority of the
same service area.
• Continues to cover a majority of the
same provider network (as applicable).
We recognize that a plan’s provider
network may change throughout the
plan year. Therefore, for purposes of
determining whether a plan maintains a
majority of the same provider network,
the plan’s provider network on the first
day of the plan year is compared with
the plan’s provider network on the first
day of the preceding plan year. If at least
50 percent of the contracted providers at
the beginning of the plan year are still
contracted providers at the beginning of
the next plan year, the plan will be
considered to have maintained a
majority of the same provider network.
Furthermore, similar to the standard
for uniform modification of a product, a
plan also will not fail to be treated as
the same plan to the extent the changes
are made uniformly and solely pursuant
to applicable Federal or State
requirements, provided that the changes
are made within a reasonable time
period after the imposition or
modification of the Federal or State
requirement and are directly related to
the imposition or modification of the
Federal or State requirement.
The cost-sharing provision under this
final rule is identical to the cost-sharing
provision under the uniform
modification standard. In the 2015
Market Standards Rule (79 FR 30251),
which established criteria for uniform
modification, we stated that the costsharing provision is intended to
establish basic parameters around costsharing modifications to protect
consumers from extreme changes in
deductibles, copayments, and
coinsurance, while preserving issuer
flexibility to make reasonable and
customary adjustments from year to
year.
Finally, as with the uniform
modification provision, States have
flexibility to broaden the definition of
‘‘same plan.’’ States may, at their option,
permit greater changes to cost-sharing
structure, or designate a lower threshold
than the ‘‘majority’’ standard in this
final rule for changes in provider
network and service area, to constitute
the same plan. We intend to monitor
issues around compliance with the
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categorization of ‘‘plans’’ and may
provide future guidance as necessary.
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b. State
We proposed to amend the definition
of ‘‘State’’ to exclude application of the
Affordable Care Act market reforms
under part 147 to issuers in the U.S.
Territories of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and
the Northern Mariana Islands. The
change codifies HHS’s interpretation,
outlined in letters to the Territories on
July 16, 2014, that the new provisions
of the PHS Act enacted in title I of the
Affordable Care Act are appropriately
governed by the definition of ‘‘State’’ set
forth in that title, and therefore do not
apply to group or individual health
insurance issuers in the Territories.5
As explained in the July 16, 2014
letters and reiterated in the preamble to
the proposed rule (79 FR 70681), this
interpretation applies only to health
insurance that is governed by the PHS
Act. It does not affect the PHS Act
requirements that were enacted in the
Affordable Care Act and incorporated
into ERISA and the Code and apply to
group health plans (whether insured or
self-insured), because such applicability
does not rely upon the term ‘‘State’’ as
it is defined in either the PHS Act or
Affordable Care Act. It also does not
affect the PHS Act requirements that
were enacted in the Affordable Care Act
and apply to non-Federal governmental
plans. As a practical matter, therefore,
PHS Act, ERISA, and Code requirements
applicable to group health plans
continue to apply to such coverage, and
issuers selling policies to both private
sector and public sector employers in
the Territories should ensure their
products comply with the relevant
Affordable Care Act amendments to the
PHS Act applicable to group health
plans since their customers—the group
health plans—are subject to those
provisions. These include the
prohibition on lifetime and annual
limits (section 2711 of the PHS Act), the
prohibition on rescissions (section 2712
of the PHS Act), coverage of preventive
health services (section 2713 of the PHS
Act), and the revised internal and
external appeals process (section 2719
of the PHS Act).
We are finalizing these amendments
as proposed.
Comment: Several commenters
supported the proposed amendments to
the term ‘‘State’’ to avoid undermining
the stability of the Territories’ health
5 See for example, Letter to Virgin Islands on the
Definition of State (July 16, 2014). Available at:
https://www.cms.gov/CCIIO/Resources/Letters/
Downloads/letter-to-Francis.pdf.
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insurance markets. One commenter
encouraged HHS to work with the
Territories to improve access to
coverage for their residents.
Response: We are committed to
partnering with the Territories to ensure
their markets are robust and
competitive, so that consumers have
access to quality, affordable health
insurance.
B. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
1. Guaranteed Availability of Coverage
(§ 147.104)
We proposed several modifications to
the guaranteed availability requirements
under § 147.104. First, we proposed to
remove regulation text in § 147.104(b)(2)
establishing a special enrollment period
(also referred to as a ‘‘limited open
enrollment period’’) for individuals
enrolled in non-calendar year
individual market plans, because the
requirement is incorporated through
cross-reference in the same paragraph to
the Exchange rules at § 155.420(d)(1)(ii).
Second, we proposed to add new
paragraph § 147.104(f), which would
move and recodify, with minor
modifications for clarity, the
requirement under existing
§ 147.104(b)(2) for non-grandfathered
individual and merged market plans to
be offered on a calendar year basis.
Third, we proposed to amend
§ 147.104(b)(4) by adding a crossreference to the advance availability of
special enrollment periods under
§ 155.420(c)(2). This would align with
the Exchange regulations and allow
individuals to make a plan selection 60
days before and after certain triggering
events when enrolling inside or outside
the individual market Exchanges.
Finally, we proposed amending
§ 147.104(b)(1)(i)(C) to update the
citation to the SHOP regulations to
conform with changes made in this
rulemaking. The cross-reference is
changed from § 155.725(a)(2) to
§ 155.725.
We are finalizing these amendments
as proposed.
Comment: Most commenters
supported extending the 60-day advance
availability provisions to ensure marketwide consistency in special enrollment
periods. One commenter recommended
a 30-day special enrollment period.
Other commenters recommended
maintaining the 60-day special
enrollment period.
Response: We agree with commenters
who urged consistency in access to
special enrollment periods inside and
outside the individual market
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Exchanges. We believe these provisions
will help consumers avoid gaps in
coverage when they experience certain
significant life changes without
resulting in adverse selection.
2. Guaranteed Renewability of Coverage
(§ 147.106)
Consistent with previous guidance,
we proposed that an issuer will not
satisfy the requirements for product
discontinuation under the guaranteed
renewability regulations at
§ 146.152(c)(2), § 147.106(c)(2), or
§ 148.122(d)(2) if the issuer
automatically enrolls a plan sponsor or
individual (as applicable) into a product
of another licensed health insurance
issuer.6 However, this would not
prevent an issuer that decides to
withdraw from the market in a State
from mapping enrollees to a product of
another licensed issuer, to the extent
permitted by applicable State law, and
provided the issuer otherwise satisfies
the requirements for market withdrawal.
We stated that allowing an issuer to
transfer blocks of business to another
issuer could create opportunities for risk
segmentation, but also recognized that
regulating these matters could have
implications for certain corporate
reorganization practices. We sought
comment on how to interpret the
guaranteed renewability provisions in
the context of various corporate
transactions involving a change of
ownership, such as acquisitions,
mergers, or other corporate transactions;
how common such transactions are and
how they are typically structured;
whether auto-enrollment should be
allowed into a product of the posttransaction issuer; how the market
reforms such as the single risk pool
provision should be applied; and what
protections should be provided to
consumers when their product is
transferred.
Because ownership transfers have
implications for the operational
processes of HHS-administered
programs, such as advance payments of
the premium tax credit, cost-sharing
reduction payments, FFE user fees, and
the premium stabilization programs, we
proposed a notification requirement on
6 See Insurance Standards Bulletin, Form and
Manner of Notices When Discontinuing or
Renewing a Product in the Group or Individual
Market, section IV (September 2, 2014). Available
at: https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/RenewalNotices-9-3-14-FINAL.PDF. See also Patient
Protection and Affordable Care Act; Annual
Eligibility Redeterminations for Exchange
Participation and Insurance Affordability Programs;
Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to
Exchanges, 79 FR at 53000 (September 5, 2014).
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issuers of a QHP, a plan otherwise
subject to risk corridors, or a
reinsurance-eligible plan or a risk
adjustment covered plan, in cases of
changes of ownership. We proposed that
the post-transaction issuer notify HHS
of the transaction by the date the
transaction is entered into or the 30th
day prior to the effective date of the
transaction, whichever is later. We
sought comments on all aspects of the
notification, including what further
notification requirements should apply
to ownership transfers, and whether the
notification requirement should apply
to all plans subject to the guaranteed
renewability requirements, including
grandfathered health plans.
We are finalizing the notification
requirement in cases of changes of
ownership as recognized by the State in
which the issuer offers coverage. In light
of the comments discussed below, we
are not codifying the provision
prohibiting an issuer from automatically
enrolling plan sponsors or individuals
(as applicable) into a product of another
licensed health insurance issuer. We
intend to consult with the NAIC and
other stakeholders before releasing
further guidance on this issue.
Comment: Many commenters
encouraged HHS to defer to State
determinations on matters regarding
change of ownership, including when it
is appropriate for an issuer to renew
coverage through another licensed
issuer. One commenter requested that
HHS expressly recognize an offer of
coverage by an affiliated issuer as an
exception to the prohibition on autoenrollment. Several commenters
emphasized the need for continuity of
care and recommended that, in cases of
mid-year changes of ownership, the
acquiring issuer retain some or all of the
characteristics of the original plan, such
as the same benefits, cost sharing,
formulary, and network. Conversely,
another commenter noted that the same
coverage features rarely remain in place
after an ownership transfer. Some
commenters recommended HHS work
with States and issuers before releasing
guidance on how corporate transactions
should be handled.
Response: After careful review of the
comments submitted on this issue and
the relevant statutory language, we are
not codifying the prohibition on autoenrollment into a product of another
licensed issuer at this time. We intend
to consult with the NAIC and other
stakeholders to develop guidance on
how to handle corporate transactions
involving a change of ownership. We
will generally look to the applicable
State authority on matters regarding
changes of ownership until further
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guidance is issued. In the interim, we
will continue to apply our interpretation
of the guaranteed renewability
requirements, set forth in previous
guidance,7 to prohibit auto-enrollment
into a product of another issuer in cases
where the auto-enrollment does not
occur in connection with a change of
ownership.
Comment: Some commenters
recommended that HHS provide
flexibility to issuers to determine
liability of each party in a transaction
for advance payments of the premium
tax credit, cost-sharing reductions
payments, and the premium
stabilization programs.
Response: We intend to take these
comments into consideration as we
consider whether guidance on liability
is necessary as it relates to the HHSadministered programs described above.
Comment: In response to the
proposed notification requirement for
issuers experiencing a change of
ownership, some commenters
recommended that HHS defer to State
definitions of change of ownership. One
commenter suggested notice is
unnecessary, as QHP issuers in the FFEs
must already provide HHS with notice
of change of ownership under § 156.330.
One commenter recommended issuers
be required to provide notice only after
a transaction is completed, and sought
clarification that HHS will collect only
the minimum information necessary to
facilitate operational processes and has
no intention of collecting the
information for purposes other than for
continuity of operations.
Response: We are finalizing the
proposal to require notification when an
issuer experiences a change of
ownership, as recognized by the State in
which the issuer offers coverage. The
definition of change of ownership for
the purpose of notification is intended
simply to capture situations in which
such a change may have operational
implications for the above mentioned
programs. We recognize that States have
existing regulatory processes for
reviewing changes of ownership.
We also recognize that FFE issuers are
subject to a notification requirement
under § 156.330; however, changes of
ownership may have operational
implications for HHS-administered
programs beyond the FFEs. The HHSadministered programs described above
affect QHP issuers in both the FFEs and
State-based Exchanges, as well as
issuers offering plans outside of
Exchanges. To work closely with issuers
to anticipate and resolve potential
issues arising from such transactions,
7 Id.
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we are finalizing the notice requirement
for an issuer of a QHP, a plan otherwise
subject to risk corridors, a risk
adjustment covered plan, or a
reinsurance-eligible plan, as proposed.
We intend to limit the information
collected to those elements necessary
for HHS and issuers to determine how
the change of ownership affects
operations of HHS-administered
programs. These elements include the
legal name, HIOS plan identifier, tax
identification number of the original
and post-transaction issuers, the
effective date of the change of
ownership, and the summary
description of transaction. Depending
on the nature of the transaction,
additional information may be
necessary to ensure smooth operations
of affected programs. We anticipate
addressing the need for additional
information on a case-by-case basis,
through discussion with affected
issuers, with the participation of
affected issuers.
Finally, we are sensitive to the fluid
nature of change of ownership
transactions, but believe that our
proposed dates for notification
accommodate most transactional
timelines. In addition, the information
we intend to require from issuers is
limited in scope and should not
substantially burden either issuers or
HHS, even if the transaction is not
ultimately consummated. To ensure
continuity of operations, particularly for
administration of monthly payments
and charges for advance payments of the
premium tax credit and cost-sharing
reductions, it is in the interest of both
issuers and HHS to coordinate prior to
the effective date of the transaction.
C. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment Under the Affordable Care
Act
1. Provisions for the State Notice of
Benefit and Payment Parameters
(§ 153.100)
In § 153.100(c), we established a
deadline of March 1 of the calendar year
prior to the applicable benefit year for
a State to publish a State notice of
benefit and payment parameters if the
State is required to do so under
§ 153.100(a) or (b)—that is, if the State
is operating a risk adjustment program,
or if the State is establishing a
reinsurance program and wishes to
modify the data requirements for issuers
to receive reinsurance payments from
those specified in the HHS notice of
benefit and payment parameters for the
benefit year, wishes to collect additional
reinsurance contributions or use
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additional funds for reinsurance
payments, or elects to use more than
one applicable reinsurance entity. As of
the date of publication of this final rule,
Connecticut is the only State that has
elected to establish a transitional
reinsurance program and Massachusetts
is the only State that has elected to
operate a risk adjustment program. We
proposed to modify § 153.100(c) so that
the publication deadline for the State
notice of benefit and payment
parameters would be the later of March
1 of the calendar year prior to the
applicable benefit year, or the 30th day
following publication of the final HHS
notice of benefit and payment
parameters for that benefit year.
We are finalizing this modification as
proposed.
Comment: One commenter disagreed
with our proposal, stating that delaying
the publication of the State notices
would not give issuers enough time to
develop product and rate filings.
Response: Although HHS intends to
issue the final HHS notice of benefit and
payment parameters in a timely fashion,
it is difficult for States to publish such
a notice by the required deadline if the
final HHS notice of benefit and payment
parameters for the applicable benefit
year has not yet been published.
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2. Provisions and Parameters for the
Permanent Risk Adjustment Program
The risk adjustment program is a
permanent program created by section
1343 of the Affordable Care Act that
transfers funds from lower risk, nongrandfathered plans to higher risk, nongrandfathered plans in the individual
and small group markets, inside and
outside the Exchanges, to balance risk
and maintain market stability. In
subparts D and G of the Premium
Stabilization Rule, we established
standards for the administration of the
risk adjustment program. A State that is
approved or conditionally approved by
the Secretary to operate an Exchange
may establish a risk adjustment
program, or have HHS do so on its
behalf.
a. Risk Adjustment User Fee
If a State is not approved to operate
or chooses to forgo operating its own
risk adjustment program, HHS will
operate risk adjustment on the State’s
behalf. As described in the 2014
Payment Notice, HHS’s operation of risk
adjustment on behalf of States is funded
through a risk adjustment user fee.
Section 153.610(f)(2) provides that an
issuer of a risk adjustment covered plan
must remit a user fee to HHS equal to
the product of its monthly enrollment in
the plan and the per-enrollee-per-month
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risk adjustment user fee specified in the
annual HHS notice of benefit and
payment parameters for the applicable
benefit year.
OMB Circular No. A–25R establishes
Federal policy regarding user fees, and
specifies that a user charge will be
assessed against each identifiable
recipient for special benefits derived
from Federal activities beyond those
received by the general public. The risk
adjustment program will provide special
benefits as defined in section 6(a)(1)(b)
of Circular No. A–25R to issuers of risk
adjustment covered plans because it
will mitigate the financial instability
associated with potential adverse risk
selection. The risk adjustment program
also will contribute to consumer
confidence in the health insurance
industry by helping to stabilize
premiums across the individual and
small group health insurance markets.
In the 2015 Payment Notice, we
estimated Federal administrative
expenses of operating the risk
adjustment program to be $0.96 perenrollee-per-year, based on our
estimated contract costs for risk
adjustment operations. For the 2016
benefit year, we proposed to use the
same methodology to estimate our
administrative expenses to operate the
program. These contracts cover
development of the risk adjustment
model and methodology, collections,
payments, account management, data
collection, data validation, program
integrity and audit functions,
operational and fraud analytics,
stakeholder training, and operational
support. To calculate the user fee, we
divided HHS’s projected total costs for
administering the risk adjustment
programs on behalf of States by the
expected number of enrollees in risk
adjustment covered plans in HHSoperated risk adjustment programs for
the benefit year (other than plans not
subject to market reforms and student
health plans, which are not subject to
payments and charges under the risk
adjustment methodology HHS uses
when it operates risk adjustment on
behalf of a State).
We estimated that the total cost for
HHS to operate the risk adjustment
program on behalf of States for 2016
will be approximately $50 million, and
that the risk adjustment user fee would
be $1.75 per enrollee per year. The
increased risk adjustment user fee for
2016 is the result of the increased
contract costs to support the risk
adjustment data validation process
when HHS operates risk adjustment,
which HHS will administer for the first
time in 2016. We are finalizing the
proposed methodology for benefit year
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2016 and are finalizing a per capita risk
adjustment user fee of $1.75 per enrollee
per year, which we will apply as a perenrollee-per-month risk adjustment user
fee of $0.15.
Comment: One commenter did not
support the higher risk adjustment user
fee for 2016, noting that issuers are
already bearing significant costs for risk
adjustment data validation audits, and
requested that CMS identify efficiencies
that could be leveraged in risk
adjustment data validation operations
that will keep costs down. Another
commenter supported the higher risk
adjustment user fee for 2016 to support
risk adjustment data validation audits,
reiterating the importance of these
audits to ensure that the risk adjustment
program is as accurate and effective as
possible over time. One commenter
requested clarification that the risk
adjustment user fee is assessed on
issuers, not States.
Response: As we stated in the 2014
Payment Notice, we believe that a
reliable funding source is necessary to
ensure a robust Federal risk adjustment
program. We also agree with the
commenter that risk adjustment data
validation audits are critical to ensure
that risk adjustment is as accurate, fair,
and effective as possible over time. The
risk adjustment user fee was established
for the sole purpose of funding HHS’s
costs for operating the Federal risk
adjustment program, and we intend to
keep the user fee amount as low as
possible. The risk adjustment user fee
must be remitted by issuers of risk
adjustment covered plans, rather than
States.
b. Overview of the HHS Risk
Adjustment Model
The HHS risk adjustment model
predicts plan liability for an enrollee
based on that person’s age, sex, and
diagnoses (risk factors), producing a risk
score. The HHS risk adjustment
methodology utilizes separate models
for adults, children, and infants to
account for cost differences in each of
these age groups. In each of the adult
and child models, the relative costs
assigned to an individual’s age, sex, and
diagnoses are added together to produce
a risk score. Infant risk scores are
determined by inclusion in one of 25
mutually exclusive groups based on the
infant’s maturity and the severity of his
or her diagnoses. If applicable, the risk
score is multiplied by a cost-sharing
reduction adjustment.
The enrollment-weighted average risk
score of all enrollees in a particular risk
adjustment-covered plan, or the plan
liability risk score, within a geographic
rating area is one input into the
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payment transfer formula, which
determines an issuer’s transfer (payment
or charge) for that plan. Thus, the HHS
risk adjustment model predicts
individual-level risk scores, but is
designed to predict average group costs
to account for risk across plans, which,
as we stated in the 2014 Payment
Notice, accords with the Actuarial
Standards Board’s Actuarial Standards
of Practice for risk classification. We
received several general comments
about the HHS risk adjustment model.
Comment: Several commenters
requested additional guidance about the
ICD–10 transition and how the risk
adjustment model will implement these
changes.
Response: We will publish updated
ICD–9 instructions and software and
then a combined set of ICD–9 and ICD–
10 instructions and software on our Web
site, as we did for the original ICD–9
software and instructions, which we
have updated annually.8 Because ICD–
10 codes will be accepted for risk
adjustment beginning October 1, 2015,
we intend to publish these documents
shortly.
Comment: One commenter requested
an additional 60 days for review of the
risk adjustment recalibration, stating
that the 30-day comment period was
insufficient to review the model and
provide sufficient comments. Another
commenter stressed that issuers need 60
to 90 days prior to filing dates to
account for final risk adjustment model
changes.
Response: We are sympathetic to
these concerns; however, we received
numerous detailed, substantive
comments on the proposed risk
adjustment recalibration. Additionally,
the timeline for publication of this final
rule accommodates many commenters’
requests that the final rule be published
prior to filing deadlines for the 2016
benefit year.
Comment: One commenter requested
that the § 153.420(b) data submission
deadline of April 30 of the year
following the benefit year be moved to
July 31 for the initial year of risk
adjustment.
Response: We have been working
with issuers to ensure that issuers’ data
submissions for 2014 benefit year risk
adjustment and reinsurance will be
complete and accurate by April 30,
2015. We do not intend to delay the
final data submission deadline for 2014
risk adjustment (and reinsurance).
8 The HHS-Developed Risk Adjustment Model
Algorithm Software and Instructions are available
at: https://www.cms.gov/CCIIO/Programs-andInitiatives/Premium-Stabilization-Programs/
index.html under ‘‘Regulations & Guidance’’
(posted under ‘‘Guidance’’ on June 2, 2014).
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c. Proposed Updates to Risk Adjustment
Models
We proposed to continue to use the
same risk adjustment methodology
finalized in the 2014 Payment Notice,
with changes to reflect more current
data, as described below. As we stated
above, in the adult and child models,
enrollee health risks are estimated using
the HHS risk adjustment methodology,
which assigns a set of additive factors
that reflect the relative costs of
demographics and diagnoses. Risk
adjustment factors are developed using
claims data and reflect the costs of a
given disease relative to average
spending. The longer the lag in data
used to develop the risk factors, the
greater the potential that the costs of
treating one disease versus another have
changed in a manner not fully reflected
in the risk factors.
To provide risk adjustment factors
that best reflect more recent treatment
patterns and costs, we proposed to
recalibrate the HHS risk adjustment
models for 2016 by using more recent
claims data to develop updated risk
factors. The risk factors published in the
2014 Payment Notice for use in 2014
and 2015 were developed using the
Truven Health Analytics 2010
MarketScan® Commercial Claims and
Encounters database (MarketScan); we
proposed to update the risk factors in
the HHS risk adjustment models using
2010, 2011, and 2012 MarketScan data.
We also proposed that if 2013
MarketScan data becomes available after
the publication of the proposed rule, we
would update the risk factors in the
HHS risk adjustment model using the 3
most recent years of data available—
MarketScan 2011, 2012, and 2013 data.
These updated risk factors would be
published and finalized in this final
rule.
We proposed to implement the
recalibrated risk adjustment factors in
2016 to provide sufficient time for
issuers to account for risk adjustment
model changes. However, we also
sought comment on making the
recalibrated HHS risk adjustment
models effective beginning for the 2015
benefit year instead of the 2016 benefit
year. We sought comment on this
approach, including whether we should
update risk factors based on 2013
MarketScan data when it becomes
available after publication of the
proposed rule, and whether the updated
risk factors should be implemented for
2015 or 2016. We are finalizing the HHS
risk adjustment recalibration using
2011, 2012, and 2013 MarketScan data
to develop final risk adjustment factors
to be implemented in the 2016 benefit
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year. We are making no changes for the
2015 benefit year.
Comment: Commenters supported
recalibrating the risk adjustment model
based on the most recent data available,
noting that the underlying data is dated
and that updating the factors will boost
issuers’ confidence in the model’s
predictive power, which could reduce
risk selection behaviors and help
stabilize premiums. One commenter
suggested that we provide simulated
results between the proposed 3-year
recalibration approach and the 2014 risk
adjustment factors for the 2015 benefit
year. Another commenter requested that
CMS provide a report that includes a
detailed analysis of the impact that
recalibration may have, including
details sufficient for issuers to make
adjustments to premium rates as
appropriate. Most commenters
supported recalibrating for the 2016
benefit year, since 2015 rates have
already been set, with some commenters
supporting implementation of
recalibration in the 2015 benefit year.
Commenters supported using 2013 data
as long as the data would be available
prior to publication of the final 2016
Payment Notice and would be available
prior to 2016 rate filings. Other
commenters did not support using 2013
MarketScan data, instead suggesting that
2010, 2011, and 2012 data are sufficient.
Response: We agree on the
importance of using recent data to
calibrate our models. However, we also
agree that timely notice of risk
adjustment model changes is necessary
for orderly rate development. Therefore,
we will implement the recalibrated risk
adjustment models in the 2016 benefit
year. Additionally, because we received
and were able to prepare the 2013
MarketScan dataset prior to the
publication of this final rule, we have
developed the 2016 risk adjustment
factors using 2011, 2012, and 2013
MarketScan data. We believe this
incorporation allows for the use of the
most recent data available to HHS,
while giving issuers the notice required
for rate setting for the 2016 benefit year.
We will continue to assess how we may
ameliorate the data lag in future
recalibrations. We believe that the
transfer equation provided in the 2014
Payment Notice and the updated risk
adjustment factors provided in this final
Payment Notice are sufficient for issuers
to evaluate the impact of risk
adjustment on their rate development
for 2016.
We believe that using multiple years
of data will promote market stability
and minimize volatility in coefficients
for certain rare diagnoses. In using
multiple years of data to recalibrate the
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risk adjustment model, we considered
either pooling data from 3 sample years
or averaging coefficients from three
separately estimated calibrations, based
on the 2010, 2011, and 2012 data, and
sought comment on the two approaches.
We examined the effects of pooling data
and averaging separate calibrations, and
did not find a quantitatively important
difference between the resulting
coefficients. However, we believe that
averaging coefficients offers the
advantage of transparency and ease in
future recalibrations. Averaging
coefficients using the 3 most recent
years of separately estimated
calibrations allows for most recent data
to be incorporated into the model, while
ensuring that coefficients remain
relatively stable, and are therefore
finalizing our approach to average the
coefficients from 3 separately estimated
sample years. Below we publish the
R-squared statistics of the 3 separately
estimated sample years’ estimates, and
the blended coefficient for each risk
adjustment factor.
Comment: Commenters supported the
transparency and ease of averaging
coefficients from three separately
estimated calibrations, with one
commenter recommending that we
consider statistical best practices in the
decision as to whether to average
coefficients or pool data. Another
commenter requested that we average
coefficients, validate the results using
pooled data, and publish a report
detailing the results of the two methods.
Response: We carefully considered
the two approaches, noting the benefits
of each approach—transparency with
averaging, and a single R-squared
statistic and larger sample sizes for each
model with pooling. However, when we
compared the coefficients from both
approaches, we did not find
quantitatively important differences
across the coefficients. We will continue
to evaluate the coefficient averaging
approach and consider any refinements
in future recalibrations.
We made minor refinements to the
underlying MarketScan recalibration
samples from which the risk adjustment
factors are derived. In particular, we
changed our treatment of Age 0 infants
without birth hierarchical condition
categories (HCCs). There may be cases
in which there is no separate infant
birth claim from which to gather
diagnoses. For example, mother and
infant claims may be bundled such that
infant diagnoses appear on the mother’s
record. Where newborn diagnoses
appear on the mother’s claims, HHS has
issued operational guidance on how
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best to associate those codes with the
appropriate infant.9
However, we proposed a change in
how we categorize age 0 infants who do
not have birth codes. We previously
stated in the operational guidance
referenced above that infants without
birth codes would be assigned an ‘‘Age
0, Term’’ factor in risk adjustment
operations. We did so under the
assumption that issuers paid the birth
costs, yet the birth HCCs were missing
(perhaps because claims were bundled
with the mother’s, whose claims were
excluded). Upon further analysis of age
0 and age 1 claims, we found that age
0 infants without birth HCCs had costs
more similar to age 1 infants by severity
level. We believe that these infants
should be assigned to age 1 in situations
where the issuer did not pay the birth
costs during the plan year. For many age
0 infants without birth HCCs, the birth
could have occurred in the prior year or
was paid for by a different issuer. We
proposed that age 0 infants without
birth HCCs be assigned to ‘‘Age 1’’ by
severity level. We have made this
change in the recalibration samples that
we are using to calculate risk factors for
proposed implementation in the 2016
benefit year. We also proposed to make
this change in the operation of the risk
adjustment methodology for the year in
which we would implement the
recalibrated risk adjustment factors. We
are finalizing our approach as proposed,
for implementation in the 2016 benefit
year with the recalibrated risk
adjustment models.
Comment: Some commenters
supported our reassignment of age 0
infants without birth codes from ‘‘Age 0,
Term’’ to ‘‘Age 1, severity level,’’ noting
the reduction in the factor that occurs
from these infants’ reassignment. Other
commenters disagreed with our
reassignment of age 0 infants without
birth codes to ‘‘Age 1, severity level.’’
Commenters suggested that bundling
claims is standard industry practice and
infants on bundled claims without birth
codes should be assigned to ‘‘Age 0,
Term,’’ while another commenter
suggested that this reassignment would
result in incorrect payments for infant
claims with discharge dates that overlap
benefit years.
Response: In previous guidance, we
have stated that issuers should
unbundle claims to receive credit for all
diagnoses. We believe that many age 0
infants without birth codes more closely
resemble the risk profiles of age 1
9 HHS-Developed Risk Adjustment Model
Algorithm Software Instructions. June 2, 2014.
https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/DIY-instructions-5-2014.pdf
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infants. In many cases, the birth codes
have been appropriately excluded due
to a birth in the previous year or a
change in insurance status. We will
continue to treat infants with discharge
dates that overlap benefit years as age 0,
unless they do not have birth codes, in
which case we would assign them to
‘‘age 1, severity level,’’ as with age 0
infants without birth codes whose
discharge dates do not overlap benefit
years.
d. List of Factors To Be Employed in the
Model
The HHS risk adjustment models
predict annualized plan liability
expenditures using age and sex
categories and the HHS HCCs included
in the HHS risk adjustment model.
Dollar coefficients were estimated for
these factors using weighted least
squares regression, where the weight
was the fraction of the year enrolled.
We are including the same HCCs that
were included in the original risk
adjustment calibration in the 2014
Payment Notice. For each model, the
factors are the statistical regression
dollar values for each HCC in the model
divided by a weighted average plan
liability for the full modeling sample.
The factors represent the predicted
relative incremental expenditures for
each HCC. The proposed factors
resulting from the averaged factors from
the 2011, 2012, and 2013 separately
solved models are shown in the tables
below. For a given enrollee, the sums of
the factors for the enrollee’s HCCs are
the total relative predicted expenditures
for that enrollee. Table 1 contains the
factors for each adult model, including
the interactions. Table 3 contains the
factors for each child model. Table 4
contains the factors for each infant
model.
Comment: One commenter requested
that HHS provide the rationale for the
modification of the child model
transplant factors.
Response: We constrained the six
transplant status HCC coefficients (other
than kidney) in the child model. The
sample sizes of transplants are smaller
in the child than the adult model. The
levels and changes in the child
transplant relative coefficients appeared
to be dominated by random instability
and therefore, we believe the accuracy
of the model will be improved by
constraining these coefficients. We
intend to monitor the child transplant
relative coefficients, and adjust them if
needed in future recalibrations.
Comment: Several commenters
suggested that the model is not
equipped to accurately account for the
introduction of new treatments, and
E:\FR\FM\27FER2.SGM
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10762
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
recommended that HHS add drug
utilization or selected classes of
prescription medicines to the list of risk
adjustment model factors. Commenters
suggested that plans placing
medications to treat serious chronic
diseases on formulary tiers with the
highest cost sharing is evidence that
current plan designs discourage
enrollment by higher-risk enrollees,
which suggests that the current risk
adjustment model is not effectively
reducing plans’ incentives to design
benefits that discourage enrollment by
higher risk and higher cost patients. One
commenter recommended that HHS
evaluate additional medical conditions
or characteristics for new enrollees
which may indicate future
expenditures. Another commenter
suggested that HHS analyze the
difference between Truven and
Medicaid claim variables for age 0–1
and that HHS assess the impact of
habilitative and Medicaid-like benefits
on costs which are generally not present
in commercial claims. Lastly, a
commenter suggested that the risk
adjustment factors may be more
appropriately calculated and applied
regionally.
Response: As stated above, we wish to
use the same risk adjustment models
finalized in the 2014 Payment Notice,
with changes to reflect more current
data. We did not intend to change the
models’ structure, for example by
including pharmacy utilization.
However, we will continue to consider
including prescription drug data in
future model recalibrations. Similarly,
we intend to evaluate additional
medical conditions and characteristics
for new enrollees which may indicate
future expenditures, including through
Medicaid claims comparisons. The risk
adjustment methodology takes into
account Statewide average premium and
geographic rating area in the transfer
formula.
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS
Factor
Platinum
Gold
Silver
Bronze
Catastrophic
Demographic Factors
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
Age
21–24,
25–29,
30–34,
35–39,
40–44,
45–49,
50–54,
55–59,
60–64,
21–24,
25–29,
30–34,
35–39,
40–44,
45–49,
50–54,
55–59,
60–64,
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Male ..................................................................
Female .............................................................
Female .............................................................
Female .............................................................
Female .............................................................
Female .............................................................
Female .............................................................
Female .............................................................
Female .............................................................
Female .............................................................
0.250
0.260
0.311
0.375
0.459
0.548
0.701
0.814
0.982
0.408
0.505
0.634
0.735
0.824
0.849
0.962
0.989
1.088
0.202
0.208
0.248
0.302
0.374
0.451
0.584
0.681
0.824
0.326
0.406
0.520
0.612
0.689
0.709
0.809
0.830
0.911
0.139
0.141
0.168
0.209
0.269
0.334
0.445
0.529
0.650
0.208
0.271
0.376
0.466
0.532
0.548
0.636
0.652
0.720
0.076
0.074
0.083
0.109
0.149
0.198
0.273
0.339
0.428
0.089
0.130
0.222
0.308
0.358
0.361
0.420
0.427
0.473
0.070
0.067
0.075
0.099
0.138
0.184
0.255
0.319
0.404
0.078
0.116
0.207
0.292
0.340
0.343
0.397
0.403
0.447
6.157
5.598
5.302
5.310
5.315
12.643
12.435
12.334
12.417
12.429
7.550
5.290
10.151
26.334
7.419
5.002
10.027
25.786
7.353
4.868
9.969
25.486
7.389
4.805
9.964
25.597
7.394
4.803
9.963
25.610
12.032
11.615
11.394
11.418
11.421
6.543
5.929
6.254
5.641
6.097
5.482
6.045
5.426
6.039
5.420
3.447
3.235
3.117
3.051
3.043
1.651
6.947
1.344
1.344
1.344
15.443
2.379
2.379
2.379
1.476
6.726
1.193
1.193
1.193
15.449
2.239
2.239
2.239
1.368
6.616
1.100
1.100
1.100
15.444
2.160
2.160
2.160
1.239
6.645
0.959
0.959
0.959
15.532
2.088
2.088
2.088
1.224
6.650
0.942
0.942
0.942
15.541
2.080
2.080
2.080
2.379
16.879
6.272
2.548
2.239
16.651
5.972
2.348
2.160
16.547
5.825
2.252
2.088
16.575
5.852
2.213
2.080
16.581
5.857
2.210
tkelley on DSK3SPTVN1PROD with RULES2
Diagnosis Factors
HIV/AIDS ..............................................................................
Septicemia, Sepsis, Systemic Inflammatory Response
Syndrome/Shock ..............................................................
Central Nervous System Infections, Except Viral Meningitis ...................................................................................
Viral or Unspecified Meningitis ............................................
Opportunistic Infections .......................................................
Metastatic Cancer ................................................................
Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia .......................................
Non-Hodgkin’s Lymphomas and Other Cancers and Tumors ..................................................................................
Colorectal, Breast (Age <50), Kidney, and Other Cancers
Breast (Age 50+) and Prostate Cancer, Benign/Uncertain
Brain Tumors, and Other Cancers and Tumors ..............
Thyroid Cancer, Melanoma, Neurofibromatosis, and Other
Cancers and Tumors ........................................................
Pancreas Transplant Status/Complications .........................
Diabetes with Acute Complications .....................................
Diabetes with Chronic Complications ..................................
Diabetes without Complication ............................................
Protein-Calorie Malnutrition .................................................
Mucopolysaccharidosis ........................................................
Lipidoses and Glycogenosis ................................................
Amyloidosis, Porphyria, and Other Metabolic Disorders .....
Adrenal, Pituitary, and Other Significant Endocrine Disorders ...............................................................................
Liver Transplant Status/Complications ................................
End-Stage Liver Disease .....................................................
Cirrhosis of Liver ..................................................................
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10763
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued
tkelley on DSK3SPTVN1PROD with RULES2
Factor
Platinum
Chronic Hepatitis ..................................................................
Acute Liver Failure/Disease, Including Neonatal Hepatitis
Intestine Transplant Status/Complications ..........................
Peritonitis/Gastrointestinal
Perforation/Necrotizing
Enterocolitis ......................................................................
Intestinal Obstruction ...........................................................
Chronic Pancreatitis .............................................................
Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption ...........................................................
Inflammatory Bowel Disease ...............................................
Necrotizing Fasciitis .............................................................
Bone/Joint/Muscle Infections/Necrosis ................................
Rheumatoid Arthritis and Specified Autoimmune Disorders
Systemic Lupus Erythematosus and Other Autoimmune
Disorders ..........................................................................
Osteogenesis Imperfecta and Other Osteodystrophies ......
Congenital/Developmental Skeletal and Connective Tissue
Disorders ..........................................................................
Cleft Lip/Cleft Palate ............................................................
Hemophilia ...........................................................................
Myelodysplastic Syndromes and Myelofibrosis ...................
Aplastic Anemia ...................................................................
Acquired Hemolytic Anemia, Including Hemolytic Disease
of Newborn .......................................................................
Sickle Cell Anemia (Hb-SS) .................................................
Thalassemia Major ...............................................................
Combined and Other Severe Immunodeficiencies ..............
Disorders of the Immune Mechanism ..................................
Coagulation Defects and Other Specified Hematological
Disorders ..........................................................................
Drug Psychosis ....................................................................
Drug Dependence ................................................................
Schizophrenia ......................................................................
Major Depressive and Bipolar Disorders .............................
Reactive and Unspecified Psychosis, Delusional Disorders
Personality Disorders ...........................................................
Anorexia/Bulimia Nervosa ....................................................
Prader-Willi, Patau, Edwards, and Autosomal Deletion
Syndromes .......................................................................
Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes ................
Autistic Disorder ...................................................................
Pervasive Developmental Disorders, Except Autistic Disorder .................................................................................
Traumatic Complete Lesion Cervical Spinal Cord ..............
Quadriplegia .........................................................................
Traumatic Complete Lesion Dorsal Spinal Cord .................
Paraplegia ............................................................................
Spinal Cord Disorders/Injuries .............................................
Amyotrophic Lateral Sclerosis and Other Anterior Horn
Cell Disease .....................................................................
Quadriplegic Cerebral Palsy ................................................
Cerebral Palsy, Except Quadriplegic ...................................
Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies .............................................................
Myasthenia Gravis/Myoneural Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic Neuropathy ...............
Muscular Dystrophy .............................................................
Multiple Sclerosis .................................................................
Parkinson’s, Huntington’s, and Spinocerebellar Disease,
and Other Neurodegenerative Disorders .........................
Seizure Disorders and Convulsions ....................................
Hydrocephalus .....................................................................
Non-Traumatic Coma, and Brain Compression/Anoxic
Damage ............................................................................
Respirator Dependence/Tracheostomy Status ....................
Respiratory Arrest ................................................................
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes ............................................
Heart Assistive Device/Artificial Heart .................................
Heart Transplant ..................................................................
Congestive Heart Failure .....................................................
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Gold
Silver
Bronze
Catastrophic
2.339
4.521
41.078
2.170
4.324
41.016
2.077
4.225
40.976
1.994
4.215
41.009
1.987
4.216
41.010
13.554
7.453
6.273
13.224
7.114
5.985
13.049
6.952
5.849
13.108
6.996
5.891
13.115
7.004
5.898
3.183
3.283
7.506
7.506
3.834
2.950
2.988
7.254
7.254
3.534
2.834
2.831
7.120
7.120
3.373
2.778
2.693
7.153
7.153
3.349
2.772
2.677
7.157
7.157
3.348
1.306
3.633
1.154
3.399
1.066
3.262
0.949
3.188
0.936
3.179
3.633
1.639
46.716
13.937
13.937
3.399
1.453
46.362
13.773
13.773
3.262
1.348
46.145
13.686
13.686
3.188
1.246
46.164
13.711
13.711
3.179
1.236
46.167
13.714
13.714
10.383
10.383
10.383
5.543
5.543
10.181
10.181
10.181
5.353
5.353
10.065
10.065
10.065
5.257
5.257
10.058
10.058
10.058
5.270
5.270
10.057
10.057
10.057
5.272
5.272
3.203
3.915
3.915
3.294
1.889
1.889
1.234
2.860
3.085
3.627
3.627
3.004
1.703
1.703
1.097
2.670
3.015
3.471
3.471
2.852
1.590
1.590
0.994
2.560
2.982
3.346
3.346
2.750
1.449
1.449
0.840
2.473
2.978
3.332
3.332
2.741
1.433
1.433
0.822
2.462
2.958
2.806
2.723
2.663
2.655
1.262
1.234
1.152
1.097
1.073
0.994
0.972
0.840
0.960
0.822
1.234
14.620
14.620
10.397
10.397
6.455
1.097
14.420
14.420
10.195
10.195
6.200
0.994
14.307
14.307
10.085
10.085
6.068
0.840
14.313
14.313
10.079
10.079
6.041
0.822
14.313
14.313
10.078
10.078
6.039
3.907
1.158
0.126
3.620
0.914
0.080
3.478
0.795
0.050
3.430
0.709
0.020
3.427
0.701
0.017
0.090
0.021
0.000
0.000
0.000
5.561
2.284
9.513
5.383
2.088
9.024
5.290
1.993
8.764
5.262
1.902
8.834
5.259
1.893
8.842
2.284
1.588
8.049
2.088
1.408
7.897
1.993
1.305
7.806
1.902
1.202
7.777
1.893
1.192
7.773
10.501
40.044
12.390
10.329
40.031
12.191
10.227
40.014
12.082
10.228
40.103
12.179
10.227
40.113
12.191
12.390
37.771
37.771
3.598
12.191
37.451
37.451
3.462
12.082
37.284
37.284
3.391
12.179
37.380
37.380
3.390
12.191
37.392
37.392
3.391
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10764
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued
tkelley on DSK3SPTVN1PROD with RULES2
Factor
Platinum
Acute Myocardial Infarction .................................................
Unstable Angina and Other Acute Ischemic Heart Disease
Heart Infection/Inflammation, Except Rheumatic ................
Specified Heart Arrhythmias ................................................
Intracranial Hemorrhage ......................................................
Ischemic or Unspecified Stroke ...........................................
Cerebral Aneurysm and Arteriovenous Malformation .........
Hemiplegia/Hemiparesis ......................................................
Monoplegia, Other Paralytic Syndromes .............................
Atherosclerosis of the Extremities with Ulceration or Gangrene ................................................................................
Vascular Disease with Complications ..................................
Pulmonary Embolism and Deep Vein Thrombosis ..............
Lung Transplant Status/Complications ................................
Cystic Fibrosis ......................................................................
Chronic Obstructive Pulmonary Disease, Including
Bronchiectasis ..................................................................
Asthma .................................................................................
Fibrosis of Lung and Other Lung Disorders ........................
Aspiration and Specified Bacterial Pneumonias and Other
Severe Lung Infections ....................................................
Kidney Transplant Status .....................................................
End Stage Renal Disease ...................................................
Chronic Kidney Disease, Stage 5 ........................................
Chronic Kidney Disease, Severe (Stage 4) .........................
Ectopic and Molar Pregnancy, Except with Renal Failure,
Shock, or Embolism .........................................................
Miscarriage with Complications ...........................................
Miscarriage with No or Minor Complications .......................
Completed Pregnancy With Major Complications ...............
Completed Pregnancy With Complications .........................
Completed Pregnancy with No or Minor Complications ......
Chronic Ulcer of Skin, Except Pressure ..............................
Hip Fractures and Pathological Vertebral or Humerus
Fractures ..........................................................................
Pathological Fractures, Except of Vertebrae, Hip, or Humerus ................................................................................
Stem Cell, Including Bone Marrow, Transplant Status/
Complications ...................................................................
Artificial Openings for Feeding or Elimination .....................
Amputation Status, Lower Limb/Amputation Complications
.
Severe illness x Opportunistic Infections .............................
Severe illness x Metastatic Cancer .....................................
Severe illness x Lung, Brain, and Other Severe Cancers,
Including Pediatric Acute Lymphoid Leukemia ................
Severe illness x Non-Hodgkin’s Lymphomas and Other
Cancers and Tumors ........................................................
Severe illness x Myasthenia Gravis/Myoneural Disorders
and Guillain-Barre Syndrome/Inflammatory and Toxic
Neuropathy .......................................................................
Severe illness x Heart Infection/Inflammation, Except
Rheumatic ........................................................................
Severe illness x Intracranial Hemorrhage ...........................
Severe illness x HCC group G06 (G06 is HCC Group 6
which includes the following HCCs in the blood disease
category: 67, 68) ..............................................................
Severe illness x HCC group G08 (G08 is HCC Group 8
which includes the following HCCs in the blood disease
category: 73, 74) ..............................................................
Severe illness x End-Stage Liver Disease ..........................
Severe illness x Acute Liver Failure/Disease, Including
Neonatal Hepatitis ............................................................
Severe illness x Atherosclerosis of the Extremities with Ulceration or Gangrene .......................................................
Severe illness x Vascular Disease with Complications .......
Severe illness x Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections ......................
Severe illness x Artificial Openings for Feeding or Elimination ................................................................................
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Gold
Silver
Bronze
Catastrophic
11.768
6.075
7.146
3.350
11.056
4.012
4.709
6.343
3.968
11.329
5.719
6.980
3.170
10.700
3.770
4.455
6.218
3.805
11.100
5.555
6.891
3.073
10.519
3.665
4.331
6.155
3.724
11.278
5.592
6.869
3.007
10.548
3.685
4.287
6.223
3.700
11.300
5.600
6.867
3.000
10.554
3.690
4.284
6.231
3.699
12.395
8.583
4.542
37.791
12.367
12.261
8.349
4.335
37.528
11.975
12.194
8.230
4.229
37.388
11.747
12.299
8.246
4.206
37.504
11.763
12.311
8.249
4.204
37.517
11.764
1.090
1.090
2.365
0.958
0.958
2.217
0.871
0.871
2.143
0.762
0.762
2.098
0.750
0.750
2.093
8.585
11.146
42.543
2.440
2.440
8.482
10.803
42.217
2.308
2.308
8.429
10.642
42.036
2.248
2.248
8.454
10.645
42.222
2.244
2.244
8.457
10.649
42.243
2.245
2.245
1.455
1.455
1.455
4.050
4.050
4.050
2.575
1.260
1.260
1.260
3.489
3.489
3.489
2.425
1.139
1.139
1.139
3.288
3.288
3.288
2.354
0.891
0.891
0.891
3.066
3.066
3.066
2.337
0.856
0.856
0.856
3.065
3.065
3.065
2.337
10.290
10.016
9.873
9.943
9.951
2.010
1.868
1.782
1.681
1.669
34.090
11.500
5.978
34.078
11.373
5.779
34.067
11.306
5.679
34.095
11.372
5.721
34.098
11.379
5.728
12.043
12.043
12.306
12.306
12.433
12.433
12.560
12.560
12.572
12.572
12.043
12.306
12.433
12.560
12.572
12.043
12.306
12.433
12.560
12.572
12.043
12.306
12.433
12.560
12.572
12.043
12.043
12.306
12.306
12.433
12.433
12.560
12.560
12.572
12.572
12.043
12.306
12.433
12.560
12.572
12.043
2.634
12.306
2.785
12.433
2.855
12.560
2.974
12.572
2.984
2.634
2.785
2.855
2.974
2.984
2.634
2.634
2.785
2.785
2.855
2.855
2.974
2.974
2.984
2.984
2.634
2.785
2.855
2.974
2.984
2.634
2.785
2.855
2.974
2.984
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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
10765
TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued
Factor
Platinum
Severe illness x HCC group G03 (G03 is HCC Group 3
which includes the following HCCs in the musculoskeletal disease category: 54, 55) ...................................
Gold
2.634
Silver
2.785
2.855
Bronze
2.974
Catastrophic
2.984
TABLE 2—HHS HCCS IN THE SEVERITY ILLNESS INDICATOR VARIABLE
Description
Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.
Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis.
Seizure Disorders and Convulsions.
Non-Traumatic Coma, Brain Compression/Anoxic Damage.
Respirator Dependence/Tracheostomy Status.
Respiratory Arrest.
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes.
Pulmonary Embolism and Deep Vein Thrombosis.
TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS
Factor
Platinum
Gold
Silver
Bronze
Catastrophic
Demographic Factors
Age
Age
Age
Age
Age
Age
Age
Age
2–4, Male ......................................................................
5–9, Male ......................................................................
10–14, Male ..................................................................
15–20, Male ..................................................................
2–4, Female .................................................................
5–9, Female .................................................................
10–14, Female .............................................................
15–20, Female .............................................................
0.262
0.179
0.229
0.302
0.212
0.141
0.213
0.358
0.191
0.128
0.176
0.241
0.150
0.095
0.162
0.283
0.097
0.058
0.099
0.161
0.066
0.036
0.093
0.180
0.016
0.000
0.034
0.084
0.004
0.000
0.037
0.079
0.009
0.000
0.028
0.077
0.002
0.000
0.033
0.070
3.905
3.443
3.195
3.035
3.022
19.194
19.011
18.921
18.952
18.957
12.691
3.766
25.545
40.241
12.467
3.517
25.461
39.934
12.344
3.386
25.417
39.739
12.356
3.226
25.403
39.739
12.357
3.210
25.402
39.738
13.408
13.064
12.852
12.768
12.758
10.279
4.078
9.971
3.830
9.778
3.661
9.654
3.498
9.639
3.479
3.274
3.044
2.901
2.749
2.731
1.832
35.005
2.695
2.695
2.695
15.577
6.759
6.759
6.759
6.759
1.650
34.817
2.350
2.350
2.350
15.458
6.440
6.440
6.440
6.440
1.520
34.724
2.169
2.169
2.169
15.387
6.245
6.245
6.245
6.245
1.360
34.753
1.832
1.832
1.832
15.437
6.182
6.182
6.182
6.182
1.342
34.755
1.794
1.794
1.794
15.442
6.176
6.176
6.176
6.176
6.759
35.005
15.326
10.171
1.316
10.916
35.005
6.440
34.817
15.150
9.978
1.149
10.745
34.817
6.245
34.724
15.059
9.868
1.025
10.640
34.724
6.182
34.753
15.061
9.837
0.917
10.615
34.753
6.176
34.755
15.063
9.836
0.908
10.614
34.755
17.618
17.189
16.947
16.982
16.986
tkelley on DSK3SPTVN1PROD with RULES2
Diagnosis Factors
HIV/AIDS ..............................................................................
Septicemia, Sepsis, Systemic Inflammatory Response
Syndrome/Shock ..............................................................
Central Nervous System Infections, Except Viral Meningitis ...................................................................................
Viral or Unspecified Meningitis ............................................
Opportunistic Infections .......................................................
Metastatic Cancer ................................................................
Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia .......................................
Non-Hodgkin’s Lymphomas and Other Cancers and Tumors ..................................................................................
Colorectal, Breast (Age < 50), Kidney, and Other Cancers
Breast (Age 50+) and Prostate Cancer, Benign/Uncertain
Brain Tumors, and Other Cancers and Tumors ..............
Thyroid Cancer, Melanoma, Neurofibromatosis, and Other
Cancers and Tumors ........................................................
Pancreas Transplant Status/Complications .........................
Diabetes with Acute Complications .....................................
Diabetes with Chronic Complications ..................................
Diabetes without Complication ............................................
Protein-Calorie Malnutrition .................................................
Mucopolysaccharidosis ........................................................
Lipidoses and Glycogenosis ................................................
Congenital Metabolic Disorders, Not Elsewhere Classified
Amyloidosis, Porphyria, and Other Metabolic Disorders .....
Adrenal, Pituitary, and Other Significant Endocrine Disorders ...............................................................................
Liver Transplant Status/Complications ................................
End-Stage Liver Disease .....................................................
Cirrhosis of Liver ..................................................................
Chronic Hepatitis ..................................................................
Acute Liver Failure/Disease, Including Neonatal Hepatitis
Intestine Transplant Status/Complications ..........................
Peritonitis/Gastrointestinal
Perforation/Necrotizing
Enterocolitis ......................................................................
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10766
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued
tkelley on DSK3SPTVN1PROD with RULES2
Factor
Platinum
Intestinal Obstruction ...........................................................
Chronic Pancreatitis .............................................................
Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption ...........................................................
Inflammatory Bowel Disease ...............................................
Necrotizing Fasciitis .............................................................
Bone/Joint/Muscle Infections/Necrosis ................................
Rheumatoid Arthritis and Specified Autoimmune Disorders
Systemic Lupus Erythematosus and Other Autoimmune
Disorders ..........................................................................
Osteogenesis Imperfecta and Other Osteodystrophies ......
Congenital/Developmental Skeletal and Connective Tissue
Disorders ..........................................................................
Cleft Lip/Cleft Palate ............................................................
Hemophilia ...........................................................................
Myelodysplastic Syndromes and Myelofibrosis ...................
Aplastic Anemia ...................................................................
Acquired Hemolytic Anemia, Including Hemolytic Disease
of Newborn .......................................................................
Sickle Cell Anemia (Hb-SS) .................................................
Thalassemia Major ...............................................................
Combined and Other Severe Immunodeficiencies ..............
Disorders of the Immune Mechanism ..................................
Coagulation Defects and Other Specified Hematological
Disorders ..........................................................................
Drug Psychosis ....................................................................
Drug Dependence ................................................................
Schizophrenia ......................................................................
Major Depressive and Bipolar Disorders .............................
Reactive and Unspecified Psychosis, Delusional Disorders
Personality Disorders ...........................................................
Anorexia/Bulimia Nervosa ....................................................
Prader-Willi, Patau, Edwards, and Autosomal Deletion
Syndromes .......................................................................
Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes ................
Autistic Disorder ...................................................................
Pervasive Developmental Disorders, Except Autistic Disorder .................................................................................
Traumatic Complete Lesion Cervical Spinal Cord ..............
Quadriplegia .........................................................................
Traumatic Complete Lesion Dorsal Spinal Cord .................
Paraplegia ............................................................................
Spinal Cord Disorders/Injuries .............................................
Amyotrophic Lateral Sclerosis and Other Anterior Horn
Cell Disease .....................................................................
Quadriplegic Cerebral Palsy ................................................
Cerebral Palsy, Except Quadriplegic ...................................
Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies .............................................................
Myasthenia Gravis/Myoneural Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic Neuropathy ...............
Muscular Dystrophy .............................................................
Multiple Sclerosis .................................................................
Parkinson’s, Huntington’s, and Spinocerebellar Disease,
and Other Neurodegenerative Disorders .........................
Seizure Disorders and Convulsions ....................................
Hydrocephalus .....................................................................
Non-Traumatic Coma, and Brain Compression/Anoxic
Damage ............................................................................
Respirator Dependence/Tracheostomy Status ....................
Respiratory Arrest ................................................................
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes ............................................
Heart Assistive Device/Artificial Heart .................................
Heart Transplant ..................................................................
Congestive Heart Failure .....................................................
Acute Myocardial Infarction .................................................
Unstable Angina and Other Acute Ischemic Heart Disease
Heart Infection/Inflammation, Except Rheumatic ................
Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders ....................................................
VerDate Sep<11>2014
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Gold
Silver
Bronze
Catastrophic
6.347
11.190
6.064
10.860
5.897
10.691
5.782
10.687
5.768
10.687
3.182
6.004
5.256
5.256
3.436
3.026
5.576
4.965
4.965
3.177
2.921
5.331
4.789
4.789
3.005
2.791
5.179
4.706
4.706
2.858
2.774
5.161
4.699
4.699
2.843
1.257
1.796
1.086
1.655
0.962
1.544
0.795
1.435
0.775
1.421
1.796
1.859
59.085
21.395
21.395
1.655
1.618
58.511
21.190
21.190
1.544
1.468
58.167
21.067
21.067
1.435
1.300
58.146
21.051
21.051
1.421
1.281
58.143
21.050
21.050
8.368
8.368
8.368
7.081
7.081
8.039
8.039
8.039
6.862
6.862
7.846
7.846
7.846
6.737
6.737
7.752
7.752
7.752
6.659
6.659
7.742
7.742
7.742
6.649
6.649
5.332
5.134
5.134
5.630
2.003
1.974
0.857
2.863
5.169
4.831
4.831
5.184
1.776
1.745
0.726
2.630
5.053
4.672
4.672
4.940
1.618
1.588
0.603
2.484
4.945
4.584
4.584
4.795
1.392
1.360
0.390
2.385
4.932
4.576
4.576
4.784
1.366
1.334
0.363
2.374
3.910
3.649
3.524
3.486
3.481
1.795
1.899
1.582
1.691
1.460
1.543
1.334
1.329
1.320
1.304
0.958
14.568
14.568
12.632
12.632
5.814
0.819
14.494
14.494
12.373
12.373
5.533
0.685
14.454
14.454
12.237
12.237
5.376
0.447
14.554
14.554
12.245
12.245
5.274
0.417
14.565
14.565
12.248
12.248
5.263
10.349
4.321
1.066
10.046
3.997
0.840
9.870
3.842
0.715
9.821
3.871
0.595
9.813
3.876
0.582
1.352
1.182
1.075
0.973
0.961
10.325
3.561
6.515
10.110
3.323
6.125
9.984
3.187
5.899
9.926
3.077
5.854
9.919
3.064
5.850
3.561
2.308
6.416
3.323
2.110
6.260
3.187
1.968
6.175
3.077
1.774
6.167
3.064
1.751
6.166
9.357
43.573
14.726
9.165
43.432
14.485
9.058
43.370
14.364
9.011
43.553
14.374
9.005
43.572
14.375
14.726
35.005
35.005
7.529
8.526
4.832
18.137
14.485
34.817
34.817
7.399
8.355
4.731
17.976
14.364
34.724
34.724
7.313
8.262
4.675
17.883
14.374
34.753
34.753
7.259
8.268
4.688
17.866
14.375
34.755
34.755
7.252
8.270
4.692
17.865
7.760
7.525
7.350
7.178
7.156
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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
10767
TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued
Factor
Platinum
Major Congenital Heart/Circulatory Disorders .....................
Atrial and Ventricular Septal Defects, Patent Ductus
Arteriosus, and Other Congenital Heart/Circulatory Disorders ...............................................................................
Specified Heart Arrhythmias ................................................
Intracranial Hemorrhage ......................................................
Ischemic or Unspecified Stroke ...........................................
Cerebral Aneurysm and Arteriovenous Malformation .........
Hemiplegia/Hemiparesis ......................................................
Monoplegia, Other Paralytic Syndromes .............................
Atherosclerosis of the Extremities with Ulceration or Gangrene ................................................................................
Vascular Disease with Complications ..................................
Pulmonary Embolism and Deep Vein Thrombosis ..............
Lung Transplant Status/Complications ................................
Cystic Fibrosis ......................................................................
Chronic Obstructive Pulmonary Disease, Including
Bronchiectasis ..................................................................
Asthma .................................................................................
Fibrosis of Lung and Other Lung Disorders ........................
Aspiration and Specified Bacterial Pneumonias and Other
Severe Lung Infections ....................................................
Kidney Transplant Status .....................................................
End Stage Renal Disease ...................................................
Chronic Kidney Disease, Stage 5 ........................................
Chronic Kidney Disease, Severe (Stage 4) .........................
Ectopic and Molar Pregnancy, Except with Renal Failure,
Shock, or Embolism .........................................................
Miscarriage with Complications ...........................................
Miscarriage with No or Minor Complications .......................
Completed Pregnancy With Major Complications ...............
Completed Pregnancy With Complications .........................
Completed Pregnancy with No or Minor Complications ......
Chronic Ulcer of Skin, Except Pressure ..............................
Hip Fractures and Pathological Vertebral or Humerus
Fractures ..........................................................................
Pathological Fractures, Except of Vertebrae, Hip, or Humerus ................................................................................
Stem Cell, Including Bone Marrow, Transplant Status/
Complications ...................................................................
Artificial Openings for Feeding or Elimination .....................
Amputation Status, Lower Limb/Amputation Complications
Gold
Silver
Bronze
Catastrophic
2.184
2.053
1.918
1.752
1.734
1.355
5.208
19.273
8.661
4.442
6.306
4.394
1.243
4.988
18.970
8.495
4.184
6.169
4.195
1.121
4.842
18.808
8.414
4.044
6.101
4.095
0.985
4.750
18.815
8.461
3.962
6.077
4.052
0.970
4.739
18.816
8.466
3.950
6.074
4.049
15.443
17.744
16.259
35.005
14.929
15.201
17.530
16.035
34.817
14.393
15.064
17.416
15.925
34.724
14.082
14.935
17.432
15.959
34.753
14.107
14.918
17.433
15.964
34.755
14.110
0.519
0.519
4.441
0.439
0.439
4.279
0.332
0.332
4.165
0.187
0.187
4.066
0.170
0.170
4.055
9.634
16.696
38.999
8.885
8.885
9.540
16.265
38.735
8.683
8.683
9.477
16.038
38.594
8.557
8.557
9.494
16.049
38.720
8.433
8.433
9.494
16.054
38.733
8.417
8.417
1.245
1.245
1.245
3.528
3.528
3.528
1.703
1.056
1.056
1.056
3.009
3.009
3.009
1.596
0.919
0.919
0.919
2.801
2.801
2.801
1.500
0.640
0.640
0.640
2.513
2.513
2.513
1.407
0.606
0.606
0.606
2.500
2.500
2.500
1.397
6.420
6.099
5.893
5.758
5.744
1.784
1.641
1.509
1.327
1.308
35.005
16.599
9.440
34.817
16.457
9.135
34.724
16.401
8.972
34.753
16.574
8.856
34.755
16.594
8.841
TABLE 4—INFANT RISK ADJUSTMENT MODELS FACTORS
tkelley on DSK3SPTVN1PROD with RULES2
Group
Platinum
Extremely Immature *, Severity Level 5 (Highest) ..............
Extremely Immature *, Severity Level 4 ..............................
Extremely Immature *, Severity Level 3 ..............................
Extremely Immature *, Severity Level 2 ..............................
Extremely Immature *, Severity Level 1 (Lowest) ...............
Immature *, Severity Level 5 (Highest) ...............................
Immature *, Severity Level 4 ...............................................
Immature *, Severity Level 3 ...............................................
Immature *, Severity Level 2 ...............................................
Immature *, Severity Level 1 (Lowest) ................................
Premature/Multiples *, Severity Level 5 (Highest) ...............
Premature/Multiples *, Severity Level 4 ..............................
Premature/Multiples *, Severity Level 3 ..............................
Premature/Multiples *, Severity Level 2 ..............................
Premature/Multiples *, Severity Level 1 (Lowest) ...............
Term *, Severity Level 5 (Highest) ......................................
Term *, Severity Level 4 ......................................................
Term *, Severity Level 3 ......................................................
Term *, Severity Level 2 ......................................................
Term *, Severity Level 1 (Lowest) .......................................
Age 1 *, Severity Level 5 (Highest) .....................................
Age 1 *, Severity Level 4 .....................................................
Age 1 *, Severity Level 3 .....................................................
Age 1 *, Severity Level 2 .....................................................
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Gold
434.244
218.568
63.306
63.306
63.306
218.648
97.820
56.283
33.845
33.845
177.856
36.022
19.582
10.730
7.152
155.054
19.318
7.022
4.219
1.785
42.616
7.142
2.678
1.625
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432.604
216.965
62.118
62.118
62.118
217.060
96.171
54.855
32.464
32.464
176.320
34.500
18.378
9.739
6.431
153.597
18.169
6.305
3.676
1.511
41.994
6.731
2.410
1.426
Silver
431.540
215.930
61.302
61.302
61.302
216.033
95.105
53.924
31.571
31.571
175.329
33.543
17.607
9.072
5.831
152.653
17.434
5.738
3.163
1.033
41.549
6.402
2.191
1.231
E:\FR\FM\27FER2.SGM
27FER2
Bronze
431.548
215.892
60.931
60.931
60.931
216.039
95.087
53.770
31.302
31.302
175.253
33.349
17.163
8.420
5.073
152.503
16.891
4.947
2.300
0.268
41.337
6.146
1.927
0.958
Catastrophic
431.554
215.892
60.895
60.895
60.895
216.046
95.091
53.758
31.279
31.279
175.251
33.338
17.121
8.342
4.987
152.492
16.841
4.851
2.193
0.196
41.318
6.123
1.899
0.931
10768
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
TABLE 4—INFANT RISK ADJUSTMENT MODELS FACTORS—Continued
Group
Platinum
Age 1 *, Severity Level 1 (Lowest) ......................................
Age 0 Male ...........................................................................
Age 1 Male ...........................................................................
Gold
0.636
0.728
0.158
Silver
0.527
0.673
0.137
Bronze
0.321
0.659
0.128
0.138
0.607
0.094
Catastrophic
0.124
0.594
0.090
TABLE 5—HHS HCCS INCLUDED IN INFANT MODEL MATURITY CATEGORIES
Maturity category
HCC/Description
Extremely Immature .........................................
Extremely Immature .........................................
Extremely Immature .........................................
Immature ...........................................................
Immature ...........................................................
Premature/Multiples ..........................................
Premature/Multiples ..........................................
Term .................................................................
Age 1 ................................................................
Extremely Immature Newborns, Birthweight <500 Grams.
Extremely Immature Newborns, Including Birthweight 500–749 Grams.
Extremely Immature Newborns, Including Birthweight 750–999 Grams.
Premature Newborns, Including Birthweight 1000–1499 Grams.
Premature Newborns, Including Birthweight 1500–1999 Grams.
Premature Newborns, Including Birthweight 2000–2499 Grams.
Other Premature, Low Birthweight, Malnourished, or Multiple Birth Newborns.
Term or Post-Term Singleton Newborn, Normal or High Birthweight.
All age 1 infants.
TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES
tkelley on DSK3SPTVN1PROD with RULES2
Severity category
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
VerDate Sep<11>2014
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
3
3
3
3
3
3
3
HCC
(Highest) ...........
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
17:26 Feb 26, 2015
Metastatic Cancer.
Pancreas Transplant Status/Complications.
Liver Transplant Status/Complications.
End-Stage Liver Disease.
Intestine Transplant Status/Complications.
Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis.
Respirator Dependence/Tracheostomy Status.
Heart Assistive Device/Artificial Heart.
Heart Transplant.
Congestive Heart Failure.
Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders.
Lung Transplant Status/Complications.
Kidney Transplant Status.
End Stage Renal Disease.
Stem Cell, Including Bone Marrow, Transplant Status/Complications.
Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.
Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia.
Mucopolysaccharidosis.
Major Congenital Anomalies of Diaphragm, Abdominal Wall, and Esophagus, Age <2.
Myelodysplastic Syndromes and Myelofibrosis.
Aplastic Anemia.
Combined and Other Severe Immunodeficiencies.
Traumatic Complete Lesion Cervical Spinal Cord.
Quadriplegia.
Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease.
Quadriplegic Cerebral Palsy.
Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy.
Non-Traumatic Coma, Brain Compression/Anoxic Damage.
Respiratory Arrest.
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes.
Acute Myocardial Infarction.
Heart Infection/Inflammation, Except Rheumatic.
Major Congenital Heart/Circulatory Disorders.
Intracranial Hemorrhage.
Ischemic or Unspecified Stroke.
Vascular Disease with Complications.
Pulmonary Embolism and Deep Vein Thrombosis.
Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections.
Chronic Kidney Disease, Stage 5.
Hip Fractures and Pathological Vertebral or Humerus Fractures.
Artificial Openings for Feeding or Elimination.
HIV/AIDS.
Central Nervous System Infections, Except Viral Meningitis.
Opportunistic Infections.
Non-Hodgkin’s Lymphomas and Other Cancers and Tumors.
Colorectal, Breast (Age <50), Kidney and Other Cancers.
Breast (Age 50+), Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors.
Lipidoses and Glycogenosis.
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10769
TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES—Continued
Severity category
HCC
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
tkelley on DSK3SPTVN1PROD with RULES2
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Severity
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
3
3
3
3
3
3
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
(Lowest) ............
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Adrenal, Pituitary, and Other Significant Endocrine Disorders.
Acute Liver Failure/Disease, Including Neonatal Hepatitis.
Intestinal Obstruction.
Necrotizing Fasciitis.
Bone/Joint/Muscle Infections/Necrosis.
Osteogenesis Imperfecta and Other Osteodystrophies.
Cleft Lip/Cleft Palate.
Hemophilia.
Disorders of the Immune Mechanism.
Coagulation Defects and Other Specified Hematological Disorders.
Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes.
Traumatic Complete Lesion Dorsal Spinal Cord.
Paraplegia.
Spinal Cord Disorders/Injuries.
Cerebral Palsy, Except Quadriplegic.
Muscular Dystrophy.
Parkinson’s, Huntington’s, and Spinocerebellar Disease, and Other Neurodegenerative Disorders.
Hydrocephalus.
Unstable Angina and Other Acute Ischemic Heart Disease.
Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital Heart/Circulatory Disorders.
Specified Heart Arrhythmias.
Cerebral Aneurysm and Arteriovenous Malformation.
Hemiplegia/Hemiparesis.
Cystic Fibrosis.
Fibrosis of Lung and Other Lung Disorders.
Pathological Fractures, Except of Vertebrae, Hip, or Humerus.
Viral or Unspecified Meningitis.
Thyroid, Melanoma, Neurofibromatosis, and Other Cancers and Tumors.
Diabetes with Acute Complications.
Diabetes with Chronic Complications.
Diabetes without Complication.
Protein-Calorie Malnutrition.
Congenital Metabolic Disorders, Not Elsewhere Classified.
Amyloidosis, Porphyria, and Other Metabolic Disorders.
Cirrhosis of Liver.
Chronic Pancreatitis.
Inflammatory Bowel Disease.
Rheumatoid Arthritis and Specified Autoimmune Disorders.
Systemic Lupus Erythematosus and Other Autoimmune Disorders.
Congenital/Developmental Skeletal and Connective Tissue Disorders.
Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn.
Sickle Cell Anemia (Hb-SS).
Drug Psychosis.
Drug Dependence.
Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes.
Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies.
Seizure Disorders and Convulsions.
Monoplegia, Other Paralytic Syndromes.
Atherosclerosis of the Extremities with Ulceration or Gangrene.
Chronic Obstructive Pulmonary Disease, Including Bronchiectasis.
Chronic Ulcer of Skin, Except Pressure.
Chronic Hepatitis.
Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption.
Thalassemia Major.
Autistic Disorder.
Pervasive Developmental Disorders, Except Autistic Disorder.
Multiple Sclerosis.
Asthma.
Chronic Kidney Disease, Severe (Stage 4).
Amputation Status, Lower Limb/Amputation Complications.
No Severity HCCs.
e. Cost-Sharing Reductions Adjustments
We proposed to continue to include
an adjustment for the receipt of costsharing reductions in the model, and
proposed to continue not to adjust for
receipt of reinsurance payments in the
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model. We have updated the
adjustments to the HHS risk adjustment
models for individuals who receive
cost-sharing reductions to be consistent
with the cost-sharing reductions
advance payment formula finalized in
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the 2015 Payment Notice, for
implementation in 2015 benefit year
risk adjustment. The silver plan
variation and zero cost sharing factors
are unchanged from those finalized in
the 2014 Payment Notice. The
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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
adjustment factors are set forth in Table
7. These adjustments are multiplied
against the sum of the demographic,
diagnosis, and interaction factors. We
will continue to evaluate this
adjustment as more data becomes
available. We received no comments on
this approach, and are finalizing it as
proposed.
TABLE 7—COST-SHARING REDUCTION ADJUSTMENT
Household income
Induced
utilization
factor
Plan AV
Silver Plan Variation Recipients
100–150% of FPL .......................................................................
150–200% of FPL .......................................................................
200–250% of FPL .......................................................................
>250% of FPL .............................................................................
Plan Variation 94%
Plan Variation 87%
Plan Variation 73%
Standard Plan 70%
....................................................................
....................................................................
....................................................................
....................................................................
1.12
1.12
1.00
1.00
Zero Cost Sharing Recipients
<300%
<300%
<300%
<300%
of
of
of
of
FPL
FPL
FPL
FPL
.............................................................................
.............................................................................
.............................................................................
.............................................................................
Platinum (90%) ..........................................................................
Gold (80%) .................................................................................
Silver (70%) ...............................................................................
Bronze (60%) .............................................................................
1.00
1.07
1.12
1.15
Limited Cost Sharing Recipients
>300%
>300%
>300%
>300%
of
of
of
of
FPL
FPL
FPL
FPL
.............................................................................
.............................................................................
.............................................................................
.............................................................................
f. Model Performance Statistics
To evaluate model performance, we
examined R-squared statistics and
predictive ratios. The R-squared
statistic, which calculates the
percentage of individual variation
explained by a model, measures the
predictive accuracy of the model
overall. The predictive ratios measure
the predictive accuracy of a model for
different validation groups or
Platinum (90%) ..........................................................................
Gold (80%) .................................................................................
Silver (70%) ...............................................................................
Bronze (60%) .............................................................................
subpopulations. The predictive ratio for
each of the HHS risk adjustment models
is the ratio of the weighted mean
predicted plan liability for the model
sample population to the weighted
mean actual plan liability for the model
sample population. The predictive ratio
represents how well the model does on
average at predicting plan liability for
that subpopulation. A subpopulation
that is predicted perfectly would have a
predictive ratio of 1.0. For each of the
1.00
1.07
1.12
1.15
HHS risk adjustment models, the Rsquared statistic and the predictive ratio
are in the range of published estimates
for concurrent risk adjustment
models.10 Because we are averaging the
coefficients from separately solved
models based on MarketScan 2011, 2012
and 2013 data, we are publishing the Rsquared statistic for each model and
year separately to verify their statistical
validity. The R-squared statistic for each
model is shown in Table 8.
TABLE 8—R-SQUARED STATISTIC FOR HHS RISK ADJUSTMENT MODELS
R-squared statistic
Risk adjustment model
2011
tkelley on DSK3SPTVN1PROD with RULES2
Platinum Adult ..............................................................................................................................
Platinum Child ..............................................................................................................................
Platinum Infant .............................................................................................................................
Gold Adult ....................................................................................................................................
Gold Child ....................................................................................................................................
Gold Infant ...................................................................................................................................
Silver Adult ...................................................................................................................................
Silver Child ...................................................................................................................................
Silver Infant ..................................................................................................................................
Bronze Adult ................................................................................................................................
Bronze Child ................................................................................................................................
Bronze Infant ...............................................................................................................................
Catastrophic Adult .......................................................................................................................
Catastrophic Child .......................................................................................................................
Catastrophic Infant .......................................................................................................................
10 Winkleman, Ross and Syed Mehmud. ‘‘A
Comparative Analysis of Claims-Based Tools for
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2012
0.368
0.283
0.337
0.363
0.278
0.335
0.360
0.275
0.334
0.358
0.272
0.334
0.358
0.271
0.334
Health Risk Assessment.’’ Society of Actuaries.
April 2007.
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27FER2
0.394
0.286
0.284
0.389
0.280
0.282
0.387
0.277
0.281
0.384
0.273
0.281
0.384
0.273
0.281
2013
0.382
0.277
0.322
0.377
0.272
0.319
0.374
0.268
0.318
0.372
0.265
0.318
0.371
0.265
0.318
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
Where:
¯
PS = State average premium;
PLRSi = plan i’s plan liability risk score;
AVi = plan i’s metal level AV;
ARFi = allowable rating factor;
IDFi = plan i’s induced demand factor;
GCFi = plan i’s geographic cost factor;
si = plan i’s share of State enrollment;
tkelley on DSK3SPTVN1PROD with RULES2
and the denominator is summed across
all plans in the risk pool in the market
in the State.
The difference between the two
premium estimates in the payment
transfer formula determines whether a
plan pays a risk transfer charge or
receives a risk transfer payment. Note
that the value of the plan average risk
score by itself does not determine
whether a plan would be assessed a
charge or receive a payment—even if the
risk score is greater than 1.0, it is
possible that the plan would be assessed
a charge if the premium compensation
that the plan may receive through its
rating practices (as measured through
the allowable rating factor) exceeds the
plan’s predicted liability associated
with risk selection. Risk adjustment
transfers are calculated at the risk pool
level and catastrophic plans are treated
as a separate risk pool for purposes of
risk adjustment.
h. HHS Risk Adjustment Methodology
Considerations
In the 2014 Payment Notice, we
finalized the methodology that HHS will
use when operating a risk adjustment
program on behalf of a State. In the
second Program Integrity Rule (78 FR
65046), we clarified the modification to
the transfer formula to accommodate
community rated States that utilize
family tiering rating factors. We further
clarified this formula in the proposed
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rule to ensure that the allowable rating
factor (ARF) is appropriately applied in
the transfer formula in community rated
States for 2014 risk adjustment. In the
second Program Integrity Rule, we
stated that the ARF formula should be
modified so that the numerator is a
summation over all subscribers of the
product of the family tiering factor and
the subscriber member months, and the
denominator the sum of billable
member months. However, we do not
believe the revised formula accurately
reflects that description, as it does not
distinguish between subscriber months
(months attributed to the sole
subscriber) and billable member months
(months attributed to all allowable
members of the family factored into the
community rating). The calculation of
ARF for family tiering States that was
published in the second Program
Integrity Rule that would be calculated
at the level of the subscriber, was as
follows:
Where:
ARFs is the rating factor for the subscriber(s)
(based on family size/composition), and
Ms is the number of billed person-months
that are counted in determining the
premium(s) for the subscriber(s).
While the preamble description in the
second Program Integrity Rule is correct,
as we noted, the formula itself is
incorrect in that it does not distinguish
between billable member months and
subscriber months by using the same
variable for both. Therefore, we
proposed a technical change to the ARF
calculation for family tiering States, as
follows:
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(1) Overview of the Payment Transfer
Formula
Though we did not propose to change
the payment transfer formula from what
was finalized in the 2014 Payment
Notice (78 FR 15430–15434), we believe
it useful to republish the formula in its
entirety, since we are finalizing
recalibrated HHS risk adjustment
models. Transfers (payments and
charges) will be calculated as the
difference between the plan premium
estimate reflecting risk selection and the
plan premium estimate not reflecting
risk selection. As finalized in the 2014
Payment Notice, the HHS risk
adjustment payment transfer formula is:
Where:
ARFi is the allowable rating factor for plan i,
ARFs is the allowable rating factor—also
known as the family rating tier—for
subscriber (family) s in plan i,
MSs is the number of subscriber months for
subscriber s, and
MBs is the number of billable member
months for subscriber (family) s.
The numerator is summed over the
product of the allowable rating factor
and the number of subscriber months
(that is, months of family subscription),
and the denominator is the sum over all
billable members. Each family unit
covered under a single contract is
considered a single ‘‘subscriber.’’
Therefore, a family of four that
purchases coverage for a period from
January through December will
accumulate 12 subscriber months (MSs),
although coverage is being provided for
48 member months (both billable and
non-billable). Billable members are
individuals who are counted for
purposes of placing the subscriber in a
family tier. For example, in a
community rated State that rates based
on two adults and one or more children
with one full year of enrollment, the
family of four would have 36 billable
member months (MBs), (12 billable
member months for the subscriber, 12
billable member months for the second
adult, and 12 billable months for the
first child). We received no comments
on this correction and are finalizing it
as proposed.
E:\FR\FM\27FER2.SGM
27FER2
ER27FE15.002</GPH>
We do not propose to alter our
payment transfer methodology. Plan
average risk scores would be calculated
as the member month-weighted average
of individual enrollee risk scores. We
defined the calculation of plan average
actuarial risk and the calculation of
payments and charges in the Premium
Stabilization Rule. In the 2014 Payment
Notice, we combined those concepts
into a risk adjustment payment transfer
formula. Risk adjustment transfers
(payments and charges) will be
calculated following the completion of
issuer risk adjustment data reporting.
The payment transfer formula includes
a set of cost adjustment terms that
require transfers to be calculated at the
geographic rating area level for each
plan (that is, HHS will calculate two
separate transfer amounts for a plan that
operates in two rating areas).
The payment transfer formula is
designed to provide a per member per
month (PMPM) transfer amount. The
PMPM transfer amount derived from the
payment transfer formula will be
multiplied by each plan’s total member
months for the benefit year to determine
the total payment due or charge owed
by the issuer for that plan in a rating
area.
ER27FE15.000</GPH> ER27FE15.001</GPH>
g. Overview of the Payment Transfer
Formula
10771
10772
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
i. State-Submitted Alternate Risk
Adjustment Methodology
For 2016, we are recertifying the
alternate risk adjustment methodology
submitted by Massachusetts and
certified in the 2014 Payment Notice (78
FR 15439–15452).
3. Provisions and Parameters for the
Transitional Reinsurance Program
The Affordable Care Act directs that
a transitional reinsurance program be
established in each State to help
stabilize premiums for coverage in the
individual market from 2014 through
2016. In the 2014 Payment Notice, we
expanded on the standards set forth in
subparts C and E of the Premium
Stabilization Rule and established the
reinsurance payment parameters and
uniform reinsurance contribution rate
for the 2014 benefit year. In the 2015
Payment Notice, we established the
reinsurance payment parameters and
uniform reinsurance contribution rate
for the 2015 benefit year and certain
oversight provisions related to the
operation of the reinsurance program.
tkelley on DSK3SPTVN1PROD with RULES2
a. Common Ownership Clarification
The definition of a ‘‘contributing
entity’’ at § 153.20 provides that for the
2015 and 2016 benefit years, a
contributing entity is (i) a health
insurance issuer or (ii) a self-insured
group health plan, including a group
health plan that is partially self-insured
and partially insured, where the health
insurance coverage does not constitute
major medical coverage, that uses a TPA
in connection with claims processing or
adjudication, including the management
of internal appeals, or plan enrollment
for services other than for pharmacy
benefits or excepted benefits within the
meaning of section 2791(c) of the PHS
Act. Solely for purposes of the
reinsurance program, a self-insured
group health plan will not be deemed to
use a TPA if it uses an unrelated third
party: (a) To obtain a provider network
and related claims repricing services; or
(b) for up to 5 percent of claims
processing or adjudication or plan
enrollment, based on either the number
of transactions processed by the third
party, or the value of the claims
processing and adjudication and plan
enrollment services provided by the
third party.
The definition of a ‘‘contributing
entity’’ does not include qualifying selfadministered, self-insured group health
plans for the purpose of the requirement
to make reinsurance contributions for
the 2015 and 2016 benefit years. In the
preamble to the 2015 Payment Notice,
we indicated that we consider a TPA to
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be, with respect to a self-insured group
health plan, an entity that is not under
common ownership or control with the
self-insured group health plan or its
plan sponsor that provides the specified
core administrative services (79 FR
13773).
We received a number of inquiries
seeking clarification on how to
determine common ownership or
control for purposes of the definition of
a ‘‘contributing entity’’ in § 153.20. In
response, in the proposed rule, we
proposed to clarify that principles
similar to the controlled group rules of
section 414(b) and (c) of the Code be
used to determine whether the TPA is
under common ownership or control
with the self-insured group health plan
or the plan sponsor, because these rules
are familiar to many stakeholders. We
also noted that similar ownership or
control rules apply for other purposes
under the Affordable Care Act, such as
the shared responsibility payment for
applicable large employers that do not
offer full-time employees and
dependents the opportunity to enroll in
minimum essential coverage, and the
annual fee on health insurance issuers
under section 9010 of the Affordable
Care Act.
We sought comment on this proposal
and on alternative definitions that
would be familiar to stakeholders for
determining whether a TPA is under
common ownership or control with the
self-insured group health plan or its
sponsor for purposes of the definition of
‘‘contributing entity’’ at § 153.20.
We finalize this proposal with one
clarification—we are limiting the
incorporation of the section 414 rules to
sections 414(b) and (c).
Comment: One commenter stated that
the common ownership or control test
should mirror, ‘‘not use similar
principles to,’’ the section 414
controlled group rules, so that one
consistent test of determining common
ownership applies for all employer
compliance purposes under the
Affordable Care Act.
Response: The section 414 controlled
group rules address a variety of
structures for related corporations and
businesses, some of which are not
relevant to defining a ‘‘contributing
entity,’’ such as sections 414(m), (n),
and (o). The intent of the proposed
language was to limit the incorporation
of the section 414 rules to sections
414(b) and (c), the provisions most
applicable to defining a contributing
entity. Therefore, we are finalizing the
proposal with that clarification.
PO 00000
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b. Reinsurance Contributing Entities and
Minimum Value
Section 1341(b)(3)(B) of the
Affordable Care Act and the
implementing regulations at
§ 153.400(a)(1) require contributing
entities to make reinsurance
contributions for major medical
coverage that is considered to be part of
a commercial book of business. We
define major medical coverage at
§ 153.20 as coverage meeting minimum
value (MV) or that is subject to the
actuarial value (AV) requirements. In
light of this definition, stakeholders
have asked whether plans that do not
offer inpatient hospital coverage, but
that are considered to offer MV for
purposes of the employer shared
responsibility payment because they
were in place before HHS and IRS
guidance 11 on MV was issued
November 4, 2014, must make
reinsurance contributions for the 2015
benefit year. As detailed in the
November 4, 2014 guidance, we clarify
that plans that entered into a binding
agreement or began enrolling employees
prior to November 4, 2014, with plan
years beginning by March 1, 2015, are
considered to meet MV requirements
until the end of the current plan year for
purposes of the employer shared
responsibility penalties. We clarify that
these plans will therefore also be
deemed to satisfy the definition of
‘‘major medical coverage’’ in § 153.20
for purposes of reinsurance
contributions, since these plans meet
the previous definition of MV until plan
renewal.
c. Self-Insured Expatriate Plans
(§ 153.400(a)(1)(iii))
Section 1341(b)(3)(B) of the
Affordable Care Act and the
implementing regulations at
§ 153.400(a)(1) require contributing
entities to make reinsurance
contributions for major medical
coverage that is considered to be part of
a commercial book of business. In the
2014 Payment Notice (78 FR 15457), we
stated that we interpret this language to
exclude expatriate health coverage, as
defined by the Secretary, and we
codified this approach in regulatory text
at § 153.400(a)(1)(iii). In the March 8,
2013, FAQs about the Affordable Care
Act Implementation Part XIII,12 an
expatriate health plan is defined as an
insured group health plan for which
11 Group Health Plans that Fail to Cover In-Patient
Hospitalization Services, Notice 2014–69, available
at: https://www.irs.gov/pub/irs-drop/n-14-69.pdf.
12 Available at: https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs13.html.
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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
tkelley on DSK3SPTVN1PROD with RULES2
enrollment is limited to primary insured
who reside outside of their home
country for at least 6 months of the plan
year and any covered dependents, and
its associated group health insurance
coverage. Therefore, under our current
regulation, self-insured expatriate plans
that would otherwise meet the
conditions outlined in the March 8,
2013 FAQ are required to make
reinsurance contributions if these plans
provide major medical coverage, unless
another exemption in § 153.400(a)
applies, because the definition in the
FAQ applies only to insured expatriate
plans.
We proposed to amend
§ 153.400(a)(1)(iii), which currently
exempts expatriate health coverage, as
defined by the Secretary, from
reinsurance contributions, so that it also
exempts, for the 2015 and 2016 benefit
years only, any self-insured group
health plan for which enrollment is
limited to participants, and any covered
dependents, who reside outside of their
home country for at least 6 months of
the plan year. This definition would be
applicable solely to the transitional
reinsurance program.
We received one comment in support
of this proposal, which also stated that
the expatriate plan requirements should
be revised to reflect the effect of the
recently enacted Expatriate Health
Coverage Clarification Act of 2014, as
part of the Consolidated and Further
Continuing Appropriations Act, 2015,
H.R. 83 (2014 Expatriate Health
Coverage Act). Since the expatriate plan
requirements (and accompanying
definitions) enacted in the 2014
Expatriate Health Coverage Act only
apply to expatriate plans issued or
renewed on or after July 1, 2015, we are
finalizing the amendment as proposed,
and we intend to undertake future
rulemaking in conjunction with the
Departments of the Treasury and Labor
governing the application of the
Affordable Care Act to expatriate plans
to harmonize our regulations (as may be
necessary) with the 2014 Expatriate
Health Coverage Act. We do not
anticipate that this future rulemaking
will affect the availability of the
exemption for the expatriate plans
described in this final rule.
d. Determination of Debt (§ 153.400(c))
Consistent with the determination of
debt provision set forth in § 156.1215(c),
we proposed to clarify in § 153.400(c)
that any amount owed to the Federal
government by a self-insured group
health plan (including a group health
plan that is partially self-insured and
partially insured, where the health
insurance coverage does not constitute
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major medical coverage), including
reinsurance contributions that are not
remitted in full in a timely manner,
would be a determination of a debt.
We received no comments on this
proposal and are finalizing this
provision as proposed.
e. Reinsurance Contribution Submission
Process
On May 22, 2014, we released an FAQ
about the reinsurance contribution
submission process.13 As detailed in
this FAQ, we implemented a
streamlined process for the collection of
reinsurance contributions. A
contributing entity, or a TPA or
administrative services-only (ASO)
contractor on behalf of the contributing
entity, must complete all required steps
for the reinsurance contribution
submission process on www.pay.gov
(Pay.gov). The ‘‘ACA Transitional
Reinsurance Program Annual
Enrollment and Contributions
Submission Form’’ available on Pay.gov
must be completed and submitted by a
contributing entity or a TPA or ASO
contractor on its behalf no later than
November 15 of the benefit year under
§ 153.405(b).
We proposed to amend § 153.405(b),
which requires a contributing entity to
submit its annual enrollment count of
the number of covered lives of
reinsurance contribution enrollees for
the applicable benefit year to HHS no
later than November 15 of benefit year
2014, 2015, or 2016. When November 15
does not fall on a business day, we
proposed that a contributing entity
submit its annual enrollment count of
the number of covered lives of
reinsurance contribution enrollees for
the applicable benefit year to HHS no
later than November 15, 2014, 2015, or
2016, or, if such date is not a business
day, the next business day. Similarly,
because November 15, 2015 and January
15, 2017 do not fall on a business day,
we proposed to amend § 153.405(c)(2)
so that a contributing entity must remit
reinsurance contributions to HHS no
later than January 15, 2015, 2016, or
2017, as applicable, or, if such date is
not a business day, the next applicable
business day, if making a combined
contribution or the first payment of the
bifurcated contribution; and no later
than November 15, 2015, 2016, or 2017,
as applicable, or, if such date is not a
business day, the next applicable
business day, if making the second
13 Available
at: https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/Downloads/
Reinsurance-contributions-process-FAQ-5-2214.pdf.
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10773
payment of the bifurcated
contribution.14
Although we stated in the 2015
Payment Notice (79 FR 13776) that, for
operational reasons, HHS would not
permit contributing entities to elect to
make the entire benefit year’s
reinsurance contribution by January 15,
2015, 2016, or 2017, as applicable, we
have resolved those operational barriers,
and now offer contributing entities the
option to pay: (1) The entire 2014, 2015
or 2016 benefit year contribution in one
payment no later than January 15, 2015,
2016, or 2017, as applicable (or, if such
date is not a business day, the next
applicable business day), reflecting the
entire uniform contribution rate
applicable to each benefit year (that is,
$63 per covered life for 2014, $44 per
covered life for 2015, and $27 per
covered life for 2016); or (2) in two
separate payments for the 2014, 2015, or
2016 benefit years, with the first
remittance due by January 15, 2015,
2016, and 2017, as applicable (or, if
such date is not a business day, the next
applicable business day) reflecting the
first payment of the bifurcated
contribution (that is, $52.50 per covered
life for 2014, $33.00 per covered life for
2015, and $21.60 per covered life for
2016); and the second remittance due by
November 15, 2015, 2016, or 2017, as
applicable (or, if such date is not a
business day, the next applicable
business day) reflecting the second
payment of the bifurcated contribution
(that is, $10.50 reinsurance fee per
covered life for 2014, $11.00 per
covered life for 2015, and $5.40 per
covered life for 2016).
Under § 153.405(c)(1), HHS must
notify the contributing entity of the
reinsurance contribution amount
allocated to reinsurance payments and
administrative expenses to be paid for
the applicable benefit year following
submission of the annual enrollment
count. We clarified that this notification
will occur when the contributing entity
enters the gross annual enrollment
count into the Pay.gov form and the
form auto-calculates the contribution
amount owed. No separate notification
or invoice will be sent to a contributing
entity, unless a discrepancy in data or
payment has been identified by the
entity or HHS after the form is
submitted. In addition, we proposed to
delete § 153.405(c)(2), to be consistent
with HHS permitting flexibility for a
contributing entity (or the TPA or ASO
contractor on its behalf) to remit the
14 To be comprehensive, we included all
reinsurance contribution submission dates
throughout the entirety of the program,
understanding that some dates noted here have
passed.
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entire contribution in one payment,
rather than requiring a bifurcated
payment. Notification of the reinsurance
contribution amount related to the
allocation for reinsurance payments,
administrative expenses, and payments
to the U.S. Treasury for the applicable
benefit year will also be made through
the automatic calculation of this amount
when a contributing entity (or the TPA
or ASO contractor on its behalf)
completes the reinsurance contribution
submission process and submits the
form through Pay.gov.
We also proposed to amend and
redesignate § 153.405(c)(3) to (c)(2) to
clarify that a contributing entity must
schedule its contribution payment for
the applicable benefit year to occur no
later than January 15, 2015, 2016, or
2017, as applicable (or, if such date is
not a business day, the next applicable
business day) if making a combined
payment or the first payment of the
bifurcated payment, and no later than
November 15, 2015, 2016, or 2017, as
applicable (or, if such date is not a
business day, the next applicable
business day) if making the second
payment of the bifurcated payment.
However, we noted that the form must
be completed and the reinsurance
contribution payment(s) must be
scheduled no later than November 15,
2014, 2015, or 2016, as applicable, to
successfully comply with the deadline
set forth in § 153.405(b) and complete
the reinsurance contribution submission
process through Pay.gov.15 The
reinsurance contribution payments must
be scheduled by this deadline regardless
of whether the contributing entity (or
the TPA or ASO contractor on its behalf)
is remitting a combined payment or two
payments under the bifurcated
schedule.
We noted that if a contributing entity
elects to follow the bifurcated schedule,
then the contributing entity is required
to submit two separate forms through
Pay.gov. However, the annual
enrollment count reported on both
forms must be the same. This is
consistent with § 153.405(b) and
previous guidance, which provide that
no later than November 15 of benefit
year 2014, 2015, or 2016, as applicable,
a contributing entity must submit an
annual enrollment count of the number
of covered lives of reinsurance
contribution enrollees one time for the
applicable benefit year to HHS.
Finally, we proposed to amend
§ 153.405(g)(4)(1)(i) and (ii), which
require a plan sponsor who maintains
multiple group health plans to report to
15 We note that for the 2014 benefit year, we
extended the filing deadline to December 5, 2014.
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HHS the average number of covered
lives calculated, the counting method
used, and the names of the multiple
plans being treated as a single group
health plan as determined by the plan
sponsor. A plan sponsor would
continue to be required to determine
this information, but would only need
to report to HHS the average number of
covered lives calculated and the other
data elements required through the
Pay.gov reinsurance contribution
submission process. Under § 153.405(h),
plan sponsors should retain this
additional information (that is, the
counting method used and the names of
the multiple plans being treated as a
single group health plan), as this
information may be requested to assess
the plan sponsor’s compliance with the
reinsurance contribution requirements.
We are finalizing these provisions as
proposed.
Comment: Several commenters asked
that HHS publicize the amount of
reinsurance contributions collected by
December 31st of the benefit year for
issuers to assess the possible proration
of reinsurance payments.
Response: We intend to issue a report
of the estimated total contributions
collected in the spring of the year
following the applicable benefit year.
This estimate would include the amount
of contributions already paid and
scheduled to be paid for the entire
benefit year.
f. Consistency in Counting Methods for
Health Insurance Issuers (§ 153.405(d))
As noted in the 2014 Payment Notice
(78 FR 15462), the counting methods for
the transitional reinsurance program are
designed to align with the methods
permitted for purposes of the fee to fund
the Patient-Centered Outcomes Research
Trust Fund (PCORTF). The PCORTF
Final Rule (77 FR 72729) requires
consistency in the use of counting
methods for calculating covered lives
for the duration of the year. We
proposed for the 2015 and 2016 benefit
years 16 to amend § 153.405(d) to
similarly require a contributing entity
that is a health insurance issuer to use
the same counting method to calculate
its annual enrollment count of covered
lives of reinsurance contribution
enrollees in a State (including both the
individual and group markets) for a
benefit year even if the fully insured
major medical plans for which
reinsurance contributions are required
enroll different covered lives. If a health
16 As noted in an FAQ issued on October 21,
2014, we also encouraged this approach for the
2014 benefit year. Available at: https://
www.regtap.info/, FAQ# 6037.
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insurance issuer has multiple major
medical plans covering different lives in
different States, the issuer may use
different counting methods for all major
medical plans in each State (including
both the individual and group markets).
We noted that this amendment would
not prevent an issuer from using
different counting methods for different
benefit years. We did not propose a
similar requirement for self-insured
group health plans and sought
comments on whether a similar
uniformity requirement should extend
to self-insured group health plans that
are contributing entities.
We are finalizing this provision as
proposed.
Comment: One commenter stated that
it is difficult for self-insured plans to
use consistent counting methods for
multiple plans.
Response: In many instances, a plan
sponsor’s multiple group health plans
may be administered by different
entities, making implementation of a
uniformity of counting method
requirement potentially more difficult.
Therefore, we are finalizing this policy.
g. Snapshot Count and Snapshot Factor
Counting Methods (§§ 153.405(d)(2) and
(e)(2))
Under § 153.400(a)(1), reinsurance
contributions are generally required for
major medical coverage that is
considered to be part of a commercial
book of business, but contributions are
not required to be paid more than once
for the same covered life. Reinsurance
contributions are generally calculated
based on the number of covered lives
covered by a plan or coverage that
provides major medical coverage. The
reinsurance contribution required from
a contributing entity is calculated by
multiplying the number of covered lives
(determined under a permitted counting
method set forth in § 153.405(d) through
§ 153.405(g)) during the applicable
calendar year for all applicable plans
and coverage of the contributing entity
by the applicable contribution rate for
the respective benefit year.
We proposed to clarify how the
counting methods set forth in
§§ 153.405(d)(2) and (e)(2) are to be used
in those situations when a plan
terminates or is established in the
middle of a quarter to effectuate the
principle that contributions are required
to be paid once for the same covered
life. Under the snapshot count method,
described at § 153.405(d)(2), to
determine the number of covered lives
for the purposes of reinsurance
contributions, the issuer or self-insured
group health plan must add the total
number of lives covered on any date (or
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10775
question had enrollees on any day
during a quarter and if the contributing
entity elects to (and is permitted to) use
either the snapshot count or snapshot
factor method, it must choose a set of
counting dates for the 9-month counting
period such that the plan or coverage
has enrollees on each of the dates, if
possible. However, the enrollment count
for a date during a quarter in which the
plan or coverage was in existence for
only part of the quarter could be
reduced by a factor reflecting the
amount of time during the quarter for
which the plan or coverage was not in
existence. This approach is intended to
accurately capture the amount of time
during the quarter for which major
medical coverage that is part of a
commercial book of business and
subject to reinsurance contributions was
provided to enrollees, while not
requiring contributions to be paid more
than once for the same covered life. For
example, a contributing entity that has
a plan that terminates on August 31st
(that is, 62 days into the third quarter)
would not be permitted to use
September 1st as the date for the third
quarter under the snapshot count or
snapshot factor methods because this
would not properly reflect the number
of covered lives of reinsurance
contribution enrollees under the plan in
the third quarter of the benefit year.
However, it would be entitled to reduce
its count of covered lives during that
quarter by 30/92, the proportion of the
quarter during which the plan had no
enrollment. This reduction factor would
only be applicable for the snapshot
count and snapshot factor methods set
forth in §§ 153.405(d)(2) and (e)(2),
respectively, as all of the other
permitted counting methods
automatically account for partial year
enrollment.
Comment: One commenter asked that
the 2.35 factor in the snapshot factor
counting method set forth in
§ 153.405(e)(2) be optional, rather than
required, since some plans may only
cover one employee and a spouse or
only one employee and one dependent.
Response: We decline to make this
change, but note that a number of
different counting methods are available
and contributing entities have flexibility
to choose the one that best meets their
needs and circumstances.
As discussed in greater detail below, we
proposed collecting $32 million for
administrative expenses for the 2016
benefit year. Therefore, the total amount
to be collected for the 2016 benefit year
would be approximately $5.032 billion.
Our estimate of the number of enrollees
in plans that must make reinsurance
contributions yields an annual per
capita contribution rate of $27 for the
2016 benefit year.
(1) Allocation of Uniform Reinsurance
Contribution Rate
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h. Uniform Reinsurance Contribution
Rate for 2016
Section 153.220(c) provides that HHS
is to publish in the annual HHS notice
of benefit and payment parameters the
uniform reinsurance contribution rate
for the upcoming benefit year. Section
1341(b)(3)(B)(iii) of the Affordable Care
Act specifies that $10 billion for
reinsurance contributions are to be
collected from contributing entities for
the 2014 benefit year (the reinsurance
payment pool), $6 billion for the 2015
benefit year, and $4 billion for the 2016
benefit year. Additionally, sections
1341(b)(3)(B)(iv) and 1341(b)(4) of the
Affordable Care Act direct that $2
billion in funds are to be collected for
contribution to the U.S. Treasury for the
2014 benefit year, $2 billion for the 2015
benefit year, and $1 billion for the 2016
benefit year. Finally, section
1341(b)(3)(B)(ii) of the Affordable Care
Act authorizes the collection of
additional amounts for administrative
expenses. Taken together, these three
components make up the total dollar
amount to be collected from
contributing entities for each of the
2014, 2015, and 2016 benefit years
under the uniform reinsurance
contribution rate.
As discussed in the 2014 and 2015
Payment Notices, each year, the uniform
reinsurance contribution rate will be
calculated by dividing the sum of the
three amounts (the reinsurance payment
pool, the U.S. Treasury contribution,
and administrative costs) by the
estimated number of enrollees in plans
that must make reinsurance
contributions:
Section 153.220(c) provides that HHS
is to establish in the annual HHS notice
of benefit and payment parameters for
the applicable benefit year the
proportion of contributions collected
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more dates, if an equal number of dates
are used for each quarter) during the
same corresponding month in each of
the first 3 quarters of the benefit year,
and divide that total by the number of
dates on which a count was made.
Under the snapshot factor method,
described at § 153.405(e)(2), to
determine the number of covered lives
for the purposes of reinsurance
contributions, the self-insured group
health plan must add the total number
of lives covered on any date (or more
dates, if an equal number of dates are
used for each quarter) during the same
corresponding month in each of the first
3 quarters of the benefit year, and divide
that total by the number of dates on
which a count was made, except that
the number of lives covered on a date
is calculated by adding the number of
participants with self-only coverage on
the date to the product of the number of
participants with coverage other than
self-only coverage on the date and a
factor of 2.35. For each of these counting
methods, the same months must be used
for each quarter (for example, January,
April, July), and the date used for the
second and third quarter must fall
within the same week of the quarter as
the corresponding date used for the first
quarter.
We understand that a health
insurance plan or coverage may be
established, terminated, or change
funding mechanisms (that is, from fully
insured to self-insured or self-insured to
fully insured), in the middle of a
quarter. In these circumstances, it is
possible that the new plan or coverage
would not have covered lives enrolled
in the plan or coverage for the entire
quarter. If this occurs, a contributing
entity could, due to its selection of
dates, be required to pay an amount
significantly greater or lesser than the
amount that would be due based on its
average count of covered lives over the
course of the 9-month counting period.
To avoid this result, we proposed to
clarify that, if the plan or coverage in
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under the uniform reinsurance
contribution rate to be allocated to
reinsurance payments, payments to the
U.S. Treasury, and administrative
expenses. In the 2014 and 2015 Payment
Notices, we stated that reinsurance
contributions collected for the 2014 and
2015 benefit years would be allocated
pro rata to the reinsurance payment
pool, administrative expenses, and the
U.S. Treasury, up to $12.02 billion for
2014 and up to $8.025 billion for 2015.
However, we amended this approach in
the 2015 Market Standards Rule,17 such
that, if reinsurance collections fall short
of our estimates for a particular benefit
year, we will allocate reinsurance
contributions collected first to the
reinsurance payment pool, with any
remaining amounts being then allocated
to the U.S. Treasury and administrative
expenses, on a pro rata basis. We
proposed following a similar approach
for the 2016 benefit year, such that if
reinsurance contributions fall short of
our estimates, contributions collected
will first be allocated to the reinsurance
payment pool, with any remaining
amounts being then allocated to the U.S.
Treasury and administrative expenses,
on a pro rata basis. In the proposed rule,
we also proposed to use any excess
contributions for reinsurance payments
for the current benefit year by increasing
the coinsurance rate for the 2016 benefit
year up to 100 percent before rolling
over any remaining funds to the next
year and sought comment on whether to
expend all of the contributions in 2016
or roll over any excess funds to the 2017
benefit year.
(2) Administrative Expenses
In the 2015 Payment Notice, we
estimated that the Federal
administrative expenses of operating the
reinsurance program would be $25.4
million, based on our estimated contract
and operational costs. We used the same
methodology to estimate the
administrative expenses for the 2016
benefit year. These estimated costs
would cover the costs related to
contracts for developing the uniform
reinsurance payment parameters and
the uniform reinsurance contribution
rate, collecting reinsurance
contributions, making reinsurance
payments, and conducting account
management, data collection, program
integrity and audit functions,
operational and fraud analytics, training
for entities involved in the reinsurance
program, and general operational
support. To calculate our reinsurance
administrative expenses for 2016, we
divided HHS’s projected total costs for
administering the reinsurance programs
on behalf of States by the expected
number of covered lives for which
reinsurance contributions are to be
made for 2016.
We estimated this amount to be
approximately $32 million for the 2016
benefit year. This estimate increased for
the 2016 benefit year due to increased
audit and data validation contract costs.
We believe that this amount reflects the
Federal government’s significant
economies of scale, which helps to
decrease the costs associated with
operating the reinsurance program.
Based on our estimate of covered lives
for which reinsurance contributions are
to be made for 2016, we proposed a
uniform reinsurance contribution rate of
$0.17 annually per capita for HHS
administrative expenses. We provide
details below on the methodology we
used to develop the 2016 enrollment
estimates.
Similar to the allocation for 2015, for
the 2016 benefit year, administrative
expenses are allocated equally between
contribution and payment-related
activities. Because we anticipate that
our additional activities in the 2016
benefit year, including our program
integrity and audit activities, will also
be divided approximately equally
between contribution and paymentrelated activities, we again proposed to
allocate the total administrative
expenses equally between these two
functions. Therefore, as shown in Table
9, we will apportion the annual per
capita amount of $0.17 of administrative
expenses as follows: (a) $0.085 of the
total amount collected per capita for
administrative expenses for the
collection of contributions from
contributing entities; and (b) $0.085 of
the total amount collected per capita for
administrative expenses for reinsurance
payment activities, supporting the
administration of payments to issuers of
reinsurance-eligible plans.
TABLE 9—BREAKDOWN OF ADMINISTRATIVE EXPENSES
[Annual, per capita]
Estimated
expenses
Activities
$0.085
0.085
Total annual per capita administrative expenses for HHS to perform all reinsurance functions ................................................
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Collecting reinsurance contributions from health insurance issuers and certain self-insured group health plans .............................
Calculation and disbursement of reinsurance payments ....................................................................................................................
0.17
If HHS operates the reinsurance
program on behalf of a State, HHS
would retain the annual per capita fee
to fund HHS’s performance of all
reinsurance functions, which would be
$0.17. If a State establishes its own
reinsurance program, HHS would
transfer $0.085 of the per capita
administrative fee to the State for
purposes of administrative expenses
incurred in making reinsurance
payments, and retain the remaining
$0.085 to offset HHS’s costs of collecting
contributions. We note that the
administrative expenses for reinsurance
17 79
payments will be distributed to those
States that operate their own
reinsurance program in proportion to
the State-by-State total requests for
reinsurance payments made under the
uniform reinsurance payment
parameters.
We are finalizing the 2016
contribution rate as proposed and
finalizing our policy to increase the
2016 coinsurance rate to 100 percent
prior to rolling over any excess funds to
2017.
Comment: Several commenters
supported our proposal to increase the
2016 coinsurance rate to 100 percent if
collections exceed the requests for
reinsurance payments. Some
commenters further supported rolling
over any excess collections to 2017 if
excess funds remain after increasing the
coinsurance rate to 100 percent, while
other commenters disagreed with our
proposal to roll over the excess funds to
2017 asking that HHS instead increase
the reinsurance cap in 2016 to expend
all contributions collected in 2016.
Response: We will continue with our
policy to increase the coinsurance rate
to 100 percent for the 2016 benefit year
FR 30259.
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in the event collections exceed the
requests for reinsurance payments. If
additional funds remain after the
increase in the coinsurance rate to 100
percent, we will roll over the excess
funds to 2017 to extend the premium
stabilization effects of the program.
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i. Uniform Reinsurance Payment
Parameters for 2016
Section 1341(b)(2)(B) of the
Affordable Care Act directs the
Secretary, in establishing standards for
the transitional reinsurance program, to
include a formula for determining the
amount of reinsurance payments to be
made to issuers for high-risk individuals
that provides for the equitable allocation
of funds. In the Premium Stabilization
Rule, we provided that reinsurance
payments to eligible issuers will be
made for a portion of an enrollee’s
claims costs paid by the issuer (the
coinsurance rate, meant to reimburse a
proportion of claims while giving
issuers an incentive to contain costs)
that exceeds an attachment point (when
reinsurance would begin), subject to a
reinsurance cap (when the reinsurance
program stops paying claims for a highcost individual). The coinsurance rate,
attachment point, and reinsurance cap
together constitute the uniform
reinsurance payment parameters.
Given the smaller pool of reinsurance
contributions to be collected for the
2016 benefit year, we proposed that the
uniform reinsurance payment
parameters for the 2016 benefit year be
established at an attachment point of
$90,000, a reinsurance cap of $250,000,
and a coinsurance rate of 50 percent. We
estimated that these uniform
reinsurance payment parameters will
result in total requests for reinsurance
payments of approximately $4 billion
for the 2016 benefit year. We believe
setting the coinsurance rate at 50
percent and increasing the attachment
point allows for the reinsurance
program to help pay for nearly the same
group of high-cost enrollees as was the
case for the 2014 and 2015 benefit years,
while still encouraging issuers to
contain costs.
As discussed in the 2014 and 2015
Payment Notices, to assist with the
development of the uniform reinsurance
payment parameters and the premium
adjustment percentage index, HHS
developed the Affordable Care Act
Health Insurance Model (ACAHIM). The
ACAHIM generates a range of national
and State-level outputs for 2016, using
updated assumptions reflecting more
recent data, but using the same
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methodology described in the 2014 and
2015 Payment Notices.18
Specifically, the ACAHIM uses the
Health Intelligence Company, LLC (HIC)
database from calendar year 2010, with
the claims data trended to 2016 to
estimate total medical expenditures per
enrollee by age, gender, and area of
residence. The expenditure
distributions are further adjusted to take
into account plan benefit design, or
‘‘metal’’ level (that is, ‘‘level of
coverage,’’ as defined in § 156.20) and
other characteristics of individual
insurance coverage in an Exchange. To
describe a State’s coverage market, the
ACAHIM computes the pattern of
enrollment using the model’s predicted
number and composition of participants
in a coverage market. These estimated
expenditure distributions were the basis
for the uniform reinsurance payment
parameters.
We are finalizing the 2016 payment
parameters as proposed.
Comment: Several commenters
supported the proposed 2016 uniform
reinsurance payment parameters. One
commenter asked that HHS consider
when setting the parameters that some
issuers are unable to obtain commercial
reinsurance and therefore are left
unprotected from large losses.
Response: We are finalizing the 2016
uniform reinsurance payment
parameters as proposed, and as we
explained above and in the 2014 and
2015 Payment Notices, these parameters
are set in an effort not to interfere with
commercial reinsurance, although we
understand not all issuers can obtain
commercial reinsurance. Additionally,
we believe that maintaining the
reinsurance cap for the 2016 benefit
year while ensuring that the
coinsurance rate sufficiently
compensates issuers for high-risk
individuals will make it easier for
issuers to estimate the effects of
reinsurance.
Comment: Several commenters asked
that HHS not change the uniform
reinsurance payment parameters for
2016 finalized in this rule in subsequent
rulemaking.
Response: We are finalizing the 2016
uniform payment parameters as
proposed, and do not intend to make
any future adjustments to these
parameters.
j. Uniform Reinsurance Payment
Parameters for 2015
In the proposed rule, we proposed
lowering the 2015 attachment point
18 See the proposed 2014 Payment Notice (77 FR
73160) and the proposed 2015 Payment Notice (78
FR 72344) for more information on the ACAHIM
methodology.
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from $70,000 to $45,000 as this would
allow the reinsurance program to make
more payments for high-cost enrollees
in individual market reinsuranceeligible plans without increasing the
contribution rate. We did not propose to
adjust the 2015 coinsurance rate of 50
percent or reinsurance cap of $250,000.
We are finalizing the reduction of the
2015 attachment point to $45,000 as
proposed.
Comment: Some commenters
supported our proposal to lower the
2015 attachment point to $45,000. Other
commenters disagreed with our
proposal to lower the 2015 attachment
point, noting that this change would
affect premium rates already submitted.
One commenter noted that lowering the
attachment point would result in lower
MLRs, requiring issuers to rebate excess
funds. Additionally, some noted that
changing the 2015 payment parameters
at this point could interfere with any
State supplemental reinsurance program
that depends on the national
reinsurance payment parameters.
Response: In the 2015 Market
Standards Rule,19 we signaled our
intention to propose to lower the 2015
attachment point from $70,000 to
$45,000 for the 2015 benefit year in an
effort to notify issuers of this change in
advance of rate settings for 2015
coverage. Additionally, we believe that
lowering the attachment point to
$45,000 will further the premium
stabilization effects of the program in
2015 as more individuals enroll in nongrandfathered, individual market plans
that are compliant with §§ 147.102,
147.104 (subject to § 147.145), 147.106
(subject to § 147.145), 156.80, and
subpart B of part 156 than in 2014.
k. Deducting Cost-Sharing Reduction
Amounts From Reinsurance Payments
We proposed to modify the
methodology finalized in the 2015
Payment Notice (79 FR 13780) regarding
the deduction of cost-sharing reduction
amounts from reinsurance payments.
Under § 156.410, if an individual is
determined eligible to enroll in an
individual market Exchange QHP and
elects to do so, the QHP issuer must
assign the individual to a standard plan
or cost-sharing plan variation based on
the enrollment and eligibility
information submitted by the Exchange.
Issuers of individual market Exchange
QHPs will receive cost-sharing
reduction payments for enrollees who
have effectuated coverage in costsharing plan variations. To avoid double
payment by the Federal government, we
indicated in the 2014 Payment Notice
19 79
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(78 FR 15499) that the enrollee-level
claims data submitted by an issuer of a
reinsurance-eligible plan should be net
of cost-sharing reductions provided
through a cost-sharing plan variation
(which are reimbursed by the Federal
government).
In the 2015 Payment Notice (79 FR
13780), we explained the methodology
HHS will use to deduct the amount of
cost-sharing reductions paid on behalf
of an enrollee enrolled in a QHP in an
individual market through an Exchange.
For each enrollee enrolled in a QHP
plan variation,20 we will subtract from
the QHP issuer’s total plan paid
amounts for the enrollee in a
reinsurance-eligible plan the difference
between the annual limitation on cost
sharing for the standard plan and the
annual limitation on cost sharing for the
plan variation. For policies with
multiple enrollees, such as family
policies, we stated we would allocate
the difference in annual limitation in
cost sharing across all enrollees covered
by the family policy in proportion to the
enrollees’ QHP issuer total plan paid
amounts.
We also stated that for an enrollee
who is assigned to different plan
variations during the benefit year, we
would calculate the adjustment for costsharing reductions based on the annual
limitation on cost sharing applicable to
the plan variation in which the enrollee
was last enrolled during the benefit
year, because cost sharing accumulates
over the benefit year across plan
variations of the same standard plan.
We proposed a modification to this
particular policy.
Specifically, if an enrollee is assigned
to different plan variations during the
benefit year, we proposed to calculate
the adjustment for cost-sharing
reductions based on the difference
between the annual limitation on cost
sharing for the standard plan and the
average annual limitation on cost
sharing in the plan variations (including
any standard plan), weighted by the
number of months the enrollee is
enrolled in each plan variation during
the benefit year.21
We are finalizing this proposal as
proposed.
Comment: Several commenters stated
that our proposed modification was too
complex, and would increase the
burden on issuers to make additional
20 Except for limited cost-sharing plan variations,
for which we stated we would not reduce the QHP
issuer’s plan paid amounts.
21 We did not propose any changes to the
approach finalized in the 2015 Payment Notice with
respect to the QHP issuer’s plan paid amounts for
purposes of calculating reinsurance payments for an
Indian in a limited cost-sharing plan variation.
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calculations and data system
enhancements.
Response: We believe that our
modified approach will permit HHS to
more accurately allocate the difference
in annual limitations in a family policy
to individual family members when a
member exits or enters the policy midyear, or if there are other changes in
circumstances that impact the costsharing reductions provided to enrollees
covered by the family policy. We will
continue to work with issuers and
provide technical support to help with
the updates to the calculations and data
system enhancements that may be
necessary.
4. Provisions for the Temporary Risk
Corridors Program
a. Application of the Transitional Policy
Adjustment in Early Renewal States
On November 14, 2013, the Federal
government announced a transitional
policy under which it will not consider
certain health insurance coverage in the
individual or small group markets that
is renewed for a policy year starting
after January 1, 2014, under certain
conditions to be out of compliance with
specified 2014 market rules, and
requested that States adopt a similar
non-enforcement policy.22 23 In the 2015
Payment Notice, HHS implemented an
adjustment to the administrative cost
ceiling and profit floor of the risk
corridors formula for the 2014 benefit
year to help further offset losses that
might occur under the transitional
policy as a result of increased claims
costs not accounted for when setting
2014 premiums. Because we believe that
the Statewide effect on the risk pool in
States that adopted the Federal
transitional policy would increase with
an increase in the percentage enrollment
in transitional plans in the State, we
stated that we would vary the Statespecific percentage adjustment to the
risk corridors formula with the
percentage of member-months
enrollment in these transitional plans in
the State.24
In response to stakeholder questions,
we proposed to clarify in the 2016
22 Letter to Insurance Commissioners, Center for
Consumer Information and Insurance Oversight,
November 14, 2013. Available at: https://
www.cms.gov/CCIIO/Resources/Letters/Downloads/
commissioner-letter-11-14-2013.PDF.
23 HHS extended the transitional policy on March
5, 2014, permitting issuers to renew transitional
policies through policy years beginning on or before
October 1, 2016.
24 As stated in the 2015 Payment Notice, HHS
will calculate the amount of the adjustment that
applies to each State based on the State’s membermonth enrollment count for transitional plans and
non-transitional plans in the individual and small
group markets.
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Payment Notice that the transitional
adjustment applies only for plans under
the transitional policy—that is, plans
that renew after January 1, 2014 for
which HHS and the applicable State are
not enforcing market rules. We
proposed to further clarify that membermonths of enrollees in early renewal
plans would not be counted towards the
risk corridors transitional policy
adjustment (that is, unless and until the
plan becomes a transitional plan in a
transitional State upon renewal in
2014).25 We are finalizing this
clarification as proposed, and are
maintaining the policy previously
finalized in the 2015 Payment Notice
under § 153.500 and § 153.530 without
modification.
Comment: Several commenters
recommended that HHS modify our
policy to include the experience of early
renewal plans. One commenter
suggested that HHS include early
renewals in the adjustment because our
announcement did not occur until
November 11, 2013, which was too late
to be reflected in the rates that were
finalized in July 2013. Another
commenter requested that HHS modify
its policy to accommodate issuers in
States that decided to allow early
renewals after the announcement of the
transitional policy.
Response: We believe that issuers
were aware of State policy for early
renewals when they set their 2014 rates;
moreover, the transitional policy
adjustment was intended to address the
Federal transitional policy, not State
early renewal policies. Under our
current policy, HHS counts months
occurring after an early renewal plan
becomes a transitional plan when we
calculate the transitional adjustment for
each State. We believe that this
approach for counting member months
towards the risk corridors transitional
adjustment is consistent with the intent
of the transitional policy adjustment set
forth in the 2015 Payment Notice.
Comment: One commenter suggested
that the transitional adjustment be
applied to the risk corridors calculation
for the entire market for 2014, not just
in markets where the transitional policy
is in effect. Another commenter
requested that HHS implement the
transitional adjustment in a manner that
does not disadvantage States that did
not adopt the Federal transitional policy
for 2014.
25 § 153.530 sets forth the data requirements for
this information collection. HHS published 60-day
and 30-day notices in the Federal Register,
providing the public with an opportunity to submit
written comments on the information collection.
The data collection is approved under OMB Control
Number 0938–1267.
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Response: We are maintaining the
policy finalized in the 2015 Payment
Notice under § 153.500 and § 153.530,
which provides, for 2014, that the effect
of the transitional adjustment will vary
according to the member-month
enrollment in a State, such that the 3
percent profit floor and 20 percent
allowable administrative cost ceiling
will apply in States that did not adopt
the Federal transitional policy (QHP
issuers in these States will receive a risk
corridors transitional adjustment equal
to zero). We believe that issuers in
States that did not adopt the Federal
transitional policy will not require the
transitional adjustment to help mitigate
mispricing that may have occurred due
to unexpected changes in the risk pool
resulting from the Federal transitional
policy. We note that the adjustment will
account for the effect of the Federal
transitional policy in the entire market
within a State that adopted the
transitional policy, such that a QHP
issuer in a transitional State will be
eligible to receive an adjustment to its
risk corridors calculation even if the
issuer has not issued transitional
policies.
b. Risk Corridors Payments for 2016
On April 11, 2014, we issued a
bulletin titled ‘‘Risk Corridors and
Budget Neutrality,’’ which described
how we intend to administer risk
corridors over the 3-year life of the
program.26 Specifically, we stated that if
any risk corridors funds remain after
prior and current year payment
obligations have been met, they will be
held to offset potential insufficiencies in
risk corridors collections in the next
year. We also stated that we would
establish in future guidance how we
would calculate risk corridors payments
in the event that cumulative risk
corridors collections do not equal
cumulative risk corridors payment
requests.
In the proposed 2016 Payment Notice,
we proposed that if, for the 2016 benefit
year, cumulative risk corridors
collections exceed cumulative risk
corridors payment requests, we would
make an adjustment to our
administrative expense definitions (that
is, the profit margin floor and the ceiling
for allowable administrative costs) to
account for the excess funds. That is, if,
when the risk corridors program
concludes, cumulative risk corridors
collections exceed both 2016 payment
26 The
Centers for Medicare and Medicaid
Services, Center for Consumer Information and
Insurance Oversight. ‘‘Risk Corridors and Budget
Neutrality,’’ April 11, 2014. Available at: https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Downloads/faq-risk-corridors-04-11-2014.pdf.
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requests under the risk corridors
formula and any unpaid risk corridors
amounts from previous years, we would
increase the administrative cost ceiling
and the profit floor in the risk corridors
formula by a percentage calculated to
pay out all collections to QHP issuers.
The administrative cost ceiling and the
profit floor would be adjusted by the
same percentage.
We proposed to determine the
percentage adjustment to the
administrative cost ceiling and profit
margin floor by evaluating the amount
of excess risk corridors collections (if
any) available after risk corridors
payments for benefit year 2016 have
been calculated. As stated in our
bulletin on risk corridors and budget
neutrality, after receiving charges from
issuers for the 2016 benefit year, we
would first prioritize payments to any
unpaid risk corridors payments
remaining from the 2015 benefit year.
We would then calculate benefit year
2016 risk corridors payments for eligible
issuers based on the 3 percent profit
floor and 20 percent allowable
administrative cost ceiling, as required
by regulation. If, after making 2015
payments and calculating (but not
paying) risk corridors payments for
benefit year 2016, we determine that the
aggregate amount of collections
(including any amounts collected for
2016 and any amounts remaining from
benefit years 2014 and 2015) exceed
what is needed to make 2016 risk
corridors payments, we would
implement an adjustment to the profit
floor and administrative cost ceiling to
increase risk corridors payments for
eligible issuers for benefit year 2016. We
would examine data that issuers have
submitted for calculation of their 2016
risk corridors ratios (that is, allowable
costs and target amount) and determine,
based on the amount of collections
available, what percentage increase to
the administrative cost ceiling and
profit floor could be implemented for
eligible issuers while maintaining
budget neutrality for the program
overall. Although all eligible issuers
would receive the same percentage
adjustment, we proposed that the
amount of additional payment made to
each issuer would vary based on the
issuer’s allowable costs and target
amount. We proposed that, once HHS
calculated the adjustment and applied it
to eligible issuers’ risk corridors
formulas, it would make a single risk
corridors payment for benefit year 2016
that would include any additional,
adjusted payment amount.
Because risk corridors collections are
a user fee to be used to fund premium
stabilization under risk corridors and no
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other programs, we proposed to limit
this adjustment to excess amounts
collected. We also proposed to apply
this adjustment to allowable
administrative costs and profits for the
2016 benefit year only to plans whose
allowable costs (as defined at § 153.500)
are at least 80 percent of their after-tax
premiums, because issuers under this
threshold would generally be required
to pay out MLR rebates to consumers.27
For plans whose ratio of allowable costs
to after-tax premium is below 80
percent, we proposed that the 3 percent
risk corridors profit margin and 20
percent allowable administrative cost
ceiling would continue to apply.
Furthermore, we proposed that, to the
extent that applying the proposed
adjustment to a plan could increase its
risk corridors payment and affect its
MLR calculation, the MLR calculation
would ignore these adjustments.
As previously stated, we anticipate
that risk corridors collections will be
sufficient to pay for all risk corridors
payments. HHS recognizes that the
Affordable Care Act requires the
Secretary to make full payments to
issuers. In the unlikely event that risk
corridors collections, including any
potential carryover from the prior years,
are insufficient to make risk corridors
payments for the 2016 program year,
HHS will use other sources of funding
for the risk corridors payments, subject
to the availability of appropriations.
We are finalizing this policy as
proposed.
Comment: We received one comment
on the proposed approach for allocating
excess risk corridors collections at the
end of the program. The commenter
supported our approach. Another
commenter supported language in the
proposed Payment Notice that
reaffirmed HHS’s commitment to make
full risk corridors payments if
collections are insufficient to fund
payments.
Response: We are finalizing the policy
regarding allocation of excess risk
corridors collections for 2016 as
proposed.
27 Because of some differences in the MLR
numerator and the definition of allowable costs that
applies with respect to the risk corridors formula,
in a small number of cases, an issuer with allowable
costs that are at least 80 percent of after-tax
premium, may be required to pay MLR rebates to
consumers.
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5. Distributed Data Collection for the
HHS-Operated Risk Adjustment and
Reinsurance Programs
a. Good Faith Safe Harbor (§ 153.740(a))
In the second Program Integrity
Rule,28 HHS finalized a good faith safe
harbor policy which provided that civil
money penalties (CMPs) will not be
imposed for non-compliance with the
HHS-operated risk adjustment and
reinsurance data requirements during
2014, if the issuer has made good faith
efforts to comply with these
requirements.29 That safe harbor
parallels a similar safe harbor for QHP
issuers in FFEs under § 156.800.
We proposed to amend § 153.740(a) to
extend the safe harbor for noncompliance with the HHS-operated risk
adjustment and reinsurance data
requirements during the 2015 calendar
year if the issuer has made good faith
efforts to comply with these
requirements. This proposal
acknowledged that the distributed data
collection requirements have been the
subject of modifications through the
2014 calendar year, including the
introduction of cloud-based virtual
options for the distributed data
environment. We note that good faith
efforts could include notifying,
communicating with, and cooperating
with HHS for issues that arise with the
establishment and provisioning of the
issuers’ dedicated distributed data
environment.
The extension of this good faith safe
harbor would not affect HHS’s ability to
assess issuers of risk adjustment covered
plans a default risk adjustment charge
under § 153.740(b).30 Additionally, we
noted that the good faith safe harbor
would not apply to non-compliance
with dedicated distributed data
environment standards applicable
during 2016, even if the non-compliance
in the 2016 calendar year relates to data
for the 2015 benefit year. For example,
the data loading schedule applicable to
the 2015 benefit year for risk adjustment
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Where:
DCi is the total amount of default charges
allocated to plan i;
28 78
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b. Default Risk Adjustment Charge
(§ 153.740(b))
In the second Program Integrity Rule
and the 2015 Payment Notice, HHS
indicated that a default risk adjustment
charge will be assessed if an issuer does
not establish a dedicated distributed
data environment or submits inadequate
risk adjustment data. However, we did
not establish how the money collected
from the default charge will be allocated
among risk adjustment covered plans.
We proposed to allocate collected per
member per month default charge funds
proportional to each plan’s relative
revenue requirement, the product of
PLRS*IDF*GCF (Plan Liability Risk
Score * Induced Demand Factor *
Geographic Cost Factor) relative to the
market average of these products, across
all risk adjustment covered plans in the
market in the State. This approach
would allocate funds proportionally to a
plan’s enrollment, adjusted for factors
such as health risk, actuarial value, and
geographic cost differences. This
approach would also allocate the default
charge funds in accordance with plans’
expected revenue requirements as
calculated in the transfer formula. By
contrast, an approach that allocates risk
adjustment default charge funds in
accordance with enrollment or
premiums, for example, would favor
plans with lower metal levels, low risk
selection, or lower geographic costs.
This allocation would occur only in
risk adjustment markets with at least
one noncompliant plan, and these steps
would be used to calculate each
compliant plan’s allocation of the
default charges collected from the
noncompliant plan(s). We would
calculate risk transfers among the
compliant plans only and exclude all
data from noncompliant plans. Using
the same inputs of the compliant plans
as used in the transfer formula, we
would calculate the distribution of
default charges paid by noncompliant
plans among the compliant plans using
the following formula:
‘‘Total default charges collected’’ is the sum,
in dollars, collected from all
noncompliant plans (aggregate dollars,
FR 65046.
note that HHS also clarified in a March 28,
2014 FAQ that CMPs would not be imposed on an
issuer for non-compliance during the 2014 calendar
year, if the issuer made good efforts to comply with
these requirements. See, FAQ 1212, published
29 We
and reinsurance data extends into the
2016 calendar year (the final loading
deadline is April 30, 2016). Therefore,
the good faith safe harbor would not
apply to non-compliance with the
dedicated distributed data environment
standards applicable during 2016.
Comment: Several commenters
supported our proposal to extend the
good faith safe harbor to the 2015
benefit year. The commenters asked that
we clarify that the safe harbor extension
would apply to conduct that occurred in
a covered year (2014 or 2015) regardless
of when an enforcement action is
initiated. These commenters also asked
that the good faith safe harbor apply for
any risk adjustment or reinsurance data
requirements that apply to the 2015
benefit year, even if the data is reported
in 2016.
Response: As we clarified in the 2015
Payment Notice (79 FR 13791), HHS
will not impose CMPs for
noncompliance for dedicated
distributed data environment standards
for the 2014 benefit year, if the issuer
attempted in good faith to comply,
simply by waiting until 2015 to initiate
the enforcement action. We will follow
the same approach with respect to the
extension of the good faith safe harbor
through the 2015 calendar year.
However, the good faith safe harbor will
not apply to non-compliance with
dedicated distributed data environment
standards applicable during the 2016
calendar year, even if the noncompliance in 2016 relates to data for
the 2015 benefit year.
Comment: One commenter asked that
we extend the good faith safe harbor to
2016.
Response: We are not extending the
good faith compliance safe harbor to
2016.
that is, not on a per member per month
basis);
Other terms are as defined in the usual risk
transfer calculations, and restricted to
March 28, 2014. Available at: https://
www.regtap.info/faq_viewu.php?id=1212.
30 According to § 153.740(b), if an issuer of a risk
adjustment covered plan fails to establish a
dedicated distributed data environment or fails to
provide HHS with access to the required data in
such environment in accordance with § 153.610(a),
§ 153.700, § 153.710, or § 153.730 such that HHS
cannot apply the applicable Federally certified risk
adjustment methodology to calculate the risk
adjustment payment transfer amount for the risk
adjustment covered plan in a timely fashion, HHS
will assess a default risk adjustment charge.
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compliant plans only (si = plan i’s share
of State enrollment; PLRSi = plan i’s plan
liability risk score, IDFi = plan i’s
induced demand factor, GCFi = plan i’s
geographic cost factor);
and i indexes compliant plans, and the
summation in the denominator is over
compliant plans only.
Comment: One commenter agreed
with the proposed allocation of default
risk adjustment charges to risk
adjustment compliant plans, noting that
it provides an equitable distribution of
default risk adjustment charges.
Response: We are finalizing the
allocation of default risk adjustment
charges as proposed.
c. Information Sharing (§ 153.740(c))
In § 153.740, we established the
enforcement remedies available to HHS
for an issuer of a risk adjustment
covered plan or a reinsurance-eligible
plan’s failure to comply with HHSoperated risk adjustment and
reinsurance data requirements.
Consistent with the policy set forth at
§ 156.800(d), as finalized in the 2015
Market Standards Rule,31 we proposed
adding paragraph (c) to clarify that HHS
may consult with and share information
about issuers of a risk adjustment
covered plan or a reinsurance-eligible
plan with other Federal and State
regulatory and enforcement entities to
the extent that the consultation or
information is necessary for HHS to
determine whether an enforcement
remedy against the issuer of the risk
adjustment covered plan or reinsuranceeligible plan under § 153.740 is
appropriate. For example, HHS may
consult other Federal and State
regulatory and enforcement entities to
identify issuers within a State that have
failed to establish a dedicated
distributed data environment. No
personally identifiable information
would be transferred as part of such a
consultation.
We received no comments on this
proposal. We are finalizing this
provision as proposed.
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D. Part 154—Health Insurance Issuer
Rate Increases: Disclosure and Review
Requirements
1. General Provisions
In the proposed rule, we proposed
several modifications to enhance the
transparency and effectiveness of the
rate review program under part 154.
These provisions were proposed to
apply generally beginning with rates
filed in 2015 for coverage effective on or
after January 1, 2016. We requested
comment on whether the proposal
31 79
FR 30240.
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provides States and issuers sufficient
time to transition to the new rate review
requirements.
Comment: While some commenters
believed the proposed timeframe was
adequate, others suggested that issuers
would not have sufficient time to
implement the requirements to meet
deadlines for the 2015 filing year. Some
commenters noted it would take time
for HHS to modify the Unified Rate
Review Template (URRT) to
accommodate the new plan-level trigger
under proposed § 154.200(c).
Commenters recommended the planlevel requirements not apply until the
2016 filings for plan years beginning in
2017.
Response: In response to comments,
to provide adequate time to make
necessary adjustments to the URRT, the
revised definition of ‘‘rate increase’’ and
plan-level trigger under §§ 154.102 and
154.200(c) of this final rule will apply
beginning with rates filed in 2016 for
coverage effective on or after January 1,
2017. The uniform rate review and
disclosure timelines under §§ 154.220
and 154.301 of this final rule will apply
beginning with rates filed in 2015 for
coverage effective on or after January 1,
2016. As discussed below, the
individual market annual open
enrollment period for the 2016 benefit
year will not begin until November 1,
2015, which provides additional time to
meet the filing deadlines for 2016 rates.
a. Definitions (§ 154.102)
Under § 154.102, we set forth
definitions of terms that are used
throughout part 154. We proposed
adding a new definition of ‘‘plan’’ and
revising the definitions of ‘‘individual
market,’’ ‘‘small group market,’’ and
‘‘State.’’ For the most part, these terms
would have the meaning given such
terms in § 144.103. For a discussion of
the terms ‘‘plan’’ and ‘‘State,’’ please see
the preamble for § 144.103 in this final
rule.
We also proposed to modify the
definition of ‘‘rate increase.’’ The
revisions would conform with our
proposal in § 154.200 to consider rate
increases at the plan-level when
determining whether a rate increase is
subject to review.
We did not receive comments on the
definitions of ‘‘individual market,’’
‘‘small group market,’’ and ‘‘rate
increase.’’ We are finalizing these
revisions as proposed, except that the
revised definition of ‘‘rate increase’’ has
been modified to clarify that the
changes made to conform with the
proposal in § 154.200 will apply for
rates filed for coverage effective on or
after January 1, 2017. The other
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definitions will apply for rates filed for
coverage effective on or after January 1,
2016.
Comment: Several commenters did
not agree with our proposal to apply the
definition of ‘‘plan’’ in the context of the
rate review program. The commenters
expressed concern that this would add
complexity and create delays to the
product filing and review process.
Response: Because this final rule
establishes a trigger for review of rate
increases at the plan level, we are
adopting the definition of ‘‘plan’’ at
§ 144.103 of this final rule for purposes
of the rate review requirements under
part 154. While changing to a plan-level
trigger may increase the number of rate
filings subject to review, we believe
doing so will more accurately reflect
consumer expectations for the rate
review program. We note that nothing in
this final rule changes the scope of
issuer rate filings, which will continue
to be submitted at the product level.
2. Disclosure and Review Provisions
a. Rate Increases Subject to Review
(§ 154.200)
In § 154.200, we proposed
modifications to the standards for rate
increases that are subject to review. In
paragraphs (a)(1) and (2), we proposed
technical corrections to clarify that rate
increases are applicable to a 12-month
period that begins on January 1 rather
than September 1 of each year.
In paragraph (c), we proposed that
rate increases would be calculated at the
plan level (as opposed to the product
level) when determining whether an
increase is subject to review. Under this
approach, if any plan within a product
in the individual or small group market
experiences an increase in the planadjusted index rate (as described in
§ 156.80) that meets or exceeds the
applicable threshold (either 10 percent
or a State-specific threshold), the entire
product would be subject to review to
determine whether the rate increase is
unreasonable. This proposal was
intended to ensure that a plan that
experiences a significant rate increase
could not avoid review simply because
the average increase for the product did
not meet or exceed the applicable
threshold.
We sought comment on all aspects of
these proposals, including the benefits
and costs to States of carrying out the
plan-level trigger for review.
Comment: We received comments
that suggested some confusion as to
whether rate increases would be
reviewed at the product level or the
plan level when determining whether
an increase is an unreasonable rate
increase.
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Response: We clarify that the planlevel threshold under this final rule is
simply a trigger for review. The review
will continue to occur, as it does today,
at the product level, taking into account
the combined experience of the plans
within the product.
Comment: Many commenters
supported the proposal to apply the
trigger for review at the plan level,
suggesting it better reflected the intent
of Congress to protect consumers against
unreasonable rate increases. Other
commenters opposed the proposal and
urged HHS to retain the current
product-level trigger for review. Many of
these commenters were concerned that
the proposed rule would significantly
increase the number of rate filings
subject to review, placing greater burden
on State regulators and increasing
administrative cost to issuers. Several
commenters additionally stated the
plan-level trigger is inappropriate
because plan-level rates vary naturally
due to common market factors, such as
provider contracting and deductible
leveraging. Multiple other commenters
urged us to lower the threshold for
review—for example, tying it to growth
in national health expenditures. One
commenter suggested maintaining a 10
percent threshold at the product level
and applying a 20 percent threshold at
the plan level.
Response: Because consumers are
affected by rate increases at the plan
level, we believe that increases for the
plan, not the product, should be the
trigger for determining whether an
increase is subject to review. We
acknowledge the concerns about
burden, but believe the consumer
protection benefits of this policy
outweigh the costs and further the
intent of section 2794 of the PHS Act to
protect consumers against unreasonable
rate increases. Therefore, we are
finalizing the trigger for determining
whether an increase is subject to review
based on rate increases at the plan level.
However, as noted above, we are
modifying the final rule to apply this
change effective for rates filed for
coverage beginning on or after January
1, 2017. We have updated the regulation
text at § 154.200(a) to maintain the
current trigger for determining whether
the increase is subject to review for rates
filed for coverage effective before
January 1, 2017. HHS will continue to
collect and review available data on
trends in rate and medical increases in
assessing whether to modify the 10
percent threshold for review.
Comment: One commenter
recommended considering not only
increases in the plan-adjusted index
rate, but also changes in premium rating
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factors including those for geography
and tobacco use.
Response: We interpret section 2794
of the PHS Act as requiring the
Secretary to establish a process for the
annual review of unreasonable increases
in the underlying rates that are used to
develop the premiums, as opposed to
the actual premiums themselves (75 FR
81009). Therefore, the final rule
considers only increases in the planadjusted index rate described in
§ 156.80 rather than the premium rating
factors described in § 147.102. We note
that nothing in this regulation prevents
a State from reviewing other aspects of
an insurance rate filing, including
premium rating factors.
b. Submission of Rate Filing
Justification (§ 154.215)
In § 154.215(a), we proposed a
technical correction to clarify that
issuers must submit a rate filing
justification for all products in the
issuer’s single risk pool when ‘‘any plan
within a product’’ in the individual or
small group market is subject to a rate
increase. This is true regardless of
whether the rate increase meets or
exceeds the subject to review threshold.
We proposed this clarification take
effect with the effective date of the final
rule. We are finalizing this clarification
as proposed.
Comment: Some commenters
encouraged HHS to clarify throughout
§ 154.215 that issuers must justify rate
increases at the plan level, in addition
to justifying them at the product level.
Response: The final rule does not
adopt this suggestion. Because rate
increases that are subject to review are
reviewed at the product level, issuers
will likewise submit the rate filing
justification at the product level rather
than the plan level.
c. Timing of Providing the Rate Filing
Justification (§ 154.220)
To provide consistency and
transparency in the rate submission
process, ensure a more meaningful
opportunity for public review and
comment, and reduce the opportunity
for anti-competitive behavior, we
proposed to modify § 154.220 to
establish a uniform timeline by which
health insurance issuers must submit to
CMS or the applicable State a completed
rate filing justification for proposed rate
increases—for both QHPs and nonQHPs—in the individual and small
group markets. Under the proposed rule,
the issuer would be required to submit
the justification by the earlier of the
following: (1) The date by which the
State requires a proposed rate increase
to be filed with the State; or (2) the date
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specified by the Secretary in guidance.
We suggested that we were considering
specifying a deadline to coincide with
the end of the QHP application window
for the FFE. States would have
flexibility to impose earlier rate filing
deadlines to meet their specific State
needs. We sought comment on this
proposal.
We are finalizing these provisions as
proposed. We intend to specify the
submission deadline for the 2015 filing
year in forthcoming guidance.
Comment: We received many
comments regarding the proposal to
establish a uniform rate filing timeline.
Commenters who supported the
proposal generally agreed it would
increase transparency and encourage
public participation in the rate review
process. Commenters also viewed the
common submission deadline for both
QHP and non-QHP rate filings as a
positive step to protect against shadow
pricing among competing issuers and
create a level playing field inside and
outside the Exchange.
Commenters who opposed the
proposal were concerned that the HHS
deadline would not provide issuers
sufficient time to collect claims data and
appropriately develop rates for the
upcoming benefit year. Commenters
also expressed concern that requiring
rates for QHPs and non-QHPs to be
submitted at the same time would
impose an increased workload on State
regulators, making it difficult to conduct
thorough reviews and potentially
creating delays in the review and
approval process. Many commenters
objected to a nationally uniform rate
review timeline and urged State
flexibility to set their own filing
deadlines, particularly in States with
effective rate review programs and
States that operate their own Exchanges.
Some commenters believed it would be
sufficient for HHS to simply establish a
deadline for States to complete their
reviews.
Several commenters remarked on the
specific deadline for rate filing
submissions. One commenter
recommended HHS establish a rate
filing deadline of no sooner than May
15, while another commenter
recommended a mid-summer deadline.
Another commenter recommended that
issuers have 90 days after the end of the
FFE QHP application window to
prepare the rate filing justification.
Some commenters asserted that the
filing deadline must accommodate a
sufficient public comment period.
One commenter suggested that
grandfathered and transitional plans
should not be subject to the same filing
deadlines as single risk pool compliant
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plans. Finally, some commenters
recommended the NAIC convene a
workgroup to make recommendations to
HHS regarding the rate review timeline.
Response: We believe the rate review
process should be both predictable and
transparent. To achieve this objective,
we believe it is necessary to establish a
uniform submission deadline for issuers
to submit proposed rate increases for
single risk pool coverage in the
individual and small group markets.
Therefore, we are finalizing proposed
§ 154.220 authorizing the Secretary to
establish in guidance the deadline for
issuers to submit the rate filing
justification for proposed rate increases
for both QHPs and non-QHPs in the
individual and small group markets. We
will carefully consider commenters’
suggestions and consult with the NAIC
and other interested parties when
developing such guidance which we
expect to issue soon. We anticipate the
deadline will provide issuers adequate
time to develop rates and afford States
and the public the necessary time for
review.
We note that States retain significant
flexibility to stage the timing of their
reviews consistent with this final rule.
This could include establishing filing
deadlines prior to the HHS deadline,
staggering the submission of forms and
rates, or establishing varying deadlines
for the individual and small group
markets.
Finally, we clarify that, while
transitional plans are generally subject
to the rate review requirements, the
uniform submission timeline applies
only to non-grandfathered individual
and small group market coverage that is
subject to the single risk pool
requirement. Grandfathered health
plans are not subject to the Federal rate
review program.
d. CMS’s Determinations of Effective
Rate Review Programs (§ 154.301)
We proposed to amend § 154.301(b) to
specify the timeframe for a State with an
effective rate review program to provide
public access to information about
proposed and final rate increases.
Under the proposed rule, for proposed
rate increases subject to review, the
State would be required to provide
public access from its Web site to the
information contained in Parts I, II, and
III of the rate filing justification that
CMS makes available on its Web site (or
provide CMS’s web address for such
information). The proposed rule would
require that the State take this action no
later than the date specified by the
Secretary in guidance. We suggested the
10th business day following receipt of
all rate filings in the relevant State
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market as the potential timeframe we
may specify for this purpose. The
proposed rule would also continue to
require that the State have a mechanism
for receiving public comments on those
proposed rate increases.
For all final rate increases (including
those not subject to review), the
proposed rule would similarly require
that the State provide public access
from its Web site to the information
contained in Parts I, II, and III of the rate
filing justification that CMS makes
available on its Web site (or provide
CMS’s web address for such
information). The State would be
required to take this action no later than
the first day of the individual market
annual open enrollment period.
Nothing in this proposal would
prevent States from making additional
information available to the public, or
prevent States from establishing earlier
timeframes for public disclosure. States
that elect to establish earlier posting
timeframes would be required under the
proposed rule to notify CMS in writing
at least 30 days prior to the date the
information will be made public. States
would also be required to ensure that
rate information released to the public
is made available at a uniform time for
all proposed and final rate increases (as
applicable) in the relevant market
segment and without regard to whether
coverage is offered through an Exchange
or outside of an Exchange.
We sought comment on these
proposals, including how the
timeframes may interact with current
State practice and workload. We also
sought comment on whether States with
effective rate review programs should be
required to post rate information on the
State’s Web site, rather than being
permitted to provide a link to CMS’s
Web site for such information.
We are finalizing these provisions as
proposed. We are also maintaining the
option for States to continue to provide
public access from their Web site via
link to rate information made available
on the CMS Web site.
Comment: Some commenters
suggested that CMS should not require
the release of rate information before
rates are finalized. Another commenter
requested that all proposed rates be
made available to the public, not only
those subject to review.
Response: Section 2794 of the PHS
Act requires the Secretary to ensure the
public disclosure of information,
including the justification for an
unreasonable rate increase. We believe
that Congress intended the rate review
process to be transparent, and that this
objective is served by giving consumers
timely access to basic information
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regarding the proposed increase that is
under review by CMS or States and
prior to the implementation of the
increase. The proposed rule and this
final rule do not change the existing
requirements regarding the scope of the
information that must be disclosed
under the current regulations.
Comment: Several commenters
expressed opposition to our proposal to
specify the timeframe for posting
information about proposed rate
increases that are subject to review.
Commenters generally asserted that
States have existing processes for rate
disclosure and requested State
flexibility to manage publication
timeframes in the way most appropriate
to their market and regulatory structure.
One commenter suggested CMS
establish a timeframe of 5 business days
for States to post information about
proposed rate increases subject to
review. Another commenter requested
clarification about the information CMS
intends to post on its Web site and how
the suggested timeframe of 10 business
days from the filing deadline would
provide sufficient time to redact issuers’
confidential and proprietary
information protected by the Freedom of
Information Act.
Response: We are finalizing the
proposal for the Secretary to specify the
timeframe for States with effective rate
review programs to provide public
access to information about proposed
rate increases that are subject to review.
This timeframe will be specified in
guidance. We anticipate specifying a
deadline of the 10th business day after
receipt of all rate filings in the relevant
State market. We note this provision
applies only to products with proposed
rate increases that are subject to review
and only includes the information in
Parts I, II, and III of the rate filing
justification that CMS makes available
on its Web site. Under § 154.215(h),
CMS makes available on its Web site
only the information that is not
considered a trade secret or confidential
commercial or financial information as
defined in Freedom of Information Act
regulations, 45 CFR 5.65. We note that
States may choose to make additional
information available as permitted by
applicable State law and regulations.
Comment: Many commenters
emphasized the need for sufficient
opportunity for public review and
comment before rates are finalized, with
suggested timeframes ranging from 30 to
90 days of public comment.
Response: Under current regulations,
a State with an effective rate review
program must have a mechanism for
receiving public comments on proposed
rate increases that are subject to review.
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We believe this standard is sufficient to
encourage public participation in the
rate review process, while affording
States flexibility to manage the public
comment process in the way most
appropriate for the State.
Comment: Some commenters stated
that information about final rate
increases should be released prior to the
start of the annual open enrollment
period to allow consumers, assisters,
and other interested stakeholders greater
opportunity to familiarize themselves
with issuer rates. These commenters
offered various suggestions, most
commonly recommending that final
rates be posted 15 days in advance of
the annual open enrollment period.
Other commenters were concerned
about the workload and burden on
States of completing reviews for both
Exchange and non-Exchange plans at
the same time.
Response: The final rule retains the
proposal that information about final
rate increases must be posted by the first
day of the annual open enrollment
period. We believe this timeframe
strikes the appropriate balance between
providing State and Federal regulators
sufficient time to complete their
reviews, while providing consumers the
information needed to make informed
purchasing decisions. We note that
States may establish earlier posting
timeframes with appropriate notice to
CMS.
Comment: One commenter
recommended clarifying in
§ 154.301(b)(1)(ii) that the term ‘‘annual
open enrollment period’’ refers to the
open enrollment period in the
individual market.
Response: The final rule adopts the
suggestion to reference the ‘‘individual
market’’ annual open enrollment period
under § 154.301(b)(1)(ii).
Comment: One commenter stated that
CMS should also establish posting
deadlines for States in which CMS is
conducting the reviews.
Response: While the rate review
timeline under this final rule establishes
minimum standards for submission and
posting of rate information in States
with effective rate review programs, we
will also apply these timelines in States
without effective rate review programs
where CMS conducts the reviews.
Comment: Some commenters
recommended that States be required to
post rate information directly on their
Web sites instead of relying on the CMS
Web site. Other commenters stated it
would be costly and unnecessary to
impose this requirement on States, since
CMS already provides consumers with
information about rate increases on its
Web site. These commenters
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recommended that States continue to be
permitted to link to the CMS Web site.
Response: We agree that specifying
that States must separately post rate
information is not necessary at this
time. Through CMS’s Web site
(www.ratereview.healthcare.gov),
consumers and other stakeholders can
easily review rate increases requested by
issuers in every State.32 We therefore
retain the option for States to continue
to provide public access from their Web
site via link to rate information made
available on the CMS Web site.
Comment: Some commenters believed
that States should be required to
provide public access to the entire rate
filing justification, rather than only the
information contained in Parts I, II and
III that CMS makes available on its Web
site. Other commenters indicated that
States have policies and procedures
governing rate increase disclosure and
contended that States should have
discretion to determine what
information to release.
Response: The proposed rule and this
final rule do not change the scope of
information disclosure under the
current regulations. The existing rules
establish the minimum level of
information that States with effective
rate review programs must make
available to the public, either directly
on their Web sites or via link to the CMS
Web site. We note that States have
discretion to make additional
information available to the public, as
permitted by applicable State law and
regulation.
Comment: Some commenters opposed
the requirement that States must notify
CMS in writing 30 days prior to making
rate information public. The
commenters were concerned the 30-day
notice requirement was impractical and
unnecessary, and may interfere with
State and issuer rate negotiations and
timelines. One commenter
recommended that States simply make a
good-faith effort to provide advance
notice to CMS.
Response: We maintain in the final
rule the requirement that States must
provide at least 30-day notice of their
intent to release proposed or final rate
information when the State publication
timeline is earlier than that specified by
CMS. As we stated in the preamble to
the proposed rule (79 FR 70703), this
information will enable CMS to better
coordinate the availability of rate
information, increasing transparency
nationally into the rate-setting process.
32 Rate filing information can also be accessed at
https://www.cms.gov/CCIIO/Resources/DataResources/ratereview.html.
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E. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. General Provisions
a. Definitions (§ 155.20)
In § 155.20, we proposed to amend
the definitions of ‘‘applicant,’’
‘‘enrollee,’’ and ‘‘qualified employee.’’
First, we proposed to specify that a
qualified employer could elect to offer
coverage through a SHOP to its former
employees that may include retirees, as
well as former employees to whom an
employer might be obligated to provide
continuation coverage under applicable
State or Federal law. Second, we
proposed to specify that a qualified
employer could also elect to offer
coverage through the SHOP to
dependents of employees or former
employees. Third, we proposed to
specify that business owners may enroll
in SHOP coverage provided that at least
one employee enrolls. We proposed to
amend these definitions to make it clear
that SHOPs may allow small group
enrollment practices that were in place
before the Affordable Care Act to
continue, to preserve continuity for
issuers and employers, and to reduce
the administrative complexity involved
with transitioning to SHOP coverage for
qualified employers.
We are finalizing the amendments to
the definitions of applicant and
qualified employee as proposed, and are
modifying the amendments to the
definition of enrollee in light of
comments we received.
The preamble to the proposed rule
also sought comment on whether other
provisions of the Exchange rules in
parts 155 and 156 would need to be
amended to implement the changes
proposed to these definitions. HHS
interprets § 155.220(i) to give SHOPs the
flexibility to permit web-brokers to
enroll not just ‘‘qualified employees,’’
but all enrollees, consistent with the
expansion of the definition of
‘‘enrollee’’ that is being finalized in this
rule. Therefore, we are also modifying
§ 155.220(i) to refer to facilitating
enrollment in coverage through the
SHOP for enrollees instead of qualified
employees.
Comment: One commenter
commented that the proposed definition
of an ‘‘applicant’’ does not capture all
situations in which a person could
become eligible for continuation
coverage, such as divorce or loss of
dependent child status.
Response: Not every person eligible to
enroll in coverage purchased through
the SHOP is considered a SHOP
applicant. In the case of individuals
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eligible to enroll in coverage through the
SHOP due to a continuation coverage
qualifying event, such as a divorce or a
loss of dependent status, such an
individual qualifies for such coverage
by virtue of his or her coverage through
the SHOP that existed on the day prior
to the qualifying event. Such an
individual need not file an application
with the SHOP to continue to receive
coverage after a qualifying event.
Instead, consistent with current
business practices, the qualified
beneficiary should notify the employer
or plan administrator of his or her desire
to participate in continuation coverage.
The employer or plan administrator
must then notify the SHOP.33 Where
appropriate, such notification will allow
the SHOP to individually bill the
continuation coverage enrollee.
Comment: One commenter asked for
clarification on whether at least one
employee has to be eligible for or
enrolled in SHOP coverage, and
requested that HHS clarify whether a
business owner may enroll in a QHP
through the SHOP if at least one
employee is eligible for coverage
through SHOP but has not enrolled.
Response: We clarify that where a
business’s only enrollee(s) in coverage
through the SHOP would be the
owner(s) of the business, the owner is
not eligible to enroll in coverage sold
through the SHOP.34
Comment: Some commenters
requested clarification on whether an
employee may enroll dependents
without enrolling him or herself in the
plan. Another commenter opposed the
exclusion of child-only plans in the
SHOP and stated that all children
should have access to coverage even if
they do not qualify as a ‘‘qualified
employee.’’
Response: We note that under
common market practice, dependents of
an employee offered employersponsored coverage generally may
enroll in such coverage only as a
33 26 CFR 54.4980B–6 A–1(b) defines an election
to enroll in continuation coverage as the date the
notification is sent to the plan administrator, and
§ 157.205(f) requires qualified employers
participating in the SHOP to provide the SHOP
with information regarding changes in dependent or
employee eligibility status for coverage.
34 Persons may enroll in coverage available
through the SHOP only if the plan constitutes a
group health plan maintained by a small employer.
A group health plan is an ‘‘employee welfare
benefit plan’’ as defined by the Employee
Retirement Income Security Act of 1974 (ERISA),
and is a form of employee benefit plan, see ERISA
§ 3(3), 29 U.S.C. 1002(3). An ‘‘employee benefit
plan’’ does not exist if there are no ‘‘employees’’
participating in the plan, 29 CFR 2510.3–3(b), and
for the purpose of identifying an employee benefit
plan an ‘‘employee’’ does not include the sole
owner of a business or a spouse of the business
owner, Id. §§ 2510.3–3(c), 2590.732(d).
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dependent, if the employee enrolls in
the coverage.35 Except for continuation
coverage, coverage offered through the
SHOP does not depart from this general
practice. Except as may be provided
under otherwise applicable law,
dependents of a qualified employee may
enroll in a QHP through the SHOP
through the qualified employee only if
the qualified employee also enrolls in
the same QHP through the SHOP. We
note that this does not relieve issuers
from the obligation to offer child-only
coverage under the group health plan
where the child is the primary
subscriber, such as where the employee
is 18 years old. Consistent with our
policy for individual market QHPs at
section 1302(f) of the Affordable Care
Act, QHP issuers could satisfy this
standard by offering employee-only
coverage under the group health plan to
qualified applicants seeking child-only
coverage, as long as the QHP includes
rating for child-only coverage in
accordance with applicable premium
rating rules.36
In light of this comment, we note that
the proposed amendments to the
definition of ‘‘enrollee’’ did not account
for a situation in which a person is
enrolled in coverage because she is
eligible for continuation coverage, but is
no longer a dependent of the qualified
employee or other primary subscriber.
To account for this situation, we are
modifying the proposed definition of
‘‘enrollee’’ to include any other person
who is enrolled in a QHP through the
SHOP consistent with applicable law
and the terms of the group health plan.
Comment: Some commenters stated
that the inclusion of ‘‘former
employees’’ in the definition of
qualified employee is not appropriate
except in the case of continuation
coverage.
Response: The inclusion of ‘‘former
employee’’ in the Exchange rules’
definitions of ‘‘applicant’’ and
‘‘qualified employee’’ does not provide
eligibility for individuals to enroll in
coverage if they are not otherwise
eligible to enroll in small group
coverage under HIPAA, COBRA, and
other applicable Federal or State law. If
individuals qualify for coverage under
the terms of the plan and under existing
statute and regulations governing
eligibility to enroll in group health
coverage, they may enroll in group
35 See, for example, 29 U.S.C. 1002(7) & (8),
defining a beneficiary of an employee welfare
benefit plan in relationship to a participant in such
a plan.
36 Exchange Establishment Rule, 77 FR 18310 at
18415.
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health coverage through the SHOP.37
The SHOP regulations do not impose
any additional obligation upon
employers to offer former employees
coverage sold through the SHOP, and
employers may do so where permitted
under the terms of the plan. In light of
this comment, and to clarify that the
persons listed in the definition of
‘‘enrollee’’ are generally meant to
include all those who have enrolled in
coverage through the SHOP consistent
with applicable law and the terms of the
group health plan, we are modifying the
definition of ‘‘enrollee’’ to include, in
addition to the listed individuals, any
other person who is enrolled in a QHP
through the SHOP consistent with
applicable law and the terms of the
group health plan.
Comment: One commenter asked how
expanding the definition of ‘‘enrollee’’
to include a business owner will impact
eligibility thresholds for the Small
Business Health Care Tax Credit.
Response: The inclusion of owners in
the definition of ‘‘enrollee’’ does not
modify qualification requirements for
the Small Business Health Care Tax
Credit, as determinations for the credit
do not rely on the SHOP’s definition of
‘‘enrollee.’’
2. General Functions of an Exchange
a. Consumer Assistance Tools and
Programs of an Exchange (§ 155.205)
In the proposed rule, we proposed to
amend § 155.205(c) to specify the oral
interpretation services that are required
for certain entities subject to
§ 155.205(c). Specifically, for each
Exchange, QHP issuer, and agent or
broker subject to § 155.220(c)(3)(i)
(referred to in this section as a ‘‘webbroker’’), we proposed that the
requirement to provide oral
interpretation services under
§ 155.205(c)(2)(i) would include making
available telephonic interpreters in at
least 150 languages. We also proposed
amendments to § 156.250 that are
discussed below, and that would require
QHP issuers to provide all information
that is critical for obtaining health
insurance coverage or access to health
care services through the QHP,
including applications, forms, and
notices, to qualified individuals,
applicants, qualified employers,
qualified employees, and enrollees in
37 See, for example, § 146.145(a)(1) defining a
‘‘group health plan’’ as, among other things, a plan
that provides medical care to current and former
employees, and § 146.150(b) defining an individual
eligible to enroll in coverage sold in the small group
market as an individual eligible to enroll in group
health insurance coverage offered to a group health
plan in accordance with the terms of the group
health plan.
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accordance with the standards
described in § 155.205(c), including the
provision of telephonic interpreter
services in at least 150 languages.
We proposed to limit the applicability
of the proposed 150 languages standard
for telephonic interpreter services to
Exchanges, web-brokers, and QHP
issuers. We did not propose to apply
this standard to Navigators and nonNavigator assistance personnel because,
as we stated in the proposed rule, the
smaller non-profit organizations that
frequently make up the bulk of these
consumer assistance entities have
limited resources.
In the proposed rule, we also solicited
comment on whether we should
consider more or different language
accessibility standards in § 155.205(c).
We provided certain examples in the
preamble. With respect to written
translations, we gave an example of
requiring written translations in the
languages spoken by the top 10 limited
English proficiency (LEP) groups in the
State or spoken by 10,000 persons or
greater, whichever yields the greater
number of languages. With respect to
taglines (short statements informing
individuals of the availability of
language access services), we gave an
example of requiring taglines in the top
30 non-English languages spoken
nationwide on documents required by
State or Federal law or containing
information that is critical to obtaining
health insurance coverage or access to
health care services through a QHP. We
also provided an example that would
establish a uniform, national standard
that written translations, taglines on
notices and Web site content, and oral
interpretation services be provided in
the top 15 languages spoken by LEP
individuals in the United States.
Finally, we provided an example
specific to Web site content that would
have required the content to be
translated in each non-English language
spoken by an LEP population that
reaches 10 percent of the State
population.
Based on comments received, as
discussed below, we are finalizing the
proposal with the following
modifications:
To give new web-brokers more time
for implementation, we are revising
§ 155.205(c)(2)(i) to specify that for an
agent or broker subject to
§ 155.220(c)(3)(i), the standard to
provide telephonic interpreter services
in at least 150 languages applies no later
than November 1, 2015, the first day of
the individual market open enrollment
period for the 2016 benefit year, or 1
year after such entity has been
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registered with the Exchange, whichever
is later.
We are revising § 155.205(c)(2)(iii) to
specify that, beginning at the start of the
individual market open enrollment
period for the 2017 benefit year, for
Exchanges, QHP issuers, and agents or
brokers subject to § 155.220(c)(3)(i), the
general standard to provide taglines in
non-English languages indicating the
availability of language services
includes taglines on Web site content
and documents that are critical for
obtaining health insurance coverage or
access to health care services through a
QHP for qualified individuals,
applicants, qualified employers,
qualified employees, or enrollees
indicating the availability of language
services in at least the top 15 languages
spoken by the LEP population of the
relevant State, as determined in HHS
guidance. Documents are considered to
be ‘‘critical’’ if the entity is required by
State or Federal law or regulation to
provide them to a qualified individual,
applicant, qualified employer, qualified
employee, or enrollee. We added that
for an agent or broker subject to
§ 155.220(c)(3)(i), this standard will
apply beginning no later than at the start
of the individual market open
enrollment period for the 2017 benefit
year, or when the entity has been
registered with the Exchange for at least
1 year, whichever date is later. HHS
plans to provide sample taglines in all
languages triggered by this threshold.
For purposes of § 155.205(c)(2), the
meaning of the terms ‘‘qualified
individual,’’ ‘‘applicant,’’ ‘‘qualified
employer,’’ ‘‘qualified employee,’’ and
‘‘enrollee’’ is intended to be consistent
with the definitions for these terms
under § 155.20.
We also modified the language
following § 155.205(c)(2)(i) and
§ 155.205(c)(2)(iii) to make clear that the
general standards with respect to oral
interpretation and taglines continue to
apply to all entities subject to
§ 155.205(c).
We added § 155.205(c)(2)(iv) to create
a new standard related to translations of
Web site content for Exchanges, QHP
issuers, and agents or brokers subject to
§ 155.220(c)(3)(i). The new standard
specifies that beginning at the start of
the individual market open enrollment
period for the 2017 benefit year, the
content of a Web site maintained by an
Exchange or QHP issuer must be
translated into any non-English
language that is spoken by an LEP
population that reaches 10 percent or
more of the population of the relevant
State, as determined in HHS guidance.
For an agent or broker subject to
§ 155.220(c)(3)(i), this standard will
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apply beginning at the start of the
individual market open enrollment
period for the 2017 benefit year or when
the entity has been registered with the
Exchange for at least 1 year, whichever
date is later. We clarify that for
Exchanges and web-brokers, this
requirement applies to all content that
is intended for qualified individuals,
applicants, qualified employers,
qualified employees, or enrollees that is
maintained by the entity on the Web site
and is not limited to information that is
critical for obtaining health insurance
coverage or access to health care
services through a QHP. We note that
QHP issuers are not required to translate
all Web site content that is intended for
qualified individuals, applicants,
qualified employers, qualified
employees, or enrollees; rather, the type
of Web site content that must be
translated aligns with the definition of
‘‘critical’’ information to which QHP
issuers must provide meaningful access
under § 156.250 as finalized in this rule.
In addition, an entity that is required to
translate Web site content consistent
with this provision must also still
include taglines, in accordance with
§ 155.205(c)(2)(iii), on its English
version Web pages. This entity would
not, however, be required to include
taglines on its non-English version Web
pages, but it could do so voluntarily.
Comment: The majority of comments
received regarding the proposed
standard for telephonic interpreter
services in 150 languages were
supportive. A few commenters stated
that telephonic interpretation is a costeffective means of providing language
access relative to written translations,
which, according to the commenters, are
demanded with much less frequency
than oral interpretation. Many
commenters stated that the proposal
would help ensure that LEP individuals
obtain language access, helping them
enroll in health insurance coverage.
These commenters suggested requiring
bilingual customer service
representatives in addition to language
lines. Several commenters stated that
specifying telephonic interpreter
services in 150 languages was arbitrary,
overly prescriptive, and potentially
burdensome for smaller entities. Some
commenters suggested that telephonic
interpreter services be available in any
language requested, as they are under
certain State laws, like California’s, or in
as many languages as are necessary to
serve the oral interpretation needs of
applicants and enrollees within the
applicable service area.
Response: We appreciate the
comments regarding this proposal. We
believe that providing telephonic
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interpreter services in 150 languages is
a useful and cost-effective tool to ensure
that most LEP consumers in the service
area are able to receive oral
interpretation services that are required
by existing Federal regulations at
§ 155.205(c)(2)(i). HHS expects to
monitor the extent that the industry
standard for telephonic interpreter
services might diverge substantially
from the 150-language threshold. We
also clarify that this standard should not
be construed to mean that other ways of
providing oral interpretation, such as inperson interpreters or bilingual
customer service representatives, are
prohibited or should be displaced by
telephonic interpreter services. We
recognize that these alternative services
can provide a superior experience for
the consumer which, in turn, can
ultimately benefit the entity.
Comment: Commenters generally
supported our proposal that webbrokers provide telephonic interpreter
services. In particular, one supporter
reasoned that because web-brokers are
‘‘standing in’’ for an issuer or Exchange,
they should be subject to the same
requirement as issuers and Exchanges.
Another commenter, while supporting
the goal of increasing language
accessibility and extending health
coverage to diverse populations,
opposed the requirement and suggested
that we give new participant webbrokers to the Exchange more time to
comply.
Response: We believe that, in regard
to language access, a web-broker should
be expected to provide the same
minimum level of service to a consumer
as would be expected from an Exchange
or QHP issuer. In response to the
concerns that newer web-brokers may
be smaller companies less able to incur
the costs of this requirement, we are
providing web-brokers until November
1, 2015, the first day of the open
enrollment period for the 2016 benefit
year, or 1 year from the date the webbroker registers with the Exchange,
whichever date is later, to comply. As
a reminder, we note that a web-broker,
like every other entity subject to
§ 155.205(c), is required to provide
accessible information to individuals
who are LEP according to the more
general standards under § 155.205(c)(2),
even before the web-broker would be
subject to the more specific standards
finalized in this rule. Moreover, under
§ 155.205(c)(3), a web-broker is required
to inform individuals who are LEP of
the availability of the full range of
language access services described in
§ 155.205(c)(2), and how to access such
services. If a web-broker is not yet
providing telephonic interpreter
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services in at least 150 languages
directly, it must provide oral
interpretation services and inform
individuals of the availability of this
service from other sources, such as the
Exchange’s Call Center.
Comment: With respect to our
proposal to not require Navigators and
non-Navigator assistance personnel to
provide telephonic interpreter services
in at least 150 languages, comments
were mixed. Some commenters believed
that our approach of exempting
Navigators ran counter to a Navigator’s
statutory duty to provide information in
a manner that is culturally and
linguistically appropriate to the needs of
the population being served by the
Exchange or Exchanges.38 Others who
opposed the proposal stated that while
these entities should strive to hire bi- or
multi-lingual staff for the most prevalent
non-English languages spoken by LEP
individuals in their community, for less
frequently encountered languages, or for
smaller entities for whom hiring staff
with special language skills is not
possible, requiring access to telephonic
interpreter services is a cost-effective
strategy for providing language access
services. Among those who agreed with
our proposal, commenters stated that
specifically requiring each entity to
provide telephonic interpreter services
in 150 languages could be cost
prohibitive and potentially force
organizations to opt out of serving as
assisters. At the same time, these
commenters also stated that Navigators
and non-Navigator assistance personnel
should be responsive to and
accommodate, to the extent possible,
any LEP consumer’s language access
needs. These commenters suggested a
number of options, such as requiring
referrals to the Exchange’s Call Center if
an entity cannot meet a specific need;
partnering with other organizations to
provide telephonic interpreter services;
hiring bi- and multi-lingual staff to meet
the ‘‘most significant’’ language needs of
the community; or having HHS contract
with a language line that these entities
could use so that the entity would not
bear additional costs.
Response: We are not extending the
requirement to provide telephonic
interpreter services in 150 languages to
Navigators and non-Navigator assistance
personnel at this time. We recognize
that ensuring that the language needs of
a consumer are met is an important
component of providing high-quality
application and enrollment assistance.
We will continue to consider options for
making language access services more
38 Section
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10787
robust for Navigators and non-Navigator
assistance personnel.
There are a number of existing
language access standards under current
regulations applicable to Navigators that
are consistent with the requirement
under section 1311(i)(3)(E) of the
Affordable Care Act that Navigators
provide information in a manner that is
culturally and linguistically appropriate
to the needs of the population being
served by the Exchange or Exchanges.
For example, under § 155.210(e)(5),
Navigators in all Exchanges must
provide information in a manner that is
culturally and linguistically appropriate
to the needs of the population being
served by the Exchange, including
individuals with LEP. Further, the
general requirements at § 155.205(c) to
provide oral interpretation, written
translations, and taglines in non-English
languages indicating the availability of
language services, continue to apply to
all entities carrying out activities under
§ 155.205(d) and (e), including
Navigators and non-Navigator assistance
personnel, even though the more
specific standards finalized here do not
apply to those entities. As noted above,
included in this general requirement is
the requirement under § 155.205(c)(3) to
inform individuals who are LEP about
the availability of the full range of
language access services described in
§ 155.205(c)(2) and how to access such
services. As such, if they lack the
immediate capacity to help an LEP
individual, all Navigators and nonNavigator assistance personnel in every
Exchange should inform that individual
about the availability of language access
services through other sources, such as
the Exchange Call Center. In addition,
Navigators and non-Navigator assistance
personnel in FFEs and State Partnership
Exchanges, and non-Navigator
assistance personnel funded through an
Exchange Establishment grant, must
comply with the standards set forth in
§ 155.215(c)(3), which require them to
provide consumers with information
and assistance in the consumer’s
preferred language, at no cost to the
consumer, including the provision of
oral interpretation of non-English
languages and the translation of written
documents in non-English languages
when necessary or when requested by
the consumer to ensure effective
communication. Exempting Navigators
and non-Navigator assistance personnel
from the specific requirements finalized
here does not exempt them from
complying with other applicable laws
and regulations that govern the language
accessibility of their work.
Comment: We received comments
regarding whether we should consider
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additional, specific standards pertaining
to written translations, taglines, and
Web site content, as well as suggestions
for standards other than those that we
had specifically mentioned in the
preamble of the proposed rule, as
described above. Some commenters
agreed in principle that improved
language access services will help
consumers. While some commenters
broadly agreed that language access
services should account for the
demographics in a particular service
area, comments were mixed with
respect to the specific thresholds that
should trigger written translations.
Some commenters opposed requiring
more specific standards beyond the
proposed telephonic interpreter services
standard. Still other commenters added
that written translations should be
required only upon request, rather than
automatically, reasoning that limiting
the standard to requests would help
reduce the burden on entities as well as
on State insurance departments, which
often require issuers to file translated
versions of previously filed forms for
State review. One commenter asserted
that additional standards for stand-alone
dental plan issuers were not warranted.
Response: We are not finalizing any
specific standards with respect to
written translations at this time. We will
continue to consider solutions that
balance the language access needs of
consumers who apply for and enroll in
coverage through Exchanges with the
burdens on entities in providing quality
written translations in a timely fashion.
It is important to note that even though
we are not finalizing specific written
translations standards, the general
standard under § 155.205(c)(2)(ii)
continues to apply to all entities subject
to § 155.205(c), as do the general
standards with respect to oral
interpretation and taglines in nonEnglish languages indicating the
availability of language services. We
have modified the language following
§ 155.205(c)(2)(i) and § 155.205(c)(2)(iii)
to make clear that the general standards
with respect to oral interpretation and
taglines continue to apply to all entities
subject to § 155.205(c).
Comment: Some commenters who
commented on our proposal on
language accessibility standards for
taglines suggested that notices and Web
site content provided by HHS should be
available in the top 30 languages spoken
nationwide by LEP populations. Some
commenters suggested that for all other
entities besides the FFEs, a Statespecific approach should be adopted,
specifically recommending that notices
and Web site content provided by a
State Exchange, QHP issuer, or web-
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broker include taglines in the top 15
languages spoken in the relevant State(s)
by LEP populations. One commenter
did not suggest a specific numeric
threshold, but stressed that a uniform
standard should be adopted across
entities.
Response: We agree with many
commenters’ views that the
demographics of a State’s LEP
population, rather than nationwide
demographics, should be taken into
account when taglines are used. This
approach identifies languages tailored to
the needs of each State and thus is more
attuned to the anticipated language
access needs of individuals serviced by
entities. We also believe we should
avoid creating a situation in which 30
taglines take up significant space on
written content, potentially adding to
printing costs.
In light of these considerations, we
are finalizing a standard whereby an
Exchange, QHP issuer, or web-broker
would be required to include taglines on
Web site content and any document that
is critical for obtaining health insurance
coverage or access to health care
services through a QHP for qualified
individuals, applicants, qualified
employers, qualified employees, or
enrollees in at least the top 15 languages
spoken by the LEP population in the
relevant State. If an entity’s service area
covers multiple States, the top 15
languages spoken by LEP individuals
may be determined by aggregating the
top 15 languages spoken by all LEP
individuals among the total population
of the relevant States. A document is
deemed to be critical for obtaining
health insurance coverage or access to
health care services through a QHP if it
is required to be provided by State or
Federal law or regulation to a qualified
individual, applicant, qualified
employer, qualified employee, or
enrollee. Taglines must be included if a
document is considered ‘‘critical’’
information to which QHP issuers must
provide meaningful access under
§ 156.250 as finalized in this rule, so
that most LEP consumers might receive
notice of language access services
regardless of whether such ‘‘critical’’
information is being provided to them
by an Exchange, a QHP issuer, or a webbroker. This requirement with respect to
taglines adds to the standard set forth in
§ 156.250 because it applies to all Web
site content that is provided to qualified
individuals, applicants, qualified
employers, qualified employees, and
enrollees by an Exchange, QHP issuer,
or web-broker, regardless of whether
such content must be translated in
accordance with § 155.205(c)(2)(iv) as
finalized in this rule. We included this
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requirement because all consumers,
regardless of their English proficiency,
are encouraged to apply for and enroll
in coverage through an Exchange online,
and we believe that consumers with LEP
should be able to immediately identify
taglines informing them of their ability
to obtain language access services on the
Web sites of entities subject to this
standard.
