Health Insurance Issuers Implementing Medical Loss Ratio (MLR) Under the Patient Protection and Affordable Care Act; Correcting Amendment, 28788-28790 [2012-11773]
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Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations
67249, Nov. 9, 2000), because it does
not have a substantial direct effect on
one or more Indian Tribes, on the
relationship between the Federal
Government and Indian Tribes, or on
the distribution of power and
responsibilities between the Federal
Government and Indian Tribes.
W. Craig Fugate,
Administrator, Federal Emergency
Management Agency.
J. Executive Order 13045, Protection of
Children From Environmental Health
Risks and Safety Risks
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
9899), is adopted as a final rule without
change.
[FR Doc. 2012–11669 Filed 5–15–12; 8:45 am]
BILLING CODE 9111–23–P
This rule will not create
environmental health risks or safety
risks for children under Executive Order
13045, Protection of Children From
Environmental Health Risks and Safety
Risks (62 FR 19885, Apr. 23, 1997).
K. National Environmental Policy Act
This rule is not a major agency action,
nor will it affect the quality of the
environment. This rule will not require
the preparation of either an
environmental assessment or an
environmental impact statement as
defined by the National Environmental
Policy Act of 1969, Public Law 91–190,
83 Stat. 852 (Jan. 1, 1970) (42 U.S.C.
4321 et seq.), as amended.
L. Congressional Review of Agency
Rulemaking
FEMA has sent this final rule to the
Congress and to the Government
Accountability Office under the
Congressional Review of Agency
Rulemaking Act, (‘‘Congressional
Review Act’’), Public Law 104–121, 110
Stat. 873 (Mar. 29, 1996) (5 U.S.C. 804).
This rule is not a ‘‘major rule’’ within
the meaning of the Congressional
Review Act.
List of Subjects in 44 CFR Part 206
pmangrum on DSK3VPTVN1PROD with RULES
Administrative practice and
procedure, Coastal zone, Community
facilities, Disaster assistance, Fire
prevention, Grant programs—housing
and community development, Housing,
Insurance, Intergovernmental relations,
Loan programs—housing and
community development, Natural
resources, Penalties, Reporting and
recordkeeping requirements.
PART 206—FEDERAL DISASTER
ASSISTANCE
Accordingly, 44 CFR 206.171 of the
interim rule published on March 21,
1989 (54 FR 11610), with the
amendment to 206.171(g)(4)(i)
published on March 3, 2003 (68 FR
■
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45 CFR Part 158
[CMS–9998–IFC3]
Health Insurance Issuers Implementing
Medical Loss Ratio (MLR) Under the
Patient Protection and Affordable Care
Act; Correcting Amendment
Center for Medicare and
Medicaid Services (CMS), Department
of Health and Human Services.
ACTION: Interim final rule; correcting
amendment.
AGENCY:
requirements for health insurance
issuers under section 2718 of the Public
Health Service Act, as added by the
Patient Protection and Affordable Care
Act. The regulations in the 2010 MLR
rule became effective January 1, 2011.
On December 30, 2010, we published
a correction notice in the Federal
Register (75 FR 82277) (hereinafter
referred to as the ‘‘2010 MLR correction
notice’’) to correct several regulations
set forth in the 2010 MLR rule. The
regulations in the 2010 MLR correction
notice became effective January 1, 2011,
as if they had been included in the 2010
MLR interim final rule.
The provisions in this correcting
amendment are also effective as if they
had been included in the 2010 MLR
interim final rule. Accordingly, the
corrections are effective January 1, 2011.
B. Overview of the Deadline for Issuers
To Report Their Annual Experience
The 2010 MLR rule established details
regarding an issuer’s obligation under
section 2718 to report information (for
SUMMARY: This document corrects
the prior calendar year) to the
technical errors that appeared in the
Department of Health and Human
interim final rule published in the
Services (HHS) by June 1st of each year
Federal Register on December 1, 2010,
on how it used its premium revenue.
