Medicaid and Children's Health Insurance Programs: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums and Cost Sharing; Exchanges: Eligibility and Enrollment, 42159-42322 [2013-16271]
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Vol. 78
Monday,
No. 135
July 15, 2013
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
42 CFR Parts 431, 435, 436, et al.
Office of the Secretary
45 CFR Parts 155 and 156
Medicaid and Children’s Health Insurance Programs: Essential Health
Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and
Appeal Processes, and Premiums and Cost Sharing; Exchanges: Eligibility
and Enrollment; Final Rule
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DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 431, 435, 436, 438, 440,
447, and 457
Office of the Secretary
45 CFR Parts 155 and 156
[CMS–2334–F]
RIN 0938–AR04
Medicaid and Children’s Health
Insurance Programs: Essential Health
Benefits in Alternative Benefit Plans,
Eligibility Notices, Fair Hearing and
Appeal Processes, and Premiums and
Cost Sharing; Exchanges: Eligibility
and Enrollment
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
This final rule implements
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. This final rule
finalizes new Medicaid eligibility
provisions; finalizes changes related to
electronic Medicaid and the Children’s
Health Insurance Program (CHIP)
eligibility notices and delegation of
appeals; modernizes and streamlines
existing Medicaid eligibility rules;
revises CHIP rules relating to the
substitution of coverage to improve the
coordination of CHIP coverage with
other coverage; and amends
requirements for benchmark and
benchmark-equivalent benefit packages
consistent with sections 1937 of the
Social Security Act (which we refer to
as ‘‘alternative benefit plans’’) to ensure
that these benefit packages include
essential health benefits and meet
certain other minimum standards. This
rule also implements specific provisions
including those related to authorized
representatives, notices, and verification
of eligibility for qualifying coverage in
an eligible employer-sponsored plan for
Affordable Insurance Exchanges. This
rule also updates and simplifies the
complex Medicaid premium and cost
sharing requirements, to promote the
most effective use of services, and to
assist states in identifying cost sharing
flexibilities. It includes transition
policies for 2014 as applicable.
DATES: The effective date for the
additions of 42 CFR 435.118, 435.603,
435.911, 435.949, 435.956, 435.1200,
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SUMMARY:
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457.315, 457.330 and 457.348;
amendments to 42 CFR 431.10, 431.11,
435.110, 435.116, 435.119, 435.907,
435.916, 435.940, 435.945, 435.948,
435.952, 457.340 and 457.350; the
removal of 42 CFR 435.953 and 435.955;
and the redesignation of 42 CFR 435.911
through 435.914 as 42 CFR 435.912
through 435.915 in CMS–2349 (FR Doc.
2012–6560) published on March 23,
2012, which were to become effective in
January 1, 2014 are now effective
October 1, 2013.
Other provisions of this final rule that
are codified in title 42 of the Code of
Federal Regulations are effective
January 1, 2014 with the exception of
amendments to the following which are
effective on October 1, 2013: 42 CFR
431.10, 431.11, 431.201, 431.205,
431.206, 431.211, 431.213, 431.230,
431.231, 431.240, 435.119, 435.603,
435.907, 435.918, 435.1200, 457.110,
457.348, and 457.350; and the addition
of 42 CFR 435.1205 and 457.370, which
are effective on October 1, 2013.
Regulations in this final rule that are
codified in title 45 of Code of Federal
Regulations are effective on September
13, 2013.
FOR FURTHER INFORMATION CONTACT:
Sarah deLone, (410) 786–0615, or
Stephanie Kaminsky, (410) 786–4653,
for provisions related to revisions to
eligibility notice and fair hearing
appeal processes and additional
eligibility changes for Medicaid and
CHIP.
Melissa Harris, (410) 786–3397, for
provisions related to essential health
benefits.
Leigha Basini, (301) 492–4307, for
provisions related to Affordable
Insurance Exchanges.
SUPPLEMENTARY INFORMATION:
Executive Summary
This final rule implements 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). This rule reflects
new statutory eligibility provisions,
implements changes related to Medicaid
and the Children’s Health Insurance
Program (CHIP) eligibility notices,
delegation of appeals, and other related
administrative procedures with similar
procedures used by other health
coverage programs authorized under the
Affordable Care Act. This final rule also
modernizes and streamlines existing
rules.
This final rule amends the
requirements applicable to Medicaid
benefit packages that provide
benchmark or benchmark-equivalent
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coverage, to include requirements to
meet new minimum standards,
including the provision of essential
health benefits, as required by the
Affordable Care Act. In an effort to bring
consistency and clarity to part 440, we
are removing the terms ‘‘benchmark and
benchmark-equivalent plan’’ where they
appear together and are replacing these
terms with ‘‘Alternative Benefit Plan’’
(ABP).
Beginning in calendar year 2014,
individuals and small businesses will be
able to purchase private health
insurance through competitive
marketplaces called Affordable
Insurance Exchanges, or ‘‘Exchanges.’’
This final rule: (1) Specifies standards
related to authorized representatives, (2)
outlines criteria related to the
verification of enrollment in and
eligibility for minimum essential
coverage through an eligible employersponsored plan, and (3) further specifies
or amends other eligibility and
enrollment provisions. This final rule
does not address proposed provisions
regarding Exchange eligibility appeals,
to provide additional time for the
careful development of standards that
can be effectively implemented,
particularly for those regarding
coordination with Medicaid and CHIP.
Additionally, this final rule does not
address proposed provisions regarding
the Children’s Health Insurance
Program Reauthorization Act of 2009
(CHIPRA), certified application
counselors in an Exchange and SHOP
coordination with individual market
Exchanges. We intend to address these
provisions in a future issuance. The
intent of this final rule is to afford each
state substantial discretion in the design
and operation of the Exchange
established by the state, with greater
standardization provided where
directed by the statute or where there
are compelling practical, efficiency or
consumer protection reasons.
This final rule also updates and
simplifies the complex Medicaid
premium and cost sharing requirements
to promote the most effective use of
services and to assist states in
identifying cost sharing flexibilities.
Finally, this final rule provides notice
that we are considering, for purposes of
the initial open enrollment period for
enrollment in a Qualified Health Plan
through the Exchange, whether various
provisions of the Medicaid and CHIP
regulations should be effective October
1, 2013, or whether a later effective date
is appropriate.
In this final rule, we do not address
all of the proposed regulatory changes to
42 CFR parts 431, 435 and 457. We are
focusing on those changes that are most
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needed to implement the changes made
by the Affordable Care Act starting in
2014. We intend to address certain of
the other provisions in future
rulemaking.
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Table of Contents
To assist readers in referencing
sections contained in this document, we
are providing the following table of
contents.
Executive Summary
I. Background
A. Medicaid Eligibility Final Rule Part II
B. Essential Health Benefits in Alternative
Benefit Plans
C. Exchanges: Eligibility and Enrollment
D. Medicaid Premiums and Cost Sharing
II. Provisions of the Proposed Regulations
and Analysis of and Responses to Public
Comments
A. Medicaid Eligibility Expansion Part II
1. Responses to General Comments
2. Appeals—Delegation of Authority To
Conduct Medicaid Fair Hearings
3. Notices
4. Medicaid Enrollment Changes Under the
Affordable Care Act Needed to Achieve
Coordination with the Exchange
5. Medicaid Eligibility Requirements and
Coverage Options Established by Other
Federal Statutes
6. Coordinated Medicaid/CHIP Open
Enrollment Process
7. Children’s Health Insurance Program
Changes
8. Premium Assistance
9. Changes to Modified Adjusted Gross
Income and MAGI Screen
10. Single State Agency—Delegation of
Eligibility Determinations to Exchanges
11. Conversion of Federal Minimum
Income Standards for Section 1931 of the
Act
B. Essential Health Benefits in Alternative
Benefit Plans
1. General Comments
2. Alignment With Essential Health
Benefits Provisions
3. Modifications in Applying the
Provisions of This Final Rule to
Medicaid
4. All Other Title XIX Provisions Apply
5. Preventive Services as an EHB
6. Other Changes To Simplify, Modernize,
and Clarify Medicaid Benchmark
Requirements and Coverage
Requirements
7. Summary
C. Exchanges: Eligibility and Enrollment
1. Definitions
2. Approval of a State Exchange
3. Functions of an Exchange
4. Authorized Representatives
5. General Standards for Exchange Notices
6. Definitions and General Standards for
Eligibility Determinations
7. Options for Conducting Eligibility
Determinations
8. Eligibility Standards
9. Eligibility Process
10. Verification Process Related to
Eligibility for Enrollment in a QHP
Through the Exchange
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11. Verifications Related to Eligibility for
Insurance Affordability Programs
12. Eligibility Redetermination During a
Benefit Year
13. Annual Eligibility Redetermination
14. Administration of Advance Payments
of the Premium Tax Credit and CostSharing Reductions
15. Coordination With Medicaid, CHIP, the
Basic Health Program, and the PreExisting Condition Insurance Plan
16. Special Eligibility Standards and
Process for Indians
17. Enrollment of Qualified Individuals
Into QHP’s
18. Special Enrollment Periods
19. Termination of Coverage
D. Medicaid Premiums and Cost Sharing
1. Responses to General Comments
2. Definitions
3. Update to Maximum Nominal Cost
Sharing
4. Higher Cost Sharing Permitted for
Individuals With Incomes Above 100
Percent of the FPL
5. Cost Sharing for Drugs
6. Cost Sharing for Emergency Department
(ED) Services
7. Premiums
8. Limitations on Premiums and Cost
Sharing
9. Beneficiary and Public Notice
Requirements
III. Provisions of the Final Regulations
IV. Collection of Information Requirements
V. Regulatory Impact Analysis
HCERA Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152, enacted March 30, 2010)
HHS [U.S. Department of] Health and
Human Services
IHS Indian Health Service
INA Immigration and Nationality Act
IRA Individual Retirement Account
IRC Internal Revenue Code of 1986
IRS Internal Revenue Service
MAGI Modified adjusted gross income
MEC Minimum Essential Coverage
MMEA Medicare & Medicaid Extenders Act
of 2010 (Pub. L. 111–309, enacted
December 15, 2010)
OMB Office of Management and Budget
OPM U.S. Office of Personnel Management
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1995
PRWORA Personal Responsibility and
Work Opportunity Reconciliation Act of
1996
QHP Qualified Health Plan
Secretary Secretary of HHS
SEP Special enrollment period
SHOP Small Business Health Options
Program
SMD State Medicaid Director
SNAP Supplemental Nutrition Assistance
Program
SPA State Plan Amendment
SSA Social Security Administration
SSI Supplemental Security Income
SSN Social Security number
TANF Temporary Assistance for Needy
Families
Regulations Text
I. Background
Acronyms and Terms
A. Medicaid Eligibility Final Rule Part II
The Patient Protection and Affordable
Care Act (Pub. L. 111–148, enacted on
March 23, 2010), was amended by the
Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152, enacted on March 30, 2010). These
laws are collectively referred to as the
Affordable Care Act. In addition, section
205 of the Medicare & Medicaid
Extenders Act of 2010 (Pub. L. 111–309,
enacted December 15, 2010) (MMEA)
and the Middle Class Tax Relief and Job
Creation Act of 2012 (Pub. L. 112–96,
enacted February 22, 2012) made
additional amendments to the Social
Security Act (the Act) provisions
affected by the Affordable Care Act.
The Affordable Care Act extends and
simplifies Medicaid eligibility, and on
March 23, 2012, we issued a final rule
(referred to as the ‘‘Medicaid Eligibility
final rule’’) addressing certain key
Medicaid and CHIP eligibility,
enrollment, and renewal issues.
This final rule provides states with
additional flexibility and guidance for
delegation of appeals and
implementation of electronic notices,
and modernizes administrative
procedures to further promote
coordination across multiple health
coverage programs, including
enrollment in a qualified health plan
Because of the many organizations
and terms to which we refer by acronym
in this final rule, we are listing these
acronyms and their corresponding terms
in alphabetical order below:
[the] Act Social Security Act
Affordable Care Act The Affordable Care
Act of 2010 (which is the collective term for
the Patient Protection and Affordable Care
Act (Pub. L. 111–148) and the Health Care
and Education Reconciliation Act (Pub. L.
111–152))
AFDC Aid to Families with Dependent
Children
BBA Balanced Budget Act of 1997
BHP Basic Health Program
CHIP Children’s Health Insurance Program
CHIPRA Children’s Health Insurance
Program Reauthorization Act of 2009
CMS Centers for Medicare & Medicaid
Services
[the]Code Internal Revenue Code of 1986
DHS Department of Homeland Security
DOL U.S. Department of Labor
DRA Deficit Reduction Act of 2005
EITC Earned Income Tax Credit
EPSDT Early and periodic screening,
diagnosis, and treatment
FEHBP Federal Employees Health Benefits
Program (5 U.S.C. 8901, et seq.)
FFE Federally-facilitated Exchange
FFP Federal financial participation
FMAP Federal medical assistance
percentage
FPL Federal poverty level
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through the Exchange with advance
payments of the premium tax credits
and cost-sharing reductions, as
authorized by the Affordable Care Act,
Medicaid and the Children’s Health
Insurance Program (CHIP). These
coverage programs are collectively
referred to as ‘‘insurance affordability
programs.’’ For more information on the
legislative overview, please refer to the
Medicaid, CHIP, and Exchanges
proposed rule (78 FR 4594).
B. Essential Health Benefits in
Alternative Benefit Plans
For plan, policy, or coverage years (as
applicable) beginning in 2014, most
health insurance coverage 1 in the
individual and small group markets,
Medicaid benchmark and benchmarkequivalent plans (now also known as
Alternative Benefit Plans (ABPs)), and
Basic Health Programs (if applicable)
will be required to cover essential
health benefits (EHBs), consistent with
the definition under section 1302 of the
Affordable Care Act and implementing
regulations at 45 CFR Parts 147, 155,
and 156, Patient Protection and
Affordable Care Act; Standards Related
to Essential Health Benefits, Actuarial
Value, and Accreditation; Final Rule.
Under that definition, EHBs include
items and services in 10 statutory
benefit categories, such as
hospitalization, prescription drugs, and
maternity and newborn care, and are
equal in scope of benefits to a typical
employer plan, which will constitute
minimum coverage in an ABP.
C. Exchanges: Eligibility and Enrollment
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1. Legislative Overview
Section 1311(b) and section 1321(b) of
the Affordable Care Act provide that
each state has the opportunity to
establish an Exchange that: (1)
Facilitates the purchase of insurance
coverage by qualified individuals
through qualified health plans (QHPs);
(2) assists qualified employers with the
enrollment of their employees in QHPs;
and (3) meets other standards specified
in the Affordable Care Act. Section
1311(k) of the Affordable Care Act
specifies that Exchanges may not
establish rules that conflict with or
prevent the application of regulations
promulgated by the Secretary under
subtitle D of title I of the Affordable
Care Act. Section 1311(d) of the
1 For more information on status as a
grandfathered health plans under the Affordable
Care Act, please see Interim Final Rule, ‘‘Group
Health Plans and Health Insurance Coverage
Relating to Status as a Grandfathered Health Plan
Under the Patient Protection and Affordable Care
Act.’’ Available at https://cciio.cms.gov/resources/
regulations/#gp.
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Affordable Care Act describes the
minimum functions of an Exchange,
including the certification of QHPs.
Section 1321 of the Affordable Care
Act discusses state flexibility in the
operation and enforcement of Exchanges
and related requirements. Section
1321(c)(1) directs the Secretary to
establish and operate an Exchange
within each state that either: (1) does
not elect to establish an Exchange, or (2)
as determined by the Secretary on or
before January 1, 2013, will not have an
Exchange operational by January 1,
2014. Section 1321(a) also provides
broad authority for the Secretary to
issue regulations setting standards to
implement the statutory requirements
related to Exchanges, QHPs, and other
standards under title I of the Affordable
Care Act.
Section 1401 of the Affordable Care
Act creates new section 36B of the
Internal Revenue Code of 1986 (the
Code), which provides for a premium
tax credit for eligible individuals who
enroll in a QHP through an Exchange.
Section 1402 of the Affordable Care Act
establishes requirements for reducing
the cost-sharing obligations of eligible
individuals who enroll in a QHP
through an Exchange, including special
cost-sharing rules for certain Indians.
Under section 1411 of the Affordable
Care Act, the Secretary is directed to
establish a program for determining
whether an individual meets the
eligibility standards for enrollment in
QHPs through the Exchange, advance
payments of the premium tax credit,
cost-sharing reductions, and exemptions
from the shared responsibility payment
under section 5000A of the Code.
Sections 1412 and 1413 of the
Affordable Care Act and section 1943 of
the Social Security Act (the Act), as
added by section 2201 of the Affordable
Care Act, contain additional provisions
regarding eligibility for advance
payments of the premium tax credit and
cost-sharing reductions, as well as
provisions regarding simplification and
coordination of eligibility
determinations and enrollment with
other insurance affordability programs.
This final rule supplements and
amends provisions originally published
as the March 27, 2012 rule titled
‘‘Patient Protection and Affordable Care
Act; Establishment of Exchanges and
Qualified Health Plans; Exchange
Standards for Employers’’ (hereafter
referred to as ‘‘Exchange Final Rule’’)
(77 FR 18310) which encompasses key
functions of Exchanges related to
eligibility and enrollment.
Unless otherwise specified, the
provisions in this final rule related to
the establishment of minimum
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functions of an Exchange are based on
the general authority of the Secretary
under section 1321(a)(1) of the
Affordable Care Act.
2. Stakeholder Consultation and Input
HHS has consulted with interested
stakeholders on policies related to the
eligibility provisions and Exchange
functions. HHS held a number of
listening sessions with consumers,
providers, employers, health plans, and
state representatives to gather public
input, and released several documents
for public review and comment. HHS
also released a bulletin that outlined our
intended regulatory approach to
verifying access to employer-sponsored
coverage and sought public comment on
the specific approaches.
Finally, HHS consulted with
stakeholders through regular meetings
with the National Association of
Insurance Commissioners (NAIC),
regular contact with states through the
Exchange grant process, consultation
with Medicaid directors, and meetings
with tribal leaders and representatives,
health insurance issuers, trade groups,
consumer advocates, employers, and
other interested parties.
We considered input from these
stakeholder meetings and in response to
the bulletin on verifying access to
employer-sponsored coverage, as well as
comments provided in response to the
proposed rule as we developed the
policies in this final rule.
3. Structure of the Final Rule
The regulations related to Exchanges
and QHPs outlined in this final rule are
codified at 45 CFR parts 155 and 156.
Part 155 outlines the standards related
to eligibility for insurance affordability
programs to facilitate a streamlined
process for eligibility for enrollment in
a QHP through the Exchange and in
insurance affordability programs. Part
156 outlines the standards for health
insurance issuers for participation in an
Exchange. This final rule:
• Revises existing definitions and
finalizes new definitions to 45 CFR part
155 subpart A.
• Provides a technical correction to
45 CFR part 155 subpart B.
• Finalizes standards related to
authorized representatives under 45
CFR part 155 subpart C.
• Finalizes standards related to
eligibility determinations for enrollment
in a QHP and for insurance affordability
programs under 45 CFR part 155 subpart
D.
• Finalizes standards related to
enrollment-related transactions, special
enrollment periods, and terminations
under 45 CFR part 155 subpart E.
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• Finalizes standards related to
termination of coverage under 45 CFR
part 156 subpart C.
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4. Alignment With Related Rules and
Published Information
As noted above, on March 27, 2012,
we published the Exchange final rule.
This final rule revises and supplements
the Exchange final rule, including by
finalizing Exchange and Medicaid
provisions associated with the eligibility
changes under the Affordable Care Act
of 2010.
D. Medicaid Premiums and Cost
Sharing
Section 1916 of the Act describes
long-standing limitations and
requirements applicable in states that
elect to provide for premiums and other
cost sharing under Medicaid. Under
section 1916 of the Act, certain
individuals are protected from
premiums and cost sharing, and cost
sharing cannot be imposed on certain
services. Permissible cost sharing under
section 1916 of the Act is limited to
‘‘nominal’’ amounts (except in some
circumstances for non-emergency use of
a hospital emergency room). Section
1916 of the Act also establishes
authority for states to impose premiums
on medically needy beneficiaries and
specific groups of individuals with
family incomes above 150 percent of the
federal poverty level (FPL). The Deficit
Reduction Act of 2005 (DRA)
established a new section 1916A of the
Act, which gives states additional
flexibility, allowing for alternative
premiums and cost sharing beyond what
is permitted under section 1916 of the
Act for somewhat higher income
beneficiaries. Such alternative costsharing approaches may be targeted to
specific groups of individuals and
payment may be required as a condition
of providing services. All premiums and
cost sharing imposed under sections
1916 and 1916A of the Act cannot
exceed 5 percent of a family’s income.
For more background information on
the streamlined and expanded
flexibility regarding premiums and cost
sharing, please refer to (78 FR 4657 and
78 FR 4658).
We initially implemented the DRA
authorities through regulations that
mirrored the dual statutory provisions
by adding a set of additional regulations
on alternative cost sharing under section
1916A of the Act to existing regulations
setting forth the framework for cost
sharing under section 1916 of the Act.
We believe states found this duality
confusing and, in this final rule, we
have integrated the two statutory
authorities for premiums and cost
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sharing (sections 1916 and 1916A of the
Act) into a unified framework.
II. Provisions of the Proposed Rule and
Analysis of and Responses to Public
Comments
A. Medicaid Eligibility Part II Final Rule
In the January 22, 2013 Federal
Register (78 FR 4594), we published the
proposed rule entitled ‘‘Essential Health
Benefits in Alternative Benefit Plans,
Eligibility Notices, Fair Hearing and
Appeal Processes for Medicaid and
Exchange Eligibility Appeals and Other
Provisions Related to Eligibility and
Enrollment for Exchanges, Medicaid
and CHIP, and Medicaid Premiums and
Cost Sharing.’’
We received a total of 741 timely
comments from individuals, state
Medicaid and CHIP agencies, advocacy
groups, tribes and tribal organizations,
policy and research organizations,
health care providers, employers,
insurers, and health care associations.
The comments ranged from general
support or opposition to the proposed
provisions to very specific questions or
comments regarding the proposed
changes.
In this final rule, we are only
addressing some of the provisions of the
proposed rule. We are reserving action
on other provisions and intend to
address those provisions in a
subsequent final rule. We discuss below
only those public comments associated
with provisions addressed in this final
rule.
We have revised some of the proposed
regulations after careful consideration of
the comments received. Some
comments were outside the scope of the
proposed rule, and therefore, are not
addressed in this final rule. In some
instances, commenters raised policy or
operational issues that will be addressed
through forthcoming regulatory and
subregulatory guidance to be provided
subsequent to this final rule; therefore,
some, but not all comments are
addressed in the preamble to this final
rule.
Brief summaries of the proposed
provisions that are being finalized in
this rule, a summary of the public
comments we received on those
provisions (except specific comments
on the paperwork burden or the
economic impact analysis), and our
responses to the comments are as
follows. Comments related to the
paperwork burden and the impact
analyses are addressed in the
‘‘Collection of Information
Requirements’’ and ‘‘Regulatory Impact
Analysis’’ sections in this final rule.
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The following sections summarize
comments about the rule in general, as
well as specific comments about certain
policies. It should be noted that the
summarized comments are structured to
explain the provisions being finalized
and do not necessarily follow the order
of the regulation text:
1. Responses to General Comments
Generally, commenters were
supportive of the policies in the
proposed rule to continue the process of
streamlining Medicaid and CHIP
eligibility rules, policies and
procedures; to support a consumer
friendly approach, and provide
increased flexibility for states.
Comment: Several commenters were
concerned about the complexity of the
proposed rules and the significance of
the changes that need to be made to
fully implement the provisions of the
Affordable Care Act. Many commenters
were concerned about the short
timeframes for implementation and
about states’ ability to make needed
changes to policy, operations, and
information technology systems.
Response: We recognize that the
timing of this final rule may result in
implementation challenges, especially
from a systems perspective. As such, we
have evaluated the provisions of the
January proposed rule and are finalizing
in this rule only those provisions that
we believe states are already in the
process of implementing or must be
finalized to meet statutory deadlines.
The remaining provisions of the
proposed rule will be addressed at a
later date.
We will continue to work with states
to support their implementation efforts,
ensure successful partnerships between
states and the federal government. We
will also continue to offer intensive
technical assistance and support to
states, and facilitate sharing of
experience and knowledge across states.
Consistent with one commenter’s
recommendation, we will also utilize
other tools, including subregulatory
guidance and the State Operations and
Technical Assistance (SOTA) initiative
to address additional state questions
that arise.
2. Appeals—Delegation of Authority To
Conduct Medicaid Fair Hearings
We proposed to implement sections
1413 and 2201 of the Affordable Care
Act in part through procedures to
coordinate Medicaid fair hearings under
section 1902(a)(3) of the Act concerning
eligibility for populations whose income
is determined using modified adjusted
gross income (MAGI)-based
methodologies of the Act with appeals
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of eligibility determinations that are
made using MAGI-based methodologies
by Exchanges for advance payment of
premium tax credits and cost-sharing
reductions under section 1411(f) of the
Affordable Care Act. Consistent with the
requirements to streamline and
coordinate eligibility determinations,
under section 1943(b)(3) of the Act, as
added by section 2201 of the Affordable
Care Act, we proposed to provide states
with an option to delegate the authority
to conduct appeals to an Exchange or
Exchange appeals entity. The option is
similar to the option states have to
delegate Medicaid eligibility
determinations to an Exchange under
§ 431.10. We also proposed changes to
existing regulations at part 431 subpart
E to support further modernization and
streamlining of the Medicaid fair
hearing process.
In this final rule, we are finalizing the
provisions of our proposed rule related
to delegation of authority to conduct
Medicaid fair hearings to an Exchange
and an Exchange appeals entity at
sections §§ 431.10, 431.205(b),
431.206(d) and (e), 431.240 and the
proposed rule related to reinstatement
of an application at §§ 435.907(h) and
457.340(a). As discussed in section
II.A.3. of this final rule (relating to
notices), we also are adopting proposed
revisions to the current regulations at
sections §§ 431.211, 431.213, 431.230,
and 431.231, related to modernizing the
process of providing notices to
applicants and beneficiaries of their fair
hearing rights and decisions. In addition
to providing substantive comments on
the proposed regulations related to
coordination of appeals across the
Exchange, Medicaid and CHIP, a
number of commenters requested
delayed implementation of those
provisions. To provide states with
additional time to consider and
effectuate implementation of such
coordination, as well as to provide us
with additional time to consider the
comments received, we are not
addressing proposed provisions at
§§ 431.200, 431, 201, 431.205(e),
431.206(b), (c)(2), (e) as it relates to
accessibility under § 435.905(b),
431.210, 431.220, 431.221, 431.224,
431.232, 431.241, 431.242, or 431.244.
Further, we are not addressing the
definitions related to appeals proposed
in 435.4, nor the provisions related to
coordination of appeals in § 435.1200.
We expect to address these proposed
provisions in a subsequent rulemaking.
Until final regulations are released,
current rules in part 431, subpart E
continue to apply. We note that while
we are not finalizing our proposed rules
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relating to accessibility in the fair
hearing process or as it relates appeals
and notices at § 431.205(e) and
§ 431.206(e) at this time, fair hearing
processes and notices must continue to
be provided in an accessible manner in
accordance with relevant federal
statutes, including the Americans with
Disabilities Act and Title VI of the Civil
Rights Act of 1964, as well as any
applicable state laws.
We received the following comments
regarding the proposed regulations
related to delegation of fair hearings and
reinstatement of applications in certain
circumstances, which we are addressing
in this rulemaking:
Comment: Many commenters
supported our approach to permit
delegation of fair hearings to an
Exchange or Exchange appeals entity so
that an integrated hearing could be
conducted to address Medicaid and
Exchange-related eligibility issues
together. We also received comments
supporting the proposals to streamline
and simplify our current fair hearings
rules. While not providing specific
recommendations, the commenters
asked that we consider additional
measures to coordinate Medicaid and
Exchange eligibility appeals even more
effectively. A few commenters requested
that the final rule maintain state
flexibility for states to retain the
Medicaid appeals function within the
Medicaid agency.
Several commenters were concerned
that our proposed rules require
duplicative processes because states
must maintain the infrastructure and
capacity to hear MAGI-based appeals,
even if the state delegates the authority
to conduct fair hearings to an Exchange.
One commenter requested that we
eliminate the requirement at proposed
§ 431.10(c)(1)(ii) and § 431.205(b)(1)(ii)
that an individual be provided an
opportunity to request a fair hearing
before the Medicaid agency when the
state has otherwise delegated authority
to conduct the individual’s fair hearing
to the Exchange, and instead make this
provision a state option. The commenter
believed that this requirement would
undermine the efficiencies achieved
through delegation. Another commenter
recommended that only one hearing
opportunity be made available to
individuals, instead of requiring a
hearing if determined ineligible for
Medicaid and a hearing related to the
eligibility for advance payment of
premium tax credits and cost-sharing
reductions.
Response: We appreciate the support
for the proposal to permit states to
delegate MAGI-based eligibility appeals
to an Exchange or Exchange appeals
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entity. We note that such delegation is
at state option. States are not required
to delegate such authority, but may
continue to have the Medicaid agency
conduct all Medicaid fair hearings.
We understand commenters’ concern
about duplication of effort in requiring
that Medicaid agencies retain an
infrastructure independent of the
Exchange appeals process to conduct
MAGI-based Medicaid eligibility
appeals when the state has delegated
authority for MAGI-based eligibility
appeals to an Exchange. There are two
key reasons why the Medicaid agency
must maintain its own appeals
infrastructure. First, an individual
whose application for Medicaid is
denied or not acted upon with
reasonable promptness has a right under
section 1902(a)(3) of the Act to an
opportunity for a fair hearing before the
Medicaid agency. We do not anticipate
that individuals will necessarily prefer
to have their appeal heard by the
Medicaid agency, but the statute
requires that the option be provided in
such delegation through our regulations.
Second, in a state where the Federallyfacilitated Exchange (FFE) is operating,
the HHS appeals entity will only
conduct appeals related to MAGI-based
eligibility determinations made by the
FFE. Thus, in states where the FFE is
operating, the Medicaid agency will
need to conduct all Medicaid fair
hearings related to MAGI-based
eligibility determinations made by the
Medicaid agency. For these reasons, we
are finalizing the requirement as
proposed.
States have options to streamline the
appeals infrastructure and reduce the
number of appeals that will come before
the Medicaid agency, in addition to the
options to delegate Medicaid appeals
authority under this final rule as
discussed above. In a state that has
established a state-based Exchange, the
state Medicaid agency may delegate
authority to conduct fair hearings of
MAGI-based determinations to the statebased Exchange by requesting a waiver
under the Intergovernmental
Cooperation Act of 1968 (ICA), as long
as the state-based Exchange is a state
agency and the state can assure
sufficient oversight of the delegated fair
hearing process. As we noted in the
preamble to the proposed rule, when a
state has an ICA waiver permitting
delegation of fair hearings to another
state agency, the state is not required to
offer individuals an option to have their
hearing conducted by the Medicaid
agency.
In states where the FFE is operating,
a state Medicaid agency that allows the
FFE to make a Medicaid eligibility
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determination delegating such authority
under § 431.10(c)(1)(i) has appeal
delegation options not available to a
State that proceeds with the assessment
model. If the Medicaid agency
authorizes the FFE to make MAGI-based
eligibility determinations, the agency
may also delegate authority to the HHS
appeals entity to conduct fair hearings
related to determinations of Medicaid
ineligibility made by the FFE,
establishing an integrated appeals
process with simultaneous appeals
related to a determination of advance
payments of the premium tax credits or
cost-sharing reductions. The Medicaid
agency would still need to maintain the
ability to conduct fair hearings for
eligibility determinations and denials
made by the Medicaid agency, as well
as when delegations are made under
these regulations for individuals who
opt out of a coordinated appeal before
the Exchange or Exchange appeals
entity, and specifically request a hearing
before the Medicaid agency. States will
also need to continue to conduct fair
hearings related to non-MAGI based
eligibility determinations, as well as fair
hearings related to termination,
suspension, or reduction of covered
benefits and other adverse
determinations.
Finally, with respect to the
recommendation that a right to only one
hearing be made available, we note that
there are two separate statutory
authorities for appeals related to
Medicaid and enrollment in a QHP and
eligibility for APTC and cost sharing
reductions, at section 1902(a)(3) of the
Act and section 1411(f) of the
Affordable Care Act, respectively. While
we permit states to integrate these
hearings and processes as much as
possible, both state Medicaid agencies
and the Exchange have distinct
responsibilities to provide for such
hearings, and we do not have authority
to eliminate individuals’ statutory
rights, or a Medicaid agency’s or
Exchange’s statutory responsibility. We
note that we are not addressing in this
final rule the proposed requirements
relating to coordination of notices.
Those proposed rules will be addressed
in future rulemaking.
Comment: Several commenters
requested clarification of our proposals
on delegation of Medicaid appeals to the
FFE, a state-based Exchange, or a state
with a partnership with the FFE. In
addition, commenters sought
clarification regarding when an
individual’s appeals rights are triggered
in states which have delegated authority
to make Medicaid eligibility
determinations to the Exchange versus
states in which the Exchange will make
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only an assessment of potential
Medicaid eligibility. A few commenters
requested clarification about whether a
delegation of authority to conduct
Medicaid fair hearings to a state-based
Exchange would extend to an appeal to
the HHS appeals entity. The
commenters were concerned that
appeals could not be coordinated at the
HHS appeals entity, rendering
meaningless any efforts to achieve
coordination at the state level.
Response: States may choose to
delegate authority to conduct Medicaid
fair hearings for MAGI-based eligibility
determinations to the Exchange
operating in the state regardless of
whether the Exchange is the FFE, the
state-based Exchange or a partnership
between the state and the FFE in
accordance with the final rules at
§ 431.10(c) and (d). There is no
difference in the delegation authority
under the regulations, as proposed or as
finalized, based on the type of
Exchange. In accordance with such
delegation, the Exchange or Exchange
appeals entity may provide a fair
hearing on Medicaid issues, but
individuals must have the option to
have their Medicaid fair hearing heard
directly before the single state agency.
As discussed below, states with statebased Exchanges that are state
governmental agencies also have an
additional way to coordinate appeals,
beyond delegation under our rules,
through a waiver granted under the
Intergovernmental Cooperation Act.
Under such a waiver, individuals would
not have a right to have their Medicaid
appeal heard by the single state agency.
In a state that has delegated authority
to the Exchange to make Medicaid
eligibility determinations based on
MAGI, individuals have the right to
request a fair hearing when the
Exchange has determined the individual
ineligible for Medicaid based on MAGI.
Thus, the determination of ineligibility
by the Exchange will trigger the
individual’s appeal rights. If the state
has delegated authority to the Exchange
to conduct fair hearings under these
regulations, such an individual found
ineligible for Medicaid by the Exchange
could request a fair hearing at the
Exchange or Exchange appeals entity so
that there would be one integrated
hearing conducting the Exchangerelated and Medicaid appeals at the
same time, or the individual may
instead request his or her Medicaid
issue be heard at the Medicaid agency.
If, an individual who is found by the
Exchange to be not eligible for Medicaid
based on MAGI seeks a determination
based on non-MAGI criteria, the
individual’s electronic account is
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transferred to the Medicaid agency for a
full evaluation by the agency in
accordance with § 155.345(b) or (c) of
the March 2012 Exchange eligibility
final rule. If the Medicaid agency still
determines the individual ineligible, he
or she would be able to appeal that
decision using the Medicaid agency’s
fair hearing process.
In states in which the Exchange will
make an assessment of Medicaid
eligibility, and will not make final
Medicaid eligibility determinations or
denials, an assessment of ineligibility
for Medicaid based on MAGI will not
trigger Medicaid appeal rights. This is
because an assessment is not a final
Medicaid eligibility determination. As
indicated in § 155.302(b)(4) of the
March 2012 Exchange rule, as revised in
this rulemaking, applicants assessed by
the Exchange as not potentially eligible
for Medicaid based on MAGI but as
potentially eligible for Medicaid on
another basis will be transferred to the
Medicaid agency for a full Medicaid
determination; for these applicants,
Medicaid appeal rights will be triggered
when the Medicaid agency makes a final
eligibility determination. Under
§ 155.302(b)(4), applicants assessed as
not potentially eligible for Medicaid on
any basis will have a choice whether to
withdraw their Medicaid application or
obtain a full determination by the
Medicaid agency. If the applicant
withdraws his or her Medicaid
application, a final determination or
denial of Medicaid will not be made,
and therefore no appeal rights arise at
that point. (The applicant will have the
ability to reinstate their Medicaid
application in certain circumstances,
discussed more fully below). When an
applicant obtains a formal
determination by the Medicaid agency,
the Medicaid agency’s determination
will trigger appeal rights, if applicable.
Finally, if a state agency delegates
authority to conduct MAGI-based
eligibility appeals to an Exchange,
including a state-based Exchange, in
accordance with § 431.10(c) and (d) of
this final rule, such a delegation would
extend to any government agency
adjudicating an Exchange appeal,
including the HHS appeals entity. We
note, however, that if a state delegates
authority to conduct fair hearings
through an ICA waiver to another state
agency, including a state-based
Exchange or state-based Exchange
appeals entity, Medicaid decisions
made by that entity could not be
appealed to the HHS appeals entity. The
ICA waiver is a waiver of single state
agency requirements that permits
alternative arrangements of state agency
functions to another state agency. Once
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such an agency has issued a decision
after a Medicaid fair hearing, that
Medicaid decision would be the final
decision of the Medicaid agency and
thus no further right of appeal would be
available to the individual. If the
individual decided to appeal his or her
advance payment of premium tax credit,
cost-sharing reduction or Exchange
eligibility decision to the HHS appeals
entity, that entity would need to adhere
to the Medicaid appeals entity decision
under § 155.302(b)(5), as revised in this
final rule, and § 155.345(h) which will
prevent inconsistent decisions between
the HHS appeals entity and the statebased Exchange or Exchange appeals
entity.
Comment: Many commenters
requested clarification on the scope of
fair hearings that may be delegated from
a Medicaid agency to an Exchange or
Exchange appeals entity. Commenters
specifically requested clarification
regarding whether fair hearings of
eligibility determinations on bases other
than MAGI may be delegated to an
Exchange or Exchange appeals entity,
and whether findings other than MAGIbased income determinations may be
delegated to an Exchange or Exchange
appeals entity.
Response: The term ‘‘MAGI-based
determinations’’ is used to refer to
determinations in which financial
eligibility is determined using the
MAGI-based methods described in
§ 435.603 of the March 2012 final
Medicaid eligibility rule. However, in
accordance with § 435.911(c) of the
March 2012 final Medicaid eligibility
rule, a determination of eligibility based
on MAGI also entails a determination
that an individual meets the nonfinancial conditions of eligibility,
including state residency and
citizenship or satisfactory immigration
status, and the denial of eligibility for an
individual considered for coverage
under a MAGI-based eligibility group
may be based on failure to meet any of
the financial or non-financial conditions
of eligibility. A delegation of fair
hearing authority under
§ 431.10(c)(1)(ii) to an Exchange or
Exchange appeals entity regarding a
denial of MAGI-based eligibility will
need to address any or all of the bases
of denial, just as a fair hearing
conducted by the Medicaid agency
would. We note that we have made
some technical modifications to the
regulation text at § 431.10(c)(1)(ii) to
help clarify this point. As also noted in
the preamble to the proposed rule, we
remind states that while all appeals for
an individual with a MAGI-based
eligibility determination may be
delegated to an Exchange or Exchange
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appeals entity under the regulation at
§ 431.10(c)(1)(ii), the FFE will only
accept a delegation of appeals involving
determinations rendered by the FFE.
The permissible scope of delegation
under § 431.10(c)(1)(ii) to an Exchange
or Exchange appeals entity is limited to
appeals of MAGI-based eligibility
determinations. Appeals related to
denials of eligibility for individuals
excepted from application of MAGIbased methodologies (for example,
eligibility based on disability) may not
be delegated under the regulation. As
discussed above, states may delegate
such appeals to another state agency,
including a state-based Exchange, by
requesting an ICA waiver.
Comment: One commenter asked
whether there is a timeframe under
which the individual must request a fair
hearing before the Medicaid agency to
effectuate the requirement under
§ 431.10(c)(1)(ii) that the state agency
must provide an individual an option to
have his or her Medicaid appeal
conducted at the Medicaid agency when
delegating authority to conduct fair
hearings to an Exchange or Exchange
appeals entity.
Response: An individual must be
provided the opportunity to opt to have
his or her Medicaid appeal adjudicated
at a hearing conducted at the Medicaid
agency, instead of having his or her
appeal for both enrollment in a QHP
and eligibility for APTC and CSR and
eligibility for Medicaid addressed at an
integrated hearing at the Exchange or
Exchange appeals entity. Section
431.206(d) specifies that the individual
must be informed of how to exercise
this right. We note that we clarify our
proposed regulation at § 431.206(d) to
require that individuals must be
informed of this option in writing. We
are revising the regulation text at
§ 431.10(c)(1)(ii) to clarify that the
request for a hearing before the
Medicaid agency would need to be
requested instead of the Exchange
hearing. While we are not specifying a
specific timeframe, we would expect
that if an individual was opting for a
hearing before the Medicaid agency, that
request would be made at the time that
the individual is requesting a hearing.
Thus, we finalize these proposed
regulations with these minor
modifications.
Comment: Many commenters believed
that delegation of fair hearing authority
under the regulation should be
permitted. Some of the commenters
emphasized the need to permit
delegation only in the simplest manner
reducing burden to the consumer, and
without any duplication of appeals
processes. A few commenters suggested
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we permit delegation under the
regulation only to an independent state
agency employing Administrative Law
Judges, and that delegation to any other
state agency still require an ICA waiver
to ensure transparency and opportunity
for stakeholder input. A few
commenters asked for clarification of
the conditions and process required
when requesting an ICA waiver. One
commenter opposed delegation of
authority to conduct fair hearings to any
other state or Exchange entity stating
that any delegation is duplicative, as
state agencies still will be required to
conduct Medicaid MAGI-based
hearings.
Response: Under proposed
§ 431.10(c)(1)(ii), states would be able to
delegate authority to conduct MAGIbased fair hearings to an Exchange or
Exchange appeals entity, but to delegate
Medicaid fair hearings to another state
agency, states would need to request an
ICA waiver. We sought comment on
whether states also should be permitted
to delegate authority to conduct fair
hearings to another state agency under
the regulation.
The purpose of the proposed rule is
to promote coordination of appeals and
simplification of the appeals process by
permitting delegation of Medicaid
appeals to the Exchange or Exchange
appeals entity. Because coordination
between insurance affordability
programs is a key goal of the Affordable
Care Act, we are finalizing, with minor
modifications, the proposed regulations
at § 431.10(c)(1)(ii) and at
§ 431.205(b)(1)(ii) to permit delegation
of authority to conduct Medicaid fair
hearings for denials of MAGI-based
eligibility to the Exchange or Exchange
appeals entity, including the FFE, statebased Exchange or HHS or state-based
Exchange appeals entity, provided these
entities are government agencies or
public authorities that maintain
personnel standards on a merit basis.
After consideration of the comments, we
have determined not to extend authority
to delegate Medicaid fair hearings to
state agencies other than a state-based
Exchange or an Exchange appeals entity
under the regulations because it is
already allowed through an ICA waiver.
We note that the main goal and
justification for the delegation of fair
hearings under the regulation is to
achieve coordination across insurance
affordability programs, something
which would not be served by
delegation to another state agency.
Furthermore, Medicaid agencies already
can delegate conduct of fair hearings to
other state agencies through an ICA
waiver, and there is nothing additional
that states would be able to accomplish
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through delegation under the regulation
as opposed to an ICA waiver. Indeed,
the flexibility available to states under
an ICA waiver is greater than that which
is available under the regulation since
delegation of fair hearings under an ICA
waiver does not require that states
provide individuals a right to opt for a
hearing before the Medicaid agency, nor
would the delegation be limited to
MAGI-related appeals.
We have and will continue to apply
similar conditions to the delegation of
fair hearings under an ICA waiver as
those we require under § 431.10(c) and
(d). As explained in the proposed rule,
an ICA waiver may be requested
through a straightforward process using
a state plan amendment (SPA), and CMS
staff is available to provide technical
assistance to states in completing that
process. We note that our rules relating
to hearing officers do not require that
hearing officers be Administrative Law
Judges or set any particular
qualifications for hearing officers other
than impartiality. States have flexibility
to set such requirements in
implementing fair hearings as they see
appropriate. Thus, we do not set
standards regarding the qualifications of
hearing officers for states that delegate
authority to conduct fair hearings or
specify rules if the state agency employs
Administrative Law Judges in this final
rule.
Comment: One commenter expressed
concern that the proposal to remove
§ 431.10(e)(2) and (e)(3) weakens the
single state agency authority when
delegating authority to conduct appeals
to another agency. Other commenters
supported the removal of those
paragraphs because they are
inconsistent with the goals of delegation
of authority of appeals.
Response: We are finalizing our
proposal to remove paragraphs
§ 431.10(e)(2) and (e)(3) as they are
inconsistent with the option to delegate
the authority to conduct fair hearings to
an Exchange. We believe that the
proposed language in § 431.10(e), which
we are finalizing without modification,
clearly provides that only the Medicaid
agency may develop and issue rules and
policy related to the Medicaid program.
Comment: Several commenters
requested clarification of the kinds of
conclusions of law that could be subject
to review by the agency under
§ 431.10(c)(3)(iii). They also asked how
the agency review process a state may
establish to decisions made by an
Exchange or Exchange appeals entity
conducting Medicaid fair hearings
under this provision relates to the
‘‘trumping rule’’ at § 155.302(b)(5),
which provides that if an appeals
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decision rendered by the Exchange or
Exchange appeals entity conflicts with a
fair hearing decision concerning the
same individual rendered by the
Medicaid agency, the Exchange must
adhere to the Medicaid fair hearing
decision. A number of commenters
supported the limitation of the agency
review process to conclusions of law.
One commenter requested that the
option be extended to findings of fact.
Others recommend that the option be
eliminated altogether. These
commenters discussed that any review
by the state agency of a hearing officer’s
legal or factual conclusions would
violate the due process protections
afforded under Goldberg v. Kelly to have
the appeal decided by a neutral arbiter.
One commenter suggested that the
regulation at § 431.10(c) specify the
timeframe in which the Exchange or
Exchange appeals entity be required to
issue a decision for the state agency to
complete its review within the time
limits set forth in § 431.244.
Response: We are finalizing this
provision as proposed with minor
revisions to clarify the scope of the
review process. We note the provision at
§ 431.10(c)(3)(iii) is a state option for
Medicaid agencies to establish a process
that permits a limited review of the
decisions made by the Exchange or
Exchange appeals entity to ensure
Medicaid fair hearings are made with
the proper application of federal and
state Medicaid law and regulations,
including subregulatory guidance and
written interpretive policies. The
proposed regulation text is being revised
to clarify the scope of what the agency
may review would be limited to the
legal conclusions made during the fair
hearing to ensure that they
appropriately apply federal and state
Medicaid law and regulations, including
subregulatory guidance and written
interpretive policies properly and that
the review process be conducted by an
impartial official who was not directly
involved in the initial determination.
By way of example, suppose that the
Exchange hearing officer finds that an
individual has $800 in wages and $200
in child support income each month
and, based on these amounts, concludes
that the individual’s MAGI-based
household income is $1,000 per month.
Suppose also that the applicable income
standard for the applicable household
size for this individual is $900 per
month, and that the hearing officer
upholds the initial denial of eligibility.
The findings of $800 in wages and $200
of child support per month would be
factual findings, which the Medicaid
agency could not review under the
option provided at § 431.10(c)(3)(iii).
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However, the hearing officer’s inclusion
of the wages and child support income
in total MAGI-based household income
involves an application of MAGI-based
methodologies, described in § 435.603
of the March 2012 Medicaid eligibility
final rule, as implemented by the state,
which would be reviewable as a
conclusion of law. In this case, the
inclusion of wages would be correct, but
the inclusion of child support income
would be incorrect, and the agency
upon finding such an erroneous
application of state or federal rules
could reverse the hearing officer’s
decision to conclude that, based on
household income of $800, the
individual is Medicaid eligible.
Because of the important role that an
impartial hearing officer plays in
evaluating evidence and weighing
credibility in making findings of fact,
we are not extending the option at
§ 431.10(c)(3)(iii) to include agency
review of findings of fact. We note that
fair hearings conducted under a
delegation of authority in accordance
with § 431.10(c)(1)(ii) must be
conducted in accordance with
§ 431.10(d)(1), which requires that the
delegation agreement between the
agency and the Exchange or Exchange
appeals entity must set forth the
responsibilities of each party to
effectuate the provisions of part 431
subpart E of the regulations. Section
431.205(d) provides that the fair hearing
process under subpart E must meet the
due process standards set forth in
Goldberg v. Kelly, 397 U.S. 254 (1970),
which requires that any review process
be conducted by an impartial official,
and be based solely on the information
and evidence in the record. We have
made a minor modification to
§ 431.205(b)(1)(ii) to clarify that the
hearing process provided through
delegation of authority to conduct a fair
hearing to an Exchange or Exchange
appeals entity would include the review
by the agency of the Exchange or
Exchange appeal entity’s application of
federal and state Medicaid law and
regulations, if such review is elected by
the state under § 431.10(c)(3)(iii) and
conducted by an impartial official who
was not directly involved in the initial
determination. We note also that the
state’s election under § 435.10(c)(3)(iii)
to conduct this limited review does not
create a right for the individual to
request or receive a de novo hearing
before the agency.
The review process that can be
established under § 431.10(c)(3)(iii)
functions completely independently
from the ‘‘trumping rule’’ at
§ 155.302(b)(5) of the Exchange
proposed rule. The former comes into
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play when an individual’s fair hearing
has been delegated to, and is heard by,
the Exchange or Exchange appeals
entity. The ‘‘trumping rule’’ at
§ 155.302(b)(5) as modified by this
rulemaking and at § 155.345(h) is
invoked when the Medicaid agency has
conducted the Medicaid fair hearing
relating to the appeal of a denial of
Medicaid eligibility and the Exchange or
Exchange appeals entity also has
conducted a hearing related to an appeal
of an award of advance payments of
premium tax credits. Similar to the
‘‘trumping rule’’ at § 155.302(b)(5) of the
March 2012 Exchange final rule relating
to initial eligibility determinations, if
the Medicaid agency’s fair hearing
decision conflicts with the Exchange
appeals decision, the Exchange must
adhere to the Medicaid agency or fair
hearing decision for Medicaid eligibility
under § 155.302(b)(5) and § 155.345(h).
Finally, we do not believe it is
necessary to require in the Medicaid
regulations specified timeframes within
which an Exchange, in conducting a
delegated fair hearing, must transmit a
decision to the Medicaid agency.
Instead, as part of the agreement
required under § 431.10(d), in
delegating the fair hearing authority to
the Exchange or Exchange appeals
entity, the parties will need to stipulate
each party’s responsibilities to ensure
that the time frames established under
§ 431.244(f) are met.
Comment: One commenter sought
clarification of whether the review
process of appeal decisions made by the
Exchange which the commenter
expressed as ‘‘required’’ at
§ 431.10(c)(3)(iii) is considered in the
agency’s quality assurance Payment
Error Rate Measurement (PERM)
sampling.
Response: The regulation at
§ 431.10(c)(3)(iii) does not set a
requirement, but provides states an
option to establish a review process of
appeal decisions as a part of its
oversight of the delegation of authority
to conduct fair hearings to an Exchange
or Exchange appeals entity. We note the
agency has other means to oversee its
delegation of authority to conduct
hearings. Implications for PERM are
beyond the scope of this regulation; we
intend to issue additional guidance on
PERM.
Comment: Many commenters
supported the reinstatement of an
individual’s Medicaid application at
§ 435.907(h) when the individual had
withdrawn his or her application after
an assessment of Medicaid ineligibility
by the Exchange, appealed the level of
APTC and CSR awarded by the
Exchange, and the Exchange or
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Exchange appeals entity reversed the
initial assessment and found the
individual to be potentially eligible for
Medicaid. A few commenters sought
clarification regarding the retroactive
nature of the reinstatement effective as
of the date the individual submitted the
application to the Exchange. Another
commenter asked how this provision
relates to the timeliness requirements
for Medicaid agencies to process an
application under § 435.912 of the
March 2012 Medicaid eligibility final
rule. A few commenters raised a
concern that if an Exchange appeals
entity hearing officer upholds the
finding of eligibility for advance
payment for premium tax credit, the
reinstatement would not take effect.
These commenters recommended that
the Medicaid application be reinstated
whenever an individual files an appeal
with the Exchange or Exchange appeals
entity to capture a broader set of
individuals who may be eligible for
Medicaid or CHIP.
Response: We appreciate the support
for the provision at § 435.907(h) to
reinstate the Medicaid application of an
individual who has withdrawn his or
her Medicaid application upon initial
assessment of Medicaid ineligibility by
the Exchange, but who is subsequently
assessed as potentially Medicaid eligible
following an appeal related to an award
of advance payments of the premium
tax credits or cost sharing reductions.
We are finalizing this provision as
proposed, except to clarify that the 45day or 90-day timeliness standards do
not apply to these reinstated
applications. By the time the Exchange
appeal decision is rendered, 45 or 90
days from the date of application may
already have elapsed, making
compliance by the Medicaid agency
unrealistic. Instead we clarify that the
timeliness standards required under
§ 435.912 of the March 2012 Medicaid
eligibility final rule apply based on the
date the application is reinstated.
However, we note that the 45 and 90
days prescribed in the regulation
represent the outer limit for all
applications. In the case of a reinstated
application which has been the subject
of an Exchange appeal, we would expect
that the individual’s electronic account
would be comprehensive, and that
considerably less time would be needed
for the Medicaid agency to act on the
case. We would expect states to take this
into account in establishing timeliness
standards for prompt determinations on
reinstated applications under
§ 435.911(c) and § 435.912 of the March
2012 Medicaid eligibility final rule. The
reinstated application must be made
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effective retroactive to the date the
individual submitted his or her
application to the Exchange (not the
date the application is reinstated) to
protect the effective date of coverage
required under § 435.914 of the current
regulations (redesignated at § 435.915 in
the March 2012 Medicaid eligibility
final rule). We also proposed a similar
application reinstatement provision for
CHIP at § 457.340(a), which we are
finalizing as proposed with a minor
modification to remove the reference to
§ 435.909 which was inadvertently
inserted in the proposed rule and has no
relationship to CHIP. We note that states
also will need to develop reasonable
timeliness standards for such reinstated
applications in accordance with
§ 457.340(d) of the March 2012
Medicaid eligibility final rule.
We have not modified the proposed
regulation text to reinstate the Medicaid
or CHIP application of every individual
who has withdrawn his or her Medicaid
or CHIP application in accordance with
§ 155.302(b)(4) of the March 2012
Exchange final eligibility rule and who
then subsequently appeals the
determination of eligibility for advance
payments of the premium tax credits or
cost-sharing reductions at § 435.907(h)
and § 457.340(a). We believe that the
interests of individuals filing an
Exchange appeal who should have been
assessed as potentially Medicaid eligible
by the Exchange, but who nonetheless
withdrew their Medicaid application
following the Exchange’s assessment,
will be protected through the Exchange
appeals process because the Medicaid
application for those assessed
potentially Medicaid eligible will be
reinstated, and their account transferred
to the Medicaid agency for a full
determination. On the other hand, to
reinstate the Medicaid application of
every applicant for whom the Exchange
appeals processes ultimately confirms
the initial assessment of Medicaid
ineligibility made by the Exchange—
regardless of how high above the
Medicaid income standard the
individual’s income may be—would
create confusion for individuals and
impose, we believe, unnecessary
administrative burden on state Medicaid
agencies. We expect to work closely
with Exchanges to ensure accurate
assessments of Medicaid and CHIP
eligibility in accordance with federal
regulations.
Comment: One commenter sought
clarification of when Medicaid agencies
will have to decide whether or not to
delegate eligibility determinations or
fair hearings to the Exchange, and
whether there will be additional
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requirements if the agency chooses not
to delegate such responsibility.
Response: There is no deadline to
elect to delegate eligibility
determinations or appeals to an
Exchange or Exchange appeals entity.
As discussed in section II.A.6. of
preamble, the regulation permitting
delegation of eligibility and fair hearings
goes into effect on October 1, 2013.
Once a state decides to delegate
authority to conduct eligibility or
appeals, it must indicate such an
election through the state plan, establish
a written agreement with the Exchange
or Exchange appeals entity, and
otherwise comply with the provisions
set forth in the regulation. A state may
revoke its delegation at a later time
through the same process. Whether or
not a state chooses to delegate authority,
it must comply with the provisions of
§ 435.1200, § 457.348 and § 457.350,
issued in the March 2012 Medicaid
eligibility final rule, to ensure
coordination across all insurance
affordability programs and a seamless
consumer experience. We proposed
revisions to these provisions in the
January 2013 proposed rule to address
the agencies’ responsibilities to
coordinate notices and appeals, but are
not finalizing them in this final rule.
Comment: One commenter questioned
whether a state might be able to obtain
the enhanced matching funds for
systems enhancement at a 90/10 match
for enhancement of their appeals
systems. Another commenter asked for
clarification as to whether federal
financial participation (FFP) would be
available for appeals delegated to an
Exchange.
Response: The enhanced FFP match
rate of 90/10 for the design,
development, and installation of
eligibility systems is available only for
components of the Medicaid
Management Information System
(MMIS), including eligibility and
enrollment systems through the end of
2015, subject to meeting the seven
conditions and standards outlined in
the April 19, 2011 final rule at 74 FR
21950. A 75/25 match rate is available
for operations and maintenance of these
systems. Appeals systems do not qualify
for enhanced funding under these rules.
Instead, FFP at a 50/50 rate is available.
For more details on 75/25 match rate
discussion, see https://
www.medicaid.gov/State-ResourceCenter/FAQ-Medicaid-and-CHIPAffordable-Care-Act-ACAImplementation/Downloads/AffordableCare-Act_-Newest-Version.pdf. The
availability of FFP and responsibility for
funding subject to cost allocation rules
applies to administration of fair
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hearings in the same manner as any
other context and is not affected by the
state’s delegation decision.
Comment: A few commenters
suggested that we revise § 431.240 to
require that hearing officers who
adjudicate Medicaid fair hearings abide
by specific ethical standards, either the
National Association of Hearing
Officials’ Model Code of Ethics or the
National Association of Administrative
Law Judiciary’s Model Code of Judicial
Conduct for State Administrative Law
Judges. We did not receive any
comments related to our proposed
modification of § 431.240 related to
access to information.
Response: As discussed above,
existing regulation at § 431.240 require
hearing officers to be impartial.
Additionally, existing regulations at
§ 431.205 require hearing systems to
comport with due process standards of
Goldberg v. Kelly, 397 U.S. 254 (1970).
Current regulations do not require
hearing officers to belong to a particular
profession, and we did not propose to
modify this policy in the proposed rule.
Therefore, we are not making any
changes to § 431.240 in response to this
comment. However, as noted above, we
are addressing this comment, in part, by
including that an impartial decisionmaker must be used if a state is electing
to establish a review process of legal
conclusions made by hearing officers
operating under delegated fair hearing
authority. We also encourage states to
examine this issue further and to ensure
that the requirement to utilize impartial
hearing officers at § 431.240 are adhered
to when conducting fair hearings. We
finalize § 431.240(c) without
modification.
3. Notices
a. Electronic Notices (§ 435.918)
Current notice regulations require
paper-based, written notices. To
establish a more timely and effective
notification process, proposed § 435.918
would direct states to provide
individuals with the option to receive
notices through a secure, electronic
format in lieu of written notice by
regular mail. Consumer safeguards were
proposed to ensure that individuals
make a conscious choice to receive
notices in electronic format, and would
be able to opt-in and opt-out of their
election. We solicited comments
regarding the proposed consumer
safeguards. In addition, we requested
comments on whether other types of
communications, in addition to
eligibility notices, should be offered in
electronic format. We are finalizing
§ 431.206(e), to permit beneficiaries to
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receive notices regarding fair hearings
electronically, consistent with proposed
§ 435.918. We note that we are not
addressing in this final rule comments
related to accessibility of fair hearing
notices. We will consider these
comments and this portion of
§ 431.206(e) when we finalize our rules
related to accessibility for individuals
who are limited English proficient and
individuals with disabilities in a future
rulemaking. We also proposed
modifications to §§ 431.211, 431.213,
431.230, and 431.231 to update and
modernize the language in the
regulation to remove the term ‘‘mail’’
and instead use ‘‘send,’’ to reflect the
option for beneficiaries to receive
notices electronically, consistent with
the consumer protections in proposed
§ 435.918. We proposed in
§ 457.110(a)(1) the same consumer
option and protections for electronic
notices in CHIP, and we are making
technical changes in the final rule to
better align the provisions. A
modification was also proposed to
paragraph (a) in § 457.110 regarding the
accessibility of information for
individuals who are limited English
proficient and individuals with
disabilities. However, we will finalize
this provision in future rulemaking.
We received many comments
regarding the requirement to provide
individuals with the option to receive
notices electronically, the majority of
which supported this option as an
important part of modernizing the
notification process provided that strong
consumer protections are in place.
Comment: We received many
comments regarding proposed
§ 435.918(a)(1), which would require the
agency to confirm by regular mail the
individual’s election to receive notices
electronically. Some commenters
recommended, instead, allowing
electronic confirmation for individuals
applying on-line. One commenter
suggested that in states with a FFE, the
FFE should be responsible for issuing
all mailed confirmations. Also, several
commenters were concerned that the
proposed written confirmation actually
required individuals to choose receipt of
electronic notices twice, and that this
would be confusing and burdensome for
the agency and these consumers. Many
other commenters encouraged CMS to
maintain the requirement to confirm an
individual’s election through regular
mail to ensure that individuals have
made an informed decision, and to
provide them with an opportunity to
change their election. One commenter
suggested that the mailed confirmation
include a list of the types of notices that
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the agency will send in electronic
format.
Response: Proposed section
§ 435.918(a)(1), redesignated
§ 435.918(b)(1) in our final rule, requires
the agency to send, via regular mail,
written confirmation that an individual
has elected to receive electronic notices
and that forthcoming notices will be
delivered electronically. This
communication must also instruct the
individual on how to change this
election if the individual made the
initial choice inadvertently or wishes to
change his or her mind. The purpose of
the mailed communication is to affirm
the individual’s choice and allow the
individual an early opportunity to optout of receiving notices in electronic
format. The individual does not have to
respond to this written notice to
complete his or her election to receive
electronic notices; he or she need only
respond if he or she wanted to change
the initial election. Therefore, there will
not be any need for individuals to
request electronic notices twice, as some
commenters thought. We are clarifying
at § 435.918(b)(1) of the final regulation
that it is the agency’s responsibility to
ensure that the individual’s election to
receive notices electronically is
confirmed by regular mail, since the
individual will receive all future
communication from the Medicaid
agency including information on how to
establish an electronic account with the
state, if he or she has not already done
so. If a different arrangement makes
more sense in a given state, the
Medicaid agency and Exchange can
delegate this responsibility to the other
agency in the agreement entered into
under § 435.1200(b)(3). We are not
requiring that this communication
specify which types of notices will be
delivered in electronic format, but
suggest that states take this under
consideration as it would enable
individuals to better anticipate the type
of notices that will be posted to an
electronic account. We anticipate, based
on one state’s experience piloting
electronic notices, few individuals will
revert back to paper notices. However,
given that electronic notification will be
a new approach for many individuals,
we believe this is an important
consumer protection to ensure that
individuals make a deliberate choice
regarding the format in which they
receive information. In future years,
when electronic notices are more
prevalent, we will revisit whether
written confirmation of the individuals
choice to receive notices in electronic
format is still a relevant consumer
protection.
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Comment: Several commenters
requested that electronic notices be the
default method for notice delivery such
that if an individual fails to indicate
whether he or she prefers an electronic
or paper format for notices, notices
would automatically be provided
electronically. One commenter
suggested that electronic notices should
be the default for specific populations,
such as those individuals determined
eligible through an Exchange Web site.
Response: We maintain that electronic
notices should be provided only if the
individual affirmatively opts for such
notices. The default approach makes an
assumption that the individual has the
technology to regularly retrieve notices
posted to his or her electronic account.
Even if an individual applies through an
Exchange Web site, the individual may
not have regular access to technology to
enable ongoing retrieval of electronic
notices. Consequently, we do not
believe this change is appropriate at this
time as it could pose a barrier to
applicants and beneficiaries with
limited access to technology.
Comment: Several commenters
recommended that Medicaid and CHIP
eligibility notices be provided in both
electronic and in paper format until an
individual indicates in writing that they
no longer wish to receive such notices
by regular mail. Some commenters also
recommended that all notices regarding
adverse actions always be sent in paper
format via regular mail to allow for
additional protection against delivery
error. One commenter recommended
that hearing scheduling notices should
always be sent via regular mail to ensure
adequate hearing slot availability.
Response: We are concerned that
requiring agencies to provide dual
electronic and paper notices may pose
an administrative burden for some
states. While we require that agencies
provide individuals with a choice to
receive notices in electronic format in
lieu of paper format, at state option, all
notices or a subset of notices, such as
those relating to adverse actions, could
be provided in dual formats. We
appreciate the concern expressed for
ensuring consumer protections against
delivery error. In § 435.918(a)(4), the
agency is required to send an email or
other electronic communication alerting
the individual that a notice has been
posted to his or her account. To guard
against delivery error, if the required
alert is returned as undeliverable, the
agency must send such notice by regular
mail within three business days of the
date of the failed electronic
communication. This requirement has
been further clarified by a revision to
§ 435.918(a)(5). We believe that
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electronic notices are likely to increase
receipt of important eligibility
information, as individuals will have
greater flexibility to access notices
regardless of changes to their postal
address.
Comment: We received a few
comments that recommended we amend
§ 435.918 to include specific language
noting the importance of ensuring that
the notice must be accessible to persons
who are limited English proficient and
individuals with disabilities.
Response: We agree that all eligibility
notices must be accessible to persons
who are limited English proficient and
individuals with disabilities, and we
will be addressing such rules in future
rulemaking.
Comment: One commenter requested
clarification on what constitutes an
‘‘undeliverable’’ communication in
§ 435.918(a)(5).
Response: ‘‘Non-delivery reports’’ are
system messages that report the delivery
status to the sender. We expect that if
the agency receives a non-delivery
report, this constitutes an undeliverable
communication.
Comment: One commenter requested
clarification regarding how to date a
paper version of an electronic notice.
When an electronic communication is
undeliverable, indicating an individual
may not be aware of an electronic notice
posted to his or her account,
§ 435.918(a)(5) requires that the agency
send a paper version of the electronic
notice within three business days. The
commenter, noting the ability to send
the paper version of the electronic
notice within 24 hours, supported
maintaining the same date on both
notices.
Response: It is important for the date
of the paper notice to reflect the date it
is sent, not the date of the undelivered
electronic notice. We anticipate that
while some states may be able to issue
a paper version of the electronic notice
within 24 hours, other states may take
up to the required limit of 3 days.
Individuals are given a limited time to
take action, such as requesting a date for
a hearing, and this is based on the date
the notice is sent to the individual.
Comment: One commenter requested
clarification as to whether agencies are
required to monitor an individual’s
account to determine if a notice was
accessed.
Response: We are not requiring that
agencies monitor accounts to determine
whether notices are accessed. If the
electronic alert is not undeliverable, the
agency should assume an individual is
able to access his or her notice.
Comment: One commenter
recommended that we include a
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requirement that allows the agency to
limit the number of times an individual
can request that an electronic notice be
provided in paper format.
Response: We believe that it is an
important consumer protection to allow
individuals to request notices in a paper
format. Some individuals may not have
the technology available to readily print
notices from an electronic account.
Comment: A number of commenters
supported offering additional types of
communications through an electronic
format. In addition to eligibility notices
and information specified in subpart E
of part 431, there are other
communications that occur between an
individual and the Medicaid or CHIP
agency. Some of these communications
include requests for additional
information, annual renewal forms and
reminders, premium payment
information, and information on
covered services.
Response: We do not believe it is
necessary to amend § 435.918(a) to
include other types of communications.
In § 435.918(a), we specify that
eligibility notices and information in
part 435, and notices and information
required under subpart E of part 431, be
provided in electronic format. For
example, information on covered
services must be available electronically
in addition to paper format, as required
by § 435.905(a). Annual renewal forms
must also be offered in electronic format
in accordance with § 435.916. We do not
think it is appropriate or operationally
feasible to require other types of
communications to be provided
electronically. We encourage states with
the capacity to provide additional
communications electronically, and
with beneficiaries preferring that mode
of communication, to do so, as long as
in compliance with any existing
regulations that govern the type of
communication.
Comment: One commenter asked
whether proposed § 435.918(b), which
asserts that the agency may only provide
electronic notices if the individual
elected to receive electronic notices and
must be permitted to change such
election at any time, is duplicative of
paragraph § 435.918(a).
Response: We agree with the
commenter, and the provision has been
amended by removing redundant
language in § 435.918(b)(1) and
§ 435.918(b)(2).
Comment: A number of commenters
requested a later effective date for
implementing electronic notices.
Response: We recognize that states are
at different places in the development of
their eligibility and enrollment systems,
and that the technology needs to be in
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place to offer beneficiaries and
applicants the option to receive notices
electronically. We have amended
§ 435.918(a) to delay the requirement to
provide notices electronically until
January 1, 2015, but permit states to
implement October 1, 2013 if their
systems are ready.
Comment: One commenter suggested
that we clarify whether ‘‘send’’ in
§ 431.230 means send by mail or in
electronic format consistent with
§ 435.918.
Response: Under proposed
§ 431.206(e), all information required
under subpart E of part 431 must be
provided in electronic format in
accordance with § 435.918, if an
individual elects to receive such
information in electronic format. To
further clarify, we have added to
§ 431.201, that the definition of ‘‘send’’
means deliver by mail or in electronic
format consistent with § 435.918.
Comment: One commenter requested
clarification regarding § 431.231(c)(2),
which provides beneficiaries 10 days to
request a hearing from receipt of the
notice of action. The date on which the
notice is received is considered to be 5
days after the date on the notice, unless
the beneficiary shows that he or she did
not receive the notice within the 5-day
period. The commenter specifically
requested clarification regarding how an
individual might show proof that they
did not receive an electronic notice
within the 5-day time period.
