Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Small Business Health Options Program, 15553-15558 [2013-04952]
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Federal Register / Vol. 78, No. 47 / Monday, March 11, 2013 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Parts 155 and 156
[CMS–9964–P2]
RIN 0938–AR76
Patient Protection and Affordable Care
Act; Establishment of Exchanges and
Qualified Health Plans; Small Business
Health Options Program
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
implement provisions of the Patient
Protection and Affordable Care Act and
the Health Care and Education
Reconciliation Act of 2010 (collectively
referred to as the Affordable Care Act)
related to the Small Business Health
Options Program (SHOP). Specifically,
this proposed rule would amend
existing regulations regarding triggering
events and special enrollment periods
for qualified employees and their
dependents and would implement a
transitional policy regarding employees’
choice of qualified health plans (QHPs)
in the SHOP.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on April 1, 2013.
ADDRESSES: In commenting, please refer
to file code CMS–9964–P2. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to http://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
address only: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–9964–P2, P.O. Box 8016,
Baltimore, MD 21244–8016.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address only: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–9964–P2,
Mail Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. Alternatively,
you may deliver (by hand or courier)
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SUMMARY:
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your written comments only to the
following addresses prior to the close of
the comment period:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue SW.,
Washington, DC 20201. (Because access
to the interior of the Hubert H.
Humphrey Building is not readily
available to persons without Federal
government identification, commenters
are encouraged to leave their comments
in the CMS drop slots located in the
main lobby of the building. A stamp-in
clock is available for persons wishing to
retain a proof of filing by stamping in
and retaining an extra copy of the
comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address, call
telephone number (410) 786–7195 in
advance to schedule your arrival with
one of our staff members.
Comments erroneously mailed to the
addresses indicated as appropriate for
hand or courier delivery may be delayed
and received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Leigha Basini at (301) 492–4307.
SUPPLEMENTARY INFORMATION: Inspection
of Public Comments: All comments
received before the close of the
comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: http://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
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15553
I. Executive Summary
Beginning in 2014, individuals and
small businesses will be able to
purchase private health insurance
through competitive marketplaces,
called Affordable Insurance Exchanges
or ‘‘Exchanges.’’ Section 1311(b)(1)(B) of
the Affordable Care Act directs each
state that chooses to operate an
Exchange to also establish a SHOP that
assists eligible small businesses in
providing health insurance options for
their employees. The final rule Patient
Protection and Affordable Care Act;
Establishment of Exchanges and
Qualified Health Plans; Exchange
Standards for Employers (Exchange
Establishment Rule) 1 as modified by the
Notice of Benefit and Payment
Parameters for 2014, published
elsewhere in this issue of the Federal
Register, set forth standards for the
administration of SHOP Exchanges. In
this proposed rule, we would amend
some of the standards established in
that final rule.
In the Exchange Establishment Rule,
we established standards for special
enrollment periods for people enrolled
through an Exchange or SHOP and
provided that, in most instances, a
special enrollment period is 60 days
from the date of the triggering event. See
45 CFR 155.420. We also made these
provisions applicable to SHOPs, at
§ 155.725(a)(3). We now propose to
amend the special enrollment period for
the SHOP to 30 days for most applicable
triggering events, so that it aligns with
the special enrollment periods for the
group market established by the Health
Insurance Portability and
Accountability Act of 1996 (HIPAA). To
further align the SHOP provisions with
HIPAA, we also propose that if an
employee or dependent becomes
eligible for premium assistance under
Medicaid or the Children’s Health
Insurance Program (CHIP) or loses
eligibility for Medicaid or CHIP, this
would be a triggering event, and the
employee or dependent would have a
60-day special enrollment period to
select a QHP. This triggering event had
previously been inadvertently omitted
from the regulations because it applies
only to group health plans and health
insurance coverage in the group market.
We are also proposing to make a
conforming change to § 156.285(b)(2), so
that this section references the SHOP
special enrollment periods in a way that
1 Patient Protection and Affordable Care Act;
Establishment of Exchanges and Qualified Health
Plans; Exchange Standards for Employers, 77 FR
18310 (Mar. 27, 2012) (to be codified at 45 CFR
parts 155, 156, & 157).
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is consistent with our proposed changes
to § 155.725.
In the Exchange Establishment Rule,
we also set forth the minimum functions
of a SHOP, including that the SHOP
must allow employers the option to
offer employees all QHPs at a level of
coverage chosen by the employer, and
that the SHOP may allow employers to
offer one or more QHPs to qualified
employees by other methods. We now
propose the following transitional
policy. For plan years beginning on or
after January 1, 2014 and before January
1, 2015, a SHOP would not be required
to permit qualified employers to offer
their qualified employees a choice of
QHPs at a single level of coverage but
would have the option of doing so. For
plan years beginning on or after January
1, 2014 and before January 1, 2015,
Federally-facilitated SHOPs (FF–
SHOPs) would not exercise this option,
but would instead assist employers in
choosing a single QHP to offer their
qualified employees. This transitional
policy is intended to provide additional
time to prepare for an employee choice
model and to increase the stability of
the small group market while providing
small groups with the benefits of SHOP
in 2014 (such as a choice among
competing QHPs and access for
qualifying small employers to the small
business health insurance tax credit).
We are also proposing changes to the
effective date of the SHOP premium
aggregation function set forth at
§ 155.705(b)(4) in the Exchange
Establishment Rule consistent with this
transitional policy.
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II. Background
A. Legislative Overview
Section 1311(b) of the Affordable Care
Act establishes that each state that
operates an Exchange will also operate
a SHOP. The SHOP is designed to assist
qualified small employers in providing
health insurance options to their
employees.
Section 1311(c)(6) of the Affordable
Care Act sets forth that the Secretary of
Health and Human Services (HHS) shall
require Exchanges to provide for special
enrollment periods. Section 155.420 of
the Exchange Establishment Rule
established special enrollment periods
for the individual market, and
§ 155.725(a)(3) established them for the
SHOP.
Section 1312(a)(2) of the Affordable
Care Act provides that qualified
employers may offer qualified
employees a choice among all QHPs at
a level of coverage chosen by the
employer. Section 1312(f)(2)(A) defines
a qualified employer as a small
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employer that elects to make all fulltime employees of such employer
eligible for one or more QHPs offered in
the small group market through an
Exchange that offers QHPs. The
Exchange Establishment Rule set forth
standards for the SHOP and
implemented section 1312 at 45 CFR,
part 155, subpart H.
B. Stakeholder Consultation and Input
HHS has consulted with a wide range
of interested stakeholders on policy
matters related to the SHOP, including
through regular conversations with the
National Association of Insurance
Commissioners (NAIC), health
insurance issuers, trade groups,
consumer advocates, employers, agents
and brokers, and other interested
parties. HHS has also held many
consultations with states about the
SHOP, both individually and through
group conversations. HHS received
many comments in response to the
Exchange Establishment proposed rule,2
including comments regarding the
statutory provisions on SHOP employee
choice and special enrollment periods
for employees and their dependents, to
which we responded in the Exchange
Establishment Rule. HHS also received
comments in response to the December
2012 Notice of Benefit and Payment
Parameters for 2014 proposed rule,3 to
which we responded in the Notice of
Benefit and Payment Parameters for
2014 final rule, published elsewhere in
this issue of the Federal Register. We
considered these stakeholder comments
in developing this proposed rule.