entitled ‘‘Health Insurance Issuers
The first such report is due on June 1,
Implementing Medical Loss Ratio (MLR) 2012. This information is used by HHS
Requirements under the Patient
to determine the issuer’s MLR for the
Protection and Affordable Care Act’’ and year in question, which reflects the
in the correction notice published in the percentage of premium revenue
Federal Register on December 30, 2010, expended on medical claims and health
entitled ‘‘Health Insurance Issuers
care quality improvement. Section 2718
Implementing Medical Loss Ratio (MLR) establishes MLR standards for the
Requirements Under the Patient
percentage that must be spent on such
Protection and Affordable Care Act;
costs: 80 percent for the individual and
Corrections to the Medical Loss Ratio
small group insurance markets and 85
Interim Final Rule With Request for
percent for the large group market. An
Comments.’’
issuer that fails to meet the applicable
DATES: Effective date: This document is
MLR standard must pay a premium
effective on May 16, 2012.
rebate to policyholders. To assist the
Applicability date: The corrections are issuer with reporting its experience,
applicable on January 1, 2011.
HHS developed and published an MLR
Annual Reporting Form, with
FOR FURTHER INFORMATION CONTACT:
instructions, that the issuer must
Carol Jimenez, (301) 492–4457,
complete and submit. This correcting
MLRQuestions@cms.hhs.gov.
amendment makes minor revisions to
SUPPLEMENTARY INFORMATION:
the regulations to help clarify how an
issuer will capture and report its 2011
I. Background
experience. Because these corrections
In FR Doc. 2010–29596 of December
merely clarify the terms of the 2010
1, 2010 (75 FR 74864) and FR Doc.
MLR interim final rule that took effect
2010–32466 of December 30, 2010 (75
on January 1, 2011, the changes in this
FR 82277), there were a number of
correcting amendment are applicable on
technical errors that are identified and
January 1, 2011.
corrected in the ‘‘Correction of Errors’’
section below.
II. Summary of Errors
A. Regulatory Overview
On December 1, 2010, we published
an interim final rule in the Federal
Register (75 FR 74864) (hereinafter
referred to as the ‘‘2010 MLR rule’’) to
implement medical loss ratio (MLR)
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A. Corrections of Errors in the 2010 MLR
Rule Preamble
We are making several technical and
clarifying changes to the 2010 MLR rule.
On page 74868, in the section regarding
small group market and large group
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Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations
market, the 2010 MLR rule described
how the PHS Act defined ‘‘small group’’
before the enactment of the Affordable
Care Act, without explicitly addressing
how to determine the number of
employees for purposes of that
definition. Therefore, we are revising
the preamble language to reflect the fact
that the PHS Act defined a group in
terms of the number of employees on
the last day of the calendar year with ‘‘2
to 50 employees in a small group and
51 or more employees in a large group.’’
This change will eliminate any
ambiguity resulting from the fact that
Federal and State law may differ on how
an issuer determines the number of
employees an employer has, and
accurately reflects that the Employee
Retirement Income Security Act (ERISA)
of 1974 governs this issue and ERISA
instructs an issuer or employer to use
the last day of the year to determine the
number of employees.
On page 74884, in the section
regarding de minimis rebates, the 2010
MLR rule stated that issuers must
aggregate the de minimis rebates and
distribute them in equal amounts to all
then-current enrollees who receive a
premium credit. We are revising the
preamble language by removing the
words ‘‘then current’’ before ‘‘enrollees’’
because these words are technically
inaccurate and conflict with language
elsewhere in the preamble, as there are
circumstances when those receiving
rebates are no longer enrollees at the
time of the rebate. In addition, we are
deleting the words ‘‘premium credit’’
and replacing them with the word
‘‘rebate.’’ This change reflects the fact
that, as made clear elsewhere in the
rule, the rebate may be provided in one
of several ways and not just by a
premium credit.
pmangrum on DSK3VPTVN1PROD with RULES
B. Corrections of Errors in the
Regulations Text
1. Errors in the 2010 MLR Rule
On page 74922, in § 158.103
‘‘Definitions,’’ for clarity we are
renaming ‘‘Multi State Blended rate’’ to
read as ‘‘Blended Rate.’’ This change
corrects an inadvertent error in this
section that qualifies ‘‘blended rate’’ by
the words ‘‘multi-State.’’ As clear from
other parts of the 2010 MLR rule, an
issuer can take advantage of this
provision even if the employer’s
employees are in the same State as long
as the coverage meets the remaining
elements of the definition and the rate
is blended.