Response: We understand the concern
expressed by the commenter, but do not
believe that this issue is specific to the
receipt of electronic notices, but receipt
of notices in general. It is challenging
for an individual to provide proof of a
negative, however, it is important to
provide individuals with the
opportunity to demonstrate that they
did not receive notices. One example of
how an individual might demonstrate
that he did not receive an electronic
eligibility notice is by providing
documentation that he closed the email
account on record with the agency. If an
individual cannot receive the emailed
alert that a notice is posted to the
electronic account, the individual is not
in receipt of the notice.
Comment: A few commenters
requested that we define whether the ‘‘5
days’’ § 431.231(c)(2) refers to calendar
days or business days.
Response: We are not defining
whether the ‘‘5 days’’ refers to calendar
days or business days, but allow states
the flexibility to define this in their
operating procedures.
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b. Coordinated Notices (§ 435.1200)
For individuals whose electronic
account is transferred to the Medicaid
agency for a determination of eligibility
from another insurance affordability
program, § 435.1200(d)(6) of the March
2012 Medicaid eligibility final rule
directs that the Medicaid agency notify
such other program of its final
determination of eligibility or
ineligibility only for individuals who
have enrolled in the other program
pending completion of the agency’s
final determination. We proposed to
redesignate and modify this requirement
at § 435.1200(d)(5) to require that the
Medicaid agency notify the other
program of the final determination of
Medicaid eligibility or ineligibility for
all individuals whose electronic account
was transferred from another insurance
affordability program. The same
requirement was proposed for CHIP at
§ 457.348(d)(5). No comments were
received regarding these specific
provisions. We also proposed a number
of other changes to § 435.1200 and
§ 457.348 relating to coordination of
notices and appeals. In this final rule,
we are codifying § 435.1200(d)(5) of the
proposed rule at paragraph
§ 435.1200(d)(6). Other proposed
changes to § 435.1200 of the March 2012
Medicaid final eligibility rule, including
the redesignation of paragraph (d)(6), as
appropriate, will be addressed in
subsequent rulemaking. We are also
finalizing proposed § 457.348(d)(5) as
§ 457.348(c)(6), but other proposed
changes to § 457.348 will be addressed
in subsequent rulemaking.
4. Medicaid Enrollment Changes Under
the Affordable Care Act Needed To
Achieve Coordination With the
Exchange
a. Certified Application Counselors
(§ 435.908 and § 457.340)
Many state Medicaid and CHIP
agencies have a long history of
supporting providers and other
organizations to assist individuals in
applying for and maintaining coverage.
Commonly referred to as ‘‘application
assisters’’ and referred to in this
rulemaking as ‘‘certified application
counselors,’’ these organizations and
individuals provide direct assistance to
individuals seeking coverage, and can
play a key role in promoting enrollment
among low-income individuals. The
proposed regulations at § 435.908(c)
sought to ensure that certified
application counselors, whom we
expect to continue to play an important
role in facilitating enrollment in the
expanded coverage options available
under the Affordable Care Act, will have
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the training and skills necessary to
provide reliable, effective assistance to
consumers. We proposed basic
standards for states to certify
application counselors, which we
believe are consistent with the practice
in many states today. These standards
include proposed procedures to ensure
that these trained certified application
counselors have clear authority to
access and protect confidential
information about individuals they
serve, and with that authority have a
special relationship with the Medicaid
agency that enables the counselors to
track and monitor applications. The
proposed regulations at § 435.908(c), as
finalized in this rulemaking, are
applicable to CHIP, as well under
§ 457.340(a) of the March 2012
Medicaid eligibility final rule; no
revisions are needed or made to
§ 457.340(a). We received the following
comments concerning the proposed
certified application counselor
provisions:
Comment: We received a few
comments expressing support for the
proposed requirement that states have a
designated web portal for use by
certified application counselors that has
a secure mechanism for granting rights
for only those activities the certified
application counselor is certified to
perform. Commenters stated that such a
portal will increase the proportion of
applications that are submitted
electronically, thereby providing more
applicants with access to electronic
verification and real-time eligibility
while increasing the state’s
administrative efficiency. Other
commenters also recommended a
clarification that states may use the
same portal for Navigators and nonNavigator assistance personnel
authorized under 45 CFR 155.205(d)
and (e) with proper assignment of rights
and functionality.
Response: We appreciate the support
for the establishment of a designated
web portal for use only by properly
trained and certified application
counselors. However, given the systems
challenges states face in preparing for
the initial open enrollment period and
starting up the new system of insurance
affordability programs, we are
concerned that requiring such a portal
could disrupt well-functioning
application counselor programs that
exist today. Therefore, while we
encourage states to consider such
portals as an effective vehicle for
administering and overseeing certified
application counselor programs, we are
removing from the final rule the
requirement that such portals be
established as proposed at
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§ 435.908(c)(3)(i). Although not
required, states may elect to develop
these portals to support the work of
certified application counselors.
Comment: One commenter requested
that we issue guidance on the
availability of federal funding to help
support grants or payments to certified
application counselors—in particular
information about how Medicaid
administrative claiming can be used to
match community-based investments in
application assistance.
Response: FFP is available for state
expenditures to certify and support
certified application counselors, but,
since community-based application
counselors are not state or local
employees, FFP is not available for
salaries or other direct costs of certified
application counselors.
Comment: Many commenters
requested that we require that certified
application counselors be trained to
provide culturally and linguistically
competent services. They believed that
it is not sufficient to remind Medicaid
and CHIP agencies of their
responsibility to ensure access to
individuals with limited English
proficiency and those living with
disabilities, and urged us to provide
states with specific guidance and
examples of how to fulfill this
responsibility. Some commenters
recommended that to be certified,
application counselors must be trained
in providing culturally and
linguistically appropriate services.
Some commenters recommended that
we require training for application
counselors include accommodating the
health care needs of specific
populations, such as children.
Response: Consistent with title VI of
the Civil Rights Act of 1964, the
Americans with Disabilities Act, and
other civil rights laws, state Medicaid
and CHIP agencies must ensure that
their programs are accessible to
individuals with limited English
proficiency and individuals with
disabilities. This responsibility is
codified, in part, at § 435.905(b),
§ 435.907(g), § 435.908(a), and § 457.330
(incorporating by reference the
requirements of § 435.907) of the March
2012 Medicaid eligibility final rule, and
is also contained in non-Medicaid
specific regulations implementing the
Americans with Disabilities Act and
other civil rights laws. Note that
clarifying changes were proposed in the
January 2013 proposed rule to the
accessibility standard in § 435.905(b);
those proposed changes are not
addressed in this final rule, but we
intend to address them in subsequent
rulemaking. State agencies can use
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certified application counselors as a tool
in meeting their responsibilities to make
their programs accessible to individuals
with limited English proficiency and
individuals with disabilities. But, while
some organizations providing
application assistance to individuals
applying for coverage under an
insurance affordability program may be
subject to civil rights laws independent
of the fact that they are serving as a
certified application assistor (for
example, as a condition of accepting
federal funding), we do not believe it
appropriate to hold them responsible for
meeting the accessibility standards
established for state Medicaid and CHIP
agencies under our regulations.
Moreover, to require a community
organization or provider with a mission
to provide targeted assistance to one
segment of the population to also be
able to provide assistance to all others,
would threaten the participation of
valuable state partners in maximizing
enrollment across the state’s entire
population.
Comment: Some commenters
supported the option provided to states
to certify application counselors. These
commenters pointed to existing
programs in which states work with
community organizations to expand
enrollment, and that state flexibility to
continue current, successful programs is
important. Other commenters
recommended that certification of
application counselors be required for
all Medicaid and CHIP agencies. These
commenters discussed that there will be
organizations providing application
assistance in every state, that these
organizations need to be trained, and
that consumers need to know who is
available to provide competent
assistance.
Response: We agree that a network of
application counselors can be a valuable
asset and can support states’ outreach
and enrollment efforts. We urge all
states to consider working with
interested organizations and providers
in creating an application counselor
program. However, we believe states are
best able to determine the need for such
a program, and we do not believe it is
necessary to require that state Medicaid
programs create such programs.
Comment: We received a number of
comments on certified application
counselors and requirements related to
conflicts of interest. Some commenters
stated that in addition to receiving
training on conflict of interests, certified
application counselors should be
contractually required to serve in the
best interests of clients and to disclose
any existing relationships with qualified
health plans or insurance affordability
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programs to consumers. Some
commenters recommended that health
insurance issuers, their subsidiaries and
licensed insurance brokers and agents
be explicitly excluded from being
certified as certified application
counselors given their inherent financial
conflict of interest.
Response: We are clarifying the
language in § 435.908(c)(1)(iii) to make
clear that certified application
counselors must adhere to all rules
prohibiting conflicts of interest. States
may not certify any organization or
individual who does not meet this
standard, or who may be motivated to
act in a manner contrary to best interest
of the individual being helped. Thus,
any organization that the state finds to
have an inherent conflict could not,
under the proposed regulation, be
certified as an application counselor.
We do not believe it necessary or
appropriate to identify specific types of
organizations as categorically barred
from serving as application counselors
and are finalizing this regulation as
proposed.
Comment: A few commenters
requested that we require states to
maintain a current list of certified
application counselors on the agency
Web site, and the list should include
any limitations on services that they are
certified to provide. Commenters
suggested that it will be important for
consumers to not only be informed of
the functions and responsibilities of
certified application assisters, as
required in § 435.908(c)(3)(i), but to also
know who is certified and whether there
are any limitations on the services each
certified application counselor is
certified to provide.
Response: We encourage states to
adopt the practice recommended by the
commenter, as an effective mechanism
to connect consumers with needed
assistance. However, utilization of
certified application counselors is at
state option, and while we believe such
a mechanism will enhance consumers’
ability to identify resources available to
help with applications we do not think
it appropriate to require states to post a
current list of counselors on their Web
site. We note that such a requirement
could deter some states from creating or
expanding their application counselor
program if they do not have the
resources to create and maintain such a
list.
Comment: A commenter asked CMS
to clarify that states can meet their
outstationing requirements under
§ 435.904 with application counselors at
the appropriate locations. They
suggested that given the overlap of
functions described it would seem
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inefficient to maintain separate systems
of assistance.
Response: States may be able to use
certified application counselors to help
meet the outstationing requirements set
forth in current regulations at § 435.904,
under which state Medicaid agencies
are required to provide pregnant women
and children an opportunity to apply for
coverage at designated ‘‘outstation
locations.’’ Section 435.904(e) requires
that, except for outstation locations that
are infrequently used by the pregnant
women and children targeted under the
regulation, the state agency must have
staff available at each outstation
location. Under paragraph (e)(3) of that
section, properly trained provider or
contractor staff or volunteers—which
could include organizations, staff and
volunteers certified as application
counselors—may be used in lieu of, or
as a supplement to, agency staff to meet
this requirement, subject to certain
conditions set forth in the regulation.
Comment: Commenters asked for
clarification on the overlap of functions
and certification requirements between
certified application counselors in
Medicaid and application counselors as
proposed for the Exchange at § 155.225.
Response: Although the exact
language of the Exchange application
counselor regulation at proposed 45
CFR 155.225 (which is not being
finalized in this rulemaking) and that of
the Medicaid regulation at § 435.908(c)
differ, the policies reflected are
consistent. The main substantive
difference is that the Exchange
regulation at proposed 45 CFR 155.225
would not permit certified application
counselors to limit the activities that
they agree to perform, but instead would
require them to perform all assistance
activities identified in the regulation,
whereas states can permit Medicaid and
CHIP application counselors to elect to
limit the activities which they will
perform for applicants.
As noted in the preamble to the
proposed rule, we remind the
commenters that state Medicaid and
CHIP agencies and the Exchange are
charged under § 435.1200 and § 457.348
of the Medicaid eligibility final rule and
proposed § 155.345 of the Exchange rule
to enter into agreements with each other
to create a seamless and coordinated
application and enrollment process
across all insurance affordability
programs, and the state agencies and the
Exchange should consider such
coordination in developing their
application counselor programs. States
could elect, for example, to create a
single certification process for all
insurance affordability programs, or
each program could accept application
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counselors certified by another program.
To the extent to which an application
counselor is certified by one program
but not the other, the counselor would
assist the individual in submitting the
single streamlined application for all
insurance affordability programs to the
entity by which they are certified. It is
important to note that regardless of the
entity to which the application
counselor submits the application, the
application will be evaluated for
eligibility in QHPs and all insurance
affordability programs.
Comment: One commenter requested
more information about the
development and review of training
materials for certified application
counselors. This commenter stated that
although the regulations provide that
any individual providing customer
service must be trained in a host of areas
related to the insurance affordability
programs, no specificity is provided
about the development and review of
the materials, and they requested
clarification on whether states will have
the opportunity to review and comment
on materials prior to their use. We also
received comments that recommended
we require certified application
counselors to apply for recertification
annually or biannually to ensure that
they are qualified and up to date on
changes in policy and procedures.
Response: Under § 435.908(c)(1)(ii)
and (iii), states must ensure that
application counselors are properly
trained prior to certification, and we
expect states will need to develop
training and any training materials to be
used to satisfy this requirement. We
note that materials will be developed by
HHS for use by certified application
counselors registered with an FFE,
including State Partnership Exchanges,
and state Medicaid and CHIP agencies
may adapt such materials to support
their training efforts. FFP is available for
costs to the state of conducting training
or testing of certified application
counselors, including any costs to the
state for preparation and assembly of
training materials. Being effectively
trained in the rules and regulations of
the different insurance affordability
programs in accordance with
§ 435.908(c)(1)(ii) necessarily requires
keeping abreast of any pertinent changes
in those rules, and under these
regulations states will need to ensure
that application counselors are kept upto-date. However, there are different
ways to accomplish this goal—annual or
periodic recertification is one-way,
refresher trainings or written
communications may be another—and
we believe states should have flexibility
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in determining the process that best
works in each state.
Comment: A few commenters
recommended that applicants and
enrollees be able to opt to designate
their certified application counselor to
receive copies of notices, or to access
electronic notices in the client account.
Response: As discussed in the
preamble of the proposed rule, the
certified application counselor program
is not designed to provide the level of
personal assistance to applicants and
beneficiaries that is provided by an
authorized representative, discussed in
the next section in the preamble.
However, there is nothing to prevent an
applicant or beneficiary from
designating a certified application
counselor to also serve as his or her
authorized representative, and for such
counselor to assume that function, in
accordance with § 435.923, as finalized
in this rulemaking.
Comment: One commenter suggested
that regulations governing application
assistance are not necessary. The
commenter believed that, absent any
evidence that application counselors
currently working in states to help
individuals apply for Medicaid do not
have the training and skills necessary to
provide reliable, effective assistance to
consumers, or would not meet
confidentiality requirements, there is no
reason to regulate state practices in this
area.
Response: We recognize the
successful development of application
assistor, or application counselor,
programs by many states without the
existence of federal regulations, and
have aimed to develop regulations that
will not disrupt existing, successful
programs and practice. However, given
the significant changes to the
availability of and access to affordable
health coverage created under the
Affordable Care Act—including the
advent of coverage in a QHP through the
Exchange, with premium tax credits and
cost sharing reductions available to
qualifying individuals, the coordinated
eligibility and enrollment process
required across all insurance
affordability programs, and the
expansion in use of online applications,
with the possibility confidential
information being returned to
consumers in real time through an
electronic interface—we believe that
establishment of baseline federal
standards, to be applied consistently
across states and programs, is important
to safeguarding consumer interests and
ensuring the integrity of the assistance
provided.
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b. Authorized Representatives
(§ 435.923)
We proposed regulations intended to
be consistent with current state policy
and practice, regarding the definition,
designation, and responsibilities of
‘‘authorized representatives’’ to act on
behalf of applicants and beneficiaries in
applying for and maintaining coverage.
Authorized representatives have
historically provided valuable support
to individuals needing help navigating
the application and enrollment process,
as well as ongoing communications
with the agency, particularly to seniors
and individuals with disabilities, and
we expect their role to continue. We
proposed to define the term ‘‘authorized
representative’’ as an individual or
organization that acts responsibly on
behalf of an applicant or beneficiary in
assisting with the individual’s
application and renewal of eligibility
and other ongoing communications with
the Medicaid or CHIP agency. Under
current regulations at § 435.907,
retained in the March 2012 Medicaid
eligibility final rule, states must accept
applications from authorized
representatives acting on behalf of an
applicant. We received the following
comments concerning proposed
provisions relating to authorized
representatives:
Comment: One commenter requested
clarification on whether states may
enforce additional requirements not
specifically listed in the federal
regulations on authorized
representatives. An example of this
would be state specific regulations
governing who may serve as an
authorized representative for
individuals who are not medically or
legally competent.
Response: Under proposed
§ 435.923(a), legal documentation of
authority to act on behalf of an
applicant or beneficiary under state law,
such as a court order establishing legal
guardianship or power of attorney may
serve in place of a written designation
from the applicant or beneficiary, signed
and submitted in accordance with
§ 435.923(f). Under the regulation,
however, states may not limit
authorized representatives to
individuals identified in such a legal
document or granted authorization
under operation of state law or
otherwise impose requirements other
than those listed in § 435.923 on other
individuals whom an applicant or
beneficiary wishes to have serve as his
or her authorized representative. We
have separated the regulation text as
proposed at § 435.923(a) at
§ 435.923(a)(1) and § 435.923(a)(2).
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Comment: We received a number of
comments regarding who may serve as
an authorized representative. One
commenter recommended that
organizations should not be permitted to
be designated as authorized
representatives. Another commenter
recommended that we allow states to
decide whether to permit organizations
to be authorized representatives. The
commenter suggested that by permitting
only individuals to serve as authorized
representatives, states will be better able
to ensure transparency and
accountability of the authorized
representative. Another commenter
recommended that we add a definition
of organization to § 435.923(e) to clarify
what types of organizations may act as
authorized representatives, for example,
only non-profit organizations.
Response: We believe that there are
situations in which an individual may
need an organization to serve as his or
her authorized representative and it is
appropriate for an organization to serve
in this capacity, such as for individuals
residing in a nursing home who do not
have family available to assist them. We
are finalizing the regulation as proposed
in this regard. Protections at proposed
§ 435.923(e), finalized in this
rulemaking, are designed to ensure that
organizations serving as an authorized
representative adhere to laws and
regulations relating to conflicts of
interest and act in the best interest of
the individual.
Comment: We received a number of
comments related to the timeframe for
designation of authorized
representatives. One commenter
recommended that states be given
options or flexibility in this area,
explaining that states may wish to make
the designation of the authorized
representative last for 12 months by
default, for example, unless the
applicant or beneficiary designates
otherwise. Another commenter
recommended that we add that the
authorization is valid until the
application is denied or benefits are
terminated and the appeal process is
completed.
Response: Our regulations clearly
state that applicants and beneficiaries
are able to change authorized
representatives at any time. States may
not make a designation automatically
expire such that an individual would
need to redesignate an authorized
representative after a given period of
time. However, they are allowed to
provide beneficiaries with the
opportunity to change their authorized
representative at the renewal point. For
example, states can indicate that a
beneficiary has an authorized
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representative and remind the
individual that they may keep or change
the representative on the renewal
document.
Comment: One commenter asked for
clarification on whether the scope of the
authorization is defined by the
beneficiary or applicant, or whether,
once invoked, the representative
assumes all of the duties named in the
regulations, including ‘‘all other
matters’’ with either agency.
Response: We clarify that the scope of
the authorization is defined by the
Medicaid applicant or beneficiary.
Comment: We received a number of
comments on § 435.923(c), specifically
related to the fact that the designation
of an authorized representative can only
be revoked in writing. Commenters
suggested that it would be more
appropriate and efficient to allow the
designation to be revoked by all of the
modalities by which it can be made in
the first place.
Response: We agree with the
commenter’s suggestion and have
revised the regulation text accordingly.
Comment: One commenter requested
clarification on whether the permissions
given the authorized representative may
be granted in part, for example in tiers,
if an applicant so chooses. The
commenter suggested that an applicant
may wish to authorize someone to sign
his or her application, but not to receive
his or her notices, for example.
Response: We are clarifying that the
permissions given to the authorized
representative may be granted in part.
The proposed regulation allows
applicants and beneficiaries to designate
an individual or organization to act on
their behalf and that the scope of
authorization is defined by the
applicant or beneficiary.
Comment: One commenter asked us
to confirm that the definition provided
for authorized representatives is the
same definition that the Social Security
Administration uses.
Response: We clarify that the
definition is not the same.
Comment: A few commenters
requested additional clarification
regarding situations in which an
individual is unable to personally elect
an authorized representative due to
medical incapacity. One commenter
agreed that written designation by the
individual or legal documentation
should be obtained in most instances,
but the proposed rule may be overly
restrictive in that it could result in
unreasonable delay in determining some
individuals’ eligibility for Medicaid.
The commenter recommends that states
be given the authority to waive this
regulation in instances when obtaining
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legal documentation to allow
individuals or organizations to act as
authorized representatives would be
difficult. Another commenter suggested
that legal documentation of authority to
act on behalf of an application or
beneficiary under state law, such as
court order establishing legal
guardianship or a power of attorney,
should serve in place of written
authorizations by the applicant or
beneficiary.
Response: Under section § 435.923(a),
legal documentation of authority to act
on behalf of an applicant or beneficiary
under state law, such as a court order
establishing legal guardianship or power
of attorney may serve in place of the
applicant or beneficiary’s designation.
The option to submit such
documentation is intended to enable
applicants who do not have the capacity
to provide a signature to authorize
representation.
5. Medicaid Eligibility Requirements
and Coverage Options Established by
Other Federal Statutes
a. Presumptive Eligibility for Children
(§ 435.1102)
We proposed to revise existing
regulations to align with the adoption of
MAGI-based methodologies.
Comment: One commenter suggested
that presumptive eligibility could be
better streamlined by using only a gross
income standard for eligibility
determinations.
Response: Current regulations allow
states to use either gross income or to
have qualified entities make a closer
approximation of the countable family
income, which would be used for a
regular determination by the state
agency, by applying simple disregards.
We believe it is appropriate to retain
this flexibility for states once MAGIbased methodologies are in place.
Therefore, we are codifying the
flexibility of states in § 435.1102(a), as
proposed, to direct qualified entities to
use either gross income or to apply
simplified methods, as prescribed by the
state, to better approximate MAGI-based
household income, as defined in
§ 435.603 of the March 2012 final rule.
Comment: Many commenters objected
to the state option to obtain an
attestation of citizenship or satisfactory
immigration status, or state residency as
part of a presumptive eligibility
determination. They suggested that
requiring an attestation of immigration
status would likely deter some
potentially eligible individuals who
often need urgent access to health care
services from receiving care. Further the
commenters suggested that the rules on
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immigration status are detailed and
complex, and qualified entities cannot
reasonably be expected to understand or
explain them to individuals being asked
to attest their status. Some commenters
stated that states should have the option
to request self-attestation of citizenship.
Response: We clarify that our
proposed rule gave states the option to
require qualified entities or qualified
hospitals to request this information but
did not require it. We believe that this
option is important in the context of
extending the ability to conduct
presumptive eligibility determinations
to hospitals because it limits the
possibility that individuals who are not
citizens or qualified immigrants or
residents of the state are found eligible
on a presumptive basis, receive
expensive services, only ultimately to be
determined ineligible for Medicaid.
Therefore, we are retaining the language
as proposed and maintain this provision
as a state option.
Comment: One commenter requested
that we add current foster care children
as a presumptive eligibility group in our
final regulation.
Response: We clarify that former
foster children are already a population
that is eligible to be determined
presumptively eligible. We do not
currently have the authority to add
current foster care children as a
presumptive eligibility group, but this is
unnecessary because current foster
children are automatically eligible for
Medicaid and do not need to be
determined presumptively eligible.
b. Presumptive Eligibility for Other
Individuals (§ 435.1103)
Comment: Some commenters stated
that states should have the option to
elect how many presumptive eligibility
periods should be allowed for each
pregnancy. Others supported our
proposed rule to permit only one
presumptive eligibility period per
pregnancy.
Response: We believe that providing
pregnant women with one presumptive
eligibility period per pregnancy is
reasonable in accordance with section
1920 of the Act, under which pregnant
women may receive ambulatory
prenatal care during a presumptive
eligibility period, defined as continuing
through the date a full Medicaid
determination is made under the State
plan, or, if a woman does not submit a
regular application through the end of
the month following the month during
which the presumptive eligibility
determination was made. Therefore, we
are finalizing the regulation as proposed
to provide one presumptive eligibility
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c. Presumptive Eligibility Determined
by Hospitals (§ 435.1110)
We proposed to add § 435.1110 to
implement section 1902(a)(47)(B) of the
Act, added by the Affordable Care Act,
to give hospitals the option to determine
presumptive eligibility for Medicaid.
The statute provides hospitals
participating in Medicaid with this
option whether or not the state has
elected to permit qualified entities of
the state’s selection to make
presumptive eligibility determinations
for children, pregnant women or other
specific populations under other
sections of the statute.
We received the following comments
concerning the hospital presumptive
eligibility provisions:
Comment: We received many
comments related to the establishment
of standards under proposed
§ 435.1110(d)(1) for hospitals that opt to
make presumptive eligibility
determinations. Some commenters
encouraged CMS to provide states with
maximum flexibility to implement
presumptive eligibility standards for
hospitals, while other commenters
stated that the Secretary should
establish federal standards applicable to
hospitals making presumptive eligibility
determinations in all states. Other
commenters supported the flexibility
given to state agencies to establish
standards, and some stated that states
should have even broader authority to
establish clear criteria and qualifications
which hospitals would have to meet to
make presumptive eligibility
determinations. Some believe that the
Secretary should establish minimum
federal standards and qualifications,
with the state option to impose
additional standards. Commenters
generally requested additional guidance
to states on how they must work with
hospitals that elect to make presumptive
eligibility determinations. Finally, some
commenters stated that the Secretary
should establish federal standards for
hospitals that opt to make presumptive
eligibility determinations under
§ 435.1110 of the regulations, related to
the proportion of individuals
determined presumptively eligible by
the hospital that submits a regular
application and the percent of such
individuals who are ultimately
determined eligible by the agency.
Commenters suggested that states
should use the federal standards to
determine which hospitals are capable
of making presumptive eligibility
determinations.
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Response: We are finalizing
§ 435.1110(d)(1) as proposed. Oversight
of qualified entities making presumptive
eligibility determinations, including
qualified hospitals under § 435.1110, is
a state responsibility. Under
§ 435.1110(d)(1), states may establish
state-specific standards for qualified
hospitals that conduct presumptive
eligibility determinations related to the
success of assisting individuals
determined presumptively eligible who
submit a regular application and/or are
approved for eligibility by the agency.
We believe this is an area more
appropriate for state flexibility, than for
imposition of a uniform federal standard
for all participating hospitals across all
states. Therefore, we are finalizing
§ 435.1110(d), as proposed. We will
monitor implementation and consider
whether further guidance is warranted.
Per § 435.1110(d)(2), which we also
are finalizing as proposed, state agencies
are required to take appropriate
correction action for any hospital that
does not meet the standards established
by the state or which the state otherwise
determines is not making, or is not
capable or making, presumptive
eligibility determinations in accordance
with state policies and procedures. In
fulfilling their responsibility under
§ 435.1110(d)(2), states may develop
other proficiency standards, training
and audits, with which hospitals would
need to comply, to be authorized to
make presumptive eligibility
determinations in the state.
Comment: We received many
comments on the populations for which
hospitals can make presumptive
eligibility determinations. Some
commenters stated that hospitals should
be allowed to make presumptive
eligibility determinations for all of the
patient populations they serve. Some
commenters recommended that states be
given the option to elect and limit the
populations that may be determined
presumptively eligible by hospitals.
Some commenters stated that the
preamble did not align with the
regulation text relating to this issue in
the proposed rule. Many commenters
requested additional clarification on the
populations for which hospitals may
make presumptive eligibility
determinations.
Response: We intended to propose
that qualified hospitals must be
permitted to make presumptive
eligibility determinations based on
income for all of the populations for
which presumptive eligibility may be
available in accordance with § 435.1102
and § 435.1103. The specific reference
to children, pregnant women, parents
and caretaker relatives, and other adults
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in proposed § 435.1110(c)(1) was not
intended to eliminate presumptive
eligibility determinations by hospitals
for other populations included in
§ 435.1103 (that is, former foster care
recipients or women with breast or
cervical cancer or individuals seeking
coverage of family planning services).
We are revising the regulation text at
§ 435.1110(c)(1) to clarify that states
electing to limit the presumptive
eligibility determinations which
hospitals can make must permit the
hospitals to make presumptive
eligibility determinations based on
income for all of the populations
included in § 435.1102 and § 435.1103.
Under § 435.1110(c)(2), which we
finalize as proposed in this rulemaking,
states may also permit hospitals to make
presumptive eligibility determinations
for populations for which income is not
the only factor of eligibility (for
example, for individuals who may be
eligible under an eligibility group based
on disability, or individuals eligible
under a demonstration project approved
under section 1115 of the Act).
Comment: A commenter expressed
that hospitals wishing to make
presumptive eligibility determinations
should be required to attend training on
policies and procedures established by
the states. The commenter suggested
that this was important to maximize the
likelihood that eligible individuals
complete the full Medicaid eligibility
process. They supported the proposed
rule that states may require hospitals
electing to make presumptive eligibility
determinations to assist individuals in
completing and submitting the full
application and understanding any
documentation requirements.
Response: In accordance with
§ 435.1110(a) of the proposed rule,
finalized as proposed in this
rulemaking, states are required to
provide Medicaid during a presumptive
eligibility period, to individuals who are
determined to be presumptively eligible
by a qualified hospital, subject to the
same requirements as apply to the State
options under §§ 435.1102 and 435.1103
regardless of whether the state
otherwise has opted to provide
Medicaid during a presumptive
eligibility period under either of those
sections. While not necessarily
requiring establishment of a formal
training program, current regulations at
§ 435.1102(b) require states to provide
qualified entities with information on
relevant state policies and procedures
and how to fulfill their responsibilities
in making presumptive eligibility
determinations. This requirement is
unchanged in this rulemaking and will
apply in the case of hospitals electing to
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be a qualified hospital under § 435.1110.
If a hospital does not follow state
policies and procedures, or is not
successful in helping individuals to
submit regular applications in
accordance with standards established
by the state, proposed § 435.1110(d)(2)
would require states to institute
appropriate corrective action, including
(but not requiring) termination of the
hospital as a qualified hospital. We are
revising proposed § 435.1110(d) by
adding paragraph (d)(3) to provide that
the agency may disqualify a hospital as
a qualified hospital only after it has first
provided the hospital with additional
training or taken other reasonable
corrective action measures.
Comment: A few commenters
requested that states should be able to
receive 100 percent FMAP for any
recoupments or disallowances CMS may
seek related to an improper eligibility
determination by a hospital. One
commenter questioned whether a state
can make a qualified hospital liable
when a presumptive eligibility
determination results in a denial for a
full Medicaid category.
Response: Under existing regulations,
there is no recoupment for Medicaid
provided during a presumptive
eligibility period resulting from
erroneous determinations made by
qualified entities. Payment for services
is guaranteed during a presumptive
eligibility period; without such a
guarantee, providers could not rely on
the determination. Under this provision,
states will not be permitted to recoup
money from the hospital (and CMS will
not recoup FFP from the state).
However, under § 425.1110(d)(2), a state
may disqualify a hospital from
conducting presumptive eligibility
determinations if the state finds that the
hospital is not making, or is not capable
of making, accurate presumptive
eligibility determinations in accordance
with applicable state policies and
procedures. Such a disqualification is
permitted only after the state has
provided additional training or taken
reasonable corrective action measures to
address the issue. Finally, we clarify
that states may not make a qualified
hospital liable when an individual who
was found presumptively eligible by the
hospital submits a full application and
is subsequently denied Medicaid
eligibility.
Comment: Some commenters
requested that for individuals
determined presumptively eligible by a
hospital for the adult group under
§ 435.119 of the March 2012 Medicaid
final eligibility rule, a state should
receive 100 percent federal funding for
services provided unless and until the
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individual completes the eligibility
process and is determined not ‘‘newly
eligible’’ or eligible for coverage under
the adult group. Commenters suggested
that enhanced federal funding is
necessary because there will not be
sufficient information available to
determine whether the presumptively
eligible individual should be claimed at
100 percent federal funding or the
state’s regular FMAP at the time of the
initial presumptive eligibility
determination.
Response: While we understand the
commenters’ concerns, there is no basis
to provide the 100 percent FMAP during
a presumptive eligibility period. The
state would receive the increased FMAP
provided under the Affordable Care Act
only for individuals who the state
determines actually (not presumptively)
qualify for Medicaid under the adult
group and are determined to be ‘‘newly
eligible.’’ The methodology for such
claims is set forth in the final FMAP
regulation (78 FR 19918). However,
states may retroactively adjust claiming
to receive the enhanced matching rate
for individuals determined
presumptively eligible who
subsequently complete a regular
application, are determined by the state
to be eligible for Medicaid under the
adult group and are found to be ‘‘newly
eligible.’’ Such retroactive adjustment
may extend back to the first month of
the month in which the regular
application was filed or up to 3 months
prior to the month of application in
accordance with § 435.914 of the
regulations (redesignated at § 435.915 in
the March 2012 Medicaid final
eligibility rule).
Comment: One commenter requested
that we confirm that § 435.1110(b)(2) of
the proposed rule gives states the option
to require that to participate as a
qualified hospital, a hospital must assist
individuals in completing and
submitting the full application and help
individuals understand any
documentation requirements. The
commenter suggested that this function
is the same as that of an application
counselor and requests clarification on
whether a state could also require that
a hospital that performs presumptive
eligibility determinations must follow
regulations in § 435.908 relating to
certified application counselors.
Response: Although we are not
requiring hospitals that perform
presumptive eligibility determinations
to also furnish services of certified
application counselors, states may
impose specific requirements on
hospitals to ensure that they fulfill their
role in assisting individuals with
completing and submitting the full
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application. At a minimum, states have
a responsibility to ensure that an
individual determined presumptively
eligible by qualified hospitals is
informed about how to apply and can
obtain an application.
Comment: We received several
comments on the viability of
presumptive eligibility determinations
with the advent of real-time eligibility
determinations. One commenter
recommended that states should have
the latitude to require hospitals to use
the state’s online application system
and determine presumptive eligibility
only if a real-time full eligibility
determination cannot be made. Another
commenter suggested that if eligibility
can be determined in real-time, then
there is no need for presumptive
eligibility, and asked us to clarify
whether the state could terminate use of
presumptive eligibility without
violating the Affordable Care Act’s
Maintenance of Medicaid Eligibility
requirements, as added by section
2001(b) of the Affordable Care Act
(codified at sections 1902(a)(74) and
1902(gg) of the Social Security Act (the
Act).
Response: We agree that the promise
of real-time eligibility determinations
makes the role of presumptive eligibility
different than it has been in the past. In
situations in which the individual files
a regular application right away, the
presumptive eligibility period would
likely be considerably shorter—and
eliminated altogether, as a practical
matter, if a real-time determination is
made. However, even with the most
modernized systems, there inevitably
will be individuals for whom a real-time
eligibility determination will not be
possible. There also will be individuals
who will not be comfortable with the
online application, and will instead opt
to use the paper application. In such
situations and for such individuals,
presumptive eligibility remains a useful
tool to facilitate prompt coverage and
enrollment in the program. States have
flexibility to minimize the length of
presumptive eligibility periods by
requiring that hospitals and other
qualified entities assist individuals in
submitting the single streamlined
application online. States may not
terminate use of presumptive eligibility
for pregnant women or individuals with
breast or cervical cancer prior to 2014 or
for children prior to October 1, 2019
without violating maintenance of effort.
Comment: One commenter requested
clarification on how hospital
presumptive eligibility will interact
with eligibility in breast and cervical
cancer groups.
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Response: If a state has elected to
provide presumptive eligibility for
individuals with breast or cervical
cancer under § 435.1103(c)(2), it can
limit qualified entities under that
section to providers which conduct
screenings for breast and cervical cancer
under the state’s Centers for Disease
Control and Prevention (CDC) breast
and cervical cancer early detection
program (BCCEDP), and if it has done
so, the state may limit hospitals which
may determine presumptive eligibility
for individuals with breast or cervical
cancer on that basis to hospitals that
conduct screenings under the state’s
BCCEDP. In states that do not opt to
provide presumptive eligibility for
individuals with Breast or Cervical
Cancer under § 435.1103(c), states
similarly may limit hospitals’ ability to
determine presumptive eligibility for
individuals with breast or cervical
cancer under § 435.1110 to those that
conduct screenings under the state’s
BCCEDP.
6. Coordinated Medicaid/CHIP Open
Enrollment Process (§ 435.1205 and
§ 457.370)
We proposed to implement section
1943 of the Act and section 1413 of the
Affordable Care Act to require that
Medicaid and CHIP agencies begin
accepting the single streamlined
application during the initial open
enrollment period to ensure a
coordinated transition to new coverage
that will become available in Medicaid
and through the Exchange in 2014. Our
proposed rule seeks to ensure that no
matter where applicants submit the
single, streamlined application during
the initial open enrollment period, they
will receive an eligibility determination
for all insurance affordability programs
and be able to enroll in appropriate
coverage for 2014, if eligible, without
delay.
Comment: Many commenters
supported the proposal in
§ 435.1205(c)(1) that Medicaid and CHIP
agencies to begin accepting the single
streamlined application and MAGI
determinations from the Exchange and
to process MAGI eligibility starting in
October 2013. Commenters believe this
is necessary to ensure coordination with
the Exchange, and to facilitate a
seamless transition to the new coverage
that will become available in Medicaid
and through the Exchanges in 2014.
Many commenters acknowledged that
the public will be hearing about new
coverage options throughout the
summer and fall of 2013, and expressed
concern that it would result in
confusion if, when people went to apply
for coverage and were found eligible for
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Medicaid (or their children eligible for
Medicaid or CHIP), they were told to
return several months later and submit
a new application.
Response: We agree with the
commenters that acceptance of the
single streamlined application by state
Medicaid and CHIP agencies starting in
October 2013 is needed to ensure
coordination with the Exchange, and in
facilitating new coverage that will be
available to Medicaid-eligible eligible
individuals in January 2014. Therefore,
we are finalizing the rule as proposed
and confirm that individuals may not be
required to return in January to reapply.
Comment: Some commenters
expressed concern that it is
unreasonable to require states to comply
with the prescribed time frames for
coordinated enrollment with the
Exchange in the proposed rule. They
noted that states must make major
policy, operations, and systems changes
to implement federal requirements,
which will impact agency eligibility
staff, vendors, clients, and other
stakeholders. Pending final and
complete federal guidance, it is a
significant challenge for states to
develop policies, design efficient
business processes, build systems and
new interfaces, and effectively
communicate changes to clients and
stakeholders by the proposed federal
implementation dates. One commenter
noted that its state legacy system cannot
process or transfer electronic accounts,
which means that the proposed rule has
effectively shortened the timeframe to
implement its new eligibility system by
3 months. Another commenter noted
that Medicaid eligibility systems,
policies and staff are not structured to
operate in a time-limited open
enrollment environment or to apply
competing eligibility criteria
concurrently, and cannot be changed to
do so with only a few months’ notice.
Commenters recommended that
Medicaid agencies not be required to
begin accepting streamlined
applications or determinations from the
Exchange prior to January 1, 2014.
Instead, during the initial open
enrollment from October 1, 2013 to
December 31, 2013, commenters
requested that at state option,
individuals may be required to apply
separately to the Medicaid agency and
to the Exchange and to have their
eligibility determined by the
corresponding agency. One state
suggested, as an alternative, the
information exchanged will be limited
to only the Medicaid-specific
information that is included in the
single streamlined application.
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Response: We appreciate the
operational challenges states face in
preparing for implementation of the
Affordable Care Act, but we believe that
these effective dates are central to the
success of open enrollment and we have
consistently targeted the October 1 date
as we have worked with states to
finance and develop their IT systems.
We have identified a set of seven critical
success factors that states must meet by
October 1 in an attempt to prioritize
what must be accomplished within this
timeframe. We have regularly shared
these with states via webinars, on the
CALT at https://calt.cms.gov/sf/go/
doc16369?nav=1, through State
Operational Technical Assistance
(SOTA) calls and in IT gate reviews.
These include the following: (1) Ability
to accept application data, (2) MAGI
rules engine in eligibility system, (3)
MAGI Conversion, (4) Submission of
state income thresholds and flexibilities,
(5) Connection to Federally Facilitated
Exchange (or establishment of State
Based Exchange), (6) Connection to
Federal Data Services Hub, and (7)
Ability to confirm Minimum Essential
Coverage.
We recognize the efforts that states are
making across a broad range of areas,
and have released regulations,
information technology (IT) guidance,
funding opportunities, business process
models and other tools to assist states as
they design, develop, implement, and
operate new systems. We will continue
to help states fully comply with all
relevant eligibility and enrollment
changes, as well as achieve the
necessary degree of interoperability
between IT components in the federal
and state entities that work together to
provide health insurance coverage
through Medicaid and CHIP, and
Exchanges. We are finalizing the
regulation as proposed.
Comment: Several commenters
expressed concern that, in the states
which are relying on the FFE and will
not be ready to implement the single,
streamlined application by October
2013, there is a significant risk that
people who apply for coverage through
the FFE will be told that they are likely
eligible for Medicaid or CHIP, and be
sent away without any real opportunity
to enroll in coverage or complete the
application process. These commenters
recommended that HHS strengthen this
provision by setting forth a specific
timeframe and set of procedures that
states must follow to ensure that they
are ready to implement the single,
streamlined application when open
enrollment begins in October 2013.
Specifically, they recommended
modifying the final rule to require states
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relying on the FFE to submit
information, by September 1, 2013, on
whether they intend to: (1) accept the
FFE’s determinations of Medicaid/CHIP
eligibility; or (2) to treat the FFE’s
finding as an assessment and complete
the eligibility determination themselves.
In addition, they recommend including
a provision to clearly outline that before
a state can elect the option to treat the
FFE’s findings as an assessment, the
state must demonstrate that it is (or will
be by October 2013) capable of acting
upon such assessments in full
accordance with federal law.
Response: We have a process in place
for working with states on
implementation, including the adoption
of mitigation strategies where necessary.
We do not believe that a change in the
regulations is needed to effectuate these
strategies.
Comment: Many commenters believe
that it would be time-consuming and
impractical to require states to evaluate
all cases for eligibility effective in 2013,
but that there is a subset of cases that
states should be required to evaluate.
Specifically, parents whose MAGI-based
income falls very close to the state’s
current income eligibility threshold for
parents should be evaluated based on
2013 eligibility rules. Commenters
suggested HHS provide guidance to
states on the appropriate MAGI income
threshold to use for determining
whether an individual appears to be
potentially eligibility under 2013 rules
and should be assessed for eligibility
using those rules. Some commenters
also believe that states should be
required to inform people when it
appears that their children qualify for
coverage under 2013 Medicaid and
CHIP rules because families are more
likely to pursue applications if they
believe that their children will be found
eligible for coverage. Finally, a few
commenters believed states should be
given the option to notify a subset of
applicants about the process to apply for
coverage with an effective date in 2013
(for example, only those applicants who
appear to be potentially eligible under
2013 rules based on the available
information provided on the single
streamlined application).
Some commenters stated that they are
already planning for an October 2013
implementation date of MAGI eligibility
and requested that states be given this
option without need for a waiver. These
commenters recommend states have
flexibility in handling applications
based on 2013 rules for assessing 2014
coverage. States should be allowed to
request applicants submit supplemental
form that includes additional
information to make MAGI
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determination, or to redirect applicants
to new application; or, states should
have flexibility to process applications
using 2013 rules and determine
eligibility based on MAGI proxy when
possible.
Response: We recognize the challenge
of appropriately evaluating all
applications submitted during the open
enrollment period under both the
MAGI-based rules effective January 1,
2014 and under rule in effect in 2013.
However, all applicants must have the
opportunity to have their Medicaid
eligibility assessed based on existing
Medicaid rules for 2013 as well as for
prospective enrollment effective January
2014. At a minimum under the
regulation at § 435.1205(c)(4)(ii), states
must inform individuals who submit the
single streamlined application during
October–December 2013 that coverage
may be available in 2013, but that a
different application will need to be
completed for consideration of such
coverage, and how the individual can
obtain and submit such application.
Alternatively, under § 435.1205(c)(4)(i),
states can use the information on the
single streamlined application
submitted to make a determination of
eligibility effective in 2013, based on
2013 rules, following up with the
individual to obtain additional
information if needed through
additional questions or use of a
supplemental form, if needed. States
also can pursue a combination of these
strategies—using the process outlined in
§ 435.1205(c)(4)(i) for targeted
individuals more likely to be found
eligible under 2013 rules (for example,
parents and caretaker relatives with
MAGI-based income within a threshold
margin of the applicable income
standard and individuals indicating
potential disability on the single
streamlined application), while
directing those not seen as likelyeligible under the 2013 rules to submit
a separate application in accordance
§ 435.1205(c)(4)(ii).
States may wish to avoid having to
operate two sets of rules for children,
parents and caretaker relatives, pregnant
women and other non-disabled, nonelderly adults that may be eligible for
Medicaid enrollment during this period.
To address this, we are offering states
the opportunity to begin using the new
MAGI-based methodology for these
populations effective October 1, 2013, to
coincide with the start of the open
enrollment period. See State Health
Official Letter #13–003: Facilitating
Medicaid and CHIP Enrollment and
Renewal in 2014 at https://
www.medicaid.gov/Federal-PolicyGuidance/Downloads/SHO-13-003.pdf.
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Comment: One commenter stated that
requiring post-eligibility data matching
to ensure continued eligibility as of
January 1, 2014 for individuals
determined not eligible in OctoberDecember but eligible in January,
creates an enormous burden during a
time when new systems are being
implemented and states will be
experiencing the largest influx of newly
eligible individuals into their system.
The commenter noted this would create
duplication of efforts when an
individual who was determined eligible
prior to January is already notified of
their reporting requirements and states
should be allowed to rely on recipients
reporting rather than handling the same
cases twice in a 3–4 month timeframe.
Response: Post-eligibility data
matching is an option for states to
ensure continued eligibility as of
January 1, 2014 and/or through the first
regularly-scheduled renewal. It is not
required. The agency also has the option
to schedule the first renewal for
individuals who apply during the open
enrollment period, and determined
eligible effective January 1, 2014, to
occur anytime between 12 months from
the date of application and January 1,
2015. Consistent with § 435.916,
beneficiaries are required to report any
change in circumstances that may
impact their eligibility. In the absence of
any reported change that could affect
eligibility, no post-eligibility data
matching is required.
Comment: One commenter requested
that CMS clarify § 435.1205(c)(3)(ii) that
this state option [to schedule the first
renewal under § 435.916 to occur
anytime between 12 months from the
date of application and January 1, 2015]
authorizes less than annual periods of
coverage/eligibility before renewal in
instances where renewal date is set
before January 1, 2015.
Response: This option does allow for
less than 1 year of coverage for a limited
time. For example, if someone applies
on November 1, 2013, and is determined
eligible for coverage to begin January 1,
the state may schedule renewal on
November 1, 2014. This would result in
less than a year of coverage. This onetime option is intended to provide for
ease of administration in the renewal of
coverage for a large number of
individuals whose coverage begins on
January 1, 2014 and would otherwise
need to be renewed at the same time.
Comment: We sought comments in
the proposed rule on which sections of
both this rulemaking as well as the
March 2012 Medicaid eligibility final
regulation need to be effective October
1, 2013 (as opposed to January 1, 2014)
to enable states to meet their
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responsibilities under § 435.1205 and
§ 457.370 of this rulemaking. We
received no comments in response to
this request.
Response: In the absence of any
comments regarding this question, we
have determined that the following
provisions of the March 2012 Medicaid
eligibility final rule are effective October
1, 2013 for purposes of effectuating
§ 435.1205 and § 457.370 of this final
regulation during the initial open
enrollment period beginning October 1,
2013:
• Sections 435.603, 435.911,
435.1200, 457.315, 457.330 and 457.348;
• Amendments to §§ 431.10, 431.11,
435.110, 435.116, 435.119, 435.907,
435.916, 435.940–435.956, 457.340 and
457.350, and the redesignation of
§ 435.911 through § 435.914 as § 435.912
through § 435.915.
In addition, the following provisions
of this final rule are effective October 1,
2013: §§ 435.918, 435.1205, 457.370,
and revisions to §§ 431.10, 431.11,
431.201, 431.205, 431.206, 431.211,
431.213, 431.230, 431.231, 431.240,
435.119, 435.603, 435.907, 435.1200,
457.110(a)(1), 457.348, and 457.350.
Although effective for purposes of
codification in the Code of Federal
Regulations October 1, 2013 for
application during the initial October 1–
December 31 open enrollment period,
absent a waiver under § 1115 of the
Social Security Act approved by the
Secretary, financial eligibility based on
MAGI-based methodologies codified at
§ 435.603 and § 457.315 and eligibility
for adults under § 435.119 are not
effective under the Affordable Care Act
until January 1, 2014. Technical
revisions to § 435.119 to retain the
applicability date of January 1, 2014,
even as the effective date of that section
is moved to October 1, 2013, are made
in this rulemaking. No revisions to
§ 435.603 or § 457.315 are required, as
those sections, as published in the
March 2012 Medicaid final eligibility
rule, already provide for the January 1
applicability date.
7. Children’s Health Insurance Program
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a. CHIP Waiting Periods (§ 457.340,
§ 457.350, § 457.805 and § 457.810)
We proposed revisions to existing
regulations regarding prevention of
substitution of coverage at § 457.805 to
limit the use of CHIP waiting periods to
a maximum of 90 days. This policy
aligns with section 1201 of the
Affordable Care Act, which amended
section 2708 of the Public Health
Service Act to prohibit waiting periods
exceeding 90 days for health plans and
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health insurance issuers offering group
or individual coverage. This standard,
though not directly applicable to CHIP,
is currently exceeded in roughly half of
the states that impose CHIP waiting
periods today. We also proposed to
require several exemptions to waiting
periods, consistent with policies that
many states have in place today, such as
for individuals working for employers
that stopped offering coverage of
dependents. We received the following
comments on our proposed waiting
period policy as described below.
Comment: Many commenters urged
CMS to eliminate waiting periods on
January 1, 2014, rather than permit
states to continue to impose waiting
periods of any length of time for
children. A few commenters encouraged
CMS to retain its current policy of
providing states with the discretion to
maintain waiting periods and establish
their own procedures to minimize
displacement of private insurance, and
some states expressed their intent to
eliminate waiting periods in their CHIP
programs in 2014. One commenter
suggested that waiting periods be
applied only to children with family
incomes above 200 percent of the FPL.
Commenters’ concerns with the
proposed 90-day waiting period were
related to the administrative burden of
waiting periods for state CHIP agencies
and Exchanges, potential hindrances to
streamlined and coordinated
enrollment, disruptions in continuity of
care for children and a lack of evidence
of substitution.
Response: While we acknowledge the
commenters’ concerns related to the
continuation of waiting periods for
children in 2014, we also see a need to
permit states flexibility to determine an
appropriate substitution prevention
strategy, with a full range of options
from monitoring to imposition of
waiting periods up to 90 days. Some
states have already eliminated their
CHIP waiting periods and we encourage
other states to consider taking this step.
Nothing in this final rule precludes a
state from doing so. States may also
elect to eliminate waiting periods
specifically for children at lower income
levels and/or identify additional
exemptions to the waiting period
beyond those required in this rule.
Therefore, to maintain states’ flexibility
in identifying substitution strategies
while also limiting the period of time a
child may not be eligible for CHIP due
to a waiting period, we are finalizing the
provisions at § 457.350, § 457.805 and
§ 457.810 as proposed to permit states to
impose a waiting period of no more than
90 days, with certain specified
exemptions. We note that this policy is
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consistent with the 90-day maximum
waiting period described in Section
1201 of the Affordable Care Act.
Comment: Many commenters were
concerned that the proposed policy for
a maximum 90-day waiting period
would require states and Exchanges to
set up administratively complicated
processes to temporarily enroll children
in QHPs and to receive APTCs and CSRs
while awaiting CHIP eligibility during
the waiting period. Several commenters
expressed concerns with the
administrative complexity of the
interactions that must occur between
the Exchange and the CHIP agency if a
waiting period is in place, including the
requirement at § 457.350 for the CHIP
agency to send the electronic record
back to the Exchange for enrollment in
a QHP if the child is determined not
eligible for CHIP. These commenters
also expressed concern that these
potential complications do not align
with the streamlined eligibility and
enrollment process envisioned by the
Affordable Care Act. Many commenters
stated that requiring the change to a 90day maximum waiting period policy
would be administratively burdensome
and costly to states at a time when
information technology systems are
already overburdened in preparation for
significant eligibility changes in 2014.
Some commenters highlighted that it is
likely that some state systems will not
have the capacity to track children who
are locked out of CHIP during a waiting
period and others expressed concern as
to whether states or the Federal
government have the capacity to
smoothly implement waiting periods in
the manner suggested in the proposed
rule without a disruption in coverage for
children. Some commenters also
indicated that if waiting periods were to
exist in 2014, state CHIP agencies would
need to both track when these children
would become eligible for CHIP and
also initiate action to enroll children in
the program.
Response: For states that opt to apply
a waiting period in 2014, we agree that
transitioning a child from one insurance
affordability program to another upon
the conclusion of a 90-day waiting
period may present operational
challenges. States must take into
consideration their system capabilities
and weigh the perceived benefits of
opting to have a waiting period against
any additional administrative or system
requirements needed to effectuate a
seamless transition of such children
from coverage in the Exchange and
APTC to the state’s CHIP at the
conclusion of the 90-day period. We
agree that CHIP agencies will need to
track when these children become
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eligible for CHIP as required at
§ 457.350. In addition, we have further
clarified at § 457.340(d)(4), that without
requiring new applications or
information previously provided, CHIP
agencies must implement processes to
ensure a smooth transition for children
from coverage through the Exchange to
CHIP at the end of a waiting period, as
well as facilitate the enrollment of
otherwise CHIP-eligible children who
have satisfied the waiting period, but
who were not covered in the Exchange.
For example, a state could automatically
enroll a previously determined CHIPeligible child at the end of the waiting
period without requesting any
additional information from the family.
Another option would be for a state to
suspend applications for all children
subject to a waiting period. Once these
children have completed the waiting
period, the state would then reactivate
the application and determine whether
the child is eligible for CHIP based on
the information previously provided on
the application. There is nothing in the
above options that precludes a state
from checking data sources for updated
information or processing a change in
circumstances reported by the family.
Comment: Many commenters stressed
that waiting periods of any length could
negatively impact children’s access to
continuous and coordinated health
coverage. For example, commenters
expressed concern that the proposed
rule permitting CHIP-eligible children to
enroll in qualified health plans (QHPs)
in the Exchange during a waiting
period, and subsequently enroll in CHIP
at the end of a waiting period, will
stimulate churning between QHPs and
CHIP. These commenters emphasized
that disruptions in coverage will impact
the health status of children who are left
uninsured and/or may have to change
plans or providers. Some commenters
stated that movement between plans
and programs will inhibit the QHPs’
ability to measure the quality of care
provided to children, and makes it
difficult to hold plans accountable for
improvements in quality outcomes for
children over time.
Response: We acknowledge that the
use of waiting periods may create delays
in eligibility for CHIP and increase the
likelihood of churning between the
Exchange and CHIP, which could result
in disruptions in coverage that could
negatively impact the health status of
children. Therefore, this final rule
confirms states’ ability to eliminate
waiting periods to accommodate these
concerns. In addition, the final rule
codifies the limitation of waiting
periods to a maximum of 90 days, to be
consistent with waiting periods under
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section 1201 of the Affordable Care Act.
We encourage states to examine the
costs and benefits of imposing a waiting
period in the context of the Affordable
Care Act. To make the transition from
Exchange coverage to CHIP as smooth as
possible for children, states that do
choose to maintain waiting periods will
need to meet the requirements at
§ 457.350(i), including providing
notification to the appropriate insurance
affordability program (for example, the
Exchange) promptly and without undue
delay of the date on which the waiting
period will end and the child will be
eligible to enroll in CHIP. We will
provide states with technical assistance
in this area.
Comment: Several commenters
indicated that while there were initial
concerns upon implementation of CHIP
in the late 1990s that the incentives for
substitution of public coverage for
private coverage would be significant,
states and researchers have had ample
opportunity to examine this issue over
the last 15 years. These commenters
stated that numerous studies have
shown that substitution is difficult to
measure, there continues to be much
conjecture regarding the degree to
which substitution occurs, and that
there is no evidence that procedures like
waiting periods actually prevent
substitution. These commenters also
noted that there is evidence that
uninsured children, including children
in waiting periods, frequently forego
medical services due to high out-ofpocket costs.
One state reported that during an
almost 15-year period, there has been no
evidence that crowd out is a concern,
including for children at higher income
levels. The commenter reported that the
percentage of children in families who
dropped their employer sponsored
coverage and substituted it for CHIP has
been consistently below 2 percent since
the inception of CHIP. This commenter
recommended that we permit
monitoring of crowd out at all income
levels rather than continuing to require
a substitution strategy, such as a waiting
period, for higher income children.
Another commenter stated that in their
experience in operating CHIP, nearly all
families with former employersponsored insurance meet at least one of
the exemptions to waiting periods
included in its CHIP state plan.
Response: We recognize that there is
a robust but inconclusive evidence base
in the literature calling into question the
prevalence of substitution. And, we are
therefore, revising our existing
regulations to provide states with
flexibility to determine how best to
operate their CHIP programs. The
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preamble of the existing regulation (66
FR 2490, January 11, 2001) required that
states that provide CHIP coverage to
children at or below 200 percent of the
Federal poverty level (FPL) must have
procedures for monitoring the rate of
substitution of coverage, between 200
and 250 percent of the FPL must
monitor substitution and identify
specific strategies to limit substitution if
levels become unacceptable, and for
coverage above 250 percent of the FPL
states must describe how substitution is
monitored and implement specific
strategies to prevent substitution. We
clarify in this final rule that effective
January 1, 2014, monitoring of
substitution is a sufficient approach for
addressing substitution at all income
levels. We expect that if this monitoring
demonstrates a high rate of substitution,
a state will consider strategies such as
improving public outreach about the
range of health coverage options that are
available in that state.
Comment: Some commenters
requested that CMS provide clarity
regarding the criteria for specific
exemptions (for example, children with
special health care needs), and
suggested additional types of mandatory
exemptions at the Federal level (for
example, employees that have
employers that have changed health
plans or products). Some commenters
noted that states have previously
implemented many of the proposed
required exemptions and that the
majority of applicants already qualify
for state-identified exemptions to the
waiting period.
Response: As noted by some
commenters, many of the mandatory
exemptions in the proposed rule have
previously been instituted by states on
a voluntary basis and have been
effective. Therefore, we are adopting in
our final rule the proposed exemptions
at § 457.805. In addition, and as
discussed in the preamble of our
proposed rule, we are adding an
affordability exemption at
§ 457.805(a)(i) for cases when a child’s
parent is determined eligible for APTC
for enrollment in a QHP through the
Exchange because the employersponsored insurance (ESI) in which the
family was enrolled is determined
unaffordable in accordance with 26 CFR
1.36B–2(c)(3)(v). We consider this
exemption to be essential to preventing
families from having to choose between
continuing ESI that has been
determined to be unaffordable for the
parent, and thereby forgoing premium
tax credits and cost-sharing reductions
for enrollment in an QHP, or dropping
the ESI and allowing their child to go
without coverage for a period of time to
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qualify for CHIP. We note that states
continue to have the flexibility to
provide additional exemptions beyond
those specified in this final rule, but
other than the affordability exemption at
§ 457.805(a)(i), there will be no
additional exemptions added in this
final rule. We note that we intend to
issue further sub-regulatory guidance
related to criteria for required waiting
period exemptions.
Comment: One commenter requested
that CMS delay the effective date of this
provision to give states adequate time to
make the necessary changes related to
its waiting period policy, such as a
change in state law and/or budget.
Response: This provision will be
effective on January 1, 2014 unless a
change in state law is needed for a state
to comply with this provision.
Specifically, for states with annual
legislative sessions, the effective date for
the application of the 90-day maximum
waiting period and required exemptions
must be no later than the first day of the
next fiscal year beginning after the close
of the first regular session of the 2014
state legislature. For states that have a
2-year legislative session, each year of
the session is considered a separate
regular session for this purpose.
b. Limiting CHIP Premium Lock-Out
Periods (§ 457.570)
We proposed to define a CHIP
premium lock-out as a period not
exceeding 90 days when, at state option,
a CHIP eligible child may not be
permitted to reenroll in coverage if they
have unpaid premiums or enrollment
fees. Following a premium lock-out
period, we proposed that the child must
be permitted to enroll without regard to
past due premiums. We proposed at
§ 457.570 to permit states to impose
premium lock-out periods only for
families that have not paid outstanding
premiums or enrollment fees, and only
up to a 90-day period. We also specified
that a premium lock-out period must
end once a family has paid the premium
or enrollment fee. We also invited
comments on any alternative late
payment policies to encourage families
to make their CHIP premium payments
in a timely manner to avoid gaps in
coverage. We received the following
comments concerning the proposed
lock-out period provision.
Comment: The majority of
commenters supported the proposed
rule requiring reasonable notice of nonpayment, limiting the use of lock-outs
only for non-payment of premiums (and
only as long as the non-payment
continues, and subject to a 90-day
maximum), and disallowing states from
requiring payment of outstanding
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premiums at the end of the lock-out
period before re-enrollment. In
particular, commenters strongly
supported that the CHIP agency must
review the family’s circumstances
(§ 435.570(b)) to determine if their
income has declined, making the child
eligible for Medicaid or a lower costsharing category. Some commenters also
strongly opposed the imposition of lockout periods for any length of time for a
CHIP child, and urged CMS to modify
§ 457.570 to ban lock-out periods. These
commenters indicated that lock-outs are
contrary to the goals of a reformed
health system, as well as the health of
children. Some commenters stressed
that a quarter of a year without health
insurance can have a significant impact
on a child’s healthy development, a
child should not be subject to penalties
for a failure to pay by another family
member, and the Affordable Care Act
recognizes that children should connect
with their medical home eight times in
the first year of life alone. One
commenter also stated that lock-out
periods in CHIP create disruptions in
care, burdens on families, unnecessarily
increase administrative costs, and that
the elimination of lock-out periods is an
important consumer protection.
A few commenters asked whether the
process of premium collection and debt
forgiveness will be aligned with the
premium collection regulations for the
Exchange.
Response: In response to the support
of our proposed rule by the majority of
commenters, and comments received by
states related to the need to continue to
have non-payment of premium policies
in place to manage program costs (as
described below), we are adopting in
our final rule the proposed provisions
that authorized states to institute a
maximum 90-day lock-out period for
non-payment of premiums. Lock-outs
are permitted for non-payment of
premiums, but only as long as the nonpayment continues and subject to a 90day maximum. We also want to clarify
that requirements related to reasonable
notice of nonpayment, and review of the
family’s circumstances to determine if
their income has declined (for example,
making the child eligible for Medicaid
or a lower cost-sharing category), are
existing regulatory provisions that we
have not modified by this rulemaking.
We appreciate the concerns expressed
by some commenters with regard to the
potential impact of any lock-out period
on children, and for these reasons, we
also adopted in the final rule the
proposed restriction that lock-out
periods may only apply to families who
have not paid their premiums, and must
end if a family pays its past due
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premium. We have also maintained the
requirement that children must be
permitted to enroll in CHIP subsequent
to a 90-day lock-out period regardless of
whether the family continues to owe
past due premiums. In addition, we are
also including requirements for nonpayment of premium that are intended
to align CHIP policies with policies
applicable in the Exchange, to the extent
possible. In CHIP and for those
individuals with APTC in the Exchange,
individuals are provided with a
premium payment grace period, may be
disenrolled for non-payment of
premiums, and will not be required to
pay past due premiums to reenroll in
coverage. Exchange eligible individuals
will have a longer grace period (90 days
as opposed to 30 days) than CHIP, but
will not be permitted to enroll in
coverage until the next open enrollment
period. Therefore, the amount of time an
individual may have to wait before
reenrollment in a Qualified Health Plan
will vary, depending on when the
premiums are missed in relation to the
next scheduled open enrollment period,
but will be no longer than 90 days for
a child in CHIP.
We note that neither CHIP nor the
Exchange have explicit rules governing
debt forgiveness policies. More
information on the Exchange rules
related to non-payment of premiums is
available at https://www.gpo.gov/fdsys/
pkg/FR-2012-03-27/pdf/2012-6125.pdf.
Comment: A few commenters
requested clarification on policies
governing non-payment of premiums.
They requested clarification on policies
related to ‘‘forgiving’’ past due
premiums and enrollment fees, as well
as whether a state can continue to try to
obtain the outstanding premium amount
without affecting eligibility. One
commenter indicated that funds should
be recoverable using a debt collection
process. The same commenter also
asked how many cycles of premium
forgiveness would be allowed for an
individual. Another commenter asked
CMS to generally clarify what steps
states and health plans would be
permitted to take in situations in which
a CHIP enrollee re-enrolls after a lockout period and again does not pay
premiums.
Response: We believe that
disenrolling a child from coverage and
potentially requiring a child to go
without coverage up to 90 days
(assuming the family has not paid the
premium or enrollment fee), is a
significant deterrence to prevent a
family from establishing a pattern of
non-payment of premiums and reenrollment. Therefore, this rule does not
place a limit/cap on the number of times
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an individual may be re-enrolled after
non-payment of their premiums.
Nothing in this rule precludes a state
from electing to establish policies for
collecting debt from families that have
not made their premium payments. Nor
does this rule preclude states and health
plans from offering incentives to
encourage timely payment of premiums.
Comment: Some commenters
recommended that states only be
permitted to terminate coverage during
a continuous eligibility period for
failure to pay premiums as proposed at
§ 457.342(b) after complying with the
disenrollment protections at § 457.570.
Several commenters stressed that the
proposed rule should be strengthened to
capture the intent noted in the preamble
that ‘‘prohibiting a child from
enrollment after the family pays the
unpaid premium or enrollment fee is
counter to promoting enrollment in and
continual coverage.’’ Some commenters
also recommended that the final rule
specify that if a family pays its
outstanding premium between the end
of their payment grace period and before
the end of the lock-out period, the child
be reinstated back to the effective end
date with no gap in coverage and no loss
of 12-month continuous eligibility (if
applicable).
Response: We agree that coverage
terminations occurring during a
continuous eligibility period for failure
to pay premiums can be implemented
only after complying with the
disenrollment protections at § 457.570,
and we have modified § 457.342(b) to
clarify this requirement. In addition to
the preamble language describing that
families that pay their premiums or
enrollment fees prior to the end of a
lock-out period must be re-enrolled in
CHIP, we have also specified this
requirement at § 457.570(c)(2) under
this final rule. Section 2103(e)(3) of the
Act describes a statutory premium grace
period during which CHIP enrollees
may pay their monthly premiums before
being disenrolled. This provision
requires States to grant individuals
enrolled in separate child health
programs a 30-day grace period, from
the beginning of a new coverage period,
to pay any required premium before
enrollment may be terminated. The new
coverage period begins the month
following the last period for which a
premium was paid. Aside from these
requirements, states have, and will
continue to have, flexibility to
determine when coverage can be
reinstated. As specified in our proposed
rule at § 457.342(b), continuous
eligibility may be terminated for failure
to pay required premiums or enrollment
fees.
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Comment: Some commenters
expressed concerns for potential
unintended consequences of the
proposed policies. One commenter
stated that the proposed rule creates an
incentive for individuals who are
otherwise able to pay their premium to
cycle through CHIP eligibility every
other three month period and
encourages gaps in access to medical
services for children, who may
subsequently present to the CHIP with
higher acuity levels and higher cost
needs. The commenter also stated that
the proposed rule increases costs for
states and the federal government, and
diminishes health outcomes for
children. The commenter encouraged
CMS to continue to require member
accountability in the CHIP program by
allowing the collection of outstanding
premiums in the presence of a 90-day
grace period. Another commenter
objected to the proposed rule to limit
lock-out periods to 90 days and allow an
individual to re-enroll upon payment of
past due premiums, regardless of
whether the lock-out period has
expired. The commenter stated that this
approach creates adverse selection, in
that families may stop paying their
premium when they may not have
immediate health care needs, and then
again pay their premiums only when
they are in need of health care.
Additionally, this commenter stated
individuals should be required to pay
any past due premiums as a condition
of retaining eligibility for CHIP, even
after a lock-out period has been
satisfied. This commenter also stated
that the proposed rule discards the plain
statutory authority of title XXI that
delegates this policy to states. Another
commenter noted that CHIP is a
‘‘stepping stone’’ between Medicaid and
employer-sponsored insurance or
Exchange coverage, and that premiums
in its current CHIP are minimal in
comparison to employer-based coverage
and private coverage. The commenter
requested that premiums not be waived
in states with requirement to repay
outstanding premiums and no lock-out
period. The commenter stated that
waiving premiums does not promote
responsibility, intrinsic value, or the
effective management of program costs
for states.
Response: The goal of allowing
coverage for families that make current
payments must be balanced with the
concern that families will game the
system to try to obtain coverage without
paying premiums. We agree that there
may be situations where families either
elect, or are unable to pay their
premiums multiple times during a given
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year. However, we are not aware of any
evidence that these situations represent
a significant number of cases. And, as
stated in our response to the comment
above, as long as states adhere to
regulations at § 457.570, nothing in this
rule precludes a state from continuing to
establish policies for collecting debt
from families that have not made their
premium payments. We also encourage
states to continue implementing
approaches for simplifying premium
payment arrangements and coping with
administrative concerns families may
have, and we continue to encourage
states in this area to minimize the
number of families that are disenrolled
for non-payment of premiums.
Comment: One commenter stated that
if CHIP lock-out periods are allowed in
2014, CMS should prohibit states that
use this option from requiring children
subject to a lock-out period to reapply
for coverage and that a child returning
to coverage following a lock-out period
should be handled in the same manner
as a renewal. The commenter believes
that because such children were eligible
for CHIP apart from non-payment of
premiums or enrollment fees, the state
agency should be able to reassess
eligibility based on available electronic
data sources and families should only
be asked for additional information if
what has already been provided and
currently available electronic data are
not sufficient to establish eligibility.
Response: While we encourage states
to consider the potential administrative
cost savings and reduced burden on
families that could result from assigning
a pending eligibility status to a child for
non-payment of premiums rather than
requiring a new application, we will
continue to permit states to have the
flexibility to make this decision.