It is also important that LEP
consumers, whether they are being
served by an Exchange, QHP issuer, or
web-broker, are able to obtain the same
minimum number of taglines on such
documents, and therefore are applying
this standard equally across these
entities. However, in recognition of the
fact that newer web-brokers are often
smaller entities that may not as easily
meet this standard as an Exchange or
QHP issuer, we are providing them
additional lead time to comply,
specifically, until the first day of the
individual market open enrollment
period for the 2017 benefit year or when
such entity has been registered with the
Exchange for at least 1 year, whichever
is later. To facilitate compliance with
this standard, beginning in early 2016,
we plan to issue guidance which
identifies the applicable non-English
languages in each State.39 We also
expect to provide sample taglines in all
languages triggered by this threshold
beginning in early 2016.
Comment: We received comments
supporting a possible additional
standard discussed in the preamble to
the proposed rule, under which Web
site content should be translated into
each non-English language spoken by an
LEP population that reaches 10 percent
of the State population, though one
commenter suggested that we consider
requiring translation into the top three
languages spoken by the LEP population
in a given State. A few commenters
expressed concerns about costs. Another
commenter opposed applying the
standard to web-brokers, and suggested
that we give new participant webbrokers to the Exchange more time to
comply.
Response: We recognize that Web site
content is an important source of
information for qualified individuals,
applicants, qualified employers,
qualified employees, and enrollees,
particularly in light of the fact that
applying for and enrolling into a QHP
or insurance affordability programs
online is a generally more efficient
process than other means. In addition,
39 We anticipate releasing this guidance on an
annual basis beginning in early 2016, soon after the
most recently published American Community
Survey data is expected to become available.
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the Web site content of an Exchange or
web-broker often contains consumer
tools and education materials that,
while not always ‘‘critical’’ for obtaining
health care coverage or access to health
care services through a QHP within the
meaning of § 156.250, nonetheless can
help consumers understand their
eligibility for coverage, how much
financial assistance they might qualify
for, and other important information
that help consumers make an informed
decision. We believe it is appropriate to
require Exchanges, QHP issuers, and
web-brokers to translate Web site
content into each non-English language
spoken by an LEP population that
reaches 10 percent or more of a State’s
population beginning at the start of the
individual market open enrollment
period for the 2017 benefit year. We
note that the FFE is already meeting this
standard. We clarify that for Exchanges
and web-brokers, this requirement
applies to all information intended for
qualified individuals, applicants,
qualified employers, qualified
employees, or enrollees that is
maintained by the entity on the Web site
and is not limited to information that is
critical for obtaining health insurance
coverage or access to health care
services through a QHP. We note that
for QHP issuers, the type of Web site
content for which translation is required
aligns with the definition set forth in
§ 156.250, as finalized in this rule, of
‘‘critical’’ information to which QHP
issuers must provide meaningful access.
If certain Web site content that is
maintained by an Exchange, QHP issuer,
or web-broker contains information that
specifically applies to non-QHPs only
and does not contain information that is
either (for Exchanges and web-brokers)
intended for a qualified individual,
applicant, qualified employer, qualified
employee, or enrollee or (for QHP
issuers) ‘‘critical’’ within the meaning of
§ 156.250, then the entity is not required
to translate it into an applicable nonEnglish language.
Given the substantial effort and
resources involved in translating Web
site content, we believe that the
suggestion to translate Web site content
in the top three languages spoken by the
LEP population in the State is too
burdensome. In addition, partly because
of concerns raised about burden as well
as our guiding principle of focusing on
the demographics and anticipated
language needs of the community being
served using stable and reliable data, we
are also not finalizing the standard
discussed in the preamble to the
proposed rule that would have required
a uniform standard for written
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translations, taglines, and Web site
content translations in the top 15
languages spoken nationwide among the
LEP population.
We also believe it is important that
LEP consumers in a given State are able
to obtain the same minimum level of
language access services from the
Exchange, QHP issuers operating in the
Exchange, and web-brokers operating in
the State and therefore are applying a
Web site content translation standard
across these entities. However, we are
providing web-brokers additional time
to comply. Specifically, web-brokers
will have until the first day of the
individual market open enrollment
period for the 2017 benefit year, or
when such entity has been registered
with the Exchange for at least 1 year,
whichever is later.
As noted above, regardless of whether
an entity is required to translate Web
site content into an applicable nonEnglish language under this provision,
the entity’s English Web site content
will always be required to display
taglines in at least the top 15 nonEnglish languages spoken among the
LEP population of the relevant State,
consistent with § 155.205(c)(2)(iii) of
this rule, so that a wider range of LEP
individuals whose language does not
meet the 10 percent threshold in
§ 155.205(c)(2)(iv) may still obtain
language access services through oral
interpretation or written translations, as
applicable. For example, if an entity is
required to translate Web site content
into Spanish because the Spanishspeaking LEP population in the
applicable State reaches 10 percent of
the State’s population, the entity’s
English version Web site must still
display taglines in the top 15 nonEnglish languages spoken by the LEP
population of the relevant State. To
facilitate compliance with this standard,
beginning in early 2016, we plan to
issue guidance that identifies the
applicable languages and States meeting
this threshold.
We note that for an entity whose
service area covers multiple States, if at
least one language in one of the States
it serves meets the 10 percent threshold
in § 155.205(c)(2)(iv), then the
applicable information on the entity’s
Web site must be translated into that
language.
Comment: In regards to our
solicitation for comment regarding the
proposed implementation date for the
150-language standard and other
possible specific language access
standards, a few commenters indicated
that they were already meeting or
exceeding the 150-language standard for
their language line. Many commenters
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10789
stated that to the extent additional
requirements beyond telephonic
interpreter services are required,
additional time would be necessary.
Response: With respect to the
requirement to provide telephonic
interpreter services in at least 150
languages, Exchanges and QHP issuers
will be required to comply with this
requirement when this rule takes effect.
Web-brokers will have until the later of
November 1, 2015, the first day of the
individual market open enrollment
period for the 2016 benefit year, or 1
year from the date the web-broker
registers with the Exchange to comply
with the requirement to provide
telephonic interpreter services in at
least 150 languages. For the
requirements finalized for taglines and
translation of Web site content, as stated
in the regulation text, such standards
will apply for Exchanges and QHP
issuers no later than the first day of the
open enrollment period in the
individual market for the 2017 benefit
year. To give web-brokers participating
on an Exchange additional time, the
specific requirements to provide
taglines and translated Web site content
will apply on the first day of the
individual market open enrollment
period for the 2017 benefit year, or
when the web-broker has been
registered with the Exchange for at least
1 year, whichever date is later.
Comment: Several commenters
requested that we emphasize that the
provisions set forth in § 155.205(c) do
not limit or abrogate requirements under
Title VI of the Civil Rights Act of 1964
and section 1557 of the Affordable Care
Act.
Response: As we stated in the
preamble of the proposed rule, we
remind relevant covered entities of the
obligations they may have under other
Federal laws to meet existing effective
communication requirements for
individuals with disabilities and limited
English proficiency. Such obligations
are independent of the responsibilities
these entities may have under
§§ 155.205(c), 155.230(b), 156.200(e),
and 156.250.
b. Standards Applicable to Navigators
and Non-Navigator Assistance
Personnel Carrying Out Consumer
Assistance Functions Under
§§ 155.205(d) and (e) and 155.210 in a
Federally-Facilitated Exchange and to
Non-Navigator Assistance Personnel
Funded Through an Exchange
Establishment Grant (§ 155.215)
To clarify that only a non-Navigator
entity must maintain a physical
presence in the Exchange service area,
rather than each individual non-
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Navigator associated with a nonNavigator entity, we proposed to amend
§ 155.215(h) to limit the physical
presence requirement specified under
that section to non-Navigator entities. In
the proposed rule, we explained that we
believe that the amendment would
strike an appropriate balance in
allowing individuals providing nonNavigator assistance subject to § 155.215
to provide assistance via the telephone,
Internet, or through other remote means,
particularly in circumstances in which
remote assistance would be more
effective or practical than face-to-face
assistance, while also ensuring that the
organization with which they are
affiliated is in a position to understand
and meet the specific needs of the
communities they serve and to facilitate
consumer protection efforts, as
applicable, in their State. We added that
if an individual non-Navigator is not
affiliated with a larger entity, we would
consider the individual to be the entity
specified in the amended language
under proposed § 155.215(h). We also
proposed to add the title ‘‘Physical
presence’’ to paragraph (h) for improved
clarity.
We are finalizing this clarification as
proposed.
Comment: The vast majority of
commenters expressed support for this
proposal, indicating that the proposed
change would benefit consumers
seeking remote assistance from
individual non-Navigators who may not
be physically present in the area served
by the Exchange but who can
nonetheless provide effective assistance
to an individual through the use of
technology tools. One commenter
suggested that we require non-Navigator
entities to ensure that at least half of
their personnel serving a particular
State conduct in-person assistance in
the State. Another opposed the proposal
on the grounds that it was too
prescriptive because it would bar an
otherwise well-suited organization from
serving consumers in the State if the
organization maintained no physical
presence.
Response: We agree with commenters
that remote assistance is valuable,
especially when a consumer is unable to
meet in person with an individual nonNavigator. We believe that the
requirement on the organization to
maintain a physical presence in the
State is a reasonable measure to
facilitate a State’s consumer protection
efforts and enhance the organization’s
ability to provide culturally competent
assistance 40 which, at the same time,
40 See § 155.215(c) for a list of standards regarding
the provision of culturally and linguistically
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does not preclude an organization’s
ability to provide remote assistance to
consumers.41 We also note that an
organization that is well-suited to
performing application and enrollment
assistance but does not maintain a
physical presence in the Exchange
service area may be able to participate
in the certified application counselor
program because the Federal
requirements governing this program do
not include the requirement to maintain
a physical presence.
c. Ability of States To Permit Agents
and Brokers To Assist Qualified
Individuals, Qualified Employers, or
Qualified Employees Enrolling in QHPs
(§ 155.220)
In § 155.20, we are amending the
definition of enrollee in the SHOP to
include individuals other than qualified
employees. To conform to this
amendment, we are finalizing a
modification to § 155.220(i). For a
discussion of this amendment, please
see the preamble for § 155.20.
d. Standards for HHS-Approved
Vendors of Federally-Facilitated
Exchange Training and Information
Verification for Agents and Brokers
(§ 155.222)
In § 155.222, we proposed a process
for HHS to approve vendors to offer
training and information verification
services as an additional avenue to the
available HHS training, by which State
licensed agents and brokers could
complete the training requirements
necessary to assist consumers seeking
coverage through the FFEs. In
§ 155.222(a), we proposed an
application and approval process for
vendors seeking recognition as HHSapproved vendors of FFE training and
information verification for agents and
brokers. As part of an approved training
and information verification program,
we proposed that the vendor must
require agents and brokers to
successfully complete identity proofing,
provide identifying information, and
successfully complete the required
curriculum. Further, we proposed that
no training program would be
recognized unless it included an
information verification component
under which the vendor confirms the
identity and applicable State licensure
of the person who is credited with
successful completion of the training
appropriate standards which apply in an Exchange
operated by HHS during the exercise of its authority
under § 155.105(f) and to non-Navigator assistance
personnel funded through an Exchange
Establishment Grant under section 1311(a) of the
Affordable Care Act.
41 79 FR 30287 (May 27, 2014).
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program. We proposed that only HHSapproved vendors that meet the
designated standards would have their
programs recognized by HHS. We
proposed that vendors be approved for
one-year terms, and that vendors
seeking to continue their recognition as
HHS-approved vendors for FFE agent
and broker training and information
verification the following year be reapproved through a process to be
determined by HHS.
In paragraph (b), we proposed the
standards that a vendor must meet to be
approved by HHS to offer FFE training
and information verification to agents
and brokers. In paragraph (b)(1), we
proposed that the vendor submit a
complete and accurate application by
the deadline established by HHS, which
demonstrates prior experience with
successfully conducting online training
and identity proofing, as well as
providing technical support to a large
customer base. We proposed in
paragraph (b)(2) that the vendor be
required to adhere to HHS specifications
for content, format, and delivery of
training and information verification.
HHS would require vendors to have
their training approved for continuing
education units accepted by State
regulatory entities. In paragraph (b)(3)
we proposed that vendors be required to
collect, store, and share with HHS all
data from agent and broker users of the
vendor’s training and information
verification in a manner specified by
HHS, and protect the data in accordance
with applicable privacy and security
laws and regulations. In paragraph
(b)(4), we proposed that the vendor be
required to execute an agreement with
HHS, in a form and manner to be
determined by HHS, which requires the
vendor to comply with HHS guidelines
for interfacing with HHS data systems,
the implementation of the training and
information verification processes, and
the use of all data collected. We also
proposed to require vendors to adopt a
fee structure that is consistent with the
fee structure for comparable trainings
offered by the vendor to comparable
audiences. In paragraph (b)(5), we
proposed that the vendor be required to
permit any individual who holds a valid
State license or equivalent State
authority to sell health insurance
products to access the vendor’s training
and information verification process.
In paragraph (c), we proposed that
once HHS has completed the approval
process for vendors for a given year,
HHS would publish a list of approved
entities on an HHS Web site. In
paragraph (d), we proposed that HHS
may monitor and audit approved
vendors and their records related to the
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FFE training and information
verification functions to ensure the
approved vendors’ ongoing compliance
with the standards outlined in
paragraph (b). We proposed that if HHS
determines that the approved vendor is
no longer in compliance with standards
under paragraph (b), HHS may remove
the vendor from the list described in
paragraph (c), and may direct the
vendor to cease performing the training
and information verification functions
described in this section.
In paragraph (e), we proposed that
such a vendor may appeal HHS’s
decision by notifying HHS in writing
within 15 days of receipt of the
notification by HHS of not being
approved or having its approval
revoked, and submitting additional
documentation demonstrating how the
vendor meets the standards in
paragraph (b) and (if applicable) the
terms of their agreement with HHS.
HHS will review the submitted
documentation and make a final
determination within 30 days from
receipt of the submission of the
additional documentation.
We are finalizing these provisions as
proposed, with the modifications
detailed below.
Comment: Most commenters generally
supported the proposal to permit
approved vendors to provide training
and information verification to agents
and brokers assisting consumers in the
FFEs, so that agents and brokers would
have more choice and greater
opportunity to complete the required
FFE training. Several commenters
expressed concern that external vendors
would not be able to provide training
that is comprehensive, accurate, and
without bias. These commenters urged
HHS to provide standards for quality
control and oversight.
Response: We agree that expanding
the available avenues for agents and
brokers to fulfill the FFE training
requirements will allow the FFEs to
leverage the experience, contacts, and
networks of approved vendors. To
ensure that the training and information
verification programs adhere to uniform
standards for content, format, and
delivery, under § 155.222(b)(2), HHSapproved vendors will be required to
adhere to HHS specifications for
content, format, and delivery of training
and information verification. Vendors
may choose to charge agents and brokers
for their training; HHS will consider
current training costs for State-licensed
agents and brokers for comparable
trainings to comparable audiences when
reviewing vendor applications with
proposed fee structures.
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After HHS launches 2016 plan year
training, planned for the summer of the
2015 calendar year, HHS intends to
monitor vendor training programs and
work with vendors to make sure that the
FFE training content and delivery
continues to meet HHS standards. HHS
may audit approved vendors throughout
the plan year in accordance with
§ 155.222(d). HHS intends to issue
future guidance regarding
§ 155.222(b)(2) that will outline the
training specifications for content and
coverage . If a vendor’s training program
fails to meet HHS standards after public
release, HHS may revoke the vendor’s
approval to offer FFE training, and
would work with affected agents and
brokers to ensure they have the required
training.
Comment: Several commenters had
recommendations and requests for
further clarification of requirements
relating to the application and the
agreement between HHS and vendors.
One commenter requested clarification
on what constitutes an enforcement
action for purposes of the application
and the agreement. One commenter
asked about demonstrating experience
with identity proofing, since most
vendors offering training and continuing
education programs do not conduct
identity proofing in the same manner as
HHS.
Response: HHS intends to release the
application form to become an HHS
approved vendor of FFE training and
information verification for the 2016
plan year in the first quarter of 2015.
HHS further intends to release guidance
related to the application process in the
first quarter of 2015 to help interested
vendors better understand the
application process. The vendor must
submit the application by the deadline
specified by HHS. We intend to issue
guidance that will provide details on the
timeline for the application process. We
expect that vendors will be approved for
one-year terms.
In the preamble to paragraph (b)(1)
(79 FR 70706), we explained that HHS
would only approve vendors if no
current or past regulatory, enforcement,
or legal action has been taken by a State
or Federal regulator against the entity in
the 3 years prior to the application or
renewal application deadline under this
section. After careful consideration of
the various events at the State and
Federal level that may constitute an
‘‘enforcement’’ action, we note that HHS
will take into consideration
justifications, corrective actions taken,
or other mitigating or aggravating
circumstances (for example, the
financial impact of the violation, or the
number of individuals affected by the
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violation) in evaluating whether a past
or current violation would exclude a
potential vendor from participation.
Vendors whose applications are denied
will have the opportunity to appeal
HHS’s decision under § 155.222(e), and
may submit additional documentation
for HHS to consider about potential
mitigating circumstances.
To more accurately describe the
information verification functionality
that vendors must provide to agents and
brokers, we are adding ‘‘proof of valid
State licensure’’ in paragraph (a)(2).
Because HHS expects vendors to
demonstrate prior experience with
verifying State licensure on the
application, we are adding ‘‘verification
of valid State license’’ in paragraph
(b)(1)(i). In response to a comment that
explained that organizations that
currently conduct agent and broker
training may not have experience with
identity proofing, we are amending the
requirement in paragraph (b)(1)(ii) so
that vendors must demonstrate the
ability to conduct identity proofing, but
do not have to provide proof of prior
experience. The goal of the information
verification process is to confirm the
State licensure and identity of agents
and brokers who successfully complete
FFE training before they are permitted
by HHS to assist consumers with FFE
eligibility determinations and QHP
selections as an agent or broker.
Therefore, vendors must demonstrate a
current capability of verifying both the
identity of the person completing the
training, as well as his or her State
licenses or equivalent State
authorizations to sell health insurance
products.
Comment: Several commenters made
suggestions for training content, and the
format and frequency for exchanging
training and information verification
data with HHS.
Response: All of the recommended
training topics are currently part of the
existing HHS FFE training for agents
and brokers (for example, advance
payments of the premium tax credit and
cost-sharing reductions, and Medicaid
and CHIP eligibility). Vendors approved
to offer training in the future will be
required to include those topics in the
curriculum for their respective FFE
training programs for agents and
brokers. Based on the comments we
received, we are adding language at
paragraph (b)(3) to indicate that vendors
must be able to share training and
information verification data with HHS
in a manner, format, and frequency
specified by HHS. Specifically, we are
adding ‘‘format, and frequency’’ to
paragraph (b)(3) with respect to the
collection, storage, and sharing of data
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to further protect the personally
identifiable information of agents and
brokers, and aid HHS in the monitoring
of vendors’ training and information
verification programs. We anticipate
issuing future technical guidance that
will detail the manner, format, and
frequency for the exchange of data
under § 155.222(b)(3).
Comment: In response to the
solicitation of comments on what
additional components a training
program should include in order to
qualify for HHS approval, some
commenters requested that the training
be applicable across States and that
vendors be required to offer continuing
education units (CEUs) in multiple
States. Other commenters suggested that
States should incorporate Federal
materials in existing training and
licensing programs to promote costeffectiveness and efficiency, and that
HHS should eliminate the requirement
that agents and brokers receive approval
by an Exchange. One commenter
suggested that States be able to become
vendors.
Response: HHS will require vendors
to offer training that is applicable in all
FFE States, consistent with the current
HHS training. As noted in the preamble
to the proposed rule (79 FR 70706), the
establishment of standards for HHSapproved vendors of alternative training
and information verification processes,
we seek to make the FFE training and
registration process easier for agents and
brokers while also attracting greater
agent and broker participation in the
FFEs through the development of
partnerships with vendors. After careful
consideration of these comments, we
have amended paragraph (b)(2) to
require vendors to offer CEU credit for
their training programs in at least five
States in which an FFE is operating,
effective for plan year 2016 training.
Many businesses, trade associations,
and States currently offer training that
qualifies for CEUs, so we do not believe
this requirement will be a significant
burden for vendors. We believe five is
a reasonable number of States in this
initial year of the vendor-hosted FFE
training and information verification
alternative avenue, and we intend to
monitor and evaluate whether this
number should be modified in future
years. States may apply to be recognized
as HHS-approved vendors to offer FFE
training and information verification to
agents and brokers, and must comply
with the same standards as other vendor
applicants. HHS will continue to require
the Exchanges, including FFEs, to enter
into agreements with and register agents
and brokers, as described in
§ 155.220(d) and § 155.260(b).
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We are finalizing these provisions as
proposed, with the following
modifications. We are dividing
proposed paragraph (a) into three
paragraphs. To add description to the
information verification functionality
that vendors must provide to agents and
brokers, we are adding ‘‘proof of valid
licensure’’ in paragraph (a)(2), and also
adding ‘‘verification of valid State
license’’ to the new paragraph (b)(1)(i).
We are adding paragraph (b)(1)(ii) to
clarify that vendors must have the
ability to host identity proofing, but do
not need to demonstrate prior
experience. In paragraph (b)(2), we are
adding ‘‘offering continuing education
units (CEUs) for at least five States in
which an FFE is operating.’’ We are
adding ‘‘format, and frequency’’ to
paragraph (b)(3) with respect to the
collection, storage, and sharing of data
to further protect the personally
identifiable information of agents and
brokers, and aid HHS in the monitoring
of vendors’ training and information
verification programs.
3. Exchange Functions in the Individual
Market: Eligibility Determinations for
Exchange Participation and Insurance
Affordability Programs
a. Annual Eligibility Redetermination
(§ 155.335)
In § 155.335, we proposed permitting
Exchanges to implement alternative reenrollment hierarchies in future benefit
years. We sought comment on a default
re-enrollment hierarchy that consumers
could opt into that would be triggered
if the enrollee’s current plan’s premium
increased from the prior year, or
increased relative to the premium of
other similar plans (such as plans of the
same metal tier), by more than a
threshold amount, such as 5 percent or
10 percent. We also sought comment on
whether SBMs should have the
flexibility to implement alternative reenrollment hierarchies beginning with
the 2016 open enrollment and whether
to adopt any such alternatives in the
FFE for 2017 open enrollment.
In light of the comments discussed
below, we are not finalizing our
proposal to explore alternative reenrollment hierarchies for the FFE at
this time. However our current rules
permit Exchanges to implement
alternative re-enrollment hierarchies
under § 155.335(a)(2)(iii) based on a
showing by the Exchange that the
alternative procedures would facilitate
continued enrollment in coverage for
which the enrollee remains eligible,
provide clear information about the
process to the qualified individual or
enrollee (including regarding any action
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by the qualified individual or enrollee
necessary to obtain the most accurate
redetermination of eligibility), and
provide adequate program integrity
protections, and we welcome efforts by
SBEs to develop alternative hierarchies
consistent with these standards that
meet the needs of their consumers.
Comment: We received many
comments regarding the proposed
alternative re-enrollment hierarchies.
Commenters who opposed permitting
alternative enrollment hierarchies,
particularly those that prioritize lowpremium plans, noted that, in most
cases, the plan a consumer chooses
during open enrollment is one that the
consumer has shopped for and has
determined best meets his or her needs.
Additionally, commenters highlighted
that low-cost premiums do not
necessarily lead to lower overall cost of
coverage because deductibles,
copayments, coinsurance, and out-ofpocket limits may be higher.
In contrast, some commenters
supported the proposal’s emphasis on
low-cost premiums. One commenter
believed that multiple re-enrollment
hierarchies should be available to
consumers, but cautioned that these
options should be limited to two, and be
easy to understand.
Commenters had concerns that
consumers may not realize that opting
into a default enrollment hierarchy
based on low-cost premiums may result
in other significant changes to their
coverage, as noted above. Commenters
also requested that, if alternative
hierarchies are implemented, consumers
be made aware of the consequences of
selecting this default re-enrollment
option both at the time of initial
enrollment when a person could opt
into this and also prior to re-enrollment.
Some commenters noted that the
proposal may not keep consumers
actively engaged in the process of reenrollment and making coverage
choices. Commenters emphasized that,
if alternative hierarchies are
implemented, Exchanges must educate
consumers at the time of enrollment
about their choice and what it may
mean for their future health coverage
and costs. Commenters stressed that
consumer notices should emphasize the
benefit of returning to the Exchange
during the open enrollment period to
examine plan options and encouraged
focus testing to determine messaging
that best communicates the implications
of opting into a re-enrollment hierarchy.
We received a few alternative ideas
for re-enrollment hierarchies, including
basing re-enrollment on factors
consumers identify as most important to
them. One commenter recommended
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permitting consumers to choose
between a default re-enrollment
hierarchy that prioritizes the consumer’s
choice of plan, as the current policy
does, versus prioritizing the consumer’s
original choice of premium. The
commenter believed that presenting
these two hierarchy choices to
consumers would greatly increase
consumer understanding of the
significance and consequences of
selecting one hierarchy over the other.
Another commenter suggested limiting
the low-cost premium hierarchy option
to only those consumers who are
currently enrolled in the lowest-cost or
second-lowest cost silver plan to target
consumers who are most likely to notice
a change in premium and make it
administratively easier to implement.
Finally, several commenters
emphasized the need to continue to
focus on the development of the current
redetermination and re-enrollment
process. Commenters noted
improvements should be made to the
technical ability to support automatic
eligibility redeterminations, particularly
those including determinations for
advance payments of the premium tax
credit and cost-sharing reductions. We
received several comments
recommending that HHS wait to
implement any alternative hierarchies
until the current enrollment hierarchies
have operated for a few years and more
information and lessons can be gleaned
from the experience. In contrast, a few
commenters, who supported the
proposal, encouraged early adoption of
the policy, and one commenter
suggested that consumers would not
want to wait to take advantage of this
low-cost option.
Response: We appreciate the many
comments received regarding alternative
re-enrollment hierarchies and are
sensitive to the concerns raised by
commenters. Consumers consider many
factors when selecting health coverage
in addition to the premium, including
the provider network, cost-sharing,
deductibles, and other factors which
affect overall costs, continuity of care,
and the consumer experience. At the
same time, we continue to believe that
default re-enrollment of consumers in
the same plan (or a similar plan) may
not best serve consumers’ interests in
cases where the premium for their plan
relative to available alternatives has
changes substantially. Due to concerns
expressed by commenters, we are not
finalizing changes to the re-enrollment
hierarchies. Instead, the existing reenrollment hierarchies will remain in
place. In accordance with commenters’
suggestions, we may revisit alternative
hierarchies as we learn more about
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consumer preferences and gain
implementation experience. We will
also work to continue to improve the
current annual redetermination and
renewal processes, including the
concerns expressed by commenters for
the need for greater consumer education
and engagement efforts. As noted below,
we encourage SBEs to consider
alternative re-enrollment hierarchies.
Comment: Most commenters,
including those representing SBEs,
supported the proposed flexibility for
SBEs to implement alternative reenrollment hierarchies. Commenters
saw this flexibility as a way to further
test alternative hierarchies before they
are implemented more widely, and also
as a way to meet the unique
characteristics of each Exchange.
Additionally, one commenter expressed
opposition to providing State flexibility
by the 2016 benefit year out of concern
that consumers would not have enough
time to be properly educated about reenrollment by operation of the
alternative hierarchy and because no
precedent exists for reassigning a
consumer to an entirely new set of
coverage benefits. Finally, one
commenter, who supported permitting
State flexibility in this regard, did not
believe HHS should permit States to
prioritize issuer continuity.
Response: SBEs play an important
role in implementing policies and
providing important feedback regarding
their success and difficulties,
particularly because each SBE has a
unique consumer base and market. As
noted above, under our current
regulations, SBEs may gain approval
from HHS to implement alternative
default re-enrollment hierarchies. We
encourage SBEs to consider alternative
hierarchies and we will closely examine
the results of any SBE actions in this
area.
Comment: We received a few
comments requesting more information
regarding how this proposal would
impact stand-alone dental plans
(SADPs). Several commenters noted that
the process for re-enrolling in a SADP
should be separate and independent
from re-enrollment in a QHP.
Response: Because we will not
implement the proposed alternative reenrollment hierarchies at this time, we
are not addressing how this policy
would affect SADPs. However, we
appreciate the comments raising this
issue and, if the proposal is revisited in
the future, we will address concerns
regarding SADPs then.
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4. Exchange Functions in the Individual
Market: Enrollment in Qualified Health
Plans
a. Enrollment of Qualified Individuals
Into QHPs (§ 155.400)
We proposed to amend § 155.400(e) to
explicitly provide for an Exchange to
establish a standard policy for setting
deadlines for payment of the first
month’s premium.
For the FFEs, we proposed several
possible payment deadlines tied to the
coverage effective date for regular
effective dates (meaning coverage
effective the first day of the following
month for plan selections made between
the first and fifteenth of the month, and
coverage effective the first day of the
second month following a plan selection
made between the 16th and the end of
the month). Some options we
considered included providing
consumers until the coverage effective
date, or the day before the coverage
effective date, to make their first month
premium payment. Alternatively, we
considered providing consumers
additional time after the coverage
effective date to make their premium
payment (5 days, 10 days, or 30 days
after the coverage effective date). We
sought comment on the period of time
following the coverage effective date an
issuer could be required or permitted to
accept a first month’s premium payment
for that coverage.
With respect to effective dates other
than regular effective dates, meaning
retroactive or accelerated coverage
effective dates resulting from enrollment
under certain special enrollment
periods (including birth and marriage),
resulting from the resolution of appeals,
or resulting from amounts newly due for
prior coverage based on issuer
corrections of under-billing, we
considered a premium payment
deadline of 10–15 business days from
when the issuer receives the enrollment
transaction.
We sought comment on which
proposed premium payment deadlines
give issuers an acceptable amount of
time to send an invoice and allow for
timely payment by the consumer, and
give consumers sufficient time to make
the payment. We also sought comment
on how such a policy would likely
affect issuer operations and consumers’
ability to obtain coverage.
We noted that because this
rulemaking will likely not be finalized
until after open enrollment for 2015,
any such deadlines would not be
applicable for that open enrollment
period.
We are finalizing the provisions
proposed in § 155.400 of the proposed
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rule, with the inclusion of premium
payment deadline policies for the FFEs,
selected from among the options
described in the proposed rule.
Specifically, we revised paragraph
§ 155.400(e) to establish a standard
policy for premium payment deadlines
in the FFEs, while leaving other
Exchanges the option of establishing
such policies. We added § 155.400(e)(1)
to establish a premium payment
deadline policy for the first month’s
premium payment for a first-time
enrollment on an FFE or for an active or
passive reenrollment in a plan within a
new product or with a new issuer.
In new § 155.400(e)(1)(i), we establish
a policy for the FFEs that premium
payment deadlines for the first month’s
premium for a new enrollment must be
no earlier than the coverage effective
date, but no later than 30 calendar days
from the coverage effective date in cases
where coverage becomes effective with
regular coverage effective dates, as
provided for in § 155.410(f) and
§ 155.420(b)(1).
We also added § 155.400(e)(1)(ii)
whereby the premium payment
deadlines for the first month’s premium
must be 30 calendar days from the date
the issuer receives the enrollment
transaction, in cases where coverage
becomes effective under special
effective dates, as provided for in
§ 155.420(b)(2).
Comment: We received several
comments recommending that HHS give
issuers flexibility surrounding payment
deadlines, with the rationale that
flexibility in the first year helped
maximize enrollment by
accommodating those who require
additional time to make payment.
Several commenters suggested giving
consumers 30 days to make their first
month’s premium payment, while a
large number of commenters supported
establishing a standard policy requiring
consumers to make their first month’s
premium payment prior to the effective
date. Most concerns raised by
commenters opposed allowing premium
payments after the coverage effective
date due to the uncertainty of payment
for services provided after the coverage
effective date if a premium is not paid
and the enrollee is subsequently
cancelled.
Response: We recognize that
decisions regarding payment of the first
month’s premium have traditionally
been business decisions made by
issuers, subject to State rules. We
believe that having some minimum
standards could benefit issuers and
consumers by ensuring a consistent
operational procedure while still giving
issuers flexibility. Within this context,
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we also sought to provide flexibility for
SBEs to establish their own policies for
premium payment deadlines.
Accordingly, we are finalizing
§ 155.400(e) to indicate that an
Exchange may establish a standard
policy for setting premium payment
deadlines, and are establishing a policy
for the FFEs, as described above.
This policy gives issuers flexibility
while allowing additional time for
individuals who may have
circumstances that would not otherwise
provide standard timeframes for
payment.
Comment: Several commenters were
confused about the additional language
to allow first month’s premium
payments after the coverage effective
date, thinking that a person’s coverage
could be effectuated prior to the person
making their payment. Many providers
and some issuers were opposed to
allowing more individuals to appear to
have effective coverage and then have
the coverage not be effectuated due to
non-payment of premium by the
payment deadline, resulting in having to
reverse claims for payment for services
rendered during the time between the
intended coverage effective date and the
payment deadline.
Response: Payment for first month’s
premium is still required prior to
coverage being effectuated. For the FFE,
in cases where a person, consistent with
an issuer’s payment policy, makes their
premium payment after the coverage
effective date, but before the premium
payment deadline set by the issuer, the
consumer would receive a retroactive
effective date. Issuers may pend claims
while waiting for the first month’s
premium payment and either deny or
reverse those claims based on whether
the individual makes their first month’s
payment by the premium payment
deadline. We believe that it is better to
allow payments, if the issuer chooses,
after the coverage effective date.
Comment: Several commenters
supported a uniform payment deadline,
but wanted clarification that SBEs can
establish their own policy for premium
payments.
Response: While we believe that
having uniform minimum standards for
all issuers for payment of a first month’s
premium to effectuate enrollments
could benefit issuers and consumers by
ensuring a consistent operational
procedure while still giving issuers
flexibility, our intent in the proposed
rule was to let each Exchange decide
whether to develop its own payment
deadline policy for the first month’s
premium. We are finalizing a revised
§ 155.400(e) indicating an Exchange
may establish a standard policy for
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setting premium payment deadlines,
and establishing the FFEs premium
payment deadline policy for the first
month’s premium payment.
Comment: Some commenters
suggested that the if HHS implements a
uniform policy for the first month’s
premium payment deadlines, HHS
should take into account consumers
who have unusual circumstances (for
example, when consumers are eligible
for retroactive effective dates, an issuer
fails to issue a bill in a timely manner,
a consumer’s payment is misdirected by
mail, etc.).
We also received several comments
suggesting that for irregular effective
dates, the premium payment date
should be 10–15 business days from
when the consumer receives the invoice
from the issuer, not when the issuer
receives the enrollment transaction.
Commenters suggested that this would
create a level playing field for
consumers since some issuers may take
longer to process their enrollment
transactions
Response: In this final rule, we are
adding § 155.400(e)(1)(ii), which
accommodates consumers who are
given an accelerated or retroactive
effective date based, for example, on a
change in circumstance. We want to
give consumers with irregular effective
dates sufficient time to pay the first
month’s premium and we believe, based
on comments received that suggested
giving consumers with irregular
effective dates more time to make their
first month’s premium payment, 30
calendar days is sufficient and reduces
the complexity of accounting for
weekends and holidays. We also
recognize that issuers do not all have a
mandated standard for timeliness of
billing consumers, but we believe
issuers want to collect the first month’s
premium payment and have no
intention to delay billing on their end.
Furthermore, depending on the issuers
and how the consumer elects to make
payment, not all enrollees will be sent
an invoice (for instance, in cases where
a consumer is redirected by the FFE to
the issuer’s Web site and pays the
premium online), whereas the FFE will
always send an enrollment transaction
to the issuer when a consumer selects a
plan. Therefore, we are finalizing this
rule with a standard under which these
individuals are given 30 calendar days
from the date the issuer receives the
enrollment transaction to make their
first month’s premium payment.
b. Annual Open Enrollment Period
(§ 155.410)
In § 155.410, we proposed to amend
paragraph (e), which provides the dates
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for the annual open enrollment period
in which qualified individuals and
enrollees may apply for or change
coverage in a QHP. We proposed to
restructure paragraph (e) by placing the
current provision regarding the 2015
benefit year in paragraph (e)(1) and the
proposed requirement for all benefit
years beginning on or after 2016 in
paragraph (e)(2). Specifically, in
paragraph (e)(2), we proposed that for
benefit years beginning on or after
January 1, 2016, the annual open
enrollment period would begin on
October 1 and extend through December
15 of the calendar year preceding the
benefit year. We also proposed to
redesignate the annual open enrollment
coverage effective date provisions in
paragraphs (f) and (f)(1) through (3) as
(f)(1) and (f)(1)(i) through (iii), and to
add a new (f)(2), which would specify
that, for enrollments made under any
annual open enrollment periods for
benefit years beginning on or after
January 1, 2016, coverage would be
effective on January 1 of the year
following the open enrollment period.
We are finalizing the provisions only
with regard to the 2016 benefit year,
with a modification. In response to
comments, at § 155.410(e)(2), we are
providing that for the benefit year
beginning on January 1, 2016, the
annual open enrollment period begins
on November 1, 2015 and extends
through January 31, 2016 (2 weeks
earlier but the same length as the open
enrollment period for the 2015 benefit
year). Additionally, we have revised the
proposed language at § 155.410(f)(2) and
added three paragraphs to require that
for the 2016 benefit year, the Exchange
must ensure that coverage is effective
January 1, 2016, for QHP selections
received by the Exchange on or before
December 15, 2015, February 1, 2016,
for QHP selections received by the
Exchange from December 16, 2015,
through January 15, 2016, or March 1,
2016, for QHP selections received by the
Exchange from January 16, 2016,
through January 31, 2016.
Comment: We received a variety of
comments regarding our proposal to set
the annual open enrollment period for
benefit year 2016 and beyond. A large
portion of comments focused on the
specific dates proposed for the annual
open enrollment period. Several
commenters noted their support for
establishing a standard annual open
enrollment period to promote
consistency from year to year.
Commenters also supported annual
open enrollment dates that overlap with
Medicare’s annual open enrollment
period as well as the annual open
enrollment period for much employer-
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sponsored coverage, which commenters
believed would ensure a smoother
transition for consumers moving
between the group and individual
markets. One commenter supported the
proposed timeframe and noted that
starting the Exchange annual open
enrollment period 2 weeks before
Medicare’s annual open enrollment
period may reduce stress on resources,
particularly customer service call
centers, agents, brokers, and other
consumer resources that are frequently
relied on during open enrollment
periods.
A few commenters supported
establishing the annual open enrollment
period during the last quarter of the
calendar year, but recommended slight
variations on the proposed timeframe.
For example, one commenter
recommended the annual open
enrollment period run November 1
through December 15, suggesting that a
longer enrollment period does not lead
to better consumer decisions and that
issuers may benefit from a later start to
the annual open enrollment period.
Another commenter indicated that
ending the enrollment period on
December 15 was too late to
accommodate the operational steps
necessary to ensure a universal January
1 coverage effective date, particularly
given the complexity associated with
managing active selections, automatic
renewals, and other changes. The
commenter suggested ending the
enrollment period on November 30 to
give more time to issuers and Exchanges
to handle renewals. A few commenters
recommended aligning with Medicare’s
annual open enrollment period, October
15 through December 7. In contrast, a
few commenters requested that HHS
extend the proposed annual open
enrollment period to the end of January
to capture additional consumers. Of
particular concern for these commenters
were consumers who are auto-renewed
into a new plan and will not have an
opportunity to use the plan before the
end of the annual open enrollment
period, following which they could be
unable to shop for coverage, absent a
special enrollment period (SEP).
Finally, a few commenters
representing State-based Exchanges
(SBEs) and health insurance issuers
shared concerns that shifting the annual
open enrollment period to October
would significantly strain timelines for
product development, rate setting,
product filing, and review. These groups
questioned whether notices, regulations,
and templates would be completed by
HHS in time for issuers and States to
fulfill their obligations prior to annual
open enrollment. Commenters noted
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that starting the annual open enrollment
period earlier would increase
administrative burden and constrain
resources and requested giving States
and issuers additional time to prepare.
Response: We agree that establishing
a consistent timeframe for annual open
enrollment will help reduce consumer
confusion, and administrative
complexity. However, we understand
that beginning annual open enrollment
more than a month earlier for 2016 than
for 2015 requires significant advanced
planning and preparation by Exchanges,
State regulatory authorities, issuers, and
assisters. We were persuaded by the
concerns expressed by many
commenters about the additional
burden caused by shifting the annual
open enrollment period, and therefore
we are finalizing an annual open
enrollment period for the 2016 benefit
year that begins 1 month later than the
one we had proposed, and that will run
from November 1, 2015 through January
31, 2016. We anticipate that this
timeframe will ease the burden on State
regulatory authorities, Exchanges, and
issuers while giving HHS the time to
conduct a thorough certification
process. Additionally, the finalized
timeframe will permit additional time
for consumers following the winter
holidays to complete plan selection or
to select a different plan if they do not
like the plan into which they were autoenrolled. Finally, the finalized
timeframe will continue to partially
overlap with Medicare annual open
enrollment and most employer
offerings, which will benefit consumers
by creating smooth transitions between
coverage and create process efficiencies
for issuers handling enrollments and reenrollments during the same period.
Comment: Many commenters focused
on the length of the proposed annual
open enrollment period. Several
commenters supported establishing a
shorter annual open enrollment period.
However, a few commenters considered
the proposed annual open enrollment
period too short to provide consumers
sufficient time to research coverage
options and seek help from assisters.
These commenters noted that
consumers are still becoming familiar
with Exchange-based coverage and that
the length of the proposed open
enrollment period will be a barrier to
obtaining insurance. Similarly, many
commenters requested that consumers
have the opportunity to preview and
compare plans starting on September 15
of each year, even if they are unable to
enroll, to provide additional time for
consumers to review and compare plans
to make informed decisions. One
commenter recommended that plans be
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made available as soon as they are
certified so that consumers, assisters,
non-profit organizations, and
researchers can review the plan options
available.
Response: Recognizing that
consumers, issuers, State regulatory
authorities, and Exchanges may still be
acclimating to the annual open
enrollment process, we are finalizing
the provisions with modification to set
the annual open enrollment period for
the 2016 benefit year to run from
November 1, 2015 through January 31,
2016. We will take these
recommendations under advisement as
we consider options for the 2017 annual
open enrollment period and beyond.
Comment: Several commenters
recommended establishing the annual
open enrollment period so that it either
overlaps or aligns with tax filing season.
In support of this idea, commenters
noted that consumer financial liquidity
is lowest during the months of
November and December whereas many
consumers receive tax refunds
beginning in late January through April,
which could encourage consumers to
enroll in coverage. Commenters also
noted that incurring a fee at tax filing for
not being enrolled in coverage could
create an opportune moment to
encourage enrollment. One commenter
maintained that aligning annual open
enrollment with tax filing would
alleviate private-sector administrative
burdens because open enrollment
periods for Medicare, employer plans,
and the Exchange will then not all
overlap, increasing the workload on
issuers and agents and brokers. Finally,
commenters noted that tax filing
provides the best possible income
information for consumers to increase
accuracy of eligibility determinations,
minimize repayments, and strengthen
program integrity.
Response: We appreciate the concerns
that commenters raised. As noted above,
for the 2016 benefit year, we are
finalizing the provisions with
modification to set the annual open
enrollment period for the 2016 benefit
year to run from November 1, 2015
through January 31, 2016. We note that
there are several SEPs that provide an
opportunity to enroll in coverage midyear if a qualifying event occurs. In
addition, there are several exemptions
available to consumers, including
hardship-based exemptions, which will
help prevent a consumer from being
assessed a fee, and may be claimed on
a consumer’s Federal income tax return.
Although commenters saw overlapping
annual open enrollment with Medicare
and employer offerings as burdensome,
we maintain that this overlap
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maximizes process efficiencies for
issuers and streamlines transitions
between different forms of coverage for
consumers.
Aligning more closely with the
calendar year permits consumers to plan
financially on a calendar year basis. We
also note that consumers who qualify
for financial assistance can immediately
receive it with their premium upon
enrollment, and consumers also may be
given additional time in which to pay
their initial premium, pursuant to the
amendment to § 155.400(e) described in
section III.E.4.a of this final rule, both of
which should help alleviate low
consumer financial liquidity.
Comment: A few commenters
representing SBEs requested that SBEs
be permitted to set their own annual
open enrollment period and maintain
their own QHP filing timing.
Response: Section 1311(c)(6)(B) of the
Affordable Care Act specifically directs
the Secretary to provide for annual open
enrollment periods, as determined by
the Secretary for calendar years after the
initial open enrollment period. We have
determined that permitting multiple
annual open enrollment periods that
differ by State will be confusing for
consumers and create additional
burdens on issuers to meet variable
deadlines for QHP certification, recertification, and rate-setting. Therefore,
we are finalizing this rule with a
uniform annual open enrollment period
across all Exchanges for the 2016 benefit
year.
Comment: One commenter requested
that when the end of annual open
enrollment falls on a weekend (Saturday
or Sunday) or a Federal holiday, it
should extend to the next business day.
Response: While we understand the
concern raised by this comment, we
believe the value of establishing set
dates for the annual open enrollment
period outweigh it. We anticipate that it
will be easiest for all stakeholders,
particularly consumers, to remember
and implement annual open enrollment
processes based on a standard set of
dates from year to year.
Comment: One commenter requested
that HHS commit to publishing more
enrollment data and analyze it to
maximize enrollment.
Response: HHS has published weekly
enrollment reports for the 37 States
using HealthCare.gov during the 2015
annual open enrollment period. We
intend to continue to gather and analyze
information to improve our processes
over the course of future annual open
enrollment periods.
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c. Special Enrollment Periods
(§ 155.420)
In § 155.420, we proposed certain
provisions relating to special enrollment
periods. We proposed to revise
paragraphs (b)(2)(i), (b)(2)(ii), (b)(2)(iv),
and add paragraphs (b)(2)(v), (b)(2)(vi),
and (b)(2)(vii), which pertain to effective
dates for special enrollment periods; to
amend paragraphs (c)(2)(i) and (c)(2)(ii),
which pertain to availability and length
of special enrollment periods, and to
revise paragraphs (d)(1)(ii), (d)(1)(v),
(d)(2), (d)(4), and remove paragraph
(d)(10), which pertain to specific types
of special enrollment periods. We also
proposed to delete the option for
consumers to choose a coverage
effective date of the first of the month
following the birth, adoption, placement
for adoption or placement in foster care
and to permit the Exchange to allow a
qualified individual or enrollee to elect
a regular coverage effective date in
accordance with paragraph (b)(1) of this
section.
We proposed to amend paragraph
(b)(2)(iv) to allow persons who make a
permanent move as described in
paragraph (d)(7) to have a coverage
effective date of the first day of the
month following the move if plan
selection is made before or on the day
of the loss of coverage and, effective
January 1, 2016, allow consumers
advanced access to the special
enrollment period where a qualified
individual or enrollee, or his or her
dependent, gains access to new QHPs
due to a permanent move under
paragraph (d)(7).
In addition, we proposed to add new
paragraphs (b)(2)(v) and (b)(2)(vi),
which pertain to effective dates for
coverage that must be obtained under
court orders, including child support
orders, and the death of an enrollee or
his or her dependent. In paragraph
(b)(2)(v), we proposed to require an
Exchange to make coverage effective the
first day the court order is effective to
minimize any gap in coverage the
individual may experience and allow
Exchanges to provide consumers with a
choice for regular effective dates under
paragraph (b)(1). In paragraph (b)(2)(vi),
we proposed to require that an
Exchange ensure coverage is effective
the first day of the month following a
death of the enrollee or his or her
dependent, and at the option of the
Exchange and the consumer, allow for
regular effective dates under paragraph
(b)(1) of this section.
We proposed to combine paragraphs
(c)(2)(i) and (c)(2)(ii) to a new paragraph
(c)(2) to simplify the regulatory text. In
addition, we proposed to allow
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consumers to report a permanent move
60 days in advance of the move for the
purposes of receiving special enrollment
period to reduce the likelihood of a gap
in coverage. We proposed that this
change would take effect on January 1,
2016.
We proposed to amend paragraph
(d)(1)(ii) so that this special enrollment
period is available for a qualified
individual or his or her dependent who,
in any year, has coverage under a group
health plan or an individual plan with
a plan or policy year that is not offered
on a calendar year basis. We proposed
to add paragraph (d)(2)(i) to include
situations where a court order requires
a qualified individual to cover a
dependent or other person. We also
proposed to add paragraph (d)(2)(ii) to
allow enrollees who experience a loss of
a dependent or lose dependent status
through legal separation, divorce, or
death to be determined eligible for a
special enrollment period. We proposed
to amend paragraph (d)(4), to include
situations where a non-Exchange entity
is providing enrollment assistance.
Concurrently, we proposed to strike
paragraph (d)(10) which provides a
separate special enrollment period for
non-Exchange entity misconduct.
We proposed to add paragraph
(d)(6)(iv) to create a special enrollment
period for a qualified individual in a
non-Medicaid expansion State who was
previously ineligible for advance
payments of the premium tax credit
solely because the qualified individual
had a household income below 100
percent of the FPL, who was ineligible
for Medicaid during that same
timeframe, and experienced a change in
household income that made the
individual newly eligible for advance
payments of the premium tax credit.
We also sought comments on other
situations that may warrant a special
enrollment period, particularly
situations specific to the initial years in
which consumers have an opportunity
to purchase coverage through an
Exchange.
We are finalizing paragraph (b)(2)(i)
with a minor modification. Specifically,
we are retaining the option of the
Exchange to allow consumers to elect a
coverage effective date of the first of the
month following a birth, adoption,
placement for adoption, or placement in
foster care or on the date of the birth,
adoption, placement for adoption, or
placement in foster care. These options
are in addition to the option for regular
effective dates in paragraph (b)(1) of this
section as proposed. We are amending
paragraph (b)(2)(iv) to allow these
persons to have a coverage effective date
of the first day of the month following
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the move if plan selection is made
before or on the day of the move. We are
adding paragraph (b)(2)(v) to make
coverage effective the first day of the
court order and to allow Exchanges to
provide consumers with a choice for a
regular effective date, in accordance
with paragraph (b)(1). We are adding
paragraph (b)(2)(vi) to require
Exchanges to ensure coverage is
effective the first day of the month
following the date of plan selection due
to a death of the enrollee or his or her
dependent and to allow Exchanges to
provide consumer with a choice for a
regular effective date, as specified in
paragraph (b)(1). The proposed
paragraph (b)(2)(vi) incorrectly
referenced paragraph (d)(2)(iv), which
was changed to correctly reference
paragraph (d)(2)(ii) for loss of a
dependent or dependent status.
Additionally, we corrected paragraph
(b)(2)(vi) to state that coverage will be
effective following the date of plan
selection, instead of following the date
of death.
We are combining paragraphs (c)(2)(i)
and (c)(2)(ii) to a new paragraph (c)(2),
and, in paragraph (c)(2), we are also
adding a reference in this paragraph to
individuals who receive a special
enrollment period under paragraph
(d)(7) to allow these consumers to report
a permanent move 60 days in advance
of the move for the purposes of
receiving a special enrollment period to
reduce the likelihood of a gap in
coverage. After consideration of
comments received, persons who are
eligible for a special enrollment period
under paragraph (d)(7) will be able to
exercise this flexibility effective January
1, 2017, or earlier at the option of the
Exchange. In paragraph (c)(3), we are
removing reference to paragraph (d)(10),
which is now included in paragraph
(d)(4).
As proposed, in paragraph (d)(1)(ii),
we are deleting the expiration date of
2014 for non-calendar year health
insurance policies. We are adding
paragraph (d)(2)(i), which includes
when a qualified individual gains a
dependent or becomes a dependent
through marriage, birth, adoption,
placement for adoption, placement in
foster care, or through a child support
or other court order. At the option of the
Exchange, we are adding paragraph
(d)(2)(ii) for where an enrollee loses a
dependent or is no longer considered a
dependent through divorce or legal
separation, as defined by State law.
Paragraph (d)(4) is amended to include
situations where a non-Exchange entity
is providing enrollment assistance.
Concurrently, we proposed to strike
paragraph (d)(10) which provides a
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separate special enrollment period for
non-Exchange entity misconduct. We
are adding paragraph (d)(6)(iv) to
include qualified individuals in nonMedicaid expansion States who were
previously ineligible for advance
payments of premium tax credits solely
because the individual had household
income under 100 percent of the FPL,
who was ineligible for Medicaid during
that same timeframe, and experiences a
change in household income to become
eligible for advance payments of the
premium tax credit.
Comment: Commenters were divided
in their responses to the proposed
changes to coverage effective dates for
special enrollment periods resulting
from birth, adoption, placement for
adoption, and placement in foster care,
as proposed in paragraph (b)(2)(i) of this
section. Some commenters expressed
concern about the potential gap in
coverage if a parent were to elect a
prospective coverage effective date for
the child, while others expressed
concern regarding our proposal to
remove the option for coverage to be
effective the first day of the month
following the triggering event. We also
received comments in support of our
proposal to increase flexibility for
electing a coverage effective date that
best fits the family’s needs.
Response: Current regulations require
Exchanges to ensure coverage is
effective retroactive to the date of birth,
adoption, placement for adoption, or
placement in foster care and allow
Exchanges the option to provide
prospective coverage effective dates to
the first of the month following the
triggering event. We agree with
commenters emphasizing the
importance of coverage effective dates
that best fit the needs of a family.
Accordingly, we are finalizing the
addition of a new option for coverage to
be effective following regular effective
dates, as proposed, and are not
removing the option for coverage to be
effective the first of the month following
a birth, adoption, placement for
adoption, or placement in foster care. If
the Exchange allows for prospective
coverage effective dates, it would be at
the option of the consumer to elect this
date or to elect the retroactive coverage
effective date back to the date of birth,
adoption, placement for adoption, or
placement in foster care.
Comment: Several commenters urged
HHS to clarify the proposed changes to
the special enrollment period for a
permanent move, including specifying
that consumers must submit proof of a
change of address and providing
clarification that changes to the special
enrollment period for a permanent move
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includes individuals who are being
released from incarceration. There was
also a request to amend the proposed
implementation effective date for this
special enrollment period, which was
set for January 1, 2016.
Response: Exchanges must verify
residency information as outlined in
§ 155.315(d) to make an eligibility
determination, which includes a
determination of eligibility for
enrollment periods, per § 155.305(b). As
noted in the preamble to Exchange
Establishment Rule, 77 FR 18310
(March 27, 2012), qualified individuals
newly released from incarceration are
eligible for the special enrollment
period afforded to individuals who gain
access to a new qualified health plan as
a result of a permanent move. Therefore,
under the rule being finalized,
incarcerated individuals would be able
to report a permanent move up to 60
days in advance of their release from
incarceration, once a formal release date
has been set. Recognizing that
Exchanges may need more time than
previously afforded in the proposed rule
to implement this special enrollment
period, it will be effective January 1,
2017. Exchanges are encouraged to
implement as soon as possible.
Comment: Several commenters
requested HHS provide authority for
additional triggering events for special
enrollment periods. Some commenters
requested that pregnancy trigger a
special enrollment period, so that
women who are either not enrolled or
are enrolled in a catastrophic plan can
select and enroll in or change qualified
health plan coverage prior to the birth
of a newborn. Other commenters
requested that, when an individual
reports that he or she is a victim of
domestic abuse, it triggers a special
enrollment period, so that he or she may
select and enroll in a qualified health
plan on a separate application from his
or her abuser, along with any
dependents.
Response: We are not finalizing
additional triggering events based on
life changes at this time. Specifically,
flexibility afforded under
§ 155.420(d)(9) allows the Secretary to
provide for additional special
enrollment periods in the case of
exceptional circumstances, as
determined appropriate, and HHS will
continue to exercise that authority
through sub regulatory guidance.
Furthermore, a State may establish
additional special enrollment periods to
supplement those described in this
section as long as they are more
consumer protective than those
contained in this section and otherwise
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comply with applicable laws and
regulations.
Comment: We received comments
both in support of, and opposed to,
changes to coverage effective dates for
the newly proposed special enrollment
period for court orders, including a
child support order at § 155.420(b)(2)(v).
Some commenters supported increased
flexibility for consumers to elect a
retroactive coverage effective date back
to the day of the court order, while other
commenters requested that changes
always be made effective the first of the
month following the court order.
Response: Based on comments
received, we believe that it is most
consistent to treat consumers who gain
a dependent, regardless of the means, in
an equitable manner. In addition, a
court order may be effective in the
middle of a month and requiring the
individual to wait until the first of the
following month to enroll in coverage
may violate State law. Accordingly, we
are finalizing the rule as proposed
whereby the effective date for the
special enrollment period for a court
order will be effective in accordance
with paragraph (b)(2)(i) of this section.
Comment: We received comments
that requested changes to coverage
effective dates for the newly proposed
special enrollment period for losing a
dependent as a result of death at
§ 155.420(b)(2)(vi). Some commenters
requested coverage be effective
retroactive to the date of death, others
supported the proposed regulatory text
to provide coverage effective the first
day of the month following the death,
while other commenters requested that
HHS limit the number of situations
which will allow for retroactivity. Some
commenters also requested that all
family members, regardless of whether
they are part of the enrollment group or
are enrolled in a qualified health plan
through the Exchange, receive a special
enrollment period. Another commenter
requested that no special enrollment
period be given for death as other
special enrollment periods likely apply.
Response: In response to comments,
we believe it makes sense to limit the
number of situations that will allow for
retroactivity, we have modified the
proposed regulatory text to finalize the
coverage effective date as the first day
of the month following the date of plan
selection, rather than the date of death.
Providing a coverage effective date of
the first of the month following the date
of death would give the consumer
retroactivity if they are reporting the
death late in the special enrollment
period window. We believe this
balances the need to provide
dependents of the deceased a special
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enrollment period, while addressing
requests from commenters to limit the
middle of the month and retroactive
coverage effective dates. In addition, we
encourage issuers to maintain qualified
health plan coverage for remaining
members of the enrollment group
through the end of the month. The
special enrollment period as a result of
a death is intended for remaining
enrollees on an application whose
health insurance coverage is impacted
due to the death; therefore, only the
affected members will be provided a
special enrollment period. As noted by
commenters, non-enrollees may be
determined eligible for other special
enrollment periods including that for
loss of coverage.
Comment: Commenters supported the
proposed language which provided for a
special enrollment period for
individuals enrolled in non-calendar
year group health plans or individual
health insurance coverage. One
commenter requested clarification that
this would also apply to group health
plans outside of the Exchange.
Response: We are finalizing this
policy as proposed. We note that, as
specified in the proposed rule, this
policy provides a special enrollment
period inside the Exchange for
individuals whose coverage in group
health plans and individual market
plans offered outside of the Exchange is
expiring, including grandfathered and
transitional plans. Under § 147.104, this
special enrollment period also applies
to individuals who seek to enroll in
individual market coverage off the
Exchange.
Comment: Commenters requested that
HHS provide additional clarification
and flexibility for the special enrollment
period for loss of a dependent or
dependent status due to legal
separation, divorce, or death. Comments
included requests to extend this special
enrollment period to individuals not
currently enrolled in a qualified health
plan, to include same sex couples who
enter into a legally recognized
relationship other than marriage, such
as domestic partnerships and civil
unions, and to provide Exchanges
increased flexibility for implementation.
Response: We believe the text
provides flexibility for consumers to be
determined eligible for the special
enrollment period if the separation or
termination of a civil union or domestic
partnership is in accordance with State
law. In addition, we note that
consumers not currently enrolled in a
qualified health plan who experience
one of the life events described in this
provision may be determined eligible
for a special enrollment period in
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accordance with existing special
enrollment period provisions,
specifically loss of coverage.
Recognizing that Exchanges may need
more time to implement the necessary
functional IT changes, we are making
paragraph (d)(2)(ii) effective January 1,
2017. Exchanges are encouraged to
implement the policy as soon as
possible.
Comment: Several commenters
requested that the special enrollment
period provided in paragraph (d)(8) of
this section be extended to include the
dependents of Indians to allow them to
change enrollment in a qualified health
plan once per month.
Response: An Indian as provided
under section 4(d) of the Indian SelfDetermination and Education
Assistance Act (ISDEAA) and section 4
of the Indian Health Care Improvement
Act (IHCIA) is defined as an individual
who is a member of an Indian tribe.
Both ISDEAA and IHCIA have nearly
identical language that refers to a
number of Indian entities that are
included in this definition on the basis
that they are recognized as eligible for
the special programs and services
provide by the United States to Indians
because of their status as Indians. As
such, the statute specifically provides
the special enrollment period defined in
paragraph (d)(8) of this section as
applying to the individual who is
eligible for special programs and
services because of their status as an
Indian, and not their dependents.
Comment: We received many
comments in response to our proposal
to extend a special enrollment period to
individuals below 100 percent of the
FPL in non-Medicaid expansion States
that later become eligible for advance
payments of the premium tax credit at
§ 155.420(d)(6)(iv). A few commenters
asked for HHS to clarify that an
individual would be eligible for the
special enrollment period if he or she
experienced a change in household
composition or size, in addition to a
change in household income, and one
commenter requested that change in
household income required a change in
percentage of the FPL.
Response: We are finalizing this
policy as proposed. We note that for
purposes of determining eligibility for
this special enrollment period, an
individual’s percentage of the FPL is a
function of household income,
composition and size; therefore,
individuals who gain eligibility because
of a change in income or a change in
household composition will be eligible
for this special enrollment period.
Comment: Several commenters
requested that HHS include additional
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special enrollment periods pertaining to
provider networks, specifically when a
consumer enrolls in a qualified health
plan with an inaccurate provider
directory, enrolls in a plan which
changes their health plan’s provider or
pharmacy networks mid-year, or enrolls
in a plan with no in-network providers
within a 25 mile radius of the consumer.
Response: We acknowledge the need
for consumers to have access to correct
information about their QHPs and
participating providers and pharmacies,
and have promulgated provisions
pertaining to the maintenance and
dissemination of provider and
pharmacy directories in this rule.
However, provider and pharmacy
network participation changes
frequently. Therefore, determining who
would be eligible for the type of special
enrollment period suggested by
commenters would require that issuers
report to the Exchange whenever
provider and pharmacy network
participation changes and that the
Exchange notify consumers potentially
impacted by such changes. As such, we
are not making changes in response to
these comments, and note that
consumers may be determined eligible
for the special enrollment period
provided in paragraph (d)(5) of this
section if an issuer substantially violates
their contract with the enrollee.
Comment: We received comments
that requested the length of the special
enrollment period for loss of coverage
provided in paragraph (d)(1) of this
section be shortened from 120 days to
30 or 60 days, to reduce the
administrative burden on the Exchange
and issuer to enroll the consumer in
retroactive coverage.
Response: We note that the special
enrollment period for loss of coverage,
as provided in paragraph (c)(2) of this
section, is 60 days. We clarify that,
while an individual has 60 days before
and after the loss of coverage to select
a qualified health plan through the
Marketplace, the coverage generally may
not be effective until the first day of the
month following the loss of coverage in
accordance with paragraph (b)(2)(iv) of
this section. Both the advanced
availability of this special enrollment
period and its duration are intended to
minimize the likelihood that an
individual will experience a significant
gap in coverage.
Comment: We received comments
requesting that Exchanges provide
health insurance companies with the
specific reason for a special enrollment
period so that the health insurance
company may determine during the
benefit year if a change to a policy is a
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result of a special enrollment period or
a modification to an existing policy.
Response: HHS has issued technical
guidance, including the Standard
Companion Guide Version 1.5 (issued
March 22, 2013), which provides
Exchanges with the information
necessary to build the ability to send the
reason for Special Enrollment Periods
on the enrollment transaction. The FFEs
also use a casework system to provide
insurance companies with the type of
special enrollment period being
provided to a consumer.
Comment: A commenter requested
that HHS reduce the number of special
enrollment periods other than
qualifying life events.
Response: We believe that the current
special enrollment periods requirements
appropriately account for changes in
circumstances that necessitate when
individuals would need to select a new
or different qualified health plan and
balance these needs with the
administrative burdens of enrollment
changes for issuers.
Comment: A commenter requested
that all special enrollment periods be
available both through the Exchange,
and individual and small group market
plans.
Response: We note that in accordance
with § 147.104(b)(2) health insurance
issuers in the individual market must
provide a limited open enrollment
period for the special enrollment
periods provided in paragraph (d) of
this section, with the exclusion of
paragraphs (3), (8), and (9).
Comment: We received general
support for the proposed changes to
include non-Exchange entities in the
special enrollment period where
enrollment or non-enrollment in a
qualified health plan through the
Marketplace is a result of the error of the
Exchange. Commenters noted concern
regarding the subjectivity of defining an
error of the Exchange and requested
CMS outline the specific scenarios
which would warrant such a special
enrollment period.
Response: We believe the flexibility
for Exchanges to determine when a
special enrollment period is warranted
due to an error of the Exchange protects
consumers. HHS has issued guidance
and will continue to issue guidance, as
needed, related to how Exchanges
define errors of the Exchange in
accordance with paragraph (d)(4) of this
section.
Comment: We received a comment
that HHS provide clarification that the
existing special enrollment period
available for loss of minimum essential
coverage (MEC) at paragraph (d)(1)(i)
should not be triggered when a
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consumer’s policy ends at the end of the
benefit year because guaranteed
renewability prevents the consumer
from losing their coverage.
Response: We do not think the
recommended clarification is necessary.
The existing language in the final rule
specifies that the date of the loss of
coverage is the last day the consumer
would have coverage under his or her
previous plan is sufficient. We also note
the availability of the special enrollment
period in § 155.420(d)(1)(ii) for
consumers in individual market plans
with non-calendar year plan years.
d. Termination of Exchange Enrollment
or Coverage (§ 155.430)
Under our current rules,
§ 155.430(b)(1) requires an Exchange to
permit an enrollee to terminate his or
her coverage in a qualified health plan
(QHP) following appropriate notice to
the Exchange or the QHP. We proposed
to amend this paragraph by adding a
sentence to clarify that, to the extent the
enrollee has the right to cancel the
coverage under applicable State laws,
including ‘‘free look’’ cancellation
laws—that is, laws permitting
cancellation within a certain period of
time, even following effectuation of the
enrollment, the enrollee may do so, in
accordance with the requirements of
such laws. Furthermore, we proposed to
amend § 155.430(d)(2) to add a new
paragraph (d)(2)(v) allowing a
retroactive termination effective date
when an enrollee initiates the
termination, if specified by applicable
State laws, such as ‘‘free look’’
provisions.
Additionally, we proposed to amend
§ 155.430(b)(1) by removing the
language requiring the appropriate
notice to the Exchange or QHP since the
notice requirement is addressed in
§ 155.430(d) and this would give greater
flexibility for other enrollee initiated
terminations where appropriate notice
is not defined.
We also proposed to explicitly state
that the requirement for Exchanges to
ensure appropriate actions are taken in
connection with retroactive
terminations, currently set forth in
paragraph (d)(6) regarding special
enrollment periods, applies to all
retroactive terminations, including valid
cancellations of coverage under a ‘‘free
look’’ law. To do so, we proposed to
move the applicable language to a new
paragraph (d)(8). We also proposed to
add reconciliation of Exchange user fees
to the list of items Exchanges would
need to address. Under that
requirement, the Exchange will ensure
that appropriate actions are taken to
make necessary adjustments to advance
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payments of the premium tax credit,
cost-sharing reductions, Exchange user
fees, premiums, and claims, while
adhering to any State law. We noted
that, under our proposal, the enrollee
would not become eligible to receive a
special enrollment period as a direct
result of the ‘‘free look’’ cancellation.
We also proposed to add a new
paragraph (b)(1)(iii) which would
require Exchanges to establish processes
for a third party to report the death of
a consumer.
We noted that we interpret marketwide guaranteed availability and
renewability requirements to mean that
a QHP offered through the Exchange
must generally be available and
renewable outside the Exchange. We
proposed to make changes to Exchange
regulations that could be construed to
limit coverage in a QHP to coverage
through the Exchange. For example, we
proposed to amend Exchange
regulations referencing ‘‘termination of
coverage’’ so that they appropriately
refer to termination of enrollment
through the Exchange and not
necessarily termination of the coverage
altogether.
We are finalizing the provisions
proposed in § 155.430 of the proposed
rule, with a minor modification. We are
revising § 155.430(b)(1)(i) to specify that
an enrollee has a right to terminate, and
not just cancel coverage according to
any applicable State law. Cancellation is
a specific type of termination and, as
further explained below, we want to
accommodate State laws that provide
for termination, not just cancellation.
We also corrected a typographical error
in § 155.430(b)(1)(iii). We also make
conforming revisions to §§ 155.430,
155.735, 156.270, 156.285 and 156.290
of the Exchange and SHOP regulations
to align them with our interpretation of
the guaranteed availability and
guaranteed renewability requirements,
changing references to ‘‘coverage’’ to
now also refer to ‘‘enrollment through
the Exchange,’’ ‘‘enrollment through the
SHOP,’’ or ‘‘enrollment,’’ as applicable.
Comment: Commenters, mainly
issuers, opposed allowing termination
of coverage after the coverage effective
date, citing an increase in
administrative costs and a potential to
create a less healthy risk pool; many
consumer advocates and the NAIC
supported the free-look proposal. Other
commenters stated that HHS should not
establish specific requirements related
to free look periods, but should
explicitly state that issuers should
continue to adhere to existing State laws
for Exchange enrollees.
Response: Our intent in the proposed
rule was to accommodate State laws that
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provided consumer protections such as
‘‘free look’’ provisions, to give
consumers in States with such laws the
right to terminate coverage in
accordance with those laws. Therefore,
the intent of the regulation is to ensure
that issuers adhere to existing State laws
for Exchange enrollees, not to create
new Federal laws. Thus, this change
should not increase the burden on
issuers. To make sure that we do not
unintentionally limit the applicability of
these types of laws, we are finalizing
§ 155.430(b)(1)(i) to use the word
‘‘terminate’’ in place of ‘‘cancel,’’
specifying that the enrollee has the right
to terminate their coverage under any
applicable State laws.
Comment: Some commenters were
concerned with the cost and burden of
correcting financial information for
retroactive terminations, and the
uncertainty of payment for services as a
result of retroactive terminations.
Response: We acknowledge that
retroactive terminations may cause
some administrative burden for
correcting financial information.
However, there are scenarios that
currently exist in the Exchange that
result in retroactive terminations.
Furthermore, it remains necessary that
the enrollment group pay the correct
amounts for a given policy as already
codified in § 155.430(d)(6). We note
issuers and providers should continue
to follow existing policies when dealing
with retroactive terminations. Therefore,
we are finalizing § 155.430(d)(8) to
ensure that appropriate actions are
taken to make necessary adjustments to
advance payments of the premium tax
credit, cost-sharing reductions,
Exchange user fees, premiums, and
claims, while to adhering to State law.
Comment: We received several
comments urging that an SEP be given
to consumers who exercise their freelook provision outside of open
enrollment. These commenters
suggested that the unavailability of an
SEP significantly undercuts the value of
the free-look provision.
Response: Granting an SEP for an
individual exercising a retroactive
termination under State law could result
in multiple successive enrollments and
terminations pursuant to a free look law,
which we believe would create
unwarranted burden on issuers and
providers.
Comment: Several commenters asked
us to clarify that the protection outlined
in § 155.430 applies in States with ‘‘free
look laws.’’ One commenter
recommended that the protection apply
more widely, including for States that
have policies related to termination of
coverage, like ‘‘free look provisions,’’
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that may not be law but that are
otherwise enforceable by the State.
Another commenter expressed concern
on deferring to State laws because of the
resulting variance in applicable
standards. The commenter
recommended establishing Federal
standards and allowing States the
option to establish more protective
standards.
Response: Our intent was to clarify
that consumers in States with such laws
have the right to terminate coverage in
accordance with those laws. We do not
intend to create Federal standards that
give consumers additional reasons to
terminate coverage. For States that have
policies related to termination of
coverage, like ‘‘free look provisions,’’
that may not be law but that are
otherwise enforceable by the State,
issuers must adhere to such policy as
enforced by the State. Accordingly, we
are finalizing § 155.430(b)(1)(i) to
specify that the enrollee has the right to
terminate their coverage under
applicable State laws.
Comment: We received a comment
recommending that HHS reflect
retroactive termination dates on 834s
and include termination reason codes.
Response: The 834s currently include
the effective date of the termination as
well as a high-level maintenance reason
(INS04) and an additional maintenance
reason indicating that the transaction is
a termination or cancellation. We are
working on future functionality to
indicate more specific additional
maintenance reasons for terminations
and cancellations.
Comment: Commenters generally
supported the proposed provisions that
require Exchanges to establish a process
for a third party to report the death of
a qualified health plan enrollee. One
commenter requested clarification
regarding whether the report of death
may be made to the issuer or the
Exchange.
Response: We are finalizing this
provision as proposed, and clarify that
Exchanges have flexibility to establish a
process for reporting the death of an
enrollee. For instance, in the Federallyfacilitated Exchange, the reporting of a
death of an enrollee is initiated with the
Exchange.
Comment: One commenter requested
that an individual’s agent or broker be
able to report their client’s death to the
Exchange to initiate a termination of
their coverage.
Response: An individual’s agent or
broker may report their client’s death to
the Exchange in accordance with the
process established by the Exchange.
Depending on the Exchange-specific
procedures, the agent or broker may be
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required to submit documentation
proving the death of the individual.
Comment: We received several
comments on our proposal to conform
the Exchange regulations with our
interpretation of the guaranteed
availability and renewability
requirements. Many commenters
supported the proposal. One commenter
was concerned about Exchanges’ ability
to distinguish circumstances warranting
termination of Exchange enrollment
from circumstances warranting full
termination of coverage. Another
commenter was concerned about
issuers’ ability to seamlessly continue
coverage of terminated Exchange
enrollees outside the Exchange and
recommended that HHS delay finalizing
the proposal until its operational
feasibility could be assessed.
Response: Loss of eligibility for
enrollment in a QHP through the
Exchange is not necessarily a basis for
non-renewal or termination of an
individual’s or employer’s coverage in
the market outside the Exchange.
Therefore, we make conforming
amendments in this final rule to the
following sections of the Exchange and
SHOP rules: §§ 155.430, 155.735,
156.270, 156.285 and 156.290. These
amendments are intended to more
clearly distinguish termination of
enrollment through the Exchange from
termination of coverage with the issuer.
Termination of coverage is governed by
the guaranteed renewability provisions
in section 2703 of the PHS Act and
§ 147.106. Therefore, § 156.270(a) is
further amended to include to a crossreference to § 147.106 to clarify when
and how an issuer may terminate
coverage under applicable law. We also
made a conforming amendment in
§ 155.430(b)(2)(vi) clarifying that any of
the exceptions to guaranteed
renewability that would permit an
issuer to terminate an enrollee’s
coverage also could be a basis for
terminating enrollment through the
Exchange.
We acknowledge the operational
concerns of commenters, but note that
these revisions are simply technical
clarifications to eliminate potential
conflict with the requirements that
currently apply to issuers under
sections 2702 and 2703 of the PHS Act.
Furthermore, it is anticipated that, in
most situations involving termination
by the Exchange, such as decertification
of the QHP or non-payment of premium,
the issuer will know the reason for the
termination. When the issuer knows the
reason for Exchange termination and it
is not a basis for non-renewal or
termination of the enrollee’s coverage,
the issuer generally must continue the
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coverage outside the Exchange, at the
option of the enrollee, in order to satisfy
the issuer’s responsibilities under the
guaranteed renewability requirements,
unless an exception applies. When the
issuer does not know the reason for
termination of an enrollee’s Exchange
enrollment, the issuer should continue
the enrollee’s coverage outside the
Exchange if approached by the enrollee
to do so, unless following investigation,
the reason for the termination will
permit the issuer to terminate the
coverage.
5. Exchange Functions in the Individual
Market: Eligibility Determinations for
Exemptions
a. Eligibility Standards for Exemptions
(§ 155.605)
In § 155.605, we proposed
amendments to two hardship
exemptions and a correction to a crossreference. First, we proposed to amend
§ 155.605(g)(3) to permit an individual
with gross income below the filing
threshold and who is not a dependent
of another taxpayer to qualify for a
hardship exemption through the tax
filing process and without having to
obtain an exemption certificate number
(ECN) from the Exchange. Second, we
proposed amending § 155.605(g)(6)(i) to
correct the citation to 42 CFR 447.50 by
changing it to 42 CFR 447.51, which
cross-references the Medicaid definition
for Indian. Third, we proposed new
paragraph § 155.605(g)(6)(iii) to align
the exemption process for those
individuals who are eligible for services
through the Indian Health Service (IHS),
a Tribal health facility, or an Urban
Indian organization (collectively, ITU)
with the process available to members
of Federally-recognized Tribes.
Specifically, the proposed amendment
will provide individuals who are
eligible for services through an ITU to
claim an exemption on their Federal
income tax return without obtaining an
ECN.
We are finalizing the provisions as
proposed.
Comment: Comments on this
provision supported the proposed
changes. We received a few comments
noting that, despite this additional
avenue to receive an exemption, some
American Indians/Alaskan Natives (AI/
ANs) who qualify for a recurring ECN
may continue to prefer the Exchange
exemption process rather than claiming
an exemption annually through the
Federal tax-filing process. For this
reason, these commenters encouraged
CMS to retain and improve the
Exchange exemption application
process.
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Response: We remain committed to
improving the Exchange exemptions
process. We note that the Exchange
exemptions process remains available to
AI/ANs under § 155.605(f) and (g)(6)(i).
b. Required Contribution Percentage
(§ 155.605)
Under section 5000A of the Code, an
individual must have minimum
essential coverage for each month,
qualify for an exemption, or make a
shared responsibility payment with his
or her Federal income tax return.
Section 5000A of the Code and section
1311(d)(4)(H) of the Affordable Care Act
authorizes the Secretary to determine
individuals’ eligibility for exemptions,
including the hardship exemption.
Under section 5000A(e)(1) of the Code,
an individual is exempt if the amount
that he or she would be required to pay
for minimum essential coverage
(required contribution) exceeds a
particular percentage (the required
contribution percentage) of his or her
actual household income for a taxable
year. In addition, under § 155.605(g)(2)
an individual is exempt if his or her
required contribution exceeds the
required contribution percentage of his
or her projected household income for
a year. Finally, under § 155.605(g)(5),
certain employed individuals are
exempt if, on an individual basis, the
cost of self-only coverage is less than the
required contribution percentage but the
aggregate cost of self-only coverage
through employers exceeds the required
contribution percentage and no family
coverage is available through an
employer at a cost less than the required
contribution percentage.
The required contribution percentage
for 2014 is 8 percent under section
5000A(e)(1)(A) of the Code. Section
5000A(e)(1)(D) of the Code and 26 CFR
1.5000A–3(e)(2)(ii) provide that for plan
years after 2014, the required
contribution percentage is the
percentage determined by the Secretary
that reflects the excess of the rate of
premium growth between the preceding
calendar year and 2013, over the rate of
income growth for that period. In the
2015 Market Standards Rule, we
established a method for determining
the excess of the rate of premium
growth over the rate of income growth
each year, and published the 2015 rate.
We stated that future adjustments would
be published annually in the HHS
notice of benefit and payment
parameters.
Under the method previously
established, the rate of premium growth
over the rate of income growth for 2016
is the quotient of (x), which is equal to
one plus the rate of premium growth
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between the preceding year (in this case,
2015), and 2013, carried out to ten
significant digits, divided by (y), which
is equal to one plus the rate of income
growth between the preceding year
(2015), and 2013, carried out to ten
significant digits.42 The result of this
calculation is carried out to ten
significant digits and multiplied by the
required contribution percentage
specified in section 5000A(e)(1)(A) of
the Code (8.00 percent). The result is
then rounded to the nearest hundredth
of a percent, to yield the required
contribution percentage for 2016.
Under the methodology described
above, the total rate of premium growth
for the 2-year period from 2013–2015 is
1.0831604752, or 8.3 percent. We
describe the methodology for obtaining
this number below in § 156.130(e). In
the 2015 Market Standards rule, we also
established a methodology for
calculating the rate of income growth for
the purpose of calculating the annual
adjustment to the required contribution
percentage.
The measure of income growth is
based on projections of per capita Gross
Domestic Product (GDP) used for the
National Health Expenditure Accounts
(NHEA), which is calculated by the
CMS Office of the Actuary. Accordingly,
using the NHEA data, the rate of income
growth for 2016 is the percentage (if
any) by which the most recent
projection of per capita GDP for the
preceding calendar year ($56,660 for
2015) exceeds the per capita GDP for
2013, ($53,186), carried out to ten
significant digits. The total rate of
income growth for the 2-year period
from 2013–2015 is estimated to be
1.0653179408 or 6.5 percent. We note
that the 2013 per capita GDP used for
this calculation has been updated to
reflect the latest NHEA data.
Thus, the excess of the rate of
premium growth over the rate of income
growth for 2013–2015 is 1.0831604752/
1.0653179408, or 1.0167485534, or 1.7
percent. This results in a required
contribution percentage for 2016 of
8.00*1.0167485534, or 8.13 percent,
when rounded to the nearest onehundredth of one percent.
We received no comments on the
calculation of the required contribution
percentage and are therefore finalizing
the percentage as proposed.
42 We defined premium growth for this measure
as the same annually adjusted measure of premium
growth used below in this rule to establish the
annual maximum and reduced maximum
limitations on cost sharing for plan benefit designs.
That is, the premium adjustment percentage.
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6. Exchange Functions: Small Business
Health Options Program (SHOP)
a. Standards for the Establishment of a
SHOP (§ 155.700)
We proposed to amend § 155.700(b)
such that the previous definition of
‘‘group participation rule’’ would
conform with the terminology we
proposed to use in § 155.705(b)(10).
Specifically, we proposed to modify the
term to refer to a ‘‘group participation
rate,’’ which is a minimum percentage
of all eligible individuals or employees
of an employer that must be enrolled.
We received no comments on this
proposal and we are finalizing this
amendment as proposed.
b. Functions of a SHOP (§ 155.705)
In § 155.705, we proposed to
redesignate paragraph (b)(4)(ii)(B) as
new paragraph (b)(4)(ii)(C), redesignate
paragraph (b)(4)(ii)(A) as new paragraph
(b)(4)(ii)(B), add new paragraph
(b)(4)(ii)(A), and amend paragraphs
(b)(4)(i)(B), (b)(7), and (b)(10).
In the proposed amendment to
paragraph (b)(4)(i)(B) and proposed new
paragraph (b)(4)(ii)(A), we proposed to
permit the SHOP to assist a qualified
employer in the administration of
continuation coverage in which former
employees seek to enroll through the
SHOP. We proposed that where a
qualified employer is offering Federal or
State continuation coverage,43 and
where a SHOP has entered into an
agreement with a qualified employer to
provide this service, the SHOP may
assist the employer in administration of
such coverage by billing for and
collecting premiums for the
continuation coverage directly from the
covered employee or qualified
beneficiary, rather than the employer, if
the qualified employer elects to have the
SHOP carry out this function. We
sought comment on the interaction of
the FF–SHOP’s payment grace periods
and termination policies at § 155.735
with the COBRA rules the IRS has
codified at 26 CFR part 54. We are
finalizing the proposed changes to
§ 155.705(b) with a modification to
clarify that individuals other than
former employees might be enrolled in
continuation coverage through a SHOP,
and we are also amending § 155.735 to
better align the SHOP rules with the
IRS’s COBRA rules in light of the
comments discussed below.
We considered whether the FF–SHOP
should accept premium payment using
a credit card. Currently, qualified
employers participating in the FF–
43 29 U.S.C. 1161, et seq. (‘‘COBRA’’) or
applicable State law.
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SHOP may only pay premiums to the
FF–SHOP using a check or bank draft.
We sought comment on the extent to
which employers would use this option.
Some commenters stated that it may be
more convenient for a small employer to
pay by credit card than by check or bank
draft. However, in light of the comments
discussed below, HHS does not intend
to take action on this policy at this time.
We also proposed to revise paragraph
(b)(7) to align the SHOP regulations
with the Protecting Access to Medicare
Act of 2014 (Pub. L. 113–93), which
repealed requirements related to
deductible maximums for employersponsored coverage at section 1302(c)(2)
of the Affordable Care Act. This
proposal would remove the only
reference in the SHOP regulations to the
requirements of Affordable Care Act
section 1302(c)(2). We did not receive
any comments on the proposed
revisions to paragraph (b)(7) of this
section and are finalizing this proposal
as proposed.
In paragraph (b)(10), we proposed to
modify the calculation of minimum
participation rates in the SHOP. We
proposed that a SHOP (either a Statebased or an FF–SHOP) that elects to
establish a minimum participation rate
would be required to establish a single,
uniform rate that applies to all groups
and issuers in the SHOP, rather than
establishing general rules about
minimum participation rates or a
threshold over which the minimum
percentage may not be raised. We also
proposed that if a SHOP authorizes a
minimum participation rate, such a rate
would have to be based on the rate of
employee participation in the SHOP and
in coverage through another group
health plan, governmental coverage
(such as Medicare, Medicaid or
TRICARE), coverage sold through the
individual market, or in other minimum
essential coverage, and not on the rate
of employee participation in any
particular QHP or QHPs of any
particular issuer. We proposed that
State-based SHOPs would be expected
to conform to the proposal by its
effective date.
In paragraph (b)(10)(i), we proposed
to amend existing language about
employees accepting coverage under the
employer’s group health plan to instead
refer to employees accepting coverage
offered by a qualified employer to better
account for employee choice.
We also proposed to amend paragraph
(b)(10)(i) regarding how the minimum
participation rate would be calculated
in the FF–SHOP. We proposed to
calculate the minimum participation
rate in the FF–SHOP as the number of
full-time employees accepting coverage
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offered by the qualified employer
through the SHOP plus the number of
full-time employees who are enrolled in
coverage through another group health
plan, in governmental coverage (such as
Medicare, Medicaid or TRICARE), in
coverage sold through the individual
market, or in other minimum essential
coverage, divided by the number of fulltime employees offered coverage
through the SHOP.
We sought comment on whether this
definition of which employees would be
included in the calculation should be
extended beyond the SHOP to the entire
small group market to create uniformity
among issuer practices and prevent
further gaming by issuers through their
use of non-standard definitions for other
acceptable coverage.
We are finalizing the proposed
amendments to paragraph (b)(10) with
modifications. We are modifying the
proposed amendments to the language
following (b)(10); adding the
amendments we proposed at paragraph
(b)(10)(i) at a new paragraph (b)(10)(ii);
amending current paragraph (b)(10)(i) to
reflect that it will remain in effect for
plan years beginning prior to January 1,
2016; and redesignating paragraph
(b)(10)(ii) as (b)(10)(iii) and making a
minor conforming amendment to that
paragraph to reflect the addition of new
paragraph (b)(10)(ii). The modifications
clarify that the amendments to the
minimum participation rate calculation
methodology requiring counting of
employees accepting coverage offered
by the qualified employer through the
SHOP, and counting of employees
enrolled in coverage through another
group health plan, in governmental
coverage (such as Medicare, Medicaid,
or TRICARE), in coverage sold through
the individual market, or in other
minimum essential coverage, will apply
only to the FF–SHOP, effective for plan
years beginning on or after January 1,
2016. For plan years beginning prior to
January 1, 2016, the FF–SHOP will
apply the methodology at current
(b)(10)(i). We are also modifying
paragraph (b)(10)(i) to explain that
former employees would be excluded
from the calculation of minimum
participation rates in the FF–SHOP
under the methodology that will remain
in effect for plan years beginning prior
to January 1, 2016, to ensure that the
same methodology currently being used
will continue to be used after the
modification to the definition of
qualified employee in this rule takes
effect. State-based SHOPs and small
group markets outside of the Exchanges
are not expected to conform to the
amended calculation methodology.
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Comment: Several commenters
supported the proposal that would
permit a SHOP to bill for and collect
premiums for COBRA. One commenter
disagreed with the policy. One
commenter requested that HHS preserve
the flexibility proposed for SHOPs to
determine whether they wish to offer
this service.
Many commenters requested that
HHS align SHOP rules with applicable
COBRA standards and work with the
applicable agencies to ensure clarity.
These commenters expressed concern
that a lack of harmony between the
SHOP rules, COBRA standards, and
requirements from other Federal
agencies would lead to confusion. One
commenter requested HHS specify
which IRS rules are applicable.
Response: As we indicated in the
preamble to the proposed rule, the IRS
has promulgated rules regarding the
administration of COBRA continuation
coverage at 26 CFR 54.4980B, et seq.
Our SHOP regulations do not affect or
narrow an individual’s existing
substantive and procedural rights under
COBRA or other Federal agencies’ rules
interpreting COBRA. To harmonize
existing SHOP rules regarding
terminations of coverage with the IRS’s
COBRA rules at § 54.4980B–8, we are
adding paragraphs (c)(2)(iv) and (c)(3) to
§ 155.735 in this final rule. Paragraph
(c)(2)(iv) is necessary because, in cases
other than COBRA continuation
coverage, the FF–SHOP does not
provide an additional grace period for
payments less than the total premium
amount due for a group’s cost of
coverage. Paragraph (c)(3) is necessary
to specify that the section does not
modify existing obligations under 26
CFR 54.4980B.
To further align with existing COBRA
requirements, including COBRA
eligibility for dependents and former
dependents, we are modifying the
language of paragraph (b)(4)(ii)(A) of
§ 155.705 to permit the collection of
such premiums from any person
enrolled in continuation coverage
through the SHOP consistent with
applicable law and the terms of the
group health plan. For improved clarity,
we are also replacing the reference in
proposed § 155.705(b)(4)(ii)(A) to
‘‘Federally mandated continuation
coverage’’ with a reference to
continuation coverage required under
29 U.S.C. 1161, et seq.
Comment: One commenter stated that
SHOPs should also administer required
notices that relate to continuation of
coverage.
Response: HHS continues to examine
the feasibility of expanding SHOP’s
flexibility to support additional COBRA
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administration functions, including
COBRA notification requirements.
Significant modifications may be
necessary to existing SHOP rules to
ensure conformity with existing IRS
rules if a SHOP were to fully administer
COBRA on behalf of an employer.
Therefore, HHS does not intend to take
action on this policy at this time.
Comment: Some commenters stated
that both a State-based SHOP’s and a
FF–SHOP’s implementation of
continuation coverage administration
should extend to State-mandated
continuation coverage. Some
commenters expressed concern that
limiting FF–SHOP continuation
coverage support to COBRA may cause
confusion among small employers
regarding responsibility for continuation
coverage requirements. Another
commenter requested relief from
existing SHOP payment rules requiring
the flow of funds through the SHOP
where a SHOP fails to provide payment
support for continuation coverage.
Response: The finalized language
does not require SHOPs to limit this
service to the collection of premiums
related to Federal continuation
coverage. Both State-based SHOPs and
the FF–SHOP may elect to collect
payments related to State-required
continuation coverage sold through the
SHOP on behalf of small employers.
We continue to examine applicable
State law to determine the feasibility of
the FF–SHOP providing this service for
both State and Federal continuation
coverage. Variation in State
continuation coverage laws would add
substantial complexity to the FF–
SHOP’s implementation of premium
collection for State continuation
coverage. Therefore, the FF–SHOP may
more quickly provide relief to small
employers by first supporting COBRA
continuation coverage administration
while HHS determines how it may best
support State-mandated continuation
coverage.
HHS continues to believe that the
flow of funds through the SHOP best
supports the administration of employee
choice and therefore is not modifying
existing requirements related to the flow
of funds through the SHOP.
Comment: One commenter sought
clarification on how continuation
coverage would be operationalized,
including whether 820 and 834
transactions will identify members
covered under continuation coverage.
Response: HHS recognizes that QHP
issuers will need substantially more
detailed information to effectively
integrate with a SHOP facilitating
continuation coverage. If the FF–SHOP
implements administration of premiums
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for continuation coverage, HHS intends
to issue further guidance.
Comment: We received several
comments about whether the FF–SHOP
should accept premium payments made
with a credit card. Several commenters
were in favor of this idea. However,
these commenters also noted that HHS
should consider the benefits of this
option against the costs that will be
incurred with this additional
functionality. Some commenters
opposed accepting premium payments
through a credit card and were
particularly concerned about the fees
associated with the use of a credit card.
Some commenters recommended that
the credit card fee should be included
as part of the user fee that HHS is
already collecting, while other
commenters stated that the credit card
fee should be borne by the FF–SHOP
and not issuers. One commenter noted
that the cost of the credit card fee will
add to the cost of coverage for
consumers and may impact the
calculation of the Medical Loss Ratio if
it is considered an administrative cost
payable by an issuer. One commenter
believed that the use of credit cards to
make premium payments should not be
limited to the initial payment, and
instead should be used for recurring
payments.
Response: HHS will continue to
consider whether there is a costeffective way to permit employers to
pay premiums through the SHOP with
a credit card. HHS does not intend to
take action on this policy at this time.
Comment: We received one comment
on our proposed amendments to the
SHOP rules about the minimum
participation rate in § 155.705(b)(10),
asking whether issuers may maintain
varying participation requirements
based on group size if this policy is
finalized to extend to the small group
market outside the SHOP. We also
received comments on the proposed
calculation methodology for calculating
the minimum participation rate. Some
commenters supported our proposal and
some believed that our proposed
methodology will weaken the ability of
the FF–SHOP to protect against adverse
selection and is not considered common
market practice. One commenter
recommended not including individuals
with coverage in the individual market
Exchanges because it undercuts
employer-based coverage. One
commenter stated that minimum
participation rates are a barrier to
coverage for businesses.
While we received some comments
supporting the extension of our
proposed policy to the entire small
group market, several commenters
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opposed such an extension, including
State-based SHOPs. One commenter
opposed our proposal because SHOP
issuers are protected by programs that
issuers not participating in the SHOP
are not protected by, such as the risk
corridors program. Several of these
commenters stated that the off-Exchange
market should use a methodology that
works best for their market and State,
and that it should be up to the State to
establish how to calculate the minimum
participation rate inside and outside of
the Exchanges.
In addition to these comments, we
received queries on how HHS would
verify the coverage of individuals
included in the calculation of the
minimum participation rate. Several
commenters also asked for details on the
one-month exception period for
minimum participation rates.
Response: We are finalizing a policy
under which a SHOP (either a Statebased SHOP or an FF–SHOP) that elects
to establish a minimum participation
rate would be required to establish a
single, uniform rate that applies to all
groups and issuers in the SHOP, rather
than establishing general rules about
minimum participation rates or a
threshold over which the minimum
percentage may not be raised. Under the
methodology we have finalized for
calculating a minimum participation
rate, a SHOP cannot vary its minimum
participation rate based on the employer
group size. In the final rule, we are
modifying the proposal to give Statebased SHOPs the flexibility to establish
a different minimum participation rate
calculation methodology than the one
being finalized for the FF–SHOP, but
State-based SHOPs must continue to
base the rate on employee participation
in the SHOP or in the SHOP and other
coverage (as in the FF–SHOP), and may
not base the rate on employee
participation in a particular QHP or
QHPs of any particular issuer. We
believe that providing State-based
SHOPs with this flexibility will allow
States to set a calculation methodology
that aligns with their current market
practice. We are also finalizing our
proposal on the calculation of the
minimum participation rate in the FF–
SHOP and who is included in the
methodology, but are modifying the
proposal to specify that the new FF–
SHOP calculation methodology will
take effect only for plan years beginning
on or after January 1, 2016. For plan
years beginning before January 1, 2016,
the calculation methodology currently
in place for the FF–SHOP will remain
in effect.
We note that consistent with current
§ 155.705(b)(10)(ii) (which is
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redesignated at § 155.705(b)(10)(iii) in
this rule), the FF–SHOP may establish a
different minimum participation rate in
a State if there is evidence that a State
law sets a different minimum
participation rate or that a higher or
lower minimum participation rate is
customarily used by the majority of
QHP issuers in the State for products in
the State’s small group market outside
the SHOP. HHS considered various
minimum participation rate calculation
methodologies, and believes that the
calculation methodology we are
finalizing for the FF–SHOP aligns with
current practice in many States’ small
group markets. The difficulty of
verifying other coverage exists today in
the market and is not exacerbated by
this rule. Additionally, HHS believes
that using this approach to calculating
minimum participation rates reduces
unnecessary barriers for employer
groups seeking to cover their employees
because the calculation includes
individuals with other forms of
coverage, thus making it easier for
employer groups to reach the required
minimum participation rate. By
including in the calculation individuals
with individual market coverage, we
believe this methodology does not
undercut employer-based coverage, but
rather treats employers fairly. Under the
approach taken in the final rule to
accommodate for State-specific policies,
State-based SHOPs may use a
calculation methodology that aligns
with current market practice in their
State, and that works best for their
market and State, and are therefore not
required to follow the same calculation
methodology as will apply in the FF–
SHOPs.
The final rule does not modify or
eliminate the one-month period
between November 15 and December 15
of each year, during which employer
groups may enroll in coverage
notwithstanding any employer
contribution or group participation rules
under § 147.104(b)(1)(i)(B). Thus,
SHOPs may not apply the minimum
participation rate to prevent initial
enrollments and renewals that occur
during this one-month period.
We do not believe the proposed
modification to calculation of the FF–
SHOP minimum participation rate will
result in significant adverse selection. In
some States in which the FF–SHOP
currently operates, its minimum
participation rate is more restrictive on
enrollment than the rate currently
generally applied by issuers in the
market. The proposed modifications to
the FF–SHOP’s minimum participation
rate will align the calculation of the rate
with current practices in these States by
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including other sources of coverage in
the calculation. We acknowledge that
this change will make the FF–SHOP’s
minimum participation rate more
inclusive than minimum participation
rates in the market in some other States.
However, under current law, no group
may be excluded from the small group
market altogether because it fails to
meet a minimum participation rate. Any
group may enroll during the annual
month-long period under
§ 147.104(b)(1)(B) during which no
minimum participation rate can be
applied to deny coverage. Further, the
new methodology for the participation
rate calculation is only more permissive
in that it lets in groups with additional
sources of other coverage. There is no
basis to suggest that such a group
represents worse than average risk.
c. Eligibility Standards for SHOP
(§ 155.710)
In § 155.710, we proposed to amend
paragraph (e) to specify that where an
employer has offered dependent
coverage, a qualified employee would
be eligible to enroll his or her
dependents in coverage through the
SHOP.
We received a comment supporting
our proposal. We are finalizing our
amendment as proposed.
d. Enrollment of Employees Into QHPs
Under SHOP (§ 155.720 and § 156.285)
In § 155.720, we proposed to remove
paragraph (b)(7),which requires all
SHOPs to establish effective dates for
employee coverage in the SHOP, and to
make minor conforming changes to the
list structure in paragraph (b). Current
§ 155.720(b)(7) is redundant in light of
the proposed requirements to establish
effective dates under § 155.725, which
we are finalizing as proposed.
We received no comments on these
proposed amendments. We are
finalizing the amendments as proposed.
We proposed to amend paragraph (e),
which provides that issuers must notify
SHOP consumers regarding coverage
effective dates so that the provision
would refer to enrollees and not
qualified employees, and proposed to
remove a reference in this section to
§ 156.260(b), in keeping with the
proposed amendments to § 155.725
regarding coverage effective dates.
Under the proposal, issuers would be
required to provide this notice to
anyone who enrolled in coverage
through the SHOP under the proposed
amendments to the definitions of
qualified employee and enrollee,
including dependents (including a new
dependent of the employee, when the
dependent separately joins the plan),
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former employees of a qualified
employer, and certain business owners.
We noted that the notices required
under this proposal could be
incorporated into existing notifications
that QHPs provide to their new
customers, for example in a welcome
document. We also proposed a
conforming amendment to § 156.285(c)
to ensure that QHP issuers participating
in the SHOP would provide notice to a
new enrollee of the enrollee’s effective
date of coverage.
We are finalizing the provisions with
the modifications noted below.
Comment: We received several
comments on our proposed
amendments to effective date notices
pursuant to § 155.720(e). Some
commenters supported continuing to
require issuers to send the required
notices, while others stated that the
notice requirement should be shifted to
the SHOP. We also received comments
on expanding the notice requirement to
the amended definition of an enrollee,
which includes dependents. Some
commenters stated that notices
regarding the coverage effective date
should only be provided to qualified
employees and adult dependents. Some
commenters stated that these notices
should be provided separately to
dependents of qualified employees if
the last known address for the
dependent is different from the
subscriber. We also received one
comment requesting additional time and
flexibility for issuers to implement the
notice requirement for dependents
under the new definition of an enrollee.
Response: We agree that generally,
when a dependent lives with the
qualified employee, separate
notification to the dependent is
duplicative. As such, we are modifying
the proposal to specify that when a
primary subscriber and his or her
dependents live at the same address, a
separate notice need not be sent to each
dependent at that address, so long as the
notice sent to each primary subscriber at
that address contains all the required
information about the coverage effective
date for the primary subscriber and each
of his or her dependents at that address.
We note that when dependents live at
a different address from the primary
subscriber a separate notice must be
sent to those dependents.
Amending the definition of an
enrollee and amending § 155.720(e) to
require notice to enrollees will create
additional notice obligations for issuers.
To permit issuers to update their
systems and fulfill this requirement, we
will provide issuers until plan years
beginning on or after January 1, 2017 to
fulfill the requirement of sending
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effective date notices to enrollees other
than qualified employees. Because
issuers have already been providing
these notices to qualified employees
under the current rule, we do not
believe the inclusion of former
employees that is being finalized in this
rulemaking presents similar system
challenges. Thus, issuers will be
required to send the notices to everyone
who meets the new definition of
qualified employee as soon as this rule
takes effect. We are providing an
additional year only for issuers to begin
providing notice to enrollees other than
qualified employees.
We are also making minor changes to
the wording of the proposed
requirement at 156.285(c)(3), so that the
final rule refers to a requirement to
‘‘notify’’ new enrollees, rather than to
‘‘provide’’ them ‘‘with notice.’’
e. Enrollment Periods Under SHOP
(§ 155.725 and § 156.285)
We proposed to amend paragraphs (a),
(g), (h), and (j)(5) of § 155.725 and
§ 156.285(b)(1) and (b)(4) to provide
clarity regarding the effective dates for
coverage that all SHOP Exchanges must
establish. First, we proposed to remove
the reference at current § 155.725(a)(1)
to the start of the initial open
enrollment period for 2014 coverage,
and the reference in current
§ 155.725(a)(2) to § 156.260. We
proposed to remove the reference to
effective dates under § 156.260 because
we are proposing to specify effective
dates in § 155.725 or to more directly
cross-reference the appropriate effective
date. Second, we proposed to amend
§ 155.725(h) so that SHOPs would need
only establish effective dates for
employees enrolling in coverage during
the initial group enrollment and the
employee annual open enrollment
period, rather than for special
enrollment periods. At proposed
paragraph (h)(2), we also codified the
effective dates for coverage in the FF–
SHOP for enrollments during initial and
annual open enrollment periods.
Specifically, we proposed to include
language in the SHOP regulations
specifying the same effective dates that
were previously adopted for the FF–
SHOP under our interpretation of the
cross reference in § 156.285(b)(4) to
§ 156.260, which in turn crossreferences § 155.410(c). We noted that
the dates set forth in § 155.725(h)(2)
would apply only to the FF–SHOP and
State-based SHOPs would be free to
establish their own effective dates for
initial and annual open enrollment.
Third, we proposed several
amendments to paragraph § 155.725(g)
regarding enrollment for newly
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qualified employees. A newly qualified
employee is an employee who becomes
eligible to participate in the employer’s
group health plan outside of a qualified
employer’s initial or annual enrollment
period; for example, because he or she
was hired outside of those periods. We
proposed to move paragraph (g) to
paragraph (g)(1), and proposed
amendments to the existing language to
make explicit our interpretation of
current paragraph (g), which is that a
newly qualified employee becomes
eligible for an enrollment period that
begins on the first day of becoming a
newly qualified employee regardless of
whether the employee is subject to a
waiting period. Additionally, we
proposed that the duration of a newly
qualified employee’s enrollment period
be at least 30 days. Where the employee
is subject to a waiting period in excess
of 45 days, we proposed that the
duration of the employee’s enrollment
period extend until 15 days before what
would be the conclusion of the waiting
period if the employee selected a plan
on the first day of becoming eligible. We
noted that if an employee waits to
choose a plan until the end of such an
extended enrollment period, this could
have the effect of further delaying the
effective date of coverage, consistent
with § 147.116(a). We also proposed to
add a new paragraph (g)(2) in § 155.725
to provide that the effective date for a
newly hired employee would be
determined using the same rule for
initial and open enrollments that would
be established by the SHOP under
proposed § 155.725(h). Thus, in the FF–
SHOP, coverage effective dates for
newly qualified employees would be
established according to § 155.725(h)(2):
Plan selections made between the first
and the fifteenth day of any month
would be effective the first day of the
following month, and plan selections
made between the 16th and the last day
of any month would be effective the first
day of the second following month. A
newly qualified employee may also be
subject to a waiting period under
§ 147.116, however, and in such cases,
the effective date may be on the first day
of a month that is later than the month
in which coverage would take effect
under the usual rules established by the
SHOP under § 155.725(h). However, in
no case could the effective date fail to
comply with the limitations on waiting
period durations at § 147.116 of this
subchapter.
Fourth, we proposed to amend
paragraph § 155.725(j)(5) to make it
clearer that the effective dates for
special enrollment periods in the SHOP
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should be determined according to
§ 155.420(b).
Fifth, we proposed to harmonize
§ 156.285(b)(1) and (4) with the
proposed amendments to effective dates
described above, to specify that QHP
issuers must abide by the effective dates
established under § 155.725, and must
enroll qualified employees in
accordance with the qualified
employer’s initial and annual
enrollment periods in § 155.725.
We also proposed to amend
§ 155.725(b) to harmonize rolling
enrollment in the SHOP with the
regulations applicable to guaranteed
availability in States with merged
individual and small group markets.
Section 147.104(f), as moved from
§ 147.104(b)(2) by this rule, requires that
all individual and small group health
insurance coverage sold in a State with
merged individual and small group risk
pools be offered on a calendar year
basis, meaning that it must end on
December 31 of the year in which the
policy was issued. Section 155.725(b),
in contrast, requires that SHOPs permit
qualified employers to purchase
coverage for a small group at any point
throughout the calendar year, and that
SHOPs ensure that a participating
group’s plan year lasts for 12 months
beginning with the first effective date of
coverage. Section 155.725(b) was
intended to ensure that qualified
employers can offer health insurance
through the SHOP at any point during
the year while receiving a guaranteed
rate 12 months following the purchase
of coverage, consistent with the current
practice in the small group market. We
proposed to harmonize these two
provisions in States with merged
markets, by proposing that SHOP plan
years in a State with merged risk pools
would terminate on December 31st of
the year in which they began, even if
certain qualified employers’ plan years
would thus be shorter than 12 months.
This proposal would not affect a small
employer’s ability to enroll in coverage
at any point in the year. Instead, it
would standardize the renewal date of
such a plan in a State with merged risk
pools at the beginning of each calendar
year.
We also proposed to modify
paragraph (i) to permit a SHOP to elect
to renew a qualified employer’s offer of
coverage where the employer has taken
no action during its annual election
period to modify or withdraw the prior
year’s offer of coverage. The qualified
employer’s offer would not be
automatically renewed under this
proposal if the employer is no longer
eligible to participate in the SHOP.
Renewal of the coverage offer would
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also not be automatic if the employer is
offering a single QHP and that QHP will
no longer be available through the
SHOP. We proposed this modification at
the request of State-based SHOPs that
desire to conform to existing small
group market practice regarding
automatic annual renewal of coverage
for an employer group. A SHOP would
not be required to implement this rule.
Finally, we proposed to add
paragraph (k) to make clear that SHOP
coverage may not be effectuated if the
policy may not be issued to the
employer because the group fails to
meet an applicable minimum
participation rate calculated at the time
of initial group enrollment or renewal,
subject to § 147.104(b)(1)(i)(B).
We did not receive comments on the
proposed amendments to § 156.285(b)(1)
and (4), and are finalizing them as
proposed. We are also finalizing the
provisions under § 155.725 as proposed.
Comment: We received one comment
on establishing effective dates for
employees enrolling in coverage during
the initial group enrollment and the
annual open enrollment period. The
commenter supported our proposed
provision because it establishes
flexibility for State-based SHOPs to
establish their own effective dates
during the initial and annual open
enrollment periods, including midmonth effective dates. Commenters
supported the proposed provision to
keep effective dates for special
enrollment periods standardized. Some
commenters supported the proposed
provision to ensure effective dates for
special enrollment periods are
consistent with § 155.420(b). One
commenter opposed the effective dates
for special enrollment periods under
§ 155.725(j) and recommended allowing
States flexibility to prescribe their own
effective dates for initial, annual, and
special enrollment periods, because
there may be other implications to the
effectuation of coverage for employees
and dependents with a special
enrollment period.
Response: We are finalizing the
provisions as proposed. We believe that
the proposed amendments allow
flexibility for State-based SHOPs to set
and maintain effective dates for initial
and annual open enrollment periods to
accommodate coverage effective dates
for a group as soon as possible under
local market conditions. Coverage
effective dates for initial and annual
open enrollment periods for the FF–
SHOP will be finalized as proposed to
create a uniform enrollment timeline.
We continue to believe that the effective
dates for special enrollment periods
should be standardized for all SHOPs to
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ensure a minimum standard for special
enrollment periods. We note that
pursuant to § 155.420, SHOPs have
existing authority to set earlier effective
dates for certain special enrollment
periods.
Comment: We received several
comments on the timeline for an
employee to select a SHOP plan as it
relates to employee waiting periods.
Some commenters supported our
proposed policy on employee
enrollment periods and waiting period
rules. One commenter noted that a
scenario could arise where an employee
would need to select a SHOP plan on a
timeline that does not align with the
waiting period.
Response: We are finalizing our
provision as proposed. SHOPs should
ensure that an employee waiting period
does not exceed the duration permitted
under § 147.116. State-based SHOPs
may continue to set their own rules
regarding enrollment timelines for
newly qualified employees so long as
such rules comply with § 147.116.
Comment: We received comments
supporting the proposed enrollment
process for newly qualified employees.
These commenters stated the process
provides sufficient time for employees
to select a plan. One commenter stated
that an employee election period of
more than 30 days may cause confusion
to consumers and may cause significant
IT modifications for issuers.
Response: We are finalizing the
provision as proposed. We note that
while the rule sets a 30-day minimum
for a newly qualified employee’s
enrollment period, it does not require a
SHOP to provide an enrollment period
in excess of 30 days to newly qualified
employees. A longer enrollment period
might, however, be mandated by State
law or permitted under the terms of the
plan. Because this rule provides only for
a minimum length, which already
constitutes common market practice,
finalizing this rule is not expected to
cause consumer confusion or necessitate
IT modifications.
Comment: We received several
comments on our proposed policies to
harmonize our provision on rolling
enrollment in a merged market. We
received a comment supporting rolling
enrollment in States with a merged
market. Some commenters stated they
believed our proposed policies would
be disruptive to States with merged
markets. One commenter asked HHS to
develop a more targeted set of policy
solutions to address the specific issues
associated with enrollment timelines in
States with merged markets. One
commenter asked HHS to clarify
whether States with markets that are
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merged only for purposes of State law,
but not Federal law, are subject to these
proposed rules.
Response: We are finalizing our
provision as proposed. We continue to
believe that rolling enrollment in States
with merged markets provides
employers an opportunity to offer health
insurance through the SHOP at any
point during the year, pursuant to our
policies on guaranteed availability. We
are not limiting small employer groups
in States with a merged market to the
individual market enrollment periods or
otherwise prohibiting them from
seeking coverage at any point during the
year. However, to align with the
requirements to offer plans in the
merged market on a calendar year basis
pursuant to § 147.104(f), as moved from
§ 147.104(b)(2) by this rule, SHOP
coverage with a plan year starting at any
time during the year would have the
plan year end on December 31 and
renew effective January 1 of the
following year. Rolling enrollment in
the SHOP, as it aligns with this policy,
would allow for plan years shorter than
12 months. For coverage that has an
effective date after January 1, a 12month plan year would not align with
the requirement for coverage to be
offered on a calendar year basis, and is
therefore not permitted in States with
merged markets. We note that the
additional language finalized in this
rule at § 155.725(b) is only applicable in
States that have merged their markets
under section 1312(c)(3) of the
Affordable Care Act. This language does
not apply in States with markets that are
not considered to be merged for
purposes of Federal law.
Comment: Several commenters
supported the proposal permitting
automatic renewal of employers’ offers
of coverage. One commenter asked HHS
to specify what it means to become
ineligible for SHOP coverage and to
specify whether an employer may be
eligible for automatic renewal if the
employer group falls below one nonowner full-time equivalent employee.
We also received a comment asking
HHS to specify if States may renew an
employer’s coverage if the employer’s
Employee Identification Number (EIN)
changes provided that the employer
retains the same legal identity. We also
received a comment opposing automatic
renewals and requests that HHS
streamline processes to allow employer
groups to quickly update only necessary
information for a more simplified reenrollment process. It was also
recommended that agents and brokers
be provided with an opt-in or opt-out
choice for employees rather than an
automatic renewal.
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Response: We are finalizing our
provision as proposed. We do not
believe that a streamlined process to
allow employer groups to update
information about their group is
necessary because qualified employers
are already required to update this
information to the SHOP throughout the
plan year. See § 157.205(f). We believe
our broad provision regarding SHOP
coverage renewal will provide employer
groups and their employees and
enrollees an efficient way to renew and
avoid any gaps in their coverage.
Because not all groups work with an
agent or broker, we believe that
providing agents and brokers with an
opt-in or opt-out choice for employees
will not cover the universe of renewals
that will occur.
An employer is considered eligible to
participate in the SHOP if it is a ‘‘small
employer’’ as defined in § 155.20 and if
it meets the requirements set forth at
§ 155.710(b). To qualify, employers
must have at least one employee who is
not the owner or the spouse of the
owner.44 With one limited exception, if
a group fails to meet any of these
eligibility criteria, including if it no
longer has at least one employee who is
not the owner or the owner’s spouse, it
may not renew coverage through the
SHOP. The limited exception applies,
under § 155.710(d), to employers that
cease to be small employers solely by
reason of an increase in the number of
employees, so long as they otherwise
meet the eligibility criteria and continue
to purchase coverage for qualified
employees through the SHOP. For
purposes of renewing coverage, if an
employer’s EIN changes, but it retains
the same legal identity, then the group
can renew their coverage as long as they
continue being eligible for coverage, if
permitted by applicable State law. HHS
considers an employer to have the same
legal identity if the group maintains all
other identifiable information including
the business ownership structure and
State in which the business operates.
Comment: We received some
comments related to the calculation of
and enforcement of minimum
participation rates, but we did not
receive specific comments on the
proposed policy at § 155.725(k).
Response: We are finalizing the
provision as proposed, and note that
applicable minimum participation rates
are calculated and enforced at the time
of initial group enrollment or renewal,
subject to § 147.104(b)(1)(B).
44 See Exchange Establishment Rule, 77 FR 18310
at 18399.
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f. Termination of SHOP Enrollment or
Coverage (§ 155.735 and § 156.285)
In § 155.735, we proposed to amend
paragraph (c)(2)(ii) to specify that in the
FF–SHOP, a termination of coverage
due to non-payment of premiums would
be effective on the last day of the month
for which the FF–SHOP received full
payment. Prior to this proposal, the
effective date of such a termination was
not specified in the rule. We are
finalizing this policy as proposed.
In paragraph (c)(2)(iii), we proposed
to specify that, in the FF–SHOP, a
qualified employer whose coverage was
terminated for non-payment of
premiums could be reinstated in its
prior coverage only once per calendar
year. We are finalizing this provision as
proposed.
Paragraphs (c)(2)(iv) and (c)(3) are
added in light of comments related to
COBRA continuation coverage, as
discussed in the preamble discussion of
§ 155.705.
In paragraphs (d)(1)(iii) and (g) of
§ 155.735 and in § 156.285(d)(1)(ii), we
proposed to amend certain existing
notice requirements by transferring
them from QHP issuers to the SHOP.
Under current § 156.285(d)(1)(ii), a QHP
issuer must notify an enrollee and a
qualified employer if the enrollee or
employer is terminated due to a loss of
eligibility, due to a qualified employer’s
non-payment of premiums, due to a
rescission of coverage for fraud or
misrepresentation of material fact in
accordance with § 147.128, or because
the QHP issuer elects not to seek
recertification with the Exchange for its
QHP. We proposed to transfer two of
these notice requirements to the SHOP.
At § 155.735(g)(1), we proposed that the
SHOP be required to provide notice to
the enrollee if an enrollee is terminated
due to non-payment of premium or a
loss of eligibility for participation in the
SHOP, including when an enrollee loses
eligibility due to a qualified employer’s
loss of eligibility. We also proposed at
§ 155.735(g)(2) that the SHOP be
required to provide notice to qualified
employers for termination due to
nonpayment of premiums or where
applicable, due to loss of the employer’s
eligibility. Proposed § 155.735(g)(2)
would apply to terminations for a
reason other than the employer
reporting information to the SHOP
resulting in a loss of eligibility.
Through the proposed amendments to
the definition of ‘‘enrollee’’ discussed
above, we also proposed to expand the
class of people who would receive
notices under the proposed
amendments to § 155.735 and
§ 156.285(d)(1)(ii). Additionally, we
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proposed that QHP issuers in the SHOP
would continue to be required to
provide notice to qualified employers
and enrollees when an enrollee’s
coverage is terminated due to a
rescission in accordance with § 147.128,
and when an enrollee’s coverage is
terminated due to an election by a QHP
issuer not to seek recertification with
the Exchange for its QHP. We proposed
to amend § 155.735(d)(1)(iii), which
currently refers to terminations of SHOP
coverage due to a QHP’s termination or
decertification, by adding a reference to
terminations of SHOP coverage due to
the non-renewal of a QHP’s
certification. By proposing to include a
cross-reference to § 155.735(d)(1)(iii) in
§ 156.285(d)(1)(ii), we also proposed to
expand the notice a QHP issuer must
provide regarding the discontinuation of
a product in which a qualified employee
is enrolled to include circumstances
where the QHP is terminated or is
decertified as described in § 155.1080.
We are finalizing the provisions with
modifications noted below.
We also proposed that each notice
required under § 155.735(g) and the
proposed amendments to
§ 156.285(d)(1)(ii) would have to be
provided by the SHOP or QHP issuer
promptly and without undue delay. We
explained that we would consider an
electronic notice that was sent no more
than 24 hours after the SHOP or QHP
issuer determined coverage was to be
terminated to have been provided
‘‘promptly and without undue delay.’’
In the case of paper notices, we would
consider notices that were mailed no
later than 48 hours after the SHOP
determined coverage was to be
terminated to have been provided
‘‘promptly and without undue delay.’’
We have revisited these deadlines in
light of comments received, and are
finalizing the proposal with a
modification to allow 3 business days
for electronic notices and 5 business
days for mailed notices. New paragraph
§ 155.735(g) and the corresponding
amendments related to issuer notice
requirements at § 156.285(d)(1)(ii) are
effective on January 1, 2016.
We are also finalizing amendments to
§ 155.735 and § 156.285 to conform with
our interpretation of the guaranteed
availability and guaranteed renewability
requirements. For a discussion of these
revisions, please see the preamble for
§ 155.430 in this final rule.
Comment: We received several
comments in support of HHS codifying
the termination effective date for nonpayment of premiums as the last day of
the month for which the FF–SHOP
received a full payment.
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Response: We are finalizing the
provision as proposed regarding
termination effective dates for the FF–
SHOP due to non-payment of
premiums.
Comment: We received a comment
recommending HHS provide a more
‘‘robust approach’’ to reinstatements for
a given employer. The commenter stated
that costs resulting from those that fail
to pay premiums on time are ultimately
borne by other insurers. However, the
commenter did not discuss any
alternative approach. We also received a
comment asking HHS to specify that
this provision only applies to the FF–
SHOP.
Response: We are finalizing our
provision as proposed to discourage
employers from repeatedly failing to
make timely payments in the FF–SHOP.
We note that to be reinstated, an
employer must pay its premium in full
and, generally, in order for new
coverage to be effectuated, the FF–SHOP
would require an employer to pay its
first month’s premium in full.
Therefore, we do not believe that in this
case, an employer’s failure to make
timely payments will impact another
issuer. We note this policy, like all the
policies set forth at § 155.735(c)(2), only
applies in the FF–SHOP. HHS is not
regulating the number of reinstatements
that State-based SHOPs may choose to
enforce.
Comment: We received several
comments on the transfer of certain
notice requirements from QHP issuers to
the SHOP. Many commenters supported
our proposed policies because the SHOP
has better information regarding the
timing of non-payment of premiums and
why an enrollee or employer lost his or
her eligibility. Some commenters stated
that the notices should only be provided
to qualified employees and adult
dependents, while others stated that the
notices should be provided to qualified
employees and their dependents if the
last known address for the dependent is
different from the subscriber.
Additionally, we also received a
comment requesting HHS specify that
the notice requirement also applies to
SADP issuers. One commenter
recommended employers that actively
provide to the SHOP information which
indicates a loss of eligibility also receive
a notice. We received a comment stating
issuers should not be required to send
any notices of termination to individual
employees as it is not common market
practice.
Response: We have modified the final
notice requirement to specify that when
a primary subscriber and his or her
dependents live at the same address, a
separate notice need not be sent to each
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dependent at that address, so long as the
notice sent to each primary subscriber at
that address contains all the required
information about the termination for
that primary subscriber and each of his
or her dependents at that address. We
note that when dependents live at a
different address from the primary
subscriber, a separate notice must be
sent to those dependents. We note the
broad language of the notice
requirement applies to both medical and
dental coverage sold through the SHOP.
We do not believe a notice to the
employer is necessary when an
employer reports to the SHOP that it no
longer meets the SHOP eligibility
criteria. The SHOP eligibility criteria are
sufficiently simple that we believe that
under such circumstances the loss of
eligibility would be self-evident to the
employer.
HHS believes that these notices of
termination should be sent to all
individual, qualified employees affected
by the termination of coverage or
enrollment. By communicating directly
with qualified employees through a
notice of termination, the SHOP or the
issuer can provide more timely notice
regarding termination of coverage or
enrollment, allowing employers and
enrollees to seek other coverage and
reduce gaps in coverage.
Comment: A commenter
recommended that in a State that
operates its own SHOP, the SHOP
should provide the notice unless State
law requires that the notice be provided
by the issuer. We also received a
comment requesting that sending these
notices should be at the discretion of
issuers so that issuers can communicate
and maintain relationships that they
have with employer groups and their
enrollees.
Response: We appreciate the
commenters’ concern regarding
unnecessary duplication of notices. As
such, we are finalizing the proposal
with a modification that provides that if
a State law requires such notices be
provided by the issuer, then the SHOP
is not required to also send these
notices. In a State with no such law, if
an issuer would like to send these
notices to maintain its relationships
with employer groups and enrollees, it
may do so. But the fact that the issuer
sent the notice would not exempt a
SHOP from the notice requirement.
Comment: We received a comment
asking HHS to provide specific
information on the required termination
notices about how employer groups can
maintain coverage or obtain other
coverage, reinstatement rights and
processes, how to reapply for coverage,
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and information about other coverage
options.
Response: When sending these
notices in States with an FF–SHOP,
HHS intends to provide additional
information about how to avoid a gap in
coverage and other coverage options.
However, we do not believe that this
content is necessary for the notice
requirement to be met, and are therefore
not requiring that it be included in the
notices sent by all SHOPs and issuers.
Comment: Some commenters support
a SHOP sending termination notices to
enrollees and employer groups
‘‘promptly and without undue delay.’’
However, one commenter requested
flexibility to issuers to ensure notices
are provided consistent with existing
State criteria. We also received
comments requesting that the standard
for timing be broader, and
recommending delivery of termination
notices occur at least 30 days prior to
the termination effective date, rather
than timing the notice as proposed. One
commenter recommended that HHS
specify that the timing of sending
notices be expressed in business days.
Response: We recognize that the
timeline described as a safe harbor in
the preamble to the proposed rule might
not give QHP issuers sufficient time to
mail notices. We therefore are
modifying the proposal to specify that
SHOPs and issuers should send the
required notices within 3 business days
where notice is provided electronically
and within 5 business days when hard
copy notices are mailed.
We are also making minor changes to
the wording of the proposed
requirements at § 155.735(g) and at
§ 156.285(d)(1)(ii), so that the final rule
refers to a requirement to ‘‘notify’’ new
enrollees, rather than to ‘‘provide’’ them
‘‘with a notice.’’ We are also finalizing
new § 155.735(g) and the amendments
to § 156.285(d)(1)(ii) with an effective
date of January 1, 2016.
7. Exchange Functions: Certification of
Qualified Health Plans
a. Certification Standards for QHPs
(§ 155.1000)
In § 155.1000, we proposed to add
paragraph (d) to harmonize QHP
certification with rolling enrollment in
the SHOP. Under the proposal, where a
SHOP certifies QHPs on a calendar year
basis, a QHP’s certification will be in
effect for the duration of any employer’s
plan year that began in the calendar year
for which the plan was certified.
We are finalizing as proposed with
the modification noted below.
Comment: We received some
comments supporting the proposed
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policy for QHPs in SHOPs that certify
QHPs on a calendar year basis to retain
their certification for the duration of any
employer’s plan year that began in the
calendar year for which the plan was
certified. We also received one comment
recommending that we specify that this
proposed policy applies with the
exception provided in § 155.1080.
Response: In light of comments
received, we are amending the proposed
language to specify that § 155.1000(d)
does not apply when there is a
decertification by the Exchange of
QHPs, pursuant to § 155.1080.
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b. Recertification of QHPs (§ 155.1075)
We are making a conforming
amendment to align the date by which
an Exchange must complete the QHP
recertification process with the date
finalized in this rule at § 155.410(e)(2)
for the beginning of the open enrollment
period for the benefit year beginning on
January 1, 2016. In the Exchange
Establishment Rule, we finalized
§ 155.1075(b) to state that the Exchange
must complete the QHP recertification
process on or before September 15 of the
applicable calendar year. In that rule,
we also finalized the open enrollment
periods for years other than the 2014
benefit year as running from October 15
through December 7 of the preceding
year (77 FR 18462). This gave Exchanges
until 1 month before the beginning of
the open enrollment period to complete
the recertification process.
In the proposed rule, we proposed
that the beginning of the open
enrollment period for the benefit year
beginning on or after January 1, 2016,
would begin on October 1, 2015—
approximately 2 weeks after the QHP
recertification deadline. As discussed
elsewhere in this final rule, we are
finalizing an open enrollment period for
coverage beginning in 2016 that would
begin 1 month later, on November 1. To
align the date by which an Exchange
must complete recertification and the
beginning of the open enrollment period
in a manner that provides issuers, State
regulators, and Exchanges additional
time to complete the plan review and
certification processes without placing
any substantive burden on consumers,
we are amending § 155.1075(b) to
require Exchanges to complete
recertification of QHPs no later than 2
weeks prior to the beginning of open
enrollment.
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F. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
1. General Provisions
a. Definitions (§ 156.20)
In § 156.20, we proposed that for
purposes of part 156, the term ‘‘plan’’
have the meaning given the term in
§ 144.103, as proposed to be amended in
this rulemaking. Please refer to section
III.A.1 for a discussion of the term
‘‘plan,’’ which is being finalized as
proposed.
b. FFE User Fee for the 2016 Benefit
Year (§ 156.50(c))
Section 1311(d)(5)(A) of the
Affordable Care Act contemplates an
Exchange charging assessments or user
fees to participating health insurance
issuers to generate funding to support
its operations. If a State does not elect
to operate an Exchange or does not have
an approved Exchange, section
1321(c)(1) of the Affordable Care Act
directs HHS to operate an Exchange
within the State. In addition, 31 U.S.C.
9701 permits a Federal agency to
establish a charge for a service provided
by the agency. Accordingly, at
§ 156.50(c), we specified that a
participating issuer offering a plan
through an FFE must remit a user fee to
HHS each month that is equal to the
product of the monthly user fee rate
specified in the annual HHS notice of
benefit and payment parameters for the
applicable benefit year and the monthly
premium charged by the issuer for each
policy under the plan where enrollment
is through an FFE.
OMB Circular No. A–25 Revised
(Circular No. A–25R) establishes Federal
policy regarding user fees, and specifies
that a user charge will be assessed
against each identifiable recipient for
special benefits derived from Federal
activities beyond those received by the
general public. As in benefit year 2015,
issuers seeking to participate in an FFE
in benefit year 2016 will receive two
special benefits not available to the
general public: (1) The certification of
their plans as QHPs; and (2) the ability
to sell health insurance coverage
through an FFE to individuals
determined eligible for enrollment in a
QHP. Activities performed by the
Federal government that do not provide
issuers participating in an FFE with a
special benefit will not be covered by
this user fee.
Circular No. A–25R further states that
user charges should generally be set at
a level so that they are sufficient to
recover the full cost to the Federal
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government of providing the service
when the government is acting in its
capacity as sovereign (as is the case
when HHS operates an FFE). We
proposed to set the 2016 user fee rate for
all participating issuers at 3.5 percent of
the monthly premium charged by the
issuer. This rate is the same as the 2015
user fee rate. We are finalizing the 2016
user fee rate as proposed. Circular No.
A–25R allows for exceptions to this
policy, with OMB approval. An
exception was in place for establishing
the 2015 user fee rate. To ensure that
FFEs can support many of the goals of
the Affordable Care Act, we received an
exception to this policy again for 2016.
Comment: We received one comment
on the underlying structure of the FFE
user fee, recommending that HHS
establish broad-based financing for
FFEs, such as an assessment on all
health care industry entities. If the
existing fee structure is kept, the
commenter stated that it should be paid
by consumers and small employers that
purchase coverage through an FFE. The
commenter also stated that the user fee
should not be set as a percent of
premium, as the cost to run an Exchange
is not related to the cost of coverage.
Response: We will continue to assess
the FFE user fee as a percent of the
monthly premium charged by issuers
participating in an FFE. In accordance
with Circular No. A–25R, issuers are
charged the user fee in exchange for
receiving special benefits beyond those
that accrue to the general public. Setting
the user fee as a percent of premium
ensures that the user fee generally aligns
with the business generated by the
issuer as a result of participation in an
FFE.
Comment: One commenter
recommended that HHS publish cost
estimates for the FFEs, disclose how
funds will be spent, and develop
performance metrics for the FFEs. The
commenter stated that any increase in
an issuer’s aggregate liability for FFE
user fees should be capped at changes
in the Consumer Price Index, and that
total user fee collections across all
issuers should be capped at the level of
expended costs. The commenter urged
that if user fee collections exceed FFE
costs, issuers should receive a rebate or
credit against future fees.
Response: HHS will continue to
publish cost estimates through the
Federal budget process, and publish
periodic performance measures, such as
HHS reports on Marketplace call center
wait times, and Web site visits and rates
of eligibility determinations through
HealthCare.gov. We will also continue
to set the user fee rate based on the
expected costs to the Federal
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government of providing the special
benefits to issuers; however, for 2016 as
noted above, we received an exception
to this policy because we wish to ensure
that the FFEs can support many of the
goals of the Affordable Care Act.
Because we set the user fee rate below
that which is expected to cover full
Federal costs (as in 2014 and 2015), we
do not see the need at this time to
address a situation in which user fee
collections exceed costs.
2. Essential Health Benefits Package
a. State Selection of Benchmark
(§ 156.100)
We proposed to amend paragraph (c)
of § 156.100 to delete the language
regarding the default base-benchmark
plan in the U.S. Territories of Guam, the
U.S. Virgin Islands, American Samoa,
and the Northern Mariana Islands. The
change reflects HHS’s determination,
described in more detail in section
III.A.1.b of this final rule, that certain
provisions of the PHS Act enacted in
title I of the Affordable Care Act that
apply to health insurance issuers are
appropriately governed by the definition
of ‘‘State’’ set forth in that title.
Therefore, the rules regarding EHB
(section 2707 of the PHS Act) do not
apply to health insurance issuers in the
U.S. Territories. We also proposed to
make a technical change to this section
by replacing ‘‘defined in § 156.100 of
this section’’ with ‘‘described in this
section.’’ We note that this has no effect
on Medicaid and CHIP programs and
that Alternative Benefit Plans will still
have to comply with the essential health
benefit requirements.
We did not receive any comments
regarding this proposal. We are
finalizing the provisions as proposed.
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b. Provision of EHB (§ 156.115)
(1) Habilitative Services
One of the 10 categories of benefits
that must, under section 1302(b)(1)(G) of
the Act, be included under the
Secretary’s definition of EHB is
rehabilitative and habilitative services
and devices. If a benchmark plan does
not include habilitative services,
§ 156.110(c)(6) of the current EHB
regulations requires the issuer to cover
habilitative services as specified by the
State under § 156.110(f) or, if the State
does not specify, then the issuer must
cover habilitative services in the manner
specified in § 156.115(a)(5). Section
156.115(a)(5) states that a health plan
may provide habilitative coverage by
covering habilitative services benefits
that are similar in scope, amount, and
duration to benefits covered for
rehabilitative services or otherwise
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determine which services are covered
and report the determination to HHS. In
some instances, those options have not
resulted in comprehensive coverage for
habilitative services. Therefore, we
proposed amending § 156.115(a)(5) to
establish a uniform definition of
habilitative services that may be used by
States and issuers. In addition, we
proposed to remove § 156.110(c)(6)
because that provision gives issuers the
option to determine the scope of
habilitative services.
We believe that adopting a uniform
definition of habilitative services would
minimize the variability in benefits and
lack of coverage for habilitative services
versus rehabilitative services. Defining
habilitative services clarifies the
difference between habilitative and
rehabilitative services. Habilitative
services, including devices, are
provided for a person to attain,
maintain, or prevent deterioration of a
skill or function never learned or
acquired due to a disabling condition.
Rehabilitative services, including
devices, on the other hand, are provided
to help a person regain, maintain, or
prevent deterioration of a skill or
function that has been acquired but then
lost or impaired due to illness, injury,
or disabling condition.
We proposed adopting the definition
from the Glossary of Health Coverage
and Medical Terms 45: Health care
services that help a person keep, learn,
or improve skills and functioning for
daily living. Examples include therapy
for a child who is not walking or talking
at the expected age. These services may
include physical and occupational
therapy, speech-language pathology and
other services for people with
disabilities in a variety of inpatient and/
or outpatient settings.
We did not propose any changes to
§ 156.110(f), which allows States to
determine services included in the
habilitative services and devices
category if the base-benchmark plan
does not include coverage. Several
States have made such a determination
following benchmark selection for the
2014 plan year, and we wish to continue
to defer to States on this matter as long
as the State definition complies with
EHB policies, including nondiscrimination. If the State does not
supplement missing habilitative
services or does not supplement the
services in an EHB-compliant manner,
issuers should cover habilitative
services and devices as defined in
§ 156.115(a)(5)(i).
45 https://www.cms.gov/CCIIO/Resources/Files/
Downloads/uniform-glossary-final.pdf.
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We also proposed to revise current
§ 156.115(a)(5)(ii) to provide that plans
required to provide EHB cannot impose
limits on coverage of habilitative
services that are less favorable than any
such limits imposed on coverage of
rehabilitative services. Since the
statutory category includes both
rehabilitative and habilitative services
and devices, we interpret the statute to
require coverage of each. Therefore,
issuers that previously excluded
habilitative services, but subsequently
added them, would be required under
our proposal to impose separate limits
on each service rather than retaining the
rehabilitative services visit limit and
having habilitative services count
toward the same visit limit. Because we
proposed to establish a uniform
definition of habilitative services in new
§ 156.115(a)(5)(i), we also proposed to
delete § 156.110(c)(6), which would
remove the option for issuers to
determine the scope of the habilitative
services. In § 156.110 we proposed to
make a technical change to amend the
list structure of paragraph (c) by
replacing the ‘‘and’’ in (c)(5) with a
period and adding an ‘‘and’’ at the end
of (c)(4).
We are finalizing our policy as
proposed, adopting the definition of
habilitative services from the Uniform
Glossary in its entirety, to be effective
beginning with the 2016 plan year and
requiring separate limits on habilitative
and rehabilitative services beginning
with the 2017 plan year. We are
codifying this final policy in revised
§ 156.115(a)(5) and removing
§ 156.110(c)(6).
Comment: Several commenters
requested more State flexibility, even in
cases where the benchmark plan
includes habilitative services; they
sought assurance that a Federal
definition will not supersede a State
law, and that State-required benefits
that could be considered habilitative
services would be treated as EHB.
Response: States are required to
supplement the benchmark plan if the
base benchmark plan does not include
coverage of habilitative services as
defined in this final rule. We are
codifying the definition of habilitative
services as a minimum for States to use
when determining whether plans cover
habilitative services. State laws
regarding habilitative services are not
pre-empted so long as they do not
prevent the application of the Federal
definition. State laws enacted in order
to comply with § 156.110(f) are not
considered benefits in addition to the
EHB; such laws ensure compliance with
§ 156.110(a) which requires coverage of
all EHB categories. Therefore, there is
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no obligation to defray the cost of such
State-required benefits.
Comment: Several commenters
objected to imposing separate limits on
rehabilitative and habilitative services
and devices, claiming issuers do not
have operational capacity to
differentiate between habilitative and
rehabilitative services and devices based
on enrollee diagnosis or whether the
enrollee is seeking to maintain or
achieve function.
Response: We are finalizing the
requirement to ensure coverage of each
with separate limits, but the
requirement will not become effective
until 2017. This delay is intended to
provide issuers with the opportunity to
resolve operational issues with their
claims systems.
Comment: Several commenters asked
that ‘‘devices’’ be included in the
definition of habilitative services.
Response: We originally omitted
devices because the term is already
included in the statutory description of
this category of EHB. In response to
comments, however, we have added
‘‘devices’’ to our regulatory definition.
We remind issuers that the statute
requires coverage of devices for both
rehabilitative and habilitative services.
Comment: Several commenters
requested that we require issuers to
have an exceptions process similar to
the process required by OPM for multiState plans, in case a patient needs
treatment that exceeds the visit limits
allowed by the plan.
Response: Enrollees wishing to appeal
an adverse benefit determination,
including denial of habilitative services,
should follow the process established in
§ 147.136, which implements section
2719 of the PHS Act for internal claims
and appeals and external review
processes.
Comment: Commenters offered many
suggestions for specific services and
devices, such as orthotics and
prosthetics, which they stated should be
required to be covered as habilitative
services and devices by all issuers.
Response: We are not codifying such
a list at this time, as we continue to
allow States to maintain their traditional
role in defining the scope of insurance
benefits, but we encourage issuers to
cover additional services and devices
beyond those covered by the benchmark
plan.
(2) Pediatric Services
In the preamble of the EHB Rule, we
stated that pediatric services should be
provided until at least age 19 (78 FR
12843). States, issuers, and stakeholders
requested clarification on this standard.
To provide this clarification, we
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proposed amending § 156.115(a) to add
paragraph (6), specifying that EHB
coverage for pediatric services should
continue until the end of the plan year
in which the enrollee turns 19 years of
age. This was proposed as a minimum
requirement.
This age limit is consistent with
section 1201 of the Affordable Care Act,
46 which phased in the prohibition on
preexisting conditions exclusions by
first prohibiting them for children under
age 19, as well as the age limit for
eligibility to enroll in CHIP. In addition,
as noted in the EHB Rule, this proposed
policy aligns with Medicaid rules (78
FR 12843), which require States to cover
children up to age 19 with family
incomes up to 100 percent of the FPL as
a mandatory eligibility category.
Comment: Many commenters
requested that pediatric services
continue only until the end of the
month in which the enrollee turns 19,
stating that this is the industry standard.
Response: Although we proposed to
require pediatric services until the end
of the plan year in which the enrollee
turns 19, we recognize these
commenters’ concerns. Accordingly, we
are finalizing a policy in § 156.115(a)(6),
under which issuers must provide
coverage for pediatric services until at
least the end of the month in which the
enrollee turns 19. We encourage issuers
to cover services under the pediatric
services EHB category beyond the 19th
birthday month if non-coverage of those
services after that time would negatively
affect care.
c. Collection of Data To Define Essential
Health Benefits (§ 156.120)
In the Patient Protection and
Affordable Care Act; Data Collection to
Support Standards Related to Essential
Health Benefits; Recognition of Entities
for the Accreditation of Qualified Health
Plans final rule (EHB Data Collection
Rule),47 we required issuers in each
State to submit certain data regarding
the three largest health insurance
products by enrollment (as of March 31,
2012) to HHS by September 4, 2012.
These data, gathered from 2012 plans,
were used to determine, for each State,
the benefits and limitations of the three
46 Section 1201 of the Affordable Care Act added
section 2704 of the PHS Act, which prohibited
preexisting condition exclusions. Section 1255 of
the Affordable Care Act states that the provisions
of section 2704 of the PHS Act, as they apply to
enrollees who are under 19 years of age, shall
become effective for plan years beginning on after
September 23, 2010.
47 Patient Protection and Affordable Care Act;
Data Collection to Support Standards Related to
Essential Health Benefits; Recognition of Entities for
the Accreditation of Qualified Health Plans, 77 FR
42658 (July 20, 2013) (codified at part 156).
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largest small group products by
enrollment, which were used to
establish potential benchmark plans.
The EHB Rule unintentionally deleted
§ 156.120, which included the data
submission requirement.
We proposed to allow each State to
select a new base-benchmark plan for
the 2017 plan year, allowing States to
choose a 2014 plan that meets the
requirements of § 156.110 as the new
EHB-benchmark plan, so that issuers
can design substantially equal EHBcompliant products for the 2017 plan
year. We believe that this would
ultimately create efficiencies for issuers
in designing plans. As stated in
§ 156.115(a), provision of EHB means
that a health plan provides benefits that
are substantially equal to the EHBbenchmark plan. Therefore, health plans
offering EHB in the 2017 plan year will
be required to provide benefits
substantially equal to the benefit
amounts, duration and scope of benefits
covered by the 2014 EHB-benchmark
plan (supplemented as necessary).
If a category of base-benchmark plans
under § 156.100(a)(1)–(4) does not
include a plan that meets the
requirements of § 156.110, we
considered permitting the State to select
a base-benchmark plan that does not
meet the requirements of § 156.110 in
that category and supplement its basebenchmark plan as provided in
§ 156.110(b) to ensure that all 10
categories of benefits are covered in a
benchmark plan.
We proposed re-codifying part of
§ 156.120, in a manner similar to that
which appeared in our regulations prior
to the effective date of the EHB Rule. We
proposed to require a State that chooses
a new benchmark plan in the State or,
if a State does not choose a new
benchmark plan, the issuer of the
default benchmark plan, to provide
benchmark plan data as of a date
specified by HHS. We anticipate
collection of new benchmark plan data
for the 2017 plan year and the data
discussed in § 156.120(b), including
administrative data and descriptive
information pertaining to all health
benefits in the plan, treatment
limitations, drug coverage, and
exclusions. We believe that this
information is already included in the
issuer’s form filing that the issuer
submitted to the State regulator. The
definitions previously adopted in
§ 156.120(a) for the terms health
benefits, health plan, State, and
treatment limitations are still applicable
and would be codified as previously
defined. However, we are not finalizing
the definitions for ‘‘health insurance
market’’ or ‘‘small group market’’ in
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§ 156.120(a), as they are not used in this
section.
Comment: Some commenters
requested use of a 2014 plan as the
benchmark for 2016 rather than 2017.
Several commenters suggested we use a
2015 plan as the benchmark for 2017,
noting that the final regulations
pertaining to the Mental Health Parity
and Addiction Equity Act will not be
effective until 2015.
Response: For the 2016 plan year,
HHS expects to begin the certification
process for QHPs in the FFEs in early
spring of 2015. Because issuers are
required to design QHP plans that
provide EHB that are substantially equal
to the EHB-benchmark plan, based on
the base-benchmark plan chosen and
supplemented as necessary by the State,
it is not operationally possible for us to
collect and publish new EHBbenchmark plans prior to the QHP
certification process for the 2016 plan
year if we allow States to choose a 2014
plan as their new base-benchmark plan
and supplement if necessary. As
codified in § 156.115(a)(3), an EHBcompliant plan must provide mental
health and substance use disorder
services, including behavioral health
treatment services in compliance with
MHPAEA and its corresponding
regulations. While we agree that it
would be easier for issuers to design
plans if the base-benchmark plan
chosen by the State were compliant
with MHPAEA (that is, based on a 2015
plan), nothing in this rule negates the
current requirement that EHB-compliant
plans comply with MHPAEA and any
associated regulatory requirements in
effect at the time. Based on the timelines
needed for issuers to design plans, if we
permitted States to select 2015 plans as
new base-benchmark plans, we do not
believe that issuers would be able to
design substantially equal EHBcompliant products until the 2018 plan
year, based on those benchmarks, which
we believe is not in consumers’ best
interest. Therefore, we are finalizing the
re-codification of part of § 156.120 as
proposed, as well as our proposal to
allow issuers to design a plan that is
substantially equal to the newly selected
2014 benchmark plan for the 2017 plan
year.
Comment: Several States and other
commenters requested more details on
the process for selection and
reassurance that they can supplement
their benchmark plan.
Response: We did not propose to
make changes to § 156.100(a) or (b);
therefore, the options from which a
base-benchmark plan may be selected
remain the same. HHS issued a PRA
package regarding collection of
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benchmark information on November
26, 2014.48 As stated there, HHS
proposes to obtain the certificate of
coverage and other plan documents that
describe covered services, exclusions,
limitations, cost sharing, and all other
terms and conditions of plan benefits
that are provided to enrollees. States
that select, or issuers in States that
default to a benchmark due to lack of
selection, would submit the documents
securely via email. HHS intends to work
collaboratively with States to identify
responsive documents and to secure
such documents during the second
quarter of 2015. HHS then intends to
publish selected and default benchmark
plans and supporting documents. States
retain the ability to supplement the
base-benchmark plan, as codified in
§ 156.110(b)(1), and retain the ability to
determine whether the base-benchmark
plan covers the EHB category or
whether supplementation is warranted.
We also reiterate that supplementation
is the addition of the entire category of
such benefits to satisfy § 156.110(a),
while substitution is the removal of one
particular item or service for another
actuarially-equivalent item or service
within the same category.
Supplementation ensures that all EHB
categories are covered. Substitution,
which is permitted within an EHB
category at the issuer’s discretion,
allows for greater variety of plan
designs.
Comment: Several States and other
commenters requested further
clarification regarding how new
benchmark plan selection will affect our
policy at § 155.170 pertaining to Staterequired benefits.
Response: We did not propose any
changes to § 155.170. Therefore, only
new State-required benefits enacted on
or prior to December 31, 2011 are
included as EHB, and States are
expected to continue to defray the cost
of State-required benefits enacted on or
after January 1, 2012 unless those Staterequired benefits were required in order
to comply with new Federal
requirements. HHS intends to continue
to publish a list of non-EHB Staterequired benefits on its Web site on an
annual basis.
Comment: Some commenters
expressed their desire for HHS to
abandon the benchmark policy in the
future, and specify a list of services that
issuers must cover in each EHB category
instead.
48 CMS–10448; https://www.cms.gov/Regulationsand-Guidance/Legislation/
PaperworkReductionActof1995/PRA-Listing-Items/
CMS-10448.html.
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Response: To maintain State
flexibility while ensuring
comprehensive coverage, we believe
that the benchmark policy continues to
be the most appropriate at this time.
Therefore, the benchmark policy will
continue to establish EHBs through plan
year 2017. Since the first EHB plan year
just ended, we will examine how the
policy affected enrollees and what
changes, if any, should be made in the
future. We believe that it is important to
have a more complete sense of how EHB
policy is working before proposing
changes to the benchmark approach.
d. Prescription Drug Benefits (§ 156.122)
i. § 156.122(a)
Under our regulations at § 156.122(a),
EHB plans are required to cover the
greater of one drug per United States
Pharmacopeia (USP) category and class
or the same number of drugs in each
USP category and class as the State’s
EHB-benchmark plan. In the proposed
rule, we proposed several revisions to
this policy. First, we proposed to retain
§ 156.122(a)(2), with one modification to
change ‘‘drug list’’ to ‘‘formulary drug
list’’ for uniformity purposes for this
section, and to renumber this paragraph
from § 156.122(a)(2) to § 156.122(a)(1).
Due to some concerns detailed in the
proposed rule about the drug count
standard under current § 156.122(a)(1),
we proposed an alternative to the drug
count standard. Specifically, we
proposed that plans have a pharmacy
and therapeutics (P&T) committee and
use that committee to ensure that the
plan’s formulary drug list covers a
sufficient number and type of
prescription drugs. We proposed that
the P&T committee standards must be
met for the prescription drug coverage
to be considered EHB. We stated our
belief that the use of a P&T committee
in conjunction with other standards that
we proposed would ensure that an
issuer’s formulary drug list covers a
broad array of prescription drugs. We
noted that standards defined by the
Medicare Part D Prescription Drug
Program (Medicare Part D), the NAIC,49
and other stakeholders, and we solicited
comments on these standards and
whether we should adopt them in lieu
of or in addition to the standards we are
proposing.
In the proposed rule, we proposed to
specify P&T committee standards on
49 Medicare Part D plans are required to maintain
P&T committees by the Social Security Act section
1860D–4(b)(3)(G) codified at 42 CFR 423.120(b), 42
CFR 423.272(b)(2). NAIC has a Model Act entitled
Health Carriers Prescription Drug Benefit
Management Model Act (July 2003) that includes
P&T Committee provisions at: https://www.naic.org/
store/free/MDL-22.pdf.
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membership, meetings, and
establishment and development of a
formulary drug list. For P&T committee
membership, we proposed requiring the
P&T committee to include members
from a sufficient number of clinical
specialties to adequately represent the
needs of enrollees. For instance, we
would expect that the P&T committee
members include experts in chronic
diseases and in the care of individuals
with disabilities. We proposed that the
majority of members be practicing
physicians, practicing pharmacists, and
other practicing health care
professionals. Additionally, we
proposed to require that members of the
P&T committee that have a conflict of
interest with the issuer or a
pharmaceutical manufacturer would be
permitted to sit on the P&T committee
but would be prohibited from voting on
matters for which the conflict exists. We
also proposed that at least 20 percent of
the P&T committee’s membership have
no conflict of interest with respect to
either the issuer or to any
pharmaceutical manufacturer. Under
these standards, a member who holds
more than one health care license, for
example as a nurse practitioner and a
pharmacist, would only count as one
person. We also solicited comments on
the percentage of committee members
that should have no conflict of interest,
and the proposed requirement that the
members of the P&T committee with
conflicts of interest should be permitted
to sit on the P&T committee but would
be prohibited from voting on matters for
which the conflict exists. We considered
requiring a set number of participants to
be independent and have no conflicts of
interest, but we were concerned that
absent a limitation on the total number
of committee members, requiring a
specific number of committee members
to be independent and not have a
conflict of interest would have a
variable impact, depending on the size
of the P&T committee. We also proposed
that the P&T committee would be
responsible for defining a reasonable
definition of conflict of interest and for
managing the conflicts of interest of its
committee members. As part of this
standard, the P&T committee would
require its P&T committee members to
sign a conflict of interest statement
revealing economic or other
relationships with entities, including
the issuer and any pharmaceutical
manufacturers, affected by drug
coverage decisions that could influence
committee decisions. We solicited
comments on this proposed standard,
including the implementation of this
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conflict of interest standard, whether
there are additional conflict of interest
standards that should apply and what
would constitute a conflict of interest.
In particular, we sought comments on
what could be considered a permissible
relationship with respect to the issuer or
a pharmaceutical manufacturer. We
stated that we would consider providing
further guidance regarding conflicts of
interest.
We also proposed that the P&T
committee must meet at least quarterly,
and maintain written documentation of
all decisions regarding development and
revision of formulary drug lists. For
formulary drug list establishment and
management, we proposed that the P&T
committee must develop and document
procedures to ensure appropriate drug
review and inclusion on the formulary
drug list, as well as make clinical
decisions based on scientific evidence,
such as peer-reviewed medical
literature, and standards of practice,
such as well-established clinical
practice guidelines. The P&T committee
would be required to consider the
therapeutic advantages of prescription
drugs in terms of safety and efficacy
when selecting formulary drugs and
making recommendations for their
formulary tier. The P&T committee
would be required to review both newly
FDA-approved drugs and new uses for
existing drugs. We also proposed that
the P&T committee would be required to
ensure that an issuer’s formulary drug
list covers a range of drugs across a
broad distribution of therapeutic
categories and classes and
recommended drug treatment regimens
that treat all disease states and does not
discourage enrollment by any group of
enrollees.
Lastly, we proposed to require that
issuers’ formularies provide appropriate
access to drugs that are included in
broadly accepted treatment guidelines
and which are indicative of and
consistent with general best practice
formularies in widespread use. Broadly
accepted treatment guidelines and
general best practices could be based on
industry standards or other appropriate
guidelines that are issued by expert
organizations that are current at the
time. For instance, broadly accepted
treatment guidelines could include
guidelines provided in the National
Guideline Clearinghouse (NGC), which
is a publicly available database of
evidence-based clinical practice
guidelines and related documents. As a
result of this proposed policy, we would
expect that a health plan’s formulary
drug list would ensure that appropriate
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access is being afforded to drugs in
widely accepted national treatment
guidelines and which are indicative of
general best practices at the time. Given
our proposal to use broadly accepted
treatment guidelines and best practices,
we would also expect that plans’
formulary drug lists be similar to those
formulary drug lists then currently in
widespread use. We also noted that
States have primary responsibility for
enforcing EHB requirements and, if
finalized, States would be responsible
for the oversight and enforcement of the
P&T committee standards. We sought
comment on these proposed revisions to
§ 156.122(a), including on the oversight
and enforcement of these standards, and
whether other standards are needed for
P&T committees.
As an alternative to, or in
combination with, the above-proposed
P&T committee requirements, we
considered whether to replace the USP
standard with a standard based on the
American Hospital Formulary Service
(AHFS). We sought comments on the
proposed P&T committee standard, and
whether we should consider adopting
AHFS or another drug classification
system, as well as on any other
standards that may be appropriate for
this purpose. For instance, for the AHFS
system, we considered amending the
minimum standard established in the
EHB Final Rule that requires coverage of
at least the greater of one drug in every
USP category and class or the same
number of drugs in each USP category
and class as the State’s EHB-benchmark
plan to require at least the greater of one
drug in each AHFS class and subclass
or the same number of drugs in each
AHFS class and subclass as the State’s
EHB-benchmark plan. We explained
that if we were to finalize a P&T
committee process in combination with
a drug count standard based on either
the AHFS system or the USP system, we
would expect the health plan to
establish and maintain its formulary
drug list in compliance with the P&T
committee standards, and in addition,
the resulting health plan’s formulary
drug list would also need to comply
with the drug count standard. We
discussed continuing to use the existing
USP drug count standard, and updating
the USP drug count system to a more
current version. We proposed to
implement proposed § 156.122(a)(2) to
start in the 2017 plan year, seeking
comments on this proposed timing of
implementation. Based on comments
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received, as described in detail below,
we are finalizing an approach that
combines the use of a P&T committee
(satisfying standards largely as
proposed) with the current drug count
standard that requires coverage of at
least the greater of one drug per USP
category and class or the same number
of drugs in each USP category and class
as the State’s EHB benchmark plan.
Comment: Some commenters
supported replacing the current drug
standard with the P&T committee
approach only, and some commenters
recommended that we defer to a health
plan’s accreditation by the National
Committee for Quality Assurance
(NCQA) or URAC, or use Medicare Part
D standards. Some commenters did not
support the P&T committee approach
because they were concerned it could
result in plans with widely varying
formularies, leading to consumer
confusion. They also had concerns
about oversight and enforcement.
Several commenters supported
combining the P&T committee with a
drug count standard. Of those who
commented on the drug count standard,
some supported USP, some supported
AHFS, and others supported the
creation of a new standard. Some
commenters recommended changes to
the manner in which the drug count is
calculated. For example, some
commenters suggested that the drug
count metric change to the greater of
two drugs per category and class or the
number of drugs in the benchmark.
Other commenters sought clarification
on the counting of chemically distinct
drugs and the modes of delivery.
Response: We are finalizing an
approach that combines the use of a
P&T committee with the current drug
count standard that requires coverage of
at least the greater of one drug per USP
category and class or the same number
of drugs in each USP category and class
as the State’s EHB benchmark plan. We
believe that a combination of a
qualitative and quantitative approach
will best ensure robust formulary
design, because the two standards can
complement each other. For instance,
the requirement of the P&T committee
to review new drugs addresses one of
our concerns that the current drug count
system does not incentivize coverage of
new drugs. However, the drug count
standard can provide a minimum
standard for coverage.
For the P&T committee requirements,
we considered deferring to other
standards, such as those established by
NCQA, URAC and Medicare Part D.
However, § 156.122 establishes a
market-wide standard, and not all plans
are required to be accredited by those
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organizations. We also do not believe
that some accreditation standards are as
transparent as Medicare Part D
standards—for example, some
accreditation standards are proprietary
and could be costly and burdensome for
an issuer to implement. Further,
stakeholders are already familiar with
Medicare Part D’s P&T committee
standards and we believe that these
standards will best ensure the P&T
committee is able to ensure a robust
formulary. For these reasons, we are
finalizing P&T committee standards
modeled on Medicare Part D’s P&T
committee standards that have been
modified, as explained below, to better
address the private health plan
population and the needs of plans
required to cover EHB. We also believe
that adopting P&T committee standards
that generally align with the existing
Medicare Part D standards and
guidance, where possible, will better
ensure uniformity between standards to
help reduce the burden on issuers. As
explained below, we are finalizing the
proposed conflict of interest standards.
Although these standards are different
than those adopted by Medicare Part D,
we believe that these standards are
similar to practices in the private
insurance market.
We are retaining the USP drug count
standard because stakeholders are now
familiar with the USP system after using
it for 2 years, and we were persuaded by
the comments supporting the continued
use of USP. Issuers have already
developed 2 years of formularies based
on it, States have already developed
systems to review those formularies,
and stakeholders are familiar with the
system. Thus, while AHFS had the
benefit of being updated more
frequently and incorporating a broader
set of classes and subclasses,
commenters did not uniformly support
its use because of several issues,
including a lack of transparency, the
need to supplement certain classes
when compared with USP, and the
complexity of the AHFS system. We
also believe that retaining USP will
reduce the administrative burden and
costs on States and issuers in
implementing a combined P&T
committee process with a drug count
standard. In implementing the revised
§ 156.122(a), we intend to use the most
up-to-date version of the USP system
available at the time that we build our
formulary review tools for each plan
year, starting with the 2017 plan year,
and will refer to the version number in
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the methodology document that we
update each year.50
To codify our final policy, we are
retaining § 156.122(a)(1) (with one
technical change to delete the ‘‘and’’),
we are retaining current § 156.122(a)(2)
(with one technical correction to replace
‘‘drug list’’ with ‘‘formulary drug list’’
and to add an ‘‘and’’), and we are
adding a new § 156.122(a)(3). Under the
new § 156.122(a)(3), a health plan must
establish and maintain its formulary
drug list in compliance with the P&T
committee standards. These standards
are in addition to the requirement that
the health plan’s formulary drug list
comply with the drug count standard
under § 156.122(a)(1) as the minimum
standard of coverage, and the
requirement that the health plan submit
its formulary drug list to the Exchange,
the State, or OPM. While issuers must
have a P&T committee, nothing under
§ 156.122(a) precludes issuers from
using the same P&T committee across
multiple issuers. However, we recognize
that using the same P&T committee
across multiple issuers may be complex
to administer. Because States are
primarily responsible for enforcing EHB
requirements, States will be responsible
for the oversight and enforcement of the
P&T committee standards and the drug
count standard. We intend to work with
States to implement these provisions
and may consider developing additional
tools and resources to assist States in
reviewing formulary drug lists. New
§ 156.122(a)(3) will apply starting with
the 2017 plan year to give States,
issuers, and PBMs time to implement
the new P&T committee standards.
Comment: Many commenters wanted
the P&T committee membership to
include certain types of representatives.
Some commenters also wanted
membership on the P&T committee to
be limited to a certain number.
Commenters supported limiting the P&T
committee membership category for
‘‘other practicing health professionals’’
to ‘‘other practicing health care
professionals that can prescribe.’’
Comments sought clarification that a
practicing provider on the committee
could be practicing part-time, and
clarification on the P&T committee’s
documentation of its decisions. Some
commenters supported the proposed
conflict of interest standards, while
other commenters were concerned it
would be difficult to meet the standards.
Others recommended other conflict of
interest standards. Some commenters
50 See the Essential Health Benefits (EHB) Rx
Crosswalk Methodology at: https://www.cms.gov/
CCIIO/Resources/Data-Resources/Downloads/ehbrx-crosswalk.pdf.
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supported the conflict of interest
percentage of 20 percent, and others
recommended that it be 50 percent.
Some commenters recommended
implementing the Office of Inspector
General’s recommendations on conflicts
of interest for Medicare Part D P&T
committees,51 and others sought
transparency requirements for the
operation and management of the P&T
committee.
Response: We are finalizing the
requirement that the P&T committee
must be comprised of members that
represent a sufficient number of clinical
specialties to adequately meet the needs
of enrollees. We would expect that the
P&T committee membership include
experts in chronic diseases and in the
care of individuals with disabilities and
that it would be composed of a diverse
set of experts. We have established
certain minimum standards for
membership to ensure the integrity of
the P&T committee and to allow
flexibility to issuers in designing the
P&T committee. However, we also
expect the P&T committee would
consult with experts in management of
the relevant condition for each drug
being considered. The P&T committee’s
membership is also required to include
a majority of practicing physicians,
practicing pharmacists, and other
practicing health care professionals. The
other practicing health care
professionals on the P&T committee,
excluding pharmacists, must be licensed
to prescribe drugs. The practicing
physicians, pharmacists, and other
health care professionals on the P&T
committee may be practicing part-time.
However, under these standards, a
member who holds more than one
health care license, for example, as a
nurse practitioner and a pharmacist,
only counts as one member of the P&T
committee.
We are finalizing the conflict of
interest requirements as proposed.
These conflict of interest standards are
not the same as Medicare Part D’s
standards, but we believe that issuers
are currently using similar practices in
the private health insurance market.
Members of the P&T committee that
have a conflict of interest with respect
to the issuer or a pharmaceutical
manufacturer are permitted to sit on the
P&T committee but are prohibited from
voting on matters for which the conflict
exists. We would expect that in
implementing this standard, if a
particular member of a P&T committee
51 See the Department of Health and Human
Services’ Office of the Inspector General Report on
Gaps in Overview of Conflicts of Interest in
Medicare Prescription Drug Decisions at: https://
oig.hhs.gov/oei/reports/oei-05-10-00450.pdf.
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has to abstain from a majority of votes,
that the P&T committee should consider
removal of the member from the P&T
committee. Additionally, at least 20
percent of the P&T committee’s
membership must have no conflicts of
interest with respect to either the issuer
or to any pharmaceutical manufacturer.
We considered the comments we
received on other P&T committee
standards and on the requirements for
the number and percentage of conflict
free members. However, due to concerns
about issuers’ ability to meet a
requirement with a higher threshold and
concerns about setting a fixed number of
members required to be conflict free
when we did not also set the limit on
the number of participants on the P&T
committee, we believe that requiring 20
percent of the P&T committee’s
membership to be conflict free is a
reasonable threshold in combination
with § 156.122(a)(3)(i)(C). As part of this
standard, the P&T committee members
must sign a conflict of interest statement
at least annually revealing economic or
other relationships with entities affected
by the committee’s drug coverage
decisions, including the issuer and any
pharmaceutical manufacturers. The P&T
committee is responsible for
establishing a reasonable definition of
conflict of interest and for managing the
conflicts of interest of its committee
members. We will consider providing
further guidance regarding the P&T
committee’s management and oversight,
including its operation and management
of conflicts of interest, in the future.
Comment: Commenters generally
supported the requirements regarding
the establishment and management of
the formulary drug list, and
recommended specifying the timing of
reviews for new drugs as well as other
specified guidelines or best practices.
Some commenters wanted the P&T
committees’ decisions to be binding on
the plan, and others wanted the P&T
committee’s decisions to be advisory.
Some commenters opposed the use of
treatment guidelines or best practices,
and some wanted clarification that the
P&T committee can use
pharmacoeconomic studies in formulary
development. Commenters were
concerned about the documentation
requirements of P&T committees’
decisions and others wanted additional
standards, such as to require the P&T
committee to have an appeals process
for a consumer or provider to request a
drug to be placed on the formulary.
Response: To ensure better uniformity
of P&T committee practice, we are
finalizing new § 156.122(a)(3)(iii),
which generally aligns with the
Medicare Part D standards and guidance
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on this subject. Under
§ 156.122(a)(3)(iii)(A), the P&T
committee must develop and document
procedures to ensure appropriate drug
review and inclusion. This includes
documentation of decisions regarding
formulary development and revision
and utilization management activities.
P&T committee recommendations
regarding which drugs are placed on the
plan’s formulary are binding on the
plan. This clarification reflects practices
by Medicare Part D. We also encourage
P&T committees to be transparent about
their operation and function, and while
we are not requiring that P&T
committees publicly post information
on the P&T committee, we encourage
issuers to consider providing this level
of transparency to consumers. We are
also finalizing a new
§ 156.122(a)(3)(iii)(B), which is
consistent with Medicare Part D
standards at 42 CFR 423.120(b)(1)(iv)
and which requires the P&T committee
to base clinical decisions on the strength
of scientific evidence and standards of
practice, and requires the P&T
committee to assess peer-reviewed
medical literature, pharmacoeconomic
studies, outcomes research data, and
other such information as it determines
appropriate. Formulary management
decisions must be based on scientific
evidence, and may also be based on
pharmacoeconomic considerations that
achieve appropriate, safe, and costeffective drug therapy. Under
§ 156.122(a)(3)(ii)(C), drugs’ therapeutic
advantages in terms of safety and
efficacy must be considered when
selecting formulary drugs. We are
finalizing this provision, except we are
not finalizing the requirement that
drugs’ therapeutic advantages be
considered when placing the drugs on
formulary tiers, to better align with 42
CFR 423.120(b)(1)(v).
We are also adding new
§ 156.122(a)(3)(iii)(D) through (F), which
are consistent with Medicare Part D
standards at 42 CFR 423.120(b)(1)(vi),
(vii), and (ix), respectively. The new
standard in § 156.122(a)(3)(iii)(D) will
require the P&T committee to review
policies that guide exceptions and other
utilization management processes,
including drug utilization review,
quantity limits, and therapeutic
interchange. The purpose of finalizing
these reviews, which is a typical
practice by P&T committees, is to ensure
that formulary management techniques
do not undermine access to covered
drugs.
The new standard in
§ 156.122(a)(3)(iii)(E) requires the P&T
committee to evaluate and analyze
treatment protocols and procedures
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related to the plan’s formulary at least
annually, which is also a typical
practice of P&T committees today.
Furthermore, under
§ 156.122(a)(3)(iii)(F), the P&T
committee must review and approve all
clinical prior authorization criteria, step
therapy protocols, and quantity limit
restrictions applied to each drug. P&T
committee recommendations, with
respect to a P&T committee’s clinical
appropriateness review of the practices
and policies for formulary management
activities, such as prior authorizations,
step therapies, quantity limitations, and
other drug utilization activities that
affect access, are advisory only and not
binding on the issuer, a standard that
we believe reflects current practice in
both the private health insurance and
Medicare Part D markets. However,
issuers must take the recommendations
into good faith consideration. Similar to
the new standards in
§ 156.122(a)(3)(iii)(D), the purpose of
finalizing these reviews is to better
ensure that formulary management
techniques do not undermine access to
covered drugs.
Under § 156.122(a)(3)(iii)(G), which
was proposed as § 156.122(a)(3)(iii)(D),
the P&T committee must review all new
FDA-approved drugs and new uses for
existing drugs. To implement this
requirement, the P&T committee must
make a reasonable effort to review a new
FDA approved drug product (or new
FDA approved indication) within 90
days, and make a decision on each new
FDA approved drug product (or new
FDA approved indication) within 180
days of its release onto the market, or a
clinical justification must be
documented if this timeframe is not
met.
A health plan’s formulary drug list,
under § 156.122(a)(3)(iii)(H), must cover
a range of drugs across a broad
distribution of therapeutic categories
and classes and recommended drug
treatment regimens that treat all disease
states and must not discourage
enrollment by any group of enrollees.
The formulary drug list must also
ensure appropriate access to drugs in
accordance with widely accepted
national treatment guidelines and
general best practices at the time. To
comply with § 156.122(a)(3)(iii)(H),
broadly accepted treatment guidelines
and general best practices could be
based on industry standards or other
appropriate guidelines that are issued
by expert organizations that are current
at the time. For instance, broadly
accepted treatment guidelines could
include guidelines provided in the
National Guideline Clearinghouse
(NGC), which is a publicly available
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database of evidence-based clinical
practice guidelines and related
documents.
ii. Section 156.122(c)
Section 156.122(c) currently requires
issuers of EHB plans to have procedures
in place that allow an enrollee to
request and gain access to clinically
appropriate drugs not covered by the
plan. This requirement, commonly
referred to as the ‘‘exceptions process,’’
applies to drugs that are not included on
the plan’s formulary drug list. As
established in the EHB Final Rule (78
FR 12834) and the Market Standards
Rule (79 FR 30240), such procedures
must include a process that allows an
enrollee, the enrollee’s designee, or the
enrollee’s prescribing physician (or
other prescriber) to request an expedited
review based on exigent circumstances.
Exigent circumstances exist when an
enrollee is suffering from a serious
health condition that may seriously
jeopardize the enrollee’s life, health, or
ability to regain maximum function, or
when an enrollee is undergoing a
current course of treatment using a nonformulary drug. A health plan must
make its coverage determination on an
expedited review request based on
exigent circumstances, and notify the
enrollee or the enrollee’s designee and
the prescribing physician (or other
prescriber, as appropriate) of its
coverage determination no later than 24
hours after it receives the request. A
health plan that grants an exception
based on exigent circumstances must
provide coverage of the non-formulary
drug for the duration of the exigency.
In the proposed rule, we proposed to
build on the expedited exception
process by proposing to also adopt
similar requirements for the standard
exception process. We also proposed to
adopt standards for a secondary external
review process if the first exception
request is denied by the plan (regardless
of whether the exception is requested
using the standard process or the
expedited process).
We proposed at § 156.122(c), that a
health plan providing EHB must have
certain exception processes in place that
allow an enrollee, the enrollee’s
designee, or the enrollee’s prescribing
physician (or other prescriber) to
request and gain access to clinically
appropriate drugs not covered by the
health plan, and when an exception
requested under one of these processes
is granted, the plan must treat the
excepted drug as EHB for all purposes,
including accrual to the annual
limitation on cost sharing. Proposed
§ 156.122(c)(1) sets forth the standard
exception process. Under this process,
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10817
we proposed that a health plan have a
process for an enrollee, the enrollee’s
designee, or the enrollee’s prescribing
physician (or other prescriber) to
request a standard review of a coverage
decision for a drug that is not covered
by the plan. We proposed that the
health plan must make its coverage
determination on a standard exception
request and notify the enrollee or the
enrollee’s designee and the prescribing
physician (or other prescriber, as
appropriate) of its coverage
determination no later than 72 hours
after it receives the request. We
proposed to require a health plan that
grants an exception based on the
standard review process to provide
coverage of the non-formulary drug for
the duration of the prescription,
including refills, and we stated that in
such a case the excepted drug would be
considered EHB for all purposes,
including for counting towards the
annual limitation on cost sharing. As
stated in the EHB Rule, plans are
permitted to go beyond the number of
drugs offered by the benchmark without
exceeding EHB. Therefore, if the plan is
covering drugs beyond the number of
drugs covered by the benchmark, all of
these drugs are EHB and must count
towards the annual limitation on cost
sharing.
We proposed moving the language
regarding the expedited exceptions
process from § 156.122(c)(1) to new
§ 156.122(c)(2) and to replace ‘‘Such
procedures must include’’ with ‘‘A
health plan must have’’ in current (c)(1)
proposed as a new paragraph (c)(2)(i).
In § 156.122(c)(3), we proposed that if
the health plan denies an exception
request for a non-formulary drug, the
issuer must have a process for an
enrollee, the enrollee’s designee, or the
enrollee’s prescribing physician (or
other prescriber, as appropriate) to
request that an independent review
organization review the exception
request and the denial of that request by
the plan. For this external exception
review, we proposed to apply the same
timing that applied to the initial review.
Thus, if the enrollee requested the drug
under the proposed standard process
and the request was denied, then the
independent review organization would
have to make its determination and the
health plan would have to notify the
enrollee or enrollee’s designee and the
prescribing physician (or other
prescriber, as appropriate) no later than
72 hours after the time it receives the
external exception review request.
Likewise, if the initial exception request
is for an expedited review and that
request is denied by the plan, then the
independent review organization would
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have to make its coverage determination
and provide appropriate notification no
later than 24 hours after the time it
receives the external exception review
request. We are finalizing the updated
standards in § 156.122(c) as proposed,
with an addition to clarify the duration
of coverage of the excepted drug when
accessed through the external review
process.
Comment: Many commenters
supported revising § 156.122(c), relating
to the exceptions process. Some
commenters wanted the same standards
as Medicare Part D, and others wanted
the same standards as the appeals
process codified at § 147.136. Other
commenters had concerns about conflict
with State requirements, the definitions
of expedited review and the current
course of treatment, and the
administrative cost of the exceptions
process. Some commenters were
concerned about time limits and wanted
clarification on when the time limits
begin, recommending that the time
limits should be measured in business
days instead of hours, or be different for
the external review process. Others
sought additional requirements related
to the operation of the exception process
such as requiring coverage of the nonformulary drug during the review
process, requiring issuers to begin the
external review if the original exception
request is denied, and requiring issuers
to submit or release information on its
consideration of exception requests.
Although some commenters
recommended using a separate review
organization for the external review,
several commenters supported allowing
issuers to use the same independent
review organization for the external
review as for the final external review
decision under § 147.136. Commenters
also supported requiring coverage of the
excepted drug for the duration of the
prescription, including refills, and
others supported permitting the issuer
to determine and notify the enrollees of
the duration of the coverage for the
excepted drug.
Response: The purpose of revising
§ 156.122(c) was to establish a more
uniform exceptions process across plans
and issuers providing EHB to help
reduce consumer confusion in
accessing, understanding, and using the
exception process. We believe that
uniform standards in this area will
better ensure consumers’ ability to
understand and access this consumer
protection. Because of the importance of
this process in ensuring enrollee access
to clinically appropriate medications,
we are finalizing the 72-hour review
period for the standard exception
review, continuing the 24-hour review
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period for an expedited review, and
applying the related timing standards to
the external review periods. This
exceptions process applies to drugs that
are not included on the plan’s formulary
drug list, and § 147.136 applies if an
enrollee receives an adverse benefit
determination for a drug that is
included on the plan’s formulary drug
list. Because these two processes serve
different purposes, we believe they are
not duplicative. Furthermore, while our
exception process standards are not the
same as those under Medicare Part D,
they have similar elements. Since
issuers that provide EHB are already
required under our regulations to have
formulary exceptions processes and
procedures in place that allow an
enrollee to request and gain access to
clinically appropriate drugs not covered
by the plan, we do not expect that these
new requirements will significantly
increase the administrative cost burden
on issuers. Furthermore, to permit
flexibility in implementing this policy
for issuers, we have declined to
establish additional requirements at this
time, such as requiring issuers to begin
the external review absent an enrollee
request if the original exception request
is denied, and requiring issuers’ to
submit or release information on its
consideration of exception requests.
The 24-hour timing policy for the
expedited review was adopted in the
final rule on the Market Standards Rule
(79 FR 30240), and we are finalizing the
72-hour standard review, as well as the
timing for the external reviews, in this
final rule. All of these timeframes begin
when the issuer or its designee receives
a request. An enrollee or the enrollee’s
prescribing physician (or other
prescriber) should strive to submit a
completed request; however, issuers
should not fail to commence review if
they have not yet received information
that is not necessary to begin review.
Therefore, we interpret new § 156.122(c)
to mean that the review must begin
following the receipt of information
sufficient to begin review. Issuers
should not request irrelevant or overly
burdensome information. Issuers must
be equipped to accept these requests in
writing, electronically, and
telephonically.
As part of the request for a standard
review, the prescribing physician or
other prescriber should support the
request by including an oral or written
statement that provides a justification
supporting the need for the nonformulary drug to treat the enrollee’s
condition, including a statement that all
covered formulary drugs on any tier will
be or have been ineffective, would not
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be as effective as the non-formulary
drug, or would have adverse effects.
Following a favorable decision on the
standard or external review, the enrollee
must be provided access to the
prescribed drug without unreasonable
delay. Therefore, issuers need to be
prepared to communicate rapidly with
pharmacies and pharmacy benefit
managers, as applicable. At a minimum,
we expect issuers to update certificates
of coverage to reflect the availability of
this process, and to be able to provide
instruction to enrollees or their
designees and providers or their
designees on how to use the process.