On pages 74922 through 74923, we
are revising § 158.120(d)(1) to make
explicit that where the individual
market business is sold through an
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Jkt 226001
association or a trust, the experience of
the issuer must be included in the State
report for the issue State of the
certificate of coverage. As made clear
elsewhere in the 2010 MLR rule, an
individual policy may also be issued to
a trustee who is the policyholder, and
thus the word ‘‘trust’’ should be added
to § 158.120(d)(1). We are also revising
§ 158.120(d)(2) to state that for employer
business issued through a group trust or
multiple employer welfare association
(MEWA), the experience of the issuer
must be included in the State report for
the State where the employer (if sold
through a trust) or the MEWA (if the
MEWA is the policyholder) has its
principal place of business. These
changes reflect in the text of
§ 158.120(d)(2) when it is appropriate to
report the policy’s experience based on
the situs of the employer versus that of
the MEWA.
On page 74923, we are revising
§ 158.130(b)(3) to specify that earned
premium must include adjustments to
account for any experience rating refund
when it is incurred, rather than when it
is paid, and revising § 158.140(a),
General requirements, to specify that the
report required in § 158.110, which
includes reserves for contingent
benefits, include any incurred
experience rating refunds (rather than
just those that are paid or received).
These changes are necessary in order to
make the language in § 158.130(b)(3)
consistent with the National Association
of Insurance Commissioners (NAIC’s)
recommendations, which in the
preamble we stated that we were
adopting.
On page 74923, we are also revising
§ 158.140(a), General requirements, to
make our intent explicit that the report
required in § 158.110 only include the
medical claim portion of the total
amount claimed in lawsuits, and not
claims for pain and suffering damages,
legal fees, court costs, punitive damages
or anything other than the underlying
medical claim. We are also adding
language to § 158.140(a) referencing a
3-month run out period for incurred
claims, which was inadvertently
omitted. This correction is needed to
make this provision consistent with the
NAIC’s recommendations to the
Secretary, dated October 27, 2010,
which contain a 3-month run-out for
incurred claims, and with our
statements in the 2010 MLR rule that we
were following the NAIC’s
recommendations to the Secretary. For
the same reason, we are further
clarifying that although there is a 3month run-out period for incurred and
paid claims, contract reserves should
still be determined as of the last day of
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28789
the reporting year as there is no parallel
3-month extension for calculating
contract reserves.
On page 74923, in § 158.140(a)(5), we
inadvertently used the word ‘‘paid’’ and
omitted the word ‘‘incurred’’ before the
words ‘‘exclude rebates paid as
required’’. Therefore, we are correcting
this typographical error.
On page 74924, in
§ 158.150(b)(2)(i)(A)(1), we mistakenly
made an incorrect reference to ‘‘section
3606 of the Affordable Care Act’’ when
it is clear from context that the reference
was to ‘‘section 3502 of the Affordable
Care Act’’. Therefore, we are correcting
this error.
On page 74925, in § 158.150(c)(14),
we mistakenly made an incorrect cross
reference to ‘‘paragraph (c)’’ instead of
referencing ‘‘paragraphs (a) or (b).’’ The
correction makes clear that items not
included as activities to improve health
care quality are exclusions.
On page 74928, in § 158.232(c)(1)(i),
we are revising the calculation of the
per-person deductible for a policy that
covers a subscriber and the subscriber’s
dependents to mirror the NAIC’s
recommendations, which we indicated
in the 2010 MLR rule.
2. Error in the 2010 MLR Correction
Notice
The 2010 MLR rule established
§ 158.120(d)(1), describing exceptions.
This section was amended by the 2010
MLR correction notice (see 75 FR 82278)
and currently reads: ‘‘For individual
market business sold through an
association, the experience of the issuer
must be included in the State report for
the issue State of the certificate of
coverage.’’ In this correcting
amendment, we further amend
§ 158.120(d)(1) by adding the words ‘‘or
trust’’ after the word ‘‘association’’ to
reflect the fact that under the 2010 MLR
rule the exception also applies to
individual market business sold through
a trust.
III. Correction of Errors in the Preamble
In FR Doc 2010–29596 of December 1,
2010, make the following corrections:
1. On page 74868, third column,
second full paragraph—
A. In line 21, insert the phrase ‘‘the
number of employees on the last day of
the calendar year, with’’ before ‘‘2 to 50
employees.’’