Comment: One commenter requested
clarification on whether a child can
receive APTC or CSR during a premium
lock-out period.
Response: We anticipate that this
issue will be addressed in further
guidance from the Department of
Treasury.
Comment: The preamble to our
proposed rule specified that a state may
not require the collection of past due
premiums or enrollment fees as a
condition of eligibility for reenrollment
once the lock-out period has expired,
regardless of the length of the lock-out
period. One commenter recommended
that this policy also be specified in
§ 457.570(c)(2).
Response: Section 457.570(c)(2)
clearly specifies that ‘‘a state may not
require the collection of past due
premiums or enrollment fees as a
condition of eligibility for reenrollment
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once the State-defined lock out period
has expired, regardless of the length of
the lock-out period.’’ We have not made
any modifications to this section.
Comment: Some commenters
indicated that providing multiple ways
to pay premiums and sending multiple,
non-threatening payment due reminders
are helpful in encouraging payment.
These commenters suggested that CMS
consider future sub-regulatory guidance
to states to promote best practices in
premium payments.
Response: Most CHIPs report efforts to
facilitate payment of premiums and
enrollment fees, easing the process for
families, and the majority of states also
send multiple payment due reminders
and allow a variety of payment methods
(such as allowing families to make
payments at multiple locations). We
will consider issuing further subregulatory guidance in this area.
8. Premium Assistance (§ 435.1015)
We proposed to codify the last
sentence of section 1905(a) of the Act
that authorizes payment of ‘‘other
insurance premiums for medical or any
other type of remedial care or the cost
thereof’’ to support enrollment of
individuals eligible for Medicaid in
plans in the individual market,
including enrollment in QHPs doing
business on the Exchange. Premium
assistance is one mechanism for
facilitating the coordinated system of
coverage between Medicaid, CHIP, and
the Exchange in 2014. It provides an
option for states to assist families who
wish to enroll in the same health plan
when some family members are eligible
for either Medicaid or CHIP while other
family members obtain coverage in the
Exchange with advance payments of the
premium tax credit, and it can provide
a way to minimize the extent to which
individuals have to change plans when
their circumstances change such that
their eligibility for an affordable health
insurance plan changes. The proposed
rule reflected longstanding statutory
provisions in light of the new coverage
options available in 2014. We received
the following comments to proposed
premium assistance provisions:
Comment: Many commenters were
supportive of states’ ability to use
premium assistance authority to
purchase private insurance coverage for
health plans in the individual market,
including QHPs doing business on the
Exchange. At the same time, however,
they emphasized the importance of
ensuring that Medicaid and CHIPeligible individuals receive the full
scope of services to which they are
guaranteed in Medicaid and CHIP, such
as the full range of pediatric services
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provided in Medicaid and CHIP.
Commenters urged CMS to take steps to
ensure that states provide families and
individuals with all of the information
they need regarding the benefits to
which they are entitled. They noted that
the information states track to ensure
cost-effectiveness should also be used to
assess whether children and adults are
receiving the full package of Medicaid
or CHIP services. One commenter
suggested that states should be required
to ensure that beneficiaries experience a
seamless enrollment process and that
they have a single insurance card and
point of contact for all benefits.
Response: Under all premium
assistance arrangements, Medicaid and
CHIP-eligible individuals remain
Medicaid or CHIP beneficiaries and
continue to be entitled to all Medicaid/
CHIP benefits and cost sharing
protections. Thus, we require at
§ 435.1015(a)(2) and (a)(3) that the state
agency furnish all benefits covered
under the state plan that are not
available through the individual health
plan and also that the individual does
not incur any cost sharing in excess of
that allowed in Medicaid. We expect
states to have mechanisms in place to
ensure that beneficiaries understand
their available choices of either direct
state plan coverage or coverage through
premium assistance for an individual
health plan, including a QHP in the
Exchange, under the premium
assistance option, as well as how to
access any additional benefits or cost
sharing assistance. Therefore, we have
revised § 435.1015(b) to include
provisions requiring informed choice
and information on the process for
accessing additional benefits and help
with cost sharing, if the individual
elects to receive coverage through the
premium assistance option. We do not
believe, however, that it is appropriate
to direct through rulemaking the
specific procedures states must employ
to provide any necessary ‘‘wraparound’’
benefits or cost sharing; under the state
plan option, states have the flexibility to
determine how best to meet these cost
sharing and benefit responsibilities. We
have also clarified in § 435.1015(b) that
states must require that individuals who
have elected to receive premium
assistance must obtain covered items
and services through the individual
health plan to the extent that the insurer
is contractually or otherwise responsible
to pay for such benefits.
Comment: Some commenters
expressed specific concerns about cost
sharing policies and urged CMS to
consider putting additional beneficiary
protections in place specific to premium
assistance to ensure that people
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understand the cost sharing differences
between Medicaid and CHIP and QHPs.
They recommended that we create
requirements for coordination between
Medicaid and the QHP issuer to ensure
that people do not exceed permissible
cost sharing and asked CMS to provide
guidance on how to monitor cost
sharing.
Response: We expect states to have
mechanisms in place to provide benefits
that wrap around health plan coverage
to the extent that the health plan offers
fewer benefits, or has greater cost
sharing requirements than in Medicaid
or CHIP. These mechanisms will need to
be coordinated with the health plan to
successfully implement a premium
assistance program. As noted above, we
are requiring at § 435.1015(b) that states
inform individuals how to access
additional benefits not provided by the
insurer, and also inform individuals
how to receive cost sharing assistance.
We are not proposing any specific
requirements about the way in which
such coordination can be effectuated,
however, because we believe that states
should have flexibility to develop
effective coordination procedures
consistent with state systems and
procedures, including variation in state
health care delivery systems.
Comment: Many commenters
requested clarification of the costeffectiveness test for premium
assistance. They stressed the importance
of a strong cost-effectiveness test to
ensure that taxpayer dollars are spent
wisely and also that beneficiaries do not
lose important benefits and cost sharing
protections. They were concerned that
the proposed rule could be interpreted
to include only the cost of premiums to
purchase coverage and not to include in
the test the costs associated with paying
copayments, deductibles, and other cost
sharing requirements. They believe that
this should be clarified in the final rule
to explicitly include cost sharing. Other
commenters stated that this costeffective analysis should be performed
on an annual basis to ensure that the
premium assistance program remains
cost-effective even if Medicaid and the
individual market experience different
rates of cost growth.
Response: Consistent with our
approach to cost-effectiveness in all
premium assistance authorities, we
intend for states to consider the cost
sharing requirements of the private
health plan (and therefore the cost of
providing the cost sharing protections)
when determining whether premium
assistance is a cost-effective option, and
we agree that this should be clarified.
Therefore, we are revising
§ 435.1015(a)(4) accordingly. States
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implementing premium assistance must
describe their cost-effectiveness
methodology, and to the extent that
such a methodology relies on annual per
person costs, we would expect states to
be re-running the analysis at least
annually, as new cost data is available.
Comment: Many commenters
requested additional detail on how the
option would be operationalized by
state Medicaid agencies, Exchanges, and
QHPs. One noted that successful
premium assistance programs require
robust data sharing, data mining,
automated calculations using costeffective algorithms, and strong
relationships with private insurers.
Some commenters requested that CMS
provide states with a template or other
tools to simplify the implementation of
premium assistance.
Response: We will continue to
provide technical assistance to states on
the operational aspects of pursuing this
premium assistance approach, relying
on the experience states have had over
the years implementing premium
assistance.
Comment: Some commenters stated
that families should have the choice of
either premium assistance or direct
Medicaid state plan coverage, even
when premium assistance is costeffective for the state, and they
supported the proposed rule’s provision
that states may not require enrollment
in premium assistance as a condition of
Medicaid eligibility. Other commenters
requested that CMS remove the
voluntary participation requirement
either entirely, or if this requirement is
retained, they asked that states be
allowed to make participation in
premium assistance mandatory for
certain Medicaid enrollees, such as
adults up to 138 percent of the FPL who
would be part of the state’s Medicaid
expansion population, or for pregnant
women with incomes above 133 percent
of the FPL.
Response: Consistent with the statute,
we are retaining the provision at
§ 435.1015(b) that states may not require
a Medicaid-eligible individual, as a
condition of receiving Medicaid
benefits, to enroll in a health plan in the
individual market through a premium
assistance arrangement. Enrollment in
individual market coverage is not a
statutory condition for eligibility. We
are also clarifying in § 435.1015(b) that
states must require that individuals who
have elected to receive premium
assistance must obtain covered items
and services through the individual
health plan to the extent that the insurer
is contractually or otherwise responsible
to pay for such benefits. This is
consistent with the provision in section
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1902(a)(17) of the Act that, in
determining the amount of medical
assistance, states may consider available
resources, and the provision in section
1902(a)(25) of the Act that requires that
states ensure that liable third parties pay
primary to Medicaid. We address the
issue of requiring enrollment in
premium assistance for certain
populations in the last response in this
section.
Comment: Several commenters
expressed concern that permitting state
Medicaid programs to establish
premium assistance programs could
affect premiums in the Exchange. Some
commenters recommended that CMS
revise the proposed § 435.1015(a)(4) to
require that premium assistance not
increase federal costs and not increase
premiums in the individual market.
Response: Medicaid beneficiaries
enrolled in a QHP would be included in
the individual market single risk pool of
the health insurance issuer of the plan
in which they are enrolled, just as any
other individual obtaining coverage
through such plans. § 435.1015(a)(4)
requires the cost of premium assistance
to be ‘‘comparable’’ to the cost of
providing direct coverage under the
state plan. We do not use a more
restrictive word to allow flexibility
because the amount, duration, and
scope of the QHP coverage, or the nature
of the QHP service delivery system,
might be different from direct coverage
under the state plan.
Comment: Some commenters stated
that CMS must take additional steps to
ensure that states do not steer family
members of Medicaid-eligible
individuals into less expensive plans to
accommodate a premium assistance
model and also to ensure that any
enrollees who will be using premium
tax credits have sufficient choice in
QHPs. The commenters stated that
regulations should require states to
remain impartial in providing all
available information on all QHPs so the
family can choose the best plan or plans
for the entire family, and also that
Navigators, application assisters, and
application counselors must be trained
on the premium assistance program and
provide impartial assistance to families.
Response: As noted above (and at
§ 435.1015(b)), when a state implements
the state plan premium assistance
option, the beneficiary’s participation
must be voluntary. We also expect states
to ensure that application assisters and
certified application counselors comply
with the requirements in § 435.908 of
this part and § 457.340 under subpart C
of part 457, which include requirements
that they be effectively trained in the
eligibility and benefits rules and
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regulations governing enrollment in a
QHP through the Exchange and all
insurance affordability programs
operated in the state. In addition, the
Exchange regulations at 45 CFR 155.210
require that Exchange Navigators
provide impartial information and
assistance. A Medicaid or CHIP enrollee
who is receiving benefits in whole or in
part through a premium assistance
arrangement with a QHP will not be
eligible for a premium tax credit under
section 36B of the Internal Revenue
Code because such credits are not
available to individuals who, for the
coverage month, are eligible for
minimum essential coverage through
Medicaid or CHIP.
Comment: A few commenters
questioned whether section 1905(a)(29)
of the Act creates the authority for
premium assistance in the individual
market. Many commenters
recommended that CMS eliminate the
proposed policy to allow premium
assistance for plans in the individual
market, or otherwise tightly
circumscribe it, citing cost concerns, as
well as concerns about the operational
complexity and potential consumer
confusion for consumers created by the
‘‘wrap’’ requirement.
Response: As we stated in the
preamble of the proposed rule (78 FR
4624 and 4625), in section 1905(a)(29)
of the Act, ‘‘medical assistance’’ is
defined to include payment of part or all
of the cost of ‘‘other insurance
premiums for medical or any other type
of remedial care or the cost thereof.’’ We
have interpreted this provision to
permit payment of FFP for premiums for
health plans for Medicaid-eligible
individuals, provided the state
determines it cost-effective to do so.
CMS has approved state premium
assistance programs under this authority
prior to the enactment of the Affordable
Care Act. The Affordable Care Act
provided for new rules regulating the
operation of the individual and small
group insurance markets, and expanded
access to insurance coverage through
QHPs participating in the Exchange.
This results in new opportunities for
states to deliver Medicaid coverage
through the purchase of private health
insurance in the individual market. Our
goal is to work with states to ensure that
their premium assistance approaches
result in a cost-effective, seamless, and
coordinated system of health care for
beneficiaries.
Comment: Several commenters
recommended delaying implementation
of premium assistance until rates are
determined for QHPs in the Exchange,
and the individual market has settled
from the changes it will experience in
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2014, and states have experience
implementing the Medicaid expansion.
Response: As we noted above,
premium assistance is an option
available under current law. Some states
have already expressed interest in using
the premium assistance model to deliver
benefits to their Medicaid expansion
beneficiaries through QHPs doing
business on the Exchange. In addition,
beginning in 2014, some low-income
children will be covered by Medicaid or
CHIP while their parents obtain
coverage in the Exchange with advance
payments of the premium tax credit,
and premium assistance provides an
opportunity for state Medicaid and
CHIP programs to offer coverage to such
families through the same plan, even if
supported by different payers. It also
provides opportunities for continuity of
care by increasing the likelihood that
individuals could remain in the same
health plan when moving back and forth
between Medicaid and Exchange
coverage due to fluctuations in income
or other changes in circumstances. We
are not establishing new authority but
rather ensuring that the existing
authority reflects the new coverage
options in the individual and small
group markets established by the
Affordable Care Act.
Comment: Many commenters
supported the retention of the proposed
regulation text that makes FFP available
for payment of health plan premiums
for ‘‘individuals’’ eligible for Medicaid.
They believe that this language supports
the enrollment of Medicaid-eligible
individuals in individual market plans,
including plans offering family
coverage, while not incorporating
limiting definitions of ‘‘family’’ that
would unnecessarily limit the benefits
of the rule to individuals in families that
do not comprise a taxpayer household.
One commenter asked for CMS to clarify
the meaning of ‘‘family’’ as used in the
premium assistance section of the
preamble of the proposed rule. The
commenter also questioned whether this
option is limited to Medicaid and CHIPeligible individuals who have family
members enrolled in an individual
health plan, and if so, asked if we
proposed to limit this option to
members of the same tax household,
MAGI assistance group, or to immediate
family members.
Response: We have not proposed a
definition of ‘‘family’’ that is unique to
premium assistance. Regulations at
§ 435.603 of this part (and at § 457.301
and § 457.315 under subpart C of part
457 for CHIP) contain definitions and
requirements related to family size,
household, and MAGI-based income for
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the purposes of Medicaid and CHIP
eligibility determinations.
The premium assistance option
permits Medicaid or CHIP funds to be
used to deliver coverage to Medicaid or
CHIP-eligible individuals through the
purchase of private health insurance,
and it is not limited to Medicaid or
CHIP-eligible individuals who have
family members enrolled in a QHP. In
some cases, the Medicaid or CHIP
beneficiary could be enrolled in a health
plan that provides individual coverage
only, while in other situations, the
Medicaid or CHIP beneficiary would be
enrolled in a health plan that provides
family coverage, depending on the
categories of family coverage offered in
the Exchange.
Comment: Some commenters, who
were in favor of the continued
authorization of premium assistance
programs, stated that states should be
allowed to determine how to make the
concept work and urged CMS to allow
complete state flexibility in designing
and implementing benefit structures
and cost sharing requirements.
Response: Individuals receiving
coverage through premium assistance
are Medicaid beneficiaries and are
entitled to the full range of protections,
including benefits and cost sharing,
available under the law. States have
flexibility under the state plan option to
design how they will effectuate the
coverage that is required while meeting
applicable statutory and regulatory
requirements. To the extent a state
needs additional flexibility, the state
may wish to explore demonstration
options under section 1115 of the Act.
Comment: Several commenters
recommended that premium assistance
programs might require, or best be
operated under, a Medicaid section
1115 demonstration.
Response: States have the flexibility
to adopt premium assistance as an
option under the state plan if it is
voluntary for beneficiaries and adheres
to all applicable statutory and regulatory
provisions. Enrollment in individual
market coverage is not a statutory
condition of eligibility. Some states
have expressed interest in submitting
proposals for section 1115
demonstrations to require enrollment in
premium assistance and to allow for
consideration of a broader range of
factors when cost-effectiveness is
assessed. In response to these inquiries,
we will consider approving a limited
number of premium assistance
demonstrations that are determined to
further the objectives of the Medicaid
program and which will test these new
arrangements and inform policy. For
states that implement premium
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assistance through a section 1115
demonstration, which could include
mandatory enrollment into premium
assistance, we will only consider
demonstrations under which states
make arrangements with the health plan
to provide wraparound benefits and cost
sharing assistance. For further
information on the section 1115 option,
including guidelines for proposals,
please refer to Premium Assistance
Frequently Asked Questions (FAQs) that
CMS issued on March 29, 2013,
available at https://medicaid.gov/StateResource-Center/FAQ-Medicaid-andCHIP-Affordable-Care-Act-ACAImplementation/Downloads/FAQ-03-2913-Premium-Assistance.pdf
9. Changes to Modified Adjusted Gross
Income and MAGI Screen
We proposed to implement sections
1902(e)(14) and 1943 of the Act, and
section 1413 of the Affordable Care Act
as they pertain to the definition of
‘‘modified adjusted gross income’’
(MAGI) and ‘‘household income’’ in
section 36B(d)(2) of the Internal
Revenue Code of 1986 (‘‘36B
definitions’’). We also proposed a
modification to previously issued
regulations implementing section
1902(e)(14)(I) of the Act. The proposed
rule applied the 5 percent disregard
established by the Act for purposes of
determining the income eligibility of an
individual for medical assistance whose
eligibility is determined based on
MAGI, provided the determination was
for the eligibility group with the highest
income standard under which the
individual could be determined eligible
using MAGI-based methodologies. The
proposed changes are discussed in more
detail in the January 22, 2013 Medicaid
Eligibility proposed rule (78 FR 4625
through 4627). We received the
following comments concerning the
proposed changes to MAGI provisions:
Comment: Some commenters
supported the proposal to apply the 5
percent disregard only to the highest
income threshold under a MAGI-group
available for the individual and the
related impact on the number of
individuals for whom states will be able
to claim the ‘‘newly eligible’’ enhanced
match rate.
Response: The Affordable Care Act
established a 5 percentage point of the
FPL disregard ‘‘for the purposes of
determining income eligibility’’ for
individuals whose eligibility is based on
MAGI. The objective of the proposal is
to balance giving beneficiaries the
benefit of the disregard for eligibility
purposes, with the intent to give states
the opportunity to claim enhanced
match for all newly eligible individuals
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if the state chooses to extend coverage
to the new adult group. We propose
doing so by ensuring that the disregard
is applied to the income calculation of
individuals for whom the disregard
matters for a determination of eligibility
for Medicaid under MAGI-based rules—
that is, those for whom the application
of the disregard means the difference
between being eligible for Medicaid and
being ineligible. These individuals are
those whose income is within 5 FPL
percentage points of the highest net
income standard for which they can
obtain Medicaid eligibility under MAGIbased income rules. The disregard
would not be applied for a
determination of eligibility for a
particular eligibility group, but rather
for eligibility for Medicaid.
Comment: One commenter questioned
whether the proposed policy is
consistent with federal law, which the
commenter views as entitling all
applicants to the 5 percent disregard.
The commenter stated that our proposed
policy could affect beneficiaries’ cost
sharing or benefits because it could
result in a change in their eligibility
groups. Some commenters noted that,
for example, some parents could receive
ABP coverage instead of the traditional
Medicaid benefit package. The
commenters noted, however, that this
concern should be minimal since newly
eligible adults who are medically frail
and likely to need additional services
covered under the regular Medicaid
benefit package would have a choice of
benefit package, between what is offered
through an ABP that is based on section
1937 requirements, inclusive of EHB’s,
and ABP coverage that is not subject to
section 1937 requirements, and includes
the services approved in the state’s
Medicaid plan. Other commenters cited
concerns about pregnant women and
categories that offer only limited
pregnancy-related services.
Response: The proposal to apply the
5 percent disregard to determine
Medicaid eligibility rather than
eligibility for a particular category is
consistent with section 1902(e)(14)(I) of
the Act. It is not necessarily the case
that not applying the 5 percent
disregard for purposes of determining
eligibility category would result in
moving individuals into a different
eligibility group with different benefit
and possibly cost-sharing rules because
if the 5 percent disregard were applied
as a general disregard, states would set
income eligibility standards at levels
that would compensate for that impact.
For example, if the 5 percent disregard
was applied generally, states might set
the income eligibility standard for
parents at a level 5 percent less than
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they would otherwise. Moreover, any
adverse impact of a shift of beneficiaries
from the parent group to the new adult
group with coverage through an ABP
will be minimized by the medically frail
exception to benchmark coverage
limitations. For pregnant women with
income at the border between full
benefits and pregnancy-related benefits,
although the absence of the disregard
may result in a pregnancy-related
benefit package instead of full benefits,
our March 2012 rule revised
§ 435.116(d)(3) to clarify that a State’s
coverage of pregnancy-related services
must be consistent with § 440.210(a)(2)
and § 440.250(p), which allows States to
provide additional services related to
pregnancy to pregnant women (see 77
FR 17149).
Comment: Several commenters
recommended that CMS not revise the
MAGI disregard rules. They raised
concerns that there is too little time for
states to make the systems and business
process updates required to comply
with the October 1, 2013 open
enrollment period. They noted that the
proposed rule requires more complex
programming compared to simply
adding 5 percent to all MAGI-based
categories and that this policy could
impact a state’s ability to implement the
MAGI requirements timely. In addition,
they noted that although the 90/10
matching funds are available to make
such systems-related changes, states
must still finance 10 percent of the cost
of these changes despite experiencing
severe budgetary issues.
Response: We understand that many
states relied upon the March 2012 final
eligibility rule when planning their
eligibility system builds for 2014. We
appreciate that it may be difficult at this
point in time to make programming
changes for eligibility systems and have
those changes take effect by January 1,
2014. In light of this challenge, we are
finalizing our proposal, but we will not
take any compliance actions for states
whose systems cannot accommodate
this eligibility determination
requirement. We will approve eligibility
determination systems even if as of
January 1, 2014, the system applies the
5 percent disregard across the board to
all individuals whose eligibility is
determined using MAGI-based rules,
based on a state’s assurance that by
January 1, 2015 the state will update the
system to apply the disregard only for
a determination of eligibility for
Medicaid under MAGI-based rules.
Comment: Some commenters
requested that states that are not
expanding to cover the new adult
group—and thus not claiming enhanced
FMAP—should have the option to use
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the new calculation and continue to
apply the 5 percent across- the-board
disregard. Others requested that all
states be given the option to apply the
5 percent disregard only to the highest
income threshold under MAGI as
proposed in our proposed rule.
Response: We believe that applying
the 5 percent FPL disregard to
determine eligibility based on overall
eligibility rather than eligibility group is
the best interpretation of section
1902(e)(14)(I) of the Act. Therefore, we
are adopting our proposed policy as
final, subject to the flexibility in
implementation schedules discussed
above.
Comment: One commenter asked
whether the 5 percent MAGI income
disregard would be applicable to only
eligibility for the coverage group or
whether it would also be applicable to
cost-sharing or premium determinations
—within the coverage group.
Response: Under this final rule, the 5
percent disregard under section
1902(e)(14)(I) of the Act applies to
income determinations relative to
Medicaid eligibility. It does not apply to
determine into which eligibility group
an individual should be placed. Nor is
it intended to be applied to determine
income for premium or cost-sharing
payments.
Comment: One commenter requested
clarification about whether, in a state
that implements the eligibility
expansion under section 2001 of the
Affordable Care Act (that is, adopts the
adult group), the state would need to
apply the 5 percent disregard to a parent
or caretaker relative age 65 or older that
was not eligible for the expansion
group.
Response: The 5 percent disregard is
not applied based on an eligibility
group, but based on whether the
disregard would affect MAGI-based
income eligibility for Medicaid as stated
above. In the case of a parent or
caretaker relative age 65 or older, the 5
percent disregard would be applied in
determining MAGI-based income if the
individual would otherwise be
ineligible based on income. For
example, if the parent/caretaker
eligibility standard in a state was 80
percent of FPL and the individual’s
income before application of the
disregard put them over the 80 percent
standard, the 5 percent disregard would
be applied and the individual would be
eligible if the disregard brought their
countable income below 80 percent of
the FPL.
Comment: Another commenter asked
for clarification of whether the 5 percent
is only applied when an individual
would not be eligible in another group
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or if it would apply to all individuals
being determined for eligibility in the
group. The commenter specifically
asked about whether the 5 percent
disregard would be applied to keep
family coverage in the Transitional
Medical Assistance (TMA) group.
Response: TMA is beyond the scope
of this rulemaking. TMA will be
addressed in future guidance.
Comment: Several commenters
questioned whether applying the 5
percent disregard to the MAGI income
standards equivalent being produced
through the process generally referred to
as ‘MAGI conversion’ creates a double
counting of the disregard. Other
commenters asked whether states are
being required to expand their income
levels for pregnant women and children
by 5 percent due to application of the
disregard.
Response: We considered carefully
the requirements in section
1902(e)(14)(A) of the Act in our
December 2012 guidance to states on the
establishment of converted MAGI-based
income standards equivalent to levels
used at the enactment of the Affordable
Care Act (‘‘MAGI conversion’’). See
https://www.medicaid.gov/FederalPolicy-Guidance/downloads/
SHO12003.pdf. Under this guidance,
converted MAGI-based income
standards are set without regard to the
5 percent disregard, since the MAGI
income conversion requirements in
section 1902(e)(14)(A) of the Act are
independent of the 5 percent disregard
at section 1902(e)(14)(I) of the Act.
MAGI-equivalent income standards are
established taking into account
disregards that are currently in effect
but which will no longer be in effect
under MAGI. As a result, there is no
double-counting of the 5 percent
disregard. The 5 percent disregard
would apply once when calculating an
individual’s MAGI-based income if the
individual would otherwise be
ineligible.
Comment: Several commenters
requested clarification regarding how
the 5 percent disregard under MAGI
applies to applicants under a separate
CHIP program. Similarly, commenters
asked how the 5 percent disregard is
applied to individuals at the boundary
between Medicaid and CHIP eligibility.
Response: The 5 percent disregard
should be applied to individuals who
may be eligible for the highest income
standard under the applicable Title of
the Act (for example, Title XIX or Title
XXI) for which the individual may be
determined eligible using MAGI-based
methodologies. Therefore, in states that
have separate CHIP programs, the
income disregard should be applied
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both for the highest Title XIX eligibility
group available to the child, as well as
to the separate CHIP program to cover
similarly situated children at a higher
income standard. The result would be
that children with a MAGI in the 5
percent band above the Medicaid
income standard at issue would be
determined eligible for Medicaid. To
clarify, we are modifying the language
in the final rule at § 435.603(d)(4) to
specify that the 5 percent disregard
should be applied to the highest income
standard in the applicable Title of the
Act under which the individual may be
determined eligible using MAGI-based
methodologies. We do not believe this
will impact the children for whom the
state can claim enhanced match,
because the state can claim enhanced
match for any child whose income is
greater than the upper income threshold
under Medicaid on March 31, 1997,
whether that child is covered under
Title XIX or Title XXI.
Comment: One commenter asked
whether there is any reason it would not
be permissible for a state to program its
eligibility system to build in the 5
percent disregard and effectively set the
income limit at 5 percent higher than
the state’s established limit for MAGI
related eligibility groups.
Response: Because the disregard is
applied at the individual level,
increasing the eligibility income
standard for a group would not be the
best way to program an eligibility
system. Furthermore, doing so would be
inconsistent with the statutory purpose
of developing a uniform income
determination methodology applicable
in all states, which could be applied by
the Exchange as well as the State
Medicaid or CHIP agency. Therefore,
this would not be permissible. Instead if
the eligibility system cascades
sequentially through possible eligibility
options, it should apply the 5 percent as
one last eligibility step, only when the
system has returned a determination of
ineligibility because the individual is
over scale for income.
10. Single State Agency—Delegation of
Eligibility Determinations to Exchanges
(§ 431.10 and § 431.11)
We proposed to revert to the policy
proposed in the Medicaid eligibility
proposed rule published on August 17,
2011 (76 FR 51148), that single state
Medicaid agencies will be limited to
delegating eligibility determinations to
Exchanges that are government agencies
maintaining personnel standards on a
merit basis. We retained many of the
provisions strengthening the control and
oversight responsibilities of the single
state agency including the authority to
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issue policies, rules and regulations on
program matters and to exercise
discretion in the administration or
supervision of the plan. We also
proposed to make changes to § 431.11
regarding state organization. We
received the following comments
concerning the proposed changes to the
single state agency provisions:
Comment: The majority of
commenters strongly support the
decision to revert to the policy
originally proposed in the August 2011
Medicaid eligibility rule that delegation
of the authority to determine eligibility
for Medicaid is limited to Exchanges
that are government agencies
maintaining personnel standards on a
merit basis. One state specifically
commented that it supports this change
as it allows states to maintain program
integrity. Several other commenters
noted that this construct has been a
consistent legal interpretation for many
decades. Other commenters noted that
many state Medicaid employees are
trained social workers who have the
knowledge and experience to help our
country’s most vulnerable citizens,
ensuring consistency and accessibility
to benefits.
Response: We appreciate commenters
support for our proposed policy, and
therefore, we are adopting in this final
rule the policy that delegation of the
authority to determine eligibility for
Medicaid is limited to Exchanges that
are government agencies maintaining
personnel standards on a merit basis.
This is the policy that we originally
proposed in our August 2011 proposed
rule and that was re-proposed in the
January 2013 proposed rule. We believe
that under the best read of the statute,
determining Medicaid eligibility is an
inherently governmental function that
must be performed by governmental
agencies.
For purposes of delegation, we are
treating a quasi-governmental entity or
public authority running an Exchange
and employing merit system protection
principles as a government agency such
that delegation to it would be permitted.
Although we were explicit in the
proposed regulation at
§ 431.10(c)(1)(i)(B), § 431.10(c)(2) and
§ 431.10(c)(3)(i) regarding authority to
delegate to public authorities, we are
deleting these references to public
authorities in the final rule to conform
with the Exchange regulation which
only explicitly requires at § 155.20 that
Exchanges be governmental agencies or
non-profit entities established by a state.
Comment: Some commenters wrote
that they especially appreciate the
recognition that Medicaid agencies
would not be parties to contractual
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relationships between the Exchange and
an entity engaged by the Exchange to
determine eligibility, which would
make it impossible for the Medicaid
agency to provide appropriate oversight.
They support maintaining the
requirement that the Medicaid agency
provide oversight when responsibility
for the eligibility determination is
delegated to another agency, because
monitoring and oversight is necessary
regardless of whether the delegation is
to a government or non-government
agency. They recommended that such
oversight should include review of a
sample of eligibility decisions made by
the Exchange, scrutiny of the ‘‘logic’’
used in information technology systems
to ensure that Medicaid policy is being
applied in an accurate manner, regular
observations of the processes used by
the Exchange in making eligibility
determinations, participation by
Medicaid agency staff in training of
Exchange staff, and monitoring of
complaints and appeals. Many
commenters suggested more specific
requirements in regulation that should
be added to § 431.10(d), specifying the
oversight and monitoring required in
the agreement between the Medicaid
agency and Exchange or Exchange
appeals entity include training for the
Exchange or Exchange appeals entity, as
well as monitoring of the systems being
built.
Response: We agree that the single
state agency should be required to
provide oversight when responsibility
for the eligibility determination is
delegated to another agency and are
finalizing our proposal requiring this.
We appreciate the commenter’s various
suggestions regarding quality control
and oversight by the Medicaid agency
and believe they are within the ambit of
what is intended by § 431.10(c)(3)(ii),
requiring the Medicaid agency to
exercise appropriate oversight over the
eligibility determinations and appeals
decisions made by such agencies to
ensure compliance with paragraphs
(c)(2) and (c)(3)(i) of this section and
institute corrective action as needed. We
believe § 431.10(c)(3)(ii) can be
exercised in various ways including
those suggested by the commenters. We
also agree that participation by
Medicaid agency staff in training of
Exchange staff would be valuable. We
believe that the requirements in
§ 431.10(d) which specify the
requirements for the agreement between
the Medicaid agency and the Exchange
or Exchange appeals entity include the
requisite quality control and oversight
language.
Comment: Many commenters
recommended ways to ensure a
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coordinated system by engaging nonprofits and private contractors in the
process of supporting the Medicaid and
CHIP eligibility determination, while
not allowing them to determine
eligibility. Recommendations included
providing assistance to consumers with
the application and enrollment process
as certified application counselors and
operating call centers, providing basic
information to potential applicants. One
commenter suggested that any contract
over the amount of $1 million entered
into by the State for services which
support eligibility determination, such
as data-matching or application/
eligibility screening, be submitted to the
Department of Health and Human
Services for review.
Response: We agree that certified
application counselors and call center
administration are ways to engage nonprofits and private contractors in the
Medicaid eligibility process while
assuring all final eligibility
determinations are made by
governmental entities. However, we do
not believe it necessary to subject state
contracts for support services related to
eligibility determinations to special
oversight rules. We believe that the
single state agency’s responsibility for
determining and/or overseeing
eligibility determinations includes
oversight of such support functions.
Comment: One commenter noted that,
while there is value in continuing the
role of public employees in Medicaid
eligibility determinations, this decision
can be expected to have the inadvertent
effect of requiring ‘‘hand offs’’ in some
states between privatized Exchanges
and Medicaid agencies. Specifically, in
states operating a privatized Exchange,
the Exchange will now be unable to
conduct a full Medicaid determination,
which means that an individual who
applies for coverage via an Exchange
and is found likely eligible for Medicaid
will be ‘‘bounced’’ to the Medicaid
agency for a final determination.
Families with children, in particular,
are likely to be ‘‘bounced’’ because they
are eligible for Medicaid or CHIP at far
higher income levels than adults in all
states. As a result the commenter
recommended that § 435.1200(d)
include a new subpart requiring states
to report to HHS and to make publicly
available data on the share of applicants
who are determined potentially eligible
for Medicaid or CHIP by an Exchange
who are eventually enrolled. Moreover,
they recommended that procedures
should be outlined for HHS to evaluate
the data and take corrective action if
data revealed that significant numbers
of people are ‘‘falling through the
cracks’’ because they must navigate
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multiple agencies when trying to secure
coverage for themselves or their
children.
Response: States will be required to
establish performance standards in their
state plans in accordance with
§ 435.912. To further this work, earlier
this year, we issued a request for
information (RFI) regarding performance
indicators for Medicaid and CHIP
business functions. The RFI explained
that CMS intends to begin collecting
and reporting on information including
data regarding individual (applicant and
beneficiary) experience with eligibility
and enrollment. One of the indicators
proposed under the eligibility and
enrollment domain was ‘‘accurate
eligibility determinations,’’ including a
proposed ‘‘accurate transfer rate’’. The
accurate transfer rate would be
measured by the percent of individuals
transferred to Medicaid, CHIP, or the
Exchange, as applicable, who are
determined eligible by that agency. We
are currently reviewing the comments
received and finalizing our proposal for
implementation of performance
reporting. For further information about
the RFI, see our Web site at https://
www.medicaid.gov/Medicaid-CHIPProgram-Information/By-Topics/Dataand-Systems/Downloads/RFIPerformance-Indicators-1-24-13.pdf.
Comment: One commenter requested
that we provide public access to
agreements between the Medicaid
agency and other entities conducting
determinations. Some commenters also
requested that we require public posting
of the agreements on internet Web sites.
Response: We have provided in
§ 431.10(d) that agreements with federal,
state or local entities making eligibility
determinations or appeals decisions be
available to the Secretary upon request.
To the extent that the Secretary requests
and obtains a copy of an agreement
under § 431.10(d), the public can
request a copy of the agreement through
the Freedom of Information Act, 5
U.S.C. 552. These agreements may also
be obtained at the state level under state
freedom of information act laws.
Comment: Some commenters opposed
this policy reversal from the previous
Medicaid eligibility rule, and noted that,
since that rule was issued, several states
have relied on it to inform their
decisions on establishing a State-Based
Exchange, as well as to plan for
Exchange and Medicaid systems and
operations in future years. They believe
these decisions and activities cannot
easily be amended or changed in a short
timeframe, and this policy change could
have a major impact on the work states
have completed, as well as their future
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plans. They requested that CMS revoke
the proposed change.
Response: We appreciate the
challenges facing states, which is why
we signaled nearly a year ago on May
16, 2012, in guidance titled ‘‘General
Guidance on Federally-facilitated
Exchanges’’ our intent, in light of public
comments received on the final
Medicaid and Exchange eligibility
regulations, to propose further comment
regarding ways that States could ensure
coordinated systems when engaging
non-profits and private contractors in
the process of making Medicaid
eligibility evaluations, while having
government agencies make eligibility
determinations. See https://
cciio.cms.gov/resources/files/
ffe_guidance_final_version_051612.pdf.
We have also shared our intent to
propose revised rules in webinars with
states on the eligibility rules and in
individual state meetings.
11. Conversion of Federal Minimum
Income Standards for Section 1931 of
the Act (§ 435.110 and § 435.116)
We proposed to require conversion of
the federal minimum income standard
for section 1931 of the Act to comport
with the new rules regarding modified
adjusted gross income (MAGI) that will
take effect on January 1, 2014. Sections
1902(e)(14)(A) and (E) of the Act ensure
that, in the aggregate, individuals who
would have been eligible under
Medicaid rules in effect prior to the
Affordable Care Act remain eligible
once the new MAGI-based
methodologies go into effect. Our
proposal to direct conversion of the
federal minimum standard for section
1931 implements the conversion
requirements in the statute more
consistently, which is particularly
important in light of the Supreme
Court’s decision in National Federation
of Independent Business v. Sebelius,
ll U.S. ll; 132 S. Ct. 2566; 183
L.Ed. 2d 450 (2012). The proposed
changes are discussed in more detail in
the January 22, 2013 proposed rule (78
FR 4628 and 4629).
We received no comments on our
proposed policy to convert the federal
minimum standard for section 1931 of
the Act, and therefore, are finalizing our
proposal in § 435.110. This policy
relates to the coverage levels for parents
and caretaker relatives in states that do
not implement the eligibility expansion
in section 2001 of the Affordable Care
Act to provide coverage for the lowincome adult group. In addition,
because pregnancy benefits for pregnant
women under § 435.116(d)(4)(i) are tied
to the same May 1, 1988 AFDC income
standard for the applicable family size,
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we are finalizing our proposal in
§ 435.116 that this income limit should
also be converted.
B. Essential Health Benefits in
Alternative Benefit Plans
Section 1937 of the Act provides
states with the flexibility to amend their
Medicaid state plans to provide for the
use of benefit packages other than the
standard Medicaid state plan benefit
package offered in that state, for certain
populations defined by the state. These
ABPs are based on benchmark or
benchmark-equivalent packages. There
are four benchmark packages described
in section 1937 of the Act:
• The benefit package provided by
the Federal Employees Health Benefit
plan (FEHB) Standard Blue Cross/Blue
Shield Preferred Provider Option;
• State employee health coverage that
is offered and generally available to
state employees;
• The health insurance plan offered
through the Health Maintenance
Organization (HMO) with the largest
insured commercial non-Medicaid
enrollment in the state; and
• Secretary-approved coverage,
which is a benefit package the Secretary
has determined to provide coverage
appropriate to meet the needs of the
population provided that coverage.
Benchmark-equivalent coverage is
provided when the aggregate actuarial
value of the proposed benefit package is
at least actuarially equivalent to the
coverage provided by one of the benefit
packages described above, for the
identified Medicaid population to
which it will be offered. Section 1937 of
the Act further provides that certain
categories of benefits must be provided
in any benchmark-equivalent plan, and
other categories of benefits must include
‘‘substantial actuarial value’’ compared
to the benchmark package.
That said, we appreciate that it may
be difficult at this point to make
changes to the ABP that take effect by
January 1, 2014. In light of this
challenge, we will partner with states to
work as quickly as possible to come into
full compliance with these provisions.
We do not intend to pursue compliance
actions on these issues to the extent that
states are working toward but have not
completed a transition to the new ABPs
on January 1, 2014.
Conforming Changes to Medicaid To
Align With Essential Health Benefits
We proposed to implement section
2001(c) of the Affordable Care Act that
modifies the benefit provisions of
section 1937 of the Act. Specifically,
section 2001(c) of the Affordable Care
Act added mental health benefits and
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prescription drug coverage to the list of
benefits that must be included in
benchmark-equivalent coverage;
required the provision of Essential
Health Benefits (EHBs) beginning in
2014; and directed that section 1937
benefit plans that include medical/
surgical benefits and mental health and/
or substance use disorder benefits
comply with the Paul Wellstone and
Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008
(MHPAEA).
In addition, we proposed to
implement section 1902(k)(1) of the Act,
which requires that medical assistance
for, the new eligibility adult group for
low-income adults under section
1902(a)(10)(A)(i)(VIII) of the Act must
receive medical assistance provided
through an ABP (which must include
coverage of EHBs as of the same date).
We also proposed to implement
section 1937(a)(2)(B)(viii) of the Act,
which provides that individuals in the
new mandatory eligibility group for
former foster care children under age 26
are exempt from mandatory enrollment
in an ABP.
We proposed to implement section
1937(b)(7) of the Act, which provides
that medical assistance to individuals
described in section 1905(a)(4)(C) of the
Act (individuals of child bearing age)
through enrollment in an ABP shall
include family planning services and
supplies.
We proposed to codify in § 440.345(e)
the process to determine how often
states would need to update ABPs after
December 31, 2015.
We also proposed to add a new
§ 440.347 to incorporate section
2001(c)(5) of the Affordable Care Act.
Furthermore, anti-discrimination
provisions found at section 1302(b)(4) of
the Affordable Care Act were proposed
to be codified § 440.347(e).
1. General Comments
Comment: One commenter stated they
support the structure for implementing
EHBs as proposed.
Response: CMS appreciates the
support.
2. Alignment With Essential Health
Benefits Provisions
a. Scope of Alternative Benefit Plans
(§ 440.305)
We proposed to add the new adult
eligibility group as an eligibility group
that must receive benefits consistent
with section 1937 of the Act. We also
proposed that groups provided ABP
coverage under section 1937 of the Act
may be identified based on individual
characteristics and not by the amount or
level of FMAP funding.
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Comment: Many commenters
commended the addition of language
prohibiting states from targeting
Medicaid expansion populations solely
on the basis of applicable matching rate.
In addition, many commenters
applauded language proposing to codify
the flexibility HHS has given to states to
use the Secretary-approved option in
section 1937 of the Act to extend
comprehensive Medicaid coverage to
the newly-eligible expansion
population. The commenters further
urged CMS to partner with states to
ensure that this population’s full range
of mental health and substance use
needs and other health needs will be
met.
Response: We thank the commenters
for their support.
Comment: One commenter questioned
the inclusion of the sentence which
states, ‘‘Enrollment in ABPs must be
based on the characteristics of the
individual rather than the amount or
level of federal matching funds.’’ The
commenter stated this to be an
unnecessary statement since eligibility
for FMAP is based on eligibility
category. It is unclear why enrollment in
a benchmark plan would impact FMAP.
Response: People who qualify for
eligibility under the new adult
eligibility group will be determined to
be either newly eligible or already
eligible. For Medicaid coverage
provided to the newly eligible
population, the state will receive 100
percent FMAP in 2014 and for those
who are determined to be eligible under
December 2009 state rules, the state will
receive its otherwise applicable FMAP.
We included this language to clarify that
states may not design different benefit
packages based on the level of FFP they
will receive, but rather the benefit
package should be designed based on
the medical needs of the population
being served.
Comment: One commenter believed
that the use of ABPs will assist states
with expanding coverage in a
meaningful way. However, the new
adult population may have unique
health care needs, including a high
incidence of behavioral health and
social issues. The commenter believed
that the use of the ABPs would be most
beneficial if they are used to tailor the
scope of services and alignment of
benefits to ensure adequate delivery
systems for high need populations.
Response: Section 1937 of the Act
offers flexibility for states to provide
medical assistance by designing
different benefit packages plan for
different groups of eligible individuals.
We agree with the commenter that ABPs
can be successfully designed to meet the
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needs of the new adult population,
including those with varying health care
needs. As long as each benefit package
contains all of the EHBs, much
flexibility exists for states to meet the
needs of beneficiaries.
Comment: One commenter was
concerned that individuals age 50 to 64
may not be provided EHBs that are at
least equal to those available to highincome individuals who purchase
coverage on the commercial markets.
Response: We understand that there
could be some variation in EHBs as
defined for the individual market and
for Medicaid based on the selection of
different benchmark plans to define
EHBs. But the flexibility to select
different benchmark plans to define
EHBs for Medicaid ABPs will allow
states to address the unique needs of
each circumstance and promote
administrative simplicity, while still
providing a floor for coverage. As long
as that floor is met, Medicaid
beneficiaries in the new adult group can
also receive benefits from the selected
coverage options under section 1937 of
the Act or through substitution of
benefits.
Comment: One commenter stated it is
important that all individuals obtaining
Medicaid coverage under the Affordable
Care Act receive health coverage
appropriate for their needs, including
strong coverage for mental health and
substance use disorders. The commenter
also wrote it is important that
traditionally Medicaid eligible
populations that may be enrolled in
ABPs are guaranteed adequate coverage.
Response: ABP flexibility is an option
that states can choose to use in
redesigning their current Medicaid
benefit program. The requirement that
ABPs include EHBs and comply with
mental health parity requirements
ensures a minimum level of sufficiency
of the coverage.
Comment: One commenter requested
that HHS require or give states the
option to provide EPSDT coverage to 19and 20-year olds who qualify for the
new adult group.
Response: The existing provisions of
§ 440.345 require states to make
available EPSDT services as defined in
section 1905(r) of the Act that are
medically necessary for those
individuals under age 21 who are
covered under the State plan. We did
not propose to change this requirement.
To the extent that any medically
necessary EPSDT services are not
covered through the ABP plan, states
must supplement the ABP plan to
ensure access to these services. EPSDT
provisions apply to 19- and 20-year olds
who qualify for the new adult group.
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Comment: One commenter believed
that the Affordable Care Act provided
an unprecedented opportunity to
improve access to somatic and
behavioral health treatment for the ‘‘jailinvolved’’ population. The commenter
noted that up to 6 million incarcerated
individuals have income below 133
percent which would make them newly
eligible for Medicaid under the
Affordable Care Act. These individuals
could represent up to 1⁄3 of the newly
eligible population, underscoring the
importance of considering the particular
circumstances of incarcerated
individuals in implementation of the
Affordable Care Act.
Response: Paragraph (A) following
section 1905(a)(29) of the Act and
implementing regulations at § 435.1009,
specify that Medicaid is prohibited from
making payments for care or services for
any individual who is an inmate of a
public institution, except as an inpatient
in a medical institution. We read this
prohibition to apply generally to
medical assistance, whether provided
through the regular coverage plan or
through an ABP. Regular coverage or
regular Medicaid benefit package is
defined as Medicaid state plan services
including services defined in section
1905(a), 1915(i), 1915(j) and 1945
authorities. Thus, while we agree with
the commenter that incarcerated
individuals may be eligible for
Medicaid, they would not be entitled to
ABP benefits inconsistent with the
payment exclusion. We note that this is
consistent with the exclusion of
incarcerated individuals from eligibility
to enroll in coverage through the
Exchanges. It is also consistent with the
responsibility under the Eighth
Amendment of the United States
Constitution of governmental entities to
provide necessary medical care to
individuals who they are holding as
inmates, which effectively creates a
liable third party for such care.
States should suspend, rather than
terminate, the Medicaid eligibility of
individuals who are enrolled in
Medicaid when entering a public
institution, so as to ensure ease of
reinstitution of coverage post-release.
Additionally, if an individual is not
already enrolled in Medicaid, states can
enroll eligible individuals prior to their
release so that the individual can
receive Medicaid covered services in a
timely manner upon discharge.
Comment: One commenter believed
that the new eligibility category is likely
to attract younger and healthier
populations than traditional Medicaid.
The commenter believed that a
percentage of those who are newly
eligible will acquire a condition or
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disability after they are enrolled in an
ABP. The commenter recommended
that HHS standardize an effective
process for ensuring that beneficiaries
whose health status changes have the
opportunity to access in a timely
manner other ABP or traditional state
Medicaid plans which meet their needs.
The following standards were suggested:
A process for participants to request and
receive clinically appropriate benefits
not routinely covered by the plan; a
process for participants to request and
receive coverage for benefits beyond the
limits set by the plan where
extraordinary circumstances exist; and a
process for participants to request and
receive coverage of specialty care not
routinely coverage by the plan when
medically necessary and appropriate.
Response: As noted, states have the
flexibility to define different benefit
packages to meet the needs of disparate
populations. In addition, individuals in
the new adult group meeting the
exemption criterion found in section
1937 of the Act have the ability to
choose between ABP benchmark
coverage designed by the state using the
rules of section 1937 of the Act
including EHBs as a minimum level of
coverage, or ABP benchmark coverage
defined as the state’s approved regular
state plan benefit package, which is not
subject to the requirements of section
1937 of the Act.
Comment: One commenter supported
providing states with flexibility to add
state plan benefits and services found in
base-benchmark plans to benchmarkequivalent benefits. The commenter also
believed it would helpful to clarify that
adding such benefits would be possible
and appropriate for individuals in the
Medicaid expansion group.
Response: We appreciate the
commenter’s support, and clarify here
that individuals in the new adult group
can receive benchmark-equivalent
coverage or Secretary-approved
coverage which can include a broader
range of services than in public
employee or commercial benchmark
coverage options.
Comment: One commenter
interpreted the proposed rule to say that
individuals who are newly eligible
adults—and not deemed medically
frail—do not qualify for additional
services above and beyond what is
required under section 1937 of the Act
and the EHB. Based on that
interpretation, if a state wanted to
provide wrap around services for a
particular population, in which some of
the newly eligible would fall under, it
would not be allowable unless the state
created a Secretary-approved plan that
incorporates the benefits into the
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underlying plan. The commenter
requested that CMS clarify and/or
confirm the interpretation of this
provision.
Response: We confirm that the
individual’s interpretation is correct.
Section 1902(k)(1) of the Act provides
that individuals in the new adult group
receive benchmark or benchmarkequivalent coverage subject to the
requirements of section 1937 of the Act
(except that individuals who would
otherwise be exempt may choose to
receive benchmark or benchmarkequivalent coverage that is not limited
by section 1937 of the Act, and thus
have the option of benchmark or
benchmark-equivalent coverage that is
equal to the Medicaid benefit package
otherwise available). Such coverage can
be in the form of Secretary-approved
coverage, which may, at state option,
include a broader range of services than
public employee or commercial
benchmark options.
Comment: Many commenters
requested CMS clarify that the federal
matching rate is based on the individual
and not the services provided. A few
commenters requested clarification that
services provided through the Secretaryapproved ABP process for Medicaid
expansion individuals will be covered
at the enhanced rate and that Medicaid
expansion individuals who are
exempted into traditional Medicaid
coverage will also be covered at the
enhanced rate.
Response: We clarify that the
enhanced FMAP rate for newly eligible
individuals is available for all services
they receive. The matching rate is based
on the individual, not on the services
provided to them.
Comment: One commenter urged HHS
to clarify the flexibility that states will
have to design multiple ABPs targeting
specific populations. The commenter
understands this provision will allow
states to put in place ABPs for subpopulations within the newly eligible
group (that is, people living with
chronic viral hepatitis or other chronic
conditions) and urges CMS to clarify
that this is an appropriate use of the
ABP flexibility.
Response: Section 1937 of the Act
provides states with significant
flexibility to design Medicaid benefit
coverage under the State plan. There are
many options in selecting an ABP, and
states may offer different ABPs to
different targeted populations (except
that, as discussed elsewhere, targeting
cannot be based on the amount or level
of federal matching funding). Section
1937 of the Act provides states with the
statutory construct to provide an ABP
without regard to requirements at
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sections 1902(a)(1) (related to statewideness) and 1902(a)(10)(B) (related to
comparability) of the Act. This
flexibility is provided at § 440.376 and
§ 440.380, respectively.
Comment: One commenter was
unclear why the term ABP is being
used. The Affordable Care Act
references ABPs specifically for
evaluation of the ABPs as required
under the Class Independence Advisory
Council. Other sections reference
alternative benefits or programs
specifically under section 1937 of the
Act or the establishment of Basic Health
Plans. The commenter believed the use
of the term is confusing and
unnecessary since benchmark plans are
not alternative plans or programs as
originally identified in the law. Another
commenter found § 440.305 confusing
as paragraph (a) refers to ‘‘benchmark
and benchmark-equivalent’’ however
paragraph (b) refers to ABP. The
commenter suggested revising
paragraph (a) by replacing benchmark
and benchmark-equivalent with ABP.
Response: The Deficit Reduction Act
of 2005 amended the Act by adding a
new section 1937 of the Act to provide
for the use of benefit packages other
than the standard benefit package,
namely benchmark and benchmarkequivalent packages. The Affordable
Care Act made statutory changes to
section 1937 of the Act, one of which is
the requirement that section 1937
coverage packages include EHBs. We
issued regulations outlining how the
precise parameters of EHBs will be
established in the non-grandfathered
plans in the individual and small group
markets and, to some degree, how they
will be implemented in section 1937
coverage plans. In that regulation, the
term ‘‘base-benchmark’’ was used to
refer to the base plan used by states to
determine EHBs for coverage plans in
the non-grandfathered plans in the
individual and small group markets.
That base-benchmark plan becomes the
EHB-benchmark plan after it is
supplemented with any missing
categories of EHBs. In an effort to
prevent confusion between the term
‘‘benchmark’’ used for the nongrandfathered plans in the individual
and small group markets, and the use of
‘‘benchmark’’ by section 1937 coverage
plans, we chose from the statutory
construct of section 1937 of the Act the
term ‘‘Alternative Benefit Plan’’ (ABP)
to hereafter refer to Medicaid
benchmark and benchmark-equivalent
plans as ABP.
Comment: One commenter indicated
that there was no adult group under
section 1902(a)(10)(A)(i)(VIII) of the Act
on or before February 8, 2006 so the
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exception in subsection (b) does not
appear to fit.
Response: Section 6044 of the Deficit
Reduction Act of 2005 amended Title
XIX by adding a new section 1937 of the
Act that allows States to amend their
Medicaid State plan to provide for ABPs
and limits application of this provision
to individuals whose eligibility is based
on an eligibility category under section
1905(a) of the Act that could have been
covered under the State’s plan on or
before February 8, 2006. In 2010, section
2001(a)(1) of the Affordable Care Act
amended Title XIX to establish a new
optional adult eligibility group for lowincome adults age 19 to 64. Effective
January 1, 2014, States that implement
this new eligibility group must provide
medical assistance for that group
through an ABP. As specified, all
provisions of section 1937 of the Act
apply to the new adult eligibility group
except that those individuals in the new
adult group who meet the exemption
criteria will have a choice between ABP
benchmark benefits as defined by the
state under the rules of section 1937 of
the Act and ABP benchmark benefits
defined as the state’s approved
Medicaid state plan, without regards to
the rules of section 1937 of the Act.
Comment: A few commenters
believed the final rule should clarify
that an ABP designed for individuals
within the new adult eligibility group
can align with traditional Medicaid
coverage through the process of
designing of a Secretary-approved plan.
Response: We understand the
importance of this issue, and reiterate
guidance here. Secretary-approved
coverage, which can include the full
regular Medicaid state plan benefit
package, is one of the four statutorily
specified coverage benchmarks available
under section 1937 of the Act. States
can choose to use Secretary-approved
coverage to significantly align the
benefits offered to the new adult
eligibility group with the regular state
Medicaid package. Like with the other
three statutorily specified coverage
benchmarks, the Secretary-approved
coverage must include EHBs as
described in section 1302(b) of the
Affordable Care Act and applicable
regulations. In all cases, EHBs are first
defined as the benefits from the base
benchmark plan and supplemented with
benefits from other base benchmark
plans as necessary. CMS is clarifying in
this rule that substitution of benefits as
defined at § 156.115(b) is applicable to
EHBs in ABPs. We believe that states
will appreciate this added flexibility.
Substitution of benefits can occur
benefit by benefit. The benefits must fit
into the same EHB category and the
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benefits being interchanged must be
actuarially equivalent. Benefits do not
have to be similar in nature, they must
only be in the same EHB category and
actuarially equivalent. Furthermore,
states may substitute more than one
benefit that when combined are
actuarially equivalent to a single benefit.
States may use their Medicaid state plan
benefits for substitution if the state plan
benefit is actuarially equivalent and in
the same EHB category of benefit that
will be replaced.
Comment: Consistent with the
provisions of sections 1902(k)(1) and
1903(i)(36) of the Act, the commenter
requested that CMS confirm that the
coverage for individuals eligible only
through section 1902(a)(10)(A)(i)(VIII) of
the Act is limited to benchmark or
benchmark-equivalent coverage.
Response: That is correct. This still
leaves states with significant flexibility
to design coverage using the options of
benchmark coverage, which includes
Secretary-approved coverage, and
benchmark equivalent coverage. Section
1937 of the Act must also provide EHBs,
which through selection of a basebenchmark plan, supplementation and
substitution, will be used to define the
EHBs. EHBs are then incorporated with
the section 1937 benchmark coverage to
lead to a complete benefit package.
Comment: Several commenters stated
that the option to offer specialized
benefit packages, in the form of more
than one ABP, to different target
populations creates an administrative
burden and confusion for families. The
option to offer specialized benefit
packages might require more than one
design process and public notice;
additional actuarial analyses of the
different benefit packages for rate
setting; an extra process for tracking
individuals; and a state’s contracted
MCOs would have to manages different
benefit packages.
Response: The flexibility to provide
specialized benefit packages to one or
more targeted populations is at the
option of the state. Each state will
determine whether it is appropriate or
administratively feasible to design and
offer different benefit packages for
different groups of beneficiaries.
Comment: One commenter was
concerned with the disparities in
coverage that the proposed EHB policy
would create. That is, the guidance
suggests that the policy only
mandatorily applies to the newly
eligible category of adults. In states that
wish to take up the new expansion
option this creates a situation in which
the higher income expansion population
will receive a more generous benefit
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package than the existing population
would receive.
Response: We understand the
commenter’s concern, and it is true that
the benefit package may be different
because of the requirement that ABPs
provide EHBs. However, it is not clear
that the ABP benefit package provided
to the new adult eligibility group will be
more generous than the existing
Medicaid benefit package. In addition,
we remind readers that the EHB
requirements apply to all individuals
receiving services through an ABP, not
just those in the new adult group.
Summary: We did not make any
changes to proposed regulation text as a
result of comments in this section.
b. Exempt Individuals (Former Foster
Care Children) (§ 440.315)
We proposed to implement section
1937(a)(2)(B)(viii) of the Act, added by
section 2004 of the Affordable Care Act,
as amended by section 10201(a) of the
Affordable Care Act, by providing that
individuals eligible under section
1902(a)(10)(A)(i)(IX) of the Act will be
exempt from mandatory enrollment in
an ABP.
Comment: Many commenters
commended HHS for confirming that
the new former foster care children
group is exempt from mandatory
enrollment. Many other commenters
expressed support for affirming at
§ 440.315(h) that former foster care
children are statutorily exempt from
mandatory enrollment in an ABP, and
therefore, can access the full Medicaid
benefit, including EPSDT services, up to
age 21.
Response: We appreciate commenter
support. Individuals under age 21
receive EPSDT either through the ABP
or as additional coverage that
supplements the ABP.
Comment: One commenter wrote that
while the proposed rule clarifies that
former foster care youth up to age 26 are
eligible for full Medicaid benefits, may
not be mandated into an ABP, and will
have access to full EPSDT services up to
age 21, after age 21, former foster care
youth will no longer have access to
EPSDT benefits and requested
clarification as to the meaning of ‘‘full
Medicaid benefits.’’ According to the
commenter, the American Academy of
Pediatrics recently reported that
children in foster care experience
significantly higher rates of medical and
mental health challenges, and therefore,
believes that youth aging out of foster
care require comprehensive health
coverage that recognizes their unique
needs. Once a youth turns 21 they lose
EPSDT coverage but continue to have
the same health needs. The commenter
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therefore requested that CMS define
‘‘full Medicaid benefits’’ to include
benefits akin to EPSDT, including
dental coverage, mental health services
and physical health care.
One commenter stated she appreciates
the clarification that former foster care
children are exempt from mandatory
enrollment in an ABP and that they will
receive full Medicaid benefits. However,
it is not clear whether this means they
can receive EPSDT. The commenter
urged CMS to consider mandating, or at
a minimum, allowing states to provide
EPSDT benefits for this at risk
population because in a majority of
states oral health is not part of the adult
Medicaid benefit package and evidence
suggests that roughly 35 percent of
children in foster care have significant
oral health problems. Making sure oral
health issues are addressed as former
foster care youth move into adulthood
will have a significant impact.
Response: We acknowledge that
children in foster care generally
experience significantly higher rates of
medical and mental health challenges
and that these health challenges often
continue after aging out of foster care.
For this reason, Congress provided
statutory protection for an individual
who receives aid or assistance under
part B of title IV of the Act for children
in foster care or an individual for whom
adoption or for whom foster care
assistance is made available under part
E of title IV of the Act, without regard
to age, by exempting these individuals
from mandatory enrollment in an ABP.
Under the existing provisions of
§ 440.345, States must make available
EPSDT services, as defined in section
1905(r) of the Act, for those individuals
under age 21 who are enrolled in an
ABP. To the extent that medically
necessary EPSDT services are not
otherwise covered through the ABP for
individuals under 21, states are required
to supplement the ABP to ensure access
to these services. However, there is no
statutory authority to require states to
provide EPSDT services beyond age 21.
We note that states have the flexibility
to design an ABP targeted to former
foster care children that provides a more
comprehensive array of health coverage
than is provided through the regular
state plan and to offer voluntary
enrollment in such a plan. Through the
ABP option, states can provide this
population with oral health and other
services not otherwise available to
adults through State plan coverage.
Summary: We have not changed
proposed regulation text as a result of
comments received in this section.
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c. Benchmark-Equivalent Health
Benefits Coverage (Prescription Drugs
and Mental Health Benefits) (§ 440.335)
We proposed to implement section
2001(c) of the Affordable Care Act that
added mental health benefits and
prescription drug coverage to the list of
benefits that must be included in
benchmark-equivalent coverage.
Comment: Many commenters were
supportive of paragraphs (b)(7) and
(b)(8) implementing the statutory
requirements for benchmark-equivalent
coverage to include prescription drugs
and mental health benefits. A few
commenters commended the broad list
of services included in the proposed
rule.
Response: We agree that the inclusion
of prescription drugs and mental health
benefits as defined within ABPs are
important and necessary and we
appreciate the support of commenters
regarding the coverage of the
benchmark-equivalent health benefits.
Comment: A few commenters were
pleased that HHS listed services that
can be vital to people with disabilities
and chronic health conditions as
allowable in benchmark-equivalent and
Secretary-approved coverage.
Response: We acknowledge the
special medical needs of individuals
with chronic health conditions. The
final rule provides a clear path to
coverage for chronic disease
management under § 440.347.
Comment: A number of commenters
requested that CMS clarify paragraph
(c)(1). The commenters believed that
CMS is suggesting it will use a similar
policy for benchmark-equivalent
coverage as it does for Secretaryapproved coverage and, thus, allow
addition of benefits through the
benchmark-equivalent coverage process.
The commenters believed there is no
legal impediment to this approach and
supported it. The commenters urged
CMS to confirm this interpretation.
Response: We confirm this
interpretation. The rule provides states
the flexibility to include coverage for
benefits beyond the required coverage
and allows for states to create
benchmark-equivalent coverage that can
include benefits not available through
the benchmark options.
Comment: Numerous commenters
were confused by the language in
§ 440.335(c)(1) allowing addition of
services available in ‘‘2 or more’’
benchmark options, as opposed to the
language of ‘‘1 or more’’ which appears
in § 440.330 and in current regulation.
The commenters believed this may be a
clerical error and recommended the ‘‘1
or more’’ language to maximize state
flexibility.
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Response: A clerical error was made
in § 440.335(c)(1). The regulation has
been corrected to read, ‘‘. . . for any
additional benefits of the type which are
covered in 1 or more of the standard
benchmark . . .’’
Comment: One commenter was
concerned that only provision
§ 440.335(c)(1) was being amended
leaving (c)(2) and (c)(3) intact. The
commenter believed this will result in
conflict with newly added
§ 440.335(b)(7) and (8) as these
provisions provided that four benefits
(prescription drugs, mental health,
vision and hearing services) must
represent 75 percent of the actuarial
value and are not required to be
covered.
Response: We disagree that the
existing provision § 440.335(c)(2) will
conflict with § 440.335(b)(7) and (b)(8).
The actuarial value of the coverage for
prescription drugs, mental health
services; vision services; and hearing
services must still be at least 75 percent
of the actuarial value of the coverage for
that category of service in the
benchmark plan used for comparison by
the state.
However, provision § 440.335(c)(3) is
in conflict with § 440.335(b)(7) and
(b)(8). The state will, by default, meet
the conditions of (c)(3) because
prescription drugs and mental health
services are now required benchmarkequivalent coverage and states will not
have an option to provide such coverage
as regulation currently allows. States
also have the ability to add vision and
hearing services through new
requirements for additional coverage at
§ 440.335(c), for individuals not in the
new adult group. Individuals in the new
adult group can receive these vision and
hearing services, at state option, through
the use of Secretary-approved coverage.
Therefore, we have stricken
§ 440.335(c)(3) from the final rule.
Summary: As a result of comments
received in response to the proposed
regulation, CMS has deleted
§ 440.335(c)(3) from the final rule.
Additionally, an error was made in
§ 440.335(c)(1). The regulation has been
corrected to read, ‘‘. . . for any
additional benefits of the type which are
covered in 1 or more of the standard
benchmark coverage packages described
in § 440.330(a) through (c) of this part or
State plan benefits . . .’’ Otherwise,
CMS has not made any changes to this
section.
d. EPSDT and Other Required Benefits
(Family Planning Services and
Supplies) (§ 440.345)
We proposed to codify section 2303(c)
of the Affordable Care Act by adding
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paragraph (b) to § 440.345 to provide
that ABP coverage provided to
individuals described in section
1905(a)(4)(C) of the Act (individuals of
child bearing age), include family
planning services and supplies.
Comment: Many commenters thanked
CMS for codifying the important
provision requiring that ABP coverage
provided to individuals of child-bearing
age include family planning services
and supplies. This will help insure that
Medicaid beneficiaries can access
essential family planning services and
supplies regardless of the type of
Medicaid plan in which they are
enrolled.
Response: We thank the commenters
for their support.
Comment: One commenter requested
further clarification as to the specific
services and supplies that fall into this
category. Clarification was also
requested on which services are covered
for individuals of child bearing age,
including minors who can be
considered to be sexually active, who
are eligible under the state plan, and
who want such services required under
section 1905(a)(4)(C) of the Act. Because
family planning services are not clearly
defined in federal law or regulation, the
commenter urged CMS to clarify in this
rule that family planning services and
supplies include but are not be limited
to: examination and treatment by
medical professionals; medically
appropriate laboratory examinations
and tests; counseling services and
patient education; medically approved
methods; procedures, pharmaceutical
supplies; and devices to prevent
contraception and infertility services,
including sterilization reversal.
Several recommended HHS clarify
family planning to specify coverage of
section 1905(a)(4)(C) of the Act services
and supplies and require states to assure
compliance with section 1902(a)(23) of
the Act freedom of choice for family
planning services and supplies, since it
is likely that many states will contract
with managed care organizations, some
of which may have no Medicaid
experience. They believe that explicitly
requiring freedom of choice will
increase the likelihood that all plans
will comply with the freedom of choice
requirement.
Response: Family planning services
and supplies are described in section
1905(a)(4)(C) of the Act. We have
chosen not to use this rule as the vehicle
for issuing additional guidance on
family planning services, as such
guidance would need to have broader
implications than this rule provides. In
addition, we do not believe it is
necessary to address issues relating to
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beneficiary choice of family planning
provider in this provision, since this
provision deals only with coverage
issues under an ABP, and not with
issues such as freedom of choice of
provider. That issue is separately
addressed in our regulations at § 431.51
and § 441.20.
Comment: One commenter addressed
section 2(B)(1) of the preamble,
specifically the statement ‘‘Consistent
with the current law, states have the
flexibility within those statutory and
regulatory constructs to adopt prior
authorization and other utilization
control measures, as well as policies
that promote the use of generic drugs.’’
The commenter is concerned that the
interpretation of this statement could
provide too much flexibility for states in
the use of utilization control measures,
creating a barrier to necessary family
planning supplies for Medicaid
enrollees, as women need access to the
full range of contraceptive methods to
utilize the method most effective for
them. The commenter requested HHS to
issue sub-regulatory guidance that
prohibits barriers to the full range of
FDA-approved contraceptive methods
guaranteed under the Affordable Care
Act.
Response: Prior authorization and
utilization control measures are
common practices used within regular
Medicaid, public employee, and
commercial insurance products. Benefit
packages designed within ABPs also
have this flexibility. These approaches
should not be used as a barrier to
needed services. This proposed rule and
final rule added the Affordable Care Act
requirement that all ABPs must include
coverage of family planning services
and supplies. Nothing in the final rule
authorizes deviation from the protection
of beneficiary free choice of family
planning provider, consistent with
section 1902(a)(23) of the Act and
§ 431.51, or an exception to the
requirement at § 441.20 that the state
plan provide that beneficiaries are
protected from coercion or mental
pressure and are free to choose the
method of family planning to be used.
Comment: One commenter wrote that
discrimination in benefit plan design is
a persistent practice in the insurance
industry and the exclusion of treatment
for infertility is one example. Infertility
affects an estimated 12 percent of
women of child bearing age and
infertility treatments are more
commonly prescribed for women than
for men. Another commenter
recommended that the list of required
categories of services for benchmarkequivalent coverage incorporate each of
the benefits including family planning
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services and supplies required under
EHB as specified in § 440.347(a) for
consistency and clarity and to ensure
consumer protections.