For the external exception review, we
are finalizing a standard under which
the independent review organization
that conducts the external review must
be accredited by a nationally recognized
private accrediting organization. As part
of this process, the issuer should
provide the independent review
organization with all relevant
information to conduct the review,
including the initial denial of the
exception request. The issuer may use
the same independent review
organization for the external review for
the drug exception process under
§ 156.122(c)(3) that the plan contracts
with for the final external review
decision under § 147.136. As
established in revised § 156.122(c), any
drug covered through the exception
process must be treated as an EHB,
including by counting any cost sharing
towards the plan’s annual limitation on
cost sharing and when calculating the
plan’s actuarial value. We believe that
ensuring that an enrollee has the option
to request an external review of a denied
exception request and that a drug
covered through the exception process
count towards the plan’s annual
limitation on cost sharing are important
consumer protections that help ensure
enrollees’ access to clinically
appropriate medications.
We do not believe that enrollees
should have to continue to make
requests under § 156.122(c) to access a
refill of the same clinically appropriate
drugs that they initially obtained
through the exceptions process.
Therefore, we are finalizing a standard
under which non-grandfathered health
plans in the individual and small group
markets that must provide coverage of
the essential health benefit package
under section 1302(a) of the Affordable
Care Act must cover a drug accessed
through the standard exception process
for the duration of the prescription,
including refills. To provide further
clarification on the operation of the
external review process, we are also
finalizing a new standard under which,
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if a health plan providing EHB grants an
external exception review of a standard
exception request, the health plan must
provide coverage of the non-formulary
drug for the duration of the prescription,
including refills. Likewise, if a health
plan grants an external exception review
of an expedited exception request, the
health plan must provide coverage of
the non-formulary drug for the duration
of the exigency. Nothing under this
policy precludes a State from requiring
stricter standards in this area. Issuers
will be required to comply with the new
standard exception process and external
review process requirements starting
with the 2016 plan year.
iii. Section 156.122(d)
Under § 156.122(d), we proposed
adding a requirement to the EHB
prescription drug benefit that a health
plan must publish an up-to-date,
accurate, and complete list of all
covered drugs on its formulary drug list,
including any tiering structure that it
has adopted and any restrictions on the
manner in which a drug can be
obtained, in a manner that is easily
accessible to plan enrollees, prospective
enrollees, the State, the Exchange, HHS,
OPM, and the general public. We also
solicited comment on whether the
formulary tiering information should
include cost sharing information, such
as the enrollee’s applicable pharmacy
deductible (for example, $100),
copayment (for example, $20), or costsharing percentage for the enrollee (for
example, 20 percent). We proposed that
a formulary drug list be considered
easily accessible when the general
public is able to view the formulary
drug list on the plan’s public Web site
through a clearly identifiable link or tab
and without creating or accessing an
account or entering a policy number.
The general public should be able to
easily discern which formulary drug list
applies to which plan if the issuer
maintains multiple formularies, and the
plan associated with each formulary
drug list should be clearly identified on
the plan’s Web site. As a result of this
proposed requirement, we would expect
the issuers’ formulary drug list to be upto-date, meaning that the formulary drug
list must accurately list all of the health
plan’s covered drugs at that time. We
solicited comments on this timing. Also,
the formulary drug list URL link under
this section should be the same direct
formulary drug list URL link for
obtaining information on prescription
drug coverage in the Summary of
Benefits and Coverage, in accordance
with § 147.200(a)(2)(i)(K). We proposed
that this requirement would be effective
beginning with the 2016 plan year. We
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solicited comments on these proposed
requirements, including whether we
should require that additional types of
information be included in the
formulary drug list.
As part of this proposed requirement
that issuers’ formulary drug list must be
made available to the general public, we
considered requiring issuers to make
this information publicly available on
their Web sites in a machine-readable
file and format specified by HHS. The
purpose of establishing machinereadable files with the formulary drug
list data would be to provide the
opportunity for third parties to create
resources that aggregate information on
different plans. As an alternative, we
considered whether the formulary drug
list information could be submitted to
HHS though an HHS-designed
standardized template, while
recognizing that there could be
challenges with keeping this type of
template information updated. We
solicited comments on these options.
We are finalizing these requirements
largely as proposed, with language to
clarify that the requirement to publish
an up-to-date, accurate and complete
list of all covered drugs applies
beginning with the 2016 plan year, and
to require that QHPs in the FFEs make
available this information to HHS in a
format and at times determined by HHS
beginning with the 2016 plan year.
Comment: Most commenters generally
supported the proposed standards
regarding the ease with which
consumers should be able to view
formulary drug lists on issuers’ Web
sites, and some recommended
requirements on the format for the
formulary drug list on the Web site.
Many commenters wanted detailed costsharing information to be included on
the formulary drug list, including
deductible, copay, and specific
coinsurance dollar amounts. Others
opposed providing that level of detail
on the formulary drug list because of
difficulties in keeping the formulary
drug list up to date and potential
consumer confusion because every plan
design, including each silver plan
variant, would need a separate
formulary drug list. Other commenters
sought clarification on definitions,
including all covered drugs and any
restrictions on the manner in which the
drug can be obtained. Others supported
or opposed the proposed definition of
‘‘up to date.’’
Response: The purpose of
§ 156.122(d) is to improve the
transparency of formulary drug lists for
plans required to cover the essential
health benefits by requiring accurate,
complete and up-to-date information on
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the drugs that the plan covers to assist
consumers. Thus, while we recognize
the value in providing consumers with
detailed cost-sharing information on the
formulary drug list (such as the
enrollee’s applicable pharmacy
deductible, copayment, or cost-sharing
percentage for the enrollee), our goal
with this provision is to ensure that the
formulary drug list is accurate,
complete, and up-to-date. Providing
detailed cost-sharing information on the
formulary drug list is not a typical
practice in the private health insurance
market. Therefore, we are finalizing
§ 156.122(d) as proposed at this time.
Issuers’ formulary drug lists must
include any tiering structure that it has
adopted and any restrictions on the
manner in which a drug can be
obtained, and while we are not
requiring detailed cost-sharing
information under § 156.122(d) at this
time, we encourage issuers to provide
this level of transparency on the
formulary drug list where feasible to
help consumers make more informed
decisions about their health insurance
coverage. In general, consumers should
be able to use the formulary drug list in
conjunction with the summary of
benefits and coverage or other plan
documents to determine their applicable
cost sharing. For example, a formulary
drug list would list which drugs are in
Tier 1 (or similar category of
prescription drug coverage), and the
SBC would indicate that drugs in Tier
1, or similar category, have a $20.00
copayment. While the SBC must list any
applicable coinsurance and major
limitations or exceptions, an issuer’s
SBC would not list the specific dollar
amounts an enrollee would pay for a
drug that is subject to coinsurance,
given that the SBC is only a summary
of cost-sharing features. For the purpose
of this section, references to the URL
have been removed to clarify that our
standards apply to the actual formulary
drug list, not the Web address.
For the purpose of § 156.122(d), for a
formulary drug list to be considered
complete, the formulary drug list must
list all drugs that are EHB and when the
formulary drug list specifies all drug
names that are currently covered by the
plan at that time. This requirement
means that issuers are prohibited from
listing only the most commonly
prescribed medications. The formulary
drug list does not have to list every
covered formulation for each covered
drug, but the issuer should be prepared
to provide information on the specific
formulations upon request to the plan’s
enrollees, prospective enrollees, the
State, the Exchange, HHS, OPM, and the
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general public. Issuers must also
include accurate information on any
restrictions on the manner in which the
drug can be obtained in the formulary
drug list, including prior authorization,
step therapy, quantity limits, and any
access restrictions related to obtaining
the drug from a brick and mortar retail
pharmacy, such as only being accessible
through a mail-order pharmacy because
the drug requires special handling. The
formulary drug list must be up-to-date,
which means that the formulary drug
list must accurately list all of the health
plan’s covered drugs at that time. To
meet this requirement, we would expect
that the issuer would make any coverage
changes simultaneously with updating
the formulary drug list and therefore, if
an issuer makes a change to its
formulary, it would not implement the
change until the issuer has posted the
change to the formulary drug list on its
Web site. We understand that our
standard for updating the formulary
drug list is stricter than is the case for
the typical private market plan, but we
believe that the value of increased
transparency to consumers is critically
important to ensuring that consumers
are making informed decisions about
their health care. Issuers are prohibited
from limiting the updates to their
formulary drug list to only formulary
changes that negatively impact
enrollees, such as removal of drugs from
the formulary drug list. Also, the URL
that takes a consumer to the issuer’s
formulary drug list on its Web site must
be the same direct formulary drug list
URL link for obtaining information on
prescription drug coverage in the SBC,
in accordance with § 147.200(a)(2)(i)(K),
and for QHPs on the Exchanges, this
link must be the same link displayed to
prospective enrollees on the applicable
Exchange Web site. As discussed in the
preamble to § 156.250, in addition to the
requirements imposed by § 156.250,
QHP issuers may also have duties to
make this information accessible to
individuals with disabilities and
individuals with LEP under Federal
civil rights laws that also might apply,
including section 1557 of the Affordable
Care Act, section 504 of the
Rehabilitation Act of 1973, and Title VI
of the Civil Rights Act. For the FFEs,
this URL must be the one that issuers
provide through the QHP application for
display on HealthCare.gov. While these
regulations do not prohibit issuers from
providing their drug lists in a searchable
or dynamic format on their Web sites,
consumers should not have to create an
account, be an enrollee in the plan, or
navigate multiple Web pages to view the
formulary drug list. Specifically, the
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link needs to be the direct link to the
formulary drug list. Further, if an issuer
has multiple formulary drug lists,
consumers should be able to easily
discern which formulary drug list
applies to which plan. Also, the Web
page should clearly list which plans the
formulary drug list applies to using the
marketing name for the plan, which for
Marketplace plans would be the
marketing name used on
HealthCare.gov. The revised
§ 156.122(d) is effective beginning with
the 2016 plan year, and we expect that
most issuers already have a formulary
drug list available via a URL link and
will only need to make certain minor
modifications to its link to be in
compliance with the new
§ 156.122(d)(1).
Comment: Several commenters
supported the proposal for issuers to
make the formulary drug list
information available in a machinereadable file or a format specified by
HHS, stating that this would improve
transparency and foster development of
additional tools to help consumers make
informed decisions about their coverage.
Commenters recommended types of
information that should be included and
the development of tools similar to tools
developed by the Medicare Part D
program. Others supported allowing
various options on how to search for
covered drugs, such as by the drug name
or listing alphabetically. Conversely,
some commenters opposed the
proposal, expressing concerns about
data integrity, accuracy, confidentiality,
and managing third parties’ use of this
data. Some commenters were concerned
that the machine-readable data
collection would be duplicative, and
noted that implementing any standard
would be time-consuming and
requested the opportunity to provide
additional stakeholder feedback. Some
commenters suggested use of an
application programming interface (API)
to support making formulary drug list
information more transparent.
Response: We believe a machinereadable file or a format specified by
HHS will increase transparency by
allowing software developers to access
this information and create innovative
and informative tools to help enrollees
better understand plans’ formulary drug
lists. Based on the comments received
asking us to make formulary drug list
information more transparent and
accessible to consumers, HHS is
finalizing this rule by adding
§ 156.122(d)(2) to require QHPs in the
FFEs to make available the information
on the formulary drug list on its Web
site in a HHS specified format and also
submit this information to HHS, in a
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format and at times determined by HHS.
We agree with commenters that creating
a vehicle for consumers to easily
determine which plans cover which
drugs will help consumers select QHPs
that best meet their needs. We recognize
that this will require issuer resources,
and will provide further details about
the specific data elements, frequency of
updates, file types, and other crucial
information in future guidance.
iv. Section 156.122(e)
Under § 156.122(e), we proposed to
require that enrollees be provided with
the option to access their prescription
drug benefit through retail (brick-andmortar or non-mail order) pharmacies.
This requirement would mean that a
health plan that is required to cover the
EHB package cannot have a mail-order
only prescription drug benefit. This
proposed requirement would still allow
a health plan to charge a different costsharing amount when an enrollee
obtains a drug at an in-network retail
pharmacy than he or she would pay for
obtaining the same covered drug at a
mail-order pharmacy. However, as a
part of these requirements, we proposed
to clarify that this additional cost
sharing for the covered drug would
count towards the plan’s annual
limitation on cost sharing under
§ 156.130 and would need to be taken
into account when calculating the
actuarial value of the health plan under
§ 156.135. Additionally, under this
proposed policy, issuers would still
retain the flexibility to charge a lower
cost-sharing amount when obtaining the
drug at an in-network retail pharmacy.
While this proposal requires coverage of
a drug at an in-network retail pharmacy,
for plans that do not have a network, the
enrollee would be able to go to any
pharmacy to access their prescription
drug benefit and those plans would,
therefore, be in compliance with this
proposed standard.
As part of this proposed policy, we
proposed that the health plan may
restrict access to a particular drug when:
(1) The FDA has restricted distribution
of the drug to certain facilities or
practitioners (including physicians); or
(2) appropriate dispensing of the drug
requires special handling, provider
coordination, or patient education that
cannot be met by a retail pharmacy. If
the health plan finds it necessary to
restrict access to a drug for either of the
two reasons listed above, we proposed
that it must indicate this restricted
access on the formulary drug list under
§ 156.122(d). We are finalizing these
policies as proposed with a technical
edit to § 156.122(e)(2) to replace
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‘‘higher’’ cost sharing with ‘‘different’’
cost sharing.
Comment: Several commenters
supported proposed § 156.122(e) as
helping to ensure that plans do not
discourage enrollment by, and thus
discriminate against, transient
individuals and individuals who have
conditions that they wish to keep
confidential and discussed other cases
in which obtaining a prescription from
a mail-order pharmacy is difficult for an
enrollee, such as cases where an
enrollee with a serious health condition
may be unable to wait for the
prescription to be filled via a mail-order
pharmacy. Other commenters opposed
these requirements, stating that it would
be costly, limit consumer choice of
plans that use mail-order benefits, be
contrary to specialty drug market
practices, not account for the quality
standards used by specialty pharmacies,
be contrary to precedent from other
Federal programs, and be duplicative.
Some commenters were concerned that
the issue is outside the scope of EHB, is
not reflective of a typical employer plan,
does not take into account existing
privacy laws, and should require
additional rulemaking that, for instance,
takes into account the NAIC’s pending
model act on network adequacy. Other
commenters wanted clarification that
preventive services drugs must be
covered at no cost sharing at retail
pharmacies, and other commenters
discussed similar and overlapping State
requirements. Several commenters
wanted additional exceptions, such as
an exclusion related to specialty drugs
and pharmacies, and some commenters
supported implementing this provision
in 2016 while others supported a 2017
implementation date.
Response: The intention of
§ 156.122(e) is to ensure all enrollees in
plans required to cover EHB are able to
use the prescription drug benefit if
needed, and is intended to expand
options for these enrollees. Thus, the
purpose of this policy is not to limit the
ability of issuers to use mail-order
pharmacies—issuers can continue to
influence consumer choice through cost
sharing. The issuers need only provide
enrollees with the option to access
drugs that are not exempted under
§ 156.122(e)(1)(i) and (ii) at an innetwork retail pharmacy. There are
instances in which obtaining a drug
through a mail-order pharmacy may not
be a viable option, such as when an
individual does not have a stable living
environment and does not have a
permanent address, or when a retail
pharmacy option better ensures that
consumers can access their EHB
prescription drug benefit on short
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notice. In such cases, we do not believe
that making drugs available only by
mail order constitutes fulfilling the
obligation under section 1302(b)(1)(F) of
the Affordable Care Act to provide
prescription drug coverage as part of
EHB. We also believe that making drugs
available only by mail order could
discourage enrollment by, and thus
discriminate against, transient
individuals and individuals who have
conditions that they wish to keep
confidential. We also believe that this
provision is important to ensure
uniformity in benefit design and
consumer choice. Therefore, we are
finalizing § 156.122(e) as proposed and
with a clarification that this policy will
be effective beginning with the 2017
plan year.
Issuers retain the ability to charge
different cost sharing for drugs obtained
at a retail pharmacy, but for nongrandfathered health plans in the
individual and small group markets that
must provide coverage of the essential
health benefit package under section
1302(a) of the Affordable Care Act, all
cost sharing, including any difference
between the cost sharing for mail order
and the cost sharing for retail, must
count towards the plan’s annual
limitation on cost sharing in accordance
with § 156.130(a) and must be taken into
account when calculating the actuarial
value of the health plan in accordance
with § 156.135. We are clarifying that
these issuers can apply higher or lower
cost sharing, that is, nothing requires an
issuer to use higher cost sharing for
drugs obtained from a retail pharmacy.
As a result, some or all of the costs
associated with this option may be
passed on to the consumer who chooses
to use it. However, nothing in this
provision supersedes State law that may
apply other cost sharing standards to
mail-order pharmacies. For plans that
do not have a network, enrollees should
be able to go to any pharmacy to access
their prescription drug benefit, and
those plans would, therefore, be in
compliance with this standard. In
addition, this requirement is not
intended to disrupt or supersede the
rules regarding cost sharing for
preventive service benefits when such
coverage includes drugs.
In response to comments, we
considered an exceptions process under
which an enrollee could make a request
to obtain the prescription at a brick and
mortar retail pharmacy. However, we
are concerned that if we allow an
exception process, the issuer would
retain the option to deny the request,
and such a process could be seen as
burdensome on the enrollee. In
particular, an exception process could
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be burdensome for enrollees with
complex health conditions if they had to
seek an exception request for each of
their prescription drugs that they take.
We understand that specialty
pharmacies provide more integrated
services, aimed at improving clinical
outcomes while limiting costs relating
to the delivery and management of the
product, than a typical mail-order
pharmacy or a brick and mortar retail
pharmacy. We understand that drugs on
the specialty tier of a formulary are not
necessarily the same drugs that a
specialty pharmacy would provide. Our
intention with this policy was not to
disrupt the specialty pharmacy market,
and we understand that exceptions will
be needed for many drugs that are only
accessible via a specialty pharmacy. For
these reasons, we are finalizing the
exceptions that allow a health plan to
restrict access to certain drugs in limited
circumstances. As part of this
requirement, a health plan may restrict
access to mail order, which may include
specialty pharmacies, for a particular
drug when: (1) The FDA has restricted
distribution of the drug to certain
facilities or practitioners (including
physicians); or (2) appropriate
dispensing of the drug requires special
handling, provider coordination, or
patient education that cannot be met by
a retail pharmacy. For instance, certain
drugs have a Risk Evaluation and
Mitigation Strategy (REMS) that
includes Elements to Assure Safe Use
that may require that pharmacies,
practitioners, or health care settings that
dispense the drug be specially certified
and that may limit access to the drugs
to certain health care settings.52 If the
health plan finds it necessary to restrict
access to a drug for either of the reasons
listed above, it must indicate this
restricted access on the formulary drug
list that plans must make publicly
available under § 156.122(d). The
provisions at § 156.122(e)(1)(i) and (ii)
allow an issuer to restrict access to
certain drugs at a retail pharmacy for the
specific reasons noted in those
paragraphs. Although issuers may
subject these drugs to reasonable
utilization management techniques, the
fact that these drugs have restricted
access should not in and of itself be a
justification for applying these
techniques to these drugs.
Issuers must implement the revised
§ 156.122(e) no later than for the start of
52 FDA requires a Risk Evaluation and Mitigation
Strategies (REMS) for certain drugs to ensure that
the benefits of a drug or biological product
outweigh its risks. The following is FDA’s list of
currently approved REMS at: https://www.fda.gov/
drugs/drugsafety/postmarketdrugsafetyinformation
forpatientsandproviders/ucm111350.htm.
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the 2017 plan year, and we have added
this clarification to the regulation.
v. Other Comments on the Preamble to
§ 156.122
In addition to the proposed provisions
above, we urged issuers to temporarily
cover non-formulary drugs (including
drugs that are on an issuer’s formulary
but require prior authorization or step
therapy) as if they were on formulary (or
without imposing prior authorization or
step therapy requirements) during the
first 30 days of coverage. We encouraged
plans to adopt this policy to
accommodate the immediate needs of
enrollees, while allowing the enrollee
sufficient time to go through the prior
authorization or drug exception
processes.
Comment: Some commenters sought
clarification about coverage of medical
drugs and preventive service drugs.
Others recommended requiring limits to
formulary changes during the plan year.
Several commenters recommended that
we require issuers to temporarily cover
non-formulary drugs during the first 30
days of coverage or longer and other
commenters were against this policy,
stating that it is not a typical
requirement in the private market, and
that it is costly and counterintuitive to
formulary transparency. Other
commenters supported transition
policies, but acknowledged the
importance of flexibility for issuers in
developing these policies.
Response: Preventive services,
including preventive service drugs, are
required to be covered as part of EHB.
Non-grandfathered group health plans
and health insurance coverage must
provide benefits for preventive health
services, including preventive service
drugs, without cost sharing, consistent
with the requirements of section 2713.
Similarly, the rules set forth under
§ 156.122 are specific to coverage of
drugs under the prescription drug EHB
category. Issuers could cover drugs
administered as part of another service
(such as during an inpatient
hospitalization or a physician service)
under the EHB category that covers that
service, in addition to covering the drug
under the prescription drug EHB
category. We believe this clarification
reflects the current practice of issuers.
We are also concerned about issuers
making mid-year formulary changes,
especially changes that negatively affect
enrollees. We are monitoring this issue
to consider whether further standards
are needed. We also note that, under
guaranteed renewability requirements
and the definitions of ‘‘product’’ and
‘‘plan,’’ issuers generally may not make
plan design changes, including changes
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to drug formularies, other than at the
time of plan renewal. We recognize that
certain mid-year changes to drug
formularies related to the availability of
drugs in the market may be necessary
and appropriate.
We are not requiring coverage of a
transitional fill at this time. As stated in
the proposed rule, we will consider
whether additional requirements may be
needed in this area. We remain
concerned that new enrollees may be
unfamiliar with what is covered on their
new plan’s formulary drug list and the
process and procedures under the plan.
Further, some new enrollees whose
drugs are covered by the plan’s
formulary may need to obtain prior
authorization or go through step therapy
to have coverage for their drugs, and
others may need time to work with their
provider to determine which formulary
drug the individual should be
transitioned to. For these reasons, we
urge issuers to temporarily fill drugs
that are not on the formulary (or are on
an issuer’s formulary but require prior
authorization or step therapy) as if they
were on formulary (or without imposing
prior authorization or step therapy
requirements) during the first 30 days of
coverage. We encourage plans to adopt
this policy to accommodate the
immediate needs of enrollees, while
allowing the enrollee sufficient time to
go through the prior authorization or
drug exception processes.
Comment: Some commenters
recommended that we implement the
prescription benefit requirements in
2017 or later. Others recommended that
all of the prescription drug benefit
changes be implemented in 2016. Some
had separate recommendations for the
timing or only commented on the timing
for certain requirements.
Response: We recognize that certain
prescription benefit changes under
§ 156.122 will be easier to implement
than others. For that reason, we are
finalizing our proposal effective dates
for § 156.122(c) and new § 156.122(d),
such that they are effective for plan
years beginning or after January 1, 2016.
These requirements are typical of the
current market and would require
updating and modifying of systems and
procedures to align with the finalized
policy. We are finalizing our proposed
effective dates for the revisions to
§ 156.122(a) and new § 156.122(e) such
that they are effective for plan years
beginning on or after January 1, 2017 to
better ensure a smooth transition in
implementing these policies.
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e. Prohibition on Discrimination
(§ 156.125)
Section 1302(b)(4) of the Affordable
Care Act directs the Secretary to address
certain standards in defining EHB,
including elements related to balance,
discrimination, the needs of diverse
sections of the population, and denial of
benefits. We have interpreted this
provision, in part, as a prohibition on
discrimination by issuers providing
EHB. Under § 156.125, which
implements the prohibition on
discrimination provisions, an issuer
does not provide EHB if its benefit
design, or the implementation of its
benefit design, discriminates based on
an individual’s age, expected length of
life, present or predicted disability,
degree of medical dependency, quality
of life, or other health conditions.
As described in the proposed rule,
since we finalized § 156.125, we have
become aware of benefit designs that we
believe would discourage enrollment by
individuals based on age or based on
health conditions, in effect making
those plan designs discriminatory, thus
violating this prohibition. Some issuers
have maintained limits and exclusions
that were included in the State EHB
benchmark plan. As we have previously
stated in guidance, EHB-benchmark
plans may not reflect all requirements
effective for plan years starting on or
after January 1, 2014. Therefore, when
designing plans that are substantially
equal to the EHB-benchmark plan,
issuers should design plan benefits,
including coverage and limitations, to
comply with requirements and
limitations that apply to plans
beginning in 2014.53
In the proposed rule, we discussed
three examples of potentially
discriminatory practices: (1) Attempts to
circumvent coverage of medically
necessary benefits by labeling the
benefit as a ‘‘pediatric service,’’ thereby
excluding adults; (2) refusal to cover a
single-tablet drug regimen or extendedrelease product that is customarily
prescribed and is just as effective as a
multi-tablet regimen, absent an
appropriate reason for such refusal; and
(3) placing most or all drugs that treat
a specific condition on the highest cost
tiers.
In this final rule, CMS adopts the
same approach as described in the
proposed rule. As we indicated in the
proposed rule and the 2014 Letter to
Issuers, we will notify an issuer when
we see an indication of a reduction in
the generosity of a benefit in some
53 Guide to Reviewing EHB Benchmark Plans—
https://www.cms.gov/CCIIO/Resources/DataResources/ehb.html#review benchmarks.
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manner for subsets of individuals that is
not based on clinically indicated,
reasonable medical management
practices.54 We conduct this
examination whenever a plan subject to
the EHB requirement reduces benefits
for a particular group. Issuers are
expected to impose limitations and
exclusions based on clinical guidelines
and medical evidence, and are expected
to use reasonable medical management.
Issuers may be asked to submit
justification with supporting
documentation to HHS or the State
explaining how the plan design is not
discriminatory.
We note that other nondiscrimination
and civil rights laws may apply,
including the Americans with
Disabilities Act, section 1557 of the
Affordable Care Act, Title VI of the Civil
Rights Act of 1964, the Age
Discrimination Act of 1975, section 504
of the Rehabilitation Act of 1973 and
State law. Compliance with § 156.125 is
not determinative of compliance with
any other applicable requirements, and
§ 156.125 does not apply to the
Medicaid and CHIP programs, but a
parallel provision applies to EHBs
furnished by Medicaid Alternative
Benefit Plans.
Comment: Many commenters
requested that we clarify that the
examples provided are only examples
and not per se discriminatory. Other
commenters requested that we codify
the examples and suggested additional
examples of discriminatory practices
that should be codified as well.
Response: We are not prohibiting
certain practices in regulatory text at
this time. Several factors must be taken
into consideration during benefit
design, and a discrimination
determination is often dependent on the
specific facts and circumstances.
However, the examples identified in the
proposed rule contain indications that
they are discriminatory, and therefore
further investigation by the enforcing
entity may be required. We strongly
caution issuers that the examples cited
appear discriminatory in their
application when looking at the totality
of the circumstances, and may therefore
be prohibited.
Additionally, as described later in this
preamble, section 1302(b) of the
Affordable Care requires that the
definition of EHB be based on the scope
of benefits provided under a typical
employer plan, subject to requirements
under the joint interpretive jurisdiction
54 Letter to Issuers on Federally-facilitated and
State Partnership Exchanges, April 5, 2013, page 15
and 2015 Letter to Issuers in the Federally
facilitated Marketplaces, March 14, 2014, page 29.
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of the Departments of HHS, Labor, and
the Treasury.55 Because the
nondiscrimination provisions are
related to many other such
requirements, HHS will consult with
relevant Federal agencies, such as the
Departments of Labor and the Treasury,
as necessary, in developing new
guidance related to discriminatory
benefit designs.
Comment: Some commenters asked
whether discrimination would be
identified during certification or
approval and therefore a finding of
discrimination would be prospective
only.
Response: As provided under
§ 156.125(a), an issuer does not provide
EHB if the implementation of a benefit
design discriminates based on an
individual’s age, expected length of life,
present or predicted disability, degree of
medical dependency, quality of life, or
other health conditions. Some
discriminatory practices might not be
discovered until an enrollee files a
complaint with the appropriate body.
Once a discriminatory practice is
identified, the issuer may be asked to
submit a justification with supporting
documentation to HHS or the State
explaining why the practice is not
discriminatory.
Comment: Some commenters
expressed concern regarding the
example of placing most or all drugs for
a certain condition on a high cost tier.
They noted that drug tiering reflects
current realities of the drug market and
is based on costs. The commenters
asked CMS to clarify that having a
specialty tier is not discriminatory.
Response: The examples provided in
the proposed rule are potentially
discriminatory if there is no appropriate
non-discriminatory reason for the noted
practice. Having a specialty tier is not
on its face discriminatory; however,
placing most or all drugs for a certain
condition on a high cost tier without
regard to the actual cost the issuer pays
for the drug may often be discriminatory
in application when looking at the
totality of the circumstances, and
therefore prohibited. When CMS or the
55 To inform the determination as to the scope of
a typical employer plan, section 1302(b)(2)(A) of the
Affordable Care act requires the Secretary of Labor
to conduct a survey of employer-sponsored
coverage to determine the benefits typically covered
by employers, and to provide a report to the
Secretary of HHS. These provisions suggest that,
while detailed requirements for EHB in the
individual and small group health insurance
markets were deemed necessary, the benefits
covered by typical employer plans providing
primary coverage at the time the Affordable Care
Act was enacted were seen as sufficient to satisfy
the Act’s objectives for the breadth of benefits
needed for health plan coverage and, in fact, to
serve as the basis for determining EHB.
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10823
State requests a justification for such a
practice, issuers should be able to
identify an appropriate nondiscriminatory reason that supports
their benefit design, including their
formulary design.
Comment: Several commenters
requested more detailed information
regarding how CMS and States monitor
and enforce discrimination.
Response: Enforcement of the
requirement to cover EHB is governed
by section 2723 of the PHS Act, which
looks first to States for enforcement,
then to the Secretary where a State
informs CMS that it is not enforcing the
requirement, or CMS finds that the State
has failed to substantially enforce.
Therefore the State, or CMS in States
that are not substantially enforcing
market-wide standards, is responsible
for enforcing EHB standards, including
the non-discrimination standard. In an
FFE, CMS notifies an FFE issuer when
we see an indication of a reduction in
the generosity of a benefit for a subset
of individuals and it is not apparent that
the reduction is based on a clinical
indication or reasonable medical
management practices.56 We conduct
this examination whenever a plan on an
FFE reduces benefits for a particular
group. Limitations and exclusions are
expected to be based on clinical
guidelines and medical evidence, and
medical management standards are
expected to be reasonable. Issuers may
be asked to submit a justification with
supporting documentation to CMS or
the State explaining how the plan
design is not discriminatory.
HHS’s Office for Civil Rights (OCR)
has independent authority to enforce
section 1557 of the Affordable Care Act
(42 U.S.C. 18116), which prohibits
discrimination on the basis of race,
color, national origin, sex, age, or
disability in any health program or
activity, any part of which receives
Federal financial assistance. OCR also
enforces Title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d, et seq.),
section 504 of the Rehabilitation Act of
1973 (29 U.S.C. 794), and the Age
Discrimination Act of 1975 (42 U.S.C.
6101, et seq.) and their respective
implementing regulations, which
prohibit discrimination on the basis of
race, color, national origin, disability, or
age in health programs and activities
that receive Federal financial assistance.
f. Cost-Sharing Requirements (§ 156.130)
We proposed to amend § 156.130 to
clarify how the annual limitation on
56 Letter to Issuers on Federally-facilitated and
State Partnership Exchanges, April 5, 2013, page 15
and 2015 Letter to Issuers in the Federallyfacilitated Marketplaces, March 14, 2014, page 29.
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cost sharing applies to plans that
operate on a non-calendar year, and to
make a technical correction to the
special rule for network plans. First, we
proposed to add new § 156.130(b),
which would provide that non-calendar
year plans that are subject to the annual
limitation on cost sharing in section
1302(c)(1) must adhere to the annual
limitation that is specific to the calendar
year in which the plan begins. That
annual limitation amount would serve
as the maximum for the entire plan year.
The purpose of this proposal is to
ensure that the enrollee would only be
required to accumulate cost sharing that
applies to one annual limit per year. We
also stated that under section 1302(c)(3)
of the Affordable Care Act, the term
‘‘cost sharing’’ includes deductibles,
coinsurance, copayments, or similar
charges, and any other expenditure
required of an individual that is a
qualified medical expense (within the
meaning of section 223(d)(2) of the
Code) for EHB covered under the plan.
Expenditures that meet this definition of
cost sharing must, under section 1302(c)
of the Affordable Care Act, count toward
the annual limitation on cost sharing
incurred under a health plan that is
required to cover EHB. Cost sharing
does not include premiums, balance
billing amounts for non-network
providers, or spending for non-covered
services. This definition was codified in
§ 155.20.
Additionally, we proposed to make a
technical correction to the text at
§ 156.130(c) on the special rule for
network plans to replace ‘‘shall not’’
with ‘‘is not required to.’’ This proposed
amendment was intended to clarify that
issuers have the option to count the cost
sharing for out-of-network services
towards the annual limitation on cost
sharing, but are not required to do so.
This out-of-network cost sharing would
not count toward the calculation of
actuarial value under § 156.135(b)(4) or
meeting a given level of coverage under
§ 156.140.
Lastly, in the proposed rule, we
proposed clarifying that the annual
limitation on cost sharing for self-only
coverage applies to all individuals
regardless of whether the individual is
covered by a self-only plan or is covered
by a plan that is other than self-only. In
both of these cases, an individual’s cost
sharing for EHB may never exceed the
self-only annual limitation on cost
sharing. For example, under the
proposed 2016 annual limitation on cost
sharing, if an other than self-only plan
has an annual limitation on cost sharing
of $10,000 and one individual in the
family plan incurs $20,000 in expenses
from a hospital stay, that particular
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individual would only be responsible
for paying the cost sharing related to the
costs of the hospital stay covered as
EHB up to the annual limit on cost
sharing for self-only coverage (assuming
an annual limitation of $6,850 for 2016,
the maximum for that year). We sought
comments on these proposed
requirements and clarifications as well
as whether other requirements and
clarifications were needed. We are
finalizing our proposal that the annual
limitation on cost sharing for self-only
coverage applies to all individuals
regardless of whether the individual is
covered by a self-only plan or is covered
by a plan that is other than self-only and
the technical correction we proposed to
make to the text at § 156.130(c).
Comment: Several commenters were
supportive of the proposed § 156.130(b)
as ensuring that cost sharing for noncalendar plans accrues for a 12-month
period, and ensuring that an enrollee
only has to accumulate cost sharing
towards one annual limitation on cost
sharing. Other commenters opposed the
proposed § 156.130(b) because small
employer plans typically operate on a
non-calendar year basis, but accumulate
towards a calendar year annual
limitation on cost sharing. These
commenters saw the proposed
requirements as disruptive, confusing to
consumers, and difficult to implement.
Commenters asked for an exception
from the new § 156.130(b) for large and
self-funded group health plans and
indicated that issuers would need time
to implement the rules, and would
require a clear transitional policy.
Response: The purpose of proposed
§ 156.130(b) was to ensure that issuers
could not reset the annual limitation on
cost sharing more frequently than once
a year and was not intended to disrupt
the employer group health insurance
market. After careful consideration of
comments received, we are not
finalizing this policy at this time. At this
time, we believe it is important to retain
flexibility in the employer health
insurance market on the timeframe
under which the employer sets the
annual limitation on cost sharing, but
we do maintain that the annual
limitation cost sharing is to apply on an
annual basis regardless of whether it is
a calendar year or a non-calendar year
plan.
Comment: Some commenters were
supportive of the proposed technical
correction to § 156.130(c) to replace
‘‘shall not’’ with ‘‘is not required to.’’
Some commenters recommended that
we expand this requirement to require
the counting of out-of-network services
toward the annual limit on cost sharing,
including in cases where the issuer is
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failing to meet network adequacy
standards or in cases of emergency
services, or to expand the types of cost
sharing that must count towards the
annual limitation on cost sharing.
Response: The purpose of this
correction was to better align this
regulation with the Affordable Care Act
Implementation FAQs (Set 18) that were
prepared jointly by the Departments of
Labor, HHS, and the Treasury.57 In this
final rule, we do not intend to expand
this requirement to require counting of
out-of-network services toward the
annual limitation on cost sharing and
believe that requiring coverage of out-ofnetwork services for cases where an
enrollee is unable to access an innetwork provider for covered services is
beyond the scope of the regulation
related to cost sharing requirements,
which applies in different ways in a
broad range of markets, some of which
may be subject to varying network
adequacy requirements. However,
revised § 156.130(c) ensures that an
issuer has the option to count the cost
sharing for these out-of-network services
towards the annual limitation on cost
sharing. In addition, issuers’ obligations
under § 156.130(g) and § 147.138(b)(3)
regarding coverage of emergency
services are applicable. Accordingly, we
are finalizing these changes to
§ 156.130(c) as proposed.
Comment: Several commenters
supported the clarification in the
preamble that the self-only coverage
limit for the annual limitation on cost
sharing applies to all individuals
regardless of whether the individual has
other than self-only coverage, as a step
toward greater consistency in consumer
protections. Commenters who opposed
this clarification were primarily
concerned that this provision would
limit the ability of issuers to offer high
deductible health plans with a health
savings account. Other commenters
raised concerns about whether this
clarification was within the
Congressional intent of the statute, and
whether this policy would be more
generous than other Federal programs.
Other commenters wanted additional
clarification on how the annual
limitation on cost sharing may be
applied for other than self-only
coverage.
Response: We believe that this
clarification is an important consumer
protection, as we are aware that some
consumers have been confused by the
applicability of the annual limitation on
cost sharing in other than self-only
57 https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/
aca_implementation_faqs18.html. (January 8, 2014).
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plans. Therefore, we are finalizing this
clarification. The annual limitation on
cost sharing for self-only coverage
applies to all individuals regardless of
whether the individual is covered by a
self-only plan or is covered by a plan
that is other than self-only.
Section 156.130 is specific to the
annual limitation on cost sharing. While
cost sharing incurred towards the
deductible must count towards the
annual limitation on cost sharing for
EHB, the deductible limit is not
regulated in the same manner as the
annual limitation on cost sharing.
Therefore, family high deductible health
plans that count the family’s cost
sharing to the deductible limit can
continue to be offered under this policy.
The only limit will be that the family
high deductible health plan cannot
require an individual in the family plan
to exceed the annual limitation on cost
sharing for self-only coverage. We also
note that this policy, that the annual
limitation on cost sharing for self-only
coverage applies to all individuals
regardless of whether the individual is
covered by a self-only plan or is covered
by a plan that is other than self-only,
would also apply to catastrophic plans
under § 156.155 and that plans are
required to comply with reduced
maximum annual limitation on cost
sharing under § 156.420. We note that
2016 plans must comply with this
policy.
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g. Premium Adjustment Percentage
(§ 156.130)
Section 1302(c)(4) of the Affordable
Care Act directs the Secretary to
determine an annual premium
adjustment percentage, which is used to
set the rate of increase for three
parameters detailed in the Affordable
Care Act: The maximum annual
limitation on cost sharing (defined at
§ 156.130(a)), the required contribution
percentage by individuals for minimum
essential health coverage the Secretary
may use to determine eligibility for
hardship exemptions under section
5000A of the Code, and the assessable
payment amounts under section
4980H(a) and (b) of the Code (finalized
at 26 CFR 54.4980H in the ‘‘Shared
Responsibility for Employers Regarding
Health Coverage,’’ published in the
February 12, 2014 Federal Register (79
FR 8544)). Section 156.130(e) provides
that the premium adjustment percentage
is the percentage (if any) by which the
average per capita premium for health
insurance coverage for the preceding
calendar year exceeds such average per
capita premium for health insurance for
2013, and that this percentage will be
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published annually in the HHS notice of
benefit and payment parameters.
We established a methodology for
estimating average per capita premium
for purposes of calculating the premium
adjustment percentage in the 2015
Payment Notice. Under that
methodology, the premium adjustment
percentage is calculated based on the
projections of average per enrollee
employer-sponsored insurance (ESI)
premiums from the NHEA, which is
calculated by the CMS Office of the
Actuary.
Accordingly, using the ESI data, the
premium adjustment percentage for
2016 is the percentage (if any) by which
the most recent NHEA projection of per
enrollee ESI premiums for 2015 ($5,744)
exceeds the most recent NHEA
projection of per enrollee ESI premiums
for 2013 ($5,303).58 We are finalizing
the proposed premium adjustment
percentage for 2016 at 8.316047520
percent. We note that the 2013 premium
used for this calculation has been
updated to reflect the latest NHEA data.
We are also finalizing the following
cost-sharing parameters for calendar
year 2016, based on our finalized
premium adjustment percentage for
2016.
Maximum Annual Limitation on Cost
Sharing for Calendar Year 2016. Under
§ 156.130(a)(2), for the 2016 calendar
year, cost sharing for self-only coverage
may not exceed the dollar limit for
calendar year 2014 increased by an
amount equal to the product of that
amount and the premium adjustment
percentage for 2016, and for other than
self-only coverage, the limit is twice the
dollar limit for self-only coverage.
Under § 156.130(d), these amounts must
be rounded down to the next lowest
multiple of 50. Using the premium
adjustment percentage of 8.316047520
for 2016 we established above, and the
2014 maximum annual limitation on
cost sharing of $6,350 for self-only
coverage, which was published by the
IRS on May 2, 2013,59 we are finalizing
the proposed 2016 maximum annual
limitation on cost sharing at $6,850 for
self-only coverage and $13,700 for other
than self-only coverage.
Comment: Two commenters
expressed concern with the increase in
the maximum limitation on cost
58 See https://www.cms.gov/Research-StatisticsData-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/Downloads/
ProjectionsMethodology2012.pdf and Table 17 in
https://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/
NationalHealthExpendData/Downloads/
Proj2012.pdf for additional information.
59 See https://www.irs.gov/pub/irs-drop/rp-1325.pdf.
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sharing, and asked HHS to consider
alternative factors to those that make up
the methodology or an alternate
methodology to protect patients from
increasing out-of-pocket costs. One
commenter stated that the proposed
increase of $500 for self-only and $1,000
for family policies over the 2014
maximums will deter enrollees from
using drugs, and continual annual
increases of this magnitude would
nullify the protection afforded patients
from limits on out-of-pocket expenses.
Another commenter stated that the
proposed percentage increase far
exceeds any recent percentage increase
in the maximum annual limit on
deductibles proposed by the Internal
Revenue Service for High Deductible
Health Plans, the index used to establish
maximum annual limits on cost sharing
in the first year of the Affordable Care
Act. The commenter stated that
consumers do not commonly experience
both annual premium increases and
significant increases in the cost of
benefits.
Response: We are finalizing the 2016
maximum annual limit on cost sharing
as proposed. As discussed above,
section 1302(c)(4) of the Affordable Care
Act directs the Secretary to set the
maximum limitation on cost sharing
using an annual premium adjustment
percentage. Other indices may use
different factors. HHS recognizes that
significant annual increases in out-ofpocket expenses would have a
deleterious effect on consumers’ ability
to access health care. The methodology
to establish the maximum annual
limitation on cost sharing was finalized
in the 2015 Payment Notice, and as
stated there, we will consider adjusting
the methodology in 2017 as additional
data on health insurance premiums
become available through the Exchanges
and other sources.
h. Reduced Maximum Annual
Limitation on Cost Sharing (§ 156.130)
Sections 1402(a) through (c) of the
Affordable Care Act direct issuers to
reduce cost sharing for EHBs for eligible
individuals enrolled in a silver level
QHP. In the 2014 Payment Notice, we
established standards related to the
provision of these cost-sharing
reductions. Specifically, in part 156
subpart E, we specified that QHP issuers
must provide cost-sharing reductions by
developing plan variations, which are
separate cost-sharing structures for each
eligibility category that change how the
cost sharing required under the QHP is
to be shared between the enrollee and
the Federal government. At § 156.420(a),
we detailed the structure of these plan
variations and specified that QHP
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issuers must ensure that each silver plan
variation has an annual limitation on
cost sharing no greater than the
applicable reduced maximum annual
limitation on cost sharing specified in
the annual HHS notice of benefit and
payment parameters. Although the
amount of the reduction in the
maximum annual limitation on cost
sharing is specified in section
1402(c)(1)(A) of the Affordable Care Act,
section 1402(c)(1)(B)(ii) of the
Affordable Care Act states that the
Secretary may adjust the cost-sharing
limits to ensure that the resulting limits
do not cause the AVs of the health plans
to exceed the levels specified in section
1402(c)(1)(B)(i) (that is, 73 percent, 87
percent or 94 percent, depending on the
income of the enrollee(s)). Accordingly,
we proposed to use a method we
established in the 2014 Payment Notice
for determining the appropriate
reductions in the maximum annual
limitation on cost sharing for costsharing plan variations. As finalized
above, the 2016 maximum annual
limitation on cost sharing is $6,850 for
self-only coverage and $13,700 for other
than self-only coverage. We analyzed
the effect on AV of the reductions in the
maximum annual limitation on cost
sharing described in the statute to
determine whether to adjust the
reductions so that the AV of a silver
plan variation will not exceed the AV
specified in the statute. Below, we
describe our analysis for the 2016
benefit year and the results described in
the proposed rule, which are being
finalized as proposed.
Reduced Maximum Annual
Limitation on Cost Sharing for Benefit
Year 2016. Consistent with our analysis
in the 2014 and 2015 Payment Notices,
we developed three model silver level
QHPs, and analyzed the impact on AV
of the reductions described in the
Affordable Care Act to the estimated
2016 maximum annual limitation on
cost sharing for self-only coverage
($6,850). The model plan designs are
based on data collected for 2015 plan
year QHP certification to ensure that
they represent a range of plan designs
that we expect issuers to offer at the
silver level of coverage through the
Exchange. For 2016, the model silver
level QHPs included a PPO with a
typical cost-sharing structure ($6,850
annual limitation on cost sharing,
$2,000 deductible, and 20 percent innetwork coinsurance rate), a PPO with
a lower annual limitation on cost
sharing ($4,600 annual limitation on
cost sharing, $2,550 deductible, and 20
percent in-network coinsurance rate),
and an HMO ($6,850 annual limitation
on cost sharing, $2,700 deductible, 20
percent in-network coinsurance rate,
and the following services with copays
that are not subject to the deductible or
coinsurance: $500 inpatient stay per
day, $350 emergency department visit,
$25 primary care office visit, and $50
specialist office visit). All three model
QHPs meet the AV requirements for
silver level health plans.
We then entered these model plans
into the proposed 2016 AV calculator
developed by HHS and observed how
the reductions in the maximum annual
limitation on cost sharing specified in
the Affordable Care Act affected the AVs
of the plans. We found that the
reduction in the maximum annual
limitation on cost sharing specified in
the Affordable Care Act for enrollees
with a household income between 100
and 150 percent of the FPL (2⁄3
reduction in the maximum annual
limitation on cost sharing), and 150 and
200 percent of the FPL (2⁄3 reduction),
would not cause the AV of any of the
model QHPs to exceed the statutorily
specified AV level (94 and 87 percent,
respectively). In contrast, the reduction
in the maximum annual limitation on
cost sharing specified in the Affordable
Care Act for enrollees with a household
income between 200 and 250 percent of
the FPL (1⁄2 reduction), would cause the
AVs of two of the model QHPs to exceed
the specified AV level of 73 percent. As
a result, we are finalizing our proposal
that the maximum annual limitation on
cost sharing for enrollees in the 2016
benefit year with a household income
between 200 and 250 percent of the FPL
be reduced by approximately 1⁄5, rather
than 1⁄2. We are further finalizing as
proposed a requirement that the
maximum annual limitation on cost
sharing for enrollees with a household
income between 100 and 200 percent of
the FPL be reduced by approximately
2⁄3, as specified in the statute, and as
shown in Table 10. These reductions in
the maximum annual limitation on cost
sharing should adequately account for
unique plan designs that may not be
captured by our three model QHPs. We
also note that selecting a reduction for
the maximum annual limitation on cost
sharing that is less than the reduction
specified in the statute will not reduce
the benefit afforded to enrollees in
aggregate because QHP issuers are
required to further reduce their annual
limitation on cost sharing, or reduce
other types of cost sharing, if the
required reduction does not cause the
AV of the QHP to meet the specified
level.
We note that for 2016, as described in
§ 156.135(d), States are permitted to
submit for approval by HHS Statespecific data sets for use as the standard
population to calculate AV. No State
submitted a data set by the September
1 deadline.
TABLE 10—REDUCTIONS IN MAXIMUM ANNUAL LIMITATION ON COST SHARING FOR 2016
Reduced
maximum annual
limitation on cost
sharing for selfonly coverage for
2016
Eligibility category
Reduced
maximum annual
limitation on cost
sharing for other
than self-only coverage for 2016
$2,250
$4,500
2,250
4,500
5,450
10,900
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Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(i) (that is, 100–150 percent of
FPL) ..........................................................................................................................................................
Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(ii) (that is, 150–200 percent of
FPL) ..........................................................................................................................................................
Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(iii) (that is, 200–250 percent of
FPL) ..........................................................................................................................................................
Comment: We received one comment
supporting the proposed reductions in
the maximum annual limitation on cost
sharing for 2016 for enrollees with a
household income between 200 and 250
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percent of the FPL, with the caveat that
HHS design policies in future plan years
to lower up-front cost sharing, such as
through lower deductibles. Other
commenters stated that HHS should
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consider reducing the cost-sharing
limits for individuals with a household
income between 200 and 400 percent of
the FPL as the proposed cost-sharing
limits may pose significant financial
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challenge for enrollees with significant
expenditures. One commenter urged
HHS to systematically analyze the
reduced annual limitation on cost
sharing provided by cost-sharing
reduction plans in each State or rating
area for their impact on people with
chronic illnesses.
Response: As discussed in the
proposed rule, selecting a reduction for
the maximum annual limitation on cost
sharing that is less than the reduction
specified in the statute will not reduce
the benefit afforded to enrollees in
aggregate, because QHP issuers are
required to further reduce their annual
limitation on cost sharing, or other types
of cost sharing, to meet the specified AV
for the plan variation. Therefore, we are
finalizing the reductions to the
maximum annual limitation on cost
sharing for 2016 as proposed.
i. Minimum Value (§ 156.145)
Section 1401(a) of the Affordable Care
Act added a new section 36B to the
Code, providing a premium tax credit
for certain individuals with household
incomes between 100 percent and 400
percent of the FPL who enroll in, or
who have one or more family members
enrolled in an individual market QHP
through an Exchange, who are not
otherwise eligible for MEC. An
employer-sponsored plan is MEC, but
for purposes of the premium tax credit
under section 36B(c)(2)(C)(ii) of the
Code, an employee is generally treated
as not eligible for MEC under an
employer-sponsored plan unless the
plan is affordable and provides
minimum value (MV). An employersponsored plan provides MV if the
plan’s share of the total allowed costs of
benefits provided under the plan is
greater than or equal to 60 percent of the
costs. An employee who is eligible for
coverage under an employer-sponsored
plan that is both affordable and provides
MV to the employee may not receive a
premium tax credit under section 36B of
the Code for the employee’s coverage in
a QHP. If the employer coverage does
not provide MV, the employee may be
entitled to a premium tax credit even if
the coverage is affordable.
Section 1513 of the Affordable Care
Act added a new section 4980H to the
Code providing for shared responsibility
for employers regarding health coverage.
An applicable large employer that does
not offer coverage that is affordable and
provides MV may be liable for an
employer shared responsibility payment
under section 4980H of the Code if one
or more of its full-time employees
receives a premium tax credit.
Under our regulations, the MV
standard of 60 percent of the total
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allowed costs of benefits provided
under the plan is based on an amount
equivalent to the plan’s share of total
allowed costs required for a bronze level
QHP offered on an Exchange. Section
1302(d)(2)(C) of the Affordable Care Act
provides that regulations promulgated
by the Secretary of HHS under section
1302(d)(2), addressing actuarial value,
apply in determining under this title,
the Public Health Service Act, and the
Internal Revenue Code . . . the
percentage of the total allowed costs of
benefits provided under a group health
plan or health insurance coverage that
are provided by such plan or coverage.
Accordingly, HHS regulations under
section 1302(d) implementing actuarial
value requirements, which an insurer
offering essential health benefits (EHB)
must meet for a non-grandfathered
individual market or small group health
insurance plan to be considered a
bronze plan under section 1302(d)(1)(3)
of the Affordable Care Act, also form the
basis for determining the percentage of
the total allowed costs of benefits
provided for purposes of whether the
value of coverage meets the MV
standard under section 36B(c)(2)(C)(ii)
of the Code.
HHS published final regulations
implementing section 1302(d)(2) on
February 25, 2013 (78 FR 12834). The
regulations at § 156.20 define the
percentage of the total allowed costs of
benefits as (1) the anticipated covered
medical spending for EHB coverage paid
by a health plan for a standard
population, (2) computed in accordance
with the plan’s cost sharing, and (3)
divided by the total anticipated allowed
charges for EHB coverage provided to
the standard population. HHS
regulations at § 156.145(b)(2) apply this
definition in the context of MV by
taking into account benefits a plan
provides that are included in any one of
the State EHB benchmarks.
The IRS and Treasury Department
published proposed regulations on May
3, 2013 (78 FR 25909), applying the
HHS regulations in defining MV for
employer-sponsored plans. The
proposed regulations provide that the
MV percentage is determined by
dividing a plan’s anticipated medical
spending (based on the plan’s costsharing) for plan benefits that are EHB
covered under a particular EHB
benchmark plan for the MV standard
population by the total allowed charges
for EHB coverage for the standard
population and converting the result to
a percentage. Proposed 26 CFR 1.36B–
6(c). Taxpayers may apply the proposed
regulations for taxable years ending
before January 1, 2015.
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The final HHS regulations and
proposed Treasury regulations allow
plans to determine the MV percentage
by using the MV Calculator published
by HHS. It came to our attention that
certain group health plan designs that
provide no coverage of inpatient
hospital services were being promoted,
and that representations were being
made, based on the MV Calculator, that
these plan designs would cover 60
percent of the total allowed costs of
benefits provided, and thus provide MV
under the test in the current regulations.
We understand that these designs have
been promoted as a way of both
minimizing the cost of the plan to the
employer (a consequence not only of
excluding inpatient hospitalization
benefits but also of making an offer of
coverage that a substantial percentage of
employees will not accept) and avoiding
potential liability for employer shared
responsibility payments. By offering
coverage that is affordable to the
employee and that purports to provide
MV, employers adopting these plan
designs were seeking, to deny their
employees the ability to obtain a
premium tax credit that could result in
the employer becoming subject to a
section 4980H employer shared
responsibility payment.
In Notice 2014–69 (2014–48 IRB,
November 24, 2014), released on
November 4, 2014, HHS and Treasury
advised that regulations would be
proposed providing that plans that fail
to provide substantial coverage of
inpatient hospital or physician services
do not provide MV. Allowing these
designs to be treated as providing MV
not only would allow an employer to
avoid the shared responsibility payment
that the statute imposes when an
employer does not offer its full-time
employees adequate health coverage,
but would adversely affect employees
(particularly those with significant
health risks) who understandably would
find this coverage unacceptable, by
denying them access to a premium tax
credit for individual coverage purchased
through an Exchange. Plans that omit
critical benefits used disproportionately
by individuals in poor health will enroll
far fewer of these individuals,
effectively driving down employer costs
at the expense of those who, because of
their individual health status are
discouraged from enrolling.
That the MV standard may be
interpreted to require that employersponsored plans cover critical benefits
is evident in the structure of the
Affordable Care Act, the context in
which the grant of the authority to the
Secretary to prescribe regulations under
section 1302 was enacted, and the
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policy underlying the legislation.
Section 1302(b) authorizes the Secretary
of HHS to define EHB to be offered by
individual market and small group
health insurance plans, provided that
this definition include at least 10
specified categories of benefits, and that
the benefits be equal to the scope of
benefits provided under a typical
employer plan. To inform this
determination as to the scope of a
typical employer plan, section
1302(b)(2)(A) provides that the
Secretary of Labor shall conduct a
survey of employer-sponsored coverage
to determine the benefits typically
covered by employers, including
multiemployer plans, and provide a
report on such survey to the Secretary
[of HHS].60 These provisions suggest
that, while detailed requirements for
EHB in the individual and small group
health insurance markets were deemed
necessary, the benefits covered by
typical employer plans providing
primary coverage at the time the
Affordable Care Act was enacted were
seen as sufficient to satisfy the Act’s
objectives for the breadth of benefits
needed for health plan coverage and, in
fact, to serve as the basis for
determining EHB. They also suggest that
any meaningful standard of minimum
coverage may require providing certain
critical benefits.
Employer-sponsored plans in the
large group market and self-insured
employers continue to have flexibility
in designing their plans. They are not
required to cover all EHB. Providing
flexibility, however, does not mean that
these plans can offer whatever benefits
they choose and automatically meet MV
requirements. A plan that excludes
substantial coverage for inpatient
hospital and physician services is not a
health plan in any meaningful sense and
is contrary to the purpose of the MV
requirement to ensure that an employersponsored plan, while not required to
cover all EHB, nonetheless must offer
coverage with minimum value at least
roughly comparable to that of a bronze
plan offered on an Exchange.
For these reasons, the Secretary has
concluded that the provisions of section
1302(d)(2) of the Affordable Care Act—
requiring that the regulations for
determining the percentage of the total
allowed costs of benefits that apply to
plans that must cover all EHB also be
applied as a basis for determining
minimum value—reflect a statutory
design to provide basic minimum
60 See Department of Labor. Special Report:
Selected Medical Benefits: A Report from the
Department of Labor to the Department of Health
and Human Services. https://www.bls.gov/ncs/ebs/
sp/selmedbensreport.pdf.
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standards for health benefits coverage
through the MV requirement, without
requiring large group market plans and
self-insured plans to meet all EHB
standards. Given the scope of benefits
covered by typical employer plans, the
MV requirement is properly viewed as
a means of ensuring that employersponsored plans satisfy basic minimum
standards while also accommodating
flexibility in the design of those plans.
Employers have been able to claim
that plans without coverage of inpatient
hospital services provide MV under the
current quantitative MV test by
designing a benefit package that, based
on standardized actuarial assumptions
used in the MV calculator, offsets the
absence of actuarial value derived from
spending on inpatient hospital coverage
with increased spending on other
benefits. Accordingly, some plan
designs may pass the current
quantitative test without offering a
critical benefit universally understood
to be included in any minimally
acceptable employer health plan
coverage, and which the Department of
Labor study determined was included in
all employer plans it surveyed.
As noted previously, we have
concluded that the quantitative test for
MV is not exclusive. Accordingly, we
are finalizing our proposal to amend
§ 156.145 to require that, to provide MV,
an employer-sponsored plan not only
must meet the quantitative standard of
the actuarial value of benefits, but also
must provide a benefit package that
meets a minimum standard of benefits.
Specifically, we are finalizing as
proposed the policy to revise § 156.145
to provide that, to satisfy MV, an
employer plan must provide substantial
coverage of both inpatient hospital
services and physician services.
We are not requiring that large
employer or self-insured employer
group health plans provide all EHB as
defined under section 1302 of the
Affordable Care Act. Rather, we are only
requiring that, to provide MV,
employer-sponsored plans provide
substantial coverage of the two types of
benefits that we believe were envisioned
for health plan coverage meeting the MV
standard. We have concluded that plans
that omit these types of coverage fail to
meet universally accepted minimum
standards of value expected from, and
inherent in the nature of, any
arrangement that can reasonably be
called a health plan intended to provide
the primary health coverage for
employees.
Consistent with Notice 2014–69, we
are finalizing our proposal that these
changes to our regulations on MV will
apply to employer-sponsored plans,
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including plans that are in the middle
of a plan year, immediately on the
effective date of the final regulations.
However, because some employers
adopted plans prior to publication of
Notice 2014–69, we are finalizing our
proposal that the final regulations not
apply before the end of the plan year (as
in effect under the terms of the plan on
November 3, 2014) to plans that before
November 4, 2014, entered into a
binding written commitment to adopt,
or began enrolling employees into, the
plan, so long as that plan year begins no
later than March 1, 2015. For these
purposes, a binding written
commitment exists when an employer is
contractually required to pay for an
arrangement, and a plan begins
enrolling employees when it begins
accepting employee elections to
participate in the plan. The Department
of the Treasury and the IRS are expected
to publish proposed regulations making
clear that this delayed applicability date
applies solely for purposes section
4980H of the Code. At no time will any
employee be required to treat a plan that
fails to provide substantial coverage of
inpatient hospital services or physician
services as providing MV for purposes
of eligibility for the premium tax credit
under section 36B of the Code.
Comment: We received several
comments supporting our proposal and
urging HHS to broaden the MV
requirement to include outpatient
services, emergency services and
prescription coverage. Several
commenters recommended establishing
a clear standard for ‘‘substantial
coverage’’ to determine whether an
employer has met the requirements: One
commenter suggested conducting a
survey of employer-sponsored plans to
establish a benchmark, three
commenters suggested using the Federal
Employees Health Benefits (FEHB) plan
as a benchmark, and one commenter
suggested using 4 days of minimum
hospital stays coverage as a threshold
based on an analysis of hospital stays
among individuals in employersponsored plans. Several commenters
requested that HHS establish a good
faith compliance standard for plans
offering coverage with inpatient hospital
and physician services for the 2015 plan
year.
Response: We are finalizing the policy
as proposed. As discussed in the
proposed rule, because under the terms
of the statute large employers are not
required to offer EHB as defined by the
Secretary, we are not requiring that large
employer or self-insured employer
group health plans provide all EHB as
defined under section 1302 of the
Affordable Care Act. Rather, we are only
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requiring that, to provide MV,
employer-sponsored plans provide
substantial coverage of the two types of
benefits that we believe were envisioned
as essential to health plan coverage
meeting the MV standard. We have
concluded that plans that omit these
types of coverage fail to meet
universally accepted minimum
standards of value expected from, and
inherent in, the nature of any
arrangement that can reasonably be
called a health plan intended to provide
the primary health coverage for
employees. We intend to provide further
clarity on the requirement to provide
‘‘substantial coverage,’’ as
circumstances warrant.
Comment: Several commenters raised
concerns that the Affordable Care Act
only requires coverage of 60 percent of
costs of benefits and HHS is imposing
other benefits requirements without
statutory basis. One of the commenters
recommended HHS create a safe harbor
for plans establishing coverage designs
based on good faith belief that the plan
meets the 60 percent actuarial value
threshold.
Response: As discussed above, we
believe that section 1302(d)(2) of the
Affordable Care Act—requiring that the
regulations for determining the
percentage of the total allowed costs of
benefits that apply to plans that must
cover all EHB also be applied as a basis
for determining minimum value—reflect
a statutory design to incorporate basic
minimum standards for health benefits
coverage similar in scope to EHB
through the MV requirement, without
requiring large group market plans and
self-insured plans to meet all EHB
standards. Given the scope of benefits
covered by typical employer plans, the
MV requirement is properly viewed as
a means of ensuring that employersponsored plans that prevent employees
from accessing the premium tax credit
for comprehensive coverage in the
Marketplace satisfy basic minimum
standards while also accommodating
flexibility in the design of those plans.
We believe that our rules on effective
dates adequately address transition
issues. As described above, for purposes
of section 4980H of the Code, the
changes to our regulations on MV
requirements will not apply before the
end of the plan year for employers that
adopted plans prior to November 4,
2014, so long as the plan begins no later
than March 1, 2015. However, under no
circumstances will an employee be
denied the premium tax credit under
section 36B of the Code for a plan that
does not cover at least 60 percent of the
total allowed costs of benefits, and/or
fails to provide substantial coverage of
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inpatient hospital services or physician
services.
Comment: Several commenters raised
the concern that the MV requirements
will increase the number of plans
affected by the excise tax on high-cost
employer-sponsored health coverage,
and that many employers have limited
benefits to avoid the tax or are
considering passing off the excise tax
costs to individuals.
Response: Our analysis shows plans
likely to be affected by these
clarifications of the MV requirements
generally have annual costs far below
the thresholds above which the excise
tax will apply in 2018; $10,200 for selfonly and $27,500 for other-than-selfonly coverage. Pursuant to the statute,
the thresholds may be increased for
excess growth in health care costs
through 2018 and based on inflation
annually thereafter. We thus do not
believe that this policy will affect the
number of employer plans affected by
the excise tax and are finalizing the
policy as proposed.
3. Qualified Health Plan Minimum
Certification Standards
a. QHP Issuer Participation Standards
(§ 156.200)
We proposed to revise § 156.200(b)(7)
to require that a QHP issuer comply
with the standards under part 153 and
not just the standards related to the risk
adjustment program. This amendment
clarifies that a QHP issuer must
maintain responsibility for its
compliance and, under § 156.340, the
compliance of any of its delegated or
downstream entities with the standards
set forth in part 153, not just those
specifically pertaining to risk
adjustment. We received no comments
on this proposal. We are finalizing this
provision as proposed.
b. Transparency in Coverage (§ 156.220)
The transparency in coverage
standards established under section
1311(e)(3) of the Affordable Care Act, as
implemented at § 155.1040(a) and
§ 156.220, require health insurance
issuers that offer a QHP in accordance
with a certification from an Exchange to
provide specified information to HHS,
the Exchange, and the State insurance
commissioner and to make this
information available to the public in
‘‘plain language.’’ In a frequently asked
question dated April 29, 2013,61 HHS
clarified that, to comply with section
1311(e)(3), issuers offering QHPs
61 Affordable Care Act Implementation Set 15,
available at: https://www.cms.gov/CCIIO/Resources/
Fact-Sheets-and-FAQs/
aca_implementation_faqs15.html.
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certified by an Exchange would be
required to begin submitting this
information only after QHPs have been
certified for one benefit year.62 We
noted in the proposed rule (79 FR
70726) that because a full year of claims
data will be available, we anticipate the
collection and public display of the
required information listed in § 156.220
from QHP issuers offering coverage
through Exchanges beginning in 2016.
We requested comments to inform
future policies, regarding the data
elements, format, and timeframe for the
data submission, as well as the manner
in which HHS, the Exchanges, and
QHPs should publicly display the
collected information. We also sought
feedback on how to minimize
duplication with information that
issuers must already submit to HHS,
States, or other entities (for example,
accreditation organizations). Finally, we
requested feedback on whether State
Exchanges should display the same
information and in the same format and
manner as in the FFEs.
Comment: One commenter asked
whether the transparency in coverage
standards are applicable to stand-alone
dental plans.
Response: The transparency in
coverage reporting standards,
established at § 156.220, are applicable
to all QHPs offered on Exchanges,
including stand-alone dental plans.
Comment: Several commenters
recommended that HHS narrow any
data elements it collects to reflect only
information that would be useful to
consumers as they select a QHP.
Commenters were concerned with
duplication of collections that are
already required by States or HHS.
Some commenters suggested that data
collection should rely on what is
already publicly available when
possible. Some commenters expressed
concerns regarding protection of
proprietary information and suggested
that HHS should not request or display
data that could have unintended,
anticompetitive consequences. A few
62 The FAQ also states that because section 2715A
of the PHS Act simply extends the transparency
provisions set forth in section 1311(e)(3) of the
Affordable Care Act to group health plans and
health insurance issuers offering group and
individual health insurance coverage, the
Departments clarified that the reporting
requirements under section 2715A of the PHS Act
will become applicable to group health plans and
health insurance issuers offering group and
individual health insurance coverage no sooner
than when the reporting requirements under section
1311(e)(3) of the Affordable Care Act become
applicable. Nothing in these proposed regulations
would apply any transparency reporting
requirements related to section 2715A of the PHS
Act, incorporated into section 715(a)(1) of ERISA
and section 9815(a)(1) of the Code.
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commenters suggested examples of data
elements, the frequency of collection,
the format of display, and data sources
that could be used to meet the
requirements for specific elements.
Response: We intend to provide detail
regarding the referenced data collection
and display at a future date. We will
take the commenters’ suggestions into
account when we do so. We intend to
collect and display information in a
standardized manner to minimize
burden on issuers and maximize utility
for consumers.
Comment: Some commenters
recommended that transparency of
coverage standards not be implemented
for 1 year following issuance of the final
guidance operationalizing them. These
commenters were concerned about
having sufficient time to put resources
in place to submit and display data.
Commenters also suggested that issuers
be given an opportunity to comment on
the specific elements that will be
collected, the definition of those
elements, and how the data will be
used. One commenter suggested that
HHS conduct beta testing before the
requirements are fully implemented. In
contrast, a few commenters were
concerned with the 2016
implementation date for transparency
requirements and recommended that
HHS collect and display the required
information as soon as possible.
Response: We believe a 2016 date will
allow sufficient time for HHS to provide
detailed guidance regarding the data
collection, review, and public display of
transparency elements and will allow
HHS and Exchanges to collect a full set
of data reflecting post-2014 experience.
We intend to solicit additional
comments on the specific approach
before it is finalized.
c. Network Adequacy Standards
(§ 156.230)
In § 156.230, we established the
minimum network adequacy criteria
that health and dental plans must meet
to be certified as QHPs, under the
Secretary’s authority in section
1311(c)(1)(B) of the Affordable Care Act.
In this rule, we proposed modifying
§ 156.230(a) to specify that this section
only applies to QHPs that use a provider
network and that a provider network
includes only providers that are
contracted as in-network. This means
that the general availability of out-ofnetwork providers will not be counted
for purposes of meeting network
adequacy requirements.
We believe that networks that provide
sufficient access to benefits are a
priority for issuers and consumers. HHS
continues to take great interest in
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ensuring strong network access,
particularly for QHPs that must meet the
standards in § 156.230. As stated in the
proposed rule, HHS is aware that the
NAIC has formed a workgroup that is
drafting a model act relative to network
adequacy and will await the results of
this workgroup before proposing
significant changes to network adequacy
policy. For 2016, HHS expects to
continue the reasonable access standard
adopted in the 2015 Letter to Issuers in
the Federally-facilitated Marketplaces 63
and assess the provider networks
information submitted as part of the
QHP certification process. We urge
State-based Exchanges to employ the
same standard when examining network
adequacy.
In addition to the changes above, we
are also cognizant that new enrollees in
QHPs may need a transition period to
switch to a provider that is in-network
in their new plan. We encourage QHP
issuers that use a network of providers
to offer new enrollees transitional care
for an ongoing course of treatment. We
suggest that this begin with the effective
date of coverage of a new enrollee and
last for at least 29 days thereafter (for a
minimum of 30 days). These benefits
would extend to health care services
furnished by any provider to the new
enrollee, regardless of whether the
provider is in the plan’s network, as
long as the enrollee received health
services from that provider under an
ongoing course of treatment in the 90
days prior to the effective date of
coverage. Because different plans may
have different provider networks, when
an individual enrolls in a new health
plan, he or she may be undergoing a
course of treatment with a provider that
is not in the new issuer’s provider
network. In such a case, it may take time
for the new enrollee to select a new innetwork provider and to meet with the
new provider to ensure that there is no
disruption in treatment. We encourage
issuers to adopt this policy to
accommodate the immediate needs of
enrollees, while allowing the enrollee
sufficient time to go through the process
of selecting an in-network provider in
their new plan. As we stated in the
proposed rule, we are considering
whether requirements may be needed in
this area in the future.
We are renumbering § 156.230(b), to
(b)(1) and adding (b)(2) to strengthen the
provider directory requirement effective
for plan years beginning on or after
January 1, 2016. Specifically, we
63 2015 Letter to Issuers in the Federallyfacilitated Marketplaces, March 14, 2014, available
at: https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/2015-finalissuer-letter-3-14-2014.pdf.
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proposed that a QHP issuer must
publish an up-to-date, accurate, and
complete provider directory, including
information on which providers are
accepting new patients, the provider’s
location, contact information, specialty,
medical group, and any institutional
affiliations, in a manner that is easily
accessible to plan enrollees, prospective
enrollees, the State, the Exchange, HHS,
and OPM. As part of this requirement,
we proposed that a QHP issuer must
update the directory information at least
once a month, and that a provider
directory will be considered easily
accessible when the general public is
able to view all of the current providers
for a plan on the plan’s public Web site
through a clearly identifiable link or tab
without having to create or access an
account or enter a policy number. The
general public should be able to easily
discern which providers participate in
which plan(s) and provider network(s) if
the health plan issuer maintains
multiple provider networks, and the
plan(s) and provider network(s)
associated with each provider,
including the tier in which the provider
is included, should be clearly identified
on the Web site and in the provider
directory. We solicited comments on
this proposal, including comments
regarding how often updating should
occur. We are finalizing this policy as
proposed, retaining the monthly
timeline.
We also finalize the requirement for
issuers to make this information
publicly available on their Web sites in
a machine-readable file and format
specified by HHS. The purpose of
establishing machine-readable files with
this data would be to provide the
opportunity for third parties to create
resources that aggregate information on
different plans. We believe this will
increase transparency by allowing
software developers to access this
information and create innovative and
informative tools to help enrollees better
understand the availability of providers
in a specific plan. To facilitate this
change, we proposed adding
§ 156.230(c) to require QHP issuers to
make available and submit to HHS
information about providers in its
provider networks.
We specifically solicited comments
on this requirement and other options,
including the technical requirements for
developing a machine-readable file and
format for a provider directory, as well
as other technical considerations, such
as processes and considerations that
should be taken into account. We have
established these requirements to
enhance transparency of QHP provider
directories and to help consumers make
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more informed decisions about their
health care coverage. We solicited
comments on these proposed
requirements, including how frequently
provider data should be updated, and
whether additional types of information
should be required to be included in the
provider directory. We understand the
complexity of this undertaking, and
recognize that this will require issuer
resources. Therefore, HHS intends to
provide additional details about the data
submission requirements.
We also requested comments on the
feasibility and merits of incorporating
information on physical accessibility for
individuals with disabilities, including
accessibility information regarding
facilities and equipment, or other
information that would be important to
enrollees and potential enrollees, as a
part of network adequacy standards in
the future.
Comment: A number of commenters
supported stronger network adequacy
standards. Commenters were divided
between supporting our proposal to wait
for NAIC recommendations before
taking further action, and urging us to
act immediately and implement stronger
network adequacy standards.
Commenters suggested a wide range of
network adequacy criteria for HHS to
adopt, including provider to patient
ratios; time and distance metrics;
geographic-based metrics; minimum
numbers of specialty providers; specific
criteria for areas of concern including
pediatric, dialysis centers, and
autoimmune and rare disorders;
monitoring of plans; and secret
shopping. One commenter requested
increased transparency regarding
evaluation of network adequacy. This
commenter suggested that HHS should
modify the provider data template for
QHP issuers in the FFEs to allow greater
flexibility, and should clarify how
reasonable access will be determined in
situations where a sufficient number of
providers are not willing to contract
with the issuer.
Response: We are finalizing the rule
without making any additional changes
to the network adequacy general
requirements at this point as the NAIC
finishes its work on the network
adequacy model act. We expect that the
final product of the NAIC work will
reflect the viewpoints of the various
stakeholders. This reflects our general
position that network adequacy is an
area subject to significant State
regulation and oversight. We agree with
commenters that QHP networks should
provide access to a range of health care
providers, and we continue to require
all QHP issuers to provide reasonable
access to all covered services in
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accordance with § 156.230(a) of this
rule. We are also planning changes to
the template used to collect network
data to improve the collection process
for QHP issuers in the FFE during the
QHP certification process.
Comment: A number of commenters
support the clarification that only innetwork providers will be considered
when determining if a plan’s medical
network meets reasonable access
requirements, and urged CMS to clarify
that issuers must be able to provide
reasonable access with the providers
available in their lowest cost tier. Other
commenters also urged CMS to require
issuers to have an internal exceptions or
appeals process to obtain out-of-network
services at in-network cost when
adequate access is not available, while
others stressed that out-of-network
referrals should be rare. Similarly,
several commenters voiced concerns
about consumers being charged out-ofnetwork charges while being treated in
an in-network hospital because not all
of the treating providers were innetwork. In such circumstances,
commenters urged that the consumer
only be charged in-network costs, and
that in-network hospitals should be
required to have sufficient in-network
providers to furnish all covered
services. Some commenters raised
concerns about the standard use of outof-network providers for dental
networks and the lack of availability of
dentists who will contract with issuers.
Response: In light of the general
support of the proposed change, we
intend to finalize the regulation as
proposed. We understand the concern
about confusion created when a hospital
is listed as in-network and has providers
that are out-of-network for particular inhouse services. We remind issuers that
all covered services must be reasonably
accessible, and in accordance with this
regulatory change, must be available innetwork. We urge issuers to evaluate
their in-network hospitals to make
certain that all required services are
accessible without unreasonable delay
from in-network providers. We
appreciate the concerns voiced
regarding coverage of dental providers
and are contemplating whether further
guidance is warranted.
Comment: A number of commenters
strongly supported the transition policy
allowing new enrollees to have access to
providers from whom they received
services before they joined their new
plan. Some commenters urged HHS to
require the transition policies, and some
advocated for longer transition periods,
such as 60 or 90 days or 6 months with
reassessment, to determine if continued
care is necessary at the end of the set
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10831
time period. Some commenters
suggested expanding transitional
policies to include current enrollees
whose in-network providers become
out-of-network providers mid-year due
to network changes. Conversely, some
commenters expressed that clear and
accurate provider directories make
transitional policies unnecessary, and
some believe the policy would
negatively impact care management and
that many States already have
requirements for transitional care.
Similarly, some suggested that
transitional policies should have
specific limits, including specific
situations and types of care, to reduce
the impact on premiums. Many
commenters expressed concern about
what payment rates would be if there is
no contract with the out-of-network
provider and suggested HHS should
require plans to reimburse providers the
reasonable and customary value for outof-network services and prohibit
balance billing of consumers for
anything above what they would have
been charged for the services innetwork. Commenters also stated that
this is an area that many States already
regulate closely.
Response: There are strong opinions
supporting and opposing a requirement
for a transitional policy, as well as
varying opinions about the amount of
time transitional policies should cover.
We continue to encourage issuers to
adopt appropriate transitional polices
and to pay close attention to issues
around continuity of care for both new
enrollees and enrollees whose current
providers become unavailable. We
expect to continue to analyze this area
and may propose standards concerning
this topic in the future.
Comment: Commenters generally
supported the proposal to strengthen
provider directory requirements and
agreed that provider data should be
updated at least monthly, especially for
on-line directories. Some commenters
urged more frequent updates and urged
CMS to move towards requiring ‘‘real
time’’ updates in the future. Concerns
were raised about penalizing issuers if
there were errors in the directories
because providers may fail to notify the
issuer of changes, and the
administrative burden and costs
associated with strengthened provider
directory requirements. Conversely,
other commenters urged that issuers be
required to honor what is listed in the
provider directory even if it erroneous,
and that plans be required to monitor
data for accuracy.
Response: We are finalizing the
regulation as proposed. We are requiring
that directories be updated at least
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monthly and encourage more frequent
updating when possible. We also
understand and appreciate the concern
about issuers being held accountable for
errors in directories and encourage
issuers to work with their providers to
ensure that their directories are as
current and accurate as possible. We
understand that there may be some
administrative burden associated with
updating directories, but believe it is
necessary for consumers to be fully
informed about network access.
Similarly, we appreciate commenters
who stated that issuers should honor
what is listed in their directories even
if there are errors, and while we are not
requiring that at this time, we strongly
encourage that practice.
Comment: Some commenters
supported the inclusion of the proposed
data elements in provider directories,
including indicating if the provider is
accepting new patients. Conversely,
some commenters were concerned about
being required to list if the provider is
accepting new patients, citing the
administrative burden because that
status can frequently change. There was
also concern about consumer confusion
that could be caused by the requirement
to indicate whether specialists are
‘‘accepting new patients.’’ Some
commenters noted that in the case of
specialists for whom a referral is
needed, indicating the specialist is
‘‘accepting new patients’’ could be
misleading to consumers, who may
understand that to mean that they can
request an appointment directly with
the specialist. To alleviate confusion
about referrals, it was suggested that
another column or notation be included
that indicates if a referral is needed, and
it was also suggested that issuers retain
flexibility in what is included in their
directories.
Response: We are finalizing all of
these requirements as proposed,
including the requirement that issuers
must indicate if providers are accepting
new patients. All of the required data,
including information on whether
providers are accepting new patients,
are critical for consumers to make
educated decisions about their health
coverage.
Comment: Some commenters
suggested that additional data should be
required as part of provider directories
to make it easier for consumers to
compare plans. Some of the specific
data elements suggested included: hours
physician traditionally practices at
referenced practices, board
certification(s), sub-specialties
practiced, language spoken by each
provider, interpreter services or
communication and language assistance
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services that are available at the
provider’s facilities and information
about how enrollees can obtain such
services, publication date of directory,
and a field for providing advance notice
that the provider will be leaving the
network. Commenters also urged
requiring plans to provide a dedicated
email address to be used to notify the
plan of inaccuracies in the plan
directory, and holding the issuer
accountable for making changes when
notified. Similarly, it was suggested that
plans should monitor provider
directories to determine if they are
accurate.
Response: We are finalizing our
proposal requiring the issuer to publish
an up-to-date, accurate, and complete
provider directory, including
information on which providers are
accepting new patients, the provider’s
location, contact information, specialty,
medical group, and any institutional
affiliations, in a manner that is easily
accessible to plan enrollees, prospective
enrollees, the State, the Exchange, HHS,
and OPM. We believe the new
requirements will greatly strengthen
provider directory requirements and
provide consumers with valuable
information to help them determine
which QHP best meets their needs. We
encourage issuers to continuously
evaluate the data they include in their
directories and aim to provide all of the
information that will help consumers
understand their network. We
appreciate the suggestion that issuers
have a dedicated email address for
enrollees and providers to submit
changes or inaccuracies, and while we
are not requiring it at this time, we
encourage the practice.
Comment: There was some concern
raised that including items such as
location, contact information, and
specialty type on a real time basis could
conflict with what is in National Plan
and Provider Enumeration System
(NPPES), which providers may fail to
update, and would result in confusion.
To alleviate possible NPPES confusion,
it was suggested that issuers only
include information from the previous
month’s information in the NPPES
database.
Response: We appreciate this concern
but are finalizing the regulation as
proposed. The requirement for issuers to
publish an up-to-date, accurate, and
complete provider directory takes into
account the issuers’ obligation to
develop a system to ensure that the
information about providers that they
publish in the provider directory is
accurate and up-to-date, including
ensuring it is consistent with what is
listed in the NPPES database.
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Comment: Some commenters
supported the requirement that issuers
provide access to provider directories
through the issuer’s public Web site
without the need to create an account or
enter policy information, and HHS was
asked to clarify the term ‘‘user-friendly’’
when used to describe the location of
provider directories on issuer Web sites.
Response: We are finalizing this
policy as proposed. In response to
requests for clarification about the term
‘‘user friendly,’’ we suggest issuers
adopt common industry standards for
publishing the provider directory in an
area of their Web site where it will be
easy for enrollees to find and that
enrollees will be able to access without
the need for an account or policy
number as stated in this rule at
§ 156.230(b)(2)(i). To reiterate,
consumers should not have to create a
user ID, log on, enter a policy number,
or be enrolled in a plan to view the
network. The URL that issuers provide
to HHS for publication on
HealthCare.gov for QHPs in an FFE
should link directly to the applicable
provider directory. If it does not, it
should link to a list of the issuer’s
provider directories, and it should be
readily discernible to a consumer which
directory applies to which QHP.
Comment: Some commenters
supported the proposal for issuers to
make available provider information in
a machine-readable file and format
specified by HHS, citing that this would
improve transparency and support
informed consumer decision-making
without burdening issuers. Conversely,
some commenters opposed the proposal
and voiced concerns about data
accuracy, including how HHS would
hold third parties accountable for data
errors, and cost. Some commenters
stated that if data are not frequently
updated, consumers could receive
inaccurate information, upon which
they might rely to select a QHP, while
other commenters were concerned that
frequent updating would be
burdensome to issuers. Some
commenters also noted that
implementing any standard could be
time-consuming and requested the
opportunity to provide additional
feedback. A number of commenters
provided suggestions regarding the
format, structure, file type, and content
of the data they believe should be
collected. Some commenters also
suggested that any machine-readable
databases should be accessible through
an API.
Response: We believe a machinereadable file or a format specified by
HHS will increase transparency by
allowing software developers to access
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this information and create innovative
and informative tools to help enrollees
better understand the plan’s provider
network. Based on the comments
received asking us to make provider
information more transparent and
accessible to consumers, HHS is
finalizing this rule by adding
§ 156.230(c), to require QHP issuers in
the FFEs to make available the
information on the provider list on its
Web site in a HHS specified format and
also submit this information to HHS, in
a format and at times determined by
HHS. We agree with commenters that
creating a vehicle for consumers to
easily determine which providers are in
which networks will help consumers
select QHPs that best meet their needs.
We recognize that this will require
issuer resources, and will provide
further details about the specific data
elements, frequency of updates, file
types, and other crucial information in
future guidance.
Comment: Commenters supported
having issuers list detailed information
in provider directories about physical
accessibility for individuals with
disabilities to help consumers choose
plans and providers. Some sought
information about exam table access,
transfer assistance, and wheelchair
access. One commenter urged caution in
this area out of concern that including
information on accessibility features for
certain providers could be read to imply
that other providers need not offer such
features, even though they are legally
obligated to do so pursuant to the
Americans with Disabilities Act and
section 504 of the Rehabilitation Act.
Response: We appreciate the
complexity of this topic, and do not
intend to issue additional regulation on
this topic at this time. We urge all
issuers and providers to continue to
ensure that they are providing full and
equal access to all covered services to
all enrollees, including those people
with disabilities, and we remind them
of the obligation to adhere to the
requirements of the Americans with
Disabilities Act and section 504 of the
Rehabilitation Act. Issuers are
encouraged to consult relevant
Department of Justice guidance on
accessibility of medical providers and
effective communications at
www.ada.gov. We will continue to
monitor this issue.
d. Essential Community Providers
(§ 156.235)
At § 156.235, we proposed to
strengthen the essential community
provider (ECP) standard in accordance
with section 1311(c)(1)(C) of the
Affordable Care Act, which requires that
a QHP’s network include ECPs, where
available, that serve predominantly lowincome and medically-underserved
populations. As established in section
1311(c)(1)(C) of the Affordable Care Act,
ECPs include entities defined in section
340B(a)(4) of the PHS Act and providers
described in section 1927(c)(1)(D)(i)(IV)
of the Act as set forth by section 211 of
Pub. L. 111–8. Additionally, we
proposed that ECPs may include not-forprofit or State-owned providers that
would be entities described in section
340B of the PHS Act but do not receive
Federal funding under the relevant
section of law, as these providers satisfy
the same 340B requirements and
therefore meet the definition of ECPs by
virtue of the following description in
section 1311(c)(1)(C) of the Affordable
Care Act—health care providers defined
in section 340B(a)(4) of the PHS Act and
providers in section 1927(c)(1)(D)(i)(IV)
of the Act. For the same reasons
described above, we proposed that such
providers also include not-for-profit or
governmental family planning service
sites that do not receive a grant under
Title X of the PHS Act. Other providers
that provide health care to populations
residing in low-income zip codes or
Health Professional Shortage Areas
could also be considered ECPs. We
proposed that the above proposals apply
to benefit years 2016 and thereafter.
To assist issuers in ensuring that, in
future QHP certification years, they are
providing sufficient consumer access to
ECPs to satisfy the requirement in
section 1311(c)(1)(C) of the Affordable
Care Act, we also proposed in new
10833
paragraph (a)(2)(i) of this section that,
for QHP certification cycles beginning
with the 2016 benefit year, a health plan
seeking certification to be offered
through an FFE must satisfy the general
ECP standard described in paragraph
(a)(1) of this section by demonstrating in
its applications for QHP certification
that a sufficient percentage, as
determined annually by HHS and
specified in HHS guidance, of available
ECPs in the plan’s service area have a
contractual agreement to participate in
the plan’s provider network. For
purposes of this general ECP standard,
we proposed that multiple providers at
a single location would count as a single
ECP toward the issuer’s satisfaction of
the proposed ECP participation
standard. Any update to the general ECP
inclusion standards would be based on
HHS’s post-certification assessments of
the adequacy of ECP participation, and
geographic distribution of such
providers, and evidence of contractual
negotiation efforts provided by issuers
in the ECP supplemental response
forms.
In addition, we proposed in paragraph
(a)(2)(ii) of this section that, to satisfy
the general ECP standard, the issuer of
the plan seeking certification as a QHP
in an FFE would be required to offer
contracts for participation in the plan
for which a certification application is
being submitted to the following: (1) All
available Indian health providers in the
service area, applying the special terms
and conditions necessitated by Federal
law and regulations as referenced in the
recommended model QHP addendum
for Indian health providers developed
by HHS; and (2) at least one ECP in each
ECP category (see Table 11) in each
county in the service area, where an
ECP in that category is available and
provides medical or dental services that
are covered by the issuer plan type. We
expect that issuers will offer contracts in
good faith. A good faith contract offer
should offer the same rates and contract
provisions as other contracts accepted
by or offered to similarly situated
providers that are not ECPs.
TABLE 11—ECP CATEGORIES AND TYPES IN FFES
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Major ECP category
ECP provider types
Federally Qualified Health Centers
(FQHC).
Ryan White Providers ..............................
Family Planning Providers .......................
Indian Health Care Providers ..................
Hospitals ..................................................
FQHC and FQHC ‘‘Look-Alike’’ Clinics,64 Outpatient health programs/facilities operated by tribes, tribal organizations, programs operated by Urban Indian Organizations.
Ryan White HIV/AIDS Providers.
Title X Family Planning Clinics and Title X ‘‘Look-Alike’’ Family Planning Clinics.65
Tribes, Tribal Organization and Urban Indian Organization Providers, Indian Health Service Facilities.
Disproportionate Share Hospital (DSH) and DSH-eligible Hospitals, Children’s Hospitals, Rural Referral Centers, Sole Community Hospitals, Free-standing Cancer Centers, Critical Access Hospitals.
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TABLE 11—ECP CATEGORIES AND TYPES IN FFES—Continued
Major ECP category
ECP provider types
Other ECP Providers ...............................
STD Clinics, TB Clinics, Rural Health Clinics, Black Lung Clinics, Community Mental Health Centers,
Hemophilia Treatment Centers, and other entities that serve predominantly low-income, medically
underserved individuals.
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We proposed to add paragraph (a)(3)
to this section to specify that if an
issuer’s QHP certification application to
the FFE does not satisfy the ECP
standard described in paragraph (a)(2) of
this section, the issuer must include as
part of its application a narrative
justification describing how the
provider network(s) of the plans for
which certification applications have
been submitted provides an adequate
level of service for individuals residing
in low-income zip codes or Health
Professional Shortage Areas within the
plan’s service area and how the plan’s
provider network will be strengthened
toward satisfaction of the ECP standard
prior to the start of the benefit year. The
narrative justification should include
the following: The number of contracts
offered to ECPs for the benefit year; the
number of additional contracts the
issuer expects to offer for the benefit
year and the timeframe of planned
negotiations; the names of the ECP
hospitals FQHCs, Ryan White providers,
family planning providers, Indian
health providers, and other ECPs to
which the issuer has offered contracts,
but with whom an agreement has not
yet been reached; and contingency plans
for how the issuer’s provider network(s),
as currently designed, will provide
adequate care to enrollees who might
otherwise be cared for by relevant ECPs.
Through HHS’s post-certification
assessments, HHS may examine an
issuer’s progress toward satisfying the
applicable ECP standard to ensure that
the issuer continues to qualify for
offering its plan on the Exchange, while
OPM would retain this responsibility for
issuers of multi-State plans, acting in
coordination with HHS as may be
appropriate.
We proposed to redesignate current
paragraph (a)(3) as paragraph (a)(4), in
which we clarify that nothing in the
requirements under paragraphs (a)(1)
through (a)(3) of this section requires
any QHP to provide coverage for any
specific medical procedure. We also
64 For more information on FQHC ‘‘Look-Alike’’
Clinics, see https://bphc.hrsa.gov/about/lookalike/
index.html and section 1861(a)(4) and section
1905(l)(2)(B) of the Act.
65 For more information on Title X ‘‘Look-Alike’’
Clinics, see section 1927(c)(1)(D)(i)(IV) of the Social
Security Act.
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proposed to redesignate current
paragraph (a)(2) as paragraph (a)(5).
We proposed in paragraph (b)(1) that
the alternate ECP standard described in
§ 156.235(a)(5) will apply to issuers
with plans that provide a majority of
covered professional services through
physicians employed by the issuer or
through a single contracted medical
group that offer QHPs in any Exchange.
Additionally, for plans seeking QHP
certification in FFEs, we proposed that
a QHP issuer described in paragraph
(a)(5) of this section be determined to
have a sufficient number and geographic
distribution of employed or contracted
providers by demonstrating in its QHP
application that the number of its
providers in the following locations
meets a percentage specified in HHS
guidance of the number of available
ECPs in the service area: (i) Located
within a Health Professional Shortage
Areas; or (ii) located within five-digit
zip codes in which 30 percent or more
of the population falls below 200
percent of the Federal Poverty Line. For
purposes of this alternate ECP standard,
multiple providers at a single location
will count as one ECP toward the
available ECPs in the plan’s service area
and toward the issuer’s satisfaction of
the proposed ECP participation standard
to ensure a sufficient number and
geographic distribution of ECPs as
required under § 156.235(a). Any
modification to the alternate ECP
inclusion standard in future benefit
years would be based on HHS’s postcertification assessments of the
adequacy of ECP participation and
geographic distribution of such
providers to ensure reasonable and
timely access to such ECPs for lowincome, medically underserved
individuals.
Furthermore, we proposed in new
paragraph (b)(3) of this section that if a
QHP certification application of a plan
for the FFE does not satisfy the alternate
ECP standard described in paragraph
(b)(2) of this section, the issuer must
include as part of its QHP application a
narrative justification describing how
the issuer’s provider network(s)
provides an adequate level of service for
low-income and medically underserved
enrollees. When assessing whether an
issuer has provided a satisfactory
narrative justification under either the
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general or alternate ECP standard, as
applicable, HHS will take into account
factors and circumstances identified in
the ECP Supplemental Response
Form,66 along with an explanation of
how the issuer will provide access for
individuals residing in low-income zip
codes or Health Professional Shortage
Areas within the plan’s service area and
how the plan’s provider network will be
strengthened toward satisfaction of the
ECP standard prior to the start of the
benefit year. Additionally, justifications
that include verification of contracts
offered in good faith, that include terms
that a willing, similarly-situated, nonECP provider would accept or has
accepted, would be considered toward
satisfaction of the ECP standard.
Finally, we proposed in paragraph (c)
of this section to remove the language
defining ECPs as meeting the criteria on
the initial date of the regulation’s
publication. We proposed this change in
recognition of the fact that the universe
of ECPs, as well as the databases we use
to delineate this universe, may vary over
time for many reasons, including
demographic and provider
characteristics. We requested comment
on these proposed changes. We are now
finalizing these changes with
modifications. The final rule specifies in
regulation text that entities that could
receive funding under Title X and 340B
are ECPs, clarifies the application to
SADPs, clarifies standards related to
covered services, and clarifies the
standard for integrated delivery systems.
Comment: A number of commenters
supported the clarification that ECPs
include not-for-profit or State-owned
providers that would be entities
described in section 340B of the PHS
Act but do not receive Federal funding
under the relevant section of law,
including not-for-profit or governmental
family planning service sites that do not
receive a grant under Title X of the PHS
Act. These commenters urged that HHS
include this clarification in the
regulation text. Some commenters
recommended that we provide clear
language to States and issuers indicating
that Indian health providers are among
66 More information on the supplemental
response can be found on the CCIIO Web site at:
https://www.cms.gov/cciio/programs-and-initiatives/
health-insurance-marketplaces/qhp.html.
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the ECP groups to which issuers must
extend contract offers in good faith to
satisfy § 156.235(a) of the ECP standard.
Response: Based on the comments
received, we are codifying the inclusion
of the following entities in the
definition of an ECP in § 156.235(c):
Not-for-profit or State-owned providers
that would be entities described in
section 340B of the PHS Act but do not
receive Federal funding under the
relevant section of law; not-for-profit or
governmental family planning service
sites that do not receive a grant under
Title X of the PHS Act; and Indian
health care providers. Effective January
1, 2016, we are making this
modification to emphasize that these
providers are among the ECP groups to
which issuers must extend contract
offers in good faith to satisfy
§ 156.235(a).
Comment: Several commenters
recommended that HHS clarify that
providers located in low-income zip
codes or HPSAs must also serve
predominately low-income, medically
underserved individuals to satisfy the
definition of an ECP.
Response: We agree with commenters.
In alignment with the regulatory
definition of an ECP at § 156.235(c), we
emphasize that a provider must actually
serve predominantly low-income,
medically underserved individuals to be
considered an ECP, and not simply be
located in low-income zip codes or
HPSAs.
Comment: We received a few
comments expressing concern that
removal of the language defining ECPs
as meeting the criteria on the initial date
of the regulation’s publication risks the
stability in the number and scope of
ECPs and carries the risk that States,
Exchanges, and other entities will
attempt to limit the providers identified
as an ECP.
Response: While we understand the
commenters’ desire for providers to
retain a designated ECP status as of the
initial date of the regulation’s
publication, such a policy could conflict
with the statutory definition of an ECP
if interpreted to extend past the
reexamination period for determining
continued eligibility of such providers
on the list. To avoid any such
misinterpretation, we proposed
removing this language from
§ 156.235(c) to clarify that such
providers must continue to qualify each
benefit year as providers that serve
predominantly low-income, medically
underserved individuals to retain their
ECP status on the list each year.
Therefore, we are finalizing this
provision as proposed, effective January
1, 2016.
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Comment: We received a number of
comments in support of our proposal
that a health plan seeking QHP
certification to be offered through an
FFE must satisfy the general ECP
standard by demonstrating in its
applications for QHP certification that a
sufficient percentage, as determined
annually by HHS and specified in HHS
guidance, of available ECPs in the plan’s
service area have a contractual
agreement to participate in the plan’s
provider network. Some of these
commenters urged that we increase the
percentage each year beyond the
existing 30 percent requirement. Some
commenters urged that we set a
minimum percentage requirement in the
regulation text and encourage plans to
include a greater number of ECPs in
their networks as a part of ensuring
access and continuity of care. One
commenter pointed out that some States
have implemented much higher ECP
inclusion percentage standards.
In contrast, one commenter stated that
the QHPs lack complete information to
adequately identify the universe of
ECPs. Furthermore, the commenter
stated that the ECP lists provided to
issuers in the past have included
providers that either do not provide
medical services or include inaccurate
provider information. The commenter
recommended that HHS improve the
utility of ECP information by including
National Provider Identifiers (NPIs) in
their database of ECPs, and by
publishing any revised ECP lists prior to
the anticipated QHP application
submission deadline and with any
modifications made apparent to allow
issuers to easily reconcile the HHS ECP
list with their internal records. Some
commenters recommended that SADP
issuers be exempt from the ECP
inclusion standard given that certain
elements of the ECP requirements are
less suited for dental issuers than
medical issuers, and suggested that CMS
instead require SADPs to provide
evidence of offering meaningful access
to lower income enrollees in their
service areas.
Response: Based on our QHP
certification reviews for the 2015 benefit
year and the ongoing strengthening of
our ECP list, we believe that specifying
the ECP inclusion percentage in HHS
guidance for the 2016 benefit year
provides desirable flexibility at this time
for HHS to further examine the
adequacy of this inclusion standard for
ensuring access to care for low-income,
medically underserved individuals for
future years. Furthermore, we agree
with the recommendation that the
accuracy of the ECP list be improved
prior to increasing the ECP inclusion
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10835
percentage standard. To this effect, we
have recently published a draft ECP list
for the 2016 benefit year 67 and solicited
public comments in an effort to make
corrections to the list and publish the
list prior to the anticipated QHP
application submission deadline. In
response to comments, we also intend to
make apparent the modifications to the
list to allow issuers to easily reconcile
the HHS ECP list with their internal
records. We will further examine the
feasibility of the commenter’s
recommendation to add NPIs to the ECP
list in future years in coordination with
our Federal partners from whom we
collect the provider data.
Regarding the commenters’
recommendation to exempt SADPs from
the ECP inclusion standard, we
proposed to modify the ECP
requirement at § 156.235(a)(2)(ii)(B) to
clarify that only the providers in the
ECP categories that provide dental
services would be considered available
for an SADP’s offering of a contract. In
other words, we have added ‘‘and
provides medical or dental services that
are covered by the issuer plan type’’ to
the end of that paragraph to ensure the
applicability of this provision to SADPs.
Given that this was the only ECP
provision unsuited for SADPs, we
believe we have addressed the need for
its suitability by making this proposed
modification, and are finalizing this
language as proposed, effective January
1, 2016.
Comment: We received comments in
support of our proposal that an issuer’s
satisfaction of the ECP inclusion
percentage of available ECPs in the
plan’s service area be calculated based
on multiple providers at a single
location counting as a single ECP
toward both the available ECPs in the
plan’s service area and the issuer’s
satisfaction of the ECP participation
standard, stating that the proposal
would help ensure access to a broad
range of provider types and geographic
distribution of ECPs for low-income,
medically underserved individuals.
However, several commenters suggested
that counting multiple providers at a
single location as only a single ECP may
overlook availability of different
services, and recommended that HHS
count multiple providers at a single
location as multiple ECPs toward
satisfaction of the ECP inclusion
percentage standard. One commenter
contended that such a policy would
undermine the ability of integrated
67 https://www.cms.gov/CCIIO/Programs-andInitiatives/Health-Insurance-Marketplaces/
Downloads/Description-and-Purpose-of-Draft-HHSList-of-ECPs-for-PY-2016_12-24-14.pdf.
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delivery systems to provide high levels
of consistent, quality care.
Response: We believe it is important
to clarify the underlying rationale for
this proposed provision. At
§ 156.235(a)(1) and (b)(1), we have
established that a QHP issuer that
satisfies the ECP inclusion standard
must include a sufficient number and
geographic distribution of ECPs in its
provider network, or through its
employed providers and hospital
facilities if the issuer qualifies for the
alternate ECP standard described at
§ 156.235(b). Therefore, we believe that
our proposed provision is critical for
ensuring that issuers satisfy both the
sufficient number and geographic
distribution requirements by not
concentrating the majority of its
providers at only one or a few locations.
Furthermore, such an accounting of
multiple providers at a single location
aligns with the crediting of an issuer’s
inclusion of provider facilities on the
available HHS ECP list, which includes
practices and clinics, which generally
consist of multiple providers at a single
location. While such a policy may
reduce the number of credited ECPs for
an issuer, to the extent that multiple
provider types practice at a given
location and may map to different ECP
categories, these different provider types
could contribute to satisfying the
requirement that an issuer offer a
contract to at least one ECP in each
category in each county in the plan’s
service area for multiple ECP categories.
In response to issuers that qualify for
the alternate ECP standard, as defined at
§ 156.235(a)(5), and commenters’
concern that such a policy might be
disruptive to an integrated delivery
system, the narrative justification
provision at § 156.235(b)(3) ensures that
such issuers comply with the ECP
inclusion standard by describing how
the plan’s provider networks provide an
adequate level of service for low-income
enrollees or individuals residing in
HPSAs within the plan’s service area.
After careful consideration of the public
comments applicable to issuers that
qualify for both the general and
alternate ECP standards, we are
finalizing our proposal that an issuer’s
satisfaction of the ECP inclusion
percentage of available ECPs in the
plan’s service area be calculated based
on multiple providers at a single
location counting as a single ECP
toward both the available ECPs in the
plan’s service area and the issuer’s
satisfaction of the ECP participation
standard, effective January 1, 2016.
Comment: One commenter
recommended that HHS require that
issuers that qualify for the alternate ECP
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standard, as defined at § 156.235(a)(5),
that are unable to provide all of the
categories of services provided by
entities in each of the ECP categories in
each county in the service area as
outlined in the general ECP standard, be
required to contract with outside
providers or facilities that can provide
those services to low-income, medically
underserved individuals. In contrast,
another commenter expressed concern
that HHS’s methodology for assessing
the adequacy of ECP inclusion for
issuers that provide the majority of their
covered professional services through
physicians employed by the issuer or
through a single contracted medical
group does not fit well for plans with
well-established integrated care delivery
systems. The commenter expressed
concern that requirements to contract
with outside providers that use different
clinical protocols and thus have
incomplete patient information and lack
linkages for patients with chronic
conditions, would fundamentally
change how integrated delivery systems
provide care to their patients and would
undermine the ability of integrated care
teams to provide high levels of
consistent, quality care. The commenter
contended that counting multiple
providers at a single location as only
one provider toward satisfaction of the
alternate ECP standard is problematic
for an entity that serves its members
with large facilities and has systems in
place (for example, telemedicine, etc.)
that can serve members in a broad
geographic area. This commenter urged
CMS to better assess effectiveness of
networks at delivering quality care, and
rapid access.
Response: While we recognize the
challenges for alternate ECP standard
issuers that offer an integrated health
care delivery system, we believe that
consumers should experience equal
access to covered benefits, regardless of
whether they are enrolled in plans
offered by issuers that qualify for the
general or the alternate ECP standard.
To ensure such equal access, issuers
that qualify for the alternate ECP
standard must provide access to the
same categories of services provided by
entities in each of the ECP categories in
each county in the plan’s service area as
issuers that qualify for the general ECP
standard. Therefore, effective January 1,
2016, we have modified our proposed
provision at § 156.235(b)(2)(ii) to require
issuers to provide within the issuer’s
integrated delivery system all of the
categories of services provided by
entities in each of the ECP categories in
each county in the plan’s service area as
outlined in the general standard; or
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otherwise offer a contract to at least one
ECP outside of the issuer’s integrated
delivery system per ECP category in
each county in the plan’s service area
that can provide those services to lowincome, medically underserved
individuals.
Comment: We received several
comments recommending that CMS
retain the requirement that QHP issuers
offer contracts to all Indian health care
providers in the QHP’s service area.
These commenters also urged that CMS
require QHP issuers to use the
recommended model QHP addendum,
rather than our proposal to require that
contract offers apply the special terms
and conditions necessitated by Federal
law and regulations as referenced in the
recommended model QHP addendum.
These commenters expressed concern
that not requiring use of the actual
model QHP addendum could result in
loss of the following provisions in the
executed QHP-Indian health care
provider (ICHP) contracts: (1) A listing
of each Indian-specific provision in
Federal law that is applicable to the
provider contract; and (2) a clear
statement of the meaning of each
applicable Indian-specific provision.
Response: We believe the requirement
that issuers apply the special terms and
conditions necessitated by Federal law
and regulations as referenced in the
recommended model QHP addendum,
along with encouraging issuer use of the
recommended model QHP addendum in
guidance, strikes the desirable balance
between allowing the minimal
flexibility that issuers have requested
while ensuring inclusion of the
fundamental provisions of the model
QHP addendum within the issuer
contractual offers to the Indian health
providers. Therefore, while we strongly
encourage issuers to use the model QHP
Addendum, we are not requiring that
they do so. We are finalizing, effective
January 1, 2016, our proposal requiring
that health plans seeking certification as
a QHP in an FFE offer contracts for
participation in the plan for which a
certification application is being
submitted to all available Indian health
providers in the service area, applying
the special terms and conditions
necessitated by Federal law and
regulations as referenced in the
recommended model QHP addendum
for Indian health providers developed
by HHS.
Comment: One commenter
recommended that if issuers met the
ECP standard in the previous year,
issuers not be required every year to
offer contracts to all Indian health care
providers in the service area and to at
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least one ECP in each ECP category in
each county in the service area.
Response: We share the commenter’s
interest in minimizing contracting
burden on both issuers and providers;
however, given the dynamic nature of
the health insurance industry, we
believe that a contract denial the
previous year should not carry over to
future years. Therefore, we are
finalizing, effective January 1, 2016, our
proposal that health plans seeking
certification as a QHP in an FFE offer
contracts for participation in the plan
for which a certification application is
being submitted to all available Indian
health providers in the service area.
Satisfaction of this requirement in
previous years does not exempt a QHP
from satisfying the requirement for
future QHP application years.
Comment: Several commenters urged
CMS to encourage application of the
ECP inclusion requirement, including
the requirement that issuers offer
contracts to all Indian health providers,
to issuers operating in State Exchanges,
as well to issuers operating in the FFEs.
Response: We urge State Exchanges to
employ the same standard when
examining adequacy of ECPs as outlined
in § 156.235, including the requirement
that issuers offer contracts to all Indian
health providers in the plan’s service
area.
Comment: A number of commenters
urged that we require issuers to actually
contract, as opposed to offer a contract,
with at least one ECP in each ECP
category in each county in the service
area, where an ECP in that category is
available and provides medical or
dental services that are covered by the
issuer plan type. Several commenters
urged that we require issuers to offer
contracts to all available ECPs in the
plan’s service area. A few commenters
suggested that we require that issuers
offer contracts to at least two ECPs in
each ECP category in each county in the
service area, where an ECP in that
category is available and provides
medical or dental services that are
covered by the issuer plan type.
Several commenters supported the
inclusion of Rural Health Clinics (RHCs)
and Community Mental Health Centers
in the ECP category listing in Table 11
of the preamble. Commenters expressed
concern, though, that the requirement
that QHPs offer contracts to at least one
ECP in each ECP category in each
county in the plan’s service area is a
county-based requirement, and
suggested that the requirement be based
on time and distance within the county.
A few commenters urged that we add
freestanding birth centers located in
medically underserved and rural areas
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as a new ECP category. Several
commenters recommended that we list
Hemophilia Treatment Centers as a
separate ECP category, rather than
grouped in the ‘‘Other ECP Providers’’
category. Another commenter suggested
that we add migrant and community
health centers as an ECP category. One
commenter urged that HHS require
issuers to offer a contract to any willing
Ryan White provider. One commenter
suggested adding dental providers,
substance abuse and mental health
providers, children’s hospitals, and
essential pediatric providers to the list
of ECP categories.
Several commenters suggested that
HHS disaggregate the providers listed in
the ‘‘Hospitals’’ ECP category and the
‘‘Other ECP Providers’’ category. These
commenters expressed concern that by
grouping together providers such as
Hemophilia Treatment Centers,
Community Mental Health Centers, and
Rural Health Clinics into one ECP
category such that issuers are only
required to offer a contract to one of
these and other types of providers in a
given county, HHS runs the risk that
low-income, underserved enrollees will
have inadequate access to key providers
that are uniquely suited to meet their
specialized health needs. Another
commenter urged that HHS identify
Nurse Managed Clinics within the
providers listed in the ECP categories in
Table 11 of the preamble, stating that
they are primary care clinics similar to
the FQHCs, but with a different funding
source.
One commenter recommended that
we remove Indian health care providers
as a major ECP category due to the
overlapping requirement that issuers
offer contracts to all Indian health
providers in the service area.
Numerous commenters urged HHS to
continually monitor for issuer
maintenance of their networks
throughout the year to ensure that
issuers do not discriminate against ECPs
through contract negotiations, and to
make sure contracts are offered in good
faith. One commenter urged that HHS
consider not just the number of ECPs
included and their geographic
distribution, but also the breadth of
services they provide and the type of
ECP providers and facilities that the
networks include.
Response: Given the ongoing
strengthening of the non-exhaustive
HHS List of ECPs (available at https://
www.cms.gov/cciio/programs-andinitiatives/health-insurancemarketplaces/qhp.html), we intend to
revisit this requirement to offer
contracts in good faith and may
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10837
consider a stronger requirement in
future benefit years.
In response to comments regarding
the groupings of provider types in the
ECP categories, we agree with the need
to disaggregate several of these
categories over time to ensure better
access to a wider variety of health care
services. More specifically, we
considered modifying the ECP category
listing to include a total of 11 ECP
categories, by creating a separate ECP
category each for children’s hospitals
and free-standing cancer centers, and
disaggregating hemophilia treatment
centers, community mental health
centers, and rural health clinics from
the ‘‘Other ECP Providers’’ category.
However, because we recognize that
issuers are in the process of finalizing
their networks for 2016, we intend to
propose this reclassification for 2017.
We are not removing the Indian health
care providers as a major ECP category,
notwithstanding the overlapping
requirement that issuers offer contracts
to all Indian health care providers in the
service area, because many providers
and issuers rely on Table 11 to identify
the universe of ECP types. In response
to public comments supporting the
inclusion of rural health clinics and
Community Mental Health Centers as
ECP provider types within the ‘‘other
ECP providers’’ category, we are
finalizing our proposal to include these
provider types in our ECP category
listing in Table 11, although we will not
disaggregate them into their own
separate ECP categories at this time.
For purposes of inclusion on the nonexhaustive HHS list of ECPs, we are
clarifying that only those Medicarecertified rural health clinics that meet
the following two requirements qualify:
(1) Based on attestation, the clinic
accepts patients regardless of ability to
pay and offers a sliding fee schedule, or
is located in a primary care Health
Professional Shortage Area (whether
geographic, population, or automatic 68);
68 As of January 1, 2014, more than 1,000 rural
health clinics (RHCs) were designated as an
automatic Health Professional Shortage Area
(HPSA), the criteria for which include accepting
patients regardless of ability to pay; offering a
sliding fee schedule based on ability to pay
(income); and accepting Medicare, Medicaid, CHIP
and private health insurance patients. To receive
the automatic HPSA designation, each RHC is
required to complete an attestation form, which is
available at: https://bhpr.hrsa.gov/shortage/hpsas/
certofeligibility.pdf. CMS intends to include RHCs
that are not listed on the current non-exhaustive
ECP list and complete the attestation form to
receive an automatic HPSA designation through the
Health Resources and Services Administration in
future non-exhaustive ECP lists. More information
about the HPSA designation requirements and
process is also available at: https://bhpr.hrsa.gov/
shortage/hpsas/ruralhealthhpsa.html.
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and (2) accepts patients regardless of
coverage source (whether Medicare,
Medicaid, CHIP, private health
insurance, or other source). HHS has
determined that all rural health clinics
included on the non-exhaustive HHS
list of ECPs satisfy these standards.
Lastly, we agree with commenters
regarding the importance of monitoring
issuer compliance with this important
provision of our ECP standard, and
intend to continue our post-certification
monitoring activities to help ensure that
consumers have access to the essential
health benefits guaranteed to them
under the Affordable Care Act.
Therefore, we are finalizing our
proposal, effective January 1, 2016, that
a health plan seeking certification as a
QHP in an FFE be required to offer
contracts for participation in the plan
for which a certification application is
being submitted to at least one ECP in
each ECP category in each county in the
service area, where an ECP in that
category is available and provides
medical or dental services that are
covered by the issuer plan type.
Comment: Some commenters
recommended that we eliminate the
option for an issuer to submit a
narrative justification in cases where a
plan’s network does not meet the
minimum ECP percentage requirement.
Many of these commenters expressed
concern that the narrative justification
might be accepted in lieu of issuer
compliance with the ECP inclusion
percentage requirement specified by
HHS. Commenters suggested that the
narrative justification is inadequate in
cases where an issuer fails to meet the
minimum ECP percentage standard and
suggested that issuers be required to
contract with all available ECPs. These
commenters also recommended that
HHS make publicly available the
narrative justifications submitted when
issuers do not meet the minimum ECP
percentage standard or other
requirements of the ECP standard.
Some commenters stated that if HHS
permits issuers to continue submitting
narrative justifications when unable to
satisfy the statutory ECP requirements,
HHS should only allow the
justifications in extremely rare
circumstances, and issuers should be
required to provide a reason for why the
plan has failed to satisfy the standard to
discourage plans from seeking an
exemption when unwarranted.
Several commenters supported the
requirement that QHPs not meeting the
ECP standard must submit a
justification describing how the plan’s
provider network is adequate for lowincome enrollees in HPSAs. One of
these commenters suggested that HHS
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clarify that this requirement extends to
SADPs, as well.
Response: Based on our QHP
certification reviews for the 2015 benefit
year and the ongoing strengthening of
our ECP list, we believe that the
narrative justification provides desirable
flexibility at this time for HHS to further
assess the adequacy of our ECP
inclusion standard, given the need to
provide issuers with the flexibility to
develop networks that deliver benefits
at an affordable price to low-income,
medically underserved individuals. At
the same time, the vast majority of
issuers are complying with the
requirements without submission of a
narrative justification, and therefore we
believe this option is being used under
relatively rare circumstances. Regarding
the suggestion to make publicly
available the narrative justifications
submitted when issuers do not meet the
ECP inclusion percentage, HHS will
consider the feasibility of providing
such increased transparency over the
next year. We expect the need for
issuers to submit such justifications to
decrease over time as issuers further
develop their networks in adherence to
HHS standards. Lastly, we clarify that
the narrative justification standard
applies to SADPs as well as QHPs that
provide medical services.
Comment: One commenter expressed
concern that the language under
§ 156.235(a)(4) (that is, ‘‘Nothing in
paragraphs (a)(1) through (a)(3) of this
section requires any QHP to provide
coverage for any specific medical
procedure provided by an ECP’’) might
be interpreted by issuers as permitting
discrimination regarding which covered
services among those provided by an
ECP it will contract with the ECP to
provide. The commenter pointed out
that section 1311(c)(1)(C) of the
Affordable Care Act regarding the
inclusion of ECPs in QHP networks
states that nothing in this subparagraph
shall be construed to require any health
plan to provide coverage for any specific
medical procedure. The commenter
expressed concern that our proposed
regulation adds the additional language
‘‘provided by an ECP’’ that could permit
issuers to contract with ECPs for only
some, but not all, of the services for
which they are licensed and otherwise
fully able to provide in accordance with
the same standards that the QHP applies
to other non-ECP providers. This
commenter urged HHS to remove the
additional language from the regulatory
text and clarify that, when contracting
with ECPs, QHPs must do so for the full
scope of services that the ECPs are
licensed to provide.
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Response: We agree with the
commenter in part, and so we are
removing the additional language
‘‘provided by an ECP’’ from
§ 156.235(a)(4), effective January 1,
2016. However, we emphasize that we
are not requiring that QHPs contract
with ECPs for the full scope of services
that the ECPs are licensed to provide;
rather, we are continuing to require only
that they offer the same contract
provisions as other contracts accepted
by or offered to similarly situated
providers.
Comment: One commenter
recommended that HHS modify the
language at § 156.235(d) to reflect the
language used in the preamble to ensure
that issuers offer ECPs rates comparable
to other providers. Specifically, the
commenter suggested that we replace
the language ‘‘. . . if such provider
refuses to accept the generally
applicable payment rates of such
issuer,’’ and replace it with language
that reads ‘‘. . . if such provider refuses
to accept the same rates and contract
provisions as included in contracts
accepted by similarly situated providers
that are not ECPs.’’ The commenter
noted that this would provide a clearer
definition of an issuer’s ‘‘generally
applicable payment rates’’ and would
prevent issuers from discriminating
against ECPs in their payment rates.
Response: We agree with the
commenter that such clarification
would help prevent issuers from
discriminating against ECPs in their
payment rates and would align with the
language used in our preamble.
Therefore, we are making this change at
§ 156.235(d), effective January 1, 2016.
Comment: Several commenters urged
that we retain the requirement that QHP
issuers offer contracts in good faith.
However, these commenters urged that
HHS clarify that a minimum payment
rate provision be required rather than
expected, and that we include such a
requirement in the regulation rather
than in only the preamble.
Response: We do not intend to
prescribe such specificity regarding
contract negotiations between parties.
Therefore, we are not requiring a
minimum payment rate provision, and
instead reiterate our expectation that
QHP issuers offer contracts in good
faith.
e. Meaningful Access to Qualified
Health Plan Information (§ 156.250)
In the proposed rule, we proposed to
amend § 156.250 to replace the crossreference to the Exchange application
and notices provision at § 155.230(b)
with a cross-reference to § 155.205(c).
We also proposed to change the title of
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the provision to ‘‘Meaningful access to
qualified health plan information’’ for
improved clarity. As discussed above,
amendments to § 155.205(c) for oral
interpretation services were also
proposed.
We also proposed to extend the
requirements of § 156.250 so that not
only applications and notices to
enrollees, but all information that is
critical for obtaining health insurance
coverage or access to health care
services through the QHP to qualified
individuals, applicants, qualified
employers, qualified employees, and
enrollees, would be provided in a
manner consistent with § 155.205(c). In
addition, using the summary of benefits
and coverage (SBC) disclosure required
under § 147.200 as an example, we
proposed that information would be
deemed to be critical for obtaining
health insurance coverage or access to
health care services if the issuer were
required by State or Federal law or
regulation to provide the document to a
qualified individual, applicant,
qualified employer, qualified employee,
or enrollee. We also indicated that,
based on our proposed standard, we
would consider information that is
critical for obtaining health coverage or
access to health care services to include:
Applications; consent, grievance,
appeal, and complaint forms; notices
pertaining to the denial, reduction,
modification, or termination of services,
benefits, non-payment, or coverage; a
plan’s explanation of benefits or similar
claim processing information; QHP
ratings information; rebate notices;
correspondence containing information
about eligibility and participation
criteria; notices advising individuals of
the availability of free language
assistance; and letters or notices that
require a signature or response from the
qualified individual, applicant,
qualified employer, qualified employee,
or enrollee. We stated that we would not
consider marketing materials that are
available for advertising purposes only
and not otherwise required by law to be
critical for obtaining health insurance
coverage or access to health care
services through the QHP, and therefore
an issuer would not be required to be
make such materials accessible to
individuals with disabilities or limited
English proficiency.
We are finalizing this provision as
proposed.
Comment: Commenters expressed
general support for our proposal,
including our proposed standard for
determining whether a document was
‘‘critical’’ such that an issuer would be
required to provide meaningful access
to it in accordance with the standards
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set forth in § 155.205(c). A few
commenters requested that we
specifically acknowledge other
documents, such as evidences of
coverage, or information needed to
understand coverage, provider
networks, or enrollment or reenrollment processes, as meeting the
standard. One commenter expressed
concern that our identification in
preamble of certain documents that we
would consider to meet the standard
was misplaced. The commenter stated
that certain documents we had
identified, such as ‘‘rebate notices’’
(concerning medical loss ratio
requirements) and ‘‘any letter or notice
requiring a signature or response,’’ were
not inherent to obtaining services
through the QHP or accessing health
coverage.
Response: We are finalizing the
provision as proposed. Therefore, QHP
issuers must provide all information
that is critical for obtaining health
insurance coverage or access to health
care services through the QHP,
including applications, forms, and
notices, to qualified individuals,
applicants, qualified employers,
qualified employees, and enrollees in
accordance with the standards
described in § 155.205(c). Information
will be deemed to be critical for
obtaining health insurance coverage or
access to health care services if the
issuer is required by Federal or State
law or regulation to provide the
document to a qualified individual,
applicant, qualified employer, qualified
employee, or enrollee. We agree that
evidences of coverage, group certificates
of coverage, contracts of insurance,
benefits summaries, policies, formulary
drug lists, provider directories, and
other similar documents that are relied
upon by individuals to understand their
benefits and the full terms of coverage
of the QHP are critical for obtaining
health care services through the QHP
and therefore must be provided by the
issuer in a manner that satisfies the
requirements in § 155.205(c). In
addition, given the general significance
of information, such as an MLR rebate
notice, that a QHP issuer is required by
Federal or State law or regulation to
communicate to consumers, we believe
it is appropriate to require a QHP issuer
to provide meaningful access to such
legally required information to all
consumers in a manner that conforms to
§ 155.205(c) so that all consumers
serviced by the QHP issuer can access
and understand the legal rights or duties
that are frequently discussed in such
communication. With respect to our
interpretation stated in the preamble to
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10839
the proposed rule that our proposed
standard would include any document
provided by the issuer that requires a
response or signature from the qualified
individual, applicant, qualified
employer, qualified employee, or
enrollee, in our view, these documents,
by requiring a signature or response,
typically confer an agreement or
important acknowledgement regarding
benefits or claims payment which an
individual must be able to access and
affirmatively understand. Thus, we
believe consumers receiving such
documents from a QHP issuer should
have meaningful access to this
information within the meaning of
§ 155.205(c).
As we noted in the preamble to the
proposed rule, we consider the SBC to
be a document subject to § 156.250 for
which a QHP issuer must provide
meaningful access in accordance with
the standards of § 155.205(c). As such,
like any document that is considered to
be ‘‘critical’’ within the meaning of
§ 156.250, in accordance with
§ 155.205(c)(2)(iii)(A), beginning no
later than the first day of the Exchange
individual market open enrollment
period for the 2017 benefit year, a QHP
issuer is required to include taglines
with any SBC that reflects a QHP option
or plan variation of a standard QHP
option in the top 15 languages spoken
by the LEP population in the applicable
State. An issuer may satisfy this
requirement if it includes a cover letter
or other additional pages provided along
with the SBC that contains all required
taglines. In addition, in accordance with
§ 155.205(c)(2)(i), beginning when this
rule takes effect, a QHP issuer is
required to provide telephonic
interpreter services in at least 150
languages with respect to any SBC that
reflects a QHP option or plan variation
of a standard QHP option. Because the
requirements with respect to oral
interpretation and taglines that are
finalized in this rule are different in
substance than those that apply
generally to the SBC under
§ 147.200(a)(5) (which cross-references
the internal claims and appeals and
external review processes standards at
§ 147.136(e)), we clarify that these
additional specific standards
supplement the existing ‘‘ten percent
county-level’’ language access standards
in § 147.200(a)(5).69 For example,
69 Under § 147.200(a)(5), a plan or issuer is
considered to provide the SBC in a culturally and
linguistically appropriate manner if the thresholds
and standards of § 147.136(e), implementing
standards for the form and manner of notices
related to internal claims appeals and external
review, are met as applied to the SBC. When we
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whereas the existing standards under
§ 147.136(e) require QHP issuers to
provide taglines and oral language
services with respect to an applicable
non-English language spoken by a given
LEP population that comprises ten
percent or more of the total population
residing in the applicable county, QHP
issuers must also provide taglines on the
SBC (or in a cover letter or other
additional pages included with the SBC)
in the top 15 non-English languages
spoken by the LEP population in the
relevant State as well as provide
telephonic interpreter services in at
least 150 languages with respect to any
SBC that reflects a QHP option or plan
variation of a standard QHP option. We
note that based on an analysis of current
data, the top 15 languages Statewide
standard described in § 155.205(c)(2)(iii)
will yield any language that is triggered
by the county-level standards in
§ 147.136(e)(3).70 In addition, under
§ 147.136(e)(2)(ii), a QHP issuer is still
required to provide, upon request, a
translated version of the SBC in an
applicable non-English language if at
least ten percent of the population in
the applicable county is comprised of an
LEP population that is literate in the
same non-English language.
We make one clarification regarding
our reference to ‘‘QHP ratings
information.’’ By using this term, we
intended to refer to the Quality Rating
System and QHP Enrollee Experience
Survey results established under
sections 1311(c)(3) and (c)(4) of the
Affordable Care Act. However, we
recognize that this information, when
available, is required to be displayed by
Exchanges on the Exchange Web site,
rather than by a QHP issuer directly.
Therefore, unless a QHP issuer is
required by other Federal or State law
or regulation to provide QHP ratings
information directly to consumers, that
information would not be subject to
§ 156.250. A QHP issuer voluntarily
providing the information to consumers
is encouraged, but not required, to
provide it in a manner that conforms to
§ 155.205(c).
Finally, though we do not consider
marketing materials that are available
refer to the ‘‘ten percent county-level’’ standards,
we are referring to the standards set forth under
§ 147.136(e)(3), which states that with respect to an
address in any United States county to which a
notice is sent, a non-English language is an
applicable non-English language if ten percent or
more of the population residing in the county is
literate only in the same non-English language, as
determined in guidance published by the Secretary.
70 In the counties for which the ten percent
threshold triggers an applicable non-English
language, Spanish is triggered in the vast majority
of cases. In a few counties, Tagalog, Navajo, or
Chinese are also triggered. 79 FR 78587 (Dec. 30,
2014).
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for advertising purposes only and not
otherwise required by law to be critical
for obtaining health insurance coverage
or access to health care services through
the QHP, we remind issuers that they
might have duties to make these
materials accessible to individuals with
disabilities and individuals with LEP
under Federal civil rights laws that also
might apply, including section 1557 of
the Affordable Care Act, section 504 of
the Rehabilitation Act of 1973, and Title
VI of the Civil Rights Act of 1964.
f. Enrollment Process for Qualified
Individuals (§ 156.265)
Sections 155.240 and 155.400
explicitly authorize Exchanges to
establish certain requirements related to
premium payment for enrollment in
QHPs through the Exchange. Section
156.265 currently only cross-references
§ 155.240. To clarify that both sets of
requirements apply to QHPs, we
proposed that a QHP issuer must follow
the premium payment process
established by the Exchange in
accordance with § 155.240 and the
payment rules established in
§ 155.400(e).
We did not receive comments
concerning the proposed enrollment
process provisions. We are finalizing the
provisions proposed in § 156.265 of the
proposed rule without any
modifications.
g. Termination of Coverage or
Enrollment for Qualified Individuals
(§ 156.270)
We are finalizing revisions in this
section to conform to our interpretation
of the guaranteed availability and
guaranteed renewability requirements.
For a discussion these revisions, please
see the preamble for § 155.430.
h. Segregation of Funds for Abortion
Services (§ 156.280)
Section 1303 of the Affordable Care
Act and § 156.280 specify accounting
and other standards for issuers of QHPs
through the Exchange in the individual
market that cover abortion services for
which public funding is prohibited (also
referred to as non-excepted abortion
services). The statute and regulations
establish that unless otherwise
prohibited by State law, a QHP issuer
may elect to cover such services. If an
issuer elects to cover such services
under a QHP sold through the
individual market Exchange, the issuer
must ensure that no premium tax credit
or cost-sharing reduction funds are used
to pay claims for abortion services for
which public funding is prohibited.
In the proposed rule, we provided
guidance on individual market
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Exchange issuer’s responsibilities for
requirements related to QHP coverage of
abortion services for which public
funding is prohibited. HHS works with
stakeholders, including States and
issuers, to help them fully understand
and follow the statutes and regulations
governing the provision of health
insurance coverage under a QHP
through the Exchange. As is the case
with many provisions in the Affordable
Care Act, States and State insurance
commissioners are the entities primarily
responsible for implementing and
enforcing the provisions in section 1303
of the Affordable Care Act related to
individual market QHP coverage of nonexcepted abortion services. OPM may
issue guidance related to these
provisions for multi-State plan issuers.
Under section 1303(b)(2)(B) of the
Affordable Care Act, as implemented in
§ 156.280(e)(2)(i), individual market
Exchange issuers must collect a separate
payment from each enrollee, for an
amount equal to the AV of the coverage
for abortions for which public funding
is prohibited. However, section 1303 of
the Affordable Care Act and § 156.280
do not specify the method an issuer
must use to comply with the separate
payment requirement. As we described
in the proposed rule, this provision may
be satisfied in a number of ways.
Several such ways include: Sending the
enrollee a single monthly invoice or bill
that separately itemizes the premium
amount for non-excepted abortion
services; sending a separate monthly bill
for these services; or sending the
enrollee a notice at or soon after the
time of enrollment that the monthly
invoice or bill will include a separate
charge for such services and specify the
charge. Section 1303 of the Affordable
Care Act permits, but does not require,
a QHP issuer to separately identify the
premium for non-excepted abortion
services on the monthly premium bill to
comply with the separate payment
requirement. A consumer may pay the
premium payment for non-excepted
abortion services and the separate
payment for all other services in a single
transaction, with the issuer depositing
the two separate payments into the
issuer’s two separate allocation accounts
as required by section 1301(b)(2)(C) of
the Affordable Care Act, as
implemented in § 156.280(e)(2)(ii) and
(e)(3).
Section 1303(b)(2)(D) of the
Affordable Care Act, as implemented in
§ 156.280(e)(4), establishes requirements
for individual market Exchange issuers
for how much they must charge each
QHP enrollee for coverage of abortions
for which public funding is prohibited.
A QHP issuer must estimate the basic
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per enrollee, per month cost,
determined on an average actuarial
basis, for including coverage of nonexcepted abortion services. In making
this estimate, a QHP issuer may not
estimate the basic cost of coverage for
non-excepted abortion services to be
less than $1 per enrollee, per month. In
the proposed rule and past guidance, we
clarified that this means an issuer must
charge each QHP enrollee a minimum
premium of $1 per month for coverage
of non-excepted abortion services.
Comment: Some commenters
supported enrollees paying premiums in
one single transaction for both nonexcepted abortion services and other
health care services. Commenters
requested clarification on the guidance
provided in the proposed rule so
enrollees will not receive multiple
notices regarding separate premium
amounts. These commenters stated that
a single payment transaction without
notice to the consumer would minimize
administrative complexity for issuers.
Other commenters requested that QHP
issuers be prohibited from collecting the
two separate payments for coverage for
non-excepted abortion services and
other health care services, respectively,
in a single transaction (for example,
having them combined in a single
check), and instead require that they be
separated by the enrollee. Commenters
also recommended HHS clarify the
guidance regarding itemizing the two
premium amounts on monthly invoices
and provide additional technical
guidance on maintaining separate
allocation accounts for non-excepted
abortion services and all other services,
along with enforcement mechanisms.
Response: The discussion of § 156.280
in the proposed rule of the separate
payment requirement constituted
clarifying guidance, and did not propose
to modify existing requirements under
section 1303 of the Affordable Care Act
and § 156.280. We affirm the guidance
in the proposed rule. This guidance
offers QHP issuers several ways to
comply with the requirements, while
minimizing burden on QHP issuers and
consumers.
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i. Non-Renewal and Decertification of
QHPs (§ 156.290)
We are finalizing revisions in this
section to conform with our
interpretation of the guaranteed
availability and guaranteed renewability
requirements. For a discussion of these
revisions, please see the preamble for
§ 155.430. We are also correcting a
typographical error by inserting the
words ‘‘adhere to the’’ in
§ 156.290(a)(1).
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4. Health Insurance Issuer
Responsibility for Advance Payments of
the Premium Tax Credit and CostSharing Reductions
a. Plan Variations (§ 156.420)
In the proposed rule, we proposed to
amend § 156.420 to add § 156.420(h)
and require QHP issuers to provide
SBCs that accurately represent plan
variations in a manner consistent with
the requirements set forth at § 147.200
to ensure that consumers have access to
SBCs that accurately represent costsharing responsibilities for all coverage
options, including plan variations, and
are provided adequate notice of the plan
variations.
We proposed that QHP issuers would
be required to provide SBCs for plan
variations no later than the first day of
the next Exchange open enrollment
period for the individual market for the
2016 benefit year, in accordance with
§ 155.410(e). We sought comments on
whether the proposed applicability date
would present implementation
challenges for QHP issuers as well as on
other aspects of the proposal. We also
noted that QHP issuers would be
required to provide the SBC in a manner
that is consistent with the meaningful
access requirements under § 155.205(c).
We are finalizing this provision as
proposed, with one modification to
specify that this standard will apply no
later than November 1, 2015, which is
the first day of the individual market
open enrollment period for the 2016
benefit year.
Comment: Commenters expressed
support for the proposal. Some
commented that the proposal would
better enable consumers who are
eligible for cost-sharing reductions to
take into account the overall out-ofpocket costs of a given QHP benefit
package, rather than focusing primarily
on premiums.
Response: We agree that requiring the
provision of plan variation SBCs for
individual market QHP options will
increase the likelihood that consumers
will select a plan option that is
appropriate for both their financial and
health care needs.
Comment: Commenters supported an
implementation date of no later than the
open enrollment period for the 2016
benefit year. Some commenters stated
that issuers are already providing plan
variation SBCs to enrollees and did not
express opposition to our proposed
implementation timeline. However, one
commenter opposed the proposed
implementation date because it did not
believe issuers could receive State
approval of their form filings, including
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plan variation SBCs, in time to make
such SBCs available.
Response: We are finalizing the
applicability date as proposed. We
expect that States and issuers will
continue to work collaboratively to
ensure that the applicable form filing
approvals are received sufficiently in
advance of the open enrollment period
for the 2016 benefit year.
b. Changes in Eligibility for CostSharing Reductions (§ 156.425)
In the proposed rule, we proposed to
amend § 156.425 to clarify when a QHP
issuer would be required to provide an
SBC if an individual’s assignment to a
standard plan or plan variation of the
QHP changes in accordance with
§ 156.425(a). We proposed that a QHP
issuer must provide an SBC that
accurately represents a new plan
variation (or the standard plan
variation) as soon as practicable after
receiving notice from the Exchange of
the individual’s change in eligibility,
but in no case later than 7 business days
following receipt of notice. We
proposed that this requirement would
be effective beginning on January 1,
2016.
We are finalizing these provisions as
proposed.
Comment: Commenters generally
expressed support. Some commenters
requested that an additional notice,
beyond the SBC, be sent to consumers
whose eligibility for cost-sharing
variations changes which would explain
the change to the consumer, the reason
for the change, and how many costsharing amounts already incurred by the
consumer during the benefit year would
be applied toward the new deductible(s)
and out-of-pocket limit(s).
Response: While issuers are
encouraged to develop health literacy
tools and provide consumer-friendly
explanatory information to enrollees
when their eligibility for cost-sharing
reductions changes, we are not requiring
issuers to send an additional notice
beyond the SBC at this time. We will
continue to monitor the extent to which
consumers understand cost-sharing
reductions eligibility and whether other
information should be provided to
consumers in this context.
Comment: Some commenters
requested additional time to send an
SBC to an enrollee whose eligibility for
cost-sharing reduction changes. One
commenter requested as many as 14
business days from the date the issuer
effectuates the assignment into a plan
variation (or standard plan without costsharing reductions), while the other
commenter requested 14 calendar days
to send the SBC.
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Response: We are finalizing the
timing requirement to send the SBC as
proposed, that is, 7 business days from
the date the issuer receives notice of the
change in the enrollee’s eligibility from
the Exchange. Virtually all issuers
subject to this requirement have already
incurred one-time costs to develop
systems necessary to generate and
provide SBCs in an automated and
efficient fashion to meet the timing
requirements specified in § 147.200.
Further, in accordance with
§ 147.200(a)(1)(iv)(D), QHP issuers must
already send an SBC when an
individual requests an SBC as soon as
practicable, but no later than 7 business
days following the receipt of the
request.
c. Cost-Sharing Reductions
Reconciliation (§ 156.430)
Sections 1402(a) through (c) of the
Affordable Care Act provide for costsharing reductions for EHB provided by
a QHP. Cost-sharing reductions are
advanced to issuers throughout the
benefit year, and reconciled following
the benefit year against actual costsharing amounts provided by issuers to
enrollees.
The reconciliation process requires
QHP issuers to submit to HHS the total
allowed costs for EHB charged for each
plan variation policy, the amounts paid
by the issuer, and the amounts paid by
or on behalf of the enrollee (other than
by the Federal government under
section 1402 of the Affordable Care Act),
as well as the amounts that would have
been paid by the enrollee under the
standard plan. Under the standard
methodology described at
§ 156.430(c)(2), costs paid by the issuer
under the standard plan are calculated
by applying actual cost-sharing
requirements for the standard plan to
the allowed costs for EHB under the
enrollee’s policy for the benefit year.
The difference is the amount of costsharing reductions provided.
In the proposed Payment Notice, we
reiterated that issuers will not be
reimbursed for reductions in out-ofpocket spending for benefits other than
EHB. However, we explained that
because of technology challenges in
these early years of the cost-sharing
reduction program, some issuers are
presently unable to differentiate on a
policy level between EHB claims and
non-EHB claims, as required by HHS
when applying the standard costsharing reduction reconciliation
methodology. The difficulty occurs in
plan designs that allow enrollee out-ofpocket spending for EHB and non-EHB
claims alike to accumulate toward
deductibles and the reduced annual
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limit on cost sharing. Such plan designs
benefit enrollees by allowing them to
reach their spending limits sooner. As a
result, for the purpose of cost-sharing
reduction reconciliation, we proposed
to allow QHP issuers to submit
percentage estimates of the portion of
claims attributable to non-EHB for the
2014 benefit year, and to reduce the
total claims amount by that percentage,
to arrive at an estimated total EHB
amount. The percentage estimate would
be the estimate of expected non-EHB
claims costs previously submitted for
each plan variation on the Uniform Rate
Review Template (URRT) 71 and which
HHS used to calculate 2014 advance
cost-sharing reduction payments. An
issuer using this procedure would be
required to do so for all plan variations
for which the criteria below are met.
As described in proposed
§ 156.430(c)(2)(i), this exception to
permit QHP issuers to use plan-specific
URRT estimates of non-EHB claims
would be limited to plan designs in
which out-of-pocket expenses for nonEHB benefits accumulate toward the
deductible and reduced annual
limitation on cost sharing, but for which
copayments and coinsurance rates for
non-EHB are not reduced. This
limitation helps assure that the
estimated percentage, which is
calculated based on the proportion of
claims attributable to EHB, does not
overstate the proportion of reduced outof-pocket spending associated with
EHB. In addition, the exception would
apply only when non-EHB estimated
percentages account for less than 2
percent of total claims, helping assure
that any inaccuracies in the estimate are
unlikely to result in significant
inaccuracies in total cost-sharing
reduction reimbursement.
Comment: We received comments in
support of our proposal to permit
estimates of non-EHB cost sharing based
on the URRT. One commenter asked
HHS to make this exception permanent.
Another commenter asked HHS to
extend the exception to the simplified
method of cost-sharing reduction
reconciliation since it, too, requires
comparison of standard plan cost
sharing to the total allowed EHB costs
for a plan variation, and issuers face
similar problems identifying EHB.
Another commenter asked us to clarify
71 Percentage of the total allowed costs of benefits
as defined at § 156.20 means the anticipated
covered medical spending for EHB coverage (as
defined in § 156.110(a) of the subchapter) paid by
a health plan for a standard population, computed
in accordance with the plan’s cost-sharing, divided
by the total anticipated allowed charges for EHB
coverage provided to a standard population, and
expressed as a percentage.
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what we mean by reducing total claims
amount by the percentage of non-EHB,
and specifically whether issuers must
reduce every claim before readjudication. Finally, a commenter
asked HHS to permit issuers to use the
simplified method of cost-sharing
reduction reconciliation permanently,
stating that the double adjudication
required under the standard
methodology is too complex for the
variety of plan designs on the individual
market.
Response: We are finalizing the
exception proposed in § 156.430(c)(2)(i)
to permit QHP issuers to use planspecific URRT estimates of non-EHB
claims, with two modifications. We are
expanding this exception to include
issuers using the simplified
methodology for cost-sharing reduction
reconciliation, since they are equally
affected by technology challenges, and
we are extending it to the 2015 benefit
year. We also clarify that issuers should
reduce total claims at the policy-level
before re-adjudication. Finally, we
believe the standard methodology will
provide the most accurate permanent
method of reconciling advanced costsharing reduction payments—the
simplified methodology is an interim
step.72
5. Minimum Essential Coverage
a. Other Coverage That Qualifies as
Minimum Essential Coverage
(§ 156.602)
Under § 156.602, State high risk pool
coverage is designated as minimum
essential coverage for a plan or policy
year beginning on or before December
31, 2014, for a one-year transition
period. However, many State high risk
pools have continued into the 2015
policy year. The proposed rule would
designate as minimum essential
coverage any qualified high risk pool (as
defined by section 2744(c)(2) of the PHS
Act) established in any State as of the
publication date of the proposed rule.
This would provide States additional
time to evaluate State-administered high
risk pools and facilitate the transition of
State high risk pool enrollees into QHPs
through the Exchange or into other
forms of minimum essential coverage.
We sought comment on whether the
designation should be permanent or
time-limited (for example, for 2015
only). We also sought comment on the
cut-off date for formation of State high
72 ‘‘Timing of Reconciliation of Cost-Sharing
Reductions for the 2014 Benefit Year.’’ February 13,
2015. https://www.regtap.info/uploads/library/
APTC_CSR_Recon_timing_guidance_5CR_
021315.pdf.
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risk pools that will qualify for
recognition under the regulations.
Comment: Several commenters
favored the proposal to permanently
designate State high risk pool coverage
as minimum essential coverage. One
commenter suggested the designation
should apply only through the 2016
plan year. Another commenter stated
that State high risk pools must at least
be required to provide minimum value
to be recognized as minimum essential
coverage after 2015.
Response: We believe States are in the
best position to assess the unique
circumstances in each State and
determine when it is in the best interest
of consumers to close Stateadministered high risk pools. While a
one-year designation as minimum
essential coverage would allow
adequate time for some States to phase
out high risk pools, many State laws
require the retention of State high risk
pools after 2015. Additionally, since the
benefits are generally statutorily
mandated, many States may not be able
to easily alter the State high risk pool
benefits to provide minimum value.
Imposing a timeline that is not tailored
to the unique circumstances of a
particular State potentially
disadvantages a vulnerable population
that has significant health costs and that
may be uninformed about the Exchanges
and the availability of financial help to
purchase health coverage. We received
no comments on the cut-off date for
formation for State high risk pools.
Therefore we are establishing a
permanent minimum essential coverage
designation for any State high risk pool
in existence as of November 26, 2014,
the publication date of the proposed
rule. The IRS has indicated that as long
as HHS designates qualified high risk
pool coverage as minimum essential
coverage, an individual that is eligible
but not enrolled in a qualified high risk
pool will be treated as eligible for QHP
coverage and the premium tax credit.73
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6. Enforcement Remedies in FederallyFacilitated Exchanges
a. Available Remedies; Scope
(§ 156.800)
In the first Program Integrity Rule,74
HHS finalized § 156.800(c), which
established a good faith compliance
policy for QHP issuers offering coverage
through an FFE for the 2014 calendar
year. Specifically, the first Program
Integrity Rule provides that HHS will
not impose sanctions under subpart I of
73 See
Notice 2013–41, 2013–29 I.R.B. 60.
Protection and Affordable Care Act;
Program Integrity: Exchange, SHOP, and Eligibility
Appeals, 78 FR 54074 (August 30, 2013).
74 Patient
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part 156 against a QHP issuer in an FFE
if the QHP issuer has made good faith
efforts to comply with applicable
Exchange requirements. HHS adopted
the good faith compliance policy to help
QHP issuers become familiar with the
standards unique to the FFEs during the
initial stage of operations.
HHS is committed to ensuring that
QHP issuers have the opportunity to
learn from their experiences in 2014
without undue concern about being
subject to formal enforcement actions
when the QHP issuer has made
reasonable efforts to comply with
applicable standards. While immediate
formal enforcement actions may be
appropriate in some cases, we continue
to prefer resolving most compliance
issues by providing technical assistance.
Accordingly, in the proposed rule we
proposed extending the good faith
compliance standard under § 156.800(c)
through the end of calendar year 2015.
We also noted, that irrespective of the
good faith compliance standard, QHP
issuers are required to comply with all
applicable FFE standards (and any
applicable Federal or State laws
regarding privacy, security and fraud) at
the time of certification and on an
ongoing basis.
We are finalizing the provision as
proposed.
Comment: Commenters generally
supported the proposed extension of the
good faith compliance standard. One
commenter did not support the
proposal, stating that the extension of
the standard may impede HHS’s efforts
to enforce FFE standards. Some
commenters also requested that HHS
clarify that the good faith compliance
policy would apply to non-compliance
occurring during the 2015 benefit year
that is identified after calendar year
2015.
Response: We note that issuers
seeking to avoid enforcement actions
under subpart I of part 156 through the
good faith compliance standard may do
so only by demonstrating that they
exercised good faith efforts at complying
with FFE standards. Consistent with the
good faith compliance standard for the
2014 calendar year, HHS will determine
whether the good faith compliance
standard applies based on an evaluation
of various factors surrounding the
issuer’s participation in the FFEs,
including past instances of noncompliance, the gravity or severity of
non-compliance, and the presence or
absence of HHS guidance on the matter.
We further clarify that the good faith
compliance standard would apply to
conduct occurring during the 2015
calendar year even if the activity is
identified after 2015 calendar year. It
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10843
would not apply to conduct that occurs
in 2016 or later, even if that conduct
was related to coverage provided in the
2015 calendar year.
b. Plan Suppression (§ 156.815)
In § 156.815(a), we proposed a
definition of suppression, which would
mean that a suppressed QHP
temporarily would not be available for
enrollment through the FFEs. In
§ 156.815(b), we proposed the bases for
suppression of a QHP in the FFEs. Our
first proposed basis for suppression,
§ 156.815(b)(1), is the issuer notifying
HHS of its withdrawal of the QHP from
the FFEs when one of the exceptions to
guaranteed renewability of coverage
related to discontinuing a particular
product or discontinuing all coverage
under § 147.106(c) or (d) applies. In
§ 156.815(b)(2), we proposed as a basis
to suppress a QHP submission of data
for the QHP that is incomplete or
inaccurate. For example, incorrect rates
submitted by a QHP issuer generally
would lead to the suppression of the
QHP until the rating data are corrected.
In § 156.815(b)(3), we proposed as a
basis to suppress a QHP that is
undergoing decertification under
§ 156.810 or the appeal of a
decertification under subpart J of part
156. In § 156.815(b)(4), we proposed as
a basis to suppress a QHP pending,
ongoing, or final State regulatory or
enforcement action against the QHP that
could affect the issuer’s ability to enroll
consumers or that otherwise relates to
the issuer’s ability to offer QHPs in the
FFEs. In § 156.815(b)(5), we proposed as
a basis for suppression of a QHP
application of the special rule for
network plans under § 147.104(c) or the
financial capacity limits provision
under § 147.104(d). In § 156.815(c), we
proposed a basis for suppression of a
QHP that is a multi-State plan upon
notification by OPM of certain findings.
We solicited comments on this
proposal, including whether the
proposed bases for suppression were
appropriate and whether an appeals
process should be available following
suppression decisions.
We are finalizing the provision as
proposed.
Comment: Some commenters
supported the proposed provisions.
Commenters requested that HHS clarify
that QHP suppression would not be
implemented in violation of State law.
One commenter did not support QHP
suppression, stating that it would
conflict with HIPAA and one State’s law
on guaranteed renewability. Another
commenter recommended that HHS
clarify that, when the QHP continues to
offer coverage through the FFEs but is
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being suppressed, consumers should be
notified of the suppression. One
commenter asked if the proposed
process and reasons for QHP
suppression would apply to QHPs in the
SHOP.
Response: We envision suppressing a
QHP when continuing to allow new
enrollment in the QHP through an FFE
is not in the interest of qualified
individuals and employers, such as
when the QHP has withdrawn from an
FFE, when there is incorrect data being
displayed about the QHP, and when the
QHP will be decertified. Our experience
shows that by removing QHPs subject to
the suppression from an FFE Web site,
it will minimize confusion by
consumers, agents and brokers, and
assisters about the QHPs that are
available during plan selection. Federal
regulations on guaranteed renewability
at § 147.106(c) and (d) provide for
circumstances under which an issuer
may discontinue a particular product or
discontinue all coverage in an
applicable market. We intend to
implement QHP suppression in
coordination with States to ensure that
conflicts with State law can be avoided
and adverse effects minimized. We note
that suppression does not affect reenrollments into the plan, but
temporarily restricts the availability of
the plan for new enrollments through an
FFE. We further note that if suppression
of a plan ultimately leads to the plan
being no longer available through an
FFE, the issuer may be required to offer
the same plan outside an FFE under
§§ 147.104 and 147.106. We further
clarify that the process and reasons for
QHP suppression would also apply to
QHPs in the FF–SHOP.
7. Quality Standards
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a. Quality Improvement Strategy
(§ 156.1130)
In § 156.1130(a), we proposed that a
QHP issuer participating in an Exchange
for at least 2 years must implement and
report information regarding a quality
improvement strategy (QIS), that is a
payment structure that provides
increased reimbursement or other
market-based incentives in accordance
with the health care topic areas in
section 1311(g)(1) of the Affordable Care
Act, for each QHP offered in an
Exchange, consistent with the
guidelines developed by HHS under
section 1311(g)(2) of the Affordable Care
Act. We noted that the statutory QIS
requirements, similar to the other
Exchange quality standards, extend to
all Exchange types, including a State
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Exchange and the FFEs.75 For the QIS
standards, we proposed to provide State
Exchanges flexibility to establish the
timeline, format, validation, and other
requirements related to the annual
submission of QIS data by QHP issuers
that participate in their respective
Exchanges. Under this proposal, the
establishment and implementation of
such standards and other requirements
by State Exchanges would support
compliance with § 155.200(d), which
requires the Exchange to evaluate and
oversee implementation of the QIS
(among other QHP issuer quality
initiatives for coverage offered through
Exchanges). We noted that we
envisioned the standards that will be
used for the FFEs would provide the
minimum requirements for State
Exchanges to build upon.
We proposed to phase in QIS
implementation standards and reporting
requirements to provide QHP issuers the
necessary time to understand the
populations enrolling in a QHP offered
through the Exchange and to build
quality performance data on their
respective QHP enrollees. We believe
that implementation of a QIS should be
a continuous improvement process for
which QHP issuers define the health
outcome needs of their enrollees, set
goals for improvement, and provide
increased reimbursement to their
providers or other market-based
incentives to reward achievement of
those goals. This approach is consistent
with other QHP issuer quality standards
for coverage offered through an
Exchange including implementation
and reporting for the patient safety
standards, the Quality Rating System
(QRS), and the Enrollee Satisfaction
Survey (ESS). We further noted that,
consistent with existing regulations at
§ 156.200(h), QHP issuers participating
in Exchanges would be required to attest
to compliance with QIS standards, along
with the other QHP issuer quality
initiatives for coverage offered through
Exchanges established under subpart L
of part 156, as part of the QHP
application process.
In paragraph (b), we proposed to
direct a QHP issuer to submit validated
data in a form, manner, and reporting
frequency specified by the Exchange to
support evaluation of quality
improvement strategies in accordance
with § 155.200(d) and § 156.200(b)(5).
We noted that we anticipate using the
data collected as part of information
used to evaluate and oversee
compliance of QHP issuers in FFEs with
75 Unless indicated otherwise, references in this
section to the ‘‘FFE’’ include States performing plan
management functions.
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the Exchange QIS standards and
encourage State Exchanges to adopt a
similar approach. State Exchanges
would maintain the flexibility to add to
the Federal minimum QIS standards
and would also have the ability to
establish their own form, manner, and
reporting frequency. We proposed that
beginning in 2016, a QHP issuer
participating in an Exchange for at least
2 years would submit a QIS
implementation plan for the 2017 plan
year to the applicable Exchange,
followed by annual progress updates.
We noted that we anticipate that the
implementation plan for a QHP issuer’s
proposed QIS would reflect a payment
structure that provides increased
reimbursement or other market-based
incentives for addressing at least one of
the topics in section 1311(g)(1) of the
Affordable Care Act.
We proposed requesting information
from QHP issuers regarding percentage
of payments to providers that is
adjusted based on quality and cost of
health care services as this would
promote transparency and assist
Exchanges to make better informed QHP
certification decisions. We also
proposed that 1 year after submitting the
QIS implementation plan, the QHP
issuer would submit information
including an annual update including a
description of progress of QIS
implementation activities, analysis of
progress using proposed measures and
targets, and any modifications to the
QIS.
We noted that we believe that the
implementation and reporting for the
QIS over time would provide
meaningful QIS data from QHP issuers
by minimizing administrative effort
while also allowing for flexibility and
innovation. In the proposed rule, we
explained that we anticipate issuing
technical guidance in the future that
will provide operational details
including data validation, other data
submission processes, timeframes and
potential minimum enrollment size
threshold for coverage offered through
an FFE. We anticipate that this guidance
would be updated on an annual basis
(or more frequently as may be
necessary). We proposed to allow State
Exchanges to establish the data
validation and submission requirements
for QIS data from QHP issuers that
participate in their respective
Exchanges.
In paragraph (c), we proposed to
direct a QHP issuer to submit data
annually for activities that are
conducted related to implementation of
its QIS, in a manner and timeframe
specified by the Exchange. For example,
an issuer that participates in an FFE for
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2 consecutive years for coverage
beginning in January 2014 and January
2015 would submit a QIS
implementation plan to an FFE during
the fall 2016 post-certification period,
and in a format specified by HHS. A
progress update on the QHP issuer’s QIS
activities would be required the
following year. Similarly, an issuer
participating in an FFE for the first time
during the 2015 open enrollment period
for the 2016 coverage year and also
offering coverage in the 2017 plan year
would submit an implementation plan
in the 2018 post-certification period to
align with our proposed approach of
phasing in the QIS over time and
allowing a QHP issuer 2 years to collect
data and develop quality improvement
strategies for its QHPs offered through
an Exchange, before the submission of
an implementation plan is required. A
progress update on the QHP issuer’s QIS
activities would be required the
following year. We proposed to allow
State Exchanges to establish the specific
timeline and format requirements for
the annual submission of QIS data by
QHP issuers that participate in their
respective Exchanges.
We noted that multi-State plans, as
defined in § 155.1000(a), are subject to
reporting QIS data for evaluation, as
described in paragraph (b). In the
proposed rule, we proposed to codify
this general requirement at
§ 156.1130(d). We noted that we
anticipate that OPM will provide
guidance on QIS reporting to issuers
with whom it holds multi-State plan
contracts.
We sought comment on all aspects of
this proposal, including whether the
standard should apply to all types of
QHPs offered through the Exchanges
(for example, stand-alone dental plans,
QHPs providing child-only coverage,
and health savings accounts) or if
different standards should be developed
for the different types of QHPs. We also
solicited feedback on: whether there
should be a minimum enrollment size
threshold to trigger the applicability of
the QIS standards, what information
should be included to effectively
monitor and evaluate a QIS, and
whether the information collected
should be publically displayed to
encourage transparency, support
comparison of QHP issuer QIS
activities, and align with other quality
standards for QHP issuers participating
in Exchanges.
We are finalizing these provisions as
proposed, with the following
modifications. For the initial years of
implementation, QHPs that are standalone dental plans, provide child-only
coverage, or are compatible with health
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savings accounts will not be subject to
the QIS. Additionally, HHS intends to
establish a minimum enrollment size
that triggers the QIS obligations in
alignment with the other Exchange
quality initiatives (for example, the QRS
and ESS) and will do so through
technical guidance. Further, we clarify
that, in the initial years of QIS
implementation, HHS will not require
QHP issuers to select measures from a
set of standardized or uniform
performance measures established by
HHS for inclusion in their respective
QIS implementation plans. HHS
anticipates requiring QHP issuers to
provide information regarding their
payment structure that provides
increased reimbursement or other
incentives such as the percentage of
payments made across various
categories including fee-for-service with
no link of payment to quality; fee-forservice with a link of payment to
quality; alternative payment models
built on fee-for-service architecture; and
population-based payments, to promote
transparency and align this approach
with other current CMS and HHS
payment reform initiatives. As detailed
above, we intend to issue future
technical guidance that will provide
more information regarding these and
other QIS data collection and
submission details for QHP issuers
participating on an FFE.
Comment: Several commenters
supported requiring QIS compliance
from QHP issuers that have been
participating in an Exchange for at least
2 years. A few commenters agreed the
phased-in approach of the QIS program
would allow for the necessary
preparations and knowledge building,
while other commenters recommended
a delay based on concerns that the
timeline was too aggressive. While one
commenter urged HHS to postpone its
QIS proposals and requirements for the
private sector until it has had time to
evaluate lessons learned from the public
sector, others recommended that HHS
require all QHP issuers—not only those
that have been participating in the
Exchange for 2 or more consecutive
years—to submit a QIS implementation
plan, with one stating that QHP issuers
will have sufficient information at the
outset to design their quality
improvement strategies.
Response: We maintain in the final
rule the approach outlined in the
proposed rule that QHP issuers
participating in an Exchange for at least
2 consecutive years must implement
and report information regarding a QIS,
followed by annual progress updates.
We believe that 2 years is an appropriate
time period for QHP issuers to
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10845
understand their populations who have
enrolled through Exchanges, and
develop relevant quality improvement
strategies to meet the needs of that
population. We anticipate requiring
compliance with the QIS reporting
requirements beginning in 2016 for the
2017 coverage year and will be issuing
future guidance that addresses this, as
well as other QIS operational and data
submission details, for QHP issuers
participating in the FFEs.
Comment: Some commenters
suggested that a minimum QHP
enrollment size that aligns with the
minimum threshold requirements of the
2015 QRS beta test requirement and the
QHP Enrollee Experience Survey should
be required to trigger the applicability of
the QIS certification standard. Other
commenters suggested that all QHP
issuers, regardless of enrollment size,
should be required to develop and
implement a quality improvement
strategy.
Response: We considered the
feedback regarding the applicability of a
minimum enrollment size. In an effort
to maintain consistency with other
Exchange quality standards in the initial
years, we will direct QHP issuers to
comply with the QIS certification
standard and report QIS data if they
meet the minimum enrollment size
threshold. We intend to include
additional details regarding the
applicability of the minimum
enrollment threshold to the QIS
standards in future technical guidance.
Comment: Some commenters
suggested that the QIS should align with
existing quality standards required as
part of Exchange participation standards
to be accredited by a recognized
accrediting entity and that the
accreditation certification standard
should satisfy the QIS standards
provided in § 156.1130(a).
Response: We note that the existing
accreditation standards do not include
the use of market-based incentives as
outlined in § 156.1130(a) and required
by section 1311(g) of the Affordable
Care Act for QHP issuers participating
in Exchanges. However, we would not
restrict a QHP issuer from using quality
improvement strategy information
submitted to a recognized accrediting
entity for QIS purposes as long as the
information otherwise satisfies the QIS
requirements included in this final
rulemaking and future technical
guidance.
Comment: Commenters expressed
general support for the QIS principles
and goal of improving quality of care
delivered to Exchange enrollees through
quality improvement strategies that
provide for increased reimbursements,
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benefit designs, and other market-based
incentives. Commenters supported QIS
alignment of priorities, performance
measures, and reporting requirements
with the National Quality Strategy, the
CMS Quality Strategy, and other
national and regional efforts to improve
the quality of healthcare to reduce both
QHP issuer and provider burden.
Commenters remarked on the
importance of leveraging quality
improvement efforts in the public and
private sectors to hasten achievement of
better patient outcomes and lower costs.
Response: We made extensive efforts
to incorporate similar standards and
requirements from other quality
initiatives into the QIS, and believe that
the QIS requirements will align as
consistently as possible with other
quality initiatives. At this time, we do
not intend to require QHP issuers to
select specific measures from a set
required by HHS.
Comment: Comments related to
whether all QHP types (SADPs, child
only coverage, and health savings
accounts) should be required to
implement a QIS fell into two
categories. The first category of
commenters noted that all types of
QHPs should meet the QIS certification
standard and be subject to the same QIS
standards. The second category of
commenters noted that the QIS should
apply to all QHPs, but the standards
should be directly relevant to the
population(s) covered by the QHP (that
is, different standards for SADPs, QHPs
with rural enrollees, integrated delivery
systems, etc.). Some commenters
suggested that QHP issuers be allowed
to target specific populations within
their network when implementing a QIS
instead of targeting all their QHP
enrollees. Others recommended that
QHP issuers be provided the flexibility
to address the needs of specific enrollee
populations while recommending HHS
review QIS submissions to ensure that
the strategies do not exclude any
particular group, either by design or
effect. Other commenters stressed the
need to review quality improvement
strategies to ensure that such strategies
do not discriminate, either by design or
by effect, against any one group of
individuals. Some commenters also
recommended excluding SADPs, noting
that SADPs do not have the same ability
to implement and track measures, and
therefore should be exempt from the
QIS requirements.
Response: We clarify in the final rule
that the Federal QIS standards will
apply to same QHP types that are
required to comply with the QIS
certification standard across all
Exchange types. However, a QHP
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issuer’s QIS does not need to apply to
all populations covered by its QHPs,
and the issuer has the option of
developing multiple strategies to ensure
that each QHP is covered by a QIS. We
agree that it would be premature at this
point in time to require all QHP types
(for example, SADPs, child only
coverage plans, or QHPs compatible
with health savings accounts) to
develop, implement, and track a QIS.
We therefore clarify in the final rule that
in the initial years of the QIS, SADPs,
child only coverage plans, and QHPs
that are compatible with health savings
accounts will be exempt from the QIS
certification and reporting requirements.
This approach aligns with our current
approach for other Exchange and QHP
issuer quality requirements, allows the
program to mature, and allows for
additional measures for other QHP types
to be developed for reporting.
Consistent with the nondiscrimination
prohibition in § 156.225, QIS
implementation plans will be reviewed
to ensure that they are not designed and
do not have the effect of discouraging
the enrollment of individuals with
significant health needs.
Comment: We solicited comments on
whether to require information relating
to provider payment models, such as an
issuer’s minimum target or goal set with
regards to the percentage of provider
payments adjusted for quality and cost,
to be submitted for compliance with QIS
standards proposed in § 156.1130.
While one commenter agreed with the
concept, other commenters
recommended that QHP issuers be
required to indicate specifically to
providers how payment is tied to
performance or questioned the need for
QHP issuers to report on the details of
their proprietary contracts with
providers, and encouraged HHS to let
market factors drive quality
improvements.
Response: We believe that
understanding how QHP issuers
participating in Exchanges are adjusting
provider payments for quality and cost
is important and directly aligns with the
statutory definition of a QIS. As such,
this type of information is subject to the
periodic reporting of QIS information
under section 1311(g)(3) of the
Affordable Care Act. We anticipate
requiring QHP issuers participating in
Exchanges to establish and share with
the applicable Exchange performance
measure improvement targets and report
on progress against those targets as they
relate to QIS implementation. We
anticipate alignment of QIS information
collection requirements with current
payment reform data collection efforts,
including the adoption of safeguards to
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protect confidential or proprietary
information. The goal is to collect issuer
QIS information from QHP issuers
participating in Exchanges that
demonstrates compliance with 1311(g)
of the Affordable Care Act and
facilitates understanding of the issuer’s
payment structure framework that
provides increased reimbursement or
other market-based incentives for the
implementation of activities related to
the topics specified in section 1311 (g).
We anticipate the display of a subset of
this information to promote
transparency and will provide
additional details through future
guidance. We do not intend that the
public display of payment structure
information will include information
that is considered confidential or
proprietary.
Comment: Commenters provided
feedback on the definition of a quality
improvement strategy as a payment
structure. Various commenters
recommended not linking incentives to
cost, including cost-independent
protections, and suggested that HHS
recognize different types of provider
incentives, and emphasize the
importance of capturing outcome
variations within a provider’s control.
Response: We clarify that the
description of a strategy described in
1311(g) of the Affordable Care Act is a
payment structure that provides
increased reimbursement or other
market-based incentives. The purpose of
soliciting comments was to understand
the types of market-based incentives
that are currently in use by issuers to
reward quality and value. HHS intends
to issue technical guidance to assist
QHP with compliance with the QIS
standards and reporting requirements.
Comment: Some commenters
expressed concern with HHS’s proposal
that a QHP issuer could meet the QIS
requirements by focusing on only one of
the five topic areas in the Section
1311(g) of the Affordable Care Act.
These commenters suggested requiring
QHP issuers to focus on more than one
topic area, with some commenters
suggesting a requirement of at least
three topic areas be addressed.
Response: While we agree that ideally
QHP issuers participating in Exchanges
would focus on more than one topic
area as part of their QIS, we are
cognizant that this could be difficult for
issuers to accomplish immediately.
Therefore, consistent with the phase in
approach to implementation, for the
initial years of the QIS, QHP issuers will
have to address at least one of the topic
areas included in section 1311(g) of the
Affordable Care Act.
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Comment: Some commenters
expressed concern over the impact the
QIS will have on providers if each QHP
issuer is allowed to have extensive
flexibility in designing its quality
improvement strategies, in particular
the performance measures used to track
implementation progress. One
commenter recommended that QHP
issuers be required to use quality
measures already in use by existing
quality programs and for HHS to require
QHP issuers to select their QIS quality
measures from a limited subset of
existing measures.
Response: Based on input from
experts and stakeholders, we anticipate
allowing QHP issuers to select their own
performance measures and establish
targets designed to measure the impact
of their respective QIS plans. Our
concern is that imposing specific
performance measures on QHP issuers
would limit their ability to target their
strategies to their specific populations
and possibly limit innovation. However,
we will take these comments into
consideration as we assess whether
changes are warranted in the future.
Comment: Commenters strongly
supported the proposal that QIS
standards be developed in a public,
accessible, and transparent manner that
seeks and incorporates stakeholder
feedback. Some commenters further
recommended that HHS explicitly state
that ‘‘stakeholder feedback’’ must
include both consumer advocates and
public and private purchasers, while
another recommended that HHS reach
out directly to State consumer health
advocates, patient advocates, and case
managers who represent consumer
health perspectives.
Response: Consistent with the
statutory directive at section 1311(g)(2)
of the Affordable Care Act that requires
consultation with experts in health care
quality and stakeholders, HHS
conducted numerous activities to seek
feedback and develop the proposed
approach to the QIS, including meetings
with a QIS Technical Expert Panel and
engagement of stakeholders through
activities such as key informant
interviews, listening sessions,
discussions, and a pilot test. We will
continue to engage a variety of public
and private stakeholders, and will seek
to incorporate their feedback to help
inform the further development and
evolution of the QIS.
Comment: Some commenters
suggested we develop specific formats
for data collection and reporting to
ensure consistency, reliability in the
data, and to reduce provider’s data
reporting burden. Other commenters
encouraged HHS to develop a uniform
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standardized reporting format for use by
QHP issuers in both the FFEs and the
State Exchanges to allow QHP issuers to
implement consistent quality
improvement strategies, as well as
enable fair comparison between QHP
issuers operating in State Exchanges and
the FFEs. Others urged HHS to allow for
flexibility to ensure that QHP issuers
can develop various strategies across
their populations and across their
provider contracts.
Response: We appreciate the feedback
and clarify that we plan on establishing
a standardized format for which QIS
data must be submitted for those QHP
issuers operating in the FFEs. We expect
that the exact format and the validation
process will be released as part of the
operational details in technical
guidance that will be issued later in
2015. State Exchanges will have the
flexibility to add reporting requirements
beyond the minimum Federal
requirements, determine how they will
communicate the process for
submission, establish the timeframe and
validation approach for the data
submission, and any additional quality
improvement requirements they may
require beyond the minimum Federal
requirements.
Comment: Some commenters felt that
QIS data should not be made publicly
available at all, adding that QHP issuers
may be encouraged to take on more
challenging or innovative strategies if
the data are not made public. Other
commenters suggested that if QIS data
would be publicly available, HHS
should create a uniform format for
displaying the data using consumertested language, as well as provide
evidence of effectiveness of different
payment structures for QHP issuers’ use.
Some commenters urged HHS to make
QIS data publicly available and require
evaluation against benchmark data,
allowing the data to be used for decision
making by multiple stakeholder groups
such as State Exchanges, health plans,
consumers, employers, providers and
provider organizations.
Response: We clarify in the final rule
that HHS seeks to encourage
transparency and align with other
Exchange quality standards and data
collection for QHP issuers, while
protecting information that may be
misinterpreted or misused if made
publicly available. Similar to other
quality standards and CMS programs
collecting data from QHP issuers in the
Exchanges, we do not anticipate
publicly displaying information that is
considered confidential or proprietary.
As noted above, HHS anticipates the
display of a subset of this information
to promote transparency and will
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provide additional details through
future guidance.
Comment: Many commenters
recommended that HHS require the use
of specific performance measures in the
QIS, specifically those from the
following organizations: NCQA (HEDIS);
URAC; the Pediatric Quality
Measurement Program; and the Dental
Quality Alliance (DQA). There was also
strong support for use of National
Quality Forum (NQF)-endorsed
measures, and measures that align with
the National Quality Strategy.
Commenters noted that requiring QHP
issuers to include commonly used
measures in their quality improvement
strategies would minimize the data
collection burden on QHP issuers as
well as providers. Some comments
supported inclusion of process-level
and plan-level data and measures of
improvement when evaluating a QIS.
Some commenters stated that defining
the health outcomes that will be the
focus of interventions, setting goals for
improvement, and the approach for
linking improvement to payment
incentives should be detailed in the
QHP issuer’s quality improvement
strategy. They also suggested that these
elements be fully disclosed so that
regulators and other interested parties
can properly evaluate a QHP issuer’s
quality improvement strategy. Other
commenters supported collection of
information such as the rationale for the
targeted population, proposed
performance measures, approaches to
reducing health care disparities, and a
description of the mitigation strategy.
Response: HHS will not require QHP
issuers to include specific performance
measures in a QIS. Instead, we have
outlined the elements that should be
included as part of a QIS, including a
rationale that describes its relevance to
the QHP’s enrollee population,
proposed performance measures and
targets, a description of activities
conducted to implement the strategy, a
description of activities conducted to
reduce health and health care
disparities, as well as other chosen
topics, goals, timeline, and information
about challenges, barriers, and
mitigation planning. As noted above, we
anticipate requiring QHP issuers to
include information in their respective
QIS implementation plan regarding
percentage of payments to providers
that is adjudicated based on quality and
cost of services as a range within
categories of provider payments.
Comment: Several commenters
provided comments specifically on
evaluation. Commenters supported the
evaluation of QHP issuers’ quality
improvement strategies, as long as the
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purpose of the evaluation is to drive
improvement in the strategies being
implemented, and to create a national
set of performance data against which to
assess the strategies. Some commenters
noted that evaluating the quality
improvement strategies could be
challenging, due to QHP issuers
changing, removing, or adding QHPs,
and enrollee movement across plans
both within and outside of the
Exchange. Additional challenges noted
by commenters included aligning
evaluation requirements with other
State and Federal requirements and
ensuring that QHP issuers have
sufficient time to understand changing
rules and regulations to meet
compliance requirements.
Response: This final rule adopts a
phased-in approach to implementation
of the QIS and accompanying reporting
requirements to provide QHP issuers the
necessary time to understand the
population enrolling in their respective
QHPs offered through the Exchanges
and to build quality performance data
on its QHP enrollees. We also finalize
an approach that requires a QHP issuer
participating in the FFEs for at least 2
years to submit a QIS implementation
plan for each QHP offered in the
Exchange, followed by annual progress
updates. The purpose of requiring a
QHP issuer to submit an annual
progress update on its QIS
implementation plan is to evaluate
progress. As detailed in the proposed
rule (79 FR 70735), we believe that
implementation of a QIS should be a
continuous process under which QHP
issuers define the health outcome needs
of their enrollees, set goals for
improvement, and use increased
reimbursement to their providers or
other market-based incentives as a
reward for quality improvement and to
stimulate achievement of those goals. As
such, we anticipate that QHP issuers
will be engaged in a continuous process
of evaluating the populations enrolling
in their respective QHPs offered through
Exchanges, modifying or otherwise
adjusting their QIS plan as may be
appropriate, and building quality
performance data on its QHP enrollees.
This approach is designed to account for
the changes with respect to QHP
offerings, as well as enrollee movement
across plans both within and outside of
Exchanges. We further note that since
QHP issuers will not be penalized if the
implementation is not demonstrating an
effect on the performance targets set out
in the implementation plan, we believe
that these challenges are not a barrier to
performing an annual evaluation
review. Additional details on the timing
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of the submission of the initial QIS
implementation plan and the annual
progress reports will be included in
technical guidance.
Comment: Some commenters
suggested that we provide additional
technical guidance on the QIS
requirements in § 156.1130(b),
specifically those related to data
validation and which entity will be
reviewing data submissions for accuracy
prior to public display.
Response: HHS intends to publish
QIS technical guidance in 2015 that will
establish the minimum enrollment size
threshold to trigger the applicability of
the QIS standards, as well as data
validation, data submission, and
evaluation requirements for QHP issuers
participating in the FFEs. We anticipate
that State Exchanges will be issuing
similar guidance to their respective QHP
issuers.
8. Qualified Health Plan Issuer
Responsibilities
a. Administrative Appeals
(§ 156.1220(c))
In the 2015 Payment Notice, we
established an administrative appeals
process designed to address unresolved
discrepancies regarding advance
payments of the premium tax credit,
advance payments of cost-sharing
reductions, FFE user fee payments,
payments and charges for the premium
stabilization programs, cost-sharing
reduction reconciliation payments and
charges, and assessments of default risk
adjustment charges. We established a
three-tier appeals process: a request for
reconsideration under § 156.1220(a); a
request for an informal hearing before a
CMS hearing officer under
§ 156.1220(b); and a request for review
by the Administrator of CMS under
§ 156.1220(c).
Under § 156.1220(a), we provided that
an issuer may file a request for
reconsideration of a processing error by
HHS, HHS’s incorrect application of the
relevant methodology, or HHS’s
mathematical error only for advance
payments of the premium tax credit,
advance payments of cost-sharing
reductions, FFE user fee payments,
payments and charges for the premium
stabilization programs, cost-sharing
reduction reconciliation payments and
charges, and assessments of default risk
adjustment charges for a benefit year. In
§ 156.1220(a)(6), we stated that a
reconsideration decision would be final
and binding for decisions regarding the
advance payments of the premium tax
credit, advance payments of costsharing reductions, and FFE user fees. A
reconsideration decision for other
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matters would be subject to the outcome
of a request for informal hearing filed in
accordance with § 156.1220(b).
Under § 156.1220(b), an issuer that
elects to challenge the reconsideration
decision may request an informal
hearing before a CMS hearing officer.
The CMS hearing officer’s decision
would be final and binding, but subject
to any Administrator’s review initiated
in accordance with § 156.1220(c).