C. Structure of the Proposed Rule
The regulations outlined in this
proposed rule would be codified in 45
CFR parts 155 and 156. The provisions
in part 155 outline the standards
relative to the establishment, operation,
and functions of Exchanges, including
the SHOP. The provisions in part 156
outline the health insurance issuer
standards under the Affordable Care
Act, including standards related to
Exchanges and SHOPs.
2 Patient Protection and Affordable Care Act;
Establishment of Exchanges and Qualified Health
Plans; Proposed Rule, 76 FR 41866 (July 15, 2011)
(to be codified at 45 CFR parts 155 and 156).
3 Patient Protection and Affordable Care Act; HHS
Notice of Benefit and Payment Parameters for 2014;
Proposed Rule, 77 FR 73118 (Dec. 7, 2012) (to be
codified at 45 CFR parts 153, 155, 156, 157, and
158).
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III. Provisions of the Proposed
Regulations
A. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. Subpart H—Exchange Functions:
Small Business Health Options Program
(SHOP)
a. Functions of a SHOP (§ 155.705)
Facilitating employee choice at a
single level of coverage selected by the
employer—bronze, silver, gold, or
platinum—is a required SHOP function
established in the Exchange
Establishment Rule (45 CFR
155.705(b)(2)) and discussed in greater
detail in the preamble to the December
2012 HHS Notice of Benefit and
Payment Parameters for 2014 proposed
rule. In addition, the rules permit
SHOPs to allow a qualified employer to
choose one QHP for employees
(§ 155.705(b)(3)). Because providing
employees with a choice of QHPs at the
same level of coverage would create no
additional costs for an employer who
would otherwise offer only one QHP to
its employees, we proposed in the
December 2012 HHS Notice of Benefit
and Payment Parameters for 2014
proposed rule that qualified employers
in FF–SHOPs would choose a level of
coverage (bronze, silver, gold, or
platinum) and a contribution, and
employees would then choose any QHP
at that level.
When we proposed this policy, we
also sought comments on a transitional
policy in which a FF–SHOP would
allow or direct employers to offer to
their employees a single QHP from
those offered through the SHOP (77 FR
73184). A few commenters opposed
offering the single QHP option,
suggesting that each FF–SHOP should
focus on providing employee choice.
Most commenters on this issue,
however, supported offering a single
QHP option for employers, either as an
additional option or as the only option
in the initial years of the FF–SHOP. The
commenters who supported providing a
qualified employer only the option of
offering a single QHP in the initial years
of FF–SHOP operation cited several
concerns, including the following:
Whether issuers could meet the
deadlines for submission of small group
market QHPs given the new small group
market rating rules; whether issuers
could complete enrollment and
accounting system changes required to
interact with the SHOP enrollment and
premium aggregation systems required
by employee choice; and whether there
would be adequate time to educate
employers, employees, and brokers
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about the employer and employee
choices available in the SHOP. The
commenters stated that issuer efforts to
prepare and price QHPs for an employee
choice environment and to make the
systems and operational changes
required for SHOP enrollment and
premium aggregation could compete
with efforts to prepare for participation
in the Exchange (both individual and
SHOP).
Most of these comments supported
allowing employers the option to offer
only a single QHP in the FF–SHOP.
Consequently, we concluded in the final
HHS Notice of Benefit and Payment
Parameters for 2014, published
concurrently with this proposed rule,
that the FF–SHOP would provide
employers the choice of offering only a
single QHP, as employers customarily
do today, in addition to the choice of
offering all QHPs at a single level of
coverage.
We note that the comments in
response to the draft Notice of Benefit
and Payment Parameters for 2014
identified challenges to effective
implementation of employee choice in
the FF–SHOP in 2014; we also note that
most of the comments also apply to
implementation challenges in Statebased SHOPs. In order to respond to
these comments and to provide both
State-based SHOPs and FF–SHOPs with
greater flexibility, we therefore now
propose to delay until 2015
implementation of the employee choice
model as a requirement for all SHOPs.
We also now propose that FF–SHOPs
should assist qualified employers in
offering qualified employees a single
QHP choice for plan years beginning
during calendar year 2014, which
qualifies certain of these employers for
the small business tax credit.
The Exchange Establishment Rule
also included a premium aggregation
function for the SHOP that was
designed to assist employers whose
employees were enrolled in multiple
QHPs. Because this function will not be
necessary in 2014 for SHOPs that delay
implementation of the employee choice
model, we have also proposed at
§ 155.705(b)(4) that the premium
aggregation function be optional for
plan years beginning before January 1,
2015.
Specifically, we are now proposing
amendments to § 155.705(b)(2), (b)(3),
and (b)(4) providing as follows: (1) The
effective date of the employer choice
requirements at § 155.705(b)(2) and the
premium aggregation requirements at
§ 155.705(b)(4) for both State-based
SHOPs and FF–SHOPs will be January
1, 2015; (2) State-based SHOPs could
elect to offer employee choice and
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perform premium aggregation for plan
years beginning before January 1, 2015,
but need not do so; and (3) FF–SHOPs
will begin to offer employee choice and
premium aggregation in plan years
beginning on or after January 1, 2015.
We welcome further comment on this
proposal.
b. Enrollment Periods Under SHOP
(§ 155.725)
The Exchange Establishment Rule
established special enrollment periods
for Exchanges serving the individual
market (§ 155.420), and the SHOP
regulations adopted most of these
provisions by reference (§ 155.725(a)(3)).
Under these regulations, unless
specifically stated otherwise in the
regulations, a qualified individual has
60 days from the date of the triggering
event to select a QHP (§ 155.420(c)).
This SHOP provision differs from the
length of special enrollment periods in
group markets provided by HIPAA,
which last for 30 days after loss of
eligibility for other private insurance
coverage or after a person becomes a
dependent through marriage, birth,
adoption, or placement for adoption.4
Because we believe that there is no
rationale for providing a longer special
enrollment period in a SHOP than is
provided in the group market outside
the SHOP, we propose amendments to
§ 155.725 to clarify that a qualified
employee or dependent of a qualified
employee who has obtained coverage
through the SHOP would have 30 days
from the date of most of the triggering
events specified in § 155.420 to select a
QHP. Additionally, consistent with
revisions to HIPAA enacted by the
Children’s Health Insurance Program
Reauthorization Act of 2009 (CHIPRA),
Public Law 111–3, § 311 (Feb. 4, 2009),
we propose that a qualified employee or
dependent of a qualified employee who
has become ineligible for Medicaid or
CHIP or who has become eligible for
state premium assistance under a
Medicaid or CHIP program would be
eligible for a special enrollment period
in a SHOP and would have 60 days from
the date of the triggering event to select
a QHP. Specifically, we propose striking
§ 155.725(a)(3) and adding a new
paragraph (j) consolidating the proposed
SHOP special enrollment provisions in
one paragraph. We propose a provision
clarifying that a dependent of a
qualified employee is only eligible for a
special enrollment period if the
employer offers coverage to dependents
of qualified employees. We also propose
4 See 26 CFR 54.9801–6, 29 CFR 2590.701–6, and
45 CFR 146.117 for regulations regarding special
enrollment periods under HIPAA.