Response: Coverage of infertility
services is generally at the option of the
state. However, coverage of infertility
services becomes part of the ABP benefit
package either: (1) if the state selects a
coverage plan under section 1937 of the
Act that includes such coverage or
chooses to include such coverage as part
of a benchmark-equivalent coverage
plan; or, (2) if the base-benchmark plan
chosen by the State to define EHBs
covers infertility treatment in an EHB
category, unless the state elects the
option set forth in 45 CFR 156.115(b) to
substitute actuarially equivalent benefits
in defining EHBs. We are reiterating
here that CMS is clarifying in this rule
that substitution of benefits as defined
at 45 CFR 156.115(b) is applicable to
EHBs in ABPs. We believe that states
will appreciate this added flexibility.
Under 45 CFR 156.115(b)(1),
substitution of benefits can occur
benefit by benefit. The benefits must fit
into the same EHB category and the
benefits being interchanged must be
actuarially equivalent. Furthermore,
states may substitute more than one
benefit that when combined are
actuarially equivalent to a single benefit.
States may use their Medicaid state plan
benefits for substitution if the state plan
benefit is actuarially equivalent and in
the same category of benefit that will be
replaced. We do believe it is necessary
to explicitly list the EHB categories in
the regulation text for benchmarkequivalent coverage, as section 1937 of
the Act was amended to require both
benchmark and benchmark-equivalent
coverage to include all EHBs. States will
identify substituted benefits in the ABP
SPA when submitted to CMS.
Summary: We will not be making
changes to proposed regulation text as a
result of comments received.
e. EPSDT and Other Required Benefits
(Mental Health Parity) (§ 440.345)
Section 2001(c) of the Affordable Care
Act directed that benefit plans under
section 1937 of the Act that include
medical and surgical benefits and
mental health and/or substance use
disorder benefits comply with MHPAEA
and we codified this at § 440.345(c) in
the proposed rule.
Comment: Almost all commenters
expressed support for the requirement
in § 440.345(c) requiring that mental
health or substance abuse benefits must
be provided by ABPs and must comply
with MHPAEA. Many also commended
CMS for clarifying that ABPs must
include mental health parity as this will
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lead to the provision of necessary
services to millions of individuals. A
number of commenters wrote about how
extremely important it is that all
individuals gaining Medicaid eligibility
under the Affordable Care Act receive
coverage appropriate for their needs
including strong coverage of mental
health and substance use disorders.
Many expressed their appreciation for
CMS’s strong support for this provision.
Many stated that they appreciated the
proposed rule’s explicit recognition of
the Affordable Care Act requirement
that ABPs must provide the EHBs,
including mental health and substance
use disorder (MH/SUD) services.
Response: CMS thanks the
commenters for their support on the
language in the regulation.
Comment: Some commenters asked
CMS to provide additional detail on
how the requirements of MHPAEA
apply to ABPs including details on how
to supplement benchmark or
benchmark-equivalent coverage to bring
it into compliance with parity and how
to identify violations in parity
compliance. Commenters requested
clarification that MHPAEA requires
ABPs to offer the same scope of MH/
SUD services as medical services,
including adequate prescription drug
coverage.
Response: On January 16, 2013, CMS
released a State Health Official Letter
regarding the application of MHPAEA to
Medicaid MCOs, CHIP, and ABPs. This
guidance specifically states that all
Medicaid ABPs (including Secretaryapproved coverage) must meet the
parity requirements, regardless of
whether services are delivered in
managed care or non-managed care
arrangements. This includes ABPs for
individuals in the new low-income
Medicaid expansion group, effective
January 1, 2014.
Comment: Many commenters wrote
that more than just requiring
compliance was needed in this final
rule because of the documented
disparity between coverage of medical
surgical benefits and coverage of MH/
SUD services in commercial and
employer health coverage. With about
one quarter of adults suffering from a
diagnosed mental health disorder,
disparity in services and cost sharing
has wide ranging impact. Some stated
that studies and literature indicate
deficits in employer coverage of mental
health benefits and that limits on MH/
SUD services were lower than those for
medical surgical benefits. Some
commenters stated that in clarifying the
application of mental health parity CMS
should make clear that if psychiatric
rehabilitation services are provided, so
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must psychiatric habilitation be
required, and that CMS should assure
that a robust package of mental health
coverage is part of ABPs. Commenters
indicated that supplementation,
substitution, parity and other
protections are the best approaches for
EHBs to meet the complex health needs
of the low-income adults who will gain
Medicaid eligibility under expansion.
The commenters encouraged CMS to do
whatever is within its authority to
encourage all plans to expand their
mental health and substance use
disorder treatment to provide better care
by providing the full range of MH/SUD
services and to ultimately reduce costs
and unnecessary loss of productivity
and life.
Response: States must offer services
in all ten EHB categories, including MH/
SUD services, and must provide such
MH/SUD services in a manner that
complies with the parity requirements
of MHPAEA. We do not intend to
require or request states to include
specific services within EHB categories
offered by their ABP. As states
determine their ABP service package,
states must use all of the EHB services
from the base-benchmark plan selected
by the state to define EHBs for
Medicaid, substituting or
supplementing as necessary. We believe
this will allay concerns expressed by
commenters, as commercial plans must
also adhere to mental health parity
requirements.
Comment: One commenter wrote that
final MHPAEA regulations are not yet
released, and therefore, CMS should
provide a detailed framework for
determining and enforcing parity
compliance in this final rule. The
commenter recommended that HHS
establish a clear process for how states
can modify a plan to ensure parity
compliance if it is not compliant; clarify
that the term ‘‘treatment limitation’’
includes both quantitative and nonquantitative treatment limitations and
includes limits on scope of service and
duration of treatment; require full
disclosure of benefit and medical
management criteria from states and
plans to ensure MHPAEA compliance in
ABPs; ensure that ABPs may not apply
a financial requirement or treatment
limitation, as specified in MHPAEA;
include examples of parity violations
and detailed information on how to
supplement coverage that falls short of
the parity requirements; and review all
ABPs to ensure compliance with
MHPAEA.
Response: The January 16, 2013 CMS
State Health Officials Letter provided a
framework for States to apply MHPAEA
to ABPs. Since the release of this State
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Health Officials Letter, we have also
provided technical assistance to states
regarding the application of MHPAEA to
ABPs prior to submission of the ABP
state plan amendments.
Comment: A commenter requested
that we clarify the applicability of
mental health parity to Medicaid
managed care organizations that provide
benchmark or benchmark-equivalent
coverage. The commenter wanted to
know if states would be required to
provide services (for example;
rehabilitation, habilitation, substance
abuse services, etc.) that are optional
services for Medicaid programs if they
are not currently covered.
Response: The January 16, 2013 State
Health Official Letter specifically states
that all Medicaid ABPs (including
Secretary-approved coverage) must meet
the parity requirements, regardless of
whether services are delivered in
managed care or non-managed care
arrangements. In addition, under
§ 440.347, ABPs must include MH/SUD
services regardless of whether they are
currently covered in the state’s
Medicaid plan.
Comment: One commenter requested
that CMS clarify the guidelines
concerning ABP benefit substitutions
that involve mental health benefits. One
wrote that substitutions should not be
allowed if they would diminish the
value of the mental health coverage
provided by the EHB-benchmark plan
on which ABP benefits are based. The
commenter recommended that this issue
be carefully monitored; if possible, CMS
should develop an easily applied,
objective test to evaluate whether a
proposed benefit substitution would
reduce the value of mental health
coverage compared to the mental health
coverage provided by the EHB
benchmark plan. Additionally, some
commenters stated there still is
confusion about how to apply the parity
requirements. Commenters encouraged
CMS to issue explicit guidance on
whether benchmark plans will be
evaluated for compliance with parity
requirements as necessary before they
are approved by CMS as ABPs.
Response: As discussed above and
below in the summary, substitution will
be allowed according to provisions at 45
CFR 156.115(b) except that states will
perform substitution rather than issuers.
We will review all ABP state plan
amendment requests from states against
applicable federal laws and regulations,
including MHPAEA.
Comment: Some commenters wrote
that because they are not specifically
enumerated in MHPAEA, inpatient
mental health substance abuse disorder
(MH/SUD) services are often not
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covered. Many commenters stated that
the definition of ‘‘inpatient’’ in the
Interim Final Rules implementing
MHPAEA leaves the definition up to the
state and insurance companies. This is
important and unfortunate because it
allows for avoidance of MHPAEA and
invites litigation. A number of
commenters stated that HHS can easily
rectify this deficiency by explicitly
mandating residential coverage as an
‘‘inpatient service which must be
offered on par with medical/surgical
coverage.’’ Some urged CMS to
explicitly restate the requirement that
all Medicaid ABPs must cover MH/SUD
services. A number of comments stated
that inpatient services must be defined
as including residential services,
including Institutions for Mental
Diseases (IMDs). HHS can improve the
interpretation of relevant definitions by
incorporating by reference those
definitions as set forth by the American
Psychiatric Association in its Diagnostic
and Statistical Manual of Mental
Disorders. By offering a federal floor of
required services states can take comfort
that they have met the mandated
requirement. One commenter wrote that
IMD restrictions present an access
barrier for the expansion population and
the Affordable Care Act is clear that
ABPs should include the EHB
hospitalization and mental health
services that are included in commercial
coverage that must cover EHB. Another
commenter wrote that HHS should
prohibit ABPs from including mental
health benefits that are subject to higher
limitations on amount, scope, and
duration than benefits intended for
physical/medical conditions, or
narrowly specifying that mental health
services cannot be a component of other
EHB categories, such as the mental
health rehabilitation needs that are
required following a traumatic medical
event.
Response: States must offer services
in all ABPs that reflect the ten EHB
categories, including MH/SUD services.
We do not intend to require states to
include specific services within EHB
categories offered through an ABP. Nor
are we specifically requiring coverage of
any particular residential mental health
services as part of ‘‘inpatient services,’’
provided that the coverage complies
with MHPAEA. States may, however, be
required to provide residential mental
health services that are included in the
section 1937 coverage plan that is the
basis for the ABP, or that is included in
the base-benchmark plan selected by
states to define EHBs for Medicaid.
We clarify, however, that the IMD
payment exclusion does apply to all
medical assistance, even medical
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assistance furnished through an ABP.
This means that FFP is not available for
any services, including services
provided through an ABP, furnished to
an individual under age 65 who resides
in an IMD, except for inpatient
psychiatric hospital services furnished
to individuals under age 21. Finally, we
clarify that the requirement that all
ABPs comply with MHPAEA includes
compliance with MHPAEA
requirements regarding treatment limits.
Comment: A commenter wrote that
under the traditional Medicaid program,
the term ‘‘medical assistance’’ does not
include care or services for any
individual who is a patient in an
institution for mental disease, but
benchmark coverage does not have an
express exclusion of care and services
for such individuals. The commenter
asserted that for benchmark coverage,
which includes coverage for EHBs,
exclusion of these same services for
patients residing in an IMD would
directly conflict with the plain language
of the law because section 1937 of the
Act provides for no exception for
individuals between ages of 21 and 65
residing in an IMD, but does contain an
exemption from other provisions of
Title XIX (to which the IMD exclusion
applies). The commenter states that just
as an ABP is exempt from complying
with the requirements related to statewideness and comparability in the
Medicaid statute because they conflict
with the benchmark authority, so too is
the plan exempt from complying with
the IMD exclusion which cannot be
applied in a consistent manner with the
EHB requirements. The commenter also
added that, just as application of the
IMD exclusion to an ABP would be
‘‘directly contrary’’ to a state’s ability to
offer EHBs, the exclusion is also
contrary to any of the benchmark/
benchmark-equivalent coverage
described in the statute. Another
commenter argued the same points and
also stated that the IMD exclusion is not
consistent with the definition of an ABP
to include, among a selection of plans,
the health insurance plan offered
through the HMO that has the largest
insured commercial non-Medicaid
enrollment in the state. As such
coverage would necessarily be available
on par to individuals residing inside
and outside of an IMD, the commenter
asserted that Congress never intended
the IMD exclusion to apply to Medicaid
beneficiaries enrolled in an ABP.
Response: We do not agree with the
commenters’ statements that the IMD
exclusion does not apply to medical
assistance furnished through an ABP.
The IMD exclusion is not a service or
benefit exclusion. It is a payment
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exclusion that applies to all Medicaid
services provided to an individual
residing in an IMD, not solely a
payment exclusion for services provided
in or by an IMD. The statute excludes
services furnished to residents of an
IMD from the term ‘‘medical
assistance,’’ and we read this exclusion
to apply whether medical assistance is
furnished through regular coverage or
through an ABP. (Above we clarify that
we have a parallel reading of the similar
payment exclusion for inmates of a
public institution.) Thus, we clarify that
the IMD payment exclusion applies to
coverage offered through ABPs. Benefits
furnished through ABPs can be
structured so that individuals have
inpatient options for mental health
treatment outside of IMDs, but to the
extent that an individual resides in an
IMD, the IMD exclusion would apply.
We are not aware of any contrary
congressional intent, and this position is
consistent with the express statutory
exclusion from the definition of medical
assistance.
Comment: A few commenters stated
that MH/SUD services are sometimes
provided in facilities that are considered
an institution of mental disease for
which FFP is excluded and requested
that CMS reconcile the requirement that
these services must be provided as an
EHB.
Response: For the reasons discussed
above, we are clarifying that the IMD
payment exclusion does apply to
medical assistance furnished through
ABPs. We expect that ABPs will ensure
that coverage for MH/SUD services is
available consistent with MHPAEA and
the final regulations that govern EHBs
under Medicaid. There may be options
for inpatient services other than
inpatient services in IMDs that states
may wish to consider to meet MHPAEA
obligations under ABPs.
Comment: One commenter stated that
exclusions for otherwise-covered
benefits such as mental health services
that treat eating disorders and gender
disorders should not be permitted, as
these exclusions carve out coverage
explicitly on the basis of health
condition and are discriminatory.
Response: We will review ABP state
plan amendments to ensure their
compliance with applicable federal
statutes and regulations, including
MHPAEA, and EHB anti-discrimination
provisions.
Comment: One commenter stated that
healthcare providers who provide MH/
SUD treatment services were
encouraged by the passage of MHPAEA
but many states and insurance
companies are ‘‘stonewalling’’
implementation and inclusion of MH/
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SUD treatment as a mandate. EHB
requirements will not correct this
problem unless HHS rules provide
better clarity regarding implementation
of parity, in particular inclusion of
inpatient services.
Response: MHPAEA does not require
the provision of specific MH/SUD
services. Rather, it requires these
services to be provided in parity with
medical/surgical services, when benefit
packages include both sets of services.
The release of the January 13, 2013 State
Health Official Letter has provided
initial guidance to states and managed
care plans regarding the application of
MHPAEA to the Medicaid program. We
believe that guidance provides useful
information to states regarding their
efforts to apply MHPAEA to their
Medicaid ABPs. In addition, CMS is
reminding commenters that inpatient
hospitalization is a required EHB for
ABPs.
Comment: One commenter stated that
Medicaid regulations should employ the
same disorder carve-outs for the
expansion population as used for
existing populations and remain in
compliance with federal parity laws.
Further, states should not be required to
provide different or additional MH/SUD
benefits to the expansion populations
than what is furnished to existing
beneficiaries.
Response: This regulation does not
prohibit states from using their current
delivery systems or designing new
delivery systems to offer EHBs,
including MH/SUD services. States are
required to offer MH/SUD services
consistent with the process set forth in
this regulation regarding the
development of ABPs and MHPAEA.
Because of the need to select a public
employee or commercial plan to define
EHBs for Medicaid, there could be
differences between the ABP benefit
package and the services otherwise
offered in the regular Medicaid coverage
package.
Comment: Many commenters strongly
urged CMS to release final MHPAEA
regulations as soon as possible and to
include how to apply parity to EHBs
and ABPs and to give examples of
violations. A commenter stated that
without the final rule on MHPAEA,
effective compliance will not be
possible. Another commenter requested
prompt release of additional guidance
referenced in the January 13, 2013 State
Health Official Letter, concerning any
requirements to apply parity principles
across multiple managed care delivery
systems and urged a flexible approach
to measuring parity in carve-out setting
in promotion of continuity for existing
arrangements and authorities.
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Response: A response on the timing of
a final MHPAEA regulation is beyond
the scope of this regulation.
Comment: One commenter wrote that
insurance companies have sought to
avoid implementation of MHPAEA and
states that do not currently require
mental health parity may be concerned
that compliance will result in the state
incurring the costs associated with the
expansion of state mandates. Two
commenters stated that there are
lingering concerns with some of the
parity language in the proposed
regulation, which states in § 440.345
that ABPs that provide both medical
and surgical benefits, and mental health
or substance use disorder benefits, must
comply with MHPAEA. CMS should
revise this language to make it clearer
and more accurate. The commenters
asserted that MHPAEA does not apply
to coverage under section 1937 of the
Act that is delivered in a non-managed
care arrangement; rather the Affordable
Care Act extended the protections of
MHPAEA to this coverage without
amending MHPAEA. Specifically,
regarding coverage under section 1937
of the Act, the Affordable Care Act
requires that ‘‘the financial
requirements and treatment limitations
applicable to such mental health or
substance use disorder benefits comply
with the requirements of section 2705(a)
of the PHS Act (MHPAEA) in the same
manner as such requirements apply to a
group health plan’’ and the final rule
should include similar language.
Response: It is unclear exactly what
the commenter is asking, in terms of
incurring expenses associated with state
benefit requirements. Therefore, we will
not be able to respond to this comment
at this time. We disagree with the
commenters’ assertion that mental
health parity requirements do not apply
to ABPs using non-managed care
delivery systems. Parity requirements
apply to all ABPs, regardless of the use
of managed care.
Comment: One commenter wrote that
because of changes in the income
eligibility standards we expect Medicaid
expansion is more likely to enroll
individuals who are working but have
no insurance and who need this
coverage to access treatment to maintain
employment. People with addictions
enter treatment at different phases and
will use different parts of the
continuum, and elimination of any part
of the continuum would violate
MHPAEA and cost human lives. The
commenter urged CMS to adopt the
same standards set forth in the proposed
rule for the Affordable Care Act
standards related to EHB, Actuarial
Value, and Accreditation for purposes of
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Medicaid ABPs. Additionally, the
commenter stated that MHPAEA holds
out the promise that everyone will be
able to get help but strong enforcement
of MHPAEA is necessary.
Response: It is unclear exactly what
the commenter is asking. Therefore, we
will not be able to respond to this
comment at this time.
Comment: A commenter wrote that
this rule as proposed rule fails to link
MHPAEA compliance to adherence to
the Interim Final Rule which
operationalizes MHPAEA. The
previously issued Proposed Rule for
Standards Related to Essential Health
Benefits, which addressed the design of
EHBs for commercial market insurance
beneficiaries, made specific reference to
the Interim Final Rule effectuating
MHPAEA. The proposed rule simply
says the EHBs of ABPs must comply
with MHPAEA. The commenter
questioned whether this lack of direct
reference to the existing law mean
Medicaid ABPS need not comply with
all provisions of the Interim Rule. The
commenter strongly urges CMS to
clarify whether or not these ABPs must
comply with all provisions of the
Interim Final Rule and what if any law,
in whole, or in part, it will use to assess
ABP compliance with MHPAEA.
Response: On January 16, 2013, CMS
released a State Health Official Letter
regarding the application of MHPAEA to
Medicaid MCOs, CHIP, and ABPs. This
guidance specifically states that all
Medicaid ABPs, including Secretaryapproved coverage, must meet the parity
requirements, regardless of whether
services are delivered in managed care
or non-managed care arrangements.
Comment: Several commenters wrote
that exclusions of mental health,
substance use disorders and behavioral
health treatments that fail to meet the
parity standards required by MHPAEA
are discriminatory. Despite existing
parity requirements state
implementation and enforcement of
MHPAEA has varied widely and
patients seeking metal health services
are frequently subjected to excessive
and inappropriate non-quantitative
limitations. Another commenter stated
that CMS should identify a standard to
determine whether the coverage
provided complies with nondiscrimination provisions of the
Affordable Care Act.
Response: As stated in the January
13th State Health Official Letter, ABPs
must comply with MHPAEA.
Comment: One commenter suggested
that the goal of Affordable Care Act
coverage was to include the 10 EHBs
including mental health and substance
use disorder services.
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Response: We agree with the
commenter that one goal of Affordable
Care Act coverage was to include
coverage of the 10 EHB categories,
including mental health and substance
use disorder services in ABPs. We
support providing a floor of coverage to
Medicaid beneficiaries. As mental
health parity also applies, this will lead
to parity among mental health and
substance use services and other
medical and surgical services.
Summary: We will not be making
changes to proposed regulation text as a
result of these comments. However, we
are clarifying that the payment
exclusion for services provided to
individuals residing in an institute of
mental disease (IMD) continues to apply
to all individuals participating in ABPs.
This is important because many
commercial products offer coverage of
residential services in settings that for
Medicaid purposes are considered
IMDs, and federal matching funds will
not be available for medical assistance
for individuals who reside in such
settings.
f. EPSDT and Other Required Benefits
(ABPs Include EHBs and All Updates
and Modifications) (§ 440.345)
We proposed at § 440.345(d) the
requirement that ABPs provide EHBs
and include all updates and
modifications thereafter by the Secretary
to the definition of EHBs.
Comment: Several commenters wrote
that the revisions make Federally
Qualified Health Center (FQHC)
requirements within ABPs less clear.
The EHBs are the floor of ABP coverage
and that the requirement to provide
EHBs within ABP does not circumvent
existing requirements within section
1937 of the Act, which includes
coverage of FQHCs. The commenter
stated to identify that the regulation as
drafted is confusing as subsections (a)
describing the requirement that at least
the ten categories of EHBs be included
in section 1937 of the Act and (b)
describing the requirements to include
the benefits covered in one of the state
selected benchmark plans and
subsection (a) does not indicate that it
is a floor. The commenters requested
that CMS reiterate or clarify revisions to
the regulation to reaffirm this.
Response: There are several benefits
specified by section 1937 of the Act that
are required in addition to EHBs. We
did not change § 440.365, which reflects
section 1937(b)(4) of the Act, providing
that states must assure access to these
services through the benchmark or
benchmark-equivalent coverage or
otherwise, to rural health clinic services
and FQHC services, even if the state
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does not contract with an FQHC or rural
health clinic and that payment for these
services must be made in accordance
with the payment provisions of section
1902(bb) of the Act. The inclusion of
EHBs within section 1937 of the Act
establishes a minimum level for
benefits, to which other benefits
required as part of section 1937 of the
Act are added.
Comment: Many commenters were
supportive of the Affordable Care Act’s
application of EHB requirements to
ABPs and providing a floor of benefits.
Some commenters also supported
inclusion of updates and modifications
made thereafter. Some commenters
went further to support the inclusion of
mental health and substance use
disorder benefits as consistent with the
MHPAEA.
One commenter generally supported
implementing EHBs in ABPs to provide
a stable set of core services for people
receiving benefits in the ABP, and to
help align the rules for patients and
providers to ensure continuity of care.
This is important for people who will
churn between Medicaid, the
commercial markets and potentially a
state basic health plan.
Response: CMS appreciates the
support of commenters.
Comment: A few commenters
identified that EHB definitions will
affect how individuals maintain access
to health care, services and drugs and
biologicals that they need.
Response: We agree with these
commenters. The new coverage will
likely be different from the coverage that
beneficiaries receive today. States will
have discretion regarding how to define
EHBs using the process outlined in this
regulation, namely selecting the basebenchmark plan to define EHBs. For
Medicaid, we remind readers that EHBs
are only the floor for coverage, and
states have options for offering coverage
that exceeds this floor. States can also
add additional coverage for beneficiaries
receiving ABPs who are not eligible for
the new adult group.
Comment: One commenter suggested
that home care services should be
included in the Medicaid ABP to the
same extent that they are included in
the existing regular Medicaid program.
Response: The rules for establishing
coverage are different between the
regular state Medicaid program and
flexibility provided within section 1937
of the Act. States must provide home
health services as a mandatory benefit
in the regular Medicaid state plan. This
is not a minimum requirement for
coverage under of section 1937 of the
Act and is not required as an element of
EHBs.
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Comment: One commenter requested
clarification that the Affordable Care
Act established a floor of coverage using
EHBs. Benefits should not be limited
solely to EHBs as no ceiling was
established. The Affordable Care Act
only restricts costs for state mandated
benefits from being passed onto the
federal government via the EHBs.
Response: Yes, EHBs are considered a
minimum level of coverage. ABPs are
not limited solely to EHB benefits; ABPs
are constructed based on the coverage
plan under section 1937 of the Act
selected by the state, including EHBs
based on the state selected base
benchmark plan, supplemented as
necessary and subject to substitution of
actuarially equivalent benefits as
permitted under 45 CFR 156.115(b). The
section 1937 coverage plan selected by
the state can include a Secretaryapproved coverage plan that may
include benefits that are not available
under other section 1937 coverage
options. Furthermore, ABPs are required
to cover certain benefits including rural
health clinics, FQHCs, and family
planning services and supplies. EPSDT
services for individuals below age 21
also apply within section 1937 of the
Act. MHPAEA also applies to the
provision of MH/SUD services.
Comment: One commenter requested
that CMS consider adding an EHB
requirement for hospitals and
pediatricians to conduct risk
assessments of all newborns for severe
respiratory syncytial virus (RSV)
disease.
Response: These services can be
covered if states select coverage options
that cover such services. Furthermore,
children must receive all EPSDT
services as part of the ABP, and states
may consider such risk assessments to
be part of the required EPSDT screening
services. For the new adult group, only
19- and 20-year olds will be covered by
EPSDT. There are both requirements
and flexibility for states in both
selecting plans and constructing EHBs
and section 1937 coverage options.
Please refer to the summary at the end
of this section for further discussion of
these steps and flexibilities.
Summary: We have not made any
changes to regulation text, based on
public comments received.
g. EPSDT and Other Required Benefits
(Process for Updating EHBs) (§ 440.345)
In § 440.345(e), we proposed that the
ABPs that include EHBs will remain
effective through December 31, 2015
without a need for updating. We also
proposed that we will consult with
states and stakeholders and evaluate the
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process to determine updates to the
ABPs after that date.
Comment: Several commenters
offered support of the intent of our
proposed policy concerning the
updating of ABPs that have been
determined to include EHBs as of
January 1, 2014. One commenter
supported the Department’s intent to
issue future guidance for updating EHB
benefits for 2016 and subsequent years.
Similarly, another commenter indicated
support of the alignment of the
transition period for updating ABPs
with the transition period designated for
updating EHBs in 45 CFR Part 156.
Response: We appreciate the support.
Comment: A few commenters
indicated concern that imposing a
requirement to update section 1937
benchmark plans would add significant
new workload for states. One
commenter believed that there is
currently no statutory requirement to
make updates to section 1937 plans, and
suggested that the Secretary allow for
grandfathering of currently offered
section 1937 benchmark benefit plans.
Many commenters also recommended
that HHS reserve some authority to
resolve significant problems with the
benefits package during this time period
by revising the proposed provision to
add that states with approved ABPs as
of January 1, 2014 do not have to update
benefits until December 31, 2015,
‘‘unless the Secretary determines that
there are exceptional circumstances to
update a plan.’’ Several commenters
urged the Department to set up a formal
mechanism to ensure that adequate data
is collected for ABPs in 2014 and 2015
to inform updating benefits in 2016
through a transparent process in which
consumers help guide any necessary
changes. Similarly, several other
commenters urged the Department to
consider a more robust stakeholder
engagement in all aspects of processes
used to assess the current EHB approach
and whether to adopt a new approach
in 2016.
Response: CMS has been working
with states to submit state plan
amendments using a standardized
template that includes the information
needed for approval from CMS. The
CMS review process allows for
resolution of issues identified within
the ABP prior to approval. We aligned
the timeframes with CMS policy to
allow for implementation efficiencies.
As we develop the process, we will take
into account balancing potential
workload of the state and CMS and the
need for information to keep the ABP
current with changing commercial
market products. It is important for
ABPs to stay current with changes in the
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base-benchmark as well as with public
employee or commercial plans that may
have been selected as section 1937
coverage options. Commercial plans are
usually updated annually. All ABP
SPAs are required to have public notice
and approved SPAs will be placed on a
CMS Web site. We are also updating the
Medicaid Statistical Information System
(MSIS) to improve the quality, accuracy,
and timeliness of data submitted to CMS
by states. That said, we appreciate that
it may be difficult at this point to make
changes to the ABP that take effect by
January 1, 2014. In light of this
challenge, we will partner with states to
work as quickly as possible to come into
full compliance with these provisions.
We do not intend to pursue compliance
actions on these issues to the extent that
states are working toward but have not
completed a transition to the new ABPs
on January 1, 2014.
Comment: One commenter indicated
that the applicability of the proposed
provision was unclear when applied to
states that choose not to expand
coverage as of January 1, 2014, but
might choose to offer a benchmark
benefit plan prior to December 31, 2015.
Response: These provisions apply to
all existing and new ABPs that have an
effective date of January 1, 2014 or later.
Summary: We will not be making
changes to proposed regulation text as a
result of comments received.
h. Essential Health Benefits (§ 440.347)
We proposed to add EHBs within
section 1937 of the Act and that
individuals in the new adult group who
meet the criteria for exemption from
mandatory enrollment will receive a
choice of benchmark coverage defined
as the benefit package using section
1937 rules or the state’s approved
Medicaid state plan that is not subject
to the section 1937 rules. We proposed
a process for establishing EHBs within
an ABP that is consistent with the
general provisions for established EHBs
in the individual and small group
market, but reflects the particular
circumstances of Medicaid. In
particular, the process reflects the fact
that the state establishes coverage rather
than an insurance issuer, and that the
coverage is consistent with the
requirements of section 1937 of the Act.
We also proposed that, while EHBs will
be defined by the state using a selected
base benchmark from the list of those
plans that can be chosen to define EHBs
in the individual and small group
market, the base benchmark plan for
defining EHBs for Medicaid can be
different than the base benchmark plan
chosen for the commercial market. We
further proposed that there could be
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more than one base benchmark plan for
defining EHBs for Medicaid ABPs.
Comment: One commenter stated they
support the structure for implementing
Essential Health Benefits as proposed.
Response: CMS appreciates the
support.
Comment: One commenter supported
§ 440.347, which allows states to have
more than one ABP to reflect the health
care needs of a targeted population and
use a different base benchmark plan for
each ABP. A few commenters supported
HHS implementing the statutory
requirements to at a minimum include
EHBs. One commenter supported the
general approach to coverage of EHBs.
Another commenter supported states
having broad flexibility to choose a
benchmark plan, including the same
options available in the commercial
market and the ability to use a different
plan from the one that was selected for
the state’s commercial plans. This
commenter also recommended that the
state’s Medicaid State Plan be
considered for Secretary-approved
coverage for the ABPs. They requested
clarification of the timeframe for
approval of Secretary-approved plans.
Response: We appreciate the support
of our policy to allow states the
flexibility to use different base
benchmarks in Medicaid from those
used for the non-grandfathered plans in
the individual and small group markets.
We confirm that Secretary-approved
coverage is part of the ABP template,
and can include the full coverage
otherwise available under the approved
state plan, as long as all requirements of
this regulation are met. The entire
template is considered a state plan
amendment to be completed and
submitted by the state to CMS for
approval. The timing of action on state
plan amendments is addressed in our
regulations at § 430.16, which include
one 90-day review period, the option for
CMS to request additional information,
and an additional 90-day review period.
Comment: One commenter requested
that HHS clarify that states can design
ABPs for subpopulations within the
newly eligible group.
Response: We confirm that states can
offer different ABPs to subpopulations
within the newly eligible group. Under
section 1937(a)(1)(A) of the Act,
coverage through an ABP can be offered
to ‘‘groups specified by the State’’
without regard to the comparability or
statewideness requirements at section
1902(a)(10)(B) of the Act and § 440.240.
(Other requirements, such as civil rights
protections, still apply and may affect
the nature of the groups that a state may
specify.) As a result, states may offer
ABPs that are appropriate for the unique
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characteristics of subgroups of the new
adult group; for example, states may
offer different ABPs to individuals in
different geographic regions, or to
individuals who have particular
medical, service or support needs.
Comment: The flexibility for states to
select EHBs at § 440.347(b) and (c) to
achieve targeting of populations causes
more harm than good according to some
commenters. The commenters believe
that states already have significant
flexibility to target ABPs through the
Secretary-approved process and the
targeting flexibility adds little but
creates confusion. CMS would be better
served in terms of administrative
simplicity, oversight, and consumer
understanding if one EHB standard was
applicable in the commercial markets
and ABPs. These commenters
recommend that HHS require states to
use the state-selected base benchmark
plan that applies for the commercial
markets for ABPs as well. Another
commenter believes that EHBs should
establish a minimum floor of coverage
and that all plans should be required to
use the state-selected base-benchmark
plan that applies for the commercial
markets for purposes of section 1937 of
the Act as well. This will reduce
administrative burden and better align
standards between EHB in the
commercial markets and in Medicaid.
Response: The flexibility provided at
§ 440.347(b) and (c) permits states to
design different benefit packages that at
a minimum include EHBs.
Alternatively, one benefit package could
be used for multiple populations. States
also have the choice to use the same
base benchmark in ABPs and the
commercial markets, which would
result in aligning standards for EHB in
coverage under ABPs and the
commercial markets. We have adopted
policies that would maximize state
flexibility while ensuring sufficient
coverage for beneficiaries.
Comment: One commenter is seeking
clarification of the phrase set forth in
§ 440.347 ‘‘consistent with the
requirements set forth in 45 CFR [part]
156’’, particularly if it adds obligations
to the requirement to select a
benchmark plan that includes benefits
in each of the ten EHB categories. A few
commenters request clarification of the
specific provisions of 45 CFR Part 156
related to EHB that apply.
Response: This regulation is
consistent with the EHB requirements
under 45 CFR Part 156, but specifically
addresses the application of those
requirements for purposes of
compliance with section 1937 of the Act
as amended by section 2001(c) of the
Affordable Care Act. The base-
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benchmark plans for defining EHBs
include the same choices in both
Medicaid and the non-grandfathered
plans in the individual and small group
markets. States may choose a different
base benchmark plan for Medicaid than
for the individual and small group
markets. But, recognizing that Medicaid
coverage is provided in a different
context than coverage in the individual
and small group markets, we provide
that states may choose a different base
benchmark plan for Medicaid than the
individual and small group markets,
and may choose more than one base
benchmark plan for Medicaid. We also
provide that states exercise the options
available in the individual and small
group market to insurance issuers. This
regulation identifies those aspects of 45
CFR part 156 that are modified within
Medicaid under the section of the
preamble entitled ‘‘Modifications in
Applying the Provisions of This
Proposed Rule to Medicaid.’’
Comment: Several commenters
suggested that the list of required
categories of services for benchmarkequivalent coverage include the EHBs as
specified in § 440.347(a) for consistency
and clarity as ABP coverage must
include at least the EHBs. Another
commenter suggested that CMS should
pursue parity between Medicaid state
plan benefits and the new ABP for
newly eligible adults to assist with
‘‘churn’’ between Medicaid and the
commercial markets.
Response: Section 1302 of the
Affordable Care Act establishes EHBs
that must be provided as part of
benchmark benefit coverage. A
benchmark-equivalent benefit package
must be actuarially equivalent to the
benchmark plan that is chosen. We do
not believe it is necessary to specifically
add the EHB categories to benchmarkequivalent coverage because we are
instead setting out procedures to ensure
that coverage includes EHBs that govern
both benchmark and benchmarkequivalent coverage.
Comment: Section 440.347(c) allows
states to select more than one EHB
option for ABPs. A few commenters
urged CMS to limit states to choosing a
single EHB option for Medicaid to
provide a floor of benefits. They
asserted that Congress intended
consistency among ABPs by applying
EHB requirements to them. Some
commenters asserted that allowing for
selection of multiple options will create
unnecessary administrative burdens on
state Medicaid programs and this
commenter suggests that there should be
only one EHB benchmark option for
ABPs. But other commenters agreed
with our proposed rule that, because
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ABPs serve a different population than
private health plans, the single EHB
benchmark does not need to be the same
as the one chosen for the state’s
individual and small group market.
Another commenter asked that CMS
clarify that states do not have the
flexibility to vary amount, duration, and
scope of benefits within populations on
a plan-by-plan basis as currently
allowed, which would only increase
complexity. This commenter also
requested clarification related to
whether the limited authority provided
through the DRA and now expanded
through this rule can be superseded by
section 1115 authority. This commenter
also responded that a state may try to
combine flexibilities for EHB, ABP,
premium assistance, and amount,
duration, and scope to shift to a model
that has not been adequately explored
for unintended consequences.
Response: While it is true that
coverage of EHBs will be required for
non-grandfathered plans offered in both
the individual and small group markets
and Medicaid, we think it is important
to provide states flexibility to define
EHBs as appropriate in each context. In
the non-grandfathered plans offered in
the individual and small group markets,
states have some flexibility to define
EHBs through selection of a base
benchmark plan. For Medicaid
coverage, we believe that additional
flexibility will enable states to tailor
coverage to the needs of the Medicaid
population. While states can, for
simplicity, choose one standard to
determine EHB in both the individual
and group markets and in Medicaid,
they are not required to do so. We are
permitting states flexibility to choose a
single standard or multiple standards
for EHB in Medicaid to ensure a full
range of coverage options. States must
determine whether multiple standards
would result in administrative burdens.
We are reminding states that the floor of
coverage is EHBs defined by the
benefits, including limitations on
amount, duration, and scope, from the
selected base benchmark plan (but states
may be required to, or may have options
to, cover benefits above that floor
consistent with section 1937 of the Act).
Please refer to the summary at the end
of this section for further discussion of
these steps and flexibilities.
Comment: Several commenters
recommend that the Department ensure
that Secretary-approved coverage is
actuarially equivalent to the other
benchmark coverage options. These
commenters support the clarification
that Secretary-approved coverage must
provide robust benefits. However, these
commenters indicate that it is important
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for Secretary-approved coverage to
provide the same level of coverage as
other benchmark plan options to
prevent newly eligible people from
receiving lesser coverage.
Response: This rule is not intended to
change the assessment of Secretaryapproved coverage, except to the extent
that it must include EHBs. The standard
that we apply for assuring the
sufficiency of the benefit package
established using Secretary-approved
coverage is whether the benefits are
appropriate to meet the needs of the
population provided that coverage, as
outlined in § 440.330(d). EHBs establish
a floor of benefits for ABP populations
and must be provided with Secretaryapproved coverage as with any ABP.
Secretary-approved coverage permits
states flexibility to design a benefit plan
that might differ from the other options
available under section 1937 of the Act.
As mentioned previously, in all cases a
state must first select a base benchmark
to define EHBs. The EHBs in the base
benchmark plan serve as the minimum
floor of coverage that is supplemented
for any missing EHBs. Using
substitution, states may achieve a
benefit package that includes benefits
from the regular state plan.
Comment: One commenter believed
that extending full Medicaid benefits to
the newly-eligible expansion
population, supplemented as needed to
comply with the EHB, parity, and other
protections in the law, is the best
approach for meeting the complex
health needs of low-income adults who
will gain Medicaid eligibility under the
expansion. The commenter urged CMS
to work with States to ensure that this
population’s full range of substance use
disorders and mental health needs and
other health needs will be met. The
commenter further suggested that CMS
include language in the final rule that
explicitly restates the requirement that
all Medicaid ABPs must cover mental
health services and substance use
disorder services for all enrollees.
Response: States have much
flexibility, but are not required to use
benefits from their regular Medicaid
benefit package for the new adult
coverage group, as long as EHBs are
assured. The statute and regulation
direct that mental health parity
requirements and EHB requirements,
including the provision of mental health
and substance use services, be met. In
some circumstances, we anticipate that
the coverage furnished to the new adult
coverage group may include certain
benefits, such as certain substance abuse
treatment services, that the state has
elected not to cover under the state’s
regular Medicaid benefit package.
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Comment: The commenter stated
general agreement with the approach
that CMS has recommended for the ABP
to be offered to certain populations
under the expansion of Medicaid. The
commenter requested clarification that
the state would choose an ABP from
four benchmark packages and would
compare that choice to the private
market EHB, supplementing coverage of
the ABP if necessary to ensure that all
EHB categories are included.
Response: There are both
requirements and flexibility for states in
constructing EHBs and section 1937
coverage options. Please refer to the
summary at the end of this section for
further discussion of these steps and
flexibilities.
Comment: One commenter would like
to underscore the importance of
promoting seamless coverage among
low-income individuals. Many of the
individuals newly eligible for Medicaid
in 2014 are likely to have fluctuations
in income, and therefore are likely to
‘‘churn’’ between Medicaid and
subsidized Exchange insurance
coverage. This churn could result in
treatment disruptions among patients
and create administrative complexity for
Exchanges, plans, and providers. Thus,
promoting seamless coverage for this
population and ensuring coordination of
care during coverage transitions will be
critical.
Response: We appreciate the
circumstances that the commenter
identified for individuals that may have
fluctuations in income. States have
options for minimizing treatment
disruptions and CMS will work with
states to promote continuity of care.
Comment: One commenter urges CMS
to consider revising certain sections of
the proposed rule to allow states the
greatest opportunity to develop ABPs
that are reflective of the population that
they serve and ensure the long-term
financial sustainability of this category
of eligibility. This commenter believes
that the proposed regulations create a
cumbersome and confusing process and
appear to strongly incentivize states to
essentially mirror state plan benefits.
This commenter wants maximum
creativity to define the benefit package
that will be provided to the newly
eligible population, and encourages
CMS to use this opportunity to allow for
greater innovation at the state level by
allowing design of benefit packages that
simply take pieces of both Medicaid and
the commercial market while also
covering all EHBs. This approach will
lead states to compare Medicaid to
private and commercial market benefits
and potentially add benefits to the
Medicaid state plan.
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Response: We believe that the
regulations offer significant flexibility
for states to create benefit packages for
all or for different groups of its newly
eligible population. Appropriate benefit
package design for the population’s
needs may contribute to long-term
financial stability.
Comment: A few commenters were
concerned with disparities in coverage
as the guidance suggests that the policy
only mandatorily applies to the newly
eligible category of adults. In states that
expand their Medicaid programs to
include these new categories of
eligibility, they note that a higher
income expansion population will
receive a more generous package than
existing populations. This will create a
churn in Medicaid where states will
likely have to expand coverage for all
adult populations within Medicaid to
prevent churn. They assert that this
would result in significant financial cost
to states to expand benefits to all adults
as new benefits for the existing
population are ineligible for the
enhanced match offered under the
Affordable Care Act for the newly
eligible expansion population.
Response: The Medicaid statute
provides that coverage may be different
for those people who receive coverage
through an ABP established under
section 1937 and those who receive
regular Medicaid coverage. People in
the new adult group must receive
benchmark or benchmark-equivalent
benefits, including EHBs. Consistent
with the statute, the rules promulgated
in this regulation will apply to all ABPs,
not just for those people in the new
adult group. As long as ABP (including
EHB) requirements are met, states have
significant flexibility in designing
benefit package options that
approximate regular state plan benefits.
Comment: Many commenters
recommended that ABPs provide
appropriate coverage to meet the needs
of the population in all ten EHB
categories as per the general
requirements of § 440.330. These
commenters suggest that the lack of a
minimum standard in each of the ten
categories is a flaw in the Exchange EHB
standard that gets further magnified in
Medicaid. For women’s health, this is
particularly important in terms of
preventive services, prescription drugs,
and maternity care. Several commenters
support the EHB requirement as a strong
floor for ABPs and indicate that states
should have ample flexibility to add to
the floor. These commenters also
provided recommended regulatory
language for § 440.347(a) through (c).
Response: EHBs are a floor to
coverage and states have flexibility to
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design an ABP that includes coverage
above the minimum level of EHBs.
Section 1302(b)(2) of the Affordable
Care Act directs the Secretary to
determine EHBs by reference to benefits
typically offered in the group market,
which is the same standard that we are
applying in Medicaid by requiring that
states determine EHBs by selecting a
base benchmark from among the
regulatory options described in
§ 156.100. All benefits within the base
benchmark that defines EHBs will need
to be incorporated into the ABP,
supplemented as necessary and subject
to substitution of actuarially equivalent
benefits as permitted under 45 CFR
156.115(b). But the ABP can include
other benefits based on the state choice
of coverage option.
For groups other than those in the
new adult group, states can also offer
additional benefits to supplement the
benchmark or benchmark equivalent
coverage that includes EHB and other
required services. Sections 1902(k)(1)
and 1903(i)(26) clarify that individuals
in the new adult group receive
benchmark or benchmark-equivalent
coverage (that includes EHB and other
required services and, as we explain
below, for individuals who would
otherwise be exempt from enrollment in
an ABP, the option to receive an ABP
that consists of regular Medicaid
coverage). We intend to issue an ABP
state plan amendment template and
corresponding implementation guides
for the states to use when submitting
ABP state plan amendments.
Comment: One commenter supports
requiring coverage of all ten EHBs, as
this will go a long way toward ensuring
that Medicaid participants have
adequate health care coverage. They
request that HHS define the scope and
services within each of the ten benefit
categories to ensure that the covered
services are at a minimum the same and
provide a level of guaranteed coverage.
This is necessary to ensure that there is
adequate coverage within categories and
balance between categories, and
necessary to determine if ABPs are
equivalent to the EHB package and
comply with Affordable Care Act.
Response: We thank the commenter
for the support.
Comment: One commenter indicated
that ABPs should include an array of
home care services that exist in
traditional Medicaid benefit programs to
comply with the American with
Disabilities Act and Supreme Court
Olmstead decision. To the extent that
EHBs include institutional care or
inpatient settings, a state must offer a
choice of ‘‘the least restrictive
environment.’’ Similarly, states that
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choose to provide services to
individuals enrolled in ABPs that
involve care in an institution should be
required to include home and
community-based care as well.
Response: Section 1902(k)(1) of the
Act provides that medical assistance for
the new adult eligibility group is limited
to benchmark and benchmarkequivalent coverage. Section 1902(k)(1)
of the Act also provides an exception to
the requirements of section 1937 of the
Act for individuals who would be
described in the exemptions at section
1937(a)(2) of the Act. This means that
individuals in the new adult eligibility
group that otherwise meet the
exemption criteria are required to be
enrolled in benchmark or benchmarkequivalent coverage, but their
benchmark or benchmark-equivalent
coverage is not limited by the
requirements of section 1937 of the Act.
Therefore, these individuals must have
a choice to receive ABP benefits as
defined by the state applying the
requirements of section 1937 of the Act
using benchmark or benchmarkequivalent coverage (including EHBs
and other required coverage) or ABP
benefits defined without regard to the
requirements of section 1937 of the Act,
which consists of regular Medicaid
coverage under the state plan. Home
care is not a standardized term in
Medicaid, so clarification would be
needed to determine which Medicaid
benefit category is actually applicable.
We agree that states are obligated to
comply with the Americans with
Disabilities Act and the Olmstead
decision.
Comment: One commenter requests
that crisis services be included in the
mental health and substance abuse
services category in the EHB package.
This commenter requests that it be
offered by qualified health plans and in
new Medicaid expansion benefits in
each state. These are important services
to the safety net and for 24/7 crisis care,
suicide prevention and access to
emergency health care services,
especially in communities where
emergency mental health clinics or
mobile health services are unavailable.
Response: CMS is not requiring
specific services to be included in any
of the EHB categories, but all ABPs must
include all EHBs defined through the
process described in our regulations.
Comment: Several commenters
suggest that EHBs should comply with
a consistent standard across ABPs as
they are concerned that the proposed
rule allows for states to select more than
one option for establishing EHB to
implement multiple ABPs for targeted
populations. These commenters also
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recognize the need for states to target
populations to address specific health
care needs.
Response: We are providing flexibility
for states to select base benchmark plans
in Medicaid that are different than the
one selected for the individual and
small group market, and to select
multiple base benchmark plans, to
maximize the ability for states to define
ABPs that serve the unique needs of
Medicaid populations and
subpopulations.
Comment: One commenter requested
CMS include autism coverage in the
EHB package to correct the omission.
Lack of coverage can create significant
financial burden on families and
discourages autism professionals from
practice. Families also may decide to
not pursue treatment.
Response: States have choices in
determining in the benefit package that
will be covered in their state within
federal guidelines, but all ABPs must
provide for coverage of EPSDT services
for individuals under the age of 21. We
expect that services to treat autism may
be covered through a variety of coverage
categories and many would be included
in a state’s ABP either because the
services are within the section 1937
coverage option or included as part of
EHBs.
Comment: One commenter applauds
HHS for including coverage of the full
package of EHBs, as it includes coverage
of screening and brief counseling for
domestic and interpersonal violence, in
the Medicaid ABPs.
Response: We thank the commenter
for the support. While it is not certain
that every ABP will include counseling
for domestic and interpersonal violence,
such services will be provided if they
are part of the EHBs.
Comment: One commenter believes
that strong and comprehensive oversight
and enforcement of EHBs and
nondiscrimination standards at the state
and federal level will help ensure
consistent coverage of transplant
benefits and eliminate discriminatory
insurance practices. Therefore, the
commenter asserted, ABPs must cover
all EHB categories without
discrimination for people who have or
will acquire health conditions that lead
to end stage organ failure. The
commenter stated that a wide range of
medical services are required during the
transplant process and fall under the
categories of ambulatory services,
hospitalization, chronic disease
management, mental health services,
rehabilitative services, and prescription
drugs. The commenter urged that all of
these treatments must be covered under
ABPs.
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Response: If transplant services are
covered as part of the coverage option
chosen by the state, or the benefits
under the selected base benchmark
plan, as supplemented (and subject to
permissible substitution of benefits),
then they will be covered as part of the
ABP.
Comment: According to one
commenter, the Affordable Care Act
specifies that entities covered under
section 340B(a)(4) of the Public Health
Services Act, which includes federally
recognized Hemophilia Treatment
Centers, be designated as essential
community providers and that
designation requires that qualified
health plan networks to include
Hemophilia Treatment Centers. This
commenter requests that state Medicaid
programs be encouraged or required to
include essential community providers
in their networks.
Response: Coverage through an ABP
remains subject to requirements under
the state plan to provide for beneficiary
free choice of provider, and provider
payment rates that are consistent with
efficiency, economy, and quality of care
and assure sufficient access to services.
States have options to limit free choice
of provider in some circumstances, for
example, managed care service delivery
consistent with section 1932 of the Act,
or through selective contracting
arrangements authorized under a waiver
under either section 1915 of the Act or
section 1115(a) of the Act. In any of
these cases, states must assure sufficient
beneficiary access to services.
Comment: Several commenters
suggested that the review of EHB, in the
private insurance market and Medicaid,
consider whether limits in coverage and
changes in medical evidence or
scientific advancement affect whether
enrollees have difficulty accessing
services. The EHB should be based on
the most recent and reliable clinical
evidence available and a process should
be developed to inform and shape EHBs
based on these factors over time. If not
available, there should be an allowance
for some physician discretion.
Response: Consistent with the
provisions of section 1302(b) of the
Affordable Care Act, CMS has in the
regulations at 45 CFR part 156 defined
EHBs by reference to coverage plans
available in the commercial market.
Comment: Several commenters also
requested that review of EHBs be
disaggregated to include demographic
categories. HHS should require states to
report enrollees’ race, ethnicity,
language, sex, and disability status data
uniformly, as well as data on other
demographic areas such as sexual
orientation and gender identity, as
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described in section 4302 of the
Affordable Care Act.
Response: This information does not
appear to be related to the review of
EHBs. We note, however, that we are
developing a Transformed Medicaid
Statistical Information System that will
include expanded data elements
regarding beneficiaries, claims and
providers per Affordable Care Act.
Comment: One commenter supports
inclusion of all ten EHB to reflect
appropriate balance in each category
and requested that anesthesia and pain
management services be included in the
ten categories of benefits covered by the
ABPs. This commenter also requested
that CRNAs and other non-physician
providers who bill for Medicare Part B
be included in Medicaid ABPs.
Response: The coverage of particular
services will depend upon the coverage
option selected by the state, and the
EHBs that are determined based on the
state-selected base benchmark plan, as
supplemented (and subject to
substitution of actuarially equivalent
benefits) consistent with the process
described in 45 CFR part 156. This rule
will not affect the ability of states to set
provider qualifications for covered
services.
Comment: One commenter requested
that dollar limits on a specific category
of benefits and targeted use of
utilization management techniques be
prohibited.
Response: Annual dollar limits are
prohibited in the public employee or
commercial plans that are the basis for
coverage options and the base
benchmark options according to section
2711 of the Public Health Service Act.
Utilization management techniques are
common practice for benefit
management and will continue to be
allowed in Medicaid. We expect that
these practices will be nondiscriminatory and not impede access to
needed, covered services.
Comment: One commenter indicated
that HHS should specify in the final rule
that to meet the health care needs of
diverse segments of the population, an
ABP must provide a process for
participants to request and receive:
clinically appropriate benefits not
routinely covered by the plan,
especially when the ABP is less costly
than the covered benefit; coverage for
benefits beyond limits set by the plan;
coverage of specialty care not routinely
covered by the plan when medically
necessary and appropriate.
Response: We are specifying in the
final rule that, if an individual in the
new adult group meets the criteria for
exemption from mandatory enrollment
in an ABP that would otherwise be
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applicable, then the individual would
have a choice of an ABP that includes
at least the EHBs, and is subject to the
requirements of section 1937 of the Act,
or benchmark or benchmark-equivalent
coverage that is not subject to the
requirements of section 1937 of the Act,
and thus, includes all regular Medicaid
state plan benefits. Other individuals do
not have that choice but this rule does
not affect their right to appeal denials of
coverage through the state’s fair hearing
system.
Comment: Commenters requested
clarification and further guidance on the
supplementation process established in
both the proposed rule for the EHBs in
the commercial market and the
proposed rule for EHBs in Medicaid
ABPs. Many commenters requested that
CMS clarify what benefits would
constitute coverage in each category and
identify a threshold to trigger
supplementation of a benefit category. It
appears that a single service could be
determined to be sufficient to define an
EHB in Medicaid and therefore would
not achieve MHPAEA compliance. A
few commenters also stated that a single
service would not meet nondiscrimination requirements in addition
to the balance requirement, which
requires a much stronger minimum set
of benefits in each category. One
commenter requested clarification of the
Medicaid EHB supplementation process
including the extent to which the scope
of services in one EHB category must be
consistent with services offered other
health service categories. Several
commenters believe that additional
provisions need to be added to ensure
that the level of benefits in each EHB
category are meaningful and adequate to
meet the needs of the population.
Several commenters also requested that
CMS clarify what benefits would
constitute coverage in each category and
explain how CMS would enforce the
non-discrimination and balance
requirements.
Response: Supplementation occurs
when a base-benchmark plan does not
include items or services within one or
more of the categories of EHB. Benefits
from the base benchmark that are
determined to be EHBs must be
included as an EHB, unless substituted
by the state. While the rules at
§ 156.115(b) indicates that the ‘‘issuer’’
may substitute benefits, in Medicaid,
the state functions as the issuer and we
thus provide that the state can exercise
the option to substitute benefits. We
indicated that requirements at § 156.110
apply unless we specifically modified
the approach in Medicaid. Section
156.110(e) that specifies balance
requirements also apply to EHBs
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established in Medicaid. All benefits
within the section 1937 coverage option
must also be provided. CMS will
conduct a review of all ABP SPAs to
determine appropriateness for approval.
There are both requirements and
flexibility for states in constructing
EHBs and section 1937 coverage
options. Please refer to the summary at
the end of this section for further
discussion of these steps and
flexibilities.
Comment: The HHS February 17,
2012 Bulletin allows for substitution of
services within the rehabilitative and
habilitative benefit, allowing the plan to
facilitate substitution of services at the
provider level based on patient need not
predetermined by the issuer, according
to one commenter. The November 20,
2012 Patient Protection and Affordable
Care Act; Standards related to Essential
Health Benefits, Actuarial Value, and
Accreditation proposed rule indicated
that the issuer would create a
substituted benefit plan, which would
leave providers with no choice but to
provide services in the benefit package
and potentially lead to an individual
choosing a plan that does not cover the
services that they need.
Response: States, not issuers, define
benefits within section 1937 of the Act.
Section 156.115(b) outlines the
substitution policy that will also be
applicable to Medicaid except that, in
Medicaid, states have the role of issuers
and will indicate the substituted
benefits. Substitution requires that
benefits be in the same EHB category
and that they are actuarially equivalent.
This means that a state for example,
could substitute a personal care benefit
for an in vitro fertilization benefit in the
EHB Ambulatory Services category, as
long as they were actuarially equivalent.
Within the rehabilitative and
habilitative services and devices EHB,
benefits can be substituted as long as the
resulting benefits still provide for
coverage of both rehabilitative and
habilitative services. We expect that the
benefit design will result in clinically
appropriate services based on medical
necessity. The resulting ABP, which
includes EHBs that have been
supplemented if necessary, individual
benefits that have at state option been
substituted, and benefits from the
section 1937 coverage option, must be
approved by CMS. Once approved, a
description of the benefits included in
the final ABP should be publicly
available so that beneficiaries are
knowledgeable of the benefits to which
they are entitled. That said, we
appreciate that it may be difficult at this
point to make changes to the ABP that
take effect by January 1, 2014. In light
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of this challenge, we will partner with
states to work as quickly as possible to
come into full compliance with these
provisions. We do not intend to pursue
compliance actions on these issues to
the extent that states are working toward
but have not completed a transition to
the new ABPs on January 1, 2014.
Comment: Many commenters are
concerned that there is no requirement
regarding adequacy of benefits. These
commenters specifically requested that
HHS provide a cross-reference to
§ 440.230(b) and state explicitly that the
requirement that every service offered
through the Medicaid state plan ‘‘be
sufficient in amount, duration, and
scope to reasonably achieve its
purpose’’ also applies to EHBs in the
ABPs. A few commenters recommended
that the regulations be revised to require
states to supplement the benefits in a
benchmark plan if any service in the
EHB category is not sufficient in
amount, duration, or scope to
reasonably achieve its purpose.
Response: Under section 1937of the
Act, states are authorized to offer ABPs
that include benefits derived from
public employee or commercial market
products, essential health benefits and
certain other required benefits.
Sufficiency standards applicable to the
traditional Medicaid benefit package
generally do not apply to ABPs. If
Secretary-approved coverage is chosen
as the section 1937 coverage option,
however, then we would require that
the benefit package must ‘‘provide
appropriate coverage to meet the needs
of the population provided that
coverage’’ under § 440.330(d).
Sufficiency standards at § 440.230 will
be applied in our review of proposed
Secretary-approved coverage.
Comment: Many commenters
requested that CMS reconsider the
proposed approach and define
comprehensive federal EHBs for section
1937 coverage that all states would be
required to use to supplement their
chosen benchmark or benchmarkequivalent coverage. They urged that
CMS should go further and require
states to cover comprehensive benefits
in each of the EHB categories and work
with states to ensure that minimum
coverage is met. One commenter went
further to suggest that CMS and HHS
adopt a comprehensive, national EHB in
2016, when the trial period for the
current approach is complete.
Response: EHBs in Medicaid will
generally be defined in the same fashion
as they are defined in the individual
and small group market, except for
certain EHB categories discussed in the
proposed rule and this final rule. This
approach allows the public employee or
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commercial market plan selected by the
state to define EHBs for Medicaid to set
the floor for EHB coverage (with
supplementation as needed and
substituted as desired). States then have
the authority to offer other services
(including through Secretary-approved
coverage for the new adult group).
Comment: One commenter requested
that HHS clarify that the requirement for
balance among EHB categories ensures
robust coverage in each category and
cannot be used to lower other categories
if one or more categories lacks robust
coverage.
Response: Consistent with the
requirements of 45 CFR 156.110, EHB
categories must be appropriately
balanced to ensure that benefits are not
unduly weighted toward any category.
Any benefits that are determined to be
EHBs from the base benchmark plan
must be provided. Section 1937 of the
Act also has an ‘‘equal to’’ standard that
indicates that all benefits from a section
1937 coverage option must be provided.
When Secretary-approved coverage is
used, benefits must meet Medicaid
sufficiency standards as well as the
requirement that the benefit package be
appropriate to meet the needs of the
population.
Comment: Many commenters
reiterated concerns regarding the EHB
proposed rule and EHB benchmark plan
standards. This concern remains for
ABPs as the Department does not
sufficiently define the scope of coverage
in any statutorily required category
specifically maternity care. The base
benchmark plans may include coverage
of maternity services, but the plan
documents do not specify which
services define maternity coverage or
provide details on coverage including
limits. The lack of clear definitions
further complicates the substitution and
supplementation methodology. Several
commenters want the Department to
establish clear standards for what must
be covered as required by sections
1302(b)(1) and 1302(b)(4)(C) of the
Affordable Care Act to ensure a
comprehensive standard. The adoption
of coverage should not result in a
discriminatory benchmark.
One commenter expressed concerns
related to the ambiguously defined EHB
categories and encouraged HHS to
definitively confirm the extent to which
cost effective, clinically effective
nutrition care services such as medical
nutrition therapy are included as EHBs
within Medicaid benchmark and
benchmark-equivalent plans. This
commenter requests adequate federal
oversight and approval of benchmark
plan selection by HHS to reflect the vital
and unique role that nutrition plays in
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improving and maintaining health for
all Americans, but also recognizes the
need to define EHBs flexibly. This
commenter seeks clarification in the
final rule on the metrics and bases upon
which HHS will determine whether a
benchmark or benchmark-equivalent
plan meets the EHBs mandated by
Affordable Care Act.
Response: Section 1937 of the Act
permits states to offer coverage through
an ABP without regard to sufficiency
requirements that are applicable to
regular state plan benefits, except that
we would apply sufficiency standards
in our review of proposed Secretaryapproved coverage as the section 1937
coverage option. Substitution is allowed
in section 1937 of the Act using
requirements found at 45 CFR
156.115(b) except that the state will be
exercising the option for substitution
rather than an individual market issuer.
Comment: Commenters requested that
CMS provide clear regulatory guidance
to states to ensure that the process for
supplementing coverage to meet the
additional requirements of Affordable
Care Act is clear. This is especially
important given that EHBs are not
universally covered well by state
Medicaid programs such as mental
health and substance use services.
Furthermore, for states that choose to
use benchmark-equivalent coverage, this
commenter requests that CMS establish
clear limits on states’ ability to use
benchmark-equivalent coverage to
undermine the EHB protections as it
appears that under the proposed rule
that they can reduce the value of EHBs
under the benchmark-equivalent option
to anything short of elimination. These
commenters request that CMS ensure
the comprehensiveness of the benefits
for all beneficiaries covered by section
1937 of the Act regardless of the ABP
chosen by the state.
Response: Benchmark-equivalent
benefit packages must be at least
actuarially equivalent to one of the
section 1937 benchmark coverage
options and must include benefits
within certain categories of basic
services. In addition, the Affordable
Care Act amended section 1937 of the
Act to require the provision of EHBs in
benchmark equivalent coverage, so we
do not believe that use of this section
1937 coverage authority will undermine
the EHB protections. The process for
supplementation is found at 45 CFR
156.110(b)(1) through (4) and
substitution requirements are at
§ 156.110(b). All benchmark-equivalent
coverage packages must adhere to
section 1937 requirements, and must
not violate the EHB anti-discrimination
principles.
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Comment: One commenter
recommended that HHS specify in the
final rule that ABPs must include
benefits routinely covered by the
benchmark plan, regardless of whether
those benefits are listed in the data
collection template used to report base
benchmark benefits to HHS.
Furthermore, all benefits within
categories of care that list more than one
benefit must be covered. For example,
an ABP should be required to cover as
three distinct benefits rehabilitative
services, habilitative services, and
rehabilitative and habilitative devices as
opposed to only covering one of them.
Response: We intend to develop a
template for states to use to define the
ABP in Medicaid that will result in the
submission of a state plan amendment.
This is a different process than the one
used for states to submit the base
benchmark benefits for the individual
and small group market. A state can
select a different base benchmark plan
for the individual and small group
market than it does for Medicaid
purposes. We anticipate issuing further
guidance on these operational issues.
Comment: One commenter strongly
encourages CMS to provide further
guidance on alignment issues during the
plan comparison and supplementation
process. This commenter encourages
CMS to clarify that during
supplementation, states must create the
most comprehensive benefit package
possible, drawing from services covered
in either the section 1937 coverage
option or the comparison base
benchmark plan, which could include
drawing across categories if necessary to
create a robust set of services that will
result in adequate coverage of EHBs.
Response: To clarify, the ABP must
include as a floor the EHBs covered by
the base benchmark plan selected by the
state to define EHBs for Medicaid,
supplemented as necessary and subject
to substitution of actuarially equivalent
benefits as permitted under 45 CFR
156.115(b). Balance requirements of 45
CFR 156.110(e) also apply. In addition,
the ABP must include any benefits from
the section 1937 coverage option that
are not in the base benchmark plan,
whether they are EHBs or not. If the
section 1937 coverage option that is one
of the three public employee or
commercial products provides a service
in a greater amount, duration, or scope
than the EHB provided in the base
benchmark plan, the state must utilize
that section 1937 standard for that
service. If the section 1937 coverage
option is Secretary-approved coverage,
then the state may choose which benefit
to use.
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Comment: One commenter requests
that HHS specify that appropriate
balance of EHB coverage includes
coverage of benefits across the care
continuum, prohibits substitution
between categories of EHB (for example,
prohibit coverage of rehab therapy but
include drug coverage) and between
benefits (cover wheelchairs instead of
rehabilitative hospital care to restore a
person’s ability to walk), cover all EHBs
within the settings and by specialists
which provide the current standard of
care, and protect patients’ access to
appropriate and medically necessary
care as provided by skilled medical
professionals.
Response: Substitution of benefits can
be achieved when defining the EHBs
according to 45 CFR 156.115(b). Benefits
must be in the same EHB category and
actuarially equivalent. Balance
requirements at 45 CFR 156.110(e)
apply, as CMS did not indicate that they
do not apply in Medicaid. CMS will be
reviewing each state plan submission.
As with all Medicaid services, states
will establish medical necessity criteria
for the receipt of ABP services.
Comment: A commenter indicated
understanding that benefit substitution
among EHB categories would be
prohibited for ABPs as it is prohibited
for Exchange plans. However, this
commenter believes that substitution
even within benefit categories could be
extremely problematic for children’s
and pregnant women’s access to needed
services. Commenters urged HHS to
prohibit substitutions or at a minimum
give states the flexibility to disallow
substitutions. If benefit substitution
within categories is retained, this
commenter recommends that a more
restrictive standard than an actuarial
equivalence test on the value of the
benefits compared to the EHB
benchmark plan be implemented.
Response: Substitution of benefits
within EHB categories will be at state
option, according to parameters
described in 45 CFR 156.115(b). This
process will be the same for Exchange
plans and ABPs, except that states will
be in the role of the health insurance
issuer for purposes of substitution.
Comment: Commenters note that in
some states the EHB benchmark covers
services beyond those included in the
Medicaid state plan. They argue that
requiring states to supplement coverage
to make it comparable to the EHB
benchmark is not a workable solution
for states, particularly for states that
wish to expand in 2014. They further
assert that some of the immediate
operational challenges include the need
to enroll new providers, set
reimbursement rates, design claims and
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payment rules, and incorporate those
rules into systems, and if managed care
is used, new capitation rates will need
to be designed, which will result in a
large administrative burden.
Response: It is true that ABPs under
section 1937 of the Act will contain
different benefits than those offered in
regular Medicaid, based on the coverage
options and EHBs that a state elects.
These differences are inherent in the
statutory design. While EHBs will
establish a minimum level of benefits,
that level may result in greater or lesser
benefits than are available under regular
Medicaid. ABPs require that benefits
that are based on commercial insurance
products include the benefit, the benefit
description and limitations on amount,
duration, and scope as the minimum
standard. States have been working with
CMS toward defining EHBs and ABPs
and as part of that process states may
need to undertake contracting activities
and system changes to offer and
administer the ABP.
Comment: In the proposed rule
concerning EHBs, requirements could
be different in different states according
to one commenter. Since two of the four
benchmarks are tied to what is available
to state employees in the state and what
is available from the largest HMO in the
state, employers may have confusion
about the requirements in a particular
state. This commenter requests
identification of who oversees an
employer that has employees with a
principle place of employment in
multiple states, and wonders whether it
would be the Department of Labor.
Response: The standards discussed in
this regulation relate to the
implementation of EHBs for Medicaid.
Employers do not offer Medicaid as part
of their offerings to employees and
therefore, this question is outside the
scope of this regulation.
Comment: One commenter asked if,
given the requirement that states must
supplement the benchmark package if
EHBs are not covered, states would be
required to add these benefits to the
state plan under the Secretary-approved
coverage option that is based on state
plan coverage. The commenter asserted
that it is unclear if the state must
supplement services that are covered in
the base-benchmark selection for the
Exchange, and that it is unclear if
supplementation is only for the
benchmark plans provided to newly
eligible individuals or if states that are
seeking to provide a Secretary-approved
benchmark plan to newly eligible
individuals will be required to amend
the state plan to add the new EHB
services not otherwise covered. The
commenter also asked whether states
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would now be required to add services
that are not currently covered and
categorized as optional, and also
wondered if EHB supplementation only
applies to benefits for newly eligible
people or must the state meet this
requirement for all benchmarks offered
regardless of population.
Response: States are required as part
of the ABP to cover all EHBs. While
most of the EHBs are also included
under regular Medicaid coverage, there
may be exceptions. For example,
substance abuse services and
habilitative services may not be part of
a State’s regular Medicaid benefit. The
EHB requirement applies to any ABP
offered by the state, including those
based on Secretary-approved coverage.
Comment: One commenter indicated
that the regulatory language fails to
specify that states must supplement
missing categories. This commenter
recommends that the Department clarify
that states must follow the process
established in 45 CFR part 156 to ensure
that any missing categories are
supplemented in the final rule. The
Department should also ensure that
benefit design in ABPs does not result
in less comprehensive benefits than the
private insurance market, and therefore,
ABPs should be required to include
benefits at least as robust as those in the
state’s full EHB package.
Response: EHBs establish a floor of
benefits for ABPs offered under section
1937 of the Act and are based on
commercial market products, which
means at a minimum EHBs will include
benefits at least as robust as those in the
base benchmark chosen by the state.
The supplementation process in section
1937 of the Act will follow 45 CFR
156.110(b).
Comment: Several commenters
generally supported the proposed
process to designing the Medicaid ABP.
However, HHS must establish
transparent, minimum standards for
states using ‘‘Secretary-approved’’
coverage. It will be critical to ensure
that the state cannot develop an ABP
based on the weakest benefit level
available at each step of the process.