B. In lines 21 and 22, insert the phrase
‘‘in a small group and 51 or more
employees’’ before ‘‘and a large group.’’
Remove the word ‘‘and’’ before ‘‘a large
group’’ and the words ‘‘in terms of 51
or more employees’’ after the words ‘‘a
large group.’’
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16MYR1
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Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations
2. On page 74884, third column, fifth
full paragraph—
A. In line 14, remove the words ‘‘then
current.’’
B. In line 15, revise the phrase
‘‘premium credit’’ to read ‘‘rebate.’’
IV. Waiver of Proposed Rulemaking
and Delay in Effective Date
List of Subjects in 45 CFR Part 158
Administrative practice and
procedure, Claims, Health care, Health
insurance, Health plans, Penalties,
Reporting and recordkeeping
requirements.
Accordingly, 45 CFR part 158 is
corrected by making the following
correcting amendments:
PART 158—ISSUER USE OF PREMIUM
REVENUE: REPORTING AND REBATE
REQUIREMENTS
1. The authority citation for part 158
continues to read as follows:
■
Authority: Sec. 2718 of the Public Health
Service Act (42 U.S.C. 300gg–18, as
amended).
2. Amend § 158.103 as follows:
A. Remove the definition for ‘‘MultiState blended rate.’’
■ B. Add a new definition for ‘‘Blended
rate’’ in alphabetical order.
The addition reads as follows:
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■
■
Definitions.
*
*
*
*
*
Blended rate means a single rate
charged for health insurance coverage
provided to a single employer through
two or more of an issuer’s affiliated
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Jkt 226001
§ 158.240 based upon prior MLR
reporting year experience.
*
*
*
*
*
3. Amend § 158.120 by revising
paragraphs (d)(1) and (d)(2) to read as
follows:
§ 158.150
■
§ 158.120
We ordinarily publish a notice of
proposed rulemaking in the Federal
Register to provide a period for public
comment before the provisions of a rule
take effect in accordance with section
553(b) of the Administrative Procedure
Act (APA) (5 U.S.C. 553(b)), and section
553(d) of the APA ordinarily requires a
30-day delay in effective date of final
rules after the date of their publication
in the Federal Register. These
requirements may be waived, however,
if an agency finds for good cause that
the delay is impracticable, unnecessary,
or contrary to the public interest, and
the agency incorporates a statement of
the findings and its reasons in the rule
issued.
In this case, we believe that it is
unnecessary to provide for a public
comment period or to delay
implementing these corrections, as they
clarify provisions of a final rule that has
been subjected to notice and comment
procedures and do not make any
substantive changes to it.
§ 158.103
companies for employees in one or more
States.
*
*
*
*
*
Aggregate reporting.
*
*
*
*
*
(d) * * *
(1) For individual market business
sold through an association or trust, the
experience of the issuer must be
included in the State report for the issue
State of the certificate of coverage.
(2) For employer business issued
through a group trust or multiple
employer welfare association (MEWA),
the experience of the issuer must be
included in the State report for the State
where the employer (if sold through a
trust) or the MEWA (if the MEWA is the
policyholder) has its principal place of
business.
*
*
*
*
*
§ 158.130
[Amended]
4. In § 158.130(b)(3) remove the words
‘‘paid or received’’ and add the word
‘‘incurred’’ in their place.
■ 5. Amend § 158.140 by revising
paragraph (a) introductory text and
paragraph (a)(5) to read as follows:
■
§ 158.140 Reimbursement for clinical
services provided to enrollees.
(a) General requirements. The report
required in § 158.110 must include
direct claims paid to or received by
providers, including under capitation
contracts with physicians, whose
services are covered by the policy for
clinical services or supplies covered by
the policy. In addition, the report must
include claim reserves associated with
claims incurred during the MLR
reporting year, the change in contract
reserves, reserves for contingent benefits
and the medical claim portion of
lawsuits, and any incurred experience
rating refunds. Reimbursement for
clinical services, as defined in this
section, is referred to as ‘‘incurred
claims.’’ All components of and
adjustments to incurred claims, with the
exception of contract reserves, must be
calculated based on claims incurred
only during the MLR reporting year and
paid through March 31st of the
following year. Contract reserves must
be calculated as of December 31st of the
applicable year.