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15555
paragraphs (j)(5) and (j)(6) that retain
certain provisions relating to effective
dates of coverage and loss of minimum
essential coverage from the original
§ 155.420. We propose conforming
revisions to § 156.285(b)(2), so that
provision would reference the special
enrollment periods in proposed
§ 155.725(j) instead of those set forth at
§ 155.420. We believe these changes
appropriately align the SHOP provisions
with provisions applicable to the rest of
the group market, and welcome
comment on the proposal.
IV. Collection of Information
Requirements
This proposed rule, if finalized,
would not impose new or alter existing
information collection and
recordkeeping requirements.
Consequently, it need not be reviewed
by the Office of Management and
Budget under the authority of the
Paperwork Reduction Act of 1995.
V. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and, when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document.
VI. Regulatory Impact Analysis
We have examined the impact of this
final rule as required by Executive
Order 12866 on Regulatory Planning
and Review (September 30, 1993) and
Executive Order 13563 on Improving
Regulation and Regulatory Review
(January 18, 2011). 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). A regulatory impact analysis
(RIA) must be prepared for major rules
with economically significant effects
($100 million or more in any one year).
It is HHS’s belief that this proposed rule
does not reach this economic threshold
and thus is not considered a major rule.
This proposed rule consists of a
provision to amend the duration of
certain special enrollment periods to
correspond to the duration in group
markets under HIPAA. The rule also
proposes to add a triggering event that
would create a special enrollment
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period for qualified employees and/or
their eligible dependents when an
employee or qualified dependent with
coverage through the SHOP becomes
eligible for state premium assistance
under Medicaid or CHIP or loses
eligibility for Medicaid or CHIP. HIPAA,
as revised by CHIPRA, already includes
this triggering event, which was
inadvertently omitted from the original
list in § 155.420(d) because it applies
only to group health plans and health
insurance coverage in the group market.
We do not believe either of these actions
would impose any new costs on issuers,
employers, enrollees, or the SHOP. In
fact, the proposed amendment would
create alignment of SHOP regulations
with laws for the existing group market
and could potentially create efficiencies
for QHP issuers.
Finally, this proposed rule would
require SHOPs to provide qualified
employers the option to offer qualified
employees a choice of any QHP at a
single metal level starting with plan
years beginning on or after January 1,
2015, instead of January 1, 2014. For
plan years beginning in calendar year
2014, qualified employers would offer
qualified employees coverage under a
single QHP in FF–SHOPs; State-based
SHOPs would have the flexibility to
offer either employer or employee
choice in 2014. In our analysis of the
impact of employer and employee
choices in the Notice of Benefit and
Payment Parameters for 2014 final rule,
published elsewhere in this issue of the
Federal Register, we noted that adding
the option for employers to offer a single
QHP would have the potential effect of
reducing adverse selection and any
associated risk premium and a slight
effect of decreasing the consumer
benefit resulting from choice. We
believe the same analysis applies to our
proposal to provide employer choice in
2014.
Issuers will incur costs adapting their
enrollment and financial systems to
interact with a SHOPs enrollment and
premium aggregation systems. The costs
and benefits of Exchange and SHOP
implementation were assessed in the
RIA for the Exchange Establishment
final rule, titled Patient Protection and
Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans,
Exchange Standards for Employers and
Standards Related to Reinsurance, Risk
Corridors and Risk Adjustment
Regulatory Impact Analysis (Exchange
RIA).5 Because issuers may now have an
5 Patient Protection and Affordable Care Act;
Establishment of Exchanges and Qualified Health
Plans, Exchange Standards for Employers and
Standards Related to Reinsurance, Risk Corridors
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additional year to develop these systems
and may thus be able to stage their
efforts rather than implementing all
system changes by October 1, 2013, we
believe that the total cost will be
unchanged in total.
From the Exchange perspective, in the
Exchange RIA, we noted that a Statebased Exchange could incur costs in
establishing a premium aggregation
function for the SHOP. Therefore, the
policy in this proposed rule could
decrease costs to states that operate a
State-based Exchange for the 2014 plan
year.
VII. 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 would 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
as its measure of significant economic
impact on a substantial number of small
entities a change in revenues of more
than 3 percent.
The RFA requires agencies to analyze
options for regulatory relief of small
businesses, if a proposed rule has a
significant impact on a substantial
number of small entities. For purposes
of the RFA, small entities include small
businesses, nonprofit organizations, and
small government jurisdictions. Small
businesses are those with sizes below
thresholds established by the SBA.
For the purposes of the regulatory
flexibility analysis, we expect the
following types of entities to be affected
by this proposed rule—(1) small
employers and (2) QHP issuers.
As discussed in Health Insurance
Issuers Implementing Medical Loss
Ratio (MLR) Requirements Under the
Patient Protection and Affordable Care
Act; Interim Final Rule,6 few, if any,
and Risk Adjustment Regulatory Impact Analysis,
March 2012. Available at: http://cciio.cms.gov/
resources/files/Files2/03162012/hie3r-ria032012.pdf.
6 Health Insurance Issuers Implementing Medical
Loss Ratio (MLR) Requirements Under the Patient
Protection and Affordable Care Act; Interim Final
Rule, 75 FR 74864, 74918–20 (Dec. 1, 2010) (to be
codified at 45 CFR part 158).
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issuers are small enough to fall below
the size thresholds for small business
established by the SBA. In that rule, we
used a data set created from 2009
National Association of Insurance
Commissioners (NAIC) Health and Life
Blank annual financial statement data to
develop an updated estimate of the
number of small entities that offer
comprehensive major medical coverage
in the individual and group markets.
For purposes of that analysis, HHS used
total Accident and Health earned
premiums as a proxy for annual
receipts. We estimated that there are 28
small entities with less than $7 million
in accident and health earned premiums
offering individual or group
comprehensive major medical
coverage.7 However, this estimate may
overstate the actual number of small
health insurance issuers offering such
coverage, since it does not include
receipts from these companies’ other
lines of business. We further estimate
that any issuers that would be
considered small businesses are likely
to be subsidiaries of larger issuers that
are not small businesses.
The SHOP is limited by statute to
employers with at least one but not
more than 100 employees. For this
reason, we expect that many employers
would meet the SBA standard for small
entities. We do not believe that this
proposed regulation would impose
requirements on employers offering
coverage through the SHOP that are
more restrictive than current
requirements on employers offering
employer-sponsored health insurance.
Specifically, small employers are
currently required to offer the special
enrollment period that we propose
would apply to eligible employees and
dependents with coverage through the
SHOP, and the triggering event that we
propose currently applies to eligible
individuals and dependents, as well.
The proposed provision would merely
apply existing standards to the SHOP.
Additionally, the transitional policy
regarding employee choice does not
impose new requirements on small
employers because most small
employers currently offer only one
health insurance plan to their
employees.
Based on the foregoing, we are not
preparing an analysis for the RFA
7 According to SBA size standards, entities with
average annual receipts of $7 million or less would
be considered small entities for North American
Industry Classification System (NAICS) Code
524114 (Direct Health and Medical Insurance
Carriers). For more information, see ‘‘Table of Size
Standards Matched To North American Industry
Classification System Codes,’’ effective March 26,
2012, U.S. Small Business Administration, available
at http://www.sba.gov.