The commenters expressed concern that
the rule offers very little guidance about
what the ABP must cover to meet the
ten categories of EHBs required by
Affordable Care Act and the scope of
required coverage. They indicated that
this lack of clarity may lead to people
in the Medicaid expansion group not
receiving the full range of services
available to people at higher income
levels accessing private market or
Exchange coverage in their state. An
additional commenter expressed that
the youngest and most vulnerable
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citizens, the birth to three population,
need to have access to all necessary high
quality, comprehensive physical,
developmental, mental health and
medical care to ensure positive growth
and development.
Response: Current and proposed
regulation at § 440.335(d) states that
Secretary-approved coverage must be
appropriate to meet the needs of the
population being served. CMS will
review proposed Secretary-approved
coverage against that standard. And
CMS will apply the sufficiency
standards of § 440.230 in evaluating
benefits included in Secretary-approved
coverage. In addition, all ABPs,
including Secretary-approved, must
include the full range of EPSDT services
for individuals under age 21, which
ensures that they will have access to
comprehensive screening and necessary
medical care.
Comment: Several commenters
expressed concern regarding the process
proposed by CMS to demonstrate
compliance with EHB, saying it is too
burdensome and applying the EHB
definition that was created for small
group health plans for commercial
products in the private market
needlessly complicates section 1937 of
the Act. They asserted that requiring
that states begin by using one of the ten
commercial benchmark plans as the
EHB base is not useful for states that
want to use the full Medicaid benefit set
under Secretary-approved coverage.
They argued that using the full
Medicaid benefit set allows all Medicaid
clients to receive the same benefit set
and states would not have to
operationalize a post-eligibility review
process to screen people for opting out
of the ABP for the traditional state plan.
Their position was that, given the
number of changes that states must
implement in 2014, maintaining a single
benefit set reduces administrative
burden and confusion for clients and
minimizes the number of required
system changes. According to one
commenter, it is essential that the new
adult group have the same benefit set as
the full state Medicaid benefit set.
Furthermore, the commenter asserted
that the mandatory Medicaid benefit set
should be an option to serve as the basis
for demonstrating EHB compliance
under the Secretary-approved option
without supplementation. A few
commenters recommend that HHS
create a second definition of EHB
compliance that would be based on the
Medicaid mandatory benefit set, limit
that definition to the ABP in Medicaid
programs, and allow states to use this
benefit set as the basis to build a
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coverage option for Secretary-approved
coverage.
Response: Section 2001(c) inserted
new paragraph (b)(5) into section 1937
of the Act. This amendment requires
that benchmark and benchmarkequivalent benefit packages must
provide EHBs described in section
1302(b) of the Affordable Care Act,
beginning January 1, 2014. The same
process to define EHBs applies to both
commercial plans and Medicaid, with
adjustments only to reflect the unique
nature of Medicaid. Thus, EHBs must be
established within section 1937 using
one of the state options for base
benchmark plans as set forth in 45 CFR
part 156. States may still elect to offer
Medicaid state plan benefits in their
section 1937 coverage option using
Secretary-approved coverage, as long as
all requirements of this regulation are
met.
Comment: Many commenters
indicated that states electing state plan
benefits using the Secretary-approved
option should not be required to
supplement with additional EHB
services. Although they acknowledged
that section 1937 of the Act requires
inclusion of EHBs as defined under
section 1302(b) of the Affordably Care
Act, they asserted that this does not
mandate importation of entire segments
of coverage from private plans nor does
it require a wholesale matching of these
offerings in Medicaid. They asserted
that implementing EHBs in section 1937
of the Act in this way is onerous and
could result in the relatively less
vulnerable, higher income expansion
group as compared with Medicaid
beneficiaries receiving more generous
benefits such as substance use disorder
services. They further asserted that
Congress certainly could not have
intended for the new enrollees to end
up receiving more robust coverage than
the categorically needy base. They
stated that this also creates
administrative complexity for states and
a situation where incoming beneficiaries
who may be disabled must choose
between disparate benefit schedules.
The commenters believed that the only
way to mitigate disparate benefit
schedules is for states to expand all
benefits for existing and new eligible
beneficiaries, something states are not in
a fiscal position to do. They further
asserted that the Affordable Care Act
did not authorize a departure from long
standing state discretion under Title
XIX to develop appropriately balanced
benefits and suggested that, if states
must expand all benefits for existing
and newly eligible beneficiaries, then
states must receive 100 percent FFP for
these benefits.
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Response: We believe that our
response to the question above also
responds to this question; the statute
requires that all ABPs, even Secretaryapproved coverage, include EHBs. There
are both requirements and flexibilities
for states in constructing EHBs and
section 1937 coverage options. The
process for defining and including EHBs
is the process used under section
1302(b) of the Affordable Care Act,
adapted to the unique circumstances of
the Medicaid program.
Comment: One commenter indicated
that the intersection of § 440.345(d) and
§ 440.347(a) is confusing, and
recommends that CMS clarify in
regulation that EHBs form a floor for the
ABPs and do not supplant any
preexisting requirements under section
1937 of the Act and 42 CFR part 440,
subpart C. Regulations would be clearer
if § 440.347 were worded as a definition
of EHB rather than a restatement of the
mandate to include EHB in an ABP and
for clarity should simply reference
relevant provisions in 45 CFR part 156.
Response: Section 440.345(d) is
intended to establish the universe of
benefits required within the ABPs. In
addition, state must assure access to
RHC and FQHC services and
transportation to and from medically
necessary services as set forth at
§ 440.365 and § 440.390 respectively.
Section 440.347 is intended to specify
the categories of EHBs and the process
by which those EHBs are established
within the ABP. Both sections should be
read in conjunction to the other.
Summary: We are adopting the
following approach for treatment of
individuals in the new adult group who
meet the exemption criteria from
mandatory enrollment in benchmark or
benchmark-equivalent coverage in the
final rule. If an individual in the new
adult population meets the criteria for
exemption, then they have a choice of
the ABP based on benchmark or
benchmark-equivalent coverage
including at least the EHBs, or an ABP
with coverage defined as the state’s
approved Medicaid traditional state
plan, which is not subject to any other
requirement of section 1937 of the Act,
including EHB requirements. We are not
making any changes as a result of these
comments.
i. Essential Health Benefits (NonDiscrimination Policy) (§ 440.347)
Section 1302(b)(4) of the Affordable
Care Act provides that benefit design
cannot discriminate and CMS codified
this section of the Affordable Care Act
at § 440.347(e). Benefit design
discrimination policies do not prevent
states from using targeting criteria to
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group people together to receive specific
benefit packages.
Comment: One commenter expressed
support for the inclusion of the new
provision clarifying that individuals
cannot be discriminated against based
on their ‘‘age, expected length of life, or
an individual’s present or predicted
disability, degree of medical
dependency, or quality of life or other
health conditions.’’ The commenter
seeks age-appropriate care and benefits
for children, whether through family or
child-only coverage.
Response: We appreciate the support.
Comment: Several commenters
indicated that while they understand
that section 1937 of the Act allows
states the flexibility to amend Medicaid
state plans to provide certain
populations (as defined by the state)
with benefits packages other than those
offered in the standard Medicaid state
plan, HHS must closely monitor this
and ensure there is no discrimination in
benefit design for certain populations.
Response: Benefit design should not
discriminate against individuals who
receive a benefit package under section
1937 of the Act based on age, disability,
life expectancy or condition but may
include benefits designed to meet the
special medical needs of segments of the
covered population. Benefit packages
designed in section 1937 of the Act
include the same oversight as the
regular Medicaid state plan. Aside from
the EHB anti-discrimination
requirements, § 440.230(c) indicates that
state Medicaid agencies cannot
arbitrarily deny or reduce the amount,
duration, or scope of a required service
to an otherwise eligible recipient based
solely on diagnosis, type of illness or
condition.
Comment: Several commenters
expressed support of the requirement
that EHB benefit design cannot
discriminate on the basis of an
individual’s age, expected length of life,
or an individual’s present or predicted
disability, degree of medical
dependency, or quality of life or other
health conditions. The commenters
believe these non-discrimination
provisions will require vigorous
monitoring and strong enforcement.
Response: We thank the commenters
for their support. We expect states to
comply with these provisions and
implement benefit packages that do not
discriminate. ABPs will be subject to the
same monitoring process as currently
used in the Medicaid state plan.
Comment: Many commenters
expressed support for the inclusion of a
non-discrimination provision in
§ 440.347(e). But some commenters
pointed out that, while the proposed
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rule recognized the importance of nondiscriminatory plan design § 440.347(e)
fails to state the full range of
nondiscrimination protections
applicable to the EHB. Many
commenters expressed concern that the
preamble only references section
1302(b)(4) of the Act and the
requirements proposed in § 440.347(e)
state only the protections under that
statutory provision. Therefore the
commenters believe that the
requirements in § 440.347(e) reflect an
incomplete and insufficient standard.
The commenters believe that the
protections under section 1557 of the
Affordable Care Act also apply, and the
final rule must expressly state a
comprehensive and consistent
nondiscrimination standard, explicitly
requiring EHB benefit design to comply
with section 1557 of the Affordable Care
Act. The commenters recommend the
final rule be revised to include the
language used in the nondiscrimination
standard set out in the proposed EHB
rule. The commenters believe that
without the additional requirements the
benefits of both section 1557 and the
Affordable Care Act as a whole in
ensuring comprehensive coverage for all
individuals will be undermined. Lastly,
the commenters also requested the
regulation prohibit ABPs from including
all of the following:
• Participant cost-sharing designs that
are more burdensome on some benefits
than others.
• Unreasonable and arbitrary visit
and dollar limits on a specific category
of benefits, so as to discourage
participation by individuals with brain
injury.
• Targeted use of utilization
management techniques for some
benefits, and not to others.
• Defining the benefits in such a way
to exclude coverage for those services
based upon age, disability, expected
length of life, or the willingness or
capacity to participate in wellness
programs or behavioral incentive
programs.
Response: Some of the protections
sought by commenters are already
contained in laws applicable to state
Medicaid programs. Section 430.2, an
existing regulation, identifies other
regulations applicable to state Medicaid
programs including 45 CFR part 80,
which requires that programs receiving
federal assistance, through the
Department of Health and Human
Services, include effectuation of Title VI
of the Civil Rights Act of 1964 and 45
CFR part 84, which implements Section
504 of the Rehabilitation Act of 1973,
prohibiting disability discrimination. In
addition, state Medicaid programs are
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subject to the Age Discrimination Act of
1975. Therefore, these protections are
already applicable to Medicaid.
We appreciate commenters pointing
out deficiencies in § 440.347(e) and
have revised it to align with the
regulation implementing EHBs in the
Exchanges.
Comment: A few commenters
indicated appreciation of CMS’s work to
revise current Medicaid rules such that
they incorporate statutory nondiscrimination provisions from section
1302(b)(4). The commenters strongly
encourage CMS to also codify all
statutory non-discrimination provisions
applicable to issuers of QHPs that meet
EHB requirements. CMS should specify
that § 156.200 and § 156.225 also apply
to ABPs. Section 156.200 specifically
prohibits discrimination based on
factors including but not limited to race,
disability, and age. Section 156.225
codifies section 1311(c)(1)(A) of the
Affordable Care Act which prohibits
marketing practices and benefit designs
that result in discrimination against
individuals with significant or high cost
health care needs. The commenters
believe that all Affordable Care Act nondiscrimination provisions applicable to
QHPs issuers and EHB standards must
similarly apply to ABPs in Medicaid to
ensure consistency of standards across
all forms of all health care coverage.
Response: The requirements in 45
CFR part 156 apply to QHP issuers and
not Medicaid managed care plans.
However, there are similar protections
in place in the regulations governing
Medicaid managed care plans. If ABPs
are delivered through a Medicaid
managed care plan, those protections,
including marketing, appeals and
grievances, beneficiary information, and
non-discrimination based on health
status will apply to the Medicaid
managed care plans providing ABP
benefits. There are similar protections
on many of these issues for Medicaid fee
for service delivery systems, requiring
fair hearing, free choice of provider, and
beneficiary information.
We take this opportunity to clarify
that States have the flexibility to use
managed care to deliver ABP benefits
without regard to statewideness and
comparability of services. Further,
freedom of choice of provider may also
be disregarded to the extent the State
can demonstrate that freedom of choice
would be contrary to the effective and
efficient implementation of an ABP.
Comment: Many commenters also
recommended § 440.347(e) be amended
as follows: EHBs cannot be based on a
benefit design or implementation of a
benefit design that discriminated on the
basis of an individual’s race, color,
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national origin, sex, sexual orientation,
gender identity, age expected length of
life, or of an individual’s present or
predicted disability, degree of medical
dependency, or quality of life or other
health conditions. Other commenters
recommended § 440.347(e) be amended
as follows: (e) EHBs cannot be based on
a benefit design or implementation of a
benefit design that discriminates on the
basis of an individual’s age, expected
length of life, an individual’s present or
predicted disability, degree of medical
dependency, or quality of life or other
health conditions, race, color, national
origin, language, sex, sexual orientation
or gender identity.
Response: The suggested change to
§ 440.347(e) is unnecessary because the
protections described are already
reflected in existing Medicaid
regulations.
Comment: Many commenters
expressed concern about the lack of
guidance under the proposed rule for
monitoring and enforcement of the
proposed nondiscrimination provisions,
and believe that the final rule must
better define how individual states will
assess, monitor, and enforce the law’s
nondiscrimination provisions.
Moreover, the commenters do not
believe it is sufficient to delegate all
monitoring and enforcement to states.
The commenters recommend the final
rule define how CMS will take
enforcement action when states are not
ensuring compliance with the
nondiscrimination standards
established under the Affordable Care
Act. The commenters also recommend
that CMS develop a clear standard for
what constitutes a discriminatory
benefit design. This standard must
address both individual cases of
intentional discrimination and benefit
designs that are facially neutral but that
have the effect of systematically
disadvantaging members of protected
classes. Ultimately, this standard must
make clear that the determination of
whether a coverage limitation or
exclusion is discriminatory should turn
on the degree to which the benefit
design is based on sound standards of
clinical appropriateness rather than on
arbitrary distinctions between health
conditions or personal characteristics.
To assist federal and state regulators in
rectifying discrimination in benefit
design, CMS should follow up on the
final rule with sub-regulatory guidance
explaining how to evaluate products for
impermissible discrimination and
providing examples of discriminatory
benefit designs such as those listed
above. In addition, CMS should require
trained evaluators in each state to
regularly and transparently review
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coverage available through ABPs for
discriminatory benefit designs and to
ensure identified instances of
discrimination are remedied in an
expedient manner. Where CMS
determines that a state Medicaid agency
is not fulfilling its responsibilities in
this area, CMS should establish a review
procedure to focus on ensuring that all
services deemed part of the EHBs are
available to all eligible individuals for
whom they are medically necessary,
without arbitrary discrimination on the
basis of any protected personal
characteristic.
Response: ABPs are Medicaid state
plan amendments and are subject to the
same monitoring and oversight that
occurs in the Medicaid state plan.
Under this process, states review
applicable requirements and design
their program, including ABPs. The
proposed design is submitted to CMS
for approval, and CMS reviews the
proposal for compliance with federal
requirements. If approved, CMS may
also review state implementation for
compliance with federal requirements.
In addition, issues can be raised by
beneficiaries through the fair hearing
process if services are denied. As with
any Medicaid service, we recognize the
important role that all stakeholders play
in making CMS aware of any perceived
ABP noncompliance. We will consider
issuing further guidance on this topic.
Comment: One commenter is
concerned that the proposed rule does
not establish sufficiently robust
oversight or enforcement framework to
provide states with essential guidance to
implement such a program. The
regulatory text does not expressly
require the Exchanges, states or OPM to
monitor plans for compliance with the
prohibition on discrimination. This
commenter urges CMS to adopt an
express requirement in the regulatory
text of the rule that the Exchanges,
states and OPM monitor for nondiscrimination.
Response: Medicaid is a federal and
state partnership and as such, states
have the first line of responsibility to
design and implement their program in
compliance with federal requirements,
including the non-discrimination
requirements. Federal oversight is
implemented using the existing state
plan process, as well as ongoing
monitoring of program operations.
Comment: Several commenters
expressed concern that applying the
EHB standard to prescription drug
coverage in Medicaid would not provide
appropriate protections for people with
chronic conditions like cancer, diabetes,
Parkinson’s, HIV/AIDS, schizophrenia,
epilepsy, obesity and organ transplant
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recipients. The commenters believe that
focusing on a number of drugs covered,
as opposed to ensuring a breadth of
drugs are covered, could result in a
selection of drugs that meets the
minimum requirement but
discriminates against potential
enrollees.
Response: While we understand the
commenters’ concerns, the statute
permits states a certain amount of
flexibility in determining and
structuring ABPs that meet the needs of
enrollees and are consistent with overall
state objectives. We must clarify a
statement in the preamble to the
proposed rule, indicating that
requirements under section 1927 of the
Act are applicable to ABPs under
section 1937 of the Act. Section 1927 of
the Act does not affect the flexibility of
states to define ABP benefit packages
consistent with a coverage benchmark
and including EHBs. The amount,
duration, and scope of prescription drug
coverage would thus be governed by the
requirements of section 1937 of the Act.
To the extent that a prescription drug is
within the scope of the ABP benefit as
a covered outpatient drug, section 1927
of the Act is then applicable. For such
covered outpatient drugs, since payment
is available under the state plan, all
drug rebate obligations under the rebate
agreement are required for drug
manufacturers under 1927(b) of the Act.
To explain in more detail, the
amount, duration, and scope of coverage
for an ABP is determined under section
1937 of the Act, which authorizes
benchmark or benchmark-equivalent
coverage ‘‘notwithstanding any other
provision that would be directly
contrary.’’ But, the drug rebate
obligation applies under section 1927 of
the Act when payment is made under
the Medicaid state plan for covered
outpatient drugs as part of the ABP. In
addition, to the extent that covered
outpatient drugs are within the scope of
ABP coverage, the protections and
limitations for such coverage under
section 1927 of the Act apply. So, for
example, to the extent that coverage
under an ABP includes a class of
covered outpatient drugs, a state could
impose limitations on that coverage
only consistent with the provisions of
section 1927(d) of the Act. In general the
requirements for prescription drug
coverage under section 1937 of the Act,
through the requirement for coverage of
EHBs, will mean that ABPs will meet
existing section 1927 requirements for
Medicaid payment of covered outpatient
drugs, which we believe will address
the commenters’ concerns. We discuss
the interaction between the
requirements for prescription drug
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coverage under section 1937 of the Act
with the requirements for covered
outpatient drugs under section 1927 of
the Act in further detail later in this
final rule.
Comment: Some of the commenters
are concerned that CMS allows states to
place limitations on amount, duration,
and scope and adopt prior authorization
and other utilization control measures,
as well as policies that promote the use
of generic drugs. The commenters
believe that for people living with
chronic conditions, use of utilization
management techniques can have a
detrimental impact and inhibit people
from accessing needed treatments. The
commenters also believe that these
limitations can violate the nondiscrimination requirements in the law.
In particular, commenters indicated
that it is imperative that nondiscrimination protections found in
§ 440.347 are strictly and clearly applied
to the ABP prescription drug benefit.
HIV care and treatment standards
maintained by Federal agencies
recommend a combination of
medications for effective management of
HIV disease (see https://
www.aidsinfo.nih.gov). Quantitative
limits on the number of drugs covered
per month are discriminatory against
people with HIV and others whose
quality of life and health depend on
access to a specific regimen of multiple
prescription drugs to treat both HIV and
co-occurring conditions as
recommended by their medical
provider. The application of the nondiscrimination provisions should
prohibit states from applying
quantitative limits on monthly drug
coverage for the expansion population,
and the commenters urged that this
standard also be applied to the
traditional Medicaid population. If
monthly drug limits are considered,
there must be provisions to allow for a
timely override process that does not
delay immediate and uninterrupted
access to the medications when
recommended by a medical provider.
Commenters also requested that CMS
adopt a more robust standard for
evaluating limitations on amount,
duration, and scope and prior
authorization and utilization control
measures that may be discriminatory by
design. These evaluations should be
specific to the population and based on
sound medical evidence regarding the
prescription drugs necessary to provide
adequate coverage. Restrictions to
prescription drug coverage in Medicaid,
such as monthly drug limits, could
leave some Medicaid beneficiaries with
less comprehensive coverage than that
offered to individuals covered in the
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Exchange because of limitations that are
discriminatory based on health care
need.
A few commenters also expressed
concern that the proposed rule does not
discuss the circumstances in which a
limitation on drug coverage could
violate the non-discrimination
requirement. CMS should provide
additional guidance about its
interpretation of the nondiscrimination
rule and its enforcement strategies,
particularly for prescription drugs. The
commenters believe that this should
include oversight functions to actively
monitor and test for discriminatory plan
design and implementation, and to
report such activities to CMS. For
instance, the implications of plan
substitutions within a category of EHBs
or prescription drug cost-sharing
designs for high risk enrollees should be
considered.
Response: States have considerable
flexibility in implementing the
provision of Medicaid services through
ABPs. While this flexibility permits
states in some instances to limit
prescription drug coverage based on the
coverage offered under other public
employee or commercial plans, it also
includes the ability to exceed the
amount, duration, and scope of
prescription drugs covered by those
plans, as long as the services provided
are consistent with the Medicaid
requirements.
The non-discrimination provisions
adopted in this final rule at § 440.347
require that states will need to assess
whether their ABP benefits, including
any limitations placed on the amount,
duration and scope of any benefit,
discriminate on the basis of the
individual’s age, expected length of life
or any individual’s present or predicted
disability, degree of medical
dependency, or quality of life or other
health conditions. We will consider
whether additional sub-regulatory
guidance on these matters is needed.
Comment: One commenter stated that
private market carriers argue that
exclusions for services or drugs
commonly provided for the treatment of
conditions such as HIV/AIDS are not
discriminatory because they apply to all
plan enrollees, regardless of their
specific negative effect on people with
these conditions.
Response: Under the law, states must
assess whether their ABP benefit
designs, including service or drug
exclusions that are applied to all
beneficiaries, discriminate based on an
individual’s age, expected length of life,
or an individual’s present or predicted
disability, degree of medical
dependency, or quality of life or other
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health condition contrary to the nondiscrimination provisions being adopted
in this final rule at § 440.347.
Comment: One commenter suggested
that in developing an analysis
framework to aid in testing for
discriminatory plan benefits, CMS must
ensure that ABPs refrain from using
benefit designs that treat patients in a
disparate manner based on age. For
example, where FDA approves a drug or
biologic for use in patients within a
certain population, such as pediatrics,
the commenter argued that ABPs should
not be permitted to restrict coverage or
employ varying utilization techniques
for children of different age ranges
within that pediatric population. The
commenter requested CMS’ vigilant
oversight to protect children from being
subject to age-based discrimination in
accessing FDA-approved products.
Response: The non-discrimination
provisions adopted in this final rule at
§ 440.347 require that states will need to
assess whether their ABP benefits,
including any limitations placed on the
amount, duration and scope of any
benefit, discriminate on the basis of the
individual’s age, expected length of life
or any individual’s present or predicted
disability, degree of medical
dependency, or quality of life or other
health conditions. A limitation on
medically necessary care provided to
pediatric patients would violate the
requirement under section 1937 of the
Act that ABPs include the full range of
medically necessary EPSDT screening
and treatment services. Thus, the issue
would not be one of benefit design but
of compliance in providing a covered
benefit.
Comment: A few commenters stated
that CMS should adopt similar guidance
and review processes as required under
Medicare Part D program in the
Medicaid EHB final rule. These proven
non-discrimination policies and
processes have been critically important
in assuring that all Medicare
beneficiaries—from the healthiest
beneficiaries to the most vulnerable
beneficiaries with serious and chronic
illnesses—can obtain affordable Part D
coverage that meets their individual
needs. Additionally, CMS’ experience
assessing Medicare Advantage plans’
cost-sharing and benefit designs for
discriminatory effects may help point
the way.
Response: We appreciate the
comments regarding the use of Part D
non-discrimination standards and will
consider those standards as we evaluate
these issues and the need for further
guidance.
Comment: Several commenters
indicated that meaningful non-
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discrimination protections will require a
thoughtful and thorough review of
preferred drug lists (PDLs). They stated
that the following approaches could
help ensure meaningful access: (1) PDLs
should only be permitted to categorize
a drug as non-preferred when there are
genuine therapeutic alternatives
classified as preferred; (2) PDLs should
allow for appropriate access to drugs or
drug classes needed for adherence to
widely accepted treatment guidelines;
(3) The most commonly used
medications (or therapeutically similar
medications) for conditions with high
prevalence in the Medicaid population
should be categorized as preferred
drugs; and (4) Most importantly,
medications used by particularly
vulnerable Medicaid beneficiaries, such
as those living with HIV/AIDS, cancer
or serious mental illness, should be
largely available as preferred drugs,
given the importance of avoiding
medical complications and
interruptions in therapy for individuals
with those conditions.
Response: For covered outpatient
drugs, a PDL is permitted under section
1927 of the Act, as long as it is under
a prior authorization program that meets
the requirements of section 1927(d)(5) of
the Act. Furthermore, as we discuss in
the cost sharing sections of this final
rule, a PDL may also be established for
cost sharing purposes.
Comment: Many commenters
expressed concern that the regulation
did not provide examples of what
would be considered discriminatory
benefit design. The commenters request
CMS identify a clear standard to
determine whether the coverage
provided complies with the nondiscrimination provisions of the
Affordable Care Act. Additionally, the
commenters believe that CMS should
provide examples to States of what
would constitute violations, monitor
ABP coverage for compliance with the
non-discrimination requirements, and
enforce these provisions of the law.
Many other commenters added that the
rule also did not establish a process to
bring discriminatory benefit design or
practice into compliance. CMS should
consider developing more detail in the
final regulation defining these
protections. This should include a
process for bringing a State’s chosen
benchmark or benchmark-equivalent
option into compliance with the law.
Response: States will submit
Medicaid state plan amendments for
federal approval to implement ABPs
and receive FFP. The state will assure
in that submission that they will comply
with non-discriminatory requirements
as set forth in § 440.347(e). If issues are
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detected with adherence to these
requirements, we will pursue
appropriate action with the state to
rectify the issues. As always, we
appreciate the ongoing input of
stakeholders to help inform states and
CMS of concerns relating to these
matters.
Comment: One commenter indicated
that it is unclear how the requirement
that EHBs cannot be based on a benefit
design or implementation of a benefit
design that discriminates on the basis of
an individual’s age, expected length of
life, or of an individual’s present or
predicted disability, degree of medical
dependency, or quality of life or other
health condition will be evaluated in
the context of benchmark plans for
specified population. It is unclear
whether targeting permitted under other
sections such as section 1915(i) of the
Act would be permitted. The
commenter wondered whether it would
preclude the establishment of specialty
plans based on diagnosis.
Response: Section 1937 of the Act
does allow for a waiver of comparability
at § 440.230(c); thus permitting states to
identify groups of people, populations,
based on certain characteristics such as
presence of a chronic condition. States
can then design benefit packages that
are suitable for the population, but this
activity does not permit benefit designs
that are inherently discriminatory.
Comment: A few commenters
expressed concern that neither earlier
rules on EHB nor this proposed rule
specifically define ‘‘discrimination’’ in
the context of discriminatory benefit
design. The commenters urge HHS to
develop and promulgate a definition of
‘‘discrimination’’ that will allow states
to evaluate health plans uniformly. The
proposed rule delegates entirely to
states the task of evaluating EHB for
discriminatory design or intent with no
further guidance at all. The absence of
a definition of discrimination will
inevitably lead to a 50-state patchwork
of definitions. The commenters strongly
believe that the definition of
discriminatory benefit design should
not vary among states.
Response: Medicaid is a federal and
state partnership that allows states to
design state-specific programs within
broad federal guidelines and, more
generally, that allocates responsibilities
to both states and the federal
government. By identifying states as
accountable for determining that benefit
design is not discriminatory, we
recognize their important role in
assuring compliance with this important
statutory directive. Such accountability
does not negate federal responsibility.
As noted, we will consider whether
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further guidance on discrimination
benefit design would be useful.
Comment: One commenter pointed to
the Affordable Care Act’s provision
barring discrimination in EHB as
prohibiting disability-based
discrimination in making decisions
about coverage, reimbursement rates,
establishing incentive programs, and
designing benefits, and the commenters
believe those requirements should apply
to Medicaid ABPs. The commenter
recommends the Department provide
additional guidance concerning
applications of the Affordable Care Act
EHB non-discrimination mandate to
ABPs. The commenter believes the
Department should also identify a
minimum scope of services that plans
must cover to comply with the
Affordable Care Act’s parity and
nondiscrimination requirements and the
requirement that EHB take into account
the ‘‘needs of diverse segments of the
population, including . . . persons with
disabilities.’’
Response: The United State Supreme
Court decision in Olmstead v. L.C.
rendered on June 22, 1999 held that
unjustified segregation of people with
disabilities constitutes discrimination in
violation of Title II of the ADA. Public
agencies must provide services to
people in the community when services
are appropriate, people do not oppose
services in the community, and the
community-based services can be
reasonably accommodated, taking into
account the resources available to the
entity and the needs of others who are
receiving disability services from the
entity. Medicaid beneficiaries must
receive services in the most integrated
setting appropriate. We agree with the
commenter that benefit design,
including rate structures, should not
create a pathway to institutionalization
or segregation. Setting is not an
appropriate targeting criterion, because
it is potentially discriminatory as
different benefits could be designed
based on where individuals live and
therefore, it would not be acceptable as
a waiver of comparability.
Comment: Many commenters
recommend CMS use the following data
to determine compliance with the nondiscrimination requirements:
• Medical necessity requirements for
Medicaid must be evaluated and
standardized, and HHS should monitor
state implementation of medical
necessity to ensure that people living
with HIV, chronic disabilities and other
chronic and complex conditions have
unimpeded access to essential care and
treatment.
• Utilization management techniques,
exclusions, and service limits must be
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closely monitored to ensure that plans
have not put in place barriers to services
or excluded or limited certain items or
services solely to deny access to care for
people with chronic and complex health
conditions. The commenters urge HHS
to develop a list of practices that
amount to discrimination to help guide
monitoring and enforcement activities.
For instance, requiring step therapy for
HIV treatment without a medical
override provision is a discriminatory
utilization management technique that
should be barred. Similarly, a monthly
limit on prescription drugs (for
example, several states have monthly
limits of three or four prescription
drugs) is also per-se discriminatory, as
applied to people living with HIV and
other chronic conditions.
• Physician network size and
composition must be evaluated to
ensure that Medicaid managed care plan
networks include providers that are able
to deliver quality care for people living
with HIV and other chronic and
complex conditions. A plan network
that excludes HIV providers violates
network adequacy standards outlined in
qualified health plan standards and is a
discriminatory plan design practice that
forecloses access to EHB services. In
addition, patient protections (for
example, standing out-of-network
referrals) will be necessary to ensure a
smooth transition to coverage and to
support continuity in care. The
commenters strongly urge CMS to
require Medicaid managed care plans to
contract with Essential Community
Providers, including Ryan White
medical providers.
• For chronic and complex
conditions, where the standard of care
is rapidly evolving, reference to clinical
guidelines is particularly important to
ensure that coverage decisions are based
on established medically accepted
guidelines.
Response: Thank you for your
suggestions. We agree that Medicaid
managed care provider networks need to
be adequate to provide services to all of
their members. It is at state discretion to
include (or not) standards for managed
care providers in the contracts that the
state holds with the managed care
organizations in the state. Managed care
entities can contract with any provider
operating within the scope of their
license to provide services.
Comment: A few commenters
recommend ongoing procedures for
states to monitor and share data on how
they are meeting their benefit design
and anti-discrimination obligations over
time, and make this information
transparent and readily available in at
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least an aggregate fashion to HHS, the
public, and to health advocates.
Response: We appreciate the
comments. We are currently redesigning
data collection procedures and
standards and will consider these
comments.
Comment: One commenter is
requesting that any coverage under the
Affordable Care Act, including
Medicaid Programs, adequately cover
therapies that cancer patients absolutely
must take whether or not there is an
actuarial equivalent at a lower cost.
Coverage of drugs and services related
to cancer care should not create cost
barriers to patients through cost-sharing
schemes such as burdensome co-pays
and co-insurance. To do so would be
unfairly discriminatory, and could
impact a patient’s ability to access their
care, particularly low-income patients
enrolled in Medicaid. The commenter
would like to see strong protections and
oversight established to prevent
discrimination.
Response: We agree that a patient’s
ability to pay cost sharing imposed for
a service can affect a patient’s access to
care and that low-income patients are
particularly sensitive to such costs.
Medicaid cost sharing rules at § 447.52
generally and § 447.53 for drugs apply
to ABPs. States design cost sharing for
therapies and drugs using those rules,
and cost sharing rules may not be
implemented in a manner that would be
discriminatory. Annual dollar limits on
services will not be allowed on benefits
in the public employee or commercial
plans that are the basis for the base
benchmark options used to define EHBs
per section 2711 of the Affordable Care
Act.
Comment: A few commenters believe
that § 440.347(e) sets out a strong nondiscrimination requirement. However,
the commenters also believe that there
will be times when individuals are
going to need access to legal advocacy
to seek redress from discrimination and
enforce these due process protections.
The commenters recommend that the
states be required to assist individuals
to use the due process and appeals
processes, this would include: (1)
Information and assistance in pursuing
complaints and appeals; (2) negotiation
and mediation; (3) case advocacy
assistance in interpreting relevant law;
(4) reporting on patterns of noncompliance by plans as appropriate; and
(5) individual case advocacy in
administrative hearings and court
proceedings relating to program
benefits.
Response: We appreciate these
suggestions; however, they are outside
the scope of this regulation.
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Comment: Many commenters
representing the Lesbian Gay Bi-Sexual
and Transgender (LGBT) community
stated that the final rules must also
address gaps in enforcement of this
prohibition on discriminatory
exclusions by providing clear guidance
to state Medicaid agencies on
implementation of these
nondiscrimination standards.
Enforcement is a major concern for
these commenters in two areas: (i)
instances of discrimination against
individual enrollees, and (ii)
discriminatory benefit design. The
former is very important for LGBT
enrollees, and they encourage CMS to
work with state Medicaid Directors to
ensure that robust and transparent
appeals procedures are equally available
to all individuals who need them. With
regard to discriminatory benefits design,
they are particularly concerned about
enforcement in the context of potential
disagreement as to what kinds of benefit
limitations and exclusions constitute
impermissible discrimination in benefit
design.
Response: We appreciate the concerns
expressed by these commenters. We
intend to work with states on these
matters as well as consider ways in
which discrimination for LGBT
enrollees may be rooted in benefit
limitations and exclusions as well as in
appeals processes.
Comment: Several commenters stated
that the proposed rule requires that a
Medicaid benchmark plan’s benefit
design cannot be discriminatory, and
the final regulation must ensure
adequate protections against
discrimination. The commenters
recommend the regulation require the
following non-discrimination standards:
• Processes for review of plan
benefits design to avoid discrimination
caused by unfair utilization
management techniques or other plan
design elements.
• Requirements for plans to disclose
to all prospective and current members
all utilization management techniques
as well as all limits on services.
• Final authority at the federal level
to approve any state non-discrimination
review processes to ensure appropriate
measures are in place to guarantee that
plans are meeting the requirements of
this section.
• Federal monitoring programs to
ensure appropriate checks are in place
to guarantee that plans are meeting
federal requirements.
In addition, the commenters urge
CMS to clarify that Medicaid costsharing limits apply to the managed care
organizations participating in the
Medicaid program. For more details on
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non-discrimination standards, the
commenters refer CMS to its proposed
regulatory language for a comprehensive
set of patient protections.
Response: In Medicaid, utilization
management processes are at state
discretion. States have flexibility to
design and implement the Medicaid
program in the state according to state
policies and procedures. States will
assure in the state plan amendment
submission that anti-discrimination
practices at § 440.347(e) are met. We
clarify here that Medicaid cost sharing
parameters apply to services provided
in a managed care delivery system.
Furthermore, we have oversight
responsibility of state programs to
insure that federal rules and
requirements are being followed.
Comment: One commenter pointed
out that § 440.347 deals exclusively
with patient non-discrimination. The
commenter indicated that there is also
provider discrimination within health
plans, where sometimes entire classes of
healthcare professionals are excluded
from providing services under the
benefit solely based on their licensure or
certification. The commenter believes
such discrimination can limit or deny
patient choice and access to a range of
beneficial, safe and cost-efficient
healthcare professionals, impairing
competition, patient access to care, and
optimal healthcare delivery. The
commenter recommends the rule
require ABPs offering EHBs to align
payment systems to adhere to existing
state provider non-discrimination laws
as applicable, and to the federal
provider non-discrimination provision
in the Patient Protection and Affordable
Care Act (Sec. 1201, Subpart 1, creating
a new Public Health Service Act Sec.
2706, ‘‘Non-Discrimination in Health
Care’’, 42 U.S.C. 300gg–5) slated to take
effect January 1, 2014.
Response: We require that all
providers are operating within the scope
of their licensure or certification when
providing services to Medicaid
beneficiaries.
Summary: We appreciate the
comments and suggestions and may
consider further guidance. No change in
the substance of the regulatory text is
needed. However, CMS made
grammatical changes to the regulation
text at § 440.347(e) as a result of
comments received in this section.
3. Modifications in Applying the
Provisions of This Final Rule to
Medicaid
We proposed in the implementation
of section 1937 of the Act and the
provisions in the Affordable Care Act
relating to EHBs, a process in Medicaid
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for designing ABPs. The Affordable Care
Act modified section 1937 of the Act to
implement two standards for minimum
coverage provision; not only must EHBs,
as defined by the Secretary, be
provided, but all requirements of
section 1937 of the Act continue to
apply. Furthermore, we outlined
expectations for specific EHBs as they
are implemented in Medicaid including:
habilitative services; pediatric or and
vision services; prescription drugs;
preventive services as an EHB; and the
fact that all other Title XIX provisions
apply.
a. Essential Health Benefits
(Rehabilitative and Habilitative Services
and Devices) (§ 440.347)
The proposed rule requested
comment on an approach for defining
habilitative services in Medicaid and we
reserved regulatory text to do so. We
received varied comments, and are
adopting in this final rule the
requirement that services covered by the
base benchmark are the floor of EHB
coverage, substituted as desired by the
state. Under 45 CFR 156.110(f), if no
habilitative services and devices are
included in the base benchmark, states
have the option to determine generally
the required EHB services that are in the
category of habilitative services and
devices. If the state has done so, the
base benchmark, and coverage under the
ABP, must reflect that determination. If
the state has not made a general
determination of the habilitative
services that are required for this EHB
category, the state must exercise the
option set forth in 45 CFR 156.115(a)(5)
to determine EHB for the specific ABP.
Under that option, habilitative services
and devices must be included as EHBs
either in an amount, duration, and
scope no more restrictive in terms of
treatment and benefit limitations than
rehabilitative services and devices, or
otherwise to an extent determined by
the state and reported to HHS. In other
words, if the base benchmark does not
include habilitative services and
devices, ABP coverage must, at a
minimum, be based on the general state
determination of habilitative services
and devices that are included in EHBs,
or on a Medicaid-specific determination
for the particular ABP.
While we are not prescribing a
specific definition of habilitative
services and devices for purposes of
ABP coverage of EHB, we clarify here
that states may choose to adopt service
definitions similar to those issued by
the National Association of Insurance
Commissioners (NAIC), as follows:
rehabilitative services and devices are
defined as services and devices
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provided to assist a person to prevent
deterioration and regain or maintain a
skill or function acquired and then lost
or impaired due to illness, injury or
disabling conditions. The NAIC also
defines habilitative services and devices
as services and devices provided for a
person to prevent deterioration or attain
or maintain a skill or function never
learned or acquired due to a disabling
condition. CMS will consider the need
for future guidance, once experience is
gained in implementing these EHB
services and devices. We also note that
while there is a definition of habilitative
services under existing sections 1915(c)
and 1915(i) of the Act, this definition is
not necessarily applicable and may in
fact not be appropriate for the
population covered under ABPs.
Comment: A number of commenters
believed that by requiring coverage of
habilitative services in the ten
mandatory EHB categories, Congress
clearly indicated its intent to meet the
health needs of individuals with
functional limitations following illness,
injury, disability or due to a chronic
condition. The commenters
recommended that HHS develop an
objective minimum national standard
for habilitative services based on
‘‘appropriate coverage to meet the needs
of the population,’’ and allow states
flexibility to add to this minimum for
purposes of innovation.
A few commenters recommended
HHS better define this category of
services including providing clarity as
to how plan definitions and scope of
coverage will be assessed to ensure
compliance with non-discrimination
provisions. A number of commenters
requested HHS cover habilitation at
parity with rehabilitation, with some
comments suggesting this standard also
require habilitative services under
Medicaid to be at least as generously
defined as in the private market.
Many commenters requested that
HHS require coverage of habilitative
devices without arbitrary restrictions
and caps that limit the effectiveness of
the benefit.
Several commenters recommended
HHS include a set of habilitative
services specifying the minimum type of
services to be provided and specify that
these services are a floor.
Many commenters recommended that
habilitation be covered separate and
distinct from rehabilitation. For
example, the plan cannot substitute
rehabilitation for habilitation or apply
only a single visit limit to both benefits.
Each benefit must have separate and
distinct limits which are applied based
on medical necessity, not an arbitrary
cap.
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One commenter requested that HHS
recognize that habilitative services are
similar in type and scope to
rehabilitative services (for example,
physical therapy, occupational therapy,
speech-language pathology). One
commenter believed that habilitation
should be covered in the same setting
and include the same type of providers
and specialists as covered in the
rehabilitation benefit.
A number of commenters believed
that setting clear, comprehensive, and
uniform standards for habilitative
services will prevent non-aligned
localized definitions that could create
serious problems across programs and
states. A few commenters requested
formal guidance on what the minimal
expectation is for habilitative services.
A few commenters believed that when
states adopt the habilitative benefit for
ABP, HHS require that they do not
impose financial requirements,
quantitative treatment limitations, or
financial limitations that are more
restrictive than the predominant
requirements or limitations that apply to
all other benefit categories.
Response: We believe the provision of
habilitative services is in addition to
rehabilitative services and devices as an
EHB. As EHBs are based on commercial
market products, we are interpreting
rehabilitative services as an EHB to
more closely align with commercial
market definitions, rather than the
broader definition of rehabilitation in
Medicaid. We therefore, are establishing
that the commercial market definition of
EHBs is the floor of coverage, subject to
substitution flexibilities. If the
commercial market coverage is not
adequate, states, not issuers, define the
benefit. At state discretion, as indicated
above, states may offer coverage of
habilitative services and devices that is
no more restrictive in terms of amount,
duration, and scope than rehabilitative
services and devices. We expect that the
services will be clinically appropriate to
meet the needs of individuals based on
medical necessity. We have added this
flexibility for states to define a
minimum standard of coverage if the
commercial market benefits are not
adequate. We are suggesting, but not
requiring, definitions of rehabilitative
and habilitative services and devices, as
indicated above, and will consider
needs for future guidance. We are
reiterating that the benefit flexibility
under an ABP allows states considerable
latitude to define the benefit package for
each population and there may be
services that are covered in some
settings but not in other settings, or that
are covered when furnished by some
practitioners but not others. This is
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flexibility that exists currently in the
commercial marketplace, and is
extended to state Medicaid programs
under section 1937 of the Act.
Comment: One commenter
recommended that the coverage and
medical necessity determinations for
habilitative services and devices should
be based on clinical judgment of the
effectiveness of the therapy, service, or
device to address the deficit. In
addition, HHS should make clear that
such benefits are to cover maintenance
of function not just improvements, to
assure that individuals in need have
access to care that prevents
deterioration of their conditions.
One commenter requested that HHS
inform states that habilitative services
need to be medically necessary and
plans must be clear on how they define
and determine medical necessity.
Response: States may require that all
services covered under Medicaid be
medically necessary. Determining the
specific coverage of habilitative services
and devices will be done by the state,
based on services found in the base
benchmark plan selected by the state to
define EHBs for Medicaid, and
substituted as desired. If a base
benchmark plan does not include
habilitative services, consistent with 45
CFR 156.110(f) and 156.115(f), States
will determine which services are
included as EHB in the habilitative
services and devices category. We agree
with the commenter that habilitative
services, generally speaking, cover
acquisition and maintenance of skills,
while rehabilitative services cover
restoration of previously acquired skills,
but we are not setting forth a specific
definition of these terms at this time.
Comment: One commenter
recommended that HHS look to state
Medicaid programs as a guide for
defining what habilitation services
should be covered under the EHB. A
number of commenters requested that
HHS require states and plans to adopt
the definition of habilitative services
put forth by the NAIC, which was
included in the Department’s proposed
rule defining medical and insurance
terminology. Many commenters
recommend that if the NAIC definition
is not used, an alternate definition to
consider is provided in Medicaid law
under section 1915(c)(5)(A) of the Act.
Response: We appreciate these
suggestions and find the definitions of
rehabilitative services and devices and
habilitative services and devices
extremely useful. Habilitative services
and devices as described in the base
benchmark plan is the floor of coverage,
subject to substitution flexibility. If a
base benchmark plan does not include
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habilitative services, consistent with 45
CFR 156.110(f) and 156.115(f), States
will determine which services are
included as EHB in the habilitative
services and devices category. States
may choose to offer habilitative services
and devices in no more restrictive in
terms of amount, duration, and scope of
treatment than is applied for
rehabilitative services and devices.
Comment: One commenter requested
the state-defined habilitative benefit
definition, as applied to section 1937
ABP in Medicaid, should not be
extended to QHPs on the Exchange.
This commenter indicated that in many
states, Medicaid takes an expansive
view of habilitative services, and there
is a risk that if applied to the
commercial market, this could raise
costs on QHPs in the Exchange. States
should have the option to either
separately define habilitative services
for Medicaid or apply the state-defined
habilitative definition for the Exchange
to the Medicaid programs, but not apply
a broad Medicaid habilitative service
definition to QHPs in the Exchange.
Response: This regulation is focused
on the parameters of the habilitative
services and devices that are EHBs for
purposes of section 1937 ABPs under
the Medicaid program and, this
regulation does not apply to QHPs.
Comment: Many commenters
recommended that states should be
allowed to define habilitative services
for their Medicaid program.
Response: We are adopting the
position in this final rule that states will
have the ability to define habilitative
services and devices. If the base
benchmark plan selected by the state to
define EHBs, does not include
habilitative services and devices, states
will define the habilitative services and
devices that will be regarded as this
EHB category and must be covered in
the ABP. In so doing, states can choose
to offer habilitative services and devices
that are at a minimum no more
restrictive in terms of amount, duration,
and scope than rehabilitative services
and devices.
Comment: One commenter requested
that HHS continue to allow states and
issuers the flexibility to define
habilitative services for the individual
and small group markets as proposed in
the EHB proposed rule and not be
required to follow Medicaid definitions.
Response: We reiterate that this
regulation applies only to the Medicaid
program, and has no bearing on the
provision of habilitative services in the
individual and small group markets.
Comment: One commenter requested
HHS clarify that states will be deemed
to cover habilitation if they provide ABP
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42215
enrollees with such services through a
section 1915(c) waiver program.
Response: The new adult eligibility
group is not eligible for enrollment in
section 1915(c) waivers. However, states
may also add section 1915(i) services to
the ABP using Secretary-approved
coverage, which may include some
habilitative services and devices. But we
do not see a reason to ‘‘deem’’
compliance with the habilitative
services and devices EHB requirements
just because a state may include some
habilitative services and devices in
those ways. The state must still
determine habilitative services and
devices that are EHBs in accordance
with this regulation.
Comment: A few commenters
recommended that if HHS does not use
a national standard for Medicaid
habilitative service benefits, then states
should be required to base their
definitions on documented and
evidence-based criteria, such as those
endorsed by a relevant national
academy of providers or national
disease group; and states should not
automatically be allowed to use their
Exchange habilitative services
definitions unless it independently
meets the criteria stated above.
Response: We expect that states will
consider the efficacy of services,
evidence-based criteria, and the needs
of the populations being served as they
are designing habilitative services,
based on the services found in the base
benchmark selected by the state to
define EHBs for Medicaid, and
supplemented and substituted as
necessary and desired.
Comment: Many commenters
recommended that the state-defined
habilitative services for Exchanges
should not apply to Medicaid. Instead,
some commenters indicated that states
should be required to define habilitative
services through a public process that
establishes minimum standards for
coverage, while taking into account
unique circumstances of the Medicaid
population, including the impact of a
restrictive definition on access to
critical services in early intervention
and special education. One commenter
believed that states should have the
option to offer parity.
Response: In terms of complying with
EHB requirements, the same basic
framework applies to both ABPs and
plans in the individual and small group
markets. But that basic framework
includes considerable flexibility that
states can exercise in the Medicaid
context. While states will ultimately
determine coverage of habilitative
services we encourage states to do so in
recognition of the unique needs of the
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Medicaid population. As states work to
identify coverable habilitative services,
they are expected to consider input from
the public in making the decisions.
ABPs are subject to public notice
requirements in § 440.386.
Comment: One commenter requested
that the final rule ensure that the state’s
Medicaid definition of habilitation is at
least as generous as the definition used
for Exchange plans.
Response: While we believe that the
procedures we are adopting to
determine habilitative services included
in EHB for Medicaid will generally be
at least as generous as the parallel
procedures for the individual and group
market, we are not requiring that result.
We believe that the procedures for
Medicaid will lead to appropriate
coverage for Medicaid beneficiaries
while recognizing the state’s role in
designing Medicaid coverage.
Comment: Many commenters
recommended against HHS allowing
any of the potential flexibility,
authorized in the Exchange, for issuers
to define the habilitative benefit.
Commenters were concerned that
issuers would limit the range of services
too narrowly.
Response: States will retain flexibility
to design services covered within the
rehabilitative and habilitative services
and devices EHB consistent with the
procedures set forth in this final
regulation.
Comment: A few commenters
recommended HHS require states to
establish the same definition of
habilitative services for ABP, QHPs, and
Exchange, due to the significant amount
of churn associated with the population
being served. One commenter believed
that habilitative services should have a
common definition, but that definition
should not necessarily determine what
is covered by the Exchange or Medicaid.
Those habilitative services that are to be
covered should be separately
established by the Exchange and by
Medicaid, since this is a question of
affordability and comprehensiveness.
Response: We recognize the
possibility for churn between Medicaid
and the individual and small group
markets. We believe the flexibility
reflected in this regulation provides the
basis for continuity between the
commercial market and Medicaid. We
are also allowing states to use provider
qualifications from the commercial
market plans to help minimize the
possibility for provider changes if a
person’s plan changes.
Comment: One commenter indicated
that currently under Medicaid,
habilitation services are defined in
statute and provided as an alternative to
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institutional services such as nursing
home care. As noted in the regulation,
employers do not cover the service
consistent with Medicaid requirements.
As a result, if parity is required without
consideration of the scope of
habilitation services offered, the result
could be states exceeding the EHB
standard. States should be provided the
flexibility to define and provide
coverage of habilitation services.
Response: Habilitative services and
devices are coverable services under the
section 1915(c) waiver program and the
waiver program does provide a
suggested definition. Section 1915(i)
also allows coverage of habilitative
services and devices where states define
the service. We are giving states
flexibility to define habilitative services
and devices within the standards
finalized in this regulation. In addition,
states may offer either habilitative or
rehabilitative services in excess of these
standards.
Comment: Numerous commenters
believed that states should not be
allowed to define habilitative services
through parity with rehabilitative
services since the two service sets have
totally distinct purposes and impact
different sets of individuals. They
asserted that parity is a poor standard
because there is no certainty that the
rehabilitative services level is itself
adequate to begin with.
Response: We appreciate the
commenters’ concerns. We are
establishing that the state may
determine the ABP-covered benefit
beyond the benefits included in the base
benchmark plan,. To the extent that the
base benchmark has no habilitative
services, the state may elect to include
as the EHB category habilitative services
and devices coverage that is no more
restrictive in amount, duration, and
scope than the coverage of rehabilitative
services and devices. We acknowledge
that this standard does not guarantee
provision of any particular habilitative
or rehabilitative service. This will be in
large part determined by the services
offered in the plan selected by the state
to define EHBs for Medicaid.
Comment: One commenter requested
HHS, at a minimum, afford flexibility to
issuers allowing them to either provide
parity by covering habilitative services
in the same manner as rehabilitative
services or report the services it decides
to cover to HHS.
Response: The procedures we have
adopted recognize that states have the
role that issuers have in the individual
and small group market. Federal
Medicaid works directly with state
governments and not issuers. Therefore,
we believe that having states define the
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habilitative services benefit instead of
issuers, using the procedures finalized
here, is the most appropriate approach.
Comment: One commenter believed
that habilitative services complement
rehabilitative services and are integral to
ensuring that the beneficiary receives
comprehensive care that restores him/
her to maximum functional levels. This
commenter stated that both substitution
among and parity between these
services could be problematic if the
beneficiary’s medical condition requires
significantly more rehabilitative services
than habilitative services and vice versa.
Response: States may implement
utilization management processes that
allow for individuals who need
additional services beyond the limits
established in the ABP to receive such
services based on medical necessity.
States could substitute rehabilitative
services for rehabilitative services and
habilitative services for habilitative
services.
Comment: A number of commenters
recommended that HHS remove the
requirement that state Medicaid
programs cover habilitative services, as
this is not a separate mandated category
of EHB services. Instead, a Section 1937
plan that covers either rehabilitative or
habilitative services should be deemed
to cover items and services within the
general EHB category for rehabilitativehabilitative services.
Alternatively, a few commenters
recommended that HHS clarify that
ABPs must cover all of the benefits
within categories of care that list more
than one benefit, as is the case for
rehabilitative and habilitative services
and devices. In particular, a plan should
not be considered to meet the
requirement of covering all EHBs unless
it covers, as three distinct benefits,
rehabilitative services, habilitative
services, and rehabilitative and
habilitative devices, as opposed to
covering only one of the many benefits
included in this category.
Response: Habilitative services are
listed as a required benefit category of
EHB at section 1302(b)(1)(G) of the
Affordable Care Act. It is part of a
category of EHBs, but is distinct from
rehabilitative services and devices. Both
rehabilitative and habilitative services
and devices must be offered in all ABPs.
Comment: A number of commenters
supported access to habilitative services
and devices including autism services,
durable medical equipment, orthotics,
prosthetics, low vision aides, hearing
aids, augmentative communication
devices that aid in speech and hearing,
and other assistive technology and
supplies that are often critical to ensure
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individuals are able to function
independently in the community.
Response: We appreciate the
comment and agree that these types of
services could assist people with living
in the community. We are not requiring
any specific services to be offered
within this EHB category.
Comment: A number of commenters
requested that HHS require coverage of
services without age restrictions. They
indicated that a pediatric-only
habilitative benefit is inadequate,
especially as the new eligibility category
is for adults only.
Response: EHBs including
rehabilitative and habilitative services
and devices apply to all individuals
who receive a benefit package in ABPs,
regardless of age. For the new adult
group, only individuals who are ages 19
and 20 will qualify for EPSDT services.
Comment: A few commenters
requested HHS prohibit the exclusion of
specific conditions or diagnoses from
accessing the benefit.
Response: ABPs allow for
comparability to be waived, which
results in allowing for targeting of
individuals to specific benefit packages.
However, all individuals in the new
adult group and other individuals the
state either mandates or offers voluntary
enrollment into an ABP must receive all
EHBs, including habilitative and
rehabilitative services and devices.
Comment: A few commenters
recommended that states should define
habilitation using EPSDT criteria.
Response: Section 1905(a) of the Act
does not include a service category for
‘‘habilitation services’’ so it is not useful
to look to EPSDT coverage for guidance
and EPSDT criteria do not apply under
law to adults. For children, however,
the EPSDT benefit must provide eligible
individuals with any medically
necessary service that is coverable
under a section 1905(a) service category.
Consistent with the law, these
regulations extend the EPSDT benefit,
which also includes children covered in
an ABP. Therefore, children in an ABP
should receive any covered section
1905(a) benefits that they require based
on medical necessity.
Comment: A few commenters
requested that HHS cover habilitation
services, which maintain an
individual’s functional status, as
defined by the HHS Summary of
Benefits and Coverage regulations.
Response: The HHS Summary of
Benefits and Coverage regulations apply
to private insurance markets, which do
not include Medicaid.
Comment: A few commenters
cautioned against restricting services in
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EHB plans without allowing for an
exception process.
Response: States do have the
flexibility to allow for exception
processes for utilization management of
the benefit; such exceptions must be
based on medical need.
Comment: One commenter
recommended that the habilitative
benefit cover the full array of health and
ancillary service needs of children with
special health care needs. The
commenter believed that this is
especially important for children aging
out of foster care, as these children are
at greater risk of having a chronic
condition requiring habilitative services.
A few commenters indicated that it is
inappropriate for any one service to
satisfy the requirement for a benchmark
plan covering habilitative services. For
example, providing only Applied
Behavioral Analysis to children under
the benchmark plan is inadequate to
satisfy the full requirement of coverage
of habilitative services. These
commenters requested that the
benchmark plan utilized be as
comprehensive in its coverage as
feasible. One commenter recommended
defining habilitation and contrasting it
with rehabilitation to help clarify the
distinction between the two benefits.
Response: We remind readers that
states must not only comply with the
standards finalized in this regulation,
but must also include all habilitative
services covered in the public employee
or commercial plan selected by the state
to define EHBs for Medicaid,
supplemented and substituted as
necessary and permitted.
Comment: One commenter believed
there should be no exclusion for
services that may be educationallyrelevant, as is the current policy in
Medicaid.
Response: Payment for Medicaid
services must be for services that are
medical or remedial in nature as
specified by the particular authority
from which the service is derived.
Comment: One commenter requested
HHS provide states a description of
maintenance programs and clarify at
what point services are no longer
covered.
Response: The level at which services
no longer have clinical value is
determined by the state through medical
necessity criteria.
Comments: One commenter requested
that HHS clarify the clinical settings in
which habilitative services may be
covered and ensure that there is a
prohibition against ‘‘school’’ exclusions.
Response: Settings in which services
are furnished are largely determined by
the providers authorized by the state to
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deliver services. Practitioners within
schools can become Medicaid providers
if they meet the provider qualifications
as established by the state. In ABPs,
states may use provider qualifications
for the benefit as defined for the
commercial market, Medicaid provider
qualification rules for the benefit, or a
combination of both.
Comment: A few commenters
requested information related to the cost
of adding habilitative services.
Response: Habilitative services are not
included in the benefit package
typically included in the Medicaid state
plan, and our limited experience does
not allow for extrapolation for a
nationally required service. States will
initially receive 100 percent FMAP
starting January 1, 2014 to cover the cost
of providing services to individuals who
are considered newly eligible in the new
adult group, and that funding will
decline to 90 percent FMAP in 2020.
For individuals who are considered not
newly eligible in the new adult group
and those who are not in the new adult
group, FMAP will be provided at the
state’s regular FMAP rate.
Comment: Many commenters
recommended that HHS prohibit the use
of cost-sharing requirements or
utilization management tools which
target the habilitation benefit and are
not applied to other EHB benefits.
Response: We are not accepting this
comment because states have the
flexibility to impose cost sharing
consistent with the exemptions and
beneficiary protections set forth in
sections 1916 and 1916A of the Act,
which we address separately in this
final rule. There is no exemption under
those provisions for habilitation
services. In determining how to exercise
the flexibility to impose cost sharing,
however, we recognize that states must
consider their obligations under the
Americans with Disabilities Act and
must not implement a discriminatory
benefit design.
Comment: A few commenters were
disappointed that HHS has chosen not
to provide states any guidance regarding
the habilitation benefit in ABP.
Response: In the proposed rule, we
solicited public comments on the EHB
requirements for rehabilitative and
habilitative services, including devices.
We received considerable numbers of
comments, and considered those
comments carefully. We weighed
concerns about burden and cost of
expansive coverage against the benefits
of wider access for beneficiaries to
needed care. We also considered the
treatment of these benefits in the
commercial market. Based on this
consideration, we are issuing in this
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final regulation the policy for coverage
of rehabilitative and habilitative
services, including devices. We hope
that these policies provide the guidance
requested by commenters.
Comment: Many commenters
requested HHS stipulate in the final
regulation an ongoing process for data
collection and evaluation related to ABP
and Exchange coverage of habilitative
services and devices. If this data were
compared to the model definition of
habilitation, that would give parameters
for determining the adequacy of
coverage for the first year of ABP and
exchange operation.
Response: CMS collects data from
states in a variety of ways. The data will
be available to help states, CMS and
others determine what services are
actually being provided, and it will help
to inform us for future coverage
decisions.
Comment: One commenter indicated
that states should be able to include as
Medicaid state plan services any
habilitative services included in either
its Exchange EHB benchmark or ABP.
Response: Habilitative services are
only required in the Medicaid program
for individuals in an ABP. Many states
cover habilitative services under their
section 1915(c) waivers. States
interested offering habilitative services
in other contexts should initiate
conversations with CMS.
Comment: One commenter believed
the habilitative benefit proposed to be
defined in the November 20, 2012 EHB
proposed regulation is wholly
inadequate and urged HHS to pursue
promulgation of a strong, uniform
definition of habilitative services for
ABPs, as well as those offered through
the Exchange.
Response: The scope of this regulation
is related to the definition of
habilitation services as EHBs for
purposes of Medicaid ABPs under
section 1937 of the Act. This regulation
does not extend to the definition of
habilitation services as EHBs for
purposes of the individual and small
group markets.
Comment: One commenter
recommended that HHS have the
authority to amend state defined
coverage of habilitative services should
evidence show that they provide
insufficient coverage for users.
Response: We anticipate that states
will provide appropriate coverage of
this service but section 1937 of the Act
gives states a certain amount of
flexibility to define ABPs that include
the minimum coverage defined as EHBs.
Comment: One commenter believed
that by requiring section 1937 plans to
cover habilitative services, CMS is
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creating a disconnect between the scope
of services offered under the state plan
and section 1937 coverage, in essence
making the section 1937 plans more
generous than current Medicaid state
plans (which goes against congressional
intent).
Response: The Affordable Care Act
established habilitative services as part
of the EHB category ‘‘Rehabilitative and
Habilitative Services and Devices.’’
EHBs are required to be offered as part
of ABPs and are not required in other
Medicaid state plan benefits for adults.
ABP benefit packages will be different
from those defined as the Medicaid state
plan.
Comment: One commenter believed
that requiring habilitative coverage does
little to ensure that appropriate services
are available to individuals, as those
requiring habilitative services are likely
to be considered ‘‘medically frail’’,
exempting them from mandatory
enrollment in the benchmark package.
Response: Individuals in the new
adult group who meet the criteria to
otherwise be determined to be exempt
for medical frailty, will have a choice
between ABP coverage that is defined in
accordance with the requirements of
section 1937 of the Act, including the
EHB requirements, or ABP coverage that
is defined as the coverage available
under the state’s approved Medicaid
state plan. People who are not in the
new adult group and are eligible for
voluntary enrollment may be given a
choice by the state between the benefit
package defined using the ABP or the
state’s approved Medicaid state plan.
An individual who has such an election
may obtain needed habilitation services
if the state has elected to provide such
coverage under the state plan under
section 1915(i) of the Act. If not, such
individuals who need habilitative
services may wish to voluntarily enroll
in an ABP defined under section 1937
of the Act, if the EHB benefit package,
inclusive of habilitative services, meets
their needs.
Summary: We solicited public
comments related to this provision in
the proposed rule. We clarify in
regulation text that the state will define
rehabilitative and habilitative services.
Services covered by the base benchmark
are the floor of EHB coverage,
substituted as desired by the state.
Under 45 CFR 156.110(f), if no
habilitative services and devices are
included in the base benchmark, states
have the option to determine generally
the required EHB services that are in the
category of habilitative services and
devices. If the state has done so, the
base benchmark, and coverage under the
ABP, must reflect that determination. If
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the state has not made a general
determination of the habilitative
services that are required as this EHB
category, the state must exercise the
option set forth in 45 CFR 156.115(a)(5)
to determine EHB for the specific ABP.
Under that option, habilitative services
and devices must be included as EHBs
either in an amount, duration, and
scope no more restrictive in terms of
treatment and benefit limitations than
rehabilitative services and devices, or
otherwise to an extent determined by
the state and reported to HHS. In other
words, if the base benchmark does not
include habilitative services and
devices, ABP coverage must, at a
minimum, be based on the general state
determination of habilitative services
and devices that are included in EHBs,
or on a Medicaid-specific determination
for the particular ABP.
b. Pediatric Oral and Vision and EPSDT
Services
For Medicaid, medically necessary
services, including pediatric oral and
vision services, must be provided to
eligible individuals under the age of 21
according to requirements of the EPSDT
benefit. We clarified in the proposed
rule that any limitations relating to
pediatric services that may apply in the
individual or small group market does
not apply to Medicaid. In this final rule,
we made no change from the proposed
rule.
Comment: Several commenters
expressed appreciation for and support
of the clarifying language in the
preamble that confirmed that medically
necessary services provided to eligible
beneficiaries under the age of 21 must
be provided under the EPSDT program,
and that any limitation relating to
pediatric services based on benchmarks
would not apply to Medicaid for
children enrolled in ABPs.
One commenter added that the
EPSDT benefit ensures that Medicaid
eligible children have access to a
complete range of medically necessary
services, concluding that this will prove
especially important for children with
chronic conditions.
A separate commenter believed that
the pediatric services category for
benchmark plans for all populations
must include a comprehensive pediatric
services benefit modeled after EPSDT.
Response: We generally agree with
these commenters, that the EPSDT
benefit is important in offering
increased access and a comprehensive
range of medically necessary services
for children under the age of 21. For
children enrolled in Medicaid, all
medically necessary services in general,
including pediatric oral and vision
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services, are covered under the
Medicaid EPSDT benefit, which applies
to every section 1937 ABP. As a result,
EHB supplementation for pediatric
services is not necessary in Medicaid.
When assuring access to EPSDT
services, a state has the option to offer
medically necessary services to eligible
children through either benchmark and
benchmark-equivalent plan benefits
without limitation or, alternatively, a
state may meet the ESPDT requirement
by providing services in combination
with an eligible individual’s benchmark
or benchmark-equivalent plan as
additional benefits. The state Medicaid
program must assure that eligible
individuals enrolled in ABP coverage
receive EPSDT services that can be
accessed in the most beneficial and
seamless manner for the population
being served.
Comment: One commenter believed
that subjecting ABP benefit categories to
EPSDT requirement, such as
preliminary screening, would water
down ABP benefit packages and serve as
an artificial barrier to care that children
need. The commenter believed that a
robust pediatric vision services benefit,
as envisioned by Congress in the
Affordable Care Act, based on coverage
typical in the commercial market,
should not be interrupted by imposing
a harmful screening requirement.
Response: We disagree. The
commenter may have a
misunderstanding of the EPSDT
screening requirements. States are
required to adopt EPSDT screenings
(that is, preventive visits) for well-child,
vision, hearing, and dental services.
States may also adopt a national
periodicity schedule such as Bright
Futures (the Guidelines for health of the
American Academy of Pediatrics).
Services are provided based on these
periodicity schedules and at other
intervals as determined medically
necessary. The inclusion of screening
requirements as part of the EPSDT
mandate should not in any way ‘‘water
down’’ benefits provided under ABPs to
individuals under the age of 21. It
should serve to ensure that children
receive the necessary screenings and
any additional services and treatments
according to appropriate standards of
care.
Summary: No changes were made.
CMS clarified in regulation text that
EPSDT applies to pediatric services
including oral and vision care as a result
of comments received in this section.
c. Essential Health Benefits
(Prescription Drugs) (§ 440.347)
In the proposed rule, we proposed to
add a new paragraph (b)(7) to include
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benchmark-equivalent health benefits
coverage for prescription drugs. We also
indicated in the preamble that section
1927 of the Act requirements for
covered outpatient drugs also apply to
such prescription drug benefits as an
EHB. As we previously discussed, we
are clarifying in this final rule that this
statement may have been over-inclusive,
since section 1927 requirements do not
apply to ABPs to the extent that they
conflict with the flexibility under
section 1937 of the Act for states to
define the amount, duration, and scope
of the benefit for covered outpatient
drugs. We received the following
comments:
Comment: A few commenters
expressed support of paragraph (b)(7) of
§ 440.335, which implements the
statutory requirements for benchmark
equivalent coverage of prescription
drugs.
Response: We appreciate the
commenters’ support for the coverage of
prescription drugs as required under
section 1937 of the Act.
Comment: A few commenters
indicated that in the current Medicaid
program, states limit the number of
drugs and include other utilization
control measures that are harmful to
patients and deny them the therapies
that meet their health needs as
prescribed by their physician. Some
state Medicaid programs limit patients
to two to four brand name drugs per
month. Such limitations clearly do not
meet patients’ needs and the commenter
urges CMS not to allow states to adopt
them for the expansion population.
Patients should be able to access the
medications that they need as
prescribed by their physicians. If they
are not able to access appropriate
medications, patients may become ill,
impacting healthcare spending in the
long run.
The commenters further seek
clarification on what is being proposed
in the rule’s recommendation regarding
prescription drug limits. While the rule
proposes that the ABP has to meet the
benefits in the state-selected EHB for the
private market, the rule separately
appears to replace the ABPs EHB drug
benefit category with that described in
section 1927 of the Act. In the final rule,
the commenters ask for clarification on
this matter and specifically on whether
the ABP drug benefit is trumped by
what is outlined in section 1927 of the
Act, including with respect to any
limitations. Furthermore, they are
greatly concerned by the seemingly
open ended ability of states to impose
limits, and recommend that quantity
limitations not apply to the ABP.
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Another commenter states that CMS’
final rule must clearly specify all the
drug access protections that apply to
Medicaid ABPs. The commenter
believes that these protections are
essential in the Medicaid context
because Medicaid beneficiaries
represent a vulnerable population that
tends to have lower health status and
fewer resources to obtain needed care.
Response: States have considerable
flexibility in designing benefit packages
for ABPs, including in the process of
ensuring coverage of EHBs. While this
flexibility permits states in some
instances to limit prescription drug
coverage based on the coverage offered
under other public employee or
commercial plans, it also includes the
ability to exceed the amount, duration,
and scope of prescription drugs covered
under those plans. We also clarify that
nothing in the commercial market
implementation of EHBs, including
prescription drugs, directly prohibits
the utilization of monthly quantity
limits. In developing ABPs, states must
include prescription drug coverage to at
least reflect the EHB-benchmark plan
standards, including the requirement to
have procedures in place that allow an
enrollee to request and gain access to
clinically appropriate drugs not
otherwise covered. We believe these
requirements will result in coverage that
is similar to the coverage otherwise
required under regular Medicaid state
plan coverage.