*
*
*
*
*
(5) Incurred claims must include
incurred experience rating refunds and
exclude rebates paid as required by
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[Amended]
6. Amend § 158.150 as follows:
A. In paragraph (b)(2)(i)(A)(1), remove
‘‘section 3606’’ and add in its place
‘‘section 3502.’’
■ B. In paragraph (c)(14), remove the
reference ‘‘paragraph (c) of this section’’
and add in its place the reference
‘‘paragraph (a) or (b) of this section.’’
■ 7. Amend § 158.232 by revising
paragraph (c)(1)(i) to read as follows:
■
■
§ 158.232 Calculating the credibility
adjustment.
*
*
*
*
*
(c) * * *
(1) * * *
(i) The per person deductible for a
policy that covers a subscriber and the
subscriber’s dependents shall be the
lesser of: The sum of the deductible
applicable to each of the individual
family members; or the overall family
deductible for the subscriber and
subscriber’s family, divided by two
(regardless of the total number of
individuals covered through the
subscriber).
*
*
*
*
*
Dated: May 10, 2012.
Jennifer Cannistra,
Executive Secretary to the Department.
[FR Doc. 2012–11773 Filed 5–15–12; 8:45 am]
BILLING CODE 4120–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Part 158
[CMS–9998–F]
RIN 0938–AR41
Medical Loss Ratio Requirements
Under the Patient Protection and
Affordable Care Act
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
This final rule amends the
regulations implementing medical loss
ratio (MLR) standards for health
insurance issuers under the Public
Health Service Act in order to establish
notice requirements for issuers in the
group and individual markets that meet
or exceed the applicable MLR standard
in the 2011 MLR reporting year.
DATES: Effective date. This rule is
effective on June 15, 2012.
Applicability date. The amendments
to part 158 generally apply beginning
SUMMARY:
E:\FR\FM\16MYR1.SGM
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]]>Agencies
[Federal Register Volume 77, Number 95 (Wednesday, May 16, 2012)]
[Rules and Regulations]
[Pages 28788-28790]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11773]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 158
[CMS-9998-IFC3]
Health Insurance Issuers Implementing Medical Loss Ratio (MLR)
Under the Patient Protection and Affordable Care Act; Correcting
Amendment
AGENCY: Center for Medicare and Medicaid Services (CMS), Department of
Health and Human Services.
ACTION: Interim final rule; correcting amendment.
-----------------------------------------------------------------------
SUMMARY: This document corrects technical errors that appeared in the
interim final rule published in the Federal Register on December 1,
2010, entitled ``Health Insurance Issuers Implementing Medical Loss
Ratio (MLR) Requirements under the Patient Protection and Affordable
Care Act'' and in the correction notice published in the Federal
Register on December 30, 2010, entitled ``Health Insurance Issuers
Implementing Medical Loss Ratio (MLR) Requirements Under the Patient
Protection and Affordable Care Act; Corrections to the Medical Loss
Ratio Interim Final Rule With Request for Comments.''
DATES: Effective date: This document is effective on May 16, 2012.
Applicability date: The corrections are applicable on January 1,
2011.
FOR FURTHER INFORMATION CONTACT: Carol Jimenez, (301) 492-4457,
MLRQuestions@cms.hhs.gov.
SUPPLEMENTARY INFORMATION:
I. Background
In FR Doc. 2010-29596 of December 1, 2010 (75 FR 74864) and FR Doc.
2010-32466 of December 30, 2010 (75 FR 82277), there were a number of
technical errors that are identified and corrected in the ``Correction
of Errors'' section below.
A. Regulatory Overview
On December 1, 2010, we published an interim final rule in the
Federal Register (75 FR 74864) (hereinafter referred to as the ``2010
MLR rule'') to implement medical loss ratio (MLR) requirements for
health insurance issuers under section 2718 of the Public Health
Service Act, as added by the Patient Protection and Affordable Care
Act. The regulations in the 2010 MLR rule became effective January 1,
2011.