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because we have determined, and the
Secretary certifies, that this proposed
rule would not have a significant
economic impact on a substantial
number of small entities.
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VIII. 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 proposed rule
(and subsequent final rule) that includes
any federal mandate that may result in
expenditures in any one 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 2012, that
threshold is approximately $139
million. UMRA does not address the
total cost of a rule. Rather, it focuses on
certain categories of costs, mainly those
‘‘federal mandate’’ costs resulting from:
(1) Imposing enforceable duties on state,
local, or tribal governments, or on the
private sector; or (2) increasing the
stringency of conditions in, or
decreasing the funding of, state, local, or
tribal governments under entitlement
programs.
This proposed rule does not place any
financial mandates on state, local, or
tribal governments. It proposes the
application of a triggering event and
special enrollment period to coverage
through the SHOP, modification of the
duration of certain special enrollment
periods, and implementation of
employee choice in the SHOP starting
with plan years on or after January 1,
2015. These proposed amendments
would only affect state governments to
the extent that they operate a SHOP and,
if they are affected, would not place any
new financial mandates on them.
IX. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
costs on state and local governments,
preempts state law, or otherwise has
Federalism implications. This proposed
regulation does not impose any costs on
state or local governments.
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
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Commissioners (NAIC), and consulting
with State insurance officials on an
individual basis. We believe that this
proposed rule does not impose
substantial direct costs on state and
local governments, preempt state law, or
otherwise have federalism implications.
We note that we have attempted to
provide states that choose to operate a
SHOP with flexibility such that states
may, if they choose, offer employee
choice beginning with plan years
starting on or after January 1, 2014, or
they may delay this implementation
until plan years starting on or after
January 1, 2015.
Pursuant to the requirements set forth
in section 8(a) of Executive Order
13132, and by the signatures affixed to
this regulation, the Department of
Health and Human Services certifies
that CMS has complied with the
requirements of Executive Order 13132
for the attached proposed regulation in
a meaningful and timely manner.
List of Subjects
45 CFR Part 155
Administrative practice and
procedure, Advertising, Advisory
Committees, Brokers, Conflict of
interest, Consumer protection, Grant
programs-health, Grants administration,
Health care, Health insurance, Health
maintenance organization (HMO),
Health records, Hospitals, American
Indian/Alaska Natives, Individuals with
disabilities, Loan programs-health,
Organization and functions
(Government agencies), Medicaid,
Public assistance programs, Reporting
and recordkeeping requirements, State
and local governments, Sunshine Act,
Technical assistance, Women, and
Youth.
45 CFR Part 156
Administrative practice and
procedure, Advertising, Advisory
Committees, Brokers, Conflict of
interest, Consumer protection, Grant
programs-health, Grants administration,
Health care, Health insurance, Health
maintenance organization (HMO),
Health records, Hospitals, Indians,
Individuals with disabilities, Loan
programs-health, Organization and
functions (Government agencies),
Medicaid, Public assistance programs,
Reporting and recordkeeping
requirements, Safety, State and local
governments, Sunshine Act, Technical
assistance, Women, and Youth
For the reasons set forth in the
preamble, the Department of Health and
Human Services proposes to amend 45
CFR parts 155 and 156 as set forth
below:
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15557
PART 155—EXCHANGE
ESTABLISHMENT STANDARDS AND
OTHER RELATED STANDARDS
UNDER THE AFFORDABLE CARE ACT
1. 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, 1334, 1402,
1411, 1412, 1413.
2. Section 155.705 is amended by
revising paragraphs (b)(2), (b)(3), and
(b)(4) to read as follows:
■
§ 155.705
Functions of a SHOP.
*
*
*
*
*
(b) * * *
(2) Employer choice requirements.
With regard to QHPs offered through the
SHOP for plan years beginning on or
after January 1, 2015, the SHOP must
allow a qualified employer to select a
level of coverage as described in section
1302(d)(1) of the Affordable Care Act, in
which all QHPs within that level are
made available to the qualified
employees of the employer.
(3) SHOP options with respect to
employer choice requirements. (i) For
plan years beginning before January 1,
2015, a SHOP may allow a qualified
employer to make one or more QHPs
available to qualified employees:
(A) By the method described in
paragraph (b)(2) of this section, or
(B) By a method other than the
method described in paragraph (b)(2) of
this section.
(ii) For plan years beginning on or
after January 1, 2015, a SHOP:
(A) Must allow an employer to make
available to qualified employees all
QHPs at the level of coverage selected
by the employer as described in
paragraph (b)(2) of this section, and
(B) May allow an employer to make
one or more QHPs available to qualified
employees by a method other than the
method described in paragraph (b)(2) of
this section.
(iii) For plan years beginning before
January 1, 2015, a Federally-facilitated
SHOP will only provide a qualified
employer the choice to make available
to qualified employees a single QHP.
(iv) For plan years beginning on or
after January 1, 2015, a Federallyfacilitated SHOP will provide a
qualified employer a choice of two
methods to make QHPs available to
qualified employees:
(A) The employer may choose a level
of coverage as described in paragraph
(b)(2) of this section, or
(B) The employer may choose a single
QHP.
(4)(i) Premium aggregation. Consistent
with the effective dates set forth in
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paragraph (b)(4)(ii)of this section, the
SHOP must perform the following
functions related to premium payment
administration:
(A) Provide each qualified employer
with a bill on a monthly basis that
identifies the employer contribution, the
employee contribution, and the total
amount that is due to the QHP issuers
from the qualified employer;
(B) Collect from each employer the
total amount due and make payments to
QHP issuers in the SHOP for all
enrollees; and
(C) Maintain books, records,
documents, and other evidence of
accounting procedures and practices of
the premium aggregation program for
each benefit year for at least 10 years.
(ii) Effective dates.
(A) A State-based SHOP may elect to
perform these functions for plan years
beginning before January 1, 2015, but
need not do so.
(B) A Federally-facilitated SHOP will
perform these functions only in plan
years beginning on or after January 1,
2015.
*
*
*
*
*
■ 3. Section 155.725 is amended by
removing paragraph (a)(3), and adding
paragraph (j) to read as follows:
§ 155.725
Enrollment periods under SHOP.
*
*
*
*
(j)(1) Special enrollment periods. The
SHOP must provide special enrollment
periods consistent with this section,
during which certain qualified
employees or a dependent of a qualified
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*
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employee may enroll in QHPs and
enrollees may change QHPs.
(2) The SHOP must provide a special
enrollment period for a qualified
employee or dependent of a qualified
employee who:
(i) Experiences an event described in
§ 155.420 (d)(1), (2), (4), (5), (7), (8), or
(9);
(ii) Loses eligibility for coverage
under a Medicaid plan under title XIX
of the Social Security Act or a state
child health plan under title XXI of the
Social Security Act; or
(iii) Becomes eligible for assistance,
with respect to coverage under a SHOP,
under such Medicaid plan or a state
child health plan (including any waiver
or demonstration project conducted
under or in relation to such a plan).