Comment: A few commenters stated
that they support the rules governing
coverage of prescription drugs under
Medicaid (section 1927 of the Act)
applying to the ABP requiring coverage
of nearly all of the drugs produced by
manufacturers who participate in the
Medicaid drug rebate program. The
breadth of coverage offered by the
Medicaid drug benefit is important to
meet the medication needs of people
with HIV who rely on a complex and
unique drug regimen to treat HIV
infection and manage serious cooccurring conditions, such as heart
disease, serious mental illnesses and
hepatitis B or C. However, they have
serious concerns regarding the
flexibility afforded to states to apply
quantitative limits on drug coverage,
particularly given that these limits are
not common practice in the private
insurance market. Allowing these types
of limits in ABPs threatens access to
lifesaving care and treatment and
undermines the letter and spirit of the
Affordable Care Act’s EHB requirements
for newly eligible Medicaid
beneficiaries. It will also have the effect
of undermining the adequacy of
prescription drug coverage for those
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with chronic health needs. The
commenters recommend that HHS
apply the section 1927 requirement for
the range of covered medications, but
prohibit additional authority for
quantitative limits or other limits except
as legally applicable based on the
underlying ABP and EHB benchmarks.
The commenters further recommend
that § 440.347 be amended to read:
‘‘(e)Prescription drugs. Prescription
drugs will be offered at a minimum in
accordance with the requirements of
section 1927 of the Act and
implementing regulations.’’
Response: While drug rebate
obligations under section 1927(b) of the
Act are applicable to payment for
covered outpatient drugs covered
through an ABP, the amount, duration
and scope of coverage for an ABP is
determined under section 1937 of the
Act, which authorizes benchmark or
benchmark-equivalent coverage
‘‘notwithstanding any other provisions
that would be directly contrary.’’ This
being the case, we do not have the
authority to require states, when
establishing its benefits under its ABP,
to meet the coverage requirements of
section 1927 of the Act. Doing so would
be directly contrary to flexibility with
respect to the amount, duration, and
scope of coverage provided under
section 1937 of the Act. As for the
commenters’ concerns with the limits
provided under section 1927 of the Act
as they apply to the Medicaid
population, especially on disease
specific or chronic care populations, we
note that states have considerable
discretion in the provision of Medicaid
services including the ability to define
the amount, duration, and scope of
prescription drugs covered under ABPs.
We also clarify that nothing in the
commercial market implementation of
EHBs, including prescription drugs,
prohibits the utilization of monthly
quantity limits.
Comment: One commenter stated that
in 2014, the Affordable Care Act
requires that ABPs cover at ‘‘least
essential health benefits, as described in
section 1302(b) of Affordable Care Act’’.
The commenter continues that while
CMS proposes that the EHB
requirements described in its November
2012 EHB proposed rule apply to ABPs,
the Medicaid EHB proposed rule does
not spell out the minimum prescription
drug coverage requirements that will
govern ABPs.
The commenter requests CMS clarify
that Medicaid ABPs must cover at least
the same number of drugs in a particular
United States Pharmacopeia (USP) class
that the state-selected benchmark plan
pertinent to the ABP covers, consistent
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with the ‘‘Standards Related to Essential
Health Benefits, Actuarial Value, and
Accreditation’’ proposed rule. The
commenter also requests that CMS
consider identifying classes of drugs in
which broad access to different drugs
within the class is essential to assure
that vulnerable patients have prompt
access to the right medicine for a serious
illness, and bolster the drug coverage
requirements for those drug classes
accordingly.
Response: As indicated above, states
have considerable discretion in the
provision of Medicaid services
including the ability to define the
amount, duration, and scope of
prescription drug coverage under an
ABP. In developing ABPs, states must
include prescription drug coverage
consistent with the EHB-benchmark
plan standards. These standards are set
forth at 45 CFR 156.122 and include the
requirement that health plans have
procedures in place that allow an
enrollee to request and gain access to
clinically appropriate drugs not covered
by the health plan. We believe such
requirements will result in coverage that
is similar to the coverage otherwise
required under regular Medicaid state
plan coverage.
Comment: One commenter is
concerned with the adequacy of the
EHB prescription drug benefit, which
will apply to Medicaid beneficiaries
enrolled in ABPs effective January 1,
2014. Medicaid beneficiaries in ABPs
including those low-income adults who
are newly eligible for Medicaid under
Affordable Care Act are entitled to
coverage for EHB. The proposed rule
codifies this requirement and
incorporates the definitions and
standards that were specified for EHB
coverage in the individual and small
group market in the EHB proposed rule
that CMS published on November 26,
2012, including CMS’ proposed
formulary standard for the prescription
drug benefit. While the final rule states
that USP will be used at least through
‘‘the years 2014 and 2015 during the
transitional EHB policy’’ and thus it
applies to the Medicaid ABPs during
that time, the commenter urges CMS
reconsider the use of the USP system as
it is currently structured after 2015
given that many significant concerns
remain. The commenter lists the
following concerns regarding the EHB
prescription drug benefit:
• The inadequacy of the USP to
represent the full range of categories and
classes of drugs needed by the
populations covered by the EHB,
including Medicaid beneficiaries
enrolled in ABPs, because the USP was
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created as a classification system to be
used by Medicare Part D plans;
• The need to incorporate specific
protections for vulnerable populations
to ensure appropriate access to vital
medications;
• The need to expand the USP
categories and classes and include more
detail to adequately represent the drugs
needed by enrollees in plans subject to
EHB;
• The inability of USP categories and
classes to capture all medical benefit
drugs, including physicianadministered drugs, and the need for
CMS to specify that plans must offer
robust coverage of drugs that are
included as part of a comprehensive
medical benefit, including a wider range
of therapies, and should not rely on the
USP categories and classes when
determining coverage for physicianadministered therapies;
• A requirement that new therapies
be reviewed and added to plan
formularies within 90 to 180 days
through a process that mirrors the
review process performed by
independent Pharmacy and Therapeutic
Committees in Medicare Part D to
support timely access to new and
innovative medications;
• A requirement for specific appeals
and exceptions procedures to ensure
that patients have access to needed
treatments, and the application of these
procedures also apply to drugs that are
covered as part of a comprehensive
medical benefit; and,
• The need for CMS to provide
specific guidance about Medicaid ABPs
regarding acceptable and unacceptable
utilization management techniques,
without which there is a real risk that
plans could apply utilization
management tools in a way that
discriminates against individuals with
more significant health care needs.
Response: We appreciate the
comments submitted regarding the
application of the EHB requirements to
ABPs, including the commenter’s
concerns with the use of the USP
classification system. As stated above,
states have considerable discretion in
the provision of Medicaid services
including the ability to define the
amount, duration, and scope of coverage
under an ABP. We also clarify that
nothing in the commercial market
implementation of EHBs, including
prescription drugs, prohibits the use of
utilization management tools. In
developing ABPs, states must include
prescription drug coverage to reflect the
EHB-benchmark plan standards,
including the requirements at section 45
CFR 156.122. We believe these
requirements will result in coverage that
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is similar to the coverage otherwise
required under regular state plan
coverage.
Comment: A few commenters
indicated that the preamble to the
proposed rule says that all drugs of the
companies that participate in the drug
rebate program should be included in
the ABP; however that language is not
included in the language of the
proposed regulation. The commenters
recommended that the regulatory
language be amended to correct that
omission. Additionally, commenters
agreed with HHS’ legal conclusion,
stated at 78 FR 4631, that section 1927
of the Act applies to ABPs and believe
that this is a critical protection requiring
coverage of a range of drugs necessary
to meet the needs of the Medicaid
population. The commenter
recommends that HHS’ explicitly state
this requirement in the regulation.
Response: As noted earlier, we must
clarify a statement in the preamble to
the proposed rule, indicating that
coverage requirements under section
1927 of the Act are applicable to ABPs
under section 1937 of the Act. While
drug rebate obligations under the rebate
agreement are required for drug
manufacturers under section 1927(b) of
the Act, the amount, duration and scope
of drug coverage under an ABP is
determined under section 1937 of the
Act. The drug rebate obligation applies
because payment is made under the
Medicaid state plan for covered
outpatient drugs as part of the ABP. The
amount, duration, and scope of coverage
for an ABP are determined under
section 1937 of the Act, which
authorizes benchmark or benchmarkequivalent coverage ‘‘notwithstanding
any other provision that would be
directly contrary.’’ That said, to the
extent that covered outpatient drugs are
within the scope of coverage, the noncoverage provisions under section
1927(d) of the Act would apply. For
example, states will continue to be
permitted to apply certain permissible
restrictions such as prior authorization.
However, when establishing such
programs, states must continue to
adhere to the requirements that states
must respond within 24 hours for preauthorization requests, except for
excluded drugs listed at section
1927(d)(2) of the Act, and that at least
a 72-hour supply of a covered outpatient
prescription drug must be dispensed in
an emergency situation. Further, we are
revising § 440.345 to add a new
paragraph (f) that states that when states
pay for covered outpatient drugs under
their ABP’s prescription drug coverage,
they must comply with the
requirements of section 1927 of the Act.
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Comment: A few commenters
believed that ABPs are required by
statute to include all outpatient drugs in
the Medicaid drug rebate program, as
well as meet the requirements for
prescription drugs as proposed in the
EHB proposed rule for the commercial
market. These commenters also believe
that in the absence of prescription drug
coverage in a particular category or
class, the ABP benefit must include at
least one drug. They also recommend
that the final rule clarify that
prescription drug coverage within ABPs
must provide the greater of the
statutorily required coverage described
in section 1927 of the Act, or the
required EHB coverage described in the
proposed rule issued November 26,
2012. Another commenter
recommended that CMS require each
ABP’s coverage of prescription drugs to
be consistent with the state’s EHB
standard.
Response: As indicated above, states
have considerable flexibility in
implementing the provision of Medicaid
services through ABPs. In developing
ABPs, states must include prescription
drug coverage to reflect the EHBbenchmark plan standards at section 45
CFR 156.122 for prescription drug
coverage. We believe these requirements
will result in coverage that is similar to
the coverage otherwise required under
regular state plan coverage.
Comment: A few commenters
indicated that the regulatory text is
correct at part 440, but the preamble is
not, in that the rebate statute section
1927 of the Act does not apply to ABPs.
They reasoned that the benefits under
section 1937 of the Act are mandatory
benefits, and they explicitly refer to the
prescription drugs of the essential
health benefits and not to the covered
outpatient drugs of the voluntary
Medicaid benefit to which section 1927
of the Act applies. Thus, the EHB’s
prescription drug coverage, which
requires the greater of one drug in a
class or the number of drugs in the class
in the benchmark plan, should apply to
ABPs. If it is determined that section
1927 of the Act applies, then all the
requirements and protections of section
1927 of the Act should apply to ABPs.
A commenter stated that the rebate
statute applies exclusively to covered
outpatient drugs; it requires
manufacturers to pay rebates on covered
outpatient drugs (when they are paid for
under a state Medicaid plan); and it
limits the restrictions that states can
place on access to covered outpatient
drugs. The statute defines a ‘‘covered
outpatient drug’’ in terms of what is
included in the definition and what is
excluded. This commenter believes the
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term ‘‘covered outpatient drug’’ is a well
understood term of art meaning those
drugs to which the Medicaid rebate
statute applies. If Congress had intended
the Medicaid rebate statute to apply to
Medicaid ABPs, then Congress would
have stated this explicitly and described
the drugs covered under an ABP as
‘‘covered outpatient drugs.’’ When
Congress decided to apply the rebate
statute to Medicaid managed care
organizations, Congress made its
decision clear and took the steps
necessary to make its decision workable.
For example, Congress explicitly revised
the rebate statute to provide that
covered outpatient drugs for which
payment was made under the state
Medicaid plan includes ‘‘such drugs as
dispensed to individuals enrolled with
a Medicaid managed care organization if
the organization is responsible for
coverage of such drugs,’’ among other
changes.
By contrast, the commenters assert
that Congress took an entirely different
approach with Medicaid ABPs. Unlike
in the Medicaid MCO case, Congress
never mentioned Medicaid rebates in
the statutory provision authorizing
ABPs, never mentioned ABPs in the
Medicaid rebate statute, never
established any mechanism for ABPs to
report drug utilization data to states and
for states to include this data in
manufacturers’ rebate invoices, and
never provided that state payments to
ABPs would be premised on the
understanding that states would collect
Medicaid rebates.
Similarly, the commenters indicate
that section 1937 of the Act makes no
mention of covered outpatient drugs.
Instead, the drug-related provisions in
section 1937 of the Act provide only
that (1) benchmark-equivalent coverage
must include ‘‘prescriptions drugs’’
(among other basic services required in
benchmark-equivalent plans) and (2)
starting in 2014, all ABPs must provide
‘‘at least essential health benefits as
described in section 1302(b) of
Affordable Care Act, which benefits
include prescription drugs.’’ Thus in
both of the statutory provisions
referencing ABPs’ drug coverage,
Congress omitted the term denoting
those drugs that are subject to the
Medicaid rebate statute and instead
incorporated different terms with no
connection to the rebate statute. And
Congress’ decision to omit ‘‘covered
outpatient drug’’ terminology is
consistent with its decisions: (1) not to
require to authorize reporting of ABP
drug utilization data to states and
manufacturers; and (2) not to address
any implications of state rebate
collection on ABP payments. Congress’
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decision not to apply the rebate statute
also is consistent with the purpose of
section 1937 of the Act, which is to give
State Medicaid programs more
flexibility and allow them to operate
more like commercial payers.
Another commenter stated that the
prescription drug benefit to be provided
to Medicaid beneficiaries under section
1937 of the Act is not the same benefit
as the ‘‘prescribed drugs’’ provided
under a State plan under section
1905(a)(12) of the Act. Indeed, the
coverage for prescription drugs made
available to the Medicaid expansion
population is derived from a different
statutory authority than the traditional
Medicaid option to provide coverage for
‘‘prescribed drugs.’’ The benefit under
section 1905(a)(12) of the Act is optional
for a State, while the prescription drug
provided by an ABP is mandatory in
accord with EHB requirements
established by Affordable Care Act.
Therefore, the commenter contends, and
urges CMS to clarify in the final rule,
that there is no statutory basis to apply
section 1927 of the Act to these ABPs.
In short, the commenters believe the
statutory evidence demonstrates that
Congress decided not to apply the
Medicaid rebate statute to ABPs. When
a word or phrase has become a term of
art with a specialized meaning, that
specialized meaning governs. Likewise,
when Congress uses a term of art in one
statutory provision but omits it in
another (like section 1937 of the Act),
then Congress intends a different
meaning; ‘‘where Congress includes
particular language in one section of a
statute but omits it in another . . ., it is
generally presumed that Congress acts
intentionally and purposefully in
disparate inclusion or exclusion.’’
Accordingly, applying the rebate statute
to ABPs would be directly contrary to
section 1937 of the Act and thus
prohibited.
Response: Drug rebate obligations are
required for drug manufacturers under
1927(b) of the Act when payment occurs
for covered outpatient drugs covered
through an ABP. However, the amount,
duration, and scope of drug coverage
under an ABP are determined under
section 1937 of the Act. That is, the drug
rebate obligation applies because
payment is made under the Medicaid
state plan for covered outpatient drugs
provided as part of the ABP prescription
drug benefit. The amount, duration, and
scope of coverage for an ABP are
determined under section 1937 of the
Act, which authorizes benchmark or
benchmark-equivalent coverage
‘‘notwithstanding any other provision
that would be directly contrary.’’ That
said, to the extent that covered
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outpatient drugs are within the scope of
coverage, the non-coverage provisions of
section 1927 of the Act would apply.
Comment: A commenter indicated
that they anticipate that requiring ABPs
to satisfy the requirements of both
section 1927 of the Act and the EHB
formulary standard may present
significant practical challenges for the
ABPs. The proposed rule does not
explain how these two sets of
requirements will fit together or
whether and when the requirements of
section 1927 of the Act will take
precedence over the EHB formulary
standard. For example, section 1927 of
the Act requires manufacturers and the
Secretary to enter into an agreement
under which manufacturers must pay
rebates to state Medicaid agencies for
utilization of the manufacturer’s
covered outpatient drugs, in return for
the state coverage of such drugs, which
may be restricted only within the set
confines of section 1927(d) of the Act.
The proposed EHB prescription drug
benefit, by contrast, requires coverage of
at least the greater of (1) one drug in
every USP category and class; or (2) the
same number of drugs in each category
and class as the EHB benchmark plan.
Response: As we stated earlier, there
is no authority to require states to meet
requirements of section 1927 of the Act
related to the amount, duration and
scope of covered outpatient drugs under
an ABP. States have some discretion in
the provision of Medicaid services
including the ability to define the
amount, duration, and scope of coverage
under an ABP. In developing ABPs,
states must include prescription drug
coverage to reflect the standards used to
define EHBs for Medicaid. As stated
earlier, we believe these requirements at
45 CFR 156.122 will result in coverage
that is similar to the coverage otherwise
required under regular Medicaid state
plan coverage.
Comment: A few commenters
indicated that to the extent that CMS
nonetheless decides to apply section
1927 to ABPs, it is of the utmost
importance that CMS apply and
stringently enforce both the coverage
and access requirements of that section.
CMS should explicitly indicate that the
section 1927 safeguards on coverage and
exclusions apply, in addition to the
prescription drug benefit requirements
of the EHB proposed rule. Any
requirements for payment of rebates
under section 1927 of the Act without
adherence to the coverage and exclusion
limitations violates the intent and spirit
of that section.
Another commenter indicated that the
Medicaid rebate statute requires states
that provide payment for drugs to cover
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all ‘‘covered outpatient drugs’’ of
manufacturers that sign a Medicaid
rebate agreement, subject to certain
limitations on coverage that the statute
describes very specifically. The rebate
statute explicitly lists the limited
circumstances in which a State
Medicaid program may exclude or
otherwise restrict coverage of a drug
manufactured by a company with a
Medicaid rebate agreement.
Response: While drug rebate
obligations under the rebate agreement
with drug manufacturers under section
1927(b) of the Act are applicable to
covered outpatient drugs covered
through an ABP, the amount, duration,
and scope of drug coverage under an
ABP are determined under section 1937
of the Act alone. The drug rebate
obligation applies when payment is
made for covered outpatient drugs in
accordance under the Medicaid state
plan, including a state’s ABP. The
amount, duration, and scope of coverage
for an ABP is determined under section
1937 of the Act, which authorizes
benchmark or benchmark-equivalent
coverage ‘‘notwithstanding any other
provision that would be directly
contrary.’’
Comment: One commenter
recommended that the prescription drug
benefit under ABPs should include all
over-the-counter and prescription
medications approved by the FDA to
treat tobacco cessation. The commenter
continues that tobacco cessation
medications are currently on the list of
‘‘drugs subject to restriction’’ in section
1927(d) of the Act, and therefore, states
are allowed to exclude coverage of these
drugs.
Response: Effective January 1, 2014,
section 1927(d) of the Act requires states
to provide coverage of non-prescription
and prescription covered outpatient
drugs used to treat tobacco cessation for
all Medicaid beneficiaries.
Notwithstanding that requirement, we
note that there is no authority to require
states to meet requirements of section
1927 of the Act related to the amount,
duration, and scope of covered
outpatient drugs under an ABP. States
have considerable discretion in the
provision of Medicaid services
including the ability to define the
amount, duration, and scope of coverage
under an ABP. In developing ABPs,
states must include prescription drug
coverage to reflect the standards for
defining EHBs in Medicaid. As stated
earlier, we believe these requirements at
45 CFR 156.122 will result in coverage
that is similar to the coverage otherwise
required under regular Medicaid state
plan coverage.
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Comment: A few commenters
indicated that the agency says that the
states have the flexibility to ‘‘adopt prior
authorization and other utilization
control measures, as well as policies
that promote use of generic drugs.’’ The
commenters believe there is potential
for conflict between the prescription
drug coverage of an ABP supplemented
by the states’ essential health benefit
standard, and a drug benefit that is
consistent with the State’s Medicaid
program. The commenter urged
clarification of the coverage standard
accompanied by protections to ensure
that patients can appeal utilization
controls that might prevent them from
receiving necessary medications.
One commenter recommended that
CMS monitor the implementation of
traditional Medicaid and ABP PDLs and
utilization management techniques, and
act to stop burdensome limitations that
reduce access to care and could impact
patient health because of limited access
to needed drugs. The commenter also
recommends requiring that decisions
regarding PDLs take into account
evidence-based clinical practice
guidelines, and not just of drugs; and
that CMS require that states only be
permitted to classify a drug as nonpreferred when there are genuine
therapeutic alternatives classified as
preferred.
Response: Prescription drug coverage
under an ABP is still subject to the
provisions related to drug rebates, as
well as the non-coverage provisions
under section 1927(d) of the Act.
Therefore, states will continue to be
permitted to apply certain permissible
restrictions such as prior authorization.
However, when establishing such
programs, states must continue to
adhere to the requirements that states
must respond within 24 hours for preauthorization requests, except for
excluded drugs listed at section
1927(d)(2) of the Act, and that at least
a 72-hour supply of a covered outpatient
prescription drug must be dispensed in
an emergency situation.
Furthermore, a state Medicaid
agency’s Pharmacy and Therapeutics
(P&T) Committee typically makes
decisions on inclusion of preferred
drugs in a therapeutic class when
establishing a state’s PDL. Specifically,
the P&T Committee reviews evidencebased information, along with review of
comparative clinical trials to make such
decisions regarding a state’s PDL. A PDL
is permitted under section 1927 of the
Act, as long as it is under a prior
authorization program that meets the
requirements of section 1927(d)(5) of the
Act.
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Comment: One commenter
recommends that individuals have
access to the full range of available
clotting factors without limitation
through restrictive drug formularies,
which negatively impacts patient care.
Patients and physicians should make
the choice of which therapy is
appropriate. The commenter also noted
that hemophilia patients should have
access to a range of specialty pharmacy
providers. Several commenters
recommend that CMS require states to
implement beneficiary protections
consistent with Medicare Part D,
including consideration of specific
drugs, tiering, and utilization
management strategies used in each
formulary.
Response: As we stated earlier, there
is no authority to require states to meet
requirements of section 1927 of the Act
related to the amount, duration and
scope of covered outpatient drugs under
an ABP. States have considerable
discretion in the provision of Medicaid
services including the ability to define
the amount, duration, and scope of
coverage under an ABP. In developing
ABPs, states must include prescription
drug coverage to reflect the standards
for defining EHBs in Medicaid. As we
have noted in prior responses, we
believe these requirements will result in
coverage that is similar to the coverage
otherwise required under regular
Medicaid state plan coverage.
Comment: One commenter stated that
section 2001(c) of Affordable Care Act
modified the benefit provisions of
section 1937 of the Act. Among other
things, section 2001(c) of the Affordable
Care Act added mental health benefits
and prescription drug coverage to the
list of benefits that must be included in
benchmark equivalent coverage; and
directed that ABPs that include
medical/surgical benefits and mental
health and/or substance use disorder
benefits comply with the Mental Health
Parity and Addiction Equity Act of
2008.
This being the case, the commenter
encourages CMS to clarify and
strengthen the guidance on drug
formularies in the current parity
regulations which make it difficult to
determine whether a formulary satisfies
the law’s parity standards.
Response: While we appreciate the
commenter’s concern, the Interim Final
Regulation regarding the Mental Health
Parity and Addiction Equity Act of 2008
is not the subject of this final rule.
Comment: One commenter suggested
that CMS provide guidance to states on
medication assisted treatment of
substance abuse disorder. Specifically,
states should be required to cover
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Methadone, Buprenorphine, Vivitrol,
etc., in the EHB and that where needed
states should expand the formulary to
include all FDA approved medications
for the treatment of substance use
disorders.
Response: CMS is not providing
guidance regarding specific services
offered in each of the ten essential
health benefits in this final rule.
Comment: One commenter requests
that CMS encourage state Medicaid
programs to utilize the 340B drug
purchasing program provided by
hemophilia treatment centers or HTCs
so that individuals with hemophilia can
receive their pharmacy services from
their HTC. HTCs with 340B programs
integrate clinical and pharmacy services
to provide comprehensive high-quality
care to patients and closely monitor
drug utilization, allowing for more
immediate changes in treatment and
better management of treatment costs.
Patients benefit from lower cost
prescriptions that reduce out-of-pocket
spending and accumulation of costs
towards caps on health insurance
expenditures and ongoing education
and support to ensure that they
appropriately assess their treatment
needs. Medicaid programs will benefit
from better management of overall
treatment costs through close
monitoring of bleeds and factor use to
reduce complications.
Response: We appreciate the
comments regarding the 340B program
and coverage of drugs for hemophilia;
however, the State’s utilization of the
340B drug purchasing program is
outside the scope of this rule.
Comment: CMS should establish clear
requirements to assure that utilization
data for populations eligible to receive
Medicaid rebates is maintained
separately from data from other lines of
business. That is, the final regulation
must provide clear rules to assure that
plans maintain data on prescription
drug claims appropriately and do not
mix data from populations eligible for
Medicaid rebates with data for other
enrollees not eligible for Medicaid
rebates. Because many plans may offer
products in the exchanges as well as
participate in Medicaid managed care
(under either section 1903(m) of the Act,
as well as Medicaid ABPs) the potential
for confusion is high and clear rules are
needed to assure that utilization for
rebate-eligible patients is maintained
separately from data for other lines of
business.
Response: If the state administers its
ABP via a Medicaid MCO, the state will
need to ensure the MCO distinguishes
these claims from its other lines of
business for the purpose of claiming
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Medicaid rebates consistent with the
current requirement for such claims
under section 1927 of the Act. CMS
expects to issue subregulatory guidance
on collecting manufacturer rebates for
ABPs. Manufacturers are not required
under section 1927 of the Act to pay
rebates absent a Medicaid payment for
the drugs, which would not be present
in the case of drugs dispensed to
Medicaid beneficiaries that are enrolled
in qualified health plans where the only
Medicaid payment was premium
assistance for the beneficiary.
Summary: Based upon the comments
requesting clarification as to whether or
not section 1927 of the Act applies to
prescription drug coverage provided
under a state’s ABP, we will be adding
paragraph (f) to § 440.345 to require that
when states pay for covered outpatient
drugs under their ABP’s prescription
drug coverage, states must comply with
the requirements under section 1927 of
the Act.
4. All Other Title XIX Provisions Apply
We clarified in the proposed rule that
all other Title XIX of the Act provisions
apply unless, as spelled out in section
1937 of the Act, a state can satisfactorily
demonstrate that implementing such
other provisions would be directly
contrary to their ability to implement
ABPs under section 1937 of the Act.
Comment: We received one comment
requesting that CMS elaborate on what
is meant by the preamble language that
all other provisions under title XIX of
the Act apply, and whether states are
required to cover the current mandatory
Medicaid benefits, and ensure nonemergency transportation, when using
an ABP for the new adult expansion
group.
Response: The Medicaid benchmark
and benchmark-equivalent coverage was
first authorized by the DRA, which
included language stating that
‘‘notwithstanding any other provision of
title XIX’’ states can offer medical
assistance to certain Medicaid
beneficiaries through benchmark or
benchmark-equivalent benefit packages.
As a result of CHIPRA changes to the
DRA, CMS regulations were revised to
implement this change in law. CHIPRA
language provides clearly that a state’s
benchmark or benchmark-equivalent
programs may vary only from statutory
requirements explicitly waived in
section 1937 of the Act (statewideness
and comparability), unless states can
demonstrate that other provisions not
identified in section 1937 of the Act
would be directly contrary to their
ability to implement ABP. As such, in
the proposed rule, we offered clarifying
language in the preamble to reiterate
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that this current policy continues to
apply. Due to statutory requirements,
states may not disregard any provisions
of title XIX and are therefore required to
assure that all populations receiving
ABPs, including the new adult
expansion group, have access to
transportation necessary to obtain
Medicaid covered services.
Summary: No changes will be made to
the proposed regulation as a result of
comments received in this section.
5. Preventive Services as an EHB
The EHB Final rule specified that, to
provide EHB, a plan must provide
coverage of preventive services. This
requires plans to cover a broad range of
preventive services including ‘‘A’’ or
‘‘B’’ services recommended by the
United States Preventive Services Task
Force; Advisory Committee for
Immunization Practices recommended
vaccines; preventive care and screening
of infants, children and adults
recommend by HRSA’s Bright Futures
program, and additional preventive
services for women recommended by
the Institute of Medicine. We proposed
that Title XIX premium and cost sharing
provisions apply to preventive services
for adults, but not for children.
Comment: Many commenters
commended HHS for including in ABPs
the full range of preventive services
required in the EHB, including all of the
services specified in section 2713 of the
PHS Act. The commenters believed this
is a critical provision for vulnerable
populations and will help achieve the
Affordable Care Act objective of shifting
health care emphasis from expensive
interventions to cost-effective
prevention. The commenters requested
that HHS explicitly state this
requirement (currently in the preamble
at 78 FR 4631) in the regulation itself.
Response: The language in the
preamble to the proposed rule,
originating in section 2713 of the PHS
Act, was included as a reference to the
requirement to cover preventive services
as part of providing EHB, which has
been implemented by regulation
codified at 45 CFR 147.130. We do not
believe this requires further clarification
in this final rule.
Comment: A number of commenters
asked CMS to clarify its preamble
language, ‘‘Title XIX premium and cost
sharing provisions apply to preventive
services.’’ Specifically, CMS should
clarify whether it intends this to apply
to the ABPs for the new expansion
population and/or to current state
Medicaid plan services.
Response: We agree that this issue
needs to be clarified, particularly in
light of the issuance of the final rules
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implementing EHB requirements for the
individual and small group markets. In
the final regulations issued February 25,
2013 at 78 FR 12835, the provision of
EHB was defined at 45 CFR
156.115(a)(4) to ‘‘include preventive
health services described in [45 CFR]
§ 147.130’’. That cross referenced
provision describes the requirement for
coverage of preventive services without
cost sharing. As explained in the
preamble to the proposed regulations, at
77 FR 70644, 70651 (Nov. 26, 2012), the
intent was to include in the EHB
coverage obligation the prohibition on
cost sharing for preventive health
services. Thus, while Medicaid cost
sharing provisions at sections 1916 and
1916A of the Act apply generally to
preventive services provided in ABPs,
cost sharing may not be applied to
preventive services that are within the
definition of EHBs (described in 45 CFR
147.130). An ABP may include
preventive services beyond the floor of
coverage required as EHBs, and cost
sharing may be applied to such
preventive services at state option to the
extent permissible under sections 1916
and 1916A of the Act.
Comment: One commenter requested
clarification on whether the full range of
United States Preventive Services Task
Force (USPSTF) ‘‘A’’ and ‘‘B’’ services is
specific to benchmark benefits offered to
individuals that are newly eligible.
Response: These services, along with
IOM-recommended women’s preventive
services, ACIP-recommended vaccines,
and HRSA’s Bright Futures
recommendations, comprise the
preventive services EHB category that
will be provided to all individuals in an
ABP, including those in the new adult
group. In addition, coverage of USPSTF
‘‘A’’ and ‘‘B’’ preventive services under
section 4106 of the Affordable Care Act
applies, at state option, to preventive
services furnished under the regular
state plan. States implementing the
preventive services EHB in their ABP
without cost sharing will be eligible for
the additional 1 percentage point of
FMAP (for newly eligible individuals,
this increased FMAP will be available
once Federal reimbursement of services
drops below 100 percent).
Comment: A few commenters were
concerned that other preventive
screenings recommended by the CDC
are not included in the proposed rule.
The commenters recommended the
inclusion of all CDC hepatitis B and C
screening recommendations as required
components of Medicaid’s ABPs.
Response: CMS recognizes the
importance of CDC recommendations
related to preventive services. The
proposed rule was not meant to be an
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exhaustive list of all recommendations
made by government agencies such as
the USPSTF. States have the option to
adopt CDC recommendations as long as
they are in line with EHB preventive
service statutory and regulatory
guidance.
Comment: A few commenters
requested that HHS clearly define which
tobacco cessation treatments are
required to be covered as a preventive
service under EHB. The commenters
believed this definition should be
comprehensive, and include—and
require—all tobacco cessation
medications approved by the FDA as
well as individual, group and phone
counseling. The commenters believed it
should be based on and reference the
most recent version of the Public Health
Service Guideline Treating Tobacco Use
and Dependence, to ensure that when
and if the guideline is updated the
benefit will be revised as appropriate.
Response: We appreciate the
commenter’s recommendations.
Tobacco cessation programs are
important preventive services. However,
states have been given latitude on how
to furnish this service within the
bounds of statute, regulation, and subregulatory guidance. Tobacco cessation
for pregnant women is defined in
section 4107 of Affordable Care Act and
is located at section 1905(a)(4)(D) of the
Act. We also issued a letter to State
Medicaid Directors dated June 24, 2011
that clarified policy related to this
provision. The only tobacco cessation
services required to be furnished in the
EHB package are those recommended by
the entities designated in section 2713
of the Public Health Service Act.
Comment: Many commenters
requested greater definition of the
preventive services that states are
required to cover to meet the EHB
requirement. The commenters found it
difficult to determine what preventive
health services are covered and what the
scope and limits of the coverage may be.
Response: The definition of
preventive services as an EHB includes
a broad range of preventive services
including: ‘‘A’’ or ‘‘B’’ services
recommended by the United States
Preventive Services Task Force;
Advisory Committee for Immunization
Practices (ACIP) recommended
vaccines; preventive care and screening
for infants, children and adults
recommended by HRSA’s Bright Futures
program/project; and additional
preventive services for women
recommended by Institute of Medicine
(IOM). Further definition was not
provided as these standards were
established by experts in the field of
prevention.
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Comment: A few commenters
requested that HHS provide the
following guidance:
• Clarify in the language of the final
rule that Medicaid ABP must cover all
section 2713 services.
• Clarify that section 2713 coverage
requirements apply even where there is
overlap with EHB categories.
• Create standards to ensure that
section 2713 preventive service
coverage offers meaningful incentives to
providers.
• Encourage states to align traditional
Medicaid coverage with the section
2713 preventive services requirement.
Response: We appreciate the
commenters’ request to include further
descriptions within the final rule. The
rule, as written, requires states to
provide a robust set of preventive
services that align with § 147.130. The
Affordable Care Act established § 4106
effective January 1, 2013 within regular
Medicaid coverage, which includes a
subset of the services implemented in
§ 2713 of the Public Health Service Act
(PHSA). A State Medicaid Director
Letter on § 4106 was released on
February 1, 2013 (https://
www.medicaid.gov/Federal-PolicyGuidance/downloads/SMD-13-002.pdf).
Comment: One commenter requested
clarification regarding the interval after
which a preventive service rated with
an A or B by the USPSTF must be
included in EHBs for Medicaid plans.
The commenter encouraged HHS to
establish an interval of no later than the
1-year minimum specified in section
2713(b)(1) of the Public Health Service
Act, irrespective of any other timetable
HHS choose for updating the EHBs more
broadly over time.
Response: Section 2713(b)(1) and (2)
of the Public Health Service Act set
forth the interval between the date on
which a recommendation described in
subsection (a)(1) or (a)(2) or a guideline
under subsection (a)(3) is issued and the
plan year for which of the requirements
described in subsection (a) is effective
for the service described in such
recommendation or guideline. We
believe that such an interval is
appropriate for applicable preventive
services included in the ABP.
Comment: One commenter requested
specificity around the process by which
USPSTF recommendations will be
incorporated into EHBs over time and
the process for determining the
frequency and intensity of USPSTFrecommended behavioral interventions.
Response: A broad range of preventive
services including all ‘‘A’’ or ‘‘B’’
services recommended by the United
States Preventive Services Task Force
must be incorporated in the EHB and
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are required to be implemented
according to the effective date of the
submitted SPA. If states want an
effective date of January 1, 2014 for the
entire ABP including these preventive
services, then a SPA will need to be
submitted by the end of the first
calendar quarter of 2014. States are
expected to keep abreast of changes to
the USPSTF-recommended services to
ensure provision of a current array of
services.
Comment: One commenter indicated
that, to the extent that HHS does not
specify the number of covered visits to
registered dietician specialists for
medical nutrition therapy, national
practice guidelines should determine
appropriate coverage.
Response: We encourage states to
consult and rely on national practice
guidelines, as they design their benefit
packages.
Comment: One commenter requested
that while HHS may be reluctant to
explicitly require coverage of obesity
treatment, HHS should clarify whether
management of obesity and metabolic
disorders are chronic disease
management services and are therefore
covered services under the ‘‘Preventive
and Wellness Services and Chronic
Disease Management’’ category of the
EHB package. One commenter believed
that beneficiaries affected by severe
obesity should have access to bariatric
surgery with comprehensive pre- and
post-surgery nutrition evaluation and
counseling to ensure the efficacy and
cost effectiveness of the bariatric surgery
benefit over the long term.
Response: ‘‘A’’ or ‘‘B’’ services
recommended by the United States
Preventive Services Task Force must be
incorporated in the EHB. Current
USPSTF guidelines provide for the
screening and counseling for obesity in
both children and adults. Aside from
the services specified at section 2713 of
the Public Health Service Act, we are
not mandating the provision of specific
services through the EHB package. We
agree that bariatric surgery, complete
with appropriate counseling, can be a
valuable service, and it will covered in
the ABP if it is included in EHB
definitions of the public employee or
commercial plan selected by the state to
define EHBs for Medicaid,
supplemented and substituted as
necessary and permitted. States may
also choose to add this service to their
ABP.
Comment: One commenter asked HHS
to clarify whether a state that chooses to
use its current state plan as the ABP
would need to add services to the state
plan for ABP recipients if not all
preventive services are included. The
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commenter also asked whether states
would need to amend the state plan and
provide these services for all Medicaid
recipients of the state plan services.
Response: The regular state plan does
not need to be amended to reflect the
breadth and depth of required
preventive service coverage in an ABP.
States will have to comply with the
definition of preventive services for the
EHB category within the ABP. States
using Secretary-approved coverage to
implement a benefit package similar to
their Medicaid state plan would need to
ensure provision of all EHB preventive
services through the ABP, even if such
services are not available under the state
plan. A state plan amendment will be
required to implement an ABP for the
new adult group and for any other
categorically needy eligibility groups
that a state may wish to enroll in an
ABP.
Comment: A number of commenters
recommended that HHS apply the PHS
Act 2713 cost-sharing prohibition for
preventive services under section 2713
of the PHS Act to the same preventive
services covered by ABPs. The
commenters believed these protections
are essential to provide meaningful
coverage to vulnerable population and
avoid the unfair outcome of greater costsharing for poorer individuals. The
commenters believed cost sharing on
preventive services should be
prohibited based on the authority of
section 2713 of the PHS Act. One
commenter believed that cost-sharing
for preventive services is prohibited
under the definition of EHB in
regulations at 45 CFR 156.115, which
state that the EHB include ‘‘preventive
health services described in [45 CFR]
§ 147.30.’’ The commenter explained
that this section lists the services
included in the definition of preventive
health services and states that insurers
‘‘may not impose any cost-sharing
requirements (such as copayment,
coinsurance, or deductible) for those
items or services.’’ The commenter
believed the definition of preventive
services in the EHB is unique in that it
incorporated a prohibition on costsharing in the definition of the benefit.
The commenter believed that by
requiring EHB in ABPs, Congress
intended to carry that prohibition on
cost-sharing into Medicaid’s ABPs. A
number of commenters believed that
prohibiting cost sharing for preventive
services is consistent with the provision
giving states a percentage point increase
in their FMAP under section 4106 of the
Affordable Care Act.
Response: We appreciate the concerns
commenters raised regarding cost
sharing for preventive services and we
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are adopting their suggested policies in
light of the provisions of the recently
issued EHB regulations for the
individual and group markets at 45 CFR
156.115(a)(4). As stated above, states
may not impose cost sharing for
preventive services included in ABPs
that are within the scope of EHBs, as
defined at 45 CFR 147.130, but may
impose cost sharing consistent with
sections 1916 and 1916A of the Act on
preventive services that go beyond that
scope. This is because the definition of
preventive services for purposes of the
EHBs precludes cost sharing, and
Medicaid ABPs must include EHBs. We
clarify that the broader prohibitions on
cost sharing for preventive services at
section 2713 of the PHS Act apply only
to group health plans and health
insurance issuers providing group or
individual health insurance coverage,
and do not apply to Medicaid. For
preventive health services beyond the
scope of EHBs, we note that cost sharing
is not allowed for preventive services
provided to children under sections
1916 and 1916A(b)(ii) of the Act. We
agree with commenters that this
preclusion of cost sharing for preventive
service EHBs is consistent with the
policies set forth in section 4106 of the
Affordable Care Act, which added
section 1905(b)(5) to the Act, giving
states an increase in the federal medical
assistance percentage for preventive
services if the state did not impose cost
sharing on such services.
Comment: A number of commenters
believe that cost sharing should not be
applied to the EPSDT population.
Response: While we discuss cost
sharing issues at greater length in
discussing the streamlined cost sharing
regulations being issued in this final
rule, for EPSDT for individuals enrolled
in ABPs, we note that sections 1916 and
1916A(b)(ii) of the Act preclude cost
sharing for individuals under age 18
who are mandatorily eligible, and
preclude cost sharing for preventive
services (such as well baby and well
child care and immunizations) provided
to children under 18 years of age
regardless of family income. Section
1916(b)(2)(a) of the Act further states
that cost sharing cannot be imposed
under the plan for services furnished to
individuals under 18 years of age (and,
at the option of the State, individuals
under 21, 20, or 19 years of age, or any
reasonable category of individuals 18
years of age or over). These provisions
also apply to ABPs.
Summary: No changes will be made to
the proposed regulation as a result of
comments received in this section.
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6. Other Changes To Simplify,
Modernize, and Clarify Medicaid
Benchmark Requirements and Coverage
Requirements
We proposed to make certain changes
to the regulations to promote
simplification and clarification where
needed, and provide some additional
flexibilities to states regarding benefit
options. We received the following
comments:
a. Diagnostic, Screening, Preventive,
and Rehabilitative Services (Preventive
Services) (§ 440.130)
We proposed to conform our
regulatory definition of preventive
services at § 440.130(c) with the statute
relating to the issue of who can be
providers of preventive services. Our
current regulation states that preventive
services must be provided by a
physician or other licensed practitioner.
This is not in alignment with the
statutory provision at section
1905(a)(13) of the Act that defines
‘‘services . . . recommended by a
physician or other licensed practitioner
of healing arts within the scope of their
practice under state law.’’ We proposed
to change the rule to make clear that
physicians or other licensed
practitioners may recommend these
services. In our proposed rule, we
inadvertently used punctuation that
would have had the effect of eliminating
the other three prongs of the preventive
services definition, and we are restoring
those prongs in this final rule.
Comment: Many commenters
commended HHS for conforming the
regulatory definition relating to who can
provide preventive services at section
1905(a)(13) of the Act that defines
‘‘services . . . recommended by a
physician or other licensed practitioner
of healing arts within the scope of their
practice under State law.’’ Many
commenters believed this change will
improve access to preventive services,
expand access to evidence based
practices, and provide greater
partnership between providers and
advocates. The commenters urged CMS
to preserve this important provision in
the final rule.
Response: We agree that the amended
regulatory definition of who can provide
preventive services will result in
improved access to preventive services
and facilitate partnership between
providers and advocates. This provision
has been codified in the final rule.
Comment: A number of commenters
believed that the amended regulatory
definition will be especially important
to low-income people who
disproportionately access care through
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community-based and support services
and may experience significant stigma
and lower trust levels with other
providers.
One commenter believed current
Medicaid regulations surrounding
§ 440.130(c) have significantly limited
the available care and treatment for
Medicaid and CHIP-enrolled children
who suffer from chronic diseases.
Response: The amended definition
may result in greater access for
individuals who suffer from chronic
disease as the pool of providers could
increase significantly.
Comment: A few commenters
commended HHS for making reference
to this regulatory change in a February
1, 2013 letter to State Medicaid Director.
The letter stated that if the proposed
regulatory change is finalized, then
preventive services recommended by
USPSTF or ACIP, and provided by
practitioners other than physicians or
other licensed practitioners, are eligible
for the 1 percentage point FMAP
increase established under the
Affordable Care Act.
Response: We attempt to provide as
much notice as possible related to rule
making and appreciate the commenter’s
support.
Comment: One commenter believed
the proposed language, ‘‘(c) Preventive
services means services recommended
by a physician or other licensed
practitioner of the healing arts acting
within the scope of authorized practice
under state law’’, was overly broad.
Response: The regulation is consistent
with statutory language in section
1905(a)(13) of the Act. The final rule
increases the number of providers able
to furnish services. We are not changing
regulation text at § 440.130(c)(1) through
(c)(3).
Comment: One commenter believed
that the proposed new definition in the
rule represents a far broader view of the
term ‘‘preventive services’’ than
Congress contemplated in Affordable
Care Act. For purposes of describing
what services are included in EHB,
‘‘preventive services’’ are already
extensively described at § 147.130. The
proposed revision in the definition of
‘‘preventive services’’ at § 440.130
would not primarily affect the scope of
preventive services required to be
offered as EHB in the state benchmark
plans. Rather, the amendment would
greatly expand the scope of the
preventive services benefit that may be
offered as an optional service under
standard state MA plans.
Response: This change is not based on
an interpretation of ‘‘preventive
services’’ as it is used in the Affordable
Care Act for purposes of EHB, but an
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interpretation of the coverage of
preventive services under regular
Medicaid under section 1905(a)(13) of
the Act. This regulatory change will
primarily impact the provision of
preventive services under the regular
state Medicaid plan. Section 4106 of the
Affordable Care Act, ‘Improving Access
to Preventive Services for Eligible
Adults in Medicaid,’ broadens the
section 1905(a)(13) preventive services
benefit by providing a 1 percentage
point FMAP increase on clinical
preventive services that are assigned a
grade of A or B by the USPSTF.
Comment: A number of commenters
believed the new definition could have
a significant fiscal impact on states’
Medicaid programs because, as a part of
EPSDT, the expanded scope of services
must be offered to recipients under age
of 21.
Response: While we acknowledge that
this change will result in additional
providers being authorized to provide
preventive services, it accurately reflects
the statutory language for the preventive
services benefit. In addition, broadening
the scope of providers who can provide
preventive services in the Medicaid
program may reduce, rather than
increase, program expenditures by
making available services in the most
efficient and effective settings.
Providing broader access to these types
of providers and benefits may assist
individuals with improved health.
Comment: A number of commenters
requested clarification on preventive
services. The commenters believed that
the definition provided (§ 440.130) is
broad and will be difficult for states to
operationalize without more detail. The
commenters requested a more precise
definition that includes the current
procedural terminology codes for each
preventive service and that HHS work
with states to develop preventive
definitions. Without such guidance
states and the federal government could
end up inappropriately paying for air
conditioners, ineffective weight loss
programs, or similar services which are
simply not appropriate.
Response: States still have the ability
to restrict preventive services to direct
patient care that is medically necessary
and is for the purpose of preventing
disease, disability and other health
conditions or their progression,
prolonging life and promoting physical
and mental health and efficiency. The
commenters may have been confused
because we inadvertently proposed to
eliminate these other prongs of the
preventive services definition, which
we preserve in this final rule. States also
have some options in determining
coverage of preventive services, and can
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specify the options, and specific billing
codes, for covered preventive services
using the state plan amendment process.
Comment: One commenter urged HHS
to retain the current regulatory
definition which established that the
allowable providers of preventive
services are physicians or other licensed
practitioners. The commenter disagreed
that the provider requirements for
preventive services under the
Affordable Care Act should be aligned
with Medicaid provider requirements
for the optional benefit category as
established under section 1905(a)(13) of
the Act. The commenter stated that the
benefits are distinctly different and have
different purposes, particularly for
children up to the age 21.
Response: We disagree with this
position. Both section 1905(a)(13) of the
Act and Affordable Care Act provide for
a more robust set of preventive services
than the current regulations, in allowing
a broader pool of providers to deliver
such services. In making this change in
the final rule, we are aligning our
regulation with the statutory coverage
provision. States will continue to have
some flexibility to determine the scope
of covered preventive services in their
state by submitting a SPA to do so.
Comment: Many commenters were
concerned that this broad language
would allow for unlimited services as
recommended by health care providers
and other providers of the healing arts.
These commenters requested that this
be clarified to impose reasonable limits
on services.
Response: Under existing rules, states
can establish limitations on amount,
duration, and scope, on the optional
preventive services provided the
resulting benefit is sufficient to meet the
purpose of the benefit. CMS reviews
each state plan amendment submitted
by states to determine the sufficiency of
the benefit.
Comment: One commenter
recommended closer integration of
community prevention and lifestyle
changes into the Medicare and Medicaid
programs, as an important opportunity
to both effectively and often less
expensively treat and prevent chronic
disease, such as heart disease and
diabetes.
Response: We agree that greater
coordination between Medicare and
Medicaid will provide efficiencies and
health outcomes for individuals with
chronic disease as well as other
conditions. Medicaid continues to build
closer and more integrated community
preventive services with Medicare.
Comment: One commenter believed
that Registered Dieticians should be
designated as the recognized providers
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of nutrition services, including medical
nutrition therapy and nutrition
counseling because of RD’s
demonstrated competency and
effectiveness. This commenter stated
that nutrition counseling is medically
necessary for chronic disease states in
which dietary adjustment has a
therapeutic role, when it is prescribed
by a physician and furnished by
qualified provider.
Response: We believe that Registered
Dieticians have an important role in
furnishing nutrition services. All
preventive services should be furnished
by qualified providers within their
scope of practice.
Comment: One commenter urged HHS
to clarify that § 440.130 of the proposed
regulation does not dictate who can
provide preventive services; it merely
dictates what providers can recommend
them, consistent with the totality of the
statute.
Response: The proposed regulation
does not dictate who can provide
preventive services; it defines who can
recommend such services. States will
have discretion to determine which
providers will provide the service using
the state plan amendment process.
Summary: No changes to the
proposed regulation will be made as a
result of comments received in this
section.
b. Public Notice (§ 440.386)
The proposed rule added a new
provision to allow states greater
flexibility when required to publish
public notice associated with an ABP
state plan amendment (SPA). We
proposed modifying the public notice
requirement for ABPs to require that
such notice be given prior to
implementing a SPA when the new ABP
provides individuals with a benefit
package equal to or enhanced beyond
the state’s approved state plan, or adds
additional services to an existing ABP.
We proposed the requirement to publish
public notice no less than two weeks
prior to submitting a SPA that
establishes an ABP that provides
coverage that is less than the coverage
by a state’s approved state plan or
includes cost sharing of any type. Based
on public comment, we are negating
what we proposed, as we do not believe
that 2 weeks is a sufficient time period.
We will be reverting back to our existing
policy of requiring the states to provide
‘‘a reasonable opportunity to comment’’
on all ABP SPAs prior to their
submission to CMS.
Comment: Many commenters
supported requiring states to give public
notice before implementation of a SPA
that established an ABP. The
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commenters also commended HHS for
requiring states to provide public notice
regarding how they must comply with
the requirement that children have
access to EPSDT.
Many commenters believed that the
proposed public notice requirements at
§ 440.386 are problematic and HHS
should not use them as a model for all
SPAs. Some commenters believed
proposed § 440.386 repeats the language
of § 440.305(d) requiring a ‘‘reasonable
opportunity’’ for public comment, but
then limits the public comment period
to just two weeks for certain ABPs
which the state Medicaid agency
determines provide less coverage or
higher cost sharing than existing
benchmark plans, and other
commenters believed that two weeks is
an inadequate amount of time for
meaningful stakeholder consideration
and input.
Many commenters believed HHS
should require an advance notice and
comment period of no less than 30 days
as this aligns with other comment
periods (such as the state comment
period for section 1115 waivers) and is
particularly important because of the
time and effort required to conduct the
benefit-by-benefit comparisons between
non-aligned Medicaid state plans, ABP
proposals and EHBs which will be
necessary to provide meaningful input.
Response: We have considered all of
the comments concerning the
requirement for public notice and agree
with the commenters that two weeks is
not sufficient to allow for a meaningful
timeframe in which public comments
can be solicited and considered. We are
therefore revising § 440.386 to revert to
our existing ABP public notice policy
currently found at § 440.305(d). We
would also like to clarify that the public
notice requirements at § 440.386 are
applicable only to section 1937 ABPs.
Comment: A number of commenters
requested HHS require a mandatory 15day period (sometimes referred to as a
‘‘cool down’’ period) for states to review
comments received and incorporate
suggestions into the final ABP
submission.
A few commenters believed that
§ 440.386 creates a two tiered process
whereby the state’s own evaluation of
an ABP determines whether it is subject
to public notice and comment. The
commenters believed this kind of
agency determination defeats the very
purpose of transparency and
stakeholder input.
Many commenters believed that there
is no compliance provision to help
ensure meaningful participation by the
public, unlike the reporting requirement
of § 431.412(viii) for section 1115
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demonstrations. The commenters
requested that any SPAs, including
those establishing ABPs, should be
subject to the same transparency and
public input procedures and reporting
requirement modeled upon those
governing section 1115 demonstrations
to help ensure meaningful participation
by the public, and that HHS
understands the issues raised at the
state level when making the SPA
approval decision.
Response: In revising § 440.386 to
revert to our existing policy, we believe
that we have provided a minimum floor
that allows sufficient time for
stakeholder feedback and state review.
Comment: Numerous commenters
requested that at a minimum, SPAs that
materially change a state Medicaid
program should be subject to increased
transparency and stakeholder input
requirements.
Response: States will be required to
follow existing public notice
requirements, which requires that the
state must have provided the public
with advance notice of the State plan
amendment and reasonable opportunity
to comment prior to the submission of
the SPA.
Comment: A few commenters
recommended that states should be
required to provide detailed information
on the ABP options under
consideration.
Response: The state is required to
provide information regarding the ABP
through the public notice process.
Comment: A number of commenters
requested that HHS include specific
requirements for adequate public
posting of the proposal, including that
it be posted on an internet Web site, as
well as a clear description of the process
and timeline for comment submission.
Response: We believe that states
should have the flexibility to determine
how best to provide public notice to the
populations in their state.
Comment: One commenter believed
that notice and stakeholder engagement
requirements should explicitly include
HIV/AIDS programs within health
departments.
Response: We believe that all
stakeholder groups, including HIV/
AIDS, will be served by the public
notice policy.
Comment: One commenter noted that
there were a number of different sources
of information for public notice
(including 59 FR 49249 (September 27,
1994); § 447.205; and new transparency
requirements for waiver and waiver
renewals (see State Health Official
(SHO) Letter #12–001)) and HHS could
achieve efficiencies by streamlining
notice requirements.
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Response: While there are various
methods for providing public notice
across programs, we believe that each
serves its own purpose for that program.
The public notice regulations under
§ 440.386 provide the most efficient and
effective policy for ABPs.
Comment: One commenter proposed
that HHS further define ‘‘substantial’’,
which triggers the ‘‘notice and
comment’’ requirement. The commenter
requested that HHS adopt a universal
definition of ‘‘substantial’’ so that there
is no confusion of the word’s meaning.
Response: ‘‘Substantial’’ is used in the
ABP public notice requirements. It
means that eligibility, enrollment,
benefits, cost sharing, payment
methodologies, or delivery systems have
changed significantly to affect
beneficiaries.
Comment: One commenter believed
that requiring public notice for a SPA
when an ABP provides a benefit
package equal to or enhanced beyond a
state’s approved state plan was
puzzling. The commenter believed it
added yet another public notice
requirement with questionable return,
particularly when this occurs prior to
implementation. The commenter agreed
that prior public notice should be
required when providing a lesser benefit
package than the approved State Plan,
adding cost sharing or reducing benefits.
Response: We believe, for the purpose
of transparency, ABPs should be
disseminated to the public. We believe
it is important that all beneficiaries are
made aware of changes being made to
ABPs.
Comment: One commenter requested
that when a SPA is submitted providing
less coverage the public should have at
least 30 days to submit comments and
the agency should provide a summary of
the comments it receives and how the
comments were addressed when it
submits the SPA to CMS for approval.
Response: Based on comments related
to this section of the regulation, we will
be continuing with the existing ABP
public notice requirements. Requiring
the state to provide a summary of the
comments it receives and how the
comments were addressed when it
submits the SPA to CMS for approval
could be too onerous to operationalize
depending on the magnitude of
comments received. CMS reserves the
right to request, when appropriate,
specific information on public
comments.
Comment: A few commenters
requested that HHS publically release
all ABPs selected and allow an
opportunity for public comment to
ensure plan adequacy.
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Response: All approved SPAs are
public documents. If the commenter
would like to comment on a particular
SPA they may contact their specific
state.
Comment: Many commenters
recommended HHS amend § 430.12 by
adding new paragraph (d) or deleting
§ 440.386 (a) and (b) and replacing them
with language that would require a 30
day public comment period and a 15
day review period for the state and
outlined the detail to be included in the
public notice. These commenters also
included requirements for publication
of public notice and information to be
included in the SPA.
Response: We appreciate the
commenters’ thorough language
recommendations. However, we believe
that the current public notice policy
sufficiently balances the need for
transparency while preventing the
impediment of the approval of SPAs in
a timely manner.
Comment: One commenter requested
that HHS monitor the public
information on Medicaid programs and
State-Based Exchange, provide and
consider issuing guidance on how to
communicate benefit packages to
enrollees and plan members in a clear
and effective way, incorporating low
literacy-level principles. The
commenter suggested that HHS should
consider requiring states to undergo a
public stakeholder review process for
these materials.
Response: We thank the commenter
for these recommendations and will
take them under further review however
they are beyond the scope of this
regulation.
Comment: One commenter requested
that HHS require all state plan
amendments be made public and
subject to comment.
Response: While we agree it is a good
practice for states to place SPAs online;
requiring states to do so is beyond the
scope of this regulation.
Comment: One commenter asked if
HHS was going to require additional
public notice requirements on anything
that is related to cost-sharing.
Response: Cost sharing of any type
requires public notice per § 440.386.
Comment: One commenter believed
there was a technical error made in the
Part 440-services. The commenter noted
that the general provisions section
§ 440.305 to § 440.386 is not mentioned
in the description of the changes to
either § 440.305 or § 440.386.
Response: CMS will take this
opportunity to delete § 440.305(d) as a
new § 440.386 has been added for
public notice.
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Summary: CMS will delete
§ 440.305(d), which was the section
describing public notice requirements,
as a new § 440.386 has been added for
public notice. We have reverted to our
existing public notice requirements
based on public comment on this
section of the rule.
c. Exempt Individuals (Modifying
Definition of Medically Frail)
(§ 440.315)
The proposed rule updated the
definition of the ‘‘medically frail’’
category of individuals exempted from
mandatory enrollment, and solicited
comment about whether to add SUD to
the definition. The final rule adds
individuals with chronic SUDs to the
definition of ‘‘medically frail’’, based on
the overwhelming support in public
comments.
Comment: Many commenters strongly
supported CMS’s definition of exempt
individuals and clarification of
medically frail. In supporting the
definition of medically, many
commenters also thanked the Secretary
for including in the definition of
medically frail, individuals with serious
or disabling mental illness, (including
children with serious emotional
disturbances), and individuals with
physical, intellectual or developmental
disabilities that significantly impair
their ability to perform one or more
activities of daily living; many
commenters agreed that individuals
with a disability determination based on
Social Security criteria should be
exempted from mandatory enrollment
in an ABP.
One commenter stated that medically
frail are an identifiable population with
unique care and cost characteristics and
this definition provides an opportunity
for these individuals through practices
that may not be included in the
products offered through state
exchanges.
Response: We are pleased with the
overwhelming support for the clarified
definition of ‘‘medically frail’’ displayed
in the majority of comments.
Comment: Many of the commenters
urged CMS to include individuals with
substance use disorders in the definition
of medically frail because individuals
with substance use disorders (SUD)
have similar health needs as those with
the other complex conditions included
in the definition, and ABP coverage may
be less likely to provide needed services
and supports typically provided by
Medicaid.
Many commenters also pointed out
that individuals with SUD cannot be
considered disabled under Social
Security law if SUD is a contributing
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factor material to the determination that
the individual is disabled, regardless of
the severity of the SUD. Particular
concern was raised about benchmark
coverage in states that may choose the
weakest available benchmark plan
option in an effort to limit perceived
financial risk for the state, or to avoid
political risk. Concern was also raised
that beneficiaries living in states
offering fewer benefits ‘‘suffer’’ from
placement in clinically inappropriate
levels of care resulting in poor outcomes
and higher federal costs.
One commenter wrote that SUD
should be included in the definition of
medically frail because scientific
research indicates that addiction is a
chronic brain disorder with intrinsic
behavioral and social components,
similar to other forms of mental illness.
In supporting clarification of the
definition of medically frail, a
commenter wrote that the definition
should include all those with disabling
conditions because the reference plans
that may serve as the model for benefits
in ABPs are employer-sponsored
insurance plans and may not be
adequate to serve the needs of those
who are too medically frail to work.
Another commenter wrote that it
supported clarifying the definition of
medically frail by including all those
with disabling conditions. Medicaid
should provide more comprehensive
benefits for individuals and this
language will allow it to do so since
employer sponsored plans often
inadequately cover substance use
disorders, therefore the commenter
supports adding SUD to the definition
of medically frail.
Alternatively, a few commenters
recommended that CMS not require that
individuals with SUD be considered
exempt from mandatory ABP
enrollment. This commenter wrote that
because states must design their ABPs to
include a comprehensive array of
mental and behavioral health services,
inclusive of substance use treatment at
parity with physical health services, it
seems unnecessary and overly
prescriptive to mandate the exemption
of individuals with SUDs.
Response: Since publication, in 2010,
of the Final Rule: State Flexibility for
Medicaid Benefit Packages, numerous
stakeholders have raised concern that
individuals with SUD may not be
appropriate for enrollment in an ABP
because ABPs may not provide the same
level of care provided by the standard
Medicaid State plan. Individuals with a
substance use disorder may have
chronic health conditions and need an
expanded array of behavioral health and
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possibly long term services and
supports.
Considering the overwhelming
support for including SUD in the
definition of medically frail, we have
modified § 440.315(f) to include as
medically frail, individuals with
chronic SUD. While we recognize that
substance use is among the EHBs, we
believe that individuals with this
condition could be medically frail and
should have the choice to elect
voluntary enrollment in an ABP or
receive full state plan benefits (for
individuals in the new adult group,
through an ABP that consists of full
state plan benefits).
Comment: One commenter wrote that
while the definition of ‘‘medically frail’’
appropriately clarifies that individuals
with serious mental illnesses and
children with serious emotional
disturbances are included among
‘‘individuals with disabling mental
disorders’’ it inappropriately excludes
people with psychiatric disabilities from
another listed group—‘‘individuals with
a physical, intellectual or
developmental disability that
significantly impairs their ability to
perform one or more activities of daily
living.’’ People with psychiatric
disabilities should continue to be
included in that group. Particularly due
to the lack of clarity about what may
count as a ‘‘serious mental illness,’’ it is
important to ensure that people with
mental illness have the same
opportunity as people with other
disabilities to qualify for exemption on
the grounds that their disability
significantly impairs their ability to
perform one or more daily living
activities.
Response: We acknowledge that
individuals with serious mental illness
tend to have significant co-morbid
conditions that are going to require a
different array of mental health and
medical services, and long term services
and supports that may not be available
through an ABP. However, we do not
believe it is necessary to explicitly
specify that individuals with psychiatric
disorders also qualify for ‘‘medically
frail’’ due to deficiencies in activities of
daily living. Individuals only need to
meet one criterion within this definition
to qualify for the exemption to
mandatory enrollment. Section
440.315(f) provides states with a
minimum standard for identifying
individuals who are medically frail and
states have the flexibility to expand this
definition.
Comment: A commenter wrote that
the term medically frail should be
replaced with individuals with
disabilities.
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Response: We are retaining the term
medically frail in our regulations
because that term is specified in section
1937 of the Act and we believe it would
be confusing to use a different term for
the exemption.
Comment: One commenter stated that
CMS should avoid defining any new
categories of medically frail as the
concept of medically frail as outlined in
the proposed rule is incomplete and
unworkable, and more time and thought
needs to be put into this before moving
forward with final rules. The
commenter believes there are both
operational and implementation
challenges to the new concept of
medically frail contained in the
proposed rule and since there is no clear
definition of medically frail, or guidance
on how a state would go about making
that determination, if the rules were
implemented as written, the likely
result would be a significant disruption
of the eligibility process and a large
number of appeals.
Response: Section 440.315 provides
states with a minimum standard for
exempting specified categories of
individuals from mandatory enrollment
in an ABP. We do not expect these
exemptions to mandatory enrollment to
be disruptive to the eligibility process as
eligibility determination occurs first as
a separate process. States will not need
to determine whether a beneficiary
qualifies as medically frail upfront but
will need to have a process for
identifying individuals who cannot be
mandatorily enrolled into an ABP.
Comment: We received many
comments requesting that CMS provide
further clarification regarding the
operationalization and coverage
implications of the proposed revision to
the definition of medically frail, as well
as clarifying how the revised definition
will impact implementation.
One commenter indicated that states
have limited experience with ABP
coverage under section 1937 of the Act,
and it is unclear how exemption from
mandatory enrollment in an ABP for
individuals defined as medically frail
(and other categories of exempt
individuals) would be operationalized
on a broader scale. Further, it may be
operationally challenging to identify the
range of individuals included in the
proposed definition as medically frail,
prior to eligibility determination and
plan enrollment, particularly for
individuals with SUDs.
Several commenters requested CMS to
provide clear, objective standards for
defining medically frail, such as the
criteria used to determine eligibility for
Supplemental Security Income. One
comment also expressed concern that
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any approach to identifying individuals
who could be exempt from mandatory
enrollment in an ABP not stigmatize
individuals or create unintended
barriers to seeking treatment. Several
commenters wrote that the definition of
medically frail is vague and will be
difficult for states to operationalize.
Another wrote that the impact of the
medically frail definition will be
significantly mitigated if CMS clarifies
that a state’s existing Medicaid benefit
package will be deemed to meet the
ABP standards under the Secretaryapproved coverage option.
One commenter expressed concern
that the definition of medically frail is
so broad that there could be confusion,
inconsistency, and costly implications
to having such a broad set of individuals
eligible for exemption and
recommended that CMS should clearly
and carefully define the set of
individuals who would be exempt and
not include individuals with chemical
dependency in the definition.
A number of commenters encouraged
HHS to develop a systemic plan for how
the medically frail that are enrolled into
an ABP, based on the streamlined
application collecting minimal
information about disability or function,
will be identified for exemption and
stated HHS must develop requirements
and supports for states to identify
exemption eligibility.
Several commenters expressed
concern that the process of ensuring that
all exempt individuals are identified
and enrolled in the benefit plan that
best service their health care needs
(either an ABP or traditional Medicaid)
will be very burdensome or difficult for
states and asked that CMS provide
further guidance on how this can be
accomplished. Several of these
commenters stated that ABPs are not
well aligned with traditional Medicaid
and urged CMS to provide further
guidance to states on methods and
strategies for identifying exempted
individuals through the streamlined
application process and enrolling them
in the appropriate coverage.
Another commenter envisioned
situations where it may be beneficial for
a medically frail individual to have
access to an ABP rather than traditional
Medicaid and urged CMS to design
processes that ensure that individuals
have the ability to make an informed
choice about their Medicaid benefit
options.
Another commenter voiced concern
that the proposed rule does not require
a process to ensure that individuals are
appropriately identified as potentially
exempt when they apply for coverage.
This commenter pointed out that
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individuals with serious mental
illnesses and disabilities may not realize
that they may qualify as exempt if they
do not receive clear notification
concerning (1) The possibility that they
may be exempt, (2) the process for
determining whether they are exempt,
and (3) how to opt out of enrollment in
an ABP if they are exempt. The final
rule should require this type of notice
and process.
Response: CMS acknowledges that
many states will not have prior
experience with implementation of an
ABP, or with identifying individuals
who are exempt from mandatory
enrollment or who meet the criteria for
exemption. We anticipate that for
existing eligible individuals the state, if
it chooses, will be able to screen
beneficiaries it intends to enroll to
identify exempt individuals by
eligibility category and through the use
of historic medical encounter data.
For newly enrolled individuals, who
are eligible based on income rather than
disability, the state will not initially
have information concerning their
current health status or historic
encounter data. Therefore, the
enrollment process could be important
to identifying if an individual meets the
criteria of the statutory exemptions. One
appropriate screening option includes
beneficiaries identifying themselves as
meeting the exemption criteria. We
encourage states to implement a process
to screen for exempt individuals using
this minimum standard for identifying
individuals who are medically frail.
Proposed regulations that were not
finalized as part of this rule at
§ 435.917(b) and (c) set forth the
information that must be provided to an
individual regarding benefits and
services and provide that the
information must be sufficient to enable
the individual to make an informed
choice. Sample beneficiary notices will
be provided to the states by CMS,
incorporating questions posed to
beneficiaries to aide in the selfidentification process. While the
individual is being provided with this
information through options counseling,
the individual could be initially
enrolled in benchmark or benchmarkequivalent coverage that is subject to
section 1937 requirements.
Comment: One commenter wrote that
the phrase ‘‘disabling mental disorders’’
relies on non-measurable terms. The
commenter believes that specific
disorders, including SUDs, should be
added if they meet a defined disability
test. CMS should provide states with the
flexibility to define medically frail or
provide states with general guidelines
that an individual would have to meet
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to qualify and allow states to set defined
criteria.
Response: To ensure appropriate
service protection for individuals with
disabilities and special medical needs,
we have included a basic definition of
medically frail that we anticipate will
ensure that vulnerable individuals with
special medical needs are not
mandatorily enrolled in an ABP that
may not provide appropriate medical
treatment for their individual medical
condition. Section 440.315(f) provides
states with a minimum standard for
defining medically frail populations.
Comment: Several commenters stated
that the underlying goal of the
exemption from mandatory enrollment
of vulnerable populations is to protect
access to needed services. There may be
instances where amount, duration and
scope limitations are more restrictive
under the Medicaid state plan rather
than under the ABP, highlighting the
need for beneficiaries to receive easily
understandable information that allows
them to compare coverage options.
Response: CMS thanks the
commenters’ for acknowledging the
underlying purpose for exempting
certain populations from mandatory
enrollment in an ABP and concurs with
this comment. Beneficiaries need to
make individualized determinations of
the benefit package (either the ABP or
the regular state plan) that best meets
their needs.