We stated in § 156.1220(c)(1) that if
the CMS hearing officer upholds the
reconsideration decision, the issuer is
permitted to request a review by the
Administrator of CMS within 15
calendar days of the date of the CMS
hearing officer’s decision. We proposed
a modification to this process to also
permit CMS the opportunity to request
review of the CMS hearing officer’s
decision, and to permit the
Administrator of CMS to decline to
review the CMS hearing officer’s
decision. Specifically, we proposed to
amend § 156.1220(c)(1) to permit either
the issuer or CMS to request review by
the Administrator of the CMS hearing
officer’s decision. We proposed to
provide that any request for review of
the hearing officer’s decision must be
submitted to the Administrator of CMS
within 15 calendar days of the date of
the hearing officer’s decision, and must
specify the findings or issues that the
issuer or CMS challenges. We proposed
that the issuer or CMS be permitted to
submit for review by the Administrator
a statement supporting the decision of
the CMS hearing officer.
We also proposed to amend
§ 156.1220(c)(2) to provide the
Administrator of CMS with the
discretion to review or not review the
decision of the CMS hearing officer after
receiving a request for review under
§ 156.1220(c)(1). We believe such
discretion will permit the Administrator
to focus resources on the priority
matters, including disputes with
implications for other issuers. In
keeping with our current process set
forth in § 156.1220(c), we proposed that
if the Administrator elects to review the
CMS hearing officer’s decision, the
Administrator will review the
statements of the issuer and CMS, and
any other information included in the
record of the CMS hearing officer’s
decision, and will determine whether to
uphold, reverse, or modify the CMS
hearing officer’s decision. We proposed
that the issuer or CMS be required to
prove its case by clear and convincing
evidence for issues of fact, and that the
Administrator will send the decision
and the reasons for the decision to the
issuer. As established in
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§ 156.1220(c)(3), the Administrator’s
decision will be final and binding.
We received no comments on this
proposal. We are finalizing these
amendments as proposed.
F. Part 158—Issuer Use of Premium
Revenue: Reporting and Rebate
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1. Treatment of Cost-Sharing Reductions
in MLR Calculation (§ 158.140)
The Premium Stabilization rule (77
FR 17220) aligned the definition of
‘‘allowable costs’’ under the risk
corridors program at § 153.500 with the
definition of incurred claims under the
MLR program at § 158.140 and
expenditures for health care quality and
health information technology under
§ 158.150-§ 158.151. In the 2014
Payment Notice, we additionally
specified that allowable costs under risk
corridors must be reduced by the
amount of cost-sharing reduction
payments received by the issuer, to the
extent not reimbursed to the provider.
To align the calculations between the
two programs, we proposed to specify
that cost-sharing reduction payments
should be deducted from incurred
claims under the MLR program just as
they are deducted from allowable costs
under the risk corridors program. As we
explained in the proposed rule, it is our
understanding that in capitated
arrangements, issuers will generally
retain the cost-sharing reduction
payments, and in such circumstances
cost-sharing reduction payments should
be accounted for as a reduction to
incurred claims because capitation
payments (which are reflected directly
in an issuer’s incurred claims) will be
raised to account for the reductions in
the providers’ cost-sharing income. In
contrast, in most fee-for-service
arrangements, issuers will pass the costsharing reduction payments through to
providers, and therefore no adjustment
to incurred claims for cost-sharing
reduction payments would be required
in such situations.
We are finalizing this provision as
proposed.
Comment: Several commenters
supported our proposal as drafted,
while one commenter opposed it.
Several commenters expressed concern
that the proposal could disadvantage
issuers in capitated arrangements that
do pass through the cost-sharing
reduction payments to the providers.
Response: We agree with the
commenters that issuers who pursue
innovative cost containment practices
involving capitation and cost-sharing
reduction payments should not be
treated differently than issuers in fee-
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for-service arrangements. However, we
note that our proposed regulation text
did not distinguish between capitation
and fee-for-service arrangements. Under
our proposal, issuers in either type of
arrangement must deduct cost-sharing
reduction payments from incurred
claims, to the extent such payments are
not reimbursed to the provider
furnishing the item or service.
Therefore, we are finalizing the
clarification of the definition of incurred
claims in § 158.140 as proposed.
2. Reporting of Federal and State Taxes
(§ 158.162)
The MLR December 1, 2010 interim
final rule (75 FR 74864) broadly
describes Federal and State taxes and
assessments that are excluded from
premiums in the MLR and rebate
calculations, and Federal and State
taxes and assessments not excluded
from premium in MLR and rebate
calculations. In the proposed rule (79
FR 70737), we proposed to further
clarify for future MLR reporting years
the treatment of Federal and State
employment taxes. Specifically, we
proposed to amend the provisions for
the reporting of Federal and State taxes
in § 158.162(a)(2) and (b)(2) to provide
that Federal and State employment
taxes (such as the Federal Insurance
Contributions Act (FICA) and the
Railroad Retirement Tax Act (RRTA)
taxes, the Federal Unemployment Act
(FUTA) and State unemployment taxes,
and other similar taxes) should not be
excluded from premium in the MLR and
rebate calculations.
Comment: Several commenters
supported our proposal. One commenter
noted that our proposal reflected their
understanding of Congressional intent,
as evidenced by the 2010 letter to the
Secretary from six congressional
committee chairs involved in drafting
the Affordable Care Act.76 In contrast,
other commenters opposed our
proposal, questioning our authority to
amend the definition of taxes. These
commenters stated that the reference to
‘‘excluding Federal and State taxes’’ in
section 2718 of the PHS Act does not
require clarification. These commenters
alternatively asserted that to the extent
the statute requires interpretation, only
the NAIC has the authority to do so.
Consequently, a subset of these
commenters recommended that we
obtain an official recommendation from
the NAIC before adopting any
modifications to the definition of taxes.
Some commenters additionally
76 Available at https://www.politico.com/static/
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expressed concern regarding the
effective date of the proposed provision.
Response: We disagree that there is no
need to clarify the statutory reference to
taxes or that the NAIC, rather than HHS,
has the authority to clarify it. Our
review of the MLR reports submitted by
issuers identified this issue as one that
would benefit from further clarification
for future reporting years due to the fact
that there appeared to be inconsistent
treatment among issuers. While most
issuers do not exclude employment
taxes from premium, others have
adopted the opposite approach and
exclude such taxes from premium.
Further, as some of the commenters
point out, section 2718 of the PHS Act
directed the NAIC to develop the
uniform definitions and standardized
methodologies with regard to the MLR
provisions. It directed the NAIC to
develop such definitions and
methodologies no later than December
31, 2010, and subjected all such
definitions and methodologies to the
certification of the Secretary. As a
Federal agency, HHS retains the
authority to implement the statute and
interpret the statutory terms where
necessary, including the authority to
adjust the MLR definitions after 2010.
Furthermore, the NAIC’s
recommendation to the Secretary
provided that certain Federal and State
taxes should not be excluded from
premiums in MLR and rebate
calculations, supporting our belief that
the phrase ‘‘excluding Federal and State
taxes’’ requires clarification and does
not mean all taxes of any kind. This
approach—the identification of those
Federal and State taxes that must be
excluded from premium and those that
cannot be excluded—was codified in
our regulations at § 158.162 as part of
the MLR December 1, 2010 interim final
rule. The use of uniform definitions and
standardized methodologies when
calculating the MLR and associated
rebates (including the treatment of
employment taxes) is critical to both
ensuring a level playing field across
issuers and to deliver to consumers the
protections promised by the statute.
Therefore, we are finalizing the
amendment to the definition of Federal
and State taxes that may be deducted
from premium in § 158.162(a)(2) and
(b)(2) as proposed. In recognition of
commenters’ concerns regarding the
effective date of this provision, we note
that this provision will become effective
for the 2016 reporting year, and
therefore must be reflected in reports
submitted to the Secretary by July 31,
2017. This should provide adequate
time for those issuers that previously
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interpreted the regulation differently to
adjust their financial planning. We also
reiterate that this is simply a
clarification to explicitly require
inclusion, as our data indicate most
issuers have been doing.
3. Distribution of Rebates to Group
Enrollees in Non-Federal Governmental
Plans (§ 158.242)
The December 7, 2011 MLR Rebate
Requirements for Non-Federal
Governmental Plans interim final rule
(76 FR 76596) directs issuers to
distribute rebates to the group
policyholders of non-Federal
governmental plans. Under CMS’s direct
enforcement authority over non-Federal
governmental plans, the interim final
rule further directs the group
policyholders of such plans to use the
portion of the rebate attributable to the
amount of premium paid by subscribers
of such plans for the benefit of
subscribers in one of three prescribed
ways. These provisions were put in
place to ensure that rebates are used for
the benefit of enrollees of non-Federal
governmental plans, who do not receive
the protections of Employee Retirement
Income Security Act of 1974 (ERISA), as
amended. Under ERISA and
implementing regulations, most plan
participants are assured that the rebate
(when the rebate is determined to be a
plan asset) is applied for their benefit
within 3 months of receipt by the
policyholder.
To afford similar protection to
subscribers of non-Federal
governmental plans, we proposed to
amend the provisions for distribution of
rebates in § 158.242(b) to require group
policyholders of non-Federal
governmental plans to use the
subscribers’ portion of the rebate for the
subscribers’ benefit within 3 months of
receipt of the rebate by the group
policyholder. Under the proposal, plans
would continue to be able to use the
rebate to reduce the subscribers’ portion
of premium for the subsequent policy
year (including by spreading it over the
12 months of the policy year) as long as
the subsequent policy year commences
within 3 months of receipt of the rebate
by the group policyholder. If the
subsequent policy year commences
outside this 3-month window, the group
policyholder of a non-Federal
governmental plan must distribute the
subscribers’ portion of the rebate within
3 months in the form of a cash refund
or by applying a mid-policy year
premium credit to the subscriber’s
portion of the premium. We also noted
that, because under § 158.242(b)(3)
group health plans that are not
governmental plans and are not subject
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to ERISA (such as church plans) must
follow the same rebate distribution rules
in order to receive the rebate directly,
the same distribution deadline would
apply to such plans.
We are finalizing the amendments as
proposed. In addition, we are finalizing
the December 7, 2011 interim final rule
(76 FR 76596) with minor changes after
consideration of the comments received
on that rule as noted below.
Comment: We received one comment
supporting the requirement that
policyholders that are non-Federal
governmental or other group health
plans not subject to ERISA apply or
distribute rebates within 3 months of
receipt, or pay interest on the rebates.
Response: We appreciate the
comment regarding the distribution of
rebates to group enrollees in nonFederal governmental and other group
health plans not subject to ERISA.
Policyholders that are non-Federal
governmental or other group health
plans not subject to ERISA that do not
apply or distribute rebates within 3
months of receipt will be required to
pay interest on the rebates, much the
same as an issuer is required to do if
they do not disburse the rebate to the
policyholder by the due date.
Comment: We received several
comments supporting the rules
governing the distribution of rebates to
subscribers of non-Federal
governmental and other group health
plans not subject to ERISA, which were
set forth in the December 7, 2011 MLR
Rebate Requirements for Non-Federal
Governmental Plans interim final rule
(76 FR 76596). Other commenters
requested that we clarify the deadline
for rebate distribution by such plans.
One commenter expressed concern that
the regulation does not afford such
plans adequate time to use the rebate to
reduce the subscribers’ portion of
premium or enhance benefits for a
subsequent policy year. One commenter
requested that such plans be permitted
to distribute rebates directly to
subscribers in situations where the
policyholder has modified or ceased to
offer group coverage.
Response: We agree with the
commenters regarding the need for
clarification of the rebate distribution
deadline for policyholders that are nonFederal governmental or other group
health plans not subject to ERISA. As
noted above, we believe that requiring
such policyholders to use the rebate for
the benefit of subscribers no later than
3 months of receipt of the rebate by the
policyholder ensures that consumers in
group health plans not subject to ERISA
receive the benefit of MLR rebates in a
timely manner. Accordingly, we have
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clarified the deadline in this final rule,
as described in more detail above. In
addition, we agree that policyholders
that are non-Federal governmental or
other group health plans not subject to
ERISA should be allowed to distribute
rebates directly to subscribers in
situations where the policyholder does
not offer the same plan(s) or has ceased
to offer group coverage. Therefore, we
are amending the provisions in
§ 158.242(b)(1)(iii) to specify that as an
alternative to providing a cash rebate to
the subscribers enrolled in the plan
option at the time the policyholder
receives the rebate, the group
policyholder may instead provide a cash
rebate to the subscribers who were
enrolled in the plan option during the
MLR reporting year that generated the
rebate.
IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide 30day notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. This final rule contains
information collection requirements
(ICRs) that are subject to review by
OMB. A description of these provisions
is given in the following paragraphs
with an estimate of the annual burden,
summarized in Table 12.
In the November 26, 2014 (79 FR
70674) proposed rule, we requested
public comment on each of the
collection of information requirements
contained in the proposed rule. The
comments and our responses to them
are discussed below:
A. ICRs Regarding Standards for
Notification of Change of Ownership
(§ 147.106(g))
When an issuer that offers a QHP, a
plan otherwise subject to risk corridors,
a risk adjustment covered plan, or a
reinsurance-eligible plan experiences a
change of ownership as recognized by
the State in which the plan is offered,
the issuer is required to notify HHS in
a manner to be specified by HHS and
provide the legal name, Health
Insurance Oversight System (HIOS) plan
identifier,77 tax identification number of
the original and post-transaction issuers,
as applicable, and the effective date of
the change of ownership, and the
summary description of transaction. The
information must be submitted by the
latest of (1) the date the transaction is
entered into; or (2) the 30th day prior to
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the effective date of the transaction. The
burden associated with this requirement
is the time and effort for the issuer to
notify HHS of a change of ownership.
We estimate that it will take an
insurance operations analyst 30 minutes
(at an hourly wage rate of $56.63) to
prepare the data related to the change of
ownership, and 10 minutes for a senior
manager (at an hourly wage rate of
$103.95) to review the data and transmit
it electronically to HHS. We estimate
that it will cost an issuer $45.65 to
comply with this reporting requirement.
Although at this time we cannot
precisely estimate the number of issuers
that will be reporting changes of
ownership, we expect that no more than
20 issuers will be subject to this
reporting requirement annually, for a
total burden of $913.
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B. ICRs Regarding Effective Rate Review
Programs (§ 154.301)
Under § 154.301(b)(2), if a State
intends to make the information
contained in Parts I, II, and III of the rate
filing justification regarding proposed
rate increases subject to review available
to the public prior to the date specified
in guidance by the Secretary, or if it
intends to make the information
contained in Parts I, II, and III of the rate
filing justification regarding final rate
increases available to the public prior to
the first day of the annual open
enrollment period in the individual
market for the applicable calendar year,
the State must notify CMS in writing of
its intent to publish this information at
least 30 days before it makes the
information public and the date it
intends to make the information public.
We intend to seek OMB approval and
solicit public comment on this
information collection requirement, in
accordance with the Paperwork
Reduction Act of 1995, at a future date.
C. ICRs Regarding Standards for HHSApproved Vendors of FederallyFacilitated Exchange Training and
Information Verification for Agents and
Brokers (§ 155.222)
In § 155.222, we describe the
information collection and disclosure
requirements that pertain to the
approval of vendors’ FFE agent and
broker training programs, including
information verification and
administration of identity proofing. The
burden estimate associated with these
disclosure requirements includes the
time and effort required for vendors to
develop, compile, and submit the
application information and any
documentation or agreement necessary
to support oversight in the form and
manner required by HHS. We estimate
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that HHS will receive applications from
nine or fewer vendors, and that it will
take each vendor approximately 10
hours to complete an application and
the agreement, at a cost of $24.10 per
hour. Therefore, we estimate a total
burden of approximately 90 hours and
a cost of $2,169 as a result of this
requirement. HHS will develop a model
vendor application that will include
data elements necessary for HHS review
and approval. HHS will estimate the
burden on vendors for complying with
this provision of the regulation, and
submit the application for OMB
approval in the future. For vendors that
choose to charge for their training, HHS
will consider current training costs for
State-licensed agents and brokers for
comparable training to comparable
audiences when reviewing vendor
applications with proposed fee
structures.
In § 155.222(d), we establish a process
through which HHS will monitor
approved vendors for ongoing
compliance. HHS may require
additional information from approved
vendors to be submitted periodically to
ensure continued compliance related to
the obligations described in this section.
We estimate that HHS will receive
applications from nine or fewer
vendors. We estimate that it will take no
longer than 10 hours (at a cost of $24.10
per hour) for each vendor to comply
with any additional monitoring by HHS.
Therefore, we estimate a total annual
burden of 90 hours for all vendors for
a total cost burden estimate of $2,169.
In § 155.222(e), we establish a process
by which a vendor whose application is
not approved or whose approval is
revoked by HHS can appeal HHS’s
determination. We discuss the costs
associated with the appeals process in
the Regulatory Impact Analysis (RIA)
section of this rule.
This section establishes a new method
by which agents and brokers may
complete training and information
verification components of the
registration process to be authorized to
assist with enrollment in individual
market and SHOP coverage through the
FFE. The information collection
associated with the current process by
which agents and brokers may be
authorized to assist with enrollment
through the Exchange is approved under
OMB Control Number 0938–1204. We
intend to revise the current collection
request to incorporate this new method
by which agents and brokers may
complete training and information
verification components of the
registration process. Based on
information not available when the
current collection request was
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10851
developed in 2013, we also expect a
significant reduction in the overall
burden, both in terms of the total
number of respondents and the time
required for each response. We intend to
seek OMB approval and solicit public
comment on this information collection
requirement in accordance with the
Paperwork Reduction Act of 1995.
D. ICRs Regarding Notification of
Effective Date for SHOP (§ 155.720(e))
Section § 155.720(e) has been
amended to refer to enrollees and not
qualified employees. This amendment
establishes that issuers must provide a
coverage effective date notice to anyone
who enrolled in coverage through a
SHOP under the new definition of
‘‘enrollee,’’ including dependents
(including a new dependent of the
employee, when the dependent
separately joins the plan), former
employees of a qualified employer, and
certain business owners, who might be
enrolled in coverage through a SHOP.
We specify that when a primary
subscriber and his or her dependents
live at the same address, a separate
notice need not be sent to each
dependent at that address, so long as the
notice sent to each primary subscriber at
that address contains all the required
information about the coverage effective
date for the primary subscriber and each
of his or her dependents at that address.
When dependents live at a different
address from the primary subscriber, a
separate notice must be sent to those
dependents. We note that the notices
required under this proposal could be
incorporated into existing notifications
that QHPs provide to their new
customers, for example in a welcome
document. We are also making a
conforming amendment to
§ 156.285(c)(3) to ensure that QHP
issuers participating in a SHOP provide
notice to a new enrollee of the enrollee’s
effective date of coverage. We note that
the effective date for this notice
requirement will take effect in plan
years beginning on or after January 1,
2017 for enrollees that are not qualified
employees. Issuers have already been
providing these notices to qualified
employees and are expected to continue
sending these notices under the current
rule. This final rule also expands
issuers’ obligation to send notices to
former employees under the amended
definition of a qualified employee.
The burden estimate associated with
this requirement includes the time and
effort needed to develop the notice and
to distribute it through an automated
process to enrollees, as appropriate. We
estimate that approximately 445 QHP
issuers (including dental issuers) will
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participate on the SHOPs in all States.
We estimate that it will take
approximately 35 hours annually to
develop and transmit this notice,
including 4 hours for a health policy
analyst (at an hourly wage rate of
$58.05), 3 hours for an operations
analyst (at an hourly wage rate of
$56.63), 25 hours for a computer
programmer (at an hourly wage rate of
$48.61), 2 hours for a fulfillment
manager (at an hourly wage rate of
$27.00), and 1 hour for a senior manager
(at an hourly wage rate of $103.95).
Therefore, we estimate an aggregate
burden of 15,575 hours and $790,004 for
QHP issuers participating in a SHOP as
a result of this requirement. We describe
this burden in more detail in our
discussion of the Information Collection
Reporting section for § 156.285(d) in
this final rule.
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E. ICRs Regarding Collection of Data To
Define Essential Health Benefits
(§ 156.120)
In § 156.120, we require States that
select a base-benchmark plan or an
issuer that offers a default basebenchmark plan to submit to HHS
certain information in a form and
manner, and by a date, determined by
HHS. We are also finalizing our
proposal to allow each State to select a
new base-benchmark plan and
supplement if necessary for the 2017
plan year. The information collection
associated with State or issuer
submission of benchmark plan data is
currently approved under OMB Control
Number 0938–1174. We expect to
collect less information for the 2017
plan year than we previously collected
for this purpose, and therefore we have
revised our current burden estimate to
reflect the reduced burden on issuers.
The burden estimate associated with
this requirement includes the time and
effort needed for issuers and States to
file an electronic submission describing
the benefits, limits, and exclusion of the
plan chosen as the State benchmark for
the 2017 benefit year. We estimate that
approximately 51 entities are subject to
the reporting requirements and that it
will take approximately 1.5 hours
annually to identify and submit the
responsive records to CMS, including
1.5 hours for an issuer or health policy
analyst (at an hourly wage rate of
$58.05). Therefore, we estimate an
aggregate burden of 76.5 hours and
$4,440.83 for issuers and States as a
result of this requirement.
We released information regarding
this data collection requirement, in
accordance with the Paperwork
Reduction Act of 1995, on November 26,
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2014 in CMS–10448,78 for a 60-day
comment period.79 We did not receive
any comments in relation to that release.
This final rule serves to provide notice
of a 30-day public comment period in
relation to this proposed information
collection which will be available on
our Web site.80
F. ICRs Regarding Prescription Drug
Benefits (§ 156.122)
In § 156.122, we require health plans
that are required to comply with EHB,
as part of a committee that meets the
standards established in that section.
We expect that health plans have
already established P&T committees that
meet these standards and follow these
processes. These processes include
recordkeeping requirements for the P&T
committee. Because we believe that
issuers are already required to maintain
such documentation, such as for
accreditation purposes, and that issuers
tend to use the same formulary drug list
for multiple plans, we believe that the
recordkeeping requirement will only
impose a minimal additional burden on
issuers. Therefore, we estimate that it
will take a compliance officer
approximately 8 hours (at an hourly
wage rate of $43.34) to prepare for and
attend meetings on a quarterly basis,
and maintain the required
documentation. Therefore, for
approximately 2,400 plans in the
individual and small group market that
would be subject to this requirement,
we estimate an aggregate annual burden
of 76,800 hours and $3,328,512.
G. ICRs Regarding Transparency in
Coverage (§ 156.220)
In the proposed rule, we solicited
comment regarding the type of
information that QHP issuers would be
required to provide and make available
to the public in plain language under
§ 156.220. We intend to provide further
detail regarding the proposed
implementation approach in the future.
We believe that the 2016
implementation date finalized in this
rule will allow sufficient time for HHS
to provide details regarding the data
collection, review, and public display of
transparency elements. We intend to
seek public comments on a proposed
information collection detailing the
78 https://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReductionAct
of1995/PRA-Listing-Items/CMS-10448.html
?DLPage=2&DLSort=1&DLSortDir=descending.
79 https://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReduction
Actof1995/PRA-Listing-Items/CMS-10448.html
?DLPage=2&DLSort=1&DLSortDir=descending.
80 https://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReduction
Actof1995/PRA-Listing.html.
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specific data elements, frequency of
updates, file types, and other crucial
information for OMB approval at a
future date.
H. ICRs Regarding Termination Notices
for SHOP (§ 156.285(d)(1)(ii)) and
§ 155.735(d)(1)(iii) and (g))
In § 156.285(d)(1)(ii) and
§ 155.735(d)(1)(iii) and (g) we require
QHP issuers participating in the SHOP
to provide notices to qualified
employers and enrollees related to
terminations of enrollment or coverage
through the SHOP due to rescission in
accordance with § 147.128 and due to
the QHP’s termination, decertification,
or non-renewal of certification, while
shifting the burden of notifying
qualified employers and enrollees of
terminations due to loss of eligibility or
nonpayment of premiums to the SHOP.
The amendments to § 156.285(d)(1)(ii)
and new § 155.735(g) will take effect
January 1, 2016. We note that, while our
current rules require issuers to provide
notice of terminations when coverage
through the SHOP is rescinded in
accordance with § 147.128, or when the
issuer elects not to seek recertification
for a QHP offered through the SHOP,
this provision will expand QHP issuers’
notice requirements to circumstances in
which the QHP terminates or is
decertified in accordance with
§ 155.1080. The notices must inform the
enrollee and qualified employer of the
termination effective date and the
reason for the termination. We specify
that when a primary subscriber and his
or her dependents live at the same
address, a separate notice need not be
sent to each dependent at that address,
so long as the notice sent to each
primary subscriber at that address
contains all the required information
about the termination of coverage for the
primary subscriber and each of his or
her dependents at that address. We note
that when dependents live at a different
address from the primary subscriber, a
separate notice must be sent to those
dependents. The burden estimate
associated with this requirement
includes the time and effort needed to
develop the notice and to distribute it
through an automated process to
qualified employer and the enrollee, as
appropriate. We estimate that
approximately 445 QHP issuers
(including dental issuers) will
participate on the SHOPs in all States.
We estimate that it will take
approximately 35 hours annually to
develop and transmit this notice,
including 4 hours for a health policy
analyst (at an hourly wage rate of
$58.05), 3 hours for an operations
analyst (at an hourly wage rate of
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$56.63), 25 hours for a computer
programmer (at an hourly wage rate of
$48.61), 2 hours for a fulfillment
manager (at an hourly wage rate of
$27.00), and 1 hour for a senior manager
(at an hourly wage rate of $103.95).
Therefore, we estimate an aggregate
burden of 15,575 hours across and
$790,004 for QHP issuers participating
in the SHOP as a result of this
requirement. HHS intends to seek
public comment on a proposed
information collection at a later date.
We note that amendments to the
definition of ‘‘enrollee’’ that are set forth
in this final rule and that take effect
sooner than January 1, 2016, may
expand the universe of individuals who
must receive these notices under both
the current rule and the amendments
that take effect January 1, 2016. As part
of developing and proposing the
information collection for this ICR, HHS
will estimate the effect of the modified
definition of ‘‘enrollee’’ on the
information collection burden.
Based on the above per-notice
development wage rates and hours, we
believe that each State-based SHOP will
spend roughly 70 hours annually to
prepare the two termination notices (35
hours per notice), for a total cost of
$3,550 to design and implement the
notices proposed under § 155.735(g). We
estimate that there will be
approximately 18 State-based SHOPs,
and that all State-based SHOPs will be
subject to this requirement. Therefore,
we estimate an aggregate burden of
1,260 hours and $63,900 for State-based
SHOPs as a result of this requirement.
I. ICRs Regarding Plan Variation Notices
and Changes in Eligibility for CostSharing Reductions (§ 156.420 and
§ 156.425)
In § 156.420(h), we require an issuer
to provide a summary of benefits and
coverage (SBC) for each plan variation
of a QHP it offers in accordance with the
rules set forth under § 156.420 (referred
to in this section as a ‘‘plan variation
SBC’’), in a manner that is consistent
with the standards set forth in
§ 147.200. In § 156.425(c), we provide
that if an individual’s assignment to a
plan variation or standard plan without
cost-sharing reductions changes in the
course of a benefit year (in accordance
with § 156.425(a)), an issuer must
provide an SBC in a manner consistent
with the standards set forth in
§ 147.200, as soon as practicable after
receiving notice from the Exchange of
the individual’s change in eligibility
and no later than 7 business days
following receipt of notice. The burden
associated with this requirement is the
time and effort for an issuer to create
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and provide plan variation SBCs to
affected individuals under § 156.420.
Nearly all issuers affected by this
requirement have already incurred onetime start-up costs related to
implementing the SBC requirements
established under § 147.200, and are
already providing SBCs that reflect the
standard QHPs they offer.81 We believe
that QHP issuers will leverage existing
processes to generate and distribute
plan variation SBCs under § 156.420(h).
We estimate that issuers would incur
additional burden to produce and
distribute plan variation SBCs under the
proposed §§ 156.420(h) and 156.425(c).
The additional burden will be
associated with three tasks: (1)
Producing plan variation SBCs; (2)
distributing plan variation SBCs; and (3)
distributing a plan variation SBC (or
standard QHP without cost-sharing
reductions) after a change in eligibility
in the course of a benefit year. We
intend to revise the information
collection approved under OMB Control
Number 0938–1187 to reflect this
additional burden.
1. Producing Plan Variation SBCs
Because stand-alone dental plans are
not required to complete SBCs, we
exclude these plans from the number of
QHPs that we estimate are required to
comply with the requirement. We
estimate that approximately 575 issuers
participate in the Exchange, and that
each issuer offers one QHP per metal
level, with four zero cost-sharing plan
variations and four limited cost-sharing
plan variations (two per metal level per
QHP) and three silver plan variations.82
81 Summary of Benefits and Coverage and
Uniform Glossary Final Rule (‘‘SBC Final Rule’’), 77
FR 8690 (Feb. 14, 2012). We have already received
OMB approval under OMB control number 0938–
1146 for the collection of information requirements
related to the SBC provisions as finalized under
current rules.
82 Under § 156.420(a), for each of its silver health
plans that an issuer offers, the issuer must offer
three variations of the standard silver plan that
reflect, in addition to the applicable annual
limitation on cost-sharing, the following: (1) A
silver plan variation with cost-sharing reductions
such that the actuarial value (AV) of the variation
is 94 percent plus or minus the de minimis
variation for a silver plan variation; (2) a silver plan
variation with cost-sharing reductions such that the
AV of the variation is 87 percent plus or minus the
de minimis variation for a silver plan variation; and
(3) a silver plan variation with cost-sharing
reductions such that the AV of the variation is 73
percent plus or minus the de minimis variation for
a silver plan variation. Under § 156.420(b), for each
QHP at any metal level that an issuer offers, the
issuer must offer two variations to American
Indians/Alaska Natives that reflect the following:
(1) A variation of the QHP with all cost sharing
eliminated; and (2) a variation of the QHP with no
cost-sharing on any item or service that is an
essential health benefit furnished directly by the
Indian Health Service, an Indian Tribe, Tribal
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10853
Therefore, we estimate that each issuer
offers 11 plan variations, and would
produce 11 SBCs to reflect each plan
variation, for a total of 6,325 plan
variation SBCs annually. We estimate
that it will take up to 1 hour to produce
each plan variation SBC, for an annual
time burden of 11 hours for each issuer.
We estimate that it would take an
information technology (IT) professional
5 hours (at an hourly wage rate of
$54.39), a benefits/sales professional 5.5
hours (an hourly wage rate of $44.9) per
hour, and an attorney 30 minutes (at an
hourly wage rate of $84.96) to comply
with the requirements. Therefore, we
estimate a total annual cost burden of
$561.44 per issuer, and $322,828 (6,325
hours) for all issuers affected by this
requirement.
2. Distributing Plan Variation SBCs
We are unable to estimate the number
of cost-sharing reduction-eligible
enrollees at this time and the related
burden on issuers to provide for these
disclosures. We expect that the vast
majority (approximately 95 percent) of
the total number of plan variation SBCs
provided in accordance with
§ 156.420(h) would be sent prior to
enrollment and electronically at
minimal cost, under the timing and
form requirements set forth in
§ 147.200(a)(1)(iv) and (a)(4)(iii). Of the
remaining number of plan variation
SBCs, we estimate that approximately 4
percent of these disclosures will be sent
in other instances, in accordance with
the other timing requirements that may
apply, including, requests for a plan
variation SBC made by a consumer in
the course of the benefit year. We expect
that the vast majority of these
disclosures will be provided
electronically at minimal cost. We
assume that there are costs for paper
disclosures, but no costs for electronic
disclosures.83 We expect that up to 1
percent of plan variation SBCs will be
provided in paper form. We estimate
that the labor costs associated with
distributing each SBC will be $1.63 (3
minutes for an administrative assistant
at an hourly wage rate of $32.59), and
that printing, mailing, and supply costs
will be $0.69 per SBC ($0.05 to print
each page and $0.49 for first class
postage), for a total cost of $2.32 per
SBC. We estimate an annual burden of
$331 for each QHP issuer and an
aggregate burden of $190,240 for all
issuers that are subject to the
requirement.
Organization, or Urban Indian Organization, or
through referral under contract health services.
83 SBC Final Rule, 77 FR 8691 (Feb. 14, 2012).
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3. Notice After Changes in Eligibility for
Cost-Sharing Reductions
In § 156.425(c), we require an issuer
to provide adequate notice to the
individual about the availability of the
SBC that accurately reflects the
applicable plan variation of the QHP (or
the standard QHP without cost-sharing
reductions) if an enrollee’s eligibility for
cost-sharing reductions changes in the
course of a benefit year. Similarly, if an
enrollee changes QHPs as the result of
a special enrollment period in
accordance with § 155.420(d)(6), the
issuer of the new QHP will be required
to provide the individual with an SBC
that accurately reflects the new QHP.
We are unable to estimate the number
of cost-sharing reduction-eligible
enrollees who would experience a
change in eligibility for cost-sharing
reductions at this time and the related
burden on issuers to provide for these
disclosures. We expect that the vast
majority (approximately 99 percent) of
the total number of SBCs provided in
accordance with § 156.425(c) will be
sent electronically at minimal cost. We
estimate that the labor costs associated
with producing each SBC will be
approximately $1.63 (3 minutes for an
administrative assistant at an hourly
wage rate of $32.59), and that printing,
and mailing costs will be $0.69 ($0.05
to print each page and $0.49 for first
class postage), for a total cost of $2.32
per SBC. We estimate a total annual cost
of $165 for each QHP issuer and $95,120
for all QHP issuers that are subject to
this requirement.
J. ICRs Regarding the Collection and
Reporting of Quality Improvement
Strategies (§ 156.1130)
In § 156.1130, we established
requirements for QHP issuers related to
data collection and submission of
information regarding a quality
improvement strategy (QIS). QIS
standards will establish the minimum
requirements for the FFEs, States with
plan management functions and that
State-based Exchanges must follow.
State-based Exchanges can, if desired,
build additional reporting requirements
in accordance with their needs.
Because SADPs will not be included
in the initial years, this estimate
assumes 575 QHP issuers (all issuers in
all Marketplaces excluding SADPs) and
covers the annual costs for a QHP issuer
over a 3-year period (2016–2018). The
burden associated with submitting
initial attestations as part of the QHP
certification process is currently
accounted for under OMB Control
Number 0938–1187. We estimate that it
will take each QHP issuer 48 hours (at
a cost of $3,372) to collect this QIS data
and to submit this information to the
Exchange. Therefore, we estimate an
aggregate burden of 27,600 hours and
$1,938,900 for 575 QHP issuers as a
result of these requirements.
TABLE 12—ANNUAL REPORTING, RECORDKEEPING AND DISCLOSURE BURDEN
Burden per
response
(hours)
Total annual
burden
(hours)
Hourly labor
cost of
reporting
($)
20
9
9
0.67
10.00
10.00
13.4
90
90
68.17
24.10
24.10
913
2,169
2,169
0
0
0
913
2,169
2,169
445
18
51
2,400
445
575
575
575
575
445
36
51
2,400
445
6,325
81,000
41,000
575
35.00
35.00
1.5
32.00
35.00
1.00
0.05
0.05
48
15.575
1,260
76.5
76,800
15,575
6,325
4,050
2,025
27,600
50.72
50.71
58.05
43.34
50.72
51.04
32.59
32.59
70.25
790,004
63,900
4,480.83
3,328,512
790,004
322,828
131,990
65,995
1,938,900
0
0
0
0
0
0
58,250
29,125
0
790,004
63,900
1,480.28
3,328,512
790,004
322,828
190,240
95,120
1,938,900
2,400
........................
....................
149,504.9
....................
7,441,865
87,375
7,529,240
Number of
respondents
§ 147.106(g) .............
§ 155.222(a) .............
§ 155.222(d) .............
§ 155.720(e) and
§ 156.285(c)(3) .....
§ 155.735(g) .............
§ 156.120 ..................
§ 156.122 ..................
§ 156.285(d)(1)(ii) .....
§ 156.420 ..................
§ 156.420(h) .............
§ 156.425 ..................
§ 156.1130 ................
20
9
9
Total ..................
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Regulation section(s)
Responses
Copies of the supporting statement
and any related forms for information
collections identified above can be
found at: https://www.cms.hhs.gov/
PaperworkReductionActof1995 or can
be obtained by emailing your request,
including your address, phone number,
OMB number, and CMS document
identifier, to: Paperwork@cms.hhs.gov,
or by calling the Reports Clearance
Office at: 410–786–1326. If you
comment on these proposed information
collection, please reference the CMS
document identifier and the OMB
control number. To be assured
consideration, comments and
recommendations must be received in
one of the following ways prior to the
public comment deadline: 1.
Electronically. You may submit your
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comments electronically to https://
www.regulations.gov. Follow the
instructions for ‘‘Comment or
Submission’’ or ‘‘More Search Options’’
to find the information collection
document(s) accepting comments. 2. By
regular mail. You may mail written
comments to the following address:
CMS, Office of Strategic Operations and
Regulatory Affairs, Division of
Regulations Development, Attention:
Document Identifier (CMS–10523),
Room C4–26–05, 7500 Security
Boulevard, Baltimore, Maryland 21244–
1850, and, OMB Office of Information
and Regulatory Affairs, Attention: CMS
Desk Officer, New Executive Office
Building, Room 10235, Washington, DC
20503, Fax Number: 202–395– 6974.
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Total labor
cost of
reporting
($)
Total capital/
maintenance
costs
($)
Total cost
($)
V. Regulatory Impact Analysis
A. Statement of Need
This final rule sets forth standards
related to the premium stabilization
programs (risk adjustment, reinsurance,
and risk corridors) for the 2016 benefit
year, as well as certain modifications for
the 2015 benefit year, that will protect
issuers from the potential effects of
adverse selection and protect consumers
from increases in premiums due to
issuer uncertainty. The Premium
Stabilization Rule and the 2014 and
2015 Payment Notices provided detail
on the implementation of these
programs, including the specific
parameters for the 2014 and 2015
benefit years applicable to these
programs. This final rule sets forth
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additional standards related to essential
health benefits, meaningful access in the
Exchange, consumer assistance tools
and programs of an Exchange, nonNavigator assistance personnel, costsharing parameters and cost-sharing
reduction notices, quality improvement
strategy standards for issuers of QHPs
participating in Exchanges, guaranteed
availability, guaranteed renewability,
minimum essential coverage, the rate
review program, the medical loss ratio
program, the Small Business Health
Options Program, and FFE user fees.
B. Overall Impact
We have examined the impacts of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 202 of the Unfunded
Mandates Reform Act of 1995 (March
22, 1995, Pub. L. 104–4), Executive
Order 13132 on Federalism (August 4,
1999), and the Congressional Review
Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. A
regulatory impact analysis (RIA) must
be prepared for rules with economically
significant effects ($100 million or more
in any 1 year).
OMB has determined that this final
rule is ‘‘economically significant’’
within the meaning of section 3(f)(1) of
Executive Order 12866, because it is
likely to have an annual effect of $100
million in any 1 year. Accordingly, we
have prepared an RIA that presents the
costs and benefits of this rule.
Although it is difficult to discuss the
wide-ranging effects of these provisions
in isolation, the overarching goal of the
premium stabilization, market
standards, and Exchange-related
provisions and policies in the
Affordable Care Act is to make
affordable health insurance available to
individuals who do not have access to
affordable employer-sponsored
coverage. The provisions within this
final rule are integral to the goal of
expanding access to affordable coverage.
For example, the premium stabilization
programs help prevent risk selection
and decrease the risk of financial loss
that health insurance issuers might
otherwise expect in 2016 and the
advance payments of the premium tax
credit and cost-sharing reduction
programs assist low- and moderateincome consumers and American
Indians/Alaska Natives in purchasing
health insurance. The combined
impacts of these provisions affect the
private sector, issuers, and consumers,
through increased access to health care
services including preventive services,
decreased uncompensated care, lower
premiums, establishment of quality
improvement strategy standards, and
increased plan transparency. Through
the reduction in financial uncertainty
for issuers and increased affordability
for consumers, these provisions are
expected to increase access to affordable
health coverage.
HHS anticipates that the provisions of
this final rule will help further the
Department’s goal of ensuring that all
consumers have access to quality,
affordable health care and are able to
make informed choices, that Exchanges
operate smoothly, that premium
stabilization programs work as
intended, that SHOPs are provided
flexibility, and that employers and
consumers are protected from
fraudulent and criminal activities.
Affected entities such as QHP issuers
will incur costs to comply with the
provisions specified in the final rule,
including administrative costs related to
notices, quality improvement strategy
requirements, training and
recertification requirements, and, in
some cases, establishing a larger
provider network. In accordance with
Executive Order 12866, HHS believes
that the benefits of this regulatory action
justify the costs.
C. Impact Estimates of the Payment
Notice Provisions and Accounting Table
In accordance with OMB Circular A–
4, Table 13 below depicts an accounting
statement summarizing HHS’s
assessment of the benefits, costs, and
transfers associated with this regulatory
action.
This final rule implements standards
for programs that will have numerous
effects, including providing consumers
with affordable health insurance
coverage, reducing the impact of
adverse selection, and stabilizing
premiums in the individual and small
group health insurance markets and in
an Exchange. We are unable to quantify
certain benefits of this rule—such as
improved health outcomes and
longevity due to continuous quality
improvement and increased insurance
enrollment—and certain costs—such as
the cost of providing additional medical
services to newly-enrolled individuals.
The effects in Table 13 reflect
qualitative impacts and estimated direct
monetary costs and transfers resulting
from the provisions of this final rule for
reinsurance contributing entities and
health insurance issuers. The
annualized monetized costs described
in Table 13 reflect direct administrative
costs to these entities as a result of these
provisions, and include administrative
costs related to notices, quality
improvement strategy requirements, and
training and recertification requirements
that are estimated in the Collection of
Information section of this final rule.
The annual monetized transfers
described in Table 13 include costs
associated with the reinsurance
contribution fee, FFE user fees, and the
risk adjustment user fee paid to HHS by
issuers, and additional MLR rebate
payments from issuers to consumers.
We also note that reinsurance
administrative expenses, included in
the reinsurance contribution rate, will
increase slightly from 2015 to 2016. In
addition, as a result of HHS’s increased
contract costs related to risk adjustment
operations and risk adjustment data
validation, we will collect a total of $50
million in risk adjustment user fees or
$1.75 per enrollee per year from risk
adjustment issuers, which is greater
than the $0.96 per-enrollee-per-year risk
adjustment user fee amount established
for benefit year 2015. This increase is
due in large part to risk adjustment data
validation costs that will occur in 2016.
The increase in FFE user fee collections
is a result of a constant user fee rate
from 2015 to 2016 (3.5 percent) but
expected growth in enrollment in the
FFEs. We are also including costs
associated with administrative appeals
under § 156.1220 in the RIA of this final
rule.
TABLE 13—ACCOUNTING TABLE
Benefits:
Qualitative:
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TABLE 13—ACCOUNTING TABLE—Continued
* Increased enrollment in the individual market leading to improved access to health care for the previously uninsured, especially individuals
with medical conditions, which will result in improved health and protection from the risk of catastrophic medical expenditures.
* Encourage continuous quality improvement among QHP issuers to improve health outcomes at lower costs.
* Allow Exchanges to make informed QHP certification decisions.
* Increasing coverage options for small businesses and their employees while mitigating the effect of adverse selection.
* Ensure that consumers in group health plans not subject to ERISA receive the benefit of MLR rebates in a timely manner.
Costs:
Estimate
(million)
Annualized Monetized ($/year) ........................................................................................
6.77
6.77
Year dollar
Discount
rate
(percent)
2015
2015
Period
covered
7
3
2015–2018
2015–2018
Quantitative:
* Costs incurred by issuers and contributing entities to comply with provisions in the rule.
* Costs incurred by States for complying with audits of State-operated reinsurance programs.
Transfers:
Estimate
(million)
Annualized Monetized ($/year) ........................................................................................
418.61
418.52
Year dollar
Discount
rate
(percent)
2015
2015
Period
covered
7
3
2015–2018
2015–2018
* Transfers reflect incremental cost increases from 2015–2016 for reinsurance administrative expenses, FFE user fees, and the risk adjustment
user fee, which are transfers from contributing entities and health insurance issuers to the Federal government. FFE user fees are newly included in the estimated transfers as collections are now projected for the period covered. Transfers also reflect annual transfer from shareholders or nonprofit stakeholders to enrollees of rebates paid by issuers for coverage in the individual and group markets, resulting from clarification regarding MLR methodology to account for Federal and State employment taxes.
* Unquantified: Lower premium rates in the individual market due to the improved risk profile of the insured, competition, and pooling risk.
This RIA expands upon the impact
analyses of previous rules and utilizes
the Congressional Budget Office’s (CBO)
analysis of the Affordable Care Act’s
impact on Federal spending, revenue
collection, and insurance enrollment.
Table 14 summarizes the effects of the
risk adjustment and reinsurance
programs on the Federal budget from
fiscal years 2015 through 2018, with the
additional, societal effects of this
proposed rule discussed in this RIA. We
do not expect the provisions of this final
rule to significantly alter CBO’s
estimates of the budget impact of the
risk adjustment, reinsurance, and risk
corridors programs that are described in
Table 14. For this RIA, we are shifting
the estimates for the risk adjustment and
reinsurance programs to reflect the 4year period from fiscal years 2015
through 2018, because these payments
and charges will begin in the 2015
calendar year for the 2014 benefit year.
We note that transfers associated with
the risk adjustment and reinsurance
programs were previously estimated in
the Premium Stabilization Rule;
therefore, to avoid double-counting, we
do not include them in the accounting
statement for this final rule (Table 13).
In addition to utilizing CBO
projections, HHS conducted an internal
analysis of the effects of its regulations
on enrollment and premiums. Based on
these internal analyses, we anticipate
that the quantitative effects of the
provisions finalized in this rule are
consistent with our previous estimates
in the 2015 Payment Notice for the
impacts associated with the cost-sharing
reduction program, the advance
payments of the premium tax credit
program, the premium stabilization
programs, and FFE user fee
requirements.
TABLE 14—ESTIMATED FEDERAL GOVERNMENT OUTLAYS AND RECEIPTS FOR THE RISK ADJUSTMENT, REINSURANCE, AND
RISK CORRIDORS PROGRAMS FROM FY 2014–2018
[In billions of dollars]
Year
2015
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Risk Adjustment, Reinsurance, and Risk Corridors Program Payments ............................................................
Risk Adjustment, Reinsurance, and Risk Corridors Program Collections ...........................................................
2016
2017
2018
2019
2015–2019
17
17.5
19.5
15
17
86
18
16.5
19.5
15
17
86
Source: Congressional Budget Office. Updated Estimates of the Insurance Coverage Provisions of the Affordable Care Act, January 2015.
1. Rate Review
The final rule will trigger review of
rate increases that meet or exceed the
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applicable review threshold when such
increases happen at the ‘‘plan’’ level
rather than at the ‘‘product’’ level. This
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will protect consumers against
unreasonable rate increases for their
plans, since, under current regulations,
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it is possible for a plan to experience a
rate increase higher than the threshold
and still avoid review because the
average rate increase for the product
does not meet or exceed the threshold.
States may have to review more
submissions and experience an increase
in related costs. The establishment of a
uniform timeframe by which issuers in
every State must submit a completed
Rate Filing Justification to CMS and the
applicable State for all rate increases,
including both QHPs and non-QHPs,
will provide timely information to
consumers and other stakeholders and
ensure that State and Federal regulators
have adequate time for review prior to
implementation of a rate increase. The
amendment to specify the timing for
States to make proposed and final rate
increase information available to the
public will ensure that consumers have
timely access to this information. These
provisions will also reduce the potential
for anti-competitive behavior and
promote fair market competition
between issuers inside and outside of
the Exchange.
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2. Change of Ownership Notification
Requirement
This final rule provides that when an
issuer of a QHP, a plan otherwise
subject to risk corridors, a risk
adjustment covered plan, or a
reinsurance-eligible plan, experiences a
change in ownership as recognized by
the State in which the plan is offered,
the issuer must notify HHS in a manner
specified by HHS, by the latest of (1) the
date the transaction is entered into; or
(2) the 30th day prior to the effective
date of the transaction. We expect that
upon notification, issuers may need to
work with HHS to clarify operational
processes related to the HHSadministered programs, and will follow
with guidance related to such
operational processes. We estimate the
administrative costs associated with the
notification requirement in the
Collection of Information section of this
final rule.
3. Appeals Process for HHS-Approved
Vendors for FFE Training and
Information Verification for Agents and
Brokers
In § 155.222, we proposed
information collection and disclosure
requirements that pertain to the
approval of vendors to have their FFE
agent and broker training and
information verification programs
recognized as sufficient for agents and
brokers to satisfy the training
requirement to assist or facilitate
enrollment in individual market or
SHOP coverage through the FFEs. We
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also establish a monitoring and appeals
process for such HHS-approved
vendors. We estimate that five vendors
that apply may not have their
application approved, and one vendor
may have their approval revoked, and
all of those vendors will appeal HHS’s
determination and submit additional
documentation to HHS. We estimate
that filing an appeal with HHS will take
no longer than 1 hour. Therefore, at an
hourly wage rate of $24.10, we estimate
a total cost of $144.60 as a result of this
appeals process.
4. Risk Adjustment
The risk adjustment program is a
permanent program created by the
Affordable Care Act that transfers funds
from lower risk, non-grandfathered
plans to higher risk, non-grandfathered
plans in the individual and small group
markets, inside and outside the
Exchanges. We established standards for
the administration of the risk
adjustment program in subparts D and
G of part 45 of the CFR.
A State approved or conditionally
approved by the Secretary to operate an
Exchange may establish a risk
adjustment program, or have HHS do so
on its behalf. As described in the 2014
and 2015 Payment Notices, if HHS
operates risk adjustment on behalf of a
State, it will fund its risk adjustment
program operations by assessing a risk
adjustment user fee on issuers of risk
adjustment covered plans. For the 2016
benefit year, we estimate that the total
cost for HHS to operate the risk
adjustment program on behalf of States
for 2016 will be approximately $50
million, and that the risk adjustment
user fee would be approximately $1.75
per enrollee per year. The increased risk
adjustment user fee for 2016 is the result
of the increased contract costs to
support the risk adjustment data
validation process.
5. Reinsurance
The Affordable Care Act directs that
a transitional reinsurance program be
established in each State to help
stabilize premiums for coverage in the
individual market by helping to pay the
cost of treating high-cost enrollees. In
the 2014 and 2015 Payment Notices, we
expanded upon the standards set forth
in subparts C and E of the Premium
Stabilization Rule and established the
2014 and 2015 uniform reinsurance
payment parameters and national
contribution rate. In this rule, we
finalize the 2016 uniform reinsurance
payment parameters and contribution
rate and a modification to the 2015
benefit year attachment point.
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Section 153.220(c) provides that HHS
will publish the uniform per capita
reinsurance contribution rate for the
upcoming benefit year in the annual
HHS notice of benefit and payment
parameters. Section 1341(b)(3)(B)(iii) of
the Affordable Care Act specifies that
$10 billion for reinsurance contributions
is to be collected from contributing
entities for the 2014 benefit year (the
reinsurance payment pool), $6 billion
for the 2015 benefit year, and $4 billion
for the 2016 benefit year. Additionally,
sections 1341(b)(3)(B)(iv) and 1341(b)(4)
of the Affordable Care Act direct that $2
billion in funds is to be collected for
contribution to the U.S. Treasury for the
2014 benefit year, $2 billion for the 2015
benefit year, and $1 billion for the 2016
benefit year. Finally, section
1341(b)(3)(B)(ii) of the Affordable Care
Act allows for the collection of
additional amounts for administrative
expenses. Taken together, these three
components make up the total dollar
amount to be collected from
contributing entities for 2014, 2015 and
2016 benefit years for the reinsurance
program under the uniform per capita
contribution rate.
In the 2015 Payment Notice, we
estimated that the Federal
administrative expenses of operating the
reinsurance program would be $25.4
million, based on our estimated contract
and operational costs. We used the same
methodology to estimate the
administrative expenses for the 2016
benefit year. We estimate this amount to
be approximately $32 million for the
2016 benefit year. This estimate
increased for the 2016 benefit year due
to increased audit and data validation
contract costs. We believe that this
figure reflects the Federal government’s
significant economies of scale, which
helps to decrease the costs associated
with operating the reinsurance program.
Based on our estimate of covered lives
for which reinsurance contributions are
to be made for 2016, we are finalizing
a uniform reinsurance contribution rate
of $0.17 annually per capita for HHS
administrative expenses. If a State
establishes its own reinsurance
program, HHS would transfer $0.085 of
the per capita administrative fee to the
State for purposes of administrative
expenses incurred in making
reinsurance payments, and retain the
remaining $0.085 to offset the costs of
collecting contributions. We note that
the administrative expenses for
reinsurance payments will be
distributed to those States that operate
their own reinsurance program in
proportion to the State-by-State total
requests for reinsurance payments made
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under the uniform reinsurance payment
parameters.
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6. Risk Corridors
The Affordable Care Act creates a
temporary risk corridors program for the
years 2014, 2015, and 2016 that applies
to QHPs, as defined in § 153.500.
Section 1342 of the Affordable Care Act
directs the Secretary to establish a
temporary risk corridors program that
protects issuers against inaccurate rate
setting from 2014 through 2016. The
Affordable Care Act establishes the risk
corridors program as a Federal program;
consequently, HHS will operate the risk
corridors program under Federal rules
with no State variation.
We finalize a clarification to the risk
corridors transitional adjustment for
benefit year 2014. We clarify that we
intend to implement the risk corridors
transitional adjustment for transitional
plans only, as stated in the 2015
Payment Notice. This clarification does
not affect the impact of the risk
corridors transitional adjustment.
For benefit year 2016, we are
finalizing the treatment of excess risk
corridors collections that may remain
after the 3-year duration of the program.
We will adjust the allowable
administrative cost ceiling and profit
floor so that any excess risk corridors
collections that remain in benefit year
2016 are paid out to eligible QHP
issuers. We anticipate that collections
will fully offset payments over the 3year duration of the program.
Consequently, we do not believe that
this provision will have a monetary
impact on QHP issuers or the Federal
government.
7. SHOP
The SHOP facilitates the enrollment
of eligible employees of small
employers into small group health
insurance plans. A qualitative analysis
of the costs and benefits of establishing
a SHOP was included in the RIA
published in conjunction with the
Exchange Establishment Rule.84
Please see the Collection of
Information section of this proposed
rule for the costs expected to be
incurred by State-based SHOPs and
QHP issuers participating in the SHOP
related to the notification requirements
related to terminations of coverage or
enrollment through the SHOP and the
notification requirement for the
coverage effective date under the new
definition of an enrollee. We believe the
cost associated with termination notices
is justified because SHOPs are best
84 Available at: https://cciio.cms.gov/resources/
files/Files2/03162012/hie3r-ria-032012.pdf.
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positioned to provide meaningful notice
regarding terminations due to loss of
eligibility and nonpayment of premiums
in a timely manner, while issuers are
best positioned to provide meaningful
notice when coverage or enrollment
through the SHOP is terminated due to
a rescission in accordance with
§ 147.128 or when the QHP is
terminated, decertified, or its
certification is not renewed, as well as
notices of the effective date of coverage.
We believe expanding the notice
requirement under § 155.720(e) benefits
all individuals with coverage, including
dependents, former employees of a
qualified employer, and certain business
owners, with a notification of effective
date of coverage.
8. User Fees
To support the operation of FFEs, we
require in § 156.50(c) that a
participating issuer offering a plan
through an FFE must remit a user fee to
HHS each month equal to the product
of the user fee rate specified in the
annual HHS notice of benefit and
payment parameters for the applicable
benefit year and the monthly premium
charged by the issuer for each policy
under the plan where enrollment is
through an FFE. For the 2016 benefit
year, we are finalizing a monthly user
fee rate equal to 3.5 percent of the
monthly premium. As described in the
Budget of the United States
Government, Fiscal Year 2016, we
expect approximately $1.514 billion in
user fee collections would be obligated
in fiscal year 2016. For the user fee
charge assessed on issuers in the FFE,
we received an exception to OMB
Circular No. A–25R, which requires that
the user fee charge be sufficient to
recover the full cost to the Federal
government of providing the special
benefit. This exception ensures that the
FFEs can support many of the goals of
the Affordable Care Act, including
improving the health of the population,
reducing health care costs, and
providing access to health coverage as
advanced by § 156.50(d).
9. Essential Health Benefits, Cost
Sharing, and Actuarial Value
Issuers may incur minor
administrative costs associated with
altering benefits, cost-sharing and/or AV
parameters of their plan designs to
ensure compliance with the EHB
requirements in this rule. For example,
issuers that do not currently meet the
standards for EHB prescription drug
coverage will incur contracting and onetime administrative costs to bring their
prescription drug benefits into
compliance. HHS expects that the
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process for compliance with the revised
EHB requirements will not significantly
add to existing compliance costs
because issuers have extensive
experience in offering products with
various benefits and levels of cost
sharing and these modifications are
expected to be relatively minor for most
issuers.
In addition, we are adding standards
for a health plan’s formulary exception
process that includes an external
review. We believe that issuers that
provide EHB already have formulary
exceptions processes and procedures in
place that allow an enrollee to request
and gain access to clinically appropriate
drugs not covered by the plan. We do
not expect these requirements to
significantly increase the volume of
reviews conducted under issuers’
contracts with Independent Review
Organizations. Therefore, we do not
anticipate that these requirements
would result in any significant new cost
for issuers.
10. Network Adequacy
Issuers may incur minor
administrative costs associated with
updating their provider directory to
ensure compliance with the
requirements under this final rule. Since
issuers already maintain a directory and
the expected modification is to re-locate
that directory to a more user-friendly
location on the issuer Web site, HHS
expects that compliance will not
demand any additional resources.
11. Downstream Entities
We revised § 156.200(b)(7), to clarify
that a QHP issuer is required to comply
with the standards under part 153 and
not just the standards related to the risk
adjustment program. Under § 156.340,
notwithstanding any relationship(s) that
a QHP issuer may have with delegated
and downstream entities, a QHP issuer
maintains responsibility for its
compliance and the compliance of any
of its delegated or downstream entities,
as applicable, with all applicable
standards, including the standards of
subpart C of part 156 for each of its
QHPs on an ongoing basis. Because we
believe that QHP issuers have existing
agreements with downstream entities
that define responsibilities, we do not
believe that this requirement will
impose an additional burden on QHP
issuers.
12. Provisions Related to Cost Sharing
The Affordable Care Act provides for
the reduction or elimination of cost
sharing for certain eligible individuals
enrolled in QHPs offered through the
Exchanges. This assistance will help
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many low- and moderate-income
individuals and families obtain health
insurance—for many people, cost
sharing is a barrier to obtaining needed
health care.85
To support the administration of the
cost-sharing reduction program, we set
forth in this final rule the reductions in
the maximum annual limitation on cost
sharing for silver plan variations.
Consistent with our analysis in the 2014
and 2015 Payment Notices, we
developed three model silver level
QHPs and analyzed the impact on their
AVs of the reductions described in the
Affordable Care Act to the estimated
2016 maximum annual limitation on
cost sharing for self-only coverage
($6,850). We do not believe these
changes will result in a significant
economic impact.
We are also finalizing the premium
adjustment percentage for the 2016
benefit year. Section 156.130(e)
provides that the premium adjustment
percentage is the percentage (if any) by
which the average per capita premium
for health insurance coverage for the
preceding calendar year exceeds such
average per capita premium for health
insurance for 2013. The annual
premium adjustment percentage sets the
rate of increase for three parameters
detailed in the Affordable Care Act: The
annual limitation on cost sharing
(defined at § 156.130(a)), the required
contribution percentage by individuals
for minimum essential health coverage
the Secretary may use to determine
eligibility for hardship exemptions
under Section 5000A of the Code, and
the section 4980H(a) and section
4980H(b) assessable payment amounts
(finalized at 26 CFR 54.4980H in the
‘‘Shared Responsibility for Employers
Regarding Health Coverage,’’ published
in the Federal Register on February 12,
2014 (79 FR 8544)). We believe that the
2016 premium adjustment percentage of
8.316047520 percent is well within the
parameters used in the modeling of the
Affordable Care Act, and we do not
expect that these proposed provisions
will alter CBO’s January 2015 baseline
estimates of the budget impact.
13. Minimum Essential Coverage
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The final rule provides continued
recognition of State high risk pools as
minimum essential coverage. This will
85 Brook, Robert H., John E. Ware, William H.
Rogers, Emmett B. Keeler, Allyson Ross Davies,
Cathy D. Sherbourne, George A. Goldberg, Kathleen
N. Lohr, Patricia Camp and Joseph P. Newhouse.
The Effect of Coinsurance on the Health of Adults:
Results from the RAND Health Insurance
Experiment. Santa Monica, CA: RAND Corporation,
1984. Available at: https://www.rand.org/pubs/
reports/R3055.
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facilitate the transition of State high risk
pool enrollees into QHPs through the
Exchange or into other forms of
minimum essential coverage, while
ensuring continued access to coverage.
It will also help ensure that this
vulnerable population will not be
subject to the shared responsibility
payment during this transition, and
thereby avoid an increase in out-ofpocket costs.
14. Quality Improvement Strategy
The standards requiring QHP issuers
participating in Exchanges to establish
and submit information regarding a
quality improvement strategy will
encourage continuous quality
improvement among QHP issuers to
help strengthen system-wide efforts to
improve health outcomes at lower costs,
promote provider payment models that
link quality and value of services, allow
for flexibility and innovation of diverse
market-based incentive approaches,
encourage meaningful improvements as
well as provide regulators and
stakeholders with information to use for
monitoring and evaluation purposes.
We discuss the administrative costs
associated with submitting this
information in the Collection of
Information section of this proposed
rule.
15. Administrative Appeals
In § 156.1220, we establish an
administrative appeals process to
address unresolved discrepancies for
advance payments of the premium tax
credit, advance payment and
reconciliation of cost-sharing
reductions, FFE user fees, and the
premium stabilization programs, as well
as any assessment of a default risk
adjustment charge under § 153.740(b).
We estimated the burden associated
with the administrative appeals process
in the 2015 Payment Notice, and in the
Supporting Statement approved under
OMB Control Number 0938–1155. We
will revise the information collection
currently approved OMB Control
Number 0938–1155 with an October 31,
2015 expiration date. We do not believe
that the provisions in this final rule will
alter the economic impact of this
requirement that was estimated in the
2015 Payment Notice.
16. Medical Loss Ratio
This final rule clarifies the treatment
of cost-sharing reductions in the MLR
calculations. This final rule also ensures
timely distribution of rebates for the
benefit of subscribers of group health
plans not subject to ERISA. Specifically,
the amendments to the MLR provisions
governing the distribution of rebates to
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10859
group enrollees in non-Federal
governmental and other group health
plans not subject to ERISA ensure that
group policyholders of such plans do
not withhold the benefit of rebates from
the enrollees for longer than 3 months.
This final rule also provides an
additional option for distribution of
rebates by such policyholders. We do
not anticipate that these provisions will
have any significant effect on MLR
program estimates. This final rule also
amends the MLR regulations to provide
that premium in MLR and rebate
calculations should not be reduced by
the amount of Federal and State
employment taxes. Based on MLR data
for the 2013 MLR reporting year, the
clarification regarding the treatment of
such taxes in the MLR and rebate
calculations may result in additional
rebate payments to consumers of
approximately $35 million from issuers
that previously interpreted the MLR
December 1, 2010 interim final rule to
permit the reduction of premium by the
amount of such taxes.
D. Regulatory Alternatives Considered
When considering the final 2016
reinsurance payment parameters we
also considered a set of uniform
reinsurance payment parameters that
would have substantially lowered the
reinsurance cap, but believe those
uniform reinsurance payment
parameters would have raised the
complexity of estimating the effects of
reinsurance for issuers.
We also considered expanding the
risk corridors transitional adjustment to
apply to early renewal plans. This
approach would have increased the
impact of the risk corridors adjustment
and altered the impact analysis related
to the risk corridors transitional
adjustment that was published in the
2015 Payment Notice. However, we
decided not to propose or finalize this
alternate policy.
We considered for the 2016 benefit
year requiring issuers to separate visit
limits for rehabilitative and habilitative
services and devices. However, we
determined that issuers’ claims systems
are unable to distinguish rehabilitative
and habilitative services and devices at
this time. Therefore, we determined that
this requirement should not be effective
until 2017 to allow issuers to modify
their claims systems.
We considered ending the good faith
compliance policy for QHP issuers.
However, we determined that subjecting
QHP issuers to increased punitive
actions in the early years of the
Exchange would be less effective than
working with issuers to address
compliance issues. We also considered
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a more expansive good faith compliance
policy, but believe that 2 years is a
sufficient transition period.
We considered not suppressing QHPs
on the FFE, but this approach would
have resulted in less flexibility for the
FFE to address situations that could
affect consumers’ interests. For
example, this alternative could cause
disruption by requiring consumers to
select a new QHP mid-year if their QHP
was decertified rather than just
suppressed for new enrollments.
We also considered not recognizing
vendors as an alternative avenue for FFE
training and information verification of
agents and brokers. However, we believe
that recognizing vendors will make it
easier for agents and brokers to identify
appropriate vendors who meet HHS
standards for training and registration.
Additionally, we considered not
requiring QIS reporting for QHP issuers.
However, we decided to finalize the
policy in this rule because we believe
that QIS reporting will result in higher
quality QHPs being offered in the
Exchange and make it easier for
consumers to select a high-quality QHP.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601, et seq.) (RFA) requires
agencies to prepare an initial regulatory
flexibility analysis to describe the
impact of the proposed rule on small
entities, unless the head of the agency
can certify that the rule will not have a
significant economic impact on a
substantial number of small entities.
The RFA generally defines a ‘‘small
entity’’ as (1) a proprietary firm meeting
the size standards of the Small Business
Administration (SBA), (2) a not-forprofit organization that is not dominant
in its field, or (3) a small government
jurisdiction with a population of less
than 50,000. States and individuals are
not included in the definition of ‘‘small
entity.’’ HHS uses a change in revenues
of more than 3 to 5 percent as its
measure of significant economic impact
on a substantial number of small
entities.
In this final rule, we set forth
standards for the risk adjustment,
reinsurance, and risk corridors
programs, which are intended to
stabilize premiums as insurance market
reforms are implemented and Exchanges
facilitate increased enrollment. Because
we believe that insurance firms offering
comprehensive health insurance
policies generally exceed the size
thresholds for ‘‘small entities’’
established by the SBA, we do not
believe that an initial regulatory
flexibility analysis is required for such
firms.
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For purposes of the RFA, we expect
the following types of entities to be
affected by this rule:
• Health insurance issuers.
• Group health plans.
• Reinsurance entities.
We believe that health insurance
issuers and group health plans would be
classified under the North American
Industry Classification System (NAICS)
code 524114 (Direct Health and Medical
Insurance Carriers). According to SBA
size standards, entities with average
annual receipts of $35.5 million or less
would be considered small entities for
these NAICS codes. Issuers could
possibly be classified in 621491 (HMO
Medical Centers) and, if this is the case,
the SBA size standard would be $32.5
million or less.
In this final rule, we set forth
standards for employers that choose to
participate in a SHOP Exchange. Until
2017, the SHOPs are limited by statute
to employers with at least one but not
more than 100 employees. For this
reason, we expect that many employers
who would be affected by these
requirements would meet the SBA
standard for small entities. We do not
believe that these provisions impose
requirements on employers offering
health insurance through the SHOP that
are more restrictive than the current
requirements on small businesses
offering employer-sponsored insurance.
We believe the processes that we have
established constitute the minimum
amount of requirements necessary to
implement the SHOP program and
accomplish our policy goals, and that no
appropriate regulatory alternatives
could be developed to further lessen the
compliance burden.
Based on data from MLR annual
report submissions for the 2013 MLR
reporting year, approximately 141 out of
500 issuers of health insurance coverage
nationwide had total premium revenue
of $38.5 million or less. This estimate
may overstate the actual number of
small health insurance companies that
may be affected, since 77 percent of
these small companies belong to larger
holding groups, and many if not all of
these small companies are likely to have
non-health lines of business that would
result in their revenues exceeding $38.5
million. Only 16 of these small entities
owed a rebate for the 2013 reporting
year, and none of these small entities
are estimated to experience a rebate
increase of more than 0.1 percent of
total premium revenue under the MLR
provisions of this final rule. None of the
small entities that did not previously
owe rebates are expected to owe rebates
as a result of the provisions of this final
rule. Based on data from MLR annual
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report submissions for the 2013 MLR
reporting year, approximately 286,750
out of 1.6 million small group
policyholders and 13,500 out of 228,000
large group policyholders nationwide
were owed rebates for the 2013
reporting year. It is uncertain how many
of the group policyholders obtaining
coverage from health insurance issuers
subject to MLR are both (a) small
entities that fall below the size
thresholds set by the SBA for various
industries, and (b) enrolled in group
health plans not subject to ERISA, and
would therefore be subject to the
proposed provisions related to MLR.
However, the provisions of this final
rule only establish a deadline for the use
of MLR rebates by certain policyholders
similar to the deadline that is already
followed by most group policyholders,
and do not otherwise alter the
requirements for rebate use by such
policyholders. In addition, the
clarification regarding how health
insurance issuers must treat cost-sharing
reductions in their MLR calculations
simply aligns the MLR regulatory
language with the risk corridors
program.
F. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits and take certain other
actions before issuing a rule that
includes any Federal mandate that may
result in expenditures in any 1 year by
a State, local, or Tribal governments, in
the aggregate, or by the private sector, of
$100 million in 1995 dollars, updated
annually for inflation. In 2015, that
threshold is approximately $141
million. Although we have not been
able to quantify all costs, the combined
administrative cost and user fee impact
on State, local, or Tribal governments
and the private sector may be above the
threshold. Earlier portions of this RIA
constitute our UMRA analysis.
G. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule that imposes substantial
direct costs on State and local
governments, preempts State law, or
otherwise has Federalism implications.
Because States have flexibility in
designing their Exchange and Exchangerelated programs, State decisions will
ultimately influence both administrative
expenses and overall premiums. States
are not required to establish an
Exchange or risk adjustment or
reinsurance program. For States electing
to operate an Exchange, risk adjustment
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or reinsurance program, much of the
initial cost of creating these programs
will be funded by Exchange Planning
and Establishment Grants. After
establishment, Exchanges will be
financially self-sustaining, with revenue
sources at the discretion of the State.
Current State Exchanges may charge
user fees to issuers.
In HHS’s view, while this rule would
not impose substantial direct
requirement costs on State and local
governments, this regulation has
Federalism implications due to direct
effects on the distribution of power and
responsibilities among the State and
Federal governments relating to
determining standards relating to health
insurance that is offered in the
individual and small group markets.
Each State electing to establish an
Exchange must adopt the Federal
standards contained in the Affordable
Care Act and in this rule, or have in
effect a State law or regulation that
implements these Federal standards.
However, HHS anticipates that the
Federalism implications (if any) are
substantially mitigated because under
the statute, States have choices
regarding the structure and governance
of their Exchanges and risk adjustment
and reinsurance programs. Additionally,
the Affordable Care Act does not require
States to establish these programs; if a
State elects not to establish any of these
programs or is not approved to do so,
HHS must establish and operate the
programs in that State.
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have Federalism implications or limit
the policy making discretion of the
States, HHS has engaged in efforts to
consult with and work cooperatively
with affected States, including
participating in conference calls with
and attending conferences of the
National Association of Insurance
Commissioners, and consulting with
State insurance officials on an
individual basis.
Throughout the process of developing
this proposed rule, HHS has attempted
to balance the States’ interests in
regulating health insurance issuers, and
Congress’ intent to provide access to
Affordable Insurance Exchanges for
consumers in every State. By doing so,
it is HHS’s view that we have complied
with the requirements of Executive
Order 13132.
H. Congressional Review Act
This rule is subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
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10861
U.S.C. 801, et seq.), which specifies that
before a rule can take effect, the Federal
agency promulgating the rule shall
submit to each House of the Congress
and to the Comptroller General a report
containing a copy of the rule along with
other specified information, and has
been transmitted to Congress and the
Comptroller General for review.
functions (Government agencies),
Medicaid, Payment and collections
reports, Public assistance programs,
Reporting and recordkeeping
requirements, State and local
governments, Sunshine Act, Technical
assistance, Women, and Youth.
List of Subjects
Administrative practice and
procedure, Claims, Health care, Health
insurance, Health plans, Medical loss
ratio, Penalties, Premium revenues,
Rebating Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, the Department of Health and
Human Services amends 45 CFR parts
144, 147, 153, 154, 155, 156, and 158 as
set forth below.
45 CFR Part 144
Health care, Health insurance, and
Reporting and recordkeeping
requirements.
45 CFR Part 147
Health care, Health insurance,
Reporting and recordkeeping
requirements, and State regulation of
health insurance.
45 CFR Part 153
Administrative practice and
procedure, Adverse selection, Health
care, Health insurance, Health records,
Organization and functions
(Government agencies), Premium
stabilization, Reporting and
recordkeeping requirements,
Reinsurance, Risk adjustment, Risk
corridors, Risk mitigation, State and
local governments.
45 CFR Part 154
Administrative practice and
procedure, Claims, Health care, Health
insurance, Health plans, Penalties,
Reporting and recordkeeping
requirements.
45 CFR Part 155
Administrative practice and
procedure, Health care access, Health
insurance, Reporting and recordkeeping
requirements, State and local
governments, Required Contribution
Percentage, Cost-sharing reductions,
Advance payments of the premium tax
credit, Administration and calculation
of advance payments of the premium
tax credit, Plan variations, Actuarial
value.
45 CFR Part 156
Administrative appeals,
Administrative practice and procedure,
Administration and calculation of
advance payments of the premium tax
credit, Advertising, Advisory
Committees, American Indian/Alaska
Natives, Brokers, Conflict of interest,
Consumer protection, Cost-sharing
reductions, Grant programs-health,
Grants administration, Health care,
Health insurance, Health maintenance
organization (HMO), Health records,
Hospitals, Individuals with disabilities,
Loan programs-health, Organization and
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45 CFR Part 158
PART 144—REQUIREMENTS
RELATING TO HEALTH INSURANCE
COVERAGE
1. The authority citation for part 144
continues to read as follows:
■
Authority: Secs. 2701 through 2763, 2791,
and 2792 of the Public Health Service Act,
42 U.S.C. 300gg through 300gg–63, 300gg–91,
and 300gg–92.
2. Section 144.103 is amended by
revising the definitions of ‘‘Plan’’ and
‘‘State’’ to read as follows:
■
§ 144.103
Definitions.
*
*
*
*
*
Plan means, with respect to an issuer
and a product, the pairing of the health
insurance coverage benefits under the
product with a particular cost-sharing
structure, provider network, and service
area. The product comprises all plans
offered with those characteristics and
the combination of the service areas for
all plans offered within a product
constitutes the total service area of the
product. With respect to a plan that has
been modified at the time of coverage
renewal consistent with § 147.106 of
this subchapter—
(1) The plan will be considered to be
the same plan if it:
(i) Has the same cost-sharing structure
as before the modification, or any
variation in cost sharing is solely related
to changes in cost or utilization of
medical care, or is to maintain the same
metal tier level described in sections
1302(d) and (e) of the Affordable Care
Act;
(ii) Continues to cover a majority of
the same service area; and
(iii) Continues to cover a majority of
the same provider network. For this
purpose, the plan’s provider network on
the first day of the plan year is
compared with the plan’s provider
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network on the first day of the
preceding plan year (as applicable).
(2) The plan will not fail to be treated
as the same plan to the extent the
modification(s) are made uniformly and
solely pursuant to applicable Federal
and State requirements if—
(i) The modification is made within a
reasonable time period after the
imposition or modification of the
Federal or State requirement;
(ii) The modification is directly
related to the imposition or
modification of the Federal or State
requirement.
(3) A State may permit greater
changes to the cost-sharing structure, or
designate a lower threshold for
maintenance of the same provider
network or service area for a plan to still
be considered the same plan.
*
*
*
*
*
State means each of the 50 States, the
District of Columbia, Puerto Rico, the
Virgin Islands, Guam, American Samoa,
and the Northern Mariana Islands;
except that for purposes of part 147, the
term does not include Puerto Rico, the
Virgin Islands, Guam, American Samoa,
and the Northern Mariana Islands.
*
*
*
*
*
PART 147—HEALTH INSURANCE
REFORM REQUIREMENTS FOR THE
GROUP AND INDIVIDUAL HEALTH
INSURANCE MARKETS
3. The authority citation for part 147
continues to read as follows:
■
Authority: Secs 2701 through 2763, 2791
and 2792 of the Public Health Service Act (42
U.S.C. 300gg through 300gg–63, 300gg–91,
and 300gg–92), as amended.
4. Section 147.104 is amended by—
a. Revising paragraphs (b)(1)(i)(C),
(b)(2), and (b)(4).
■ b. Redesignating paragraphs (f)
through (h) as paragraphs (g) through (i),
respectively.
■ c. Adding new paragraph (f).
The revisions and addition read as
follows:
■
■
§ 147.104 Guaranteed availability of
coverage.
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*
*
*
*
(b) * * *
(1) * * *
(i) * * *
(C) With respect to coverage in the
small group market, and in the large
group market if such coverage is offered
through a Small Business Health
Options Program (SHOP) in a State,
coverage must become effective
consistent with the dates described in
§ 155.725 of this subchapter, except as
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provided in paragraph (b)(1)(iii) of this
section.
*
*
*
*
*
(2) Limited open enrollment periods.
A health insurance issuer in the
individual market must provide a
limited open enrollment period for the
events described in § 155.420(d) of this
subchapter, excluding § 155.420(d)(3) of
this subchapter (concerning citizenship
status), § 155.420(d)(8) of this
subchapter (concerning Indians), and
§ 155.420(d)(9) of this subchapter
(concerning exceptional circumstances).
*
*
*
*
*
(4) Length of enrollment periods. (i) In
the group market, enrollees must be
provided 30 calendar days after the date
of the qualifying event described in
paragraph (b)(3) of this section to elect
coverage.
(ii) In the individual market, enrollees
must be provided 60 calendar days after
the date of an event described in
paragraph (b)(2) and (3) of this section
to elect coverage, as well as 60 calendar
days before certain triggering events as
provided for in § 155.420(c)(2) of this
subchapter.
*
*
*
*
*
(f) Calendar year plans. An issuer that
offers coverage in the individual market,
or in a merged market in a State that has
elected to merge the individual market
and small group market risk pools in
accordance with section 1312(c)(3) of
the Affordable Care Act, must ensure
that such coverage is offered on a
calendar year basis with a policy year
ending on December 31 of each calendar
year.
*
*
*
*
*
■ 5. Section 147.106 is amended by—
■ a. Redesignating paragraphs (g)
through (j) as paragraphs (h) through (k),
respectively.
■ b. Adding new paragraph (g).
The addition reads as follows:
§ 147.106 Guaranteed renewability of
coverage.
*
*
*
*
*
(g) Notification of change of
ownership. If an issuer of a QHP, a plan
otherwise subject to risk corridors, a risk
adjustment covered plan, or a
reinsurance-eligible plan experiences a
change of ownership, as recognized by
the State in which the plan is offered,
the issuer must notify HHS in a manner
specified by HHS, by the latest of—
(1) The date the transaction is entered
into; or
(2) The 30th day prior to the effective
date of the transaction.
*
*
*
*
*
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PART 153—STANDARDS RELATED TO
REINSURANCE, RISK CORRIDORS,
AND RISK ADJUSTMENT UNDER THE
AFFORDABLE CARE ACT
6. The authority citation for part 153
continues to read as follows:
■
Authority: Secs. 1311, 1321, 1341–1343,
Pub. L. 111–148, 24 Stat. 119.
7. Section 153.100 is amended by
revising paragraph (c) to read as follows:
■
§ 153.100 State notice of benefit and
payment parameters.
*
*
*
*
*
(c) State notice deadlines. If a State is
required to publish an annual State
notice of benefit and payment
parameters for a particular benefit year,
it must do so by the later of March 1 of
the calendar year prior to the applicable
benefit year, or by the 30th day
following the publication of the final
HHS notice of benefit and payment
parameters for that benefit year.
*
*
*
*
*
■ 8. Section 153.400 is amended by
revising paragraph (a)(1)(iii) and adding
paragraph (c) to read as follows:
§ 153.400
Reinsurance contribution funds.
(a) * * *
(1) * * *
(iii) Such plan or coverage is
expatriate health coverage, as defined by
the Secretary, or for the 2015 and 2016
benefit years only, is a self-insured
group health plan with respect to which
enrollment is limited to participants
who reside outside of their home
country for at least 6 months of the plan
year, and any covered dependents; or
*
*
*
*
*
(c) Determination of a debt. Any
amount owed to the Federal government
by a self-insured group health plan
(including a group health plan that is
partially self-insured and partially
insured, where the health insurance
coverage does not constitute major
medical coverage) and its affiliates for
reinsurance is a determination of a debt.
■ 9. Section 153.405 is amended by—
■ a. Revising paragraphs (b), (c)(1), (d)
introductory text, (g)(4)(i) introductory
text, and (g)(4)(ii) introductory text.
■ b. Removing paragraph (c)(2).
■ c. Redesignating paragraph (c)(3) as
paragraph (c)(2).
■ d. Revising newly designated
paragraph (c)(2).
The revisions read as follows:
§ 153.405 Calculation of reinsurance
contributions.
*
*
*
*
*
(b) Annual enrollment count. No later
than November 15 of benefit year 2014,
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2015, or 2016, as applicable, or, if such
date is not a business day, the next
business day, a contributing entity must
submit an annual enrollment count of
the number of covered lives of
reinsurance contribution enrollees for
the applicable benefit year to HHS. The
count must be determined as specified
in paragraphs (d) through (g) of this
section, as applicable.
(c) * * *
(1) Following submission of the
annual enrollment count described in
paragraph (b) of this section, HHS will
notify the contributing entity of the
reinsurance contribution amount
allocated to reinsurance payments,
administrative expenses, and the U.S.
Treasury to be paid for the applicable
benefit year.
(2) A contributing entity must remit
reinsurance contributions to HHS no
later than January 15, 2015, 2016, or
2017, as applicable, or, if such date is
not a business day, the next business
day, if making a combined contribution
or the first payment of the bifurcated
contribution, and no later than
November 15, 2015, 2016, or 2017, as
applicable, or, if such date is not a
business day, the next business day, if
making the second payment of the
bifurcated contribution.
(d) Procedures for counting covered
lives for health insurance issuers. A
health insurance issuer must use the
same method in a benefit year for all of
its health insurance plans in the State
(including both the individual and
group markets) for which reinsurance
contributions are required. To
determine the number of covered lives
of reinsurance contribution enrollees
under all health insurance plans in a
State for a benefit year, a health
insurance issuer must use one of the
following methods:
*
*
*
*
*
(g) * * *
(4) * * *
(i) Multiple group health plans
including an insured plan. If at least one
of the multiple plans is an insured plan,
the average number of covered lives of
reinsurance contribution enrollees must
be calculated using one of the methods
specified in either paragraph (d)(1) or
(2) of this section, applied across the
multiple plans as a whole. The
following information must be
determined by the plan sponsor:
*
*
*
*
*
(ii) Multiple group health plans not
including an insured plan. If each of the
multiple plans is a self-insured group
health plan, the average number of
covered lives of reinsurance
contribution enrollees must be
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calculated using one of the methods
specified either in paragraph (e)(1) or (2)
of this section, applied across the
multiple plans as a whole. The
following information must be
determined by the plan sponsor:
*
*
*
*
*
■ 10. Section 153.500 is amended by
revising the definition of ‘‘Adjustment
percentage’’ to read as follows:
(c) Information sharing. HHS may
consult with and share information
about issuers of risk adjustment covered
plans and reinsurance-eligible plans
with other Federal and State regulatory
and enforcement entities to the extent
the consultation or information is
necessary for purposes of Federal or
State oversight and enforcement
activities.
§ 153.500
PART 154—HEALTH INSURANCE
ISSUER RATE INCREASES:
DISCLOSURE AND REVIEW
REQUIREMENTS
Definitions.
*
*
*
*
*
Adjustment percentage means, with
respect to a QHP:
(1) For benefit year 2014—
(i) For a QHP offered by a health
insurance issuer with allowable costs of
at least 80 percent of after-tax premium
in a transitional State, the percentage
specified by HHS for such QHPs in the
transitional State; and otherwise
(ii) Zero percent.
(2) For benefit year 2015, for a QHP
offered by a health insurance issuer in
any State, 2 percent.
(3) For benefit year 2016—
(i) For a QHP offered by a health
insurance issuer with allowable costs of
at least 80 percent of after-tax premium,
the percentage specified by HHS; and
otherwise
(ii) Zero percent.
*
*
*
*
*
■ 11. Section 153.740 is amended by
revising paragraph (a) and adding
paragraph (c) to read as follows:
§ 153.740 Failure to comply with HHSoperated risk adjustment and reinsurance
data requirements.
(a) Enforcement actions. If an issuer of
a risk adjustment covered plan or
reinsurance-eligible plan fails to
establish a dedicated distributed data
environment in a manner and timeframe
specified by HHS; fails to provide HHS
with access to the required data in such
environment in accordance with
§ 153.700(a) or otherwise fails to comply
with the requirements of §§ 153.700
through 153.730; fails to adhere to the
reinsurance data submission
requirements set forth in § 153.420; or
fails to adhere to the risk adjustment
data submission and data storage
requirements set forth in §§ 153.610
through 153.630, HHS may impose civil
money penalties in accordance with the
procedures set forth in § 156.805 of this
subchapter. Civil monetary penalties
will not be imposed for non-compliance
with these requirements during the 2014
or 2015 calendar years under this
paragraph if the issuer has made good
faith efforts to comply with these
requirements.
*
*
*
*
*
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12. The authority citation for part 154
continues to read as follows:
■
Authority: Section 2794 of the Public
Health Service Act (42 U.S.C. 300gg–94).
13. Section 154.102 is amended by—
a. Revising the definitions of
‘‘Individual market’’, ‘‘Rate increase’’,
‘‘Small group market’’, and ‘‘State’’.
■ b. Adding a definition of ‘‘Plan’’ in
alphabetical order.
The revisions and addition read as
follows:
■
■
§ 154.102
Definitions.
*
*
*
*
*
Individual market has the meaning
given the term in § 144.103 of this
subchapter.
*
*
*
*
*
Plan has the meaning given the term
in § 144.103 of this subchapter.
*
*
*
*
*
Rate increase means, with respect to
rates filed—
(1) For coverage effective prior to
January 1, 2017, any increase of the
rates for a specific product offered in the
individual or small group market.
(2) For coverage effective on or after
January 1, 2017, any increase of the
rates for a specific product or plan
within a product offered in the
individual or small group market.
*
*
*
*
*
Small group market has the meaning
given the term in § 144.103 of this
subchapter.
State means each of the 50 States and
the District of Columbia.
*
*
*
*
*
■ 14. Section 154.200 is amended by
revising paragraphs (a) and (c) to read as
follows:
§ 154.200
review.
Rate increases subject to
(a) A rate increase filed in a State, or
effective in a State that does not require
a rate increase to be filed, is subject to
review if:
(1) The rate increase is 10 percent or
more applicable to a 12-month period
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that begins on January 1, as calculated
under paragraph (c) of this section; or
(2) The rate increase meets or exceeds
a State-specific threshold applicable to
a 12-month period that begins on
January 1, as calculated under
paragraph (c) of this section, determined
by the Secretary. A State-specific
threshold shall be based on factors
impacting rate increases in a State to the
extent that the data relating to such
State-specific factors is available by
August 1. States interested in proposing
a State-specific threshold for approval
are required to submit a proposal to the
Secretary by August 1.
*
*
*
*
*
(c) A rate increase meets or exceeds
the applicable threshold set forth in
paragraph (a) of this section if—
(1) For rates filed for coverage
beginning before January 1, 2017, the
average increase for all enrollees
weighted by premium volume meets or
exceeds the applicable threshold.
(2) For rates filed for coverage
beginning on or after January 1, 2017, an
increase in the plan-adjusted index rate
(as described in § 156.80 of this
subchapter) for any plan within the
product meets or exceeds the applicable
threshold.
*
*
*
*
*
■ 15. Section 154.215 is amended by
revising paragraph (a) to read as follows:
§ 154.215 Submission of rate filing
justification.
(a) If any plan within a product is
subject to a rate increase, a health
insurance issuer must submit a Rate
Filing Justification for all products in
the single risk pool, including new or
discontinuing products, on a form and
in a manner prescribed by the Secretary.
*
*
*
*
*
■ 16. Section 154.220 is revised to read
as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 154.220 Timing of providing the rate
filing justification.
A health insurance issuer must
submit a Rate Filing Justification for all
rate increases that are filed in a State, or
effective in a State that does not require
the rate increase to be filed, as follows:
(a) For rate increases for coverage
effective prior to January 1, 2016:
(1) If a State requires that a proposed
rate increase be filed with the State
prior to the implementation of the rate,
the health insurance issuer must submit
to CMS and the applicable State the
Rate Filing Justification on the date on
which the health insurance issuer
submits the proposed rate increase to
the State.
(2) For all other States, the health
insurance issuer must submit to CMS
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and the State the Rate Filing
Justification prior to the implementation
of the rate increase.
(b) For rate increases for coverage
effective on or after January 1, 2016, the
health insurance issuer must submit to
CMS and the applicable State a Rate
Filing Justification by the earlier of the
following:
(1) The date by which the State
requires that a proposed rate increase be
filed with the State; or
(2) The date specified in guidance by
the Secretary.
■ 17. Section 154.301 is amended by
revising paragraph (b) to read as follows:
§ 154.301 CMS’s determinations of
Effective Rate Review Programs.
*
*
*
*
*
(b) Public disclosure and input. (1) In
addition to satisfying the provisions in
paragraph (a) of this section, a State
with an Effective Rate Review Program
must provide:
(i) For proposed rate increases subject
to review, access from its Web site to at
least the information contained in Parts
I, II, and III of the Rate Filing
Justification that CMS makes available
on its Web site (or provide CMS’s Web
address for such information), and have
a mechanism for receiving public
comments on those proposed rate
increases, no later than the date
specified in guidance by the Secretary.
(ii) Beginning with rates filed for
coverage effective on or after January 1,
2016, for all final rate increases
(including those not subject to review),
access from its Web site to at least the
information contained in Parts I, II, and
III of the Rate Filing Justification (as
applicable) that CMS makes available on
its Web site (or provide CMS’s Web
address for such information), no later
than the first day of the annual open
enrollment period in the individual
market for the applicable calendar year.
(2) If a State intends to make the
information in paragraph (b)(1)(i) of this
section available to the public prior to
the date specified by the Secretary, or if
it intends to make the information in
paragraph (b)(1)(ii) of this section
available to the public prior to the first
day of the annual open enrollment
period in the individual market for the
applicable calendar year, the State must
notify CMS in writing, no later than 30
days prior to the date it intends to make
the information public, of its intent to
do so and the date it intends to make the
information public.
(3) A State with an Effective Rate
Review Program must ensure the
information in paragraphs (b)(1)(i) and
(ii) of this section is made available to
the public at a uniform time for all
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proposed and final rate increases, as
applicable, in the relevant market
segment and without regard to whether
coverage is offered through or outside
an Exchange.
*
*
*
*
*
PART 155—EXCHANGE
ESTABLISHMENT STANDARDS AND
OTHER RELATED STANDARDS
UNDER THE AFFORDABLE CARE ACT
18. The authority citation for part 155
continues to read as follows:
■
Authority: Title I of the Affordable Care
Act, sections 1301, 1302, 1303, 1304, 1311,
1312, 1313, 1321, 1322, 1331, 1332, 1334,
1402, 1411, 1412, 1413, Pub. L. 111–148, 124
Stat. 119 (42 U.S.C. 18021–18024, 18031–
18033, 18041–18042, 18051, 18054, 18071,
and 18081–18083).
19. Section 155.20 is amended by—
a. Revising paragraph (2) of the
definition of ‘‘Applicant.’’
■ b. Revising the definitions of
‘‘Enrollee’’ and ‘‘Qualified employee.’’
The revisions read as follows:
■
■
§ 155.20
Definitions.
*
*
*
*
*
Applicant * * *
(2) An employer, employee, or former
employee seeking eligibility for
enrollment in a QHP through the SHOP
for himself or herself, and, if the
qualified employer offers dependent
coverage through the SHOP, seeking
eligibility to enroll his or her
dependents in a QHP through the
SHOP.
*
*
*
*
*
Enrollee means a qualified individual
or qualified employee enrolled in a
QHP. Enrollee also means the
dependent of a qualified employee
enrolled in a QHP through the SHOP,
and any other person who is enrolled in
a QHP through the SHOP, consistent
with applicable law and the terms of the
group health plan. Provided that at least
one employee enrolls in a QHP through
the SHOP, enrollee also means a
business owner enrolled in a QHP
through the SHOP, or the dependent of
a business owner enrolled in a QHP
through the SHOP.
*
*
*
*
*
Qualified employee means any
employee or former employee of a
qualified employer who has been
offered health insurance coverage by
such qualified employer through the
SHOP for himself or herself and, if the
qualified employer offers dependent
coverage through the SHOP, for his or
her dependents.
*
*
*
*
*
■ 20. Section 155.205 is amended by
revising paragraphs (c)(2)(i) and (iii) and
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follows:
§ 155.205 Consumer assistance tools and
programs of an Exchange.
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*
*
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(c) * * *
(2) * * *
(i) For all entities subject to this
standard, oral interpretation.
(A) For Exchanges and QHP issuers,
this standard also includes telephonic
interpreter services in at least 150
languages.
(B) For an agent or broker subject to
§ 155.220(c)(3)(i), beginning November
1, 2015, or when such entity been
registered with the Exchange for at least
1 year, whichever is later, this standard
also includes telephonic interpreter
services in at least 150 languages.
*
*
*
*
*
(iii) For all entities subject to this
standard, taglines in non-English
languages indicating the availability of
language services.
(A) For Exchanges and QHP issuers,
beginning no later than the first day of
the individual market open enrollment
period for the 2017 benefit year, this
standard also includes taglines on Web
site content and any document that is
critical for obtaining health insurance
coverage or access to health care
services through a QHP for qualified
individuals, applicants, qualified
employers, qualified employees, or
enrollees. A document is deemed to be
critical for obtaining health insurance
coverage or access to health care
services through a QHP if it is required
to be provided by law or regulation to
a qualified individual, applicant,
qualified employer, qualified employee,
or enrollee. Such taglines must indicate
the availability of language services in at
least the top 15 languages spoken by the
limited English proficient population of
the relevant State, as determined in
guidance published by the Secretary.
(B) For an agent or broker subject to
§ 155.220(c)(3)(i), beginning on the first
day of the individual market open
enrollment period for the 2017 benefit
year, or when such entity has been
registered with the Exchange for at least
1 year, whichever is later, this standard
also includes taglines on Web site
content and any document that is
critical for obtaining health insurance
coverage or access to health care
services through a QHP for qualified
individuals, applicants, qualified
employers, qualified employees, or
enrollees. A document is deemed to be
critical for obtaining health insurance
coverage or access to health care
services through a QHP if it is required
to be provided by law or regulation to
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a qualified individual, applicant,
qualified employer, qualified employee,
or enrollee. Such taglines must indicate
the availability of language services in at
least the top 15 languages spoken by the
limited English proficient population of
the relevant State, as determined in
guidance published by the Secretary.
(iv) For Exchanges, QHP issuers, and
an agent or broker subject to
§ 155.220(c)(3)(i), Web site translations.
(A) For an Exchange, beginning no
later than the first day of the individual
market open enrollment period for the
2017 benefit year, content that is
intended for qualified individuals,
applicants, qualified employers,
qualified employees, or enrollees on a
Web site that is maintained by the
Exchange must be translated into any
non-English language that is spoken by
a limited English proficient population
that reaches 10 percent or more of the
population of the relevant State, as
determined in guidance published by
the Secretary.
(B) For a QHP issuer, beginning no
later than the first day of the individual
market open enrollment period for the
2017 benefit year, if the content of a
Web site maintained by the QHP issuer
is critical for obtaining health insurance
coverage or access to health care
services through a QHP, within the
meaning of § 156.250 of this subchapter,
it must be translated into any nonEnglish language that is spoken by a
limited English proficient population
that reaches 10 percent or more of the
population of the relevant State, as
determined in guidance published by
the Secretary.
(C) For an agent or broker subject to
§ 155.220(c)(3)(i), beginning on the first
day of the individual market open
enrollment period for the 2017 benefit
year, or when such entity has been
registered with the Exchange for at least
1 year, whichever is later, content that
is intended for qualified individuals,
applicants, qualified employers,
qualified employees, or enrollees on a
Web site that is maintained by the agent
or broker must be translated into any
non-English language that is spoken by
a limited English proficient population
that reaches 10 percent or more of the
population of the relevant State, as
determined in guidance published by
the Secretary.
*
*
*
*
*
21. Section 155.215 is amended by
revising paragraph (h) to read as
follows:
■
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§ 155.215 Standards applicable to
Navigators and Non-Navigator Assistance
Personnel carrying out consumer
assistance functions under §§ 155.205(d)
and (e) and 155.210 in a Federally-facilitated
Exchange and to Non-Navigator Assistance
Personnel funded through an Exchange
Establishment Grant.
*
*
*
*
*
(h) Physical presence. All nonNavigator entities carrying out
consumer assistance functions under
§ 155.205(d) and (e) in an Exchange
operated by HHS during the exercise of
its authority under § 155.105(f) and all
non-Navigator entities funded through
an Exchange Establishment Grant under
section 1311(a) of the Affordable Care
Act must maintain a physical presence
in the Exchange service area, so that
face-to-face assistance can be provided
to applicants and enrollees. In a
Federally-facilitated Exchange, no
individual or entity shall be ineligible to
operate as a non-Navigator entity or as
non-Navigator assistance personnel
solely because its principal place of
business is outside of the Exchange
service area.
*
*
*
*
*
■ 22. Section 155.220 is amended by
revising paragraph (i) to read as follows:
§ 155.220 Ability of States to permit agents
and brokers to assist qualified individuals,
qualified employers, or qualified employees
enrolling in QHPs.
*
*
*
*
*
(i) Use of agents’ and brokers’ Internet
Web sites for SHOP. For plan years
beginning on or after January 1, 2015, in
States that permit this activity under
State law, a SHOP may permit agents
and brokers to use an Internet Web site
to assist qualified employers and
facilitate enrollment of enrollees in a
QHP through the Exchange, under
paragraph (c)(3) of this section.
■ 23. Section 155.222 is added to read
as follows:
§ 155.222 Standards for HHS-approved
vendors of Federally-facilitated Exchange
training and information verification for
agents and brokers.
(a) Application for approval. (1) A
vendor must be approved by HHS, in a
form and manner to be determined by
HHS, in order to have its training and
information verification program
recognized for agents and brokers
assisting with or facilitating enrollment
in individual market or SHOP coverage
through the Exchanges consistent with
§ 155.220.
(2) As part of the training program,
the vendor must require agents and
brokers to provide identifying
information and proof of valid State
licensure, and successfully complete the
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required curriculum and identity
proofing.
(3) HHS will approve vendors on an
annual basis for a given plan year, and
each vendor must submit an application
for each year that approval is sought.
(b) Standards. To be approved by
HHS and maintain its status as an
approved vendor for plan year 2016 and
future plan years, a vendor must meet
each of the following standards:
(1) Submit a complete and accurate
application by the deadline established
by HHS, which includes demonstration
of the following:
(i) Prior experience with successfully
conducting online training, verification
of valid State license, as well as
providing technical support to a large
customer base; and
(ii) The ability to conduct identity
proofing.
(2) Adhere to HHS specifications for
content, format, and delivery of training
and information verification, which
include offering continuing education
units (CEUs) for at least five States in
which a Federally-facilitated Exchange
is operating.
(3) Collect, store, and share with HHS
all data from agent and broker users of
the vendor’s training and information
verification in a manner, format, and
frequency specified by HHS, and protect
the data in accordance with applicable
privacy and security laws and
regulations.
(4) Execute an agreement with HHS,
in a form and manner to be determined
by HHS, which requires the vendor to
comply with HHS guidelines for
interfacing with HHS data systems, the
implementation of the training and
information verification processes, and
the use of all data collected.
(5) Permit any individual who holds
a valid State license or equivalent State
authority to sell health insurance
products to access the vendor’s training
and information verification.
(c) Approved list. A list of approved
vendors will be published on an HHS
Web site.
(d) Monitoring. HHS may periodically
monitor and audit vendors approved
under this subpart, and their records
related to the training and information
verification functions described in this
section, to ensure ongoing compliance
with the standards in paragraph (b) of
this section. If HHS determines that an
HHS-approved vendor is not in
compliance with the standards required
in paragraph (b) of this section, the
vendor may be removed from the
approved list described in paragraph (c)
of this section and may be required by
HHS to cease performing the training
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and information verification functions
described under this subpart.
(e) Appeals. A vendor that is not
approved by HHS after submitting the
application described in paragraph (a) of
this section, or an approved vendor
whose agreement is revoked under
paragraph (d) of this section, may
appeal HHS’s decision by notifying HHS
in writing within 15 days from receipt
of the notification of not being approved
and submitting additional
documentation demonstrating how the
vendor meets the standards in
paragraph (b) of this section and (if
applicable) the terms of its agreement
with HHS. HHS will review the
submitted documentation and make a
final approval determination within 30
days from receipt of the additional
documentation.
■ 24. Section 155.400 is amended by
revising paragraph (e) to read as follows:
§ 155.400 Enrollment of qualified
individuals into QHPs.
*
*
*
*
*
(e) Premium payment. Exchanges
may, and the Federally-facilitated
Exchange will, require payment of the
first month’s premium to effectuate an
enrollment. Exchanges may, and the
Federally-facilitated Exchange will,
establish a standard policy for setting
premium payment deadlines:
(1) In a Federally-facilitated
Exchange, for first month (or binder
payment) premiums:
(i) For coverage being effectuated
under regular coverage effective dates,
as provided for in §§ 155.410(f) and
155.420(b)(1), premium payment
deadlines must be no earlier than the
coverage effective date, but no later than
30 calendar days from the coverage
effective date; and
(ii) For coverage being effectuated
under special effective dates, as
provided in § 155.420(b)(2), premium
payment deadlines must be 30 calendar
days from the date the issuer receives
the enrollment transaction.
(2) [Reserved]
*
*
*
*
*
■ 25. Section 155.410 is amended by
revising paragraphs (e) and (f) to read as
follows:
§ 155.410 Initial and annual open
enrollment periods.
*
*
*
*
*
(e) Annual open enrollment period.
(1) For the benefit year beginning on
January 1, 2015, the annual open
enrollment period begins on November
15, 2014, and extends through February
15, 2015.
(2) For the benefit year beginning on
January 1, 2016, the annual open
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enrollment period begins on November
1, 2015 and extends through January 31,
2016.
(f) Effective date. (1) For the benefit
year beginning on January 1, 2015, the
Exchange must ensure coverage is
effective—
(i) January 1, 2015, for QHP selections
received by the Exchange on or before
December 15, 2014.
(ii) February 1, 2015, for QHP
selections received by the Exchange
from December 16, 2014 through
January 15, 2015.
(iii) March 1, 2015, for QHP selections
received by the Exchange from January
16, 2015 through February 15, 2015.
(2) For the benefit year beginning on
January 1, 2016, the Exchange must
ensure that coverage is effective—
(i) January 1, 2016, for QHP selections
received by the Exchange on or before
December 15, 2015.
(ii) February 1, 2016, for QHP
selections received by the Exchange
from December 16, 2015 through
January 15, 2016.
(iii) March 1, 2016, for QHP selections
received by the Exchange from January
16, 2016 through January 31, 2016.
*
*
*
*
*
■ 26. Section 155.420 is amended by—
■ a. Revising paragraphs (b)(2)(i),
(b)(2)(iv), (c)(2), (c)(3), (d)(1)(ii), (d)(2),
and (d)(4).
■ b. Adding paragraphs (b)(2)(v),
(b)(2)(vi), and (d)(6)(iv).
■ c. Removing paragraph (d)(10).
The revisions and additions read as
follows:
§ 155.420
Special enrollment periods.
*
*
*
*
*
(b) * * *
(2) * * *
(i) In the case of birth, adoption,
placement for adoption, or placement in
foster care as described in paragraph
(d)(2)(i) of this section, the Exchange
must ensure that coverage is effective
for a qualified individual or enrollee on
the date of birth, adoption, placement
for adoption, or placement in foster
care, or it may permit the qualified
individual or enrollee to elect a
coverage effective date of the first of the
month following the date of birth,
adoption, placement for adoption, or
placement in foster care, or in
accordance with paragraph (b)(1) of this
section. If the Exchange permits the
qualified individual or enrollee to elect
a coverage effective date of either the
first of the month following the date of
birth, adoption, placement for adoption
or placement in foster care or in
accordance with paragraph (b)(1) of this
section, the Exchange must ensure
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coverage is effective on the date duly
selected by the qualified individual or
enrollee.
*
*
*
*
*
(iv) If a consumer loses coverage as
described in paragraph (d)(1) or
(d)(6)(iii), or gains access to a new QHP
as described in paragraph (d)(7) of this
section, if the plan selection is made on
or before the day of the triggering event,
the Exchange must ensure that the
coverage effective date is on the first day
of the month following the loss of
coverage. If the plan selection is made
after the day of the triggering event, the
Exchange must ensure that coverage is
effective in accordance with paragraph
(b)(1) of this section or on the first day
of the following month, at the option of
the Exchange.
(v) In the case of a court order as
described in paragraph (d)(2)(i) of this
section, the Exchange must ensure that
coverage is effective for a qualified
individual or enrollee on the date the
court order is effective, or it may permit
the qualified individual or enrollee to
elect a coverage effective date in
accordance with paragraph (b)(1) of this
section. If the Exchange permits the
qualified individual or enrollee to elect
a coverage effective date in accordance
with paragraph (b)(1) of this section, the
Exchange must ensure coverage is
effective on the date duly selected by
the qualified individual or enrollee.
(vi) If an enrollee or his or her
dependent dies as described in
paragraph (d)(2)(ii) of this section, the
Exchange must ensure that coverage is
effective on the first day of the month
following the plan selection, or it may
permit the enrollee or his or her
dependent to elect a coverage effective
date in accordance with paragraph (b)(1)
of this section. If the Exchange permits
the enrollee or his or her dependent to
elect a coverage effective date in
accordance with paragraph (b)(1) of this
section, the Exchange must ensure
coverage is effective on the date duly
selected by the enrollee or his or her
dependent.
*
*
*
*
*
(c) * * *
(2) Advanced availability. A qualified
individual or his or her dependent who
is described in paragraph (d)(1) or
(d)(6)(iii) or, beginning on January 1,
2017 or earlier at the option of the
Exchange, paragraph (d)(7) of this
section, has 60 days before and after the
triggering event to select a QHP. Prior to
January 1, 2017, a qualified individual
or his or her dependent who is
described in paragraph (d)(7) of this
section may select a QHP in accordance
with paragraph (c)(1) of this section.
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(3) Special rule. In the case of a
qualified individual or enrollee who is
eligible for a special enrollment period
as described in paragraphs (d)(4), (5), or
(9) of this section, the Exchange may
define the length of the special
enrollment period as appropriate based
on the circumstances of the special
enrollment period, but in no event may
the length of the special enrollment
period exceed 60 days.
(d) * * *
(1) * * *
(ii) Is enrolled in any non-calendar
year group health plan or individual
health insurance coverage, even if the
qualified individual or his or her
dependent has the option to renew such
coverage. The date of the loss of
coverage is the last day of the plan or
policy year;
*
*
*
*
*
(2)(i) The qualified individual gains a
dependent or becomes a dependent
through marriage, birth, adoption,
placement for adoption, or placement in
foster care, or through a child support
order or other court order.
(ii) At the option of the Exchange, the
enrollee loses a dependent or is no
longer considered a dependent through
divorce or legal separation as defined by
State law in the State in which the
divorce or legal separation occurs, or if
the enrollee, or his or her dependent,
dies.
*
*
*
*
*
(4) The qualified individual’s or his or
her dependent’s, enrollment or nonenrollment in a QHP is unintentional,
inadvertent, or erroneous and is the
result of the error, misrepresentation,
misconduct, or inaction of an officer,
employee, or agent of the Exchange or
HHS, its instrumentalities, or a nonExchange entity providing enrollment
assistance or conducting enrollment
activities. For purposes of this
provision, misconduct includes the
failure to comply with applicable
standards under this part, part 156 of
this subchapter, or other applicable
Federal or State laws as determined by
the Exchange.
*
*
*
*
*
(6) * * *
(iv) A qualified individual in a nonMedicaid expansion State who was
previously ineligible for advance
payments of the premium tax credit
solely because of a household income
below 100 percent of the FPL, who was
ineligible for Medicaid during that same
timeframe, and who has experienced a
change in household income that makes
the qualified individual newly eligible
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10867
for advance payments of the premium
tax credit.
*
*
*
*
*
■ 27. Section 155.430 is amended by—
■ a. Revising the section heading.
■ b. Revising paragraphs (a), (b)(1),
(b)(2) introductory text, (c), (d)
paragraph heading, (d)(2) introductory
text, (d)(2)(iv), (d)(3) through (7), and
(e)(1) and (2).
■ c. Adding paragraphs (b)(2)(vi),
(d)(2)(v), and (d)(8).
The revisions and additions read as
follows:
§ 155.430 Termination of Exchange
enrollment or coverage.
(a) General requirements. The
Exchange must determine the form and
manner in which enrollment in a QHP
through the Exchange may be
terminated.
(b) * * *
(1) Enrollee-initiated terminations. (i)
The Exchange must permit an enrollee
to terminate his or her coverage or
enrollment in a QHP through the
Exchange, including as a result of the
enrollee obtaining other minimum
essential coverage. To the extent the
enrollee has the right to terminate the
coverage under applicable State laws,
including ‘‘free look’’ cancellation laws,
the enrollee may do so, in accordance
with such laws.
(ii) The Exchange must provide an
opportunity at the time of plan selection
for an enrollee to choose to remain
enrolled in a QHP if he or she becomes
eligible for other minimum essential
coverage and the enrollee does not
request termination in accordance with
paragraph (b)(1)(i) of this section. If an
enrollee does not choose to remain
enrolled in a QHP in such a situation,
the Exchange must initiate termination
of his or her enrollment in the QHP
upon completion of the redetermination
process specified in § 155.330.
(iii) The Exchange must establish a
process to permit individuals, including
enrollees’ authorized representatives, to
report the death of an enrollee for
purposes of initiating termination of the
enrollee’s Exchange enrollment. The
Exchange may require the reporting
party to submit documentation of the
death. Any applicable premium refund,
or premium due, must be processed by
the deceased enrollee’s QHP in
accordance with State law.
(2) Exchange-initiated terminations.
The Exchange may initiate termination
of an enrollee’s enrollment in a QHP
through the Exchange, and must permit
a QHP issuer to terminate such coverage
or enrollment, in the following
circumstances:
*
*
*
*
*
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(vi) Any other reason for termination
of coverage described in § 147.106 of
this subchapter.
(c) Termination of coverage or
enrollment tracking and approval. The
Exchange must—
(1) Establish mandatory procedures
for QHP issuers to maintain records of
termination of enrollment in a QHP
through the Exchange;
(2) Send termination information to
the QHP issuer and HHS, promptly and
without undue delay in accordance with
§ 155.400(b).
(3) Require QHP issuers to make
reasonable accommodations for all
individuals with disabilities (as defined
by the Americans with Disabilities Act)
before terminating enrollment of such
individuals through the Exchange; and
(4) Retain records in order to facilitate
audit functions.
(d) Effective dates for termination of
coverage or enrollment.
*
*
*
*
*
(2) In the case of a termination in
accordance with paragraph (b)(1) of this
section, the last day of enrollment
through the Exchange is—
*
*
*
*
*
(iv) If the enrollee is newly eligible for
Medicaid, CHIP, or the BHP, if a BHP
is operating in the service area of the
Exchange, the last day of enrollment in
a QHP through the Exchange is the day
before the individual is determined
eligible for Medicaid, CHIP, or the BHP.
(v) The retroactive termination date
requested by the enrollee, if specified by
applicable State laws.
(3) In the case of a termination in
accordance with paragraph (b)(2)(i) of
this section, the last day of enrollment
in a QHP through the Exchange is the
last day of eligibility, as described in
§ 155.330(f), unless the individual
requests an earlier termination effective
date per paragraph (b)(1) of this section.
(4) In the case of a termination in
accordance with paragraph (b)(2)(ii)(A)
of this section, the last day of
enrollment in a QHP through the
Exchange will be the last day of the first
month of the 3-month grace period.
(5) In the case of a termination in
accordance with paragraph (b)(2)(ii)(B)
of this section, the last day of
enrollment in a QHP through the
Exchange should be consistent with
existing State laws regarding grace
periods.
(6) In the case of a termination in
accordance with paragraph (b)(2)(v) of
this section, the last day of coverage in
an enrollee’s prior QHP is the day before
the effective date of coverage in his or
her new QHP, including any retroactive
enrollments effectuated under
§ 155.420(b)(2)(iii).
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(7) In the case of a termination due to
death, the last day of enrollment in a
QHP through the Exchange is the date
of death.
(8) In cases of retroactive termination
dates, the Exchange will ensure that
appropriate actions are taken to make
necessary adjustments to advance
payments of the premium tax credit,
cost-sharing reductions, premiums,
claims, and user fees.
(e) * * *
(1) Termination. A termination is an
action taken after a coverage effective
date that ends an enrollee’s enrollment
through the Exchange for a date after the
original coverage effective date,
resulting in a period during which the
individual was enrolled in coverage
through the Exchange.
(2) Cancellation. A cancellation is
specific type of termination action that
ends a qualified individual’s enrollment
through the Exchange on the date such
enrollment became effective resulting in
enrollment through the Exchange never
having been effective.
*
*
*
*
*
■ 28. Section 155.605 is amended by
revising paragraphs (g)(3) and (g)(6)(i)
and adding paragraph (g)(6)(iii) to read
as follows:
§ 155.605 Eligibility standards for
exemptions.
*
*
*
*
*
(g) * * *
(3) Filing threshold. The IRS may
allow an applicant to claim an
exemption without obtaining an
exemption certificate number from an
Exchange for a taxable year if, for such
year, the applicant could not be claimed
as a dependent by another taxpayer and
the applicant’s gross income was less
than the applicant’s applicable return
filing threshold described in section
5000A(e)(2) of the Code;
*
*
*
*
*
(6) * * *
(i) The Exchange must determine an
applicant eligible for an exemption for
any month if he or she is an Indian
eligible for services through an Indian
health care provider, as defined in 42
CFR 447.51 and not otherwise eligible
for an exemption under paragraph (f) of
this section, or an individual eligible for
services through the Indian Health
Service in accordance with 25 U.S.C.
1680c(a), (b), or (d)(3).
*
*
*
*
*
(iii) The IRS may allow an applicant
to claim the exemption specified in
paragraph (g)(6) of this section without
obtaining an exemption certificate
number from an Exchange.
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29. Section 155.700(b) is amended by
removing the definition of ‘‘Group
participation rule’’ and by adding the
definition of ‘‘Group participation rate’’
in alphabetical order to read as follows:
■
§ 155.700 Standards for the establishment
of a SHOP.
*
*
*
*
*
(b) * * *
Group participation rate means the
minimum percentage of all eligible
individuals or employees of an
employer that must be enrolled.
*
*
*
*
*
■ 30. Section 155.705 is amended by—
■ a. Revising paragraph (b)(4)(i)(B).
■ b. Redesignating paragraphs
(b)(4)(ii)(A) and (B) as paragraphs
(b)(4)(ii)(B) and (C), respectively.
■ c. Adding new paragraph (b)(4)(ii)(A).
■ d. Revising paragraphs (b)(7) and (10).
The additions and revisions read as
follows:
§ 155.705
Functions of a SHOP.
*
*
*
*
*
(b) * * *
(4) * * *
(i) * * *
(B) Collect from each employer the
total amount due and make payments to
QHP issuers in the SHOP for all
enrollees except as provided for in
paragraph (b)(4)(ii)(A) of this section;
and
*
*
*
*
*
(ii) * * *
(A) The SHOP may, upon an election
by a qualified employer, enter into an
agreement with a qualified employer to
facilitate the administration of
continuation coverage by collecting
premiums for continuation coverage
enrolled in through the SHOP directly
from a person enrolled in continuation
coverage through the SHOP consistent
with applicable law and the terms of the
group health plan, and remitting
premium payments for this coverage to
QHP issuers. A Federally-facilitated
SHOP may elect to limit this service to
the collection of premiums related to
continuation coverage required under
29 U.S.C. 1161, et seq.
*
*
*
*
*
(7) QHP availability in merged
markets. If a State merges the individual
market and the small group market risk
pools in accordance with section
1312(c)(3) of the Affordable Care Act,
the SHOP may permit a qualified
employee to enroll in any QHP meeting
level of coverage requirements
described in section 1302(d) of the
Affordable Care Act.
*
*
*
*
*
(10) Participation rules. Subject to
§ 147.104 of this subchapter, the SHOP
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may authorize a uniform group
participation rate for the offering of
health insurance coverage in the SHOP,
which must be a single, uniform rate
that applies to all groups and issuers in
the SHOP. If the SHOP authorizes a
minimum participation rate, such rate
must be based on the rate of employee
participation in the SHOP, not on the
rate of employee participation in any
particular QHP or QHPs of any
particular issuer.
(i) For plan years beginning before
January 1, 2016, subject to § 147.104 of
this subchapter, a Federally-facilitated
SHOP must use a minimum
participation rate of 70 percent,
calculated as the number of qualified
employees accepting coverage under the
employer’s group health plan, divided
by the number of qualified employees
offered coverage, excluding from the
calculation any employee who, at the
time the employer submits the SHOP
application, is enrolled in coverage
through another employer’s group
health plan or through a governmental
plan such as Medicare, Medicaid, or
TRICARE. For purposes of this
calculation, qualified employees who
are former employees will not be
counted.
(ii) For plan years beginning on or
after January 1, 2016, subject to
§ 147.104 of this subchapter, a
Federally-facilitated SHOP must use a
minimum participation rate of 70
percent, calculated as the number of
full-time employees accepting coverage
offered by a qualified employer plus the
number of full-time employees who, at
the time the employer submits the
SHOP group enrollment, are enrolled in
coverage through another group health
plan, governmental coverage (such as
Medicare, Medicaid, or TRICARE),
coverage sold through the individual
market, or in other minimum essential
coverage, divided by the number of fulltime employees offered coverage.
(iii) Notwithstanding paragraphs
(b)(10)(i) and (ii) of this section, a
Federally-facilitated SHOP may utilize a
different minimum participation rate in
a State if there is evidence that a State
law sets a minimum participation rate
or that a higher or lower minimum
participation rate is customarily used by
the majority of QHP issuers in that State
for products in the State’s small group
market outside the SHOP.
*
*
*
*
*
■ 31. Section 155.710 is amended by
revising paragraph (e) to read as follows:
§ 155.710
Eligibility standards for SHOP.
*
*
*
*
*
(e) Employee eligibility requirements.
An employee is a qualified employee
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eligible to enroll in coverage through a
SHOP if such employee receives an offer
of coverage from a qualified employer.
A qualified employee is eligible to
enroll his or her dependents in coverage
through a SHOP if the offer from the
qualified employer includes an offer of
dependent coverage.
■ 32. Section 155.720 is amended by:
■ a. Removing ‘‘;’’ from paragraph (b)(5)
and adding ‘‘; and’’ in its place.
■ b. Removing ‘‘; and’’ from paragraph
(b)(6) and adding a period in its place.
■ c. Removing paragraph (b)(7).
■ d. Revising paragraph (e).
The revisions read as follows:
§ 155.720 Enrollment of employees into
QHPs under SHOP.
*
*
*
*
*
(e) Notification of effective date. (1)
For plan years beginning before January
1, 2017, the SHOP must ensure that a
QHP issuer notifies a qualified
employee enrolled in a QHP through the
SHOP of the effective date of his or her
coverage.
(2) For plan years beginning on or
after January 1, 2017, the SHOP must
ensure that a QHP issuer notifies an
enrollee enrolled in a QHP through the
SHOP of the effective date of his or her
coverage.
(3) When a primary subscriber and his
or her dependents live at the same
address, a separate notice of the
effective date of coverage need not be
sent to each dependent at that address,
provided that the notice sent to each
primary subscriber at that address
contains all required information about
the coverage effective date for the
primary subscriber and his or her
dependents at that address.
*
*
*
*
*
■ 33. Section 155.725 is amended by
revising paragraphs (a), (b), (g), (h), (i),
and (j)(5) and adding paragraph (k) to
read as follows:
§ 155.725
Enrollment periods under SHOP.
(a) General requirements. The SHOP
must ensure that enrollment
transactions are sent to QHP issuers and
that such issuers adhere to coverage
effective dates in accordance with this
section.
(b) Rolling enrollment in the SHOP.
The SHOP must permit a qualified
employer to purchase coverage for its
small group at any point during the
year. The employer’s plan year must
consist of the 12-month period
beginning with the qualified employer’s
effective date of coverage, unless the
plan is issued in a State that has elected
to merge its individual and small group
risk pools under section 1312(c)(3) of
the Affordable Care Act, in which case
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10869
the plan year will end on December 31
of the calendar year in which coverage
first became effective.
*
*
*
*
*
(g) Newly qualified employees. (1) The
SHOP must provide an employee who
becomes a qualified employee outside of
the initial or annual open enrollment
period an enrollment period beginning
on the first day of becoming a qualified
employee. A newly qualified employee
must have at least 30 days from the
beginning of his or her enrollment
period to select a QHP. The enrollment
period must end no sooner than 15 days
prior to the date that any applicable
employee waiting period longer than 45
days would end if the employee made
a plan selection on the first day of
becoming eligible.
(2) The effective date of coverage for
a QHP selection received by the SHOP
from a newly qualified employee must
always be the first day of a month, and
must generally be determined in
accordance with § 155.725(h), unless the
employee is subject to a waiting period
consistent with § 147.116 of this
subchapter, in which case the effective
date may be on the first day of a later
month, but in no case may the effective
date fail to comply with § 147.116 of
this subchapter.
(h) Initial and annual open
enrollment effective dates. (1) The
SHOP must establish effective dates of
coverage for qualified employees
enrolling in coverage for the first time,
and for qualified employees enrolling
during the annual open enrollment
period described in paragraph (e) of this
section.
(2) For a QHP selection received by
the Federally-facilitated SHOP from a
qualified employee in his or her initial
or annual open enrollment period:
(i) Between the first and fifteenth day
of any month, the Federally-facilitated
SHOP must ensure a coverage effective
date of the first day of the following
month.
(ii) Between the 16th and last day of
any month, the Federally-facilitated
SHOP must ensure a coverage effective
date of the first day of the second
following month.
(i) Renewal of coverage. (1) If a
qualified employee enrolled in a QHP
through the SHOP remains eligible for
coverage, such employee will remain in
the QHP selected the previous year
unless—
(i) The qualified employee terminates
coverage from such QHP in accordance
with standards identified in § 155.430;
(ii) The qualified employee enrolls in
another QHP if such option exists; or
(iii) The QHP is no longer available to
the qualified employee.
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(2) The SHOP may treat a qualified
employer offering coverage through the
SHOP as offering the same coverage
under § 155.705(b)(3) at the same level
of contribution under § 155.705(b)(11)
unless:
(i) The qualified employer is no
longer eligible to offer such coverage
through the SHOP;
(ii) The qualified employer elects to
offer different coverage or a different
contribution through the SHOP;
(iii) The qualified employer
withdraws from the SHOP; or
(iv) In the case of a qualified employer
offering a single QHP, the single QHP is
no longer available through the SHOP.
(j) * * *
(5) The effective dates of coverage for
special enrollment periods are
determined using the provisions of
§ 155.420(b).
*
*
*
*
*
(k) Limitation. Qualified employees
will not be able to enroll unless the
employer group meets any applicable
minimum participation rate
implemented under § 155.705(b)(10).
■ 34. Section 155.735 is amended by—
■ a. Revising the section heading.
■ b. Revising paragraphs (a), (b),
(c)(2)(ii), (c)(2)(iii), (d)(1) introductory
text, and (d)(1)(iii), and the headings of
paragraphs (d) and (e).
■ c. Adding paragraphs (c)(2)(iv), (c)(3),
and (g).
The revisions and additions read as
follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 155.735 Termination of SHOP enrollment
or coverage.
(a) General requirements. The SHOP
must determine the timing, form, and
manner in which coverage or
enrollment in a QHP through the SHOP
may be terminated.
(b) Termination of employer group
health coverage or enrollment at the
request of the employer. (1) The SHOP
must establish policies for advance
notice of termination required from the
employer and effective dates of
termination.
(2) In the Federally-facilitated SHOP,
an employer may terminate coverage or
enrollment for all enrollees covered by
the employer group health plan effective
on the last day of any month, provided
that the employer has given notice to
the Federally-facilitated SHOP on or
before the 15th day of any month. If
notice is given after the 15th of the
month, the Federally-facilitated SHOP
may terminate the coverage or
enrollment on the last day of the
following month.
(c) * * *
(2) * * *
(ii) If premium payment is not
received 31 days from the first of the
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coverage month, the Federallyfacilitated SHOP may terminate the
qualified employer for lack of payment.
The termination would take effect on
the last day of the month for which the
Federally-facilitated SHOP received full
payment.
(iii) If a qualified employer is
terminated due to lack of premium
payment, but within 30 days following
its termination the qualified employer
requests reinstatement, pays all
premiums owed including any prior
premiums owed for coverage during the
grace period, and pays the premium for
the next month’s coverage, the
Federally-facilitated SHOP must
reinstate the qualified employer in its
previous coverage. A qualified employer
may be reinstated in the Federallyfacilitated SHOP only once per calendar
year.
(iv) Enrollees enrolled in continuation
coverage required under 29 U.S.C. 1161,
et seq. through the Federally-facilitated
SHOP may not be terminated if timely
payment is made to the Federallyfacilitated SHOP in an amount that is
not less than $50 less than the amount
the plan requires to be paid for a period
of coverage unless the Federallyfacilitated SHOP notifies the enrollee of
the amount of the deficiency and the
enrollee does not pay the deficiency
within 30 days of such notice, pursuant
to the notice requirements in § 155.230.
(3) Payment for COBRA Continuation
Coverage. Nothing in this section
modifies existing obligations related to
the administration of coverage required
under 29 U.S.C. 1161, et seq., as
described in 26 CFR part 54.
(d) Termination of employee or
dependent coverage or enrollment. (1)
The SHOP must establish consistent
policies regarding the process for and
effective dates of termination of
employee or dependent coverage or
enrollment in the following
circumstances:
*
*
*
*
*
(iii) The QHP in which the enrollee is
enrolled terminates, is decertified as
described in § 155.1080, or its
certification as a QHP is not renewed;
*
*
*
*
*
(e) Termination of enrollment or
coverage tracking and approval. * * *
*
*
*
*
*
(g) Notice of termination. Beginning
January 1, 2016:
(1) Except as provided in paragraph
(g)(3) of this section, if any enrollee’s
coverage or enrollment through the
SHOP is terminated due to non-payment
of premiums or due to a loss of the
enrollee’s eligibility to participate in the
SHOP, including where an enrollee
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loses his or her eligibility because a
qualified employer has lost its
eligibility, the SHOP must notify the
enrollee of the termination. Such notice
must include the termination effective
date and reason for termination, and
must be sent within 3 business days if
an electronic notice is sent, and within
5 business days if a mailed hard copy
notice is sent.
(2) Except as provided in paragraph
(g)(3) of this section, if an employer
group’s coverage or enrollment through
the SHOP is terminated due to nonpayment of premiums or, where
applicable, due to a loss of the qualified
employer’s eligibility to offer coverage
through the SHOP, the SHOP must
notify the employer of the termination.
Such notice must include the
termination effective date and reason for
termination, and must be sent within 3
business days if an electronic notice is
sent, and within 5 business days if a
mailed hard copy notice is sent.
(3) Where State law requires a QHP
issuer to send the notices described in
paragraphs (g)(1) and (2) of this section,
a SHOP is not required to send such
notices.
(4) When a primary subscriber and his
or her dependents live at the same
address, a separate termination notice
need not be sent to each dependent at
that address, provided that the notice
sent to each primary subscriber at that
address contains all required
information about the termination for
the primary subscriber and his or her
dependents at that address.
35. Section 155.1000 is amended by
adding paragraph (d) to read as follows:
■
§ 155.1000
QHPs.
Certification standards for
*
*
*
*
*
(d) Special rule for SHOP. Except
when a QHP is decertified by the
Exchange pursuant to § 155.1080, in a
SHOP that certifies QHPs on a calendaryear basis, the certification shall remain
in effect for the duration of any plan
year beginning in the calendar year for
which the QHP was certified, even if the
plan year ends after the calendar year
for which the QHP was certified.
36. Section 155.1075 is amended by
revising paragraph (b) to read as follows:
■
§ 155.1075
Recertification of QHPs.
*
*
*
*
*
(b) Timing. The Exchange must
complete the QHP recertification
process no later than 2 weeks prior to
the beginning of the open enrollment
date at § 155.410(e)(2) of the applicable
calendar year.
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PART 156—HEALTH INSURANCE
ISSUER STANDARDS UNDER THE
AFFORDABLE CARE ACT, INCLUDING
STANDARDS RELATED TO
EXCHANGES
37. The authority citation for part 156
continues to read as follows:
■
Authority: Title I of the Affordable Care
Act, sections 1301–1304, 1311–1313, 1321–
1322, 1324, 1334, 1342–1343, 1401–1402,
Pub. L. 111–148, 124 Stat. 119 (42 U.S.C.
18021–18024, 18031–18032, 18041–18042,
18044, 18054, 18061, 18063, 18071, 18082,
26 U.S.C. 36B, and 31 U.S.C. 9701).
38. Section 156.20 is amended by
adding a definition of ‘‘Plan’’ in
alphabetical order to read as follows:
■
§ 156.20
Definitions.
*
*
*
*
*
Plan has the meaning given the term
in § 144.103 of this subchapter.
*
*
*
*
*
■ 39. Section 156.100 is amended by
revising paragraph (c) to read as follows:
§ 156.100
State selection of benchmark.
*
*
*
*
*
(c) Default base-benchmark plan. If a
State does not make a selection using
the process described in this section, the
default base-benchmark plan will be the
largest plan by enrollment in the largest
product by enrollment in the State’s
small group market.
■ 40. Section 156.110 is amended by
revising paragraphs (c)(4) and (5) and
removing paragraph (c)(6) to read as
follows:
§ 156.110
EHB-benchmark plan standards.
*
*
*
*
*
(c) * * *
(4) The plan described in paragraph
(b)(2)(i) of this section for pediatric oral
care benefits; and
(5) The plan described in paragraph
(b)(3)(i) of this section for pediatric
vision care benefits.
*
*
*
*
*
■ 41. Section 156.115 is amended by
revising paragraphs (a)(5)(i) and (ii) and
adding paragraphs (a)(5)(iii) and (a)(6) to
read as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 156.115
Provision of EHB.
(a) * * *
(5) With respect to habilitative
services and devices—
(i) Cover health care services and
devices that help a person keep, learn,
or improve skills and functioning for
daily living (habilitative services).
Examples include therapy for a child
who is not walking or talking at the
expected age. These services may
include physical and occupational
therapy, speech-language pathology and
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other services for people with
disabilities in a variety of inpatient and/
or outpatient settings;
(ii) Do not impose limits on coverage
of habilitative services and devices that
are less favorable than any such limits
imposed on coverage of rehabilitative
services and devices; and
(iii) For plan years beginning on or
after January 1, 2017, do not impose
combined limits on habilitative and
rehabilitative services and devices.
(6) For plan years beginning on or
after January 1, 2016, for pediatric
services that are required under
§ 156.110(a)(10), provide coverage for
enrollees until at least the end of the
month in which the enrollee turns 19
years of age.
*
*
*
*
*
■ 42. Section 156.120 is added to read
as follows:
§ 156.120 Collection of data to define
essential health benefits.
(a) Definitions. The following
definitions apply to this section, unless
the context indicates otherwise:
Health benefits means benefits for
medical care, as defined at § 144.103 of
this subchapter, which may be delivered
through the purchase of insurance or
otherwise.
Health plan has the meaning given to
the term ‘‘Portal Plan’’ in § 159.110 of
this subchapter.
State has the meaning given to that
term in § 155.20 of this subchapter.
Treatment limitations include limits
on benefits based on the frequency of
treatment, number of visits, days of
coverage, or other similar limits on the
scope or duration of treatment.
Treatment limitations include only
quantitative treatment limitations. A
permanent exclusion of all benefits for
a particular condition or disorder is not
a treatment limitation.
(b) Reporting requirement. A State
that selects a base-benchmark plan or an
issuer that offers a default basebenchmark plan in accordance with
§ 156.100 must submit to HHS the
following information in a form and
manner, and by a date, determined by
HHS:
(1) Administrative data necessary to
identify the health plan;
(2) Data and descriptive information
for each plan on the following items:
(i) All health benefits in the plan;
(ii) Treatment limitations;
(iii) Drug coverage; and
(iv) Exclusions.
■ 43. Section 156.122 is amended by
revising paragraphs (a)(1), (a)(2), and (c)
and adding paragraphs (a)(3), (d), and
(e) to read as follows:
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§ 156.122
10871
Prescription drug benefits.
(a) * * *
(1) Subject to the exception in
paragraph (b) of this section, covers at
least the greater of:
(i) One drug in every United States
Pharmacopeia (USP) category and class;
or
(ii) The same number of prescription
drugs in each category and class as the
EHB-benchmark plan;
(2) Submits its formulary drug list to
the Exchange, the State or OPM; and
(3) For plans years beginning on or
after January 1, 2017, uses a pharmacy
and therapeutics (P&T) committee that
meets the following standards.
(i) Membership standards. The P&T
committee must:
(A) Have members that represent a
sufficient number of clinical specialties
to adequately meet the needs of
enrollees.
(B) Consist of a majority of
individuals who are practicing
physicians, practicing pharmacists and
other practicing health care
professionals who are licensed to
prescribe drugs.
(C) Prohibit any member with a
conflict of interest with respect to the
issuer or a pharmaceutical manufacturer
from voting on any matters for which
the conflict exists.
(D) Require at least 20 percent of its
membership to have no conflict of
interest with respect to the issuer and
any pharmaceutical manufacturer.
(ii) Meeting standards. The P&T
committee must:
(A) Meet at least quarterly.
(B) Maintain written documentation
of the rationale for all decisions
regarding formulary drug list
development or revision.
(iii) Formulary drug list establishment
and management. The P&T committee
must:
(A) Develop and document
procedures to ensure appropriate drug
review and inclusion.
(B) Base clinical decisions on the
strength of scientific evidence and
standards of practice, including
assessing peer-reviewed medical
literature, pharmacoeconomic studies,
outcomes research data, and other such
information as it determines
appropriate.
(C) Consider the therapeutic
advantages of drugs in terms of safety
and efficacy when selecting formulary
drugs.
(D) Review policies that guide
exceptions and other utilization
management processes, including drug
utilization review, quantity limits, and
therapeutic interchange.
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(E) Evaluate and analyze treatment
protocols and procedures related to the
plan’s formulary at least annually.
(F) Review and approve all clinical
prior authorization criteria, step therapy
protocols, and quantity limit restrictions
applied to each covered drug.
(G) Review new FDA-approved drugs
and new uses for existing drugs.
(H) Ensure the issuer’s formulary drug
list:
(1) Covers a range of drugs across a
broad distribution of therapeutic
categories and classes and
recommended drug treatment regimens
that treat all disease states, and does not
discourage enrollment by any group of
enrollees; and
(2) Provides appropriate access to
drugs that are included in broadly
accepted treatment guidelines and that
are indicative of general best practices at
the time.
*
*
*
*
*
(c) A health plan providing essential
health benefits must have the following
processes in place that allow an
enrollee, the enrollee’s designee, or the
enrollee’s prescribing physician (or
other prescriber, as appropriate) to
request and gain access to clinically
appropriate drugs not otherwise covered
by the health plan (a request for
exception). In the event that an
exception request is granted, the plan
must treat the excepted drug(s) as an
essential health benefit, including by
counting any cost-sharing towards the
plan’s annual limitation on cost-sharing
under § 156.130 and when calculating
the plan’s actuarial value under
§ 156.135.
(1) Standard exception request. For
plans years beginning on or after
January 1, 2016:
(i) A health plan must have a process
for an enrollee, the enrollee’s designee,
or the enrollee’s prescribing physician
(or other prescriber) to request a
standard review of a decision that a
drug is not covered by the plan.
(ii) A health plan must make its
determination on a standard exception
and notify the enrollee or the enrollee’s
designee and the prescribing physician
(or other prescriber, as appropriate) of
its coverage determination no later than
72 hours following receipt of the
request.
(iii) A health plan that grants a
standard exception request must
provide coverage of the non-formulary
drug for the duration of the prescription,
including refills.
(2) Expedited exception request. (i) A
health plan must have a process for an
enrollee, the enrollee’s designee, or the
enrollee’s prescribing physician (or
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Jkt 235001
other prescriber) to request an expedited
review based on exigent circumstances.
(ii) Exigent circumstances exist when
an enrollee is suffering from a health
condition that may seriously jeopardize
the enrollee’s life, health, or ability to
regain maximum function or when an
enrollee is undergoing a current course
of treatment using a non-formulary
drug.
(iii) A health plan must make its
coverage determination on an expedited
review request based on exigent
circumstances and notify the enrollee or
the enrollee’s designee and the
prescribing physician (or other
prescriber, as appropriate) of its
coverage determination no later than 24
hours following receipt of the request.
(iv) A health plan that grants an
exception based on exigent
circumstances must provide coverage of
the non-formulary drug for the duration
of the exigency.
(3) External exception request review.
For plans years beginning on or after
January 1, 2016:
(i) If the health plan denies a request
for a standard exception under
paragraph (c)(1) of this section or for an
expedited exception under paragraph
(c)(2) of this section, the health plan
must have a process for the enrollee, the
enrollee’s designee, or the enrollee’s
prescribing physician (or other
prescriber) to request that the original
exception request and subsequent
denial of such request be reviewed by
an independent review organization.
(ii) A health plan must make its
determination on the external exception
request and notify the enrollee or the
enrollee’s designee and the prescribing
physician (or other prescriber, as
appropriate) of its coverage
determination no later than 72 hours
following its receipt of the request, if the
original request was a standard
exception request under paragraph (c)(1)
of this section, and no later than 24
hours following its receipt of the
request, if the original request was an
expedited exception request under
paragraph (c)(2) of this section.
(iii) If a health plan grants an external
exception review of a standard
exception request, the health plan must
provide coverage of the non-formulary
drug for the duration of the prescription.
If a health plan grants an external
exception review of an expedited
exception request, the health plan must
provide coverage of the non-formulary
drug for the duration of the exigency.
(d)(1) For plan years beginning on or
after January 1, 2016, a health plan must
publish an up-to-date, accurate, and
complete list of all covered drugs on its
formulary drug list, including any
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tiering structure that it has adopted and
any restrictions on the manner in which
a drug can be obtained, in a manner that
is easily accessible to plan enrollees,
prospective enrollees, the State, the
Exchange, HHS, the U.S. Office of
Personnel Management, and the general
public. A formulary drug list is easily
accessible when:
(i) It can be viewed on the plan’s
public Web site through a clearly
identifiable link or tab without requiring
an individual to create or access an
account or enter a policy number; and
(ii) If an issuer offers more than one
plan, when an individual can easily
discern which formulary drug list
applies to which plan.
(2) A QHP in the Federally-facilitated
Exchange must make available the
information described in paragraph
(d)(1) of this section on its Web site in
an HHS-specified format and also
submit this information to HHS, in a
format and at times determined by HHS.
(e) For plan years beginning on or
after January 1, 2017, a health plan
providing essential health benefits must
have the following access procedures:
(1) A health plan must allow enrollees
to access prescription drug benefits at
in-network retail pharmacies, unless:
(i) The drug is subject to restricted
distribution by the U.S. Food and Drug
Administration; or
(ii) The drug requires special
handling, provider coordination, or
patient education that cannot be
provided by a retail pharmacy.
(2) A health plan may charge
enrollees a different cost-sharing
amount for obtaining a covered drug at
a retail pharmacy, but all cost sharing
will count towards the plan’s annual
limitation on cost sharing under
§ 156.130 and must be accounted for in
the plan’s actuarial value calculated
under § 156.135.
44. Section 156.130 is amended by
revising paragraph (c) to read as follows:
■
§ 156.130
Cost-sharing requirements.
*
*
*
*
*
(c) Special rule for network plans. In
the case of a plan using a network of
providers, cost sharing paid by, or on
behalf of, an enrollee for benefits
provided outside of such network is not
required to count toward the annual
limitation on cost sharing (as defined in
paragraph (a) of this section).
*
*
*
*
*
45. Section 156.145 is amended by
revising paragraph (a) introductory text
to read as follows:
■
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§ 156.145
value.
Determination of minimum
(a) Acceptable methods for
determining MV. An employersponsored plan provides minimum
value (MV) only if the percentage of the
total allowed costs of benefits provided
under the plan is greater than or equal
to 60 percent, and the benefits under the
plan include substantial coverage of
inpatient hospital services and
physician services. An employersponsored plan may use one of the
following methods to determine
whether the percentage of the total
allowed costs of benefits provided
under the plan is not less than 60
percent.
*
*
*
*
*
■ 46. Section 156.200 is amended by
revising paragraph (b)(7) to read as
follows:
§ 156.200 QHP issuer participation
standards.
*
*
*
*
*
(b) * * *
(7) Comply with the standards under
45 CFR part 153.
*
*
*
*
*
■ 47. Section 156.230 is amended by
revising paragraph (a) introductory text
and paragraph (b) and adding paragraph
(c) to read as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 156.230
Network adequacy standards.
(a) General requirement. Each QHP
issuer that uses a provider network must
ensure that the provider network
consisting of in-network providers, as
available to all enrollees, meets the
following standards—
*
*
*
*
*
(b) Access to provider directory. (1) A
QHP issuer must make its provider
directory for a QHP available to the
Exchange for publication online in
accordance with guidance from HHS
and to potential enrollees in hard copy
upon request. In the provider directory,
a QHP issuer must identify providers
that are not accepting new patients.
(2) For plan years beginning on or
after January 1, 2016, a QHP issuer must
publish an up-to-date, accurate, and
complete provider directory, including
information on which providers are
accepting new patients, the provider’s
location, contact information, specialty,
medical group, and any institutional
affiliations, in a manner that is easily
accessible to plan enrollees, prospective
enrollees, the State, the Exchange, HHS
and OPM. A provider directory is easily
accessible when—
(i) The general public is able to view
all of the current providers for a plan in
the provider directory on the issuer’s
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public Web site through a clearly
identifiable link or tab and without
creating or accessing an account or
entering a policy number; and
(ii) If a health plan issuer maintains
multiple provider networks, the general
public is able to easily discern which
providers participate in which plans
and which provider networks.
(c) Increasing consumer transparency.
A QHP issuer in a Federally-facilitated
Exchange must make available the
information described in paragraph (b)
of this section on its Web site in an HHS
specified format and also submit this
information to HHS, in a format and
manner and at times determined by
HHS.
■ 48. Section 156.235 is revised to read
as follows:
§ 156.235
Essential community providers.
(a) General ECP standard. (1) A QHP
issuer that uses a provider network must
include in its provider network a
sufficient number and geographic
distribution of essential community
providers (ECPs), where available, to
ensure reasonable and timely access to
a broad range of such providers for lowincome individuals or individuals
residing in Health Professional Shortage
Areas within the QHP’s service area, in
accordance with the Exchange’s
network adequacy standards.
(2) A plan applying for QHP
certification to be offered through a
Federally-facilitated Exchange has a
sufficient number and geographic
distribution of ECPs if it demonstrates
in its QHP application that—
(i) The network includes as
participating providers at least a
minimum percentage, as specified by
HHS, of available ECPs in each plan’s
service area with multiple providers at
a single location counting as a single
ECP toward both the available ECPs in
the plan’s service area and the issuer’s
satisfaction of the ECP participation
standard; and
(ii) The issuer of the plan offers
contracts to—
(A) All available Indian health care
providers in the service area, applying
the special terms and conditions
required by Federal law and regulations
as referenced in the recommended
model QHP addendum for Indian health
care providers developed by HHS; and
(B) At least one ECP in each of the
ECP categories (Federally Qualified
Health Centers, Ryan White Providers,
Family Planning Providers, Indian
Health Care Providers, Hospitals and
other ECP providers) in each county in
the service area, where an ECP in that
category is available and provides
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10873
medical or dental services that are
covered by the issuer plan type.
(3) If a plan applying for QHP
certification to be offered through a
Federally-facilitated Exchange does not
satisfy the ECP standard described in
paragraph (a)(2) of this section, the
issuer must include as part of its QHP
application a narrative justification
describing how the plan’s provider
network provides an adequate level of
service for low-income enrollees or
individuals residing in Health
Professional Shortage Areas within the
plan’s service area and how the plan’s
provider network will be strengthened
toward satisfaction of the ECP standard
prior to the start of the benefit year.
(4) Nothing in paragraphs (a)(1)
through (3) of this section requires any
QHP to provide coverage for any
specific medical procedure.
(5) A plan that provides a majority of
covered professional services through
physicians employed by the issuer or
through a single contracted medical
group may instead comply with the
alternate standard described in
paragraph (b) of this section.
(b) Alternate ECP standard. (1) A plan
described in paragraph (a)(5) of this
section must have a sufficient number
and geographic distribution of
employed providers and hospital
facilities, or providers of its contracted
medical group and hospital facilities, to
ensure reasonable and timely access for
low-income individuals or individuals
residing in Health Professional Shortage
Areas within the plan’s service area, in
accordance with the Exchange’s
network adequacy standards.
(2) A plan described in paragraph
(a)(5) of this section applying for QHP
certification to be offered through a
Federally-facilitated Exchange has a
sufficient number and geographic
distribution of employed or contracted
providers if it demonstrates in its QHP
application that—
(i) The number of its providers that
are located in Health Professional
Shortage Areas or five-digit zip codes in
which 30 percent or more of the
population falls below 200 percent of
the Federal Poverty Line satisfies a
minimum percentage, specified by HHS,
of available ECPs in the plan’s service
area with multiple providers at a single
location counting as a single ECP; and
(ii) The issuer’s integrated delivery
system provides all of the categories of
services provided by entities in each of
the ECP categories in each county in the
plan’s service area as outlined in the
general ECP standard, or otherwise
offers a contract to at least one ECP
outside of the issuer’s integrated
delivery system per ECP category in
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each county in the plan’s service area
that can provide those services to lowincome, medically underserved
individuals.
(3) If a plan does not satisfy the
alternate ECP standard described in
paragraph (b)(2) of this section, the
issuer must include as part of its QHP
application a narrative justification
describing how the plan’s provider
networks provide an adequate level of
service for low-income enrollees or
individuals residing in Health
Professional Shortage Areas within the
plan’s service area and how the plan’s
provider network will be strengthened
toward satisfaction of the ECP standard
prior to the start of the benefit year.
(c) Definition. An essential
community provider is a provider that
serves predominantly low-income,
medically underserved individuals,
including a health care provider defined
in section 340B(a)(4) of the PHS Act; or
described in section 1927(c)(1)(D)(i)(IV)
of the Act as set forth by section 221 of
Pub. L. 111–8; or a State-owned family
planning service site, or governmental
family planning service site, or not-forprofit family planning service site that
does not receive Federal funding under
special programs, including under Title
X of the PHS Act, or an Indian health
care provider, unless any of the above
providers has lost its status under either
of these sections, 340(B) of the PHS Act
or 1927 of the Act as a result of violating
Federal law.
(d) Payment rates. Nothing in
paragraph (a) of this section may be
construed to require a QHP issuer to
contract with an ECP if such provider
refuses to accept the same rates and
contract provisions included in
contracts accepted by similarly situated
providers.
(e) Payment of Federally qualified
health centers. If an item or service
covered by a QHP is provided by a
Federally-qualified health center (as
defined in section 1905(l)(2)(B) of the
Act) to an enrollee of a QHP, the QHP
issuer must pay the Federally qualified
health center for the item or service an
amount that is not less than the amount
of payment that would have been paid
to the center under section 1902(bb) of
the Act for such item or service. Nothing
in this paragraph (e) precludes a QHP
issuer and Federally-qualified health
center from agreeing upon payment
rates other than those that would have
been paid to the center under section
1902(bb) of the Act, as long as that rate
is at least equal to the generally
applicable payment rate of the issuer
described in paragraph (d) of this
section.
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49. Section 156.250 is revised to read
as follows:
■
§ 156.250 Meaningful access to qualified
health plan information.
A QHP issuer must provide all
information that is critical for obtaining
health insurance coverage or access to
health care services through the QHP,
including applications, forms, and
notices, to qualified individuals,
applicants, qualified employers,
qualified employees, and enrollees in
accordance with the standards
described in § 155.205(c) of this
subchapter. Information is deemed to be
critical for obtaining health insurance
coverage or access to health care
services if the issuer is required by law
or regulation to provide the document to
a qualified individual, applicant,
qualified employer, qualified employee,
or enrollee.
■ 50. Section 156.265 is amended by
revising paragraph (d) to read as
follows:
§ 156.265 Enrollment process for qualified
individuals.
*
*
*
*
*
(d) Premium payment. A QHP issuer
must follow the premium payment
process established by the Exchange in
accordance with § 155.240 of this
subchapter and the payment rules
established in § 155.400(e) of this
subchapter.
*
*
*
*
*
■ 51. Section 156.270 is amended by
revising the section heading and
paragraphs (a), (b), (c) introductory text,
(g), and (i) to read as follows:
§ 156.270 Termination of coverage or
enrollment for qualified individuals.
(a) General requirement. A QHP issuer
may only terminate enrollment in a
QHP through the Exchange as permitted
by the Exchange in accordance with
§ 155.430(b) of this subchapter. (See also
§ 147.106 of this subchapter for
termination of coverage.)
(b) Termination of coverage or
enrollment notice requirement. If a QHP
issuer terminates an enrollee’s coverage
or enrollment in a QHP through the
Exchange in accordance with
§ 155.430(b)(2)(i), (ii), or (iii) of this
subchapter, the QHP issuer must,
promptly and without undue delay:
(1) Provide the enrollee with a notice
of termination that includes the
termination effective date and reason for
termination.
(2) [Reserved]
(c) Termination of coverage or
enrollment due to non-payment of
premium. A QHP issuer must establish
a standard policy for the termination of
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enrollment of enrollees through the
Exchange due to non-payment of
premium as permitted by the Exchange
in § 155.430(b)(2)(ii) of this subchapter.
This policy for the termination of
enrollment:
*
*
*
*
*
(g) Exhaustion of grace period. If an
enrollee receiving advance payments of
the premium tax credit exhausts the 3month grace period in paragraph (d) of
this section without paying all
outstanding premiums, the QHP issuer
must terminate the enrollee’s
enrollment through the Exchange on the
effective date described in
§ 155.430(d)(4) of this subchapter,
provided that the QHP issuer meets the
notice requirement specified in
paragraph (b) of this section.
*
*
*
*
*
(i) Effective date of termination of
coverage or enrollment. QHP issuers
must abide by the termination of
coverage or enrollment effective dates
described in § 155.430(d) of this
subchapter.
*
*
*
*
*
■ 52. Section 156.285 is amended by—
■ a. Revising paragraphs (b)(1), (b)(4),
(d) introductory text, (d)(1) introductory
text, (d)(1)(i), and (d)(1)(iii);
■ b. Redesignating paragraphs (c)(3), (4),
(5), (6), and (7) as paragraphs (c)(4), (5),
(6), (7), and (8), respectively.
■ c. Adding new paragraph (c)(3).
■ d. Adding and reserving paragraph
(d)(2).
The revisions and addition read as
follows:
§ 156.285
SHOP.
Additional standards specific to
*
*
*
*
*
(b) * * *
(1) Enroll a qualified employee in
accordance with the qualified
employer’s initial and annual employee
open enrollment periods described in
§ 155.725 of this subchapter;
*
*
*
*
*
(4) Adhere to effective dates of
coverage established in accordance with
§ 155.725 of this subchapter.
(c) * * *
(3) Notify new enrollees of their
effective date of coverage consistent
with § 155.720(e) of this subchapter.
*
*
*
*
*
(d) Termination of coverage or
enrollment in the SHOP. QHP issuers
offering a QHP through the SHOP must:
(1) Comply with the following
requirements with respect to
termination of enrollees in the SHOP:
(i)(A) Effective in plan years
beginning on or after January 1, 2015,
requirements regarding termination of
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coverage or enrollment established in
§ 155.735 of this subchapter, if
applicable to the coverage or enrollment
being terminated; otherwise
(B) General requirements regarding
termination of coverage or enrollment
established in § 156.270(a).
*
*
*
*
*
(iii)(A) Effective in plan years
beginning on or after January 1, 2015,
requirements regarding termination of
coverage or enrollment effective dates as
set forth in § 155.735 of this subchapter,
if applicable to the coverage or
enrollment being terminated; otherwise
(B) Requirements regarding
termination of coverage or enrollment
effective dates as set forth in
§ 156.270(i).
(2) [Reserved]
*
*
*
*
*
■ 53. Section 156.285 is further
amended, effective January 1, 2016, by
revising paragraph (d)(1)(ii) to read as
follows:
§ 156.285
SHOP.
Additional standards specific to
*
*
*
*
*
(d) * * *
(1) * * *
(ii) If a QHP issuer terminates an
enrollee’s coverage or enrollment
through the SHOP in accordance with
§ 155.735(d)(1)(iii) or (v) of this
subchapter, the QHP issuer must notify
the qualified employer and the enrollee
of the termination. Such notice must
include the termination effective date
and reason for termination, and must be
sent within 3 business days if an
electronic notice is sent, and within 5
business days if a mailed hard copy
notice is sent. When a primary
subscriber and his or her dependents
live at the same address, a separate
termination notice need not be sent to
each dependent at that address,
provided that the notice sent to each
primary subscriber at that address
contains all required information about
the termination for the primary
subscriber and his or her dependents at
that address.
*
*
*
*
*
■ 54. Section 156.290 is amended by
revising paragraphs (a)(1), (a)(2), (a)(5),
and (c) introductory text to read as
follows:
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§ 156.290
of QHPs.
Non-renewal and decertification
(a) * * *
(1) Notify the Exchange of its decision
prior to the beginning of the
recertification process and adhere to the
procedures adopted by the Exchange in
accordance with § 155.1075 of this
subchapter;
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(2) Fulfill its obligation to cover
benefits for each enrollee through the
end of the plan or benefit year through
the Exchange;
*
*
*
*
*
(5) Terminate the coverage or
enrollment through the Exchange of
enrollees in the QHP in accordance with
§ 156.270, as applicable.
*
*
*
*
*
(c) Decertification. If a QHP is
decertified by the Exchange, the QHP
issuer must terminate the enrollment of
enrollees through the Exchange only
after:
*
*
*
*
*
■ 55. Section 156.410 is amended by
removing the second paragraph
designated as paragraph (d)(4)(ii) and
adding paragraph (d)(4)(iii) to read as
follows:
§ 156.410 Cost-sharing reductions for
enrollees.
*
*
*
*
*
(d) * * *
(4) * * *
(iii) If the excess cost sharing was not
paid by the provider, then, if the
enrollee requests a refund, the refund
must be provided to the enrollee within
45 calendar days of the date of the
request.
■ 56. Section 156.420 is amended by
adding paragraph (h) to read as follows:
§ 156.420
Plan variations.
*
*
*
*
*
(h) Notice. No later than November 1,
2015, for each plan variation that an
issuer offers in accordance with the
rules of this section, an issuer must
provide a summary of benefits and
coverage that accurately represents each
plan variation consistent with the
requirements set forth in § 147.200 of
this subchapter.
■ 57. Section 156.425 is amended by
adding paragraph (c) to read as follows:
§ 156.425 Changes in eligibility for costsharing reductions.
*
*
*
*
*
(c) Notice upon assignment.
Beginning on January 1, 2016, if an
individual’s assignment to a standard
plan or plan variation of the QHP
changes in accordance with paragraph
(a) of this section, the issuer must
provide to that individual a summary of
benefits and coverage that accurately
reflects the new plan variation (or
standard plan variation without costsharing reductions) in a manner
consistent with § 147.200 of this
subchapter as soon as practicable
following receipt of notice from the
Exchange, but not later than 7 business
days following receipt of notice.
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10875
58. Section 156.430 is amended by
adding paragraph (c)(2)(i) and adding
and reserving paragraph (c)(2)(ii) to read
as follows:
■
§ 156.430 Payment for cost-sharing
reductions.
*
*
*
*
*
(c) * * *
(2) * * *
(i) For reconciliation of cost-sharing
reduction amounts advanced for the
2014 and 2015 benefit years, an issuer
of a QHP using the standard or
simplified methodology may calculate
claims amounts attributable to EHB,
including cost sharing amounts
attributable to EHB, by reducing total
claims amounts by the plan-specific
percentage estimate of non-essential
health benefit claims submitted on the
Uniform Rate Review Template for the
corresponding benefit year, if the
following conditions are met:
(A) The non-essential health benefits
percentage estimate is less than 2
percent; and
(B) Out-of-pocket expenses for nonEHB benefits are included in the
calculation of amounts subject to a
deductible or annual limitation on cost
sharing, but copayments and
coinsurance rates on non-EHB benefits
are not reduced under the plan
variation.
(ii) [Reserved]
*
*
*
*
*
■ 59. Section 156.602 is amended by
revising paragraph (d) to read as
follows:
§ 156.602 Other coverage that qualifies as
minimum essential coverage.
*
*
*
*
*
(d) State high risk pool coverage. A
qualified high risk pool as defined by
section 2744(c)(2) of the Public Health
Service Act established on or before
November 26, 2014 in any State.
*
*
*
*
*
■ 60. Section 156.800 is amended by
revising paragraph (c) to read as follows:
§ 156.800
Available remedies; Scope.
*
*
*
*
*
(c) Compliance standard. For calendar
years 2014 and 2015, sanctions under
this subpart will not be imposed if the
QHP issuer has made good faith efforts
to comply with applicable requirements.
*
*
*
*
*
■ 61. Section 156.815 is added to
subpart I to read as follows:
§ 156.815
Plan suppression.
(a) Suppression means temporarily
making a QHP certified to be offered
through the Federally-facilitated
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Exchange unavailable for enrollment
through the Federally-facilitated
Exchange.
(b) Grounds for suppression. A QHP
may be suppressed as described in
paragraph (a) of this section on one or
more of the following grounds:
(1) The QHP issuer notifies HHS of its
intent to withdraw the QHP from a
Federally-facilitated Exchange when
one of the exceptions to guaranteed
renewability of coverage related to
discontinuing a particular product or
discontinuing all coverage under
§ 147.106(c) or (d) of this subchapter
applies;
(2) Data submitted for the QHP is
incomplete or inaccurate;
(3) The QHP is in the process of being
decertified as described in § 156.810(c)
or (d), or the QHP issuer is appealing a
completed decertification as described
in subpart J of this part;
(4) The QHP issuer offering the QHP
is the subject of a pending, ongoing, or
final State regulatory or enforcement
action or determination that could affect
the issuer’s ability to enroll consumers
or otherwise relates to the issuer
offering QHPs in the Federallyfacilitated Exchanges; or
(5) One of the exceptions to
guaranteed availability of coverage
related to special rules for network
plans or financial capacity limits under
§ 147.104(c) or (d) of this subchapter
applies.
(c) A multi-State plan as defined in
§ 155.1000(a) of this subchapter may be
suppressed as described in paragraph (a)
of this section if OPM notifies the
Exchange that:
(1) OPM has found a compliance
violation within the multi-State plan, or
(2) One of the grounds for suppression
in paragraph (b) of this section exists for
the multi-State plan.
■ 62. Section 156.1130 is added to
subpart L to read as follows:
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§ 156.1130
Quality improvement strategy.
(a) General requirement. A QHP issuer
participating in an Exchange for 2 or
more consecutive years must implement
and report on a quality improvement
strategy including a payment structure
that provides increased reimbursement
or other market-based incentives in
accordance with the health care topic
areas in section 1311(g)(1) of the
Affordable Care Act, for each QHP
offered in an Exchange, consistent with
the guidelines developed by HHS under
section 1311(g) of the Affordable Care
Act.
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(b) Data requirement. A QHP issuer
must submit data that has been
validated in a manner and timeframe
specified by the Exchange to support the
evaluation of quality improvement
strategies in accordance with
§ 155.200(d) of this subchapter.
(c) Timeline. A QHP issuer must
submit data annually to evaluate
compliance with the standards for a
quality improvement strategy in
accordance with paragraph (a) of this
section, in a manner and timeframe
specified by the Exchange.
(d) Multi-State plans. Issuers of multiState plans, as defined in § 155.1000(a)
of this subchapter, must provide the
data described in paragraph (b) of this
section to the U.S. Office of Personnel
Management, in the manner and
timeframe specified by the U.S. Office of
Personnel Management.
■ 63. Section 156.1220 is amended by
revising paragraph (c) to read as follows:
§ 156.1220
Administrative appeals.
*
*
*
*
*
(c) Review by the Administrator of
CMS. (1) Either the issuer or CMS may
request review by the Administrator of
CMS of the CMS hearing officer’s
decision. A request for review of the
CMS hearing officer’s decision must be
submitted to the Administrator of CMS
within 15 calendar days of the date of
the CMS hearing officer’s decision, and
must specify the findings or issues that
the issuer or CMS challenges. The issuer
or CMS may submit for review by the
Administrator of CMS a statement
supporting the decision of the CMS
hearing officer.
(2) After receiving a request for
review, the Administrator of CMS has
the discretion to elect to review the
CMS hearing officer’s decision or to
decline to review the CMS hearing
officer’s decision. If the Administrator
of CMS elects to review the CMS
hearing officer’s decision, the
Administrator of CMS will also review
the statements of the issuer and CMS,
and any other information included in
the record of the CMS hearing officer’s
decision, and will determine whether to
uphold, reverse, or modify the CMS
hearing officer’s decision. The issuer or
CMS must prove its case by clear and
convincing evidence for issues of fact.
The Administrator of CMS will send the
decision and the reasons for the
decision to the issuer.
(3) The Administrator of CMS’s
determination is final and binding.
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PART 158—ISSUER USE OF PREMIUM
REVENUE: REPORTING AND REBATE
REQUIREMENTS
64. The authority citation for part 158
continues to read as follows:
■
Authority: Section 2718 of the Public
Health Service Act (42 U.S.C. 300gg–18), as
amended.
65. Section 158.140 is amended by
adding paragraph (b)(1)(iii) to read as
follows:
■
§ 158.140 Reimbursement for clinical
services provided to enrollees.
*
*
*
*
*
(b) * * *
(1) * * *
(iii) Cost-sharing reduction payments
received by the issuer to the extent not
reimbursed to the provider furnishing
the item or service.
*
*
*
*
*
■ 66. Section 158.162 is amended by
revising paragraph (a)(2) and adding
paragraph (b)(2)(iv) to read as follows:
§ 158.162
taxes.
Reporting of Federal and State
(a) * * *
(2) Federal taxes not excluded from
premium under subpart B of this part
which include Federal income taxes on
investment income and capital gains, as
well as Federal employment taxes, as
other non-claims costs.
(b) * * *
(2) * * *
(iv) State employment and similar
taxes and assessments.
*
*
*
*
*
■ 67. Section 158.242 is amended by
■ a. Revising paragraph (b)(1)(iii);
■ b. Amending paragraph (b)(1)(iv) by
removing the period and adding ‘‘; and’’
in its place; and
■ c. Adding paragraph (b)(1)(v).
The revision and addition read as
follows:
§ 158.242
Recipients of rebates.
*
*
*
*
*
(b) * * *
(1) * * *
(iii) A cash refund to subscribers of
the group health plan option for which
the issuer is providing a rebate, who
were enrolled in the group health plan
option either during the MLR reporting
year that resulted in the issuer
providing the rebate or at the time the
rebate is received by the policyholder;
*
*
*
*
*
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(v) All rebate distributions made
under paragraphs (b)(1)(i), (ii), or (iii) of
this section must be made within 3
months of the policyholder’s receipt of
the rebate. Rebate distributions made
after 3 months must include late
payment interest at the current Federal
Reserve Board lending rate or 10 percent
annually, whichever is higher, on the
total amount of the rebate, accruing
from the date payment was due under
this section.
*
*
*
*
*
10877
Dated: February 6, 2015.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: February 17, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human
Services.
[FR Doc. 2015–03751 Filed 2–20–15; 4:15 pm]
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BILLING CODE 4120–01–P
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]]>Agencies
[Federal Register Volume 80, Number 39 (Friday, February 27, 2015)]
[Rules and Regulations]
[Pages 10749-10877]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03751]
[[Page 10749]]
Vol. 80
Friday,
No. 39
February 27, 2015
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
45 CFR Parts 144, 147, 153, et al.
Patient Protection and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2016; Final Rule
Federal Register / Vol. 80 , No. 39 / Friday, February 27, 2015 /
Rules and Regulations
[[Page 10750]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 144, 147, 153, 154, 155, 156 and 158
[CMS-9944-F]
RIN 0938-AS19
Patient Protection and Affordable Care Act; HHS Notice of Benefit
and Payment Parameters for 2016
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule sets forth payment parameters and provisions
related to the risk adjustment, reinsurance, and risk corridors
programs; cost sharing parameters and cost-sharing reductions; and user
fees for Federally-facilitated Exchanges. It also finalizes additional
standards for the individual market annual open enrollment period for
the 2016 benefit year, essential health benefits, qualified health
plans, network adequacy, quality improvement strategies, the Small
Business Health Options Program, guaranteed availability, guaranteed
renewability, minimum essential coverage, the rate review program, the
medical loss ratio program, and other related topics.
DATES: These regulations are effective on April 28, 2015 except the
amendments to Sec. Sec. 156.235, 156.285(d)(1)(ii), and 158.162 are
effective on January 1, 2016.
FOR FURTHER INFORMATION CONTACT:
For general information: Jeff Wu, (301) 492-4305.
For matters related to guaranteed availability, guaranteed
renewability, rate review, or the applicability of Title I of the
Affordable Care Act in the U.S. Territories: Jacob Ackerman, (301) 492-
4179.
For matters related to risk adjustment or the methodology for
determining the reinsurance contribution rate and payment parameters:
Kelly Horney, (410) 786-0558.
For matters related to reinsurance generally, distributed data
collection good faith compliance policy, or administrative appeals:
Adrianne Glasgow, (410) 786-0686.
For matters related to the definition of common ownership for
purposes of reinsurance contributions: Adam Shaw, (410) 786-1019.
For matters related to risk corridors: Jaya Ghildiyal, (301) 492-
5149.
For matters related to essential health benefits, network adequacy,
essential community providers, or other standards for QHP issuers:
Leigha Basini, (301) 492-4380.
For matters related to the qualified health plan good faith
compliance policy: Cindy Yen, (301) 492-5142.
For matters related to the Small Business Health Options Program:
Christelle Jang, (410) 786-8438.
For matters related to the Federally-facilitated Exchange user fee
or minimum value: Krutika Amin, (301) 492-5153.
For matters related to cost-sharing reductions or the premium
adjustment percentage: Pat Meisol, (410) 786-1917.
For matters related to re-enrollment, open enrollment periods, or
exemptions from the individual shared responsibility payment: Christine
Hammer, (301) 492-4431.
For matters related to special enrollment periods: Rachel Arguello,
(301) 492-4263.
For matters related to minimum essential coverage: Cam Moultrie
Clemmons, (206) 615-2338.
For matters related to quality improvement strategies: Marsha
Smith, (410) 786-6614.
For matters related to the medical loss ratio program: Julie
McCune, (301) 492-4196.
For matters related to meaningful access to QHP information,
consumer assistance tools and programs of an Exchange, or cost-sharing
reduction notices: Tricia Beckmann, (301) 492-4328.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
III. Provisions of the Final Regulations and Analysis and Responses
to Public Comments
A. Part 144--Requirements Relating to Health Insurance Coverage
1. Definitions (Sec. 144.103)
a. Plan
b. State
B. Part 147--Health Insurance Reform Requirements for the Group
and Individual Health Insurance Markets
1. Guaranteed Availability of Coverage (Sec. 147.104)
2. Guaranteed Renewability of Coverage (Sec. 147.106)
C. Part 153--Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment Under the Affordable Care Act
1. Provisions for the State Notice of Benefit and Payment
Parameters (Sec. 153.100)
2. Provisions and Parameters for the Permanent Risk Adjustment
Program
a. Risk Adjustment User Fee (Sec. 153.610(f))
b. Overview of the HHS Risk Adjustment Model (Sec. 153.320)
c. Proposed Updates to Risk Adjustment Model (Sec. 153.320)
d. List of Factors To Be Employed in the Model (Sec. 153.320)
e. Cost-Sharing Reductions Adjustments (Sec. 153.320)
f. Model Performance Statistics (Sec. 153.320)
g. Overview of the Payment Transfer Formula (Sec. 153.320)
h. HHS Risk Adjustment Methodology Considerations (Sec.
153.320)
i. State-Submitted Alternate Risk Adjustment Methodology (Sec.
153.330)
3. Provisions and Parameters for the Transitional Reinsurance
Program
a. Common Ownership Clarification
b. Reinsurance Contributing Entities and Minimum Value
c. Self-Insured Expatriate Plans (Sec. 153.400(a)(1)(iii))
d. Determination of Debt (Sec. 153.400(c))
e. Reinsurance Contribution Submission Process
f. Consistency in Counting Methods for Health Insurance Issuers
(Sec. 153.405(d))
g. Snapshot Count and Snapshot Factor Counting Methods
(Sec. Sec. 153.405(d)(2) and (e)(2))
h. Uniform Reinsurance Contribution Rate for 2016
i. Uniform Reinsurance Payment Parameters for 2016
j. Uniform Reinsurance Payment Parameters for 2015
k. Deducting Cost-Sharing Reduction Amounts From Reinsurance
Payments
4. Provisions for the Temporary Risk Corridors Program
a. Application of the Transitional Policy Adjustment in Early
Renewal States
b. Risk Corridors Payments for 2016
5. Distributed Data Collection for the HHS-Operated Risk
Adjustment and Reinsurance Programs
a. Good Faith Safe Harbor (Sec. 153.740(a))
b. Default Risk Adjustment Charge (Sec. 153.740(b))
c. Information Sharing (Sec. 153.740(c))
D. Part 154--Health Insurance Issuer Rate Increases: Disclosure
and Review Requirements
1. General Provisions
a. Definitions (Sec. 154.102)
2. Disclosure and Review Provisions
a. Rate Increases Subject to Review (Sec. 154.200)
b. Submission of Rate Filing Justification (Sec. 154.215)
c. Timing of Providing the Rate Filing Justification (Sec.
154.220)
d. CMS's Determinations of Effective Rate Review Programs (Sec.
154.301)
E. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. General Provisions
a. Definitions (Sec. 155.20)
2. General Functions of an Exchange
a. Consumer Assistance Tools and Programs of an Exchange (Sec.
155.205)
b. Standards Applicable to Navigators and Non-Navigator
Assistance Personnel Carrying Out Consumer Assistance Functions
Under Sec. Sec. 155.205(d) and (e) and 155.210 in a Federally-
Facilitated Exchange and to Non-Navigator
[[Page 10751]]
Assistance Personnel Funded Through an Exchange Establishment Grant
(Sec. 155.215)
c. Ability of States To Permit Agents and Brokers To Assist
Qualified Individuals, Qualified Employers, or Qualified Employees
Enrolling in QHPs (Sec. 155.220)
d. Standards for HHS-Approved Vendors of Federally-Facilitated
Exchange Training for Agents and Brokers (Sec. 155.222)
3. Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance
Affordability Programs
a. Annual Eligibility Redetermination (Sec. 155.335)
4. Exchange Functions in the Individual Market: Enrollment in
Qualified Health Plans
a. Enrollment of Qualified Individuals Into QHPs (Sec. 155.400)
b. Annual Open Enrollment Period (Sec. 155.410)
c. Special Enrollment Periods (Sec. 155.420)
d. Termination of Exchange Enrollment or Coverage (Sec.
155.430)
5. Exchange Functions in the Individual Market: Eligibility
Determinations for Exemptions
a. Eligibility Standards for Exemptions (Sec. 155.605)
b. Required Contribution Percentage (Sec. 155.605)
6. Exchange Functions: Small Business Health Options Program
(SHOP)
a. Standards for the Establishment of a SHOP (Sec. 155.700)
b. Functions of a SHOP (Sec. 155.705)
c. Eligibility Standards for SHOP (Sec. 155.710)
d. Enrollment of Employees Into QHPs Under SHOP (Sec. 155.720
and Sec. 156.285)
e. Enrollment Periods Under SHOP (Sec. 155.725 and Sec.
156.285)
f. Termination of SHOP Enrollment or Coverage (Sec. 155.735 and
Sec. 156.285)
7. Exchange Functions: Certification of Qualified Health Plans
a. Certification Standards for QHPs (Sec. 155.1000)
b. Recertification of QHPs (Sec. 155.1075)
F. Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
1. General Provisions
a. Definitions (Sec. 156.20)
b. FFE User Fee for the 2016 Benefit Year (Sec. 156.50(c))
2. Essential Health Benefits Package
a. State Selection of Benchmark (Sec. 156.100)
b. Provision of EHB (Sec. 156.115)
c. Collection of Data To Define Essential Health Benefits (Sec.
156.120)
d. Prescription Drug Benefits (Sec. 156.122)
e. Prohibition on Discrimination (Sec. 156.125)
f. Cost-Sharing Requirements (Sec. 156.130)
g. Premium Adjustment Percentage (Sec. 156.130)
h. Reduced Maximum Annual Limitation On Cost Sharing (Sec.
156.130)
i. Minimum Value (Sec. 156.145)
3. Qualified Health Plan Minimum Certification Standards
a. QHP Issuer Participation Standards (Sec. 156.200)
b. Transparency in Coverage (Sec. 156.220)
c. Network Adequacy Standards (Sec. 156.230)
d. Essential Community Providers (Sec. 156.235)
e. Meaningful Access to Qualified Health Plan Information (Sec.
156.250)
f. Enrollment Process for Qualified Individuals (Sec. 156.265)
g. Termination of Coverage or Enrollment for Qualified
Individuals (Sec. 156.270)
h. Segregation of Funds for Abortion Services (Sec. 156.280)
i. Non-Renewal and decertification of QHPs (Sec. 156.290)
4. Health Insurance Issuer Responsibility for Advance Payments
of the Premium Tax Credit and Cost-Sharing Reductions
a. Plan Variations (Sec. 156.420)
b. Changes in Eligibility for Cost-Sharing Reductions (Sec.
156.425)
c. Cost-Sharing Reductions Reconciliation (Sec. 156.430)
5. Minimum Essential Coverage
a. Other Coverage That Qualifies as Minimum Essential Coverage
(Sec. 156.602)
6. Enforcement Remedies in Federally-Facilitated Exchanges
a. Available Remedies; Scope (Sec. 156.800)
b. Plan Suppression (Sec. 156.815)
7. Quality Standards
a. Quality Improvement Strategy (Sec. 156.1130)
8. Qualified Health Plan Issuer Responsibilities
a. Administrative Appeals (Sec. 156.1220(c))
G. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Treatment of Cost-Sharing Reductions in MLR Calculation
(Sec. 158.140)
2. Reporting of Federal and State Taxes (Sec. 158.162)
3. Distribution of Rebates to Group Enrollees in Non-Federal
Governmental Plans (Sec. 158.242)
IV. Collection of Information Requirements
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice Provisions and
Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act
F. Unfunded Mandates
G. Federalism
H. Congressional Review Act Regulations Text
Acronyms
Affordable Care Act The collective term for the Patient Protection
and Affordable Care Act (Pub. L. 111-148) and the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), as amended
AHFS American hospital formulary system
AV Actuarial value
CFR Code of Federal Regulations
CMS Centers for Medicare & Medicaid Services
COBRA Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub.
L. 99-272) (29 U.S.C. 1161, et seq.)
ECP Essential community provider
EHB Essential health benefits
ERISA Employee Retirement Income Security Act of 1974 (Pub. L. 93-
406)
FFE Federally-facilitated Exchange
FF-SHOP Federally-facilitated Small Business Health Options Program
FPL Federal Poverty Level
FQHC Federally qualified health center
HCC Hierarchical condition category
HHS United States Department of Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
IRS Internal Revenue Service
LEP Limited English proficient/proficiency
MLR Medical loss ratio
MV Minimum value
NAIC National Association of Insurance Commissioners
OMB Office of Management and Budget
OPM United States Office of Personnel Management
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1995
P&T committee Pharmacy and therapeutics committee
QHP Qualified health plan
QIS Quality improvement strategy
SADP Stand-alone Dental Plan
SEP Special enrollment period
SHOP Small Business Health Options Program
The Code Internal Revenue Code of 1986
TPA Third-party administrator
URL Uniform resource locator
USP United States Pharmacopeia
I. Executive Summary
Qualified individuals and qualified employers are now able to
purchase private health insurance coverage through competitive
marketplaces called Affordable Insurance Exchanges, or ``Exchanges''
(also called Health Insurance Marketplaces, or ``Marketplaces'').
Individuals who enroll in qualified health plans (QHPs) through
individual market Exchanges may be eligible to receive a premium tax
credit to make health insurance more affordable and for cost-sharing
reductions to reduce out-of-pocket expenses for health care services.
Additionally, in 2014, HHS began operationalizing the premium
stabilization programs established by the Affordable Care Act. These
programs--the risk adjustment, reinsurance, and risk corridors
programs--are intended to mitigate the potential impact of adverse
selection and stabilize the price of health insurance in the individual
and small group markets. These programs, together with other reforms of
the Affordable Care Act, are making high-quality health insurance
affordable and accessible to millions of Americans.