(3) A qualified employee or
dependent of a qualified employee who
experiences a qualifying event described
in paragraph (j)(2) of this section has:
(i) 30 days from the date of a
triggering event described in paragraph
(j)(2)(i) of this section to select a QHP
through the SHOP; and
(ii) 60 days from the date of a
triggering event described in paragraph
(j)(2)(ii) of this section or (iii) of this
section to select a QHP through the
SHOP;
(4) A dependent of a qualified
employee is not eligible for a special
election period if the employer does not
extend the offer of coverage to
dependents.
(5) The effective dates of coverage are
determined using the provisions of
§ 155.420(b).
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Sfmt 9990
(6) Loss of minimum essential
coverage is determined using the
provisions of § 155.420(e).
PART 156—HEALTH INSURANCE
ISSUER STANDARDS UNDER THE
AFFORDABLE CARE ACT, INCLUDING
STANDARDS RELATED TO
EXCHANGES
4. The authority citation for part 156
continues to read as follows:
■
Authority: Title I of the Affordable Care
Act, sections 1301–1304, 1311–1312, 1321,
1322, 1324, 1334, 1341–1343, and 1401–
1402, Pub l. 111–148, 124 Stat. 119 (42 U.S.C.
18042).
5. Section 156.285 is amended by
revising paragraph (b)(2) to read as
follows:
■
§ 156.285
SHOP.
Additional standards specific to
*
*
*
*
*
(b) * * *
(2) Provide special enrollment periods
as described in § 155.725(j).
*
*
*
*
*
Dated: February 25, 2013.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Approved: February 27, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2013–04952 Filed 3–1–13; 11:15 am]
BILLING CODE 4120–01–P
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Agencies
[Federal Register Volume 78, Number 47 (Monday, March 11, 2013)]
[Proposed Rules]
[Pages 15553-15558]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04952]
Federal Register / Vol. 78, No. 47 / Monday, March 11, 2013 /
Proposed Rules
[[Page 15553]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 155 and 156
[CMS-9964-P2]
RIN 0938-AR76
Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans; Small Business Health Options
Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would implement provisions of the Patient
Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010 (collectively referred to as the Affordable
Care Act) related to the Small Business Health Options Program (SHOP).
Specifically, this proposed rule would amend existing regulations
regarding triggering events and special enrollment periods for
qualified employees and their dependents and would implement a
transitional policy regarding employees' choice of qualified health
plans (QHPs) in the SHOP.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on April 1, 2013.
ADDRESSES: In commenting, please refer to file code CMS-9964-P2.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9964-P2, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9964-P2, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments only to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201. (Because access to the interior of the Hubert H. Humphrey
Building is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Leigha Basini at (301) 492-4307.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following Web site as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Executive Summary
Beginning in 2014, individuals and small businesses will be able to
purchase private health insurance through competitive marketplaces,
called Affordable Insurance Exchanges or ``Exchanges.'' Section
1311(b)(1)(B) of the Affordable Care Act directs each state that
chooses to operate an Exchange to also establish a SHOP that assists
eligible small businesses in providing health insurance options for
their employees. The final rule Patient Protection and Affordable Care
Act; Establishment of Exchanges and Qualified Health Plans; Exchange
Standards for Employers (Exchange Establishment Rule) \1\ as modified
by the Notice of Benefit and Payment Parameters for 2014, published
elsewhere in this issue of the Federal Register, set forth standards
for the administration of SHOP Exchanges. In this proposed rule, we
would amend some of the standards established in that final rule.
---------------------------------------------------------------------------
\1\ Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans; Exchange Standards for
Employers, 77 FR 18310 (Mar. 27, 2012) (to be codified at 45 CFR
parts 155, 156, & 157).
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In the Exchange Establishment Rule, we established standards for
special enrollment periods for people enrolled through an Exchange or
SHOP and provided that, in most instances, a special enrollment period
is 60 days from the date of the triggering event. See 45 CFR 155.420.
We also made these provisions applicable to SHOPs, at Sec.
155.725(a)(3). We now propose to amend the special enrollment period
for the SHOP to 30 days for most applicable triggering events, so that
it aligns with the special enrollment periods for the group market
established by the Health Insurance Portability and Accountability Act
of 1996 (HIPAA). To further align the SHOP provisions with HIPAA, we
also propose that if an employee or dependent becomes eligible for
premium assistance under Medicaid or the Children's Health Insurance
Program (CHIP) or loses eligibility for Medicaid or CHIP, this would be
a triggering event, and the employee or dependent would have a 60-day
special enrollment period to select a QHP. This triggering event had
previously been inadvertently omitted from the regulations because it
applies only to group health plans and health insurance coverage in the
group market. We are also proposing to make a conforming change to
Sec. 156.285(b)(2), so that this section references the SHOP special
enrollment periods in a way that
[[Page 15554]]
is consistent with our proposed changes to Sec. 155.725.
In the Exchange Establishment Rule, we also set forth the minimum
functions of a SHOP, including that the SHOP must allow employers the
option to offer employees all QHPs at a level of coverage chosen by the
employer, and that the SHOP may allow employers to offer one or more
QHPs to qualified employees by other methods. We now propose the
following transitional policy. For plan years beginning on or after
January 1, 2014 and before January 1, 2015, a SHOP would not be
required to permit qualified employers to offer their qualified
employees a choice of QHPs at a single level of coverage but would have
the option of doing so. For plan years beginning on or after January 1,
2014 and before January 1, 2015, Federally-facilitated SHOPs (FF-SHOPs)
would not exercise this option, but would instead assist employers in
choosing a single QHP to offer their qualified employees. This
transitional policy is intended to provide additional time to prepare
for an employee choice model and to increase the stability of the small
group market while providing small groups with the benefits of SHOP in
2014 (such as a choice among competing QHPs and access for qualifying
small employers to the small business health insurance tax credit). We
are also proposing changes to the effective date of the SHOP premium
aggregation function set forth at Sec. 155.705(b)(4) in the Exchange
Establishment Rule consistent with this transitional policy.
II. Background
A. Legislative Overview
Section 1311(b) of the Affordable Care Act establishes that each
state that operates an Exchange will also operate a SHOP. The SHOP is
designed to assist qualified small employers in providing health
insurance options to their employees.
Section 1311(c)(6) of the Affordable Care Act sets forth that the
Secretary of Health and Human Services (HHS) shall require Exchanges to
provide for special enrollment periods. Section 155.420 of the Exchange
Establishment Rule established special enrollment periods for the
individual market, and Sec. 155.725(a)(3) established them for the
SHOP.
Section 1312(a)(2) of the Affordable Care Act provides that
qualified employers may offer qualified employees a choice among all
QHPs at a level of coverage chosen by the employer. Section
1312(f)(2)(A) defines a qualified employer as a small employer that
elects to make all full-time employees of such employer eligible for
one or more QHPs offered in the small group market through an Exchange
that offers QHPs. The Exchange Establishment Rule set forth standards
for the SHOP and implemented section 1312 at 45 CFR, part 155, subpart
H.
B. Stakeholder Consultation and Input
HHS has consulted with a wide range of interested stakeholders on
policy matters related to the SHOP, including through regular
conversations with the National Association of Insurance Commissioners
(NAIC), health insurance issuers, trade groups, consumer advocates,
employers, agents and brokers, and other interested parties. HHS has
also held many consultations with states about the SHOP, both
individually and through group conversations. HHS received many
comments in response to the Exchange Establishment proposed rule,\2\
including comments regarding the statutory provisions on SHOP employee
choice and special enrollment periods for employees and their
dependents, to which we responded in the Exchange Establishment Rule.