On December 30, 2010, we published a correction notice in the
Federal Register (75 FR 82277) (hereinafter referred to as the ``2010
MLR correction notice'') to correct several regulations set forth in
the 2010 MLR rule. The regulations in the 2010 MLR correction notice
became effective January 1, 2011, as if they had been included in the
2010 MLR interim final rule.
The provisions in this correcting amendment are also effective as
if they had been included in the 2010 MLR interim final rule.
Accordingly, the corrections are effective January 1, 2011.
B. Overview of the Deadline for Issuers To Report Their Annual
Experience
The 2010 MLR rule established details regarding an issuer's
obligation under section 2718 to report information (for the prior
calendar year) to the Department of Health and Human Services (HHS) by
June 1st of each year on how it used its premium revenue. The first
such report is due on June 1, 2012. This information is used by HHS to
determine the issuer's MLR for the year in question, which reflects the
percentage of premium revenue expended on medical claims and health
care quality improvement. Section 2718 establishes MLR standards for
the percentage that must be spent on such costs: 80 percent for the
individual and small group insurance markets and 85 percent for the
large group market. An issuer that fails to meet the applicable MLR
standard must pay a premium rebate to policyholders. To assist the
issuer with reporting its experience, HHS developed and published an
MLR Annual Reporting Form, with instructions, that the issuer must
complete and submit. This correcting amendment makes minor revisions to
the regulations to help clarify how an issuer will capture and report
its 2011 experience. Because these corrections merely clarify the terms
of the 2010 MLR interim final rule that took effect on January 1, 2011,
the changes in this correcting amendment are applicable on January 1,
2011.
II. Summary of Errors
A. Corrections of Errors in the 2010 MLR Rule Preamble
We are making several technical and clarifying changes to the 2010
MLR rule. On page 74868, in the section regarding small group market
and large group
[[Page 28789]]
market, the 2010 MLR rule described how the PHS Act defined ``small
group'' before the enactment of the Affordable Care Act, without
explicitly addressing how to determine the number of employees for
purposes of that definition. Therefore, we are revising the preamble
language to reflect the fact that the PHS Act defined a group in terms
of the number of employees on the last day of the calendar year with
``2 to 50 employees in a small group and 51 or more employees in a
large group.'' This change will eliminate any ambiguity resulting from
the fact that Federal and State law may differ on how an issuer
determines the number of employees an employer has, and accurately
reflects that the Employee Retirement Income Security Act (ERISA) of
1974 governs this issue and ERISA instructs an issuer or employer to
use the last day of the year to determine the number of employees.
On page 74884, in the section regarding de minimis rebates, the
2010 MLR rule stated that issuers must aggregate the de minimis rebates
and distribute them in equal amounts to all then-current enrollees who
receive a premium credit. We are revising the preamble language by
removing the words ``then current'' before ``enrollees'' because these
words are technically inaccurate and conflict with language elsewhere
in the preamble, as there are circumstances when those receiving
rebates are no longer enrollees at the time of the rebate. In addition,
we are deleting the words ``premium credit'' and replacing them with
the word ``rebate.'' This change reflects the fact that, as made clear
elsewhere in the rule, the rebate may be provided in one of several
ways and not just by a premium credit.
B. Corrections of Errors in the Regulations Text
1. Errors in the 2010 MLR Rule
On page 74922, in Sec. 158.103 ``Definitions,'' for clarity we are
renaming ``Multi State Blended rate'' to read as ``Blended Rate.'' This
change corrects an inadvertent error in this section that qualifies
``blended rate'' by the words ``multi-State.'' As clear from other
parts of the 2010 MLR rule, an issuer can take advantage of this
provision even if the employer's employees are in the same State as
long as the coverage meets the remaining elements of the definition and
the rate is blended.
On pages 74922 through 74923, we are revising Sec. 158.120(d)(1)
to make explicit that where the individual market business is sold
through an association or a trust, the experience of the issuer must be
included in the State report for the issue State of the certificate of
coverage. As made clear elsewhere in the 2010 MLR rule, an individual
policy may also be issued to a trustee who is the policyholder, and
thus the word ``trust'' should be added to Sec. 158.120(d)(1). We are
also revising Sec. 158.120(d)(2) to state that for employer business
issued through a group trust or multiple employer welfare association
(MEWA), the experience of the issuer must be included in the State
report for the State where the employer (if sold through a trust) or
the MEWA (if the MEWA is the policyholder) has its principal place of
business. These changes reflect in the text of Sec. 158.120(d)(2) when
it is appropriate to report the policy's experience based on the situs
of the employer versus that of the MEWA.