We have previously outlined the major provisions and parameters
related to the advance payments of the premium tax credit, cost-sharing
reductions, and premium stabilization programs. This rule finalizes
additional
[[Page 10752]]
provisions and modifications related to the implementation of the
premium stabilization programs, as well as key payment parameters for
the 2016 benefit year.
The HHS Notice of Benefit and Payment Parameters for 2014 (78 FR
15410) (2014 Payment Notice) finalized the risk adjustment methodology
that HHS will use when it operates the risk adjustment program on
behalf of a State. Risk adjustment factors reflect enrollee health risk
and the costs of a given disease relative to average spending. This
final rule recalibrates the HHS risk adjustment models for the 2016
benefit year by using 2011, 2012, and 2013 claims data from the Truven
Health Analytics 2010 MarketScan[supreg] Commercial Claims and
Encounters database (MarketScan) to develop updated risk factors.
Using the same methodology as set forth in the 2014 Payment Notice
and the HHS Notice of Benefit and Payment Parameters for 2015 (79 FR
13744) (2015 Payment Notice), we finalize a 2016 uniform reinsurance
contribution rate of $27 annually per enrollee, and the 2016 uniform
reinsurance payment parameters--a $90,000 attachment point, a $250,000
reinsurance cap, and a 50 percent coinsurance rate. We are decreasing
the attachment point for the 2015 benefit year from $70,000 to $45,000,
while retaining the $250,000 reinsurance cap and a 50 percent
coinsurance rate. In this rule, we also finalize the definition of
``common ownership'' for purposes of determining whether a contributing
entity uses a third-party administrator for core administrative
functions. In addition, this final rule discusses the reinsurance
contribution payment schedule and accompanying notifications. We also
extend the good faith safe harbor for non-compliance with the HHS-
operated risk adjustment and reinsurance data requirements through the
2015 calendar year.
We are finalizing a clarification and a modification to the risk
corridors program. We clarify that the risk corridors transitional
adjustment policy established in the 2015 Payment Notice, which makes
an adjustment to a QHP issuer's risk corridors calculation based on
Statewide enrollment in transitional plans, does not include in that
calculation enrollment in so-called ``early renewal plans'' (plans that
renewed before January 1, 2014 and before the end of their 12-month
terms) unless and until the plans renew in 2014 and become transitional
plans. Additionally, for the 2016 benefit year, we are finalizing an
approach for the treatment of risk corridors collections under the
policy set forth in our April 11, 2014, FAQ on Risk Corridors and
Budget Neutrality,\1\ in the event that risk corridors collections
available in 2016 exceed risk corridors payment requests from QHP
issuers.
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\1\ Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/faq-risk-corridors-04-11-2014.pdf.
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We also finalize several provisions related to cost sharing. First,
we establish the premium adjustment percentage for 2016, which is used
to set the rate of increase for several parameters detailed in the
Affordable Care Act, including the maximum annual limitation on cost
sharing for 2016. We establish the maximum annual limitations on cost
sharing for the 2016 benefit year for cost-sharing reduction plan
variations. For reconciliation of 2014 cost-sharing reductions, we are
finalizing and expanding our proposal to permit issuers whose plan
variations meet certain criteria to estimate the portion of claims
attributable to non-essential health benefits to calculate cost-sharing
reductions provided.
For 2016, we finalize a Federally-facilitated Exchange (FFE) user
fee rate of 3.5 percent of premium, the same rate as for 2015. This
rule also finalizes provisions to enhance the transparency and
effectiveness of the rate review program and standards related to
minimum essential coverage, the individual market annual open
enrollment period for the 2016 benefit year, and amendments to a number
of Small Business Health Options Program (SHOP) provisions, including
minimum participation rates. This final rule amends the medical loss
ratio (MLR) provisions relating to the treatment of cost-sharing
reductions and certain taxes in MLR and rebate calculations, as well as
the distribution of rebates by group health plans not subject to the
Employee Retirement Income Security Act of 1974 (Pub. L. 93-406)
(ERISA). This final rule provides more specificity about the meaningful
access requirements applicable to Exchanges, to QHP issuers, and to
agents and brokers subject to Sec. 155.220(c)(3)(i), related to access
for individuals with limited English proficiency (LEP). This final rule
requires issuers to provide a summary of benefits and coverage (SBC)
for each plan variation of the standard QHP and to provide adequate
notice to enrollees of changes in cost-sharing reduction eligibility.
This final rule also includes additional quality improvement strategy
reporting provisions for QHP issuers, specifies the circumstances that
may lead an Exchange to suppress a QHP from being offered to new
enrollees through an Exchange, and extends the good faith compliance
policy for QHP issuers in the FFEs through the 2015 calendar year.
In this final rule, we are finalizing a number of standards
relating to essential health benefits (EHBs), including a definition of
habilitative services, coverage of pediatric services, and coverage of
prescription drugs. This final rule also provides examples of
discriminatory plan designs and amends requirements for essential
community providers (ECPs).
II. Background
A. Legislative and Regulatory Overview
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised
several provisions of the Patient Protection and Affordable Care Act,
was enacted on March 30, 2010. In this final rule, we refer to the two
statutes collectively as the ``Affordable Care Act.''
Subtitles A and C of title I of the Affordable Care Act
reorganized, amended, and added to the provisions of part A of title
XXVII of the Public Health Service Act (PHS Act) relating to group
health plans and health insurance issuers in the group and individual
markets.
Section 2701 of the PHS Act, as added by the Affordable Care Act,
restricts the variation in premium rates that may be charged by a
health insurance issuer for non-grandfathered health insurance coverage
in the individual or small group market to certain specified factors.
The factors are: Family size, rating area, age, and tobacco use (within
specified limits).
Section 2701 of the PHS Act operates in coordination with section
1312(c) of the Affordable Care Act. Section 1312(c) of the Affordable
Care Act generally requires a health insurance issuer to consider all
enrollees in all health plans (except for grandfathered health plans)
offered by such issuer to be members of a single risk pool for each of
its individual and small group markets. States have the option to merge
the individual market and small group market risk pools under section
1312(c)(3) of the Affordable Care Act.
Section 2702 of the PHS Act, as added by the Affordable Care Act,
requires health insurance issuers that offer health insurance coverage
in the group or individual market in a State to offer coverage to and
accept every employer
[[Page 10753]]
and individual in the State that applies for such coverage unless an
exception applies.
Section 2703 of the PHS Act, as added by the Affordable Care Act,
requires health insurance issuers that offer health insurance coverage
in the group or individual market to renew or continue in force such
coverage at the option of the plan sponsor or individual unless an
exception applies.
Section 2718 of the PHS Act, as added by the Affordable Care Act,
generally requires health insurance issuers to submit an annual MLR
report to HHS and provide rebates to enrollees if they do not achieve
specified MLR thresholds.
Section 2794 of the PHS Act, as added by the Affordable Care Act,
directs the Secretary of HHS (the Secretary), in conjunction with the
States, to establish a process for the annual review of ``unreasonable
increases in premiums for health insurance coverage.'' \2\ The law also
requires health insurance issuers to submit justifications to the
Secretary and the applicable State entities for unreasonable premium
increases prior to the implementation of the increases. Section
2794(b)(2) of the PHS Act further specifies that, beginning in 2014,
the Secretary, in conjunction with the States, will monitor premium
increases of health insurance coverage offered through an Exchange and
outside of an Exchange.
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\2\ The implementing regulations in part 154 limit the scope of
the requirements under section 2794 of the PHS Act to health
insurance issuers offering health insurance coverage in the
individual market or small group market. See Rate Increase
Disclosure and Review; Final Rule, 76 FR 29964, 29966 (May 23,
2011).
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Section 1302 of the Affordable Care Act provides for the
establishment of an essential health benefits (EHB) package that
includes coverage of EHB (as defined by the Secretary) and cost-sharing
limits, and meets statutorily defined actuarial value (AV)
requirements. The law directs that EHBs be equal in scope to the
benefits covered by a typical employer plan and that they cover at
least the following 10 general categories: Ambulatory patient services;
emergency services; hospitalization; maternity and newborn care; mental
health and substance use disorder services, including behavioral health
treatment; prescription drugs; rehabilitative and habilitative services
and devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral and
vision care.
Sections 1302(b)(4)(A) through (D) establish that the Secretary
must define EHB in a manner that: (1) Reflects appropriate balance
among the 10 categories; (2) is not designed in such a way as to
discriminate based on age, disability, or expected length of life; (3)
takes into account the health care needs of diverse segments of the
population; and (4) does not allow denials of EHBs based on age, life
expectancy, disability, degree of medical dependency, or quality of
life.
Section 1302(d) of the Affordable Care Act describes the various
levels of coverage based on AV. Consistent with section 1302(d)(2)(A)
of the Affordable Care Act, AV is calculated based on the provision of
EHB to a standard population. Section 1302(d)(3) of the Affordable Care
Act directs the Secretary to develop guidelines that allow for de
minimis variation in AV calculations.
Section 1311(b)(1)(B) of the Affordable Care Act directs the SHOP
to assist qualified small employers in facilitating the enrollment of
their employees in QHPs offered in the small group market. Sections
1312(f)(1) and (2) of the Affordable Care Act define qualified
individuals and qualified employers. Under section 1312(f)(2)(B) of the
Affordable Care Act, beginning in 2017, States will have the option to
allow issuers to offer QHPs in the large group market through the
SHOP.\3\
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\3\ If a State elects to offer QHPs in the large group market
through the SHOP, the rating rules in section 2701 of the PHS Act
and its implementing regulations will apply to all coverage offered
in such State's large group market (except for self-insured group
health plans) under section 2701(a)(5) of the PHS Act.
---------------------------------------------------------------------------
Section 1311(c)(1)(B) of the Affordable Care Act requires the
Secretary to establish minimum criteria for provider network adequacy
that a health plan must meet to be certified as a QHP. Section
1311(c)(1)(E) of the Affordable Care Act specifies that, to be
certified as a QHP participating in Exchanges, each health plan must
implement a quality improvement strategy (QIS), which is described in
section 1311(g)(1) of the Affordable Care Act.
Section 1311(c)(5) of the Affordable Care Act requires the
Secretary to continue to operate, maintain, and update the Internet
portal developed under section 1103 of the Affordable Care Act to
provide information to consumers and small businesses on affordable
health insurance coverage options.
Section 1311(c)(6)(B) of the Affordable Care Act states that the
Secretary is to set annual open enrollment periods for Exchanges for
calendar years after the initial enrollment period.
Section 1301(a)(1)(B) of the Affordable Care Act directs all
issuers of QHPs to cover the EHB package described in section 1302(a)
of the Affordable Care Act, including the services described in section
1302(b) of the Affordable Care Act, to adhere to the cost-sharing
limits described in section 1302(c) of the Affordable Care Act, and to
meet the AV levels established in section 1302(d) of the Affordable
Care Act. Section 2707(a) of the PHS Act, which is effective for plan
or policy years beginning on or after January 1, 2014, extends the
coverage of the EHB package to non-grandfathered individual and small
group coverage, irrespective of whether such coverage is offered
through an Exchange. In addition, section 2707(b) of the PHS Act
directs non-grandfathered group health plans to ensure that cost
sharing under the plan does not exceed the limitations described in
sections 1302(c)(1) and (2) of the Affordable Care Act.
Sections 1313 and 1321 of the Affordable Care Act provide the
Secretary with the authority to oversee the financial integrity of
State Exchanges, their compliance with HHS standards, and the efficient
and non-discriminatory administration of State Exchange activities.
Section 1321 of the Affordable Care Act provides for State flexibility
in the operation and enforcement of Exchanges and related requirements.
Section 1321(a) of the Affordable Care Act provides the Secretary
with broad authority to establish standards and regulations to
implement statutory requirements related to Exchanges, QHPs, and other
components of title I of the Affordable Care Act. Under the authority
established in section 1321(a)(1) of the Affordable Care Act, the
Secretary promulgated the regulations at Sec. 155.205(d) and (e).
Section 155.205 authorizes Exchanges to perform certain consumer
service functions. Section 155.205(d) provides that each Exchange must
conduct consumer assistance activities, including the Navigator program
described in Sec. 155.210, and Sec. 155.205(e) provides that each
Exchange must conduct outreach and education activities to inform
consumers about the Exchange and insurance affordability programs to
encourage participation. Sections 155.205(d) and (e) also allow for the
establishment of a non-Navigator consumer assistance program. Section
155.215 establishes standards for Navigators and non-Navigator
assistance personnel in FFEs and for non-Navigator assistance personnel
that are
[[Page 10754]]
funded with Exchange establishment grant funds under section 1311(a) of
the Affordable Care Act.
When operating an FFE under section 1321(c)(1) of the Affordable
Care Act, HHS has the authority under sections 1321(c)(1) and
1311(d)(5)(A) of the Affordable Care Act to collect and spend user
fees. In addition, 31 U.S.C. 9701 permits a Federal agency to establish
a charge for a service provided by the agency. Office of Management and
Budget (OMB) Circular No. A-25 Revised establishes Federal policy
regarding user fees and specifies that a user charge will be assessed
against each identifiable recipient for special benefits derived from
Federal activities beyond those received by the general public.
Section 1321(c)(2) of the Affordable Care Act authorizes the
Secretary to enforce the Exchange standards using civil money penalties
(CMPs) on the same basis as detailed in section 2723(b) of the PHS Act.
Section 2723(b) of the PHS Act authorizes the Secretary to impose CMPs
as a means of enforcing the individual and group market reforms
contained in Part A of title XXVII of the PHS Act when a State fails to
substantially enforce these provisions.
Section 1321(d) of the Affordable Care Act provides that nothing in
title I of the Affordable Care Act should be construed to preempt any
State law that does not prevent the application of title I of the
Affordable Care Act. Section 1311(k) of the Affordable Care Act
specifies that Exchanges may not establish rules that conflict with or
prevent the application of regulations issued by the Secretary.
Section 1341 of the Affordable Care Act provides for the
establishment of a transitional reinsurance program in each State to
help pay the cost of treating high-cost enrollees in the individual
market in the 2014 through 2016 benefit years. Section 1342 of the
Affordable Care Act directs the Secretary to establish a temporary risk
corridors program that protects against inaccurate rate setting in the
2014 through 2016 benefit years. Section 1343 of the Affordable Care
Act establishes a permanent risk adjustment program that is intended to
provide increased payments to health insurance issuers that attract
higher-risk populations, such as those with chronic conditions, funded
by payments from those that attract lower-risk populations, thereby
reducing incentives for issuers to avoid higher-risk enrollees.
Sections 1402 and 1412 of the Affordable Care Act provide for
reductions in cost sharing for EHBs for qualified low- and moderate-
income enrollees in silver level health plans offered through the
individual market Exchanges. These sections also provide for reductions
in cost sharing for Indians enrolled in Exchange plans at any metal
level.
Section 5000A of the Internal Revenue Code (the Code), as added by
section 1501(b) of the Affordable Care Act, requires an individual to
have minimum essential coverage for each month, qualify for an
exemption, or make a shared responsibility payment with his or her
Federal income tax return. Section 5000A(f) of the Code defines minimum
essential coverage as any of the following: (1) Coverage under a
specified government sponsored program; (2) coverage under an eligible
employer-sponsored plan; (3) coverage under a health plan offered in
the individual market within a State; or (4) coverage under a
grandfathered health plan. Section 5000A(f)(1)(E) of the Code
authorizes the Secretary, in coordination with the Secretary of the
Treasury, to designate other health benefits coverage as minimum
essential coverage.
1. Premium Stabilization Programs
In the July 15, 2011 Federal Register (76 FR 41930), we published a
proposed rule outlining the framework for the premium stabilization
programs. We implemented the premium stabilization programs in a final
rule, published in the March 23, 2012 Federal Register (77 FR 17220)
(Premium Stabilization Rule). In the December 7, 2012 Federal Register
(77 FR 73118), we published a proposed rule outlining the benefit and
payment parameters for the 2014 benefit year to expand the provisions
related to the premium stabilization programs, and establish payment
parameters for those programs (proposed 2014 Payment Notice). We
published the 2014 Payment Notice final rule in the March 11, 2013
Federal Register (78 FR 15410).
In the December 2, 2013 Federal Register (78 FR 72322), we
published a proposed rule outlining the benefit and payment parameters
for the 2015 benefit year to expand upon the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions, and establishing the 2015 payment parameters for those
programs (proposed 2015 Payment Notice). We published the 2015 Payment
Notice final rule in the March 11, 2014 Federal Register (79 FR 13744).
2. Program Integrity
In the June 19, 2013 Federal Register (78 FR 37032), we published a
proposed rule that proposed certain program integrity standards related
to Exchanges and the premium stabilization programs (proposed Program
Integrity Rule). The provisions of that proposed rule were finalized in
two rules, the ``first Program Integrity Rule'' published in the August
30, 2013 Federal Register (78 FR 54070) and the ``second Program
Integrity Rule'' published in the October 30, 2013 Federal Register (78
FR 65046).
3. Exchanges
We published a request for comment relating to Exchanges in the
August 3, 2010 Federal Register (75 FR 45584). We issued initial
guidance to States on Exchanges on November 18, 2010. We proposed a
rule in the July 15, 2011 Federal Register (76 FR 41866) to implement
components of the Exchange, and a rule in the August 17, 2011 Federal
Register (76 FR 51202) regarding Exchange functions in the individual
market, eligibility determinations, and Exchange standards for
employers. A final rule implementing components of the Exchanges and
setting forth standards for eligibility for Exchanges was published in
the March 27, 2012 Federal Register (77 FR 18310) (Exchange
Establishment Rule).
We established standards for the administration and payment of
cost-sharing reductions and the SHOP in the 2014 Payment Notice and in
the Amendments to the HHS Notice of Benefit and Payment Parameters for
2014 interim final rule, published in the March 11, 2013 Federal
Register (78 FR 15541). The provisions established in the interim final
rule were finalized in the second Program Integrity Rule. We also set
forth standards related to Exchange user fees in the 2014 Payment
Notice. We also established an adjustment to the FFE user fee in the
Coverage of Certain Preventive Services Under the Affordable Care Act
final rule, published in the July 2, 2013 Federal Register (78 FR
39870) (Preventive Services Rule).
In a final rule published in the July 17, 2013 Federal Register (78
FR 42859), we established standards for Navigators and non-Navigator
assistance personnel in FFEs and for non-Navigator assistance personnel
funded through an Exchange establishment grant.
4. Essential Health Benefits and Actuarial Value
We initially established requirements relating to EHBs and AVs in
the Standards Related to Essential Health Benefits, Actuarial Value,
and Accreditation Final Rule, which was
[[Page 10755]]
published in the February 25, 2013 Federal Register (78 FR 12834) (EHB
Rule). We established standards for updating the AV Calculator for
future plan years in the 2015 Payment Notice and established an
expedited prescription drug exception process based on exigent
circumstances for plans providing EHB in the Exchange and Insurance
Market Standards for 2015 and Beyond Final Rule (2015 Market Standards
Rule) that was published in the May 27, 2014 Federal Register (79 FR
30240).
5. Market Rules
A proposed rule relating to the Health Insurance Market Rules was
published in the November 26, 2012 Federal Register (77 FR 70584). A
final rule implementing the Health Insurance Market Rules was published
in the February 27, 2013 Federal Register (78 FR 13406) (2014 Market
Rules).
A proposed rule relating to Exchanges and Insurance Market
Standards for 2015 and Beyond was published in the March 21, 2014
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule).
The 2015 Market Standards Rule was published in the May 27, 2014
Federal Register (79 FR 30240).
6. Rate Review
We published a proposed rule to establish the rate review program
in the December 23, 2010 Federal Register (75 FR 81004). We implemented
the rate review program in a final rule published in the May 23, 2011
Federal Register (76 FR 26694). We subsequently amended the rate review
provisions in a final rule published in the September 6, 2011 Federal
Register (76 FR 54969) and in the 2014 Market Rules.
7. Medical Loss Ratio (MLR)
We published a request for comment on section 2718 of the PHS Act
in the April 14, 2010 Federal Register (75 FR 19297), and published an
interim final rule with a 60-day comment period relating to the MLR
program on December 1, 2010 (75 FR 74864). A final rule with a 30-day
comment period was published in the December 7, 2011 Federal Register
(76 FR 76574). An interim final rule with a 60-day comment period was
published in the December 7, 2011 Federal Register (76 FR 76596). A
final rule was published in the Federal Register on May 16, 2012 (77 FR
28790).
B. Stakeholder Consultation and Input
HHS has consulted with stakeholders on policies related to the
operation of Exchanges, including the SHOP and the premium
stabilization programs. HHS has held a number of listening sessions
with consumers, providers, employers, health plans, the actuarial
community, and State representatives to gather public input. HHS
consulted with stakeholders through regular meetings with the National
Association of Insurance Commissioners (NAIC), regular contact with
States through the Exchange Establishment grant and Exchange Blueprint
approval processes, and meetings with Tribal leaders and
representatives, health insurance issuers, trade groups, consumer
advocates, employers, and other interested parties. We considered all
of the public input as we developed the policies in this final rule.
III. Provisions of the Final Regulations and Analysis and Responses to
Public Comments
In the November 26, 2014 Federal Register (79 FR 70674), we
published the ``Patient Protection and Affordable Care Act; HHS Notice
of Benefit and Payment Parameters for 2016'' proposed rule. We received
313 comments from various stakeholders, including States, health
insurance issuers, consumer groups, labor entities, industry groups,
provider groups, patient safety groups, national interest groups, and
other stakeholders. The comments ranged from general support of or
opposition to the proposed provisions to very specific questions or
comments regarding proposed changes. We received a number of comments
and suggestions that were outside the scope of the proposed rule and
therefore will not be addressed in this final rule.
In this final rule, we provide a summary of each proposed
provision, a summary of the public comments received and our responses
to them, and the provisions we are finalizing.
Comment: We received a number of comments requesting that the
comment period be extended to 60 days. Several commenters asked that
HHS develop a standard timeline for issuance of the proposed and final
Payment Notices, one commenter asked that the final Payment Notice be
published by mid-January each year, and another asked that it be
published by February 1st each year.
Response: The timeline for publication of this final rule
accommodates issuer filing deadlines for the 2016 benefit year. We
appreciate the deadlines that States, Exchanges, issuers, and other
entities face in implementing these rules.
Comment: We received one comment disapproving of the wide array of
topics covered in the rule.
Response: Many of the programs covered by this final rule are
closely linked. To simplify the regulatory process, facilitate public
comment, and provide the information needed to meet statutory
deadlines, we elected to propose and finalize these regulatory
provisions in one rule.
Comment: One commenter asked that HHS allow States to continue
their oversight of their insurance markets and defer to the NAIC for
the development of important industry-wide, State-based standards.
Response: Title XXVII of the PHS Act contemplates that States will
exercise primary enforcement authority over health insurance issuers in
the group and individual markets to ensure compliance with the Federal
market reforms. HHS has the responsibility to enforce these provisions
in the event that a State notifies HHS that it does not have the
statutory authority to enforce or that it is not otherwise enforcing,
or if HHS determines that a State is not substantially enforcing, these
requirements. This enforcement framework, in place since 1996, ensures
that all consumers in all States have the protections of the Affordable
Care Act and other parts of the PHS Act. We aim to establish Federal
oversight standards that complement State standards while meeting
Federal obligations, and intend to continue to coordinate with State
authorities to address compliance issues and to reduce the burden on
stakeholders.
Comment: One commenter urged HHS to ensure that all regulatory
information related to the premium stabilization programs be presented
in a transparent and timely fashion.
Response: We strive to publicize and present all information
related to the premium stabilization programs in a transparent and
timely fashion.
A. Part 144--Requirements Relating to Health Insurance Coverage
1. Definitions (Sec. 144.103)
Section 144.103 sets forth definitions of terms that are used
throughout parts 146 through 150. In the proposed rule, we proposed to
amend the definitions of ``plan'' and ``State.''
a. Plan
We proposed to make the definition of ``plan'' more specific by
clarifying that the term means the pairing of the health insurance
coverage benefits under a ``product'' with a particular cost-sharing
structure, provider network, and service
[[Page 10756]]
area.\4\ The same definition would be used for purposes of part 154,
rate review, and part 156, health insurance issuer standards.
---------------------------------------------------------------------------
\4\ Under Sec. 144.103, the term ``product'' means a discrete
package of health insurance coverage benefits that a health
insurance issuer offers using a particular product network type
within a service area. Examples of product network types include
health maintenance organization (HMO), preferred provider
organization (PPO), exclusive provider organization (EPO), point of
service (POS), and indemnity.
---------------------------------------------------------------------------
We noted that issuers can modify the health insurance coverage for
a product upon coverage renewal and sought comment on standards for
determining when a plan that has been modified should be considered to
be the ``same plan'' for purposes of rate review, plan identification
in the Health Insurance Oversight System (HIOS), and other programs. In
particular, we sought comment on whether these standards should be
similar to those applicable at the product level under the uniform
modification provision at Sec. 147.106(e).
We are finalizing the amendments to the definition of ``plan'' as
proposed. We are also specifying standards for determining when a plan
that has been modified will be considered to be the ``same plan.''
Comment: Many commenters were supportive of the proposed definition
of ``plan'' stating it more closely aligns with issuer operations and
consumer expectations. However, some commenters believed that parts of
the definition were too vague, such as the references to ``cost-sharing
structure'' and ``provider network.'' For example, one commenter stated
that the reference to a ``particular'' cost-sharing structure could
mean that each cost-sharing reduction plan variation of the standard
QHP would constitute a separate ``plan.'' One commenter recommended
adding the prescription drug formulary as a distinct plan
characteristic. Other commenters cautioned HHS to be mindful of the
operational impacts of changing the definition of ``plan.''
Response: We believe the proposed definition accurately reflects
the key features of a plan: a package of benefits paired with a cost-
sharing structure and provider network that operates within a service
area. By ``provider network,'' we mean the defined set of providers
under contract with the issuer for the delivery of medical care
(including items and services paid for as medical care), if applicable.
We recognize that the prescription drug formulary is an important
element of plan coverage, but do not specifically include it in the
definition, because each aspect of the formulary--the covered drugs and
the tiering design--are represented by the plan's benefits and cost-
sharing structure. Further, we clarify that each plan variation of a
standard QHP would not constitute a ``particular cost-sharing
structure'' for purposes of the definition and thus would not
constitute a separate plan.
The final rule adopts the definition of ``plan'' as proposed. We
believe many issuers already distinguish their plans according to these
characteristics, and we do not anticipate significant downstream issues
as a result of these clarifications. Nevertheless, we will work with
States and issuers to make any necessary adjustments to plan
identifiers in Federal systems.
Comment: We received some comments addressing when a plan should be
considered to be the ``same plan'' following modifications at the plan
level. Several commenters agreed with the option we presented in the
preamble to the proposed rule of using standards similar to those for
uniform modification of a product for identifying modifications to a
plan that would result in the plan remaining the ``same plan.''
Commenters stated that we should permit changes to cost sharing
designed to maintain the same metal level and modifications
attributable to Federal or State legal requirements to constitute the
same plan. Two commenters recommended standards regarding provider
network and service area.
Response: In this final rule, we specify when a plan that has been
modified will be considered to be the ``same plan.'' Based on the
comments received, the final rule generally adopts the standards for
uniform modification at the product level for changes made at the plan
level. These standards reflect characteristics relevant to the
definition of ``plan,'' including provider network, an additional
characteristic not reflected in the uniform modification provision. We
specifically omit those standards at Sec. 147.106(e)(3) related to
issuer, product network type, and covered benefits, which are relevant
only at the product level. We note that modifications to these
characteristics in a manner that exceeds the standards for uniform
modification would result in a new product and, consequently, new plans
within the product.
The final rule provides that a plan that has been modified at the
time of coverage renewal in accordance with Sec. 147.106 will be
considered to be the same plan if it meets the following conditions:
Has the same cost-sharing structure as before the
modification, or any variation in cost sharing is solely related to
changes in cost or utilization of medical care (that is, medical
inflation or demand for services based on inflationary increases in the
cost of medical care), or is to maintain the same metal tier level
described in sections 1302(d) and (e) of the Affordable Care Act (that
is, bronze, silver, gold, platinum, or catastrophic).
Continues to cover a majority of the same service area.
Continues to cover a majority of the same provider network
(as applicable).
We recognize that a plan's provider network may change throughout
the plan year. Therefore, for purposes of determining whether a plan
maintains a majority of the same provider network, the plan's provider
network on the first day of the plan year is compared with the plan's
provider network on the first day of the preceding plan year. If at
least 50 percent of the contracted providers at the beginning of the
plan year are still contracted providers at the beginning of the next
plan year, the plan will be considered to have maintained a majority of
the same provider network.
Furthermore, similar to the standard for uniform modification of a
product, a plan also will not fail to be treated as the same plan to
the extent the changes are made uniformly and solely pursuant to
applicable Federal or State requirements, provided that the changes are
made within a reasonable time period after the imposition or
modification of the Federal or State requirement and are directly
related to the imposition or modification of the Federal or State
requirement.
The cost-sharing provision under this final rule is identical to
the cost-sharing provision under the uniform modification standard. In
the 2015 Market Standards Rule (79 FR 30251), which established
criteria for uniform modification, we stated that the cost-sharing
provision is intended to establish basic parameters around cost-sharing
modifications to protect consumers from extreme changes in deductibles,
copayments, and coinsurance, while preserving issuer flexibility to
make reasonable and customary adjustments from year to year.
Finally, as with the uniform modification provision, States have
flexibility to broaden the definition of ``same plan.'' States may, at
their option, permit greater changes to cost-sharing structure, or
designate a lower threshold than the ``majority'' standard in this
final rule for changes in provider network and service area, to
constitute the same plan. We intend to monitor issues around compliance
with the
[[Page 10757]]
categorization of ``plans'' and may provide future guidance as
necessary.
b. State
We proposed to amend the definition of ``State'' to exclude
application of the Affordable Care Act market reforms under part 147 to
issuers in the U.S. Territories of Puerto Rico, the Virgin Islands,
Guam, American Samoa, and the Northern Mariana Islands. The change
codifies HHS's interpretation, outlined in letters to the Territories
on July 16, 2014, that the new provisions of the PHS Act enacted in
title I of the Affordable Care Act are appropriately governed by the
definition of ``State'' set forth in that title, and therefore do not
apply to group or individual health insurance issuers in the
Territories.\5\
---------------------------------------------------------------------------
\5\ See for example, Letter to Virgin Islands on the Definition
of State (July 16, 2014). Available at: https://www.cms.gov/CCIIO/Resources/Letters/Downloads/letter-to-Francis.pdf.
---------------------------------------------------------------------------
As explained in the July 16, 2014 letters and reiterated in the
preamble to the proposed rule (79 FR 70681), this interpretation
applies only to health insurance that is governed by the PHS Act. It
does not affect the PHS Act requirements that were enacted in the
Affordable Care Act and incorporated into ERISA and the Code and apply
to group health plans (whether insured or self-insured), because such
applicability does not rely upon the term ``State'' as it is defined in
either the PHS Act or Affordable Care Act. It also does not affect the
PHS Act requirements that were enacted in the Affordable Care Act and
apply to non-Federal governmental plans. As a practical matter,
therefore, PHS Act, ERISA, and Code requirements applicable to group
health plans continue to apply to such coverage, and issuers selling
policies to both private sector and public sector employers in the
Territories should ensure their products comply with the relevant
Affordable Care Act amendments to the PHS Act applicable to group
health plans since their customers--the group health plans--are subject
to those provisions. These include the prohibition on lifetime and
annual limits (section 2711 of the PHS Act), the prohibition on
rescissions (section 2712 of the PHS Act), coverage of preventive
health services (section 2713 of the PHS Act), and the revised internal
and external appeals process (section 2719 of the PHS Act).
We are finalizing these amendments as proposed.
Comment: Several commenters supported the proposed amendments to
the term ``State'' to avoid undermining the stability of the
Territories' health insurance markets. One commenter encouraged HHS to
work with the Territories to improve access to coverage for their
residents.
Response: We are committed to partnering with the Territories to
ensure their markets are robust and competitive, so that consumers have
access to quality, affordable health insurance.
B. Part 147--Health Insurance Reform Requirements for the Group and
Individual Health Insurance Markets
1. Guaranteed Availability of Coverage (Sec. 147.104)
We proposed several modifications to the guaranteed availability
requirements under Sec. 147.104. First, we proposed to remove
regulation text in Sec. 147.104(b)(2) establishing a special
enrollment period (also referred to as a ``limited open enrollment
period'') for individuals enrolled in non-calendar year individual
market plans, because the requirement is incorporated through cross-
reference in the same paragraph to the Exchange rules at Sec.
155.420(d)(1)(ii).
Second, we proposed to add new paragraph Sec. 147.104(f), which
would move and recodify, with minor modifications for clarity, the
requirement under existing Sec. 147.104(b)(2) for non-grandfathered
individual and merged market plans to be offered on a calendar year
basis.
Third, we proposed to amend Sec. 147.104(b)(4) by adding a cross-
reference to the advance availability of special enrollment periods
under Sec. 155.420(c)(2). This would align with the Exchange
regulations and allow individuals to make a plan selection 60 days
before and after certain triggering events when enrolling inside or
outside the individual market Exchanges.
Finally, we proposed amending Sec. 147.104(b)(1)(i)(C) to update
the citation to the SHOP regulations to conform with changes made in
this rulemaking. The cross-reference is changed from Sec.
155.725(a)(2) to Sec. 155.725.
We are finalizing these amendments as proposed.
Comment: Most commenters supported extending the 60-day advance
availability provisions to ensure market-wide consistency in special
enrollment periods. One commenter recommended a 30-day special
enrollment period. Other commenters recommended maintaining the 60-day
special enrollment period.
Response: We agree with commenters who urged consistency in access
to special enrollment periods inside and outside the individual market
Exchanges. We believe these provisions will help consumers avoid gaps
in coverage when they experience certain significant life changes
without resulting in adverse selection.
2. Guaranteed Renewability of Coverage (Sec. 147.106)
Consistent with previous guidance, we proposed that an issuer will
not satisfy the requirements for product discontinuation under the
guaranteed renewability regulations at Sec. 146.152(c)(2), Sec.
147.106(c)(2), or Sec. 148.122(d)(2) if the issuer automatically
enrolls a plan sponsor or individual (as applicable) into a product of
another licensed health insurance issuer.\6\ However, this would not
prevent an issuer that decides to withdraw from the market in a State
from mapping enrollees to a product of another licensed issuer, to the
extent permitted by applicable State law, and provided the issuer
otherwise satisfies the requirements for market withdrawal.
---------------------------------------------------------------------------
\6\ See Insurance Standards Bulletin, Form and Manner of Notices
When Discontinuing or Renewing a Product in the Group or Individual
Market, section IV (September 2, 2014). Available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Renewal-Notices-9-3-14-FINAL.PDF. See also Patient Protection and
Affordable Care Act; Annual Eligibility Redeterminations for
Exchange Participation and Insurance Affordability Programs; Health
Insurance Issuer Standards Under the Affordable Care Act, Including
Standards Related to Exchanges, 79 FR at 53000 (September 5, 2014).
---------------------------------------------------------------------------
We stated that allowing an issuer to transfer blocks of business to
another issuer could create opportunities for risk segmentation, but
also recognized that regulating these matters could have implications
for certain corporate reorganization practices. We sought comment on
how to interpret the guaranteed renewability provisions in the context
of various corporate transactions involving a change of ownership, such
as acquisitions, mergers, or other corporate transactions; how common
such transactions are and how they are typically structured; whether
auto-enrollment should be allowed into a product of the post-
transaction issuer; how the market reforms such as the single risk pool
provision should be applied; and what protections should be provided to
consumers when their product is transferred.
Because ownership transfers have implications for the operational
processes of HHS-administered programs, such as advance payments of the
premium tax credit, cost-sharing reduction payments, FFE user fees, and
the premium stabilization programs, we proposed a notification
requirement on
[[Page 10758]]
issuers of a QHP, a plan otherwise subject to risk corridors, or a
reinsurance-eligible plan or a risk adjustment covered plan, in cases
of changes of ownership. We proposed that the post-transaction issuer
notify HHS of the transaction by the date the transaction is entered
into or the 30th day prior to the effective date of the transaction,
whichever is later. We sought comments on all aspects of the
notification, including what further notification requirements should
apply to ownership transfers, and whether the notification requirement
should apply to all plans subject to the guaranteed renewability
requirements, including grandfathered health plans.
We are finalizing the notification requirement in cases of changes
of ownership as recognized by the State in which the issuer offers
coverage. In light of the comments discussed below, we are not
codifying the provision prohibiting an issuer from automatically
enrolling plan sponsors or individuals (as applicable) into a product
of another licensed health insurance issuer. We intend to consult with
the NAIC and other stakeholders before releasing further guidance on
this issue.
Comment: Many commenters encouraged HHS to defer to State
determinations on matters regarding change of ownership, including when
it is appropriate for an issuer to renew coverage through another
licensed issuer. One commenter requested that HHS expressly recognize
an offer of coverage by an affiliated issuer as an exception to the
prohibition on auto-enrollment. Several commenters emphasized the need
for continuity of care and recommended that, in cases of mid-year
changes of ownership, the acquiring issuer retain some or all of the
characteristics of the original plan, such as the same benefits, cost
sharing, formulary, and network. Conversely, another commenter noted
that the same coverage features rarely remain in place after an
ownership transfer. Some commenters recommended HHS work with States
and issuers before releasing guidance on how corporate transactions
should be handled.
Response: After careful review of the comments submitted on this
issue and the relevant statutory language, we are not codifying the
prohibition on auto-enrollment into a product of another licensed
issuer at this time. We intend to consult with the NAIC and other
stakeholders to develop guidance on how to handle corporate
transactions involving a change of ownership. We will generally look to
the applicable State authority on matters regarding changes of
ownership until further guidance is issued. In the interim, we will
continue to apply our interpretation of the guaranteed renewability
requirements, set forth in previous guidance,\7\ to prohibit auto-
enrollment into a product of another issuer in cases where the auto-
enrollment does not occur in connection with a change of ownership.
---------------------------------------------------------------------------
\7\ Id.
---------------------------------------------------------------------------
Comment: Some commenters recommended that HHS provide flexibility
to issuers to determine liability of each party in a transaction for
advance payments of the premium tax credit, cost-sharing reductions
payments, and the premium stabilization programs.
Response: We intend to take these comments into consideration as we
consider whether guidance on liability is necessary as it relates to
the HHS-administered programs described above.
Comment: In response to the proposed notification requirement for
issuers experiencing a change of ownership, some commenters recommended
that HHS defer to State definitions of change of ownership. One
commenter suggested notice is unnecessary, as QHP issuers in the FFEs
must already provide HHS with notice of change of ownership under Sec.
156.330. One commenter recommended issuers be required to provide
notice only after a transaction is completed, and sought clarification
that HHS will collect only the minimum information necessary to
facilitate operational processes and has no intention of collecting the
information for purposes other than for continuity of operations.
Response: We are finalizing the proposal to require notification
when an issuer experiences a change of ownership, as recognized by the
State in which the issuer offers coverage. The definition of change of
ownership for the purpose of notification is intended simply to capture
situations in which such a change may have operational implications for
the above mentioned programs. We recognize that States have existing
regulatory processes for reviewing changes of ownership.
We also recognize that FFE issuers are subject to a notification
requirement under Sec. 156.330; however, changes of ownership may have
operational implications for HHS-administered programs beyond the FFEs.
The HHS-administered programs described above affect QHP issuers in
both the FFEs and State-based Exchanges, as well as issuers offering
plans outside of Exchanges. To work closely with issuers to anticipate
and resolve potential issues arising from such transactions, we are
finalizing the notice requirement for an issuer of a QHP, a plan
otherwise subject to risk corridors, a risk adjustment covered plan, or
a reinsurance-eligible plan, as proposed. We intend to limit the
information collected to those elements necessary for HHS and issuers
to determine how the change of ownership affects operations of HHS-
administered programs. These elements include the legal name, HIOS plan
identifier, tax identification number of the original and post-
transaction issuers, the effective date of the change of ownership, and
the summary description of transaction. Depending on the nature of the
transaction, additional information may be necessary to ensure smooth
operations of affected programs. We anticipate addressing the need for
additional information on a case-by-case basis, through discussion with
affected issuers, with the participation of affected issuers.
Finally, we are sensitive to the fluid nature of change of
ownership transactions, but believe that our proposed dates for
notification accommodate most transactional timelines. In addition, the
information we intend to require from issuers is limited in scope and
should not substantially burden either issuers or HHS, even if the
transaction is not ultimately consummated. To ensure continuity of
operations, particularly for administration of monthly payments and
charges for advance payments of the premium tax credit and cost-sharing
reductions, it is in the interest of both issuers and HHS to coordinate
prior to the effective date of the transaction.
C. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment Under the Affordable Care Act
1. Provisions for the State Notice of Benefit and Payment Parameters
(Sec. 153.100)
In Sec. 153.100(c), we established a deadline of March 1 of the
calendar year prior to the applicable benefit year for a State to
publish a State notice of benefit and payment parameters if the State
is required to do so under Sec. 153.100(a) or (b)--that is, if the
State is operating a risk adjustment program, or if the State is
establishing a reinsurance program and wishes to modify the data
requirements for issuers to receive reinsurance payments from those
specified in the HHS notice of benefit and payment parameters for the
benefit year, wishes to collect additional reinsurance contributions or
use
[[Page 10759]]
additional funds for reinsurance payments, or elects to use more than
one applicable reinsurance entity. As of the date of publication of
this final rule, Connecticut is the only State that has elected to
establish a transitional reinsurance program and Massachusetts is the
only State that has elected to operate a risk adjustment program. We
proposed to modify Sec. 153.100(c) so that the publication deadline
for the State notice of benefit and payment parameters would be the
later of March 1 of the calendar year prior to the applicable benefit
year, or the 30th day following publication of the final HHS notice of
benefit and payment parameters for that benefit year.
We are finalizing this modification as proposed.
Comment: One commenter disagreed with our proposal, stating that
delaying the publication of the State notices would not give issuers
enough time to develop product and rate filings.
Response: Although HHS intends to issue the final HHS notice of
benefit and payment parameters in a timely fashion, it is difficult for
States to publish such a notice by the required deadline if the final
HHS notice of benefit and payment parameters for the applicable benefit
year has not yet been published.
2. Provisions and Parameters for the Permanent Risk Adjustment Program
The risk adjustment program is a permanent program created by
section 1343 of the Affordable Care Act that transfers funds from lower
risk, non-grandfathered plans to higher risk, non-grandfathered plans
in the individual and small group markets, inside and outside the
Exchanges, to balance risk and maintain market stability. In subparts D
and G of the Premium Stabilization Rule, we established standards for
the administration of the risk adjustment program. A State that is
approved or conditionally approved by the Secretary to operate an
Exchange may establish a risk adjustment program, or have HHS do so on
its behalf.
a. Risk Adjustment User Fee
If a State is not approved to operate or chooses to forgo operating
its own risk adjustment program, HHS will operate risk adjustment on
the State's behalf. As described in the 2014 Payment Notice, HHS's
operation of risk adjustment on behalf of States is funded through a
risk adjustment user fee. Section 153.610(f)(2) provides that an issuer
of a risk adjustment covered plan must remit a user fee to HHS equal to
the product of its monthly enrollment in the plan and the per-enrollee-
per-month risk adjustment user fee specified in the annual HHS notice
of benefit and payment parameters for the applicable benefit year.
OMB Circular No. A-25R establishes Federal policy regarding user
fees, and specifies that a user charge will be assessed against each
identifiable recipient for special benefits derived from Federal
activities beyond those received by the general public. The risk
adjustment program will provide special benefits as defined in section
6(a)(1)(b) of Circular No. A-25R to issuers of risk adjustment covered
plans because it will mitigate the financial instability associated
with potential adverse risk selection. The risk adjustment program also
will contribute to consumer confidence in the health insurance industry
by helping to stabilize premiums across the individual and small group
health insurance markets.
In the 2015 Payment Notice, we estimated Federal administrative
expenses of operating the risk adjustment program to be $0.96 per-
enrollee-per-year, based on our estimated contract costs for risk
adjustment operations. For the 2016 benefit year, we proposed to use
the same methodology to estimate our administrative expenses to operate
the program. These contracts cover development of the risk adjustment
model and methodology, collections, payments, account management, data
collection, data validation, program integrity and audit functions,
operational and fraud analytics, stakeholder training, and operational
support. To calculate the user fee, we divided HHS's projected total
costs for administering the risk adjustment programs on behalf of
States by the expected number of enrollees in risk adjustment covered
plans in HHS-operated risk adjustment programs for the benefit year
(other than plans not subject to market reforms and student health
plans, which are not subject to payments and charges under the risk
adjustment methodology HHS uses when it operates risk adjustment on
behalf of a State).
We estimated that the total cost for HHS to operate the risk
adjustment program on behalf of States for 2016 will be approximately
$50 million, and that the risk adjustment user fee would be $1.75 per
enrollee per year. The increased risk adjustment user fee for 2016 is
the result of the increased contract costs to support the risk
adjustment data validation process when HHS operates risk adjustment,
which HHS will administer for the first time in 2016. We are finalizing
the proposed methodology for benefit year 2016 and are finalizing a per
capita risk adjustment user fee of $1.75 per enrollee per year, which
we will apply as a per-enrollee-per-month risk adjustment user fee of
$0.15.
Comment: One commenter did not support the higher risk adjustment
user fee for 2016, noting that issuers are already bearing significant
costs for risk adjustment data validation audits, and requested that
CMS identify efficiencies that could be leveraged in risk adjustment
data validation operations that will keep costs down. Another commenter
supported the higher risk adjustment user fee for 2016 to support risk
adjustment data validation audits, reiterating the importance of these
audits to ensure that the risk adjustment program is as accurate and
effective as possible over time. One commenter requested clarification
that the risk adjustment user fee is assessed on issuers, not States.
Response: As we stated in the 2014 Payment Notice, we believe that
a reliable funding source is necessary to ensure a robust Federal risk
adjustment program. We also agree with the commenter that risk
adjustment data validation audits are critical to ensure that risk
adjustment is as accurate, fair, and effective as possible over time.
The risk adjustment user fee was established for the sole purpose of
funding HHS's costs for operating the Federal risk adjustment program,
and we intend to keep the user fee amount as low as possible. The risk
adjustment user fee must be remitted by issuers of risk adjustment
covered plans, rather than States.
b. Overview of the HHS Risk Adjustment Model
The HHS risk adjustment model predicts plan liability for an
enrollee based on that person's age, sex, and diagnoses (risk factors),
producing a risk score. The HHS risk adjustment methodology utilizes
separate models for adults, children, and infants to account for cost
differences in each of these age groups. In each of the adult and child
models, the relative costs assigned to an individual's age, sex, and
diagnoses are added together to produce a risk score. Infant risk
scores are determined by inclusion in one of 25 mutually exclusive
groups based on the infant's maturity and the severity of his or her
diagnoses. If applicable, the risk score is multiplied by a cost-
sharing reduction adjustment.
The enrollment-weighted average risk score of all enrollees in a
particular risk adjustment-covered plan, or the plan liability risk
score, within a geographic rating area is one input into the
[[Page 10760]]
payment transfer formula, which determines an issuer's transfer
(payment or charge) for that plan. Thus, the HHS risk adjustment model
predicts individual-level risk scores, but is designed to predict
average group costs to account for risk across plans, which, as we
stated in the 2014 Payment Notice, accords with the Actuarial Standards
Board's Actuarial Standards of Practice for risk classification. We
received several general comments about the HHS risk adjustment model.
Comment: Several commenters requested additional guidance about the
ICD-10 transition and how the risk adjustment model will implement
these changes.
Response: We will publish updated ICD-9 instructions and software
and then a combined set of ICD-9 and ICD-10 instructions and software
on our Web site, as we did for the original ICD-9 software and
instructions, which we have updated annually.\8\ Because ICD-10 codes
will be accepted for risk adjustment beginning October 1, 2015, we
intend to publish these documents shortly.
---------------------------------------------------------------------------
\8\ The HHS-Developed Risk Adjustment Model Algorithm Software
and Instructions are available at: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/
under ``Regulations & Guidance'' (posted under ``Guidance'' on June
2, 2014).
---------------------------------------------------------------------------
Comment: One commenter requested an additional 60 days for review
of the risk adjustment recalibration, stating that the 30-day comment
period was insufficient to review the model and provide sufficient
comments. Another commenter stressed that issuers need 60 to 90 days
prior to filing dates to account for final risk adjustment model
changes.
Response: We are sympathetic to these concerns; however, we
received numerous detailed, substantive comments on the proposed risk
adjustment recalibration. Additionally, the timeline for publication of
this final rule accommodates many commenters' requests that the final
rule be published prior to filing deadlines for the 2016 benefit year.
Comment: One commenter requested that the Sec. 153.420(b) data
submission deadline of April 30 of the year following the benefit year
be moved to July 31 for the initial year of risk adjustment.
Response: We have been working with issuers to ensure that issuers'
data submissions for 2014 benefit year risk adjustment and reinsurance
will be complete and accurate by April 30, 2015. We do not intend to
delay the final data submission deadline for 2014 risk adjustment (and
reinsurance).
c. Proposed Updates to Risk Adjustment Models
We proposed to continue to use the same risk adjustment methodology
finalized in the 2014 Payment Notice, with changes to reflect more
current data, as described below. As we stated above, in the adult and
child models, enrollee health risks are estimated using the HHS risk
adjustment methodology, which assigns a set of additive factors that
reflect the relative costs of demographics and diagnoses. Risk
adjustment factors are developed using claims data and reflect the
costs of a given disease relative to average spending. The longer the
lag in data used to develop the risk factors, the greater the potential
that the costs of treating one disease versus another have changed in a
manner not fully reflected in the risk factors.
To provide risk adjustment factors that best reflect more recent
treatment patterns and costs, we proposed to recalibrate the HHS risk
adjustment models for 2016 by using more recent claims data to develop
updated risk factors. The risk factors published in the 2014 Payment
Notice for use in 2014 and 2015 were developed using the Truven Health
Analytics 2010 MarketScan[supreg] Commercial Claims and Encounters
database (MarketScan); we proposed to update the risk factors in the
HHS risk adjustment models using 2010, 2011, and 2012 MarketScan data.
We also proposed that if 2013 MarketScan data becomes available after
the publication of the proposed rule, we would update the risk factors
in the HHS risk adjustment model using the 3 most recent years of data
available--MarketScan 2011, 2012, and 2013 data. These updated risk
factors would be published and finalized in this final rule.
We proposed to implement the recalibrated risk adjustment factors
in 2016 to provide sufficient time for issuers to account for risk
adjustment model changes. However, we also sought comment on making the
recalibrated HHS risk adjustment models effective beginning for the
2015 benefit year instead of the 2016 benefit year. We sought comment
on this approach, including whether we should update risk factors based
on 2013 MarketScan data when it becomes available after publication of
the proposed rule, and whether the updated risk factors should be
implemented for 2015 or 2016. We are finalizing the HHS risk adjustment
recalibration using 2011, 2012, and 2013 MarketScan data to develop
final risk adjustment factors to be implemented in the 2016 benefit
year. We are making no changes for the 2015 benefit year.
Comment: Commenters supported recalibrating the risk adjustment
model based on the most recent data available, noting that the
underlying data is dated and that updating the factors will boost
issuers' confidence in the model's predictive power, which could reduce
risk selection behaviors and help stabilize premiums. One commenter
suggested that we provide simulated results between the proposed 3-year
recalibration approach and the 2014 risk adjustment factors for the
2015 benefit year. Another commenter requested that CMS provide a
report that includes a detailed analysis of the impact that
recalibration may have, including details sufficient for issuers to
make adjustments to premium rates as appropriate. Most commenters
supported recalibrating for the 2016 benefit year, since 2015 rates
have already been set, with some commenters supporting implementation
of recalibration in the 2015 benefit year. Commenters supported using
2013 data as long as the data would be available prior to publication
of the final 2016 Payment Notice and would be available prior to 2016
rate filings. Other commenters did not support using 2013 MarketScan
data, instead suggesting that 2010, 2011, and 2012 data are sufficient.
Response: We agree on the importance of using recent data to
calibrate our models. However, we also agree that timely notice of risk
adjustment model changes is necessary for orderly rate development.
Therefore, we will implement the recalibrated risk adjustment models in
the 2016 benefit year. Additionally, because we received and were able
to prepare the 2013 MarketScan dataset prior to the publication of this
final rule, we have developed the 2016 risk adjustment factors using
2011, 2012, and 2013 MarketScan data. We believe this incorporation
allows for the use of the most recent data available to HHS, while
giving issuers the notice required for rate setting for the 2016
benefit year. We will continue to assess how we may ameliorate the data
lag in future recalibrations. We believe that the transfer equation
provided in the 2014 Payment Notice and the updated risk adjustment
factors provided in this final Payment Notice are sufficient for
issuers to evaluate the impact of risk adjustment on their rate
development for 2016.
We believe that using multiple years of data will promote market
stability and minimize volatility in coefficients for certain rare
diagnoses. In using multiple years of data to recalibrate the
[[Page 10761]]
risk adjustment model, we considered either pooling data from 3 sample
years or averaging coefficients from three separately estimated
calibrations, based on the 2010, 2011, and 2012 data, and sought
comment on the two approaches. We examined the effects of pooling data
and averaging separate calibrations, and did not find a quantitatively
important difference between the resulting coefficients. However, we
believe that averaging coefficients offers the advantage of
transparency and ease in future recalibrations. Averaging coefficients
using the 3 most recent years of separately estimated calibrations
allows for most recent data to be incorporated into the model, while
ensuring that coefficients remain relatively stable, and are therefore
finalizing our approach to average the coefficients from 3 separately
estimated sample years. Below we publish the R-squared statistics of
the 3 separately estimated sample years' estimates, and the blended
coefficient for each risk adjustment factor.
Comment: Commenters supported the transparency and ease of
averaging coefficients from three separately estimated calibrations,
with one commenter recommending that we consider statistical best
practices in the decision as to whether to average coefficients or pool
data. Another commenter requested that we average coefficients,
validate the results using pooled data, and publish a report detailing
the results of the two methods.
Response: We carefully considered the two approaches, noting the
benefits of each approach--transparency with averaging, and a single R-
squared statistic and larger sample sizes for each model with pooling.
However, when we compared the coefficients from both approaches, we did
not find quantitatively important differences across the coefficients.
We will continue to evaluate the coefficient averaging approach and
consider any refinements in future recalibrations.
We made minor refinements to the underlying MarketScan
recalibration samples from which the risk adjustment factors are
derived. In particular, we changed our treatment of Age 0 infants
without birth hierarchical condition categories (HCCs). There may be
cases in which there is no separate infant birth claim from which to
gather diagnoses. For example, mother and infant claims may be bundled
such that infant diagnoses appear on the mother's record. Where newborn
diagnoses appear on the mother's claims, HHS has issued operational
guidance on how best to associate those codes with the appropriate
infant.\9\
---------------------------------------------------------------------------
\9\ HHS-Developed Risk Adjustment Model Algorithm Software
Instructions. June 2, 2014. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/DIY-instructions-5-20-14.pdf
---------------------------------------------------------------------------
However, we proposed a change in how we categorize age 0 infants
who do not have birth codes. We previously stated in the operational
guidance referenced above that infants without birth codes would be
assigned an ``Age 0, Term'' factor in risk adjustment operations. We
did so under the assumption that issuers paid the birth costs, yet the
birth HCCs were missing (perhaps because claims were bundled with the
mother's, whose claims were excluded). Upon further analysis of age 0
and age 1 claims, we found that age 0 infants without birth HCCs had
costs more similar to age 1 infants by severity level. We believe that
these infants should be assigned to age 1 in situations where the
issuer did not pay the birth costs during the plan year. For many age 0
infants without birth HCCs, the birth could have occurred in the prior
year or was paid for by a different issuer. We proposed that age 0
infants without birth HCCs be assigned to ``Age 1'' by severity level.
We have made this change in the recalibration samples that we are using
to calculate risk factors for proposed implementation in the 2016
benefit year. We also proposed to make this change in the operation of
the risk adjustment methodology for the year in which we would
implement the recalibrated risk adjustment factors. We are finalizing
our approach as proposed, for implementation in the 2016 benefit year
with the recalibrated risk adjustment models.
Comment: Some commenters supported our reassignment of age 0
infants without birth codes from ``Age 0, Term'' to ``Age 1, severity
level,'' noting the reduction in the factor that occurs from these
infants' reassignment. Other commenters disagreed with our reassignment
of age 0 infants without birth codes to ``Age 1, severity level.''
Commenters suggested that bundling claims is standard industry practice
and infants on bundled claims without birth codes should be assigned to
``Age 0, Term,'' while another commenter suggested that this
reassignment would result in incorrect payments for infant claims with
discharge dates that overlap benefit years.
Response: In previous guidance, we have stated that issuers should
unbundle claims to receive credit for all diagnoses. We believe that
many age 0 infants without birth codes more closely resemble the risk
profiles of age 1 infants. In many cases, the birth codes have been
appropriately excluded due to a birth in the previous year or a change
in insurance status. We will continue to treat infants with discharge
dates that overlap benefit years as age 0, unless they do not have
birth codes, in which case we would assign them to ``age 1, severity
level,'' as with age 0 infants without birth codes whose discharge
dates do not overlap benefit years.
d. List of Factors To Be Employed in the Model
The HHS risk adjustment models predict annualized plan liability
expenditures using age and sex categories and the HHS HCCs included in
the HHS risk adjustment model. Dollar coefficients were estimated for
these factors using weighted least squares regression, where the weight
was the fraction of the year enrolled.
We are including the same HCCs that were included in the original
risk adjustment calibration in the 2014 Payment Notice. For each model,
the factors are the statistical regression dollar values for each HCC
in the model divided by a weighted average plan liability for the full
modeling sample. The factors represent the predicted relative
incremental expenditures for each HCC. The proposed factors resulting
from the averaged factors from the 2011, 2012, and 2013 separately
solved models are shown in the tables below. For a given enrollee, the
sums of the factors for the enrollee's HCCs are the total relative
predicted expenditures for that enrollee. Table 1 contains the factors
for each adult model, including the interactions. Table 3 contains the
factors for each child model. Table 4 contains the factors for each
infant model.
Comment: One commenter requested that HHS provide the rationale for
the modification of the child model transplant factors.
Response: We constrained the six transplant status HCC coefficients
(other than kidney) in the child model. The sample sizes of transplants
are smaller in the child than the adult model. The levels and changes
in the child transplant relative coefficients appeared to be dominated
by random instability and therefore, we believe the accuracy of the
model will be improved by constraining these coefficients. We intend to
monitor the child transplant relative coefficients, and adjust them if
needed in future recalibrations.
Comment: Several commenters suggested that the model is not
equipped to accurately account for the introduction of new treatments,
and
[[Page 10762]]
recommended that HHS add drug utilization or selected classes of
prescription medicines to the list of risk adjustment model factors.
Commenters suggested that plans placing medications to treat serious
chronic diseases on formulary tiers with the highest cost sharing is
evidence that current plan designs discourage enrollment by higher-risk
enrollees, which suggests that the current risk adjustment model is not
effectively reducing plans' incentives to design benefits that
discourage enrollment by higher risk and higher cost patients. One
commenter recommended that HHS evaluate additional medical conditions
or characteristics for new enrollees which may indicate future
expenditures. Another commenter suggested that HHS analyze the
difference between Truven and Medicaid claim variables for age 0-1 and
that HHS assess the impact of habilitative and Medicaid-like benefits
on costs which are generally not present in commercial claims. Lastly,
a commenter suggested that the risk adjustment factors may be more
appropriately calculated and applied regionally.
Response: As stated above, we wish to use the same risk adjustment
models finalized in the 2014 Payment Notice, with changes to reflect
more current data. We did not intend to change the models' structure,
for example by including pharmacy utilization. However, we will
continue to consider including prescription drug data in future model
recalibrations. Similarly, we intend to evaluate additional medical
conditions and characteristics for new enrollees which may indicate
future expenditures, including through Medicaid claims comparisons. The
risk adjustment methodology takes into account Statewide average
premium and geographic rating area in the transfer formula.
Table 1--Adult Risk Adjustment Model Factors
----------------------------------------------------------------------------------------------------------------
Factor Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Demographic Factors
----------------------------------------------------------------------------------------------------------------
Age 21-24, Male................. 0.250 0.202 0.139 0.076 0.070
Age 25-29, Male................. 0.260 0.208 0.141 0.074 0.067
Age 30-34, Male................. 0.311 0.248 0.168 0.083 0.075
Age 35-39, Male................. 0.375 0.302 0.209 0.109 0.099
Age 40-44, Male................. 0.459 0.374 0.269 0.149 0.138
Age 45-49, Male................. 0.548 0.451 0.334 0.198 0.184
Age 50-54, Male................. 0.701 0.584 0.445 0.273 0.255
Age 55-59, Male................. 0.814 0.681 0.529 0.339 0.319
Age 60-64, Male................. 0.982 0.824 0.650 0.428 0.404
Age 21-24, Female............... 0.408 0.326 0.208 0.089 0.078
Age 25-29, Female............... 0.505 0.406 0.271 0.130 0.116
Age 30-34, Female............... 0.634 0.520 0.376 0.222 0.207
Age 35-39, Female............... 0.735 0.612 0.466 0.308 0.292
Age 40-44, Female............... 0.824 0.689 0.532 0.358 0.340
Age 45-49, Female............... 0.849 0.709 0.548 0.361 0.343
Age 50-54, Female............... 0.962 0.809 0.636 0.420 0.397
Age 55-59, Female............... 0.989 0.830 0.652 0.427 0.403
Age 60-64, Female............... 1.088 0.911 0.720 0.473 0.447
----------------------------------------------------------------------------------------------------------------
Diagnosis Factors
----------------------------------------------------------------------------------------------------------------
HIV/AIDS........................ 6.157 5.598 5.302 5.310 5.315
Septicemia, Sepsis, Systemic 12.643 12.435 12.334 12.417 12.429
Inflammatory Response Syndrome/
Shock..........................
Central Nervous System 7.550 7.419 7.353 7.389 7.394
Infections, Except Viral
Meningitis.....................
Viral or Unspecified Meningitis. 5.290 5.002 4.868 4.805 4.803
Opportunistic Infections........ 10.151 10.027 9.969 9.964 9.963
Metastatic Cancer............... 26.334 25.786 25.486 25.597 25.610
Lung, Brain, and Other Severe 12.032 11.615 11.394 11.418 11.421
Cancers, Including Pediatric
Acute Lymphoid Leukemia........
Non-Hodgkin's Lymphomas and 6.543 6.254 6.097 6.045 6.039
Other Cancers and Tumors.......
Colorectal, Breast (Age <50), 5.929 5.641 5.482 5.426 5.420
Kidney, and Other Cancers......
Breast (Age 50+) and Prostate 3.447 3.235 3.117 3.051 3.043
Cancer, Benign/Uncertain Brain
Tumors, and Other Cancers and
Tumors.........................
Thyroid Cancer, Melanoma, 1.651 1.476 1.368 1.239 1.224
Neurofibromatosis, and Other
Cancers and Tumors.............
Pancreas Transplant Status/ 6.947 6.726 6.616 6.645 6.650
Complications..................
Diabetes with Acute 1.344 1.193 1.100 0.959 0.942
Complications..................
Diabetes with Chronic 1.344 1.193 1.100 0.959 0.942
Complications..................
Diabetes without Complication... 1.344 1.193 1.100 0.959 0.942
Protein-Calorie Malnutrition.... 15.443 15.449 15.444 15.532 15.541
Mucopolysaccharidosis........... 2.379 2.239 2.160 2.088 2.080
Lipidoses and Glycogenosis...... 2.379 2.239 2.160 2.088 2.080
Amyloidosis, Porphyria, and 2.379 2.239 2.160 2.088 2.080
Other Metabolic Disorders......
Adrenal, Pituitary, and Other 2.379 2.239 2.160 2.088 2.080
Significant Endocrine Disorders
Liver Transplant Status/ 16.879 16.651 16.547 16.575 16.581
Complications..................
End-Stage Liver Disease......... 6.272 5.972 5.825 5.852 5.857
Cirrhosis of Liver.............. 2.548 2.348 2.252 2.213 2.210
[[Page 10763]]
Chronic Hepatitis............... 2.339 2.170 2.077 1.994 1.987
Acute Liver Failure/Disease, 4.521 4.324 4.225 4.215 4.216
Including Neonatal Hepatitis...
Intestine Transplant Status/ 41.078 41.016 40.976 41.009 41.010
Complications..................
Peritonitis/Gastrointestinal 13.554 13.224 13.049 13.108 13.115
Perforation/Necrotizing
Enterocolitis..................
Intestinal Obstruction.......... 7.453 7.114 6.952 6.996 7.004
Chronic Pancreatitis............ 6.273 5.985 5.849 5.891 5.898
Acute Pancreatitis/Other 3.183 2.950 2.834 2.778 2.772
Pancreatic Disorders and
Intestinal Malabsorption.......
Inflammatory Bowel Disease...... 3.283 2.988 2.831 2.693 2.677
Necrotizing Fasciitis........... 7.506 7.254 7.120 7.153 7.157
Bone/Joint/Muscle Infections/ 7.506 7.254 7.120 7.153 7.157
Necrosis.......................
Rheumatoid Arthritis and 3.834 3.534 3.373 3.349 3.348
Specified Autoimmune Disorders.
Systemic Lupus Erythematosus and 1.306 1.154 1.066 0.949 0.936
Other Autoimmune Disorders.....
Osteogenesis Imperfecta and 3.633 3.399 3.262 3.188 3.179
Other Osteodystrophies.........
Congenital/Developmental 3.633 3.399 3.262 3.188 3.179
Skeletal and Connective Tissue
Disorders......................
Cleft Lip/Cleft Palate.......... 1.639 1.453 1.348 1.246 1.236
Hemophilia...................... 46.716 46.362 46.145 46.164 46.167
Myelodysplastic Syndromes and 13.937 13.773 13.686 13.711 13.714
Myelofibrosis..................
Aplastic Anemia................. 13.937 13.773 13.686 13.711 13.714
Acquired Hemolytic Anemia, 10.383 10.181 10.065 10.058 10.057
Including Hemolytic Disease of
Newborn........................
Sickle Cell Anemia (Hb-SS)...... 10.383 10.181 10.065 10.058 10.057
Thalassemia Major............... 10.383 10.181 10.065 10.058 10.057
Combined and Other Severe 5.543 5.353 5.257 5.270 5.272
Immunodeficiencies.............
Disorders of the Immune 5.543 5.353 5.257 5.270 5.272
Mechanism......................
Coagulation Defects and Other 3.203 3.085 3.015 2.982 2.978
Specified Hematological
Disorders......................
Drug Psychosis.................. 3.915 3.627 3.471 3.346 3.332
Drug Dependence................. 3.915 3.627 3.471 3.346 3.332
Schizophrenia................... 3.294 3.004 2.852 2.750 2.741
Major Depressive and Bipolar 1.889 1.703 1.590 1.449 1.433
Disorders......................
Reactive and Unspecified 1.889 1.703 1.590 1.449 1.433
Psychosis, Delusional Disorders
Personality Disorders........... 1.234 1.097 0.994 0.840 0.822
Anorexia/Bulimia Nervosa........ 2.860 2.670 2.560 2.473 2.462
Prader-Willi, Patau, Edwards, 2.958 2.806 2.723 2.663 2.655
and Autosomal Deletion
Syndromes......................
Down Syndrome, Fragile X, Other 1.262 1.152 1.073 0.972 0.960
Chromosomal Anomalies, and
Congenital Malformation
Syndromes......................
Autistic Disorder............... 1.234 1.097 0.994 0.840 0.822
Pervasive Developmental 1.234 1.097 0.994 0.840 0.822
Disorders, Except Autistic
Disorder.......................
Traumatic Complete Lesion 14.620 14.420 14.307 14.313 14.313
Cervical Spinal Cord...........
Quadriplegia.................... 14.620 14.420 14.307 14.313 14.313
Traumatic Complete Lesion Dorsal 10.397 10.195 10.085 10.079 10.078
Spinal Cord....................
Paraplegia...................... 10.397 10.195 10.085 10.079 10.078
Spinal Cord Disorders/Injuries.. 6.455 6.200 6.068 6.041 6.039
Amyotrophic Lateral Sclerosis 3.907 3.620 3.478 3.430 3.427
and Other Anterior Horn Cell
Disease........................
Quadriplegic Cerebral Palsy..... 1.158 0.914 0.795 0.709 0.701
Cerebral Palsy, Except 0.126 0.080 0.050 0.020 0.017
Quadriplegic...................
Spina Bifida and Other Brain/ 0.090 0.021 0.000 0.000 0.000
Spinal/Nervous System
Congenital Anomalies...........
Myasthenia Gravis/Myoneural 5.561 5.383 5.290 5.262 5.259
Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic
Neuropathy.....................
Muscular Dystrophy.............. 2.284 2.088 1.993 1.902 1.893
Multiple Sclerosis.............. 9.513 9.024 8.764 8.834 8.842
Parkinson's, Huntington's, and 2.284 2.088 1.993 1.902 1.893
Spinocerebellar Disease, and
Other Neurodegenerative
Disorders......................
Seizure Disorders and 1.588 1.408 1.305 1.202 1.192
Convulsions....................
Hydrocephalus................... 8.049 7.897 7.806 7.777 7.773
Non-Traumatic Coma, and Brain 10.501 10.329 10.227 10.228 10.227
Compression/Anoxic Damage......
Respirator Dependence/ 40.044 40.031 40.014 40.103 40.113
Tracheostomy Status............
Respiratory Arrest.............. 12.390 12.191 12.082 12.179 12.191
Cardio-Respiratory Failure and 12.390 12.191 12.082 12.179 12.191
Shock, Including Respiratory
Distress Syndromes.............
Heart Assistive Device/ 37.771 37.451 37.284 37.380 37.392
Artificial Heart...............
Heart Transplant................ 37.771 37.451 37.284 37.380 37.392
Congestive Heart Failure........ 3.598 3.462 3.391 3.390 3.391
[[Page 10764]]
Acute Myocardial Infarction..... 11.768 11.329 11.100 11.278 11.300
Unstable Angina and Other Acute 6.075 5.719 5.555 5.592 5.600
Ischemic Heart Disease.........
Heart Infection/Inflammation, 7.146 6.980 6.891 6.869 6.867
Except Rheumatic...............
Specified Heart Arrhythmias..... 3.350 3.170 3.073 3.007 3.000
Intracranial Hemorrhage......... 11.056 10.700 10.519 10.548 10.554
Ischemic or Unspecified Stroke.. 4.012 3.770 3.665 3.685 3.690
Cerebral Aneurysm and 4.709 4.455 4.331 4.287 4.284
Arteriovenous Malformation.....
Hemiplegia/Hemiparesis.......... 6.343 6.218 6.155 6.223 6.231
Monoplegia, Other Paralytic 3.968 3.805 3.724 3.700 3.699
Syndromes......................
Atherosclerosis of the 12.395 12.261 12.194 12.299 12.311
Extremities with Ulceration or
Gangrene.......................
Vascular Disease with 8.583 8.349 8.230 8.246 8.249
Complications..................
Pulmonary Embolism and Deep Vein 4.542 4.335 4.229 4.206 4.204
Thrombosis.....................
Lung Transplant Status/ 37.791 37.528 37.388 37.504 37.517
Complications..................
Cystic Fibrosis................. 12.367 11.975 11.747 11.763 11.764
Chronic Obstructive Pulmonary 1.090 0.958 0.871 0.762 0.750
Disease, Including
Bronchiectasis.................
Asthma.......................... 1.090 0.958 0.871 0.762 0.750
Fibrosis of Lung and Other Lung 2.365 2.217 2.143 2.098 2.093
Disorders......................
Aspiration and Specified 8.585 8.482 8.429 8.454 8.457
Bacterial Pneumonias and Other
Severe Lung Infections.........
Kidney Transplant Status........ 11.146 10.803 10.642 10.645 10.649
End Stage Renal Disease......... 42.543 42.217 42.036 42.222 42.243
Chronic Kidney Disease, Stage 5. 2.440 2.308 2.248 2.244 2.245
Chronic Kidney Disease, Severe 2.440 2.308 2.248 2.244 2.245
(Stage 4)......................
Ectopic and Molar Pregnancy, 1.455 1.260 1.139 0.891 0.856
Except with Renal Failure,
Shock, or Embolism.............
Miscarriage with Complications.. 1.455 1.260 1.139 0.891 0.856
Miscarriage with No or Minor 1.455 1.260 1.139 0.891 0.856
Complications..................
Completed Pregnancy With Major 4.050 3.489 3.288 3.066 3.065
Complications..................
Completed Pregnancy With 4.050 3.489 3.288 3.066 3.065
Complications..................
Completed Pregnancy with No or 4.050 3.489 3.288 3.066 3.065
Minor Complications............
Chronic Ulcer of Skin, Except 2.575 2.425 2.354 2.337 2.337
Pressure.......................
Hip Fractures and Pathological 10.290 10.016 9.873 9.943 9.951
Vertebral or Humerus Fractures.
Pathological Fractures, Except 2.010 1.868 1.782 1.681 1.669
of Vertebrae, Hip, or Humerus..
Stem Cell, Including Bone 34.090 34.078 34.067 34.095 34.098
Marrow, Transplant Status/
Complications..................
Artificial Openings for Feeding 11.500 11.373 11.306 11.372 11.379
or Elimination.................
Amputation Status, Lower Limb/ 5.978 5.779 5.679 5.721 5.728
Amputation Complications.......
Severe illness x Opportunistic 12.043 12.306 12.433 12.560 12.572
Infections.....................
Severe illness x Metastatic 12.043 12.306 12.433 12.560 12.572
Cancer.........................
Severe illness x Lung, Brain, 12.043 12.306 12.433 12.560 12.572
and Other Severe Cancers,
Including Pediatric Acute
Lymphoid Leukemia..............
Severe illness x Non-Hodgkin's 12.043 12.306 12.433 12.560 12.572
Lymphomas and Other Cancers and
Tumors.........................
Severe illness x Myasthenia 12.043 12.306 12.433 12.560 12.572
Gravis/Myoneural Disorders and
Guillain-Barre Syndrome/
Inflammatory and Toxic
Neuropathy.....................
Severe illness x Heart Infection/ 12.043 12.306 12.433 12.560 12.572
Inflammation, Except Rheumatic.
Severe illness x Intracranial 12.043 12.306 12.433 12.560 12.572
Hemorrhage.....................
Severe illness x HCC group G06 12.043 12.306 12.433 12.560 12.572
(G06 is HCC Group 6 which
includes the following HCCs in
the blood disease category: 67,
68)............................
Severe illness x HCC group G08 12.043 12.306 12.433 12.560 12.572
(G08 is HCC Group 8 which
includes the following HCCs in
the blood disease category: 73,
74)............................
Severe illness x End-Stage Liver 2.634 2.785 2.855 2.974 2.984
Disease........................
Severe illness x Acute Liver 2.634 2.785 2.855 2.974 2.984
Failure/Disease, Including
Neonatal Hepatitis.............
Severe illness x Atherosclerosis 2.634 2.785 2.855 2.974 2.984
of the Extremities with
Ulceration or Gangrene.........
Severe illness x Vascular 2.634 2.785 2.855 2.974 2.984
Disease with Complications.....
Severe illness x Aspiration and 2.634 2.785 2.855 2.974 2.984
Specified Bacterial Pneumonias
and Other Severe Lung
Infections.....................
Severe illness x Artificial 2.634 2.785 2.855 2.974 2.984
Openings for Feeding or
Elimination....................
[[Page 10765]]
Severe illness x HCC group G03 2.634 2.785 2.855 2.974 2.984
(G03 is HCC Group 3 which
includes the following HCCs in
the musculoskeletal disease
category: 54, 55)..............
----------------------------------------------------------------------------------------------------------------
Table 2--HHS HCCs in the Severity Illness Indicator Variable
------------------------------------------------------------------------
Description
-------------------------------------------------------------------------
Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock.
Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis.
Seizure Disorders and Convulsions.
Non-Traumatic Coma, Brain Compression/Anoxic Damage.
Respirator Dependence/Tracheostomy Status.
Respiratory Arrest.
Cardio-Respiratory Failure and Shock, Including Respiratory Distress
Syndromes.
Pulmonary Embolism and Deep Vein Thrombosis.
------------------------------------------------------------------------
Table 3--Child Risk Adjustment Model Factors
----------------------------------------------------------------------------------------------------------------
Factor Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Demographic Factors
----------------------------------------------------------------------------------------------------------------
Age 2-4, Male................... 0.262 0.191 0.097 0.016 0.009
Age 5-9, Male................... 0.179 0.128 0.058 0.000 0.000
Age 10-14, Male................. 0.229 0.176 0.099 0.034 0.028
Age 15-20, Male................. 0.302 0.241 0.161 0.084 0.077
Age 2-4, Female................. 0.212 0.150 0.066 0.004 0.002
Age 5-9, Female................. 0.141 0.095 0.036 0.000 0.000
Age 10-14, Female............... 0.213 0.162 0.093 0.037 0.033
Age 15-20, Female............... 0.358 0.283 0.180 0.079 0.070
----------------------------------------------------------------------------------------------------------------
Diagnosis Factors
----------------------------------------------------------------------------------------------------------------
HIV/AIDS........................ 3.905 3.443 3.195 3.035 3.022
Septicemia, Sepsis, Systemic 19.194 19.011 18.921 18.952 18.957
Inflammatory Response Syndrome/
Shock..........................
Central Nervous System 12.691 12.467 12.344 12.356 12.357
Infections, Except Viral
Meningitis.....................
Viral or Unspecified Meningitis. 3.766 3.517 3.386 3.226 3.210
Opportunistic Infections........ 25.545 25.461 25.417 25.403 25.402
Metastatic Cancer............... 40.241 39.934 39.739 39.739 39.738
Lung, Brain, and Other Severe 13.408 13.064 12.852 12.768 12.758
Cancers, Including Pediatric
Acute Lymphoid Leukemia........
Non-Hodgkin's Lymphomas and 10.279 9.971 9.778 9.654 9.639
Other Cancers and Tumors.......
Colorectal, Breast (Age < 50), 4.078 3.830 3.661 3.498 3.479
Kidney, and Other Cancers......
Breast (Age 50+) and Prostate 3.274 3.044 2.901 2.749 2.731
Cancer, Benign/Uncertain Brain
Tumors, and Other Cancers and
Tumors.........................
Thyroid Cancer, Melanoma, 1.832 1.650 1.520 1.360 1.342
Neurofibromatosis, and Other
Cancers and Tumors.............
Pancreas Transplant Status/ 35.005 34.817 34.724 34.753 34.755
Complications..................
Diabetes with Acute 2.695 2.350 2.169 1.832 1.794
Complications..................
Diabetes with Chronic 2.695 2.350 2.169 1.832 1.794
Complications..................
Diabetes without Complication... 2.695 2.350 2.169 1.832 1.794
Protein-Calorie Malnutrition.... 15.577 15.458 15.387 15.437 15.442
Mucopolysaccharidosis........... 6.759 6.440 6.245 6.182 6.176
Lipidoses and Glycogenosis...... 6.759 6.440 6.245 6.182 6.176
Congenital Metabolic Disorders, 6.759 6.440 6.245 6.182 6.176
Not Elsewhere Classified.......
Amyloidosis, Porphyria, and 6.759 6.440 6.245 6.182 6.176
Other Metabolic Disorders......
Adrenal, Pituitary, and Other 6.759 6.440 6.245 6.182 6.176
Significant Endocrine Disorders
Liver Transplant Status/ 35.005 34.817 34.724 34.753 34.755
Complications..................
End-Stage Liver Disease......... 15.326 15.150 15.059 15.061 15.063
Cirrhosis of Liver.............. 10.171 9.978 9.868 9.837 9.836
Chronic Hepatitis............... 1.316 1.149 1.025 0.917 0.908
Acute Liver Failure/Disease, 10.916 10.745 10.640 10.615 10.614
Including Neonatal Hepatitis...
Intestine Transplant Status/ 35.005 34.817 34.724 34.753 34.755
Complications..................
Peritonitis/Gastrointestinal 17.618 17.189 16.947 16.982 16.986
Perforation/Necrotizing
Enterocolitis..................
[[Page 10766]]
Intestinal Obstruction.......... 6.347 6.064 5.897 5.782 5.768
Chronic Pancreatitis............ 11.190 10.860 10.691 10.687 10.687
Acute Pancreatitis/Other 3.182 3.026 2.921 2.791 2.774
Pancreatic Disorders and
Intestinal Malabsorption.......
Inflammatory Bowel Disease...... 6.004 5.576 5.331 5.179 5.161
Necrotizing Fasciitis........... 5.256 4.965 4.789 4.706 4.699
Bone/Joint/Muscle Infections/ 5.256 4.965 4.789 4.706 4.699
Necrosis.......................
Rheumatoid Arthritis and 3.436 3.177 3.005 2.858 2.843
Specified Autoimmune Disorders.
Systemic Lupus Erythematosus and 1.257 1.086 0.962 0.795 0.775
Other Autoimmune Disorders.....
Osteogenesis Imperfecta and 1.796 1.655 1.544 1.435 1.421
Other Osteodystrophies.........
Congenital/Developmental 1.796 1.655 1.544 1.435 1.421
Skeletal and Connective Tissue
Disorders......................
Cleft Lip/Cleft Palate.......... 1.859 1.618 1.468 1.300 1.281
Hemophilia...................... 59.085 58.511 58.167 58.146 58.143
Myelodysplastic Syndromes and 21.395 21.190 21.067 21.051 21.050
Myelofibrosis..................
Aplastic Anemia................. 21.395 21.190 21.067 21.051 21.050
Acquired Hemolytic Anemia, 8.368 8.039 7.846 7.752 7.742
Including Hemolytic Disease of
Newborn........................
Sickle Cell Anemia (Hb-SS)...... 8.368 8.039 7.846 7.752 7.742
Thalassemia Major............... 8.368 8.039 7.846 7.752 7.742
Combined and Other Severe 7.081 6.862 6.737 6.659 6.649
Immunodeficiencies.............
Disorders of the Immune 7.081 6.862 6.737 6.659 6.649
Mechanism......................
Coagulation Defects and Other 5.332 5.169 5.053 4.945 4.932
Specified Hematological
Disorders......................
Drug Psychosis.................. 5.134 4.831 4.672 4.584 4.576
Drug Dependence................. 5.134 4.831 4.672 4.584 4.576
Schizophrenia................... 5.630 5.184 4.940 4.795 4.784
Major Depressive and Bipolar 2.003 1.776 1.618 1.392 1.366
Disorders......................
Reactive and Unspecified 1.974 1.745 1.588 1.360 1.334
Psychosis, Delusional Disorders
Personality Disorders........... 0.857 0.726 0.603 0.390 0.363
Anorexia/Bulimia Nervosa........ 2.863 2.630 2.484 2.385 2.374
Prader-Willi, Patau, Edwards, 3.910 3.649 3.524 3.486 3.481
and Autosomal Deletion
Syndromes......................
Down Syndrome, Fragile X, Other 1.795 1.582 1.460 1.334 1.320
Chromosomal Anomalies, and
Congenital Malformation
Syndromes......................
Autistic Disorder............... 1.899 1.691 1.543 1.329 1.304
Pervasive Developmental 0.958 0.819 0.685 0.447 0.417
Disorders, Except Autistic
Disorder.......................
Traumatic Complete Lesion 14.568 14.494 14.454 14.554 14.565
Cervical Spinal Cord...........
Quadriplegia.................... 14.568 14.494 14.454 14.554 14.565
Traumatic Complete Lesion Dorsal 12.632 12.373 12.237 12.245 12.248
Spinal Cord....................
Paraplegia...................... 12.632 12.373 12.237 12.245 12.248
Spinal Cord Disorders/Injuries.. 5.814 5.533 5.376 5.274 5.263
Amyotrophic Lateral Sclerosis 10.349 10.046 9.870 9.821 9.813
and Other Anterior Horn Cell
Disease........................
Quadriplegic Cerebral Palsy..... 4.321 3.997 3.842 3.871 3.876
Cerebral Palsy, Except 1.066 0.840 0.715 0.595 0.582
Quadriplegic...................
Spina Bifida and Other Brain/ 1.352 1.182 1.075 0.973 0.961
Spinal/Nervous System
Congenital Anomalies...........
Myasthenia Gravis/Myoneural 10.325 10.110 9.984 9.926 9.919
Disorders and Guillain-Barre
Syndrome/Inflammatory and Toxic
Neuropathy.....................
Muscular Dystrophy.............. 3.561 3.323 3.187 3.077 3.064
Multiple Sclerosis.............. 6.515 6.125 5.899 5.854 5.850
Parkinson's, Huntington's, and 3.561 3.323 3.187 3.077 3.064
Spinocerebellar Disease, and
Other Neurodegenerative
Disorders......................
Seizure Disorders and 2.308 2.110 1.968 1.774 1.751
Convulsions....................
Hydrocephalus................... 6.416 6.260 6.175 6.167 6.166
Non-Traumatic Coma, and Brain 9.357 9.165 9.058 9.011 9.005
Compression/Anoxic Damage......
Respirator Dependence/ 43.573 43.432 43.370 43.553 43.572
Tracheostomy Status............
Respiratory Arrest.............. 14.726 14.485 14.364 14.374 14.375
Cardio-Respiratory Failure and 14.726 14.485 14.364 14.374 14.375
Shock, Including Respiratory
Distress Syndromes.............
Heart Assistive Device/ 35.005 34.817 34.724 34.753 34.755
Artificial Heart...............
Heart Transplant................ 35.005 34.817 34.724 34.753 34.755
Congestive Heart Failure........ 7.529 7.399 7.313 7.259 7.252
Acute Myocardial Infarction..... 8.526 8.355 8.262 8.268 8.270
Unstable Angina and Other Acute 4.832 4.731 4.675 4.688 4.692
Ischemic Heart Disease.........
Heart Infection/Inflammation, 18.137 17.976 17.883 17.866 17.865
Except Rheumatic...............
Hypoplastic Left Heart Syndrome 7.760 7.525 7.350 7.178 7.156
and Other Severe Congenital
Heart Disorders................
[[Page 10767]]
Major Congenital Heart/ 2.184 2.053 1.918 1.752 1.734
Circulatory Disorders..........
Atrial and Ventricular Septal 1.355 1.243 1.121 0.985 0.970
Defects, Patent Ductus
Arteriosus, and Other
Congenital Heart/Circulatory
Disorders......................
Specified Heart Arrhythmias..... 5.208 4.988 4.842 4.750 4.739
Intracranial Hemorrhage......... 19.273 18.970 18.808 18.815 18.816
Ischemic or Unspecified Stroke.. 8.661 8.495 8.414 8.461 8.466
Cerebral Aneurysm and 4.442 4.184 4.044 3.962 3.950
Arteriovenous Malformation.....
Hemiplegia/Hemiparesis.......... 6.306 6.169 6.101 6.077 6.074
Monoplegia, Other Paralytic 4.394 4.195 4.095 4.052 4.049
Syndromes......................
Atherosclerosis of the 15.443 15.201 15.064 14.935 14.918
Extremities with Ulceration or
Gangrene.......................
Vascular Disease with 17.744 17.530 17.416 17.432 17.433
Complications..................
Pulmonary Embolism and Deep Vein 16.259 16.035 15.925 15.959 15.964
Thrombosis.....................
Lung Transplant Status/ 35.005 34.817 34.724 34.753 34.755
Complications..................
Cystic Fibrosis................. 14.929 14.393 14.082 14.107 14.110
Chronic Obstructive Pulmonary 0.519 0.439 0.332 0.187 0.170
Disease, Including
Bronchiectasis.................
Asthma.......................... 0.519 0.439 0.332 0.187 0.170
Fibrosis of Lung and Other Lung 4.441 4.279 4.165 4.066 4.055
Disorders......................
Aspiration and Specified 9.634 9.540 9.477 9.494 9.494
Bacterial Pneumonias and Other
Severe Lung Infections.........
Kidney Transplant Status........ 16.696 16.265 16.038 16.049 16.054
End Stage Renal Disease......... 38.999 38.735 38.594 38.720 38.733
Chronic Kidney Disease, Stage 5. 8.885 8.683 8.557 8.433 8.417
Chronic Kidney Disease, Severe 8.885 8.683 8.557 8.433 8.417
(Stage 4)......................
Ectopic and Molar Pregnancy, 1.245 1.056 0.919 0.640 0.606
Except with Renal Failure,
Shock, or Embolism.............
Miscarriage with Complications.. 1.245 1.056 0.919 0.640 0.606
Miscarriage with No or Minor 1.245 1.056 0.919 0.640 0.606
Complications..................
Completed Pregnancy With Major 3.528 3.009 2.801 2.513 2.500
Complications..................
Completed Pregnancy With 3.528 3.009 2.801 2.513 2.500
Complications..................
Completed Pregnancy with No or 3.528 3.009 2.801 2.513 2.500
Minor Complications............
Chronic Ulcer of Skin, Except 1.703 1.596 1.500 1.407 1.397
Pressure.......................
Hip Fractures and Pathological 6.420 6.099 5.893 5.758 5.744
Vertebral or Humerus Fractures.
Pathological Fractures, Except 1.784 1.641 1.509 1.327 1.308
of Vertebrae, Hip, or Humerus..
Stem Cell, Including Bone 35.005 34.817 34.724 34.753 34.755
Marrow, Transplant Status/
Complications..................
Artificial Openings for Feeding 16.599 16.457 16.401 16.574 16.594
or Elimination.................
Amputation Status, Lower Limb/ 9.440 9.135 8.972 8.856 8.841
Amputation Complications.......
----------------------------------------------------------------------------------------------------------------
Table 4--Infant Risk Adjustment Models Factors
----------------------------------------------------------------------------------------------------------------
Group Platinum Gold Silver Bronze Catastrophic
----------------------------------------------------------------------------------------------------------------
Extremely Immature *, Severity 434.244 432.604 431.540 431.548 431.554
Level 5 (Highest)..............
Extremely Immature *, Severity 218.568 216.965 215.930 215.892 215.892
Level 4........................
Extremely Immature *, Severity 63.306 62.118 61.302 60.931 60.895
Level 3........................
Extremely Immature *, Severity 63.306 62.118 61.302 60.931 60.895
Level 2........................
Extremely Immature *, Severity 63.306 62.118 61.302 60.931 60.895
Level 1 (Lowest)...............
Immature *, Severity Level 5 218.648 217.060 216.033 216.039 216.046
(Highest)......................
Immature *, Severity Level 4.... 97.820 96.171 95.105 95.087 95.091
Immature *, Severity Level 3.... 56.283 54.855 53.924 53.770 53.758
Immature *, Severity Level 2.... 33.845 32.464 31.571 31.302 31.279
Immature *, Severity Level 1 33.845 32.464 31.571 31.302 31.279
(Lowest).......................
Premature/Multiples *, Severity 177.856 176.320 175.329 175.253 175.251
Level 5 (Highest)..............
Premature/Multiples *, Severity 36.022 34.500 33.543 33.349 33.338
Level 4........................
Premature/Multiples *, Severity 19.582 18.378 17.607 17.163 17.121
Level 3........................
Premature/Multiples *, Severity 10.730 9.739 9.072 8.420 8.342
Level 2........................
Premature/Multiples *, Severity 7.152 6.431 5.831 5.073 4.987
Level 1 (Lowest)...............
Term *, Severity Level 5 155.054 153.597 152.653 152.503 152.492
(Highest)......................
Term *, Severity Level 4........ 19.318 18.169 17.434 16.891 16.841
Term *, Severity Level 3........ 7.022 6.305 5.738 4.947 4.851
Term *, Severity Level 2........ 4.219 3.676 3.163 2.300 2.193
Term *, Severity Level 1 1.785 1.511 1.033 0.268 0.196
(Lowest).......................
Age 1 *, Severity Level 5 42.616 41.994 41.549 41.337 41.318
(Highest)......................
Age 1 *, Severity Level 4....... 7.142 6.731 6.402 6.146 6.123
Age 1 *, Severity Level 3....... 2.678 2.410 2.191 1.927 1.899
Age 1 *, Severity Level 2....... 1.625 1.426 1.231 0.958 0.931
[[Page 10768]]
Age 1 *, Severity Level 1 0.636 0.527 0.321 0.138 0.124
(Lowest).......................
Age 0 Male...................... 0.728 0.673 0.659 0.607 0.594
Age 1 Male...................... 0.158 0.137 0.128 0.094 0.090
----------------------------------------------------------------------------------------------------------------
Table 5--HHS HCCS Included in Infant Model Maturity Categories
------------------------------------------------------------------------
Maturity category HCC/Description
------------------------------------------------------------------------
Extremely Immature................... Extremely Immature Newborns,
Birthweight <500 Grams.
Extremely Immature................... Extremely Immature Newborns,
Including Birthweight 500-749
Grams.
Extremely Immature................... Extremely Immature Newborns,
Including Birthweight 750-999
Grams.
Immature............................. Premature Newborns, Including
Birthweight 1000-1499 Grams.
Immature............................. Premature Newborns, Including
Birthweight 1500-1999 Grams.
Premature/Multiples.................. Premature Newborns, Including
Birthweight 2000-2499 Grams.
Premature/Multiples.................. Other Premature, Low Birthweight,
Malnourished, or Multiple Birth
Newborns.
Term................................. Term or Post-Term Singleton
Newborn, Normal or High
Birthweight.
Age 1................................ All age 1 infants.
------------------------------------------------------------------------
Table 6--HHS HCCs Included in Infant Model Severity Categories
------------------------------------------------------------------------
Severity category HCC
------------------------------------------------------------------------
Severity Level 5 (Highest)................... Metastatic Cancer.
Severity Level 5............................. Pancreas Transplant
Status/Complications.
Severity Level 5............................. Liver Transplant Status/
Complications.
Severity Level 5............................. End-Stage Liver Disease.
Severity Level 5............................. Intestine Transplant
Status/Complications.
Severity Level 5............................. Peritonitis/
Gastrointestinal
Perforation/Necrotizing
Enterocolitis.
Severity Level 5............................. Respirator Dependence/
Tracheostomy Status.
Severity Level 5............................. Heart Assistive Device/
Artificial Heart.
Severity Level 5............................. Heart Transplant.
Severity Level 5............................. Congestive Heart Failure.
Severity Level 5............................. Hypoplastic Left Heart
Syndrome and Other
Severe Congenital Heart
Disorders.
Severity Level 5............................. Lung Transplant Status/
Complications.
Severity Level 5............................. Kidney Transplant Status.
Severity Level 5............................. End Stage Renal Disease.
Severity Level 5............................. Stem Cell, Including Bone
Marrow, Transplant
Status/Complications.
Severity Level 4............................. Septicemia, Sepsis,
Systemic Inflammatory
Response Syndrome/Shock.
Severity Level 4............................. Lung, Brain, and Other
Severe Cancers,
Including Pediatric
Acute Lymphoid Leukemia.
Severity Level 4............................. Mucopolysaccharidosis.
Severity Level 4............................. Major Congenital
Anomalies of Diaphragm,
Abdominal Wall, and
Esophagus, Age <2.
Severity Level 4............................. Myelodysplastic Syndromes
and Myelofibrosis.
Severity Level 4............................. Aplastic Anemia.
Severity Level 4............................. Combined and Other Severe
Immunodeficiencies.
Severity Level 4............................. Traumatic Complete Lesion
Cervical Spinal Cord.
Severity Level 4............................. Quadriplegia.
Severity Level 4............................. Amyotrophic Lateral
Sclerosis and Other
Anterior Horn Cell
Disease.
Severity Level 4............................. Quadriplegic Cerebral
Palsy.
Severity Level 4............................. Myasthenia Gravis/
Myoneural Disorders and
Guillain-Barre Syndrome/
Inflammatory and Toxic
Neuropathy.
Severity Level 4............................. Non-Traumatic Coma, Brain
Compression/Anoxic
Damage.
Severity Level 4............................. Respiratory Arrest.
Severity Level 4............................. Cardio-Respiratory
Failure and Shock,
Including Respiratory
Distress Syndromes.
Severity Level 4............................. Acute Myocardial
Infarction.
Severity Level 4............................. Heart Infection/
Inflammation, Except
Rheumatic.
Severity Level 4............................. Major Congenital Heart/
Circulatory Disorders.
Severity Level 4............................. Intracranial Hemorrhage.
Severity Level 4............................. Ischemic or Unspecified
Stroke.
Severity Level 4............................. Vascular Disease with
Complications.
Severity Level 4............................. Pulmonary Embolism and
Deep Vein Thrombosis.
Severity Level 4............................. Aspiration and Specified
Bacterial Pneumonias and
Other Severe Lung
Infections.
Severity Level 4............................. Chronic Kidney Disease,
Stage 5.
Severity Level 4............................. Hip Fractures and
Pathological Vertebral
or Humerus Fractures.
Severity Level 4............................. Artificial Openings for
Feeding or Elimination.
Severity Level 3............................. HIV/AIDS.
Severity Level 3............................. Central Nervous System
Infections, Except Viral
Meningitis.
Severity Level 3............................. Opportunistic Infections.
Severity Level 3............................. Non-Hodgkin's Lymphomas
and Other Cancers and
Tumors.
Severity Level 3............................. Colorectal, Breast (Age
<50), Kidney and Other
Cancers.
Severity Level 3............................. Breast (Age 50+),
Prostate Cancer, Benign/
Uncertain Brain Tumors,
and Other Cancers and
Tumors.
Severity Level 3............................. Lipidoses and
Glycogenosis.
[[Page 10769]]
Severity Level 3............................. Adrenal, Pituitary, and
Other Significant
Endocrine Disorders.
Severity Level 3............................. Acute Liver Failure/
Disease, Including
Neonatal Hepatitis.
Severity Level 3............................. Intestinal Obstruction.
Severity Level 3............................. Necrotizing Fasciitis.
Severity Level 3............................. Bone/Joint/Muscle
Infections/Necrosis.
Severity Level 3............................. Osteogenesis Imperfecta
and Other
Osteodystrophies.
Severity Level 3............................. Cleft Lip/Cleft Palate.
Severity Level 3............................. Hemophilia.
Severity Level 3............................. Disorders of the Immune
Mechanism.
Severity Level 3............................. Coagulation Defects and
Other Specified
Hematological Disorders.
Severity Level 3............................. Prader-Willi, Patau,
Edwards, and Autosomal
Deletion Syndromes.
Severity Level 3............................. Traumatic Complete Lesion
Dorsal Spinal Cord.
Severity Level 3............................. Paraplegia.
Severity Level 3............................. Spinal Cord Disorders/
Injuries.
Severity Level 3............................. Cerebral Palsy, Except
Quadriplegic.
Severity Level 3............................. Muscular Dystrophy.
Severity Level 3............................. Parkinson's,
Huntington's, and
Spinocerebellar Disease,
and Other
Neurodegenerative
Disorders.
Severity Level 3............................. Hydrocephalus.
Severity Level 3............................. Unstable Angina and Other
Acute Ischemic Heart
Disease.
Severity Level 3............................. Atrial and Ventricular
Septal Defects, Patent
Ductus Arteriosus, and
Other Congenital Heart/
Circulatory Disorders.
Severity Level 3............................. Specified Heart
Arrhythmias.
Severity Level 3............................. Cerebral Aneurysm and
Arteriovenous
Malformation.
Severity Level 3............................. Hemiplegia/Hemiparesis.
Severity Level 3............................. Cystic Fibrosis.
Severity Level 3............................. Fibrosis of Lung and
Other Lung Disorders.
Severity Level 3............................. Pathological Fractures,
Except of Vertebrae,
Hip, or Humerus.
Severity Level 2............................. Viral or Unspecified
Meningitis.
Severity Level 2............................. Thyroid, Melanoma,
Neurofibromatosis, and
Other Cancers and
Tumors.
Severity Level 2............................. Diabetes with Acute
Complications.
Severity Level 2............................. Diabetes with Chronic
Complications.
Severity Level 2............................. Diabetes without
Complication.
Severity Level 2............................. Protein-Calorie
Malnutrition.
Severity Level 2............................. Congenital Metabolic
Disorders, Not Elsewhere
Classified.
Severity Level 2............................. Amyloidosis, Porphyria,
and Other Metabolic
Disorders.
Severity Level 2............................. Cirrhosis of Liver.
Severity Level 2............................. Chronic Pancreatitis.
Severity Level 2............................. Inflammatory Bowel
Disease.
Severity Level 2............................. Rheumatoid Arthritis and
Specified Autoimmune
Disorders.
Severity Level 2............................. Systemic Lupus
Erythematosus and Other
Autoimmune Disorders.
Severity Level 2............................. Congenital/Developmental
Skeletal and Connective
Tissue Disorders.
Severity Level 2............................. Acquired Hemolytic
Anemia, Including
Hemolytic Disease of
Newborn.
Severity Level 2............................. Sickle Cell Anemia (Hb-
SS).
Severity Level 2............................. Drug Psychosis.
Severity Level 2............................. Drug Dependence.
Severity Level 2............................. Down Syndrome, Fragile X,
Other Chromosomal
Anomalies, and
Congenital Malformation
Syndromes.
Severity Level 2............................. Spina Bifida and Other
Brain/Spinal/Nervous
System Congenital
Anomalies.
Severity Level 2............................. Seizure Disorders and
Convulsions.
Severity Level 2............................. Monoplegia, Other
Paralytic Syndromes.
Severity Level 2............................. Atherosclerosis of the
Extremities with
Ulceration or Gangrene.
Severity Level 2............................. Chronic Obstructive
Pulmonary Disease,
Including
Bronchiectasis.
Severity Level 2............................. Chronic Ulcer of Skin,
Except Pressure.
Severity Level 1 (Lowest).................... Chronic Hepatitis.
Severity Level 1............................. Acute Pancreatitis/Other
Pancreatic Disorders and
Intestinal
Malabsorption.
Severity Level 1............................. Thalassemia Major.
Severity Level 1............................. Autistic Disorder.
Severity Level 1............................. Pervasive Developmental
Disorders, Except
Autistic Disorder.
Severity Level 1............................. Multiple Sclerosis.
Severity Level 1............................. Asthma.
Severity Level 1............................. Chronic Kidney Disease,
Severe (Stage 4).
Severity Level 1............................. Amputation Status, Lower
Limb/Amputation
Complications.
Severity Level 1............................. No Severity HCCs.
------------------------------------------------------------------------
e. Cost-Sharing Reductions Adjustments
We proposed to continue to include an adjustment for the receipt of
cost-sharing reductions in the model, and proposed to continue not to
adjust for receipt of reinsurance payments in the model. We have
updated the adjustments to the HHS risk adjustment models for
individuals who receive cost-sharing reductions to be consistent with
the cost-sharing reductions advance payment formula finalized in the
2015 Payment Notice, for implementation in 2015 benefit year risk
adjustment. The silver plan variation and zero cost sharing factors are
unchanged from those finalized in the 2014 Payment Notice. The
[[Page 10770]]
adjustment factors are set forth in Table 7. These adjustments are
multiplied against the sum of the demographic, diagnosis, and
interaction factors. We will continue to evaluate this adjustment as
more data becomes available. We received no comments on this approach,
and are finalizing it as proposed.
Table 7--Cost-Sharing Reduction Adjustment
------------------------------------------------------------------------
Induced
Household income Plan AV utilization
factor
------------------------------------------------------------------------
Silver Plan Variation Recipients
------------------------------------------------------------------------
100-150% of FPL................ Plan Variation 94%..... 1.12
150-200% of FPL................ Plan Variation 87%..... 1.12
200-250% of FPL................ Plan Variation 73%..... 1.00
>250% of FPL................... Standard Plan 70%...... 1.00
------------------------------------------------------------------------
Zero Cost Sharing Recipients
------------------------------------------------------------------------
<300% of FPL................... Platinum (90%)......... 1.00
<300% of FPL................... Gold (80%)............. 1.07
<300% of FPL................... Silver (70%)........... 1.12
<300% of FPL................... Bronze (60%)........... 1.15
------------------------------------------------------------------------
Limited Cost Sharing Recipients
------------------------------------------------------------------------
>300% of FPL................... Platinum (90%)......... 1.00
>300% of FPL................... Gold (80%)............. 1.07
>300% of FPL................... Silver (70%)........... 1.12
>300% of FPL................... Bronze (60%)........... 1.15
------------------------------------------------------------------------
f. Model Performance Statistics
To evaluate model performance, we examined R-squared statistics and
predictive ratios. The R-squared statistic, which calculates the
percentage of individual variation explained by a model, measures the
predictive accuracy of the model overall. The predictive ratios measure
the predictive accuracy of a model for different validation groups or
subpopulations. The predictive ratio for each of the HHS risk
adjustment models is the ratio of the weighted mean predicted plan
liability for the model sample population to the weighted mean actual
plan liability for the model sample population. The predictive ratio
represents how well the model does on average at predicting plan
liability for that subpopulation. A subpopulation that is predicted
perfectly would have a predictive ratio of 1.0. For each of the HHS
risk adjustment models, the R-squared statistic and the predictive
ratio are in the range of published estimates for concurrent risk
adjustment models.\10\ Because we are averaging the coefficients from
separately solved models based on MarketScan 2011, 2012 and 2013 data,
we are publishing the R-squared statistic for each model and year
separately to verify their statistical validity. The R-squared
statistic for each model is shown in Table 8.
---------------------------------------------------------------------------
\10\ Winkleman, Ross and Syed Mehmud. ``A Comparative Analysis
of Claims-Based Tools for Health Risk Assessment.'' Society of
Actuaries. April 2007.
Table 8--R-Squared Statistic for HHS Risk Adjustment Models
----------------------------------------------------------------------------------------------------------------
R-squared statistic
Risk adjustment model -----------------------------------------------
2011 2012 2013
----------------------------------------------------------------------------------------------------------------
Platinum Adult.................................................. 0.368 0.394 0.382
Platinum Child.................................................. 0.283 0.286 0.277
Platinum Infant................................................. 0.337 0.284 0.322
Gold Adult...................................................... 0.363 0.389 0.377
Gold Child...................................................... 0.278 0.280 0.272
Gold Infant..................................................... 0.335 0.282 0.319
Silver Adult.................................................... 0.360 0.387 0.374
Silver Child.................................................... 0.275 0.277 0.268
Silver Infant................................................... 0.334 0.281 0.318
Bronze Adult.................................................... 0.358 0.384 0.372
Bronze Child.................................................... 0.272 0.273 0.265
Bronze Infant................................................... 0.334 0.281 0.318
Catastrophic Adult.............................................. 0.358 0.384 0.371
Catastrophic Child.............................................. 0.271 0.273 0.265
Catastrophic Infant............................................. 0.334 0.281 0.318
----------------------------------------------------------------------------------------------------------------
[[Page 10771]]
g. Overview of the Payment Transfer Formula
We do not propose to alter our payment transfer methodology. Plan
average risk scores would be calculated as the member month-weighted
average of individual enrollee risk scores. We defined the calculation
of plan average actuarial risk and the calculation of payments and
charges in the Premium Stabilization Rule. In the 2014 Payment Notice,
we combined those concepts into a risk adjustment payment transfer
formula. Risk adjustment transfers (payments and charges) will be
calculated following the completion of issuer risk adjustment data
reporting. The payment transfer formula includes a set of cost
adjustment terms that require transfers to be calculated at the
geographic rating area level for each plan (that is, HHS will calculate
two separate transfer amounts for a plan that operates in two rating
areas).
The payment transfer formula is designed to provide a per member
per month (PMPM) transfer amount. The PMPM transfer amount derived from
the payment transfer formula will be multiplied by each plan's total
member months for the benefit year to determine the total payment due
or charge owed by the issuer for that plan in a rating area.
(1) Overview of the Payment Transfer Formula
Though we did not propose to change the payment transfer formula
from what was finalized in the 2014 Payment Notice (78 FR 15430-15434),
we believe it useful to republish the formula in its entirety, since we
are finalizing recalibrated HHS risk adjustment models. Transfers
(payments and charges) will be calculated as the difference between the
plan premium estimate reflecting risk selection and the plan premium
estimate not reflecting risk selection. As finalized in the 2014
Payment Notice, the HHS risk adjustment payment transfer formula is:
[GRAPHIC] [TIFF OMITTED] TR27FE15.000
Where:
PPS = State average premium;
PLRSi = plan i's plan liability risk score;
AVi = plan i's metal level AV;
ARFi = allowable rating factor;
IDFi = plan i's induced demand factor;
GCFi = plan i's geographic cost factor;
si = plan i's share of State enrollment;
and the denominator is summed across all plans in the risk pool in the
market in the State.
The difference between the two premium estimates in the payment
transfer formula determines whether a plan pays a risk transfer charge
or receives a risk transfer payment. Note that the value of the plan
average risk score by itself does not determine whether a plan would be
assessed a charge or receive a payment--even if the risk score is
greater than 1.0, it is possible that the plan would be assessed a
charge if the premium compensation that the plan may receive through
its rating practices (as measured through the allowable rating factor)
exceeds the plan's predicted liability associated with risk selection.
Risk adjustment transfers are calculated at the risk pool level and
catastrophic plans are treated as a separate risk pool for purposes of
risk adjustment.
h. HHS Risk Adjustment Methodology Considerations
In the 2014 Payment Notice, we finalized the methodology that HHS
will use when operating a risk adjustment program on behalf of a State.
In the second Program Integrity Rule (78 FR 65046), we clarified the
modification to the transfer formula to accommodate community rated
States that utilize family tiering rating factors. We further clarified
this formula in the proposed rule to ensure that the allowable rating
factor (ARF) is appropriately applied in the transfer formula in
community rated States for 2014 risk adjustment. In the second Program
Integrity Rule, we stated that the ARF formula should be modified so
that the numerator is a summation over all subscribers of the product
of the family tiering factor and the subscriber member months, and the
denominator the sum of billable member months. However, we do not
believe the revised formula accurately reflects that description, as it
does not distinguish between subscriber months (months attributed to
the sole subscriber) and billable member months (months attributed to
all allowable members of the family factored into the community
rating). The calculation of ARF for family tiering States that was
published in the second Program Integrity Rule that would be calculated
at the level of the subscriber, was as follows:
[GRAPHIC] [TIFF OMITTED] TR27FE15.001
Where:
ARFs is the rating factor for the subscriber(s) (based on
family size/composition), and
Ms is the number of billed person-months that are counted
in determining the premium(s) for the subscriber(s).
While the preamble description in the second Program Integrity Rule
is correct, as we noted, the formula itself is incorrect in that it
does not distinguish between billable member months and subscriber
months by using the same variable for both. Therefore, we proposed a
technical change to the ARF calculation for family tiering States, as
follows:
[GRAPHIC] [TIFF OMITTED] TR27FE15.002
Where:
ARFi is the allowable rating factor for plan i,
ARFs is the allowable rating factor--also known as the family rating
tier--for subscriber (family) s in plan i,
MSs is the number of subscriber months for subscriber s, and
MBs is the number of billable member months for subscriber (family)
s.
The numerator is summed over the product of the allowable rating
factor and the number of subscriber months (that is, months of family
subscription), and the denominator is the sum over all billable
members. Each family unit covered under a single contract is considered
a single ``subscriber.'' Therefore, a family of four that purchases
coverage for a period from January through December will accumulate 12
subscriber months (MSs), although coverage is being provided for 48
member months (both billable and non-billable). Billable members are
individuals who are counted for purposes of placing the subscriber in a
family tier. For example, in a community rated State that rates based
on two adults and one or more children with one full year of
enrollment, the family of four would have 36 billable member months
(MBs), (12 billable member months for the subscriber, 12 billable
member months for the second adult, and 12 billable months for the
first child). We received no comments on this correction and are
finalizing it as proposed.
[[Page 10772]]
i. State-Submitted Alternate Risk Adjustment Methodology
For 2016, we are recertifying the alternate risk adjustment
methodology submitted by Massachusetts and certified in the 2014
Payment Notice (78 FR 15439-15452).
3. Provisions and Parameters for the Transitional Reinsurance Program
The Affordable Care Act directs that a transitional reinsurance
program be established in each State to help stabilize premiums for
coverage in the individual market from 2014 through 2016. In the 2014
Payment Notice, we expanded on the standards set forth in subparts C
and E of the Premium Stabilization Rule and established the reinsurance
payment parameters and uniform reinsurance contribution rate for the
2014 benefit year. In the 2015 Payment Notice, we established the
reinsurance payment parameters and uniform reinsurance contribution
rate for the 2015 benefit year and certain oversight provisions related
to the operation of the reinsurance program.
a. Common Ownership Clarification
The definition of a ``contributing entity'' at Sec. 153.20
provides that for the 2015 and 2016 benefit years, a contributing
entity is (i) a health insurance issuer or (ii) a self-insured group
health plan, including a group health plan that is partially self-
insured and partially insured, where the health insurance coverage does
not constitute major medical coverage, that uses a TPA in connection
with claims processing or adjudication, including the management of
internal appeals, or plan enrollment for services other than for
pharmacy benefits or excepted benefits within the meaning of section
2791(c) of the PHS Act. Solely for purposes of the reinsurance program,
a self-insured group health plan will not be deemed to use a TPA if it
uses an unrelated third party: (a) To obtain a provider network and
related claims repricing services; or (b) for up to 5 percent of claims
processing or adjudication or plan enrollment, based on either the
number of transactions processed by the third party, or the value of
the claims processing and adjudication and plan enrollment services
provided by the third party.
The definition of a ``contributing entity'' does not include
qualifying self-administered, self-insured group health plans for the
purpose of the requirement to make reinsurance contributions for the
2015 and 2016 benefit years. In the preamble to the 2015 Payment
Notice, we indicated that we consider a TPA to be, with respect to a
self-insured group health plan, an entity that is not under common
ownership or control with the self-insured group health plan or its
plan sponsor that provides the specified core administrative services
(79 FR 13773).
We received a number of inquiries seeking clarification on how to
determine common ownership or control for purposes of the definition of
a ``contributing entity'' in Sec. 153.20. In response, in the proposed
rule, we proposed to clarify that principles similar to the controlled
group rules of section 414(b) and (c) of the Code be used to determine
whether the TPA is under common ownership or control with the self-
insured group health plan or the plan sponsor, because these rules are
familiar to many stakeholders. We also noted that similar ownership or
control rules apply for other purposes under the Affordable Care Act,
such as the shared responsibility payment for applicable large
employers that do not offer full-time employees and dependents the
opportunity to enroll in minimum essential coverage, and the annual fee
on health insurance issuers under section 9010 of the Affordable Care
Act.
We sought comment on this proposal and on alternative definitions
that would be familiar to stakeholders for determining whether a TPA is
under common ownership or control with the self-insured group health
plan or its sponsor for purposes of the definition of ``contributing
entity'' at Sec. 153.20.
We finalize this proposal with one clarification--we are limiting
the incorporation of the section 414 rules to sections 414(b) and (c).
Comment: One commenter stated that the common ownership or control
test should mirror, ``not use similar principles to,'' the section 414
controlled group rules, so that one consistent test of determining
common ownership applies for all employer compliance purposes under the
Affordable Care Act.
Response: The section 414 controlled group rules address a variety
of structures for related corporations and businesses, some of which
are not relevant to defining a ``contributing entity,'' such as
sections 414(m), (n), and (o). The intent of the proposed language was
to limit the incorporation of the section 414 rules to sections 414(b)
and (c), the provisions most applicable to defining a contributing
entity. Therefore, we are finalizing the proposal with that
clarification.
b. Reinsurance Contributing Entities and Minimum Value
Section 1341(b)(3)(B) of the Affordable Care Act and the
implementing regulations at Sec. 153.400(a)(1) require contributing
entities to make reinsurance contributions for major medical coverage
that is considered to be part of a commercial book of business. We
define major medical coverage at Sec. 153.20 as coverage meeting
minimum value (MV) or that is subject to the actuarial value (AV)
requirements. In light of this definition, stakeholders have asked
whether plans that do not offer inpatient hospital coverage, but that
are considered to offer MV for purposes of the employer shared
responsibility payment because they were in place before HHS and IRS
guidance \11\ on MV was issued November 4, 2014, must make reinsurance
contributions for the 2015 benefit year. As detailed in the November 4,
2014 guidance, we clarify that plans that entered into a binding
agreement or began enrolling employees prior to November 4, 2014, with
plan years beginning by March 1, 2015, are considered to meet MV
requirements until the end of the current plan year for purposes of the
employer shared responsibility penalties. We clarify that these plans
will therefore also be deemed to satisfy the definition of ``major
medical coverage'' in Sec. 153.20 for purposes of reinsurance
contributions, since these plans meet the previous definition of MV
until plan renewal.
---------------------------------------------------------------------------
\11\ Group Health Plans that Fail to Cover In-Patient
Hospitalization Services, Notice 2014-69, available at: https://www.irs.gov/pub/irs-drop/n-14-69.pdf.
---------------------------------------------------------------------------
c. Self-Insured Expatriate Plans (Sec. 153.400(a)(1)(iii))
Section 1341(b)(3)(B) of the Affordable Care Act and the
implementing regulations at Sec. 153.400(a)(1) require contributing
entities to make reinsurance contributions for major medical coverage
that is considered to be part of a commercial book of business. In the
2014 Payment Notice (78 FR 15457), we stated that we interpret this
language to exclude expatriate health coverage, as defined by the
Secretary, and we codified this approach in regulatory text at Sec.
153.400(a)(1)(iii). In the March 8, 2013, FAQs about the Affordable
Care Act Implementation Part XIII,\12\ an expatriate health plan is
defined as an insured group health plan for which
[[Page 10773]]
enrollment is limited to primary insured who reside outside of their
home country for at least 6 months of the plan year and any covered
dependents, and its associated group health insurance coverage.
Therefore, under our current regulation, self-insured expatriate plans
that would otherwise meet the conditions outlined in the March 8, 2013
FAQ are required to make reinsurance contributions if these plans
provide major medical coverage, unless another exemption in Sec.
153.400(a) applies, because the definition in the FAQ applies only to
insured expatriate plans.
---------------------------------------------------------------------------
\12\ Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs13.html.
---------------------------------------------------------------------------
We proposed to amend Sec. 153.400(a)(1)(iii), which currently
exempts expatriate health coverage, as defined by the Secretary, from
reinsurance contributions, so that it also exempts, for the 2015 and
2016 benefit years only, any self-insured group health plan for which
enrollment is limited to participants, and any covered dependents, who
reside outside of their home country for at least 6 months of the plan
year. This definition would be applicable solely to the transitional
reinsurance program.
We received one comment in support of this proposal, which also
stated that the expatriate plan requirements should be revised to
reflect the effect of the recently enacted Expatriate Health Coverage
Clarification Act of 2014, as part of the Consolidated and Further
Continuing Appropriations Act, 2015, H.R. 83 (2014 Expatriate Health
Coverage Act). Since the expatriate plan requirements (and accompanying
definitions) enacted in the 2014 Expatriate Health Coverage Act only
apply to expatriate plans issued or renewed on or after July 1, 2015,
we are finalizing the amendment as proposed, and we intend to undertake
future rulemaking in conjunction with the Departments of the Treasury
and Labor governing the application of the Affordable Care Act to
expatriate plans to harmonize our regulations (as may be necessary)
with the 2014 Expatriate Health Coverage Act. We do not anticipate that
this future rulemaking will affect the availability of the exemption
for the expatriate plans described in this final rule.
d. Determination of Debt (Sec. 153.400(c))
Consistent with the determination of debt provision set forth in
Sec. 156.1215(c), we proposed to clarify in Sec. 153.400(c) that any
amount owed to the Federal government by a self-insured group health
plan (including a group health plan that is partially self-insured and
partially insured, where the health insurance coverage does not
constitute major medical coverage), including reinsurance contributions
that are not remitted in full in a timely manner, would be a
determination of a debt.
We received no comments on this proposal and are finalizing this
provision as proposed.
e. Reinsurance Contribution Submission Process
On May 22, 2014, we released an FAQ about the reinsurance
contribution submission process.\13\ As detailed in this FAQ, we
implemented a streamlined process for the collection of reinsurance
contributions. A contributing entity, or a TPA or administrative
services-only (ASO) contractor on behalf of the contributing entity,
must complete all required steps for the reinsurance contribution
submission process on www.pay.gov (Pay.gov). The ``ACA Transitional
Reinsurance Program Annual Enrollment and Contributions Submission
Form'' available on Pay.gov must be completed and submitted by a
contributing entity or a TPA or ASO contractor on its behalf no later
than November 15 of the benefit year under Sec. 153.405(b).
---------------------------------------------------------------------------
\13\ Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Reinsurance-contributions-process-FAQ-5-22-14.pdf.
---------------------------------------------------------------------------
We proposed to amend Sec. 153.405(b), which requires a
contributing entity to submit its annual enrollment count of the number
of covered lives of reinsurance contribution enrollees for the
applicable benefit year to HHS no later than November 15 of benefit
year 2014, 2015, or 2016. When November 15 does not fall on a business
day, we proposed that a contributing entity submit its annual
enrollment count of the number of covered lives of reinsurance
contribution enrollees for the applicable benefit year to HHS no later
than November 15, 2014, 2015, or 2016, or, if such date is not a
business day, the next business day. Similarly, because November 15,
2015 and January 15, 2017 do not fall on a business day, we proposed to
amend Sec. 153.405(c)(2) so that a contributing entity must remit
reinsurance contributions to HHS no later than January 15, 2015, 2016,
or 2017, as applicable, or, if such date is not a business day, the
next applicable business day, if making a combined contribution or the
first payment of the bifurcated contribution; and no later than
November 15, 2015, 2016, or 2017, as applicable, or, if such date is
not a business day, the next applicable business day, if making the
second payment of the bifurcated contribution.\14\
---------------------------------------------------------------------------
\14\ To be comprehensive, we included all reinsurance
contribution submission dates throughout the entirety of the
program, understanding that some dates noted here have passed.
---------------------------------------------------------------------------
Although we stated in the 2015 Payment Notice (79 FR 13776) that,
for operational reasons, HHS would not permit contributing entities to
elect to make the entire benefit year's reinsurance contribution by
January 15, 2015, 2016, or 2017, as applicable, we have resolved those
operational barriers, and now offer contributing entities the option to
pay: (1) The entire 2014, 2015 or 2016 benefit year contribution in one
payment no later than January 15, 2015, 2016, or 2017, as applicable
(or, if such date is not a business day, the next applicable business
day), reflecting the entire uniform contribution rate applicable to
each benefit year (that is, $63 per covered life for 2014, $44 per
covered life for 2015, and $27 per covered life for 2016); or (2) in
two separate payments for the 2014, 2015, or 2016 benefit years, with
the first remittance due by January 15, 2015, 2016, and 2017, as
applicable (or, if such date is not a business day, the next applicable
business day) reflecting the first payment of the bifurcated
contribution (that is, $52.50 per covered life for 2014, $33.00 per
covered life for 2015, and $21.60 per covered life for 2016); and the
second remittance due by November 15, 2015, 2016, or 2017, as
applicable (or, if such date is not a business day, the next applicable
business day) reflecting the second payment of the bifurcated
contribution (that is, $10.50 reinsurance fee per covered life for
2014, $11.00 per covered life for 2015, and $5.40 per covered life for
2016).
Under Sec. 153.405(c)(1), HHS must notify the contributing entity
of the reinsurance contribution amount allocated to reinsurance
payments and administrative expenses to be paid for the applicable
benefit year following submission of the annual enrollment count. We
clarified that this notification will occur when the contributing
entity enters the gross annual enrollment count into the Pay.gov form
and the form auto-calculates the contribution amount owed. No separate
notification or invoice will be sent to a contributing entity, unless a
discrepancy in data or payment has been identified by the entity or HHS
after the form is submitted. In addition, we proposed to delete Sec.
153.405(c)(2), to be consistent with HHS permitting flexibility for a
contributing entity (or the TPA or ASO contractor on its behalf) to
remit the
[[Page 10774]]
entire contribution in one payment, rather than requiring a bifurcated
payment. Notification of the reinsurance contribution amount related to
the allocation for reinsurance payments, administrative expenses, and
payments to the U.S. Treasury for the applicable benefit year will also
be made through the automatic calculation of this amount when a
contributing entity (or the TPA or ASO contractor on its behalf)
completes the reinsurance contribution submission process and submits
the form through Pay.gov.
We also proposed to amend and redesignate Sec. 153.405(c)(3) to
(c)(2) to clarify that a contributing entity must schedule its
contribution payment for the applicable benefit year to occur no later
than January 15, 2015, 2016, or 2017, as applicable (or, if such date
is not a business day, the next applicable business day) if making a
combined payment or the first payment of the bifurcated payment, and no
later than November 15, 2015, 2016, or 2017, as applicable (or, if such
date is not a business day, the next applicable business day) if making
the second payment of the bifurcated payment. However, we noted that
the form must be completed and the reinsurance contribution payment(s)
must be scheduled no later than November 15, 2014, 2015, or 2016, as
applicable, to successfully comply with the deadline set forth in Sec.
153.405(b) and complete the reinsurance contribution submission process
through Pay.gov.\15\ The reinsurance contribution payments must be
scheduled by this deadline regardless of whether the contributing
entity (or the TPA or ASO contractor on its behalf) is remitting a
combined payment or two payments under the bifurcated schedule.
---------------------------------------------------------------------------
\15\ We note that for the 2014 benefit year, we extended the
filing deadline to December 5, 2014.
---------------------------------------------------------------------------
We noted that if a contributing entity elects to follow the
bifurcated schedule, then the contributing entity is required to submit
two separate forms through Pay.gov. However, the annual enrollment
count reported on both forms must be the same. This is consistent with
Sec. 153.405(b) and previous guidance, which provide that no later
than November 15 of benefit year 2014, 2015, or 2016, as applicable, a
contributing entity must submit an annual enrollment count of the
number of covered lives of reinsurance contribution enrollees one time
for the applicable benefit year to HHS.
Finally, we proposed to amend Sec. 153.405(g)(4)(1)(i) and (ii),
which require a plan sponsor who maintains multiple group health plans
to report to HHS the average number of covered lives calculated, the
counting method used, and the names of the multiple plans being treated
as a single group health plan as determined by the plan sponsor. A plan
sponsor would continue to be required to determine this information,
but would only need to report to HHS the average number of covered
lives calculated and the other data elements required through the
Pay.gov reinsurance contribution submission process. Under Sec.
153.405(h), plan sponsors should retain this additional information
(that is, the counting method used and the names of the multiple plans
being treated as a single group health plan), as this information may
be requested to assess the plan sponsor's compliance with the
reinsurance contribution requirements.
We are finalizing these provisions as proposed.
Comment: Several commenters asked that HHS publicize the amount of
reinsurance contributions collected by December 31st of the benefit
year for issuers to assess the possible proration of reinsurance
payments.
Response: We intend to issue a report of the estimated total
contributions collected in the spring of the year following the
applicable benefit year. This estimate would include the amount of
contributions already paid and scheduled to be paid for the entire
benefit year.
f. Consistency in Counting Methods for Health Insurance Issuers (Sec.
153.405(d))
As noted in the 2014 Payment Notice (78 FR 15462), the counting
methods for the transitional reinsurance program are designed to align
with the methods permitted for purposes of the fee to fund the Patient-
Centered Outcomes Research Trust Fund (PCORTF). The PCORTF Final Rule
(77 FR 72729) requires consistency in the use of counting methods for
calculating covered lives for the duration of the year. We proposed for
the 2015 and 2016 benefit years \16\ to amend Sec. 153.405(d) to
similarly require a contributing entity that is a health insurance
issuer to use the same counting method to calculate its annual
enrollment count of covered lives of reinsurance contribution enrollees
in a State (including both the individual and group markets) for a
benefit year even if the fully insured major medical plans for which
reinsurance contributions are required enroll different covered lives.
If a health insurance issuer has multiple major medical plans covering
different lives in different States, the issuer may use different
counting methods for all major medical plans in each State (including
both the individual and group markets). We noted that this amendment
would not prevent an issuer from using different counting methods for
different benefit years. We did not propose a similar requirement for
self-insured group health plans and sought comments on whether a
similar uniformity requirement should extend to self-insured group
health plans that are contributing entities.
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\16\ As noted in an FAQ issued on October 21, 2014, we also
encouraged this approach for the 2014 benefit year. Available at:
https://www.regtap.info/, FAQ# 6037.
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We are finalizing this provision as proposed.
Comment: One commenter stated that it is difficult for self-insured
plans to use consistent counting methods for multiple plans.
Response: In many instances, a plan sponsor's multiple group health
plans may be administered by different entities, making implementation
of a uniformity of counting method requirement potentially more
difficult. Therefore, we are finalizing this policy.
g. Snapshot Count and Snapshot Factor Counting Methods (Sec. Sec.
153.405(d)(2) and (e)(2))
Under Sec. 153.400(a)(1), reinsurance contributions are generally
required for major medical coverage that is considered to be part of a
commercial book of business, but contributions are not required to be
paid more than once for the same covered life. Reinsurance
contributions are generally calculated based on the number of covered
lives covered by a plan or coverage that provides major medical
coverage. The reinsurance contribution required from a contributing
entity is calculated by multiplying the number of covered lives
(determined under a permitted counting method set forth in Sec.
153.405(d) through Sec. 153.405(g)) during the applicable calendar
year for all applicable plans and coverage of the contributing entity
by the applicable contribution rate for the respective benefit year.
We proposed to clarify how the counting methods set forth in
Sec. Sec. 153.405(d)(2) and (e)(2) are to be used in those situations
when a plan terminates or is established in the middle of a quarter to
effectuate the principle that contributions are required to be paid
once for the same covered life. Under the snapshot count method,
described at Sec. 153.405(d)(2), to determine the number of covered
lives for the purposes of reinsurance contributions, the issuer or
self-insured group health plan must add the total number of lives
covered on any date (or
[[Page 10775]]
more dates, if an equal number of dates are used for each quarter)
during the same corresponding month in each of the first 3 quarters of
the benefit year, and divide that total by the number of dates on which
a count was made. Under the snapshot factor method, described at Sec.
153.405(e)(2), to determine the number of covered lives for the
purposes of reinsurance contributions, the self-insured group health
plan must add the total number of lives covered on any date (or more
dates, if an equal number of dates are used for each quarter) during
the same corresponding month in each of the first 3 quarters of the
benefit year, and divide that total by the number of dates on which a
count was made, except that the number of lives covered on a date is
calculated by adding the number of participants with self-only coverage
on the date to the product of the number of participants with coverage
other than self-only coverage on the date and a factor of 2.35. For
each of these counting methods, the same months must be used for each
quarter (for example, January, April, July), and the date used for the
second and third quarter must fall within the same week of the quarter
as the corresponding date used for the first quarter.
We understand that a health insurance plan or coverage may be
established, terminated, or change funding mechanisms (that is, from
fully insured to self-insured or self-insured to fully insured), in the
middle of a quarter. In these circumstances, it is possible that the
new plan or coverage would not have covered lives enrolled in the plan
or coverage for the entire quarter. If this occurs, a contributing
entity could, due to its selection of dates, be required to pay an
amount significantly greater or lesser than the amount that would be
due based on its average count of covered lives over the course of the
9-month counting period. To avoid this result, we proposed to clarify
that, if the plan or coverage in question had enrollees on any day
during a quarter and if the contributing entity elects to (and is
permitted to) use either the snapshot count or snapshot factor method,
it must choose a set of counting dates for the 9-month counting period
such that the plan or coverage has enrollees on each of the dates, if
possible. However, the enrollment count for a date during a quarter in
which the plan or coverage was in existence for only part of the
quarter could be reduced by a factor reflecting the amount of time
during the quarter for which the plan or coverage was not in existence.
This approach is intended to accurately capture the amount of time
during the quarter for which major medical coverage that is part of a
commercial book of business and subject to reinsurance contributions
was provided to enrollees, while not requiring contributions to be paid
more than once for the same covered life. For example, a contributing
entity that has a plan that terminates on August 31st (that is, 62 days
into the third quarter) would not be permitted to use September 1st as
the date for the third quarter under the snapshot count or snapshot
factor methods because this would not properly reflect the number of
covered lives of reinsurance contribution enrollees under the plan in
the third quarter of the benefit year. However, it would be entitled to
reduce its count of covered lives during that quarter by 30/92, the
proportion of the quarter during which the plan had no enrollment. This
reduction factor would only be applicable for the snapshot count and
snapshot factor methods set forth in Sec. Sec. 153.405(d)(2) and
(e)(2), respectively, as all of the other permitted counting methods
automatically account for partial year enrollment.
Comment: One commenter asked that the 2.35 factor in the snapshot
factor counting method set forth in Sec. 153.405(e)(2) be optional,
rather than required, since some plans may only cover one employee and
a spouse or only one employee and one dependent.
Response: We decline to make this change, but note that a number of
different counting methods are available and contributing entities have
flexibility to choose the one that best meets their needs and
circumstances.
h. Uniform Reinsurance Contribution Rate for 2016
Section 153.220(c) provides that HHS is to publish in the annual
HHS notice of benefit and payment parameters the uniform reinsurance
contribution rate for the upcoming benefit year. Section
1341(b)(3)(B)(iii) of the Affordable Care Act specifies that $10
billion for reinsurance contributions are to be collected from
contributing entities for the 2014 benefit year (the reinsurance
payment pool), $6 billion for the 2015 benefit year, and $4 billion for
the 2016 benefit year. Additionally, sections 1341(b)(3)(B)(iv) and
1341(b)(4) of the Affordable Care Act direct that $2 billion in funds
are to be collected for contribution to the U.S. Treasury for the 2014
benefit year, $2 billion for the 2015 benefit year, and $1 billion for
the 2016 benefit year. Finally, section 1341(b)(3)(B)(ii) of the
Affordable Care Act authorizes the collection of additional amounts for
administrative expenses. Taken together, these three components make up
the total dollar amount to be collected from contributing entities for
each of the 2014, 2015, and 2016 benefit years under the uniform
reinsurance contribution rate.
As discussed in the 2014 and 2015 Payment Notices, each year, the
uniform reinsurance contribution rate will be calculated by dividing
the sum of the three amounts (the reinsurance payment pool, the U.S.
Treasury contribution, and administrative costs) by the estimated
number of enrollees in plans that must make reinsurance contributions:
[GRAPHIC] [TIFF OMITTED] TR27FE15.003
As discussed in greater detail below, we proposed collecting $32
million for administrative expenses for the 2016 benefit year.
Therefore, the total amount to be collected for the 2016 benefit year
would be approximately $5.032 billion. Our estimate of the number of
enrollees in plans that must make reinsurance contributions yields an
annual per capita contribution rate of $27 for the 2016 benefit year.
(1) Allocation of Uniform Reinsurance Contribution Rate
Section 153.220(c) provides that HHS is to establish in the annual
HHS notice of benefit and payment parameters for the applicable benefit
year the proportion of contributions collected
[[Page 10776]]
under the uniform reinsurance contribution rate to be allocated to
reinsurance payments, payments to the U.S. Treasury, and administrative
expenses. In the 2014 and 2015 Payment Notices, we stated that
reinsurance contributions collected for the 2014 and 2015 benefit years
would be allocated pro rata to the reinsurance payment pool,
administrative expenses, and the U.S. Treasury, up to $12.02 billion
for 2014 and up to $8.025 billion for 2015. However, we amended this
approach in the 2015 Market Standards Rule,\17\ such that, if
reinsurance collections fall short of our estimates for a particular
benefit year, we will allocate reinsurance contributions collected
first to the reinsurance payment pool, with any remaining amounts being
then allocated to the U.S. Treasury and administrative expenses, on a
pro rata basis. We proposed following a similar approach for the 2016
benefit year, such that if reinsurance contributions fall short of our
estimates, contributions collected will first be allocated to the
reinsurance payment pool, with any remaining amounts being then
allocated to the U.S. Treasury and administrative expenses, on a pro
rata basis. In the proposed rule, we also proposed to use any excess
contributions for reinsurance payments for the current benefit year by
increasing the coinsurance rate for the 2016 benefit year up to 100
percent before rolling over any remaining funds to the next year and
sought comment on whether to expend all of the contributions in 2016 or
roll over any excess funds to the 2017 benefit year.
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\17\ 79 FR 30259.
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(2) Administrative Expenses
In the 2015 Payment Notice, we estimated that the Federal
administrative expenses of operating the reinsurance program would be
$25.4 million, based on our estimated contract and operational costs.
We used the same methodology to estimate the administrative expenses
for the 2016 benefit year. These estimated costs would cover the costs
related to contracts for developing the uniform reinsurance payment
parameters and the uniform reinsurance contribution rate, collecting
reinsurance contributions, making reinsurance payments, and conducting
account management, data collection, program integrity and audit
functions, operational and fraud analytics, training for entities
involved in the reinsurance program, and general operational support.
To calculate our reinsurance administrative expenses for 2016, we
divided HHS's projected total costs for administering the reinsurance
programs on behalf of States by the expected number of covered lives
for which reinsurance contributions are to be made for 2016.
We estimated this amount to be approximately $32 million for the
2016 benefit year. This estimate increased for the 2016 benefit year
due to increased audit and data validation contract costs. We believe
that this amount reflects the Federal government's significant
economies of scale, which helps to decrease the costs associated with
operating the reinsurance program. Based on our estimate of covered
lives for which reinsurance contributions are to be made for 2016, we
proposed a uniform reinsurance contribution rate of $0.17 annually per
capita for HHS administrative expenses. We provide details below on the
methodology we used to develop the 2016 enrollment estimates.
Similar to the allocation for 2015, for the 2016 benefit year,
administrative expenses are allocated equally between contribution and
payment-related activities. Because we anticipate that our additional
activities in the 2016 benefit year, including our program integrity
and audit activities, will also be divided approximately equally
between contribution and payment-related activities, we again proposed
to allocate the total administrative expenses equally between these two
functions. Therefore, as shown in Table 9, we will apportion the annual
per capita amount of $0.17 of administrative expenses as follows: (a)
$0.085 of the total amount collected per capita for administrative
expenses for the collection of contributions from contributing
entities; and (b) $0.085 of the total amount collected per capita for
administrative expenses for reinsurance payment activities, supporting
the administration of payments to issuers of reinsurance-eligible
plans.
Table 9--Breakdown of Administrative Expenses
[Annual, per capita]
------------------------------------------------------------------------
Estimated
Activities expenses
------------------------------------------------------------------------
Collecting reinsurance contributions from health $0.085
insurance issuers and certain self-insured group health
plans..................................................
Calculation and disbursement of reinsurance payments.... 0.085
---------------
Total annual per capita administrative expenses for 0.17
HHS to perform all reinsurance functions...........
------------------------------------------------------------------------
If HHS operates the reinsurance program on behalf of a State, HHS
would retain the annual per capita fee to fund HHS's performance of all
reinsurance functions, which would be $0.17. If a State establishes its
own reinsurance program, HHS would transfer $0.085 of the per capita
administrative fee to the State for purposes of administrative expenses
incurred in making reinsurance payments, and retain the remaining
$0.085 to offset HHS's costs of collecting contributions. We note that
the administrative expenses for reinsurance payments will be
distributed to those States that operate their own reinsurance program
in proportion to the State-by-State total requests for reinsurance
payments made under the uniform reinsurance payment parameters.
We are finalizing the 2016 contribution rate as proposed and
finalizing our policy to increase the 2016 coinsurance rate to 100
percent prior to rolling over any excess funds to 2017.
Comment: Several commenters supported our proposal to increase the
2016 coinsurance rate to 100 percent if collections exceed the requests
for reinsurance payments. Some commenters further supported rolling
over any excess collections to 2017 if excess funds remain after
increasing the coinsurance rate to 100 percent, while other commenters
disagreed with our proposal to roll over the excess funds to 2017
asking that HHS instead increase the reinsurance cap in 2016 to expend
all contributions collected in 2016.
Response: We will continue with our policy to increase the
coinsurance rate to 100 percent for the 2016 benefit year
[[Page 10777]]
in the event collections exceed the requests for reinsurance payments.
If additional funds remain after the increase in the coinsurance rate
to 100 percent, we will roll over the excess funds to 2017 to extend
the premium stabilization effects of the program.
i. Uniform Reinsurance Payment Parameters for 2016
Section 1341(b)(2)(B) of the Affordable Care Act directs the
Secretary, in establishing standards for the transitional reinsurance
program, to include a formula for determining the amount of reinsurance
payments to be made to issuers for high-risk individuals that provides
for the equitable allocation of funds. In the Premium Stabilization
Rule, we provided that reinsurance payments to eligible issuers will be
made for a portion of an enrollee's claims costs paid by the issuer
(the coinsurance rate, meant to reimburse a proportion of claims while
giving issuers an incentive to contain costs) that exceeds an
attachment point (when reinsurance would begin), subject to a
reinsurance cap (when the reinsurance program stops paying claims for a
high-cost individual). The coinsurance rate, attachment point, and
reinsurance cap together constitute the uniform reinsurance payment
parameters.
Given the smaller pool of reinsurance contributions to be collected
for the 2016 benefit year, we proposed that the uniform reinsurance
payment parameters for the 2016 benefit year be established at an
attachment point of $90,000, a reinsurance cap of $250,000, and a
coinsurance rate of 50 percent. We estimated that these uniform
reinsurance payment parameters will result in total requests for
reinsurance payments of approximately $4 billion for the 2016 benefit
year. We believe setting the coinsurance rate at 50 percent and
increasing the attachment point allows for the reinsurance program to
help pay for nearly the same group of high-cost enrollees as was the
case for the 2014 and 2015 benefit years, while still encouraging
issuers to contain costs.
As discussed in the 2014 and 2015 Payment Notices, to assist with
the development of the uniform reinsurance payment parameters and the
premium adjustment percentage index, HHS developed the Affordable Care
Act Health Insurance Model (ACAHIM). The ACAHIM generates a range of
national and State-level outputs for 2016, using updated assumptions
reflecting more recent data, but using the same methodology described
in the 2014 and 2015 Payment Notices.\18\
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\18\ See the proposed 2014 Payment Notice (77 FR 73160) and the
proposed 2015 Payment Notice (78 FR 72344) for more information on
the ACAHIM methodology.
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Specifically, the ACAHIM uses the Health Intelligence Company, LLC
(HIC) database from calendar year 2010, with the claims data trended to
2016 to estimate total medical expenditures per enrollee by age,
gender, and area of residence. The expenditure distributions are
further adjusted to take into account plan benefit design, or ``metal''
level (that is, ``level of coverage,'' as defined in Sec. 156.20) and
other characteristics of individual insurance coverage in an Exchange.
To describe a State's coverage market, the ACAHIM computes the pattern
of enrollment using the model's predicted number and composition of
participants in a coverage market. These estimated expenditure
distributions were the basis for the uniform reinsurance payment
parameters.
We are finalizing the 2016 payment parameters as proposed.
Comment: Several commenters supported the proposed 2016 uniform
reinsurance payment parameters. One commenter asked that HHS consider
when setting the parameters that some issuers are unable to obtain
commercial reinsurance and therefore are left unprotected from large
losses.
Response: We are finalizing the 2016 uniform reinsurance payment
parameters as proposed, and as we explained above and in the 2014 and
2015 Payment Notices, these parameters are set in an effort not to
interfere with commercial reinsurance, although we understand not all
issuers can obtain commercial reinsurance. Additionally, we believe
that maintaining the reinsurance cap for the 2016 benefit year while
ensuring that the coinsurance rate sufficiently compensates issuers for
high-risk individuals will make it easier for issuers to estimate the
effects of reinsurance.
Comment: Several commenters asked that HHS not change the uniform
reinsurance payment parameters for 2016 finalized in this rule in
subsequent rulemaking.
Response: We are finalizing the 2016 uniform payment parameters as
proposed, and do not intend to make any future adjustments to these
parameters.
j. Uniform Reinsurance Payment Parameters for 2015
In the proposed rule, we proposed lowering the 2015 attachment
point from $70,000 to $45,000 as this would allow the reinsurance
program to make more payments for high-cost enrollees in individual
market reinsurance-eligible plans without increasing the contribution
rate. We did not propose to adjust the 2015 coinsurance rate of 50
percent or reinsurance cap of $250,000.
We are finalizing the reduction of the 2015 attachment point to
$45,000 as proposed.
Comment: Some commenters supported our proposal to lower the 2015
attachment point to $45,000. Other commenters disagreed with our
proposal to lower the 2015 attachment point, noting that this change
would affect premium rates already submitted. One commenter noted that
lowering the attachment point would result in lower MLRs, requiring
issuers to rebate excess funds. Additionally, some noted that changing
the 2015 payment parameters at this point could interfere with any
State supplemental reinsurance program that depends on the national
reinsurance payment parameters.
Response: In the 2015 Market Standards Rule,\19\ we signaled our
intention to propose to lower the 2015 attachment point from $70,000 to
$45,000 for the 2015 benefit year in an effort to notify issuers of
this change in advance of rate settings for 2015 coverage.
Additionally, we believe that lowering the attachment point to $45,000
will further the premium stabilization effects of the program in 2015
as more individuals enroll in non-grandfathered, individual market
plans that are compliant with Sec. Sec. 147.102, 147.104 (subject to
Sec. 147.145), 147.106 (subject to Sec. 147.145), 156.80, and subpart
B of part 156 than in 2014.
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\19\ 79 FR 30259.
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k. Deducting Cost-Sharing Reduction Amounts From Reinsurance Payments
We proposed to modify the methodology finalized in the 2015 Payment
Notice (79 FR 13780) regarding the deduction of cost-sharing reduction
amounts from reinsurance payments. Under Sec. 156.410, if an
individual is determined eligible to enroll in an individual market
Exchange QHP and elects to do so, the QHP issuer must assign the
individual to a standard plan or cost-sharing plan variation based on
the enrollment and eligibility information submitted by the Exchange.
Issuers of individual market Exchange QHPs will receive cost-sharing
reduction payments for enrollees who have effectuated coverage in cost-
sharing plan variations. To avoid double payment by the Federal
government, we indicated in the 2014 Payment Notice
[[Page 10778]]
(78 FR 15499) that the enrollee-level claims data submitted by an
issuer of a reinsurance-eligible plan should be net of cost-sharing
reductions provided through a cost-sharing plan variation (which are
reimbursed by the Federal government).
In the 2015 Payment Notice (79 FR 13780), we explained the
methodology HHS will use to deduct the amount of cost-sharing
reductions paid on behalf of an enrollee enrolled in a QHP in an
individual market through an Exchange. For each enrollee enrolled in a
QHP plan variation,\20\ we will subtract from the QHP issuer's total
plan paid amounts for the enrollee in a reinsurance-eligible plan the
difference between the annual limitation on cost sharing for the
standard plan and the annual limitation on cost sharing for the plan
variation. For policies with multiple enrollees, such as family
policies, we stated we would allocate the difference in annual
limitation in cost sharing across all enrollees covered by the family
policy in proportion to the enrollees' QHP issuer total plan paid
amounts.
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\20\ Except for limited cost-sharing plan variations, for which
we stated we would not reduce the QHP issuer's plan paid amounts.
---------------------------------------------------------------------------
We also stated that for an enrollee who is assigned to different
plan variations during the benefit year, we would calculate the
adjustment for cost-sharing reductions based on the annual limitation
on cost sharing applicable to the plan variation in which the enrollee
was last enrolled during the benefit year, because cost sharing
accumulates over the benefit year across plan variations of the same
standard plan. We proposed a modification to this particular policy.
Specifically, if an enrollee is assigned to different plan
variations during the benefit year, we proposed to calculate the
adjustment for cost-sharing reductions based on the difference between
the annual limitation on cost sharing for the standard plan and the
average annual limitation on cost sharing in the plan variations
(including any standard plan), weighted by the number of months the
enrollee is enrolled in each plan variation during the benefit
year.\21\
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\21\ We did not propose any changes to the approach finalized in
the 2015 Payment Notice with respect to the QHP issuer's plan paid
amounts for purposes of calculating reinsurance payments for an
Indian in a limited cost-sharing plan variation.
---------------------------------------------------------------------------
We are finalizing this proposal as proposed.
Comment: Several commenters stated that our proposed modification
was too complex, and would increase the burden on issuers to make
additional calculations and data system enhancements.
Response: We believe that our modified approach will permit HHS to
more accurately allocate the difference in annual limitations in a
family policy to individual family members when a member exits or
enters the policy mid-year, or if there are other changes in
circumstances that impact the cost-sharing reductions provided to
enrollees covered by the family policy. We will continue to work with
issuers and provide technical support to help with the updates to the
calculations and data system enhancements that may be necessary.
4. Provisions for the Temporary Risk Corridors Program
a. Application of the Transitional Policy Adjustment in Early Renewal
States
On November 14, 2013, the Federal government announced a
transitional policy under which it will not consider certain health
insurance coverage in the individual or small group markets that is
renewed for a policy year starting after January 1, 2014, under certain
conditions to be out of compliance with specified 2014 market rules,
and requested that States adopt a similar non-enforcement
policy.22 23 In the 2015 Payment Notice, HHS implemented an
adjustment to the administrative cost ceiling and profit floor of the
risk corridors formula for the 2014 benefit year to help further offset
losses that might occur under the transitional policy as a result of
increased claims costs not accounted for when setting 2014 premiums.
Because we believe that the Statewide effect on the risk pool in States
that adopted the Federal transitional policy would increase with an
increase in the percentage enrollment in transitional plans in the
State, we stated that we would vary the State-specific percentage
adjustment to the risk corridors formula with the percentage of member-
months enrollment in these transitional plans in the State.\24\
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\22\ Letter to Insurance Commissioners, Center for Consumer
Information and Insurance Oversight, November 14, 2013. Available
at: https://www.cms.gov/CCIIO/Resources/Letters/Downloads/commissioner-letter-11-14-2013.PDF.
\23\ HHS extended the transitional policy on March 5, 2014,
permitting issuers to renew transitional policies through policy
years beginning on or before October 1, 2016.
\24\ As stated in the 2015 Payment Notice, HHS will calculate
the amount of the adjustment that applies to each State based on the
State's member-month enrollment count for transitional plans and
non-transitional plans in the individual and small group markets.
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In response to stakeholder questions, we proposed to clarify in the
2016 Payment Notice that the transitional adjustment applies only for
plans under the transitional policy--that is, plans that renew after
January 1, 2014 for which HHS and the applicable State are not
enforcing market rules. We proposed to further clarify that member-
months of enrollees in early renewal plans would not be counted towards
the risk corridors transitional policy adjustment (that is, unless and
until the plan becomes a transitional plan in a transitional State upon
renewal in 2014).\25\ We are finalizing this clarification as proposed,
and are maintaining the policy previously finalized in the 2015 Payment
Notice under Sec. 153.500 and Sec. 153.530 without modification.
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\25\ Sec. 153.530 sets forth the data requirements for this
information collection. HHS published 60-day and 30-day notices in
the Federal Register, providing the public with an opportunity to
submit written comments on the information collection. The data
collection is approved under OMB Control Number 0938-1267.
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Comment: Several commenters recommended that HHS modify our policy
to include the experience of early renewal plans. One commenter
suggested that HHS include early renewals in the adjustment because our
announcement did not occur until November 11, 2013, which was too late
to be reflected in the rates that were finalized in July 2013. Another
commenter requested that HHS modify its policy to accommodate issuers
in States that decided to allow early renewals after the announcement
of the transitional policy.
Response: We believe that issuers were aware of State policy for
early renewals when they set their 2014 rates; moreover, the
transitional policy adjustment was intended to address the Federal
transitional policy, not State early renewal policies. Under our
current policy, HHS counts months occurring after an early renewal plan
becomes a transitional plan when we calculate the transitional
adjustment for each State. We believe that this approach for counting
member months towards the risk corridors transitional adjustment is
consistent with the intent of the transitional policy adjustment set
forth in the 2015 Payment Notice.
Comment: One commenter suggested that the transitional adjustment
be applied to the risk corridors calculation for the entire market for
2014, not just in markets where the transitional policy is in effect.
Another commenter requested that HHS implement the transitional
adjustment in a manner that does not disadvantage States that did not
adopt the Federal transitional policy for 2014.
[[Page 10779]]
Response: We are maintaining the policy finalized in the 2015
Payment Notice under Sec. 153.500 and Sec. 153.530, which provides,
for 2014, that the effect of the transitional adjustment will vary
according to the member-month enrollment in a State, such that the 3
percent profit floor and 20 percent allowable administrative cost
ceiling will apply in States that did not adopt the Federal
transitional policy (QHP issuers in these States will receive a risk
corridors transitional adjustment equal to zero). We believe that
issuers in States that did not adopt the Federal transitional policy
will not require the transitional adjustment to help mitigate
mispricing that may have occurred due to unexpected changes in the risk
pool resulting from the Federal transitional policy. We note that the
adjustment will account for the effect of the Federal transitional
policy in the entire market within a State that adopted the
transitional policy, such that a QHP issuer in a transitional State
will be eligible to receive an adjustment to its risk corridors
calculation even if the issuer has not issued transitional policies.
b. Risk Corridors Payments for 2016
On April 11, 2014, we issued a bulletin titled ``Risk Corridors and
Budget Neutrality,'' which described how we intend to administer risk
corridors over the 3-year life of the program.\26\ Specifically, we
stated that if any risk corridors funds remain after prior and current
year payment obligations have been met, they will be held to offset
potential insufficiencies in risk corridors collections in the next
year. We also stated that we would establish in future guidance how we
would calculate risk corridors payments in the event that cumulative
risk corridors collections do not equal cumulative risk corridors
payment requests.
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\26\ The Centers for Medicare and Medicaid Services, Center for
Consumer Information and Insurance Oversight. ``Risk Corridors and
Budget Neutrality,'' April 11, 2014. Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/faq-risk-corridors-04-11-2014.pdf.
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In the proposed 2016 Payment Notice, we proposed that if, for the
2016 benefit year, cumulative risk corridors collections exceed
cumulative risk corridors payment requests, we would make an adjustment
to our administrative expense definitions (that is, the profit margin
floor and the ceiling for allowable administrative costs) to account
for the excess funds. That is, if, when the risk corridors program
concludes, cumulative risk corridors collections exceed both 2016
payment requests under the risk corridors formula and any unpaid risk
corridors amounts from previous years, we would increase the
administrative cost ceiling and the profit floor in the risk corridors
formula by a percentage calculated to pay out all collections to QHP
issuers. The administrative cost ceiling and the profit floor would be
adjusted by the same percentage.
We proposed to determine the percentage adjustment to the
administrative cost ceiling and profit margin floor by evaluating the
amount of excess risk corridors collections (if any) available after
risk corridors payments for benefit year 2016 have been calculated. As
stated in our bulletin on risk corridors and budget neutrality, after
receiving charges from issuers for the 2016 benefit year, we would
first prioritize payments to any unpaid risk corridors payments
remaining from the 2015 benefit year. We would then calculate benefit
year 2016 risk corridors payments for eligible issuers based on the 3
percent profit floor and 20 percent allowable administrative cost
ceiling, as required by regulation. If, after making 2015 payments and
calculating (but not paying) risk corridors payments for benefit year
2016, we determine that the aggregate amount of collections (including
any amounts collected for 2016 and any amounts remaining from benefit
years 2014 and 2015) exceed what is needed to make 2016 risk corridors
payments, we would implement an adjustment to the profit floor and
administrative cost ceiling to increase risk corridors payments for
eligible issuers for benefit year 2016. We would examine data that
issuers have submitted for calculation of their 2016 risk corridors
ratios (that is, allowable costs and target amount) and determine,
based on the amount of collections available, what percentage increase
to the administrative cost ceiling and profit floor could be
implemented for eligible issuers while maintaining budget neutrality
for the program overall. Although all eligible issuers would receive
the same percentage adjustment, we proposed that the amount of
additional payment made to each issuer would vary based on the issuer's
allowable costs and target amount. We proposed that, once HHS
calculated the adjustment and applied it to eligible issuers' risk
corridors formulas, it would make a single risk corridors payment for
benefit year 2016 that would include any additional, adjusted payment
amount.
Because risk corridors collections are a user fee to be used to
fund premium stabilization under risk corridors and no other programs,
we proposed to limit this adjustment to excess amounts collected. We
also proposed to apply this adjustment to allowable administrative
costs and profits for the 2016 benefit year only to plans whose
allowable costs (as defined at Sec. 153.500) are at least 80 percent
of their after-tax premiums, because issuers under this threshold would
generally be required to pay out MLR rebates to consumers.\27\ For
plans whose ratio of allowable costs to after-tax premium is below 80
percent, we proposed that the 3 percent risk corridors profit margin
and 20 percent allowable administrative cost ceiling would continue to
apply. Furthermore, we proposed that, to the extent that applying the
proposed adjustment to a plan could increase its risk corridors payment
and affect its MLR calculation, the MLR calculation would ignore these
adjustments.
---------------------------------------------------------------------------
\27\ Because of some differences in the MLR numerator and the
definition of allowable costs that applies with respect to the risk
corridors formula, in a small number of cases, an issuer with
allowable costs that are at least 80 percent of after-tax premium,
may be required to pay MLR rebates to consumers.
---------------------------------------------------------------------------
As previously stated, we anticipate that risk corridors collections
will be sufficient to pay for all risk corridors payments. HHS
recognizes that the Affordable Care Act requires the Secretary to make
full payments to issuers. In the unlikely event that risk corridors
collections, including any potential carryover from the prior years,
are insufficient to make risk corridors payments for the 2016 program
year, HHS will use other sources of funding for the risk corridors
payments, subject to the availability of appropriations.
We are finalizing this policy as proposed.
Comment: We received one comment on the proposed approach for
allocating excess risk corridors collections at the end of the program.
The commenter supported our approach. Another commenter supported
language in the proposed Payment Notice that reaffirmed HHS's
commitment to make full risk corridors payments if collections are
insufficient to fund payments.
Response: We are finalizing the policy regarding allocation of
excess risk corridors collections for 2016 as proposed.
[[Page 10780]]
5. Distributed Data Collection for the HHS-Operated Risk Adjustment and
Reinsurance Programs
a. Good Faith Safe Harbor (Sec. 153.740(a))
In the second Program Integrity Rule,\28\ HHS finalized a good
faith safe harbor policy which provided that civil money penalties
(CMPs) will not be imposed for non-compliance with the HHS-operated
risk adjustment and reinsurance data requirements during 2014, if the
issuer has made good faith efforts to comply with these
requirements.\29\ That safe harbor parallels a similar safe harbor for
QHP issuers in FFEs under Sec. 156.800.
---------------------------------------------------------------------------
\28\ 78 FR 65046.
\29\ We note that HHS also clarified in a March 28, 2014 FAQ
that CMPs would not be imposed on an issuer for non-compliance
during the 2014 calendar year, if the issuer made good efforts to
comply with these requirements. See, FAQ 1212, published March 28,
2014. Available at: https://www.regtap.info/faq_viewu.php?id=1212.
---------------------------------------------------------------------------
We proposed to amend Sec. 153.740(a) to extend the safe harbor for
non-compliance with the HHS-operated risk adjustment and reinsurance
data requirements during the 2015 calendar year if the issuer has made
good faith efforts to comply with these requirements. This proposal
acknowledged that the distributed data collection requirements have
been the subject of modifications through the 2014 calendar year,
including the introduction of cloud-based virtual options for the
distributed data environment. We note that good faith efforts could
include notifying, communicating with, and cooperating with HHS for
issues that arise with the establishment and provisioning of the
issuers' dedicated distributed data environment.
The extension of this good faith safe harbor would not affect HHS's
ability to assess issuers of risk adjustment covered plans a default
risk adjustment charge under Sec. 153.740(b).\30\ Additionally, we
noted that the good faith safe harbor would not apply to non-compliance
with dedicated distributed data environment standards applicable during
2016, even if the non-compliance in the 2016 calendar year relates to
data for the 2015 benefit year. For example, the data loading schedule
applicable to the 2015 benefit year for risk adjustment and reinsurance
data extends into the 2016 calendar year (the final loading deadline is
April 30, 2016). Therefore, the good faith safe harbor would not apply
to non-compliance with the dedicated distributed data environment
standards applicable during 2016.
---------------------------------------------------------------------------
\30\ According to Sec. 153.740(b), if an issuer of a risk
adjustment covered plan fails to establish a dedicated distributed
data environment or fails to provide HHS with access to the required
data in such environment in accordance with Sec. 153.610(a), Sec.
153.700, Sec. 153.710, or Sec. 153.730 such that HHS cannot apply
the applicable Federally certified risk adjustment methodology to
calculate the risk adjustment payment transfer amount for the risk
adjustment covered plan in a timely fashion, HHS will assess a
default risk adjustment charge.
---------------------------------------------------------------------------
Comment: Several commenters supported our proposal to extend the
good faith safe harbor to the 2015 benefit year. The commenters asked
that we clarify that the safe harbor extension would apply to conduct
that occurred in a covered year (2014 or 2015) regardless of when an
enforcement action is initiated. These commenters also asked that the
good faith safe harbor apply for any risk adjustment or reinsurance
data requirements that apply to the 2015 benefit year, even if the data
is reported in 2016.
Response: As we clarified in the 2015 Payment Notice (79 FR 13791),
HHS will not impose CMPs for noncompliance for dedicated distributed
data environment standards for the 2014 benefit year, if the issuer
attempted in good faith to comply, simply by waiting until 2015 to
initiate the enforcement action. We will follow the same approach with
respect to the extension of the good faith safe harbor through the 2015
calendar year. However, the good faith safe harbor will not apply to
non-compliance with dedicated distributed data environment standards
applicable during the 2016 calendar year, even if the non-compliance in
2016 relates to data for the 2015 benefit year.
Comment: One commenter asked that we extend the good faith safe
harbor to 2016.
Response: We are not extending the good faith compliance safe
harbor to 2016.
b. Default Risk Adjustment Charge (Sec. 153.740(b))
In the second Program Integrity Rule and the 2015 Payment Notice,
HHS indicated that a default risk adjustment charge will be assessed if
an issuer does not establish a dedicated distributed data environment
or submits inadequate risk adjustment data. However, we did not
establish how the money collected from the default charge will be
allocated among risk adjustment covered plans.
We proposed to allocate collected per member per month default
charge funds proportional to each plan's relative revenue requirement,
the product of PLRS*IDF*GCF (Plan Liability Risk Score * Induced Demand
Factor * Geographic Cost Factor) relative to the market average of
these products, across all risk adjustment covered plans in the market
in the State. This approach would allocate funds proportionally to a
plan's enrollment, adjusted for factors such as health risk, actuarial
value, and geographic cost differences. This approach would also
allocate the default charge funds in accordance with plans' expected
revenue requirements as calculated in the transfer formula. By
contrast, an approach that allocates risk adjustment default charge
funds in accordance with enrollment or premiums, for example, would
favor plans with lower metal levels, low risk selection, or lower
geographic costs.
This allocation would occur only in risk adjustment markets with at
least one noncompliant plan, and these steps would be used to calculate
each compliant plan's allocation of the default charges collected from
the noncompliant plan(s). We would calculate risk transfers among the
compliant plans only and exclude all data from noncompliant plans.
Using the same inputs of the compliant plans as used in the transfer
formula, we would calculate the distribution of default charges paid by
noncompliant plans among the compliant plans using the following
formula:
[GRAPHIC] [TIFF OMITTED] TR27FE15.004
Where:
DCi is the total amount of default charges allocated to plan i;
``Total default charges collected'' is the sum, in dollars,
collected from all noncompliant plans (aggregate dollars, that is,
not on a per member per month basis);
Other terms are as defined in the usual risk transfer calculations,
and restricted to
[[Page 10781]]
compliant plans only (si = plan i's share of State enrollment; PLRSi
= plan i's plan liability risk score, IDFi = plan i's induced demand
factor, GCFi = plan i's geographic cost factor);
and i indexes compliant plans, and the summation in the denominator
is over compliant plans only.
Comment: One commenter agreed with the proposed allocation of
default risk adjustment charges to risk adjustment compliant plans,
noting that it provides an equitable distribution of default risk
adjustment charges.
Response: We are finalizing the allocation of default risk
adjustment charges as proposed.
c. Information Sharing (Sec. 153.740(c))
In Sec. 153.740, we established the enforcement remedies available
to HHS for an issuer of a risk adjustment covered plan or a
reinsurance-eligible plan's failure to comply with HHS-operated risk
adjustment and reinsurance data requirements. Consistent with the
policy set forth at Sec. 156.800(d), as finalized in the 2015 Market
Standards Rule,\31\ we proposed adding paragraph (c) to clarify that
HHS may consult with and share information about issuers of a risk
adjustment covered plan or a reinsurance-eligible plan with other
Federal and State regulatory and enforcement entities to the extent
that the consultation or information is necessary for HHS to determine
whether an enforcement remedy against the issuer of the risk adjustment
covered plan or reinsurance-eligible plan under Sec. 153.740 is
appropriate. For example, HHS may consult other Federal and State
regulatory and enforcement entities to identify issuers within a State
that have failed to establish a dedicated distributed data environment.
No personally identifiable information would be transferred as part of
such a consultation.
---------------------------------------------------------------------------
\31\ 79 FR 30240.
---------------------------------------------------------------------------
We received no comments on this proposal. We are finalizing this
provision as proposed.
D. Part 154--Health Insurance Issuer Rate Increases: Disclosure and
Review Requirements
1. General Provisions
In the proposed rule, we proposed several modifications to enhance
the transparency and effectiveness of the rate review program under
part 154. These provisions were proposed to apply generally beginning
with rates filed in 2015 for coverage effective on or after January 1,
2016. We requested comment on whether the proposal provides States and
issuers sufficient time to transition to the new rate review
requirements.
Comment: While some commenters believed the proposed timeframe was
adequate, others suggested that issuers would not have sufficient time
to implement the requirements to meet deadlines for the 2015 filing
year. Some commenters noted it would take time for HHS to modify the
Unified Rate Review Template (URRT) to accommodate the new plan-level
trigger under proposed Sec. 154.200(c). Commenters recommended the
plan-level requirements not apply until the 2016 filings for plan years
beginning in 2017.
Response: In response to comments, to provide adequate time to make
necessary adjustments to the URRT, the revised definition of ``rate
increase'' and plan-level trigger under Sec. Sec. 154.102 and
154.200(c) of this final rule will apply beginning with rates filed in
2016 for coverage effective on or after January 1, 2017. The uniform
rate review and disclosure timelines under Sec. Sec. 154.220 and
154.301 of this final rule will apply beginning with rates filed in
2015 for coverage effective on or after January 1, 2016. As discussed
below, the individual market annual open enrollment period for the 2016
benefit year will not begin until November 1, 2015, which provides
additional time to meet the filing deadlines for 2016 rates.
a. Definitions (Sec. 154.102)
Under Sec. 154.102, we set forth definitions of terms that are
used throughout part 154. We proposed adding a new definition of
``plan'' and revising the definitions of ``individual market,'' ``small
group market,'' and ``State.'' For the most part, these terms would
have the meaning given such terms in Sec. 144.103. For a discussion of
the terms ``plan'' and ``State,'' please see the preamble for Sec.
144.103 in this final rule.
We also proposed to modify the definition of ``rate increase.'' The
revisions would conform with our proposal in Sec. 154.200 to consider
rate increases at the plan-level when determining whether a rate
increase is subject to review.
We did not receive comments on the definitions of ``individual
market,'' ``small group market,'' and ``rate increase.'' We are
finalizing these revisions as proposed, except that the revised
definition of ``rate increase'' has been modified to clarify that the
changes made to conform with the proposal in Sec. 154.200 will apply
for rates filed for coverage effective on or after January 1, 2017. The
other definitions will apply for rates filed for coverage effective on
or after January 1, 2016.
Comment: Several commenters did not agree with our proposal to
apply the definition of ``plan'' in the context of the rate review
program. The commenters expressed concern that this would add
complexity and create delays to the product filing and review process.
Response: Because this final rule establishes a trigger for review
of rate increases at the plan level, we are adopting the definition of
``plan'' at Sec. 144.103 of this final rule for purposes of the rate
review requirements under part 154. While changing to a plan-level
trigger may increase the number of rate filings subject to review, we
believe doing so will more accurately reflect consumer expectations for
the rate review program. We note that nothing in this final rule
changes the scope of issuer rate filings, which will continue to be
submitted at the product level.
2. Disclosure and Review Provisions
a. Rate Increases Subject to Review (Sec. 154.200)
In Sec. 154.200, we proposed modifications to the standards for
rate increases that are subject to review. In paragraphs (a)(1) and
(2), we proposed technical corrections to clarify that rate increases
are applicable to a 12-month period that begins on January 1 rather
than September 1 of each year.
In paragraph (c), we proposed that rate increases would be
calculated at the plan level (as opposed to the product level) when
determining whether an increase is subject to review. Under this
approach, if any plan within a product in the individual or small group
market experiences an increase in the plan-adjusted index rate (as
described in Sec. 156.80) that meets or exceeds the applicable
threshold (either 10 percent or a State-specific threshold), the entire
product would be subject to review to determine whether the rate
increase is unreasonable. This proposal was intended to ensure that a
plan that experiences a significant rate increase could not avoid
review simply because the average increase for the product did not meet
or exceed the applicable threshold.
We sought comment on all aspects of these proposals, including the
benefits and costs to States of carrying out the plan-level trigger for
review.
Comment: We received comments that suggested some confusion as to
whether rate increases would be reviewed at the product level or the
plan level when determining whether an increase is an unreasonable rate
increase.
[[Page 10782]]
Response: We clarify that the plan-level threshold under this final
rule is simply a trigger for review. The review will continue to occur,
as it does today, at the product level, taking into account the
combined experience of the plans within the product.
Comment: Many commenters supported the proposal to apply the
trigger for review at the plan level, suggesting it better reflected
the intent of Congress to protect consumers against unreasonable rate
increases. Other commenters opposed the proposal and urged HHS to
retain the current product-level trigger for review. Many of these
commenters were concerned that the proposed rule would significantly
increase the number of rate filings subject to review, placing greater
burden on State regulators and increasing administrative cost to
issuers. Several commenters additionally stated the plan-level trigger
is inappropriate because plan-level rates vary naturally due to common
market factors, such as provider contracting and deductible leveraging.
Multiple other commenters urged us to lower the threshold for review--
for example, tying it to growth in national health expenditures. One
commenter suggested maintaining a 10 percent threshold at the product
level and applying a 20 percent threshold at the plan level.
Response: Because consumers are affected by rate increases at the
plan level, we believe that increases for the plan, not the product,
should be the trigger for determining whether an increase is subject to
review. We acknowledge the concerns about burden, but believe the
consumer protection benefits of this policy outweigh the costs and
further the intent of section 2794 of the PHS Act to protect consumers
against unreasonable rate increases. Therefore, we are finalizing the
trigger for determining whether an increase is subject to review based
on rate increases at the plan level. However, as noted above, we are
modifying the final rule to apply this change effective for rates filed
for coverage beginning on or after January 1, 2017. We have updated the
regulation text at Sec. 154.200(a) to maintain the current trigger for
determining whether the increase is subject to review for rates filed
for coverage effective before January 1, 2017. HHS will continue to
collect and review available data on trends in rate and medical
increases in assessing whether to modify the 10 percent threshold for
review.
Comment: One commenter recommended considering not only increases
in the plan-adjusted index rate, but also changes in premium rating
factors including those for geography and tobacco use.
Response: We interpret section 2794 of the PHS Act as requiring the
Secretary to establish a process for the annual review of unreasonable
increases in the underlying rates that are used to develop the
premiums, as opposed to the actual premiums themselves (75 FR 81009).
Therefore, the final rule considers only increases in the plan-adjusted
index rate described in Sec. 156.80 rather than the premium rating
factors described in Sec. 147.102. We note that nothing in this
regulation prevents a State from reviewing other aspects of an
insurance rate filing, including premium rating factors.
b. Submission of Rate Filing Justification (Sec. 154.215)
In Sec. 154.215(a), we proposed a technical correction to clarify
that issuers must submit a rate filing justification for all products
in the issuer's single risk pool when ``any plan within a product'' in
the individual or small group market is subject to a rate increase.
This is true regardless of whether the rate increase meets or exceeds
the subject to review threshold. We proposed this clarification take
effect with the effective date of the final rule. We are finalizing
this clarification as proposed.
Comment: Some commenters encouraged HHS to clarify throughout Sec.
154.215 that issuers must justify rate increases at the plan level, in
addition to justifying them at the product level.
Response: The final rule does not adopt this suggestion. Because
rate increases that are subject to review are reviewed at the product
level, issuers will likewise submit the rate filing justification at
the product level rather than the plan level.
c. Timing of Providing the Rate Filing Justification (Sec. 154.220)
To provide consistency and transparency in the rate submission
process, ensure a more meaningful opportunity for public review and
comment, and reduce the opportunity for anti-competitive behavior, we
proposed to modify Sec. 154.220 to establish a uniform timeline by
which health insurance issuers must submit to CMS or the applicable
State a completed rate filing justification for proposed rate
increases--for both QHPs and non-QHPs--in the individual and small
group markets. Under the proposed rule, the issuer would be required to
submit the justification by the earlier of the following: (1) The date
by which the State requires a proposed rate increase to be filed with
the State; or (2) the date specified by the Secretary in guidance. We
suggested that we were considering specifying a deadline to coincide
with the end of the QHP application window for the FFE. States would
have flexibility to impose earlier rate filing deadlines to meet their
specific State needs. We sought comment on this proposal.
We are finalizing these provisions as proposed. We intend to
specify the submission deadline for the 2015 filing year in forthcoming
guidance.
Comment: We received many comments regarding the proposal to
establish a uniform rate filing timeline. Commenters who supported the
proposal generally agreed it would increase transparency and encourage
public participation in the rate review process. Commenters also viewed
the common submission deadline for both QHP and non-QHP rate filings as
a positive step to protect against shadow pricing among competing
issuers and create a level playing field inside and outside the
Exchange.
Commenters who opposed the proposal were concerned that the HHS
deadline would not provide issuers sufficient time to collect claims
data and appropriately develop rates for the upcoming benefit year.
Commenters also expressed concern that requiring rates for QHPs and
non-QHPs to be submitted at the same time would impose an increased
workload on State regulators, making it difficult to conduct thorough
reviews and potentially creating delays in the review and approval
process. Many commenters objected to a nationally uniform rate review
timeline and urged State flexibility to set their own filing deadlines,
particularly in States with effective rate review programs and States
that operate their own Exchanges. Some commenters believed it would be
sufficient for HHS to simply establish a deadline for States to
complete their reviews.
Several commenters remarked on the specific deadline for rate
filing submissions. One commenter recommended HHS establish a rate
filing deadline of no sooner than May 15, while another commenter
recommended a mid-summer deadline. Another commenter recommended that
issuers have 90 days after the end of the FFE QHP application window to
prepare the rate filing justification. Some commenters asserted that
the filing deadline must accommodate a sufficient public comment
period.
One commenter suggested that grandfathered and transitional plans
should not be subject to the same filing deadlines as single risk pool
compliant
[[Page 10783]]
plans. Finally, some commenters recommended the NAIC convene a
workgroup to make recommendations to HHS regarding the rate review
timeline.
Response: We believe the rate review process should be both
predictable and transparent. To achieve this objective, we believe it
is necessary to establish a uniform submission deadline for issuers to
submit proposed rate increases for single risk pool coverage in the
individual and small group markets. Therefore, we are finalizing
proposed Sec. 154.220 authorizing the Secretary to establish in
guidance the deadline for issuers to submit the rate filing
justification for proposed rate increases for both QHPs and non-QHPs in
the individual and small group markets. We will carefully consider
commenters' suggestions and consult with the NAIC and other interested
parties when developing such guidance which we expect to issue soon. We
anticipate the deadline will provide issuers adequate time to develop
rates and afford States and the public the necessary time for review.
We note that States retain significant flexibility to stage the
timing of their reviews consistent with this final rule. This could
include establishing filing deadlines prior to the HHS deadline,
staggering the submission of forms and rates, or establishing varying
deadlines for the individual and small group markets.
Finally, we clarify that, while transitional plans are generally
subject to the rate review requirements, the uniform submission
timeline applies only to non-grandfathered individual and small group
market coverage that is subject to the single risk pool requirement.
Grandfathered health plans are not subject to the Federal rate review
program.
d. CMS's Determinations of Effective Rate Review Programs (Sec.
154.301)
We proposed to amend Sec. 154.301(b) to specify the timeframe for
a State with an effective rate review program to provide public access
to information about proposed and final rate increases.
Under the proposed rule, for proposed rate increases subject to
review, the State would be required to provide public access from its
Web site to the information contained in Parts I, II, and III of the
rate filing justification that CMS makes available on its Web site (or
provide CMS's web address for such information). The proposed rule
would require that the State take this action no later than the date
specified by the Secretary in guidance. We suggested the 10th business
day following receipt of all rate filings in the relevant State market
as the potential timeframe we may specify for this purpose. The
proposed rule would also continue to require that the State have a
mechanism for receiving public comments on those proposed rate
increases.
For all final rate increases (including those not subject to
review), the proposed rule would similarly require that the State
provide public access from its Web site to the information contained in
Parts I, II, and III of the rate filing justification that CMS makes
available on its Web site (or provide CMS's web address for such
information). The State would be required to take this action no later
than the first day of the individual market annual open enrollment
period.
Nothing in this proposal would prevent States from making
additional information available to the public, or prevent States from
establishing earlier timeframes for public disclosure. States that
elect to establish earlier posting timeframes would be required under
the proposed rule to notify CMS in writing at least 30 days prior to
the date the information will be made public. States would also be
required to ensure that rate information released to the public is made
available at a uniform time for all proposed and final rate increases
(as applicable) in the relevant market segment and without regard to
whether coverage is offered through an Exchange or outside of an
Exchange.
We sought comment on these proposals, including how the timeframes
may interact with current State practice and workload. We also sought
comment on whether States with effective rate review programs should be
required to post rate information on the State's Web site, rather than
being permitted to provide a link to CMS's Web site for such
information.