HHS also received comments in response to the December 2012 Notice of
Benefit and Payment Parameters for 2014 proposed rule,\3\ to which we
responded in the Notice of Benefit and Payment Parameters for 2014
final rule, published elsewhere in this issue of the Federal Register.
We considered these stakeholder comments in developing this proposed
rule.
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\2\ Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans; Proposed Rule, 76 FR 41866
(July 15, 2011) (to be codified at 45 CFR parts 155 and 156).
\3\ Patient Protection and Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for 2014; Proposed Rule, 77 FR 73118
(Dec. 7, 2012) (to be codified at 45 CFR parts 153, 155, 156, 157,
and 158).
---------------------------------------------------------------------------
C. Structure of the Proposed Rule
The regulations outlined in this proposed rule would be codified in
45 CFR parts 155 and 156. The provisions in part 155 outline the
standards relative to the establishment, operation, and functions of
Exchanges, including the SHOP. The provisions in part 156 outline the
health insurance issuer standards under the Affordable Care Act,
including standards related to Exchanges and SHOPs.
III. Provisions of the Proposed Regulations
A. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Subpart H--Exchange Functions: Small Business Health Options Program
(SHOP)
a. Functions of a SHOP (Sec. 155.705)
Facilitating employee choice at a single level of coverage selected
by the employer--bronze, silver, gold, or platinum--is a required SHOP
function established in the Exchange Establishment Rule (45 CFR
155.705(b)(2)) and discussed in greater detail in the preamble to the
December 2012 HHS Notice of Benefit and Payment Parameters for 2014
proposed rule. In addition, the rules permit SHOPs to allow a qualified
employer to choose one QHP for employees (Sec. 155.705(b)(3)). Because
providing employees with a choice of QHPs at the same level of coverage
would create no additional costs for an employer who would otherwise
offer only one QHP to its employees, we proposed in the December 2012
HHS Notice of Benefit and Payment Parameters for 2014 proposed rule
that qualified employers in FF-SHOPs would choose a level of coverage
(bronze, silver, gold, or platinum) and a contribution, and employees
would then choose any QHP at that level.
When we proposed this policy, we also sought comments on a
transitional policy in which a FF-SHOP would allow or direct employers
to offer to their employees a single QHP from those offered through the
SHOP (77 FR 73184). A few commenters opposed offering the single QHP
option, suggesting that each FF-SHOP should focus on providing employee
choice. Most commenters on this issue, however, supported offering a
single QHP option for employers, either as an additional option or as
the only option in the initial years of the FF-SHOP. The commenters who
supported providing a qualified employer only the option of offering a
single QHP in the initial years of FF-SHOP operation cited several
concerns, including the following: Whether issuers could meet the
deadlines for submission of small group market QHPs given the new small
group market rating rules; whether issuers could complete enrollment
and accounting system changes required to interact with the SHOP
enrollment and premium aggregation systems required by employee choice;
and whether there would be adequate time to educate employers,
employees, and brokers
[[Page 15555]]
about the employer and employee choices available in the SHOP. The
commenters stated that issuer efforts to prepare and price QHPs for an
employee choice environment and to make the systems and operational
changes required for SHOP enrollment and premium aggregation could
compete with efforts to prepare for participation in the Exchange (both
individual and SHOP).
Most of these comments supported allowing employers the option to
offer only a single QHP in the FF-SHOP. Consequently, we concluded in
the final HHS Notice of Benefit and Payment Parameters for 2014,
published concurrently with this proposed rule, that the FF-SHOP would
provide employers the choice of offering only a single QHP, as
employers customarily do today, in addition to the choice of offering
all QHPs at a single level of coverage.
We note that the comments in response to the draft Notice of
Benefit and Payment Parameters for 2014 identified challenges to
effective implementation of employee choice in the FF-SHOP in 2014; we
also note that most of the comments also apply to implementation
challenges in State-based SHOPs. In order to respond to these comments
and to provide both State-based SHOPs and FF-SHOPs with greater
flexibility, we therefore now propose to delay until 2015
implementation of the employee choice model as a requirement for all
SHOPs. We also now propose that FF-SHOPs should assist qualified
employers in offering qualified employees a single QHP choice for plan
years beginning during calendar year 2014, which qualifies certain of
these employers for the small business tax credit.
The Exchange Establishment Rule also included a premium aggregation
function for the SHOP that was designed to assist employers whose
employees were enrolled in multiple QHPs. Because this function will
not be necessary in 2014 for SHOPs that delay implementation of the
employee choice model, we have also proposed at Sec. 155.705(b)(4)
that the premium aggregation function be optional for plan years
beginning before January 1, 2015.
Specifically, we are now proposing amendments to Sec.
155.705(b)(2), (b)(3), and (b)(4) providing as follows: (1) The
effective date of the employer choice requirements at Sec.
155.705(b)(2) and the premium aggregation requirements at Sec.
155.705(b)(4) for both State-based SHOPs and FF-SHOPs will be January
1, 2015; (2) State-based SHOPs could elect to offer employee choice and
perform premium aggregation for plan years beginning before January 1,
2015, but need not do so; and (3) FF-SHOPs will begin to offer employee
choice and premium aggregation in plan years beginning on or after
January 1, 2015. We welcome further comment on this proposal.
b. Enrollment Periods Under SHOP (Sec. 155.725)
The Exchange Establishment Rule established special enrollment
periods for Exchanges serving the individual market (Sec. 155.420),
and the SHOP regulations adopted most of these provisions by reference
(Sec. 155.725(a)(3)). Under these regulations, unless specifically
stated otherwise in the regulations, a qualified individual has 60 days
from the date of the triggering event to select a QHP (Sec.
155.420(c)).
This SHOP provision differs from the length of special enrollment
periods in group markets provided by HIPAA, which last for 30 days
after loss of eligibility for other private insurance coverage or after
a person becomes a dependent through marriage, birth, adoption, or
placement for adoption.\4\ Because we believe that there is no
rationale for providing a longer special enrollment period in a SHOP
than is provided in the group market outside the SHOP, we propose
amendments to Sec. 155.725 to clarify that a qualified employee or
dependent of a qualified employee who has obtained coverage through the
SHOP would have 30 days from the date of most of the triggering events
specified in Sec. 155.420 to select a QHP. Additionally, consistent
with revisions to HIPAA enacted by the Children's Health Insurance
Program Reauthorization Act of 2009 (CHIPRA), Public Law 111-3, Sec.
311 (Feb. 4, 2009), we propose that a qualified employee or dependent
of a qualified employee who has become ineligible for Medicaid or CHIP
or who has become eligible for state premium assistance under a
Medicaid or CHIP program would be eligible for a special enrollment
period in a SHOP and would have 60 days from the date of the triggering
event to select a QHP. Specifically, we propose striking Sec.