On page 74923, we are revising Sec. 158.130(b)(3) to specify that
earned premium must include adjustments to account for any experience
rating refund when it is incurred, rather than when it is paid, and
revising Sec. 158.140(a), General requirements, to specify that the
report required in Sec. 158.110, which includes reserves for
contingent benefits, include any incurred experience rating refunds
(rather than just those that are paid or received). These changes are
necessary in order to make the language in Sec. 158.130(b)(3)
consistent with the National Association of Insurance Commissioners
(NAIC's) recommendations, which in the preamble we stated that we were
adopting.
On page 74923, we are also revising Sec. 158.140(a), General
requirements, to make our intent explicit that the report required in
Sec. 158.110 only include the medical claim portion of the total
amount claimed in lawsuits, and not claims for pain and suffering
damages, legal fees, court costs, punitive damages or anything other
than the underlying medical claim. We are also adding language to Sec.
158.140(a) referencing a 3-month run out period for incurred claims,
which was inadvertently omitted. This correction is needed to make this
provision consistent with the NAIC's recommendations to the Secretary,
dated October 27, 2010, which contain a 3-month run-out for incurred
claims, and with our statements in the 2010 MLR rule that we were
following the NAIC's recommendations to the Secretary. For the same
reason, we are further clarifying that although there is a 3-month run-
out period for incurred and paid claims, contract reserves should still
be determined as of the last day of the reporting year as there is no
parallel 3-month extension for calculating contract reserves.
On page 74923, in Sec. 158.140(a)(5), we inadvertently used the
word ``paid'' and omitted the word ``incurred'' before the words
``exclude rebates paid as required''. Therefore, we are correcting this
typographical error.
On page 74924, in Sec. 158.150(b)(2)(i)(A)(1), we mistakenly made
an incorrect reference to ``section 3606 of the Affordable Care Act''
when it is clear from context that the reference was to ``section 3502
of the Affordable Care Act''. Therefore, we are correcting this error.
On page 74925, in Sec. 158.150(c)(14), we mistakenly made an
incorrect cross reference to ``paragraph (c)'' instead of referencing
``paragraphs (a) or (b).'' The correction makes clear that items not
included as activities to improve health care quality are exclusions.
On page 74928, in Sec. 158.232(c)(1)(i), we are revising the
calculation of the per-person deductible for a policy that covers a
subscriber and the subscriber's dependents to mirror the NAIC's
recommendations, which we indicated in the 2010 MLR rule.
2. Error in the 2010 MLR Correction Notice
The 2010 MLR rule established Sec. 158.120(d)(1), describing
exceptions. This section was amended by the 2010 MLR correction notice
(see 75 FR 82278) and currently reads: ``For individual market business
sold through an association, the experience of the issuer must be
included in the State report for the issue State of the certificate of
coverage.'' In this correcting amendment, we further amend Sec.
158.120(d)(1) by adding the words ``or trust'' after the word
``association'' to reflect the fact that under the 2010 MLR rule the
exception also applies to individual market business sold through a
trust.
III. Correction of Errors in the Preamble
In FR Doc 2010-29596 of December 1, 2010, make the following
corrections:
1. On page 74868, third column, second full paragraph--
A. In line 21, insert the phrase ``the number of employees on the
last day of the calendar year, with'' before ``2 to 50 employees.''
B. In lines 21 and 22, insert the phrase ``in a small group and 51
or more employees'' before ``and a large group.'' Remove the word
``and'' before ``a large group'' and the words ``in terms of 51 or more
employees'' after the words ``a large group.''
[[Page 28790]]
2. On page 74884, third column, fifth full paragraph--
A. In line 14, remove the words ``then current.''
B. In line 15, revise the phrase ``premium credit'' to read
``rebate.''