We are finalizing these provisions as proposed. We are also
maintaining the option for States to continue to provide public access
from their Web site via link to rate information made available on the
CMS Web site.
Comment: Some commenters suggested that CMS should not require the
release of rate information before rates are finalized. Another
commenter requested that all proposed rates be made available to the
public, not only those subject to review.
Response: Section 2794 of the PHS Act requires the Secretary to
ensure the public disclosure of information, including the
justification for an unreasonable rate increase. We believe that
Congress intended the rate review process to be transparent, and that
this objective is served by giving consumers timely access to basic
information regarding the proposed increase that is under review by CMS
or States and prior to the implementation of the increase. The proposed
rule and this final rule do not change the existing requirements
regarding the scope of the information that must be disclosed under the
current regulations.
Comment: Several commenters expressed opposition to our proposal to
specify the timeframe for posting information about proposed rate
increases that are subject to review. Commenters generally asserted
that States have existing processes for rate disclosure and requested
State flexibility to manage publication timeframes in the way most
appropriate to their market and regulatory structure. One commenter
suggested CMS establish a timeframe of 5 business days for States to
post information about proposed rate increases subject to review.
Another commenter requested clarification about the information CMS
intends to post on its Web site and how the suggested timeframe of 10
business days from the filing deadline would provide sufficient time to
redact issuers' confidential and proprietary information protected by
the Freedom of Information Act.
Response: We are finalizing the proposal for the Secretary to
specify the timeframe for States with effective rate review programs to
provide public access to information about proposed rate increases that
are subject to review. This timeframe will be specified in guidance. We
anticipate specifying a deadline of the 10th business day after receipt
of all rate filings in the relevant State market. We note this
provision applies only to products with proposed rate increases that
are subject to review and only includes the information in Parts I, II,
and III of the rate filing justification that CMS makes available on
its Web site. Under Sec. 154.215(h), CMS makes available on its Web
site only the information that is not considered a trade secret or
confidential commercial or financial information as defined in Freedom
of Information Act regulations, 45 CFR 5.65. We note that States may
choose to make additional information available as permitted by
applicable State law and regulations.
Comment: Many commenters emphasized the need for sufficient
opportunity for public review and comment before rates are finalized,
with suggested timeframes ranging from 30 to 90 days of public comment.
Response: Under current regulations, a State with an effective rate
review program must have a mechanism for receiving public comments on
proposed rate increases that are subject to review.
[[Page 10784]]
We believe this standard is sufficient to encourage public
participation in the rate review process, while affording States
flexibility to manage the public comment process in the way most
appropriate for the State.
Comment: Some commenters stated that information about final rate
increases should be released prior to the start of the annual open
enrollment period to allow consumers, assisters, and other interested
stakeholders greater opportunity to familiarize themselves with issuer
rates. These commenters offered various suggestions, most commonly
recommending that final rates be posted 15 days in advance of the
annual open enrollment period. Other commenters were concerned about
the workload and burden on States of completing reviews for both
Exchange and non-Exchange plans at the same time.
Response: The final rule retains the proposal that information
about final rate increases must be posted by the first day of the
annual open enrollment period. We believe this timeframe strikes the
appropriate balance between providing State and Federal regulators
sufficient time to complete their reviews, while providing consumers
the information needed to make informed purchasing decisions. We note
that States may establish earlier posting timeframes with appropriate
notice to CMS.
Comment: One commenter recommended clarifying in Sec.
154.301(b)(1)(ii) that the term ``annual open enrollment period''
refers to the open enrollment period in the individual market.
Response: The final rule adopts the suggestion to reference the
``individual market'' annual open enrollment period under Sec.
154.301(b)(1)(ii).
Comment: One commenter stated that CMS should also establish
posting deadlines for States in which CMS is conducting the reviews.
Response: While the rate review timeline under this final rule
establishes minimum standards for submission and posting of rate
information in States with effective rate review programs, we will also
apply these timelines in States without effective rate review programs
where CMS conducts the reviews.
Comment: Some commenters recommended that States be required to
post rate information directly on their Web sites instead of relying on
the CMS Web site. Other commenters stated it would be costly and
unnecessary to impose this requirement on States, since CMS already
provides consumers with information about rate increases on its Web
site. These commenters recommended that States continue to be permitted
to link to the CMS Web site.
Response: We agree that specifying that States must separately post
rate information is not necessary at this time. Through CMS's Web site
(www.ratereview.healthcare.gov), consumers and other stakeholders can
easily review rate increases requested by issuers in every State.\32\
We therefore retain the option for States to continue to provide public
access from their Web site via link to rate information made available
on the CMS Web site.
---------------------------------------------------------------------------
\32\ Rate filing information can also be accessed at https://www.cms.gov/CCIIO/Resources/Data-Resources/ratereview.html.
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Comment: Some commenters believed that States should be required to
provide public access to the entire rate filing justification, rather
than only the information contained in Parts I, II and III that CMS
makes available on its Web site. Other commenters indicated that States
have policies and procedures governing rate increase disclosure and
contended that States should have discretion to determine what
information to release.
Response: The proposed rule and this final rule do not change the
scope of information disclosure under the current regulations. The
existing rules establish the minimum level of information that States
with effective rate review programs must make available to the public,
either directly on their Web sites or via link to the CMS Web site. We
note that States have discretion to make additional information
available to the public, as permitted by applicable State law and
regulation.
Comment: Some commenters opposed the requirement that States must
notify CMS in writing 30 days prior to making rate information public.
The commenters were concerned the 30-day notice requirement was
impractical and unnecessary, and may interfere with State and issuer
rate negotiations and timelines. One commenter recommended that States
simply make a good-faith effort to provide advance notice to CMS.
Response: We maintain in the final rule the requirement that States
must provide at least 30-day notice of their intent to release proposed
or final rate information when the State publication timeline is
earlier than that specified by CMS. As we stated in the preamble to the
proposed rule (79 FR 70703), this information will enable CMS to better
coordinate the availability of rate information, increasing
transparency nationally into the rate-setting process.
E. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. General Provisions
a. Definitions (Sec. 155.20)
In Sec. 155.20, we proposed to amend the definitions of
``applicant,'' ``enrollee,'' and ``qualified employee.'' First, we
proposed to specify that a qualified employer could elect to offer
coverage through a SHOP to its former employees that may include
retirees, as well as former employees to whom an employer might be
obligated to provide continuation coverage under applicable State or
Federal law. Second, we proposed to specify that a qualified employer
could also elect to offer coverage through the SHOP to dependents of
employees or former employees. Third, we proposed to specify that
business owners may enroll in SHOP coverage provided that at least one
employee enrolls. We proposed to amend these definitions to make it
clear that SHOPs may allow small group enrollment practices that were
in place before the Affordable Care Act to continue, to preserve
continuity for issuers and employers, and to reduce the administrative
complexity involved with transitioning to SHOP coverage for qualified
employers.
We are finalizing the amendments to the definitions of applicant
and qualified employee as proposed, and are modifying the amendments to
the definition of enrollee in light of comments we received.
The preamble to the proposed rule also sought comment on whether
other provisions of the Exchange rules in parts 155 and 156 would need
to be amended to implement the changes proposed to these definitions.
HHS interprets Sec. 155.220(i) to give SHOPs the flexibility to permit
web-brokers to enroll not just ``qualified employees,'' but all
enrollees, consistent with the expansion of the definition of
``enrollee'' that is being finalized in this rule. Therefore, we are
also modifying Sec. 155.220(i) to refer to facilitating enrollment in
coverage through the SHOP for enrollees instead of qualified employees.
Comment: One commenter commented that the proposed definition of an
``applicant'' does not capture all situations in which a person could
become eligible for continuation coverage, such as divorce or loss of
dependent child status.
Response: Not every person eligible to enroll in coverage purchased
through the SHOP is considered a SHOP applicant. In the case of
individuals
[[Page 10785]]
eligible to enroll in coverage through the SHOP due to a continuation
coverage qualifying event, such as a divorce or a loss of dependent
status, such an individual qualifies for such coverage by virtue of his
or her coverage through the SHOP that existed on the day prior to the
qualifying event. Such an individual need not file an application with
the SHOP to continue to receive coverage after a qualifying event.
Instead, consistent with current business practices, the qualified
beneficiary should notify the employer or plan administrator of his or
her desire to participate in continuation coverage. The employer or
plan administrator must then notify the SHOP.\33\ Where appropriate,
such notification will allow the SHOP to individually bill the
continuation coverage enrollee.
---------------------------------------------------------------------------
\33\ 26 CFR 54.4980B-6 A-1(b) defines an election to enroll in
continuation coverage as the date the notification is sent to the
plan administrator, and Sec. 157.205(f) requires qualified
employers participating in the SHOP to provide the SHOP with
information regarding changes in dependent or employee eligibility
status for coverage.
---------------------------------------------------------------------------
Comment: One commenter asked for clarification on whether at least
one employee has to be eligible for or enrolled in SHOP coverage, and
requested that HHS clarify whether a business owner may enroll in a QHP
through the SHOP if at least one employee is eligible for coverage
through SHOP but has not enrolled.
Response: We clarify that where a business's only enrollee(s) in
coverage through the SHOP would be the owner(s) of the business, the
owner is not eligible to enroll in coverage sold through the SHOP.\34\
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\34\ Persons may enroll in coverage available through the SHOP
only if the plan constitutes a group health plan maintained by a
small employer. A group health plan is an ``employee welfare benefit
plan'' as defined by the Employee Retirement Income Security Act of
1974 (ERISA), and is a form of employee benefit plan, see ERISA
Sec. 3(3), 29 U.S.C. 1002(3). An ``employee benefit plan'' does not
exist if there are no ``employees'' participating in the plan, 29
CFR 2510.3-3(b), and for the purpose of identifying an employee
benefit plan an ``employee'' does not include the sole owner of a
business or a spouse of the business owner, Id. Sec. Sec. 2510.3-
3(c), 2590.732(d).
---------------------------------------------------------------------------
Comment: Some commenters requested clarification on whether an
employee may enroll dependents without enrolling him or herself in the
plan. Another commenter opposed the exclusion of child-only plans in
the SHOP and stated that all children should have access to coverage
even if they do not qualify as a ``qualified employee.''
Response: We note that under common market practice, dependents of
an employee offered employer-sponsored coverage generally may enroll in
such coverage only as a dependent, if the employee enrolls in the
coverage.\35\ Except for continuation coverage, coverage offered
through the SHOP does not depart from this general practice. Except as
may be provided under otherwise applicable law, dependents of a
qualified employee may enroll in a QHP through the SHOP through the
qualified employee only if the qualified employee also enrolls in the
same QHP through the SHOP. We note that this does not relieve issuers
from the obligation to offer child-only coverage under the group health
plan where the child is the primary subscriber, such as where the
employee is 18 years old. Consistent with our policy for individual
market QHPs at section 1302(f) of the Affordable Care Act, QHP issuers
could satisfy this standard by offering employee-only coverage under
the group health plan to qualified applicants seeking child-only
coverage, as long as the QHP includes rating for child-only coverage in
accordance with applicable premium rating rules.\36\
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\35\ See, for example, 29 U.S.C. 1002(7) & (8), defining a
beneficiary of an employee welfare benefit plan in relationship to a
participant in such a plan.
\36\ Exchange Establishment Rule, 77 FR 18310 at 18415.
---------------------------------------------------------------------------
In light of this comment, we note that the proposed amendments to
the definition of ``enrollee'' did not account for a situation in which
a person is enrolled in coverage because she is eligible for
continuation coverage, but is no longer a dependent of the qualified
employee or other primary subscriber. To account for this situation, we
are modifying the proposed definition of ``enrollee'' to include any
other person who is enrolled in a QHP through the SHOP consistent with
applicable law and the terms of the group health plan.
Comment: Some commenters stated that the inclusion of ``former
employees'' in the definition of qualified employee is not appropriate
except in the case of continuation coverage.
Response: The inclusion of ``former employee'' in the Exchange
rules' definitions of ``applicant'' and ``qualified employee'' does not
provide eligibility for individuals to enroll in coverage if they are
not otherwise eligible to enroll in small group coverage under HIPAA,
COBRA, and other applicable Federal or State law. If individuals
qualify for coverage under the terms of the plan and under existing
statute and regulations governing eligibility to enroll in group health
coverage, they may enroll in group health coverage through the
SHOP.\37\ The SHOP regulations do not impose any additional obligation
upon employers to offer former employees coverage sold through the
SHOP, and employers may do so where permitted under the terms of the
plan. In light of this comment, and to clarify that the persons listed
in the definition of ``enrollee'' are generally meant to include all
those who have enrolled in coverage through the SHOP consistent with
applicable law and the terms of the group health plan, we are modifying
the definition of ``enrollee'' to include, in addition to the listed
individuals, any other person who is enrolled in a QHP through the SHOP
consistent with applicable law and the terms of the group health plan.
---------------------------------------------------------------------------
\37\ See, for example, Sec. 146.145(a)(1) defining a ``group
health plan'' as, among other things, a plan that provides medical
care to current and former employees, and Sec. 146.150(b) defining
an individual eligible to enroll in coverage sold in the small group
market as an individual eligible to enroll in group health insurance
coverage offered to a group health plan in accordance with the terms
of the group health plan.
---------------------------------------------------------------------------
Comment: One commenter asked how expanding the definition of
``enrollee'' to include a business owner will impact eligibility
thresholds for the Small Business Health Care Tax Credit.
Response: The inclusion of owners in the definition of ``enrollee''
does not modify qualification requirements for the Small Business
Health Care Tax Credit, as determinations for the credit do not rely on
the SHOP's definition of ``enrollee.''
2. General Functions of an Exchange
a. Consumer Assistance Tools and Programs of an Exchange (Sec.
155.205)
In the proposed rule, we proposed to amend Sec. 155.205(c) to
specify the oral interpretation services that are required for certain
entities subject to Sec. 155.205(c). Specifically, for each Exchange,
QHP issuer, and agent or broker subject to Sec. 155.220(c)(3)(i)
(referred to in this section as a ``web-broker''), we proposed that the
requirement to provide oral interpretation services under Sec.
155.205(c)(2)(i) would include making available telephonic interpreters
in at least 150 languages. We also proposed amendments to Sec. 156.250
that are discussed below, and that would require QHP issuers to provide
all information that is critical for obtaining health insurance
coverage or access to health care services through the QHP, including
applications, forms, and notices, to qualified individuals, applicants,
qualified employers, qualified employees, and enrollees in
[[Page 10786]]
accordance with the standards described in Sec. 155.205(c), including
the provision of telephonic interpreter services in at least 150
languages.
We proposed to limit the applicability of the proposed 150
languages standard for telephonic interpreter services to Exchanges,
web-brokers, and QHP issuers. We did not propose to apply this standard
to Navigators and non-Navigator assistance personnel because, as we
stated in the proposed rule, the smaller non-profit organizations that
frequently make up the bulk of these consumer assistance entities have
limited resources.
In the proposed rule, we also solicited comment on whether we
should consider more or different language accessibility standards in
Sec. 155.205(c). We provided certain examples in the preamble. With
respect to written translations, we gave an example of requiring
written translations in the languages spoken by the top 10 limited
English proficiency (LEP) groups in the State or spoken by 10,000
persons or greater, whichever yields the greater number of languages.
With respect to taglines (short statements informing individuals of the
availability of language access services), we gave an example of
requiring taglines in the top 30 non-English languages spoken
nationwide on documents required by State or Federal law or containing
information that is critical to obtaining health insurance coverage or
access to health care services through a QHP. We also provided an
example that would establish a uniform, national standard that written
translations, taglines on notices and Web site content, and oral
interpretation services be provided in the top 15 languages spoken by
LEP individuals in the United States. Finally, we provided an example
specific to Web site content that would have required the content to be
translated in each non-English language spoken by an LEP population
that reaches 10 percent of the State population.
Based on comments received, as discussed below, we are finalizing
the proposal with the following modifications:
To give new web-brokers more time for implementation, we are
revising Sec. 155.205(c)(2)(i) to specify that for an agent or broker
subject to Sec. 155.220(c)(3)(i), the standard to provide telephonic
interpreter services in at least 150 languages applies no later than
November 1, 2015, the first day of the individual market open
enrollment period for the 2016 benefit year, or 1 year after such
entity has been registered with the Exchange, whichever is later.
We are revising Sec. 155.205(c)(2)(iii) to specify that, beginning
at the start of the individual market open enrollment period for the
2017 benefit year, for Exchanges, QHP issuers, and agents or brokers
subject to Sec. 155.220(c)(3)(i), the general standard to provide
taglines in non-English languages indicating the availability of
language services includes taglines on Web site content and documents
that are critical for obtaining health insurance coverage or access to
health care services through a QHP for qualified individuals,
applicants, qualified employers, qualified employees, or enrollees
indicating the availability of language services in at least the top 15
languages spoken by the LEP population of the relevant State, as
determined in HHS guidance. Documents are considered to be ``critical''
if the entity is required by State or Federal law or regulation to
provide them to a qualified individual, applicant, qualified employer,
qualified employee, or enrollee. We added that for an agent or broker
subject to Sec. 155.220(c)(3)(i), this standard will apply beginning
no later than at the start of the individual market open enrollment
period for the 2017 benefit year, or when the entity has been
registered with the Exchange for at least 1 year, whichever date is
later. HHS plans to provide sample taglines in all languages triggered
by this threshold. For purposes of Sec. 155.205(c)(2), the meaning of
the terms ``qualified individual,'' ``applicant,'' ``qualified
employer,'' ``qualified employee,'' and ``enrollee'' is intended to be
consistent with the definitions for these terms under Sec. 155.20.
We also modified the language following Sec. 155.205(c)(2)(i) and
Sec. 155.205(c)(2)(iii) to make clear that the general standards with
respect to oral interpretation and taglines continue to apply to all
entities subject to Sec. 155.205(c).
We added Sec. 155.205(c)(2)(iv) to create a new standard related
to translations of Web site content for Exchanges, QHP issuers, and
agents or brokers subject to Sec. 155.220(c)(3)(i). The new standard
specifies that beginning at the start of the individual market open
enrollment period for the 2017 benefit year, the content of a Web site
maintained by an Exchange or QHP issuer must be translated into any
non-English language that is spoken by an LEP population that reaches
10 percent or more of the population of the relevant State, as
determined in HHS guidance. For an agent or broker subject to Sec.
155.220(c)(3)(i), this standard will apply beginning at the start of
the individual market open enrollment period for the 2017 benefit year
or when the entity has been registered with the Exchange for at least 1
year, whichever date is later. We clarify that for Exchanges and web-
brokers, this requirement applies to all content that is intended for
qualified individuals, applicants, qualified employers, qualified
employees, or enrollees that is maintained by the entity on the Web
site and is not limited to information that is critical for obtaining
health insurance coverage or access to health care services through a
QHP. We note that QHP issuers are not required to translate all Web
site content that is intended for qualified individuals, applicants,
qualified employers, qualified employees, or enrollees; rather, the
type of Web site content that must be translated aligns with the
definition of ``critical'' information to which QHP issuers must
provide meaningful access under Sec. 156.250 as finalized in this
rule. In addition, an entity that is required to translate Web site
content consistent with this provision must also still include
taglines, in accordance with Sec. 155.205(c)(2)(iii), on its English
version Web pages. This entity would not, however, be required to
include taglines on its non-English version Web pages, but it could do
so voluntarily.
Comment: The majority of comments received regarding the proposed
standard for telephonic interpreter services in 150 languages were
supportive. A few commenters stated that telephonic interpretation is a
cost-effective means of providing language access relative to written
translations, which, according to the commenters, are demanded with
much less frequency than oral interpretation. Many commenters stated
that the proposal would help ensure that LEP individuals obtain
language access, helping them enroll in health insurance coverage.
These commenters suggested requiring bilingual customer service
representatives in addition to language lines. Several commenters
stated that specifying telephonic interpreter services in 150 languages
was arbitrary, overly prescriptive, and potentially burdensome for
smaller entities. Some commenters suggested that telephonic interpreter
services be available in any language requested, as they are under
certain State laws, like California's, or in as many languages as are
necessary to serve the oral interpretation needs of applicants and
enrollees within the applicable service area.
Response: We appreciate the comments regarding this proposal. We
believe that providing telephonic
[[Page 10787]]
interpreter services in 150 languages is a useful and cost-effective
tool to ensure that most LEP consumers in the service area are able to
receive oral interpretation services that are required by existing
Federal regulations at Sec. 155.205(c)(2)(i). HHS expects to monitor
the extent that the industry standard for telephonic interpreter
services might diverge substantially from the 150-language threshold.
We also clarify that this standard should not be construed to mean that
other ways of providing oral interpretation, such as in-person
interpreters or bilingual customer service representatives, are
prohibited or should be displaced by telephonic interpreter services.
We recognize that these alternative services can provide a superior
experience for the consumer which, in turn, can ultimately benefit the
entity.
Comment: Commenters generally supported our proposal that web-
brokers provide telephonic interpreter services. In particular, one
supporter reasoned that because web-brokers are ``standing in'' for an
issuer or Exchange, they should be subject to the same requirement as
issuers and Exchanges. Another commenter, while supporting the goal of
increasing language accessibility and extending health coverage to
diverse populations, opposed the requirement and suggested that we give
new participant web-brokers to the Exchange more time to comply.
Response: We believe that, in regard to language access, a web-
broker should be expected to provide the same minimum level of service
to a consumer as would be expected from an Exchange or QHP issuer. In
response to the concerns that newer web-brokers may be smaller
companies less able to incur the costs of this requirement, we are
providing web-brokers until November 1, 2015, the first day of the open
enrollment period for the 2016 benefit year, or 1 year from the date
the web-broker registers with the Exchange, whichever date is later, to
comply. As a reminder, we note that a web-broker, like every other
entity subject to Sec. 155.205(c), is required to provide accessible
information to individuals who are LEP according to the more general
standards under Sec. 155.205(c)(2), even before the web-broker would
be subject to the more specific standards finalized in this rule.
Moreover, under Sec. 155.205(c)(3), a web-broker is required to inform
individuals who are LEP of the availability of the full range of
language access services described in Sec. 155.205(c)(2), and how to
access such services. If a web-broker is not yet providing telephonic
interpreter services in at least 150 languages directly, it must
provide oral interpretation services and inform individuals of the
availability of this service from other sources, such as the Exchange's
Call Center.
Comment: With respect to our proposal to not require Navigators and
non-Navigator assistance personnel to provide telephonic interpreter
services in at least 150 languages, comments were mixed. Some
commenters believed that our approach of exempting Navigators ran
counter to a Navigator's statutory duty to provide information in a
manner that is culturally and linguistically appropriate to the needs
of the population being served by the Exchange or Exchanges.\38\ Others
who opposed the proposal stated that while these entities should strive
to hire bi- or multi-lingual staff for the most prevalent non-English
languages spoken by LEP individuals in their community, for less
frequently encountered languages, or for smaller entities for whom
hiring staff with special language skills is not possible, requiring
access to telephonic interpreter services is a cost-effective strategy
for providing language access services. Among those who agreed with our
proposal, commenters stated that specifically requiring each entity to
provide telephonic interpreter services in 150 languages could be cost
prohibitive and potentially force organizations to opt out of serving
as assisters. At the same time, these commenters also stated that
Navigators and non-Navigator assistance personnel should be responsive
to and accommodate, to the extent possible, any LEP consumer's language
access needs. These commenters suggested a number of options, such as
requiring referrals to the Exchange's Call Center if an entity cannot
meet a specific need; partnering with other organizations to provide
telephonic interpreter services; hiring bi- and multi-lingual staff to
meet the ``most significant'' language needs of the community; or
having HHS contract with a language line that these entities could use
so that the entity would not bear additional costs.
---------------------------------------------------------------------------
\38\ Section 1311(i)(3)(E) of Affordable Care Act.
---------------------------------------------------------------------------
Response: We are not extending the requirement to provide
telephonic interpreter services in 150 languages to Navigators and non-
Navigator assistance personnel at this time. We recognize that ensuring
that the language needs of a consumer are met is an important component
of providing high-quality application and enrollment assistance. We
will continue to consider options for making language access services
more robust for Navigators and non-Navigator assistance personnel.
There are a number of existing language access standards under
current regulations applicable to Navigators that are consistent with
the requirement under section 1311(i)(3)(E) of the Affordable Care Act
that Navigators provide information in a manner that is culturally and
linguistically appropriate to the needs of the population being served
by the Exchange or Exchanges. For example, under Sec. 155.210(e)(5),
Navigators in all Exchanges must provide information in a manner that
is culturally and linguistically appropriate to the needs of the
population being served by the Exchange, including individuals with
LEP. Further, the general requirements at Sec. 155.205(c) to provide
oral interpretation, written translations, and taglines in non-English
languages indicating the availability of language services, continue to
apply to all entities carrying out activities under Sec. 155.205(d)
and (e), including Navigators and non-Navigator assistance personnel,
even though the more specific standards finalized here do not apply to
those entities. As noted above, included in this general requirement is
the requirement under Sec. 155.205(c)(3) to inform individuals who are
LEP about the availability of the full range of language access
services described in Sec. 155.205(c)(2) and how to access such
services. As such, if they lack the immediate capacity to help an LEP
individual, all Navigators and non-Navigator assistance personnel in
every Exchange should inform that individual about the availability of
language access services through other sources, such as the Exchange
Call Center. In addition, Navigators and non-Navigator assistance
personnel in FFEs and State Partnership Exchanges, and non-Navigator
assistance personnel funded through an Exchange Establishment grant,
must comply with the standards set forth in Sec. 155.215(c)(3), which
require them to provide consumers with information and assistance in
the consumer's preferred language, at no cost to the consumer,
including the provision of oral interpretation of non-English languages
and the translation of written documents in non-English languages when
necessary or when requested by the consumer to ensure effective
communication. Exempting Navigators and non-Navigator assistance
personnel from the specific requirements finalized here does not exempt
them from complying with other applicable laws and regulations that
govern the language accessibility of their work.
Comment: We received comments regarding whether we should consider
[[Page 10788]]
additional, specific standards pertaining to written translations,
taglines, and Web site content, as well as suggestions for standards
other than those that we had specifically mentioned in the preamble of
the proposed rule, as described above. Some commenters agreed in
principle that improved language access services will help consumers.
While some commenters broadly agreed that language access services
should account for the demographics in a particular service area,
comments were mixed with respect to the specific thresholds that should
trigger written translations. Some commenters opposed requiring more
specific standards beyond the proposed telephonic interpreter services
standard. Still other commenters added that written translations should
be required only upon request, rather than automatically, reasoning
that limiting the standard to requests would help reduce the burden on
entities as well as on State insurance departments, which often require
issuers to file translated versions of previously filed forms for State
review. One commenter asserted that additional standards for stand-
alone dental plan issuers were not warranted.
Response: We are not finalizing any specific standards with respect
to written translations at this time. We will continue to consider
solutions that balance the language access needs of consumers who apply
for and enroll in coverage through Exchanges with the burdens on
entities in providing quality written translations in a timely fashion.
It is important to note that even though we are not finalizing specific
written translations standards, the general standard under Sec.
155.205(c)(2)(ii) continues to apply to all entities subject to Sec.
155.205(c), as do the general standards with respect to oral
interpretation and taglines in non-English languages indicating the
availability of language services. We have modified the language
following Sec. 155.205(c)(2)(i) and Sec. 155.205(c)(2)(iii) to make
clear that the general standards with respect to oral interpretation
and taglines continue to apply to all entities subject to Sec.
155.205(c).
Comment: Some commenters who commented on our proposal on language
accessibility standards for taglines suggested that notices and Web
site content provided by HHS should be available in the top 30
languages spoken nationwide by LEP populations. Some commenters
suggested that for all other entities besides the FFEs, a State-
specific approach should be adopted, specifically recommending that
notices and Web site content provided by a State Exchange, QHP issuer,
or web-broker include taglines in the top 15 languages spoken in the
relevant State(s) by LEP populations. One commenter did not suggest a
specific numeric threshold, but stressed that a uniform standard should
be adopted across entities.
Response: We agree with many commenters' views that the
demographics of a State's LEP population, rather than nationwide
demographics, should be taken into account when taglines are used. This
approach identifies languages tailored to the needs of each State and
thus is more attuned to the anticipated language access needs of
individuals serviced by entities. We also believe we should avoid
creating a situation in which 30 taglines take up significant space on
written content, potentially adding to printing costs.
In light of these considerations, we are finalizing a standard
whereby an Exchange, QHP issuer, or web-broker would be required to
include taglines on Web site content and any document that is critical
for obtaining health insurance coverage or access to health care
services through a QHP for qualified individuals, applicants, qualified
employers, qualified employees, or enrollees in at least the top 15
languages spoken by the LEP population in the relevant State. If an
entity's service area covers multiple States, the top 15 languages
spoken by LEP individuals may be determined by aggregating the top 15
languages spoken by all LEP individuals among the total population of
the relevant States. A document is deemed to be critical for obtaining
health insurance coverage or access to health care services through a
QHP if it is required to be provided by State or Federal law or
regulation to a qualified individual, applicant, qualified employer,
qualified employee, or enrollee. Taglines must be included if a
document is considered ``critical'' information to which QHP issuers
must provide meaningful access under Sec. 156.250 as finalized in this
rule, so that most LEP consumers might receive notice of language
access services regardless of whether such ``critical'' information is
being provided to them by an Exchange, a QHP issuer, or a web-broker.
This requirement with respect to taglines adds to the standard set
forth in Sec. 156.250 because it applies to all Web site content that
is provided to qualified individuals, applicants, qualified employers,
qualified employees, and enrollees by an Exchange, QHP issuer, or web-
broker, regardless of whether such content must be translated in
accordance with Sec. 155.205(c)(2)(iv) as finalized in this rule. We
included this requirement because all consumers, regardless of their
English proficiency, are encouraged to apply for and enroll in coverage
through an Exchange online, and we believe that consumers with LEP
should be able to immediately identify taglines informing them of their
ability to obtain language access services on the Web sites of entities
subject to this standard.
It is also important that LEP consumers, whether they are being
served by an Exchange, QHP issuer, or web-broker, are able to obtain
the same minimum number of taglines on such documents, and therefore
are applying this standard equally across these entities. However, in
recognition of the fact that newer web-brokers are often smaller
entities that may not as easily meet this standard as an Exchange or
QHP issuer, we are providing them additional lead time to comply,
specifically, until the first day of the individual market open
enrollment period for the 2017 benefit year or when such entity has
been registered with the Exchange for at least 1 year, whichever is
later. To facilitate compliance with this standard, beginning in early
2016, we plan to issue guidance which identifies the applicable non-
English languages in each State.\39\ We also expect to provide sample
taglines in all languages triggered by this threshold beginning in
early 2016.
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\39\ We anticipate releasing this guidance on an annual basis
beginning in early 2016, soon after the most recently published
American Community Survey data is expected to become available.
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Comment: We received comments supporting a possible additional
standard discussed in the preamble to the proposed rule, under which
Web site content should be translated into each non-English language
spoken by an LEP population that reaches 10 percent of the State
population, though one commenter suggested that we consider requiring
translation into the top three languages spoken by the LEP population
in a given State. A few commenters expressed concerns about costs.
Another commenter opposed applying the standard to web-brokers, and
suggested that we give new participant web-brokers to the Exchange more
time to comply.
Response: We recognize that Web site content is an important source
of information for qualified individuals, applicants, qualified
employers, qualified employees, and enrollees, particularly in light of
the fact that applying for and enrolling into a QHP or insurance
affordability programs online is a generally more efficient process
than other means. In addition,
[[Page 10789]]
the Web site content of an Exchange or web-broker often contains
consumer tools and education materials that, while not always
``critical'' for obtaining health care coverage or access to health
care services through a QHP within the meaning of Sec. 156.250,
nonetheless can help consumers understand their eligibility for
coverage, how much financial assistance they might qualify for, and
other important information that help consumers make an informed
decision. We believe it is appropriate to require Exchanges, QHP
issuers, and web-brokers to translate Web site content into each non-
English language spoken by an LEP population that reaches 10 percent or
more of a State's population beginning at the start of the individual
market open enrollment period for the 2017 benefit year. We note that
the FFE is already meeting this standard. We clarify that for Exchanges
and web-brokers, this requirement applies to all information intended
for qualified individuals, applicants, qualified employers, qualified
employees, or enrollees that is maintained by the entity on the Web
site and is not limited to information that is critical for obtaining
health insurance coverage or access to health care services through a
QHP. We note that for QHP issuers, the type of Web site content for
which translation is required aligns with the definition set forth in
Sec. 156.250, as finalized in this rule, of ``critical'' information
to which QHP issuers must provide meaningful access. If certain Web
site content that is maintained by an Exchange, QHP issuer, or web-
broker contains information that specifically applies to non-QHPs only
and does not contain information that is either (for Exchanges and web-
brokers) intended for a qualified individual, applicant, qualified
employer, qualified employee, or enrollee or (for QHP issuers)
``critical'' within the meaning of Sec. 156.250, then the entity is
not required to translate it into an applicable non-English language.
Given the substantial effort and resources involved in translating
Web site content, we believe that the suggestion to translate Web site
content in the top three languages spoken by the LEP population in the
State is too burdensome. In addition, partly because of concerns raised
about burden as well as our guiding principle of focusing on the
demographics and anticipated language needs of the community being
served using stable and reliable data, we are also not finalizing the
standard discussed in the preamble to the proposed rule that would have
required a uniform standard for written translations, taglines, and Web
site content translations in the top 15 languages spoken nationwide
among the LEP population.
We also believe it is important that LEP consumers in a given State
are able to obtain the same minimum level of language access services
from the Exchange, QHP issuers operating in the Exchange, and web-
brokers operating in the State and therefore are applying a Web site
content translation standard across these entities. However, we are
providing web-brokers additional time to comply. Specifically, web-
brokers will have until the first day of the individual market open
enrollment period for the 2017 benefit year, or when such entity has
been registered with the Exchange for at least 1 year, whichever is
later.
As noted above, regardless of whether an entity is required to
translate Web site content into an applicable non-English language
under this provision, the entity's English Web site content will always
be required to display taglines in at least the top 15 non-English
languages spoken among the LEP population of the relevant State,
consistent with Sec. 155.205(c)(2)(iii) of this rule, so that a wider
range of LEP individuals whose language does not meet the 10 percent
threshold in Sec. 155.205(c)(2)(iv) may still obtain language access
services through oral interpretation or written translations, as
applicable. For example, if an entity is required to translate Web site
content into Spanish because the Spanish-speaking LEP population in the
applicable State reaches 10 percent of the State's population, the
entity's English version Web site must still display taglines in the
top 15 non-English languages spoken by the LEP population of the
relevant State. To facilitate compliance with this standard, beginning
in early 2016, we plan to issue guidance that identifies the applicable
languages and States meeting this threshold.
We note that for an entity whose service area covers multiple
States, if at least one language in one of the States it serves meets
the 10 percent threshold in Sec. 155.205(c)(2)(iv), then the
applicable information on the entity's Web site must be translated into
that language.
Comment: In regards to our solicitation for comment regarding the
proposed implementation date for the 150-language standard and other
possible specific language access standards, a few commenters indicated
that they were already meeting or exceeding the 150-language standard
for their language line. Many commenters stated that to the extent
additional requirements beyond telephonic interpreter services are
required, additional time would be necessary.
Response: With respect to the requirement to provide telephonic
interpreter services in at least 150 languages, Exchanges and QHP
issuers will be required to comply with this requirement when this rule
takes effect. Web-brokers will have until the later of November 1,
2015, the first day of the individual market open enrollment period for
the 2016 benefit year, or 1 year from the date the web-broker registers
with the Exchange to comply with the requirement to provide telephonic
interpreter services in at least 150 languages. For the requirements
finalized for taglines and translation of Web site content, as stated
in the regulation text, such standards will apply for Exchanges and QHP
issuers no later than the first day of the open enrollment period in
the individual market for the 2017 benefit year. To give web-brokers
participating on an Exchange additional time, the specific requirements
to provide taglines and translated Web site content will apply on the
first day of the individual market open enrollment period for the 2017
benefit year, or when the web-broker has been registered with the
Exchange for at least 1 year, whichever date is later.
Comment: Several commenters requested that we emphasize that the
provisions set forth in Sec. 155.205(c) do not limit or abrogate
requirements under Title VI of the Civil Rights Act of 1964 and section
1557 of the Affordable Care Act.
Response: As we stated in the preamble of the proposed rule, we
remind relevant covered entities of the obligations they may have under
other Federal laws to meet existing effective communication
requirements for individuals with disabilities and limited English
proficiency. Such obligations are independent of the responsibilities
these entities may have under Sec. Sec. 155.205(c), 155.230(b),
156.200(e), and 156.250.
b. Standards Applicable to Navigators and Non-Navigator Assistance
Personnel Carrying Out Consumer Assistance Functions Under Sec. Sec.
155.205(d) and (e) and 155.210 in a Federally-Facilitated Exchange and
to Non-Navigator Assistance Personnel Funded Through an Exchange
Establishment Grant (Sec. 155.215)
To clarify that only a non-Navigator entity must maintain a
physical presence in the Exchange service area, rather than each
individual non-
[[Page 10790]]
Navigator associated with a non-Navigator entity, we proposed to amend
Sec. 155.215(h) to limit the physical presence requirement specified
under that section to non-Navigator entities. In the proposed rule, we
explained that we believe that the amendment would strike an
appropriate balance in allowing individuals providing non-Navigator
assistance subject to Sec. 155.215 to provide assistance via the
telephone, Internet, or through other remote means, particularly in
circumstances in which remote assistance would be more effective or
practical than face-to-face assistance, while also ensuring that the
organization with which they are affiliated is in a position to
understand and meet the specific needs of the communities they serve
and to facilitate consumer protection efforts, as applicable, in their
State. We added that if an individual non-Navigator is not affiliated
with a larger entity, we would consider the individual to be the entity
specified in the amended language under proposed Sec. 155.215(h). We
also proposed to add the title ``Physical presence'' to paragraph (h)
for improved clarity.
We are finalizing this clarification as proposed.
Comment: The vast majority of commenters expressed support for this
proposal, indicating that the proposed change would benefit consumers
seeking remote assistance from individual non-Navigators who may not be
physically present in the area served by the Exchange but who can
nonetheless provide effective assistance to an individual through the
use of technology tools. One commenter suggested that we require non-
Navigator entities to ensure that at least half of their personnel
serving a particular State conduct in-person assistance in the State.
Another opposed the proposal on the grounds that it was too
prescriptive because it would bar an otherwise well-suited organization
from serving consumers in the State if the organization maintained no
physical presence.
Response: We agree with commenters that remote assistance is
valuable, especially when a consumer is unable to meet in person with
an individual non-Navigator. We believe that the requirement on the
organization to maintain a physical presence in the State is a
reasonable measure to facilitate a State's consumer protection efforts
and enhance the organization's ability to provide culturally competent
assistance \40\ which, at the same time, does not preclude an
organization's ability to provide remote assistance to consumers.\41\
We also note that an organization that is well-suited to performing
application and enrollment assistance but does not maintain a physical
presence in the Exchange service area may be able to participate in the
certified application counselor program because the Federal
requirements governing this program do not include the requirement to
maintain a physical presence.
---------------------------------------------------------------------------
\40\ See Sec. 155.215(c) for a list of standards regarding the
provision of culturally and linguistically appropriate standards
which apply in an Exchange operated by HHS during the exercise of
its authority under Sec. 155.105(f) and to non-Navigator assistance
personnel funded through an Exchange Establishment Grant under
section 1311(a) of the Affordable Care Act.
\41\ 79 FR 30287 (May 27, 2014).
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c. Ability of States To Permit Agents and Brokers To Assist Qualified
Individuals, Qualified Employers, or Qualified Employees Enrolling in
QHPs (Sec. 155.220)
In Sec. 155.20, we are amending the definition of enrollee in the
SHOP to include individuals other than qualified employees. To conform
to this amendment, we are finalizing a modification to Sec.
155.220(i). For a discussion of this amendment, please see the preamble
for Sec. 155.20.
d. Standards for HHS-Approved Vendors of Federally-Facilitated Exchange
Training and Information Verification for Agents and Brokers (Sec.
155.222)
In Sec. 155.222, we proposed a process for HHS to approve vendors
to offer training and information verification services as an
additional avenue to the available HHS training, by which State
licensed agents and brokers could complete the training requirements
necessary to assist consumers seeking coverage through the FFEs. In
Sec. 155.222(a), we proposed an application and approval process for
vendors seeking recognition as HHS-approved vendors of FFE training and
information verification for agents and brokers. As part of an approved
training and information verification program, we proposed that the
vendor must require agents and brokers to successfully complete
identity proofing, provide identifying information, and successfully
complete the required curriculum. Further, we proposed that no training
program would be recognized unless it included an information
verification component under which the vendor confirms the identity and
applicable State licensure of the person who is credited with
successful completion of the training program. We proposed that only
HHS-approved vendors that meet the designated standards would have
their programs recognized by HHS. We proposed that vendors be approved
for one-year terms, and that vendors seeking to continue their
recognition as HHS-approved vendors for FFE agent and broker training
and information verification the following year be re-approved through
a process to be determined by HHS.
In paragraph (b), we proposed the standards that a vendor must meet
to be approved by HHS to offer FFE training and information
verification to agents and brokers. In paragraph (b)(1), we proposed
that the vendor submit a complete and accurate application by the
deadline established by HHS, which demonstrates prior experience with
successfully conducting online training and identity proofing, as well
as providing technical support to a large customer base. We proposed in
paragraph (b)(2) that the vendor be required to adhere to HHS
specifications for content, format, and delivery of training and
information verification. HHS would require vendors to have their
training approved for continuing education units accepted by State
regulatory entities. In paragraph (b)(3) we proposed that vendors be
required to collect, store, and share with HHS all data from agent and
broker users of the vendor's training and information verification in a
manner specified by HHS, and protect the data in accordance with
applicable privacy and security laws and regulations. In paragraph
(b)(4), we proposed that the vendor be required to execute an agreement
with HHS, in a form and manner to be determined by HHS, which requires
the vendor to comply with HHS guidelines for interfacing with HHS data
systems, the implementation of the training and information
verification processes, and the use of all data collected. We also
proposed to require vendors to adopt a fee structure that is consistent
with the fee structure for comparable trainings offered by the vendor
to comparable audiences. In paragraph (b)(5), we proposed that the
vendor be required to permit any individual who holds a valid State
license or equivalent State authority to sell health insurance products
to access the vendor's training and information verification process.
In paragraph (c), we proposed that once HHS has completed the
approval process for vendors for a given year, HHS would publish a list
of approved entities on an HHS Web site. In paragraph (d), we proposed
that HHS may monitor and audit approved vendors and their records
related to the
[[Page 10791]]
FFE training and information verification functions to ensure the
approved vendors' ongoing compliance with the standards outlined in
paragraph (b). We proposed that if HHS determines that the approved
vendor is no longer in compliance with standards under paragraph (b),
HHS may remove the vendor from the list described in paragraph (c), and
may direct the vendor to cease performing the training and information
verification functions described in this section.
In paragraph (e), we proposed that such a vendor may appeal HHS's
decision by notifying HHS in writing within 15 days of receipt of the
notification by HHS of not being approved or having its approval
revoked, and submitting additional documentation demonstrating how the
vendor meets the standards in paragraph (b) and (if applicable) the
terms of their agreement with HHS. HHS will review the submitted
documentation and make a final determination within 30 days from
receipt of the submission of the additional documentation.
We are finalizing these provisions as proposed, with the
modifications detailed below.
Comment: Most commenters generally supported the proposal to permit
approved vendors to provide training and information verification to
agents and brokers assisting consumers in the FFEs, so that agents and
brokers would have more choice and greater opportunity to complete the
required FFE training. Several commenters expressed concern that
external vendors would not be able to provide training that is
comprehensive, accurate, and without bias. These commenters urged HHS
to provide standards for quality control and oversight.
Response: We agree that expanding the available avenues for agents
and brokers to fulfill the FFE training requirements will allow the
FFEs to leverage the experience, contacts, and networks of approved
vendors. To ensure that the training and information verification
programs adhere to uniform standards for content, format, and delivery,
under Sec. 155.222(b)(2), HHS-approved vendors will be required to
adhere to HHS specifications for content, format, and delivery of
training and information verification. Vendors may choose to charge
agents and brokers for their training; HHS will consider current
training costs for State-licensed agents and brokers for comparable
trainings to comparable audiences when reviewing vendor applications
with proposed fee structures.
After HHS launches 2016 plan year training, planned for the summer
of the 2015 calendar year, HHS intends to monitor vendor training
programs and work with vendors to make sure that the FFE training
content and delivery continues to meet HHS standards. HHS may audit
approved vendors throughout the plan year in accordance with Sec.
155.222(d). HHS intends to issue future guidance regarding Sec.
155.222(b)(2) that will outline the training specifications for content
and coverage . If a vendor's training program fails to meet HHS
standards after public release, HHS may revoke the vendor's approval to
offer FFE training, and would work with affected agents and brokers to
ensure they have the required training.
Comment: Several commenters had recommendations and requests for
further clarification of requirements relating to the application and
the agreement between HHS and vendors. One commenter requested
clarification on what constitutes an enforcement action for purposes of
the application and the agreement. One commenter asked about
demonstrating experience with identity proofing, since most vendors
offering training and continuing education programs do not conduct
identity proofing in the same manner as HHS.
Response: HHS intends to release the application form to become an
HHS approved vendor of FFE training and information verification for
the 2016 plan year in the first quarter of 2015. HHS further intends to
release guidance related to the application process in the first
quarter of 2015 to help interested vendors better understand the
application process. The vendor must submit the application by the
deadline specified by HHS. We intend to issue guidance that will
provide details on the timeline for the application process. We expect
that vendors will be approved for one-year terms.
In the preamble to paragraph (b)(1) (79 FR 70706), we explained
that HHS would only approve vendors if no current or past regulatory,
enforcement, or legal action has been taken by a State or Federal
regulator against the entity in the 3 years prior to the application or
renewal application deadline under this section. After careful
consideration of the various events at the State and Federal level that
may constitute an ``enforcement'' action, we note that HHS will take
into consideration justifications, corrective actions taken, or other
mitigating or aggravating circumstances (for example, the financial
impact of the violation, or the number of individuals affected by the
violation) in evaluating whether a past or current violation would
exclude a potential vendor from participation. Vendors whose
applications are denied will have the opportunity to appeal HHS's
decision under Sec. 155.222(e), and may submit additional
documentation for HHS to consider about potential mitigating
circumstances.
To more accurately describe the information verification
functionality that vendors must provide to agents and brokers, we are
adding ``proof of valid State licensure'' in paragraph (a)(2). Because
HHS expects vendors to demonstrate prior experience with verifying
State licensure on the application, we are adding ``verification of
valid State license'' in paragraph (b)(1)(i). In response to a comment
that explained that organizations that currently conduct agent and
broker training may not have experience with identity proofing, we are
amending the requirement in paragraph (b)(1)(ii) so that vendors must
demonstrate the ability to conduct identity proofing, but do not have
to provide proof of prior experience. The goal of the information
verification process is to confirm the State licensure and identity of
agents and brokers who successfully complete FFE training before they
are permitted by HHS to assist consumers with FFE eligibility
determinations and QHP selections as an agent or broker. Therefore,
vendors must demonstrate a current capability of verifying both the
identity of the person completing the training, as well as his or her
State licenses or equivalent State authorizations to sell health
insurance products.
Comment: Several commenters made suggestions for training content,
and the format and frequency for exchanging training and information
verification data with HHS.
Response: All of the recommended training topics are currently part
of the existing HHS FFE training for agents and brokers (for example,
advance payments of the premium tax credit and cost-sharing reductions,
and Medicaid and CHIP eligibility). Vendors approved to offer training
in the future will be required to include those topics in the
curriculum for their respective FFE training programs for agents and
brokers. Based on the comments we received, we are adding language at
paragraph (b)(3) to indicate that vendors must be able to share
training and information verification data with HHS in a manner,
format, and frequency specified by HHS. Specifically, we are adding
``format, and frequency'' to paragraph (b)(3) with respect to the
collection, storage, and sharing of data
[[Page 10792]]
to further protect the personally identifiable information of agents
and brokers, and aid HHS in the monitoring of vendors' training and
information verification programs. We anticipate issuing future
technical guidance that will detail the manner, format, and frequency
for the exchange of data under Sec. 155.222(b)(3).
Comment: In response to the solicitation of comments on what
additional components a training program should include in order to
qualify for HHS approval, some commenters requested that the training
be applicable across States and that vendors be required to offer
continuing education units (CEUs) in multiple States. Other commenters
suggested that States should incorporate Federal materials in existing
training and licensing programs to promote cost-effectiveness and
efficiency, and that HHS should eliminate the requirement that agents
and brokers receive approval by an Exchange. One commenter suggested
that States be able to become vendors.
Response: HHS will require vendors to offer training that is
applicable in all FFE States, consistent with the current HHS training.
As noted in the preamble to the proposed rule (79 FR 70706), the
establishment of standards for HHS-approved vendors of alternative
training and information verification processes, we seek to make the
FFE training and registration process easier for agents and brokers
while also attracting greater agent and broker participation in the
FFEs through the development of partnerships with vendors. After
careful consideration of these comments, we have amended paragraph
(b)(2) to require vendors to offer CEU credit for their training
programs in at least five States in which an FFE is operating,
effective for plan year 2016 training. Many businesses, trade
associations, and States currently offer training that qualifies for
CEUs, so we do not believe this requirement will be a significant
burden for vendors. We believe five is a reasonable number of States in
this initial year of the vendor-hosted FFE training and information
verification alternative avenue, and we intend to monitor and evaluate
whether this number should be modified in future years. States may
apply to be recognized as HHS-approved vendors to offer FFE training
and information verification to agents and brokers, and must comply
with the same standards as other vendor applicants. HHS will continue
to require the Exchanges, including FFEs, to enter into agreements with
and register agents and brokers, as described in Sec. 155.220(d) and
Sec. 155.260(b).
We are finalizing these provisions as proposed, with the following
modifications. We are dividing proposed paragraph (a) into three
paragraphs. To add description to the information verification
functionality that vendors must provide to agents and brokers, we are
adding ``proof of valid licensure'' in paragraph (a)(2), and also
adding ``verification of valid State license'' to the new paragraph
(b)(1)(i). We are adding paragraph (b)(1)(ii) to clarify that vendors
must have the ability to host identity proofing, but do not need to
demonstrate prior experience. In paragraph (b)(2), we are adding
``offering continuing education units (CEUs) for at least five States
in which an FFE is operating.'' We are adding ``format, and frequency''
to paragraph (b)(3) with respect to the collection, storage, and
sharing of data to further protect the personally identifiable
information of agents and brokers, and aid HHS in the monitoring of
vendors' training and information verification programs.
3. Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance Affordability
Programs
a. Annual Eligibility Redetermination (Sec. 155.335)
In Sec. 155.335, we proposed permitting Exchanges to implement
alternative re-enrollment hierarchies in future benefit years. We
sought comment on a default re-enrollment hierarchy that consumers
could opt into that would be triggered if the enrollee's current plan's
premium increased from the prior year, or increased relative to the
premium of other similar plans (such as plans of the same metal tier),
by more than a threshold amount, such as 5 percent or 10 percent. We
also sought comment on whether SBMs should have the flexibility to
implement alternative re-enrollment hierarchies beginning with the 2016
open enrollment and whether to adopt any such alternatives in the FFE
for 2017 open enrollment.
In light of the comments discussed below, we are not finalizing our
proposal to explore alternative re-enrollment hierarchies for the FFE
at this time. However our current rules permit Exchanges to implement
alternative re-enrollment hierarchies under Sec. 155.335(a)(2)(iii)
based on a showing by the Exchange that the alternative procedures
would facilitate continued enrollment in coverage for which the
enrollee remains eligible, provide clear information about the process
to the qualified individual or enrollee (including regarding any action
by the qualified individual or enrollee necessary to obtain the most
accurate redetermination of eligibility), and provide adequate program
integrity protections, and we welcome efforts by SBEs to develop
alternative hierarchies consistent with these standards that meet the
needs of their consumers.
Comment: We received many comments regarding the proposed
alternative re-enrollment hierarchies. Commenters who opposed
permitting alternative enrollment hierarchies, particularly those that
prioritize low-premium plans, noted that, in most cases, the plan a
consumer chooses during open enrollment is one that the consumer has
shopped for and has determined best meets his or her needs.
Additionally, commenters highlighted that low-cost premiums do not
necessarily lead to lower overall cost of coverage because deductibles,
copayments, coinsurance, and out-of-pocket limits may be higher.
In contrast, some commenters supported the proposal's emphasis on
low-cost premiums. One commenter believed that multiple re-enrollment
hierarchies should be available to consumers, but cautioned that these
options should be limited to two, and be easy to understand.
Commenters had concerns that consumers may not realize that opting
into a default enrollment hierarchy based on low-cost premiums may
result in other significant changes to their coverage, as noted above.
Commenters also requested that, if alternative hierarchies are
implemented, consumers be made aware of the consequences of selecting
this default re-enrollment option both at the time of initial
enrollment when a person could opt into this and also prior to re-
enrollment.
Some commenters noted that the proposal may not keep consumers
actively engaged in the process of re-enrollment and making coverage
choices. Commenters emphasized that, if alternative hierarchies are
implemented, Exchanges must educate consumers at the time of enrollment
about their choice and what it may mean for their future health
coverage and costs. Commenters stressed that consumer notices should
emphasize the benefit of returning to the Exchange during the open
enrollment period to examine plan options and encouraged focus testing
to determine messaging that best communicates the implications of
opting into a re-enrollment hierarchy.
We received a few alternative ideas for re-enrollment hierarchies,
including basing re-enrollment on factors consumers identify as most
important to them. One commenter recommended
[[Page 10793]]
permitting consumers to choose between a default re-enrollment
hierarchy that prioritizes the consumer's choice of plan, as the
current policy does, versus prioritizing the consumer's original choice
of premium. The commenter believed that presenting these two hierarchy
choices to consumers would greatly increase consumer understanding of
the significance and consequences of selecting one hierarchy over the
other. Another commenter suggested limiting the low-cost premium
hierarchy option to only those consumers who are currently enrolled in
the lowest-cost or second-lowest cost silver plan to target consumers
who are most likely to notice a change in premium and make it
administratively easier to implement.
Finally, several commenters emphasized the need to continue to
focus on the development of the current redetermination and re-
enrollment process. Commenters noted improvements should be made to the
technical ability to support automatic eligibility redeterminations,
particularly those including determinations for advance payments of the
premium tax credit and cost-sharing reductions. We received several
comments recommending that HHS wait to implement any alternative
hierarchies until the current enrollment hierarchies have operated for
a few years and more information and lessons can be gleaned from the
experience. In contrast, a few commenters, who supported the proposal,
encouraged early adoption of the policy, and one commenter suggested
that consumers would not want to wait to take advantage of this low-
cost option.
Response: We appreciate the many comments received regarding
alternative re-enrollment hierarchies and are sensitive to the concerns
raised by commenters. Consumers consider many factors when selecting
health coverage in addition to the premium, including the provider
network, cost-sharing, deductibles, and other factors which affect
overall costs, continuity of care, and the consumer experience. At the
same time, we continue to believe that default re-enrollment of
consumers in the same plan (or a similar plan) may not best serve
consumers' interests in cases where the premium for their plan relative
to available alternatives has changes substantially. Due to concerns
expressed by commenters, we are not finalizing changes to the re-
enrollment hierarchies. Instead, the existing re-enrollment hierarchies
will remain in place. In accordance with commenters' suggestions, we
may revisit alternative hierarchies as we learn more about consumer
preferences and gain implementation experience. We will also work to
continue to improve the current annual redetermination and renewal
processes, including the concerns expressed by commenters for the need
for greater consumer education and engagement efforts. As noted below,
we encourage SBEs to consider alternative re-enrollment hierarchies.
Comment: Most commenters, including those representing SBEs,
supported the proposed flexibility for SBEs to implement alternative
re-enrollment hierarchies. Commenters saw this flexibility as a way to
further test alternative hierarchies before they are implemented more
widely, and also as a way to meet the unique characteristics of each
Exchange. Additionally, one commenter expressed opposition to providing
State flexibility by the 2016 benefit year out of concern that
consumers would not have enough time to be properly educated about re-
enrollment by operation of the alternative hierarchy and because no
precedent exists for reassigning a consumer to an entirely new set of
coverage benefits. Finally, one commenter, who supported permitting
State flexibility in this regard, did not believe HHS should permit
States to prioritize issuer continuity.
Response: SBEs play an important role in implementing policies and
providing important feedback regarding their success and difficulties,
particularly because each SBE has a unique consumer base and market. As
noted above, under our current regulations, SBEs may gain approval from
HHS to implement alternative default re-enrollment hierarchies. We
encourage SBEs to consider alternative hierarchies and we will closely
examine the results of any SBE actions in this area.
Comment: We received a few comments requesting more information
regarding how this proposal would impact stand-alone dental plans
(SADPs). Several commenters noted that the process for re-enrolling in
a SADP should be separate and independent from re-enrollment in a QHP.
Response: Because we will not implement the proposed alternative
re-enrollment hierarchies at this time, we are not addressing how this
policy would affect SADPs. However, we appreciate the comments raising
this issue and, if the proposal is revisited in the future, we will
address concerns regarding SADPs then.
4. Exchange Functions in the Individual Market: Enrollment in Qualified
Health Plans
a. Enrollment of Qualified Individuals Into QHPs (Sec. 155.400)
We proposed to amend Sec. 155.400(e) to explicitly provide for an
Exchange to establish a standard policy for setting deadlines for
payment of the first month's premium.
For the FFEs, we proposed several possible payment deadlines tied
to the coverage effective date for regular effective dates (meaning
coverage effective the first day of the following month for plan
selections made between the first and fifteenth of the month, and
coverage effective the first day of the second month following a plan
selection made between the 16th and the end of the month). Some options
we considered included providing consumers until the coverage effective
date, or the day before the coverage effective date, to make their
first month premium payment. Alternatively, we considered providing
consumers additional time after the coverage effective date to make
their premium payment (5 days, 10 days, or 30 days after the coverage
effective date). We sought comment on the period of time following the
coverage effective date an issuer could be required or permitted to
accept a first month's premium payment for that coverage.
With respect to effective dates other than regular effective dates,
meaning retroactive or accelerated coverage effective dates resulting
from enrollment under certain special enrollment periods (including
birth and marriage), resulting from the resolution of appeals, or
resulting from amounts newly due for prior coverage based on issuer
corrections of under-billing, we considered a premium payment deadline
of 10-15 business days from when the issuer receives the enrollment
transaction.
We sought comment on which proposed premium payment deadlines give
issuers an acceptable amount of time to send an invoice and allow for
timely payment by the consumer, and give consumers sufficient time to
make the payment. We also sought comment on how such a policy would
likely affect issuer operations and consumers' ability to obtain
coverage.
We noted that because this rulemaking will likely not be finalized
until after open enrollment for 2015, any such deadlines would not be
applicable for that open enrollment period.
We are finalizing the provisions proposed in Sec. 155.400 of the
proposed
[[Page 10794]]
rule, with the inclusion of premium payment deadline policies for the
FFEs, selected from among the options described in the proposed rule.
Specifically, we revised paragraph Sec. 155.400(e) to establish a
standard policy for premium payment deadlines in the FFEs, while
leaving other Exchanges the option of establishing such policies. We
added Sec. 155.400(e)(1) to establish a premium payment deadline
policy for the first month's premium payment for a first-time
enrollment on an FFE or for an active or passive reenrollment in a plan
within a new product or with a new issuer.
In new Sec. 155.400(e)(1)(i), we establish a policy for the FFEs
that premium payment deadlines for the first month's premium for a new
enrollment must be no earlier than the coverage effective date, but no
later than 30 calendar days from the coverage effective date in cases
where coverage becomes effective with regular coverage effective dates,
as provided for in Sec. 155.410(f) and Sec. 155.420(b)(1).
We also added Sec. 155.400(e)(1)(ii) whereby the premium payment
deadlines for the first month's premium must be 30 calendar days from
the date the issuer receives the enrollment transaction, in cases where
coverage becomes effective under special effective dates, as provided
for in Sec. 155.420(b)(2).
Comment: We received several comments recommending that HHS give
issuers flexibility surrounding payment deadlines, with the rationale
that flexibility in the first year helped maximize enrollment by
accommodating those who require additional time to make payment.
Several commenters suggested giving consumers 30 days to make their
first month's premium payment, while a large number of commenters
supported establishing a standard policy requiring consumers to make
their first month's premium payment prior to the effective date. Most
concerns raised by commenters opposed allowing premium payments after
the coverage effective date due to the uncertainty of payment for
services provided after the coverage effective date if a premium is not
paid and the enrollee is subsequently cancelled.
Response: We recognize that decisions regarding payment of the
first month's premium have traditionally been business decisions made
by issuers, subject to State rules. We believe that having some minimum
standards could benefit issuers and consumers by ensuring a consistent
operational procedure while still giving issuers flexibility. Within
this context, we also sought to provide flexibility for SBEs to
establish their own policies for premium payment deadlines.
Accordingly, we are finalizing Sec. 155.400(e) to indicate that an
Exchange may establish a standard policy for setting premium payment
deadlines, and are establishing a policy for the FFEs, as described
above.
This policy gives issuers flexibility while allowing additional
time for individuals who may have circumstances that would not
otherwise provide standard timeframes for payment.
Comment: Several commenters were confused about the additional
language to allow first month's premium payments after the coverage
effective date, thinking that a person's coverage could be effectuated
prior to the person making their payment. Many providers and some
issuers were opposed to allowing more individuals to appear to have
effective coverage and then have the coverage not be effectuated due to
non-payment of premium by the payment deadline, resulting in having to
reverse claims for payment for services rendered during the time
between the intended coverage effective date and the payment deadline.
Response: Payment for first month's premium is still required prior
to coverage being effectuated. For the FFE, in cases where a person,
consistent with an issuer's payment policy, makes their premium payment
after the coverage effective date, but before the premium payment
deadline set by the issuer, the consumer would receive a retroactive
effective date. Issuers may pend claims while waiting for the first
month's premium payment and either deny or reverse those claims based
on whether the individual makes their first month's payment by the
premium payment deadline. We believe that it is better to allow
payments, if the issuer chooses, after the coverage effective date.
Comment: Several commenters supported a uniform payment deadline,
but wanted clarification that SBEs can establish their own policy for
premium payments.
Response: While we believe that having uniform minimum standards
for all issuers for payment of a first month's premium to effectuate
enrollments could benefit issuers and consumers by ensuring a
consistent operational procedure while still giving issuers
flexibility, our intent in the proposed rule was to let each Exchange
decide whether to develop its own payment deadline policy for the first
month's premium. We are finalizing a revised Sec. 155.400(e)
indicating an Exchange may establish a standard policy for setting
premium payment deadlines, and establishing the FFEs premium payment
deadline policy for the first month's premium payment.
Comment: Some commenters suggested that the if HHS implements a
uniform policy for the first month's premium payment deadlines, HHS
should take into account consumers who have unusual circumstances (for
example, when consumers are eligible for retroactive effective dates,
an issuer fails to issue a bill in a timely manner, a consumer's
payment is misdirected by mail, etc.).
We also received several comments suggesting that for irregular
effective dates, the premium payment date should be 10-15 business days
from when the consumer receives the invoice from the issuer, not when
the issuer receives the enrollment transaction. Commenters suggested
that this would create a level playing field for consumers since some
issuers may take longer to process their enrollment transactions
Response: In this final rule, we are adding Sec.
155.400(e)(1)(ii), which accommodates consumers who are given an
accelerated or retroactive effective date based, for example, on a
change in circumstance. We want to give consumers with irregular
effective dates sufficient time to pay the first month's premium and we
believe, based on comments received that suggested giving consumers
with irregular effective dates more time to make their first month's
premium payment, 30 calendar days is sufficient and reduces the
complexity of accounting for weekends and holidays. We also recognize
that issuers do not all have a mandated standard for timeliness of
billing consumers, but we believe issuers want to collect the first
month's premium payment and have no intention to delay billing on their
end. Furthermore, depending on the issuers and how the consumer elects
to make payment, not all enrollees will be sent an invoice (for
instance, in cases where a consumer is redirected by the FFE to the
issuer's Web site and pays the premium online), whereas the FFE will
always send an enrollment transaction to the issuer when a consumer
selects a plan. Therefore, we are finalizing this rule with a standard
under which these individuals are given 30 calendar days from the date
the issuer receives the enrollment transaction to make their first
month's premium payment.
b. Annual Open Enrollment Period (Sec. 155.410)
In Sec. 155.410, we proposed to amend paragraph (e), which
provides the dates
[[Page 10795]]
for the annual open enrollment period in which qualified individuals
and enrollees may apply for or change coverage in a QHP. We proposed to
restructure paragraph (e) by placing the current provision regarding
the 2015 benefit year in paragraph (e)(1) and the proposed requirement
for all benefit years beginning on or after 2016 in paragraph (e)(2).
Specifically, in paragraph (e)(2), we proposed that for benefit years
beginning on or after January 1, 2016, the annual open enrollment
period would begin on October 1 and extend through December 15 of the
calendar year preceding the benefit year. We also proposed to
redesignate the annual open enrollment coverage effective date
provisions in paragraphs (f) and (f)(1) through (3) as (f)(1) and
(f)(1)(i) through (iii), and to add a new (f)(2), which would specify
that, for enrollments made under any annual open enrollment periods for
benefit years beginning on or after January 1, 2016, coverage would be
effective on January 1 of the year following the open enrollment
period.
We are finalizing the provisions only with regard to the 2016
benefit year, with a modification. In response to comments, at Sec.
155.410(e)(2), we are providing that for the benefit year beginning on
January 1, 2016, the annual open enrollment period begins on November
1, 2015 and extends through January 31, 2016 (2 weeks earlier but the
same length as the open enrollment period for the 2015 benefit year).
Additionally, we have revised the proposed language at Sec.
155.410(f)(2) and added three paragraphs to require that for the 2016
benefit year, the Exchange must ensure that coverage is effective
January 1, 2016, for QHP selections received by the Exchange on or
before December 15, 2015, February 1, 2016, for QHP selections received
by the Exchange from December 16, 2015, through January 15, 2016, or
March 1, 2016, for QHP selections received by the Exchange from January
16, 2016, through January 31, 2016.
Comment: We received a variety of comments regarding our proposal
to set the annual open enrollment period for benefit year 2016 and
beyond. A large portion of comments focused on the specific dates
proposed for the annual open enrollment period. Several commenters
noted their support for establishing a standard annual open enrollment
period to promote consistency from year to year. Commenters also
supported annual open enrollment dates that overlap with Medicare's
annual open enrollment period as well as the annual open enrollment
period for much employer-sponsored coverage, which commenters believed
would ensure a smoother transition for consumers moving between the
group and individual markets. One commenter supported the proposed
timeframe and noted that starting the Exchange annual open enrollment
period 2 weeks before Medicare's annual open enrollment period may
reduce stress on resources, particularly customer service call centers,
agents, brokers, and other consumer resources that are frequently
relied on during open enrollment periods.
A few commenters supported establishing the annual open enrollment
period during the last quarter of the calendar year, but recommended
slight variations on the proposed timeframe. For example, one commenter
recommended the annual open enrollment period run November 1 through
December 15, suggesting that a longer enrollment period does not lead
to better consumer decisions and that issuers may benefit from a later
start to the annual open enrollment period. Another commenter indicated
that ending the enrollment period on December 15 was too late to
accommodate the operational steps necessary to ensure a universal
January 1 coverage effective date, particularly given the complexity
associated with managing active selections, automatic renewals, and
other changes. The commenter suggested ending the enrollment period on
November 30 to give more time to issuers and Exchanges to handle
renewals. A few commenters recommended aligning with Medicare's annual
open enrollment period, October 15 through December 7. In contrast, a
few commenters requested that HHS extend the proposed annual open
enrollment period to the end of January to capture additional
consumers. Of particular concern for these commenters were consumers
who are auto-renewed into a new plan and will not have an opportunity
to use the plan before the end of the annual open enrollment period,
following which they could be unable to shop for coverage, absent a
special enrollment period (SEP).
Finally, a few commenters representing State-based Exchanges (SBEs)
and health insurance issuers shared concerns that shifting the annual
open enrollment period to October would significantly strain timelines
for product development, rate setting, product filing, and review.
These groups questioned whether notices, regulations, and templates
would be completed by HHS in time for issuers and States to fulfill
their obligations prior to annual open enrollment. Commenters noted
that starting the annual open enrollment period earlier would increase
administrative burden and constrain resources and requested giving
States and issuers additional time to prepare.
Response: We agree that establishing a consistent timeframe for
annual open enrollment will help reduce consumer confusion, and
administrative complexity. However, we understand that beginning annual
open enrollment more than a month earlier for 2016 than for 2015
requires significant advanced planning and preparation by Exchanges,
State regulatory authorities, issuers, and assisters. We were persuaded
by the concerns expressed by many commenters about the additional
burden caused by shifting the annual open enrollment period, and
therefore we are finalizing an annual open enrollment period for the
2016 benefit year that begins 1 month later than the one we had
proposed, and that will run from November 1, 2015 through January 31,
2016. We anticipate that this timeframe will ease the burden on State
regulatory authorities, Exchanges, and issuers while giving HHS the
time to conduct a thorough certification process. Additionally, the
finalized timeframe will permit additional time for consumers following
the winter holidays to complete plan selection or to select a different
plan if they do not like the plan into which they were auto-enrolled.
Finally, the finalized timeframe will continue to partially overlap
with Medicare annual open enrollment and most employer offerings, which
will benefit consumers by creating smooth transitions between coverage
and create process efficiencies for issuers handling enrollments and
re-enrollments during the same period.
Comment: Many commenters focused on the length of the proposed
annual open enrollment period. Several commenters supported
establishing a shorter annual open enrollment period. However, a few
commenters considered the proposed annual open enrollment period too
short to provide consumers sufficient time to research coverage options
and seek help from assisters. These commenters noted that consumers are
still becoming familiar with Exchange-based coverage and that the
length of the proposed open enrollment period will be a barrier to
obtaining insurance. Similarly, many commenters requested that
consumers have the opportunity to preview and compare plans starting on
September 15 of each year, even if they are unable to enroll, to
provide additional time for consumers to review and compare plans to
make informed decisions. One commenter recommended that plans be
[[Page 10796]]
made available as soon as they are certified so that consumers,
assisters, non-profit organizations, and researchers can review the
plan options available.
Response: Recognizing that consumers, issuers, State regulatory
authorities, and Exchanges may still be acclimating to the annual open
enrollment process, we are finalizing the provisions with modification
to set the annual open enrollment period for the 2016 benefit year to
run from November 1, 2015 through January 31, 2016. We will take these
recommendations under advisement as we consider options for the 2017
annual open enrollment period and beyond.
Comment: Several commenters recommended establishing the annual
open enrollment period so that it either overlaps or aligns with tax
filing season. In support of this idea, commenters noted that consumer
financial liquidity is lowest during the months of November and
December whereas many consumers receive tax refunds beginning in late
January through April, which could encourage consumers to enroll in
coverage. Commenters also noted that incurring a fee at tax filing for
not being enrolled in coverage could create an opportune moment to
encourage enrollment. One commenter maintained that aligning annual
open enrollment with tax filing would alleviate private-sector
administrative burdens because open enrollment periods for Medicare,
employer plans, and the Exchange will then not all overlap, increasing
the workload on issuers and agents and brokers. Finally, commenters
noted that tax filing provides the best possible income information for
consumers to increase accuracy of eligibility determinations, minimize
repayments, and strengthen program integrity.
Response: We appreciate the concerns that commenters raised. As
noted above, for the 2016 benefit year, we are finalizing the
provisions with modification to set the annual open enrollment period
for the 2016 benefit year to run from November 1, 2015 through January
31, 2016. We note that there are several SEPs that provide an
opportunity to enroll in coverage mid-year if a qualifying event
occurs. In addition, there are several exemptions available to
consumers, including hardship-based exemptions, which will help prevent
a consumer from being assessed a fee, and may be claimed on a
consumer's Federal income tax return. Although commenters saw
overlapping annual open enrollment with Medicare and employer offerings
as burdensome, we maintain that this overlap maximizes process
efficiencies for issuers and streamlines transitions between different
forms of coverage for consumers.
Aligning more closely with the calendar year permits consumers to
plan financially on a calendar year basis. We also note that consumers
who qualify for financial assistance can immediately receive it with
their premium upon enrollment, and consumers also may be given
additional time in which to pay their initial premium, pursuant to the
amendment to Sec. 155.400(e) described in section III.E.4.a of this
final rule, both of which should help alleviate low consumer financial
liquidity.
Comment: A few commenters representing SBEs requested that SBEs be
permitted to set their own annual open enrollment period and maintain
their own QHP filing timing.
Response: Section 1311(c)(6)(B) of the Affordable Care Act
specifically directs the Secretary to provide for annual open
enrollment periods, as determined by the Secretary for calendar years
after the initial open enrollment period. We have determined that
permitting multiple annual open enrollment periods that differ by State
will be confusing for consumers and create additional burdens on
issuers to meet variable deadlines for QHP certification, re-
certification, and rate-setting. Therefore, we are finalizing this rule
with a uniform annual open enrollment period across all Exchanges for
the 2016 benefit year.
Comment: One commenter requested that when the end of annual open
enrollment falls on a weekend (Saturday or Sunday) or a Federal
holiday, it should extend to the next business day.
Response: While we understand the concern raised by this comment,
we believe the value of establishing set dates for the annual open
enrollment period outweigh it. We anticipate that it will be easiest
for all stakeholders, particularly consumers, to remember and implement
annual open enrollment processes based on a standard set of dates from
year to year.
Comment: One commenter requested that HHS commit to publishing more
enrollment data and analyze it to maximize enrollment.
Response: HHS has published weekly enrollment reports for the 37
States using HealthCare.gov during the 2015 annual open enrollment
period. We intend to continue to gather and analyze information to
improve our processes over the course of future annual open enrollment
periods.
c. Special Enrollment Periods (Sec. 155.420)
In Sec. 155.420, we proposed certain provisions relating to
special enrollment periods. We proposed to revise paragraphs (b)(2)(i),
(b)(2)(ii), (b)(2)(iv), and add paragraphs (b)(2)(v), (b)(2)(vi), and
(b)(2)(vii), which pertain to effective dates for special enrollment
periods; to amend paragraphs (c)(2)(i) and (c)(2)(ii), which pertain to
availability and length of special enrollment periods, and to revise
paragraphs (d)(1)(ii), (d)(1)(v), (d)(2), (d)(4), and remove paragraph
(d)(10), which pertain to specific types of special enrollment periods.
We also proposed to delete the option for consumers to choose a
coverage effective date of the first of the month following the birth,
adoption, placement for adoption or placement in foster care and to
permit the Exchange to allow a qualified individual or enrollee to
elect a regular coverage effective date in accordance with paragraph
(b)(1) of this section.
We proposed to amend paragraph (b)(2)(iv) to allow persons who make
a permanent move as described in paragraph (d)(7) to have a coverage
effective date of the first day of the month following the move if plan
selection is made before or on the day of the loss of coverage and,
effective January 1, 2016, allow consumers advanced access to the
special enrollment period where a qualified individual or enrollee, or
his or her dependent, gains access to new QHPs due to a permanent move
under paragraph (d)(7).
In addition, we proposed to add new paragraphs (b)(2)(v) and
(b)(2)(vi), which pertain to effective dates for coverage that must be
obtained under court orders, including child support orders, and the
death of an enrollee or his or her dependent. In paragraph (b)(2)(v),
we proposed to require an Exchange to make coverage effective the first
day the court order is effective to minimize any gap in coverage the
individual may experience and allow Exchanges to provide consumers with
a choice for regular effective dates under paragraph (b)(1). In
paragraph (b)(2)(vi), we proposed to require that an Exchange ensure
coverage is effective the first day of the month following a death of
the enrollee or his or her dependent, and at the option of the Exchange
and the consumer, allow for regular effective dates under paragraph
(b)(1) of this section.
We proposed to combine paragraphs (c)(2)(i) and (c)(2)(ii) to a new
paragraph (c)(2) to simplify the regulatory text. In addition, we
proposed to allow
[[Page 10797]]
consumers to report a permanent move 60 days in advance of the move for
the purposes of receiving special enrollment period to reduce the
likelihood of a gap in coverage. We proposed that this change would
take effect on January 1, 2016.
We proposed to amend paragraph (d)(1)(ii) so that this special
enrollment period is available for a qualified individual or his or her
dependent who, in any year, has coverage under a group health plan or
an individual plan with a plan or policy year that is not offered on a
calendar year basis. We proposed to add paragraph (d)(2)(i) to include
situations where a court order requires a qualified individual to cover
a dependent or other person. We also proposed to add paragraph
(d)(2)(ii) to allow enrollees who experience a loss of a dependent or
lose dependent status through legal separation, divorce, or death to be
determined eligible for a special enrollment period. We proposed to
amend paragraph (d)(4), to include situations where a non-Exchange
entity is providing enrollment assistance. Concurrently, we proposed to
strike paragraph (d)(10) which provides a separate special enrollment
period for non-Exchange entity misconduct.
We proposed to add paragraph (d)(6)(iv) to create a special
enrollment period for a qualified individual in a non-Medicaid
expansion State who was previously ineligible for advance payments of
the premium tax credit solely because the qualified individual had a
household income below 100 percent of the FPL, who was ineligible for
Medicaid during that same timeframe, and experienced a change in
household income that made the individual newly eligible for advance
payments of the premium tax credit.
We also sought comments on other situations that may warrant a
special enrollment period, particularly situations specific to the
initial years in which consumers have an opportunity to purchase
coverage through an Exchange.
We are finalizing paragraph (b)(2)(i) with a minor modification.
Specifically, we are retaining the option of the Exchange to allow
consumers to elect a coverage effective date of the first of the month
following a birth, adoption, placement for adoption, or placement in
foster care or on the date of the birth, adoption, placement for
adoption, or placement in foster care. These options are in addition to
the option for regular effective dates in paragraph (b)(1) of this
section as proposed. We are amending paragraph (b)(2)(iv) to allow
these persons to have a coverage effective date of the first day of the
month following the move if plan selection is made before or on the day
of the move. We are adding paragraph (b)(2)(v) to make coverage
effective the first day of the court order and to allow Exchanges to
provide consumers with a choice for a regular effective date, in
accordance with paragraph (b)(1). We are adding paragraph (b)(2)(vi) to
require Exchanges to ensure coverage is effective the first day of the
month following the date of plan selection due to a death of the
enrollee or his or her dependent and to allow Exchanges to provide
consumer with a choice for a regular effective date, as specified in
paragraph (b)(1). The proposed paragraph (b)(2)(vi) incorrectly
referenced paragraph (d)(2)(iv), which was changed to correctly
reference paragraph (d)(2)(ii) for loss of a dependent or dependent
status. Additionally, we corrected paragraph (b)(2)(vi) to state that
coverage will be effective following the date of plan selection,
instead of following the date of death.
We are combining paragraphs (c)(2)(i) and (c)(2)(ii) to a new
paragraph (c)(2), and, in paragraph (c)(2), we are also adding a
reference in this paragraph to individuals who receive a special
enrollment period under paragraph (d)(7) to allow these consumers to
report a permanent move 60 days in advance of the move for the purposes
of receiving a special enrollment period to reduce the likelihood of a
gap in coverage. After consideration of comments received, persons who
are eligible for a special enrollment period under paragraph (d)(7)
will be able to exercise this flexibility effective January 1, 2017, or
earlier at the option of the Exchange. In paragraph (c)(3), we are
removing reference to paragraph (d)(10), which is now included in
paragraph (d)(4).
As proposed, in paragraph (d)(1)(ii), we are deleting the
expiration date of 2014 for non-calendar year health insurance
policies. We are adding paragraph (d)(2)(i), which includes when a
qualified individual gains a dependent or becomes a dependent through
marriage, birth, adoption, placement for adoption, placement in foster
care, or through a child support or other court order. At the option of
the Exchange, we are adding paragraph (d)(2)(ii) for where an enrollee
loses a dependent or is no longer considered a dependent through
divorce or legal separation, as defined by State law. Paragraph (d)(4)
is amended to include situations where a non-Exchange entity is
providing enrollment assistance. Concurrently, we proposed to strike
paragraph (d)(10) which provides a separate special enrollment period
for non-Exchange entity misconduct. We are adding paragraph (d)(6)(iv)
to include qualified individuals in non-Medicaid expansion States who
were previously ineligible for advance payments of premium tax credits
solely because the individual had household income under 100 percent of
the FPL, who was ineligible for Medicaid during that same timeframe,
and experiences a change in household income to become eligible for
advance payments of the premium tax credit.
Comment: Commenters were divided in their responses to the proposed
changes to coverage effective dates for special enrollment periods
resulting from birth, adoption, placement for adoption, and placement
in foster care, as proposed in paragraph (b)(2)(i) of this section.
Some commenters expressed concern about the potential gap in coverage
if a parent were to elect a prospective coverage effective date for the
child, while others expressed concern regarding our proposal to remove
the option for coverage to be effective the first day of the month
following the triggering event. We also received comments in support of
our proposal to increase flexibility for electing a coverage effective
date that best fits the family's needs.
Response: Current regulations require Exchanges to ensure coverage
is effective retroactive to the date of birth, adoption, placement for
adoption, or placement in foster care and allow Exchanges the option to
provide prospective coverage effective dates to the first of the month
following the triggering event. We agree with commenters emphasizing
the importance of coverage effective dates that best fit the needs of a
family. Accordingly, we are finalizing the addition of a new option for
coverage to be effective following regular effective dates, as
proposed, and are not removing the option for coverage to be effective
the first of the month following a birth, adoption, placement for
adoption, or placement in foster care. If the Exchange allows for
prospective coverage effective dates, it would be at the option of the
consumer to elect this date or to elect the retroactive coverage
effective date back to the date of birth, adoption, placement for
adoption, or placement in foster care.
Comment: Several commenters urged HHS to clarify the proposed
changes to the special enrollment period for a permanent move,
including specifying that consumers must submit proof of a change of
address and providing clarification that changes to the special
enrollment period for a permanent move
[[Page 10798]]
includes individuals who are being released from incarceration. There
was also a request to amend the proposed implementation effective date
for this special enrollment period, which was set for January 1, 2016.
Response: Exchanges must verify residency information as outlined
in Sec. 155.315(d) to make an eligibility determination, which
includes a determination of eligibility for enrollment periods, per
Sec. 155.305(b). As noted in the preamble to Exchange Establishment
Rule, 77 FR 18310 (March 27, 2012), qualified individuals newly
released from incarceration are eligible for the special enrollment
period afforded to individuals who gain access to a new qualified
health plan as a result of a permanent move. Therefore, under the rule
being finalized, incarcerated individuals would be able to report a
permanent move up to 60 days in advance of their release from
incarceration, once a formal release date has been set. Recognizing
that Exchanges may need more time than previously afforded in the
proposed rule to implement this special enrollment period, it will be
effective January 1, 2017. Exchanges are encouraged to implement as
soon as possible.
Comment: Several commenters requested HHS provide authority for
additional triggering events for special enrollment periods. Some
commenters requested that pregnancy trigger a special enrollment
period, so that women who are either not enrolled or are enrolled in a
catastrophic plan can select and enroll in or change qualified health
plan coverage prior to the birth of a newborn. Other commenters
requested that, when an individual reports that he or she is a victim
of domestic abuse, it triggers a special enrollment period, so that he
or she may select and enroll in a qualified health plan on a separate
application from his or her abuser, along with any dependents.
Response: We are not finalizing additional triggering events based
on life changes at this time. Specifically, flexibility afforded under
Sec. 155.420(d)(9) allows the Secretary to provide for additional
special enrollment periods in the case of exceptional circumstances, as
determined appropriate, and HHS will continue to exercise that
authority through sub regulatory guidance. Furthermore, a State may
establish additional special enrollment periods to supplement those
described in this section as long as they are more consumer protective
than those contained in this section and otherwise comply with
applicable laws and regulations.
Comment: We received comments both in support of, and opposed to,
changes to coverage effective dates for the newly proposed special
enrollment period for court orders, including a child support order at
Sec. 155.420(b)(2)(v). Some commenters supported increased flexibility
for consumers to elect a retroactive coverage effective date back to
the day of the court order, while other commenters requested that
changes always be made effective the first of the month following the
court order.
Response: Based on comments received, we believe that it is most
consistent to treat consumers who gain a dependent, regardless of the
means, in an equitable manner. In addition, a court order may be
effective in the middle of a month and requiring the individual to wait
until the first of the following month to enroll in coverage may
violate State law. Accordingly, we are finalizing the rule as proposed
whereby the effective date for the special enrollment period for a
court order will be effective in accordance with paragraph (b)(2)(i) of
this section.
Comment: We received comments that requested changes to coverage
effective dates for the newly proposed special enrollment period for
losing a dependent as a result of death at Sec. 155.420(b)(2)(vi).
Some commenters requested coverage be effective retroactive to the date
of death, others supported the proposed regulatory text to provide
coverage effective the first day of the month following the death,
while other commenters requested that HHS limit the number of
situations which will allow for retroactivity. Some commenters also
requested that all family members, regardless of whether they are part
of the enrollment group or are enrolled in a qualified health plan
through the Exchange, receive a special enrollment period. Another
commenter requested that no special enrollment period be given for
death as other special enrollment periods likely apply.
Response: In response to comments, we believe it makes sense to
limit the number of situations that will allow for retroactivity, we
have modified the proposed regulatory text to finalize the coverage
effective date as the first day of the month following the date of plan
selection, rather than the date of death. Providing a coverage
effective date of the first of the month following the date of death
would give the consumer retroactivity if they are reporting the death
late in the special enrollment period window. We believe this balances
the need to provide dependents of the deceased a special enrollment
period, while addressing requests from commenters to limit the middle
of the month and retroactive coverage effective dates. In addition, we
encourage issuers to maintain qualified health plan coverage for
remaining members of the enrollment group through the end of the month.
The special enrollment period as a result of a death is intended for
remaining enrollees on an application whose health insurance coverage
is impacted due to the death; therefore, only the affected members will
be provided a special enrollment period. As noted by commenters, non-
enrollees may be determined eligible for other special enrollment
periods including that for loss of coverage.
Comment: Commenters supported the proposed language which provided
for a special enrollment period for individuals enrolled in non-
calendar year group health plans or individual health insurance
coverage. One commenter requested clarification that this would also
apply to group health plans outside of the Exchange.
Response: We are finalizing this policy as proposed. We note that,
as specified in the proposed rule, this policy provides a special
enrollment period inside the Exchange for individuals whose coverage in
group health plans and individual market plans offered outside of the
Exchange is expiring, including grandfathered and transitional plans.
Under Sec. 147.104, this special enrollment period also applies to
individuals who seek to enroll in individual market coverage off the
Exchange.
Comment: Commenters requested that HHS provide additional
clarification and flexibility for the special enrollment period for
loss of a dependent or dependent status due to legal separation,
divorce, or death. Comments included requests to extend this special
enrollment period to individuals not currently enrolled in a qualified
health plan, to include same sex couples who enter into a legally
recognized relationship other than marriage, such as domestic
partnerships and civil unions, and to provide Exchanges increased
flexibility for implementation.
Response: We believe the text provides flexibility for consumers to
be determined eligible for the special enrollment period if the
separation or termination of a civil union or domestic partnership is
in accordance with State law. In addition, we note that consumers not
currently enrolled in a qualified health plan who experience one of the
life events described in this provision may be determined eligible for
a special enrollment period in
[[Page 10799]]
accordance with existing special enrollment period provisions,
specifically loss of coverage. Recognizing that Exchanges may need more
time to implement the necessary functional IT changes, we are making
paragraph (d)(2)(ii) effective January 1, 2017. Exchanges are
encouraged to implement the policy as soon as possible.
Comment: Several commenters requested that the special enrollment
period provided in paragraph (d)(8) of this section be extended to
include the dependents of Indians to allow them to change enrollment in
a qualified health plan once per month.
Response: An Indian as provided under section 4(d) of the Indian
Self-Determination and Education Assistance Act (ISDEAA) and section 4
of the Indian Health Care Improvement Act (IHCIA) is defined as an
individual who is a member of an Indian tribe. Both ISDEAA and IHCIA
have nearly identical language that refers to a number of Indian
entities that are included in this definition on the basis that they
are recognized as eligible for the special programs and services
provide by the United States to Indians because of their status as
Indians. As such, the statute specifically provides the special
enrollment period defined in paragraph (d)(8) of this section as
applying to the individual who is eligible for special programs and
services because of their status as an Indian, and not their
dependents.
Comment: We received many comments in response to our proposal to
extend a special enrollment period to individuals below 100 percent of
the FPL in non-Medicaid expansion States that later become eligible for
advance payments of the premium tax credit at Sec. 155.420(d)(6)(iv).
A few commenters asked for HHS to clarify that an individual would be
eligible for the special enrollment period if he or she experienced a
change in household composition or size, in addition to a change in
household income, and one commenter requested that change in household
income required a change in percentage of the FPL.
Response: We are finalizing this policy as proposed. We note that
for purposes of determining eligibility for this special enrollment
period, an individual's percentage of the FPL is a function of
household income, composition and size; therefore, individuals who gain
eligibility because of a change in income or a change in household
composition will be eligible for this special enrollment period.
Comment: Several commenters requested that HHS include additional
special enrollment periods pertaining to provider networks,
specifically when a consumer enrolls in a qualified health plan with an
inaccurate provider directory, enrolls in a plan which changes their
health plan's provider or pharmacy networks mid-year, or enrolls in a
plan with no in-network providers within a 25 mile radius of the
consumer.
Response: We acknowledge the need for consumers to have access to
correct information about their QHPs and participating providers and
pharmacies, and have promulgated provisions pertaining to the
maintenance and dissemination of provider and pharmacy directories in
this rule. However, provider and pharmacy network participation changes
frequently. Therefore, determining who would be eligible for the type
of special enrollment period suggested by commenters would require that
issuers report to the Exchange whenever provider and pharmacy network
participation changes and that the Exchange notify consumers
potentially impacted by such changes. As such, we are not making
changes in response to these comments, and note that consumers may be
determined eligible for the special enrollment period provided in
paragraph (d)(5) of this section if an issuer substantially violates
their contract with the enrollee.
Comment: We received comments that requested the length of the
special enrollment period for loss of coverage provided in paragraph
(d)(1) of this section be shortened from 120 days to 30 or 60 days, to
reduce the administrative burden on the Exchange and issuer to enroll
the consumer in retroactive coverage.
Response: We note that the special enrollment period for loss of
coverage, as provided in paragraph (c)(2) of this section, is 60 days.
We clarify that, while an individual has 60 days before and after the
loss of coverage to select a qualified health plan through the
Marketplace, the coverage generally may not be effective until the
first day of the month following the loss of coverage in accordance
with paragraph (b)(2)(iv) of this section. Both the advanced
availability of this special enrollment period and its duration are
intended to minimize the likelihood that an individual will experience
a significant gap in coverage.
Comment: We received comments requesting that Exchanges provide
health insurance companies with the specific reason for a special
enrollment period so that the health insurance company may determine
during the benefit year if a change to a policy is a result of a
special enrollment period or a modification to an existing policy.
Response: HHS has issued technical guidance, including the Standard
Companion Guide Version 1.5 (issued March 22, 2013), which provides
Exchanges with the information necessary to build the ability to send
the reason for Special Enrollment Periods on the enrollment
transaction. The FFEs also use a casework system to provide insurance
companies with the type of special enrollment period being provided to
a consumer.
Comment: A commenter requested that HHS reduce the number of
special enrollment periods other than qualifying life events.
Response: We believe that the current special enrollment periods
requirements appropriately account for changes in circumstances that
necessitate when individuals would need to select a new or different
qualified health plan and balance these needs with the administrative
burdens of enrollment changes for issuers.
Comment: A commenter requested that all special enrollment periods
be available both through the Exchange, and individual and small group
market plans.
Response: We note that in accordance with Sec. 147.104(b)(2)
health insurance issuers in the individual market must provide a
limited open enrollment period for the special enrollment periods
provided in paragraph (d) of this section, with the exclusion of
paragraphs (3), (8), and (9).
Comment: We received general support for the proposed changes to
include non-Exchange entities in the special enrollment period where
enrollment or non-enrollment in a qualified health plan through the
Marketplace is a result of the error of the Exchange. Commenters noted
concern regarding the subjectivity of defining an error of the Exchange
and requested CMS outline the specific scenarios which would warrant
such a special enrollment period.
Response: We believe the flexibility for Exchanges to determine
when a special enrollment period is warranted due to an error of the
Exchange protects consumers. HHS has issued guidance and will continue
to issue guidance, as needed, related to how Exchanges define errors of
the Exchange in accordance with paragraph (d)(4) of this section.
Comment: We received a comment that HHS provide clarification that
the existing special enrollment period available for loss of minimum
essential coverage (MEC) at paragraph (d)(1)(i) should not be triggered
when a
[[Page 10800]]
consumer's policy ends at the end of the benefit year because
guaranteed renewability prevents the consumer from losing their
coverage.
Response: We do not think the recommended clarification is
necessary. The existing language in the final rule specifies that the
date of the loss of coverage is the last day the consumer would have
coverage under his or her previous plan is sufficient. We also note the
availability of the special enrollment period in Sec.
155.420(d)(1)(ii) for consumers in individual market plans with non-
calendar year plan years.
d. Termination of Exchange Enrollment or Coverage (Sec. 155.430)
Under our current rules, Sec. 155.430(b)(1) requires an Exchange
to permit an enrollee to terminate his or her coverage in a qualified
health plan (QHP) following appropriate notice to the Exchange or the
QHP. We proposed to amend this paragraph by adding a sentence to
clarify that, to the extent the enrollee has the right to cancel the
coverage under applicable State laws, including ``free look''
cancellation laws--that is, laws permitting cancellation within a
certain period of time, even following effectuation of the enrollment,
the enrollee may do so, in accordance with the requirements of such
laws. Furthermore, we proposed to amend Sec. 155.430(d)(2) to add a
new paragraph (d)(2)(v) allowing a retroactive termination effective
date when an enrollee initiates the termination, if specified by
applicable State laws, such as ``free look'' provisions.
Additionally, we proposed to amend Sec. 155.430(b)(1) by removing
the language requiring the appropriate notice to the Exchange or QHP
since the notice requirement is addressed in Sec. 155.430(d) and this
would give greater flexibility for other enrollee initiated
terminations where appropriate notice is not defined.
We also proposed to explicitly state that the requirement for
Exchanges to ensure appropriate actions are taken in connection with
retroactive terminations, currently set forth in paragraph (d)(6)
regarding special enrollment periods, applies to all retroactive
terminations, including valid cancellations of coverage under a ``free
look'' law. To do so, we proposed to move the applicable language to a
new paragraph (d)(8). We also proposed to add reconciliation of
Exchange user fees to the list of items Exchanges would need to
address. Under that requirement, the Exchange will ensure that
appropriate actions are taken to make necessary adjustments to advance
payments of the premium tax credit, cost-sharing reductions, Exchange
user fees, premiums, and claims, while adhering to any State law. We
noted that, under our proposal, the enrollee would not become eligible
to receive a special enrollment period as a direct result of the ``free
look'' cancellation.
We also proposed to add a new paragraph (b)(1)(iii) which would
require Exchanges to establish processes for a third party to report
the death of a consumer.
We noted that we interpret market-wide guaranteed availability and
renewability requirements to mean that a QHP offered through the
Exchange must generally be available and renewable outside the
Exchange. We proposed to make changes to Exchange regulations that
could be construed to limit coverage in a QHP to coverage through the
Exchange. For example, we proposed to amend Exchange regulations
referencing ``termination of coverage'' so that they appropriately
refer to termination of enrollment through the Exchange and not
necessarily termination of the coverage altogether.
We are finalizing the provisions proposed in Sec. 155.430 of the
proposed rule, with a minor modification. We are revising Sec.
155.430(b)(1)(i) to specify that an enrollee has a right to terminate,
and not just cancel coverage according to any applicable State law.
Cancellation is a specific type of termination and, as further
explained below, we want to accommodate State laws that provide for
termination, not just cancellation. We also corrected a typographical
error in Sec. 155.430(b)(1)(iii). We also make conforming revisions to
Sec. Sec. 155.430, 155.735, 156.270, 156.285 and 156.290 of the
Exchange and SHOP regulations to align them with our interpretation of
the guaranteed availability and guaranteed renewability requirements,
changing references to ``coverage'' to now also refer to ``enrollment
through the Exchange,'' ``enrollment through the SHOP,'' or
``enrollment,'' as applicable.
Comment: Commenters, mainly issuers, opposed allowing termination
of coverage after the coverage effective date, citing an increase in
administrative costs and a potential to create a less healthy risk
pool; many consumer advocates and the NAIC supported the free-look
proposal. Other commenters stated that HHS should not establish
specific requirements related to free look periods, but should
explicitly state that issuers should continue to adhere to existing
State laws for Exchange enrollees.
Response: Our intent in the proposed rule was to accommodate State
laws that provided consumer protections such as ``free look''
provisions, to give consumers in States with such laws the right to
terminate coverage in accordance with those laws. Therefore, the intent
of the regulation is to ensure that issuers adhere to existing State
laws for Exchange enrollees, not to create new Federal laws. Thus, this
change should not increase the burden on issuers. To make sure that we
do not unintentionally limit the applicability of these types of laws,
we are finalizing Sec. 155.430(b)(1)(i) to use the word ``terminate''
in place of ``cancel,'' specifying that the enrollee has the right to
terminate their coverage under any applicable State laws.
Comment: Some commenters were concerned with the cost and burden of
correcting financial information for retroactive terminations, and the
uncertainty of payment for services as a result of retroactive
terminations.
Response: We acknowledge that retroactive terminations may cause
some administrative burden for correcting financial information.
However, there are scenarios that currently exist in the Exchange that
result in retroactive terminations. Furthermore, it remains necessary
that the enrollment group pay the correct amounts for a given policy as
already codified in Sec. 155.430(d)(6). We note issuers and providers
should continue to follow existing policies when dealing with
retroactive terminations. Therefore, we are finalizing Sec.
155.430(d)(8) to ensure that appropriate actions are taken to make
necessary adjustments to advance payments of the premium tax credit,
cost-sharing reductions, Exchange user fees, premiums, and claims,
while to adhering to State law.
Comment: We received several comments urging that an SEP be given
to consumers who exercise their free-look provision outside of open
enrollment. These commenters suggested that the unavailability of an
SEP significantly undercuts the value of the free-look provision.
Response: Granting an SEP for an individual exercising a
retroactive termination under State law could result in multiple
successive enrollments and terminations pursuant to a free look law,
which we believe would create unwarranted burden on issuers and
providers.
Comment: Several commenters asked us to clarify that the protection
outlined in Sec. 155.430 applies in States with ``free look laws.''
One commenter recommended that the protection apply more widely,
including for States that have policies related to termination of
coverage, like ``free look provisions,''
[[Page 10801]]
that may not be law but that are otherwise enforceable by the State.
Another commenter expressed concern on deferring to State laws because
of the resulting variance in applicable standards. The commenter
recommended establishing Federal standards and allowing States the
option to establish more protective standards.
Response: Our intent was to clarify that consumers in States with
such laws have the right to terminate coverage in accordance with those
laws. We do not intend to create Federal standards that give consumers
additional reasons to terminate coverage. For States that have policies
related to termination of coverage, like ``free look provisions,'' that
may not be law but that are otherwise enforceable by the State, issuers
must adhere to such policy as enforced by the State. Accordingly, we
are finalizing Sec. 155.430(b)(1)(i) to specify that the enrollee has
the right to terminate their coverage under applicable State laws.
Comment: We received a comment recommending that HHS reflect
retroactive termination dates on 834s and include termination reason
codes.
Response: The 834s currently include the effective date of the
termination as well as a high-level maintenance reason (INS04) and an
additional maintenance reason indicating that the transaction is a
termination or cancellation. We are working on future functionality to
indicate more specific additional maintenance reasons for terminations
and cancellations.
Comment: Commenters generally supported the proposed provisions
that require Exchanges to establish a process for a third party to
report the death of a qualified health plan enrollee. One commenter
requested clarification regarding whether the report of death may be
made to the issuer or the Exchange.
Response: We are finalizing this provision as proposed, and clarify
that Exchanges have flexibility to establish a process for reporting
the death of an enrollee. For instance, in the Federally-facilitated
Exchange, the reporting of a death of an enrollee is initiated with the
Exchange.
Comment: One commenter requested that an individual's agent or
broker be able to report their client's death to the Exchange to
initiate a termination of their coverage.
Response: An individual's agent or broker may report their client's
death to the Exchange in accordance with the process established by the
Exchange. Depending on the Exchange-specific procedures, the agent or
broker may be required to submit documentation proving the death of the
individual.
Comment: We received several comments on our proposal to conform
the Exchange regulations with our interpretation of the guaranteed
availability and renewability requirements. Many commenters supported
the proposal. One commenter was concerned about Exchanges' ability to
distinguish circumstances warranting termination of Exchange enrollment
from circumstances warranting full termination of coverage. Another
commenter was concerned about issuers' ability to seamlessly continue
coverage of terminated Exchange enrollees outside the Exchange and
recommended that HHS delay finalizing the proposal until its
operational feasibility could be assessed.
Response: Loss of eligibility for enrollment in a QHP through the
Exchange is not necessarily a basis for non-renewal or termination of
an individual's or employer's coverage in the market outside the
Exchange. Therefore, we make conforming amendments in this final rule
to the following sections of the Exchange and SHOP rules: Sec. Sec.
155.430, 155.735, 156.270, 156.285 and 156.290. These amendments are
intended to more clearly distinguish termination of enrollment through
the Exchange from termination of coverage with the issuer. Termination
of coverage is governed by the guaranteed renewability provisions in
section 2703 of the PHS Act and Sec. 147.106. Therefore, Sec.
156.270(a) is further amended to include to a cross-reference to Sec.
147.106 to clarify when and how an issuer may terminate coverage under
applicable law. We also made a conforming amendment in Sec.
155.430(b)(2)(vi) clarifying that any of the exceptions to guaranteed
renewability that would permit an issuer to terminate an enrollee's
coverage also could be a basis for terminating enrollment through the
Exchange.
We acknowledge the operational concerns of commenters, but note
that these revisions are simply technical clarifications to eliminate
potential conflict with the requirements that currently apply to
issuers under sections 2702 and 2703 of the PHS Act. Furthermore, it is
anticipated that, in most situations involving termination by the
Exchange, such as decertification of the QHP or non-payment of premium,
the issuer will know the reason for the termination. When the issuer
knows the reason for Exchange termination and it is not a basis for
non-renewal or termination of the enrollee's coverage, the issuer
generally must continue the coverage outside the Exchange, at the
option of the enrollee, in order to satisfy the issuer's
responsibilities under the guaranteed renewability requirements, unless
an exception applies. When the issuer does not know the reason for
termination of an enrollee's Exchange enrollment, the issuer should
continue the enrollee's coverage outside the Exchange if approached by
the enrollee to do so, unless following investigation, the reason for
the termination will permit the issuer to terminate the coverage.
5. Exchange Functions in the Individual Market: Eligibility
Determinations for Exemptions
a. Eligibility Standards for Exemptions (Sec. 155.605)
In Sec. 155.605, we proposed amendments to two hardship exemptions
and a correction to a cross-reference. First, we proposed to amend
Sec. 155.605(g)(3) to permit an individual with gross income below the
filing threshold and who is not a dependent of another taxpayer to
qualify for a hardship exemption through the tax filing process and
without having to obtain an exemption certificate number (ECN) from the
Exchange. Second, we proposed amending Sec. 155.605(g)(6)(i) to
correct the citation to 42 CFR 447.50 by changing it to 42 CFR 447.51,
which cross-references the Medicaid definition for Indian. Third, we
proposed new paragraph Sec. 155.605(g)(6)(iii) to align the exemption
process for those individuals who are eligible for services through the
Indian Health Service (IHS), a Tribal health facility, or an Urban
Indian organization (collectively, ITU) with the process available to
members of Federally-recognized Tribes. Specifically, the proposed
amendment will provide individuals who are eligible for services
through an ITU to claim an exemption on their Federal income tax return
without obtaining an ECN.
We are finalizing the provisions as proposed.
Comment: Comments on this provision supported the proposed changes.
We received a few comments noting that, despite this additional avenue
to receive an exemption, some American Indians/Alaskan Natives (AI/ANs)
who qualify for a recurring ECN may continue to prefer the Exchange
exemption process rather than claiming an exemption annually through
the Federal tax-filing process. For this reason, these commenters
encouraged CMS to retain and improve the Exchange exemption application
process.
[[Page 10802]]
Response: We remain committed to improving the Exchange exemptions
process. We note that the Exchange exemptions process remains available
to AI/ANs under Sec. 155.605(f) and (g)(6)(i).
b. Required Contribution Percentage (Sec. 155.605)
Under section 5000A of the Code, an individual must have minimum
essential coverage for each month, qualify for an exemption, or make a
shared responsibility payment with his or her Federal income tax
return. Section 5000A of the Code and section 1311(d)(4)(H) of the
Affordable Care Act authorizes the Secretary to determine individuals'
eligibility for exemptions, including the hardship exemption. Under
section 5000A(e)(1) of the Code, an individual is exempt if the amount
that he or she would be required to pay for minimum essential coverage
(required contribution) exceeds a particular percentage (the required
contribution percentage) of his or her actual household income for a
taxable year. In addition, under Sec. 155.605(g)(2) an individual is
exempt if his or her required contribution exceeds the required
contribution percentage of his or her projected household income for a
year. Finally, under Sec. 155.605(g)(5), certain employed individuals
are exempt if, on an individual basis, the cost of self-only coverage
is less than the required contribution percentage but the aggregate
cost of self-only coverage through employers exceeds the required
contribution percentage and no family coverage is available through an
employer at a cost less than the required contribution percentage.
The required contribution percentage for 2014 is 8 percent under
section 5000A(e)(1)(A) of the Code. Section 5000A(e)(1)(D) of the Code
and 26 CFR 1.5000A-3(e)(2)(ii) provide that for plan years after 2014,
the required contribution percentage is the percentage determined by
the Secretary that reflects the excess of the rate of premium growth
between the preceding calendar year and 2013, over the rate of income
growth for that period. In the 2015 Market Standards Rule, we
established a method for determining the excess of the rate of premium
growth over the rate of income growth each year, and published the 2015
rate. We stated that future adjustments would be published annually in
the HHS notice of benefit and payment parameters.
Under the method previously established, the rate of premium growth
over the rate of income growth for 2016 is the quotient of (x), which
is equal to one plus the rate of premium growth between the preceding
year (in this case, 2015), and 2013, carried out to ten significant
digits, divided by (y), which is equal to one plus the rate of income
growth between the preceding year (2015), and 2013, carried out to ten
significant digits.\42\ The result of this calculation is carried out
to ten significant digits and multiplied by the required contribution
percentage specified in section 5000A(e)(1)(A) of the Code (8.00
percent). The result is then rounded to the nearest hundredth of a
percent, to yield the required contribution percentage for 2016.
---------------------------------------------------------------------------
\42\ We defined premium growth for this measure as the same
annually adjusted measure of premium growth used below in this rule
to establish the annual maximum and reduced maximum limitations on
cost sharing for plan benefit designs. That is, the premium
adjustment percentage.
---------------------------------------------------------------------------
Under the methodology described above, the total rate of premium
growth for the 2-year period from 2013-2015 is 1.0831604752, or 8.3
percent. We describe the methodology for obtaining this number below in
Sec. 156.130(e). In the 2015 Market Standards rule, we also
established a methodology for calculating the rate of income growth for
the purpose of calculating the annual adjustment to the required
contribution percentage.
The measure of income growth is based on projections of per capita
Gross Domestic Product (GDP) used for the National Health Expenditure
Accounts (NHEA), which is calculated by the CMS Office of the Actuary.
Accordingly, using the NHEA data, the rate of income growth for 2016 is
the percentage (if any) by which the most recent projection of per
capita GDP for the preceding calendar year ($56,660 for 2015) exceeds
the per capita GDP for 2013, ($53,186), carried out to ten significant
digits. The total rate of income growth for the 2-year period from
2013-2015 is estimated to be 1.0653179408 or 6.5 percent. We note that
the 2013 per capita GDP used for this calculation has been updated to
reflect the latest NHEA data.
Thus, the excess of the rate of premium growth over the rate of
income growth for 2013-2015 is 1.0831604752/1.0653179408, or
1.0167485534, or 1.7 percent. This results in a required contribution
percentage for 2016 of 8.00*1.0167485534, or 8.13 percent, when rounded
to the nearest one-hundredth of one percent.
We received no comments on the calculation of the required
contribution percentage and are therefore finalizing the percentage as
proposed.
6. Exchange Functions: Small Business Health Options Program (SHOP)
a. Standards for the Establishment of a SHOP (Sec. 155.700)
We proposed to amend Sec. 155.700(b) such that the previous
definition of ``group participation rule'' would conform with the
terminology we proposed to use in Sec. 155.705(b)(10). Specifically,
we proposed to modify the term to refer to a ``group participation
rate,'' which is a minimum percentage of all eligible individuals or
employees of an employer that must be enrolled.
We received no comments on this proposal and we are finalizing this
amendment as proposed.
b. Functions of a SHOP (Sec. 155.705)
In Sec. 155.705, we proposed to redesignate paragraph
(b)(4)(ii)(B) as new paragraph (b)(4)(ii)(C), redesignate paragraph
(b)(4)(ii)(A) as new paragraph (b)(4)(ii)(B), add new paragraph
(b)(4)(ii)(A), and amend paragraphs (b)(4)(i)(B), (b)(7), and (b)(10).
In the proposed amendment to paragraph (b)(4)(i)(B) and proposed
new paragraph (b)(4)(ii)(A), we proposed to permit the SHOP to assist a
qualified employer in the administration of continuation coverage in
which former employees seek to enroll through the SHOP. We proposed
that where a qualified employer is offering Federal or State
continuation coverage,\43\ and where a SHOP has entered into an
agreement with a qualified employer to provide this service, the SHOP
may assist the employer in administration of such coverage by billing
for and collecting premiums for the continuation coverage directly from
the covered employee or qualified beneficiary, rather than the
employer, if the qualified employer elects to have the SHOP carry out
this function. We sought comment on the interaction of the FF-SHOP's
payment grace periods and termination policies at Sec. 155.735 with
the COBRA rules the IRS has codified at 26 CFR part 54. We are
finalizing the proposed changes to Sec. 155.705(b) with a modification
to clarify that individuals other than former employees might be
enrolled in continuation coverage through a SHOP, and we are also
amending Sec. 155.735 to better align the SHOP rules with the IRS's
COBRA rules in light of the comments discussed below.
---------------------------------------------------------------------------
\43\ 29 U.S.C. 1161, et seq. (``COBRA'') or applicable State
law.
---------------------------------------------------------------------------
We considered whether the FF-SHOP should accept premium payment
using a credit card. Currently, qualified employers participating in
the FF-
[[Page 10803]]
SHOP may only pay premiums to the FF-SHOP using a check or bank draft.
We sought comment on the extent to which employers would use this
option. Some commenters stated that it may be more convenient for a
small employer to pay by credit card than by check or bank draft.
However, in light of the comments discussed below, HHS does not intend
to take action on this policy at this time.
We also proposed to revise paragraph (b)(7) to align the SHOP
regulations with the Protecting Access to Medicare Act of 2014 (Pub. L.
113-93), which repealed requirements related to deductible maximums for
employer-sponsored coverage at section 1302(c)(2) of the Affordable
Care Act. This proposal would remove the only reference in the SHOP
regulations to the requirements of Affordable Care Act section
1302(c)(2). We did not receive any comments on the proposed revisions
to paragraph (b)(7) of this section and are finalizing this proposal as
proposed.
In paragraph (b)(10), we proposed to modify the calculation of
minimum participation rates in the SHOP. We proposed that a SHOP
(either a State-based or an FF-SHOP) that elects to establish a minimum
participation rate would be required to establish a single, uniform
rate that applies to all groups and issuers in the SHOP, rather than
establishing general rules about minimum participation rates or a
threshold over which the minimum percentage may not be raised. We also
proposed that if a SHOP authorizes a minimum participation rate, such a
rate would have to be based on the rate of employee participation in
the SHOP and in coverage through another group health plan,
governmental coverage (such as Medicare, Medicaid or TRICARE), coverage
sold through the individual market, or in other minimum essential
coverage, and not on the rate of employee participation in any
particular QHP or QHPs of any particular issuer. We proposed that
State-based SHOPs would be expected to conform to the proposal by its
effective date.
In paragraph (b)(10)(i), we proposed to amend existing language
about employees accepting coverage under the employer's group health
plan to instead refer to employees accepting coverage offered by a
qualified employer to better account for employee choice.
We also proposed to amend paragraph (b)(10)(i) regarding how the
minimum participation rate would be calculated in the FF-SHOP. We
proposed to calculate the minimum participation rate in the FF-SHOP as
the number of full-time employees accepting coverage offered by the
qualified employer through the SHOP plus the number of full-time
employees who are enrolled in coverage through another group health
plan, in governmental coverage (such as Medicare, Medicaid or TRICARE),
in coverage sold through the individual market, or in other minimum
essential coverage, divided by the number of full-time employees
offered coverage through the SHOP.
We sought comment on whether this definition of which employees
would be included in the calculation should be extended beyond the SHOP
to the entire small group market to create uniformity among issuer
practices and prevent further gaming by issuers through their use of
non-standard definitions for other acceptable coverage.
We are finalizing the proposed amendments to paragraph (b)(10) with
modifications. We are modifying the proposed amendments to the language
following (b)(10); adding the amendments we proposed at paragraph
(b)(10)(i) at a new paragraph (b)(10)(ii); amending current paragraph
(b)(10)(i) to reflect that it will remain in effect for plan years
beginning prior to January 1, 2016; and redesignating paragraph
(b)(10)(ii) as (b)(10)(iii) and making a minor conforming amendment to
that paragraph to reflect the addition of new paragraph (b)(10)(ii).
The modifications clarify that the amendments to the minimum
participation rate calculation methodology requiring counting of
employees accepting coverage offered by the qualified employer through
the SHOP, and counting of employees enrolled in coverage through
another group health plan, in governmental coverage (such as Medicare,
Medicaid, or TRICARE), in coverage sold through the individual market,
or in other minimum essential coverage, will apply only to the FF-SHOP,
effective for plan years beginning on or after January 1, 2016. For
plan years beginning prior to January 1, 2016, the FF-SHOP will apply
the methodology at current (b)(10)(i). We are also modifying paragraph
(b)(10)(i) to explain that former employees would be excluded from the
calculation of minimum participation rates in the FF-SHOP under the
methodology that will remain in effect for plan years beginning prior
to January 1, 2016, to ensure that the same methodology currently being
used will continue to be used after the modification to the definition
of qualified employee in this rule takes effect. State-based SHOPs and
small group markets outside of the Exchanges are not expected to
conform to the amended calculation methodology.
Comment: Several commenters supported the proposal that would
permit a SHOP to bill for and collect premiums for COBRA. One commenter
disagreed with the policy. One commenter requested that HHS preserve
the flexibility proposed for SHOPs to determine whether they wish to
offer this service.
Many commenters requested that HHS align SHOP rules with applicable
COBRA standards and work with the applicable agencies to ensure
clarity. These commenters expressed concern that a lack of harmony
between the SHOP rules, COBRA standards, and requirements from other
Federal agencies would lead to confusion. One commenter requested HHS
specify which IRS rules are applicable.
Response: As we indicated in the preamble to the proposed rule, the
IRS has promulgated rules regarding the administration of COBRA
continuation coverage at 26 CFR 54.4980B, et seq. Our SHOP regulations
do not affect or narrow an individual's existing substantive and
procedural rights under COBRA or other Federal agencies' rules
interpreting COBRA. To harmonize existing SHOP rules regarding
terminations of coverage with the IRS's COBRA rules at Sec. 54.4980B-
8, we are adding paragraphs (c)(2)(iv) and (c)(3) to Sec. 155.735 in
this final rule. Paragraph (c)(2)(iv) is necessary because, in cases
other than COBRA continuation coverage, the FF-SHOP does not provide an
additional grace period for payments less than the total premium amount
due for a group's cost of coverage. Paragraph (c)(3) is necessary to
specify that the section does not modify existing obligations under 26
CFR 54.4980B.
To further align with existing COBRA requirements, including COBRA
eligibility for dependents and former dependents, we are modifying the
language of paragraph (b)(4)(ii)(A) of Sec. 155.705 to permit the
collection of such premiums from any person enrolled in continuation
coverage through the SHOP consistent with applicable law and the terms
of the group health plan. For improved clarity, we are also replacing
the reference in proposed Sec. 155.705(b)(4)(ii)(A) to ``Federally
mandated continuation coverage'' with a reference to continuation
coverage required under 29 U.S.C. 1161, et seq.
Comment: One commenter stated that SHOPs should also administer
required notices that relate to continuation of coverage.
Response: HHS continues to examine the feasibility of expanding
SHOP's flexibility to support additional COBRA
[[Page 10804]]
administration functions, including COBRA notification requirements.
Significant modifications may be necessary to existing SHOP rules to
ensure conformity with existing IRS rules if a SHOP were to fully
administer COBRA on behalf of an employer. Therefore, HHS does not
intend to take action on this policy at this time.
Comment: Some commenters stated that both a State-based SHOP's and
a FF-SHOP's implementation of continuation coverage administration
should extend to State-mandated continuation coverage. Some commenters
expressed concern that limiting FF-SHOP continuation coverage support
to COBRA may cause confusion among small employers regarding
responsibility for continuation coverage requirements. Another
commenter requested relief from existing SHOP payment rules requiring
the flow of funds through the SHOP where a SHOP fails to provide
payment support for continuation coverage.
Response: The finalized language does not require SHOPs to limit
this service to the collection of premiums related to Federal
continuation coverage. Both State-based SHOPs and the FF-SHOP may elect
to collect payments related to State-required continuation coverage
sold through the SHOP on behalf of small employers.
We continue to examine applicable State law to determine the
feasibility of the FF-SHOP providing this service for both State and
Federal continuation coverage. Variation in State continuation coverage
laws would add substantial complexity to the FF-SHOP's implementation
of premium collection for State continuation coverage. Therefore, the
FF-SHOP may more quickly provide relief to small employers by first
supporting COBRA continuation coverage administration while HHS
determines how it may best support State-mandated continuation
coverage.
HHS continues to believe that the flow of funds through the SHOP
best supports the administration of employee choice and therefore is
not modifying existing requirements related to the flow of funds
through the SHOP.
Comment: One commenter sought clarification on how continuation
coverage would be operationalized, including whether 820 and 834
transactions will identify members covered under continuation coverage.
Response: HHS recognizes that QHP issuers will need substantially
more detailed information to effectively integrate with a SHOP
facilitating continuation coverage. If the FF-SHOP implements
administration of premiums for continuation coverage, HHS intends to
issue further guidance.
Comment: We received several comments about whether the FF-SHOP
should accept premium payments made with a credit card. Several
commenters were in favor of this idea. However, these commenters also
noted that HHS should consider the benefits of this option against the
costs that will be incurred with this additional functionality. Some
commenters opposed accepting premium payments through a credit card and
were particularly concerned about the fees associated with the use of a
credit card. Some commenters recommended that the credit card fee
should be included as part of the user fee that HHS is already
collecting, while other commenters stated that the credit card fee
should be borne by the FF-SHOP and not issuers. One commenter noted
that the cost of the credit card fee will add to the cost of coverage
for consumers and may impact the calculation of the Medical Loss Ratio
if it is considered an administrative cost payable by an issuer. One
commenter believed that the use of credit cards to make premium
payments should not be limited to the initial payment, and instead
should be used for recurring payments.
Response: HHS will continue to consider whether there is a cost-
effective way to permit employers to pay premiums through the SHOP with
a credit card. HHS does not intend to take action on this policy at
this time.
Comment: We received one comment on our proposed amendments to the
SHOP rules about the minimum participation rate in Sec.
155.705(b)(10), asking whether issuers may maintain varying
participation requirements based on group size if this policy is
finalized to extend to the small group market outside the SHOP. We also
received comments on the proposed calculation methodology for
calculating the minimum participation rate. Some commenters supported
our proposal and some believed that our proposed methodology will
weaken the ability of the FF-SHOP to protect against adverse selection
and is not considered common market practice. One commenter recommended
not including individuals with coverage in the individual market
Exchanges because it undercuts employer-based coverage. One commenter
stated that minimum participation rates are a barrier to coverage for
businesses.
While we received some comments supporting the extension of our
proposed policy to the entire small group market, several commenters
opposed such an extension, including State-based SHOPs. One commenter
opposed our proposal because SHOP issuers are protected by programs
that issuers not participating in the SHOP are not protected by, such
as the risk corridors program. Several of these commenters stated that
the off-Exchange market should use a methodology that works best for
their market and State, and that it should be up to the State to
establish how to calculate the minimum participation rate inside and
outside of the Exchanges.
In addition to these comments, we received queries on how HHS would
verify the coverage of individuals included in the calculation of the
minimum participation rate. Several commenters also asked for details
on the one-month exception period for minimum participation rates.
Response: We are finalizing a policy under which a SHOP (either a
State-based SHOP or an FF-SHOP) that elects to establish a minimum
participation rate would be required to establish a single, uniform
rate that applies to all groups and issuers in the SHOP, rather than
establishing general rules about minimum participation rates or a
threshold over which the minimum percentage may not be raised. Under
the methodology we have finalized for calculating a minimum
participation rate, a SHOP cannot vary its minimum participation rate
based on the employer group size. In the final rule, we are modifying
the proposal to give State-based SHOPs the flexibility to establish a
different minimum participation rate calculation methodology than the
one being finalized for the FF-SHOP, but State-based SHOPs must
continue to base the rate on employee participation in the SHOP or in
the SHOP and other coverage (as in the FF-SHOP), and may not base the
rate on employee participation in a particular QHP or QHPs of any
particular issuer. We believe that providing State-based SHOPs with
this flexibility will allow States to set a calculation methodology
that aligns with their current market practice. We are also finalizing
our proposal on the calculation of the minimum participation rate in
the FF-SHOP and who is included in the methodology, but are modifying
the proposal to specify that the new FF-SHOP calculation methodology
will take effect only for plan years beginning on or after January 1,
2016. For plan years beginning before January 1, 2016, the calculation
methodology currently in place for the FF-SHOP will remain in effect.
We note that consistent with current Sec. 155.705(b)(10)(ii)
(which is
[[Page 10805]]
redesignated at Sec. 155.705(b)(10)(iii) in this rule), the FF-SHOP
may establish a different minimum participation rate in a State if
there is evidence that a State law sets a different minimum
participation rate or that a higher or lower minimum participation rate
is customarily used by the majority of QHP issuers in the State for
products in the State's small group market outside the SHOP. HHS
considered various minimum participation rate calculation
methodologies, and believes that the calculation methodology we are
finalizing for the FF-SHOP aligns with current practice in many States'
small group markets. The difficulty of verifying other coverage exists
today in the market and is not exacerbated by this rule. Additionally,
HHS believes that using this approach to calculating minimum
participation rates reduces unnecessary barriers for employer groups
seeking to cover their employees because the calculation includes
individuals with other forms of coverage, thus making it easier for
employer groups to reach the required minimum participation rate. By
including in the calculation individuals with individual market
coverage, we believe this methodology does not undercut employer-based
coverage, but rather treats employers fairly. Under the approach taken
in the final rule to accommodate for State-specific policies, State-
based SHOPs may use a calculation methodology that aligns with current
market practice in their State, and that works best for their market
and State, and are therefore not required to follow the same
calculation methodology as will apply in the FF-SHOPs.
The final rule does not modify or eliminate the one-month period
between November 15 and December 15 of each year, during which employer
groups may enroll in coverage notwithstanding any employer contribution
or group participation rules under Sec. 147.104(b)(1)(i)(B). Thus,
SHOPs may not apply the minimum participation rate to prevent initial
enrollments and renewals that occur during this one-month period.
We do not believe the proposed modification to calculation of the
FF-SHOP minimum participation rate will result in significant adverse
selection. In some States in which the FF-SHOP currently operates, its
minimum participation rate is more restrictive on enrollment than the
rate currently generally applied by issuers in the market. The proposed
modifications to the FF-SHOP's minimum participation rate will align
the calculation of the rate with current practices in these States by
including other sources of coverage in the calculation. We acknowledge
that this change will make the FF-SHOP's minimum participation rate
more inclusive than minimum participation rates in the market in some
other States. However, under current law, no group may be excluded from
the small group market altogether because it fails to meet a minimum
participation rate. Any group may enroll during the annual month-long
period under Sec. 147.104(b)(1)(B) during which no minimum
participation rate can be applied to deny coverage. Further, the new
methodology for the participation rate calculation is only more
permissive in that it lets in groups with additional sources of other
coverage. There is no basis to suggest that such a group represents
worse than average risk.
c. Eligibility Standards for SHOP (Sec. 155.710)
In Sec. 155.710, we proposed to amend paragraph (e) to specify
that where an employer has offered dependent coverage, a qualified
employee would be eligible to enroll his or her dependents in coverage
through the SHOP.
We received a comment supporting our proposal. We are finalizing
our amendment as proposed.
d. Enrollment of Employees Into QHPs Under SHOP (Sec. 155.720 and
Sec. 156.285)
In Sec. 155.720, we proposed to remove paragraph (b)(7),which
requires all SHOPs to establish effective dates for employee coverage
in the SHOP, and to make minor conforming changes to the list structure
in paragraph (b). Current Sec. 155.720(b)(7) is redundant in light of
the proposed requirements to establish effective dates under Sec.
155.725, which we are finalizing as proposed.
We received no comments on these proposed amendments. We are
finalizing the amendments as proposed.
We proposed to amend paragraph (e), which provides that issuers
must notify SHOP consumers regarding coverage effective dates so that
the provision would refer to enrollees and not qualified employees, and
proposed to remove a reference in this section to Sec. 156.260(b), in
keeping with the proposed amendments to Sec. 155.725 regarding
coverage effective dates. Under the proposal, issuers would be required
to provide this notice to anyone who enrolled in coverage through the
SHOP under the proposed amendments to the definitions of qualified
employee and enrollee, including dependents (including a new dependent
of the employee, when the dependent separately joins the plan), former
employees of a qualified employer, and certain business owners. We
noted that the notices required under this proposal could be
incorporated into existing notifications that QHPs provide to their new
customers, for example in a welcome document. We also proposed a
conforming amendment to Sec. 156.285(c) to ensure that QHP issuers
participating in the SHOP would provide notice to a new enrollee of the
enrollee's effective date of coverage.
We are finalizing the provisions with the modifications noted
below.
Comment: We received several comments on our proposed amendments to
effective date notices pursuant to Sec. 155.720(e). Some commenters
supported continuing to require issuers to send the required notices,
while others stated that the notice requirement should be shifted to
the SHOP. We also received comments on expanding the notice requirement
to the amended definition of an enrollee, which includes dependents.
Some commenters stated that notices regarding the coverage effective
date should only be provided to qualified employees and adult
dependents. Some commenters stated that these notices should be
provided separately to dependents of qualified employees if the last
known address for the dependent is different from the subscriber. We
also received one comment requesting additional time and flexibility
for issuers to implement the notice requirement for dependents under
the new definition of an enrollee.
Response: We agree that generally, when a dependent lives with the
qualified employee, separate notification to the dependent is
duplicative. As such, we are modifying the proposal to specify that
when a primary subscriber and his or her dependents live at the same
address, a separate notice need not be sent to each dependent at that
address, so long as the notice sent to each primary subscriber at that
address contains all the required information about the coverage
effective date for the primary subscriber and each of his or her
dependents at that address. We note that when dependents live at a
different address from the primary subscriber a separate notice must be
sent to those dependents.
Amending the definition of an enrollee and amending Sec.
155.720(e) to require notice to enrollees will create additional notice
obligations for issuers. To permit issuers to update their systems and
fulfill this requirement, we will provide issuers until plan years
beginning on or after January 1, 2017 to fulfill the requirement of
sending
[[Page 10806]]
effective date notices to enrollees other than qualified employees.
Because issuers have already been providing these notices to qualified
employees under the current rule, we do not believe the inclusion of
former employees that is being finalized in this rulemaking presents
similar system challenges. Thus, issuers will be required to send the
notices to everyone who meets the new definition of qualified employee
as soon as this rule takes effect. We are providing an additional year
only for issuers to begin providing notice to enrollees other than
qualified employees.
We are also making minor changes to the wording of the proposed
requirement at 156.285(c)(3), so that the final rule refers to a
requirement to ``notify'' new enrollees, rather than to ``provide''
them ``with notice.''
e. Enrollment Periods Under SHOP (Sec. 155.725 and Sec. 156.285)
We proposed to amend paragraphs (a), (g), (h), and (j)(5) of Sec.
155.725 and Sec. 156.285(b)(1) and (b)(4) to provide clarity regarding
the effective dates for coverage that all SHOP Exchanges must
establish. First, we proposed to remove the reference at current Sec.
155.725(a)(1) to the start of the initial open enrollment period for
2014 coverage, and the reference in current Sec. 155.725(a)(2) to
Sec. 156.260. We proposed to remove the reference to effective dates
under Sec. 156.260 because we are proposing to specify effective dates
in Sec. 155.725 or to more directly cross-reference the appropriate
effective date. Second, we proposed to amend Sec. 155.725(h) so that
SHOPs would need only establish effective dates for employees enrolling
in coverage during the initial group enrollment and the employee annual
open enrollment period, rather than for special enrollment periods. At
proposed paragraph (h)(2), we also codified the effective dates for
coverage in the FF-SHOP for enrollments during initial and annual open
enrollment periods. Specifically, we proposed to include language in
the SHOP regulations specifying the same effective dates that were
previously adopted for the FF-SHOP under our interpretation of the
cross reference in Sec. 156.285(b)(4) to Sec. 156.260, which in turn
cross-references Sec. 155.410(c). We noted that the dates set forth in
Sec. 155.725(h)(2) would apply only to the FF-SHOP and State-based
SHOPs would be free to establish their own effective dates for initial
and annual open enrollment.
Third, we proposed several amendments to paragraph Sec. 155.725(g)
regarding enrollment for newly qualified employees. A newly qualified
employee is an employee who becomes eligible to participate in the
employer's group health plan outside of a qualified employer's initial
or annual enrollment period; for example, because he or she was hired
outside of those periods. We proposed to move paragraph (g) to
paragraph (g)(1), and proposed amendments to the existing language to
make explicit our interpretation of current paragraph (g), which is
that a newly qualified employee becomes eligible for an enrollment
period that begins on the first day of becoming a newly qualified
employee regardless of whether the employee is subject to a waiting
period. Additionally, we proposed that the duration of a newly
qualified employee's enrollment period be at least 30 days. Where the
employee is subject to a waiting period in excess of 45 days, we
proposed that the duration of the employee's enrollment period extend
until 15 days before what would be the conclusion of the waiting period
if the employee selected a plan on the first day of becoming eligible.
We noted that if an employee waits to choose a plan until the end of
such an extended enrollment period, this could have the effect of
further delaying the effective date of coverage, consistent with Sec.
147.116(a). We also proposed to add a new paragraph (g)(2) in Sec.
155.725 to provide that the effective date for a newly hired employee
would be determined using the same rule for initial and open
enrollments that would be established by the SHOP under proposed Sec.
155.725(h). Thus, in the FF-SHOP, coverage effective dates for newly
qualified employees would be established according to Sec.
155.725(h)(2): Plan selections made between the first and the fifteenth
day of any month would be effective the first day of the following
month, and plan selections made between the 16th and the last day of
any month would be effective the first day of the second following
month. A newly qualified employee may also be subject to a waiting
period under Sec. 147.116, however, and in such cases, the effective
date may be on the first day of a month that is later than the month in
which coverage would take effect under the usual rules established by
the SHOP under Sec. 155.725(h). However, in no case could the
effective date fail to comply with the limitations on waiting period
durations at Sec. 147.116 of this subchapter.
Fourth, we proposed to amend paragraph Sec. 155.725(j)(5) to make
it clearer that the effective dates for special enrollment periods in
the SHOP should be determined according to Sec. 155.420(b).
Fifth, we proposed to harmonize Sec. 156.285(b)(1) and (4) with
the proposed amendments to effective dates described above, to specify
that QHP issuers must abide by the effective dates established under
Sec. 155.725, and must enroll qualified employees in accordance with
the qualified employer's initial and annual enrollment periods in Sec.
155.725.
We also proposed to amend Sec. 155.725(b) to harmonize rolling
enrollment in the SHOP with the regulations applicable to guaranteed
availability in States with merged individual and small group markets.
Section 147.104(f), as moved from Sec. 147.104(b)(2) by this rule,
requires that all individual and small group health insurance coverage
sold in a State with merged individual and small group risk pools be
offered on a calendar year basis, meaning that it must end on December
31 of the year in which the policy was issued. Section 155.725(b), in
contrast, requires that SHOPs permit qualified employers to purchase
coverage for a small group at any point throughout the calendar year,
and that SHOPs ensure that a participating group's plan year lasts for
12 months beginning with the first effective date of coverage. Section
155.725(b) was intended to ensure that qualified employers can offer
health insurance through the SHOP at any point during the year while
receiving a guaranteed rate 12 months following the purchase of
coverage, consistent with the current practice in the small group
market. We proposed to harmonize these two provisions in States with
merged markets, by proposing that SHOP plan years in a State with
merged risk pools would terminate on December 31st of the year in which
they began, even if certain qualified employers' plan years would thus
be shorter than 12 months. This proposal would not affect a small
employer's ability to enroll in coverage at any point in the year.
Instead, it would standardize the renewal date of such a plan in a
State with merged risk pools at the beginning of each calendar year.
We also proposed to modify paragraph (i) to permit a SHOP to elect
to renew a qualified employer's offer of coverage where the employer
has taken no action during its annual election period to modify or
withdraw the prior year's offer of coverage. The qualified employer's
offer would not be automatically renewed under this proposal if the
employer is no longer eligible to participate in the SHOP. Renewal of
the coverage offer would
[[Page 10807]]
also not be automatic if the employer is offering a single QHP and that
QHP will no longer be available through the SHOP. We proposed this
modification at the request of State-based SHOPs that desire to conform
to existing small group market practice regarding automatic annual
renewal of coverage for an employer group. A SHOP would not be required
to implement this rule.
Finally, we proposed to add paragraph (k) to make clear that SHOP
coverage may not be effectuated if the policy may not be issued to the
employer because the group fails to meet an applicable minimum
participation rate calculated at the time of initial group enrollment
or renewal, subject to Sec. 147.104(b)(1)(i)(B).
We did not receive comments on the proposed amendments to Sec.
156.285(b)(1) and (4), and are finalizing them as proposed. We are also
finalizing the provisions under Sec. 155.725 as proposed.
Comment: We received one comment on establishing effective dates
for employees enrolling in coverage during the initial group enrollment
and the annual open enrollment period. The commenter supported our
proposed provision because it establishes flexibility for State-based
SHOPs to establish their own effective dates during the initial and
annual open enrollment periods, including mid-month effective dates.
Commenters supported the proposed provision to keep effective dates for
special enrollment periods standardized. Some commenters supported the
proposed provision to ensure effective dates for special enrollment
periods are consistent with Sec. 155.420(b). One commenter opposed the
effective dates for special enrollment periods under Sec. 155.725(j)
and recommended allowing States flexibility to prescribe their own
effective dates for initial, annual, and special enrollment periods,
because there may be other implications to the effectuation of coverage
for employees and dependents with a special enrollment period.
Response: We are finalizing the provisions as proposed. We believe
that the proposed amendments allow flexibility for State-based SHOPs to
set and maintain effective dates for initial and annual open enrollment
periods to accommodate coverage effective dates for a group as soon as
possible under local market conditions. Coverage effective dates for
initial and annual open enrollment periods for the FF-SHOP will be
finalized as proposed to create a uniform enrollment timeline. We
continue to believe that the effective dates for special enrollment
periods should be standardized for all SHOPs to ensure a minimum
standard for special enrollment periods. We note that pursuant to Sec.
155.420, SHOPs have existing authority to set earlier effective dates
for certain special enrollment periods.
Comment: We received several comments on the timeline for an
employee to select a SHOP plan as it relates to employee waiting
periods. Some commenters supported our proposed policy on employee
enrollment periods and waiting period rules. One commenter noted that a
scenario could arise where an employee would need to select a SHOP plan
on a timeline that does not align with the waiting period.
Response: We are finalizing our provision as proposed. SHOPs should
ensure that an employee waiting period does not exceed the duration
permitted under Sec. 147.116. State-based SHOPs may continue to set
their own rules regarding enrollment timelines for newly qualified
employees so long as such rules comply with Sec. 147.116.
Comment: We received comments supporting the proposed enrollment
process for newly qualified employees. These commenters stated the
process provides sufficient time for employees to select a plan. One
commenter stated that an employee election period of more than 30 days
may cause confusion to consumers and may cause significant IT
modifications for issuers.
Response: We are finalizing the provision as proposed. We note that
while the rule sets a 30-day minimum for a newly qualified employee's
enrollment period, it does not require a SHOP to provide an enrollment
period in excess of 30 days to newly qualified employees. A longer
enrollment period might, however, be mandated by State law or permitted
under the terms of the plan. Because this rule provides only for a
minimum length, which already constitutes common market practice,
finalizing this rule is not expected to cause consumer confusion or
necessitate IT modifications.
Comment: We received several comments on our proposed policies to
harmonize our provision on rolling enrollment in a merged market. We
received a comment supporting rolling enrollment in States with a
merged market. Some commenters stated they believed our proposed
policies would be disruptive to States with merged markets. One
commenter asked HHS to develop a more targeted set of policy solutions
to address the specific issues associated with enrollment timelines in
States with merged markets. One commenter asked HHS to clarify whether
States with markets that are merged only for purposes of State law, but
not Federal law, are subject to these proposed rules.
Response: We are finalizing our provision as proposed. We continue
to believe that rolling enrollment in States with merged markets
provides employers an opportunity to offer health insurance through the
SHOP at any point during the year, pursuant to our policies on
guaranteed availability. We are not limiting small employer groups in
States with a merged market to the individual market enrollment periods
or otherwise prohibiting them from seeking coverage at any point during
the year. However, to align with the requirements to offer plans in the
merged market on a calendar year basis pursuant to Sec. 147.104(f), as
moved from Sec. 147.104(b)(2) by this rule, SHOP coverage with a plan
year starting at any time during the year would have the plan year end
on December 31 and renew effective January 1 of the following year.
Rolling enrollment in the SHOP, as it aligns with this policy, would
allow for plan years shorter than 12 months. For coverage that has an
effective date after January 1, a 12-month plan year would not align
with the requirement for coverage to be offered on a calendar year
basis, and is therefore not permitted in States with merged markets. We
note that the additional language finalized in this rule at Sec.
155.725(b) is only applicable in States that have merged their markets
under section 1312(c)(3) of the Affordable Care Act. This language does
not apply in States with markets that are not considered to be merged
for purposes of Federal law.
Comment: Several commenters supported the proposal permitting
automatic renewal of employers' offers of coverage. One commenter asked
HHS to specify what it means to become ineligible for SHOP coverage and
to specify whether an employer may be eligible for automatic renewal if
the employer group falls below one non-owner full-time equivalent
employee. We also received a comment asking HHS to specify if States
may renew an employer's coverage if the employer's Employee
Identification Number (EIN) changes provided that the employer retains
the same legal identity. We also received a comment opposing automatic
renewals and requests that HHS streamline processes to allow employer
groups to quickly update only necessary information for a more
simplified re-enrollment process. It was also recommended that agents
and brokers be provided with an opt-in or opt-out choice for employees
rather than an automatic renewal.
[[Page 10808]]
Response: We are finalizing our provision as proposed. We do not
believe that a streamlined process to allow employer groups to update
information about their group is necessary because qualified employers
are already required to update this information to the SHOP throughout
the plan year. See Sec. 157.205(f). We believe our broad provision
regarding SHOP coverage renewal will provide employer groups and their
employees and enrollees an efficient way to renew and avoid any gaps in
their coverage. Because not all groups work with an agent or broker, we
believe that providing agents and brokers with an opt-in or opt-out
choice for employees will not cover the universe of renewals that will
occur.
An employer is considered eligible to participate in the SHOP if it
is a ``small employer'' as defined in Sec. 155.20 and if it meets the
requirements set forth at Sec. 155.710(b). To qualify, employers must
have at least one employee who is not the owner or the spouse of the
owner.\44\ With one limited exception, if a group fails to meet any of
these eligibility criteria, including if it no longer has at least one
employee who is not the owner or the owner's spouse, it may not renew
coverage through the SHOP. The limited exception applies, under Sec.
155.710(d), to employers that cease to be small employers solely by
reason of an increase in the number of employees, so long as they
otherwise meet the eligibility criteria and continue to purchase
coverage for qualified employees through the SHOP. For purposes of
renewing coverage, if an employer's EIN changes, but it retains the
same legal identity, then the group can renew their coverage as long as
they continue being eligible for coverage, if permitted by applicable
State law. HHS considers an employer to have the same legal identity if
the group maintains all other identifiable information including the
business ownership structure and State in which the business operates.
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\44\ See Exchange Establishment Rule, 77 FR 18310 at 18399.
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Comment: We received some comments related to the calculation of
and enforcement of minimum participation rates, but we did not receive
specific comments on the proposed policy at Sec. 155.725(k).
Response: We are finalizing the provision as proposed, and note
that applicable minimum participation rates are calculated and enforced
at the time of initial group enrollment or renewal, subject to Sec.
147.104(b)(1)(B).
f. Termination of SHOP Enrollment or Coverage (Sec. 155.735 and Sec.
156.285)
In Sec. 155.735, we proposed to amend paragraph (c)(2)(ii) to
specify that in the FF-SHOP, a termination of coverage due to non-
payment of premiums would be effective on the last day of the month for
which the FF-SHOP received full payment. Prior to this proposal, the
effective date of such a termination was not specified in the rule. We
are finalizing this policy as proposed.
In paragraph (c)(2)(iii), we proposed to specify that, in the FF-
SHOP, a qualified employer whose coverage was terminated for non-
payment of premiums could be reinstated in its prior coverage only once
per calendar year. We are finalizing this provision as proposed.
Paragraphs (c)(2)(iv) and (c)(3) are added in light of comments
related to COBRA continuation coverage, as discussed in the preamble
discussion of Sec. 155.705.
In paragraphs (d)(1)(iii) and (g) of Sec. 155.735 and in Sec.
156.285(d)(1)(ii), we proposed to amend certain existing notice
requirements by transferring them from QHP issuers to the SHOP. Under
current Sec. 156.285(d)(1)(ii), a QHP issuer must notify an enrollee
and a qualified employer if the enrollee or employer is terminated due
to a loss of eligibility, due to a qualified employer's non-payment of
premiums, due to a rescission of coverage for fraud or
misrepresentation of material fact in accordance with Sec. 147.128, or
because the QHP issuer elects not to seek recertification with the
Exchange for its QHP. We proposed to transfer two of these notice
requirements to the SHOP. At Sec. 155.735(g)(1), we proposed that the
SHOP be required to provide notice to the enrollee if an enrollee is
terminated due to non-payment of premium or a loss of eligibility for
participation in the SHOP, including when an enrollee loses eligibility
due to a qualified employer's loss of eligibility. We also proposed at
Sec. 155.735(g)(2) that the SHOP be required to provide notice to
qualified employers for termination due to nonpayment of premiums or
where applicable, due to loss of the employer's eligibility. Proposed
Sec. 155.735(g)(2) would apply to terminations for a reason other than
the employer reporting information to the SHOP resulting in a loss of
eligibility.
Through the proposed amendments to the definition of ``enrollee''
discussed above, we also proposed to expand the class of people who
would receive notices under the proposed amendments to Sec. 155.735
and Sec. 156.285(d)(1)(ii). Additionally, we proposed that QHP issuers
in the SHOP would continue to be required to provide notice to
qualified employers and enrollees when an enrollee's coverage is
terminated due to a rescission in accordance with Sec. 147.128, and
when an enrollee's coverage is terminated due to an election by a QHP
issuer not to seek recertification with the Exchange for its QHP. We
proposed to amend Sec. 155.735(d)(1)(iii), which currently refers to
terminations of SHOP coverage due to a QHP's termination or
decertification, by adding a reference to terminations of SHOP coverage
due to the non-renewal of a QHP's certification. By proposing to
include a cross-reference to Sec. 155.735(d)(1)(iii) in Sec.
156.285(d)(1)(ii), we also proposed to expand the notice a QHP issuer
must provide regarding the discontinuation of a product in which a
qualified employee is enrolled to include circumstances where the QHP
is terminated or is decertified as described in Sec. 155.1080. We are
finalizing the provisions with modifications noted below.
We also proposed that each notice required under Sec. 155.735(g)
and the proposed amendments to Sec. 156.285(d)(1)(ii) would have to be
provided by the SHOP or QHP issuer promptly and without undue delay. We
explained that we would consider an electronic notice that was sent no
more than 24 hours after the SHOP or QHP issuer determined coverage was
to be terminated to have been provided ``promptly and without undue
delay.'' In the case of paper notices, we would consider notices that
were mailed no later than 48 hours after the SHOP determined coverage
was to be terminated to have been provided ``promptly and without undue
delay.'' We have revisited these deadlines in light of comments
received, and are finalizing the proposal with a modification to allow
3 business days for electronic notices and 5 business days for mailed
notices. New paragraph Sec. 155.735(g) and the corresponding
amendments related to issuer notice requirements at Sec.
156.285(d)(1)(ii) are effective on January 1, 2016.
We are also finalizing amendments to Sec. 155.735 and Sec.
156.285 to conform with our interpretation of the guaranteed
availability and guaranteed renewability requirements. For a discussion
of these revisions, please see the preamble for Sec. 155.430 in this
final rule.
Comment: We received several comments in support of HHS codifying
the termination effective date for non-payment of premiums as the last
day of the month for which the FF-SHOP received a full payment.
[[Page 10809]]
Response: We are finalizing the provision as proposed regarding
termination effective dates for the FF-SHOP due to non-payment of
premiums.
Comment: We received a comment recommending HHS provide a more
``robust approach'' to reinstatements for a given employer. The
commenter stated that costs resulting from those that fail to pay
premiums on time are ultimately borne by other insurers. However, the
commenter did not discuss any alternative approach. We also received a
comment asking HHS to specify that this provision only applies to the
FF-SHOP.
Response: We are finalizing our provision as proposed to discourage
employers from repeatedly failing to make timely payments in the FF-
SHOP. We note that to be reinstated, an employer must pay its premium
in full and, generally, in order for new coverage to be effectuated,
the FF-SHOP would require an employer to pay its first month's premium
in full. Therefore, we do not believe that in this case, an employer's
failure to make timely payments will impact another issuer. We note
this policy, like all the policies set forth at Sec. 155.735(c)(2),
only applies in the FF-SHOP. HHS is not regulating the number of
reinstatements that State-based SHOPs may choose to enforce.
Comment: We received several comments on the transfer of certain
notice requirements from QHP issuers to the SHOP. Many commenters
supported our proposed policies because the SHOP has better information
regarding the timing of non-payment of premiums and why an enrollee or
employer lost his or her eligibility. Some commenters stated that the
notices should only be provided to qualified employees and adult
dependents, while others stated that the notices should be provided to
qualified employees and their dependents if the last known address for
the dependent is different from the subscriber. Additionally, we also
received a comment requesting HHS specify that the notice requirement
also applies to SADP issuers. One commenter recommended employers that
actively provide to the SHOP information which indicates a loss of
eligibility also receive a notice. We received a comment stating
issuers should not be required to send any notices of termination to
individual employees as it is not common market practice.
Response: We have modified the final notice requirement to specify
that when a primary subscriber and his or her dependents live at the
same address, a separate notice need not be sent to each dependent at
that address, so long as the notice sent to each primary subscriber at
that address contains all the required information about the
termination for that primary subscriber and each of his or her
dependents at that address. We note that when dependents live at a
different address from the primary subscriber, a separate notice must
be sent to those dependents. We note the broad language of the notice
requirement applies to both medical and dental coverage sold through
the SHOP. We do not believe a notice to the employer is necessary when
an employer reports to the SHOP that it no longer meets the SHOP
eligibility criteria. The SHOP eligibility criteria are sufficiently
simple that we believe that under such circumstances the loss of
eligibility would be self-evident to the employer.
HHS believes that these notices of termination should be sent to
all individual, qualified employees affected by the termination of
coverage or enrollment. By communicating directly with qualified
employees through a notice of termination, the SHOP or the issuer can
provide more timely notice regarding termination of coverage or
enrollment, allowing employers and enrollees to seek other coverage and
reduce gaps in coverage.
Comment: A commenter recommended that in a State that operates its
own SHOP, the SHOP should provide the notice unless State law requires
that the notice be provided by the issuer. We also received a comment
requesting that sending these notices should be at the discretion of
issuers so that issuers can communicate and maintain relationships that
they have with employer groups and their enrollees.
Response: We appreciate the commenters' concern regarding
unnecessary duplication of notices. As such, we are finalizing the
proposal with a modification that provides that if a State law requires
such notices be provided by the issuer, then the SHOP is not required
to also send these notices. In a State with no such law, if an issuer
would like to send these notices to maintain its relationships with
employer groups and enrollees, it may do so. But the fact that the
issuer sent the notice would not exempt a SHOP from the notice
requirement.
Comment: We received a comment asking HHS to provide specific
information on the required termination notices about how employer
groups can maintain coverage or obtain other coverage, reinstatement
rights and processes, how to reapply for coverage, and information
about other coverage options.
Response: When sending these notices in States with an FF-SHOP, HHS
intends to provide additional information about how to avoid a gap in
coverage and other coverage options. However, we do not believe that
this content is necessary for the notice requirement to be met, and are
therefore not requiring that it be included in the notices sent by all
SHOPs and issuers.
Comment: Some commenters support a SHOP sending termination notices
to enrollees and employer groups ``promptly and without undue delay.''
However, one commenter requested flexibility to issuers to ensure
notices are provided consistent with existing State criteria. We also
received comments requesting that the standard for timing be broader,
and recommending delivery of termination notices occur at least 30 days
prior to the termination effective date, rather than timing the notice
as proposed. One commenter recommended that HHS specify that the timing
of sending notices be expressed in business days.
Response: We recognize that the timeline described as a safe harbor
in the preamble to the proposed rule might not give QHP issuers
sufficient time to mail notices. We therefore are modifying the
proposal to specify that SHOPs and issuers should send the required
notices within 3 business days where notice is provided electronically
and within 5 business days when hard copy notices are mailed.
We are also making minor changes to the wording of the proposed
requirements at Sec. 155.735(g) and at Sec. 156.285(d)(1)(ii), so
that the final rule refers to a requirement to ``notify'' new
enrollees, rather than to ``provide'' them ``with a notice.'' We are
also finalizing new Sec. 155.735(g) and the amendments to Sec.
156.285(d)(1)(ii) with an effective date of January 1, 2016.
7. Exchange Functions: Certification of Qualified Health Plans
a. Certification Standards for QHPs (Sec. 155.1000)
In Sec. 155.1000, we proposed to add paragraph (d) to harmonize
QHP certification with rolling enrollment in the SHOP. Under the
proposal, where a SHOP certifies QHPs on a calendar year basis, a QHP's
certification will be in effect for the duration of any employer's plan
year that began in the calendar year for which the plan was certified.
We are finalizing as proposed with the modification noted below.
Comment: We received some comments supporting the proposed
[[Page 10810]]
policy for QHPs in SHOPs that certify QHPs on a calendar year basis to
retain their certification for the duration of any employer's plan year
that began in the calendar year for which the plan was certified. We
also received one comment recommending that we specify that this
proposed policy applies with the exception provided in Sec. 155.1080.
Response: In light of comments received, we are amending the
proposed language to specify that Sec. 155.1000(d) does not apply when
there is a decertification by the Exchange of QHPs, pursuant to Sec.
155.1080.
b. Recertification of QHPs (Sec. 155.1075)
We are making a conforming amendment to align the date by which an
Exchange must complete the QHP recertification process with the date
finalized in this rule at Sec. 155.410(e)(2) for the beginning of the
open enrollment period for the benefit year beginning on January 1,
2016. In the Exchange Establishment Rule, we finalized Sec.
155.1075(b) to state that the Exchange must complete the QHP
recertification process on or before September 15 of the applicable
calendar year. In that rule, we also finalized the open enrollment
periods for years other than the 2014 benefit year as running from
October 15 through December 7 of the preceding year (77 FR 18462). This
gave Exchanges until 1 month before the beginning of the open
enrollment period to complete the recertification process.
In the proposed rule, we proposed that the beginning of the open
enrollment period for the benefit year beginning on or after January 1,
2016, would begin on October 1, 2015--approximately 2 weeks after the
QHP recertification deadline. As discussed elsewhere in this final
rule, we are finalizing an open enrollment period for coverage
beginning in 2016 that would begin 1 month later, on November 1. To
align the date by which an Exchange must complete recertification and
the beginning of the open enrollment period in a manner that provides
issuers, State regulators, and Exchanges additional time to complete
the plan review and certification processes without placing any
substantive burden on consumers, we are amending Sec. 155.1075(b) to
require Exchanges to complete recertification of QHPs no later than 2
weeks prior to the beginning of open enrollment.
F. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges
1. General Provisions
a. Definitions (Sec. 156.20)
In Sec. 156.20, we proposed that for purposes of part 156, the
term ``plan'' have the meaning given the term in Sec. 144.103, as
proposed to be amended in this rulemaking. Please refer to section
III.A.1 for a discussion of the term ``plan,'' which is being finalized
as proposed.
b. FFE User Fee for the 2016 Benefit Year (Sec. 156.50(c))
Section 1311(d)(5)(A) of the Affordable Care Act contemplates an
Exchange charging assessments or user fees to participating health
insurance issuers to generate funding to support its operations. If a
State does not elect to operate an Exchange or does not have an
approved Exchange, section 1321(c)(1) of the Affordable Care Act
directs HHS to operate an Exchange within the State. In addition, 31
U.S.C. 9701 permits a Federal agency to establish a charge for a
service provided by the agency. Accordingly, at Sec. 156.50(c), we
specified that a participating issuer offering a plan through an FFE
must remit a user fee to HHS each month that is equal to the product of
the monthly user fee rate specified in the annual HHS notice of benefit
and payment parameters for the applicable benefit year and the monthly
premium charged by the issuer for each policy under the plan where
enrollment is through an FFE.
OMB Circular No. A-25 Revised (Circular No. A-25R) establishes
Federal policy regarding user fees, and specifies that a user charge
will be assessed against each identifiable recipient for special
benefits derived from Federal activities beyond those received by the
general public. As in benefit year 2015, issuers seeking to participate
in an FFE in benefit year 2016 will receive two special benefits not
available to the general public: (1) The certification of their plans
as QHPs; and (2) the ability to sell health insurance coverage through
an FFE to individuals determined eligible for enrollment in a QHP.
Activities performed by the Federal government that do not provide
issuers participating in an FFE with a special benefit will not be
covered by this user fee.
Circular No. A-25R further states that user charges should
generally be set at a level so that they are sufficient to recover the
full cost to the Federal government of providing the service when the
government is acting in its capacity as sovereign (as is the case when
HHS operates an FFE). We proposed to set the 2016 user fee rate for all
participating issuers at 3.5 percent of the monthly premium charged by
the issuer. This rate is the same as the 2015 user fee rate. We are
finalizing the 2016 user fee rate as proposed. Circular No. A-25R
allows for exceptions to this policy, with OMB approval. An exception
was in place for establishing the 2015 user fee rate. To ensure that
FFEs can support many of the goals of the Affordable Care Act, we
received an exception to this policy again for 2016.
Comment: We received one comment on the underlying structure of the
FFE user fee, recommending that HHS establish broad-based financing for
FFEs, such as an assessment on all health care industry entities. If
the existing fee structure is kept, the commenter stated that it should
be paid by consumers and small employers that purchase coverage through
an FFE. The commenter also stated that the user fee should not be set
as a percent of premium, as the cost to run an Exchange is not related
to the cost of coverage.
Response: We will continue to assess the FFE user fee as a percent
of the monthly premium charged by issuers participating in an FFE. In
accordance with Circular No. A-25R, issuers are charged the user fee in
exchange for receiving special benefits beyond those that accrue to the
general public. Setting the user fee as a percent of premium ensures
that the user fee generally aligns with the business generated by the
issuer as a result of participation in an FFE.
Comment: One commenter recommended that HHS publish cost estimates
for the FFEs, disclose how funds will be spent, and develop performance
metrics for the FFEs. The commenter stated that any increase in an
issuer's aggregate liability for FFE user fees should be capped at
changes in the Consumer Price Index, and that total user fee
collections across all issuers should be capped at the level of
expended costs. The commenter urged that if user fee collections exceed
FFE costs, issuers should receive a rebate or credit against future
fees.
Response: HHS will continue to publish cost estimates through the
Federal budget process, and publish periodic performance measures, such
as HHS reports on Marketplace call center wait times, and Web site
visits and rates of eligibility determinations through HealthCare.gov.
We will also continue to set the user fee rate based on the expected
costs to the Federal
[[Page 10811]]
government of providing the special benefits to issuers; however, for
2016 as noted above, we received an exception to this policy because we
wish to ensure that the FFEs can support many of the goals of the
Affordable Care Act. Because we set the user fee rate below that which
is expected to cover full Federal costs (as in 2014 and 2015), we do
not see the need at this time to address a situation in which user fee
collections exceed costs.
2. Essential Health Benefits Package
a. State Selection of Benchmark (Sec. 156.100)
We proposed to amend paragraph (c) of Sec. 156.100 to delete the
language regarding the default base-benchmark plan in the U.S.
Territories of Guam, the U.S. Virgin Islands, American Samoa, and the
Northern Mariana Islands. The change reflects HHS's determination,
described in more detail in section III.A.1.b of this final rule, that
certain provisions of the PHS Act enacted in title I of the Affordable
Care Act that apply to health insurance issuers are appropriately
governed by the definition of ``State'' set forth in that title.
Therefore, the rules regarding EHB (section 2707 of the PHS Act) do not
apply to health insurance issuers in the U.S. Territories. We also
proposed to make a technical change to this section by replacing
``defined in Sec. 156.100 of this section'' with ``described in this
section.'' We note that this has no effect on Medicaid and CHIP
programs and that Alternative Benefit Plans will still have to comply
with the essential health benefit requirements.
We did not receive any comments regarding this proposal. We are
finalizing the provisions as proposed.
b. Provision of EHB (Sec. 156.115)
(1) Habilitative Services
One of the 10 categories of benefits that must, under section
1302(b)(1)(G) of the Act, be included under the Secretary's definition
of EHB is rehabilitative and habilitative services and devices. If a
benchmark plan does not include habilitative services, Sec.
156.110(c)(6) of the current EHB regulations requires the issuer to
cover habilitative services as specified by the State under Sec.
156.110(f) or, if the State does not specify, then the issuer must
cover habilitative services in the manner specified in Sec.
156.115(a)(5). Section 156.115(a)(5) states that a health plan may
provide habilitative coverage by covering habilitative services
benefits that are similar in scope, amount, and duration to benefits
covered for rehabilitative services or otherwise determine which
services are covered and report the determination to HHS. In some
instances, those options have not resulted in comprehensive coverage
for habilitative services. Therefore, we proposed amending Sec.
156.115(a)(5) to establish a uniform definition of habilitative
services that may be used by States and issuers. In addition, we
proposed to remove Sec. 156.110(c)(6) because that provision gives
issuers the option to determine the scope of habilitative services.
We believe that adopting a uniform definition of habilitative
services would minimize the variability in benefits and lack of
coverage for habilitative services versus rehabilitative services.
Defining habilitative services clarifies the difference between
habilitative and rehabilitative services. Habilitative services,
including devices, are provided for a person to attain, maintain, or
prevent deterioration of a skill or function never learned or acquired
due to a disabling condition. Rehabilitative services, including
devices, on the other hand, are provided to help a person regain,
maintain, or prevent deterioration of a skill or function that has been
acquired but then lost or impaired due to illness, injury, or disabling
condition.
We proposed adopting the definition from the Glossary of Health
Coverage and Medical Terms \45\: Health care services that help a
person keep, learn, or improve skills and functioning for daily living.
Examples include therapy for a child who is not walking or talking at
the expected age. These services may include physical and occupational
therapy, speech-language pathology and other services for people with
disabilities in a variety of inpatient and/or outpatient settings.
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\45\ https://www.cms.gov/CCIIO/Resources/Files/Downloads/uniform-glossary-final.pdf.
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We did not propose any changes to Sec. 156.110(f), which allows
States to determine services included in the habilitative services and
devices category if the base-benchmark plan does not include coverage.
Several States have made such a determination following benchmark
selection for the 2014 plan year, and we wish to continue to defer to
States on this matter as long as the State definition complies with EHB
policies, including non-discrimination. If the State does not
supplement missing habilitative services or does not supplement the
services in an EHB-compliant manner, issuers should cover habilitative
services and devices as defined in Sec. 156.115(a)(5)(i).
We also proposed to revise current Sec. 156.115(a)(5)(ii) to
provide that plans required to provide EHB cannot impose limits on
coverage of habilitative services that are less favorable than any such
limits imposed on coverage of rehabilitative services. Since the
statutory category includes both rehabilitative and habilitative
services and devices, we interpret the statute to require coverage of
each. Therefore, issuers that previously excluded habilitative
services, but subsequently added them, would be required under our
proposal to impose separate limits on each service rather than
retaining the rehabilitative services visit limit and having
habilitative services count toward the same visit limit. Because we
proposed to establish a uniform definition of habilitative services in
new Sec. 156.115(a)(5)(i), we also proposed to delete Sec.
156.110(c)(6), which would remove the option for issuers to determine
the scope of the habilitative services. In Sec. 156.110 we proposed to
make a technical change to amend the list structure of paragraph (c) by
replacing the ``and'' in (c)(5) with a period and adding an ``and'' at
the end of (c)(4).
We are finalizing our policy as proposed, adopting the definition
of habilitative services from the Uniform Glossary in its entirety, to
be effective beginning with the 2016 plan year and requiring separate
limits on habilitative and rehabilitative services beginning with the
2017 plan year. We are codifying this final policy in revised Sec.
156.115(a)(5) and removing Sec. 156.110(c)(6).
Comment: Several commenters requested more State flexibility, even
in cases where the benchmark plan includes habilitative services; they
sought assurance that a Federal definition will not supersede a State
law, and that State-required benefits that could be considered
habilitative services would be treated as EHB.
Response: States are required to supplement the benchmark plan if
the base benchmark plan does not include coverage of habilitative
services as defined in this final rule. We are codifying the definition
of habilitative services as a minimum for States to use when
determining whether plans cover habilitative services. State laws
regarding habilitative services are not pre-empted so long as they do
not prevent the application of the Federal definition. State laws
enacted in order to comply with Sec. 156.110(f) are not considered
benefits in addition to the EHB; such laws ensure compliance with Sec.
156.110(a) which requires coverage of all EHB categories. Therefore,
there is
[[Page 10812]]
no obligation to defray the cost of such State-required benefits.
Comment: Several commenters objected to imposing separate limits on
rehabilitative and habilitative services and devices, claiming issuers
do not have operational capacity to differentiate between habilitative
and rehabilitative services and devices based on enrollee diagnosis or
whether the enrollee is seeking to maintain or achieve function.
Response: We are finalizing the requirement to ensure coverage of
each with separate limits, but the requirement will not become
effective until 2017. This delay is intended to provide issuers with
the opportunity to resolve operational issues with their claims
systems.
Comment: Several commenters asked that ``devices'' be included in
the definition of habilitative services.
Response: We originally omitted devices because the term is already
included in the statutory description of this category of EHB. In
response to comments, however, we have added ``devices'' to our
regulatory definition. We remind issuers that the statute requires
coverage of devices for both rehabilitative and habilitative services.
Comment: Several commenters requested that we require issuers to
have an exceptions process similar to the process required by OPM for
multi-State plans, in case a patient needs treatment that exceeds the
visit limits allowed by the plan.
Response: Enrollees wishing to appeal an adverse benefit
determination, including denial of habilitative services, should follow
the process established in Sec. 147.136, which implements section 2719
of the PHS Act for internal claims and appeals and external review
processes.
Comment: Commenters offered many suggestions for specific services
and devices, such as orthotics and prosthetics, which they stated
should be required to be covered as habilitative services and devices
by all issuers.
Response: We are not codifying such a list at this time, as we
continue to allow States to maintain their traditional role in defining
the scope of insurance benefits, but we encourage issuers to cover
additional services and devices beyond those covered by the benchmark
plan.
(2) Pediatric Services
In the preamble of the EHB Rule, we stated that pediatric services
should be provided until at least age 19 (78 FR 12843). States,
issuers, and stakeholders requested clarification on this standard. To
provide this clarification, we proposed amending Sec. 156.115(a) to
add paragraph (6), specifying that EHB coverage for pediatric services
should continue until the end of the plan year in which the enrollee
turns 19 years of age. This was proposed as a minimum requirement.
This age limit is consistent with section 1201 of the Affordable
Care Act, \46\ which phased in the prohibition on preexisting
conditions exclusions by first prohibiting them for children under age
19, as well as the age limit for eligibility to enroll in CHIP. In
addition, as noted in the EHB Rule, this proposed policy aligns with
Medicaid rules (78 FR 12843), which require States to cover children up
to age 19 with family incomes up to 100 percent of the FPL as a
mandatory eligibility category.
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\46\ Section 1201 of the Affordable Care Act added section 2704
of the PHS Act, which prohibited preexisting condition exclusions.
Section 1255 of the Affordable Care Act states that the provisions
of section 2704 of the PHS Act, as they apply to enrollees who are
under 19 years of age, shall become effective for plan years
beginning on after September 23, 2010.
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Comment: Many commenters requested that pediatric services continue
only until the end of the month in which the enrollee turns 19, stating
that this is the industry standard.
Response: Although we proposed to require pediatric services until
the end of the plan year in which the enrollee turns 19, we recognize
these commenters' concerns. Accordingly, we are finalizing a policy in
Sec. 156.115(a)(6), under which issuers must provide coverage for
pediatric services until at least the end of the month in which the
enrollee turns 19. We encourage issuers to cover services under the
pediatric services EHB category beyond the 19th birthday month if non-
coverage of those services after that time would negatively affect
care.
c. Collection of Data To Define Essential Health Benefits (Sec.
156.120)
In the Patient Protection and Affordable Care Act; Data Collection
to Support Standards Related to Essential Health Benefits; Recognition
of Entities for the Accreditation of Qualified Health Plans final rule
(EHB Data Collection Rule),\47\ we required issuers in each State to
submit certain data regarding the three largest health insurance
products by enrollment (as of March 31, 2012) to HHS by September 4,
2012. These data, gathered from 2012 plans, were used to determine, for
each State, the benefits and limitations of the three largest small
group products by enrollment, which were used to establish potential
benchmark plans. The EHB Rule unintentionally deleted Sec. 156.120,
which included the data submission requirement.
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\47\ Patient Protection and Affordable Care Act; Data Collection
to Support Standards Related to Essential Health Benefits;
Recognition of Entities for the Accreditation of Qualified Health
Plans, 77 FR 42658 (July 20, 2013) (codified at part 156).
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We proposed to allow each State to select a new base-benchmark plan
for the 2017 plan year, allowing States to choose a 2014 plan that
meets the requirements of Sec. 156.110 as the new EHB-benchmark plan,
so that issuers can design substantially equal EHB-compliant products
for the 2017 plan year. We believe that this would ultimately create
efficiencies for issuers in designing plans. As stated in Sec.
156.115(a), provision of EHB means that a health plan provides benefits
that are substantially equal to the EHB-benchmark plan. Therefore,
health plans offering EHB in the 2017 plan year will be required to
provide benefits substantially equal to the benefit amounts, duration
and scope of benefits covered by the 2014 EHB-benchmark plan
(supplemented as necessary).
If a category of base-benchmark plans under Sec. 156.100(a)(1)-(4)
does not include a plan that meets the requirements of Sec. 156.110,
we considered permitting the State to select a base-benchmark plan that
does not meet the requirements of Sec. 156.110 in that category and
supplement its base-benchmark plan as provided in Sec. 156.110(b) to
ensure that all 10 categories of benefits are covered in a benchmark
plan.
We proposed re-codifying part of Sec. 156.120, in a manner similar
to that which appeared in our regulations prior to the effective date
of the EHB Rule. We proposed to require a State that chooses a new
benchmark plan in the State or, if a State does not choose a new
benchmark plan, the issuer of the default benchmark plan, to provide
benchmark plan data as of a date specified by HHS. We anticipate
collection of new benchmark plan data for the 2017 plan year and the
data discussed in Sec. 156.120(b), including administrative data and
descriptive information pertaining to all health benefits in the plan,
treatment limitations, drug coverage, and exclusions. We believe that
this information is already included in the issuer's form filing that
the issuer submitted to the State regulator. The definitions previously
adopted in Sec. 156.120(a) for the terms health benefits, health plan,
State, and treatment limitations are still applicable and would be
codified as previously defined. However, we are not finalizing the
definitions for ``health insurance market'' or ``small group market''
in
[[Page 10813]]
Sec. 156.120(a), as they are not used in this section.
Comment: Some commenters requested use of a 2014 plan as the
benchmark for 2016 rather than 2017. Several commenters suggested we
use a 2015 plan as the benchmark for 2017, noting that the final
regulations pertaining to the Mental Health Parity and Addiction Equity
Act will not be effective until 2015.
Response: For the 2016 plan year, HHS expects to begin the
certification process for QHPs in the FFEs in early spring of 2015.
Because issuers are required to design QHP plans that provide EHB that
are substantially equal to the EHB-benchmark plan, based on the base-
benchmark plan chosen and supplemented as necessary by the State, it is
not operationally possible for us to collect and publish new EHB-
benchmark plans prior to the QHP certification process for the 2016
plan year if we allow States to choose a 2014 plan as their new base-
benchmark plan and supplement if necessary. As codified in Sec.
156.115(a)(3), an EHB-compliant plan must provide mental health and
substance use disorder services, including behavioral health treatment
services in compliance with MHPAEA and its corresponding regulations.
While we agree that it would be easier for issuers to design plans if
the base-benchmark plan chosen by the State were compliant with MHPAEA
(that is, based on a 2015 plan), nothing in this rule negates the
current requirement that EHB-compliant plans comply with MHPAEA and any
associated regulatory requirements in effect at the time. Based on the
timelines needed for issuers to design plans, if we permitted States to
select 2015 plans as new base-benchmark plans, we do not believe that
issuers would be able to design substantially equal EHB-compliant
products until the 2018 plan year, based on those benchmarks, which we
believe is not in consumers' best interest. Therefore, we are
finalizing the re-codification of part of Sec. 156.120 as proposed, as
well as our proposal to allow issuers to design a plan that is
substantially equal to the newly selected 2014 benchmark plan for the
2017 plan year.
Comment: Several States and other commenters requested more details
on the process for selection and reassurance that they can supplement
their benchmark plan.
Response: We did not propose to make changes to Sec. 156.100(a) or
(b); therefore, the options from which a base-benchmark plan may be
selected remain the same. HHS issued a PRA package regarding collection
of benchmark information on November 26, 2014.\48\ As stated there, HHS
proposes to obtain the certificate of coverage and other plan documents
that describe covered services, exclusions, limitations, cost sharing,
and all other terms and conditions of plan benefits that are provided
to enrollees. States that select, or issuers in States that default to
a benchmark due to lack of selection, would submit the documents
securely via email. HHS intends to work collaboratively with States to
identify responsive documents and to secure such documents during the
second quarter of 2015. HHS then intends to publish selected and
default benchmark plans and supporting documents. States retain the
ability to supplement the base-benchmark plan, as codified in Sec.
156.110(b)(1), and retain the ability to determine whether the base-
benchmark plan covers the EHB category or whether supplementation is
warranted. We also reiterate that supplementation is the addition of
the entire category of such benefits to satisfy Sec. 156.110(a), while
substitution is the removal of one particular item or service for
another actuarially-equivalent item or service within the same
category. Supplementation ensures that all EHB categories are covered.
Substitution, which is permitted within an EHB category at the issuer's
discretion, allows for greater variety of plan designs.
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\48\ CMS-10448; https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10448.html.
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Comment: Several States and other commenters requested further
clarification regarding how new benchmark plan selection will affect
our policy at Sec. 155.170 pertaining to State-required benefits.
Response: We did not propose any changes to Sec. 155.170.
Therefore, only new State-required benefits enacted on or prior to
December 31, 2011 are included as EHB, and States are expected to
continue to defray the cost of State-required benefits enacted on or
after January 1, 2012 unless those State-required benefits were
required in order to comply with new Federal requirements. HHS intends
to continue to publish a list of non-EHB State-required benefits on its
Web site on an annual basis.
Comment: Some commenters expressed their desire for HHS to abandon
the benchmark policy in the future, and specify a list of services that
issuers must cover in each EHB category instead.
Response: To maintain State flexibility while ensuring
comprehensive coverage, we believe that the benchmark policy continues
to be the most appropriate at this time. Therefore, the benchmark
policy will continue to establish EHBs through plan year 2017. Since
the first EHB plan year just ended, we will examine how the policy
affected enrollees and what changes, if any, should be made in the
future. We believe that it is important to have a more complete sense
of how EHB policy is working before proposing changes to the benchmark
approach.
d. Prescription Drug Benefits (Sec. 156.122)
i. Sec. 156.122(a)
Under our regulations at Sec. 156.122(a), EHB plans are required
to cover the greater of one drug per United States Pharmacopeia (USP)
category and class or the same number of drugs in each USP category and
class as the State's EHB-benchmark plan. In the proposed rule, we
proposed several revisions to this policy. First, we proposed to retain
Sec. 156.122(a)(2), with one modification to change ``drug list'' to
``formulary drug list'' for uniformity purposes for this section, and
to renumber this paragraph from Sec. 156.122(a)(2) to Sec.
156.122(a)(1). Due to some concerns detailed in the proposed rule about
the drug count standard under current Sec. 156.122(a)(1), we proposed
an alternative to the drug count standard. Specifically, we proposed
that plans have a pharmacy and therapeutics (P&T) committee and use
that committee to ensure that the plan's formulary drug list covers a
sufficient number and type of prescription drugs. We proposed that the
P&T committee standards must be met for the prescription drug coverage
to be considered EHB. We stated our belief that the use of a P&T
committee in conjunction with other standards that we proposed would
ensure that an issuer's formulary drug list covers a broad array of
prescription drugs. We noted that standards defined by the Medicare
Part D Prescription Drug Program (Medicare Part D), the NAIC,\49\ and
other stakeholders, and we solicited comments on these standards and
whether we should adopt them in lieu of or in addition to the standards
we are proposing.
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\49\ Medicare Part D plans are required to maintain P&T
committees by the Social Security Act section 1860D-4(b)(3)(G)
codified at 42 CFR 423.120(b), 42 CFR 423.272(b)(2). NAIC has a
Model Act entitled Health Carriers Prescription Drug Benefit
Management Model Act (July 2003) that includes P&T Committee
provisions at: https://www.naic.org/store/free/MDL-22.pdf.
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In the proposed rule, we proposed to specify P&T committee
standards on
[[Page 10814]]
membership, meetings, and establishment and development of a formulary
drug list. For P&T committee membership, we proposed requiring the P&T
committee to include members from a sufficient number of clinical
specialties to adequately represent the needs of enrollees. For
instance, we would expect that the P&T committee members include
experts in chronic diseases and in the care of individuals with
disabilities. We proposed that the majority of members be practicing
physicians, practicing pharmacists, and other practicing health care
professionals. Additionally, we proposed to require that members of the
P&T committee that have a conflict of interest with the issuer or a
pharmaceutical manufacturer would be permitted to sit on the P&T
committee but would be prohibited from voting on matters for which the
conflict exists. We also proposed that at least 20 percent of the P&T
committee's membership have no conflict of interest with respect to
either the issuer or to any pharmaceutical manufacturer. Under these
standards, a member who holds more than one health care license, for
example as a nurse practitioner and a pharmacist, would only count as
one person. We also solicited comments on the percentage of committee
members that should have no conflict of interest, and the proposed
requirement that the members of the P&T committee with conflicts of
interest should be permitted to sit on the P&T committee but would be
prohibited from voting on matters for which the conflict exists. We
considered requiring a set number of participants to be independent and
have no conflicts of interest, but we were concerned that absent a
limitation on the total number of committee members, requiring a
specific number of committee members to be independent and not have a
conflict of interest would have a variable impact, depending on the
size of the P&T committee. We also proposed that the P&T committee
would be responsible for defining a reasonable definition of conflict
of interest and for managing the conflicts of interest of its committee
members. As part of this standard, the P&T committee would require its
P&T committee members to sign a conflict of interest statement
revealing economic or other relationships with entities, including the
issuer and any pharmaceutical manufacturers, affected by drug coverage
decisions that could influence committee decisions. We solicited
comments on this proposed standard, including the implementation of
this conflict of interest standard, whether there are additional
conflict of interest standards that should apply and what would
constitute a conflict of interest. In particular, we sought comments on
what could be considered a permissible relationship with respect to the
issuer or a pharmaceutical manufacturer. We stated that we would
consider providing further guidance regarding conflicts of interest.