155.725(a)(3) and adding a new paragraph (j) consolidating the proposed
SHOP special enrollment provisions in one paragraph. We propose a
provision clarifying that a dependent of a qualified employee is only
eligible for a special enrollment period if the employer offers
coverage to dependents of qualified employees. We also propose
paragraphs (j)(5) and (j)(6) that retain certain provisions relating to
effective dates of coverage and loss of minimum essential coverage from
the original Sec. 155.420. We propose conforming revisions to Sec.
156.285(b)(2), so that provision would reference the special enrollment
periods in proposed Sec. 155.725(j) instead of those set forth at
Sec. 155.420. We believe these changes appropriately align the SHOP
provisions with provisions applicable to the rest of the group market,
and welcome comment on the proposal.
---------------------------------------------------------------------------
\4\ See 26 CFR 54.9801-6, 29 CFR 2590.701-6, and 45 CFR 146.117
for regulations regarding special enrollment periods under HIPAA.
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IV. Collection of Information Requirements
This proposed rule, if finalized, would not impose new or alter
existing information collection and recordkeeping requirements.
Consequently, it need not be reviewed by the Office of Management and
Budget under the authority of the Paperwork Reduction Act of 1995.
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
VI. Regulatory Impact Analysis
We have examined the impact of this final rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993) and Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011). 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). A regulatory impact analysis (RIA) must be prepared for
major rules with economically significant effects ($100 million or more
in any one year). It is HHS's belief that this proposed rule does not
reach this economic threshold and thus is not considered a major rule.
This proposed rule consists of a provision to amend the duration of
certain special enrollment periods to correspond to the duration in
group markets under HIPAA. The rule also proposes to add a triggering
event that would create a special enrollment
[[Page 15556]]
period for qualified employees and/or their eligible dependents when an
employee or qualified dependent with coverage through the SHOP becomes
eligible for state premium assistance under Medicaid or CHIP or loses
eligibility for Medicaid or CHIP. HIPAA, as revised by CHIPRA, already
includes this triggering event, which was inadvertently omitted from
the original list in Sec. 155.420(d) because it applies only to group
health plans and health insurance coverage in the group market. We do
not believe either of these actions would impose any new costs on
issuers, employers, enrollees, or the SHOP. In fact, the proposed
amendment would create alignment of SHOP regulations with laws for the
existing group market and could potentially create efficiencies for QHP
issuers.
Finally, this proposed rule would require SHOPs to provide
qualified employers the option to offer qualified employees a choice of
any QHP at a single metal level starting with plan years beginning on
or after January 1, 2015, instead of January 1, 2014. For plan years
beginning in calendar year 2014, qualified employers would offer
qualified employees coverage under a single QHP in FF-SHOPs; State-
based SHOPs would have the flexibility to offer either employer or
employee choice in 2014. In our analysis of the impact of employer and
employee choices in the Notice of Benefit and Payment Parameters for
2014 final rule, published elsewhere in this issue of the Federal
Register, we noted that adding the option for employers to offer a
single QHP would have the potential effect of reducing adverse
selection and any associated risk premium and a slight effect of
decreasing the consumer benefit resulting from choice. We believe the
same analysis applies to our proposal to provide employer choice in
2014.
Issuers will incur costs adapting their enrollment and financial
systems to interact with a SHOPs enrollment and premium aggregation
systems. The costs and benefits of Exchange and SHOP implementation
were assessed in the RIA for the Exchange Establishment final rule,
titled Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans, Exchange Standards for Employers
and Standards Related to Reinsurance, Risk Corridors and Risk
Adjustment Regulatory Impact Analysis (Exchange RIA).\5\ Because
issuers may now have an additional year to develop these systems and
may thus be able to stage their efforts rather than implementing all
system changes by October 1, 2013, we believe that the total cost will
be unchanged in total.
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\5\ Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans, Exchange Standards for
Employers and Standards Related to Reinsurance, Risk Corridors and
Risk Adjustment Regulatory Impact Analysis, March 2012. Available
at: http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
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From the Exchange perspective, in the Exchange RIA, we noted that a
State-based Exchange could incur costs in establishing a premium
aggregation function for the SHOP. Therefore, the policy in this
proposed rule could decrease costs to states that operate a State-based
Exchange for the 2014 plan year.
VII. 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 would 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 as its measure of significant economic
impact on a substantial number of small entities a change in revenues
of more than 3 percent.
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a proposed rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
government jurisdictions. Small businesses are those with sizes below
thresholds established by the SBA.
For the purposes of the regulatory flexibility analysis, we expect
the following types of entities to be affected by this proposed rule--
(1) small employers and (2) QHP issuers.
As discussed in Health Insurance Issuers Implementing Medical Loss
Ratio (MLR) Requirements Under the Patient Protection and Affordable
Care Act; Interim Final Rule,\6\ few, if any, issuers are small enough
to fall below the size thresholds for small business established by the
SBA. In that rule, we used a data set created from 2009 National
Association of Insurance Commissioners (NAIC) Health and Life Blank
annual financial statement data to develop an updated estimate of the
number of small entities that offer comprehensive major medical
coverage in the individual and group markets. For purposes of that
analysis, HHS used total Accident and Health earned premiums as a proxy
for annual receipts. We estimated that there are 28 small entities with
less than $7 million in accident and health earned premiums offering
individual or group comprehensive major medical coverage.\7\ However,
this estimate may overstate the actual number of small health insurance
issuers offering such coverage, since it does not include receipts from
these companies' other lines of business. We further estimate that any
issuers that would be considered small businesses are likely to be
subsidiaries of larger issuers that are not small businesses.
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\6\ Health Insurance Issuers Implementing Medical Loss Ratio
(MLR) Requirements Under the Patient Protection and Affordable Care
Act; Interim Final Rule, 75 FR 74864, 74918-20 (Dec. 1, 2010) (to be
codified at 45 CFR part 158).
\7\ According to SBA size standards, entities with average
annual receipts of $7 million or less would be considered small
entities for North American Industry Classification System (NAICS)
Code 524114 (Direct Health and Medical Insurance Carriers). For more
information, see ``Table of Size Standards Matched To North American
Industry Classification System Codes,'' effective March 26, 2012,
U.S. Small Business Administration, available at http://www.sba.gov.
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The SHOP is limited by statute to employers with at least one but
not more than 100 employees. For this reason, we expect that many
employers would meet the SBA standard for small entities. We do not
believe that this proposed regulation would impose requirements on
employers offering coverage through the SHOP that are more restrictive
than current requirements on employers offering employer-sponsored
health insurance. Specifically, small employers are currently required
to offer the special enrollment period that we propose would apply to
eligible employees and dependents with coverage through the SHOP, and
the triggering event that we propose currently applies to eligible
individuals and dependents, as well. The proposed provision would
merely apply existing standards to the SHOP. Additionally, the
transitional policy regarding employee choice does not impose new
requirements on small employers because most small employers currently
offer only one health insurance plan to their employees.
Based on the foregoing, we are not preparing an analysis for the
RFA
[[Page 15557]]
because we have determined, and the Secretary certifies, that this
proposed rule would not have a significant economic impact on a
substantial number of small entities.
VIII. 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 proposed rule (and subsequent
final rule) that includes any federal mandate that may result in
expenditures in any one 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 2012, that threshold is
approximately $139 million. UMRA does not address the total cost of a
rule. Rather, it focuses on certain categories of costs, mainly those
``federal mandate'' costs resulting from: (1) Imposing enforceable
duties on state, local, or tribal governments, or on the private
sector; or (2) increasing the stringency of conditions in, or
decreasing the funding of, state, local, or tribal governments under
entitlement programs.