IV. Waiver of Proposed Rulemaking and Delay in Effective Date
We ordinarily publish a notice of proposed rulemaking in the
Federal Register to provide a period for public comment before the
provisions of a rule take effect in accordance with section 553(b) of
the Administrative Procedure Act (APA) (5 U.S.C. 553(b)), and section
553(d) of the APA ordinarily requires a 30-day delay in effective date
of final rules after the date of their publication in the Federal
Register. These requirements may be waived, however, if an agency finds
for good cause that the delay is impracticable, unnecessary, or
contrary to the public interest, and the agency incorporates a
statement of the findings and its reasons in the rule issued.
In this case, we believe that it is unnecessary to provide for a
public comment period or to delay implementing these corrections, as
they clarify provisions of a final rule that has been subjected to
notice and comment procedures and do not make any substantive changes
to it.
List of Subjects in 45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Health plans, Penalties, Reporting and recordkeeping
requirements.
Accordingly, 45 CFR part 158 is corrected by making the following
correcting amendments:
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
1. The authority citation for part 158 continues to read as follows:
Authority: Sec. 2718 of the Public Health Service Act (42 U.S.C.
300gg-18, as amended).
0
2. Amend Sec. 158.103 as follows:
0
A. Remove the definition for ``Multi-State blended rate.''
0
B. Add a new definition for ``Blended rate'' in alphabetical order.
The addition reads as follows:
Sec. 158.103 Definitions.
* * * * *
Blended rate means a single rate charged for health insurance
coverage provided to a single employer through two or more of an
issuer's affiliated companies for employees in one or more States.
* * * * *
0
3. Amend Sec. 158.120 by revising paragraphs (d)(1) and (d)(2) to read
as follows:
Sec. 158.120 Aggregate reporting.
* * * * *
(d) * * *
(1) For individual market business sold through an association or
trust, the experience of the issuer must be included in the State
report for the issue State of the certificate of coverage.
(2) For employer business issued through a group trust or multiple
employer welfare association (MEWA), the experience of the issuer must
be included in the State report for the State where the employer (if
sold through a trust) or the MEWA (if the MEWA is the policyholder) has
its principal place of business.
* * * * *
Sec. 158.130 [Amended]
0
4. In Sec. 158.130(b)(3) remove the words ``paid or received'' and add
the word ``incurred'' in their place.
0
5. Amend Sec. 158.140 by revising paragraph (a) introductory text and
paragraph (a)(5) to read as follows:
Sec. 158.140 Reimbursement for clinical services provided to
enrollees.
(a) General requirements. The report required in Sec. 158.110 must
include direct claims paid to or received by providers, including under
capitation contracts with physicians, whose services are covered by the
policy for clinical services or supplies covered by the policy. In
addition, the report must include claim reserves associated with claims
incurred during the MLR reporting year, the change in contract
reserves, reserves for contingent benefits and the medical claim
portion of lawsuits, and any incurred experience rating refunds.
Reimbursement for clinical services, as defined in this section, is
referred to as ``incurred claims.'' All components of and adjustments
to incurred claims, with the exception of contract reserves, must be
calculated based on claims incurred only during the MLR reporting year
and paid through March 31st of the following year. Contract reserves
must be calculated as of December 31st of the applicable year.
* * * * *
(5) Incurred claims must include incurred experience rating refunds
and exclude rebates paid as required by Sec. 158.240 based upon prior
MLR reporting year experience.
* * * * *
Sec. 158.150 [Amended]
0
6. Amend Sec. 158.150 as follows:
0
A. In paragraph (b)(2)(i)(A)(1), remove ``section 3606'' and add in its
place ``section 3502.''
0
B. In paragraph (c)(14), remove the reference ``paragraph (c) of this
section'' and add in its place the reference ``paragraph (a) or (b) of
this section.''
0
7. Amend Sec. 158.232 by revising paragraph (c)(1)(i) to read as
follows:
Sec. 158.232 Calculating the credibility adjustment.
* * * * *
(c) * * *
(1) * * *
(i) The per person deductible for a policy that covers a subscriber
and the subscriber's dependents shall be the lesser of: The sum of the
deductible applicable to each of the individual family members; or the
overall family deductible for the subscriber and subscriber's family,
divided by two (regardless of the total number of individuals covered
through the subscriber).
* * * * *
Dated: May 10, 2012.
Jennifer Cannistra,
Executive Secretary to the Department.
[FR Doc. 2012-11773 Filed 5-15-12; 8:45 am]
BILLING CODE 4120-01-P