We also proposed that the P&T committee must meet at least
quarterly, and maintain written documentation of all decisions
regarding development and revision of formulary drug lists. For
formulary drug list establishment and management, we proposed that the
P&T committee must develop and document procedures to ensure
appropriate drug review and inclusion on the formulary drug list, as
well as make clinical decisions based on scientific evidence, such as
peer-reviewed medical literature, and standards of practice, such as
well-established clinical practice guidelines. The P&T committee would
be required to consider the therapeutic advantages of prescription
drugs in terms of safety and efficacy when selecting formulary drugs
and making recommendations for their formulary tier. The P&T committee
would be required to review both newly FDA-approved drugs and new uses
for existing drugs. We also proposed that the P&T committee would be
required to ensure that an issuer's formulary drug list covers a range
of drugs across a broad distribution of therapeutic categories and
classes and recommended drug treatment regimens that treat all disease
states and does not discourage enrollment by any group of enrollees.
Lastly, we proposed to require that issuers' formularies provide
appropriate access to drugs that are included in broadly accepted
treatment guidelines and which are indicative of and consistent with
general best practice formularies in widespread use. Broadly accepted
treatment guidelines and general best practices could be based on
industry standards or other appropriate guidelines that are issued by
expert organizations that are current at the time. For instance,
broadly accepted treatment guidelines could include guidelines provided
in the National Guideline Clearinghouse (NGC), which is a publicly
available database of evidence-based clinical practice guidelines and
related documents. As a result of this proposed policy, we would expect
that a health plan's formulary drug list would ensure that appropriate
access is being afforded to drugs in widely accepted national treatment
guidelines and which are indicative of general best practices at the
time. Given our proposal to use broadly accepted treatment guidelines
and best practices, we would also expect that plans' formulary drug
lists be similar to those formulary drug lists then currently in
widespread use. We also noted that States have primary responsibility
for enforcing EHB requirements and, if finalized, States would be
responsible for the oversight and enforcement of the P&T committee
standards. We sought comment on these proposed revisions to Sec.
156.122(a), including on the oversight and enforcement of these
standards, and whether other standards are needed for P&T committees.
As an alternative to, or in combination with, the above-proposed
P&T committee requirements, we considered whether to replace the USP
standard with a standard based on the American Hospital Formulary
Service (AHFS). We sought comments on the proposed P&T committee
standard, and whether we should consider adopting AHFS or another drug
classification system, as well as on any other standards that may be
appropriate for this purpose. For instance, for the AHFS system, we
considered amending the minimum standard established in the EHB Final
Rule that requires coverage of at least the greater of one drug in
every USP category and class or the same number of drugs in each USP
category and class as the State's EHB-benchmark plan to require at
least the greater of one drug in each AHFS class and subclass or the
same number of drugs in each AHFS class and subclass as the State's
EHB-benchmark plan. We explained that if we were to finalize a P&T
committee process in combination with a drug count standard based on
either the AHFS system or the USP system, we would expect the health
plan to establish and maintain its formulary drug list in compliance
with the P&T committee standards, and in addition, the resulting health
plan's formulary drug list would also need to comply with the drug
count standard. We discussed continuing to use the existing USP drug
count standard, and updating the USP drug count system to a more
current version. We proposed to implement proposed Sec. 156.122(a)(2)
to start in the 2017 plan year, seeking comments on this proposed
timing of implementation. Based on comments
[[Page 10815]]
received, as described in detail below, we are finalizing an approach
that combines the use of a P&T committee (satisfying standards largely
as proposed) with the current drug count standard that requires
coverage of at least the greater of one drug per USP category and class
or the same number of drugs in each USP category and class as the
State's EHB benchmark plan.
Comment: Some commenters supported replacing the current drug
standard with the P&T committee approach only, and some commenters
recommended that we defer to a health plan's accreditation by the
National Committee for Quality Assurance (NCQA) or URAC, or use
Medicare Part D standards. Some commenters did not support the P&T
committee approach because they were concerned it could result in plans
with widely varying formularies, leading to consumer confusion. They
also had concerns about oversight and enforcement. Several commenters
supported combining the P&T committee with a drug count standard. Of
those who commented on the drug count standard, some supported USP,
some supported AHFS, and others supported the creation of a new
standard. Some commenters recommended changes to the manner in which
the drug count is calculated. For example, some commenters suggested
that the drug count metric change to the greater of two drugs per
category and class or the number of drugs in the benchmark. Other
commenters sought clarification on the counting of chemically distinct
drugs and the modes of delivery.
Response: We are finalizing an approach that combines the use of a
P&T committee with the current drug count standard that requires
coverage of at least the greater of one drug per USP category and class
or the same number of drugs in each USP category and class as the
State's EHB benchmark plan. We believe that a combination of a
qualitative and quantitative approach will best ensure robust formulary
design, because the two standards can complement each other. For
instance, the requirement of the P&T committee to review new drugs
addresses one of our concerns that the current drug count system does
not incentivize coverage of new drugs. However, the drug count standard
can provide a minimum standard for coverage.
For the P&T committee requirements, we considered deferring to
other standards, such as those established by NCQA, URAC and Medicare
Part D. However, Sec. 156.122 establishes a market-wide standard, and
not all plans are required to be accredited by those organizations. We
also do not believe that some accreditation standards are as
transparent as Medicare Part D standards--for example, some
accreditation standards are proprietary and could be costly and
burdensome for an issuer to implement. Further, stakeholders are
already familiar with Medicare Part D's P&T committee standards and we
believe that these standards will best ensure the P&T committee is able
to ensure a robust formulary. For these reasons, we are finalizing P&T
committee standards modeled on Medicare Part D's P&T committee
standards that have been modified, as explained below, to better
address the private health plan population and the needs of plans
required to cover EHB. We also believe that adopting P&T committee
standards that generally align with the existing Medicare Part D
standards and guidance, where possible, will better ensure uniformity
between standards to help reduce the burden on issuers. As explained
below, we are finalizing the proposed conflict of interest standards.
Although these standards are different than those adopted by Medicare
Part D, we believe that these standards are similar to practices in the
private insurance market.
We are retaining the USP drug count standard because stakeholders
are now familiar with the USP system after using it for 2 years, and we
were persuaded by the comments supporting the continued use of USP.
Issuers have already developed 2 years of formularies based on it,
States have already developed systems to review those formularies, and
stakeholders are familiar with the system. Thus, while AHFS had the
benefit of being updated more frequently and incorporating a broader
set of classes and subclasses, commenters did not uniformly support its
use because of several issues, including a lack of transparency, the
need to supplement certain classes when compared with USP, and the
complexity of the AHFS system. We also believe that retaining USP will
reduce the administrative burden and costs on States and issuers in
implementing a combined P&T committee process with a drug count
standard. In implementing the revised Sec. 156.122(a), we intend to
use the most up-to-date version of the USP system available at the time
that we build our formulary review tools for each plan year, starting
with the 2017 plan year, and will refer to the version number in the
methodology document that we update each year.\50\
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\50\ See the Essential Health Benefits (EHB) Rx Crosswalk
Methodology at: https://www.cms.gov/CCIIO/Resources/Data-Resources/Downloads/ehb-rx-crosswalk.pdf.
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To codify our final policy, we are retaining Sec. 156.122(a)(1)
(with one technical change to delete the ``and''), we are retaining
current Sec. 156.122(a)(2) (with one technical correction to replace
``drug list'' with ``formulary drug list'' and to add an ``and''), and
we are adding a new Sec. 156.122(a)(3). Under the new Sec.
156.122(a)(3), a health plan must establish and maintain its formulary
drug list in compliance with the P&T committee standards. These
standards are in addition to the requirement that the health plan's
formulary drug list comply with the drug count standard under Sec.
156.122(a)(1) as the minimum standard of coverage, and the requirement
that the health plan submit its formulary drug list to the Exchange,
the State, or OPM. While issuers must have a P&T committee, nothing
under Sec. 156.122(a) precludes issuers from using the same P&T
committee across multiple issuers. However, we recognize that using the
same P&T committee across multiple issuers may be complex to
administer. Because States are primarily responsible for enforcing EHB
requirements, States will be responsible for the oversight and
enforcement of the P&T committee standards and the drug count standard.
We intend to work with States to implement these provisions and may
consider developing additional tools and resources to assist States in
reviewing formulary drug lists. New Sec. 156.122(a)(3) will apply
starting with the 2017 plan year to give States, issuers, and PBMs time
to implement the new P&T committee standards.
Comment: Many commenters wanted the P&T committee membership to
include certain types of representatives. Some commenters also wanted
membership on the P&T committee to be limited to a certain number.
Commenters supported limiting the P&T committee membership category for
``other practicing health professionals'' to ``other practicing health
care professionals that can prescribe.'' Comments sought clarification
that a practicing provider on the committee could be practicing part-
time, and clarification on the P&T committee's documentation of its
decisions. Some commenters supported the proposed conflict of interest
standards, while other commenters were concerned it would be difficult
to meet the standards. Others recommended other conflict of interest
standards. Some commenters
[[Page 10816]]
supported the conflict of interest percentage of 20 percent, and others
recommended that it be 50 percent. Some commenters recommended
implementing the Office of Inspector General's recommendations on
conflicts of interest for Medicare Part D P&T committees,\51\ and
others sought transparency requirements for the operation and
management of the P&T committee.
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\51\ See the Department of Health and Human Services' Office of
the Inspector General Report on Gaps in Overview of Conflicts of
Interest in Medicare Prescription Drug Decisions at: https://oig.hhs.gov/oei/reports/oei-05-10-00450.pdf.
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Response: We are finalizing the requirement that the P&T committee
must be comprised of members that represent a sufficient number of
clinical specialties to adequately meet the needs of enrollees. We
would expect that the P&T committee membership include experts in
chronic diseases and in the care of individuals with disabilities and
that it would be composed of a diverse set of experts. We have
established certain minimum standards for membership to ensure the
integrity of the P&T committee and to allow flexibility to issuers in
designing the P&T committee. However, we also expect the P&T committee
would consult with experts in management of the relevant condition for
each drug being considered. The P&T committee's membership is also
required to include a majority of practicing physicians, practicing
pharmacists, and other practicing health care professionals. The other
practicing health care professionals on the P&T committee, excluding
pharmacists, must be licensed to prescribe drugs. The practicing
physicians, pharmacists, and other health care professionals on the P&T
committee may be practicing part-time. However, under these standards,
a member who holds more than one health care license, for example, as a
nurse practitioner and a pharmacist, only counts as one member of the
P&T committee.
We are finalizing the conflict of interest requirements as
proposed. These conflict of interest standards are not the same as
Medicare Part D's standards, but we believe that issuers are currently
using similar practices in the private health insurance market. Members
of the P&T committee that have a conflict of interest with respect to
the issuer or a pharmaceutical manufacturer are permitted to sit on the
P&T committee but are prohibited from voting on matters for which the
conflict exists. We would expect that in implementing this standard, if
a particular member of a P&T committee has to abstain from a majority
of votes, that the P&T committee should consider removal of the member
from the P&T committee. Additionally, at least 20 percent of the P&T
committee's membership must have no conflicts of interest with respect
to either the issuer or to any pharmaceutical manufacturer. We
considered the comments we received on other P&T committee standards
and on the requirements for the number and percentage of conflict free
members. However, due to concerns about issuers' ability to meet a
requirement with a higher threshold and concerns about setting a fixed
number of members required to be conflict free when we did not also set
the limit on the number of participants on the P&T committee, we
believe that requiring 20 percent of the P&T committee's membership to
be conflict free is a reasonable threshold in combination with Sec.
156.122(a)(3)(i)(C). As part of this standard, the P&T committee
members must sign a conflict of interest statement at least annually
revealing economic or other relationships with entities affected by the
committee's drug coverage decisions, including the issuer and any
pharmaceutical manufacturers. The P&T committee is responsible for
establishing a reasonable definition of conflict of interest and for
managing the conflicts of interest of its committee members. We will
consider providing further guidance regarding the P&T committee's
management and oversight, including its operation and management of
conflicts of interest, in the future.
Comment: Commenters generally supported the requirements regarding
the establishment and management of the formulary drug list, and
recommended specifying the timing of reviews for new drugs as well as
other specified guidelines or best practices. Some commenters wanted
the P&T committees' decisions to be binding on the plan, and others
wanted the P&T committee's decisions to be advisory. Some commenters
opposed the use of treatment guidelines or best practices, and some
wanted clarification that the P&T committee can use pharmacoeconomic
studies in formulary development. Commenters were concerned about the
documentation requirements of P&T committees' decisions and others
wanted additional standards, such as to require the P&T committee to
have an appeals process for a consumer or provider to request a drug to
be placed on the formulary.
Response: To ensure better uniformity of P&T committee practice, we
are finalizing new Sec. 156.122(a)(3)(iii), which generally aligns
with the Medicare Part D standards and guidance on this subject. Under
Sec. 156.122(a)(3)(iii)(A), the P&T committee must develop and
document procedures to ensure appropriate drug review and inclusion.
This includes documentation of decisions regarding formulary
development and revision and utilization management activities. P&T
committee recommendations regarding which drugs are placed on the
plan's formulary are binding on the plan. This clarification reflects
practices by Medicare Part D. We also encourage P&T committees to be
transparent about their operation and function, and while we are not
requiring that P&T committees publicly post information on the P&T
committee, we encourage issuers to consider providing this level of
transparency to consumers. We are also finalizing a new Sec.
156.122(a)(3)(iii)(B), which is consistent with Medicare Part D
standards at 42 CFR 423.120(b)(1)(iv) and which requires the P&T
committee to base clinical decisions on the strength of scientific
evidence and standards of practice, and requires the P&T committee to
assess peer-reviewed medical literature, pharmacoeconomic studies,
outcomes research data, and other such information as it determines
appropriate. Formulary management decisions must be based on scientific
evidence, and may also be based on pharmacoeconomic considerations that
achieve appropriate, safe, and cost-effective drug therapy. Under Sec.
156.122(a)(3)(ii)(C), drugs' therapeutic advantages in terms of safety
and efficacy must be considered when selecting formulary drugs. We are
finalizing this provision, except we are not finalizing the requirement
that drugs' therapeutic advantages be considered when placing the drugs
on formulary tiers, to better align with 42 CFR 423.120(b)(1)(v).
We are also adding new Sec. 156.122(a)(3)(iii)(D) through (F),
which are consistent with Medicare Part D standards at 42 CFR
423.120(b)(1)(vi), (vii), and (ix), respectively. The new standard in
Sec. 156.122(a)(3)(iii)(D) will require the P&T committee to review
policies that guide exceptions and other utilization management
processes, including drug utilization review, quantity limits, and
therapeutic interchange. The purpose of finalizing these reviews, which
is a typical practice by P&T committees, is to ensure that formulary
management techniques do not undermine access to covered drugs.
The new standard in Sec. 156.122(a)(3)(iii)(E) requires the P&T
committee to evaluate and analyze treatment protocols and procedures
[[Page 10817]]
related to the plan's formulary at least annually, which is also a
typical practice of P&T committees today. Furthermore, under Sec.
156.122(a)(3)(iii)(F), the P&T committee must review and approve all
clinical prior authorization criteria, step therapy protocols, and
quantity limit restrictions applied to each drug. P&T committee
recommendations, with respect to a P&T committee's clinical
appropriateness review of the practices and policies for formulary
management activities, such as prior authorizations, step therapies,
quantity limitations, and other drug utilization activities that affect
access, are advisory only and not binding on the issuer, a standard
that we believe reflects current practice in both the private health
insurance and Medicare Part D markets. However, issuers must take the
recommendations into good faith consideration. Similar to the new
standards in Sec. 156.122(a)(3)(iii)(D), the purpose of finalizing
these reviews is to better ensure that formulary management techniques
do not undermine access to covered drugs.
Under Sec. 156.122(a)(3)(iii)(G), which was proposed as Sec.
156.122(a)(3)(iii)(D), the P&T committee must review all new FDA-
approved drugs and new uses for existing drugs. To implement this
requirement, the P&T committee must make a reasonable effort to review
a new FDA approved drug product (or new FDA approved indication) within
90 days, and make a decision on each new FDA approved drug product (or
new FDA approved indication) within 180 days of its release onto the
market, or a clinical justification must be documented if this
timeframe is not met.
A health plan's formulary drug list, under Sec.
156.122(a)(3)(iii)(H), must cover a range of drugs across a broad
distribution of therapeutic categories and classes and recommended drug
treatment regimens that treat all disease states and must not
discourage enrollment by any group of enrollees. The formulary drug
list must also ensure appropriate access to drugs in accordance with
widely accepted national treatment guidelines and general best
practices at the time. To comply with Sec. 156.122(a)(3)(iii)(H),
broadly accepted treatment guidelines and general best practices could
be based on industry standards or other appropriate guidelines that are
issued by expert organizations that are current at the time. For
instance, broadly accepted treatment guidelines could include
guidelines provided in the National Guideline Clearinghouse (NGC),
which is a publicly available database of evidence-based clinical
practice guidelines and related documents.
ii. Section 156.122(c)
Section 156.122(c) currently requires issuers of EHB plans to have
procedures in place that allow an enrollee to request and gain access
to clinically appropriate drugs not covered by the plan. This
requirement, commonly referred to as the ``exceptions process,''
applies to drugs that are not included on the plan's formulary drug
list. As established in the EHB Final Rule (78 FR 12834) and the Market
Standards Rule (79 FR 30240), such procedures must include a process
that allows an enrollee, the enrollee's designee, or the enrollee's
prescribing physician (or other prescriber) to request an expedited
review based on exigent circumstances. Exigent circumstances exist when
an enrollee is suffering from a serious health condition that may
seriously jeopardize the enrollee's life, health, or ability to regain
maximum function, or when an enrollee is undergoing a current course of
treatment using a non-formulary drug. A health plan must make its
coverage determination on an expedited review request based on exigent
circumstances, and notify the enrollee or the enrollee's designee and
the prescribing physician (or other prescriber, as appropriate) of its
coverage determination no later than 24 hours after it receives the
request. A health plan that grants an exception based on exigent
circumstances must provide coverage of the non-formulary drug for the
duration of the exigency.
In the proposed rule, we proposed to build on the expedited
exception process by proposing to also adopt similar requirements for
the standard exception process. We also proposed to adopt standards for
a secondary external review process if the first exception request is
denied by the plan (regardless of whether the exception is requested
using the standard process or the expedited process).
We proposed at Sec. 156.122(c), that a health plan providing EHB
must have certain exception processes in place that allow an enrollee,
the enrollee's designee, or the enrollee's prescribing physician (or
other prescriber) to request and gain access to clinically appropriate
drugs not covered by the health plan, and when an exception requested
under one of these processes is granted, the plan must treat the
excepted drug as EHB for all purposes, including accrual to the annual
limitation on cost sharing. Proposed Sec. 156.122(c)(1) sets forth the
standard exception process. Under this process, we proposed that a
health plan have a process for an enrollee, the enrollee's designee, or
the enrollee's prescribing physician (or other prescriber) to request a
standard review of a coverage decision for a drug that is not covered
by the plan. We proposed that the health plan must make its coverage
determination on a standard exception request and notify the enrollee
or the enrollee's designee and the prescribing physician (or other
prescriber, as appropriate) of its coverage determination no later than
72 hours after it receives the request. We proposed to require a health
plan that grants an exception based on the standard review process to
provide coverage of the non-formulary drug for the duration of the
prescription, including refills, and we stated that in such a case the
excepted drug would be considered EHB for all purposes, including for
counting towards the annual limitation on cost sharing. As stated in
the EHB Rule, plans are permitted to go beyond the number of drugs
offered by the benchmark without exceeding EHB. Therefore, if the plan
is covering drugs beyond the number of drugs covered by the benchmark,
all of these drugs are EHB and must count towards the annual limitation
on cost sharing.
We proposed moving the language regarding the expedited exceptions
process from Sec. 156.122(c)(1) to new Sec. 156.122(c)(2) and to
replace ``Such procedures must include'' with ``A health plan must
have'' in current (c)(1) proposed as a new paragraph (c)(2)(i).
In Sec. 156.122(c)(3), we proposed that if the health plan denies
an exception request for a non-formulary drug, the issuer must have a
process for an enrollee, the enrollee's designee, or the enrollee's
prescribing physician (or other prescriber, as appropriate) to request
that an independent review organization review the exception request
and the denial of that request by the plan. For this external exception
review, we proposed to apply the same timing that applied to the
initial review. Thus, if the enrollee requested the drug under the
proposed standard process and the request was denied, then the
independent review organization would have to make its determination
and the health plan would have to notify the enrollee or enrollee's
designee and the prescribing physician (or other prescriber, as
appropriate) no later than 72 hours after the time it receives the
external exception review request. Likewise, if the initial exception
request is for an expedited review and that request is denied by the
plan, then the independent review organization would
[[Page 10818]]
have to make its coverage determination and provide appropriate
notification no later than 24 hours after the time it receives the
external exception review request. We are finalizing the updated
standards in Sec. 156.122(c) as proposed, with an addition to clarify
the duration of coverage of the excepted drug when accessed through the
external review process.
Comment: Many commenters supported revising Sec. 156.122(c),
relating to the exceptions process. Some commenters wanted the same
standards as Medicare Part D, and others wanted the same standards as
the appeals process codified at Sec. 147.136. Other commenters had
concerns about conflict with State requirements, the definitions of
expedited review and the current course of treatment, and the
administrative cost of the exceptions process. Some commenters were
concerned about time limits and wanted clarification on when the time
limits begin, recommending that the time limits should be measured in
business days instead of hours, or be different for the external review
process. Others sought additional requirements related to the operation
of the exception process such as requiring coverage of the non-
formulary drug during the review process, requiring issuers to begin
the external review if the original exception request is denied, and
requiring issuers to submit or release information on its consideration
of exception requests. Although some commenters recommended using a
separate review organization for the external review, several
commenters supported allowing issuers to use the same independent
review organization for the external review as for the final external
review decision under Sec. 147.136. Commenters also supported
requiring coverage of the excepted drug for the duration of the
prescription, including refills, and others supported permitting the
issuer to determine and notify the enrollees of the duration of the
coverage for the excepted drug.
Response: The purpose of revising Sec. 156.122(c) was to establish
a more uniform exceptions process across plans and issuers providing
EHB to help reduce consumer confusion in accessing, understanding, and
using the exception process. We believe that uniform standards in this
area will better ensure consumers' ability to understand and access
this consumer protection. Because of the importance of this process in
ensuring enrollee access to clinically appropriate medications, we are
finalizing the 72-hour review period for the standard exception review,
continuing the 24-hour review period for an expedited review, and
applying the related timing standards to the external review periods.
This exceptions process applies to drugs that are not included on the
plan's formulary drug list, and Sec. 147.136 applies if an enrollee
receives an adverse benefit determination for a drug that is included
on the plan's formulary drug list. Because these two processes serve
different purposes, we believe they are not duplicative. Furthermore,
while our exception process standards are not the same as those under
Medicare Part D, they have similar elements. Since issuers that provide
EHB are already required under our regulations to have formulary
exceptions processes and procedures in place that allow an enrollee to
request and gain access to clinically appropriate drugs not covered by
the plan, we do not expect that these new requirements will
significantly increase the administrative cost burden on issuers.
Furthermore, to permit flexibility in implementing this policy for
issuers, we have declined to establish additional requirements at this
time, such as requiring issuers to begin the external review absent an
enrollee request if the original exception request is denied, and
requiring issuers' to submit or release information on its
consideration of exception requests.
The 24-hour timing policy for the expedited review was adopted in
the final rule on the Market Standards Rule (79 FR 30240), and we are
finalizing the 72-hour standard review, as well as the timing for the
external reviews, in this final rule. All of these timeframes begin
when the issuer or its designee receives a request. An enrollee or the
enrollee's prescribing physician (or other prescriber) should strive to
submit a completed request; however, issuers should not fail to
commence review if they have not yet received information that is not
necessary to begin review. Therefore, we interpret new Sec. 156.122(c)
to mean that the review must begin following the receipt of information
sufficient to begin review. Issuers should not request irrelevant or
overly burdensome information. Issuers must be equipped to accept these
requests in writing, electronically, and telephonically.
As part of the request for a standard review, the prescribing
physician or other prescriber should support the request by including
an oral or written statement that provides a justification supporting
the need for the non-formulary drug to treat the enrollee's condition,
including a statement that all covered formulary drugs on any tier will
be or have been ineffective, would not be as effective as the non-
formulary drug, or would have adverse effects.
Following a favorable decision on the standard or external review,
the enrollee must be provided access to the prescribed drug without
unreasonable delay. Therefore, issuers need to be prepared to
communicate rapidly with pharmacies and pharmacy benefit managers, as
applicable. At a minimum, we expect issuers to update certificates of
coverage to reflect the availability of this process, and to be able to
provide instruction to enrollees or their designees and providers or
their designees on how to use the process.
For the external exception review, we are finalizing a standard
under which the independent review organization that conducts the
external review must be accredited by a nationally recognized private
accrediting organization. As part of this process, the issuer should
provide the independent review organization with all relevant
information to conduct the review, including the initial denial of the
exception request. The issuer may use the same independent review
organization for the external review for the drug exception process
under Sec. 156.122(c)(3) that the plan contracts with for the final
external review decision under Sec. 147.136. As established in revised
Sec. 156.122(c), any drug covered through the exception process must
be treated as an EHB, including by counting any cost sharing towards
the plan's annual limitation on cost sharing and when calculating the
plan's actuarial value. We believe that ensuring that an enrollee has
the option to request an external review of a denied exception request
and that a drug covered through the exception process count towards the
plan's annual limitation on cost sharing are important consumer
protections that help ensure enrollees' access to clinically
appropriate medications.
We do not believe that enrollees should have to continue to make
requests under Sec. 156.122(c) to access a refill of the same
clinically appropriate drugs that they initially obtained through the
exceptions process. Therefore, we are finalizing a standard under which
non-grandfathered health plans in the individual and small group
markets that must provide coverage of the essential health benefit
package under section 1302(a) of the Affordable Care Act must cover a
drug accessed through the standard exception process for the duration
of the prescription, including refills. To provide further
clarification on the operation of the external review process, we are
also finalizing a new standard under which,
[[Page 10819]]
if a health plan providing EHB grants an external exception review of a
standard exception request, the health plan must provide coverage of
the non-formulary drug for the duration of the prescription, including
refills. Likewise, if a health plan grants an external exception review
of an expedited exception request, the health plan must provide
coverage of the non-formulary drug for the duration of the exigency.
Nothing under this policy precludes a State from requiring stricter
standards in this area. Issuers will be required to comply with the new
standard exception process and external review process requirements
starting with the 2016 plan year.
iii. Section 156.122(d)
Under Sec. 156.122(d), we proposed adding a requirement to the EHB
prescription drug benefit that a health plan must publish an up-to-
date, accurate, and complete list of all covered drugs on its formulary
drug list, including any tiering structure that it has adopted and any
restrictions on the manner in which a drug can be obtained, in a manner
that is easily accessible to plan enrollees, prospective enrollees, the
State, the Exchange, HHS, OPM, and the general public. We also
solicited comment on whether the formulary tiering information should
include cost sharing information, such as the enrollee's applicable
pharmacy deductible (for example, $100), copayment (for example, $20),
or cost-sharing percentage for the enrollee (for example, 20 percent).
We proposed that a formulary drug list be considered easily accessible
when the general public is able to view the formulary drug list on the
plan's public Web site through a clearly identifiable link or tab and
without creating or accessing an account or entering a policy number.
The general public should be able to easily discern which formulary
drug list applies to which plan if the issuer maintains multiple
formularies, and the plan associated with each formulary drug list
should be clearly identified on the plan's Web site. As a result of
this proposed requirement, we would expect the issuers' formulary drug
list to be up-to-date, meaning that the formulary drug list must
accurately list all of the health plan's covered drugs at that time. We
solicited comments on this timing. Also, the formulary drug list URL
link under this section should be the same direct formulary drug list
URL link for obtaining information on prescription drug coverage in the
Summary of Benefits and Coverage, in accordance with Sec.
147.200(a)(2)(i)(K). We proposed that this requirement would be
effective beginning with the 2016 plan year. We solicited comments on
these proposed requirements, including whether we should require that
additional types of information be included in the formulary drug list.
As part of this proposed requirement that issuers' formulary drug
list must be made available to the general public, we considered
requiring issuers to make this information publicly available on their
Web sites in a machine-readable file and format specified by HHS. The
purpose of establishing machine-readable files with the formulary drug
list data would be to provide the opportunity for third parties to
create resources that aggregate information on different plans. As an
alternative, we considered whether the formulary drug list information
could be submitted to HHS though an HHS-designed standardized template,
while recognizing that there could be challenges with keeping this type
of template information updated. We solicited comments on these
options. We are finalizing these requirements largely as proposed, with
language to clarify that the requirement to publish an up-to-date,
accurate and complete list of all covered drugs applies beginning with
the 2016 plan year, and to require that QHPs in the FFEs make available
this information to HHS in a format and at times determined by HHS
beginning with the 2016 plan year.
Comment: Most commenters generally supported the proposed standards
regarding the ease with which consumers should be able to view
formulary drug lists on issuers' Web sites, and some recommended
requirements on the format for the formulary drug list on the Web site.
Many commenters wanted detailed cost-sharing information to be included
on the formulary drug list, including deductible, copay, and specific
coinsurance dollar amounts. Others opposed providing that level of
detail on the formulary drug list because of difficulties in keeping
the formulary drug list up to date and potential consumer confusion
because every plan design, including each silver plan variant, would
need a separate formulary drug list. Other commenters sought
clarification on definitions, including all covered drugs and any
restrictions on the manner in which the drug can be obtained. Others
supported or opposed the proposed definition of ``up to date.''
Response: The purpose of Sec. 156.122(d) is to improve the
transparency of formulary drug lists for plans required to cover the
essential health benefits by requiring accurate, complete and up-to-
date information on the drugs that the plan covers to assist consumers.
Thus, while we recognize the value in providing consumers with detailed
cost-sharing information on the formulary drug list (such as the
enrollee's applicable pharmacy deductible, copayment, or cost-sharing
percentage for the enrollee), our goal with this provision is to ensure
that the formulary drug list is accurate, complete, and up-to-date.
Providing detailed cost-sharing information on the formulary drug list
is not a typical practice in the private health insurance market.
Therefore, we are finalizing Sec. 156.122(d) as proposed at this time.
Issuers' formulary drug lists must include any tiering structure that
it has adopted and any restrictions on the manner in which a drug can
be obtained, and while we are not requiring detailed cost-sharing
information under Sec. 156.122(d) at this time, we encourage issuers
to provide this level of transparency on the formulary drug list where
feasible to help consumers make more informed decisions about their
health insurance coverage. In general, consumers should be able to use
the formulary drug list in conjunction with the summary of benefits and
coverage or other plan documents to determine their applicable cost
sharing. For example, a formulary drug list would list which drugs are
in Tier 1 (or similar category of prescription drug coverage), and the
SBC would indicate that drugs in Tier 1, or similar category, have a
$20.00 copayment. While the SBC must list any applicable coinsurance
and major limitations or exceptions, an issuer's SBC would not list the
specific dollar amounts an enrollee would pay for a drug that is
subject to coinsurance, given that the SBC is only a summary of cost-
sharing features. For the purpose of this section, references to the
URL have been removed to clarify that our standards apply to the actual
formulary drug list, not the Web address.
For the purpose of Sec. 156.122(d), for a formulary drug list to
be considered complete, the formulary drug list must list all drugs
that are EHB and when the formulary drug list specifies all drug names
that are currently covered by the plan at that time. This requirement
means that issuers are prohibited from listing only the most commonly
prescribed medications. The formulary drug list does not have to list
every covered formulation for each covered drug, but the issuer should
be prepared to provide information on the specific formulations upon
request to the plan's enrollees, prospective enrollees, the State, the
Exchange, HHS, OPM, and the
[[Page 10820]]
general public. Issuers must also include accurate information on any
restrictions on the manner in which the drug can be obtained in the
formulary drug list, including prior authorization, step therapy,
quantity limits, and any access restrictions related to obtaining the
drug from a brick and mortar retail pharmacy, such as only being
accessible through a mail-order pharmacy because the drug requires
special handling. The formulary drug list must be up-to-date, which
means that the formulary drug list must accurately list all of the
health plan's covered drugs at that time. To meet this requirement, we
would expect that the issuer would make any coverage changes
simultaneously with updating the formulary drug list and therefore, if
an issuer makes a change to its formulary, it would not implement the
change until the issuer has posted the change to the formulary drug
list on its Web site. We understand that our standard for updating the
formulary drug list is stricter than is the case for the typical
private market plan, but we believe that the value of increased
transparency to consumers is critically important to ensuring that
consumers are making informed decisions about their health care.
Issuers are prohibited from limiting the updates to their formulary
drug list to only formulary changes that negatively impact enrollees,
such as removal of drugs from the formulary drug list. Also, the URL
that takes a consumer to the issuer's formulary drug list on its Web
site must be the same direct formulary drug list URL link for obtaining
information on prescription drug coverage in the SBC, in accordance
with Sec. 147.200(a)(2)(i)(K), and for QHPs on the Exchanges, this
link must be the same link displayed to prospective enrollees on the
applicable Exchange Web site. As discussed in the preamble to Sec.
156.250, in addition to the requirements imposed by Sec. 156.250, QHP
issuers may also have duties to make this information accessible to
individuals with disabilities and individuals with LEP under Federal
civil rights laws that also might apply, including section 1557 of the
Affordable Care Act, section 504 of the Rehabilitation Act of 1973, and
Title VI of the Civil Rights Act. For the FFEs, this URL must be the
one that issuers provide through the QHP application for display on
HealthCare.gov. While these regulations do not prohibit issuers from
providing their drug lists in a searchable or dynamic format on their
Web sites, consumers should not have to create an account, be an
enrollee in the plan, or navigate multiple Web pages to view the
formulary drug list. Specifically, the link needs to be the direct link
to the formulary drug list. Further, if an issuer has multiple
formulary drug lists, consumers should be able to easily discern which
formulary drug list applies to which plan. Also, the Web page should
clearly list which plans the formulary drug list applies to using the
marketing name for the plan, which for Marketplace plans would be the
marketing name used on HealthCare.gov. The revised Sec. 156.122(d) is
effective beginning with the 2016 plan year, and we expect that most
issuers already have a formulary drug list available via a URL link and
will only need to make certain minor modifications to its link to be in
compliance with the new Sec. 156.122(d)(1).
Comment: Several commenters supported the proposal for issuers to
make the formulary drug list information available in a machine-
readable file or a format specified by HHS, stating that this would
improve transparency and foster development of additional tools to help
consumers make informed decisions about their coverage. Commenters
recommended types of information that should be included and the
development of tools similar to tools developed by the Medicare Part D
program. Others supported allowing various options on how to search for
covered drugs, such as by the drug name or listing alphabetically.
Conversely, some commenters opposed the proposal, expressing concerns
about data integrity, accuracy, confidentiality, and managing third
parties' use of this data. Some commenters were concerned that the
machine-readable data collection would be duplicative, and noted that
implementing any standard would be time-consuming and requested the
opportunity to provide additional stakeholder feedback. Some commenters
suggested use of an application programming interface (API) to support
making formulary drug list information more transparent.
Response: We believe a machine-readable file or a format specified
by HHS will increase transparency by allowing software developers to
access this information and create innovative and informative tools to
help enrollees better understand plans' formulary drug lists. Based on
the comments received asking us to make formulary drug list information
more transparent and accessible to consumers, HHS is finalizing this
rule by adding Sec. 156.122(d)(2) to require QHPs in the FFEs to make
available the information on the formulary drug list on its Web site in
a HHS specified format and also submit this information to HHS, in a
format and at times determined by HHS. We agree with commenters that
creating a vehicle for consumers to easily determine which plans cover
which drugs will help consumers select QHPs that best meet their needs.
We recognize that this will require issuer resources, and will provide
further details about the specific data elements, frequency of updates,
file types, and other crucial information in future guidance.
iv. Section 156.122(e)
Under Sec. 156.122(e), we proposed to require that enrollees be
provided with the option to access their prescription drug benefit
through retail (brick-and-mortar or non-mail order) pharmacies. This
requirement would mean that a health plan that is required to cover the
EHB package cannot have a mail-order only prescription drug benefit.
This proposed requirement would still allow a health plan to charge a
different cost-sharing amount when an enrollee obtains a drug at an in-
network retail pharmacy than he or she would pay for obtaining the same
covered drug at a mail-order pharmacy. However, as a part of these
requirements, we proposed to clarify that this additional cost sharing
for the covered drug would count towards the plan's annual limitation
on cost sharing under Sec. 156.130 and would need to be taken into
account when calculating the actuarial value of the health plan under
Sec. 156.135. Additionally, under this proposed policy, issuers would
still retain the flexibility to charge a lower cost-sharing amount when
obtaining the drug at an in-network retail pharmacy. While this
proposal requires coverage of a drug at an in-network retail pharmacy,
for plans that do not have a network, the enrollee would be able to go
to any pharmacy to access their prescription drug benefit and those
plans would, therefore, be in compliance with this proposed standard.
As part of this proposed policy, we proposed that the health plan
may restrict access to a particular drug when: (1) The FDA has
restricted distribution of the drug to certain facilities or
practitioners (including physicians); or (2) appropriate dispensing of
the drug requires special handling, provider coordination, or patient
education that cannot be met by a retail pharmacy. If the health plan
finds it necessary to restrict access to a drug for either of the two
reasons listed above, we proposed that it must indicate this restricted
access on the formulary drug list under Sec. 156.122(d). We are
finalizing these policies as proposed with a technical edit to Sec.
156.122(e)(2) to replace
[[Page 10821]]
``higher'' cost sharing with ``different'' cost sharing.
Comment: Several commenters supported proposed Sec. 156.122(e) as
helping to ensure that plans do not discourage enrollment by, and thus
discriminate against, transient individuals and individuals who have
conditions that they wish to keep confidential and discussed other
cases in which obtaining a prescription from a mail-order pharmacy is
difficult for an enrollee, such as cases where an enrollee with a
serious health condition may be unable to wait for the prescription to
be filled via a mail-order pharmacy. Other commenters opposed these
requirements, stating that it would be costly, limit consumer choice of
plans that use mail-order benefits, be contrary to specialty drug
market practices, not account for the quality standards used by
specialty pharmacies, be contrary to precedent from other Federal
programs, and be duplicative. Some commenters were concerned that the
issue is outside the scope of EHB, is not reflective of a typical
employer plan, does not take into account existing privacy laws, and
should require additional rulemaking that, for instance, takes into
account the NAIC's pending model act on network adequacy. Other
commenters wanted clarification that preventive services drugs must be
covered at no cost sharing at retail pharmacies, and other commenters
discussed similar and overlapping State requirements. Several
commenters wanted additional exceptions, such as an exclusion related
to specialty drugs and pharmacies, and some commenters supported
implementing this provision in 2016 while others supported a 2017
implementation date.
Response: The intention of Sec. 156.122(e) is to ensure all
enrollees in plans required to cover EHB are able to use the
prescription drug benefit if needed, and is intended to expand options
for these enrollees. Thus, the purpose of this policy is not to limit
the ability of issuers to use mail-order pharmacies--issuers can
continue to influence consumer choice through cost sharing. The issuers
need only provide enrollees with the option to access drugs that are
not exempted under Sec. 156.122(e)(1)(i) and (ii) at an in-network
retail pharmacy. There are instances in which obtaining a drug through
a mail-order pharmacy may not be a viable option, such as when an
individual does not have a stable living environment and does not have
a permanent address, or when a retail pharmacy option better ensures
that consumers can access their EHB prescription drug benefit on short
notice. In such cases, we do not believe that making drugs available
only by mail order constitutes fulfilling the obligation under section
1302(b)(1)(F) of the Affordable Care Act to provide prescription drug
coverage as part of EHB. We also believe that making drugs available
only by mail order could discourage enrollment by, and thus
discriminate against, transient individuals and individuals who have
conditions that they wish to keep confidential. We also believe that
this provision is important to ensure uniformity in benefit design and
consumer choice. Therefore, we are finalizing Sec. 156.122(e) as
proposed and with a clarification that this policy will be effective
beginning with the 2017 plan year.
Issuers retain the ability to charge different cost sharing for
drugs obtained at a retail pharmacy, but for non-grandfathered health
plans in the individual and small group markets that must provide
coverage of the essential health benefit package under section 1302(a)
of the Affordable Care Act, all cost sharing, including any difference
between the cost sharing for mail order and the cost sharing for
retail, must count towards the plan's annual limitation on cost sharing
in accordance with Sec. 156.130(a) and must be taken into account when
calculating the actuarial value of the health plan in accordance with
Sec. 156.135. We are clarifying that these issuers can apply higher or
lower cost sharing, that is, nothing requires an issuer to use higher
cost sharing for drugs obtained from a retail pharmacy. As a result,
some or all of the costs associated with this option may be passed on
to the consumer who chooses to use it. However, nothing in this
provision supersedes State law that may apply other cost sharing
standards to mail-order pharmacies. For plans that do not have a
network, enrollees should be able to go to any pharmacy to access their
prescription drug benefit, and those plans would, therefore, be in
compliance with this standard. In addition, this requirement is not
intended to disrupt or supersede the rules regarding cost sharing for
preventive service benefits when such coverage includes drugs.
In response to comments, we considered an exceptions process under
which an enrollee could make a request to obtain the prescription at a
brick and mortar retail pharmacy. However, we are concerned that if we
allow an exception process, the issuer would retain the option to deny
the request, and such a process could be seen as burdensome on the
enrollee. In particular, an exception process could be burdensome for
enrollees with complex health conditions if they had to seek an
exception request for each of their prescription drugs that they take.
We understand that specialty pharmacies provide more integrated
services, aimed at improving clinical outcomes while limiting costs
relating to the delivery and management of the product, than a typical
mail-order pharmacy or a brick and mortar retail pharmacy. We
understand that drugs on the specialty tier of a formulary are not
necessarily the same drugs that a specialty pharmacy would provide. Our
intention with this policy was not to disrupt the specialty pharmacy
market, and we understand that exceptions will be needed for many drugs
that are only accessible via a specialty pharmacy. For these reasons,
we are finalizing the exceptions that allow a health plan to restrict
access to certain drugs in limited circumstances. As part of this
requirement, a health plan may restrict access to mail order, which may
include specialty pharmacies, for a particular drug when: (1) The FDA
has restricted distribution of the drug to certain facilities or
practitioners (including physicians); or (2) appropriate dispensing of
the drug requires special handling, provider coordination, or patient
education that cannot be met by a retail pharmacy. For instance,
certain drugs have a Risk Evaluation and Mitigation Strategy (REMS)
that includes Elements to Assure Safe Use that may require that
pharmacies, practitioners, or health care settings that dispense the
drug be specially certified and that may limit access to the drugs to
certain health care settings.\52\ If the health plan finds it necessary
to restrict access to a drug for either of the reasons listed above, it
must indicate this restricted access on the formulary drug list that
plans must make publicly available under Sec. 156.122(d). The
provisions at Sec. 156.122(e)(1)(i) and (ii) allow an issuer to
restrict access to certain drugs at a retail pharmacy for the specific
reasons noted in those paragraphs. Although issuers may subject these
drugs to reasonable utilization management techniques, the fact that
these drugs have restricted access should not in and of itself be a
justification for applying these techniques to these drugs.
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\52\ FDA requires a Risk Evaluation and Mitigation Strategies
(REMS) for certain drugs to ensure that the benefits of a drug or
biological product outweigh its risks. The following is FDA's list
of currently approved REMS at: https://www.fda.gov/drugs/drugsafety/postmarketdrugsafetyinformationforpatientsandproviders/ucm111350.htm.
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Issuers must implement the revised Sec. 156.122(e) no later than
for the start of
[[Page 10822]]
the 2017 plan year, and we have added this clarification to the
regulation.
v. Other Comments on the Preamble to Sec. 156.122
In addition to the proposed provisions above, we urged issuers to
temporarily cover non-formulary drugs (including drugs that are on an
issuer's formulary but require prior authorization or step therapy) as
if they were on formulary (or without imposing prior authorization or
step therapy requirements) during the first 30 days of coverage. We
encouraged plans to adopt this policy to accommodate the immediate
needs of enrollees, while allowing the enrollee sufficient time to go
through the prior authorization or drug exception processes.
Comment: Some commenters sought clarification about coverage of
medical drugs and preventive service drugs. Others recommended
requiring limits to formulary changes during the plan year. Several
commenters recommended that we require issuers to temporarily cover
non-formulary drugs during the first 30 days of coverage or longer and
other commenters were against this policy, stating that it is not a
typical requirement in the private market, and that it is costly and
counterintuitive to formulary transparency. Other commenters supported
transition policies, but acknowledged the importance of flexibility for
issuers in developing these policies.
Response: Preventive services, including preventive service drugs,
are required to be covered as part of EHB. Non-grandfathered group
health plans and health insurance coverage must provide benefits for
preventive health services, including preventive service drugs, without
cost sharing, consistent with the requirements of section 2713.
Similarly, the rules set forth under Sec. 156.122 are specific to
coverage of drugs under the prescription drug EHB category. Issuers
could cover drugs administered as part of another service (such as
during an inpatient hospitalization or a physician service) under the
EHB category that covers that service, in addition to covering the drug
under the prescription drug EHB category. We believe this clarification
reflects the current practice of issuers.
We are also concerned about issuers making mid-year formulary
changes, especially changes that negatively affect enrollees. We are
monitoring this issue to consider whether further standards are needed.
We also note that, under guaranteed renewability requirements and the
definitions of ``product'' and ``plan,'' issuers generally may not make
plan design changes, including changes to drug formularies, other than
at the time of plan renewal. We recognize that certain mid-year changes
to drug formularies related to the availability of drugs in the market
may be necessary and appropriate.
We are not requiring coverage of a transitional fill at this time.
As stated in the proposed rule, we will consider whether additional
requirements may be needed in this area. We remain concerned that new
enrollees may be unfamiliar with what is covered on their new plan's
formulary drug list and the process and procedures under the plan.
Further, some new enrollees whose drugs are covered by the plan's
formulary may need to obtain prior authorization or go through step
therapy to have coverage for their drugs, and others may need time to
work with their provider to determine which formulary drug the
individual should be transitioned to. For these reasons, we urge
issuers to temporarily fill drugs that are not on the formulary (or are
on an issuer's formulary but require prior authorization or step
therapy) as if they were on formulary (or without imposing prior
authorization or step therapy requirements) during the first 30 days of
coverage. We encourage plans to adopt this policy to accommodate the
immediate needs of enrollees, while allowing the enrollee sufficient
time to go through the prior authorization or drug exception processes.
Comment: Some commenters recommended that we implement the
prescription benefit requirements in 2017 or later. Others recommended
that all of the prescription drug benefit changes be implemented in
2016. Some had separate recommendations for the timing or only
commented on the timing for certain requirements.
Response: We recognize that certain prescription benefit changes
under Sec. 156.122 will be easier to implement than others. For that
reason, we are finalizing our proposal effective dates for Sec.
156.122(c) and new Sec. 156.122(d), such that they are effective for
plan years beginning or after January 1, 2016. These requirements are
typical of the current market and would require updating and modifying
of systems and procedures to align with the finalized policy. We are
finalizing our proposed effective dates for the revisions to Sec.
156.122(a) and new Sec. 156.122(e) such that they are effective for
plan years beginning on or after January 1, 2017 to better ensure a
smooth transition in implementing these policies.
e. Prohibition on Discrimination (Sec. 156.125)
Section 1302(b)(4) of the Affordable Care Act directs the Secretary
to address certain standards in defining EHB, including elements
related to balance, discrimination, the needs of diverse sections of
the population, and denial of benefits. We have interpreted this
provision, in part, as a prohibition on discrimination by issuers
providing EHB. Under Sec. 156.125, which implements the prohibition on
discrimination provisions, an issuer does not provide EHB if its
benefit design, or the implementation of its benefit design,
discriminates based on an individual's age, expected length of life,
present or predicted disability, degree of medical dependency, quality
of life, or other health conditions.
As described in the proposed rule, since we finalized Sec.
156.125, we have become aware of benefit designs that we believe would
discourage enrollment by individuals based on age or based on health
conditions, in effect making those plan designs discriminatory, thus
violating this prohibition. Some issuers have maintained limits and
exclusions that were included in the State EHB benchmark plan. As we
have previously stated in guidance, EHB-benchmark plans may not reflect
all requirements effective for plan years starting on or after January
1, 2014. Therefore, when designing plans that are substantially equal
to the EHB-benchmark plan, issuers should design plan benefits,
including coverage and limitations, to comply with requirements and
limitations that apply to plans beginning in 2014.\53\
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\53\ Guide to Reviewing EHB Benchmark Plans-- https://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.html#review
benchmarks.
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In the proposed rule, we discussed three examples of potentially
discriminatory practices: (1) Attempts to circumvent coverage of
medically necessary benefits by labeling the benefit as a ``pediatric
service,'' thereby excluding adults; (2) refusal to cover a single-
tablet drug regimen or extended-release product that is customarily
prescribed and is just as effective as a multi-tablet regimen, absent
an appropriate reason for such refusal; and (3) placing most or all
drugs that treat a specific condition on the highest cost tiers.
In this final rule, CMS adopts the same approach as described in
the proposed rule. As we indicated in the proposed rule and the 2014
Letter to Issuers, we will notify an issuer when we see an indication
of a reduction in the generosity of a benefit in some
[[Page 10823]]
manner for subsets of individuals that is not based on clinically
indicated, reasonable medical management practices.\54\ We conduct this
examination whenever a plan subject to the EHB requirement reduces
benefits for a particular group. Issuers are expected to impose
limitations and exclusions based on clinical guidelines and medical
evidence, and are expected to use reasonable medical management.
Issuers may be asked to submit justification with supporting
documentation to HHS or the State explaining how the plan design is not
discriminatory.
---------------------------------------------------------------------------
\54\ Letter to Issuers on Federally-facilitated and State
Partnership Exchanges, April 5, 2013, page 15 and 2015 Letter to
Issuers in the Federally facilitated Marketplaces, March 14, 2014,
page 29.
---------------------------------------------------------------------------
We note that other nondiscrimination and civil rights laws may
apply, including the Americans with Disabilities Act, section 1557 of
the Affordable Care Act, Title VI of the Civil Rights Act of 1964, the
Age Discrimination Act of 1975, section 504 of the Rehabilitation Act
of 1973 and State law. Compliance with Sec. 156.125 is not
determinative of compliance with any other applicable requirements, and
Sec. 156.125 does not apply to the Medicaid and CHIP programs, but a
parallel provision applies to EHBs furnished by Medicaid Alternative
Benefit Plans.
Comment: Many commenters requested that we clarify that the
examples provided are only examples and not per se discriminatory.
Other commenters requested that we codify the examples and suggested
additional examples of discriminatory practices that should be codified
as well.
Response: We are not prohibiting certain practices in regulatory
text at this time. Several factors must be taken into consideration
during benefit design, and a discrimination determination is often
dependent on the specific facts and circumstances. However, the
examples identified in the proposed rule contain indications that they
are discriminatory, and therefore further investigation by the
enforcing entity may be required. We strongly caution issuers that the
examples cited appear discriminatory in their application when looking
at the totality of the circumstances, and may therefore be prohibited.
Additionally, as described later in this preamble, section 1302(b)
of the Affordable Care requires that the definition of EHB be based on
the scope of benefits provided under a typical employer plan, subject
to requirements under the joint interpretive jurisdiction of the
Departments of HHS, Labor, and the Treasury.\55\ Because the
nondiscrimination provisions are related to many other such
requirements, HHS will consult with relevant Federal agencies, such as
the Departments of Labor and the Treasury, as necessary, in developing
new guidance related to discriminatory benefit designs.
---------------------------------------------------------------------------
\55\ To inform the determination as to the scope of a typical
employer plan, section 1302(b)(2)(A) of the Affordable Care act
requires the Secretary of Labor to conduct a survey of employer-
sponsored coverage to determine the benefits typically covered by
employers, and to provide a report to the Secretary of HHS. These
provisions suggest that, while detailed requirements for EHB in the
individual and small group health insurance markets were deemed
necessary, the benefits covered by typical employer plans providing
primary coverage at the time the Affordable Care Act was enacted
were seen as sufficient to satisfy the Act's objectives for the
breadth of benefits needed for health plan coverage and, in fact, to
serve as the basis for determining EHB.
---------------------------------------------------------------------------
Comment: Some commenters asked whether discrimination would be
identified during certification or approval and therefore a finding of
discrimination would be prospective only.
Response: As provided under Sec. 156.125(a), an issuer does not
provide EHB if the implementation of a benefit design discriminates
based on an individual's age, expected length of life, present or
predicted disability, degree of medical dependency, quality of life, or
other health conditions. Some discriminatory practices might not be
discovered until an enrollee files a complaint with the appropriate
body. Once a discriminatory practice is identified, the issuer may be
asked to submit a justification with supporting documentation to HHS or
the State explaining why the practice is not discriminatory.
Comment: Some commenters expressed concern regarding the example of
placing most or all drugs for a certain condition on a high cost tier.
They noted that drug tiering reflects current realities of the drug
market and is based on costs. The commenters asked CMS to clarify that
having a specialty tier is not discriminatory.
Response: The examples provided in the proposed rule are
potentially discriminatory if there is no appropriate non-
discriminatory reason for the noted practice. Having a specialty tier
is not on its face discriminatory; however, placing most or all drugs
for a certain condition on a high cost tier without regard to the
actual cost the issuer pays for the drug may often be discriminatory in
application when looking at the totality of the circumstances, and
therefore prohibited. When CMS or the State requests a justification
for such a practice, issuers should be able to identify an appropriate
non-discriminatory reason that supports their benefit design, including
their formulary design.
Comment: Several commenters requested more detailed information
regarding how CMS and States monitor and enforce discrimination.
Response: Enforcement of the requirement to cover EHB is governed
by section 2723 of the PHS Act, which looks first to States for
enforcement, then to the Secretary where a State informs CMS that it is
not enforcing the requirement, or CMS finds that the State has failed
to substantially enforce. Therefore the State, or CMS in States that
are not substantially enforcing market-wide standards, is responsible
for enforcing EHB standards, including the non-discrimination standard.
In an FFE, CMS notifies an FFE issuer when we see an indication of a
reduction in the generosity of a benefit for a subset of individuals
and it is not apparent that the reduction is based on a clinical
indication or reasonable medical management practices.\56\ We conduct
this examination whenever a plan on an FFE reduces benefits for a
particular group. Limitations and exclusions are expected to be based
on clinical guidelines and medical evidence, and medical management
standards are expected to be reasonable. Issuers may be asked to submit
a justification with supporting documentation to CMS or the State
explaining how the plan design is not discriminatory.
---------------------------------------------------------------------------
\56\ Letter to Issuers on Federally-facilitated and State
Partnership Exchanges, April 5, 2013, page 15 and 2015 Letter to
Issuers in the Federally-facilitated Marketplaces, March 14, 2014,
page 29.
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HHS's Office for Civil Rights (OCR) has independent authority to
enforce section 1557 of the Affordable Care Act (42 U.S.C. 18116),
which prohibits discrimination on the basis of race, color, national
origin, sex, age, or disability in any health program or activity, any
part of which receives Federal financial assistance. OCR also enforces
Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d, et seq.),
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and the
Age Discrimination Act of 1975 (42 U.S.C. 6101, et seq.) and their
respective implementing regulations, which prohibit discrimination on
the basis of race, color, national origin, disability, or age in health
programs and activities that receive Federal financial assistance.
f. Cost-Sharing Requirements (Sec. 156.130)
We proposed to amend Sec. 156.130 to clarify how the annual
limitation on
[[Page 10824]]
cost sharing applies to plans that operate on a non-calendar year, and
to make a technical correction to the special rule for network plans.
First, we proposed to add new Sec. 156.130(b), which would provide
that non-calendar year plans that are subject to the annual limitation
on cost sharing in section 1302(c)(1) must adhere to the annual
limitation that is specific to the calendar year in which the plan
begins. That annual limitation amount would serve as the maximum for
the entire plan year. The purpose of this proposal is to ensure that
the enrollee would only be required to accumulate cost sharing that
applies to one annual limit per year. We also stated that under section
1302(c)(3) of the Affordable Care Act, the term ``cost sharing''
includes deductibles, coinsurance, copayments, or similar charges, and
any other expenditure required of an individual that is a qualified
medical expense (within the meaning of section 223(d)(2) of the Code)
for EHB covered under the plan. Expenditures that meet this definition
of cost sharing must, under section 1302(c) of the Affordable Care Act,
count toward the annual limitation on cost sharing incurred under a
health plan that is required to cover EHB. Cost sharing does not
include premiums, balance billing amounts for non-network providers, or
spending for non-covered services. This definition was codified in
Sec. 155.20.
Additionally, we proposed to make a technical correction to the
text at Sec. 156.130(c) on the special rule for network plans to
replace ``shall not'' with ``is not required to.'' This proposed
amendment was intended to clarify that issuers have the option to count
the cost sharing for out-of-network services towards the annual
limitation on cost sharing, but are not required to do so. This out-of-
network cost sharing would not count toward the calculation of
actuarial value under Sec. 156.135(b)(4) or meeting a given level of
coverage under Sec. 156.140.
Lastly, in the proposed rule, we proposed clarifying that the
annual limitation on cost sharing for self-only coverage applies to all
individuals regardless of whether the individual is covered by a self-
only plan or is covered by a plan that is other than self-only. In both
of these cases, an individual's cost sharing for EHB may never exceed
the self-only annual limitation on cost sharing. For example, under the
proposed 2016 annual limitation on cost sharing, if an other than self-
only plan has an annual limitation on cost sharing of $10,000 and one
individual in the family plan incurs $20,000 in expenses from a
hospital stay, that particular individual would only be responsible for
paying the cost sharing related to the costs of the hospital stay
covered as EHB up to the annual limit on cost sharing for self-only
coverage (assuming an annual limitation of $6,850 for 2016, the maximum
for that year). We sought comments on these proposed requirements and
clarifications as well as whether other requirements and clarifications
were needed. We are finalizing our proposal that the annual limitation
on cost sharing for self-only coverage applies to all individuals
regardless of whether the individual is covered by a self-only plan or
is covered by a plan that is other than self-only and the technical
correction we proposed to make to the text at Sec. 156.130(c).
Comment: Several commenters were supportive of the proposed Sec.
156.130(b) as ensuring that cost sharing for non-calendar plans accrues
for a 12-month period, and ensuring that an enrollee only has to
accumulate cost sharing towards one annual limitation on cost sharing.
Other commenters opposed the proposed Sec. 156.130(b) because small
employer plans typically operate on a non-calendar year basis, but
accumulate towards a calendar year annual limitation on cost sharing.
These commenters saw the proposed requirements as disruptive, confusing
to consumers, and difficult to implement. Commenters asked for an
exception from the new Sec. 156.130(b) for large and self-funded group
health plans and indicated that issuers would need time to implement
the rules, and would require a clear transitional policy.
Response: The purpose of proposed Sec. 156.130(b) was to ensure
that issuers could not reset the annual limitation on cost sharing more
frequently than once a year and was not intended to disrupt the
employer group health insurance market. After careful consideration of
comments received, we are not finalizing this policy at this time. At
this time, we believe it is important to retain flexibility in the
employer health insurance market on the timeframe under which the
employer sets the annual limitation on cost sharing, but we do maintain
that the annual limitation cost sharing is to apply on an annual basis
regardless of whether it is a calendar year or a non-calendar year
plan.
Comment: Some commenters were supportive of the proposed technical
correction to Sec. 156.130(c) to replace ``shall not'' with ``is not
required to.'' Some commenters recommended that we expand this
requirement to require the counting of out-of-network services toward
the annual limit on cost sharing, including in cases where the issuer
is failing to meet network adequacy standards or in cases of emergency
services, or to expand the types of cost sharing that must count
towards the annual limitation on cost sharing.
Response: The purpose of this correction was to better align this
regulation with the Affordable Care Act Implementation FAQs (Set 18)
that were prepared jointly by the Departments of Labor, HHS, and the
Treasury.\57\ In this final rule, we do not intend to expand this
requirement to require counting of out-of-network services toward the
annual limitation on cost sharing and believe that requiring coverage
of out-of-network services for cases where an enrollee is unable to
access an in-network provider for covered services is beyond the scope
of the regulation related to cost sharing requirements, which applies
in different ways in a broad range of markets, some of which may be
subject to varying network adequacy requirements. However, revised
Sec. 156.130(c) ensures that an issuer has the option to count the
cost sharing for these out-of-network services towards the annual
limitation on cost sharing. In addition, issuers' obligations under
Sec. 156.130(g) and Sec. 147.138(b)(3) regarding coverage of
emergency services are applicable. Accordingly, we are finalizing these
changes to Sec. 156.130(c) as proposed.
---------------------------------------------------------------------------
\57\ https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.html. (January 8, 2014).
---------------------------------------------------------------------------
Comment: Several commenters supported the clarification in the
preamble that the self-only coverage limit for the annual limitation on
cost sharing applies to all individuals regardless of whether the
individual has other than self-only coverage, as a step toward greater
consistency in consumer protections. Commenters who opposed this
clarification were primarily concerned that this provision would limit
the ability of issuers to offer high deductible health plans with a
health savings account. Other commenters raised concerns about whether
this clarification was within the Congressional intent of the statute,
and whether this policy would be more generous than other Federal
programs. Other commenters wanted additional clarification on how the
annual limitation on cost sharing may be applied for other than self-
only coverage.
Response: We believe that this clarification is an important
consumer protection, as we are aware that some consumers have been
confused by the applicability of the annual limitation on cost sharing
in other than self-only
[[Page 10825]]
plans. Therefore, we are finalizing this clarification. The annual
limitation on cost sharing for self-only coverage applies to all
individuals regardless of whether the individual is covered by a self-
only plan or is covered by a plan that is other than self-only.
Section 156.130 is specific to the annual limitation on cost
sharing. While cost sharing incurred towards the deductible must count
towards the annual limitation on cost sharing for EHB, the deductible
limit is not regulated in the same manner as the annual limitation on
cost sharing. Therefore, family high deductible health plans that count
the family's cost sharing to the deductible limit can continue to be
offered under this policy. The only limit will be that the family high
deductible health plan cannot require an individual in the family plan
to exceed the annual limitation on cost sharing for self-only coverage.
We also note that this policy, that the annual limitation on cost
sharing for self-only coverage applies to all individuals regardless of
whether the individual is covered by a self-only plan or is covered by
a plan that is other than self-only, would also apply to catastrophic
plans under Sec. 156.155 and that plans are required to comply with
reduced maximum annual limitation on cost sharing under Sec. 156.420.
We note that 2016 plans must comply with this policy.
g. Premium Adjustment Percentage (Sec. 156.130)
Section 1302(c)(4) of the Affordable Care Act directs the Secretary
to determine an annual premium adjustment percentage, which is used to
set the rate of increase for three parameters detailed in the
Affordable Care Act: The maximum annual limitation on cost sharing
(defined at Sec. 156.130(a)), the required contribution percentage by
individuals for minimum essential health coverage the Secretary may use
to determine eligibility for hardship exemptions under section 5000A of
the Code, and the assessable payment amounts under section 4980H(a) and
(b) of the Code (finalized at 26 CFR 54.4980H in the ``Shared
Responsibility for Employers Regarding Health Coverage,'' published in
the February 12, 2014 Federal Register (79 FR 8544)). Section
156.130(e) provides that the premium adjustment percentage is the
percentage (if any) by which the average per capita premium for health
insurance coverage for the preceding calendar year exceeds such average
per capita premium for health insurance for 2013, and that this
percentage will be published annually in the HHS notice of benefit and
payment parameters.
We established a methodology for estimating average per capita
premium for purposes of calculating the premium adjustment percentage
in the 2015 Payment Notice. Under that methodology, the premium
adjustment percentage is calculated based on the projections of average
per enrollee employer-sponsored insurance (ESI) premiums from the NHEA,
which is calculated by the CMS Office of the Actuary.
Accordingly, using the ESI data, the premium adjustment percentage
for 2016 is the percentage (if any) by which the most recent NHEA
projection of per enrollee ESI premiums for 2015 ($5,744) exceeds the
most recent NHEA projection of per enrollee ESI premiums for 2013
($5,303).\58\ We are finalizing the proposed premium adjustment
percentage for 2016 at 8.316047520 percent. We note that the 2013
premium used for this calculation has been updated to reflect the
latest NHEA data. We are also finalizing the following cost-sharing
parameters for calendar year 2016, based on our finalized premium
adjustment percentage for 2016.
---------------------------------------------------------------------------
\58\ See https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology2012.pdf and Table 17 in https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2012.pdf for
additional information.
---------------------------------------------------------------------------
Maximum Annual Limitation on Cost Sharing for Calendar Year 2016.
Under Sec. 156.130(a)(2), for the 2016 calendar year, cost sharing for
self-only coverage may not exceed the dollar limit for calendar year
2014 increased by an amount equal to the product of that amount and the
premium adjustment percentage for 2016, and for other than self-only
coverage, the limit is twice the dollar limit for self-only coverage.
Under Sec. 156.130(d), these amounts must be rounded down to the next
lowest multiple of 50. Using the premium adjustment percentage of
8.316047520 for 2016 we established above, and the 2014 maximum annual
limitation on cost sharing of $6,350 for self-only coverage, which was
published by the IRS on May 2, 2013,\59\ we are finalizing the proposed
2016 maximum annual limitation on cost sharing at $6,850 for self-only
coverage and $13,700 for other than self-only coverage.
---------------------------------------------------------------------------
\59\ See https://www.irs.gov/pub/irs-drop/rp-13-25.pdf.
---------------------------------------------------------------------------
Comment: Two commenters expressed concern with the increase in the
maximum limitation on cost sharing, and asked HHS to consider
alternative factors to those that make up the methodology or an
alternate methodology to protect patients from increasing out-of-pocket
costs. One commenter stated that the proposed increase of $500 for
self-only and $1,000 for family policies over the 2014 maximums will
deter enrollees from using drugs, and continual annual increases of
this magnitude would nullify the protection afforded patients from
limits on out-of-pocket expenses. Another commenter stated that the
proposed percentage increase far exceeds any recent percentage increase
in the maximum annual limit on deductibles proposed by the Internal
Revenue Service for High Deductible Health Plans, the index used to
establish maximum annual limits on cost sharing in the first year of
the Affordable Care Act. The commenter stated that consumers do not
commonly experience both annual premium increases and significant
increases in the cost of benefits.
Response: We are finalizing the 2016 maximum annual limit on cost
sharing as proposed. As discussed above, section 1302(c)(4) of the
Affordable Care Act directs the Secretary to set the maximum limitation
on cost sharing using an annual premium adjustment percentage. Other
indices may use different factors. HHS recognizes that significant
annual increases in out-of-pocket expenses would have a deleterious
effect on consumers' ability to access health care. The methodology to
establish the maximum annual limitation on cost sharing was finalized
in the 2015 Payment Notice, and as stated there, we will consider
adjusting the methodology in 2017 as additional data on health
insurance premiums become available through the Exchanges and other
sources.
h. Reduced Maximum Annual Limitation on Cost Sharing (Sec. 156.130)
Sections 1402(a) through (c) of the Affordable Care Act direct
issuers to reduce cost sharing for EHBs for eligible individuals
enrolled in a silver level QHP. In the 2014 Payment Notice, we
established standards related to the provision of these cost-sharing
reductions. Specifically, in part 156 subpart E, we specified that QHP
issuers must provide cost-sharing reductions by developing plan
variations, which are separate cost-sharing structures for each
eligibility category that change how the cost sharing required under
the QHP is to be shared between the enrollee and the Federal
government. At Sec. 156.420(a), we detailed the structure of these
plan variations and specified that QHP
[[Page 10826]]
issuers must ensure that each silver plan variation has an annual
limitation on cost sharing no greater than the applicable reduced
maximum annual limitation on cost sharing specified in the annual HHS
notice of benefit and payment parameters. Although the amount of the
reduction in the maximum annual limitation on cost sharing is specified
in section 1402(c)(1)(A) of the Affordable Care Act, section
1402(c)(1)(B)(ii) of the Affordable Care Act states that the Secretary
may adjust the cost-sharing limits to ensure that the resulting limits
do not cause the AVs of the health plans to exceed the levels specified
in section 1402(c)(1)(B)(i) (that is, 73 percent, 87 percent or 94
percent, depending on the income of the enrollee(s)). Accordingly, we
proposed to use a method we established in the 2014 Payment Notice for
determining the appropriate reductions in the maximum annual limitation
on cost sharing for cost-sharing plan variations. As finalized above,
the 2016 maximum annual limitation on cost sharing is $6,850 for self-
only coverage and $13,700 for other than self-only coverage. We
analyzed the effect on AV of the reductions in the maximum annual
limitation on cost sharing described in the statute to determine
whether to adjust the reductions so that the AV of a silver plan
variation will not exceed the AV specified in the statute. Below, we
describe our analysis for the 2016 benefit year and the results
described in the proposed rule, which are being finalized as proposed.
Reduced Maximum Annual Limitation on Cost Sharing for Benefit Year
2016. Consistent with our analysis in the 2014 and 2015 Payment
Notices, we developed three model silver level QHPs, and analyzed the
impact on AV of the reductions described in the Affordable Care Act to
the estimated 2016 maximum annual limitation on cost sharing for self-
only coverage ($6,850). The model plan designs are based on data
collected for 2015 plan year QHP certification to ensure that they
represent a range of plan designs that we expect issuers to offer at
the silver level of coverage through the Exchange. For 2016, the model
silver level QHPs included a PPO with a typical cost-sharing structure
($6,850 annual limitation on cost sharing, $2,000 deductible, and 20
percent in-network coinsurance rate), a PPO with a lower annual
limitation on cost sharing ($4,600 annual limitation on cost sharing,
$2,550 deductible, and 20 percent in-network coinsurance rate), and an
HMO ($6,850 annual limitation on cost sharing, $2,700 deductible, 20
percent in-network coinsurance rate, and the following services with
copays that are not subject to the deductible or coinsurance: $500
inpatient stay per day, $350 emergency department visit, $25 primary
care office visit, and $50 specialist office visit). All three model
QHPs meet the AV requirements for silver level health plans.
We then entered these model plans into the proposed 2016 AV
calculator developed by HHS and observed how the reductions in the
maximum annual limitation on cost sharing specified in the Affordable
Care Act affected the AVs of the plans. We found that the reduction in
the maximum annual limitation on cost sharing specified in the
Affordable Care Act for enrollees with a household income between 100
and 150 percent of the FPL (\2/3\ reduction in the maximum annual
limitation on cost sharing), and 150 and 200 percent of the FPL (\2/3\
reduction), would not cause the AV of any of the model QHPs to exceed
the statutorily specified AV level (94 and 87 percent, respectively).
In contrast, the reduction in the maximum annual limitation on cost
sharing specified in the Affordable Care Act for enrollees with a
household income between 200 and 250 percent of the FPL (\1/2\
reduction), would cause the AVs of two of the model QHPs to exceed the
specified AV level of 73 percent. As a result, we are finalizing our
proposal that the maximum annual limitation on cost sharing for
enrollees in the 2016 benefit year with a household income between 200
and 250 percent of the FPL be reduced by approximately \1/5\, rather
than \1/2\. We are further finalizing as proposed a requirement that
the maximum annual limitation on cost sharing for enrollees with a
household income between 100 and 200 percent of the FPL be reduced by
approximately \2/3\, as specified in the statute, and as shown in Table
10. These reductions in the maximum annual limitation on cost sharing
should adequately account for unique plan designs that may not be
captured by our three model QHPs. We also note that selecting a
reduction for the maximum annual limitation on cost sharing that is
less than the reduction specified in the statute will not reduce the
benefit afforded to enrollees in aggregate because QHP issuers are
required to further reduce their annual limitation on cost sharing, or
reduce other types of cost sharing, if the required reduction does not
cause the AV of the QHP to meet the specified level.
We note that for 2016, as described in Sec. 156.135(d), States are
permitted to submit for approval by HHS State-specific data sets for
use as the standard population to calculate AV. No State submitted a
data set by the September 1 deadline.
Table 10--Reductions in Maximum Annual Limitation on Cost Sharing for
2016
------------------------------------------------------------------------
Reduced maximum
Reduced maximum annual limitation
annual limitation on cost sharing
Eligibility category on cost sharing for other than
for self-only self-only
coverage for 2016 coverage for 2016
------------------------------------------------------------------------
Individuals eligible for cost- $2,250 $4,500
sharing reductions under Sec.
155.305(g)(2)(i) (that is, 100-
150 percent of FPL)..............
Individuals eligible for cost- 2,250 4,500
sharing reductions under Sec.
155.305(g)(2)(ii) (that is, 150-
200 percent of FPL)..............
Individuals eligible for cost- 5,450 10,900
sharing reductions under Sec.
155.305(g)(2)(iii) (that is, 200-
250 percent of FPL)..............
------------------------------------------------------------------------
Comment: We received one comment supporting the proposed reductions
in the maximum annual limitation on cost sharing for 2016 for enrollees
with a household income between 200 and 250 percent of the FPL, with
the caveat that HHS design policies in future plan years to lower up-
front cost sharing, such as through lower deductibles. Other commenters
stated that HHS should consider reducing the cost-sharing limits for
individuals with a household income between 200 and 400 percent of the
FPL as the proposed cost-sharing limits may pose significant financial
[[Page 10827]]
challenge for enrollees with significant expenditures. One commenter
urged HHS to systematically analyze the reduced annual limitation on
cost sharing provided by cost-sharing reduction plans in each State or
rating area for their impact on people with chronic illnesses.
Response: As discussed in the proposed rule, selecting a reduction
for the maximum annual limitation on cost sharing that is less than the
reduction specified in the statute will not reduce the benefit afforded
to enrollees in aggregate, because QHP issuers are required to further
reduce their annual limitation on cost sharing, or other types of cost
sharing, to meet the specified AV for the plan variation. Therefore, we
are finalizing the reductions to the maximum annual limitation on cost
sharing for 2016 as proposed.
i. Minimum Value (Sec. 156.145)
Section 1401(a) of the Affordable Care Act added a new section 36B
to the Code, providing a premium tax credit for certain individuals
with household incomes between 100 percent and 400 percent of the FPL
who enroll in, or who have one or more family members enrolled in an
individual market QHP through an Exchange, who are not otherwise
eligible for MEC. An employer-sponsored plan is MEC, but for purposes
of the premium tax credit under section 36B(c)(2)(C)(ii) of the Code,
an employee is generally treated as not eligible for MEC under an
employer-sponsored plan unless the plan is affordable and provides
minimum value (MV). An employer-sponsored plan provides MV if the
plan's share of the total allowed costs of benefits provided under the
plan is greater than or equal to 60 percent of the costs. An employee
who is eligible for coverage under an employer-sponsored plan that is
both affordable and provides MV to the employee may not receive a
premium tax credit under section 36B of the Code for the employee's
coverage in a QHP. If the employer coverage does not provide MV, the
employee may be entitled to a premium tax credit even if the coverage
is affordable.
Section 1513 of the Affordable Care Act added a new section 4980H
to the Code providing for shared responsibility for employers regarding
health coverage. An applicable large employer that does not offer
coverage that is affordable and provides MV may be liable for an
employer shared responsibility payment under section 4980H of the Code
if one or more of its full-time employees receives a premium tax
credit.
Under our regulations, the MV standard of 60 percent of the total
allowed costs of benefits provided under the plan is based on an amount
equivalent to the plan's share of total allowed costs required for a
bronze level QHP offered on an Exchange. Section 1302(d)(2)(C) of the
Affordable Care Act provides that regulations promulgated by the
Secretary of HHS under section 1302(d)(2), addressing actuarial value,
apply in determining under this title, the Public Health Service Act,
and the Internal Revenue Code . . . the percentage of the total allowed
costs of benefits provided under a group health plan or health
insurance coverage that are provided by such plan or coverage.
Accordingly, HHS regulations under section 1302(d) implementing
actuarial value requirements, which an insurer offering essential
health benefits (EHB) must meet for a non-grandfathered individual
market or small group health insurance plan to be considered a bronze
plan under section 1302(d)(1)(3) of the Affordable Care Act, also form
the basis for determining the percentage of the total allowed costs of
benefits provided for purposes of whether the value of coverage meets
the MV standard under section 36B(c)(2)(C)(ii) of the Code.
HHS published final regulations implementing section 1302(d)(2) on
February 25, 2013 (78 FR 12834). The regulations at Sec. 156.20 define
the percentage of the total allowed costs of benefits as (1) the
anticipated covered medical spending for EHB coverage paid by a health
plan for a standard population, (2) computed in accordance with the
plan's cost sharing, and (3) divided by the total anticipated allowed
charges for EHB coverage provided to the standard population. HHS
regulations at Sec. 156.145(b)(2) apply this definition in the context
of MV by taking into account benefits a plan provides that are included
in any one of the State EHB benchmarks.
The IRS and Treasury Department published proposed regulations on
May 3, 2013 (78 FR 25909), applying the HHS regulations in defining MV
for employer-sponsored plans. The proposed regulations provide that the
MV percentage is determined by dividing a plan's anticipated medical
spending (based on the plan's cost-sharing) for plan benefits that are
EHB covered under a particular EHB benchmark plan for the MV standard
population by the total allowed charges for EHB coverage for the
standard population and converting the result to a percentage. Proposed
26 CFR 1.36B-6(c). Taxpayers may apply the proposed regulations for
taxable years ending before January 1, 2015.
The final HHS regulations and proposed Treasury regulations allow
plans to determine the MV percentage by using the MV Calculator
published by HHS. It came to our attention that certain group health
plan designs that provide no coverage of inpatient hospital services
were being promoted, and that representations were being made, based on
the MV Calculator, that these plan designs would cover 60 percent of
the total allowed costs of benefits provided, and thus provide MV under
the test in the current regulations. We understand that these designs
have been promoted as a way of both minimizing the cost of the plan to
the employer (a consequence not only of excluding inpatient
hospitalization benefits but also of making an offer of coverage that a
substantial percentage of employees will not accept) and avoiding
potential liability for employer shared responsibility payments. By
offering coverage that is affordable to the employee and that purports
to provide MV, employers adopting these plan designs were seeking, to
deny their employees the ability to obtain a premium tax credit that
could result in the employer becoming subject to a section 4980H
employer shared responsibility payment.
In Notice 2014-69 (2014-48 IRB, November 24, 2014), released on
November 4, 2014, HHS and Treasury advised that regulations would be
proposed providing that plans that fail to provide substantial coverage
of inpatient hospital or physician services do not provide MV. Allowing
these designs to be treated as providing MV not only would allow an
employer to avoid the shared responsibility payment that the statute
imposes when an employer does not offer its full-time employees
adequate health coverage, but would adversely affect employees
(particularly those with significant health risks) who understandably
would find this coverage unacceptable, by denying them access to a
premium tax credit for individual coverage purchased through an
Exchange. Plans that omit critical benefits used disproportionately by
individuals in poor health will enroll far fewer of these individuals,
effectively driving down employer costs at the expense of those who,
because of their individual health status are discouraged from
enrolling.
That the MV standard may be interpreted to require that employer-
sponsored plans cover critical benefits is evident in the structure of
the Affordable Care Act, the context in which the grant of the
authority to the Secretary to prescribe regulations under section 1302
was enacted, and the
[[Page 10828]]
policy underlying the legislation. Section 1302(b) authorizes the
Secretary of HHS to define EHB to be offered by individual market and
small group health insurance plans, provided that this definition
include at least 10 specified categories of benefits, and that the
benefits be equal to the scope of benefits provided under a typical
employer plan. To inform this determination as to the scope of a
typical employer plan, section 1302(b)(2)(A) provides that the
Secretary of Labor shall conduct a survey of employer-sponsored
coverage to determine the benefits typically covered by employers,
including multiemployer plans, and provide a report on such survey to
the Secretary [of HHS].\60\ These provisions suggest that, while
detailed requirements for EHB in the individual and small group health
insurance markets were deemed necessary, the benefits covered by
typical employer plans providing primary coverage at the time the
Affordable Care Act was enacted were seen as sufficient to satisfy the
Act's objectives for the breadth of benefits needed for health plan
coverage and, in fact, to serve as the basis for determining EHB. They
also suggest that any meaningful standard of minimum coverage may
require providing certain critical benefits.
---------------------------------------------------------------------------
\60\ See Department of Labor. Special Report: Selected Medical
Benefits: A Report from the Department of Labor to the Department of
Health and Human Services. https://www.bls.gov/ncs/ebs/sp/selmedbensreport.pdf.
---------------------------------------------------------------------------
Employer-sponsored plans in the large group market and self-insured
employers continue to have flexibility in designing their plans. They
are not required to cover all EHB. Providing flexibility, however, does
not mean that these plans can offer whatever benefits they choose and
automatically meet MV requirements. A plan that excludes substantial
coverage for inpatient hospital and physician services is not a health
plan in any meaningful sense and is contrary to the purpose of the MV
requirement to ensure that an employer-sponsored plan, while not
required to cover all EHB, nonetheless must offer coverage with minimum
value at least roughly comparable to that of a bronze plan offered on
an Exchange.
For these reasons, the Secretary has concluded that the provisions
of section 1302(d)(2) of the Affordable Care Act--requiring that the
regulations for determining the percentage of the total allowed costs
of benefits that apply to plans that must cover all EHB also be applied
as a basis for determining minimum value--reflect a statutory design to
provide basic minimum standards for health benefits coverage through
the MV requirement, without requiring large group market plans and
self-insured plans to meet all EHB standards. Given the scope of
benefits covered by typical employer plans, the MV requirement is
properly viewed as a means of ensuring that employer-sponsored plans
satisfy basic minimum standards while also accommodating flexibility in
the design of those plans.
Employers have been able to claim that plans without coverage of
inpatient hospital services provide MV under the current quantitative
MV test by designing a benefit package that, based on standardized
actuarial assumptions used in the MV calculator, offsets the absence of
actuarial value derived from spending on inpatient hospital coverage
with increased spending on other benefits. Accordingly, some plan
designs may pass the current quantitative test without offering a
critical benefit universally understood to be included in any minimally
acceptable employer health plan coverage, and which the Department of
Labor study determined was included in all employer plans it surveyed.
As noted previously, we have concluded that the quantitative test
for MV is not exclusive. Accordingly, we are finalizing our proposal to
amend Sec. 156.145 to require that, to provide MV, an employer-
sponsored plan not only must meet the quantitative standard of the
actuarial value of benefits, but also must provide a benefit package
that meets a minimum standard of benefits. Specifically, we are
finalizing as proposed the policy to revise Sec. 156.145 to provide
that, to satisfy MV, an employer plan must provide substantial coverage
of both inpatient hospital services and physician services.
We are not requiring that large employer or self-insured employer
group health plans provide all EHB as defined under section 1302 of the
Affordable Care Act. Rather, we are only requiring that, to provide MV,
employer-sponsored plans provide substantial coverage of the two types
of benefits that we believe were envisioned for health plan coverage
meeting the MV standard. We have concluded that plans that omit these
types of coverage fail to meet universally accepted minimum standards
of value expected from, and inherent in the nature of, any arrangement
that can reasonably be called a health plan intended to provide the
primary health coverage for employees.
Consistent with Notice 2014-69, we are finalizing our proposal that
these changes to our regulations on MV will apply to employer-sponsored
plans, including plans that are in the middle of a plan year,
immediately on the effective date of the final regulations. However,
because some employers adopted plans prior to publication of Notice
2014-69, we are finalizing our proposal that the final regulations not
apply before the end of the plan year (as in effect under the terms of
the plan on November 3, 2014) to plans that before November 4, 2014,
entered into a binding written commitment to adopt, or began enrolling
employees into, the plan, so long as that plan year begins no later
than March 1, 2015. For these purposes, a binding written commitment
exists when an employer is contractually required to pay for an
arrangement, and a plan begins enrolling employees when it begins
accepting employee elections to participate in the plan. The Department
of the Treasury and the IRS are expected to publish proposed
regulations making clear that this delayed applicability date applies
solely for purposes section 4980H of the Code. At no time will any
employee be required to treat a plan that fails to provide substantial
coverage of inpatient hospital services or physician services as
providing MV for purposes of eligibility for the premium tax credit
under section 36B of the Code.
Comment: We received several comments supporting our proposal and
urging HHS to broaden the MV requirement to include outpatient
services, emergency services and prescription coverage. Several
commenters recommended establishing a clear standard for ``substantial
coverage'' to determine whether an employer has met the requirements:
One commenter suggested conducting a survey of employer-sponsored plans
to establish a benchmark, three commenters suggested using the Federal
Employees Health Benefits (FEHB) plan as a benchmark, and one commenter
suggested using 4 days of minimum hospital stays coverage as a
threshold based on an analysis of hospital stays among individuals in
employer-sponsored plans. Several commenters requested that HHS
establish a good faith compliance standard for plans offering coverage
with inpatient hospital and physician services for the 2015 plan year.
Response: We are finalizing the policy as proposed. As discussed in
the proposed rule, because under the terms of the statute large
employers are not required to offer EHB as defined by the Secretary, we
are not requiring that large employer or self-insured employer group
health plans provide all EHB as defined under section 1302 of the
Affordable Care Act. Rather, we are only
[[Page 10829]]
requiring that, to provide MV, employer-sponsored plans provide
substantial coverage of the two types of benefits that we believe were
envisioned as essential to health plan coverage meeting the MV
standard. We have concluded that plans that omit these types of
coverage fail to meet universally accepted minimum standards of value
expected from, and inherent in, the nature of any arrangement that can
reasonably be called a health plan intended to provide the primary
health coverage for employees. We intend to provide further clarity on
the requirement to provide ``substantial coverage,'' as circumstances
warrant.
Comment: Several commenters raised concerns that the Affordable
Care Act only requires coverage of 60 percent of costs of benefits and
HHS is imposing other benefits requirements without statutory basis.
One of the commenters recommended HHS create a safe harbor for plans
establishing coverage designs based on good faith belief that the plan
meets the 60 percent actuarial value threshold.
Response: As discussed above, we believe that section 1302(d)(2) of
the Affordable Care Act--requiring that the regulations for determining
the percentage of the total allowed costs of benefits that apply to
plans that must cover all EHB also be applied as a basis for
determining minimum value--reflect a statutory design to incorporate
basic minimum standards for health benefits coverage similar in scope
to EHB through the MV requirement, without requiring large group market
plans and self-insured plans to meet all EHB standards. Given the scope
of benefits covered by typical employer plans, the MV requirement is
properly viewed as a means of ensuring that employer-sponsored plans
that prevent employees from accessing the premium tax credit for
comprehensive coverage in the Marketplace satisfy basic minimum
standards while also accommodating flexibility in the design of those
plans. We believe that our rules on effective dates adequately address
transition issues. As described above, for purposes of section 4980H of
the Code, the changes to our regulations on MV requirements will not
apply before the end of the plan year for employers that adopted plans
prior to November 4, 2014, so long as the plan begins no later than
March 1, 2015. However, under no circumstances will an employee be
denied the premium tax credit under section 36B of the Code for a plan
that does not cover at least 60 percent of the total allowed costs of
benefits, and/or fails to provide substantial coverage of inpatient
hospital services or physician services.
Comment: Several commenters raised the concern that the MV
requirements will increase the number of plans affected by the excise
tax on high-cost employer-sponsored health coverage, and that many
employers have limited benefits to avoid the tax or are considering
passing off the excise tax costs to individuals.
Response: Our analysis shows plans likely to be affected by these
clarifications of the MV requirements generally have annual costs far
below the thresholds above which the excise tax will apply in 2018;
$10,200 for self-only and $27,500 for other-than-self-only coverage.
Pursuant to the statute, the thresholds may be increased for excess
growth in health care costs through 2018 and based on inflation
annually thereafter. We thus do not believe that this policy will
affect the number of employer plans affected by the excise tax and are
finalizing the policy as proposed.
3. Qualified Health Plan Minimum Certification Standards
a. QHP Issuer Participation Standards (Sec. 156.200)
We proposed to revise Sec. 156.200(b)(7) to require that a QHP
issuer comply with the standards under part 153 and not just the
standards related to the risk adjustment program. This amendment
clarifies that a QHP issuer must maintain responsibility for its
compliance and, under Sec. 156.340, the compliance of any of its
delegated or downstream entities with the standards set forth in part
153, not just those specifically pertaining to risk adjustment. We
received no comments on this proposal. We are finalizing this provision
as proposed.
b. Transparency in Coverage (Sec. 156.220)
The transparency in coverage standards established under section
1311(e)(3) of the Affordable Care Act, as implemented at Sec.
155.1040(a) and Sec. 156.220, require health insurance issuers that
offer a QHP in accordance with a certification from an Exchange to
provide specified information to HHS, the Exchange, and the State
insurance commissioner and to make this information available to the
public in ``plain language.'' In a frequently asked question dated
April 29, 2013,\61\ HHS clarified that, to comply with section
1311(e)(3), issuers offering QHPs certified by an Exchange would be
required to begin submitting this information only after QHPs have been
certified for one benefit year.\62\ We noted in the proposed rule (79
FR 70726) that because a full year of claims data will be available, we
anticipate the collection and public display of the required
information listed in Sec. 156.220 from QHP issuers offering coverage
through Exchanges beginning in 2016. We requested comments to inform
future policies, regarding the data elements, format, and timeframe for
the data submission, as well as the manner in which HHS, the Exchanges,
and QHPs should publicly display the collected information. We also
sought feedback on how to minimize duplication with information that
issuers must already submit to HHS, States, or other entities (for
example, accreditation organizations). Finally, we requested feedback
on whether State Exchanges should display the same information and in
the same format and manner as in the FFEs.
---------------------------------------------------------------------------
\61\ Affordable Care Act Implementation Set 15, available at:
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs15.html.
\62\ The FAQ also states that because section 2715A of the PHS
Act simply extends the transparency provisions set forth in section
1311(e)(3) of the Affordable Care Act to group health plans and
health insurance issuers offering group and individual health
insurance coverage, the Departments clarified that the reporting
requirements under section 2715A of the PHS Act will become
applicable to group health plans and health insurance issuers
offering group and individual health insurance coverage no sooner
than when the reporting requirements under section 1311(e)(3) of the
Affordable Care Act become applicable. Nothing in these proposed
regulations would apply any transparency reporting requirements
related to section 2715A of the PHS Act, incorporated into section
715(a)(1) of ERISA and section 9815(a)(1) of the Code.
---------------------------------------------------------------------------
Comment: One commenter asked whether the transparency in coverage
standards are applicable to stand-alone dental plans.
Response: The transparency in coverage reporting standards,
established at Sec. 156.220, are applicable to all QHPs offered on
Exchanges, including stand-alone dental plans.
Comment: Several commenters recommended that HHS narrow any data
elements it collects to reflect only information that would be useful
to consumers as they select a QHP. Commenters were concerned with
duplication of collections that are already required by States or HHS.
Some commenters suggested that data collection should rely on what is
already publicly available when possible. Some commenters expressed
concerns regarding protection of proprietary information and suggested
that HHS should not request or display data that could have unintended,
anticompetitive consequences. A few
[[Page 10830]]
commenters suggested examples of data elements, the frequency of
collection, the format of display, and data sources that could be used
to meet the requirements for specific elements.
Response: We intend to provide detail regarding the referenced data
collection and display at a future date. We will take the commenters'
suggestions into account when we do so. We intend to collect and
display information in a standardized manner to minimize burden on
issuers and maximize utility for consumers.
Comment: Some commenters recommended that transparency of coverage
standards not be implemented for 1 year following issuance of the final
guidance operationalizing them. These commenters were concerned about
having sufficient time to put resources in place to submit and display
data. Commenters also suggested that issuers be given an opportunity to
comment on the specific elements that will be collected, the definition
of those elements, and how the data will be used. One commenter
suggested that HHS conduct beta testing before the requirements are
fully implemented. In contrast, a few commenters were concerned with
the 2016 implementation date for transparency requirements and
recommended that HHS collect and display the required information as
soon as possible.
Response: We believe a 2016 date will allow sufficient time for HHS
to provide detailed guidance regarding the data collection, review, and
public display of transparency elements and will allow HHS and
Exchanges to collect a full set of data reflecting post-2014
experience. We intend to solicit additional comments on the specific
approach before it is finalized.
c. Network Adequacy Standards (Sec. 156.230)
In Sec. 156.230, we established the minimum network adequacy
criteria that health and dental plans must meet to be certified as
QHPs, under the Secretary's authority in section 1311(c)(1)(B) of the
Affordable Care Act. In this rule, we proposed modifying Sec.
156.230(a) to specify that this section only applies to QHPs that use a
provider network and that a provider network includes only providers
that are contracted as in-network. This means that the general
availability of out-of-network providers will not be counted for
purposes of meeting network adequacy requirements.
We believe that networks that provide sufficient access to benefits
are a priority for issuers and consumers. HHS continues to take great
interest in ensuring strong network access, particularly for QHPs that
must meet the standards in Sec. 156.230. As stated in the proposed
rule, HHS is aware that the NAIC has formed a workgroup that is
drafting a model act relative to network adequacy and will await the
results of this workgroup before proposing significant changes to
network adequacy policy. For 2016, HHS expects to continue the
reasonable access standard adopted in the 2015 Letter to Issuers in the
Federally-facilitated Marketplaces \63\ and assess the provider
networks information submitted as part of the QHP certification
process. We urge State-based Exchanges to employ the same standard when
examining network adequacy.
---------------------------------------------------------------------------
\63\ 2015 Letter to Issuers in the Federally-facilitated
Marketplaces, March 14, 2014, available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2015-final-issuer-letter-3-14-2014.pdf.
---------------------------------------------------------------------------
In addition to the changes above, we are also cognizant that new
enrollees in QHPs may need a transition period to switch to a provider
that is in-network in their new plan. We encourage QHP issuers that use
a network of providers to offer new enrollees transitional care for an
ongoing course of treatment. We suggest that this begin with the
effective date of coverage of a new enrollee and last for at least 29
days thereafter (for a minimum of 30 days). These benefits would extend
to health care services furnished by any provider to the new enrollee,
regardless of whether the provider is in the plan's network, as long as
the enrollee received health services from that provider under an
ongoing course of treatment in the 90 days prior to the effective date
of coverage. Because different plans may have different provider
networks, when an individual enrolls in a new health plan, he or she
may be undergoing a course of treatment with a provider that is not in
the new issuer's provider network. In such a case, it may take time for
the new enrollee to select a new in-network provider and to meet with
the new provider to ensure that there is no disruption in treatment. We
encourage issuers to adopt this policy to accommodate the immediate
needs of enrollees, while allowing the enrollee sufficient time to go
through the process of selecting an in-network provider in their new
plan. As we stated in the proposed rule, we are considering whether
requirements may be needed in this area in the future.
We are renumbering Sec. 156.230(b), to (b)(1) and adding (b)(2) to
strengthen the provider directory requirement effective for plan years
beginning on or after January 1, 2016. Specifically, we proposed that a
QHP issuer must publish an up-to-date, accurate, and complete provider
directory, including information on which providers are accepting new
patients, the provider's location, contact information, specialty,
medical group, and any institutional affiliations, in a manner that is
easily accessible to plan enrollees, prospective enrollees, the State,
the Exchange, HHS, and OPM. As part of this requirement, we proposed
that a QHP issuer must update the directory information at least once a
month, and that a provider directory will be considered easily
accessible when the general public is able to view all of the current
providers for a plan on the plan's public Web site through a clearly
identifiable link or tab without having to create or access an account
or enter a policy number. The general public should be able to easily
discern which providers participate in which plan(s) and provider
network(s) if the health plan issuer maintains multiple provider
networks, and the plan(s) and provider network(s) associated with each
provider, including the tier in which the provider is included, should
be clearly identified on the Web site and in the provider directory. We
solicited comments on this proposal, including comments regarding how
often updating should occur. We are finalizing this policy as proposed,
retaining the monthly timeline.
We also finalize the requirement for issuers to make this
information publicly available on their Web sites in a machine-readable
file and format specified by HHS. The purpose of establishing machine-
readable files with this data would be to provide the opportunity for
third parties to create resources that aggregate information on
different plans. We believe this will increase transparency by allowing
software developers to access this information and create innovative
and informative tools to help enrollees better understand the
availability of providers in a specific plan. To facilitate this
change, we proposed adding Sec. 156.230(c) to require QHP issuers to
make available and submit to HHS information about providers in its
provider networks.
We specifically solicited comments on this requirement and other
options, including the technical requirements for developing a machine-
readable file and format for a provider directory, as well as other
technical considerations, such as processes and considerations that
should be taken into account. We have established these requirements to
enhance transparency of QHP provider directories and to help consumers
make
[[Page 10831]]
more informed decisions about their health care coverage. We solicited
comments on these proposed requirements, including how frequently
provider data should be updated, and whether additional types of
information should be required to be included in the provider
directory. We understand the complexity of this undertaking, and
recognize that this will require issuer resources. Therefore, HHS
intends to provide additional details about the data submission
requirements.
We also requested comments on the feasibility and merits of
incorporating information on physical accessibility for individuals
with disabilities, including accessibility information regarding
facilities and equipment, or other information that would be important
to enrollees and potential enrollees, as a part of network adequacy
standards in the future.
Comment: A number of commenters supported stronger network adequacy
standards. Commenters were divided between supporting our proposal to
wait for NAIC recommendations before taking further action, and urging
us to act immediately and implement stronger network adequacy
standards. Commenters suggested a wide range of network adequacy
criteria for HHS to adopt, including provider to patient ratios; time
and distance metrics; geographic-based metrics; minimum numbers of
specialty providers; specific criteria for areas of concern including
pediatric, dialysis centers, and autoimmune and rare disorders;
monitoring of plans; and secret shopping. One commenter requested
increased transparency regarding evaluation of network adequacy. This
commenter suggested that HHS should modify the provider data template
for QHP issuers in the FFEs to allow greater flexibility, and should
clarify how reasonable access will be determined in situations where a
sufficient number of providers are not willing to contract with the
issuer.
Response: We are finalizing the rule without making any additional
changes to the network adequacy general requirements at this point as
the NAIC finishes its work on the network adequacy model act. We expect
that the final product of the NAIC work will reflect the viewpoints of
the various stakeholders. This reflects our general position that
network adequacy is an area subject to significant State regulation and
oversight. We agree with commenters that QHP networks should provide
access to a range of health care providers, and we continue to require
all QHP issuers to provide reasonable access to all covered services in
accordance with Sec. 156.230(a) of this rule. We are also planning
changes to the template used to collect network data to improve the
collection process for QHP issuers in the FFE during the QHP
certification process.
Comment: A number of commenters support the clarification that only
in-network providers will be considered when determining if a plan's
medical network meets reasonable access requirements, and urged CMS to
clarify that issuers must be able to provide reasonable access with the
providers available in their lowest cost tier. Other commenters also
urged CMS to require issuers to have an internal exceptions or appeals
process to obtain out-of-network services at in-network cost when
adequate access is not available, while others stressed that out-of-
network referrals should be rare. Similarly, several commenters voiced
concerns about consumers being charged out-of-network charges while
being treated in an in-network hospital because not all of the treating
providers were in-network. In such circumstances, commenters urged that
the consumer only be charged in-network costs, and that in-network
hospitals should be required to have sufficient in-network providers to
furnish all covered services. Some commenters raised concerns about the
standard use of out-of-network providers for dental networks and the
lack of availability of dentists who will contract with issuers.
Response: In light of the general support of the proposed change,
we intend to finalize the regulation as proposed. We understand the
concern about confusion created when a hospital is listed as in-network
and has providers that are out-of-network for particular in-house
services. We remind issuers that all covered services must be
reasonably accessible, and in accordance with this regulatory change,
must be available in-network. We urge issuers to evaluate their in-
network hospitals to make certain that all required services are
accessible without unreasonable delay from in-network providers. We
appreciate the concerns voiced regarding coverage of dental providers
and are contemplating whether further guidance is warranted.
Comment: A number of commenters strongly supported the transition
policy allowing new enrollees to have access to providers from whom
they received services before they joined their new plan. Some
commenters urged HHS to require the transition policies, and some
advocated for longer transition periods, such as 60 or 90 days or 6
months with reassessment, to determine if continued care is necessary
at the end of the set time period. Some commenters suggested expanding
transitional policies to include current enrollees whose in-network
providers become out-of-network providers mid-year due to network
changes. Conversely, some commenters expressed that clear and accurate
provider directories make transitional policies unnecessary, and some
believe the policy would negatively impact care management and that
many States already have requirements for transitional care. Similarly,
some suggested that transitional policies should have specific limits,
including specific situations and types of care, to reduce the impact
on premiums. Many commenters expressed concern about what payment rates
would be if there is no contract with the out-of-network provider and
suggested HHS should require plans to reimburse providers the
reasonable and customary value for out-of-network services and prohibit
balance billing of consumers for anything above what they would have
been charged for the services in-network. Commenters also stated that
this is an area that many States already regulate closely.
Response: There are strong opinions supporting and opposing a
requirement for a transitional policy, as well as varying opinions
about the amount of time transitional policies should cover. We
continue to encourage issuers to adopt appropriate transitional polices
and to pay close attention to issues around continuity of care for both
new enrollees and enrollees whose current providers become unavailable.
We expect to continue to analyze this area and may propose standards
concerning this topic in the future.
Comment: Commenters generally supported the proposal to strengthen
provider directory requirements and agreed that provider data should be
updated at least monthly, especially for on-line directories. Some
commenters urged more frequent updates and urged CMS to move towards
requiring ``real time'' updates in the future. Concerns were raised
about penalizing issuers if there were errors in the directories
because providers may fail to notify the issuer of changes, and the
administrative burden and costs associated with strengthened provider
directory requirements. Conversely, other commenters urged that issuers
be required to honor what is listed in the provider directory even if
it erroneous, and that plans be required to monitor data for accuracy.
Response: We are finalizing the regulation as proposed. We are
requiring that directories be updated at least
[[Page 10832]]
monthly and encourage more frequent updating when possible. We also
understand and appreciate the concern about issuers being held
accountable for errors in directories and encourage issuers to work
with their providers to ensure that their directories are as current
and accurate as possible. We understand that there may be some
administrative burden associated with updating directories, but believe
it is necessary for consumers to be fully informed about network
access. Similarly, we appreciate commenters who stated that issuers
should honor what is listed in their directories even if there are
errors, and while we are not requiring that at this time, we strongly
encourage that practice.
Comment: Some commenters supported the inclusion of the proposed
data elements in provider directories, including indicating if the
provider is accepting new patients. Conversely, some commenters were
concerned about being required to list if the provider is accepting new
patients, citing the administrative burden because that status can
frequently change. There was also concern about consumer confusion that
could be caused by the requirement to indicate whether specialists are
``accepting new patients.'' Some commenters noted that in the case of
specialists for whom a referral is needed, indicating the specialist is
``accepting new patients'' could be misleading to consumers, who may
understand that to mean that they can request an appointment directly
with the specialist. To alleviate confusion about referrals, it was
suggested that another column or notation be included that indicates if
a referral is needed, and it was also suggested that issuers retain
flexibility in what is included in their directories.
Response: We are finalizing all of these requirements as proposed,
including the requirement that issuers must indicate if providers are
accepting new patients. All of the required data, including information
on whether providers are accepting new patients, are critical for
consumers to make educated decisions about their health coverage.
Comment: Some commenters suggested that additional data should be
required as part of provider directories to make it easier for
consumers to compare plans. Some of the specific data elements
suggested included: hours physician traditionally practices at
referenced practices, board certification(s), sub-specialties
practiced, language spoken by each provider, interpreter services or
communication and language assistance services that are available at
the provider's facilities and information about how enrollees can
obtain such services, publication date of directory, and a field for
providing advance notice that the provider will be leaving the network.
Commenters also urged requiring plans to provide a dedicated email
address to be used to notify the plan of inaccuracies in the plan
directory, and holding the issuer accountable for making changes when
notified. Similarly, it was suggested that plans should monitor
provider directories to determine if they are accurate.
Response: We are finalizing our proposal requiring the issuer to
publish an up-to-date, accurate, and complete provider directory,
including information on which providers are accepting new patients,
the provider's location, contact information, specialty, medical group,
and any institutional affiliations, in a manner that is easily
accessible to plan enrollees, prospective enrollees, the State, the
Exchange, HHS, and OPM. We believe the new requirements will greatly
strengthen provider directory requirements and provide consumers with
valuable information to help them determine which QHP best meets their
needs. We encourage issuers to continuously evaluate the data they
include in their directories and aim to provide all of the information
that will help consumers understand their network. We appreciate the
suggestion that issuers have a dedicated email address for enrollees
and providers to submit changes or inaccuracies, and while we are not
requiring it at this time, we encourage the practice.
Comment: There was some concern raised that including items such as
location, contact information, and specialty type on a real time basis
could conflict with what is in National Plan and Provider Enumeration
System (NPPES), which providers may fail to update, and would result in
confusion. To alleviate possible NPPES confusion, it was suggested that
issuers only include information from the previous month's information
in the NPPES database.
Response: We appreciate this concern but are finalizing the
regulation as proposed. The requirement for issuers to publish an up-
to-date, accurate, and complete provider directory takes into account
the issuers' obligation to develop a system to ensure that the
information about providers that they publish in the provider directory
is accurate and up-to-date, including ensuring it is consistent with
what is listed in the NPPES database.
Comment: Some commenters supported the requirement that issuers
provide access to provider directories through the issuer's public Web
site without the need to create an account or enter policy information,
and HHS was asked to clarify the term ``user-friendly'' when used to
describe the location of provider directories on issuer Web sites.
Response: We are finalizing this policy as proposed. In response to
requests for clarification about the term ``user friendly,'' we suggest
issuers adopt common industry standards for publishing the provider
directory in an area of their Web site where it will be easy for
enrollees to find and that enrollees will be able to access without the
need for an account or policy number as stated in this rule at Sec.
156.230(b)(2)(i). To reiterate, consumers should not have to create a
user ID, log on, enter a policy number, or be enrolled in a plan to
view the network. The URL that issuers provide to HHS for publication
on HealthCare.gov for QHPs in an FFE should link directly to the
applicable provider directory. If it does not, it should link to a list
of the issuer's provider directories, and it should be readily
discernible to a consumer which directory applies to which QHP.
Comment: Some commenters supported the proposal for issuers to make
available provider information in a machine-readable file and format
specified by HHS, citing that this would improve transparency and
support informed consumer decision-making without burdening issuers.
Conversely, some commenters opposed the proposal and voiced concerns
about data accuracy, including how HHS would hold third parties
accountable for data errors, and cost. Some commenters stated that if
data are not frequently updated, consumers could receive inaccurate
information, upon which they might rely to select a QHP, while other
commenters were concerned that frequent updating would be burdensome to
issuers. Some commenters also noted that implementing any standard
could be time-consuming and requested the opportunity to provide
additional feedback. A number of commenters provided suggestions
regarding the format, structure, file type, and content of the data
they believe should be collected. Some commenters also suggested that
any machine-readable databases should be accessible through an API.
Response: We believe a machine-readable file or a format specified
by HHS will increase transparency by allowing software developers to
access
[[Page 10833]]
this information and create innovative and informative tools to help
enrollees better understand the plan's provider network. Based on the
comments received asking us to make provider information more
transparent and accessible to consumers, HHS is finalizing this rule by
adding Sec. 156.230(c), to require QHP issuers in the FFEs to make
available the information on the provider list on its Web site in a HHS
specified format and also submit this information to HHS, in a format
and at times determined by HHS. We agree with commenters that creating
a vehicle for consumers to easily determine which providers are in
which networks will help consumers select QHPs that best meet their
needs. We recognize that this will require issuer resources, and will
provide further details about the specific data elements, frequency of
updates, file types, and other crucial information in future guidance.
Comment: Commenters supported having issuers list detailed
information in provider directories about physical accessibility for
individuals with disabilities to help consumers choose plans and
providers. Some sought information about exam table access, transfer
assistance, and wheelchair access. One commenter urged caution in this
area out of concern that including information on accessibility
features for certain providers could be read to imply that other
providers need not offer such features, even though they are legally
obligated to do so pursuant to the Americans with Disabilities Act and
section 504 of the Rehabilitation Act.
Response: We appreciate the complexity of this topic, and do not
intend to issue additional regulation on this topic at this time. We
urge all issuers and providers to continue to ensure that they are
providing full and equal access to all covered services to all
enrollees, including those people with disabilities, and we remind them
of the obligation to adhere to the requirements of the Americans with
Disabilities Act and section 504 of the Rehabilitation Act. Issuers are
encouraged to consult relevant Department of Justice guidance on
accessibility of medical providers and effective communications at
www.ada.gov. We will continue to monitor this issue.
d. Essential Community Providers (Sec. 156.235)
At Sec. 156.235, we proposed to strengthen the essential community
provider (ECP) standard in accordance with section 1311(c)(1)(C) of the
Affordable Care Act, which requires that a QHP's network include ECPs,
where available, that serve predominantly low-income and medically-
underserved populations. As established in section 1311(c)(1)(C) of the
Affordable Care Act, ECPs include entities defined in section
340B(a)(4) of the PHS Act and providers described in section
1927(c)(1)(D)(i)(IV) of the Act as set forth by section 211 of Pub. L.
111-8. Additionally, we proposed that ECPs may include not-for-profit
or State-owned providers that would be entities described in section
340B of the PHS Act but do not receive Federal funding under the
relevant section of law, as these providers satisfy the same 340B
requirements and therefore meet the definition of ECPs by virtue of the
following description in section 1311(c)(1)(C) of the Affordable Care
Act--health care providers defined in section 340B(a)(4) of the PHS Act
and providers in section 1927(c)(1)(D)(i)(IV) of the Act. For the same
reasons described above, we proposed that such providers also include
not-for-profit or governmental family planning service sites that do
not receive a grant under Title X of the PHS Act. Other providers that
provide health care to populations residing in low-income zip codes or
Health Professional Shortage Areas could also be considered ECPs. We
proposed that the above proposals apply to benefit years 2016 and
thereafter.
To assist issuers in ensuring that, in future QHP certification
years, they are providing sufficient consumer access to ECPs to satisfy
the requirement in section 1311(c)(1)(C) of the Affordable Care Act, we
also proposed in new paragraph (a)(2)(i) of this section that, for QHP
certification cycles beginning with the 2016 benefit year, a health
plan seeking certification to be offered through an FFE must satisfy
the general ECP standard described in paragraph (a)(1) of this section
by demonstrating in its applications for QHP certification that a
sufficient percentage, as determined annually by HHS and specified in
HHS guidance, of available ECPs in the plan's service area have a
contractual agreement to participate in the plan's provider network.
For purposes of this general ECP standard, we proposed that multiple
providers at a single location would count as a single ECP toward the
issuer's satisfaction of the proposed ECP participation standard. Any
update to the general ECP inclusion standards would be based on HHS's
post-certification assessments of the adequacy of ECP participation,
and geographic distribution of such providers, and evidence of
contractual negotiation efforts provided by issuers in the ECP
supplemental response forms.
In addition, we proposed in paragraph (a)(2)(ii) of this section
that, to satisfy the general ECP standard, the issuer of the plan
seeking certification as a QHP in an FFE would be required to offer
contracts for participation in the plan for which a certification
application is being submitted to the following: (1) All available
Indian health providers in the service area, applying the special terms
and conditions necessitated by Federal law and regulations as
referenced in the recommended model QHP addendum for Indian health
providers developed by HHS; and (2) at least one ECP in each ECP
category (see Table 11) in each county in the service area, where an
ECP in that category is available and provides medical or dental
services that are covered by the issuer plan type. We expect that
issuers will offer contracts in good faith. A good faith contract offer
should offer the same rates and contract provisions as other contracts
accepted by or offered to similarly situated providers that are not
ECPs.
Table 11--ECP Categories and Types in FFEs
----------------------------------------------------------------------------------------------------------------
Major ECP category ECP provider types
----------------------------------------------------------------------------------------------------------------
Federally Qualified Health Centers (FQHC)... FQHC and FQHC ``Look-Alike'' Clinics,\64\ Outpatient health
programs/facilities operated by tribes, tribal organizations,
programs operated by Urban Indian Organizations.
Ryan White Providers........................ Ryan White HIV/AIDS Providers.
Family Planning Providers................... Title X Family Planning Clinics and Title X ``Look-Alike'' Family
Planning Clinics.\65\
Indian Health Care Providers................ Tribes, Tribal Organization and Urban Indian Organization
Providers, Indian Health Service Facilities.
Hospitals................................... Disproportionate Share Hospital (DSH) and DSH-eligible Hospitals,
Children's Hospitals, Rural Referral Centers, Sole Community
Hospitals, Free-standing Cancer Centers, Critical Access
Hospitals.
[[Page 10834]]
Other ECP Providers......................... STD Clinics, TB Clinics, Rural Health Clinics, Black Lung Clinics,
Community Mental Health Centers, Hemophilia Treatment Centers,
and other entities that serve predominantly low-income, medically
underserved individuals.
----------------------------------------------------------------------------------------------------------------
We proposed to add paragraph (a)(3) to this section to specify that
if an issuer's QHP certification application to the FFE does not
satisfy the ECP standard described in paragraph (a)(2) of this section,
the issuer must include as part of its application a narrative
justification describing how the provider network(s) of the plans for
which certification applications have been submitted provides an
adequate level of service for individuals residing in low-income zip
codes or Health Professional Shortage Areas within the plan's service
area and how the plan's provider network will be strengthened toward
satisfaction of the ECP standard prior to the start of the benefit
year. The narrative justification should include the following: The
number of contracts offered to ECPs for the benefit year; the number of
additional contracts the issuer expects to offer for the benefit year
and the timeframe of planned negotiations; the names of the ECP
hospitals FQHCs, Ryan White providers, family planning providers,
Indian health providers, and other ECPs to which the issuer has offered
contracts, but with whom an agreement has not yet been reached; and
contingency plans for how the issuer's provider network(s), as
currently designed, will provide adequate care to enrollees who might
otherwise be cared for by relevant ECPs. Through HHS's post-
certification assessments, HHS may examine an issuer's progress toward
satisfying the applicable ECP standard to ensure that the issuer
continues to qualify for offering its plan on the Exchange, while OPM
would retain this responsibility for issuers of multi-State plans,
acting in coordination with HHS as may be appropriate.
---------------------------------------------------------------------------
\64\ For more information on FQHC ``Look-Alike'' Clinics, see
https://bphc.hrsa.gov/about/lookalike/ and section
1861(a)(4) and section 1905(l)(2)(B) of the Act.
\65\ For more information on Title X ``Look-Alike'' Clinics, see
section 1927(c)(1)(D)(i)(IV) of the Social Security Act.
---------------------------------------------------------------------------
We proposed to redesignate current paragraph (a)(3) as paragraph
(a)(4), in which we clarify that nothing in the requirements under
paragraphs (a)(1) through (a)(3) of this section requires any QHP to
provide coverage for any specific medical procedure. We also proposed
to redesignate current paragraph (a)(2) as paragraph (a)(5).
We proposed in paragraph (b)(1) that the alternate ECP standard
described in Sec. 156.235(a)(5) will apply to issuers with plans that
provide a majority of covered professional services through physicians
employed by the issuer or through a single contracted medical group
that offer QHPs in any Exchange. Additionally, for plans seeking QHP
certification in FFEs, we proposed that a QHP issuer described in
paragraph (a)(5) of this section be determined to have a sufficient
number and geographic distribution of employed or contracted providers
by demonstrating in its QHP application that the number of its
providers in the following locations meets a percentage specified in
HHS guidance of the number of available ECPs in the service area: (i)
Located within a Health Professional Shortage Areas; or (ii) located
within five-digit zip codes in which 30 percent or more of the
population falls below 200 percent of the Federal Poverty Line. For
purposes of this alternate ECP standard, multiple providers at a single
location will count as one ECP toward the available ECPs in the plan's
service area and toward the issuer's satisfaction of the proposed ECP
participation standard to ensure a sufficient number and geographic
distribution of ECPs as required under Sec. 156.235(a). Any
modification to the alternate ECP inclusion standard in future benefit
years would be based on HHS's post-certification assessments of the
adequacy of ECP participation and geographic distribution of such
providers to ensure reasonable and timely access to such ECPs for low-
income, medically underserved individuals.
Furthermore, we proposed in new paragraph (b)(3) of this section
that if a QHP certification application of a plan for the FFE does not
satisfy the alternate ECP standard described in paragraph (b)(2) of
this section, the issuer must include as part of its QHP application a
narrative justification describing how the issuer's provider network(s)
provides an adequate level of service for low-income and medically
underserved enrollees. When assessing whether an issuer has provided a
satisfactory narrative justification under either the general or
alternate ECP standard, as applicable, HHS will take into account
factors and circumstances identified in the ECP Supplemental Response
Form,\66\ along with an explanation of how the issuer will provide
access for individuals residing in low-income zip codes or Health
Professional Shortage Areas within the plan's service area and how the
plan's provider network will be strengthened toward satisfaction of the
ECP standard prior to the start of the benefit year. Additionally,
justifications that include verification of contracts offered in good
faith, that include terms that a willing, similarly-situated, non-ECP
provider would accept or has accepted, would be considered toward
satisfaction of the ECP standard.
---------------------------------------------------------------------------
\66\ More information on the supplemental response can be found
on the CCIIO Web site at: https://www.cms.gov/cciio/programs-and-initiatives/health-insurance-marketplaces/qhp.html.
---------------------------------------------------------------------------
Finally, we proposed in paragraph (c) of this section to remove the
language defining ECPs as meeting the criteria on the initial date of
the regulation's publication. We proposed this change in recognition of
the fact that the universe of ECPs, as well as the databases we use to
delineate this universe, may vary over time for many reasons, including
demographic and provider characteristics. We requested comment on these
proposed changes. We are now finalizing these changes with
modifications. The final rule specifies in regulation text that
entities that could receive funding under Title X and 340B are ECPs,
clarifies the application to SADPs, clarifies standards related to
covered services, and clarifies the standard for integrated delivery
systems.
Comment: A number of commenters supported the clarification that
ECPs include not-for-profit or State-owned providers that would be
entities described in section 340B of the PHS Act but do not receive
Federal funding under the relevant section of law, including not-for-
profit or governmental family planning service sites that do not
receive a grant under Title X of the PHS Act. These commenters urged
that HHS include this clarification in the regulation text. Some
commenters recommended that we provide clear language to States and
issuers indicating that Indian health providers are among
[[Page 10835]]
the ECP groups to which issuers must extend contract offers in good
faith to satisfy Sec. 156.235(a) of the ECP standard.
Response: Based on the comments received, we are codifying the
inclusion of the following entities in the definition of an ECP in
Sec. 156.235(c): Not-for-profit or State-owned providers that would be
entities described in section 340B of the PHS Act but do not receive
Federal funding under the relevant section of law; not-for-profit or
governmental family planning service sites that do not receive a grant
under Title X of the PHS Act; and Indian health care providers.
Effective January 1, 2016, we are making this modification to emphasize
that these providers are among the ECP groups to which issuers must
extend contract offers in good faith to satisfy Sec. 156.235(a).
Comment: Several commenters recommended that HHS clarify that
providers located in low-income zip codes or HPSAs must also serve
predominately low-income, medically underserved individuals to satisfy
the definition of an ECP.
Response: We agree with commenters. In alignment with the
regulatory definition of an ECP at Sec. 156.235(c), we emphasize that
a provider must actually serve predominantly low-income, medically
underserved individuals to be considered an ECP, and not simply be
located in low-income zip codes or HPSAs.
Comment: We received a few comments expressing concern that removal
of the language defining ECPs as meeting the criteria on the initial
date of the regulation's publication risks the stability in the number
and scope of ECPs and carries the risk that States, Exchanges, and
other entities will attempt to limit the providers identified as an
ECP.
Response: While we understand the commenters' desire for providers
to retain a designated ECP status as of the initial date of the
regulation's publication, such a policy could conflict with the
statutory definition of an ECP if interpreted to extend past the
reexamination period for determining continued eligibility of such
providers on the list. To avoid any such misinterpretation, we proposed
removing this language from Sec. 156.235(c) to clarify that such
providers must continue to qualify each benefit year as providers that
serve predominantly low-income, medically underserved individuals to
retain their ECP status on the list each year. Therefore, we are
finalizing this provision as proposed, effective January 1, 2016.
Comment: We received a number of comments in support of our
proposal that a health plan seeking QHP certification to be offered
through an FFE must satisfy the general ECP standard by demonstrating
in its applications for QHP certification that a sufficient percentage,
as determined annually by HHS and specified in HHS guidance, of
available ECPs in the plan's service area have a contractual agreement
to participate in the plan's provider network. Some of these commenters
urged that we increase the percentage each year beyond the existing 30
percent requirement. Some commenters urged that we set a minimum
percentage requirement in the regulation text and encourage plans to
include a greater number of ECPs in their networks as a part of
ensuring access and continuity of care. One commenter pointed out that
some States have implemented much higher ECP inclusion percentage
standards.
In contrast, one commenter stated that the QHPs lack complete
information to adequately identify the universe of ECPs. Furthermore,
the commenter stated that the ECP lists provided to issuers in the past
have included providers that either do not provide medical services or
include inaccurate provider information. The commenter recommended that
HHS improve the utility of ECP information by including National
Provider Identifiers (NPIs) in their database of ECPs, and by
publishing any revised ECP lists prior to the anticipated QHP
application submission deadline and with any modifications made
apparent to allow issuers to easily reconcile the HHS ECP list with
their internal records. Some commenters recommended that SADP issuers
be exempt from the ECP inclusion standard given that certain elements
of the ECP requirements are less suited for dental issuers than medical
issuers, and suggested that CMS instead require SADPs to provide
evidence of offering meaningful access to lower income enrollees in
their service areas.
Response: Based on our QHP certification reviews for the 2015
benefit year and the ongoing strengthening of our ECP list, we believe
that specifying the ECP inclusion percentage in HHS guidance for the
2016 benefit year provides desirable flexibility at this time for HHS
to further examine the adequacy of this inclusion standard for ensuring
access to care for low-income, medically underserved individuals for
future years. Furthermore, we agree with the recommendation that the
accuracy of the ECP list be improved prior to increasing the ECP
inclusion percentage standard. To this effect, we have recently
published a draft ECP list for the 2016 benefit year \67\ and solicited
public comments in an effort to make corrections to the list and
publish the list prior to the anticipated QHP application submission
deadline. In response to comments, we also intend to make apparent the
modifications to the list to allow issuers to easily reconcile the HHS
ECP list with their internal records. We will further examine the
feasibility of the commenter's recommendation to add NPIs to the ECP
list in future years in coordination with our Federal partners from
whom we collect the provider data.
---------------------------------------------------------------------------
\67\ https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/Description-and-Purpose-of-Draft-HHS-List-of-ECPs-for-PY-2016_12-24-14.pdf.
---------------------------------------------------------------------------
Regarding the commenters' recommendation to exempt SADPs from the
ECP inclusion standard, we proposed to modify the ECP requirement at
Sec. 156.235(a)(2)(ii)(B) to clarify that only the providers in the
ECP categories that provide dental services would be considered
available for an SADP's offering of a contract. In other words, we have
added ``and provides medical or dental services that are covered by the
issuer plan type'' to the end of that paragraph to ensure the
applicability of this provision to SADPs. Given that this was the only
ECP provision unsuited for SADPs, we believe we have addressed the need
for its suitability by making this proposed modification, and are
finalizing this language as proposed, effective January 1, 2016.
Comment: We received comments in support of our proposal that an
issuer's satisfaction of the ECP inclusion percentage of available ECPs
in the plan's service area be calculated based on multiple providers at
a single location counting as a single ECP toward both the available
ECPs in the plan's service area and the issuer's satisfaction of the
ECP participation standard, stating that the proposal would help ensure
access to a broad range of provider types and geographic distribution
of ECPs for low-income, medically underserved individuals. However,
several commenters suggested that counting multiple providers at a
single location as only a single ECP may overlook availability of
different services, and recommended that HHS count multiple providers
at a single location as multiple ECPs toward satisfaction of the ECP
inclusion percentage standard. One commenter contended that such a
policy would undermine the ability of integrated
[[Page 10836]]
delivery systems to provide high levels of consistent, quality care.
Response: We believe it is important to clarify the underlying
rationale for this proposed provision. At Sec. 156.235(a)(1) and
(b)(1), we have established that a QHP issuer that satisfies the ECP
inclusion standard must include a sufficient number and geographic
distribution of ECPs in its provider network, or through its employed
providers and hospital facilities if the issuer qualifies for the
alternate ECP standard described at Sec. 156.235(b). Therefore, we
believe that our proposed provision is critical for ensuring that
issuers satisfy both the sufficient number and geographic distribution
requirements by not concentrating the majority of its providers at only
one or a few locations. Furthermore, such an accounting of multiple
providers at a single location aligns with the crediting of an issuer's
inclusion of provider facilities on the available HHS ECP list, which
includes practices and clinics, which generally consist of multiple
providers at a single location. While such a policy may reduce the
number of credited ECPs for an issuer, to the extent that multiple
provider types practice at a given location and may map to different
ECP categories, these different provider types could contribute to
satisfying the requirement that an issuer offer a contract to at least
one ECP in each category in each county in the plan's service area for
multiple ECP categories. In response to issuers that qualify for the
alternate ECP standard, as defined at Sec. 156.235(a)(5), and
commenters' concern that such a policy might be disruptive to an
integrated delivery system, the narrative justification provision at
Sec. 156.235(b)(3) ensures that such issuers comply with the ECP
inclusion standard by describing how the plan's provider networks
provide an adequate level of service for low-income enrollees or
individuals residing in HPSAs within the plan's service area. After
careful consideration of the public comments applicable to issuers that
qualify for both the general and alternate ECP standards, we are
finalizing our proposal that an issuer's satisfaction of the ECP
inclusion percentage of available ECPs in the plan's service area be
calculated based on multiple providers at a single location counting as
a single ECP toward both the available ECPs in the plan's service area
and the issuer's satisfaction of the ECP participation standard,
effective January 1, 2016.
Comment: One commenter recommended that HHS require that issuers
that qualify for the alternate ECP standard, as defined at Sec.
156.235(a)(5), that are unable to provide all of the categories of
services provided by entities in each of the ECP categories in each
county in the service area as outlined in the general ECP standard, be
required to contract with outside providers or facilities that can
provide those services to low-income, medically underserved
individuals. In contrast, another commenter expressed concern that
HHS's methodology for assessing the adequacy of ECP inclusion for
issuers that provide the majority of their covered professional
services through physicians employed by the issuer or through a single
contracted medical group does not fit well for plans with well-
established integrated care delivery systems. The commenter expressed
concern that requirements to contract with outside providers that use
different clinical protocols and thus have incomplete patient
information and lack linkages for patients with chronic conditions,
would fundamentally change how integrated delivery systems provide care
to their patients and would undermine the ability of integrated care
teams to provide high levels of consistent, quality care. The commenter
contended that counting multiple providers at a single location as only
one provider toward satisfaction of the alternate ECP standard is
problematic for an entity that serves its members with large facilities
and has systems in place (for example, telemedicine, etc.) that can
serve members in a broad geographic area. This commenter urged CMS to
better assess effectiveness of networks at delivering quality care, and
rapid access.
Response: While we recognize the challenges for alternate ECP
standard issuers that offer an integrated health care delivery system,
we believe that consumers should experience equal access to covered
benefits, regardless of whether they are enrolled in plans offered by
issuers that qualify for the general or the alternate ECP standard. To
ensure such equal access, issuers that qualify for the alternate ECP
standard must provide access to the same categories of services
provided by entities in each of the ECP categories in each county in
the plan's service area as issuers that qualify for the general ECP
standard. Therefore, effective January 1, 2016, we have modified our
proposed provision at Sec. 156.235(b)(2)(ii) to require issuers to
provide within the issuer's integrated delivery system all of the
categories of services provided by entities in each of the ECP
categories in each county in the plan's service area as outlined in the
general standard; or otherwise offer a contract to at least one ECP
outside of the issuer's integrated delivery system per ECP category in
each county in the plan's service area that can provide those services
to low-income, medically underserved individuals.
Comment: We received several comments recommending that CMS retain
the requirement that QHP issuers offer contracts to all Indian health
care providers in the QHP's service area. These commenters also urged
that CMS require QHP issuers to use the recommended model QHP addendum,
rather than our proposal to require that contract offers apply the
special terms and conditions necessitated by Federal law and
regulations as referenced in the recommended model QHP addendum. These
commenters expressed concern that not requiring use of the actual model
QHP addendum could result in loss of the following provisions in the
executed QHP-Indian health care provider (ICHP) contracts: (1) A
listing of each Indian-specific provision in Federal law that is
applicable to the provider contract; and (2) a clear statement of the
meaning of each applicable Indian-specific provision.
Response: We believe the requirement that issuers apply the special
terms and conditions necessitated by Federal law and regulations as
referenced in the recommended model QHP addendum, along with
encouraging issuer use of the recommended model QHP addendum in
guidance, strikes the desirable balance between allowing the minimal
flexibility that issuers have requested while ensuring inclusion of the
fundamental provisions of the model QHP addendum within the issuer
contractual offers to the Indian health providers. Therefore, while we
strongly encourage issuers to use the model QHP Addendum, we are not
requiring that they do so. We are finalizing, effective January 1,
2016, our proposal requiring that health plans seeking certification as
a QHP in an FFE offer contracts for participation in the plan for which
a certification application is being submitted to all available Indian
health providers in the service area, applying the special terms and
conditions necessitated by Federal law and regulations as referenced in
the recommended model QHP addendum for Indian health providers
developed by HHS.
Comment: One commenter recommended that if issuers met the ECP
standard in the previous year, issuers not be required every year to
offer contracts to all Indian health care providers in the service area
and to at
[[Page 10837]]
least one ECP in each ECP category in each county in the service area.
Response: We share the commenter's interest in minimizing
contracting burden on both issuers and providers; however, given the
dynamic nature of the health insurance industry, we believe that a
contract denial the previous year should not carry over to future
years. Therefore, we are finalizing, effective January 1, 2016, our
proposal that health plans seeking certification as a QHP in an FFE
offer contracts for participation in the plan for which a certification
application is being submitted to all available Indian health providers
in the service area. Satisfaction of this requirement in previous years
does not exempt a QHP from satisfying the requirement for future QHP
application years.
Comment: Several commenters urged CMS to encourage application of
the ECP inclusion requirement, including the requirement that issuers
offer contracts to all Indian health providers, to issuers operating in
State Exchanges, as well to issuers operating in the FFEs.
Response: We urge State Exchanges to employ the same standard when
examining adequacy of ECPs as outlined in Sec. 156.235, including the
requirement that issuers offer contracts to all Indian health providers
in the plan's service area.
Comment: A number of commenters urged that we require issuers to
actually contract, as opposed to offer a contract, with at least one
ECP in each ECP category in each county in the service area, where an
ECP in that category is available and provides medical or dental
services that are covered by the issuer plan type. Several commenters
urged that we require issuers to offer contracts to all available ECPs
in the plan's service area. A few commenters suggested that we require
that issuers offer contracts to at least two ECPs in each ECP category
in each county in the service area, where an ECP in that category is
available and provides medical or dental services that are covered by
the issuer plan type.
Several commenters supported the inclusion of Rural Health Clinics
(RHCs) and Community Mental Health Centers in the ECP category listing
in Table 11 of the preamble. Commenters expressed concern, though, that
the requirement that QHPs offer contracts to at least one ECP in each
ECP category in each county in the plan's service area is a county-
based requirement, and suggested that the requirement be based on time
and distance within the county.
A few commenters urged that we add freestanding birth centers
located in medically underserved and rural areas as a new ECP category.
Several commenters recommended that we list Hemophilia Treatment
Centers as a separate ECP category, rather than grouped in the ``Other
ECP Providers'' category. Another commenter suggested that we add
migrant and community health centers as an ECP category. One commenter
urged that HHS require issuers to offer a contract to any willing Ryan
White provider. One commenter suggested adding dental providers,
substance abuse and mental health providers, children's hospitals, and
essential pediatric providers to the list of ECP categories.
Several commenters suggested that HHS disaggregate the providers
listed in the ``Hospitals'' ECP category and the ``Other ECP
Providers'' category. These commenters expressed concern that by
grouping together providers such as Hemophilia Treatment Centers,
Community Mental Health Centers, and Rural Health Clinics into one ECP
category such that issuers are only required to offer a contract to one
of these and other types of providers in a given county, HHS runs the
risk that low-income, underserved enrollees will have inadequate access
to key providers that are uniquely suited to meet their specialized
health needs. Another commenter urged that HHS identify Nurse Managed
Clinics within the providers listed in the ECP categories in Table 11
of the preamble, stating that they are primary care clinics similar to
the FQHCs, but with a different funding source.
One commenter recommended that we remove Indian health care
providers as a major ECP category due to the overlapping requirement
that issuers offer contracts to all Indian health providers in the
service area.
Numerous commenters urged HHS to continually monitor for issuer
maintenance of their networks throughout the year to ensure that
issuers do not discriminate against ECPs through contract negotiations,
and to make sure contracts are offered in good faith. One commenter
urged that HHS consider not just the number of ECPs included and their
geographic distribution, but also the breadth of services they provide
and the type of ECP providers and facilities that the networks include.
Response: Given the ongoing strengthening of the non-exhaustive HHS
List of ECPs (available at https://www.cms.gov/cciio/programs-and-initiatives/health-insurance-marketplaces/qhp.html), we intend to
revisit this requirement to offer contracts in good faith and may
consider a stronger requirement in future benefit years.
In response to comments regarding the groupings of provider types
in the ECP categories, we agree with the need to disaggregate several
of these categories over time to ensure better access to a wider
variety of health care services. More specifically, we considered
modifying the ECP category listing to include a total of 11 ECP
categories, by creating a separate ECP category each for children's
hospitals and free-standing cancer centers, and disaggregating
hemophilia treatment centers, community mental health centers, and
rural health clinics from the ``Other ECP Providers'' category.
However, because we recognize that issuers are in the process of
finalizing their networks for 2016, we intend to propose this
reclassification for 2017. We are not removing the Indian health care
providers as a major ECP category, notwithstanding the overlapping
requirement that issuers offer contracts to all Indian health care
providers in the service area, because many providers and issuers rely
on Table 11 to identify the universe of ECP types. In response to
public comments supporting the inclusion of rural health clinics and
Community Mental Health Centers as ECP provider types within the
``other ECP providers'' category, we are finalizing our proposal to
include these provider types in our ECP category listing in Table 11,
although we will not disaggregate them into their own separate ECP
categories at this time.
For purposes of inclusion on the non-exhaustive HHS list of ECPs,
we are clarifying that only those Medicare-certified rural health
clinics that meet the following two requirements qualify: (1) Based on
attestation, the clinic accepts patients regardless of ability to pay
and offers a sliding fee schedule, or is located in a primary care
Health Professional Shortage Area (whether geographic, population, or
automatic \68\);
[[Page 10838]]
and (2) accepts patients regardless of coverage source (whether
Medicare, Medicaid, CHIP, private health insurance, or other source).
HHS has determined that all rural health clinics included on the non-
exhaustive HHS list of ECPs satisfy these standards.
---------------------------------------------------------------------------
\68\ As of January 1, 2014, more than 1,000 rural health clinics
(RHCs) were designated as an automatic Health Professional Shortage
Area (HPSA), the criteria for which include accepting patients
regardless of ability to pay; offering a sliding fee schedule based
on ability to pay (income); and accepting Medicare, Medicaid, CHIP
and private health insurance patients. To receive the automatic HPSA
designation, each RHC is required to complete an attestation form,
which is available at: https://bhpr.hrsa.gov/shortage/hpsas/certofeligibility.pdf. CMS intends to include RHCs that are not
listed on the current non-exhaustive ECP list and complete the
attestation form to receive an automatic HPSA designation through
the Health Resources and Services Administration in future non-
exhaustive ECP lists. More information about the HPSA designation
requirements and process is also available at: https://bhpr.hrsa.gov/shortage/hpsas/ruralhealthhpsa.html.
---------------------------------------------------------------------------
Lastly, we agree with commenters regarding the importance of
monitoring issuer compliance with this important provision of our ECP
standard, and intend to continue our post-certification monitoring
activities to help ensure that consumers have access to the essential
health benefits guaranteed to them under the Affordable Care Act.
Therefore, we are finalizing our proposal, effective January 1, 2016,
that a health plan seeking certification as a QHP in an FFE be required
to offer contracts for participation in the plan for which a
certification application is being submitted to at least one ECP in
each ECP category in each county in the service area, where an ECP in
that category is available and provides medical or dental services that
are covered by the issuer plan type.
Comment: Some commenters recommended that we eliminate the option
for an issuer to submit a narrative justification in cases where a
plan's network does not meet the minimum ECP percentage requirement.
Many of these commenters expressed concern that the narrative
justification might be accepted in lieu of issuer compliance with the
ECP inclusion percentage requirement specified by HHS. Commenters
suggested that the narrative justification is inadequate in cases where
an issuer fails to meet the minimum ECP percentage standard and
suggested that issuers be required to contract with all available ECPs.
These commenters also recommended that HHS make publicly available the
narrative justifications submitted when issuers do not meet the minimum
ECP percentage standard or other requirements of the ECP standard.
Some commenters stated that if HHS permits issuers to continue
submitting narrative justifications when unable to satisfy the
statutory ECP requirements, HHS should only allow the justifications in
extremely rare circumstances, and issuers should be required to provide
a reason for why the plan has failed to satisfy the standard to
discourage plans from seeking an exemption when unwarranted.
Several commenters supported the requirement that QHPs not meeting
the ECP standard must submit a justification describing how the plan's
provider network is adequate for low-income enrollees in HPSAs. One of
these commenters suggested that HHS clarify that this requirement
extends to SADPs, as well.
Response: Based on our QHP certification reviews for the 2015
benefit year and the ongoing strengthening of our ECP list, we believe
that the narrative justification provides desirable flexibility at this
time for HHS to further assess the adequacy of our ECP inclusion
standard, given the need to provide issuers with the flexibility to
develop networks that deliver benefits at an affordable price to low-
income, medically underserved individuals. At the same time, the vast
majority of issuers are complying with the requirements without
submission of a narrative justification, and therefore we believe this
option is being used under relatively rare circumstances. Regarding the
suggestion to make publicly available the narrative justifications
submitted when issuers do not meet the ECP inclusion percentage, HHS
will consider the feasibility of providing such increased transparency
over the next year. We expect the need for issuers to submit such
justifications to decrease over time as issuers further develop their
networks in adherence to HHS standards. Lastly, we clarify that the
narrative justification standard applies to SADPs as well as QHPs that
provide medical services.
Comment: One commenter expressed concern that the language under
Sec. 156.235(a)(4) (that is, ``Nothing in paragraphs (a)(1) through
(a)(3) of this section requires any QHP to provide coverage for any
specific medical procedure provided by an ECP'') might be interpreted
by issuers as permitting discrimination regarding which covered
services among those provided by an ECP it will contract with the ECP
to provide. The commenter pointed out that section 1311(c)(1)(C) of the
Affordable Care Act regarding the inclusion of ECPs in QHP networks
states that nothing in this subparagraph shall be construed to require
any health plan to provide coverage for any specific medical procedure.
The commenter expressed concern that our proposed regulation adds the
additional language ``provided by an ECP'' that could permit issuers to
contract with ECPs for only some, but not all, of the services for
which they are licensed and otherwise fully able to provide in
accordance with the same standards that the QHP applies to other non-
ECP providers. This commenter urged HHS to remove the additional
language from the regulatory text and clarify that, when contracting
with ECPs, QHPs must do so for the full scope of services that the ECPs
are licensed to provide.
Response: We agree with the commenter in part, and so we are
removing the additional language ``provided by an ECP'' from Sec.
156.235(a)(4), effective January 1, 2016. However, we emphasize that we
are not requiring that QHPs contract with ECPs for the full scope of
services that the ECPs are licensed to provide; rather, we are
continuing to require only that they offer the same contract provisions
as other contracts accepted by or offered to similarly situated
providers.
Comment: One commenter recommended that HHS modify the language at
Sec. 156.235(d) to reflect the language used in the preamble to ensure
that issuers offer ECPs rates comparable to other providers.
Specifically, the commenter suggested that we replace the language ``.
. . if such provider refuses to accept the generally applicable payment
rates of such issuer,'' and replace it with language that reads ``. . .
if such provider refuses to accept the same rates and contract
provisions as included in contracts accepted by similarly situated
providers that are not ECPs.'' The commenter noted that this would
provide a clearer definition of an issuer's ``generally applicable
payment rates'' and would prevent issuers from discriminating against
ECPs in their payment rates.
Response: We agree with the commenter that such clarification would
help prevent issuers from discriminating against ECPs in their payment
rates and would align with the language used in our preamble.
Therefore, we are making this change at Sec. 156.235(d), effective
January 1, 2016.
Comment: Several commenters urged that we retain the requirement
that QHP issuers offer contracts in good faith. However, these
commenters urged that HHS clarify that a minimum payment rate provision
be required rather than expected, and that we include such a
requirement in the regulation rather than in only the preamble.
Response: We do not intend to prescribe such specificity regarding
contract negotiations between parties. Therefore, we are not requiring
a minimum payment rate provision, and instead reiterate our expectation
that QHP issuers offer contracts in good faith.
e. Meaningful Access to Qualified Health Plan Information (Sec.
156.250)
In the proposed rule, we proposed to amend Sec. 156.250 to replace
the cross-reference to the Exchange application and notices provision
at Sec. 155.230(b) with a cross-reference to Sec. 155.205(c). We also
proposed to change the title of
[[Page 10839]]
the provision to ``Meaningful access to qualified health plan
information'' for improved clarity. As discussed above, amendments to
Sec. 155.205(c) for oral interpretation services were also proposed.
We also proposed to extend the requirements of Sec. 156.250 so
that not only applications and notices to enrollees, but all
information that is critical for obtaining health insurance coverage or
access to health care services through the QHP to qualified
individuals, applicants, qualified employers, qualified employees, and
enrollees, would be provided in a manner consistent with Sec.
155.205(c). In addition, using the summary of benefits and coverage
(SBC) disclosure required under Sec. 147.200 as an example, we
proposed that information would be deemed to be critical for obtaining
health insurance coverage or access to health care services if the
issuer were required by State or Federal law or regulation to provide
the document to a qualified individual, applicant, qualified employer,
qualified employee, or enrollee. We also indicated that, based on our
proposed standard, we would consider information that is critical for
obtaining health coverage or access to health care services to include:
Applications; consent, grievance, appeal, and complaint forms; notices
pertaining to the denial, reduction, modification, or termination of
services, benefits, non-payment, or coverage; a plan's explanation of
benefits or similar claim processing information; QHP ratings
information; rebate notices; correspondence containing information
about eligibility and participation criteria; notices advising
individuals of the availability of free language assistance; and
letters or notices that require a signature or response from the
qualified individual, applicant, qualified employer, qualified
employee, or enrollee. We stated that we would not consider marketing
materials that are available for advertising purposes only and not
otherwise required by law to be critical for obtaining health insurance
coverage or access to health care services through the QHP, and
therefore an issuer would not be required to be make such materials
accessible to individuals with disabilities or limited English
proficiency.
We are finalizing this provision as proposed.
Comment: Commenters expressed general support for our proposal,
including our proposed standard for determining whether a document was
``critical'' such that an issuer would be required to provide
meaningful access to it in accordance with the standards set forth in
Sec. 155.205(c). A few commenters requested that we specifically
acknowledge other documents, such as evidences of coverage, or
information needed to understand coverage, provider networks, or
enrollment or re-enrollment processes, as meeting the standard. One
commenter expressed concern that our identification in preamble of
certain documents that we would consider to meet the standard was
misplaced. The commenter stated that certain documents we had
identified, such as ``rebate notices'' (concerning medical loss ratio
requirements) and ``any letter or notice requiring a signature or
response,'' were not inherent to obtaining services through the QHP or
accessing health coverage.
Response: We are finalizing the provision as proposed. Therefore,
QHP issuers must provide all information that is critical for obtaining
health insurance coverage or access to health care services through the
QHP, including applications, forms, and notices, to qualified
individuals, applicants, qualified employers, qualified employees, and
enrollees in accordance with the standards described in Sec.
155.205(c). Information will be deemed to be critical for obtaining
health insurance coverage or access to health care services if the
issuer is required by Federal or State law or regulation to provide the
document to a qualified individual, applicant, qualified employer,
qualified employee, or enrollee. We agree that evidences of coverage,
group certificates of coverage, contracts of insurance, benefits
summaries, policies, formulary drug lists, provider directories, and
other similar documents that are relied upon by individuals to
understand their benefits and the full terms of coverage of the QHP are
critical for obtaining health care services through the QHP and
therefore must be provided by the issuer in a manner that satisfies the
requirements in Sec. 155.205(c). In addition, given the general
significance of information, such as an MLR rebate notice, that a QHP
issuer is required by Federal or State law or regulation to communicate
to consumers, we believe it is appropriate to require a QHP issuer to
provide meaningful access to such legally required information to all
consumers in a manner that conforms to Sec. 155.205(c) so that all
consumers serviced by the QHP issuer can access and understand the
legal rights or duties that are frequently discussed in such
communication. With respect to our interpretation stated in the
preamble to the proposed rule that our proposed standard would include
any document provided by the issuer that requires a response or
signature from the qualified individual, applicant, qualified employer,
qualified employee, or enrollee, in our view, these documents, by
requiring a signature or response, typically confer an agreement or
important acknowledgement regarding benefits or claims payment which an
individual must be able to access and affirmatively understand. Thus,
we believe consumers receiving such documents from a QHP issuer should
have meaningful access to this information within the meaning of Sec.
155.205(c).
As we noted in the preamble to the proposed rule, we consider the
SBC to be a document subject to Sec. 156.250 for which a QHP issuer
must provide meaningful access in accordance with the standards of
Sec. 155.205(c). As such, like any document that is considered to be
``critical'' within the meaning of Sec. 156.250, in accordance with
Sec. 155.205(c)(2)(iii)(A), beginning no later than the first day of
the Exchange individual market open enrollment period for the 2017
benefit year, a QHP issuer is required to include taglines with any SBC
that reflects a QHP option or plan variation of a standard QHP option
in the top 15 languages spoken by the LEP population in the applicable
State. An issuer may satisfy this requirement if it includes a cover
letter or other additional pages provided along with the SBC that
contains all required taglines. In addition, in accordance with Sec.
155.205(c)(2)(i), beginning when this rule takes effect, a QHP issuer
is required to provide telephonic interpreter services in at least 150
languages with respect to any SBC that reflects a QHP option or plan
variation of a standard QHP option. Because the requirements with
respect to oral interpretation and taglines that are finalized in this
rule are different in substance than those that apply generally to the
SBC under Sec. 147.200(a)(5) (which cross-references the internal
claims and appeals and external review processes standards at Sec.
147.136(e)), we clarify that these additional specific standards
supplement the existing ``ten percent county-level'' language access
standards in Sec. 147.200(a)(5).\69\ For example,
[[Page 10840]]
whereas the existing standards under Sec. 147.136(e) require QHP
issuers to provide taglines and oral language services with respect to
an applicable non-English language spoken by a given LEP population
that comprises ten percent or more of the total population residing in
the applicable county, QHP issuers must also provide taglines on the
SBC (or in a cover letter or other additional pages included with the
SBC) in the top 15 non-English languages spoken by the LEP population
in the relevant State as well as provide telephonic interpreter
services in at least 150 languages with respect to any SBC that
reflects a QHP option or plan variation of a standard QHP option. We
note that based on an analysis of current data, the top 15 languages
Statewide standard described in Sec. 155.205(c)(2)(iii) will yield any
language that is triggered by the county-level standards in Sec.
147.136(e)(3).\70\ In addition, under Sec. 147.136(e)(2)(ii), a QHP
issuer is still required to provide, upon request, a translated version
of the SBC in an applicable non-English language if at least ten
percent of the population in the applicable county is comprised of an
LEP population that is literate in the same non-English language.
---------------------------------------------------------------------------
\69\ Under Sec. 147.200(a)(5), a plan or issuer is considered
to provide the SBC in a culturally and linguistically appropriate
manner if the thresholds and standards of Sec. 147.136(e),
implementing standards for the form and manner of notices related to
internal claims appeals and external review, are met as applied to
the SBC. When we refer to the ``ten percent county-level''
standards, we are referring to the standards set forth under Sec.
147.136(e)(3), which states that with respect to an address in any
United States county to which a notice is sent, a non-English
language is an applicable non-English language if ten percent or
more of the population residing in the county is literate only in
the same non-English language, as determined in guidance published
by the Secretary.
\70\ In the counties for which the ten percent threshold
triggers an applicable non-English language, Spanish is triggered in
the vast majority of cases. In a few counties, Tagalog, Navajo, or
Chinese are also triggered. 79 FR 78587 (Dec. 30, 2014).
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We make one clarification regarding our reference to ``QHP ratings
information.'' By using this term, we intended to refer to the Quality
Rating System and QHP Enrollee Experience Survey results established
under sections 1311(c)(3) and (c)(4) of the Affordable Care Act.
However, we recognize that this information, when available, is
required to be displayed by Exchanges on the Exchange Web site, rather
than by a QHP issuer directly. Therefore, unless a QHP issuer is
required by other Federal or State law or regulation to provide QHP
ratings information directly to consumers, that information would not
be subject to Sec. 156.250. A QHP issuer voluntarily providing the
information to consumers is encouraged, but not required, to provide it
in a manner that conforms to Sec. 155.205(c).
Finally, though we do not consider marketing materials that are
available for advertising purposes only and not otherwise required by
law to be critical for obtaining health insurance coverage or access to
health care services through the QHP, we remind issuers that they might
have duties to make these materials accessible to individuals with
disabilities and individuals with LEP under Federal civil rights laws
that also might apply, including section 1557 of the Affordable Care
Act, section 504 of the Rehabilitation Act of 1973, and Title VI of the
Civil Rights Act of 1964.
f. Enrollment Process for Qualified Individuals (Sec. 156.265)
Sections 155.240 and 155.400 explicitly authorize Exchanges to
establish certain requirements related to premium payment for
enrollment in QHPs through the Exchange. Section 156.265 currently only
cross-references Sec. 155.240. To clarify that both sets of
requirements apply to QHPs, we proposed that a QHP issuer must follow
the premium payment process established by the Exchange in accordance
with Sec. 155.240 and the payment rules established in Sec.
155.400(e).
We did not receive comments concerning the proposed enrollment
process provisions. We are finalizing the provisions proposed in Sec.
156.265 of the proposed rule without any modifications.
g. Termination of Coverage or Enrollment for Qualified Individuals
(Sec. 156.270)
We are finalizing revisions in this section to conform to our
interpretation of the guaranteed availability and guaranteed
renewability requirements. For a discussion these revisions, please see
the preamble for Sec. 155.430.
h. Segregation of Funds for Abortion Services (Sec. 156.280)
Section 1303 of the Affordable Care Act and Sec. 156.280 specify
accounting and other standards for issuers of QHPs through the Exchange
in the individual market that cover abortion services for which public
funding is prohibited (also referred to as non-excepted abortion
services). The statute and regulations establish that unless otherwise
prohibited by State law, a QHP issuer may elect to cover such services.
If an issuer elects to cover such services under a QHP sold through the
individual market Exchange, the issuer must ensure that no premium tax
credit or cost-sharing reduction funds are used to pay claims for
abortion services for which public funding is prohibited.
In the proposed rule, we provided guidance on individual market
Exchange issuer's responsibilities for requirements related to QHP
coverage of abortion services for which public funding is prohibited.
HHS works with stakeholders, including States and issuers, to help them
fully understand and follow the statutes and regulations governing the
provision of health insurance coverage under a QHP through the
Exchange. As is the case with many provisions in the Affordable Care
Act, States and State insurance commissioners are the entities
primarily responsible for implementing and enforcing the provisions in
section 1303 of the Affordable Care Act related to individual market
QHP coverage of non-excepted abortion services. OPM may issue guidance
related to these provisions for multi-State plan issuers.
Under section 1303(b)(2)(B) of the Affordable Care Act, as
implemented in Sec. 156.280(e)(2)(i), individual market Exchange
issuers must collect a separate payment from each enrollee, for an
amount equal to the AV of the coverage for abortions for which public
funding is prohibited. However, section 1303 of the Affordable Care Act
and Sec. 156.280 do not specify the method an issuer must use to
comply with the separate payment requirement. As we described in the
proposed rule, this provision may be satisfied in a number of ways.
Several such ways include: Sending the enrollee a single monthly
invoice or bill that separately itemizes the premium amount for non-
excepted abortion services; sending a separate monthly bill for these
services; or sending the enrollee a notice at or soon after the time of
enrollment that the monthly invoice or bill will include a separate
charge for such services and specify the charge. Section 1303 of the
Affordable Care Act permits, but does not require, a QHP issuer to
separately identify the premium for non-excepted abortion services on
the monthly premium bill to comply with the separate payment
requirement. A consumer may pay the premium payment for non-excepted
abortion services and the separate payment for all other services in a
single transaction, with the issuer depositing the two separate
payments into the issuer's two separate allocation accounts as required
by section 1301(b)(2)(C) of the Affordable Care Act, as implemented in
Sec. 156.280(e)(2)(ii) and (e)(3).
Section 1303(b)(2)(D) of the Affordable Care Act, as implemented in
Sec. 156.280(e)(4), establishes requirements for individual market
Exchange issuers for how much they must charge each QHP enrollee for
coverage of abortions for which public funding is prohibited. A QHP
issuer must estimate the basic
[[Page 10841]]
per enrollee, per month cost, determined on an average actuarial basis,
for including coverage of non-excepted abortion services. In making
this estimate, a QHP issuer may not estimate the basic cost of coverage
for non-excepted abortion services to be less than $1 per enrollee, per
month. In the proposed rule and past guidance, we clarified that this
means an issuer must charge each QHP enrollee a minimum premium of $1
per month for coverage of non-excepted abortion services.
Comment: Some commenters supported enrollees paying premiums in one
single transaction for both non-excepted abortion services and other
health care services. Commenters requested clarification on the
guidance provided in the proposed rule so enrollees will not receive
multiple notices regarding separate premium amounts. These commenters
stated that a single payment transaction without notice to the consumer
would minimize administrative complexity for issuers. Other commenters
requested that QHP issuers be prohibited from collecting the two
separate payments for coverage for non-excepted abortion services and
other health care services, respectively, in a single transaction (for
example, having them combined in a single check), and instead require
that they be separated by the enrollee. Commenters also recommended HHS
clarify the guidance regarding itemizing the two premium amounts on
monthly invoices and provide additional technical guidance on
maintaining separate allocation accounts for non-excepted abortion
services and all other services, along with enforcement mechanisms.
Response: The discussion of Sec. 156.280 in the proposed rule of
the separate payment requirement constituted clarifying guidance, and
did not propose to modify existing requirements under section 1303 of
the Affordable Care Act and Sec. 156.280. We affirm the guidance in
the proposed rule. This guidance offers QHP issuers several ways to
comply with the requirements, while minimizing burden on QHP issuers
and consumers.
i. Non-Renewal and Decertification of QHPs (Sec. 156.290)
We are finalizing revisions in this section to conform with our
interpretation of the guaranteed availability and guaranteed
renewability requirements. For a discussion of these revisions, please
see the preamble for Sec. 155.430. We are also correcting a
typographical error by inserting the words ``adhere to the'' in Sec.
156.290(a)(1).
4. Health Insurance Issuer Responsibility for Advance Payments of the
Premium Tax Credit and Cost-Sharing Reductions
a. Plan Variations (Sec. 156.420)
In the proposed rule, we proposed to amend Sec. 156.420 to add
Sec. 156.420(h) and require QHP issuers to provide SBCs that
accurately represent plan variations in a manner consistent with the
requirements set forth at Sec. 147.200 to ensure that consumers have
access to SBCs that accurately represent cost-sharing responsibilities
for all coverage options, including plan variations, and are provided
adequate notice of the plan variations.
We proposed that QHP issuers would be required to provide SBCs for
plan variations no later than the first day of the next Exchange open
enrollment period for the individual market for the 2016 benefit year,
in accordance with Sec. 155.410(e). We sought comments on whether the
proposed applicability date would present implementation challenges for
QHP issuers as well as on other aspects of the proposal. We also noted
that QHP issuers would be required to provide the SBC in a manner that
is consistent with the meaningful access requirements under Sec.
155.205(c).
We are finalizing this provision as proposed, with one modification
to specify that this standard will apply no later than November 1,
2015, which is the first day of the individual market open enrollment
period for the 2016 benefit year.
Comment: Commenters expressed support for the proposal. Some
commented that the proposal would better enable consumers who are
eligible for cost-sharing reductions to take into account the overall
out-of-pocket costs of a given QHP benefit package, rather than
focusing primarily on premiums.
Response: We agree that requiring the provision of plan variation
SBCs for individual market QHP options will increase the likelihood
that consumers will select a plan option that is appropriate for both
their financial and health care needs.
Comment: Commenters supported an implementation date of no later
than the open enrollment period for the 2016 benefit year. Some
commenters stated that issuers are already providing plan variation
SBCs to enrollees and did not express opposition to our proposed
implementation timeline. However, one commenter opposed the proposed
implementation date because it did not believe issuers could receive
State approval of their form filings, including plan variation SBCs, in
time to make such SBCs available.
Response: We are finalizing the applicability date as proposed. We
expect that States and issuers will continue to work collaboratively to
ensure that the applicable form filing approvals are received
sufficiently in advance of the open enrollment period for the 2016
benefit year.
b. Changes in Eligibility for Cost-Sharing Reductions (Sec. 156.425)
In the proposed rule, we proposed to amend Sec. 156.425 to clarify
when a QHP issuer would be required to provide an SBC if an
individual's assignment to a standard plan or plan variation of the QHP
changes in accordance with Sec. 156.425(a). We proposed that a QHP
issuer must provide an SBC that accurately represents a new plan
variation (or the standard plan variation) as soon as practicable after
receiving notice from the Exchange of the individual's change in
eligibility, but in no case later than 7 business days following
receipt of notice. We proposed that this requirement would be effective
beginning on January 1, 2016.
We are finalizing these provisions as proposed.
Comment: Commenters generally expressed support. Some commenters
requested that an additional notice, beyond the SBC, be sent to
consumers whose eligibility for cost-sharing variations changes which
would explain the change to the consumer, the reason for the change,
and how many cost-sharing amounts already incurred by the consumer
during the benefit year would be applied toward the new deductible(s)
and out-of-pocket limit(s).
Response: While issuers are encouraged to develop health literacy
tools and provide consumer-friendly explanatory information to
enrollees when their eligibility for cost-sharing reductions changes,
we are not requiring issuers to send an additional notice beyond the
SBC at this time. We will continue to monitor the extent to which
consumers understand cost-sharing reductions eligibility and whether
other information should be provided to consumers in this context.
Comment: Some commenters requested additional time to send an SBC
to an enrollee whose eligibility for cost-sharing reduction changes.
One commenter requested as many as 14 business days from the date the
issuer effectuates the assignment into a plan variation (or standard
plan without cost-sharing reductions), while the other commenter
requested 14 calendar days to send the SBC.
[[Page 10842]]
Response: We are finalizing the timing requirement to send the SBC
as proposed, that is, 7 business days from the date the issuer receives
notice of the change in the enrollee's eligibility from the Exchange.
Virtually all issuers subject to this requirement have already incurred
one-time costs to develop systems necessary to generate and provide
SBCs in an automated and efficient fashion to meet the timing
requirements specified in Sec. 147.200. Further, in accordance with
Sec. 147.200(a)(1)(iv)(D), QHP issuers must already send an SBC when
an individual requests an SBC as soon as practicable, but no later than
7 business days following the receipt of the request.
c. Cost-Sharing Reductions Reconciliation (Sec. 156.430)
Sections 1402(a) through (c) of the Affordable Care Act provide for
cost-sharing reductions for EHB provided by a QHP. Cost-sharing
reductions are advanced to issuers throughout the benefit year, and
reconciled following the benefit year against actual cost-sharing
amounts provided by issuers to enrollees.
The reconciliation process requires QHP issuers to submit to HHS
the total allowed costs for EHB charged for each plan variation policy,
the amounts paid by the issuer, and the amounts paid by or on behalf of
the enrollee (other than by the Federal government under section 1402
of the Affordable Care Act), as well as the amounts that would have
been paid by the enrollee under the standard plan. Under the standard
methodology described at Sec. 156.430(c)(2), costs paid by the issuer
under the standard plan are calculated by applying actual cost-sharing
requirements for the standard plan to the allowed costs for EHB under
the enrollee's policy for the benefit year. The difference is the
amount of cost-sharing reductions provided.
In the proposed Payment Notice, we reiterated that issuers will not
be reimbursed for reductions in out-of-pocket spending for benefits
other than EHB. However, we explained that because of technology
challenges in these early years of the cost-sharing reduction program,
some issuers are presently unable to differentiate on a policy level
between EHB claims and non-EHB claims, as required by HHS when applying
the standard cost-sharing reduction reconciliation methodology. The
difficulty occurs in plan designs that allow enrollee out-of-pocket
spending for EHB and non-EHB claims alike to accumulate toward
deductibles and the reduced annual limit on cost sharing. Such plan
designs benefit enrollees by allowing them to reach their spending
limits sooner. As a result, for the purpose of cost-sharing reduction
reconciliation, we proposed to allow QHP issuers to submit percentage
estimates of the portion of claims attributable to non-EHB for the 2014
benefit year, and to reduce the total claims amount by that percentage,
to arrive at an estimated total EHB amount. The percentage estimate
would be the estimate of expected non-EHB claims costs previously
submitted for each plan variation on the Uniform Rate Review Template
(URRT) \71\ and which HHS used to calculate 2014 advance cost-sharing
reduction payments. An issuer using this procedure would be required to
do so for all plan variations for which the criteria below are met.
---------------------------------------------------------------------------
\71\ Percentage of the total allowed costs of benefits as
defined at Sec. 156.20 means the anticipated covered medical
spending for EHB coverage (as defined in Sec. 156.110(a) of the
subchapter) paid by a health plan for a standard population,
computed in accordance with the plan's cost-sharing, divided by the
total anticipated allowed charges for EHB coverage provided to a
standard population, and expressed as a percentage.
---------------------------------------------------------------------------
As described in proposed Sec. 156.430(c)(2)(i), this exception to
permit QHP issuers to use plan-specific URRT estimates of non-EHB
claims would be limited to plan designs in which out-of-pocket expenses
for non-EHB benefits accumulate toward the deductible and reduced
annual limitation on cost sharing, but for which copayments and
coinsurance rates for non-EHB are not reduced. This limitation helps
assure that the estimated percentage, which is calculated based on the
proportion of claims attributable to EHB, does not overstate the
proportion of reduced out-of-pocket spending associated with EHB. In
addition, the exception would apply only when non-EHB estimated
percentages account for less than 2 percent of total claims, helping
assure that any inaccuracies in the estimate are unlikely to result in
significant inaccuracies in total cost-sharing reduction reimbursement.
Comment: We received comments in support of our proposal to permit
estimates of non-EHB cost sharing based on the URRT. One commenter
asked HHS to make this exception permanent. Another commenter asked HHS
to extend the exception to the simplified method of cost-sharing
reduction reconciliation since it, too, requires comparison of standard
plan cost sharing to the total allowed EHB costs for a plan variation,
and issuers face similar problems identifying EHB. Another commenter
asked us to clarify what we mean by reducing total claims amount by the
percentage of non-EHB, and specifically whether issuers must reduce
every claim before re-adjudication. Finally, a commenter asked HHS to
permit issuers to use the simplified method of cost-sharing reduction
reconciliation permanently, stating that the double adjudication
required under the standard methodology is too complex for the variety
of plan designs on the individual market.
Response: We are finalizing the exception proposed in Sec.
156.430(c)(2)(i) to permit QHP issuers to use plan-specific URRT
estimates of non-EHB claims, with two modifications. We are expanding
this exception to include issuers using the simplified methodology for
cost-sharing reduction reconciliation, since they are equally affected
by technology challenges, and we are extending it to the 2015 benefit
year. We also clarify that issuers should reduce total claims at the
policy-level before re-adjudication. Finally, we believe the standard
methodology will provide the most accurate permanent method of
reconciling advanced cost-sharing reduction payments--the simplified
methodology is an interim step.\72\
---------------------------------------------------------------------------
\72\ ``Timing of Reconciliation of Cost-Sharing Reductions for
the 2014 Benefit Year.'' February 13, 2015. https://www.regtap.info/uploads/library/APTC_CSR_Recon_timing_guidance_5CR_021315.pdf.
---------------------------------------------------------------------------
5. Minimum Essential Coverage
a. Other Coverage That Qualifies as Minimum Essential Coverage (Sec.
156.602)
Under Sec. 156.602, State high risk pool coverage is designated as
minimum essential coverage for a plan or policy year beginning on or
before December 31, 2014, for a one-year transition period. However,
many State high risk pools have continued into the 2015 policy year.
The proposed rule would designate as minimum essential coverage any
qualified high risk pool (as defined by section 2744(c)(2) of the PHS
Act) established in any State as of the publication date of the
proposed rule. This would provide States additional time to evaluate
State-administered high risk pools and facilitate the transition of
State high risk pool enrollees into QHPs through the Exchange or into
other forms of minimum essential coverage. We sought comment on whether
the designation should be permanent or time-limited (for example, for
2015 only). We also sought comment on the cut-off date for formation of
State high
[[Page 10843]]
risk pools that will qualify for recognition under the regulations.
Comment: Several commenters favored the proposal to permanently
designate State high risk pool coverage as minimum essential coverage.
One commenter suggested the designation should apply only through the
2016 plan year. Another commenter stated that State high risk pools
must at least be required to provide minimum value to be recognized as
minimum essential coverage after 2015.
Response: We believe States are in the best position to assess the
unique circumstances in each State and determine when it is in the best
interest of consumers to close State-administered high risk pools.
While a one-year designation as minimum essential coverage would allow
adequate time for some States to phase out high risk pools, many State
laws require the retention of State high risk pools after 2015.
Additionally, since the benefits are generally statutorily mandated,
many States may not be able to easily alter the State high risk pool
benefits to provide minimum value. Imposing a timeline that is not
tailored to the unique circumstances of a particular State potentially
disadvantages a vulnerable population that has significant health costs
and that may be uninformed about the Exchanges and the availability of
financial help to purchase health coverage. We received no comments on
the cut-off date for formation for State high risk pools. Therefore we
are establishing a permanent minimum essential coverage designation for
any State high risk pool in existence as of November 26, 2014, the
publication date of the proposed rule. The IRS has indicated that as
long as HHS designates qualified high risk pool coverage as minimum
essential coverage, an individual that is eligible but not enrolled in
a qualified high risk pool will be treated as eligible for QHP coverage
and the premium tax credit.\73\
---------------------------------------------------------------------------
\73\ See Notice 2013-41, 2013-29 I.R.B. 60.
---------------------------------------------------------------------------
6. Enforcement Remedies in Federally-Facilitated Exchanges
a. Available Remedies; Scope (Sec. 156.800)
In the first Program Integrity Rule,\74\ HHS finalized Sec.
156.800(c), which established a good faith compliance policy for QHP
issuers offering coverage through an FFE for the 2014 calendar year.
Specifically, the first Program Integrity Rule provides that HHS will
not impose sanctions under subpart I of part 156 against a QHP issuer
in an FFE if the QHP issuer has made good faith efforts to comply with
applicable Exchange requirements. HHS adopted the good faith compliance
policy to help QHP issuers become familiar with the standards unique to
the FFEs during the initial stage of operations.
---------------------------------------------------------------------------
\74\ Patient Protection and Affordable Care Act; Program
Integrity: Exchange, SHOP, and Eligibility Appeals, 78 FR 54074
(August 30, 2013).
---------------------------------------------------------------------------
HHS is committed to ensuring that QHP issuers have the opportunity
to learn from their experiences in 2014 without undue concern about
being subject to formal enforcement actions when the QHP issuer has
made reasonable efforts to comply with applicable standards. While
immediate formal enforcement actions may be appropriate in some cases,
we continue to prefer resolving most compliance issues by providing
technical assistance. Accordingly, in the proposed rule we proposed
extending the good faith compliance standard under Sec. 156.800(c)
through the end of calendar year 2015. We also noted, that irrespective
of the good faith compliance standard, QHP issuers are required to
comply with all applicable FFE standards (and any applicable Federal or
State laws regarding privacy, security and fraud) at the time of
certification and on an ongoing basis.
We are finalizing the provision as proposed.
Comment: Commenters generally supported the proposed extension of
the good faith compliance standard. One commenter did not support the
proposal, stating that the extension of the standard may impede HHS's
efforts to enforce FFE standards. Some commenters also requested that
HHS clarify that the good faith compliance policy would apply to non-
compliance occurring during the 2015 benefit year that is identified
after calendar year 2015.
Response: We note that issuers seeking to avoid enforcement actions
under subpart I of part 156 through the good faith compliance standard
may do so only by demonstrating that they exercised good faith efforts
at complying with FFE standards. Consistent with the good faith
compliance standard for the 2014 calendar year, HHS will determine
whether the good faith compliance standard applies based on an
evaluation of various factors surrounding the issuer's participation in
the FFEs, including past instances of non-compliance, the gravity or
severity of non-compliance, and the presence or absence of HHS guidance
on the matter. We further clarify that the good faith compliance
standard would apply to conduct occurring during the 2015 calendar year
even if the activity is identified after 2015 calendar year. It would
not apply to conduct that occurs in 2016 or later, even if that conduct
was related to coverage provided in the 2015 calendar year.
b. Plan Suppression (Sec. 156.815)
In Sec. 156.815(a), we proposed a definition of suppression, which
would mean that a suppressed QHP temporarily would not be available for
enrollment through the FFEs. In Sec. 156.815(b), we proposed the bases
for suppression of a QHP in the FFEs. Our first proposed basis for
suppression, Sec. 156.815(b)(1), is the issuer notifying HHS of its
withdrawal of the QHP from the FFEs when one of the exceptions to
guaranteed renewability of coverage related to discontinuing a
particular product or discontinuing all coverage under Sec. 147.106(c)
or (d) applies. In Sec. 156.815(b)(2), we proposed as a basis to
suppress a QHP submission of data for the QHP that is incomplete or
inaccurate. For example, incorrect rates submitted by a QHP issuer
generally would lead to the suppression of the QHP until the rating
data are corrected. In Sec. 156.815(b)(3), we proposed as a basis to
suppress a QHP that is undergoing decertification under Sec. 156.810
or the appeal of a decertification under subpart J of part 156. In
Sec. 156.815(b)(4), we proposed as a basis to suppress a QHP pending,
ongoing, or final State regulatory or enforcement action against the
QHP that could affect the issuer's ability to enroll consumers or that
otherwise relates to the issuer's ability to offer QHPs in the FFEs. In
Sec. 156.815(b)(5), we proposed as a basis for suppression of a QHP
application of the special rule for network plans under Sec.
147.104(c) or the financial capacity limits provision under Sec.
147.104(d). In Sec. 156.815(c), we proposed a basis for suppression of
a QHP that is a multi-State plan upon notification by OPM of certain
findings. We solicited comments on this proposal, including whether the
proposed bases for suppression were appropriate and whether an appeals
process should be available following suppression decisions.
We are finalizing the provision as proposed.
Comment: Some commenters supported the proposed provisions.
Commenters requested that HHS clarify that QHP suppression would not be
implemented in violation of State law. One commenter did not support
QHP suppression, stating that it would conflict with HIPAA and one
State's law on guaranteed renewability. Another commenter recommended
that HHS clarify that, when the QHP continues to offer coverage through
the FFEs but is
[[Page 10844]]
being suppressed, consumers should be notified of the suppression. One
commenter asked if the proposed process and reasons for QHP suppression
would apply to QHPs in the SHOP.
Response: We envision suppressing a QHP when continuing to allow
new enrollment in the QHP through an FFE is not in the interest of
qualified individuals and employers, such as when the QHP has withdrawn
from an FFE, when there is incorrect data being displayed about the
QHP, and when the QHP will be decertified. Our experience shows that by
removing QHPs subject to the suppression from an FFE Web site, it will
minimize confusion by consumers, agents and brokers, and assisters
about the QHPs that are available during plan selection. Federal
regulations on guaranteed renewability at Sec. 147.106(c) and (d)
provide for circumstances under which an issuer may discontinue a
particular product or discontinue all coverage in an applicable market.
We intend to implement QHP suppression in coordination with States to
ensure that conflicts with State law can be avoided and adverse effects
minimized. We note that suppression does not affect re-enrollments into
the plan, but temporarily restricts the availability of the plan for
new enrollments through an FFE. We further note that if suppression of
a plan ultimately leads to the plan being no longer available through
an FFE, the issuer may be required to offer the same plan outside an
FFE under Sec. Sec. 147.104 and 147.106. We further clarify that the
process and reasons for QHP suppression would also apply to QHPs in the
FF-SHOP.
7. Quality Standards
a. Quality Improvement Strategy (Sec. 156.1130)
In Sec. 156.1130(a), we proposed that a QHP issuer participating
in an Exchange for at least 2 years must implement and report
information regarding a quality improvement strategy (QIS), that is a
payment structure that provides increased reimbursement or other
market-based incentives in accordance with the health care topic areas
in section 1311(g)(1) of the Affordable Care Act, for each QHP offered
in an Exchange, consistent with the guidelines developed by HHS under
section 1311(g)(2) of the Affordable Care Act. We noted that the
statutory QIS requirements, similar to the other Exchange quality
standards, extend to all Exchange types, including a State Exchange and
the FFEs.\75\ For the QIS standards, we proposed to provide State
Exchanges flexibility to establish the timeline, format, validation,
and other requirements related to the annual submission of QIS data by
QHP issuers that participate in their respective Exchanges. Under this
proposal, the establishment and implementation of such standards and
other requirements by State Exchanges would support compliance with
Sec. 155.200(d), which requires the Exchange to evaluate and oversee
implementation of the QIS (among other QHP issuer quality initiatives
for coverage offered through Exchanges). We noted that we envisioned
the standards that will be used for the FFEs would provide the minimum
requirements for State Exchanges to build upon.
---------------------------------------------------------------------------
\75\ Unless indicated otherwise, references in this section to
the ``FFE'' include States performing plan management functions.
---------------------------------------------------------------------------
We proposed to phase in QIS implementation standards and reporting
requirements to provide QHP issuers the necessary time to understand
the populations enrolling in a QHP offered through the Exchange and to
build quality performance data on their respective QHP enrollees. We
believe that implementation of a QIS should be a continuous improvement
process for which QHP issuers define the health outcome needs of their
enrollees, set goals for improvement, and provide increased
reimbursement to their providers or other market-based incentives to
reward achievement of those goals. This approach is consistent with
other QHP issuer quality standards for coverage offered through an
Exchange including implementation and reporting for the patient safety
standards, the Quality Rating System (QRS), and the Enrollee
Satisfaction Survey (ESS). We further noted that, consistent with
existing regulations at Sec. 156.200(h), QHP issuers participating in
Exchanges would be required to attest to compliance with QIS standards,
along with the other QHP issuer quality initiatives for coverage
offered through Exchanges established under subpart L of part 156, as
part of the QHP application process.
In paragraph (b), we proposed to direct a QHP issuer to submit
validated data in a form, manner, and reporting frequency specified by
the Exchange to support evaluation of quality improvement strategies in
accordance with Sec. 155.200(d) and Sec. 156.200(b)(5). We noted that
we anticipate using the data collected as part of information used to
evaluate and oversee compliance of QHP issuers in FFEs with the
Exchange QIS standards and encourage State Exchanges to adopt a similar
approach. State Exchanges would maintain the flexibility to add to the
Federal minimum QIS standards and would also have the ability to
establish their own form, manner, and reporting frequency. We proposed
that beginning in 2016, a QHP issuer participating in an Exchange for
at least 2 years would submit a QIS implementation plan for the 2017
plan year to the applicable Exchange, followed by annual progress
updates. We noted that we anticipate that the implementation plan for a
QHP issuer's proposed QIS would reflect a payment structure that
provides increased reimbursement or other market-based incentives for
addressing at least one of the topics in section 1311(g)(1) of the
Affordable Care Act.
We proposed requesting information from QHP issuers regarding
percentage of payments to providers that is adjusted based on quality
and cost of health care services as this would promote transparency and
assist Exchanges to make better informed QHP certification decisions.
We also proposed that 1 year after submitting the QIS implementation
plan, the QHP issuer would submit information including an annual
update including a description of progress of QIS implementation
activities, analysis of progress using proposed measures and targets,
and any modifications to the QIS.
We noted that we believe that the implementation and reporting for
the QIS over time would provide meaningful QIS data from QHP issuers by
minimizing administrative effort while also allowing for flexibility
and innovation. In the proposed rule, we explained that we anticipate
issuing technical guidance in the future that will provide operational
details including data validation, other data submission processes,
timeframes and potential minimum enrollment size threshold for coverage
offered through an FFE. We anticipate that this guidance would be
updated on an annual basis (or more frequently as may be necessary). We
proposed to allow State Exchanges to establish the data validation and
submission requirements for QIS data from QHP issuers that participate
in their respective Exchanges.
In paragraph (c), we proposed to direct a QHP issuer to submit data
annually for activities that are conducted related to implementation of
its QIS, in a manner and timeframe specified by the Exchange. For
example, an issuer that participates in an FFE for
[[Page 10845]]
2 consecutive years for coverage beginning in January 2014 and January
2015 would submit a QIS implementation plan to an FFE during the fall
2016 post-certification period, and in a format specified by HHS. A
progress update on the QHP issuer's QIS activities would be required
the following year. Similarly, an issuer participating in an FFE for
the first time during the 2015 open enrollment period for the 2016
coverage year and also offering coverage in the 2017 plan year would
submit an implementation plan in the 2018 post-certification period to
align with our proposed approach of phasing in the QIS over time and
allowing a QHP issuer 2 years to collect data and develop quality
improvement strategies for its QHPs offered through an Exchange, before
the submission of an implementation plan is required. A progress update
on the QHP issuer's QIS activities would be required the following
year. We proposed to allow State Exchanges to establish the specific
timeline and format requirements for the annual submission of QIS data
by QHP issuers that participate in their respective Exchanges.