This proposed rule does not place any financial mandates on state,
local, or tribal governments. It proposes the application of a
triggering event and special enrollment period to coverage through the
SHOP, modification of the duration of certain special enrollment
periods, and implementation of employee choice in the SHOP starting
with plan years on or after January 1, 2015. These proposed amendments
would only affect state governments to the extent that they operate a
SHOP and, if they are affected, would not place any new financial
mandates on them.
IX. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct costs on state and local
governments, preempts state law, or otherwise has Federalism
implications. This proposed regulation does not impose any costs on
state or local governments.
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 (NAIC), and consulting with State insurance officials on
an individual basis. We believe that this proposed rule does not impose
substantial direct costs on state and local governments, preempt state
law, or otherwise have federalism implications. We note that we have
attempted to provide states that choose to operate a SHOP with
flexibility such that states may, if they choose, offer employee choice
beginning with plan years starting on or after January 1, 2014, or they
may delay this implementation until plan years starting on or after
January 1, 2015.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signatures affixed to this regulation, the
Department of Health and Human Services certifies that CMS has complied
with the requirements of Executive Order 13132 for the attached
proposed regulation in a meaningful and timely manner.
List of Subjects
45 CFR Part 155
Administrative practice and procedure, Advertising, Advisory
Committees, Brokers, Conflict of interest, Consumer protection, Grant
programs-health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
American Indian/Alaska Natives, Individuals with disabilities, Loan
programs-health, Organization and functions (Government agencies),
Medicaid, Public assistance programs, Reporting and recordkeeping
requirements, State and local governments, Sunshine Act, Technical
assistance, Women, and Youth.
45 CFR Part 156
Administrative practice and procedure, Advertising, Advisory
Committees, Brokers, Conflict of interest, Consumer protection, Grant
programs-health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
Indians, Individuals with disabilities, Loan programs-health,
Organization and functions (Government agencies), Medicaid, Public
assistance programs, Reporting and recordkeeping requirements, Safety,
State and local governments, Sunshine Act, Technical assistance, Women,
and Youth
For the reasons set forth in the preamble, the Department of Health
and Human Services proposes to amend 45 CFR parts 155 and 156 as set
forth below:
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
1. 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, 1334, 1402,
1411, 1412, 1413.
0
2. Section 155.705 is amended by revising paragraphs (b)(2), (b)(3),
and (b)(4) to read as follows:
Sec. 155.705 Functions of a SHOP.
* * * * *
(b) * * *
(2) Employer choice requirements. With regard to QHPs offered
through the SHOP for plan years beginning on or after January 1, 2015,
the SHOP must allow a qualified employer to select a level of coverage
as described in section 1302(d)(1) of the Affordable Care Act, in which
all QHPs within that level are made available to the qualified
employees of the employer.
(3) SHOP options with respect to employer choice requirements. (i)
For plan years beginning before January 1, 2015, a SHOP may allow a
qualified employer to make one or more QHPs available to qualified
employees:
(A) By the method described in paragraph (b)(2) of this section, or
(B) By a method other than the method described in paragraph (b)(2)
of this section.
(ii) For plan years beginning on or after January 1, 2015, a SHOP:
(A) Must allow an employer to make available to qualified employees
all QHPs at the level of coverage selected by the employer as described
in paragraph (b)(2) of this section, and
(B) May allow an employer to make one or more QHPs available to
qualified employees by a method other than the method described in
paragraph (b)(2) of this section.
(iii) For plan years beginning before January 1, 2015, a Federally-
facilitated SHOP will only provide a qualified employer the choice to
make available to qualified employees a single QHP.
(iv) For plan years beginning on or after January 1, 2015, a
Federally-facilitated SHOP will provide a qualified employer a choice
of two methods to make QHPs available to qualified employees:
(A) The employer may choose a level of coverage as described in
paragraph (b)(2) of this section, or
(B) The employer may choose a single QHP.
(4)(i) Premium aggregation. Consistent with the effective dates set
forth in
[[Page 15558]]
paragraph (b)(4)(ii)of this section, the SHOP must perform the
following functions related to premium payment administration:
(A) Provide each qualified employer with a bill on a monthly basis
that identifies the employer contribution, the employee contribution,
and the total amount that is due to the QHP issuers from the qualified
employer;
(B) Collect from each employer the total amount due and make
payments to QHP issuers in the SHOP for all enrollees; and
(C) Maintain books, records, documents, and other evidence of
accounting procedures and practices of the premium aggregation program
for each benefit year for at least 10 years.
(ii) Effective dates.
(A) A State-based SHOP may elect to perform these functions for
plan years beginning before January 1, 2015, but need not do so.
(B) A Federally-facilitated SHOP will perform these functions only
in plan years beginning on or after January 1, 2015.
* * * * *
0
3. Section 155.725 is amended by removing paragraph (a)(3), and adding
paragraph (j) to read as follows:
Sec. 155.725 Enrollment periods under SHOP.
* * * * *
(j)(1) Special enrollment periods. The SHOP must provide special
enrollment periods consistent with this section, during which certain
qualified employees or a dependent of a qualified employee may enroll
in QHPs and enrollees may change QHPs.
(2) The SHOP must provide a special enrollment period for a
qualified employee or dependent of a qualified employee who:
(i) Experiences an event described in Sec. 155.420 (d)(1), (2),
(4), (5), (7), (8), or (9);
(ii) Loses eligibility for coverage under a Medicaid plan under
title XIX of the Social Security Act or a state child health plan under
title XXI of the Social Security Act; or
(iii) Becomes eligible for assistance, with respect to coverage
under a SHOP, under such Medicaid plan or a state child health plan
(including any waiver or demonstration project conducted under or in
relation to such a plan).
(3) A qualified employee or dependent of a qualified employee who
experiences a qualifying event described in paragraph (j)(2) of this
section has:
(i) 30 days from the date of a triggering event described in
paragraph (j)(2)(i) of this section to select a QHP through the SHOP;
and
(ii) 60 days from the date of a triggering event described in
paragraph (j)(2)(ii) of this section or (iii) of this section to select
a QHP through the SHOP;
(4) A dependent of a qualified employee is not eligible for a
special election period if the employer does not extend the offer of
coverage to dependents.
(5) The effective dates of coverage are determined using the
provisions of Sec. 155.420(b).
(6) Loss of minimum essential coverage is determined using the
provisions of Sec. 155.420(e).
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
4. The authority citation for part 156 continues to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1312, 1321, 1322, 1324, 1334, 1341-1343, and 1401-1402,
Pub l. 111-148, 124 Stat. 119 (42 U.S.C. 18042).
0
5. Section 156.285 is amended by revising paragraph (b)(2) to read as
follows:
Sec. 156.285 Additional standards specific to SHOP.
* * * * *
(b) * * *
(2) Provide special enrollment periods as described in Sec.
155.725(j).
* * * * *
Dated: February 25, 2013.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: February 27, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-04952 Filed 3-1-13; 11:15 am]
BILLING CODE 4120-01-P