Comment: Several commenters
requested CMS provide further guidance
on the enrollment and selection process
for medically frail beneficiaries as this
will be critical for those who qualify to
be able to select the benefit plan that
best meets their health care needs. The
commenter wants to assure that,
depending on the circumstances,
medically frail individuals will not be
forced into a plan that provides fewer
benefits than the traditional Medicaid
plan or the ABP.
Response: The purpose of the criteria
for the exempt categories is to assure
that individuals with special medical
needs will be enrolled in a coverage
plan that best provides necessary
services. The design and
implementation of a process to
determine medical frailty will likely be
specific to each state. However, states
will have to follow proposed regulations
that were not finalized as part of this
rule at § 435.917(b) and (c) in that
sufficient information must be provided
to an individual about benefits and
services to enable the individual to
make an informed choice.
Comment: One commenter requested
that CMS allow states to define the
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exempt medically frail population using
objective measurable criteria.
Response: Section 440.315 provides
states with a minimum set of criteria for
exempting specified categories of
individuals from mandatory enrollment
in an ABP or for individuals in the new
adult group, a choice between
benchmark coverage that is either
coverage defined in the ABP or
benchmark coverage that is the state’s
regular approved Medicaid state plan.
Comment: One commenter
recommended that the definition of
‘‘medically frail’’ include individuals
that meet the Medicaid Health Home
eligibility requirements in section 2703
of the Affordable Care Act.
Response: We believe that many
enrollees in health homes, as they are
individuals with chronic conditions that
are serious and complex, will be
covered by the existing definition of
medically frail. But not all health home
enrollees have that level of medical
need, and we have determined that the
suggested revision would not serve the
limited purposes of the exemption.
Comment: One commenter requested
that the definition of medically frail
include all people with disabilities,
because this definition is one of the
most essential provisions among all of
the proposed rules, and because persons
with disabilities would be imperiled as
a result of mandatory enrollment in an
ABP modeled after a commercial plan.
One commenter stated that inclusion
of individuals with SSI appears to
broaden the definition of medically
fragile for which there is currently no
standard definition and historically
states have been able to define. As a
result, determinations for SSI will likely
differ as other considerations are
included in the determination.
Response: In defining medically frail,
§ 440.315 (f) covers a wide range of
populations that will be determined to
be eligible for voluntary enrollment, or
in the case of individuals determined
eligible for the new adult group, eligible
to choose to receive benchmark benefits
as defined in the ABP or benchmark
benefits that are the state’s approved
Medicaid state plan, assuring that these
individuals will receive care that is
appropriate to their medical needs. As
proposed, § 440.315(f) specifically
includes individuals with disabling
mental disorders (including children
with serious emotional disturbances and
adults with serious mental illness),
individuals with serious and complex
medical conditions, individuals with a
physical, intellectual or developmental
disability that significantly impairs their
ability to perform one or more activities
of daily living, and individuals with a
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disability determination, based on
Social Security criteria, or in states that
apply more restrictive criteria than the
Supplemental Security Income (SSI)
program, as the state plan criteria.
Sufficient information must be provided
to an individual about benefits and
services to enable the individual to
make an informed choice according to
proposed regulations that were not
finalized as part of this rule at
§ 435.917(b) and (c).
Section 440.315(f) provides states
with a minimum standard for
identifying individuals who are
medically frail and states have the
flexibility to expand this definition.
Comment: One commenter wrote that,
by including in the final rule such a
broad description of medically frail,
CMS could substantially increase the
number of individuals who would be
exempt from mandatory enrollment in
section 1937 benefit plans. The
commenter asserted that this would
allow the states less flexibility in
creating plans to best meet the needs of
these individuals. The commenter wrote
that this is particularly true if
individuals with SUDs were to be
included in the definition and strongly
recommended not including people
with SUD in the medically frail category
as mental health and SUD services are
required benefits under the EHB
benefits package. The commenter also
questioned the reasoning behind
including people with SUD in the
definition of medically frail.
Response: We do not agree that the
definition of medically frail is too
expansive and will unduly limit state
flexibility. Nor do we think that
inclusion of individuals with SUDs will
be problematic. We recognize that a
broader definition of medically frail
individuals will mean that such
individuals will only elect to enroll in
an ABP if the benefits are designed to
meet their needs at least as well as
regular state plan coverage.
Comment: One commenter wrote that
if newly eligible individuals meet the
criteria for exemption and are exempt
from section 1937 of the Act, the
Federal government needs to clarify if
the enhanced funding for this group
would be available for all services
provided to those individuals.
Response: Yes, enhanced FMAP is
available for all services provided to a
newly eligible individual, whether that
person chooses the ABP based on a
benchmark or benchmark equivalent
package that includes the EHBs in
compliance with section 1937 of the
Act, or chooses an ABP equal to the
state’s approved regular state plan.
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Comment: A number of commenters
expressed concern how individuals who
are exempt will be identified and
requested further guidance on
enrollment and selection process for
medically frail so that those exempt can
select the plan that best meets their
needs. Several commenters
recommended adding a requirement
that the notice provided to individuals
who have been found eligible for the
expansion group include detailed
information regarding how one can
qualify for an exemption and the
services and supports that would be
available to a person who is exempt
from mandatory enrollment in an ABP,
and should include information
regarding how to request and receive an
exemption. A commenter suggested that
this requirement should be added to
§ 435.917. Another stated that those
who may be exempt will need clear,
consumer friendly information and
decision support to help them
understand their choices.
Another commenter voiced concern
that the proposed rule does not require
a process to ensure that individuals are
appropriately identified as potentially
exempt when they apply for coverage.
Individuals with serious mental
illnesses and disabilities may not realize
that they may qualify as exempt if they
do not receive clear notification
concerning (1) The possibility that they
may be exempt, (2) the process for
determining whether they are exempt,
and (3) how to opt out of enrollment in
an ABP if they are exempt. The final
rule should require this type of notice
and process.
A commenter expressed concern that
the proposed rule does not issue
requirements outlining the process
states should use to identify people who
are exempt and this is particularly
pertinent given the ongoing confusion
about whether or not states will be able
to claim enhanced federal match for
Medicaid expansions individuals who
are exempt from ABP enrollment. The
commenter fears states will incur high
administrative costs managing different
federal match rates for different
Medicaid expansion individuals,
creating an incentive to develop
processes that implicitly or explicitly
discourage exempt individuals from
taking advantage of their right to enroll
in traditional Medicaid.
One commenter voiced concern that
including in the definition of medically
frail individuals with disabling mental
disorders, individuals with serious and
complex medical conditions,
individuals with physical and
intellectual or developmental
disabilities that significantly impair
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their ability to perform one or more
activities of daily living, or individuals
with a disability determination based on
Social Security criteria does not appear
to be couched entirely within SSA
disability criteria and that some
individuals with substance use
disorders who are not otherwise
considered ‘‘disabled’’ under Medicaid
may be viewed as medically frail and
exempt for ABP. Therefore, individuals
with SUDs would be included in a
higher-level, comprehensive Medicaid
benefit package, thereby increasing costs
to the state without the benefit of the
higher federal match under the
Medicaid expansion to newly eligible
adults.
Response: We intend that, as
amended, § 440.315 may expand the
number of individuals who will qualify
as exempt beyond the scope of those
who are otherwise considered disabled
to include other individuals whose
medical needs mean that they are
medically frail. We also agree that
exempt individuals will need clear,
consumer friendly information and
decision support to help them
understand their choices. For Medicaid
beneficiaries who are not in the new
adult group, existing requirements at
§ 440.320 requires the state to provide
each individual considering voluntary
enrollment in an ABP a comparison of
the ABP option versus the State plan
option before the individual chooses to
enroll. The comparison must also
include information on the cost-sharing
obligations of beneficiaries. CMS has
proposed requirements that were not
finalized as part of this rule at
§ 435.917(b) and (c) that an individual
must receive information based on
eligibility regarding benefits and
services that are available to them.
Information must be sufficient for the
individual to make an informed choice.
Proposed regulations that were not
finalized as part of this rule at
§ 435.917(b) and (c) will apply to all
Medicaid beneficiaries including adults
in the new eligibility group. Individuals
in the new adult group who otherwise
meet criteria for exemption from
mandatory enrollment may be enrolled
in benchmark or benchmark-equivalent
coverage subject to section 1937
requirements during the options
counseling period to insure coverage
during this time.
Comment: Several commenters stated
that CMS should further clarify which
medical conditions are considered
‘‘serious and complex’’ and urged CMS
to specify that chronic conditions such
as HIV/AIDS and viral hepatitis, which
may have co-morbidities, are serious
and complex and individuals with
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serious and complex conditions should
be exempted from mandatory
enrollment in an ABP. Many
commenters strongly recommended that
HHS also include in the definition of
medically frail or special medical needs,
individuals with chronic health
conditions because individuals with
chronic illness should not be forced into
an ABP package that will not meet their
predictable needs, as this may lead to
higher long term costs associated with
poorly managed chronic conditions.
One commenter indicated it was
assumed that chronic kidney disease
and end stage renal disease were
considered to be chronic diseases and
another commenter indicated that
individuals with Cystic Fibrosis fall
squarely within the medically frail
definition.
Another commenter wrote that it was
assumed that long term cancer survivors
managing complex treatment or a
complicated set of late and long-term
effects would fit the description of
complex medical conditions and
therefore could choose the most
appropriate benefit plan.
Some commenters also stated that
being forced into a health plan that does
not meet the needs of a person with
chronic illness may lead to higher longterm costs associated with poorly
managed chronic conditions.
One of the commenters urged CMS to
specifically include in the definition of
medically frail individuals with chronic
viral hepatitis.
Response: The exemption categories
established by statute and the proposed
clarification in § 440.315 are intended to
provide states with a minimum standard
for exempting vulnerable populations.
We agree with the commenters that
illnesses such as HIV/AIDS, viral
hepatitis, cancer and end stage renal
disease are all serious chronic medical
conditions. It would not be possible for
CMS to include an exhaustive list of
conditions that should qualify as
medically frail, but we believe that the
criteria as currently drafted is broad
enough to include individuals for whom
a choice of service package is most
appropriate.
Comment: Several commenters
suggested that benchmark exempt
populations are vulnerable and best
serviced by traditional Medicaid.
Response: We expect the exemptions
process or the process designed for
individuals in the new adult group will
provide these individuals with an
informed choice of the benefit package
that best meets their needs.
Comment: A commenter wrote that
the current exemption definition would
create the need for a new frailty
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determination process for all newly
eligible adults for states that implement
an ABP that is different from the
standard benefit. This is a concern for
one state as it becomes an
administration burden for the consumer
and the state system with considerable
fiscal implications and proposes a
common benefit for adult populations in
Medicaid that would avoid the frailty
determination and exemption process.
Response: We acknowledge the
writer’s concerns, and are not requiring
any specific processes for implementing
the exemptions criteria for the new
adult group. We provided a minimum
standard for identification of
individuals who are medically frail and
proposed regulations that were not
finalized as part of this rule at
§ 435.917(b) and (c) regarding benefits
option counseling should be followed.
Individuals may receive benchmark or
benchmark-equivalent coverage subject
to 1937 requirements during the options
counseling period to insure coverage
during this time.
Comment: Two commenters wrote
that some states have Medicaid and
other public health care programs that
have developed special initiatives
designed to meet the needs of enrollees
who have substance use disorders. They
indicated that these initiatives may
include provision of care management
series, discouraging drug-seeking
behavior by requiring care to be provide
by a specified doctor and hospital, etc.
The commenters asserted that
exempting these individuals from
mandatory ABP enrollment would make
it far more difficult for Medicaid
Programs to meet these individuals’
health care needs. While the writers
agree with the characterization of a
substance use disorder as ‘‘medically
frail’’, and thereby exempting them from
mandatory enrollment in an ABP, it
would make it more difficult for
Medicaid Programs to meet these
individuals’ care needs.
Response: We appreciate the
commenters’ concern but do not agree
that exempting individuals with chronic
SUD from mandatory ABP enrollment
would make it more difficult for
Medicaid programs to meet the
individuals’ health care needs. Section
1937 of the Act provides states with the
flexibility to redesign current Medicaid
benefit coverage to provide unique
programs for targeted populations and
encourages states to be creative in the
design of its coverage packages. The
exemption of individuals with chronic
SUD is not an impediment to providing
quality care that meets the specific
needs of this population. Conversely,
the flexibility provided by ABPs
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encourages states to design
comprehensive benefit packages that
would encourage voluntary enrollment.
Comment: One commenter wrote that
states should be able to employ
traditional Medicaid disability
assessments in evaluating medically
frail exemption and limit receipt of long
term care services and supports to those
undergoing asset testing. To ensure long
term stability and a fiscally sound
expansion, the commenter requested
sufficient flexibility to limit receipt of
non-EHB services including long term
care services, to the non-expansion
population via state plan amendment or
section 1915(c) waiver and
recommended revision to the medically
frail exemption to align with the
disability assessments already in use
within Medicaid.
Response: We disagree with this
commenter. We believe the current
construct of the medically frail
exemption category is in keeping with
legislative construct
Comment: A commenter wrote that
the proposed revision to the definition
of medically frail seems to run against
the Affordable Care Act’s benefit design
for the expansion population, that is,
coverage tied to section 1937 of the Act
and incorporation of an EHB standard
from the individual and small group
markets, which excludes coverage from
long-term care and supports. The
commenter asserted that Affordable
Care Act congressional goals to contain
the costs of the Medicaid expansion
may be jeopardized if states are faced
with widespread eligibility for long term
care services without the traditional
program integrity tools used to filter
such services based on objective need.
The commenter further asserted that
existing ABP rules already exempt a
broad range of vulnerable individuals as
compared to traditional disability
assessment and that within what is
likely to be a large exempted class, these
beneficiaries will access benefits
otherwise excluded from the EHB
standard, namely institutional or long
term care through the state plan, at
sizable cost to states and the federal
government. Of particular concern to
the commenter is the application of
personal care services to a large exempt
segment of the new adult group and
these long-term care benefits would be
accessed in the streamlined MAGI
enrollment where asset evaluation
would be prohibited.
Response: The Affordable Care Act
did not change the categories of
individuals exempted from mandatory
enrollment, and added the provision at
section 1902(k)(1) of the Act, which
contemplates that individuals who meet
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the conditions for exemption would
receive ABP coverage that is not subject
to the requirements of section 1937 of
the Act. There is nothing in the
Affordable Care Act that would
preclude us from clarifying and
amplifying the term ‘‘medically frail’’ to
include populations that have high
medical needs resulting from disabling
mental disorders, substance use
disorders, serious and complex medical
conditions, or disabilities. We are
clarifying in this final rule that the
exemptions to benchmark or
benchmark-equivalent coverage do not
directly apply to the new adult
population, but if an individual in the
new adult population meets the criteria
for exemption, then that individual has
a choice of an ABP based on benchmark
or benchmark-equivalent coverage
including EHBs, or an ABP defined as
the state’s approved Medicaid regular
state plan, which is not subject to EHB
requirements. Please see more detailed
response above for additional
information related to this provision.
Summary: We changed the proposed
regulation language at § 440.315(f) by
adding ‘‘chronic substance use
disorders’’ to the definition of the
medically frail exemption category.
d. Benchmark Health Benefits Coverage
(Adding Benefits to Secretary-Approved
Coverage) (§ 440.330)
In the proposed rule, we amended
§ 440.330(d) by broadening the benefits
available as Secretary-approved
coverage from section 1905(a) benefits
to benefits of the type that are available
under 1 or more of the standard
benchmark coverage packages or state
plan benefits described in sections
1905(a), 1915(i), 1915(j), 1915(k) or 1945
of the Act, or any other Medicaid state
plan benefits enacted under Title XIX,
or benefits available under base
benchmark plans described in
§ 156.100.
e. Secretary-Approved Health Benefits
Coverage and § 440.330(d) and State
Plan Requirements for Providing
Additional Services (Adding Benefits to
Additional Coverage) (§ 440.335)
Comment: Many commenters offered
general support for the flexibility
allowed in the proposed rule to include
a broader range of selected benefits
through a Secretary-approved coverage
package.
Some commenters noted that the
ability of states to select coverage
corresponding to their full traditional
Medicaid benefit as their ABP, which
would be presented under the Secretaryapproved coverage option, offers a clear
distinction between the section 1937
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benchmark options and the EHB
benchmark options set forth in 45 CFR
part 156.
Many commenters believed that the
proposed language correctly offered
states the option to use the Secretaryapproved option in section 1937 of the
Act to extend comprehensive Medicaid
coverage to the new adult expansion
group and that extending full Medicaid
benefits to this population,
supplemented as needed to comply with
the EHBs, mental health parity and
other protections in the law, is the best
approach for meeting the complex
health needs of the low-income adults
who will gain Medicaid eligibility under
the expansion.
Response: The proposed provisions
for defining Secretary-approved
coverage sought to balance statutory
requirements for establishing a
minimum coverage standard through
ABP with the flexibility that states may
need when considering the appropriate
range of ABP coverage relative to the
medical needs of the population being
served. States may also substitute
benefits using the state’s approved
Medicaid state plan benefits as long as
the benefits are in the same EHB
category and they are actuarially
equivalent. We appreciate the
commenters’ support.
Comment: Some commenters were
not clear on which state plan benefits
may be included and, thus, urged HHS
to clarify that state plan benefits enacted
under Title XIX are available for
inclusion through the Secretaryapproved process irrespective of
whether they have otherwise been
implemented in a particular state
Medicaid program. As an example,
those commenters noted that a state that
may conceivably want to design a
Medicaid benchmark targeting
vulnerable populations, such as
individuals with dementia, and include
a particularly relevant home support
service that is not an otherwise available
service in the state’s Medicaid program.
Response: We wish to clarify for
commenters that any benefits described
in sections 1905(a), 1915(i), 1915(j),
1915(j) or 1945 of the Act, and any
benefits included in a selected
benchmark coverage option may be
included in an ABP whether or not
those benefits are offered through a
particular Medicaid program.
Comment: Many commenters
requested that, in addition to the
provisions that Secretary-approved
coverage must meet the needs of the
target population, HHS revise language
to require that the final Secretaryapproved benefits package be at least
actuarially equivalent to one of the first
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three benchmark options, indicating
that this would ensure that states use
the Secretary-approved option to
provide a benefit that is innovative and
comprehensive, and not solely to
provide a benefit that is lesser.
Many of the same commenters
recommend amending § 440.330(d) to
read as follows: Any other health
benefits coverage that the Secretary
determines, upon application by a State,
provides appropriate coverage to meet
the needs of the population provided
that coverage, and is at least actuarially
equivalent to one of the benchmark
options in paragraphs (a), (b), or (c).
Secretarial coverage may include
benefits of the type that are available
under 1 or more of the standard
benchmark coverage packages defined
in § 440.330(a) through (c) of this
chapter, State plan benefits described in
sections 1905(a), 1915(i), 1915(j),
1915(k), and 1945 of the Act (whether
actually covered in the state plan or
not), any other Medicaid State plan
benefits enacted under title XIX, or
benefits available under base benchmark
plans described in § 156.100.
Response: For commenters requesting
that we require an actuarial equivalence
study for Secretary-approved coverage
against one of the three benchmark
options at § 440.330(a) through (c), the
statute defines Secretary-approved
coverage as one of the minimum
standards for benchmark coverage, and
as such, the benchmark options in
§ 440.330(a) through (d) should serve as
a reference for states considering the
benchmark-equivalent coverage option
offered in other regulatory provisions at
§ 440.335. Section 1937 of the Act does
not expressly mandate an actuarial
study of Secretary-approved coverage
Therefore, we are adopting § 440.330(d)
as proposed, and we believe that our
clarification here will serve to clarify
that a state plan benefit need not be
offered through the regular state
Medicaid program for its inclusion in
benchmark coverage, or benchmarkequivalent coverage.
Comment: Many commenters
indicated support of the intent to revise
§ 440.335(c)(1) to similarly align policy
for benchmark-equivalent coverage as it
does for Secretary-approved coverage
and, thus, allow addition of benefits
through the benchmark-equivalent
coverage process. Commenters believed
that there are no legal impediments to
this approach and urged HHS to finalize
the revision.
Similarly, other commenters
commended the Secretary for
continuing to allow states the option for
coverage of additional benefits in excess
of the minimum required coverage for
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benchmark-equivalent plans and for
revising the language to include home
and community-based services available
under state plan options among these
potential additional benefits.
Many other commenters applauded
HHS’s inclusion of various options for
LTSS and care coordination support.
Commenters generally offered strong
support and commended the decision to
enable states the flexibility necessary to
align ABPs with state-plan options for
home and community-based services,
self-directed personal assistance
services and attendant services, and
other state Medicaid plan benefits
described in section 1915(i), (j), (k) and
section 1945 of the Act.
One commenter indicated that the
flexibility to offer such services may
provide states further opportunity to
offer home and community-based
services to particular populations since
the proposed rule retains the section
1937 waiver of comparability that
allows states to choose target
populations for receipt of specialized
benefit packages. The commenter
offered an example of a state that could
design benefit packages that help
support community living, including
employment for persons with
disabilities.
One commenter was concerned that
states may not take advantage of this
flexibility, and suggested that CMS
consider issuing additional guidance to
states regarding the ability to cover
services critical to chronic care
management for the new adult
eligibility group, such as the new health
home benefit.
Similarly, another commenter
requested that CMS clarify how
authorities at sections 1915(i) and 1945
will be used given that individuals that
would most likely benefit from these
authorities will be exempt from
enrollment:
Response: CMS is providing states
with additional options to craft benefit
packages that most appropriately meet
the needs of the population being
served. Benefits that can now be
included as Secretary-approved
coverage may in fact assist people who
do not yet qualify as medically frail. For
instance, if someone needs assistance
with medication administration, they
may not yet meet the definition of
medically frail, but they may benefit
significantly from the service and in fact
avoid progression toward that
exemption group or meeting the
associated criteria. We are in support of
melding regular medical/surgical
benefits with home- and communitybased services that support people
living the community and potentially
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avoiding or delaying hospitalization or
institutionalization.
Comment: One commenter indicated
recognition that section 1915(i) of the
Act has proven to be a particularly
critical tool available to states to expand
home and community based services
and supports to cover a broad array of
services that enable individuals with
mental illnesses to succeed in their own
homes.
Response: We are in agreement with
the commenter that section 1915(i) of
the Act can serve as a critical tool
available to states to expand an array of
services that enable individuals with
chronic condition to succeed
independently. For this reason, we will
finalize regulations to include section
1915(i) of the Act as a viable state plan
option that states may consider for
inclusion when selecting an ABP.
Comment: A few commenters
requested clarification from CMS that
states may include section 1915(c) of the
Act and other waiver-based services in
their ABPs. Commenters stated concern
that states may need flexibility to
include additional services, such as
personal care and other services that
enable Medicaid beneficiaries to remain
in their homes to their ABPs because
section 1915(c) of the Act was not
referenced in § 440.360.
Similarly, many state Medicaid
agencies stated that the regulatory
sections should expressly specify that
states may provide ABP enrollees with
access to section 1915(c) programs. The
commenters indicated belief that section
1915(c) services are ‘‘state plan benefits
enacted under Title XIX’’ given that
section 1915(c) is found in Title XIX
and offers services that a state plan may
include as ‘‘medical assistance under
such a plan.’’ The commenters also
requested that CMS confirm their
reading of §§ 440.330, 440.360, allowing
states the option to provide enrollees
with section 1915(c) waiver services
either as part of Secretary-approved
ABP or as ‘‘additional services’’
available to non-expansion enrollees.
Response: Section 1915(c) of the Act
is not a state plan benefit, and therefore,
is not consistent with our general
principle that Secretary-approved or
additional coverage consists of coverage
under one of the benchmark coverage
options or regular state plan benefits.
Because the same services provided
under section 1915(c) of the Act may be
provided under section 1915(i) of the
Act, which can be offered in an ABP, we
do not see any reason to add section
1915(c) benefits as an exception to this
general principle.
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Summary: No changes to the
proposed regulation were made as a
result of these comments.
f. Benchmark-Equivalent Health
Benefits Coverage and § 440.360 State
Plan Requirements for Providing
Additional Services (Adding Benefits to
Additional Coverage) (§ 440.335)
In the proposed rule, we amended
§ 440.335(c) and § 440.360 by
broadening the benefits available as
additional coverage from section 1905(a)
benefits to benefits of the type that are
available under 1 or more of the
standard benchmark coverage packages
or state plan benefits described in
sections 1905(a), 1915(i), 1915(j),
1915(k) or 1945 of the Act, or any other
Medicaid state plan benefits enacted
under Title XIX, or benefits available
under base benchmark plans described
in § 156.100.
Comment: Many commenters believed
that the proposed rule would prohibit
states from providing wrap-around or
other additional benefits to newlyeligible adults, but would allow states to
provide additional benefits for other
populations in ABPs.
Many commenters shared the belief
that the Affordable Care Act does not
appear to prohibit states from providing
additional services to the newly-eligible
populations and that CMS should allow
states flexibility to provide additional
services to the newly eligible population
without having to go through the
additional process required for
Secretary-approved coverage. Those
commenters believed that if CMS
determines that the law prohibits states
from providing additional benefits to
the newly-eligible population, it should
allow states the ability to simply add
these benefits using a streamlined
process under the Secretary-approved
option or through another mechanism.
Several commenters urged CMS to
clarify through the final rule that states
may provide additional benefits to ABPs
for those eligible through section
1902(a)(10)(A)(i)(VIII) of the Act through
the Secretary-approved coverage option,
so as to not implicate the restriction on
additional coverage for the new adult
group contained through § 440.360.
Those commenters believed that the
proposed language is misleading and
could be interpreted that the expansion
population is not able to receive
additional benefits in any
circumstances, noting that the intent of
the proposed rule is that the expansion
group is limited to benchmark ABP
coverage.
A number of commenters requested
that CMS allow states the flexibility to
provide additional benefits beyond what
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is minimally required in the benchmark
to any or all populations in ABPs,
including the expansion population.
Similarly, another commenter urged
CMS to allow states to be as expansive
as they want to be in offering health care
services to all beneficiaries of ABPs,
including the newly eligible Medicaid
expansion population, beyond what is
minimally required within each state’s
ABP.
Other commenters noted that states
may identify deficiencies and gaps in
the commercial benchmark plan options
that fall outside parity, nondiscrimination, EHB and other
requirements. In this situation,
commenters believed that a state should
be able to add benefits easily for its
expansion population and CMS should
provide states with all available
flexibility to do so.
Response: Section 1902(k)(1) of the
Act is very clear that individuals
eligible through the new adult
expansion group are limited to
benchmark or benchmark-equivalent
coverage. In addition, there is a payment
exclusion under section 1903(i)(26) of
the Act for FFP in any additional
coverage. ‘‘Additional services’’
authorized under section 1937 fall
outside benchmark and benchmarkequivalent coverage. But we are
addressing this concern by allowing
states increased flexibility under this
final rule to include broader benefits
and services that are appropriate for the
population being covered and that are
similar to the benefit types listed in
§ 440.360, through Secretary-approved
coverage or benchmark-equivalent
coverage.
Comment: Many commenters
indicated strong support for HHS’
proposed policy and commended the
Department for clarifying the authority
for states to provide a wide range of
benefits in developing Secretaryapproved coverage. In continuing, those
commenters noted that many consumer
stakeholders have misunderstood the
allowance for inclusion of benefits
under Secretary-approved coverage due
to the general prohibition on adding
services to Medicaid benchmarks and
requested that the Department clarify
that benefits can be added, but only
through the Secretary-approved process.
Other commenters urged CMS to
consolidate these sections and clarify
that, despite the prohibition on adding
services to Medicaid benchmarks, states
have the flexibility to offer additional
and richer benefits to all those enrolled
in ABPs, including the expansion group,
by choosing the Secretary-approved
coverage option. Those commenters also
requested clarification that the federal
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match otherwise available for these
populations is available for the
additional benefits when they are
approved by the Secretary.
Similarly, other commenters
requested that CMS clarify and confirm
that the interpretation of this provision
within the proposed rule is that if a state
wanted to provide wrap-around services
for a particular population that some of
the ‘‘newly eligible’’ population may fall
under, it does not appear that would be
allowed unless the state creates a
Secretary-approved plan that
incorporates the benefits into the
underlying plan itself.
One commenter indicated that it
would be helpful for CMS to clarify that
adding additional benefits is possible
for individuals in the newly eligible
group, and that the prohibition on
additional coverage for the expansion
group at § 440.360 only applies to
benefits that have not been included in
the benchmark package selected by the
state. The commenter also suggested
that both benchmark-equivalent
coverage and Secretary-approved
coverage provide the state flexibility to
include benefits that can be covered
through a Medicaid state plan or a base
benchmark option available to the state.
Response: We reassert the statutory
construct that does not allow the new
adult group to received ‘‘additional’’
services. However, the broadening of
Secretary-approved coverage to include
the same options for services
accomplishes the goal of allowing
individuals in the new adult group
access to that same robust benefit
package. We reiterate that services
provided under an ABP do not have to
be offered under the regular state plan.
Comment: Several commenters
recognized that the Secretary’s
clarification that additional benefits
may include those available under base
benchmark plans (described in
§ 156.100), in additional to standard
benchmark coverage packages or
standard state plan benefits. Those
commenters were concerned about
flexibility for states to model ABPs after
any base benchmark, noting that not
every base benchmark plan option may
provide appropriate benefit levels for
the Medicaid population.
One commenter familiar with the
needs of underserved and poor
populations with chronic conditions
was appreciative that the EHB rules
builds upon protections already offered
through existing rules that allow states
to enroll certain populations in
Medicaid benchmark plans, and grants
states significant flexibility through
regulations at § 440.360 to develop a
more comprehensive benefits package
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that will better meet the needs of people
with HIV and others with chronic
conditions.
Response: As mentioned in previous
responses, we believe the statute
requires states to balance the
appropriateness of the ABP package
when considering the population being
covered. Therefore, we believe our
regulations encourage states to consider
other options if their analysis reveals
that the base benchmark options elected
do not provide an appropriate level of
benefits relative to the population being
covered.
Comment: A few commenters wished
to emphasize that section 1937 of the
Act requires states to provide FQHC
services to beneficiaries who receive
ABP coverage in the same manner as
CMS previously stated and conveyed in
the agency’s April 30, 2010 final rule.
The commenters emphasized that for
situations where no FQHCs are available
to section 1902(a)(10)(A)(i)(VII) of the
Act enrollees under their managed care
plan, then the state must provide the
beneficiary enrolled in ABP coverage
with FQHC services on a per-visit basis
as required by section 1902(bb) of the
Act. Alternatively, if a managed care
entity is able to provide FQHC services
to any beneficiary receiving ABP
coverage, payments for such services
must be made on a cost-related
prospective payment system basis, with
state supplemental payments provided
where the PPS payment would exceed
the amount provided under the
managed care contract.
Commenters indicated concern that
because § 440.360 is silent on states’
obligation to provide FQHC and RHC
services as part of benchmark or
benchmark-equivalent coverage, the
proposed regulation fails to distinguish
clearly between required and
‘‘additional benefits’’ for the section
1937 package and that the omission of
FQHC services from the list creates the
impression that these services are not a
required benefit within section 1937
coverage.
Several commenters recommended
that CMS clarify the FQHC services
requirement by: (a) Consolidating
§ 440.365 into § 440.345; or (b)
independently reference § 440.365 in
§ 440.360 by having the first sentence of
regulatory provision § 440.360 read, ‘‘In
addition to the requirements of
§ 440.345 and § 440.365.’’
Response: We agree with the
commenters that regulations at
§ 440.365 continue to require that the
state must provide that individuals
enrolled in an ABP have access, through
that coverage or otherwise, to rural
health clinic services and FQHC
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services. Such required services are
required as part of § 440.365 and a state
must assure to CMS that they are
providing these services, which is
different than adding additional services
described at § 440.360. FQHCs are
considered Essential Community
Providers in the commercial market,
and we anticipate these entities playing
a critical role in Medicaid ABPs as well.
When these providers are part of the
ABP provider network, reimbursement
to them must adhere to statutory
requirements.
Summary: Minor grammatical edits to
the proposed regulation were made as a
result of these comments.
g. Other Comments Received
We received various other comments
that did not relate specifically to
provisions proposed in the proposed
rule.
Comment: One commenter stated that
to realize the opportunity presented by
the Affordable Care Act, it is essential
that individuals who are admitted to jail
and are eligible for Medicaid be enrolled
in Medicaid either during incarceration
or immediately upon release to the
community. By law federal Medicaid
matching funds are not available for the
costs of needed items and services for
individuals who are enrolled in
Medicaid while they are inmates, unless
they are admitted to a medical
institution for treatment during the
period of incarceration. Nonetheless, the
suspension of benefits does not affect
the Medicaid eligibility of inmates or
their ability to enroll in the program if
eligible.
Response: Paragraph (A) following
section 1905(a)(29) of the Act and
implementing regulations at § 435.1009,
exclude from the definition of medical
assistance care or services for any
individual who is an inmate of a public
institution, except as an inpatient in a
medical institution. We read this
exclusion to apply generally to medical
assistance, whether provided through
the regular coverage plan or through an
ABP. Thus, while we agree with the
commenter that incarcerated
individuals may be eligible for
Medicaid, they would not be entitled to
benefits inconsistent with the exclusion.
We note that this is consistent with the
exclusion of incarcerated individuals
from eligibility to enroll in coverage
through the Exchange. It is also
consistent with the responsibility under
the Eighth Amendment of the United
States Constitution of governmental
entities to provide necessary medical
care to individuals who they are holding
as inmates, which effectively creates a
liable third party for such care.
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Individuals who are enrolled in
Medicaid when entering a public
institution should have their eligibility
suspended, rather than terminated, as
they remain eligible. This also ensures
ease of reinstitution of coverage postrelease. Additionally, if an individual is
not already enrolled in Medicaid, states
are encouraged to enroll eligible
individuals prior to their release so that
the individual can receive Medicaid
covered services in a timely manner
upon discharge.
Comment: A commenter requested
additional guidance as to what type of
information CMS will need to approve
an ABP state plan amendment and how
CMS will determine if mental health
parity has been met.
Response: We will be issuing a
template for states to use to submit
ABPs as a state plan amendment. At this
time, mental health parity will be
determined to be met with an assurance
by the state. We will be developing
more specific policy related to this topic
in the near future.
Comment: One commenter requested
CMS clarify what Medicaid category the
EHBs are applicable. The commenter
wondered whether EHBs only apply to
the expansion population and ABPs or
does it also apply to individuals who
are currently eligible for Medicaid. The
commenter questioned whether, for
example, current Medicaid benefits
would need to be adjusted to include
habilitative services.
Response: EHBs apply only to section
1937 of the Act and were not extended
into regular Medicaid. Therefore,
regular Medicaid state plan benefits will
not include the EHBs.
Summary: No changes to the
proposed regulation were made as a
result of these comments.
7. Summary
ABPs are intended to offer states
flexibility in designing benefit packages
for the Medicaid population that are
benchmarked to public employee or
commercial plans. To ensure coverage
of the kinds of services that will also be
assured for those purchasing coverage in
the individual and small group market,
the law also requires that ABPs cover
the ten EHBs specified by law.
Recognizing that states face
challenges in administering both their
state plan benefits and ABPs, we have
sought to provide as much flexibility in
aligning those packages as possible.
That said, we appreciate that it may be
difficult at this point to make changes
to the ABP that take effect by January 1,
2014. In light of this challenge, we will
partner with states to work as quickly as
possible to come into full compliance
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with these provisions. We do not intend
to pursue compliance actions on these
issues to the extent that states are
working toward but have not completed
a transition to the new ABPs on January
1, 2014. To establish its base benchmark
for EHBs for Medicaid, the state can
select the same or a different plan than
the base benchmark used for the
Exchanges. Once having selected the
base benchmark plan for EHBs, the state
maps the benefits to EHB categories, and
then can engage in supplementation
and/or substitution:
• Through supplementation at 45
CFR 156.110, the state must add EHBs
to a base benchmark plan that is missing
a required category of EHBs. States can
supply the missing EHBs from other
base benchmark plans.
• Through substitution at 45 CFR
156.115(b), the state can replace one or
more of the benefits within each
category of EHB, as long as it maps
appropriately to the category and the
services are actuarially equivalent to the
services that are being substituted. State
Medicaid programs can use this process
to substitute Medicaid state plan
benefits for public employee or
commercial plan benefits, for example,
as long as applicable requirements are
met. States must provide notification to
CMS that they have engaged in
substitution and have an actuarial
certification and analysis available for
inspection.
States must assure, as they evaluate
their base benchmark for EHBs and take
these steps that they also properly
account for special Medicaid
considerations discussed in this rule.
When states pay for covered outpatient
drugs under the ABP prescription drug
benefit, they must comply with the
requirements under section 1927 of the
Act. Habilitative services and devices
are defined by what is in the state
selected base benchmark plan,
substituted as desired. If not defined in
the base benchmark, the state will
define the benefit. For example, states
may offer coverage of habilitative
services and devices that is no more
restrictive in terms of amount, duration,
and scope than the rehabilitative
services and devices covered under the
applicable benchmark plan. We expect
that the services will be clinically
appropriate to meet the needs of
individuals based on medical necessity.
Pediatric oral and vision care must
follow requirements of the EPSDT
benefit.
The final base benchmark plan for
EHBs for Medicaid, after completion of
these steps, provides the floor for
Medicaid coverage to individuals in the
ABP.
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States also select a section 1937
coverage option. If the section 1937
coverage option and the plan initially
selected as the base benchmark for EHBs
are the same, the state will meet all
requirements by specifying as the final
ABP the final base benchmark, as
supplemented and subject to
permissible substitution, and further
supplemented to the extent necessary to
ensure coverage required under section
1937 of the Act, including EPSDT
services, family planning services, and
FQHC and RHC services.
If the section 1937 coverage option
and the selected base benchmark plan
are different (including when the state
elects Secretary approved coverage
option or benchmark equivalent
coverage), states have to take the
following steps to construct their final
ABP:
• If any other benefits are available in
the section 1937 coverage option, add
that benefit.
• For any benefits in common from
the section 1937 public employee or
commercial market plan options, but
with one having more robust qualities
related to amount, duration, or scope,
the benefit with the more robust
coverage.
• For any benefits in common from
the section 1937 Secretary-approved
coverage option, but with one having
more robust qualities related to amount,
duration, or scope, determine whether
to apply the benefit with the more
robust coverage.
Alternatively, a state can first
determine their ultimate goal in creating
their benefit package (for example,
wanting to create an ABP that mirrors
the state’s regular Medicaid state plan
benefit package as much as possible),
and develop their ABP starting first with
the selection of their 1937 coverage
option. This would entail comparing the
state plan benefit package with the base
benchmark benefit package,
supplementing the state plan benefit
with EHBs as necessary, and applying
permissible substitution of benefits
consistent with 45 CFR 156.115(b) to
better align with state plan benefits.
C. Exchanges: Eligibility and Enrollment
Throughout this proposed rule, we
proposed technical corrections to
regulation sections in part 155 to
replace references to section 36B of the
Code with the corresponding sections to
the Department of Treasury’s final rule,
Health Insurance Premium Tax Credit
(26 CFR 1.36B–0 et seq.), published in
the May 23, 2012 Federal Register (77
FR 30377). We are finalizing these
technical corrections as proposed.
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1. Definitions (§ 155.20)
In § 155.20, we proposed technical
corrections to the definitions of
‘‘advance payments of the premium tax
credit’’ and ‘‘application filer,’’ and
added a definition of ‘‘catastrophic
plan’’ by referencing the appropriate
statutory provision within the
Affordable Care Act. We did not receive
specific comments on these technical
corrections, and are thus finalizing them
as proposed.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.20 of the proposed
rule with a technical correction to the
definition of advance payments of the
premium tax credit, which we clarify
refers to the payment of the tax credit
authorized by 26 U.S.C. 36B and its
implementing regulations.
2. Approval of a State Exchange
(§ 155.105)
In § 155.105, we proposed a technical
correction to replace the reference to
section 36B of the Code to the
applicable Treasury regulation. We did
not receive specific comments on this
section, and are thus finalizing the
provision as proposed.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.105 of the proposed
rule without modification.
3. Functions of an Exchange (§ 155.200)
In § 155.200, we proposed to clarify
that the Exchange must also perform the
minimum functions described in
subpart F concerning appeals. The only
comments we received supported this
clarification.
Summary of Regulatory Changes
We intend to finalize the clarification
to paragraph (a) at a future date when
subpart F is finalized, and so thus
maintain the previous language from the
Exchange final rule.
4. Authorized Representatives
(§ 155.227)
We proposed to add § 155.227,
establishing minimum requirements for
the designation of authorized
representatives who may act on an
applicant’s or enrollee’s behalf in the
individual and small group markets. We
noted in the preamble that the proposed
rule for authorized representatives for
Exchanges closely tracks the proposed
rule for authorized representatives for
Medicaid.
In paragraph (a), we proposed that the
Exchange must permit applicants and
enrollees in the individual and small
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group markets to designate an
individual person or organization to act
on that applicant or enrollee’s behalf.
We also proposed that an applicant or
enrollee may have such a representative
through operation of state law, subject
to applicable privacy and security
requirements. We also proposed that the
Exchange must not restrict the option to
designate an authorized representative
to only certain groups of applicants or
enrollees. We noted that the Exchange
should ensure that the authorized
representative agrees to maintain, or be
legally bound to maintain, the
confidentiality of any information
regarding the applicant or enrollee
provided by the Exchange, and that
authorized representatives should
adhere to applicable authentication and
data security standards. Additionally,
we proposed that the Exchange should
ensure that the authorized
representative is responsible for
fulfilling all responsibilities
encompassed within the scope of the
authorized representation, as described
in this section, to the same extent as the
person he or she represents.
In paragraph (b), we proposed the
situations when the Exchange must
permit an applicant or enrollee to
designate an authorized representative.
We also proposed that the single,
streamlined application described in
§ 155.405 will provide applicants the
opportunity to designate an authorized
representative and will collect the
information necessary for such
representative to enter into any
associated agreements with the
Exchange as part of the application
process. We noted that applicants and
enrollees who do not designate an
authorized representative on their
applications will subsequently be able
to do so through electronic, paper
formats, and other modalities, as
described in § 155.405(c)(2). We also
noted that legal documentation of
authority to act on behalf of an
applicant or enrollee under state law,
such as a court order establishing legal
guardianship or a power of attorney,
may serve in the place of the applicant
or enrollee’s designation.
In paragraph (c), we proposed that the
Exchange must permit an applicant or
enrollee to authorize a representative
to—(1) Sign the application on the
individual’s behalf; (2) submit an
update or respond to a redetermination
for the individual; (3) receive copies of
the individual’s notices and other
communications from the Exchange;
and (4) act on behalf of the individual
in all other matters with the Exchange.
In paragraph (d), we proposed that the
Exchange must permit an applicant or
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enrollee to change or withdraw an
authorization at any time. We also noted
the authorized representative also may
withdraw his or her representation by
notifying the Exchange and the
applicant or enrollee.
In paragraph (e), we proposed that an
authorized representative acting as
either a staff member or volunteer of an
organization and the organization itself
must sign an agreement meeting the
requirements proposed in regards to
Exchange certified application
counselors. We noted that while the
protections afforded by such an
agreement are important when an
authorized representative is a member
or volunteer of an organization, we
believe that they are not logical in cases
where an authorized representative is
not acting on behalf of an organization.
We sought comments on applying the
protections in paragraph (e) to
authorized representatives more
broadly.
In paragraph (f), we proposed that the
Exchange require authorized
representatives to comply with any
applicable state and federal laws
concerning conflicts of interest and
confidentiality of information.
In paragraph (g), we proposed that the
designation of an authorized
representative must be in writing,
including a signature, or through
another legally binding format, and be
accepted through all of the modalities
described in § 155.405(c) of this part.
We received the following comments
concerning the proposed authorized
representative provisions.
Comment: Several commenters
recommended that the Exchange be
required to make clear the powers and
duties authorized representatives may
have with respect to the Exchange, as
well as all other requirements of
§ 155.227, in a manner that is easily
understandable by both the authorized
representative and applicant or enrollee.
Response: In the final rule, we added
a provision to paragraph (a) specifying
that the Exchange must provide
information regarding the powers and
duties that an authorized representative
may have with respect to Exchange
activities to both the applicant or
enrollee and the authorized
representative.
Comment: Several commenters
suggested that an authorized
representative should have an
affirmative duty to notify the Exchange
and the applicant or enrollee on whose
behalf he or she is acting of any
revocation or material change in the
authorized representative’s legal
authority to act on behalf of the
applicant or enrollee. These
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commenters also suggested that such a
material change or revocation should
result in revocation of the authorized
representative’s authority to act on
behalf of the consumer for Exchange
purposes.
Response: We have clarified in
§ 155.227(d)(2) of the final rule that an
authorized representative must notify
the Exchange and the applicant or
enrollee on whose behalf he or she is
acting when the authorized
representative no longer has legal
authority to act on behalf of the
applicant or enrollee.
Comment: Several commenters asked
HHS to clarify which legal
documentation may serve in the place of
an affirmative representation to
designate an authorized representative.
Other commenters recommended
clarifying that a power of attorney may
be used for such a purpose only if it
authorizes the holder to act in the types
of activities permitted under
§ 155.227(c). One commenter
recommended that legal documentation
to act as an authorized representative be
required, as opposed to optional, to
protect vulnerable applicants or
enrollees. Another commenter
recommended adding language that
authorizes the Exchange to dictate the
form or manner of the authorization. A
few commenters also expressed
concerns about the proposed
requirement that the designation of an
authorized representative be in writing
including a signature or other legally
binding format.
Response: In paragraph (a)(2), we
outline the form and manner of how an
applicant or enrollee may designate
another person as his or her authorized
representative, specifying that this
designation should be in a legally
binding format. We also provide
examples of legal documentation that
could be used to designate an
authorized representative in lieu of a
signed document, including, but not
limited to, a court order establishing
legal guardianship or a power of
attorney. While we do not require that
legal documentation be provided before
the Exchange may recognize an
individual as an authorized
representative, we anticipate that
Exchanges will have procedures in
place to ensure that applicants and
enrollees have control over whom they
designate as an authorized
representative. For example, Exchanges
have flexibility to require that the
designation should occur through a
signed agreement or legally binding
document. In general, an Exchange
could accept any document that is valid
for designating an authorized
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representative in the state, and that
permits the holder to perform the
activities specified in § 155.227(c), in
place of an affirmative representation to
designate an authorized representative.
We emphasize that to be used in this
manner, documentation has to give the
authority needed to be an authorized
representative for the activities specified
in § 155.227(c).
Comment: A few commenters
inquired about the relationship between
an authorized representative designated
through the Exchange and a QHP issuer,
and recommended that an applicant or
enrollee be required to complete a
separate authorization form to designate
a representative to act on his or her
behalf in interactions with the QHP
issuer. Commenters expressed an
understanding that QHP issuers would
be responsible for developing and
executing the authorized representative
forms that govern interactions between
the enrollee and the issuer.
Response: Subject to applicable law,
we believe that the authorized
representative designated by an
applicant or enrollee through the
Exchange process should also be able to
serve in the same capacity with the QHP
issuer, and that streamlining this
process is important to minimize the
burden on applicants or enrollees who
need authorized representation.
Therefore, we would urge QHP issuers
to allow an Exchange authorized
representative to serve in the same
capacity with the QHP issuer. We note
that the companion guide 2 that will be
used by all Exchanges for sending
enrollment data to QHP issuers has
fields that may accommodate this
information.
Comment: Some commenters
suggested that HHS develop some
conflict of interest standards to ensure
that consumers are protected when
interacting with entities that may
benefit from becoming an authorized
representative. Other commenters
suggested banning all organizations
from becoming authorized
representatives, because some entities
may benefit from becoming an
authorized representative.
Response: We appreciate the
comments and plan to monitor
organizations acting as authorized
representatives over time to determine
whether more specificity is needed.
Additionally, § 155.227(e) of the final
rule clarifies that authorized
representatives must comply with
2 Standard Companion Guide Transaction
Information, (March 22, 2013). Available at:
https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/companion-guide-for-ffeenrollment-transaction-v15.pdf.
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applicable state and federal laws
regarding conflicts of interest.
Comment: Several commenters
recommended that an applicant or
enrollee should be able to authorize
their representative to engage in fewer
than all of the activities described in the
proposed rule.
Response: In the final rule, we
maintain language specifying that an
Exchange must allow applicants and
enrollees to authorize a representative to
perform the full range of activities listed
in the rule. We also add language to
§ 155.227(c) clarifying that the Exchange
may (but need not) permit consumers to
authorize fewer than all of the listed
activities, so long as the Exchange is
able to track the specific permissions for
each authorized representative. We note
that for plan years beginning before
January 1, 2015, the FFE will not have
the operational capacity to support the
authorization of representatives to
perform less than the full range of
activities listed in the rule.
Comment: Several commenters urged
that the provision in proposed
§ 155.227(d) that the applicant or
enrollee notify both the Exchange and
the representative that the
representative is no longer authorized to
act on his or her behalf be removed.
Other commenters suggested that the
applicant or enrollee should notify only
the Exchange.
Response: In the final rule, we clarify
that the responsibility for notifying a
representative whose authorization has
been discontinued by an applicant or
enrollee falls only on the Exchange.
Comment: One commenter expressed
support for a policy that would permit
the Exchange to terminate a designation
after a given period of time to be
determined by the Exchange. This
commenter noted that this aligns with
the 5-year limit on authorizations from
enrollees to allow Exchanges to request
tax information for conducting annual
redeterminations in accordance with
§ 155.335(k).
Response: In the final rule, we have
added a provision specifying that
authorized representatives will notify
the Exchange if they are no longer
authorized to act in that capacity. As
long as a person has the authority to act
as an authorized representative, there is
no need to terminate or reauthorize that
relationship after a set amount of time.
An applicant or enrollee may also
modify the authorization at any time.
Comment: A commenter suggested
that compliance agreements for
authorized representatives should be
available directly from HHS, instead of
Exchanges, for entities such as multiemployer plans that are subject to
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federal regulation under ERISA, the
Code, and the Taft-Hartley Act, but not
to state insurance regulation. The
commenter noted that the relationships
between plans and plan participants
and beneficiaries established under the
Taft-Hartley Act should continue to be
recognized in regulations implementing
the Affordable Care Act.
Response: We expect that authorized
representatives will be used primarily
by applicants and enrollees who are
unable to represent themselves or who
are seriously challenged in representing
themselves in their relationship with
the Exchange. Accordingly, authorized
representatives’ agreements are between
an applicant or enrollee and his or her
authorized representative regarding
representation before the Exchange.
Comment: One commenter sought
clarification on whether staff or
volunteers of organizations must be
trained and certified as Exchange
certified application counselors under
proposed § 155.225(b) to serve as
authorized representatives.
Response: The rule does not require
authorized representatives to be trained
and certified as certified application
counselors. The role of an authorized
representative is distinct from the role
of a certified application counselor.
Specifically, certified application
counselors, for which standards will be
finalized in a future regulation, provide
guidance and assistance to applicants
and enrollees who will interact with the
Exchange on their own behalf, while
authorized representatives are
commonly used by applicants or
enrollees who are unable to represent
themselves, and have the legal authority
to actually sign for an applicant or
enrollee and make other decisions on
his or her behalf.
Comment: Several commenters
suggested that requiring organizations to
enter into agreements and follow a set
of standards as proposed in § 155.227(e)
will lead to disruptions in the
availability of assistance and lead to real
harm to persons who need assistance.
Other commenters expressed concerns
that every authorized representative
would have to be certified.
Response: In light of the commenters’
concerns, and the protections for
consumers that already apply to all
Exchange authorized representatives,
we have not finalized the proposed
requirement that organizations and staff
and volunteers of organizations sign a
separate agreement. We recognize that
authorized representatives are given
significant authority, and accordingly,
we need to ensure that the privacy and
security of applicants’ and enrollees’
personal data are protected. We note
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that all authorized representatives, not
just organizations and those working for
organizations, will be subject to the
privacy and security standards
established and implemented by the
Exchange consistent with 45 CFR
155.260 through agreements, as is
required by 45 CFR 155.260(b)(2). This
will be further clarified in subregulatory
guidance. Since all authorized
representatives will be subject to
privacy and security standards, in this
final rule, we removed the requirement
for organizations and staff and
volunteers of organizations to sign a
separate agreement.
We have also not finalized the
provision in the proposed rule that
would have subjected authorized
representatives who are staff and
volunteers of organizations, and their
organizations, to the proposed standards
for Exchange certified application
counselors. This proposal was
motivated in large part by a concern that
staff and volunteers of such
organizations might be likely to have
conflicts of interest. This concern,
however, is addressed by § 155.227(e),
which clarifies that authorized
representatives must comply with
applicable state and federal laws
regarding conflicts of interest.
Comment: One commenter suggested
requiring legal documentation when an
applicant or enrollee changes or
withdraws his or her authorization.
Response: Applicants and enrollees
will not always have legal documents to
substantiate discontinuing an
authorization. When an applicant or
enrollee appoints a new authorized
representative, including to replace an
existing authorized representative, he or
she should follow the same process as
an applicant or enrollee who appoints
an authorized representative for the first
time.
Comment: Another commenter
recommended that an enrollee should
not be able to designate an authorized
representative if he or she failed to do
so during the application process.
Response: We see no need to limit an
applicant or enrollee’s ability to
designate an authorized representative
solely to the application process,
particularly as some enrollees may
develop a need for an authorized
representative after submitting an
application, choosing a plan, and
maintaining coverage for many years.
Comment: Several commenters sought
clarification about whether an applicant
or enrollee who applies through the
Exchange with the assistance of an
authorized representative and is
subsequently transferred to the state
Medicaid agency would need to
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redesignate his or her authorized
representative.
Response: If the application is
transferred to the state Medicaid agency,
the authorized representative
designation would be transferred as
well.
Comment: One commenter inquired
about whether the Exchange will be
deemed liable for any breaches of
confidentiality that are beyond the
control of the Exchange. A commenter
also requested that HHS modify
language to make it clear that it is the
legal duty of the authorized
representative to maintain
confidentiality in daily practice.
Response: We appreciate this
comment and recognize that this issue
applies more broadly. There are
potentially some instances in which a
person that provides application
assistance, including an authorized
representative, could negligently
disclose an applicant’s or enrollee’s
information under circumstances that
the Exchange could not have prevented.
We note that authorized representatives
will need to comply with the same
privacy and security standards that the
Exchange adopts consistent with
§ 155.260, or with more stringent
standards, pursuant to § 155.260(b).
Additionally, paragraph (e) of the final
rule requires authorized representatives
to comply with applicable state and
federal laws concerning conflicts of
interest and confidentiality of
information.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.227 of the proposed
rule, with a few modifications. For
clarity and consistency with the
terminology defined in § 155.20, and to
make it clear that we intend authorized
representatives to provide assistance
both in the SHOP Exchanges and in the
individual market Exchanges, we
replaced the terms ‘‘individual’’ and/or
‘‘employee’’ with the terms ‘‘applicant’’
and/or ‘‘enrollee’’ to describe the people
helped by authorized representatives.
To further indicate that we intend
authorized representatives to provide
assistance both in the SHOP and in the
individual market Exchanges, we clarify
in § 155.227(a) that an applicant or
enrollee can designate an authorized
representative in the individual or small
group market Exchange and have added
‘‘subpart H’’ to the regulation text to
account for the functions that an
authorized representative may perform
in a SHOP. To avoid confusion with the
defined term ‘‘qualified individual,’’ we
use the term ‘‘person’’ instead of
‘‘individual’’ in the final rule when
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describing individual persons acting as
an authorized representative.
We added paragraph (a)(5) to specify
that the Exchange must provide
information about the powers and
duties of an authorized representative
both to the applicant or enrollee and to
the authorized representative. We
redesignated proposed paragraphs (c)(1)
through (c)(4) as (c)(1)(i) through
(c)(1)(iv), and added a new paragraph
(c)(2), which allows an Exchange to
permit an applicant or enrollee to
authorize a representative to perform
fewer than all of the activities described
in paragraph (c)(1) of this section,
provided that the Exchange tracks the
specific permissions of each authorized
representative. Additionally, we
removed paragraph (d)(1), and
redesignated proposed paragraphs (d)(2)
and (d)(3) as paragraphs (d)(1) and
(d)(2). We modified the language in
redesignated paragraph (d)(1) to explain
that the Exchange, not the applicant or
enrollee, will notify the authorized
representative when an applicant or
enrollee notifies the Exchange that he or
she is no longer represented by his or
her previously authorized
representative. We further modified
redesignated paragraph (d)(2) to clarify
that an authorized representative will
notify the Exchange and the applicant or
enrollee on whose behalf he or she is
acting when the authorized
representative no longer has legal
authority to act on behalf of the
applicant or enrollee. We also deleted
paragraph (e) and redesignated
paragraphs (f) and (g) as (e) and (f),
respectively. We also made the
following technical corrections. We
made a technical correction in
paragraph (a)(1) to specify that
authorized representatives are permitted
to assist individuals apply for eligibility
determinations or redeterminations for
exemptions from the shared
responsibility payment under subpart G
of this part. We made technical
corrections in paragraphs (a)(2) and (g)
to clarify that the designation of an
authorized representative must be in a
written document signed by the
applicant or enrollee instead of saying it
must be in writing, including a
signature. We also added the word
‘‘must’’ to paragraphs (a)(3), (a)(4), and
(f) to clarify that the activities described
in those paragraphs are required
Exchange functions. We made a
technical correction in paragraph (d) to
move the words ‘‘the applicant or
enrollee notifies’’ to the paragraph they
modify. Finally, we made a technical
correction in paragraph (f), to clarify
what is meant by legally binding format
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by adding ‘‘as described in
§ 155.227(a)(2).’’
5. General Standards for Exchange
Notices (§ 155.230)
In § 155.230, we proposed to make a
technical correction in paragraph (a) to
clarify that the general standards for
notices apply to all notices sent by the
Exchange to individuals or employers.
We also proposed to revise paragraph
(a) by redesignating paragraph (a)(1) as
paragraph (a)(4) and redesignating
paragraph (a)(2) as paragraph (a)(5). We
proposed to revise redesignated (a)(2) to
change ‘‘; and’’ to ‘‘.’’ We proposed to
add new paragraph (a)(1) to indicate
that any notice required to be sent by
the Exchange to individuals or
employers must be written and include
an explanation of the action that is
reflected in the notice, including the
effective date of the action, and we
proposed to add new paragraph (a)(2) to
require the notice to include any factual
findings relevant to the action. We
proposed to revise paragraph (a)(3) to
clarify that the notice must include the
citation to, or identification of, the
relevant regulations that support the
action. We note that the contents of
notices are subject to privacy and
security provisions in § 155.260,
including the limitations on disclosure
of information.
Furthermore, we proposed to add
paragraph (d) to allow the Exchange to
provide notices either through standard
mail, or if an individual or employer
elects, electronically, provided that
standards for use of electronic notices
are met as set forth in § 435.918, which
contains a parallel provision. We did
not propose that the standards
specifically described under proposed
paragraph (d) would apply to the SHOP,
and sought comment regarding this
issue. We received the following
comments concerning the proposed
provisions for standards for Exchange
notices:
Comment: Several commenters
supported our proposal to clarify that
the general standards for notices under
§ 155.230 apply to notices sent by the
Exchange to both individuals and
employers, and they supported the
changes and additions proposed under
paragraph (a). Many commenters
indicated that the Exchange should be
required to include contact information
for both customer service and consumer
assistance resources in notices, and
commenters indicated that HHS should
make copies of the applicable statute or
regulation available upon request by
consumers. One commenter stated the
notice needs to include a clear
explanation of any next steps and the
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timeframe by which action needs to be
taken, while another commenter
emphasized that notices should contain
information about where individualized
and unbiased counseling is available for
the individual. Lastly, a few
commenters suggested that we add
‘‘laws or regulations’’ to § 155.230(a)(3).
Response: In response to comments
received, we clarify that while the
standards under § 155.230 generally do
apply to notices sent by the individual
market Exchange to both individuals
and employers, HHS does not expect
that the Exchange will have the
information necessary to provide an
employer with a choice to receive the
notice specified in § 155.310(h)
regarding eligibility for advance
payments of the premium tax credit
electronically, as we do not expect that
individuals will provide email
information for employers on the
application. Accordingly, we expect that
notices sent from the Exchange to
employers will likely be provided by
standard mail, at least in the early years
of program implementation. We will
continue to work with employers
regarding how best to implement
notices from the Exchange to employers
in an efficient manner.
We intend to consider the suggestions
regarding notice content in the
development of model notices, and
encourage Exchanges to do the same in
developing notices they will use. We
expect that notices will include clear
information about next steps and
timeframe by which action needs to be
taken. We acknowledge the value of
including contact information for both
customer service and consumer
assistance resources in notices. We
recognize that including a list of all
available consumer assistance resources
will make the notice longer, and so note
that this is an area in which Exchanges
have flexibility. We also note that
applicable federal regulations are and
will remain available through public
Web sites.
Comment: Several commenters
reinforced their support for the use of
plain language to help notify enrollees
of their rights and to properly explain
health coverage options that may be
available to consumers. One commenter
recommended the notice include clear
information about how to get help if the
individual does not understand the
notice, as well as clear information that
an individual does not have to take the
premium tax credit in advance.
Response: All notices specified under
45 CFR parts 155 and 156 are required
to meet the accessibility standards
described under § 155.205(c), which
specify that information must be
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provided in plain language and in a
manner accessible to limited English
proficient individuals. We expect
Exchanges to make consumers aware of
the reconciliation process applicable to
advance payments of the premium tax
credit as a part of the initial Exchange
educational materials, as well as at the
time that an individual selects a QHP.
HHS is working with states to identify
all key messages that should be
communicated to individuals through
notices and other Exchange processes,
and will take these comments into
consideration for implementation.
Comment: Commenters generally
expressed support for the electronic
notice standards proposed under
§ 155.230(d), while some expressed
concerns or suggestions related to the
proposed standards. Commenters raised
a variety of concerns about how
consumers who elect to receive
electronic notices may not actually
receive them, including as a result of
not checking email regularly. One
commenter urged that Exchanges should
be required to change the enrollee’s
delivery method for notices if the
Exchange finds that electronic notices
are not being opened. One commenter
suggested that written notifications
should cease only after clear and
unambiguous expression from an
enrollee that they no longer wish to
receive paper notifications, and that the
Exchange should be required to track
whether electronic notices are delivered
and opened by an enrollee. Another
commenter recommended that
individuals be allowed to decide which
notices they receive electronically or by
mail. One commenter suggested that
electronic notices should be in addition
to, rather than replace, mailed paper
notices. Lastly, one commenter
recommended modifying the notice
provision so that if an individual elects
to receive electronic notices, the
Exchange also always would send a
mailed notice in addition to the
electronic notice when the Exchange is
taking an adverse action or when the
consumer is required to take an
additional action to maintain his or her
eligibility for enrollment in a QHP,
advance payments of the premium tax
credit, or cost-sharing reductions.
Response: We do not expect that the
Exchange will track and monitor when
an individual opens emails and
electronic notices. As described in the
electronic notice standards under
§ 435.918, which are incorporated by
reference under § 155.230(d), applicants
will receive paper notices by mail until
they affirmatively elect to receive
electronic notices. We expect Exchanges
to remain consistent in their overall
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approach to distributing notices, as
required under § 155.230(d). Individuals
will be able to control how they receive
notices. Additionally, under
§ 435.918(b)(6), an individual will be
able to request any notice posted in the
individual’s electronic account to be
sent through regular mail. Furthermore,
nothing precludes the Exchange from
providing an individual with the choice
to receive some types of notices
electronically and others through
regular mail (for example, notices
concerning adverse actions).
Accordingly, we are finalizing this
provision as proposed, with one
modification to allow the individual
market Exchange to choose to delay the
implementation of the process described
in 42 CFR 435.918(b)(1) regarding
sending a mailed confirmation of the
choice to receive electronic notices,
given the time available for
implementation.
Comment: Some commenters
supported the exclusion of the SHOP
Exchange from the electronic notice
standards under § 155.230(d), while
others expressed support for the SHOP
being able to send all notices
electronically. Many commenters urged
that employers in the SHOP should
have a choice regarding to how they
receive notices, and some expressed
concern about employers not having a
choice. One commenter recommended
that the SHOP be allowed to choose
between offering both written and
electronic notices, to allow qualified
employers and employees to select
which method they prefer; or to only
offer paper notices. The commenter
noted that allowing states to adopt an
electronic-only approach for notice
delivery might be problematic for some
employers. Another commenter
indicated that the proposed rule is not
clear about what the default format
would be for notices sent by the SHOP.
Response: Based on the comments
received and because we believe it is
important for employers to be able to
choose how they receive notices, we are
modifying the proposed rule to allow an
employer or employee in any SHOP to
elect to receive electronic notices,
provided that the standards for
electronic notices in § 435.918(b)(2),
(b)(3), (b)(4), and (b)(5) are met for the
employer or employee. Accordingly, the
SHOP must: (1) Permit the employer or
employee to change such election, at
any time, and inform the employer or
employee of this right; (2) Post notices
to the employer or employee’s
electronic account within one business
day of notice generation; (3) Send an
email or other electronic
communication alerting the employer or
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employee when a notice has been
posted; and (4) If an electronic
communication is undeliverable, send
the notice by regular mail within three
business days of the date of the failed
electronic communication.
Comment: Several commenters asked
for clarification regarding how
electronic notice standards apply to
QHP issuers, and they suggested that
QHP issuers also be allowed to offer
enrollees the option of receiving
electronic notices. Some commenters
recommended that the Exchange adopt
electronic notice standards for QHP
issuers similar to those applicable to the
individual market Exchange. One
commenter recommended that the
single, streamlined application include
an option for applicants to elect to
receive notices from the QHP issuer
electronically, in addition to the
election to receive notices from the
Exchange electronically. One
commenter requested that a provision
be added permitting managed care
organizations to provide electronic
notices.
Response: The provisions related to
electronic notice standards under part
155 of the proposed rule apply to the
individual market and SHOP Exchange.
We acknowledge the importance of QHP
issuers being able to send, and enrollees
being able to choose to receive,
electronic notices, and we clarify that
nothing in this regulation precludes
QHP issuers from offering their
enrollees the option to receive notices
electronically. We understand that most
QHP issuers already make electronic
notices available as an option to their
current enrollees, and we are supportive
of QHP issuers continuing to make this
option available to enrollees when they
are participating in the Exchange.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.230 of the proposed
rule with a few modifications. We
renumber proposed paragraph (d) as
paragraph (d)(1) and modify it to specify
the electronic notice standards for an
individual market Exchange, while also
adding paragraph (d)(2) to establish the
electronic notice standards for a SHOP.
We also add language to allow the
individual market Exchange to choose
to delay the implementation of the
process described in 42 CFR
435.918(b)(1) regarding sending a
mailed confirmation of the choice to
receive electronic notices. We provide
in paragraph (d)(2) that an employer or
employee in any SHOP may elect to
receive electronic notices, provided that
the requirements for electronic notices
in § 435.918(b)(2), (b)(3), (b)(4), and
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42243
(b)(5) are met for the employer or
employee.
6. Definitions and General Standards for
Eligibility Determinations (§ 155.300)
In § 155.300, we proposed technical
corrections in paragraph (a) to the
definitions of ‘‘minimum value,’’
‘‘modified adjusted gross income,’’ and
‘‘qualifying coverage in an eligible
employer-sponsored plan,’’ and also
removed the definition of ‘‘adoption
taxpayer identification number.’’ We are
finalizing the technical corrections as
proposed, with an additional technical
correction to specify the appropriate
definition of minimum value.
Comment: Several commenters
recommended that HHS should not
cross-reference in § 155.300 to the
affordability standard for eligible
employer-sponsored coverage in the
Department of the Treasury’s premium
tax credit regulation, 26 CFR 1.36B–0 et
seq., as the Department of the Treasury
regulation is based on individual rather
than family coverage.
Response: The Department of the
Treasury maintains the legal authority
to interpret and implement the
eligibility standards for the premium tax
credit, including those related to
affordability and minimum value of
coverage in an eligible employersponsored plan, because those are based
on provisions of the Code. The proposed
technical corrections do not revise the
policy regarding the Exchange’s
determination of the affordability of
eligible employer-sponsored coverage,
but simply update the cross-reference to
align with the Department of the
Treasury’s implementing regulation. As
such, we are finalizing the technical
corrections as proposed.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.300 of the proposed
rule with a technical correction to
specify the appropriate definition of
minimum value.
7. Options for Conducting Eligibility
Determinations (§ 155.302(a) and (b),
and (d))
In § 155.302, we promulgated
provisions as interim final with request
for comments in the Exchange final rule
(77 FR 18310, at 18451–52). We
proposed to modify some of the
provisions in § 155.302 in the proposed
rule (78 FR 4594, 4635).
In paragraph (a) of the interim final
rule, we provided that the Exchange
may fulfill its minimum functions under
this subpart by either executing all
eligibility functions, directly or through
contracting arrangements described in
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§ 155.110(a), or through a combination
of this approach and one or both of the
approaches identified in paragraphs (b)
and (c), which apply when other entities
make eligibility determinations for
insurance affordability programs. We
proposed a revision to the interim final
rule in paragraph (a)(1) to specify that
Medicaid and CHIP eligibility
determinations made by the Exchange
may only be made by a government
agency that maintains personnel
standards on a merit basis.
In paragraph (b) of the interim final
rule, we provided that the Exchange
may conduct an assessment of eligibility
for Medicaid and CHIP rather than an
eligibility determination for Medicaid
and CHIP, provided that the Exchange
make such an assessment based on the
applicable Medicaid and CHIP MAGIbased income standards and citizenship
and immigration status, using
verification rules and procedures
consistent with Medicaid and CHIP
regulations, without regard to how such
standards are implemented by the state
Medicaid and CHIP agencies.
In paragraph (b)(2) of the interim final
rule, we provided that notices and other
activities that must be conducted in
connection with an eligibility
determination for Medicaid or CHIP
would be conducted by the Exchange
consistent with the standards identified
in this subpart or by the applicable state
Medicaid or state CHIP agency
consistent with applicable law.