We noted that multi-State plans, as defined in Sec. 155.1000(a),
are subject to reporting QIS data for evaluation, as described in
paragraph (b). In the proposed rule, we proposed to codify this general
requirement at Sec. 156.1130(d). We noted that we anticipate that OPM
will provide guidance on QIS reporting to issuers with whom it holds
multi-State plan contracts.
We sought comment on all aspects of this proposal, including
whether the standard should apply to all types of QHPs offered through
the Exchanges (for example, stand-alone dental plans, QHPs providing
child-only coverage, and health savings accounts) or if different
standards should be developed for the different types of QHPs. We also
solicited feedback on: whether there should be a minimum enrollment
size threshold to trigger the applicability of the QIS standards, what
information should be included to effectively monitor and evaluate a
QIS, and whether the information collected should be publically
displayed to encourage transparency, support comparison of QHP issuer
QIS activities, and align with other quality standards for QHP issuers
participating in Exchanges.
We are finalizing these provisions as proposed, with the following
modifications. For the initial years of implementation, QHPs that are
stand-alone dental plans, provide child-only coverage, or are
compatible with health savings accounts will not be subject to the QIS.
Additionally, HHS intends to establish a minimum enrollment size that
triggers the QIS obligations in alignment with the other Exchange
quality initiatives (for example, the QRS and ESS) and will do so
through technical guidance. Further, we clarify that, in the initial
years of QIS implementation, HHS will not require QHP issuers to select
measures from a set of standardized or uniform performance measures
established by HHS for inclusion in their respective QIS implementation
plans. HHS anticipates requiring QHP issuers to provide information
regarding their payment structure that provides increased reimbursement
or other incentives such as the percentage of payments made across
various categories including fee-for-service with no link of payment to
quality; fee-for-service with a link of payment to quality; alternative
payment models built on fee-for-service architecture; and population-
based payments, to promote transparency and align this approach with
other current CMS and HHS payment reform initiatives. As detailed
above, we intend to issue future technical guidance that will provide
more information regarding these and other QIS data collection and
submission details for QHP issuers participating on an FFE.
Comment: Several commenters supported requiring QIS compliance from
QHP issuers that have been participating in an Exchange for at least 2
years. A few commenters agreed the phased-in approach of the QIS
program would allow for the necessary preparations and knowledge
building, while other commenters recommended a delay based on concerns
that the timeline was too aggressive. While one commenter urged HHS to
postpone its QIS proposals and requirements for the private sector
until it has had time to evaluate lessons learned from the public
sector, others recommended that HHS require all QHP issuers--not only
those that have been participating in the Exchange for 2 or more
consecutive years--to submit a QIS implementation plan, with one
stating that QHP issuers will have sufficient information at the outset
to design their quality improvement strategies.
Response: We maintain in the final rule the approach outlined in
the proposed rule that QHP issuers participating in an Exchange for at
least 2 consecutive years must implement and report information
regarding a QIS, followed by annual progress updates. We believe that 2
years is an appropriate time period for QHP issuers to understand their
populations who have enrolled through Exchanges, and develop relevant
quality improvement strategies to meet the needs of that population. We
anticipate requiring compliance with the QIS reporting requirements
beginning in 2016 for the 2017 coverage year and will be issuing future
guidance that addresses this, as well as other QIS operational and data
submission details, for QHP issuers participating in the FFEs.
Comment: Some commenters suggested that a minimum QHP enrollment
size that aligns with the minimum threshold requirements of the 2015
QRS beta test requirement and the QHP Enrollee Experience Survey should
be required to trigger the applicability of the QIS certification
standard. Other commenters suggested that all QHP issuers, regardless
of enrollment size, should be required to develop and implement a
quality improvement strategy.
Response: We considered the feedback regarding the applicability of
a minimum enrollment size. In an effort to maintain consistency with
other Exchange quality standards in the initial years, we will direct
QHP issuers to comply with the QIS certification standard and report
QIS data if they meet the minimum enrollment size threshold. We intend
to include additional details regarding the applicability of the
minimum enrollment threshold to the QIS standards in future technical
guidance.
Comment: Some commenters suggested that the QIS should align with
existing quality standards required as part of Exchange participation
standards to be accredited by a recognized accrediting entity and that
the accreditation certification standard should satisfy the QIS
standards provided in Sec. 156.1130(a).
Response: We note that the existing accreditation standards do not
include the use of market-based incentives as outlined in Sec.
156.1130(a) and required by section 1311(g) of the Affordable Care Act
for QHP issuers participating in Exchanges. However, we would not
restrict a QHP issuer from using quality improvement strategy
information submitted to a recognized accrediting entity for QIS
purposes as long as the information otherwise satisfies the QIS
requirements included in this final rulemaking and future technical
guidance.
Comment: Commenters expressed general support for the QIS
principles and goal of improving quality of care delivered to Exchange
enrollees through quality improvement strategies that provide for
increased reimbursements,
[[Page 10846]]
benefit designs, and other market-based incentives. Commenters
supported QIS alignment of priorities, performance measures, and
reporting requirements with the National Quality Strategy, the CMS
Quality Strategy, and other national and regional efforts to improve
the quality of healthcare to reduce both QHP issuer and provider
burden. Commenters remarked on the importance of leveraging quality
improvement efforts in the public and private sectors to hasten
achievement of better patient outcomes and lower costs.
Response: We made extensive efforts to incorporate similar
standards and requirements from other quality initiatives into the QIS,
and believe that the QIS requirements will align as consistently as
possible with other quality initiatives. At this time, we do not intend
to require QHP issuers to select specific measures from a set required
by HHS.
Comment: Comments related to whether all QHP types (SADPs, child
only coverage, and health savings accounts) should be required to
implement a QIS fell into two categories. The first category of
commenters noted that all types of QHPs should meet the QIS
certification standard and be subject to the same QIS standards. The
second category of commenters noted that the QIS should apply to all
QHPs, but the standards should be directly relevant to the
population(s) covered by the QHP (that is, different standards for
SADPs, QHPs with rural enrollees, integrated delivery systems, etc.).
Some commenters suggested that QHP issuers be allowed to target
specific populations within their network when implementing a QIS
instead of targeting all their QHP enrollees. Others recommended that
QHP issuers be provided the flexibility to address the needs of
specific enrollee populations while recommending HHS review QIS
submissions to ensure that the strategies do not exclude any particular
group, either by design or effect. Other commenters stressed the need
to review quality improvement strategies to ensure that such strategies
do not discriminate, either by design or by effect, against any one
group of individuals. Some commenters also recommended excluding SADPs,
noting that SADPs do not have the same ability to implement and track
measures, and therefore should be exempt from the QIS requirements.
Response: We clarify in the final rule that the Federal QIS
standards will apply to same QHP types that are required to comply with
the QIS certification standard across all Exchange types. However, a
QHP issuer's QIS does not need to apply to all populations covered by
its QHPs, and the issuer has the option of developing multiple
strategies to ensure that each QHP is covered by a QIS. We agree that
it would be premature at this point in time to require all QHP types
(for example, SADPs, child only coverage plans, or QHPs compatible with
health savings accounts) to develop, implement, and track a QIS. We
therefore clarify in the final rule that in the initial years of the
QIS, SADPs, child only coverage plans, and QHPs that are compatible
with health savings accounts will be exempt from the QIS certification
and reporting requirements. This approach aligns with our current
approach for other Exchange and QHP issuer quality requirements, allows
the program to mature, and allows for additional measures for other QHP
types to be developed for reporting. Consistent with the
nondiscrimination prohibition in Sec. 156.225, QIS implementation
plans will be reviewed to ensure that they are not designed and do not
have the effect of discouraging the enrollment of individuals with
significant health needs.
Comment: We solicited comments on whether to require information
relating to provider payment models, such as an issuer's minimum target
or goal set with regards to the percentage of provider payments
adjusted for quality and cost, to be submitted for compliance with QIS
standards proposed in Sec. 156.1130. While one commenter agreed with
the concept, other commenters recommended that QHP issuers be required
to indicate specifically to providers how payment is tied to
performance or questioned the need for QHP issuers to report on the
details of their proprietary contracts with providers, and encouraged
HHS to let market factors drive quality improvements.
Response: We believe that understanding how QHP issuers
participating in Exchanges are adjusting provider payments for quality
and cost is important and directly aligns with the statutory definition
of a QIS. As such, this type of information is subject to the periodic
reporting of QIS information under section 1311(g)(3) of the Affordable
Care Act. We anticipate requiring QHP issuers participating in
Exchanges to establish and share with the applicable Exchange
performance measure improvement targets and report on progress against
those targets as they relate to QIS implementation. We anticipate
alignment of QIS information collection requirements with current
payment reform data collection efforts, including the adoption of
safeguards to protect confidential or proprietary information. The goal
is to collect issuer QIS information from QHP issuers participating in
Exchanges that demonstrates compliance with 1311(g) of the Affordable
Care Act and facilitates understanding of the issuer's payment
structure framework that provides increased reimbursement or other
market-based incentives for the implementation of activities related to
the topics specified in section 1311 (g). We anticipate the display of
a subset of this information to promote transparency and will provide
additional details through future guidance. We do not intend that the
public display of payment structure information will include
information that is considered confidential or proprietary.
Comment: Commenters provided feedback on the definition of a
quality improvement strategy as a payment structure. Various commenters
recommended not linking incentives to cost, including cost-independent
protections, and suggested that HHS recognize different types of
provider incentives, and emphasize the importance of capturing outcome
variations within a provider's control.
Response: We clarify that the description of a strategy described
in 1311(g) of the Affordable Care Act is a payment structure that
provides increased reimbursement or other market-based incentives. The
purpose of soliciting comments was to understand the types of market-
based incentives that are currently in use by issuers to reward quality
and value. HHS intends to issue technical guidance to assist QHP with
compliance with the QIS standards and reporting requirements.
Comment: Some commenters expressed concern with HHS's proposal that
a QHP issuer could meet the QIS requirements by focusing on only one of
the five topic areas in the Section 1311(g) of the Affordable Care Act.
These commenters suggested requiring QHP issuers to focus on more than
one topic area, with some commenters suggesting a requirement of at
least three topic areas be addressed.
Response: While we agree that ideally QHP issuers participating in
Exchanges would focus on more than one topic area as part of their QIS,
we are cognizant that this could be difficult for issuers to accomplish
immediately. Therefore, consistent with the phase in approach to
implementation, for the initial years of the QIS, QHP issuers will have
to address at least one of the topic areas included in section 1311(g)
of the Affordable Care Act.
[[Page 10847]]
Comment: Some commenters expressed concern over the impact the QIS
will have on providers if each QHP issuer is allowed to have extensive
flexibility in designing its quality improvement strategies, in
particular the performance measures used to track implementation
progress. One commenter recommended that QHP issuers be required to use
quality measures already in use by existing quality programs and for
HHS to require QHP issuers to select their QIS quality measures from a
limited subset of existing measures.
Response: Based on input from experts and stakeholders, we
anticipate allowing QHP issuers to select their own performance
measures and establish targets designed to measure the impact of their
respective QIS plans. Our concern is that imposing specific performance
measures on QHP issuers would limit their ability to target their
strategies to their specific populations and possibly limit innovation.
However, we will take these comments into consideration as we assess
whether changes are warranted in the future.
Comment: Commenters strongly supported the proposal that QIS
standards be developed in a public, accessible, and transparent manner
that seeks and incorporates stakeholder feedback. Some commenters
further recommended that HHS explicitly state that ``stakeholder
feedback'' must include both consumer advocates and public and private
purchasers, while another recommended that HHS reach out directly to
State consumer health advocates, patient advocates, and case managers
who represent consumer health perspectives.
Response: Consistent with the statutory directive at section
1311(g)(2) of the Affordable Care Act that requires consultation with
experts in health care quality and stakeholders, HHS conducted numerous
activities to seek feedback and develop the proposed approach to the
QIS, including meetings with a QIS Technical Expert Panel and
engagement of stakeholders through activities such as key informant
interviews, listening sessions, discussions, and a pilot test. We will
continue to engage a variety of public and private stakeholders, and
will seek to incorporate their feedback to help inform the further
development and evolution of the QIS.
Comment: Some commenters suggested we develop specific formats for
data collection and reporting to ensure consistency, reliability in the
data, and to reduce provider's data reporting burden. Other commenters
encouraged HHS to develop a uniform standardized reporting format for
use by QHP issuers in both the FFEs and the State Exchanges to allow
QHP issuers to implement consistent quality improvement strategies, as
well as enable fair comparison between QHP issuers operating in State
Exchanges and the FFEs. Others urged HHS to allow for flexibility to
ensure that QHP issuers can develop various strategies across their
populations and across their provider contracts.
Response: We appreciate the feedback and clarify that we plan on
establishing a standardized format for which QIS data must be submitted
for those QHP issuers operating in the FFEs. We expect that the exact
format and the validation process will be released as part of the
operational details in technical guidance that will be issued later in
2015. State Exchanges will have the flexibility to add reporting
requirements beyond the minimum Federal requirements, determine how
they will communicate the process for submission, establish the
timeframe and validation approach for the data submission, and any
additional quality improvement requirements they may require beyond the
minimum Federal requirements.
Comment: Some commenters felt that QIS data should not be made
publicly available at all, adding that QHP issuers may be encouraged to
take on more challenging or innovative strategies if the data are not
made public. Other commenters suggested that if QIS data would be
publicly available, HHS should create a uniform format for displaying
the data using consumer-tested language, as well as provide evidence of
effectiveness of different payment structures for QHP issuers' use.
Some commenters urged HHS to make QIS data publicly available and
require evaluation against benchmark data, allowing the data to be used
for decision making by multiple stakeholder groups such as State
Exchanges, health plans, consumers, employers, providers and provider
organizations.
Response: We clarify in the final rule that HHS seeks to encourage
transparency and align with other Exchange quality standards and data
collection for QHP issuers, while protecting information that may be
misinterpreted or misused if made publicly available. Similar to other
quality standards and CMS programs collecting data from QHP issuers in
the Exchanges, we do not anticipate publicly displaying information
that is considered confidential or proprietary. As noted above, HHS
anticipates the display of a subset of this information to promote
transparency and will provide additional details through future
guidance.
Comment: Many commenters recommended that HHS require the use of
specific performance measures in the QIS, specifically those from the
following organizations: NCQA (HEDIS); URAC; the Pediatric Quality
Measurement Program; and the Dental Quality Alliance (DQA). There was
also strong support for use of National Quality Forum (NQF)-endorsed
measures, and measures that align with the National Quality Strategy.
Commenters noted that requiring QHP issuers to include commonly used
measures in their quality improvement strategies would minimize the
data collection burden on QHP issuers as well as providers. Some
comments supported inclusion of process-level and plan-level data and
measures of improvement when evaluating a QIS. Some commenters stated
that defining the health outcomes that will be the focus of
interventions, setting goals for improvement, and the approach for
linking improvement to payment incentives should be detailed in the QHP
issuer's quality improvement strategy. They also suggested that these
elements be fully disclosed so that regulators and other interested
parties can properly evaluate a QHP issuer's quality improvement
strategy. Other commenters supported collection of information such as
the rationale for the targeted population, proposed performance
measures, approaches to reducing health care disparities, and a
description of the mitigation strategy.
Response: HHS will not require QHP issuers to include specific
performance measures in a QIS. Instead, we have outlined the elements
that should be included as part of a QIS, including a rationale that
describes its relevance to the QHP's enrollee population, proposed
performance measures and targets, a description of activities conducted
to implement the strategy, a description of activities conducted to
reduce health and health care disparities, as well as other chosen
topics, goals, timeline, and information about challenges, barriers,
and mitigation planning. As noted above, we anticipate requiring QHP
issuers to include information in their respective QIS implementation
plan regarding percentage of payments to providers that is adjudicated
based on quality and cost of services as a range within categories of
provider payments.
Comment: Several commenters provided comments specifically on
evaluation. Commenters supported the evaluation of QHP issuers' quality
improvement strategies, as long as the
[[Page 10848]]
purpose of the evaluation is to drive improvement in the strategies
being implemented, and to create a national set of performance data
against which to assess the strategies. Some commenters noted that
evaluating the quality improvement strategies could be challenging, due
to QHP issuers changing, removing, or adding QHPs, and enrollee
movement across plans both within and outside of the Exchange.
Additional challenges noted by commenters included aligning evaluation
requirements with other State and Federal requirements and ensuring
that QHP issuers have sufficient time to understand changing rules and
regulations to meet compliance requirements.
Response: This final rule adopts a phased-in approach to
implementation of the QIS and accompanying reporting requirements to
provide QHP issuers the necessary time to understand the population
enrolling in their respective QHPs offered through the Exchanges and to
build quality performance data on its QHP enrollees. We also finalize
an approach that requires a QHP issuer participating in the FFEs for at
least 2 years to submit a QIS implementation plan for each QHP offered
in the Exchange, followed by annual progress updates. The purpose of
requiring a QHP issuer to submit an annual progress update on its QIS
implementation plan is to evaluate progress. As detailed in the
proposed rule (79 FR 70735), we believe that implementation of a QIS
should be a continuous process under which QHP issuers define the
health outcome needs of their enrollees, set goals for improvement, and
use increased reimbursement to their providers or other market-based
incentives as a reward for quality improvement and to stimulate
achievement of those goals. As such, we anticipate that QHP issuers
will be engaged in a continuous process of evaluating the populations
enrolling in their respective QHPs offered through Exchanges, modifying
or otherwise adjusting their QIS plan as may be appropriate, and
building quality performance data on its QHP enrollees. This approach
is designed to account for the changes with respect to QHP offerings,
as well as enrollee movement across plans both within and outside of
Exchanges. We further note that since QHP issuers will not be penalized
if the implementation is not demonstrating an effect on the performance
targets set out in the implementation plan, we believe that these
challenges are not a barrier to performing an annual evaluation review.
Additional details on the timing of the submission of the initial QIS
implementation plan and the annual progress reports will be included in
technical guidance.
Comment: Some commenters suggested that we provide additional
technical guidance on the QIS requirements in Sec. 156.1130(b),
specifically those related to data validation and which entity will be
reviewing data submissions for accuracy prior to public display.
Response: HHS intends to publish QIS technical guidance in 2015
that will establish the minimum enrollment size threshold to trigger
the applicability of the QIS standards, as well as data validation,
data submission, and evaluation requirements for QHP issuers
participating in the FFEs. We anticipate that State Exchanges will be
issuing similar guidance to their respective QHP issuers.
8. Qualified Health Plan Issuer Responsibilities
a. Administrative Appeals (Sec. 156.1220(c))
In the 2015 Payment Notice, we established an administrative
appeals process designed to address unresolved discrepancies regarding
advance payments of the premium tax credit, advance payments of cost-
sharing reductions, FFE user fee payments, payments and charges for the
premium stabilization programs, cost-sharing reduction reconciliation
payments and charges, and assessments of default risk adjustment
charges. We established a three-tier appeals process: a request for
reconsideration under Sec. 156.1220(a); a request for an informal
hearing before a CMS hearing officer under Sec. 156.1220(b); and a
request for review by the Administrator of CMS under Sec. 156.1220(c).
Under Sec. 156.1220(a), we provided that an issuer may file a
request for reconsideration of a processing error by HHS, HHS's
incorrect application of the relevant methodology, or HHS's
mathematical error only for advance payments of the premium tax credit,
advance payments of cost-sharing reductions, FFE user fee payments,
payments and charges for the premium stabilization programs, cost-
sharing reduction reconciliation payments and charges, and assessments
of default risk adjustment charges for a benefit year. In Sec.
156.1220(a)(6), we stated that a reconsideration decision would be
final and binding for decisions regarding the advance payments of the
premium tax credit, advance payments of cost-sharing reductions, and
FFE user fees. A reconsideration decision for other matters would be
subject to the outcome of a request for informal hearing filed in
accordance with Sec. 156.1220(b).
Under Sec. 156.1220(b), an issuer that elects to challenge the
reconsideration decision may request an informal hearing before a CMS
hearing officer. The CMS hearing officer's decision would be final and
binding, but subject to any Administrator's review initiated in
accordance with Sec. 156.1220(c).
We stated in Sec. 156.1220(c)(1) that if the CMS hearing officer
upholds the reconsideration decision, the issuer is permitted to
request a review by the Administrator of CMS within 15 calendar days of
the date of the CMS hearing officer's decision. We proposed a
modification to this process to also permit CMS the opportunity to
request review of the CMS hearing officer's decision, and to permit the
Administrator of CMS to decline to review the CMS hearing officer's
decision. Specifically, we proposed to amend Sec. 156.1220(c)(1) to
permit either the issuer or CMS to request review by the Administrator
of the CMS hearing officer's decision. We proposed to provide that any
request for review of the hearing officer's decision must be submitted
to the Administrator of CMS within 15 calendar days of the date of the
hearing officer's decision, and must specify the findings or issues
that the issuer or CMS challenges. We proposed that the issuer or CMS
be permitted to submit for review by the Administrator a statement
supporting the decision of the CMS hearing officer.
We also proposed to amend Sec. 156.1220(c)(2) to provide the
Administrator of CMS with the discretion to review or not review the
decision of the CMS hearing officer after receiving a request for
review under Sec. 156.1220(c)(1). We believe such discretion will
permit the Administrator to focus resources on the priority matters,
including disputes with implications for other issuers. In keeping with
our current process set forth in Sec. 156.1220(c), we proposed that if
the Administrator elects to review the CMS hearing officer's decision,
the Administrator will review the statements of the issuer and CMS, and
any other information included in the record of the CMS hearing
officer's decision, and will determine whether to uphold, reverse, or
modify the CMS hearing officer's decision. We proposed that the issuer
or CMS be required to prove its case by clear and convincing evidence
for issues of fact, and that the Administrator will send the decision
and the reasons for the decision to the issuer. As established in
[[Page 10849]]
Sec. 156.1220(c)(3), the Administrator's decision will be final and
binding.
We received no comments on this proposal. We are finalizing these
amendments as proposed.
F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Treatment of Cost-Sharing Reductions in MLR Calculation (Sec.
158.140)
The Premium Stabilization rule (77 FR 17220) aligned the definition
of ``allowable costs'' under the risk corridors program at Sec.
153.500 with the definition of incurred claims under the MLR program at
Sec. 158.140 and expenditures for health care quality and health
information technology under Sec. 158.150-Sec. 158.151. In the 2014
Payment Notice, we additionally specified that allowable costs under
risk corridors must be reduced by the amount of cost-sharing reduction
payments received by the issuer, to the extent not reimbursed to the
provider. To align the calculations between the two programs, we
proposed to specify that cost-sharing reduction payments should be
deducted from incurred claims under the MLR program just as they are
deducted from allowable costs under the risk corridors program. As we
explained in the proposed rule, it is our understanding that in
capitated arrangements, issuers will generally retain the cost-sharing
reduction payments, and in such circumstances cost-sharing reduction
payments should be accounted for as a reduction to incurred claims
because capitation payments (which are reflected directly in an
issuer's incurred claims) will be raised to account for the reductions
in the providers' cost-sharing income. In contrast, in most fee-for-
service arrangements, issuers will pass the cost-sharing reduction
payments through to providers, and therefore no adjustment to incurred
claims for cost-sharing reduction payments would be required in such
situations.
We are finalizing this provision as proposed.
Comment: Several commenters supported our proposal as drafted,
while one commenter opposed it. Several commenters expressed concern
that the proposal could disadvantage issuers in capitated arrangements
that do pass through the cost-sharing reduction payments to the
providers.
Response: We agree with the commenters that issuers who pursue
innovative cost containment practices involving capitation and cost-
sharing reduction payments should not be treated differently than
issuers in fee-for-service arrangements. However, we note that our
proposed regulation text did not distinguish between capitation and
fee-for-service arrangements. Under our proposal, issuers in either
type of arrangement must deduct cost-sharing reduction payments from
incurred claims, to the extent such payments are not reimbursed to the
provider furnishing the item or service. Therefore, we are finalizing
the clarification of the definition of incurred claims in Sec. 158.140
as proposed.
2. Reporting of Federal and State Taxes (Sec. 158.162)
The MLR December 1, 2010 interim final rule (75 FR 74864) broadly
describes Federal and State taxes and assessments that are excluded
from premiums in the MLR and rebate calculations, and Federal and State
taxes and assessments not excluded from premium in MLR and rebate
calculations. In the proposed rule (79 FR 70737), we proposed to
further clarify for future MLR reporting years the treatment of Federal
and State employment taxes. Specifically, we proposed to amend the
provisions for the reporting of Federal and State taxes in Sec.
158.162(a)(2) and (b)(2) to provide that Federal and State employment
taxes (such as the Federal Insurance Contributions Act (FICA) and the
Railroad Retirement Tax Act (RRTA) taxes, the Federal Unemployment Act
(FUTA) and State unemployment taxes, and other similar taxes) should
not be excluded from premium in the MLR and rebate calculations.
Comment: Several commenters supported our proposal. One commenter
noted that our proposal reflected their understanding of Congressional
intent, as evidenced by the 2010 letter to the Secretary from six
congressional committee chairs involved in drafting the Affordable Care
Act.\76\ In contrast, other commenters opposed our proposal,
questioning our authority to amend the definition of taxes. These
commenters stated that the reference to ``excluding Federal and State
taxes'' in section 2718 of the PHS Act does not require clarification.
These commenters alternatively asserted that to the extent the statute
requires interpretation, only the NAIC has the authority to do so.
Consequently, a subset of these commenters recommended that we obtain
an official recommendation from the NAIC before adopting any
modifications to the definition of taxes. Some commenters additionally
expressed concern regarding the effective date of the proposed
provision.
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Response: We disagree that there is no need to clarify the
statutory reference to taxes or that the NAIC, rather than HHS, has the
authority to clarify it. Our review of the MLR reports submitted by
issuers identified this issue as one that would benefit from further
clarification for future reporting years due to the fact that there
appeared to be inconsistent treatment among issuers. While most issuers
do not exclude employment taxes from premium, others have adopted the
opposite approach and exclude such taxes from premium. Further, as some
of the commenters point out, section 2718 of the PHS Act directed the
NAIC to develop the uniform definitions and standardized methodologies
with regard to the MLR provisions. It directed the NAIC to develop such
definitions and methodologies no later than December 31, 2010, and
subjected all such definitions and methodologies to the certification
of the Secretary. As a Federal agency, HHS retains the authority to
implement the statute and interpret the statutory terms where
necessary, including the authority to adjust the MLR definitions after
2010. Furthermore, the NAIC's recommendation to the Secretary provided
that certain Federal and State taxes should not be excluded from
premiums in MLR and rebate calculations, supporting our belief that the
phrase ``excluding Federal and State taxes'' requires clarification and
does not mean all taxes of any kind. This approach--the identification
of those Federal and State taxes that must be excluded from premium and
those that cannot be excluded--was codified in our regulations at Sec.
158.162 as part of the MLR December 1, 2010 interim final rule. The use
of uniform definitions and standardized methodologies when calculating
the MLR and associated rebates (including the treatment of employment
taxes) is critical to both ensuring a level playing field across
issuers and to deliver to consumers the protections promised by the
statute. Therefore, we are finalizing the amendment to the definition
of Federal and State taxes that may be deducted from premium in Sec.
158.162(a)(2) and (b)(2) as proposed. In recognition of commenters'
concerns regarding the effective date of this provision, we note that
this provision will become effective for the 2016 reporting year, and
therefore must be reflected in reports submitted to the Secretary by
July 31, 2017. This should provide adequate time for those issuers that
previously
[[Page 10850]]
interpreted the regulation differently to adjust their financial
planning. We also reiterate that this is simply a clarification to
explicitly require inclusion, as our data indicate most issuers have
been doing.
3. Distribution of Rebates to Group Enrollees in Non-Federal
Governmental Plans (Sec. 158.242)
The December 7, 2011 MLR Rebate Requirements for Non-Federal
Governmental Plans interim final rule (76 FR 76596) directs issuers to
distribute rebates to the group policyholders of non-Federal
governmental plans. Under CMS's direct enforcement authority over non-
Federal governmental plans, the interim final rule further directs the
group policyholders of such plans to use the portion of the rebate
attributable to the amount of premium paid by subscribers of such plans
for the benefit of subscribers in one of three prescribed ways. These
provisions were put in place to ensure that rebates are used for the
benefit of enrollees of non-Federal governmental plans, who do not
receive the protections of Employee Retirement Income Security Act of
1974 (ERISA), as amended. Under ERISA and implementing regulations,
most plan participants are assured that the rebate (when the rebate is
determined to be a plan asset) is applied for their benefit within 3
months of receipt by the policyholder.
To afford similar protection to subscribers of non-Federal
governmental plans, we proposed to amend the provisions for
distribution of rebates in Sec. 158.242(b) to require group
policyholders of non-Federal governmental plans to use the subscribers'
portion of the rebate for the subscribers' benefit within 3 months of
receipt of the rebate by the group policyholder. Under the proposal,
plans would continue to be able to use the rebate to reduce the
subscribers' portion of premium for the subsequent policy year
(including by spreading it over the 12 months of the policy year) as
long as the subsequent policy year commences within 3 months of receipt
of the rebate by the group policyholder. If the subsequent policy year
commences outside this 3-month window, the group policyholder of a non-
Federal governmental plan must distribute the subscribers' portion of
the rebate within 3 months in the form of a cash refund or by applying
a mid-policy year premium credit to the subscriber's portion of the
premium. We also noted that, because under Sec. 158.242(b)(3) group
health plans that are not governmental plans and are not subject to
ERISA (such as church plans) must follow the same rebate distribution
rules in order to receive the rebate directly, the same distribution
deadline would apply to such plans.
We are finalizing the amendments as proposed. In addition, we are
finalizing the December 7, 2011 interim final rule (76 FR 76596) with
minor changes after consideration of the comments received on that rule
as noted below.
Comment: We received one comment supporting the requirement that
policyholders that are non-Federal governmental or other group health
plans not subject to ERISA apply or distribute rebates within 3 months
of receipt, or pay interest on the rebates.
Response: We appreciate the comment regarding the distribution of
rebates to group enrollees in non-Federal governmental and other group
health plans not subject to ERISA. Policyholders that are non-Federal
governmental or other group health plans not subject to ERISA that do
not apply or distribute rebates within 3 months of receipt will be
required to pay interest on the rebates, much the same as an issuer is
required to do if they do not disburse the rebate to the policyholder
by the due date.
Comment: We received several comments supporting the rules
governing the distribution of rebates to subscribers of non-Federal
governmental and other group health plans not subject to ERISA, which
were set forth in the December 7, 2011 MLR Rebate Requirements for Non-
Federal Governmental Plans interim final rule (76 FR 76596). Other
commenters requested that we clarify the deadline for rebate
distribution by such plans. One commenter expressed concern that the
regulation does not afford such plans adequate time to use the rebate
to reduce the subscribers' portion of premium or enhance benefits for a
subsequent policy year. One commenter requested that such plans be
permitted to distribute rebates directly to subscribers in situations
where the policyholder has modified or ceased to offer group coverage.
Response: We agree with the commenters regarding the need for
clarification of the rebate distribution deadline for policyholders
that are non-Federal governmental or other group health plans not
subject to ERISA. As noted above, we believe that requiring such
policyholders to use the rebate for the benefit of subscribers no later
than 3 months of receipt of the rebate by the policyholder ensures that
consumers in group health plans not subject to ERISA receive the
benefit of MLR rebates in a timely manner. Accordingly, we have
clarified the deadline in this final rule, as described in more detail
above. In addition, we agree that policyholders that are non-Federal
governmental or other group health plans not subject to ERISA should be
allowed to distribute rebates directly to subscribers in situations
where the policyholder does not offer the same plan(s) or has ceased to
offer group coverage. Therefore, we are amending the provisions in
Sec. 158.242(b)(1)(iii) to specify that as an alternative to providing
a cash rebate to the subscribers enrolled in the plan option at the
time the policyholder receives the rebate, the group policyholder may
instead provide a cash rebate to the subscribers who were enrolled in
the plan option during the MLR reporting year that generated the
rebate.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. This
final rule contains information collection requirements (ICRs) that are
subject to review by OMB. A description of these provisions is given in
the following paragraphs with an estimate of the annual burden,
summarized in Table 12.
In the November 26, 2014 (79 FR 70674) proposed rule, we requested
public comment on each of the collection of information requirements
contained in the proposed rule. The comments and our responses to them
are discussed below:
A. ICRs Regarding Standards for Notification of Change of Ownership
(Sec. 147.106(g))
When an issuer that offers a QHP, a plan otherwise subject to risk
corridors, a risk adjustment covered plan, or a reinsurance-eligible
plan experiences a change of ownership as recognized by the State in
which the plan is offered, the issuer is required to notify HHS in a
manner to be specified by HHS and provide the legal name, Health
Insurance Oversight System (HIOS) plan identifier,\77\ tax
identification number of the original and post-transaction issuers, as
applicable, and the effective date of the change of ownership, and the
summary description of transaction. The information must be submitted
by the latest of (1) the date the transaction is entered into; or (2)
the 30th day prior to
[[Page 10851]]
the effective date of the transaction. The burden associated with this
requirement is the time and effort for the issuer to notify HHS of a
change of ownership. We estimate that it will take an insurance
operations analyst 30 minutes (at an hourly wage rate of $56.63) to
prepare the data related to the change of ownership, and 10 minutes for
a senior manager (at an hourly wage rate of $103.95) to review the data
and transmit it electronically to HHS. We estimate that it will cost an
issuer $45.65 to comply with this reporting requirement. Although at
this time we cannot precisely estimate the number of issuers that will
be reporting changes of ownership, we expect that no more than 20
issuers will be subject to this reporting requirement annually, for a
total burden of $913.
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\77\ OMB Control Number: 0938-1086.
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B. ICRs Regarding Effective Rate Review Programs (Sec. 154.301)
Under Sec. 154.301(b)(2), if a State intends to make the
information contained in Parts I, II, and III of the rate filing
justification regarding proposed rate increases subject to review
available to the public prior to the date specified in guidance by the
Secretary, or if it intends to make the information contained in Parts
I, II, and III of the rate filing justification regarding final rate
increases available to the public prior to the first day of the annual
open enrollment period in the individual market for the applicable
calendar year, the State must notify CMS in writing of its intent to
publish this information at least 30 days before it makes the
information public and the date it intends to make the information
public. We intend to seek OMB approval and solicit public comment on
this information collection requirement, in accordance with the
Paperwork Reduction Act of 1995, at a future date.
C. ICRs Regarding Standards for HHS-Approved Vendors of Federally-
Facilitated Exchange Training and Information Verification for Agents
and Brokers (Sec. 155.222)
In Sec. 155.222, we describe the information collection and
disclosure requirements that pertain to the approval of vendors' FFE
agent and broker training programs, including information verification
and administration of identity proofing. The burden estimate associated
with these disclosure requirements includes the time and effort
required for vendors to develop, compile, and submit the application
information and any documentation or agreement necessary to support
oversight in the form and manner required by HHS. We estimate that HHS
will receive applications from nine or fewer vendors, and that it will
take each vendor approximately 10 hours to complete an application and
the agreement, at a cost of $24.10 per hour. Therefore, we estimate a
total burden of approximately 90 hours and a cost of $2,169 as a result
of this requirement. HHS will develop a model vendor application that
will include data elements necessary for HHS review and approval. HHS
will estimate the burden on vendors for complying with this provision
of the regulation, and submit the application for OMB approval in the
future. For vendors that choose to charge for their training, HHS will
consider current training costs for State-licensed agents and brokers
for comparable training to comparable audiences when reviewing vendor
applications with proposed fee structures.
In Sec. 155.222(d), we establish a process through which HHS will
monitor approved vendors for ongoing compliance. HHS may require
additional information from approved vendors to be submitted
periodically to ensure continued compliance related to the obligations
described in this section. We estimate that HHS will receive
applications from nine or fewer vendors. We estimate that it will take
no longer than 10 hours (at a cost of $24.10 per hour) for each vendor
to comply with any additional monitoring by HHS. Therefore, we estimate
a total annual burden of 90 hours for all vendors for a total cost
burden estimate of $2,169. In Sec. 155.222(e), we establish a process
by which a vendor whose application is not approved or whose approval
is revoked by HHS can appeal HHS's determination. We discuss the costs
associated with the appeals process in the Regulatory Impact Analysis
(RIA) section of this rule.
This section establishes a new method by which agents and brokers
may complete training and information verification components of the
registration process to be authorized to assist with enrollment in
individual market and SHOP coverage through the FFE. The information
collection associated with the current process by which agents and
brokers may be authorized to assist with enrollment through the
Exchange is approved under OMB Control Number 0938-1204. We intend to
revise the current collection request to incorporate this new method by
which agents and brokers may complete training and information
verification components of the registration process. Based on
information not available when the current collection request was
developed in 2013, we also expect a significant reduction in the
overall burden, both in terms of the total number of respondents and
the time required for each response. We intend to seek OMB approval and
solicit public comment on this information collection requirement in
accordance with the Paperwork Reduction Act of 1995.
D. ICRs Regarding Notification of Effective Date for SHOP (Sec.
155.720(e))
Section Sec. 155.720(e) has been amended to refer to enrollees and
not qualified employees. This amendment establishes that issuers must
provide a coverage effective date notice to anyone who enrolled in
coverage through a SHOP under the new definition of ``enrollee,''
including dependents (including a new dependent of the employee, when
the dependent separately joins the plan), former employees of a
qualified employer, and certain business owners, who might be enrolled
in coverage through a SHOP. We specify that when a primary subscriber
and his or her dependents live at the same address, a separate notice
need not be sent to each dependent at that address, so long as the
notice sent to each primary subscriber at that address contains all the
required information about the coverage effective date for the primary
subscriber and each of his or her dependents at that address. When
dependents live at a different address from the primary subscriber, a
separate notice must be sent to those dependents. We note that the
notices required under this proposal could be incorporated into
existing notifications that QHPs provide to their new customers, for
example in a welcome document. We are also making a conforming
amendment to Sec. 156.285(c)(3) to ensure that QHP issuers
participating in a SHOP provide notice to a new enrollee of the
enrollee's effective date of coverage. We note that the effective date
for this notice requirement will take effect in plan years beginning on
or after January 1, 2017 for enrollees that are not qualified
employees. Issuers have already been providing these notices to
qualified employees and are expected to continue sending these notices
under the current rule. This final rule also expands issuers'
obligation to send notices to former employees under the amended
definition of a qualified employee.
The burden estimate associated with this requirement includes the
time and effort needed to develop the notice and to distribute it
through an automated process to enrollees, as appropriate. We estimate
that approximately 445 QHP issuers (including dental issuers) will
[[Page 10852]]
participate on the SHOPs in all States. We estimate that it will take
approximately 35 hours annually to develop and transmit this notice,
including 4 hours for a health policy analyst (at an hourly wage rate
of $58.05), 3 hours for an operations analyst (at an hourly wage rate
of $56.63), 25 hours for a computer programmer (at an hourly wage rate
of $48.61), 2 hours for a fulfillment manager (at an hourly wage rate
of $27.00), and 1 hour for a senior manager (at an hourly wage rate of
$103.95). Therefore, we estimate an aggregate burden of 15,575 hours
and $790,004 for QHP issuers participating in a SHOP as a result of
this requirement. We describe this burden in more detail in our
discussion of the Information Collection Reporting section for Sec.
156.285(d) in this final rule.
E. ICRs Regarding Collection of Data To Define Essential Health
Benefits (Sec. 156.120)
In Sec. 156.120, we require States that select a base-benchmark
plan or an issuer that offers a default base-benchmark plan to submit
to HHS certain information in a form and manner, and by a date,
determined by HHS. We are also finalizing our proposal to allow each
State to select a new base-benchmark plan and supplement if necessary
for the 2017 plan year. The information collection associated with
State or issuer submission of benchmark plan data is currently approved
under OMB Control Number 0938-1174. We expect to collect less
information for the 2017 plan year than we previously collected for
this purpose, and therefore we have revised our current burden estimate
to reflect the reduced burden on issuers. The burden estimate
associated with this requirement includes the time and effort needed
for issuers and States to file an electronic submission describing the
benefits, limits, and exclusion of the plan chosen as the State
benchmark for the 2017 benefit year. We estimate that approximately 51
entities are subject to the reporting requirements and that it will
take approximately 1.5 hours annually to identify and submit the
responsive records to CMS, including 1.5 hours for an issuer or health
policy analyst (at an hourly wage rate of $58.05). Therefore, we
estimate an aggregate burden of 76.5 hours and $4,440.83 for issuers
and States as a result of this requirement.
We released information regarding this data collection requirement,
in accordance with the Paperwork Reduction Act of 1995, on November 26,
2014 in CMS-10448,\78\ for a 60-day comment period.\79\ We did not
receive any comments in relation to that release. This final rule
serves to provide notice of a 30-day public comment period in relation
to this proposed information collection which will be available on our
Web site.\80\
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\78\ https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10448.html?DLPage=2&DLSort=1&DLSortDir=descending.
\79\ https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10448.html?DLPage=2&DLSort=1&DLSortDir=descending.
\80\ https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
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F. ICRs Regarding Prescription Drug Benefits (Sec. 156.122)
In Sec. 156.122, we require health plans that are required to
comply with EHB, as part of a committee that meets the standards
established in that section. We expect that health plans have already
established P&T committees that meet these standards and follow these
processes. These processes include recordkeeping requirements for the
P&T committee. Because we believe that issuers are already required to
maintain such documentation, such as for accreditation purposes, and
that issuers tend to use the same formulary drug list for multiple
plans, we believe that the recordkeeping requirement will only impose a
minimal additional burden on issuers. Therefore, we estimate that it
will take a compliance officer approximately 8 hours (at an hourly wage
rate of $43.34) to prepare for and attend meetings on a quarterly
basis, and maintain the required documentation. Therefore, for
approximately 2,400 plans in the individual and small group market that
would be subject to this requirement, we estimate an aggregate annual
burden of 76,800 hours and $3,328,512.
G. ICRs Regarding Transparency in Coverage (Sec. 156.220)
In the proposed rule, we solicited comment regarding the type of
information that QHP issuers would be required to provide and make
available to the public in plain language under Sec. 156.220. We
intend to provide further detail regarding the proposed implementation
approach in the future. We believe that the 2016 implementation date
finalized in this rule will allow sufficient time for HHS to provide
details regarding the data collection, review, and public display of
transparency elements. We intend to seek public comments on a proposed
information collection detailing the specific data elements, frequency
of updates, file types, and other crucial information for OMB approval
at a future date.
H. ICRs Regarding Termination Notices for SHOP (Sec.
156.285(d)(1)(ii)) and Sec. 155.735(d)(1)(iii) and (g))
In Sec. 156.285(d)(1)(ii) and Sec. 155.735(d)(1)(iii) and (g) we
require QHP issuers participating in the SHOP to provide notices to
qualified employers and enrollees related to terminations of enrollment
or coverage through the SHOP due to rescission in accordance with Sec.
147.128 and due to the QHP's termination, decertification, or non-
renewal of certification, while shifting the burden of notifying
qualified employers and enrollees of terminations due to loss of
eligibility or nonpayment of premiums to the SHOP. The amendments to
Sec. 156.285(d)(1)(ii) and new Sec. 155.735(g) will take effect
January 1, 2016. We note that, while our current rules require issuers
to provide notice of terminations when coverage through the SHOP is
rescinded in accordance with Sec. 147.128, or when the issuer elects
not to seek recertification for a QHP offered through the SHOP, this
provision will expand QHP issuers' notice requirements to circumstances
in which the QHP terminates or is decertified in accordance with Sec.
155.1080. The notices must inform the enrollee and qualified employer
of the termination effective date and the reason for the termination.
We specify that when a primary subscriber and his or her dependents
live at the same address, a separate notice need not be sent to each
dependent at that address, so long as the notice sent to each primary
subscriber at that address contains all the required information about
the termination of coverage for the primary subscriber and each of his
or her dependents at that address. We note that when dependents live at
a different address from the primary subscriber, a separate notice must
be sent to those dependents. The burden estimate associated with this
requirement includes the time and effort needed to develop the notice
and to distribute it through an automated process to qualified employer
and the enrollee, as appropriate. We estimate that approximately 445
QHP issuers (including dental issuers) will participate on the SHOPs in
all States. We estimate that it will take approximately 35 hours
annually to develop and transmit this notice, including 4 hours for a
health policy analyst (at an hourly wage rate of $58.05), 3 hours for
an operations analyst (at an hourly wage rate of
[[Page 10853]]
$56.63), 25 hours for a computer programmer (at an hourly wage rate of
$48.61), 2 hours for a fulfillment manager (at an hourly wage rate of
$27.00), and 1 hour for a senior manager (at an hourly wage rate of
$103.95). Therefore, we estimate an aggregate burden of 15,575 hours
across and $790,004 for QHP issuers participating in the SHOP as a
result of this requirement. HHS intends to seek public comment on a
proposed information collection at a later date. We note that
amendments to the definition of ``enrollee'' that are set forth in this
final rule and that take effect sooner than January 1, 2016, may expand
the universe of individuals who must receive these notices under both
the current rule and the amendments that take effect January 1, 2016.
As part of developing and proposing the information collection for this
ICR, HHS will estimate the effect of the modified definition of
``enrollee'' on the information collection burden.
Based on the above per-notice development wage rates and hours, we
believe that each State-based SHOP will spend roughly 70 hours annually
to prepare the two termination notices (35 hours per notice), for a
total cost of $3,550 to design and implement the notices proposed under
Sec. 155.735(g). We estimate that there will be approximately 18
State-based SHOPs, and that all State-based SHOPs will be subject to
this requirement. Therefore, we estimate an aggregate burden of 1,260
hours and $63,900 for State-based SHOPs as a result of this
requirement.
I. ICRs Regarding Plan Variation Notices and Changes in Eligibility for
Cost-Sharing Reductions (Sec. 156.420 and Sec. 156.425)
In Sec. 156.420(h), we require an issuer to provide a summary of
benefits and coverage (SBC) for each plan variation of a QHP it offers
in accordance with the rules set forth under Sec. 156.420 (referred to
in this section as a ``plan variation SBC''), in a manner that is
consistent with the standards set forth in Sec. 147.200. In Sec.
156.425(c), we provide that if an individual's assignment to a plan
variation or standard plan without cost-sharing reductions changes in
the course of a benefit year (in accordance with Sec. 156.425(a)), an
issuer must provide an SBC in a manner consistent with the standards
set forth in Sec. 147.200, as soon as practicable after receiving
notice from the Exchange of the individual's change in eligibility and
no later than 7 business days following receipt of notice. The burden
associated with this requirement is the time and effort for an issuer
to create and provide plan variation SBCs to affected individuals under
Sec. 156.420.
Nearly all issuers affected by this requirement have already
incurred one-time start-up costs related to implementing the SBC
requirements established under Sec. 147.200, and are already providing
SBCs that reflect the standard QHPs they offer.\81\ We believe that QHP
issuers will leverage existing processes to generate and distribute
plan variation SBCs under Sec. 156.420(h). We estimate that issuers
would incur additional burden to produce and distribute plan variation
SBCs under the proposed Sec. Sec. 156.420(h) and 156.425(c). The
additional burden will be associated with three tasks: (1) Producing
plan variation SBCs; (2) distributing plan variation SBCs; and (3)
distributing a plan variation SBC (or standard QHP without cost-sharing
reductions) after a change in eligibility in the course of a benefit
year. We intend to revise the information collection approved under OMB
Control Number 0938-1187 to reflect this additional burden.
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\81\ Summary of Benefits and Coverage and Uniform Glossary Final
Rule (``SBC Final Rule''), 77 FR 8690 (Feb. 14, 2012). We have
already received OMB approval under OMB control number 0938-1146 for
the collection of information requirements related to the SBC
provisions as finalized under current rules.
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1. Producing Plan Variation SBCs
Because stand-alone dental plans are not required to complete SBCs,
we exclude these plans from the number of QHPs that we estimate are
required to comply with the requirement. We estimate that approximately
575 issuers participate in the Exchange, and that each issuer offers
one QHP per metal level, with four zero cost-sharing plan variations
and four limited cost-sharing plan variations (two per metal level per
QHP) and three silver plan variations.\82\ Therefore, we estimate that
each issuer offers 11 plan variations, and would produce 11 SBCs to
reflect each plan variation, for a total of 6,325 plan variation SBCs
annually. We estimate that it will take up to 1 hour to produce each
plan variation SBC, for an annual time burden of 11 hours for each
issuer. We estimate that it would take an information technology (IT)
professional 5 hours (at an hourly wage rate of $54.39), a benefits/
sales professional 5.5 hours (an hourly wage rate of $44.9) per hour,
and an attorney 30 minutes (at an hourly wage rate of $84.96) to comply
with the requirements. Therefore, we estimate a total annual cost
burden of $561.44 per issuer, and $322,828 (6,325 hours) for all
issuers affected by this requirement.
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\82\ Under Sec. 156.420(a), for each of its silver health plans
that an issuer offers, the issuer must offer three variations of the
standard silver plan that reflect, in addition to the applicable
annual limitation on cost-sharing, the following: (1) A silver plan
variation with cost-sharing reductions such that the actuarial value
(AV) of the variation is 94 percent plus or minus the de minimis
variation for a silver plan variation; (2) a silver plan variation
with cost-sharing reductions such that the AV of the variation is 87
percent plus or minus the de minimis variation for a silver plan
variation; and (3) a silver plan variation with cost-sharing
reductions such that the AV of the variation is 73 percent plus or
minus the de minimis variation for a silver plan variation. Under
Sec. 156.420(b), for each QHP at any metal level that an issuer
offers, the issuer must offer two variations to American Indians/
Alaska Natives that reflect the following: (1) A variation of the
QHP with all cost sharing eliminated; and (2) a variation of the QHP
with no cost-sharing on any item or service that is an essential
health benefit furnished directly by the Indian Health Service, an
Indian Tribe, Tribal Organization, or Urban Indian Organization, or
through referral under contract health services.
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2. Distributing Plan Variation SBCs
We are unable to estimate the number of cost-sharing reduction-
eligible enrollees at this time and the related burden on issuers to
provide for these disclosures. We expect that the vast majority
(approximately 95 percent) of the total number of plan variation SBCs
provided in accordance with Sec. 156.420(h) would be sent prior to
enrollment and electronically at minimal cost, under the timing and
form requirements set forth in Sec. 147.200(a)(1)(iv) and (a)(4)(iii).
Of the remaining number of plan variation SBCs, we estimate that
approximately 4 percent of these disclosures will be sent in other
instances, in accordance with the other timing requirements that may
apply, including, requests for a plan variation SBC made by a consumer
in the course of the benefit year. We expect that the vast majority of
these disclosures will be provided electronically at minimal cost. We
assume that there are costs for paper disclosures, but no costs for
electronic disclosures.\83\ We expect that up to 1 percent of plan
variation SBCs will be provided in paper form. We estimate that the
labor costs associated with distributing each SBC will be $1.63 (3
minutes for an administrative assistant at an hourly wage rate of
$32.59), and that printing, mailing, and supply costs will be $0.69 per
SBC ($0.05 to print each page and $0.49 for first class postage), for a
total cost of $2.32 per SBC. We estimate an annual burden of $331 for
each QHP issuer and an aggregate burden of $190,240 for all issuers
that are subject to the requirement.
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\83\ SBC Final Rule, 77 FR 8691 (Feb. 14, 2012).
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[[Page 10854]]
3. Notice After Changes in Eligibility for Cost-Sharing Reductions
In Sec. 156.425(c), we require an issuer to provide adequate
notice to the individual about the availability of the SBC that
accurately reflects the applicable plan variation of the QHP (or the
standard QHP without cost-sharing reductions) if an enrollee's
eligibility for cost-sharing reductions changes in the course of a
benefit year. Similarly, if an enrollee changes QHPs as the result of a
special enrollment period in accordance with Sec. 155.420(d)(6), the
issuer of the new QHP will be required to provide the individual with
an SBC that accurately reflects the new QHP. We are unable to estimate
the number of cost-sharing reduction-eligible enrollees who would
experience a change in eligibility for cost-sharing reductions at this
time and the related burden on issuers to provide for these
disclosures. We expect that the vast majority (approximately 99
percent) of the total number of SBCs provided in accordance with Sec.
156.425(c) will be sent electronically at minimal cost. We estimate
that the labor costs associated with producing each SBC will be
approximately $1.63 (3 minutes for an administrative assistant at an
hourly wage rate of $32.59), and that printing, and mailing costs will
be $0.69 ($0.05 to print each page and $0.49 for first class postage),
for a total cost of $2.32 per SBC. We estimate a total annual cost of
$165 for each QHP issuer and $95,120 for all QHP issuers that are
subject to this requirement.
J. ICRs Regarding the Collection and Reporting of Quality Improvement
Strategies (Sec. 156.1130)
In Sec. 156.1130, we established requirements for QHP issuers
related to data collection and submission of information regarding a
quality improvement strategy (QIS). QIS standards will establish the
minimum requirements for the FFEs, States with plan management
functions and that State-based Exchanges must follow. State-based
Exchanges can, if desired, build additional reporting requirements in
accordance with their needs.
Because SADPs will not be included in the initial years, this
estimate assumes 575 QHP issuers (all issuers in all Marketplaces
excluding SADPs) and covers the annual costs for a QHP issuer over a 3-
year period (2016-2018). The burden associated with submitting initial
attestations as part of the QHP certification process is currently
accounted for under OMB Control Number 0938-1187. We estimate that it
will take each QHP issuer 48 hours (at a cost of $3,372) to collect
this QIS data and to submit this information to the Exchange.
Therefore, we estimate an aggregate burden of 27,600 hours and
$1,938,900 for 575 QHP issuers as a result of these requirements.
Table 12--Annual Reporting, Recordkeeping and Disclosure Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Burden per Total labor cost Total labor Total capital/
Regulation section(s) Number of Responses response annual of cost of maintenance Total cost
respondents (hours) burden reporting reporting costs ($) ($)
(hours) ($) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 147.106(g)......................... 20 20 0.67 13.4 68.17 913 0 913
Sec. 155.222(a)......................... 9 9 10.00 90 24.10 2,169 0 2,169
Sec. 155.222(d)......................... 9 9 10.00 90 24.10 2,169 0 2,169
Sec. 155.720(e) and Sec. 156.285(c)(3) 445 445 35.00 15.575 50.72 790,004 0 790,004
Sec. 155.735(g)......................... 18 36 35.00 1,260 50.71 63,900 0 63,900
Sec. 156.120............................ 51 51 1.5 76.5 58.05 4,480.83 0 1,480.28
Sec. 156.122............................ 2,400 2,400 32.00 76,800 43.34 3,328,512 0 3,328,512
Sec. 156.285(d)(1)(ii).................. 445 445 35.00 15,575 50.72 790,004 0 790,004
Sec. 156.420............................ 575 6,325 1.00 6,325 51.04 322,828 0 322,828
Sec. 156.420(h)......................... 575 81,000 0.05 4,050 32.59 131,990 58,250 190,240
Sec. 156.425............................ 575 41,000 0.05 2,025 32.59 65,995 29,125 95,120
Sec. 156.1130........................... 575 575 48 27,600 70.25 1,938,900 0 1,938,900
-------------------------------------------------------------------------------------------------------------
Total................................. 2,400 .............. ........... 149,504.9 ........... 7,441,865 87,375 7,529,240
--------------------------------------------------------------------------------------------------------------------------------------------------------
Copies of the supporting statement and any related forms for
information collections identified above can be found at: https://www.cms.hhs.gov/PaperworkReductionActof1995 or can be obtained by
emailing your request, including your address, phone number, OMB
number, and CMS document identifier, to: Paperwork@cms.hhs.gov, or by
calling the Reports Clearance Office at: 410-786-1326. If you comment
on these proposed information collection, please reference the CMS
document identifier and the OMB control number. To be assured
consideration, comments and recommendations must be received in one of
the following ways prior to the public comment deadline: 1.
Electronically. You may submit your comments electronically to https://www.regulations.gov. Follow the instructions for ``Comment or
Submission'' or ``More Search Options'' to find the information
collection document(s) accepting comments. 2. By regular mail. You may
mail written comments to the following address: CMS, Office of
Strategic Operations and Regulatory Affairs, Division of Regulations
Development, Attention: Document Identifier (CMS-10523), Room C4-26-05,
7500 Security Boulevard, Baltimore, Maryland 21244-1850, and, OMB
Office of Information and Regulatory Affairs, Attention: CMS Desk
Officer, New Executive Office Building, Room 10235, Washington, DC
20503, Fax Number: 202-395- 6974.
V. Regulatory Impact Analysis
A. Statement of Need
This final rule sets forth standards related to the premium
stabilization programs (risk adjustment, reinsurance, and risk
corridors) for the 2016 benefit year, as well as certain modifications
for the 2015 benefit year, that will protect issuers from the potential
effects of adverse selection and protect consumers from increases in
premiums due to issuer uncertainty. The Premium Stabilization Rule and
the 2014 and 2015 Payment Notices provided detail on the implementation
of these programs, including the specific parameters for the 2014 and
2015 benefit years applicable to these programs. This final rule sets
forth
[[Page 10855]]
additional standards related to essential health benefits, meaningful
access in the Exchange, consumer assistance tools and programs of an
Exchange, non-Navigator assistance personnel, cost-sharing parameters
and cost-sharing reduction notices, quality improvement strategy
standards for issuers of QHPs participating in Exchanges, guaranteed
availability, guaranteed renewability, minimum essential coverage, the
rate review program, the medical loss ratio program, the Small Business
Health Options Program, and FFE user fees.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 202 of the Unfunded Mandates Reform Act
of 1995 (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
rules with economically significant effects ($100 million or more in
any 1 year).
OMB has determined that this final rule is ``economically
significant'' within the meaning of section 3(f)(1) of Executive Order
12866, because it is likely to have an annual effect of $100 million in
any 1 year. Accordingly, we have prepared an RIA that presents the
costs and benefits of this rule.
Although it is difficult to discuss the wide-ranging effects of
these provisions in isolation, the overarching goal of the premium
stabilization, market standards, and Exchange-related provisions and
policies in the Affordable Care Act is to make affordable health
insurance available to individuals who do not have access to affordable
employer-sponsored coverage. The provisions within this final rule are
integral to the goal of expanding access to affordable coverage. For
example, the premium stabilization programs help prevent risk selection
and decrease the risk of financial loss that health insurance issuers
might otherwise expect in 2016 and the advance payments of the premium
tax credit and cost-sharing reduction programs assist low- and
moderate-income consumers and American Indians/Alaska Natives in
purchasing health insurance. The combined impacts of these provisions
affect the private sector, issuers, and consumers, through increased
access to health care services including preventive services, decreased
uncompensated care, lower premiums, establishment of quality
improvement strategy standards, and increased plan transparency.
Through the reduction in financial uncertainty for issuers and
increased affordability for consumers, these provisions are expected to
increase access to affordable health coverage.
HHS anticipates that the provisions of this final rule will help
further the Department's goal of ensuring that all consumers have
access to quality, affordable health care and are able to make informed
choices, that Exchanges operate smoothly, that premium stabilization
programs work as intended, that SHOPs are provided flexibility, and
that employers and consumers are protected from fraudulent and criminal
activities. Affected entities such as QHP issuers will incur costs to
comply with the provisions specified in the final rule, including
administrative costs related to notices, quality improvement strategy
requirements, training and recertification requirements, and, in some
cases, establishing a larger provider network. In accordance with
Executive Order 12866, HHS believes that the benefits of this
regulatory action justify the costs.
C. Impact Estimates of the Payment Notice Provisions and Accounting
Table
In accordance with OMB Circular A-4, Table 13 below depicts an
accounting statement summarizing HHS's assessment of the benefits,
costs, and transfers associated with this regulatory action.
This final rule implements standards for programs that will have
numerous effects, including providing consumers with affordable health
insurance coverage, reducing the impact of adverse selection, and
stabilizing premiums in the individual and small group health insurance
markets and in an Exchange. We are unable to quantify certain benefits
of this rule--such as improved health outcomes and longevity due to
continuous quality improvement and increased insurance enrollment--and
certain costs--such as the cost of providing additional medical
services to newly-enrolled individuals. The effects in Table 13 reflect
qualitative impacts and estimated direct monetary costs and transfers
resulting from the provisions of this final rule for reinsurance
contributing entities and health insurance issuers. The annualized
monetized costs described in Table 13 reflect direct administrative
costs to these entities as a result of these provisions, and include
administrative costs related to notices, quality improvement strategy
requirements, and training and recertification requirements that are
estimated in the Collection of Information section of this final rule.
The annual monetized transfers described in Table 13 include costs
associated with the reinsurance contribution fee, FFE user fees, and
the risk adjustment user fee paid to HHS by issuers, and additional MLR
rebate payments from issuers to consumers. We also note that
reinsurance administrative expenses, included in the reinsurance
contribution rate, will increase slightly from 2015 to 2016. In
addition, as a result of HHS's increased contract costs related to risk
adjustment operations and risk adjustment data validation, we will
collect a total of $50 million in risk adjustment user fees or $1.75
per enrollee per year from risk adjustment issuers, which is greater
than the $0.96 per-enrollee-per-year risk adjustment user fee amount
established for benefit year 2015. This increase is due in large part
to risk adjustment data validation costs that will occur in 2016. The
increase in FFE user fee collections is a result of a constant user fee
rate from 2015 to 2016 (3.5 percent) but expected growth in enrollment
in the FFEs. We are also including costs associated with administrative
appeals under Sec. 156.1220 in the RIA of this final rule.
Table 13--Accounting Table
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Benefits:
----------------------------------------------------------------------------------------------------------------
Qualitative:....................................................................................................
[[Page 10856]]
* Increased enrollment in the individual market leading to improved access to health care for the previously
uninsured, especially individuals with medical conditions, which will result in improved health and
protection from the risk of catastrophic medical expenditures..............................................
* Encourage continuous quality improvement among QHP issuers to improve health outcomes at lower costs......
* Allow Exchanges to make informed QHP certification decisions..............................................
* Increasing coverage options for small businesses and their employees while mitigating the effect of
adverse selection..........................................................................................
* Ensure that consumers in group health plans not subject to ERISA receive the benefit of MLR rebates in a
timely manner..............................................................................................
----------------------------------------------------------------------------------------------------------------
Costs:
----------------------------------------------------------------------------------------------------------------
Estimate Year dollar Discount Period
(million) rate covered
(percent)
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)............................... 6.77 2015 7 2015-2018
6.77 2015 3 2015-2018
----------------------------------------------------------------------------------------------------------------
Quantitative:...................................................................................................
* Costs incurred by issuers and contributing entities to comply with provisions in the rule.................
* Costs incurred by States for complying with audits of State-operated reinsurance programs.................
----------------------------------------------------------------------------------------------------------------
Transfers:
----------------------------------------------------------------------------------------------------------------
Estimate Year dollar Discount Period
(million) rate covered
(percent)
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)............................... 418.61 2015 7 2015-2018
418.52 2015 3 2015-2018
----------------------------------------------------------------------------------------------------------------
* Transfers reflect incremental cost increases from 2015-2016 for reinsurance administrative expenses, FFE user
fees, and the risk adjustment user fee, which are transfers from contributing entities and health insurance
issuers to the Federal government. FFE user fees are newly included in the estimated transfers as collections
are now projected for the period covered. Transfers also reflect annual transfer from shareholders or nonprofit
stakeholders to enrollees of rebates paid by issuers for coverage in the individual and group markets,
resulting from clarification regarding MLR methodology to account for Federal and State employment taxes.......
* Unquantified: Lower premium rates in the individual market due to the improved risk profile of the insured,
competition, and pooling risk..................................................................................
----------------------------------------------------------------------------------------------------------------
This RIA expands upon the impact analyses of previous rules and
utilizes the Congressional Budget Office's (CBO) analysis of the
Affordable Care Act's impact on Federal spending, revenue collection,
and insurance enrollment. Table 14 summarizes the effects of the risk
adjustment and reinsurance programs on the Federal budget from fiscal
years 2015 through 2018, with the additional, societal effects of this
proposed rule discussed in this RIA. We do not expect the provisions of
this final rule to significantly alter CBO's estimates of the budget
impact of the risk adjustment, reinsurance, and risk corridors programs
that are described in Table 14. For this RIA, we are shifting the
estimates for the risk adjustment and reinsurance programs to reflect
the 4-year period from fiscal years 2015 through 2018, because these
payments and charges will begin in the 2015 calendar year for the 2014
benefit year. We note that transfers associated with the risk
adjustment and reinsurance programs were previously estimated in the
Premium Stabilization Rule; therefore, to avoid double-counting, we do
not include them in the accounting statement for this final rule (Table
13).
In addition to utilizing CBO projections, HHS conducted an internal
analysis of the effects of its regulations on enrollment and premiums.
Based on these internal analyses, we anticipate that the quantitative
effects of the provisions finalized in this rule are consistent with
our previous estimates in the 2015 Payment Notice for the impacts
associated with the cost-sharing reduction program, the advance
payments of the premium tax credit program, the premium stabilization
programs, and FFE user fee requirements.
Table 14--Estimated Federal Government Outlays and Receipts for the Risk Adjustment, Reinsurance, and Risk
Corridors Programs From FY 2014-2018
[In billions of dollars]
----------------------------------------------------------------------------------------------------------------
Year 2015 2016 2017 2018 2019 2015-2019
----------------------------------------------------------------------------------------------------------------
Risk Adjustment, Reinsurance, and 17 17.5 19.5 15 17 86
Risk Corridors Program Payments..
Risk Adjustment, Reinsurance, and 18 16.5 19.5 15 17 86
Risk Corridors Program
Collections......................
----------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office. Updated Estimates of the Insurance Coverage Provisions of the Affordable
Care Act, January 2015.
1. Rate Review
The final rule will trigger review of rate increases that meet or
exceed the applicable review threshold when such increases happen at
the ``plan'' level rather than at the ``product'' level. This will
protect consumers against unreasonable rate increases for their plans,
since, under current regulations,
[[Page 10857]]
it is possible for a plan to experience a rate increase higher than the
threshold and still avoid review because the average rate increase for
the product does not meet or exceed the threshold. States may have to
review more submissions and experience an increase in related costs.
The establishment of a uniform timeframe by which issuers in every
State must submit a completed Rate Filing Justification to CMS and the
applicable State for all rate increases, including both QHPs and non-
QHPs, will provide timely information to consumers and other
stakeholders and ensure that State and Federal regulators have adequate
time for review prior to implementation of a rate increase. The
amendment to specify the timing for States to make proposed and final
rate increase information available to the public will ensure that
consumers have timely access to this information. These provisions will
also reduce the potential for anti-competitive behavior and promote
fair market competition between issuers inside and outside of the
Exchange.
2. Change of Ownership Notification Requirement
This final rule provides that when an issuer of a QHP, a plan
otherwise subject to risk corridors, a risk adjustment covered plan, or
a reinsurance-eligible plan, experiences a change in ownership as
recognized by the State in which the plan is offered, the issuer must
notify HHS in a manner specified by HHS, by the latest of (1) the date
the transaction is entered into; or (2) the 30th day prior to the
effective date of the transaction. We expect that upon notification,
issuers may need to work with HHS to clarify operational processes
related to the HHS-administered programs, and will follow with guidance
related to such operational processes. We estimate the administrative
costs associated with the notification requirement in the Collection of
Information section of this final rule.
3. Appeals Process for HHS-Approved Vendors for FFE Training and
Information Verification for Agents and Brokers
In Sec. 155.222, we proposed information collection and disclosure
requirements that pertain to the approval of vendors to have their FFE
agent and broker training and information verification programs
recognized as sufficient for agents and brokers to satisfy the training
requirement to assist or facilitate enrollment in individual market or
SHOP coverage through the FFEs. We also establish a monitoring and
appeals process for such HHS-approved vendors. We estimate that five
vendors that apply may not have their application approved, and one
vendor may have their approval revoked, and all of those vendors will
appeal HHS's determination and submit additional documentation to HHS.
We estimate that filing an appeal with HHS will take no longer than 1
hour. Therefore, at an hourly wage rate of $24.10, we estimate a total
cost of $144.60 as a result of this appeals process.
4. Risk Adjustment
The risk adjustment program is a permanent program created by the
Affordable Care Act that transfers funds from lower risk, non-
grandfathered plans to higher risk, non-grandfathered plans in the
individual and small group markets, inside and outside the Exchanges.
We established standards for the administration of the risk adjustment
program in subparts D and G of part 45 of the CFR.
A State approved or conditionally approved by the Secretary to
operate an Exchange may establish a risk adjustment program, or have
HHS do so on its behalf. As described in the 2014 and 2015 Payment
Notices, if HHS operates risk adjustment on behalf of a State, it will
fund its risk adjustment program operations by assessing a risk
adjustment user fee on issuers of risk adjustment covered plans. For
the 2016 benefit year, we estimate that the total cost for HHS to
operate the risk adjustment program on behalf of States for 2016 will
be approximately $50 million, and that the risk adjustment user fee
would be approximately $1.75 per enrollee per year. The increased risk
adjustment user fee for 2016 is the result of the increased contract
costs to support the risk adjustment data validation process.
5. Reinsurance
The Affordable Care Act directs that a transitional reinsurance
program be established in each State to help stabilize premiums for
coverage in the individual market by helping to pay the cost of
treating high-cost enrollees. In the 2014 and 2015 Payment Notices, we
expanded upon the standards set forth in subparts C and E of the
Premium Stabilization Rule and established the 2014 and 2015 uniform
reinsurance payment parameters and national contribution rate. In this
rule, we finalize the 2016 uniform reinsurance payment parameters and
contribution rate and a modification to the 2015 benefit year
attachment point.
Section 153.220(c) provides that HHS will publish the uniform per
capita reinsurance contribution rate for the upcoming benefit year in
the annual HHS notice of benefit and payment parameters. Section
1341(b)(3)(B)(iii) of the Affordable Care Act specifies that $10
billion for reinsurance contributions is to be collected from
contributing entities for the 2014 benefit year (the reinsurance
payment pool), $6 billion for the 2015 benefit year, and $4 billion for
the 2016 benefit year. Additionally, sections 1341(b)(3)(B)(iv) and
1341(b)(4) of the Affordable Care Act direct that $2 billion in funds
is to be collected for contribution to the U.S. Treasury for the 2014
benefit year, $2 billion for the 2015 benefit year, and $1 billion for
the 2016 benefit year. Finally, section 1341(b)(3)(B)(ii) of the
Affordable Care Act allows for the collection of additional amounts for
administrative expenses. Taken together, these three components make up
the total dollar amount to be collected from contributing entities for
2014, 2015 and 2016 benefit years for the reinsurance program under the
uniform per capita contribution rate.
In the 2015 Payment Notice, we estimated that the Federal
administrative expenses of operating the reinsurance program would be
$25.4 million, based on our estimated contract and operational costs.
We used the same methodology to estimate the administrative expenses
for the 2016 benefit year. We estimate this amount to be approximately
$32 million for the 2016 benefit year. This estimate increased for the
2016 benefit year due to increased audit and data validation contract
costs. We believe that this figure reflects the Federal government's
significant economies of scale, which helps to decrease the costs
associated with operating the reinsurance program. Based on our
estimate of covered lives for which reinsurance contributions are to be
made for 2016, we are finalizing a uniform reinsurance contribution
rate of $0.17 annually per capita for HHS administrative expenses. If a
State establishes its own reinsurance program, HHS would transfer
$0.085 of the per capita administrative fee to the State for purposes
of administrative expenses incurred in making reinsurance payments, and
retain the remaining $0.085 to offset the costs of collecting
contributions. We note that the administrative expenses for reinsurance
payments will be distributed to those States that operate their own
reinsurance program in proportion to the State-by-State total requests
for reinsurance payments made
[[Page 10858]]
under the uniform reinsurance payment parameters.
6. Risk Corridors
The Affordable Care Act creates a temporary risk corridors program
for the years 2014, 2015, and 2016 that applies to QHPs, as defined in
Sec. 153.500. Section 1342 of the Affordable Care Act directs the
Secretary to establish a temporary risk corridors program that protects
issuers against inaccurate rate setting from 2014 through 2016. The
Affordable Care Act establishes the risk corridors program as a Federal
program; consequently, HHS will operate the risk corridors program
under Federal rules with no State variation.
We finalize a clarification to the risk corridors transitional
adjustment for benefit year 2014. We clarify that we intend to
implement the risk corridors transitional adjustment for transitional
plans only, as stated in the 2015 Payment Notice. This clarification
does not affect the impact of the risk corridors transitional
adjustment.
For benefit year 2016, we are finalizing the treatment of excess
risk corridors collections that may remain after the 3-year duration of
the program. We will adjust the allowable administrative cost ceiling
and profit floor so that any excess risk corridors collections that
remain in benefit year 2016 are paid out to eligible QHP issuers. We
anticipate that collections will fully offset payments over the 3-year
duration of the program. Consequently, we do not believe that this
provision will have a monetary impact on QHP issuers or the Federal
government.
7. SHOP
The SHOP facilitates the enrollment of eligible employees of small
employers into small group health insurance plans. A qualitative
analysis of the costs and benefits of establishing a SHOP was included
in the RIA published in conjunction with the Exchange Establishment
Rule.\84\
---------------------------------------------------------------------------
\84\ Available at: https://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
---------------------------------------------------------------------------
Please see the Collection of Information section of this proposed
rule for the costs expected to be incurred by State-based SHOPs and QHP
issuers participating in the SHOP related to the notification
requirements related to terminations of coverage or enrollment through
the SHOP and the notification requirement for the coverage effective
date under the new definition of an enrollee. We believe the cost
associated with termination notices is justified because SHOPs are best
positioned to provide meaningful notice regarding terminations due to
loss of eligibility and nonpayment of premiums in a timely manner,
while issuers are best positioned to provide meaningful notice when
coverage or enrollment through the SHOP is terminated due to a
rescission in accordance with Sec. 147.128 or when the QHP is
terminated, decertified, or its certification is not renewed, as well
as notices of the effective date of coverage. We believe expanding the
notice requirement under Sec. 155.720(e) benefits all individuals with
coverage, including dependents, former employees of a qualified
employer, and certain business owners, with a notification of effective
date of coverage.
8. User Fees
To support the operation of FFEs, we require in Sec. 156.50(c)
that a participating issuer offering a plan through an FFE must remit a
user fee to HHS each month equal to the product of the user fee rate
specified in the annual HHS notice of benefit and payment parameters
for the applicable benefit year and the monthly premium charged by the
issuer for each policy under the plan where enrollment is through an
FFE. For the 2016 benefit year, we are finalizing a monthly user fee
rate equal to 3.5 percent of the monthly premium. As described in the
Budget of the United States Government, Fiscal Year 2016, we expect
approximately $1.514 billion in user fee collections would be obligated
in fiscal year 2016. For the user fee charge assessed on issuers in the
FFE, we received an exception to OMB Circular No. A-25R, which requires
that the user fee charge be sufficient to recover the full cost to the
Federal government of providing the special benefit. This exception
ensures that the FFEs can support many of the goals of the Affordable
Care Act, including improving the health of the population, reducing
health care costs, and providing access to health coverage as advanced
by Sec. 156.50(d).
9. Essential Health Benefits, Cost Sharing, and Actuarial Value
Issuers may incur minor administrative costs associated with
altering benefits, cost-sharing and/or AV parameters of their plan
designs to ensure compliance with the EHB requirements in this rule.
For example, issuers that do not currently meet the standards for EHB
prescription drug coverage will incur contracting and one-time
administrative costs to bring their prescription drug benefits into
compliance. HHS expects that the process for compliance with the
revised EHB requirements will not significantly add to existing
compliance costs because issuers have extensive experience in offering
products with various benefits and levels of cost sharing and these
modifications are expected to be relatively minor for most issuers.
In addition, we are adding standards for a health plan's formulary
exception process that includes an external review. We believe that
issuers that provide EHB already have formulary exceptions processes
and procedures in place that allow an enrollee to request and gain
access to clinically appropriate drugs not covered by the plan. We do
not expect these requirements to significantly increase the volume of
reviews conducted under issuers' contracts with Independent Review
Organizations. Therefore, we do not anticipate that these requirements
would result in any significant new cost for issuers.
10. Network Adequacy
Issuers may incur minor administrative costs associated with
updating their provider directory to ensure compliance with the
requirements under this final rule. Since issuers already maintain a
directory and the expected modification is to re-locate that directory
to a more user-friendly location on the issuer Web site, HHS expects
that compliance will not demand any additional resources.
11. Downstream Entities
We revised Sec. 156.200(b)(7), to clarify that a QHP issuer is
required to comply with the standards under part 153 and not just the
standards related to the risk adjustment program. Under Sec. 156.340,
notwithstanding any relationship(s) that a QHP issuer may have with
delegated and downstream entities, a QHP issuer maintains
responsibility for its compliance and the compliance of any of its
delegated or downstream entities, as applicable, with all applicable
standards, including the standards of subpart C of part 156 for each of
its QHPs on an ongoing basis. Because we believe that QHP issuers have
existing agreements with downstream entities that define
responsibilities, we do not believe that this requirement will impose
an additional burden on QHP issuers.
12. Provisions Related to Cost Sharing
The Affordable Care Act provides for the reduction or elimination
of cost sharing for certain eligible individuals enrolled in QHPs
offered through the Exchanges. This assistance will help
[[Page 10859]]
many low- and moderate-income individuals and families obtain health
insurance--for many people, cost sharing is a barrier to obtaining
needed health care.\85\
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\85\ Brook, Robert H., John E. Ware, William H. Rogers, Emmett
B. Keeler, Allyson Ross Davies, Cathy D. Sherbourne, George A.
Goldberg, Kathleen N. Lohr, Patricia Camp and Joseph P. Newhouse.
The Effect of Coinsurance on the Health of Adults: Results from the
RAND Health Insurance Experiment. Santa Monica, CA: RAND
Corporation, 1984. Available at: https://www.rand.org/pubs/reports/R3055.
---------------------------------------------------------------------------
To support the administration of the cost-sharing reduction
program, we set forth in this final rule the reductions in the maximum
annual limitation on cost sharing for silver plan variations.
Consistent with our analysis in the 2014 and 2015 Payment Notices, we
developed three model silver level QHPs and analyzed the impact on
their AVs of the reductions described in the Affordable Care Act to the
estimated 2016 maximum annual limitation on cost sharing for self-only
coverage ($6,850). We do not believe these changes will result in a
significant economic impact.
We are also finalizing the premium adjustment percentage for the
2016 benefit year. Section 156.130(e) provides that the premium
adjustment percentage is the percentage (if any) by which the average
per capita premium for health insurance coverage for the preceding
calendar year exceeds such average per capita premium for health
insurance for 2013. The annual premium adjustment percentage sets the
rate of increase for three parameters detailed in the Affordable Care
Act: The annual limitation on cost sharing (defined at Sec.
156.130(a)), the required contribution percentage by individuals for
minimum essential health coverage the Secretary may use to determine
eligibility for hardship exemptions under Section 5000A of the Code,
and the section 4980H(a) and section 4980H(b) assessable payment
amounts (finalized at 26 CFR 54.4980H in the ``Shared Responsibility
for Employers Regarding Health Coverage,'' published in the Federal
Register on February 12, 2014 (79 FR 8544)). We believe that the 2016
premium adjustment percentage of 8.316047520 percent is well within the
parameters used in the modeling of the Affordable Care Act, and we do
not expect that these proposed provisions will alter CBO's January 2015
baseline estimates of the budget impact.
13. Minimum Essential Coverage
The final rule provides continued recognition of State high risk
pools as minimum essential coverage. This will facilitate the
transition of State high risk pool enrollees into QHPs through the
Exchange or into other forms of minimum essential coverage, while
ensuring continued access to coverage. It will also help ensure that
this vulnerable population will not be subject to the shared
responsibility payment during this transition, and thereby avoid an
increase in out-of-pocket costs.
14. Quality Improvement Strategy
The standards requiring QHP issuers participating in Exchanges to
establish and submit information regarding a quality improvement
strategy will encourage continuous quality improvement among QHP
issuers to help strengthen system-wide efforts to improve health
outcomes at lower costs, promote provider payment models that link
quality and value of services, allow for flexibility and innovation of
diverse market-based incentive approaches, encourage meaningful
improvements as well as provide regulators and stakeholders with
information to use for monitoring and evaluation purposes. We discuss
the administrative costs associated with submitting this information in
the Collection of Information section of this proposed rule.
15. Administrative Appeals
In Sec. 156.1220, we establish an administrative appeals process
to address unresolved discrepancies for advance payments of the premium
tax credit, advance payment and reconciliation of cost-sharing
reductions, FFE user fees, and the premium stabilization programs, as
well as any assessment of a default risk adjustment charge under Sec.
153.740(b). We estimated the burden associated with the administrative
appeals process in the 2015 Payment Notice, and in the Supporting
Statement approved under OMB Control Number 0938-1155. We will revise
the information collection currently approved OMB Control Number 0938-
1155 with an October 31, 2015 expiration date. We do not believe that
the provisions in this final rule will alter the economic impact of
this requirement that was estimated in the 2015 Payment Notice.
16. Medical Loss Ratio
This final rule clarifies the treatment of cost-sharing reductions
in the MLR calculations. This final rule also ensures timely
distribution of rebates for the benefit of subscribers of group health
plans not subject to ERISA. Specifically, the amendments to the MLR
provisions governing the distribution of rebates to group enrollees in
non-Federal governmental and other group health plans not subject to
ERISA ensure that group policyholders of such plans do not withhold the
benefit of rebates from the enrollees for longer than 3 months. This
final rule also provides an additional option for distribution of
rebates by such policyholders. We do not anticipate that these
provisions will have any significant effect on MLR program estimates.
This final rule also amends the MLR regulations to provide that premium
in MLR and rebate calculations should not be reduced by the amount of
Federal and State employment taxes. Based on MLR data for the 2013 MLR
reporting year, the clarification regarding the treatment of such taxes
in the MLR and rebate calculations may result in additional rebate
payments to consumers of approximately $35 million from issuers that
previously interpreted the MLR December 1, 2010 interim final rule to
permit the reduction of premium by the amount of such taxes.
D. Regulatory Alternatives Considered
When considering the final 2016 reinsurance payment parameters we
also considered a set of uniform reinsurance payment parameters that
would have substantially lowered the reinsurance cap, but believe those
uniform reinsurance payment parameters would have raised the complexity
of estimating the effects of reinsurance for issuers.
We also considered expanding the risk corridors transitional
adjustment to apply to early renewal plans. This approach would have
increased the impact of the risk corridors adjustment and altered the
impact analysis related to the risk corridors transitional adjustment
that was published in the 2015 Payment Notice. However, we decided not
to propose or finalize this alternate policy.
We considered for the 2016 benefit year requiring issuers to
separate visit limits for rehabilitative and habilitative services and
devices. However, we determined that issuers' claims systems are unable
to distinguish rehabilitative and habilitative services and devices at
this time. Therefore, we determined that this requirement should not be
effective until 2017 to allow issuers to modify their claims systems.
We considered ending the good faith compliance policy for QHP
issuers. However, we determined that subjecting QHP issuers to
increased punitive actions in the early years of the Exchange would be
less effective than working with issuers to address compliance issues.
We also considered
[[Page 10860]]
a more expansive good faith compliance policy, but believe that 2 years
is a sufficient transition period.
We considered not suppressing QHPs on the FFE, but this approach
would have resulted in less flexibility for the FFE to address
situations that could affect consumers' interests. For example, this
alternative could cause disruption by requiring consumers to select a
new QHP mid-year if their QHP was decertified rather than just
suppressed for new enrollments.
We also considered not recognizing vendors as an alternative avenue
for FFE training and information verification of agents and brokers.
However, we believe that recognizing vendors will make it easier for
agents and brokers to identify appropriate vendors who meet HHS
standards for training and registration.
Additionally, we considered not requiring QIS reporting for QHP
issuers. However, we decided to finalize the policy in this rule
because we believe that QIS reporting will result in higher quality
QHPs being offered in the Exchange and make it easier for consumers to
select a high-quality QHP.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) (RFA)
requires agencies to prepare an initial regulatory flexibility analysis
to describe the impact of the proposed rule on small entities, unless
the head of the agency can certify that the rule will not have a
significant economic impact on a substantial number of small entities.
The RFA generally defines a ``small entity'' as (1) a proprietary firm
meeting the size standards of the Small Business Administration (SBA),
(2) a not-for-profit organization that is not dominant in its field, or
(3) a small government jurisdiction with a population of less than
50,000. States and individuals are not included in the definition of
``small entity.'' HHS uses a change in revenues of more than 3 to 5
percent as its measure of significant economic impact on a substantial
number of small entities.
In this final rule, we set forth standards for the risk adjustment,
reinsurance, and risk corridors programs, which are intended to
stabilize premiums as insurance market reforms are implemented and
Exchanges facilitate increased enrollment. Because we believe that
insurance firms offering comprehensive health insurance policies
generally exceed the size thresholds for ``small entities'' established
by the SBA, we do not believe that an initial regulatory flexibility
analysis is required for such firms.
For purposes of the RFA, we expect the following types of entities
to be affected by this rule:
Health insurance issuers.
Group health plans.
Reinsurance entities.
We believe that health insurance issuers and group health plans
would be classified under the North American Industry Classification
System (NAICS) code 524114 (Direct Health and Medical Insurance
Carriers). According to SBA size standards, entities with average
annual receipts of $35.5 million or less would be considered small
entities for these NAICS codes. Issuers could possibly be classified in
621491 (HMO Medical Centers) and, if this is the case, the SBA size
standard would be $32.5 million or less.
In this final rule, we set forth standards for employers that
choose to participate in a SHOP Exchange. Until 2017, the SHOPs are
limited by statute to employers with at least one but not more than 100
employees. For this reason, we expect that many employers who would be
affected by these requirements would meet the SBA standard for small
entities. We do not believe that these provisions impose requirements
on employers offering health insurance through the SHOP that are more
restrictive than the current requirements on small businesses offering
employer-sponsored insurance. We believe the processes that we have
established constitute the minimum amount of requirements necessary to
implement the SHOP program and accomplish our policy goals, and that no
appropriate regulatory alternatives could be developed to further
lessen the compliance burden.
Based on data from MLR annual report submissions for the 2013 MLR
reporting year, approximately 141 out of 500 issuers of health
insurance coverage nationwide had total premium revenue of $38.5
million or less. This estimate may overstate the actual number of small
health insurance companies that may be affected, since 77 percent of
these small companies belong to larger holding groups, and many if not
all of these small companies are likely to have non-health lines of
business that would result in their revenues exceeding $38.5 million.
Only 16 of these small entities owed a rebate for the 2013 reporting
year, and none of these small entities are estimated to experience a
rebate increase of more than 0.1 percent of total premium revenue under
the MLR provisions of this final rule. None of the small entities that
did not previously owe rebates are expected to owe rebates as a result
of the provisions of this final rule. Based on data from MLR annual
report submissions for the 2013 MLR reporting year, approximately
286,750 out of 1.6 million small group policyholders and 13,500 out of
228,000 large group policyholders nationwide were owed rebates for the
2013 reporting year. It is uncertain how many of the group
policyholders obtaining coverage from health insurance issuers subject
to MLR are both (a) small entities that fall below the size thresholds
set by the SBA for various industries, and (b) enrolled in group health
plans not subject to ERISA, and would therefore be subject to the
proposed provisions related to MLR. However, the provisions of this
final rule only establish a deadline for the use of MLR rebates by
certain policyholders similar to the deadline that is already followed
by most group policyholders, and do not otherwise alter the
requirements for rebate use by such policyholders. In addition, the
clarification regarding how health insurance issuers must treat cost-
sharing reductions in their MLR calculations simply aligns the MLR
regulatory language with the risk corridors program.
F. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a rule that includes any Federal
mandate that may result in expenditures in any 1 year by a State,
local, or Tribal governments, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. In 2015, that threshold is approximately $141 million.
Although we have not been able to quantify all costs, the combined
administrative cost and user fee impact on State, local, or Tribal
governments and the private sector may be above the threshold. Earlier
portions of this RIA constitute our UMRA analysis.
G. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule that imposes
substantial direct costs on State and local governments, preempts State
law, or otherwise has Federalism implications. Because States have
flexibility in designing their Exchange and Exchange-related programs,
State decisions will ultimately influence both administrative expenses
and overall premiums. States are not required to establish an Exchange
or risk adjustment or reinsurance program. For States electing to
operate an Exchange, risk adjustment
[[Page 10861]]
or reinsurance program, much of the initial cost of creating these
programs will be funded by Exchange Planning and Establishment Grants.
After establishment, Exchanges will be financially self-sustaining,
with revenue sources at the discretion of the State. Current State
Exchanges may charge user fees to issuers.
In HHS's view, while this rule would not impose substantial direct
requirement costs on State and local governments, this regulation has
Federalism implications due to direct effects on the distribution of
power and responsibilities among the State and Federal governments
relating to determining standards relating to health insurance that is
offered in the individual and small group markets. Each State electing
to establish an Exchange must adopt the Federal standards contained in
the Affordable Care Act and in this rule, or have in effect a State law
or regulation that implements these Federal standards. However, HHS
anticipates that the Federalism implications (if any) are substantially
mitigated because under the statute, States have choices regarding the
structure and governance of their Exchanges and risk adjustment and
reinsurance programs. Additionally, the Affordable Care Act does not
require States to establish these programs; if a State elects not to
establish any of these programs or is not approved to do so, HHS must
establish and operate the programs in that State.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have Federalism
implications or limit the policy making discretion of the States, HHS
has engaged in efforts to consult with and work cooperatively with
affected States, including participating in conference calls with and
attending conferences of the National Association of Insurance
Commissioners, and consulting with State insurance officials on an
individual basis.
Throughout the process of developing this proposed rule, HHS has
attempted to balance the States' interests in regulating health
insurance issuers, and Congress' intent to provide access to Affordable
Insurance Exchanges for consumers in every State. By doing so, it is
HHS's view that we have complied with the requirements of Executive
Order 13132.
H. Congressional Review Act
This rule is subject to the Congressional Review Act provisions of
the Small Business Regulatory Enforcement Fairness Act of 1996 (5
U.S.C. 801, et seq.), which specifies that before a rule can take
effect, the Federal agency promulgating the rule shall submit to each
House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
and has been transmitted to Congress and the Comptroller General for
review.
List of Subjects
45 CFR Part 144
Health care, Health insurance, and Reporting and recordkeeping
requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements, and State regulation of health insurance.
45 CFR Part 153
Administrative practice and procedure, Adverse selection, Health
care, Health insurance, Health records, Organization and functions
(Government agencies), Premium stabilization, Reporting and
recordkeeping requirements, Reinsurance, Risk adjustment, Risk
corridors, Risk mitigation, State and local governments.
45 CFR Part 154
Administrative practice and procedure, Claims, Health care, Health
insurance, Health plans, Penalties, Reporting and recordkeeping
requirements.
45 CFR Part 155
Administrative practice and procedure, Health care access, Health
insurance, Reporting and recordkeeping requirements, State and local
governments, Required Contribution Percentage, Cost-sharing reductions,
Advance payments of the premium tax credit, Administration and
calculation of advance payments of the premium tax credit, Plan
variations, Actuarial value.
45 CFR Part 156
Administrative appeals, Administrative practice and procedure,
Administration and calculation of advance payments of the premium tax
credit, Advertising, Advisory Committees, American Indian/Alaska
Natives, Brokers, Conflict of interest, Consumer protection, Cost-
sharing reductions, Grant programs-health, Grants administration,
Health care, Health insurance, Health maintenance organization (HMO),
Health records, Hospitals, Individuals with disabilities, Loan
programs-health, Organization and functions (Government agencies),
Medicaid, Payment and collections reports, Public assistance programs,
Reporting and recordkeeping requirements, State and local governments,
Sunshine Act, Technical assistance, Women, and Youth.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Health plans, Medical loss ratio, Penalties, Premium
revenues, Rebating Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Department of Health
and Human Services amends 45 CFR parts 144, 147, 153, 154, 155, 156,
and 158 as set forth below.
PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
0
1. The authority citation for part 144 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the
Public Health Service Act, 42 U.S.C. 300gg through 300gg-63, 300gg-
91, and 300gg-92.
0
2. Section 144.103 is amended by revising the definitions of ``Plan''
and ``State'' to read as follows:
Sec. 144.103 Definitions.
* * * * *
Plan means, with respect to an issuer and a product, the pairing of
the health insurance coverage benefits under the product with a
particular cost-sharing structure, provider network, and service area.
The product comprises all plans offered with those characteristics and
the combination of the service areas for all plans offered within a
product constitutes the total service area of the product. With respect
to a plan that has been modified at the time of coverage renewal
consistent with Sec. 147.106 of this subchapter--
(1) The plan will be considered to be the same plan if it:
(i) Has the same cost-sharing structure as before the modification,
or any variation in cost sharing is solely related to changes in cost
or utilization of medical care, or is to maintain the same metal tier
level described in sections 1302(d) and (e) of the Affordable Care Act;
(ii) Continues to cover a majority of the same service area; and
(iii) Continues to cover a majority of the same provider network.
For this purpose, the plan's provider network on the first day of the
plan year is compared with the plan's provider
[[Page 10862]]
network on the first day of the preceding plan year (as applicable).
(2) The plan will not fail to be treated as the same plan to the
extent the modification(s) are made uniformly and solely pursuant to
applicable Federal and State requirements if--
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement;
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) A State may permit greater changes to the cost-sharing
structure, or designate a lower threshold for maintenance of the same
provider network or service area for a plan to still be considered the
same plan.
* * * * *
State means each of the 50 States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa, and the Northern
Mariana Islands; except that for purposes of part 147, the term does
not include Puerto Rico, the Virgin Islands, Guam, American Samoa, and
the Northern Mariana Islands.
* * * * *
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
3. The authority citation for part 147 continues to read as follows:
Authority: Secs 2701 through 2763, 2791 and 2792 of the Public
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92), as amended.
0
4. Section 147.104 is amended by--
0
a. Revising paragraphs (b)(1)(i)(C), (b)(2), and (b)(4).
0
b. Redesignating paragraphs (f) through (h) as paragraphs (g) through
(i), respectively.
0
c. Adding new paragraph (f).
The revisions and addition read as follows:
Sec. 147.104 Guaranteed availability of coverage.
* * * * *
(b) * * *
(1) * * *
(i) * * *
(C) With respect to coverage in the small group market, and in the
large group market if such coverage is offered through a Small Business
Health Options Program (SHOP) in a State, coverage must become
effective consistent with the dates described in Sec. 155.725 of this
subchapter, except as provided in paragraph (b)(1)(iii) of this
section.
* * * * *
(2) Limited open enrollment periods. A health insurance issuer in
the individual market must provide a limited open enrollment period for
the events described in Sec. 155.420(d) of this subchapter, excluding
Sec. 155.420(d)(3) of this subchapter (concerning citizenship status),
Sec. 155.420(d)(8) of this subchapter (concerning Indians), and Sec.
155.420(d)(9) of this subchapter (concerning exceptional
circumstances).
* * * * *
(4) Length of enrollment periods. (i) In the group market,
enrollees must be provided 30 calendar days after the date of the
qualifying event described in paragraph (b)(3) of this section to elect
coverage.
(ii) In the individual market, enrollees must be provided 60
calendar days after the date of an event described in paragraph (b)(2)
and (3) of this section to elect coverage, as well as 60 calendar days
before certain triggering events as provided for in Sec. 155.420(c)(2)
of this subchapter.
* * * * *
(f) Calendar year plans. An issuer that offers coverage in the
individual market, or in a merged market in a State that has elected to
merge the individual market and small group market risk pools in
accordance with section 1312(c)(3) of the Affordable Care Act, must
ensure that such coverage is offered on a calendar year basis with a
policy year ending on December 31 of each calendar year.
* * * * *
0
5. Section 147.106 is amended by--
0
a. Redesignating paragraphs (g) through (j) as paragraphs (h) through
(k), respectively.
0
b. Adding new paragraph (g).
The addition reads as follows:
Sec. 147.106 Guaranteed renewability of coverage.
* * * * *
(g) Notification of change of ownership. If an issuer of a QHP, a
plan otherwise subject to risk corridors, a risk adjustment covered
plan, or a reinsurance-eligible plan experiences a change of ownership,
as recognized by the State in which the plan is offered, the issuer
must notify HHS in a manner specified by HHS, by the latest of--
(1) The date the transaction is entered into; or
(2) The 30th day prior to the effective date of the transaction.
* * * * *
PART 153--STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND
RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT
0
6. The authority citation for part 153 continues to read as follows:
Authority: Secs. 1311, 1321, 1341-1343, Pub. L. 111-148, 24
Stat. 119.
0
7. Section 153.100 is amended by revising paragraph (c) to read as
follows:
Sec. 153.100 State notice of benefit and payment parameters.
* * * * *
(c) State notice deadlines. If a State is required to publish an
annual State notice of benefit and payment parameters for a particular
benefit year, it must do so by the later of March 1 of the calendar
year prior to the applicable benefit year, or by the 30th day following
the publication of the final HHS notice of benefit and payment
parameters for that benefit year.
* * * * *
0
8. Section 153.400 is amended by revising paragraph (a)(1)(iii) and
adding paragraph (c) to read as follows:
Sec. 153.400 Reinsurance contribution funds.
(a) * * *
(1) * * *
(iii) Such plan or coverage is expatriate health coverage, as
defined by the Secretary, or for the 2015 and 2016 benefit years only,
is a self-insured group health plan with respect to which enrollment is
limited to participants who reside outside of their home country for at
least 6 months of the plan year, and any covered dependents; or
* * * * *
(c) Determination of a debt. Any amount owed to the Federal
government by a self-insured group health plan (including a group
health plan that is partially self-insured and partially insured, where
the health insurance coverage does not constitute major medical
coverage) and its affiliates for reinsurance is a determination of a
debt.
0
9. Section 153.405 is amended by--
0
a. Revising paragraphs (b), (c)(1), (d) introductory text, (g)(4)(i)
introductory text, and (g)(4)(ii) introductory text.
0
b. Removing paragraph (c)(2).
0
c. Redesignating paragraph (c)(3) as paragraph (c)(2).
0
d. Revising newly designated paragraph (c)(2).
The revisions read as follows:
Sec. 153.405 Calculation of reinsurance contributions.
* * * * *
(b) Annual enrollment count. No later than November 15 of benefit
year 2014,
[[Page 10863]]
2015, or 2016, as applicable, or, if such date is not a business day,
the next business day, a contributing entity must submit an annual
enrollment count of the number of covered lives of reinsurance
contribution enrollees for the applicable benefit year to HHS. The
count must be determined as specified in paragraphs (d) through (g) of
this section, as applicable.
(c) * * *
(1) Following submission of the annual enrollment count described
in paragraph (b) of this section, HHS will notify the contributing
entity of the reinsurance contribution amount allocated to reinsurance
payments, administrative expenses, and the U.S. Treasury to be paid for
the applicable benefit year.
(2) A contributing entity must remit reinsurance contributions to
HHS no later than January 15, 2015, 2016, or 2017, as applicable, or,
if such date is not a business day, the next business day, if making a
combined contribution or the first payment of the bifurcated
contribution, and no later than November 15, 2015, 2016, or 2017, as
applicable, or, if such date is not a business day, the next business
day, if making the second payment of the bifurcated contribution.
(d) Procedures for counting covered lives for health insurance
issuers. A health insurance issuer must use the same method in a
benefit year for all of its health insurance plans in the State
(including both the individual and group markets) for which reinsurance
contributions are required. To determine the number of covered lives of
reinsurance contribution enrollees under all health insurance plans in
a State for a benefit year, a health insurance issuer must use one of
the following methods:
* * * * *
(g) * * *
(4) * * *
(i) Multiple group health plans including an insured plan. If at
least one of the multiple plans is an insured plan, the average number
of covered lives of reinsurance contribution enrollees must be
calculated using one of the methods specified in either paragraph
(d)(1) or (2) of this section, applied across the multiple plans as a
whole. The following information must be determined by the plan
sponsor:
* * * * *
(ii) Multiple group health plans not including an insured plan. If
each of the multiple plans is a self-insured group health plan, the
average number of covered lives of reinsurance contribution enrollees
must be calculated using one of the methods specified either in
paragraph (e)(1) or (2) of this section, applied across the multiple
plans as a whole. The following information must be determined by the
plan sponsor:
* * * * *
0
10. Section 153.500 is amended by revising the definition of
``Adjustment percentage'' to read as follows:
Sec. 153.500 Definitions.
* * * * *
Adjustment percentage means, with respect to a QHP:
(1) For benefit year 2014--
(i) For a QHP offered by a health insurance issuer with allowable
costs of at least 80 percent of after-tax premium in a transitional
State, the percentage specified by HHS for such QHPs in the
transitional State; and otherwise
(ii) Zero percent.
(2) For benefit year 2015, for a QHP offered by a health insurance
issuer in any State, 2 percent.
(3) For benefit year 2016--
(i) For a QHP offered by a health insurance issuer with allowable
costs of at least 80 percent of after-tax premium, the percentage
specified by HHS; and otherwise
(ii) Zero percent.
* * * * *
0
11. Section 153.740 is amended by revising paragraph (a) and adding
paragraph (c) to read as follows:
Sec. 153.740 Failure to comply with HHS-operated risk adjustment and
reinsurance data requirements.
(a) Enforcement actions. If an issuer of a risk adjustment covered
plan or reinsurance-eligible plan fails to establish a dedicated
distributed data environment in a manner and timeframe specified by
HHS; fails to provide HHS with access to the required data in such
environment in accordance with Sec. 153.700(a) or otherwise fails to
comply with the requirements of Sec. Sec. 153.700 through 153.730;
fails to adhere to the reinsurance data submission requirements set
forth in Sec. 153.420; or fails to adhere to the risk adjustment data
submission and data storage requirements set forth in Sec. Sec.
153.610 through 153.630, HHS may impose civil money penalties in
accordance with the procedures set forth in Sec. 156.805 of this
subchapter. Civil monetary penalties will not be imposed for non-
compliance with these requirements during the 2014 or 2015 calendar
years under this paragraph if the issuer has made good faith efforts to
comply with these requirements.
* * * * *
(c) Information sharing. HHS may consult with and share information
about issuers of risk adjustment covered plans and reinsurance-eligible
plans with other Federal and State regulatory and enforcement entities
to the extent the consultation or information is necessary for purposes
of Federal or State oversight and enforcement activities.
PART 154--HEALTH INSURANCE ISSUER RATE INCREASES: DISCLOSURE AND
REVIEW REQUIREMENTS
0
12. The authority citation for part 154 continues to read as follows:
Authority: Section 2794 of the Public Health Service Act (42
U.S.C. 300gg-94).
0
13. Section 154.102 is amended by--
0
a. Revising the definitions of ``Individual market'', ``Rate
increase'', ``Small group market'', and ``State''.
0
b. Adding a definition of ``Plan'' in alphabetical order.
The revisions and addition read as follows:
Sec. 154.102 Definitions.
* * * * *
Individual market has the meaning given the term in Sec. 144.103
of this subchapter.
* * * * *
Plan has the meaning given the term in Sec. 144.103 of this
subchapter.
* * * * *
Rate increase means, with respect to rates filed--
(1) For coverage effective prior to January 1, 2017, any increase
of the rates for a specific product offered in the individual or small
group market.
(2) For coverage effective on or after January 1, 2017, any
increase of the rates for a specific product or plan within a product
offered in the individual or small group market.
* * * * *
Small group market has the meaning given the term in Sec. 144.103
of this subchapter.
State means each of the 50 States and the District of Columbia.
* * * * *
0
14. Section 154.200 is amended by revising paragraphs (a) and (c) to
read as follows:
Sec. 154.200 Rate increases subject to review.
(a) A rate increase filed in a State, or effective in a State that
does not require a rate increase to be filed, is subject to review if:
(1) The rate increase is 10 percent or more applicable to a 12-
month period
[[Page 10864]]
that begins on January 1, as calculated under paragraph (c) of this
section; or
(2) The rate increase meets or exceeds a State-specific threshold
applicable to a 12-month period that begins on January 1, as calculated
under paragraph (c) of this section, determined by the Secretary. A
State-specific threshold shall be based on factors impacting rate
increases in a State to the extent that the data relating to such
State-specific factors is available by August 1. States interested in
proposing a State-specific threshold for approval are required to
submit a proposal to the Secretary by August 1.
* * * * *
(c) A rate increase meets or exceeds the applicable threshold set
forth in paragraph (a) of this section if--
(1) For rates filed for coverage beginning before January 1, 2017,
the average increase for all enrollees weighted by premium volume meets
or exceeds the applicable threshold.
(2) For rates filed for coverage beginning on or after January 1,
2017, an increase in the plan-adjusted index rate (as described in
Sec. 156.80 of this subchapter) for any plan within the product meets
or exceeds the applicable threshold.
* * * * *
0
15. Section 154.215 is amended by revising paragraph (a) to read as
follows:
Sec. 154.215 Submission of rate filing justification.
(a) If any plan within a product is subject to a rate increase, a
health insurance issuer must submit a Rate Filing Justification for all
products in the single risk pool, including new or discontinuing
products, on a form and in a manner prescribed by the Secretary.
* * * * *
0
16. Section 154.220 is revised to read as follows:
Sec. 154.220 Timing of providing the rate filing justification.
A health insurance issuer must submit a Rate Filing Justification
for all rate increases that are filed in a State, or effective in a
State that does not require the rate increase to be filed, as follows:
(a) For rate increases for coverage effective prior to January 1,
2016:
(1) If a State requires that a proposed rate increase be filed with
the State prior to the implementation of the rate, the health insurance
issuer must submit to CMS and the applicable State the Rate Filing
Justification on the date on which the health insurance issuer submits
the proposed rate increase to the State.
(2) For all other States, the health insurance issuer must submit
to CMS and the State the Rate Filing Justification prior to the
implementation of the rate increase.
(b) For rate increases for coverage effective on or after January
1, 2016, the health insurance issuer must submit to CMS and the
applicable State a Rate Filing Justification by the earlier of the
following:
(1) The date by which the State requires that a proposed rate
increase be filed with the State; or
(2) The date specified in guidance by the Secretary.
0
17. Section 154.301 is amended by revising paragraph (b) to read as
follows:
Sec. 154.301 CMS's determinations of Effective Rate Review Programs.
* * * * *
(b) Public disclosure and input. (1) In addition to satisfying the
provisions in paragraph (a) of this section, a State with an Effective
Rate Review Program must provide:
(i) For proposed rate increases subject to review, access from its
Web site to at least the information contained in Parts I, II, and III
of the Rate Filing Justification that CMS makes available on its Web
site (or provide CMS's Web address for such information), and have a
mechanism for receiving public comments on those proposed rate
increases, no later than the date specified in guidance by the
Secretary.
(ii) Beginning with rates filed for coverage effective on or after
January 1, 2016, for all final rate increases (including those not
subject to review), access from its Web site to at least the
information contained in Parts I, II, and III of the Rate Filing
Justification (as applicable) that CMS makes available on its Web site
(or provide CMS's Web address for such information), no later than the
first day of the annual open enrollment period in the individual market
for the applicable calendar year.
(2) If a State intends to make the information in paragraph
(b)(1)(i) of this section available to the public prior to the date
specified by the Secretary, or if it intends to make the information in
paragraph (b)(1)(ii) of this section available to the public prior to
the first day of the annual open enrollment period in the individual
market for the applicable calendar year, the State must notify CMS in
writing, no later than 30 days prior to the date it intends to make the
information public, of its intent to do so and the date it intends to
make the information public.
(3) A State with an Effective Rate Review Program must ensure the
information in paragraphs (b)(1)(i) and (ii) of this section is made
available to the public at a uniform time for all proposed and final
rate increases, as applicable, in the relevant market segment and
without regard to whether coverage is offered through or outside an
Exchange.
* * * * *
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
18. The authority citation for part 155 continues to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301,
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1332, 1334,
1402, 1411, 1412, 1413, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C.
18021-18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and
18081-18083).
0
19. Section 155.20 is amended by--
0
a. Revising paragraph (2) of the definition of ``Applicant.''
0
b. Revising the definitions of ``Enrollee'' and ``Qualified employee.''
The revisions read as follows:
Sec. 155.20 Definitions.
* * * * *
Applicant * * *
(2) An employer, employee, or former employee seeking eligibility
for enrollment in a QHP through the SHOP for himself or herself, and,
if the qualified employer offers dependent coverage through the SHOP,
seeking eligibility to enroll his or her dependents in a QHP through
the SHOP.
* * * * *
Enrollee means a qualified individual or qualified employee
enrolled in a QHP. Enrollee also means the dependent of a qualified
employee enrolled in a QHP through the SHOP, and any other person who
is enrolled in a QHP through the SHOP, consistent with applicable law
and the terms of the group health plan. Provided that at least one
employee enrolls in a QHP through the SHOP, enrollee also means a
business owner enrolled in a QHP through the SHOP, or the dependent of
a business owner enrolled in a QHP through the SHOP.
* * * * *
Qualified employee means any employee or former employee of a
qualified employer who has been offered health insurance coverage by
such qualified employer through the SHOP for himself or herself and, if
the qualified employer offers dependent coverage through the SHOP, for
his or her dependents.
* * * * *
0
20. Section 155.205 is amended by revising paragraphs (c)(2)(i) and
(iii) and
[[Page 10865]]
adding paragraph (c)(2)(iv) to read as follows:
Sec. 155.205 Consumer assistance tools and programs of an Exchange.
* * * * *
(c) * * *
(2) * * *
(i) For all entities subject to this standard, oral interpretation.
(A) For Exchanges and QHP issuers, this standard also includes
telephonic interpreter services in at least 150 languages.
(B) For an agent or broker subject to Sec. 155.220(c)(3)(i),
beginning November 1, 2015, or when such entity been registered with
the Exchange for at least 1 year, whichever is later, this standard
also includes telephonic interpreter services in at least 150
languages.
* * * * *
(iii) For all entities subject to this standard, taglines in non-
English languages indicating the availability of language services.
(A) For Exchanges and QHP issuers, beginning no later than the
first day of the individual market open enrollment period for the 2017
benefit year, this standard also includes taglines on Web site content
and any document that is critical for obtaining health insurance
coverage or access to health care services through a QHP for qualified
individuals, applicants, qualified employers, qualified employees, or
enrollees. A document is deemed to be critical for obtaining health
insurance coverage or access to health care services through a QHP if
it is required to be provided by law or regulation to a qualified
individual, applicant, qualified employer, qualified employee, or
enrollee. Such taglines must indicate the availability of language
services in at least the top 15 languages spoken by the limited English
proficient population of the relevant State, as determined in guidance
published by the Secretary.
(B) For an agent or broker subject to Sec. 155.220(c)(3)(i),
beginning on the first day of the individual market open enrollment
period for the 2017 benefit year, or when such entity has been
registered with the Exchange for at least 1 year, whichever is later,
this standard also includes taglines on Web site content and any
document that is critical for obtaining health insurance coverage or
access to health care services through a QHP for qualified individuals,
applicants, qualified employers, qualified employees, or enrollees. A
document is deemed to be critical for obtaining health insurance
coverage or access to health care services through a QHP if it is
required to be provided by law or regulation to a qualified individual,
applicant, qualified employer, qualified employee, or enrollee. Such
taglines must indicate the availability of language services in at
least the top 15 languages spoken by the limited English proficient
population of the relevant State, as determined in guidance published
by the Secretary.
(iv) For Exchanges, QHP issuers, and an agent or broker subject to
Sec. 155.220(c)(3)(i), Web site translations.
(A) For an Exchange, beginning no later than the first day of the
individual market open enrollment period for the 2017 benefit year,
content that is intended for qualified individuals, applicants,
qualified employers, qualified employees, or enrollees on a Web site
that is maintained by the Exchange must be translated into any non-
English language that is spoken by a limited English proficient
population that reaches 10 percent or more of the population of the
relevant State, as determined in guidance published by the Secretary.
(B) For a QHP issuer, beginning no later than the first day of the
individual market open enrollment period for the 2017 benefit year, if
the content of a Web site maintained by the QHP issuer is critical for
obtaining health insurance coverage or access to health care services
through a QHP, within the meaning of Sec. 156.250 of this subchapter,
it must be translated into any non-English language that is spoken by a
limited English proficient population that reaches 10 percent or more
of the population of the relevant State, as determined in guidance
published by the Secretary.
(C) For an agent or broker subject to Sec. 155.220(c)(3)(i),
beginning on the first day of the individual market open enrollment
period for the 2017 benefit year, or when such entity has been
registered with the Exchange for at least 1 year, whichever is later,
content that is intended for qualified individuals, applicants,
qualified employers, qualified employees, or enrollees on a Web site
that is maintained by the agent or broker must be translated into any
non-English language that is spoken by a limited English proficient
population that reaches 10 percent or more of the population of the
relevant State, as determined in guidance published by the Secretary.
* * * * *
0
21. Section 155.215 is amended by revising paragraph (h) to read as
follows:
Sec. 155.215 Standards applicable to Navigators and Non-Navigator
Assistance Personnel carrying out consumer assistance functions under
Sec. Sec. 155.205(d) and (e) and 155.210 in a Federally-facilitated
Exchange and to Non-Navigator Assistance Personnel funded through an
Exchange Establishment Grant.
* * * * *
(h) Physical presence. All non-Navigator entities carrying out
consumer assistance functions under Sec. 155.205(d) and (e) in an
Exchange operated by HHS during the exercise of its authority under
Sec. 155.105(f) and all non-Navigator entities funded through an
Exchange Establishment Grant under section 1311(a) of the Affordable
Care Act must maintain a physical presence in the Exchange service
area, so that face-to-face assistance can be provided to applicants and
enrollees. In a Federally-facilitated Exchange, no individual or entity
shall be ineligible to operate as a non-Navigator entity or as non-
Navigator assistance personnel solely because its principal place of
business is outside of the Exchange service area.
* * * * *
0
22. Section 155.220 is amended by revising paragraph (i) to read as
follows:
Sec. 155.220 Ability of States to permit agents and brokers to assist
qualified individuals, qualified employers, or qualified employees
enrolling in QHPs.
* * * * *
(i) Use of agents' and brokers' Internet Web sites for SHOP. For
plan years beginning on or after January 1, 2015, in States that permit
this activity under State law, a SHOP may permit agents and brokers to
use an Internet Web site to assist qualified employers and facilitate
enrollment of enrollees in a QHP through the Exchange, under paragraph
(c)(3) of this section.
0
23. Section 155.222 is added to read as follows:
Sec. 155.222 Standards for HHS-approved vendors of Federally-
facilitated Exchange training and information verification for agents
and brokers.
(a) Application for approval. (1) A vendor must be approved by HHS,
in a form and manner to be determined by HHS, in order to have its
training and information verification program recognized for agents and
brokers assisting with or facilitating enrollment in individual market
or SHOP coverage through the Exchanges consistent with Sec. 155.220.
(2) As part of the training program, the vendor must require agents
and brokers to provide identifying information and proof of valid State
licensure, and successfully complete the
[[Page 10866]]
required curriculum and identity proofing.
(3) HHS will approve vendors on an annual basis for a given plan
year, and each vendor must submit an application for each year that
approval is sought.
(b) Standards. To be approved by HHS and maintain its status as an
approved vendor for plan year 2016 and future plan years, a vendor must
meet each of the following standards:
(1) Submit a complete and accurate application by the deadline
established by HHS, which includes demonstration of the following:
(i) Prior experience with successfully conducting online training,
verification of valid State license, as well as providing technical
support to a large customer base; and
(ii) The ability to conduct identity proofing.
(2) Adhere to HHS specifications for content, format, and delivery
of training and information verification, which include offering
continuing education units (CEUs) for at least five States in which a
Federally-facilitated Exchange is operating.
(3) Collect, store, and share with HHS all data from agent and
broker users of the vendor's training and information verification in a
manner, format, and frequency specified by HHS, and protect the data in
accordance with applicable privacy and security laws and regulations.
(4) Execute an agreement with HHS, in a form and manner to be
determined by HHS, which requires the vendor to comply with HHS
guidelines for interfacing with HHS data systems, the implementation of
the training and information verification processes, and the use of all
data collected.
(5) Permit any individual who holds a valid State license or
equivalent State authority to sell health insurance products to access
the vendor's training and information verification.
(c) Approved list. A list of approved vendors will be published on
an HHS Web site.
(d) Monitoring. HHS may periodically monitor and audit vendors
approved under this subpart, and their records related to the training
and information verification functions described in this section, to
ensure ongoing compliance with the standards in paragraph (b) of this
section. If HHS determines that an HHS-approved vendor is not in
compliance with the standards required in paragraph (b) of this
section, the vendor may be removed from the approved list described in
paragraph (c) of this section and may be required by HHS to cease
performing the training and information verification functions
described under this subpart.
(e) Appeals. A vendor that is not approved by HHS after submitting
the application described in paragraph (a) of this section, or an
approved vendor whose agreement is revoked under paragraph (d) of this
section, may appeal HHS's decision by notifying HHS in writing within
15 days from receipt of the notification of not being approved and
submitting additional documentation demonstrating how the vendor meets
the standards in paragraph (b) of this section and (if applicable) the
terms of its agreement with HHS. HHS will review the submitted
documentation and make a final approval determination within 30 days
from receipt of the additional documentation.
0
24. Section 155.400 is amended by revising paragraph (e) to read as
follows:
Sec. 155.400 Enrollment of qualified individuals into QHPs.
* * * * *
(e) Premium payment. Exchanges may, and the Federally-facilitated
Exchange will, require payment of the first month's premium to
effectuate an enrollment. Exchanges may, and the Federally-facilitated
Exchange will, establish a standard policy for setting premium payment
deadlines:
(1) In a Federally-facilitated Exchange, for first month (or binder
payment) premiums:
(i) For coverage being effectuated under regular coverage effective
dates, as provided for in Sec. Sec. 155.410(f) and 155.420(b)(1),
premium payment deadlines must be no earlier than the coverage
effective date, but no later than 30 calendar days from the coverage
effective date; and
(ii) For coverage being effectuated under special effective dates,
as provided in Sec. 155.420(b)(2), premium payment deadlines must be
30 calendar days from the date the issuer receives the enrollment
transaction.
(2) [Reserved]
* * * * *
0
25. Section 155.410 is amended by revising paragraphs (e) and (f) to
read as follows:
Sec. 155.410 Initial and annual open enrollment periods.
* * * * *
(e) Annual open enrollment period. (1) For the benefit year
beginning on January 1, 2015, the annual open enrollment period begins
on November 15, 2014, and extends through February 15, 2015.
(2) For the benefit year beginning on January 1, 2016, the annual
open enrollment period begins on November 1, 2015 and extends through
January 31, 2016.
(f) Effective date. (1) For the benefit year beginning on January
1, 2015, the Exchange must ensure coverage is effective--
(i) January 1, 2015, for QHP selections received by the Exchange on
or before December 15, 2014.
(ii) February 1, 2015, for QHP selections received by the Exchange
from December 16, 2014 through January 15, 2015.
(iii) March 1, 2015, for QHP selections received by the Exchange
from January 16, 2015 through February 15, 2015.
(2) For the benefit year beginning on January 1, 2016, the Exchange
must ensure that coverage is effective--
(i) January 1, 2016, for QHP selections received by the Exchange on
or before December 15, 2015.
(ii) February 1, 2016, for QHP selections received by the Exchange
from December 16, 2015 through January 15, 2016.
(iii) March 1, 2016, for QHP selections received by the Exchange
from January 16, 2016 through January 31, 2016.
* * * * *
0
26. Section 155.420 is amended by--
0
a. Revising paragraphs (b)(2)(i), (b)(2)(iv), (c)(2), (c)(3),
(d)(1)(ii), (d)(2), and (d)(4).
0
b. Adding paragraphs (b)(2)(v), (b)(2)(vi), and (d)(6)(iv).
0
c. Removing paragraph (d)(10).
The revisions and additions read as follows:
Sec. 155.420 Special enrollment periods.
* * * * *
(b) * * *
(2) * * *
(i) In the case of birth, adoption, placement for adoption, or
placement in foster care as described in paragraph (d)(2)(i) of this
section, the Exchange must ensure that coverage is effective for a
qualified individual or enrollee on the date of birth, adoption,
placement for adoption, or placement in foster care, or it may permit
the qualified individual or enrollee to elect a coverage effective date
of the first of the month following the date of birth, adoption,
placement for adoption, or placement in foster care, or in accordance
with paragraph (b)(1) of this section. If the Exchange permits the
qualified individual or enrollee to elect a coverage effective date of
either the first of the month following the date of birth, adoption,
placement for adoption or placement in foster care or in accordance
with paragraph (b)(1) of this section, the Exchange must ensure
[[Page 10867]]
coverage is effective on the date duly selected by the qualified
individual or enrollee.
* * * * *
(iv) If a consumer loses coverage as described in paragraph (d)(1)
or (d)(6)(iii), or gains access to a new QHP as described in paragraph
(d)(7) of this section, if the plan selection is made on or before the
day of the triggering event, the Exchange must ensure that the coverage
effective date is on the first day of the month following the loss of
coverage. If the plan selection is made after the day of the triggering
event, the Exchange must ensure that coverage is effective in
accordance with paragraph (b)(1) of this section or on the first day of
the following month, at the option of the Exchange.
(v) In the case of a court order as described in paragraph
(d)(2)(i) of this section, the Exchange must ensure that coverage is
effective for a qualified individual or enrollee on the date the court
order is effective, or it may permit the qualified individual or
enrollee to elect a coverage effective date in accordance with
paragraph (b)(1) of this section. If the Exchange permits the qualified
individual or enrollee to elect a coverage effective date in accordance
with paragraph (b)(1) of this section, the Exchange must ensure
coverage is effective on the date duly selected by the qualified
individual or enrollee.
(vi) If an enrollee or his or her dependent dies as described in
paragraph (d)(2)(ii) of this section, the Exchange must ensure that
coverage is effective on the first day of the month following the plan
selection, or it may permit the enrollee or his or her dependent to
elect a coverage effective date in accordance with paragraph (b)(1) of
this section. If the Exchange permits the enrollee or his or her
dependent to elect a coverage effective date in accordance with
paragraph (b)(1) of this section, the Exchange must ensure coverage is
effective on the date duly selected by the enrollee or his or her
dependent.
* * * * *
(c) * * *
(2) Advanced availability. A qualified individual or his or her
dependent who is described in paragraph (d)(1) or (d)(6)(iii) or,
beginning on January 1, 2017 or earlier at the option of the Exchange,
paragraph (d)(7) of this section, has 60 days before and after the
triggering event to select a QHP. Prior to January 1, 2017, a qualified
individual or his or her dependent who is described in paragraph (d)(7)
of this section may select a QHP in accordance with paragraph (c)(1) of
this section.
(3) Special rule. In the case of a qualified individual or enrollee
who is eligible for a special enrollment period as described in
paragraphs (d)(4), (5), or (9) of this section, the Exchange may define
the length of the special enrollment period as appropriate based on the
circumstances of the special enrollment period, but in no event may the
length of the special enrollment period exceed 60 days.
(d) * * *
(1) * * *
(ii) Is enrolled in any non-calendar year group health plan or
individual health insurance coverage, even if the qualified individual
or his or her dependent has the option to renew such coverage. The date
of the loss of coverage is the last day of the plan or policy year;
* * * * *
(2)(i) The qualified individual gains a dependent or becomes a
dependent through marriage, birth, adoption, placement for adoption, or
placement in foster care, or through a child support order or other
court order.
(ii) At the option of the Exchange, the enrollee loses a dependent
or is no longer considered a dependent through divorce or legal
separation as defined by State law in the State in which the divorce or
legal separation occurs, or if the enrollee, or his or her dependent,
dies.
* * * * *
(4) The qualified individual's or his or her dependent's,
enrollment or non-enrollment in a QHP is unintentional, inadvertent, or
erroneous and is the result of the error, misrepresentation,
misconduct, or inaction of an officer, employee, or agent of the
Exchange or HHS, its instrumentalities, or a non-Exchange entity
providing enrollment assistance or conducting enrollment activities.
For purposes of this provision, misconduct includes the failure to
comply with applicable standards under this part, part 156 of this
subchapter, or other applicable Federal or State laws as determined by
the Exchange.
* * * * *
(6) * * *
(iv) A qualified individual in a non-Medicaid expansion State who
was previously ineligible for advance payments of the premium tax
credit solely because of a household income below 100 percent of the
FPL, who was ineligible for Medicaid during that same timeframe, and
who has experienced a change in household income that makes the
qualified individual newly eligible for advance payments of the premium
tax credit.
* * * * *
0
27. Section 155.430 is amended by--
0
a. Revising the section heading.
0
b. Revising paragraphs (a), (b)(1), (b)(2) introductory text, (c), (d)
paragraph heading, (d)(2) introductory text, (d)(2)(iv), (d)(3) through
(7), and (e)(1) and (2).
0
c. Adding paragraphs (b)(2)(vi), (d)(2)(v), and (d)(8).
The revisions and additions read as follows:
Sec. 155.430 Termination of Exchange enrollment or coverage.
(a) General requirements. The Exchange must determine the form and
manner in which enrollment in a QHP through the Exchange may be
terminated.
(b) * * *
(1) Enrollee-initiated terminations. (i) The Exchange must permit
an enrollee to terminate his or her coverage or enrollment in a QHP
through the Exchange, including as a result of the enrollee obtaining
other minimum essential coverage. To the extent the enrollee has the
right to terminate the coverage under applicable State laws, including
``free look'' cancellation laws, the enrollee may do so, in accordance
with such laws.
(ii) The Exchange must provide an opportunity at the time of plan
selection for an enrollee to choose to remain enrolled in a QHP if he
or she becomes eligible for other minimum essential coverage and the
enrollee does not request termination in accordance with paragraph
(b)(1)(i) of this section. If an enrollee does not choose to remain
enrolled in a QHP in such a situation, the Exchange must initiate
termination of his or her enrollment in the QHP upon completion of the
redetermination process specified in Sec. 155.330.
(iii) The Exchange must establish a process to permit individuals,
including enrollees' authorized representatives, to report the death of
an enrollee for purposes of initiating termination of the enrollee's
Exchange enrollment. The Exchange may require the reporting party to
submit documentation of the death. Any applicable premium refund, or
premium due, must be processed by the deceased enrollee's QHP in
accordance with State law.
(2) Exchange-initiated terminations. The Exchange may initiate
termination of an enrollee's enrollment in a QHP through the Exchange,
and must permit a QHP issuer to terminate such coverage or enrollment,
in the following circumstances:
* * * * *
[[Page 10868]]
(vi) Any other reason for termination of coverage described in
Sec. 147.106 of this subchapter.
(c) Termination of coverage or enrollment tracking and approval.
The Exchange must--
(1) Establish mandatory procedures for QHP issuers to maintain
records of termination of enrollment in a QHP through the Exchange;
(2) Send termination information to the QHP issuer and HHS,
promptly and without undue delay in accordance with Sec. 155.400(b).
(3) Require QHP issuers to make reasonable accommodations for all
individuals with disabilities (as defined by the Americans with
Disabilities Act) before terminating enrollment of such individuals
through the Exchange; and
(4) Retain records in order to facilitate audit functions.
(d) Effective dates for termination of coverage or enrollment.
* * * * *
(2) In the case of a termination in accordance with paragraph
(b)(1) of this section, the last day of enrollment through the Exchange
is--
* * * * *
(iv) If the enrollee is newly eligible for Medicaid, CHIP, or the
BHP, if a BHP is operating in the service area of the Exchange, the
last day of enrollment in a QHP through the Exchange is the day before
the individual is determined eligible for Medicaid, CHIP, or the BHP.
(v) The retroactive termination date requested by the enrollee, if
specified by applicable State laws.
(3) In the case of a termination in accordance with paragraph
(b)(2)(i) of this section, the last day of enrollment in a QHP through
the Exchange is the last day of eligibility, as described in Sec.
155.330(f), unless the individual requests an earlier termination
effective date per paragraph (b)(1) of this section.
(4) In the case of a termination in accordance with paragraph
(b)(2)(ii)(A) of this section, the last day of enrollment in a QHP
through the Exchange will be the last day of the first month of the 3-
month grace period.
(5) In the case of a termination in accordance with paragraph
(b)(2)(ii)(B) of this section, the last day of enrollment in a QHP
through the Exchange should be consistent with existing State laws
regarding grace periods.
(6) In the case of a termination in accordance with paragraph
(b)(2)(v) of this section, the last day of coverage in an enrollee's
prior QHP is the day before the effective date of coverage in his or
her new QHP, including any retroactive enrollments effectuated under
Sec. 155.420(b)(2)(iii).
(7) In the case of a termination due to death, the last day of
enrollment in a QHP through the Exchange is the date of death.
(8) In cases of retroactive termination dates, the Exchange will
ensure that appropriate actions are taken to make necessary adjustments
to advance payments of the premium tax credit, cost-sharing reductions,
premiums, claims, and user fees.
(e) * * *
(1) Termination. A termination is an action taken after a coverage
effective date that ends an enrollee's enrollment through the Exchange
for a date after the original coverage effective date, resulting in a
period during which the individual was enrolled in coverage through the
Exchange.
(2) Cancellation. A cancellation is specific type of termination
action that ends a qualified individual's enrollment through the
Exchange on the date such enrollment became effective resulting in
enrollment through the Exchange never having been effective.
* * * * *
0
28. Section 155.605 is amended by revising paragraphs (g)(3) and
(g)(6)(i) and adding paragraph (g)(6)(iii) to read as follows:
Sec. 155.605 Eligibility standards for exemptions.
* * * * *
(g) * * *
(3) Filing threshold. The IRS may allow an applicant to claim an
exemption without obtaining an exemption certificate number from an
Exchange for a taxable year if, for such year, the applicant could not
be claimed as a dependent by another taxpayer and the applicant's gross
income was less than the applicant's applicable return filing threshold
described in section 5000A(e)(2) of the Code;
* * * * *
(6) * * *
(i) The Exchange must determine an applicant eligible for an
exemption for any month if he or she is an Indian eligible for services
through an Indian health care provider, as defined in 42 CFR 447.51 and
not otherwise eligible for an exemption under paragraph (f) of this
section, or an individual eligible for services through the Indian
Health Service in accordance with 25 U.S.C. 1680c(a), (b), or (d)(3).
* * * * *
(iii) The IRS may allow an applicant to claim the exemption
specified in paragraph (g)(6) of this section without obtaining an
exemption certificate number from an Exchange.
0
29. Section 155.700(b) is amended by removing the definition of ``Group
participation rule'' and by adding the definition of ``Group
participation rate'' in alphabetical order to read as follows:
Sec. 155.700 Standards for the establishment of a SHOP.
* * * * *
(b) * * *
Group participation rate means the minimum percentage of all
eligible individuals or employees of an employer that must be enrolled.
* * * * *
0
30. Section 155.705 is amended by--
0
a. Revising paragraph (b)(4)(i)(B).
0
b. Redesignating paragraphs (b)(4)(ii)(A) and (B) as paragraphs
(b)(4)(ii)(B) and (C), respectively.
0
c. Adding new paragraph (b)(4)(ii)(A).
0
d. Revising paragraphs (b)(7) and (10).
The additions and revisions read as follows:
Sec. 155.705 Functions of a SHOP.
* * * * *
(b) * * *
(4) * * *
(i) * * *
(B) Collect from each employer the total amount due and make
payments to QHP issuers in the SHOP for all enrollees except as
provided for in paragraph (b)(4)(ii)(A) of this section; and
* * * * *
(ii) * * *
(A) The SHOP may, upon an election by a qualified employer, enter
into an agreement with a qualified employer to facilitate the
administration of continuation coverage by collecting premiums for
continuation coverage enrolled in through the SHOP directly from a
person enrolled in continuation coverage through the SHOP consistent
with applicable law and the terms of the group health plan, and
remitting premium payments for this coverage to QHP issuers. A
Federally-facilitated SHOP may elect to limit this service to the
collection of premiums related to continuation coverage required under
29 U.S.C. 1161, et seq.
* * * * *
(7) QHP availability in merged markets. If a State merges the
individual market and the small group market risk pools in accordance
with section 1312(c)(3) of the Affordable Care Act, the SHOP may permit
a qualified employee to enroll in any QHP meeting level of coverage
requirements described in section 1302(d) of the Affordable Care Act.
* * * * *
(10) Participation rules. Subject to Sec. 147.104 of this
subchapter, the SHOP
[[Page 10869]]
may authorize a uniform group participation rate for the offering of
health insurance coverage in the SHOP, which must be a single, uniform
rate that applies to all groups and issuers in the SHOP. If the SHOP
authorizes a minimum participation rate, such rate must be based on the
rate of employee participation in the SHOP, not on the rate of employee
participation in any particular QHP or QHPs of any particular issuer.
(i) For plan years beginning before January 1, 2016, subject to
Sec. 147.104 of this subchapter, a Federally-facilitated SHOP must use
a minimum participation rate of 70 percent, calculated as the number of
qualified employees accepting coverage under the employer's group
health plan, divided by the number of qualified employees offered
coverage, excluding from the calculation any employee who, at the time
the employer submits the SHOP application, is enrolled in coverage
through another employer's group health plan or through a governmental
plan such as Medicare, Medicaid, or TRICARE. For purposes of this
calculation, qualified employees who are former employees will not be
counted.
(ii) For plan years beginning on or after January 1, 2016, subject
to Sec. 147.104 of this subchapter, a Federally-facilitated SHOP must
use a minimum participation rate of 70 percent, calculated as the
number of full-time employees accepting coverage offered by a qualified
employer plus the number of full-time employees who, at the time the
employer submits the SHOP group enrollment, are enrolled in coverage
through another group health plan, governmental coverage (such as
Medicare, Medicaid, or TRICARE), coverage sold through the individual
market, or in other minimum essential coverage, divided by the number
of full-time employees offered coverage.
(iii) Notwithstanding paragraphs (b)(10)(i) and (ii) of this
section, a Federally-facilitated SHOP may utilize a different minimum
participation rate in a State if there is evidence that a State law
sets a minimum participation rate or that a higher or lower minimum
participation rate is customarily used by the majority of QHP issuers
in that State for products in the State's small group market outside
the SHOP.
* * * * *
0
31. Section 155.710 is amended by revising paragraph (e) to read as
follows:
Sec. 155.710 Eligibility standards for SHOP.
* * * * *
(e) Employee eligibility requirements. An employee is a qualified
employee eligible to enroll in coverage through a SHOP if such employee
receives an offer of coverage from a qualified employer. A qualified
employee is eligible to enroll his or her dependents in coverage
through a SHOP if the offer from the qualified employer includes an
offer of dependent coverage.
0
32. Section 155.720 is amended by:
0
a. Removing ``;'' from paragraph (b)(5) and adding ``; and'' in its
place.
0
b. Removing ``; and'' from paragraph (b)(6) and adding a period in its
place.
0
c. Removing paragraph (b)(7).
0
d. Revising paragraph (e).
The revisions read as follows:
Sec. 155.720 Enrollment of employees into QHPs under SHOP.
* * * * *
(e) Notification of effective date. (1) For plan years beginning
before January 1, 2017, the SHOP must ensure that a QHP issuer notifies
a qualified employee enrolled in a QHP through the SHOP of the
effective date of his or her coverage.
(2) For plan years beginning on or after January 1, 2017, the SHOP
must ensure that a QHP issuer notifies an enrollee enrolled in a QHP
through the SHOP of the effective date of his or her coverage.
(3) When a primary subscriber and his or her dependents live at the
same address, a separate notice of the effective date of coverage need
not be sent to each dependent at that address, provided that the notice
sent to each primary subscriber at that address contains all required
information about the coverage effective date for the primary
subscriber and his or her dependents at that address.
* * * * *
0
33. Section 155.725 is amended by revising paragraphs (a), (b), (g),
(h), (i), and (j)(5) and adding paragraph (k) to read as follows:
Sec. 155.725 Enrollment periods under SHOP.
(a) General requirements. The SHOP must ensure that enrollment
transactions are sent to QHP issuers and that such issuers adhere to
coverage effective dates in accordance with this section.
(b) Rolling enrollment in the SHOP. The SHOP must permit a
qualified employer to purchase coverage for its small group at any
point during the year. The employer's plan year must consist of the 12-
month period beginning with the qualified employer's effective date of
coverage, unless the plan is issued in a State that has elected to
merge its individual and small group risk pools under section
1312(c)(3) of the Affordable Care Act, in which case the plan year will
end on December 31 of the calendar year in which coverage first became
effective.
* * * * *
(g) Newly qualified employees. (1) The SHOP must provide an
employee who becomes a qualified employee outside of the initial or
annual open enrollment period an enrollment period beginning on the
first day of becoming a qualified employee. A newly qualified employee
must have at least 30 days from the beginning of his or her enrollment
period to select a QHP. The enrollment period must end no sooner than
15 days prior to the date that any applicable employee waiting period
longer than 45 days would end if the employee made a plan selection on
the first day of becoming eligible.
(2) The effective date of coverage for a QHP selection received by
the SHOP from a newly qualified employee must always be the first day
of a month, and must generally be determined in accordance with Sec.
155.725(h), unless the employee is subject to a waiting period
consistent with Sec. 147.116 of this subchapter, in which case the
effective date may be on the first day of a later month, but in no case
may the effective date fail to comply with Sec. 147.116 of this
subchapter.
(h) Initial and annual open enrollment effective dates. (1) The
SHOP must establish effective dates of coverage for qualified employees
enrolling in coverage for the first time, and for qualified employees
enrolling during the annual open enrollment period described in
paragraph (e) of this section.
(2) For a QHP selection received by the Federally-facilitated SHOP
from a qualified employee in his or her initial or annual open
enrollment period:
(i) Between the first and fifteenth day of any month, the
Federally-facilitated SHOP must ensure a coverage effective date of the
first day of the following month.
(ii) Between the 16th and last day of any month, the Federally-
facilitated SHOP must ensure a coverage effective date of the first day
of the second following month.
(i) Renewal of coverage. (1) If a qualified employee enrolled in a
QHP through the SHOP remains eligible for coverage, such employee will
remain in the QHP selected the previous year unless--
(i) The qualified employee terminates coverage from such QHP in
accordance with standards identified in Sec. 155.430;
(ii) The qualified employee enrolls in another QHP if such option
exists; or
(iii) The QHP is no longer available to the qualified employee.
[[Page 10870]]
(2) The SHOP may treat a qualified employer offering coverage
through the SHOP as offering the same coverage under Sec.
155.705(b)(3) at the same level of contribution under Sec.
155.705(b)(11) unless:
(i) The qualified employer is no longer eligible to offer such
coverage through the SHOP;
(ii) The qualified employer elects to offer different coverage or a
different contribution through the SHOP;
(iii) The qualified employer withdraws from the SHOP; or
(iv) In the case of a qualified employer offering a single QHP, the
single QHP is no longer available through the SHOP.
(j) * * *
(5) The effective dates of coverage for special enrollment periods
are determined using the provisions of Sec. 155.420(b).
* * * * *
(k) Limitation. Qualified employees will not be able to enroll
unless the employer group meets any applicable minimum participation
rate implemented under Sec. 155.705(b)(10).
0
34. Section 155.735 is amended by--
0
a. Revising the section heading.
0
b. Revising paragraphs (a), (b), (c)(2)(ii), (c)(2)(iii), (d)(1)
introductory text, and (d)(1)(iii), and the headings of paragraphs (d)
and (e).
0
c. Adding paragraphs (c)(2)(iv), (c)(3), and (g).
The revisions and additions read as follows:
Sec. 155.735 Termination of SHOP enrollment or coverage.
(a) General requirements. The SHOP must determine the timing, form,
and manner in which coverage or enrollment in a QHP through the SHOP
may be terminated.
(b) Termination of employer group health coverage or enrollment at
the request of the employer. (1) The SHOP must establish policies for
advance notice of termination required from the employer and effective
dates of termination.
(2) In the Federally-facilitated SHOP, an employer may terminate
coverage or enrollment for all enrollees covered by the employer group
health plan effective on the last day of any month, provided that the
employer has given notice to the Federally-facilitated SHOP on or
before the 15th day of any month. If notice is given after the 15th of
the month, the Federally-facilitated SHOP may terminate the coverage or
enrollment on the last day of the following month.
(c) * * *
(2) * * *
(ii) If premium payment is not received 31 days from the first of
the coverage month, the Federally-facilitated SHOP may terminate the
qualified employer for lack of payment. The termination would take
effect on the last day of the month for which the Federally-facilitated
SHOP received full payment.
(iii) If a qualified employer is terminated due to lack of premium
payment, but within 30 days following its termination the qualified
employer requests reinstatement, pays all premiums owed including any
prior premiums owed for coverage during the grace period, and pays the
premium for the next month's coverage, the Federally-facilitated SHOP
must reinstate the qualified employer in its previous coverage. A
qualified employer may be reinstated in the Federally-facilitated SHOP
only once per calendar year.
(iv) Enrollees enrolled in continuation coverage required under 29
U.S.C. 1161, et seq. through the Federally-facilitated SHOP may not be
terminated if timely payment is made to the Federally-facilitated SHOP
in an amount that is not less than $50 less than the amount the plan
requires to be paid for a period of coverage unless the Federally-
facilitated SHOP notifies the enrollee of the amount of the deficiency
and the enrollee does not pay the deficiency within 30 days of such
notice, pursuant to the notice requirements in Sec. 155.230.
(3) Payment for COBRA Continuation Coverage. Nothing in this
section modifies existing obligations related to the administration of
coverage required under 29 U.S.C. 1161, et seq., as described in 26 CFR
part 54.
(d) Termination of employee or dependent coverage or enrollment.
(1) The SHOP must establish consistent policies regarding the process
for and effective dates of termination of employee or dependent
coverage or enrollment in the following circumstances:
* * * * *
(iii) The QHP in which the enrollee is enrolled terminates, is
decertified as described in Sec. 155.1080, or its certification as a
QHP is not renewed;
* * * * *
(e) Termination of enrollment or coverage tracking and approval. *
* *
* * * * *
(g) Notice of termination. Beginning January 1, 2016:
(1) Except as provided in paragraph (g)(3) of this section, if any
enrollee's coverage or enrollment through the SHOP is terminated due to
non-payment of premiums or due to a loss of the enrollee's eligibility
to participate in the SHOP, including where an enrollee loses his or
her eligibility because a qualified employer has lost its eligibility,
the SHOP must notify the enrollee of the termination. Such notice must
include the termination effective date and reason for termination, and
must be sent within 3 business days if an electronic notice is sent,
and within 5 business days if a mailed hard copy notice is sent.
(2) Except as provided in paragraph (g)(3) of this section, if an
employer group's coverage or enrollment through the SHOP is terminated
due to non-payment of premiums or, where applicable, due to a loss of
the qualified employer's eligibility to offer coverage through the
SHOP, the SHOP must notify the employer of the termination. Such notice
must include the termination effective date and reason for termination,
and must be sent within 3 business days if an electronic notice is
sent, and within 5 business days if a mailed hard copy notice is sent.
(3) Where State law requires a QHP issuer to send the notices
described in paragraphs (g)(1) and (2) of this section, a SHOP is not
required to send such notices.
(4) When a primary subscriber and his or her dependents live at the
same address, a separate termination notice need not be sent to each
dependent at that address, provided that the notice sent to each
primary subscriber at that address contains all required information
about the termination for the primary subscriber and his or her
dependents at that address.
0
35. Section 155.1000 is amended by adding paragraph (d) to read as
follows:
Sec. 155.1000 Certification standards for QHPs.
* * * * *
(d) Special rule for SHOP. Except when a QHP is decertified by the
Exchange pursuant to Sec. 155.1080, in a SHOP that certifies QHPs on a
calendar-year basis, the certification shall remain in effect for the
duration of any plan year beginning in the calendar year for which the
QHP was certified, even if the plan year ends after the calendar year
for which the QHP was certified.
0
36. Section 155.1075 is amended by revising paragraph (b) to read as
follows:
Sec. 155.1075 Recertification of QHPs.
* * * * *
(b) Timing. The Exchange must complete the QHP recertification
process no later than 2 weeks prior to the beginning of the open
enrollment date at Sec. 155.410(e)(2) of the applicable calendar year.
[[Page 10871]]
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
37. The authority citation for part 156 continues to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1313, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, Pub.
L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-18032,
18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C.
36B, and 31 U.S.C. 9701).
0
38. Section 156.20 is amended by adding a definition of ``Plan'' in
alphabetical order to read as follows:
Sec. 156.20 Definitions.
* * * * *
Plan has the meaning given the term in Sec. 144.103 of this
subchapter.
* * * * *
0
39. Section 156.100 is amended by revising paragraph (c) to read as
follows:
Sec. 156.100 State selection of benchmark.
* * * * *
(c) Default base-benchmark plan. If a State does not make a
selection using the process described in this section, the default
base-benchmark plan will be the largest plan by enrollment in the
largest product by enrollment in the State's small group market.
0
40. Section 156.110 is amended by revising paragraphs (c)(4) and (5)
and removing paragraph (c)(6) to read as follows:
Sec. 156.110 EHB-benchmark plan standards.
* * * * *
(c) * * *
(4) The plan described in paragraph (b)(2)(i) of this section for
pediatric oral care benefits; and
(5) The plan described in paragraph (b)(3)(i) of this section for
pediatric vision care benefits.
* * * * *
0
41. Section 156.115 is amended by revising paragraphs (a)(5)(i) and
(ii) and adding paragraphs (a)(5)(iii) and (a)(6) to read as follows:
Sec. 156.115 Provision of EHB.
(a) * * *
(5) With respect to habilitative services and devices--
(i) Cover health care services and devices that help a person keep,
learn, or improve skills and functioning for daily living (habilitative
services). Examples include therapy for a child who is not walking or
talking at the expected age. These services may include physical and
occupational therapy, speech-language pathology and other services for
people with disabilities in a variety of inpatient and/or outpatient
settings;
(ii) Do not impose limits on coverage of habilitative services and
devices that are less favorable than any such limits imposed on
coverage of rehabilitative services and devices; and
(iii) For plan years beginning on or after January 1, 2017, do not
impose combined limits on habilitative and rehabilitative services and
devices.
(6) For plan years beginning on or after January 1, 2016, for
pediatric services that are required under Sec. 156.110(a)(10),
provide coverage for enrollees until at least the end of the month in
which the enrollee turns 19 years of age.
* * * * *
0
42. Section 156.120 is added to read as follows:
Sec. 156.120 Collection of data to define essential health benefits.
(a) Definitions. The following definitions apply to this section,
unless the context indicates otherwise:
Health benefits means benefits for medical care, as defined at
Sec. 144.103 of this subchapter, which may be delivered through the
purchase of insurance or otherwise.
Health plan has the meaning given to the term ``Portal Plan'' in
Sec. 159.110 of this subchapter.
State has the meaning given to that term in Sec. 155.20 of this
subchapter.
Treatment limitations include limits on benefits based on the
frequency of treatment, number of visits, days of coverage, or other
similar limits on the scope or duration of treatment. Treatment
limitations include only quantitative treatment limitations. A
permanent exclusion of all benefits for a particular condition or
disorder is not a treatment limitation.
(b) Reporting requirement. A State that selects a base-benchmark
plan or an issuer that offers a default base-benchmark plan in
accordance with Sec. 156.100 must submit to HHS the following
information in a form and manner, and by a date, determined by HHS:
(1) Administrative data necessary to identify the health plan;
(2) Data and descriptive information for each plan on the following
items:
(i) All health benefits in the plan;
(ii) Treatment limitations;
(iii) Drug coverage; and
(iv) Exclusions.
0
43. Section 156.122 is amended by revising paragraphs (a)(1), (a)(2),
and (c) and adding paragraphs (a)(3), (d), and (e) to read as follows:
Sec. 156.122 Prescription drug benefits.
(a) * * *
(1) Subject to the exception in paragraph (b) of this section,
covers at least the greater of:
(i) One drug in every United States Pharmacopeia (USP) category and
class; or
(ii) The same number of prescription drugs in each category and
class as the EHB-benchmark plan;
(2) Submits its formulary drug list to the Exchange, the State or
OPM; and
(3) For plans years beginning on or after January 1, 2017, uses a
pharmacy and therapeutics (P&T) committee that meets the following
standards.
(i) Membership standards. The P&T committee must:
(A) Have members that represent a sufficient number of clinical
specialties to adequately meet the needs of enrollees.
(B) Consist of a majority of individuals who are practicing
physicians, practicing pharmacists and other practicing health care
professionals who are licensed to prescribe drugs.
(C) Prohibit any member with a conflict of interest with respect to
the issuer or a pharmaceutical manufacturer from voting on any matters
for which the conflict exists.
(D) Require at least 20 percent of its membership to have no
conflict of interest with respect to the issuer and any pharmaceutical
manufacturer.
(ii) Meeting standards. The P&T committee must:
(A) Meet at least quarterly.
(B) Maintain written documentation of the rationale for all
decisions regarding formulary drug list development or revision.
(iii) Formulary drug list establishment and management. The P&T
committee must:
(A) Develop and document procedures to ensure appropriate drug
review and inclusion.
(B) Base clinical decisions on the strength of scientific evidence
and standards of practice, including assessing peer-reviewed medical
literature, pharmacoeconomic studies, outcomes research data, and other
such information as it determines appropriate.
(C) Consider the therapeutic advantages of drugs in terms of safety
and efficacy when selecting formulary drugs.
(D) Review policies that guide exceptions and other utilization
management processes, including drug utilization review, quantity
limits, and therapeutic interchange.
[[Page 10872]]
(E) Evaluate and analyze treatment protocols and procedures related
to the plan's formulary at least annually.
(F) Review and approve all clinical prior authorization criteria,
step therapy protocols, and quantity limit restrictions applied to each
covered drug.
(G) Review new FDA-approved drugs and new uses for existing drugs.
(H) Ensure the issuer's formulary drug list:
(1) Covers a range of drugs across a broad distribution of
therapeutic categories and classes and recommended drug treatment
regimens that treat all disease states, and does not discourage
enrollment by any group of enrollees; and
(2) Provides appropriate access to drugs that are included in
broadly accepted treatment guidelines and that are indicative of
general best practices at the time.
* * * * *
(c) A health plan providing essential health benefits must have the
following processes in place that allow an enrollee, the enrollee's
designee, or the enrollee's prescribing physician (or other prescriber,
as appropriate) to request and gain access to clinically appropriate
drugs not otherwise covered by the health plan (a request for
exception). In the event that an exception request is granted, the plan
must treat the excepted drug(s) as an essential health benefit,
including by counting any cost-sharing towards the plan's annual
limitation on cost-sharing under Sec. 156.130 and when calculating the
plan's actuarial value under Sec. 156.135.
(1) Standard exception request. For plans years beginning on or
after January 1, 2016:
(i) A health plan must have a process for an enrollee, the
enrollee's designee, or the enrollee's prescribing physician (or other
prescriber) to request a standard review of a decision that a drug is
not covered by the plan.
(ii) A health plan must make its determination on a standard
exception and notify the enrollee or the enrollee's designee and the
prescribing physician (or other prescriber, as appropriate) of its
coverage determination no later than 72 hours following receipt of the
request.
(iii) A health plan that grants a standard exception request must
provide coverage of the non-formulary drug for the duration of the
prescription, including refills.
(2) Expedited exception request. (i) A health plan must have a
process for an enrollee, the enrollee's designee, or the enrollee's
prescribing physician (or other prescriber) to request an expedited
review based on exigent circumstances.
(ii) Exigent circumstances exist when an enrollee is suffering from
a health condition that may seriously jeopardize the enrollee's life,
health, or ability to regain maximum function or when an enrollee is
undergoing a current course of treatment using a non-formulary drug.
(iii) A health plan must make its coverage determination on an
expedited review request based on exigent circumstances and notify the
enrollee or the enrollee's designee and the prescribing physician (or
other prescriber, as appropriate) of its coverage determination no
later than 24 hours following receipt of the request.
(iv) A health plan that grants an exception based on exigent
circumstances must provide coverage of the non-formulary drug for the
duration of the exigency.
(3) External exception request review. For plans years beginning on
or after January 1, 2016:
(i) If the health plan denies a request for a standard exception
under paragraph (c)(1) of this section or for an expedited exception
under paragraph (c)(2) of this section, the health plan must have a
process for the enrollee, the enrollee's designee, or the enrollee's
prescribing physician (or other prescriber) to request that the
original exception request and subsequent denial of such request be
reviewed by an independent review organization.
(ii) A health plan must make its determination on the external
exception request and notify the enrollee or the enrollee's designee
and the prescribing physician (or other prescriber, as appropriate) of
its coverage determination no later than 72 hours following its receipt
of the request, if the original request was a standard exception
request under paragraph (c)(1) of this section, and no later than 24
hours following its receipt of the request, if the original request was
an expedited exception request under paragraph (c)(2) of this section.
(iii) If a health plan grants an external exception review of a
standard exception request, the health plan must provide coverage of
the non-formulary drug for the duration of the prescription. If a
health plan grants an external exception review of an expedited
exception request, the health plan must provide coverage of the non-
formulary drug for the duration of the exigency.
(d)(1) For plan years beginning on or after January 1, 2016, a
health plan must publish an up-to-date, accurate, and complete list of
all covered drugs on its formulary drug list, including any tiering
structure that it has adopted and any restrictions on the manner in
which a drug can be obtained, in a manner that is easily accessible to
plan enrollees, prospective enrollees, the State, the Exchange, HHS,
the U.S. Office of Personnel Management, and the general public. A
formulary drug list is easily accessible when:
(i) It can be viewed on the plan's public Web site through a
clearly identifiable link or tab without requiring an individual to
create or access an account or enter a policy number; and
(ii) If an issuer offers more than one plan, when an individual can
easily discern which formulary drug list applies to which plan.
(2) A QHP in the Federally-facilitated Exchange must make available
the information described in paragraph (d)(1) of this section on its
Web site in an HHS-specified format and also submit this information to
HHS, in a format and at times determined by HHS.
(e) For plan years beginning on or after January 1, 2017, a health
plan providing essential health benefits must have the following access
procedures:
(1) A health plan must allow enrollees to access prescription drug
benefits at in-network retail pharmacies, unless:
(i) The drug is subject to restricted distribution by the U.S. Food
and Drug Administration; or
(ii) The drug requires special handling, provider coordination, or
patient education that cannot be provided by a retail pharmacy.
(2) A health plan may charge enrollees a different cost-sharing
amount for obtaining a covered drug at a retail pharmacy, but all cost
sharing will count towards the plan's annual limitation on cost sharing
under Sec. 156.130 and must be accounted for in the plan's actuarial
value calculated under Sec. 156.135.
0
44. Section 156.130 is amended by revising paragraph (c) to read as
follows:
Sec. 156.130 Cost-sharing requirements.
* * * * *
(c) Special rule for network plans. In the case of a plan using a
network of providers, cost sharing paid by, or on behalf of, an
enrollee for benefits provided outside of such network is not required
to count toward the annual limitation on cost sharing (as defined in
paragraph (a) of this section).
* * * * *
0
45. Section 156.145 is amended by revising paragraph (a) introductory
text to read as follows:
[[Page 10873]]
Sec. 156.145 Determination of minimum value.
(a) Acceptable methods for determining MV. An employer-sponsored
plan provides minimum value (MV) only if the percentage of the total
allowed costs of benefits provided under the plan is greater than or
equal to 60 percent, and the benefits under the plan include
substantial coverage of inpatient hospital services and physician
services. An employer-sponsored plan may use one of the following
methods to determine whether the percentage of the total allowed costs
of benefits provided under the plan is not less than 60 percent.
* * * * *
0
46. Section 156.200 is amended by revising paragraph (b)(7) to read as
follows:
Sec. 156.200 QHP issuer participation standards.
* * * * *
(b) * * *
(7) Comply with the standards under 45 CFR part 153.
* * * * *
0
47. Section 156.230 is amended by revising paragraph (a) introductory
text and paragraph (b) and adding paragraph (c) to read as follows:
Sec. 156.230 Network adequacy standards.
(a) General requirement. Each QHP issuer that uses a provider
network must ensure that the provider network consisting of in-network
providers, as available to all enrollees, meets the following
standards--
* * * * *
(b) Access to provider directory. (1) A QHP issuer must make its
provider directory for a QHP available to the Exchange for publication
online in accordance with guidance from HHS and to potential enrollees
in hard copy upon request. In the provider directory, a QHP issuer must
identify providers that are not accepting new patients.
(2) For plan years beginning on or after January 1, 2016, a QHP
issuer must publish an up-to-date, accurate, and complete provider
directory, including information on which providers are accepting new
patients, the provider's location, contact information, specialty,
medical group, and any institutional affiliations, in a manner that is
easily accessible to plan enrollees, prospective enrollees, the State,
the Exchange, HHS and OPM. A provider directory is easily accessible
when--
(i) The general public is able to view all of the current providers
for a plan in the provider directory on the issuer's public Web site
through a clearly identifiable link or tab and without creating or
accessing an account or entering a policy number; and
(ii) If a health plan issuer maintains multiple provider networks,
the general public is able to easily discern which providers
participate in which plans and which provider networks.
(c) Increasing consumer transparency. A QHP issuer in a Federally-
facilitated Exchange must make available the information described in
paragraph (b) of this section on its Web site in an HHS specified
format and also submit this information to HHS, in a format and manner
and at times determined by HHS.
0
48. Section 156.235 is revised to read as follows:
Sec. 156.235 Essential community providers.
(a) General ECP standard. (1) A QHP issuer that uses a provider
network must include in its provider network a sufficient number and
geographic distribution of essential community providers (ECPs), where
available, to ensure reasonable and timely access to a broad range of
such providers for low-income individuals or individuals residing in
Health Professional Shortage Areas within the QHP's service area, in
accordance with the Exchange's network adequacy standards.
(2) A plan applying for QHP certification to be offered through a
Federally-facilitated Exchange has a sufficient number and geographic
distribution of ECPs if it demonstrates in its QHP application that--
(i) The network includes as participating providers at least a
minimum percentage, as specified by HHS, of available ECPs in each
plan's service area with multiple providers at a single location
counting as a single ECP toward both the available ECPs in the plan's
service area and the issuer's satisfaction of the ECP participation
standard; and
(ii) The issuer of the plan offers contracts to--
(A) All available Indian health care providers in the service area,
applying the special terms and conditions required by Federal law and
regulations as referenced in the recommended model QHP addendum for
Indian health care providers developed by HHS; and
(B) At least one ECP in each of the ECP categories (Federally
Qualified Health Centers, Ryan White Providers, Family Planning
Providers, Indian Health Care Providers, Hospitals and other ECP
providers) in each county in the service area, where an ECP in that
category is available and provides medical or dental services that are
covered by the issuer plan type.
(3) If a plan applying for QHP certification to be offered through
a Federally-facilitated Exchange does not satisfy the ECP standard
described in paragraph (a)(2) of this section, the issuer must include
as part of its QHP application a narrative justification describing how
the plan's provider network provides an adequate level of service for
low-income enrollees or individuals residing in Health Professional
Shortage Areas within the plan's service area and how the plan's
provider network will be strengthened toward satisfaction of the ECP
standard prior to the start of the benefit year.
(4) Nothing in paragraphs (a)(1) through (3) of this section
requires any QHP to provide coverage for any specific medical
procedure.
(5) A plan that provides a majority of covered professional
services through physicians employed by the issuer or through a single
contracted medical group may instead comply with the alternate standard
described in paragraph (b) of this section.
(b) Alternate ECP standard. (1) A plan described in paragraph
(a)(5) of this section must have a sufficient number and geographic
distribution of employed providers and hospital facilities, or
providers of its contracted medical group and hospital facilities, to
ensure reasonable and timely access for low-income individuals or
individuals residing in Health Professional Shortage Areas within the
plan's service area, in accordance with the Exchange's network adequacy
standards.
(2) A plan described in paragraph (a)(5) of this section applying
for QHP certification to be offered through a Federally-facilitated
Exchange has a sufficient number and geographic distribution of
employed or contracted providers if it demonstrates in its QHP
application that--
(i) The number of its providers that are located in Health
Professional Shortage Areas or five-digit zip codes in which 30 percent
or more of the population falls below 200 percent of the Federal
Poverty Line satisfies a minimum percentage, specified by HHS, of
available ECPs in the plan's service area with multiple providers at a
single location counting as a single ECP; and
(ii) The issuer's integrated delivery system provides all of the
categories of services provided by entities in each of the ECP
categories in each county in the plan's service area as outlined in the
general ECP standard, or otherwise offers a contract to at least one
ECP outside of the issuer's integrated delivery system per ECP category
in
[[Page 10874]]
each county in the plan's service area that can provide those services
to low-income, medically underserved individuals.
(3) If a plan does not satisfy the alternate ECP standard described
in paragraph (b)(2) of this section, the issuer must include as part of
its QHP application a narrative justification describing how the plan's
provider networks provide an adequate level of service for low-income
enrollees or individuals residing in Health Professional Shortage Areas
within the plan's service area and how the plan's provider network will
be strengthened toward satisfaction of the ECP standard prior to the
start of the benefit year.
(c) Definition. An essential community provider is a provider that
serves predominantly low-income, medically underserved individuals,
including a health care provider defined in section 340B(a)(4) of the
PHS Act; or described in section 1927(c)(1)(D)(i)(IV) of the Act as set
forth by section 221 of Pub. L. 111-8; or a State-owned family planning
service site, or governmental family planning service site, or not-for-
profit family planning service site that does not receive Federal
funding under special programs, including under Title X of the PHS Act,
or an Indian health care provider, unless any of the above providers
has lost its status under either of these sections, 340(B) of the PHS
Act or 1927 of the Act as a result of violating Federal law.
(d) Payment rates. Nothing in paragraph (a) of this section may be
construed to require a QHP issuer to contract with an ECP if such
provider refuses to accept the same rates and contract provisions
included in contracts accepted by similarly situated providers.
(e) Payment of Federally qualified health centers. If an item or
service covered by a QHP is provided by a Federally-qualified health
center (as defined in section 1905(l)(2)(B) of the Act) to an enrollee
of a QHP, the QHP issuer must pay the Federally qualified health center
for the item or service an amount that is not less than the amount of
payment that would have been paid to the center under section 1902(bb)
of the Act for such item or service. Nothing in this paragraph (e)
precludes a QHP issuer and Federally-qualified health center from
agreeing upon payment rates other than those that would have been paid
to the center under section 1902(bb) of the Act, as long as that rate
is at least equal to the generally applicable payment rate of the
issuer described in paragraph (d) of this section.
0
49. Section 156.250 is revised to read as follows:
Sec. 156.250 Meaningful access to qualified health plan information.
A QHP issuer must provide all information that is critical for
obtaining health insurance coverage or access to health care services
through the QHP, including applications, forms, and notices, to
qualified individuals, applicants, qualified employers, qualified
employees, and enrollees in accordance with the standards described in
Sec. 155.205(c) of this subchapter. Information is deemed to be
critical for obtaining health insurance coverage or access to health
care services if the issuer is required by law or regulation to provide
the document to a qualified individual, applicant, qualified employer,
qualified employee, or enrollee.
0
50. Section 156.265 is amended by revising paragraph (d) to read as
follows:
Sec. 156.265 Enrollment process for qualified individuals.
* * * * *
(d) Premium payment. A QHP issuer must follow the premium payment
process established by the Exchange in accordance with Sec. 155.240 of
this subchapter and the payment rules established in Sec. 155.400(e)
of this subchapter.
* * * * *
0
51. Section 156.270 is amended by revising the section heading and
paragraphs (a), (b), (c) introductory text, (g), and (i) to read as
follows:
Sec. 156.270 Termination of coverage or enrollment for qualified
individuals.
(a) General requirement. A QHP issuer may only terminate enrollment
in a QHP through the Exchange as permitted by the Exchange in
accordance with Sec. 155.430(b) of this subchapter. (See also Sec.
147.106 of this subchapter for termination of coverage.)
(b) Termination of coverage or enrollment notice requirement. If a
QHP issuer terminates an enrollee's coverage or enrollment in a QHP
through the Exchange in accordance with Sec. 155.430(b)(2)(i), (ii),
or (iii) of this subchapter, the QHP issuer must, promptly and without
undue delay:
(1) Provide the enrollee with a notice of termination that includes
the termination effective date and reason for termination.
(2) [Reserved]
(c) Termination of coverage or enrollment due to non-payment of
premium. A QHP issuer must establish a standard policy for the
termination of enrollment of enrollees through the Exchange due to non-
payment of premium as permitted by the Exchange in Sec.
155.430(b)(2)(ii) of this subchapter. This policy for the termination
of enrollment:
* * * * *
(g) Exhaustion of grace period. If an enrollee receiving advance
payments of the premium tax credit exhausts the 3-month grace period in
paragraph (d) of this section without paying all outstanding premiums,
the QHP issuer must terminate the enrollee's enrollment through the
Exchange on the effective date described in Sec. 155.430(d)(4) of this
subchapter, provided that the QHP issuer meets the notice requirement
specified in paragraph (b) of this section.
* * * * *
(i) Effective date of termination of coverage or enrollment. QHP
issuers must abide by the termination of coverage or enrollment
effective dates described in Sec. 155.430(d) of this subchapter.
* * * * *
0
52. Section 156.285 is amended by--
0
a. Revising paragraphs (b)(1), (b)(4), (d) introductory text, (d)(1)
introductory text, (d)(1)(i), and (d)(1)(iii);
0
b. Redesignating paragraphs (c)(3), (4), (5), (6), and (7) as
paragraphs (c)(4), (5), (6), (7), and (8), respectively.
0
c. Adding new paragraph (c)(3).
0
d. Adding and reserving paragraph (d)(2).
The revisions and addition read as follows:
Sec. 156.285 Additional standards specific to SHOP.
* * * * *
(b) * * *
(1) Enroll a qualified employee in accordance with the qualified
employer's initial and annual employee open enrollment periods
described in Sec. 155.725 of this subchapter;
* * * * *
(4) Adhere to effective dates of coverage established in accordance
with Sec. 155.725 of this subchapter.
(c) * * *
(3) Notify new enrollees of their effective date of coverage
consistent with Sec. 155.720(e) of this subchapter.
* * * * *
(d) Termination of coverage or enrollment in the SHOP. QHP issuers
offering a QHP through the SHOP must:
(1) Comply with the following requirements with respect to
termination of enrollees in the SHOP:
(i)(A) Effective in plan years beginning on or after January 1,
2015, requirements regarding termination of
[[Page 10875]]
coverage or enrollment established in Sec. 155.735 of this subchapter,
if applicable to the coverage or enrollment being terminated; otherwise
(B) General requirements regarding termination of coverage or
enrollment established in Sec. 156.270(a).
* * * * *
(iii)(A) Effective in plan years beginning on or after January 1,
2015, requirements regarding termination of coverage or enrollment
effective dates as set forth in Sec. 155.735 of this subchapter, if
applicable to the coverage or enrollment being terminated; otherwise
(B) Requirements regarding termination of coverage or enrollment
effective dates as set forth in Sec. 156.270(i).
(2) [Reserved]
* * * * *
0
53. Section 156.285 is further amended, effective January 1, 2016, by
revising paragraph (d)(1)(ii) to read as follows:
Sec. 156.285 Additional standards specific to SHOP.
* * * * *
(d) * * *
(1) * * *
(ii) If a QHP issuer terminates an enrollee's coverage or
enrollment through the SHOP in accordance with Sec. 155.735(d)(1)(iii)
or (v) of this subchapter, the QHP issuer must notify the qualified
employer and the enrollee of the termination. Such notice must include
the termination effective date and reason for termination, and must be
sent within 3 business days if an electronic notice is sent, and within
5 business days if a mailed hard copy notice is sent. When a primary
subscriber and his or her dependents live at the same address, a
separate termination notice need not be sent to each dependent at that
address, provided that the notice sent to each primary subscriber at
that address contains all required information about the termination
for the primary subscriber and his or her dependents at that address.
* * * * *
0
54. Section 156.290 is amended by revising paragraphs (a)(1), (a)(2),
(a)(5), and (c) introductory text to read as follows:
Sec. 156.290 Non-renewal and decertification of QHPs.
(a) * * *
(1) Notify the Exchange of its decision prior to the beginning of
the recertification process and adhere to the procedures adopted by the
Exchange in accordance with Sec. 155.1075 of this subchapter;
(2) Fulfill its obligation to cover benefits for each enrollee
through the end of the plan or benefit year through the Exchange;
* * * * *
(5) Terminate the coverage or enrollment through the Exchange of
enrollees in the QHP in accordance with Sec. 156.270, as applicable.
* * * * *
(c) Decertification. If a QHP is decertified by the Exchange, the
QHP issuer must terminate the enrollment of enrollees through the
Exchange only after:
* * * * *
0
55. Section 156.410 is amended by removing the second paragraph
designated as paragraph (d)(4)(ii) and adding paragraph (d)(4)(iii) to
read as follows:
Sec. 156.410 Cost-sharing reductions for enrollees.
* * * * *
(d) * * *
(4) * * *
(iii) If the excess cost sharing was not paid by the provider,
then, if the enrollee requests a refund, the refund must be provided to
the enrollee within 45 calendar days of the date of the request.
0
56. Section 156.420 is amended by adding paragraph (h) to read as
follows:
Sec. 156.420 Plan variations.
* * * * *
(h) Notice. No later than November 1, 2015, for each plan variation
that an issuer offers in accordance with the rules of this section, an
issuer must provide a summary of benefits and coverage that accurately
represents each plan variation consistent with the requirements set
forth in Sec. 147.200 of this subchapter.
0
57. Section 156.425 is amended by adding paragraph (c) to read as
follows:
Sec. 156.425 Changes in eligibility for cost-sharing reductions.
* * * * *
(c) Notice upon assignment. Beginning on January 1, 2016, if an
individual's assignment to a standard plan or plan variation of the QHP
changes in accordance with paragraph (a) of this section, the issuer
must provide to that individual a summary of benefits and coverage that
accurately reflects the new plan variation (or standard plan variation
without cost-sharing reductions) in a manner consistent with Sec.
147.200 of this subchapter as soon as practicable following receipt of
notice from the Exchange, but not later than 7 business days following
receipt of notice.
0
58. Section 156.430 is amended by adding paragraph (c)(2)(i) and adding
and reserving paragraph (c)(2)(ii) to read as follows:
Sec. 156.430 Payment for cost-sharing reductions.
* * * * *
(c) * * *
(2) * * *
(i) For reconciliation of cost-sharing reduction amounts advanced
for the 2014 and 2015 benefit years, an issuer of a QHP using the
standard or simplified methodology may calculate claims amounts
attributable to EHB, including cost sharing amounts attributable to
EHB, by reducing total claims amounts by the plan-specific percentage
estimate of non-essential health benefit claims submitted on the
Uniform Rate Review Template for the corresponding benefit year, if the
following conditions are met:
(A) The non-essential health benefits percentage estimate is less
than 2 percent; and
(B) Out-of-pocket expenses for non-EHB benefits are included in the
calculation of amounts subject to a deductible or annual limitation on
cost sharing, but copayments and coinsurance rates on non-EHB benefits
are not reduced under the plan variation.
(ii) [Reserved]
* * * * *
0
59. Section 156.602 is amended by revising paragraph (d) to read as
follows:
Sec. 156.602 Other coverage that qualifies as minimum essential
coverage.
* * * * *
(d) State high risk pool coverage. A qualified high risk pool as
defined by section 2744(c)(2) of the Public Health Service Act
established on or before November 26, 2014 in any State.
* * * * *
0
60. Section 156.800 is amended by revising paragraph (c) to read as
follows:
Sec. 156.800 Available remedies; Scope.
* * * * *
(c) Compliance standard. For calendar years 2014 and 2015,
sanctions under this subpart will not be imposed if the QHP issuer has
made good faith efforts to comply with applicable requirements.
* * * * *
0
61. Section 156.815 is added to subpart I to read as follows:
Sec. 156.815 Plan suppression.
(a) Suppression means temporarily making a QHP certified to be
offered through the Federally-facilitated
[[Page 10876]]
Exchange unavailable for enrollment through the Federally-facilitated
Exchange.
(b) Grounds for suppression. A QHP may be suppressed as described
in paragraph (a) of this section on one or more of the following
grounds:
(1) The QHP issuer notifies HHS of its intent to withdraw the QHP
from a Federally-facilitated Exchange when one of the exceptions to
guaranteed renewability of coverage related to discontinuing a
particular product or discontinuing all coverage under Sec. 147.106(c)
or (d) of this subchapter applies;
(2) Data submitted for the QHP is incomplete or inaccurate;
(3) The QHP is in the process of being decertified as described in
Sec. 156.810(c) or (d), or the QHP issuer is appealing a completed
decertification as described in subpart J of this part;
(4) The QHP issuer offering the QHP is the subject of a pending,
ongoing, or final State regulatory or enforcement action or
determination that could affect the issuer's ability to enroll
consumers or otherwise relates to the issuer offering QHPs in the
Federally-facilitated Exchanges; or
(5) One of the exceptions to guaranteed availability of coverage
related to special rules for network plans or financial capacity limits
under Sec. 147.104(c) or (d) of this subchapter applies.
(c) A multi-State plan as defined in Sec. 155.1000(a) of this
subchapter may be suppressed as described in paragraph (a) of this
section if OPM notifies the Exchange that:
(1) OPM has found a compliance violation within the multi-State
plan, or
(2) One of the grounds for suppression in paragraph (b) of this
section exists for the multi-State plan.
0
62. Section 156.1130 is added to subpart L to read as follows:
Sec. 156.1130 Quality improvement strategy.
(a) General requirement. A QHP issuer participating in an Exchange
for 2 or more consecutive years must implement and report on a quality
improvement strategy including a payment structure that provides
increased reimbursement or other market-based incentives in accordance
with the health care topic areas in section 1311(g)(1) of the
Affordable Care Act, for each QHP offered in an Exchange, consistent
with the guidelines developed by HHS under section 1311(g) of the
Affordable Care Act.
(b) Data requirement. A QHP issuer must submit data that has been
validated in a manner and timeframe specified by the Exchange to
support the evaluation of quality improvement strategies in accordance
with Sec. 155.200(d) of this subchapter.
(c) Timeline. A QHP issuer must submit data annually to evaluate
compliance with the standards for a quality improvement strategy in
accordance with paragraph (a) of this section, in a manner and
timeframe specified by the Exchange.
(d) Multi-State plans. Issuers of multi-State plans, as defined in
Sec. 155.1000(a) of this subchapter, must provide the data described
in paragraph (b) of this section to the U.S. Office of Personnel
Management, in the manner and timeframe specified by the U.S. Office of
Personnel Management.
0
63. Section 156.1220 is amended by revising paragraph (c) to read as
follows:
Sec. 156.1220 Administrative appeals.
* * * * *
(c) Review by the Administrator of CMS. (1) Either the issuer or
CMS may request review by the Administrator of CMS of the CMS hearing
officer's decision. A request for review of the CMS hearing officer's
decision must be submitted to the Administrator of CMS within 15
calendar days of the date of the CMS hearing officer's decision, and
must specify the findings or issues that the issuer or CMS challenges.
The issuer or CMS may submit for review by the Administrator of CMS a
statement supporting the decision of the CMS hearing officer.
(2) After receiving a request for review, the Administrator of CMS
has the discretion to elect to review the CMS hearing officer's
decision or to decline to review the CMS hearing officer's decision. If
the Administrator of CMS elects to review the CMS hearing officer's
decision, the Administrator of CMS will also review the statements of
the issuer and CMS, and any other information included in the record of
the CMS hearing officer's decision, and will determine whether to
uphold, reverse, or modify the CMS hearing officer's decision. The
issuer or CMS must prove its case by clear and convincing evidence for
issues of fact. The Administrator of CMS will send the decision and the
reasons for the decision to the issuer.
(3) The Administrator of CMS's determination is final and binding.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
64. The authority citation for part 158 continues to read as follows:
Authority: Section 2718 of the Public Health Service Act (42
U.S.C. 300gg-18), as amended.
0
65. Section 158.140 is amended by adding paragraph (b)(1)(iii) to read
as follows:
Sec. 158.140 Reimbursement for clinical services provided to
enrollees.
* * * * *
(b) * * *
(1) * * *
(iii) Cost-sharing reduction payments received by the issuer to the
extent not reimbursed to the provider furnishing the item or service.
* * * * *
0
66. Section 158.162 is amended by revising paragraph (a)(2) and adding
paragraph (b)(2)(iv) to read as follows:
Sec. 158.162 Reporting of Federal and State taxes.
(a) * * *
(2) Federal taxes not excluded from premium under subpart B of this
part which include Federal income taxes on investment income and
capital gains, as well as Federal employment taxes, as other non-claims
costs.
(b) * * *
(2) * * *
(iv) State employment and similar taxes and assessments.
* * * * *
0
67. Section 158.242 is amended by
0
a. Revising paragraph (b)(1)(iii);
0
b. Amending paragraph (b)(1)(iv) by removing the period and adding ``;
and'' in its place; and
0
c. Adding paragraph (b)(1)(v).
The revision and addition read as follows:
Sec. 158.242 Recipients of rebates.
* * * * *
(b) * * *
(1) * * *
(iii) A cash refund to subscribers of the group health plan option
for which the issuer is providing a rebate, who were enrolled in the
group health plan option either during the MLR reporting year that
resulted in the issuer providing the rebate or at the time the rebate
is received by the policyholder;
* * * * *
[[Page 10877]]
(v) All rebate distributions made under paragraphs (b)(1)(i), (ii),
or (iii) of this section must be made within 3 months of the
policyholder's receipt of the rebate. Rebate distributions made after 3
months must include late payment interest at the current Federal
Reserve Board lending rate or 10 percent annually, whichever is higher,
on the total amount of the rebate, accruing from the date payment was
due under this section.
* * * * *
Dated: February 6, 2015.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Dated: February 17, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-03751 Filed 2-20-15; 4:15 pm]
BILLING CODE 4120-01-P