In paragraph (b)(3) of the interim final
rule, we provided that if the Exchange
assesses an applicant potentially eligible
for Medicaid or CHIP, the Exchange
would transmit such the applicant’s
information to the State Medicaid or
CHIP agency for a formal determination
of eligibility for such insurance
affordability program. We explained in
the preamble to the interim final rule
that the Exchange would consider the
applicant ineligible for Medicaid or
CHIP for purposes of eligibility for
advance payments of the premium tax
credit and cost-sharing reductions until
the state Medicaid or CHIP agency
notified the Exchange that the applicant
was eligible for Medicaid or CHIP.
In paragraph (b)(4) of the interim final
rule, we proposed that if the Exchange
assesses an applicant not potentially
eligible for Medicaid or CHIP based on
the applicable Medicaid and CHIP
MAGI-based income standards, the
Exchange must consider such an
applicant as ineligible for Medicaid or
CHIP for purposes of determining
eligibility for advance payments of the
premium tax credit and cost-sharing
reductions, and notify the applicant and
provide him or her with the opportunity
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to withdraw his or her application for
Medicaid and CHIP or request a full
determination of eligibility for Medicaid
and CHIP from the applicable state
agencies. To the extent that an applicant
withdraws his or her application for
Medicaid and CHIP, the applicant
would not receive a formal approval or
denial for Medicaid and CHIP.
We proposed a revision to the interim
final rule in paragraph (b)(4)(i)(A) to
specify that, if an applicant who is not
assessed as potentially eligible for
Medicaid or CHIP by the Exchange
withdraws his or her application for
Medicaid or CHIP, and then appeals his
or her eligibility determination for
advance payments of the premium tax
credit or cost-sharing reductions and is
found potentially eligible for Medicaid
or CHIP, the Medicaid or CHIP
application is not considered
withdrawn. The purpose of this revision
is to reinstate the Medicaid and CHIP
application date, which is used in
determining the effective date of
coverage under Medicaid and CHIP.
We provided in paragraph (b)(4)(i)(B)
that the Exchange must notify and
provide an applicant who is assessed as
not potentially eligible for Medicaid and
CHIP with the opportunity to request a
full determination of eligibility for
Medicaid and CHIP by the applicable
state Medicaid and CHIP agencies. For
an applicant who requests a full
Medicaid and CHIP determination, we
provided that the Exchange must
transmit all information provided as
part of the application, update, or
renewal that initiated the assessment,
and any information obtained or
verified by the Exchange to the state
Medicaid and CHIP agency. We
provided that the Exchange must
consider such an applicant as ineligible
for Medicaid or CHIP for purposes of
determining eligibility for advance
payments of the premium tax credit and
cost-sharing reductions until the state
Medicaid or CHIP agency notifies the
Exchange that the applicant has been
determined eligible for Medicaid or
CHIP.
We provided in paragraph (b)(5) that,
under an assessment model discussed
above, the Exchange must adhere to the
eligibility determination for Medicaid or
CHIP made by the Medicaid or CHIP
agency. We provided in paragraph (b)(6)
that the Exchange and the applicable
state Medicaid and CHIP agencies must
enter into an agreement specifying their
respective responsibilities in connection
with eligibility determinations for
Medicaid and CHIP, which requirement
complements the standards in
§ 435.1200(d). In accordance with these
standards, when the Exchange performs
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an assessment and transmitted it to the
state Medicaid or CHIP agency, and the
Exchange is providing advance
payments of premium tax credits
pending an eligibility determination for
Medicaid and CHIP, the Exchange will
receive a notification of the final
determination of eligibility for Medicaid
and CHIP made by the receiving agency.
This approach helps avoid duplicative
requests for information from applicants
and verification of information.
We proposed a revision to the interim
final rule in paragraph (b)(5) to specify
that the Exchange also will adhere to the
appeals decision for Medicaid or CHIP
eligibility determinations made by the
state Medicaid or CHIP agency or
appeals entity for such agency.
In paragraph (d) of the interim final
rule, we provided the standards to
which the Exchange must adhere when
assessments of eligibility for Medicaid
and CHIP based on MAGI and eligibility
determinations for advance payments of
the premium tax credit and cost-sharing
reductions are made in accordance with
paragraphs (b) and (c); such standards
include that all eligibility processes are
streamlined and coordinated across
applicable agencies, that such
arrangement does not increase
administrative costs and burden on
applicants, enrollees, beneficiaries, or
application filers, or increase delay, and
that applicable requirements under part
155 and section 6103 of the Code are
met.
Comment: Several commenters raised
concerns regarding § 155.302(a) as
promulgated in the interim final rule, as
they believed it could permit non-public
agencies to conduct eligibility
determinations for Medicaid and CHIP,
which they worried would have a
negative impact on consumer assistance,
timeliness, accuracy, and the potential
for conflicts of interest. Some
commenters wanted to ensure that
agreements between state Medicaid
agencies and private entities related to
the eligibility determination process
would be relayed to HHS for
appropriate review. Several commenters
recommended clear language to specify
that a private Exchange is not permitted
to make final determinations regarding
an applicant’s eligibility for Medicaid
and CHIP. One commenter wanted HHS
to strengthen the conflict of interest
language and specify that the Exchange
may not contract out eligibility
determinations for advance payments of
the premium tax credit and cost-sharing
reductions due to such determinations
being inherently governmental.
Response: We appreciate these
comments regarding the interim final
rule, as well as comments received
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regarding the proposed revisions to
paragraph (a)(1) of the interim final rule
that would specify that any contracting
arrangement for eligibility
determinations for Medicaid and CHIP
is subject to the standards in 42 CFR
431.10(c)(2). In response to these
comments, we are finalizing
§ 155.302(a) with the proposed revision
to paragraph (a)(1), with a minor
clarification to specify that the reference
to 42 CFR 431.10(c)(2) is specific to
contracting arrangements for eligibility
determinations for Medicaid and CHIP.
Specifically, this means that an
Exchange contractor may make
eligibility determinations for Medicaid
and CHIP if it is a government agency
or public authority that maintains
personnel standards on a merit basis.
We note that 42 CFR 431.10(d) specifies
that agreements regarding the delegation
of eligibility determinations by state
Medicaid agencies must be available to
the Secretary, upon request. Exchanges
are permitted to contract eligibility
determinations for advance payments of
the premium tax credit and cost-sharing
reductions in accordance with
§ 155.110(a).
Comment: Many commenters
expressed concerns about the potential
bifurcation of the eligibility process
under § 155.302(b) for Medicaid, CHIP,
and advance payments of the premium
tax credit and cost-sharing reductions in
terms of its impact on various
stakeholders. Commenters urged that
HHS maintain the ‘‘no wrong door’’
approach envisioned by the Affordable
Care Act to ensure that an individual is
appropriately screened for all relevant
insurance affordability programs. As
such, some commenters requested that
by 2016, HHS revisit the decision to
allow states to implement eligibility
systems in the manner as described in
the interim final rule, while also
evaluating whether more Exchanges
move from making assessments to
determinations during the intervening
time period. Commenters recommended
that, if HHS retains this provision, HHS
should specify that states must
demonstrate they have the capacity to
manage electronic accounts and
applicant information in so as not to
increase the burden on individuals and
families by requesting duplicate
information or increase the
administrative costs for state Medicaid
and CHIP agencies related to file
transfers or unnecessarily duplicative
verification processes. Some
commenters wanted HHS to require the
Exchange to notify the transferring
program that it had received the
electronic account and report its final
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eligibility determination, to protect
applicants. Furthermore, commenters
urged HHS to establish a process for
monitoring and enforcing the standards,
as well as educating the public,
regarding the division of eligibility
responsibilities between the Exchange
and relevant Medicaid and CHIP
agencies. Commenters stated that if such
monitoring uncovers noncompliance
with performance standards or other
requirements, HHS should require the
Exchanges and state Medicaid and CHIP
agencies to submit corrective action
plans.
Response: We appreciate the
suggestions from commenters, and note
that many of these recommendations are
already included in the interim final
rule. We intend to monitor the
efficiency of how states implement
assessment or determination models to
determine whether to propose revisions
in future years. We believe that the
existing language in § 155.302(b) is
augmented by § 155.345(g) and 42 CFR
435.1200, which specify that the
Exchange and the state Medicaid and
CHIP agencies must have the capacity to
manage electronic accounts, and also
that the Exchange will notify the
transferring Medicaid or CHIP agency
regarding the receipt of an electronic
account as well as of its final eligibility
determination. Accordingly, we do not
modify this provision further to address
these comments. Although we do not
establish a formal process for
monitoring and taking enforcement
action for noncompliance with these
standards in the regulation text, HHS
will continue to evaluate the need for
such processes during the
implementation of these regulations.
Comment: Several commenters
suggested that states should adopt
procedures that would allow Exchanges
to assess eligibility for Medicaid based
on factors other than MAGI, and
potentially also allowing the Exchange
to assess eligibility for other programs,
including the Supplemental Nutritional
Assistance Program. Some commenters
urged HHS to require Exchanges to
develop appropriate screening standards
to identify vulnerable populations that
might be eligible for certain programs on
a basis other than MAGI.
Response: This comment is outside
the scope of § 155.302(b) of the interim
final rule, as this provision only
concerns the use of MAGI
determinations, while § 155.345(b)
concerns the duties of the Exchange for
Medicaid eligibility based on factors
other than MAGI. We note that
Exchanges are not precluded from
entering into agreements with Medicaid
and CHIP agencies to make eligibility
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determinations for Medicaid based on
factors other than MAGI.
Comment: Some commenters
requested that HHS provide greater
specificity throughout § 155.302(b) to
indicate that contracting agreements,
verifications rules and standards,
notices, and other activities discussed
must adhere to the specific standards of
§§ 155.302(d) and 155.345(g), and 42
CFR part 431, subpart E.
Response: As noted earlier,
§ 155.302(b) only applies in place of the
standards elsewhere in subpart D that
specify that the Exchange will make
eligibility determinations for Medicaid
and CHIP based on MAGI, rather than
assessments; it does not conflict with
standards provided elsewhere in
subpart D that address other
components of the eligibility process
that are unaffected by whether the
Exchange is making assessments or
determinations of eligibility for
Medicaid and CHIP. As such, Exchanges
are still guided by other provisions in
subpart D, such as § 155.345(g).
Provisions in 42 CFR part 431 concern
standards for Medicaid agencies, which
continue to apply to Medicaid agencies
in accordance with that part
notwithstanding the role of the
Exchange for Medicaid eligibility.
Finally, § 155.302(a)(2) already
specifically states that use of the option
in § 155.302(b) is subject to § 155.302(d),
so we do not believe that it is necessary
to add further references to § 155.302(d).
Comment: Some commenters
supported the increased level of
flexibility for the Exchange to make
assessments of eligibility for Medicaid
and CHIP based on MAGI, rather than
determinations. However, these
commenters expressed concerns about
relying on applicants who are not
assessed as potentially eligible for
Medicaid or CHIP based on MAGI to
self-identify as potentially eligible based
on non-MAGI standards or proactively
request a full determination from the
state Medicaid and CHIP agencies, as
opposed to placing greater burden on
the Exchange to take additional steps to
proactively identify applicants who
might be Medicaid eligible based on
non-MAGI standards. One commenter
also asked HHS to clarify that in cases
where an Exchange conducts an
assessment of Medicaid eligibility; the
assessment must include an assessment
of Medicaid eligibility on bases other
than MAGI. These commenters
suggested that HHS encourage states to
utilize a process whereby individuals
who enroll in a QHP, but are
subsequently determined eligible for
Medicaid, are able to transition into the
same carrier’s Medicaid product if the
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QHP also operates a Medicaid health
plan.
Response: We appreciate the concerns
regarding how to create a streamlined
process that is minimally burdensome
on individuals and families, and results
in accurate eligibility determinations.
Under § 155.345(b) and (c), the
Exchange will evaluate applications for
applicants who are not eligible for
Medicaid based on MAGI for possible
Medicaid eligibility based on factors
other than MAGI, and must provide an
opportunity for applicants and enrollees
to request a full determination of
Medicaid eligibility based on factors
other than MAGI. If the Exchange
evaluates an applicant as potentially
eligible for Medicaid based on factors
other than MAGI, or the applicant or
enrollee requests a full determination of
Medicaid eligibility, § 155.345(d)
specifies that the Exchange will transmit
the applicant’s information to the state
Medicaid agency for a full
determination. The Exchange has the
same responsibilities regarding
eligibility for Medicaid based on factors
other than MAGI under the assessment
and the determination models, which
we believe is appropriate because the
single, streamlined application that will
be used by the Exchange does not
request all the information necessary to
conduct a full determination of
Medicaid eligibility based on factors
other than MAGI. Rather, it includes an
opportunity for an application filer to
indicate that an applicant has
limitations in daily activities or lives in
a medical facility or nursing home,
which are factors that are considered in
determining eligibility for Medicaid
based on factors other than MAGI. If
answered affirmatively, the Exchange
will trigger a referral to the applicable
state Medicaid agency such that the
state Medicaid agency can determine
the applicant’s eligibility for Medicaid,
including based on factors other than
MAGI. Further, we note that the
assessment of eligibility for Medicaid
based on MAGI is designed to be a
robust evaluation, and we expect that
the number of applicants who will
receive an assessment that is
inconsistent with the final
determination will be limited. We note
that while comments related to HHS
encouraging a process to help
individuals transition between QHPs
and Medicaid products of the same
carrier is outside the scope of this
regulation, Exchanges maintain the
flexibility to pursue such an option.
Comment: Some commenters noted
the need for high levels of coordination
between the Exchange and state
Medicaid and CHIP agencies. A few
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commenters also wanted HHS to
provide guidance with a view toward
minimizing the situations in which an
individual will enroll in a QHP through
the Exchange pending the outcome of a
Medicaid or CHIP eligibility
determination and then be subsequently
determined eligible for Medicaid or
CHIP.
Response: We agree that a high degree
of coordination is needed to manage an
assessment model, and believe that the
language in § 155.302(b) and (d), as well
as § 155.345, prescribes an appropriate
set of standards. We recognize the
challenges that may occur related to
individuals who enroll in a QHP
pending the outcome of a Medicaid or
CHIP eligibility determination, but we
believe that these are outweighed by the
benefits associated with providing
eligible individuals with health
coverage pending the completion of an
eligibility determination for Medicaid or
CHIP, and we note that enrolling in a
QHP through the Exchange during such
a period is the individual’s choice. With
that, we expect that as states implement
their Exchanges and as eligibility
systems for the Exchange, Medicaid,
and CHIP mature, the need for multiple
entities to take part in processing an
application will lessen, and the time
needed to complete the entire eligibility
process will also decrease, which will
reduce the need for interim coverage.
Comment: One commenter worried
that the remainder of subpart D
concerning the eligibility process was
not updated to reflect § 155.302(b).
Response: We note that § 155.302(b)
provides that the Exchange may conduct
an assessment of MAGI-based eligibility
for Medicaid and CHIP, rather than a
determination of eligibility for Medicaid
and CHIP, in accordance with the
specified standards, ‘‘[n]otwithstanding
the requirements of this subpart[.]’’ In
view of this language, we did not update
other provisions in subpart D to reflect
§ 155.302(b). We note that § 155.302(b)
does not supersede other provisions,
such as those in § 155.345, that set
additional standards for Exchanges in
coordinating with Medicaid and CHIP
agencies.
Comment: Some commenters worried
that the Exchange assessment provision
would allow the Exchange the assess
eligibility without applying Medicaid
rules and procedures. Commenters
recommended that, under an assessment
model, the Exchange should provide
presumptive eligibility for Medicaid,
which they believed was particularly
important for children and pregnant
women, while the application is
transferred to the Medicaid and CHIP
agencies and a determination is made.
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One commenter suggested HHS develop
a universal model for tracking children
as they move from one coverage type to
another, which Exchanges should be
required to implement.
Response: Section 155.302(b)(1)
specifies that an assessment will be
made based on, ‘‘the applicable
Medicaid and CHIP MAGI-based income
standards and citizenship and
immigration status, using verification
rules consistent with 42 CFR parts 435
and 457, without regard to how such
standards are implemented by the State
Medicaid and CHIP agencies.’’ We
maintain this language in this final rule,
which ensures that the Exchange will
use standard Medicaid rules and
procedures in making an eligibility
assessment. We appreciate the
commenter’s recommendations related
to presumptive eligibility, but note that
HHS’ approach in establishing an
assessment model was premised on
having the Medicaid or CHIP agency
make all eligibility determinations that
result in the provision of benefits under
Medicaid or CHIP. Accordingly, we do
not specify that the Exchange will make
presumptive determinations under an
assessment model. HHS will continue to
work with Exchanges and Medicaid and
CHIP agencies to ensure that vulnerable
populations, such as children and
pregnant women, receive the correct
eligibility determinations for insurance
affordability programs in a timely
fashion.
Comment: Some commenters
recommended that the interim final rule
be amended to eliminate or strictly limit
differences between the procedures
used by Exchanges in assessing
eligibility for Medicaid and CHIP, and
those used by state Medicaid and CHIP
agencies in determining eligibility, with
HHS permitting Federally-facilitated
Exchanges and State Partnership
Exchanges to have slightly more
flexibility for differences than Statebased Exchanges.
Response: We agree that the
differences between the procedures
used by Exchanges and their partner
Medicaid and CHIP agencies in
conducting eligibility determinations
should be limited, and believe that
§ 155.302(b)(1) already accomplishes
this to a significant extent. We reiterate
that an assessment under § 155.302(b)
will be robust and will involve the
execution of detailed MAGI-based
eligibility rules and verification
procedures. Further, we believe that
there is little reason for the use of an
assessment model in a state that
operates a state-based Exchange, given
the availability of shared information
technology services and the status of the
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state-based Exchange as a state, rather
than a federal, entity. We intend to
continue to work closely with states to
ensure that systems and processes are
appropriately integrated, with the goal
of reducing administrative costs, burden
on consumers, and the time needed to
complete the eligibility process.
Comment: Several commenters
recommended that HHS set a specific
timeliness standard regarding the
electronic transmission of the
application along with all relevant
information collected from either the
application or available electronic data
sources from the Exchange to the state
Medicaid or CHIP agency to ensure that
eligibility determinations are provided
without undue delay. Some commenters
requested that HHS specify that an
Exchange must complete an eligibility
determination in no more than 30 days
(with up to 60 days for evaluations
based on factors other than MAGI under
§ 155.345(b)) and complete the transfer
of an individual’s electronic file, where
required, within one business day; some
commenters also urged greater
alignment between Exchange and
Medicaid timeliness and other
performance standards.
Response: In § 155.302(b)(3) and
(b)(4)(ii)(A), we specify that information
will be transferred promptly, and
without undue delay. Further, in
§ 155.310(e)(1), we specify that the
Exchange will make an eligibility
determination promptly, and without
undue delay. We believe that this is an
appropriate approach to initial
timeliness standards, given the fact that
this is an entirely new program, and we
intend to work closely with states to
monitor and improve the timeliness of
all aspects of the eligibility and
enrollment process. Further, we note
that we agree with the commenter’s
suggestion regarding the alignment of
performance standards, and intend to
issue future guidance on this topic.
Comment: Several commenters
suggested that HHS modify
§ 155.302(b)(6) related to the standards
for agreements entered into between the
Exchange and state Medicaid and CHIP
agencies to provide greater specificity
regarding eligibility determinations,
transfer procedures, notice and appeals
processes, and consumer assistance.
Additionally, these commenters asked
that the agreements be made readily
available to the public in addition to
HHS, while also providing a period for
public review and comments on the
agreements prior to their approval by
HHS.
Response: We finalize § 155.302(b)(6)
from the interim final rule with a
clarification that, like the agreements
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specified in § 155.345(a), the agreement
under § 155.302(b)(6) will be made
available to HHS upon request. To the
extent that the Secretary requests and
obtains a copy of an agreement under
§ 155.302(b)(6), the public can request
the agreement through the Freedom of
Information Act, 5 U.S.C. 552. The
public may also obtain copies of these
agreements under applicable state
freedom of information laws. We believe
that there are ample opportunities for
public input for Exchange operations,
particularly given that the standards
that will govern the content of these
agreements are specified in this
regulation. We also note again that
§ 155.302(b) does not supersede other
provisions, such as those in § 155.345,
that set additional standards for
Exchanges in coordinating with
Medicaid and CHIP agencies.
Comment: One commenter wanted to
ensure that HHS would review and
approve all state Medicaid verification
plans.
Response: This comment is outside of
the scope of this regulation. We note,
however, that as described in 42 CFR
435.945(j), state Medicaid verification
plans must be available to the Secretary
of HHS upon request, thereby enabling
appropriate oversight of verification
standards.
Comment: One commenter sought
clarification as to whether an Exchange
could choose to perform neither an
assessment nor a determination for
Medicaid and CHIP.
Response: We clarify that the
Exchange must make either
determinations or assessments for
Medicaid and CHIP based on MAGI for
applications that include a request for
an eligibility determination for
insurance affordability programs.
However, we note that the Exchange is
permitted to contract with an eligible
contracting entity, including the state
Medicaid agency, to conduct eligibility
determinations for Medicaid and CHIP,
consistent with § 155.302(a).
Comment: Several commenters
recommended that an applicant who
appears to be eligible for Medicaid
based on factors other than MAGI be
flagged by the Exchange early in the
process, and if the Exchange does not
assess such an applicant as potentially
eligible for Medicaid or CHIP based on
MAGI, the applicant should not have to
request a full eligibility determination
from the state agency under
§ 155.302(b)(4)(i)(B) to receive an
eligibility determination for Medicaid
based on factors other than MAGI.
Response: As noted above,
§ 155.302(b) does not supersede
§ 155.345(b), which specifies that the
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Exchange will assess information
provided on an application by an
applicant who is not eligible for
Medicaid based on MAGI to determine
whether he or she is potentially eligible
for Medicaid based on factors other than
MAGI. We clarify that this provision
applies in an Exchange that is
implementing the option under
§ 155.302(b), such that if the Exchange
does not assess an applicant as
potentially eligible for Medicaid based
on MAGI, it will then examine the
application to determine whether to
transfer the applicant to the state
Medicaid agency for consideration of
Medicaid eligibility based on other
factors.
Comment: Commenters recommended
that the provision at
§ 155.302(b)(4)(i)(A), allowing an
individual the opportunity to withdraw
his or her Medicaid and CHIP
application, be eliminated or modified
to allow only individuals above a
certain income threshold to withdraw
their Medicaid and CHIP applications.
Others commenters were concerned that
language notifying an individual of his
or her opportunity to withdraw would
be confusing and lead to individuals
being dissuaded from pursuing a
Medicaid or CHIP eligibility
determination.
Response: When an applicant requests
an eligibility determination for
insurance affordability programs, the
single, streamlined application is an
application for Medicaid and CHIP (as
well as for eligibility for enrollment in
a QHP through the Exchange, and
related insurance affordability
programs), so it needs to end in either
a final determination of eligibility for
Medicaid or CHIP (approval or denial),
or a withdrawal of the application as it
relates to Medicaid and CHIP. When a
state Medicaid or CHIP agency elects to
have the Exchange make assessments of
Medicaid or CHIP eligibility, rather than
determinations, the Exchange is unable
to provide a final determination of
Medicaid or CHIP eligibility, including
a denial of Medicaid or CHIP eligibility.
Accordingly, withdrawal allows the
assessment model to function such that
an applicant does not require a formal,
final denial of Medicaid and CHIP from
the state Medicaid or CHIP agency to
gain eligibility for advance payments of
the premium tax credit and cost-sharing
reductions, if otherwise eligible. This
approach provides significant
efficiencies for consumers by not
requiring multiple eligibility
determinations, as well as for Exchanges
and Medicaid and CHIP agencies. Given
that the proposed approach preserves
the application date for purposes of
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Medicaid and CHIP in the event of an
appeal, we note that the only
implication of withdrawing an
application in this context is that the
applicant can no longer request a
determination from the state Medicaid
or CHIP agency based on the withdrawn
application, and would instead need to
submit another application to be
considered for those programs (other
than on appeal).
We acknowledge commenters’
concerns regarding the potential for
confusion when an applicant is given
the opportunity to withdraw his or her
Medicaid and CHIP application. To
reduce the potential for consumer
confusion and administrative burden on
the consumer and the Exchange
associated with this requirement, we
offer the following option in
implementing this provision. Upon
notifying an applicant that the Exchange
has assessed him or her as not
potentially eligible for Medicaid or
CHIP, the Exchange will provide an
opportunity for the applicant to request
a determination of Medicaid or CHIP
eligibility from the state Medicaid or
CHIP agency. Rather than expressly
asking the applicant if he or she wants
to withdraw the application for
purposes of Medicaid or CHIP eligibility
(instead of requesting a determination
from the state agencies), the Exchange
may consider the application
withdrawn for purposes of Medicaid
and CHIP eligibility if the applicant
does not affirmatively request a
determination from the state Medicaid
or CHIP agency within a time period
specified in the notice to the applicant,
provided that the notice that
communicates the opportunity to
request a determination from the state
Medicaid or CHIP agency and the time
limit for doing so also specifies that the
Exchange will take this approach to
withdrawal. This will allow an
appropriate disposition for each
application, as it relates to Medicaid
and CHIP, and will help alleviate any
confusion associated with the
opportunity to expressly withdraw an
application, without creating any
adverse impacts for consumers.
Comment: A few commenters
requested language that explicitly
preserves the date of application when
an applicant withdraws his or her
Medicaid or CHIP application.
Response: Provisions related to
preserving the date of the Medicaid or
CHIP application are contained in this
final rule at 42 CFR 435.907(h).
Comment: Commenters supported the
inclusion of language that requires the
application to not be considered
withdrawn if, upon appeal, the
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applicant is found potentially eligible
for Medicaid or CHIP. A few
commenters requested that any
subsequent review finding potential
eligibility for Medicaid or CHIP be
sufficient to nullify the withdrawal.
Response: We are finalizing proposed
language requiring the application to
not be considered withdrawn if, upon
appeal, the applicant is found
potentially eligible for Medicaid or
CHIP. The additional suggestions to
amend this provision would expand the
scope of the provision beyond its
intended scope. Further, it would be
impossible to administer the
commenters’ suggestion to nullify a
withdrawal when any future review
finds potential eligibility for Medicaid
or CHIP eligibility, beyond the
parameters established in this rule,
since subsequent eligibility
determinations and redeterminations
will not necessarily be connected to the
withdrawn application.
Comment: Commenters supported the
additional proposed language in
§ 155.302(b)(5) requiring the Exchange
to adhere to State Medicaid or CHIP
agency appeals decisions.
Response: We are finalizing the
proposed language with a modification
such that the Exchange appeals entity,
in addition to the Exchange, will adhere
to the eligibility determination or
appeals decision for Medicaid or CHIP
made by the Medicaid or CHIP agency,
or the appeals entity for such agency.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.302(a) with one
clarification that any contracting
arrangement for eligibility
determinations for Medicaid and CHIP
is subject to the standards in
§ 431.10(c)(2). We are finalizing the
provision proposed in § 155.302(b)(5)
with a slight technical modification to
add ‘‘Exchange appeals entity.’’ We are
finalizing § 155.302(b)(6) of the interim
final rule issued at 77 FR 18310, 18451–
52 with a modification to specify that
the agreement under § 155.302(b)(6)
must be made available to HHS upon
request. We are finalizing the provisions
proposed in paragraph (d) of the
proposed rule without modification. We
are otherwise finalizing the other
provisions of the interim final rule with
the exception of § 155.302(c), which we
are not finalizing at this time. We are
leaving the text of § 155.302(c) as an
interim final rule as published at 77 FR
18310, 18451–52.
8. Eligibility Standards (§ 155.305)
In § 155.305, we proposed to add
paragraph (a)(3)(v) regarding residency
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standards for eligibility for enrollment
in a QHP when an individual attests to
being temporarily absent from the
service area of the Exchange but intends
to return to the service area of the
Exchange and otherwise meets the
residency standards, unless another
Exchange verifies that the individual
meets the residency standard in that
Exchange. We also proposed technical
corrections within paragraph (f) to
replace the references to section 36B of
the Code to the application Treasury
regulations.
We proposed to amend paragraph
(f)(3) to clarify the availability of
advance payments of the premium tax
credit and cost-sharing reductions to
applicants enrolled in a QHP, that is not
a catastrophic plan, through the
Exchange. We did not receive specific
comments on this amendment, and we
are thus finalizing the provision as
proposed.
We also proposed to add paragraph
(h) to codify the eligibility standards for
enrollment through the Exchange in a
QHP that is a catastrophic plan, which
are based on age or having in effect a
certificate of exemption from the shared
responsibility payment under section
5000A of the Code in specific categories.
We proposed that all Exchanges must
conduct eligibility determinations for a
QHP that is a catastrophic plan within
the Exchange.
Comment: Commenters generally
offered support for the provision at
§ 155.305(a)(3)(v) specifying that the
Exchange not deny or terminate an
individual’s eligibility for enrollment in
a QHP through the Exchange if he or she
meets the residency standards described
in paragraph (a)(3) but for a temporary
absence from the service area of the
Exchange. A few commenters
recommended deleting the phrase that
allowed the Exchange to deny or
terminate eligibility if another Exchange
verifies that the individual meets the
residency standard of such Exchange;
others suggested rephrasing the
provision to allow an individual to
maintain residency in the Exchange
service area unless he or she is enrolled
in another Exchange. Commenters
recommending revisions disagreed with
how this language would limit an
applicant’s ability to establish
residency, under the rules described in
§ 155.305(a)(3), in more than one
Exchange.
Response: We are finalizing the
provision without the proposed clause
‘‘unless another Exchange verifies that
the individual meets the residency
standard of such Exchange.’’ As
commenters pointed out, under some
circumstances, certain individuals may
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establish residency for purposes of
Exchange enrollment in multiple
Exchange service areas simultaneously
(for example, under
§ 155.305(a)(3)(iv)(B), if a parent expects
to claim a child who lives in another
state on the parent’s tax return, the child
may enroll in a QHP through the
Exchange either in the child’s state of
residence, or the parent’s state of
residence). Accordingly, while
generally, applicants will establish
residency in the Exchange service area
in which they intend to reside, since
there are exceptions to this general
principle, this clause limiting residency
to one Exchange service area is
unnecessary.
Comment: In response to the
provision proposed at § 155.305(a)(3)(v),
some commenters expressed concern
about operational challenges specific to
providing and coordinating coverage
while individuals are temporarily
residing outside the Exchange service
area. A few commenters asked that we
further define the term ‘‘temporary’’ to
ensure that the term is used consistently
across Exchanges, and to help reduce
consumer confusion and administrative
inefficiencies.
Response: We acknowledge that
coordinating care for applicants while
they are temporarily absent from the
service area of the Exchange through
which they enroll in a QHP may present
challenges for QHP issuers. However,
we believe this challenge is outweighed
by the importance of maintaining
continuity of coverage while an
individual is temporarily absent from a
particular Exchange service area.
Additionally, in paragraph (a)(3)(v), we
specify that ‘‘temporarily absent’’ means
the applicant must intend to return to
the Exchange service area when the
purpose of the absence has been
accomplished, so we do not believe that
further definition is required in
regulation. To ensure that applicants
understand the implications of applying
for coverage through a particular
Exchange, we encourage Exchanges to
notify applicants that they may want to
apply for coverage through the
Exchange where they meet the
residency requirements and wish to
most frequently access benefits.
Furthermore, this provision should
not be construed to impose any
additional requirements on QHP issuers
related to maintaining networks outside
the Exchange service area or
coordinating care for applicants
temporarily absent from the Exchange
service area.
Comment: Commenters were divided
regarding the Exchange’s role in
determining eligibility for catastrophic
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plans inside and outside the Exchange,
as some expressed support for what they
interpreted as HHS limiting enrollment
for catastrophic coverage to enrollment
through the Exchange in QHPs that are
catastrophic plans and urged flexibility
for an Exchange to decide not to
conduct eligibility determinations for
catastrophic plans, while other
commenters requested that the
Exchange conduct eligibility
determinations for QHPs that are
catastrophic plans for enrollment both
through and not through the Exchange.
Commenters also urged HHS to clarify
that an applicant still must be
determined eligible for a QHP to enroll
in a catastrophic plan through the
Exchange. Commenters wanted to
ensure that the Exchange would provide
clear information to applicants
considering purchasing different QHPs,
including by describing the significance
of enrolling in a catastrophic plan for
applicants who are also determined
eligible for advance payments of the
premium tax credit.
Response: We note that paragraph (h)
only concerns eligibility for enrollment
through the Exchange in a QHP that is
a catastrophic plan. The Exchange will
not be conducting eligibility
determinations for enrollment outside
the Exchange, including in a
catastrophic plan. In finalizing this
provision, we are modifying the
provision from its proposed form to
clarify that an individual must be
determined eligible for enrollment in a
QHP through the Exchange in
accordance with § 155.305(a) in
addition to meeting the specific
eligibility standards for enrollment in a
catastrophic QHP through the Exchange.
We believe that maintaining the
provision specifying that the Exchange
will determine eligibility for a QHP that
is a catastrophic plan through the
Exchange preserves flexibility for young
adults and people for whom coverage
would otherwise be unaffordable to
have access to health coverage, and thus
confirm that Exchanges will conduct
determinations of eligibility for
enrollment in a QHP that is a
catastrophic plan through the Exchange.
We expect that Exchanges will fully
inform qualified individuals regarding
the implications of enrolling in a QHP
that is a catastrophic plan through the
Exchange as they consider various
health coverage options, particularly as
it affects their eligibility for insurance
affordability programs.
Comment: Some commenters wanted
us to clarify that Exchanges would grant
certificates of exemption to all
applicants eligible for enrollment in a
catastrophic plan, which applicants
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42249
could use to enroll in catastrophic plans
outside the Exchange (at least
temporarily), and suggested that issuers
of catastrophic plans outside the
Exchange should be permitted to rely
solely on an attestation by the applicant
that he or she is eligible to enroll in a
catastrophic plan.
Response: This provision does not
concern catastrophic plans offered
outside of the Exchange. As discussed
in the Market Reforms final rule at 78
FR 13423, the statutory provisions
related to eligibility for catastrophic
plans apply to such coverage offered
both inside and outside an Exchange.
We maintain that approach and clarify
that nothing in this proposal modifies
the Market Reforms final rule related to
the eligibility standards for a
catastrophic plan. Similarly, the
eligibility standards for catastrophic
plans generally are specified at
§ 156.155(a)(5), which provides that a
catastrophic plan can only cover an
individual who has either not attained
the age of 30 prior to the first day of the
plan or policy year, or has received a
certificate of exemption in specified
categories. While we specify that the
Exchange will only conduct
determinations of eligibility for
enrollment through the Exchange in a
QHP that is a catastrophic plan, in HHS’
Exemptions and Miscellaneous
Minimum Essential Coverage proposed
rule, at 78 FR 7368, we propose that the
Exchange will determine eligibility for
exemptions from the shared
responsibility payment, and will
provide a notice and an exemption
certificate number to any individual
determined eligible for such an
exemption. If that provision is finalized
as proposed, an issuer of a catastrophic
plan offered outside the Exchange could
request a copy of this notice from an
applicant to validate his or her
eligibility for enrollment in the
catastrophic plan.
Comment: Some commenters
requested that the Exchange’s eligibility
standards for enrollment through the
Exchange in a QHP that is a catastrophic
plan align with preamble language in
the Market Reforms proposed rule at 77
FR 70601 such that an enrollee who
turns 30 in the middle of a coverage
year would remain enrolled in the
catastrophic plan for the duration of the
plan year. One commenter also sought
clarification that for coverage obtained
through the Exchange, the first day of
the plan year will always be the first of
the year.
Response: The eligibility standards
related to age described in this
provision follow the approach discussed
within the Market Reforms proposed
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rule at 77 FR 70601. As such, we clarify
that an enrollee turning 30 in the
middle of a coverage year could remain
enrolled in a QHP that is a catastrophic
plan through the Exchange for that
particular coverage year as long as he or
she was not 30 prior to beginning of the
plan year. We note that
§ 147.104(b)(1)(ii) clarifies that in the
individual market, the coverage
effective dates must align with § 155.410
regarding initial open enrollment, and
as such, for coverage obtained in the
individual market through the
Exchange, the first day of the plan year
will always be the first day of the
calendar year.
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Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.305 of the proposed
rule with two slight modifications: to
remove the clause ‘‘unless another
Exchange verifies that the individual
meets the residency standard of such
Exchange’’ in paragraph (a)(3)(v), and to
revise paragraph (h)(1) to clarify an
applicant must be eligible for
enrollment in a QHP through the
Exchange to be determined eligible for
enrollment through the Exchange in a
QHP that is a catastrophic plan.
9. Eligibility Process (§ 155.310)
In § 155.310, we proposed to add
paragraph (i) regarding a certification
program under the Secretary’s program
for determining eligibility for advance
payments of the premium tax credit and
cost-sharing reductions in accordance
with section 1411(a) of the Affordable
Care Act. We noted that this
certification program would be distinct
from the notice to employers required
by section 1411(e)(4)(B)(iii) of the
Affordable Care Act and paragraph (h)
of § 155.310. We proposed that the
certification to the employer would
consist of methods adopted by the
Secretary of Treasury as part of the
determination of potential employer
liability under section 4980H of the
Code. We clarified that the certification
program would address not only
individuals on whose behalf advance
payments of the premium tax credit and
cost-sharing reductions are provided,
but also individuals claiming the
premium tax credit only on their tax
returns. We solicited comments on this
proposal.
We proposed to amend previous
language from paragraphs (i) and (i)(1),
and combine those paragraphs in new
paragraph (j), to align with proposed
revisions in § 155.335, which specified
that the Exchange will redetermine
eligibility on an annual basis for all
qualified individuals, not only
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enrollees. We proposed to remove the
previous paragraph (i)(2), which
addressed situations in which a
qualified individual did not select a
plan before the date on which his or her
eligibility would have been
redetermined as a part of the annual
redetermination process. Due to the
proposed change to § 155.335(a), this
paragraph would no longer be
necessary. We received the following
comments concerning the proposed
provisions:
Comment: One commenter expressed
support for the proposal to implement a
certification process consisting of
methods adopted by the Secretary of
Treasury as part of the determination of
potential employer liability under
section 4980H of the Code, as described
in proposed § 155.310(i). In addition,
several commenters expressed concern
over the disclosure of applicant
information to the employer for use in
the certification process. Commenters
were concerned that disclosing names
in this context could have a chilling
effect on employees who wish to seek
Exchange coverage, making it less likely
that individuals would enroll.
Response: For purposes of the
certification program proposed and
finalized in § 155.310(i), we believe that
only the minimum personally
identifiable information necessary
should be released to an employer.
Additional information regarding the
certification program is found in the
regulations associated with § 4980H of
the Code.
Comment: Commenters recommended
removing the provision specifying that
the Exchange will have an applicant
attest to the accuracy of the information
on file for him or her when he or she
was previously determined eligible for
enrollment in a QHP through the
Exchange, did not select a QHP during
his or her enrollment period, or was
ineligible for an enrollment period, and
then seeks a new enrollment period
prior to his or her annual
redetermination. Commenters
characterized this as an undue burden
on qualified individuals, since enrollees
are not required to make the same
attestation about their eligibility criteria
remaining constant.
Response: This provision was largely
carried over from the Exchange final
rule, with modifications to address
changes proposed in § 155.335. It is
important for the Exchanges to ensure
all eligibility criteria are satisfied with
accurate information, before
determining eligibility for benefits,
some of which the enrollee could be
liable to repay if eligibility information
is not accurate at the time of enrollment.
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Moreover, enrollees are required to
report changes that may affect their
eligibility based on the standards in
§ 155.305 throughout the year, and thus
no additional burden is being placed on
qualified individuals. Lastly, one
alternative to this proposal would be to
require qualified individuals who do
not enroll in coverage when initially
determined eligible to file a new
application, which would be more
burdensome than the approach in
§ 155.310(j). Accordingly, we are
finalizing § 155.310(j) as proposed, with
a slight technical correction for clarity
to note that this paragraph only refers to
an applicant who is determined eligible
for enrollment in a QHP through the
Exchange.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.310 of the proposed
rule with a technical correction to
specify that paragraph (j) only refers to
an applicant who is determined eligible
for enrollment in a QHP through the
Exchange .
10. Verification Process Related to
Eligibility for Enrollment in a QHP
Through the Exchange (§ 155.315)
In § 155.315, we proposed a technical
correction in paragraph (b)(2) to clarify
the procedures for an Exchange when
the Social Security Administration
indicates an individual is deceased.
We proposed to clarify the
circumstances that trigger the
inconsistency process described in
paragraph (f)(1) and (2), such as when
required electronic data is not contained
within the electronic data source, and
when sources of required data are not
reasonably expected to be available
within two days of the initial attempt to
reach the data source. We also proposed
to amend paragraph (f)(4) to clarify that
during the clerical error resolution
period provided in paragraph (f)(1), as
well as during the period provided in
paragraph (f)(2)(ii), the Exchange
proceeds with the eligibility
determination and provides eligibility
for enrollment in a QHP and advance
payments of the premium tax credit and
cost-sharing reductions, as applicable,
during such period, to the extent the
applicant is otherwise qualified and
meets the standards specified in
paragraph (f)(4).
We proposed to add paragraph (j)
concerning the verification process
related to eligibility for enrollment
through the Exchange in a QHP that is
a catastrophic plan. We proposed that
the Exchange may either accept the
applicant’s attestation of age without
further verification or examine available
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electronic data sources that have been
approved by HHS for this purpose. To
verify an applicant’s exemption from
the shared responsibility payment, we
proposed that this would be
accomplished either through use of the
Exchange’s records, or through
verification of paper documentation if
the certificate was issued by a different
Exchange. In terms of the inconsistency
process described in paragraph (f) of
this section, we noted that applicant
would not be determined eligible for
enrollment through the Exchange in a
QHP that is a catastrophic plan until
verification of necessary information
can be completed. We received
comments that addressed both the
eligibility standards and verification
process related to QHPs that are
catastrophic plans offered through the
Exchange, and have addressed those
comments above the preamble to
§ 155.305(h). As such, we are finalizing
this paragraph as proposed.
Comment: Several commenters
supported our proposed technical
correction in paragraph (b)(2) regarding
situations in which the Social Security
Administration indicates that an
individual is deceased. Others
recommended allowing additional time,
and many commenters suggested
providing an additional 90 days when
an applicant has demonstrated a good
faith effort to resolve the issue. Some
commenters sought clarification on the
availability of appeal rights regarding
inconsistencies with Social Security
Administration data, specifically,
whether individuals had the right to
appeal during the 90-day period or
whether they must wait until after a
final determination has been made.
Response: As noted in § 155.315(f)(3),
the Exchange has the authority to
extend the inconsistency period within
§ 155.315(f)(2)(ii) based on a good faith
effort on the part of the applicant. We
note that an applicant will not be able
to appeal an eligibility decision until he
or she receives a notice containing an
approval or denial of eligibility. Further
details regarding appeals will be
provided in subsequent rulemaking. We
continue to work with the Social
Security Administration and other
federal agencies to determine the role of
other federal agencies in the appeals
process. Accordingly, we are finalizing
the provision as proposed.
Comment: Some commenters
disagreed with the proposal at
§ 155.315(f) that specifies that the
Exchange must trigger the inconsistency
period when electronic data is required
but it is not reasonably expected that
data sources will be available within 2
days of the initial request to the data
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source. Commenters recommended that
if verification cannot occur promptly, or
in ‘‘real time,’’ the inconsistency period
should be triggered immediately, along
with the provision of eligibility based
on an applicant’s attestation. Some
commenters mentioned specifically that
an inability to verify citizenship and
immigration status through electronic
data should lead to the immediate
trigger of the inconsistency period, to
align with Medicaid regulations.
Commenters supported timelines
according to which the Exchange should
be required to contact the application
filer for documentation or additional
information when data sources are
unavailable. Some commenters
supported the requirement of a 2-day
period prior to requesting information
from the application filer, and some
recommended extending it to 5 days.
Commenters also recommended that the
Exchange continue to attempt data
matches after notifying the application
filer so the entire burden is not
immediately shifted to the application
filer.
Response: Since the publication of the
proposed rule, we have confirmed that
data from IRS, SSA, and DHS should be
available every day. Accordingly, we are
modifying the proposed provision to
finalize the rule to reduce the waiting
period reduced from 2 days to 1 day.
Further, we also add new paragraph
(f)(6) to clarify the applicability of
§ 155.315(f).
First, in paragraph (f)(6), we specify
that that the Exchange will not apply
such a waiting period when electronic
data to support the verifications
specified in § 155.315(d) (residency), or
§ 155.320(b) (minimum essential
coverage, other than minimum essential
coverage in an eligible employersponsored plan) is required but it is not
reasonably expected that electronic data
sources will be available within 1 day
of the initial request to the data source;
instead, the Exchange will accept the
applicant’s attestation regarding the
factor of eligibility for which the
unavailable data source is relevant.
While the data matching described in
this subpart for these factors of
eligibility is important, we do not
believe that it should hold up an
eligibility determination or cause the
eligibility process to default to paper
documentation when electronic data
sources are unavailable. We also note
that the use of electronic data as a
primary method of verification of
residency is an option for Exchanges. In
addition, we clarify that
§ 155.320(d)(3)(iii) specifies that when
the Exchange does not have information
from data sources for the verifications
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related to enrollment in an eligible
employer-sponsored plan and eligibility
for qualifying coverage in an eligible
employer-sponsored plan, the Exchange
will move forward with a sampling
process.
Second, we clarify that § 155.320(c)(3)
(family size and income for purposes of
eligibility for advance payments of the
premium tax credit and cost-sharing
reductions) already specifies procedures
to address situations in which electronic
data sources with information about
current, MAGI-based income are
unavailable. We believe that these
procedures should continue to govern
these situations.
We acknowledge commenters’
concerns about providing eligibility
determinations in a timely fashion when
electronic data sources are delayed in
responding or do not respond. The
proposed language at § 155.315(f)
minimizes the administrative and
consumer burden associated with
requesting documentation and
providing coverage for a short period of
time (when electronic data sources may
quickly become available and indicate
eligibility for a different insurance
affordability program), with the need to
provide prompt eligibility
determinations. Accordingly, when
electronic data from IRS, SSA, or DHS
is necessary but unavailable, and it is
reasonably expected that the necessary
electronic data source will be available
within 1 day, the Exchange will wait 1
day before making an eligibility
determination, so as to not generate an
eligibility determination that may be
shown to be invalid less than 24 hours
later. This approach also avoids the
need to request documentation when an
electronic data match will make the
documentation request unnecessary less
than 24 hours later. If it is not
reasonably expected that the necessary
electronic data source will be available
within 1 day, or it is reasonably
expected that the necessary electronic
data source will be available within 1
day, but this expectation proves
incorrect, then the Exchange will
determine the applicant’s eligibility
using his or her attestation regarding the
factor of eligibility for which the
electronic data source is unavailable,
and will follow the remaining
procedures in § 155.315(f) to attempt to
complete the verification. We believe
this approach is responsive to
commenters’ concerns and satisfies the
need to reduce administrative burden
and the burden on application filers
while still ensuring accurate eligibility
determinations. We also note that the
Exchange has the flexibility to continue
checking whether such data sources
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have become available leading up to the
triggering of the inconsistency period
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Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.315 of the proposed
rule, with a few modifications. We are
modifying paragraph (f) to provide that
if key electronic data sources are
unavailable and not reasonably
expected to be available within 1 day,
the Exchange will make an eligibility
determination based on an applicant’s
attestation and trigger the inconsistency
period in paragraph (f). The proposed
language specified a 2-day period. We
also added a new paragraph (f)(6) to
clarify that the Exchange will accept an
applicant’s attestation regarding three
specific factors of eligibility when
electronic data is required but it is not
reasonably expected that data sources
will be available within 1 day of the
initial request to the data source. We are
also modifying paragraph(f)(5) of this
section by deleting paragraph (f)(5)(ii)
and combining paragraph (f)(5)(i) with
paragraph (f)(5), because the language
that previously appeared in paragraph
(f)(5)(ii) regarding effective dates
conflicted with the requirements under
§ 155.330(f). Lastly, we modify the
language in paragraph (j) related to the
verification of eligibility for enrollment
through the Exchange in a QHP that is
a catastrophic plan for purposes of
clarity.
11. Verifications Related to Eligibility
for Insurance Affordability Programs
(§ 155.320)
In § 155.320, we proposed to amend
and make technical corrections in
paragraph (c)(1), in accordance with the
legislative change made by Public Law
112–56 concerning the treatment of
Social Security benefits related to
MAGI, to incorporate Social Security
benefits when verifying projected
annual household income. We also
proposed to remove language
concerning an adoption taxpayer
identification number, and to replace
references to section 36B of the Code
with the applicable Treasury regulation.
We received comments supporting these
revisions without further suggestions,
and are thus finalizing the amendments
and technical corrections as proposed.
We proposed to amend and make
technical corrections in paragraph (c)(3)
to specify that the Exchange verify that
neither advance payments of the
premium tax credit nor cost-sharing
reductions are already provided on
behalf of an individual, and align with
the revised policy that the Exchange
incorporate Social Security benefits
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when verifying projected annual
household income. We did not receive
specific comments regarding the
proposed changes to paragraph (c)(3),
and are thus finalizing the changes as
proposed.
We proposed to clarify when
additional verification is necessary as
part of the process to verify an expected
increase in projected annual household
income when compared to annual
income data. We proposed to add
language regarding the circumstances
under which annualized current income
data will be sufficient to support an
expected decrease in projected annual
household income. We also proposed to
replace references to section 36B of the
Code with references to the applicable
Treasury regulation.
We proposed to consolidate
paragraphs (d) and (e), currently entitled
‘‘Verification related to enrollment in an
eligible employer-sponsored plan’’ and
‘‘Verification related to eligibility for
qualifying coverage in an eligible
employer-sponsored plan,’’ respectively,
into new paragraph (d). The standards
proposed in paragraph (d) set forth the
rules for verifying enrollment in an
eligible employer-sponsored plan and
eligibility for qualifying coverage in an
eligible employer-sponsored plan. We
proposed that the Exchange must verify
whether an applicant reasonably
expects to be enrolled in an eligible
employer-sponsored plan or is eligible
for qualifying coverage in an eligible
employer-sponsored plan for the benefit
year for which coverage is requested. As
a result of the proposed consolidation of
paragraphs (d) and (e), we proposed to
redesignate paragraph (f) as paragraph
(e).
In paragraph (d)(2), we proposed the
data sources the Exchange will use to
verify access to employer-sponsored
coverage, which include (1) Data about
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan from any
electronic data sources that are available
to the Exchange and which have been
approved by HHS for this purpose based
on evidence showing that such data
sources are sufficiently current,
accurate, and minimize administrative
burden; (2) data regarding enrollment in
an eligible employer-sponsored plan or
eligibility for qualifying coverage in an
eligible employer-sponsored plan based
on federal employment obtained by
transmitting identifying information
specified by HHS to HHS; (3) data from
the SHOP that operates in the state in
which the Exchange is operating; and
(4) any available data regarding the
employment of an applicant and the
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members of his or her household, as
defined in 26 CFR 1.36B–1(d), from any
electronic data sources that are available
to the Exchange and have been
approved by HHS for this purpose,
based on evidence showing that such
data sources are sufficiently current,
accurate, and minimize administrative
burden.
We proposed that data regarding
employment would not be used to
identify inconsistencies that need to be
resolved to maintain eligibility, and
would instead only be used to
determine whether an individual should
be part of the pool of individuals from
which a sample is taken for review. We
solicited comment on whether data
regarding employment should only be
used as a point of information for
applicants to help prompt accurate
attestations, and not as a point of
comparison for the purposes of
identifying inconsistencies as part of the
verification described in this paragraph,
since these data sources do not directly
address enrollment in an eligible
employer-sponsored plan or eligibility
for qualifying coverage in an eligible
employer-sponsored plan. We also
solicited comment on the feasibility of
making the necessary systems
connections by October 1, 2013, and
whether alternative approaches should
be considered for the first year of
operations.
To verify enrollment in an eligible
employer-sponsored plan and eligibility
for qualifying coverage in an eligible
employer-sponsored plan, we proposed
that the Exchange follow the
inconsistency process specified in
§ 155.315(f) if an applicant’s attestation
is not reasonably compatible with
information from a data source
authorized by HHS, data regarding
federal employment, data from SHOP,
or other information provided by the
application filer or in the records of the
Exchange. Further, if the Exchange does
not have any of the information from a
data source authorized by HHS, from
data regarding federal employment, or
from data from the SHOP for an
applicant, and either does not have any
available electronic data regarding the
employment of an applicant and the
members of his or her household or an
applicant’s attestation is not reasonably
compatible with any available data
regarding the employment of an
applicant and the members of his or her
household, we proposed that the
Exchange would place the applicant
into a pool of applicants from which it
would select a statistically-significant
sample of applicants, from whose
employers the Exchange would request
information regarding enrollment in an
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eligible employer-sponsored plan and
eligibility for qualifying coverage in an
eligible employer-sponsored plan.
We solicited comments on whether
handling inconsistencies with any
available data regarding the
employment of an applicant and the
members of his or her household
through the sampling process, rather
than through the procedures specified
in § 155.315(f), is a suitable approach.
We requested comments on a
methodology by which an Exchange
could generate a statistically significant
sample of applicants and whether there
are ways to focus the sample on
individuals who are most likely to have
access to affordable, minimum value
coverage.
In clause (d)(3)(iii)(A), we proposed
that the Exchange would provide notice
to an applicant who is selected as part
of the sample indicating that the
Exchange would be contacting any
employer identified on the application
for the applicant and the members of his
or her household, as defined in 26 CFR
1.36B–1(d), to verify whether the
applicant is enrolled in an eligible
employer-sponsored plan or is eligible
for qualifying coverage in an eligible
employer-sponsored plan for the benefit
year for which coverage is requested.
We sought comment on ways the
Exchange may communicate this
sampling process to consumers with the
intention of minimizing confusion.
We proposed that the Exchange
would proceed with all other elements
of the eligibility determination using the
applicant’s attestation while the samplebased review is occurring, and provide
eligibility for enrollment in a QHP
through the Exchange to the extent that
an applicant is otherwise qualified.
Consistent with § 155.315(f), we
proposed that during the sample-based
review, the Exchange would ensure that
advance payments of the premium tax
credit and cost-sharing reductions are
provided on behalf of an applicant who
is otherwise qualified for such payments
and reductions, as described in under
§ 155.305 of this subpart, if the tax filer
attests to the Exchange that he or she
understands that any advance payments
of the premium tax credit paid on his or
her behalf are subject to reconciliation.
When an applicant is selected for the
sample-based review, we proposed in
clause (d)(3)(iii)(D) that the Exchange
make reasonable attempts to contact any
employer identified on the application
for the applicant and the members of his
or her household, as defined in 26 CFR
1.36B–1(d), to verify whether the
applicant is enrolled in an eligible
employer-sponsored plan or is eligible
for qualifying coverage in an eligible
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employer-sponsored plan for the benefit
year for which coverage is requested.
We discussed one alternative
approach, under which the Exchange
would request documentation from
consumers who were selected as part of
the sample, instead of attempting to
contact their employers. We chose not
to propose this approach since the
application will already solicit all
necessary information from consumers,
so it is unclear what would be gained
through a second information request to
consumers. We solicited comment on
this alternative and other alternatives to
implement this process while
minimizing burden on consumers,
employers, and Exchanges. We also
sought comment on ways the Exchange
can most efficiently interact with
employers, including other entities that
employers may rely upon to support
this process, such as third-party
administrators.
In clause (d)(3)(iii)(E), we proposed
that if the Exchange receives any
information from an employer relevant
to the applicant’s enrollment in an
eligible employer-sponsored plan or
eligibility for qualifying coverage in an
eligible employer-sponsored plan as a
result of the sample-based review, the
Exchange would determine the
applicant’s eligibility based on such
information and in accordance with the
effective dates specified in § 155.330(f)
of this subpart and, if such information
changes the applicant’s eligibility
determination, notify the applicant and
his or her employer or employers of
such determination in accordance with
the notice requirements specified in
§ 155.310(g) and (h) of this part.
We also proposed that if, after a
period of 90 days from the date on
which the notice specified in clause
(d)(3)(iii)(A) is sent to the applicant, the
Exchange is unable to obtain the
necessary information from an
employer, the Exchange will determine
the applicant’s eligibility based on his
or her attestation regarding that
employer. We solicited comment on this
proposal to not provide an additional
notice to the applicant and his or her
employer when the applicant’s
eligibility does not change as a result of
the sample-based review and whether it
is preferable to include an additional
notice to the applicant and employer at
the end of the 90-day period.
In clause (d)(3)(iii)(G), we proposed
that to carry out the sampling process
described above, the Exchange must
only disclose an individual’s
information to an employer to the extent
necessary for the employer to identify
the employee. We solicited comments
on this proposed approach and whether
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there are ways these procedures can
further minimize burden on the
Exchange, employers, and consumers.
We also highlighted steps we are
taking to help consumers with
providing information related to access
to employer-sponsored coverage on the
application. We suggested the use of a
voluntary pre-enrollment template to
assist applicants in gathering the
information about access to coverage
through an eligible employer-sponsored
plan as required by the Exchange to
determine eligibility for advance
payments of the premium tax credit and
cost-sharing reductions. We sought
comments on the use of this preenrollment template and ways it could
be used to assist consumers with
providing the necessary information to
complete the verification described in
paragraph (d) while minimizing burden
on employers.
Lastly, in paragraph (d)(4), we also
proposed that the Exchange may rely on
HHS to conduct this verification. We
proposed that under this option, the
Exchange would send applicant
information to HHS; HHS would take on
all verification activities specified in
regulation, including data matching
with the Office of Personnel
Management (OPM), SHOP, available
employment data, and the sample-based
review; and the Exchange would
integrate the result into its eligibility
process and send the individual and
employer notices described in
§ 155.310(g) and (h) of this part. Further,
we proposed that under such an
arrangement, the Exchange and HHS
would enter into an agreement
specifying their respective
responsibilities in connection with the
verifications described in paragraph (d);
other activities required in connection
with the verifications described are
performed by the Exchange in
accordance with the standards
identified in this subpart or by HHS in
accordance with the agreement; and the
Exchange provides all relevant
application information to HHS through
a secure, electronic interface, promptly
and without undue delay. We solicited
comments on this proposed option.
Comment: In reference to the
proposed language at
§ 155.320(c)(3)(vi)(C), which specifies
that the Exchange will request
additional information regarding
projected annual household income
when an application filer’s attestation is
in excess of annual income data, but
below annualized current income data
by a ‘‘significant amount,’’ commenters
recommended that the phrase
‘‘significant amount’’ be replaced with a
percent threshold. Some commenters
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recommended a threshold of 20 percent,
specifically.
Response: To preserve the Exchange’s
flexibility to determine what may
constitute a significant amount, we are
finalizing this provision as proposed.
Comment: Commenters recommended
replacing the standard ‘‘not reasonably
compatible’’ with the term
‘‘significantly and materially
incompatible,’’ defined further by
commenters as ‘‘making an important
change to the outcome.’’ Such
commenters suggested only using the
process described in § 155.315(f) if an
attestation is significantly and
materially incompatible with other
information. Further, commenters
suggested easing verification rules for
individuals who comply with
information requests, including
attestations, and for whom required data
is not available.
Response: In § 155.300(d) of the
Exchange final rule, we include in the
definition of ‘‘reasonably compatible’’
that the ‘‘difference or discrepancy does
not impact the eligibility of the
applicant, including the amount of
advance payments of the premium tax
credits or category of cost-sharing.’’ This
definition allows for Exchange
flexibility in verifying application
information, and where appropriate, the
final rule provides for a more
prescriptive reasonable compatibility
standard, in reference to specific
verifications. We believe it is an ideal
approach to provide flexibility in the
case of many verifications, but for areas
in which the outcome of the eligibility
determination is sensitive to small
changes, provide a more specific
approach. Therefore, we finalize the
reasonable compatibility standards used
in § 155.320(c), with some changes
described herein, and without changing
the overall definition of ‘‘reasonable
compatibility,’’ defined in § 155.300(d),
which is used throughout Exchange and
Medicaid regulations.
For income verification, for the first
year of operations, we are providing
Exchanges with temporarily expanded
discretion to accept an attestation of
projected annual household income
without further verification, as
described below. Under current
regulations, when data described in
paragraph (c)(1)(i) of this section is
available for the tax household but the
attested annual household income is
more than 10 percent below the annual
income computed in accordance with
clause (c)(3)(ii)(A) of this section, the
Exchange must use annualized data
from the MAGI-based income sources,
specified in paragraph (c)(1)(ii), to the
extent it is available, to verify the
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attestation of annual household income.
If such data is not available or does not
support the attestation, clause
(c)(3)(vi)(C) specifies that the Exchange
must follow the procedures specified in
§ 155.315(f)(1) through (4), which
includes requesting documentation to
verify the attestation of project annual
household income. The attestation is
not supported by the data when the
attestation is more than 10 percent
below the annual income as computed
using data sources. For the first year of
operations, we will exercise
enforcement discretion under this
provision such that each Exchange will
have the option, only when the
attestation under (c)(3)(ii)(B) is greater
than ten percent below the annual
household income computed in
accordance with clause (c)(3)(ii)(A) and
MAGI-based income data from the
sources specified in paragraph (c)(1)(ii)
is unavailable to request a reasonable
explanation for the discrepancy from
the applicant, and if such explanation is
insufficient, follow the procedures
specified in § 155.315(f)(1) through (4)
for a statistically significant sample of
the population that would otherwise be
subject to such procedures under clause
(c)(3)(vi)(D). For those individuals who
are not part of this sample, the Exchange
may accept the attestation of projected
annual household income without
further verification for purposes of the
Exchange’s eligibility determination. We
expect that any Exchange that exercises
this option will monitor the process
closely and adjust the targeting and size
of the sampled population as needed to
ensure an effective verification process.
We note that we believe this exercise of
enforcement discretion concerning the
Exchange’s obligations to verify income
information in these specific
circumstances is made in the context of
all information—including the actual
household income amounts for 2014—
being available at the end of the year for
the reconciliation performed under
section 36B(f) of the Code.
Comment: We received comments
that asked if, following the 90-day
inconsistency period under § 155.315(f),
when invoked under clause (c)(3)(vi)(C)
of this section, the applicant has not
responded and data sources indicate
that the applicant is eligible for
Medicaid or CHIP, the Exchange should
notify the applicant and offer to enroll
him or her in Medicaid or CHIP, in
states where the Exchange can make
that determination, or transmit the file
to the Medicaid or CHIP agency if the
Exchange cannot make that
determination.
Response: This recommendation is
not specific to § 155.320(c)(3). However,
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we note that, under § 155.320(c)(3)(iii),
an attestation that reflects an increase
compared to the tax data would
generally be accepted without further
verification (for purposes of eligibility
for advance payments of the premium
tax credit and cost-sharing reductions);
therefore, if an applicant attests to a
projected annual household income that
would qualify him or her for advance
payments of the premium tax credit or
cost-sharing reductions but MAGI-based
income sources indicate that income is
lower than the applicant’s attestation,
even if such data indicates Medicaid or
CHIP eligibility, the attestation would
be accepted without further verification.
We note that this scenario assumes that
the applicant has not attested to
projected annual household income that
would be consistent with eligibility for
Medicaid or CHIP under the applicable
MAGI standard.
Comment: One commenter expressed
support for continuing to examine ways
in which employer reporting under the
Affordable Care Act can be streamlined
both in timeframe and in the number of
elements to prevent inefficient or
duplicative reporting.
Response: We agree with the
commenter. As stated in the proposed
rule, the Administration will continue
to consider ways to streamline reporting
under the Affordable Care Act.
Comment: One commenter
recommended that applicants should
first attest to whether or not they have
any offer of coverage. The commenter
suggested it is unnecessary to verify
enrollment in or eligibility for
qualifying coverage in an eligible
employer-sponsored plan for everyone
who applies for insurance affordability
programs. Another commenter
recommended that the Exchange only
ask for general information about
employee contributions to the
employer-sponsored plan, eligibility for
the plan, and whether the plan provides
minimum value rather than specifically
identifying to the employer the
particular employee who has requested
premium tax credits.
Response: We appreciate the
commenter’s suggestion regarding ways
to expedite the application process, and
are working to consider similar
suggestions received based on the
public comment period for the single,
streamlined application. To this end, we
have designed the employer-sponsored
coverage section of the single,
streamlined application to ask a
threshold question of whether the
individual has an offer of coverage
through a job, including an offer
through a spouse or parent’s job and
then if the answer is ‘‘no,’’ allow the
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individual to skip the remaining
employer-sponsored coverage questions
on the application. We will also collect
employer contact information as
necessary to send the employer notice
described in § 155.310(h). The paper
application for enrollment in a QHP
through the Exchange and insurance
affordability programs can be found at:
https://www.cciio.cms.gov/resources/
other/Files/AttachmentC_042913.pdf.
Comment: We received several
comments regarding available data
sources proposed in § 155.320(d)(2).
Some commenters suggested that HHS
work on developing an employersponsored coverage data source that
would be available to states at a
significantly reduced cost.
One commenter specifically
recommended that data sources that
reflect information regarding
employment be used as a point of
information for applicants only, and not
as a basis for identifying an
inconsistency that must be resolved to
maintain eligibility. The commenter
suggested that relying on employment
data to support the verification of
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan may create a
barrier to coverage and unduly delay
enrollment of eligible applicants.
One commenter requested that data
regarding federal employment as
specified in § 155.320(d)(2)(ii) be made
available through the federal data
services hub and requested that HHS
release a technical description of the
service as soon as possible.
Response: As one commenter noted,
HHS conducted an extensive search of
available data sources and found that no
comprehensive data source will be
available by October 1, 2013. Current
legislative and operational barriers
prohibit HHS from requiring employers
to report information directly to
Exchanges or requiring Exchanges to
obtain employer data from the Internal
Revenue Service. The proposed rule
included an interim solution to support
this verification until a more robust
verification process can be developed.
We remain committed to working with
any interested parties on solutions that
make employer reporting more efficient.
We agree with the comment above
suggesting that employment data not be
used as the basis for generating
inconsistencies or identifying
individuals for inclusion in the samplebased review, since it is not specific to
employer-sponsored coverage.
Accordingly, we do not believe that it is
necessary to specify the use of
employment data, and so are removing
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paragraph (d)(2)(iv) and modifying
paragraph (d)(3)(iii) to remove the
provision specifying that the Exchange
will obtain employment data. We clarify
that notwithstanding this deletion,
Exchanges may use employment data as
a tool to assist consumers in providing
accurate attestations to the Exchange
regarding employer-sponsored coverage.
Lastly, we are currently working with
our federal partners at the Office of
Personnel Management to develop a
service through the hub to verify data
regarding federal employment as is
necessary to implement proposed
155.320(d)(2)(ii). We expect to release a
detailed technical description of this
service in the near future.
Comment: We received several
comments on the pre-enrollment
template developed to assist consumers
with collecting information related to
eligibility for qualifying coverage in an
eligible employer-sponsored plan. Many
commenters expressed support for the
voluntary template and efforts to
facilitate employers reporting such
information to Exchanges. One
commenter suggested that employers
pre-populate the form and distribute it
online to employees without being
specifically requested to do so by
individual employees. Another
commenter expressed concern over
asking employees to gather information
from employers, suggesting that it could
pose problems and force employees not
to seek Exchange coverage.
A few commenters suggested ways to
implement the template including
providing the template on the date of
hire or in conjunction with other
information about employer-sponsored
coverage provided by the employer to
employees. One commenter suggested
large employers have an incentive to
report this information to employees to
avoid having employees request
information from them on an individual
basis. Another commenter suggested
that the template would need to allow
employers to report multiple premium
contributions and/or plan actuarial
values.
Response: We developed the preenrollment template, which is a tool to
help an individual complete the
questions related to employer-sponsored
coverage on the single, streamlined
application, based on extensive input
from employers and other stakeholders.
While the use of the template is
voluntary, we believe it will facilitate
the collection of related employersponsored coverage information from
employers, and in doing so, streamline
the application process, and increase
the accuracy of eligibility
determinations. To this end, we also
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note that employers have the option of
combining the employer coverage tool
with the notice specified under section
18B of the Fair Labor Standards Act, as
added by section 1512 of the Affordable
Care Act found at this link, https://
www.dol.gov/ebsa/pdf/
FLSAwithplans.pdf. As noted in the
proposed rule, we also anticipate that
employers will find additional ways to
provide this information to their
employees, including posting this prepopulated tool on a company Web site,
or making this information available
during benefit fairs, and we are
supportive of additional efforts by
employers to disseminate this
information efficiently. The employer
coverage tool can be found at: https://
cciio.cms.gov/resources/other/Files/
AttachmentC_042913.pdf.
Comment: Several commenters
generally supported the sampling
approach proposed in
§ 155.320(d)(3)(iii) and noted that
contacting the employer directly is the
most accurate and efficient way to verify
information regarding access to
qualifying employer-sponsored
coverage. One commenter specifically
supported the proposed approach to
rely on the Exchange to reach out to
employers for information about
employer-sponsored coverage rather
than relying on individuals to get the
information from their employer.
Some commenters expressed concern
over the sampling approach, suggesting
the process was burdensome for
employers and Exchanges. Commenters
urged HHS to develop sampling
procedures that are as unobtrusive as
possible and do not create confusion for
an individual or an individual’s
employer. One commenter urged the
Administration to encourage States to
use uniform processes in conjunction
with HHS. One commenter
recommended that final regulations
specify timelines and specific
information required for employer
responses under § 155.320(d)(3)(iii).
Another commenter also recommended
that final regulations permit employers
to designate third-party administrators
to respond and act on their behalf for
the sample-based review.
Some noted that contacts to
employers create risks for employees
who may have a very weak position or
status with employers. Some
commenters suggested that employees
should be able to opt out of having the
Exchange contact their employer. One
commenter suggested that any
verification process adopted by HHS
should not invite retaliation against
employees in any way. Another
commenter suggested that the notice to
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employers in § 155.310(h) communicate
that employers are explicitly prohibited
from retaliating against employees and
provide accessible information about
how employees may pursue a complaint
or seek redress, including the time limit
for filing a complaint.
Response: We believe the sampling
approach proposed in
§ 155.320(d)(3)(iii) is the best interim
approach for effectively completing this
verification while minimizing burden
on Exchanges and employers. As noted
in the proposed rule, we believe that
employers are in the best position to
provide information regarding the
employer-sponsored coverage that they
offer to their employees. We maintain
the approach of relying on Exchanges to
reach out to a select number of
employers to verify applicant
information with some minor
clarifications.
We also appreciate the concerns
raised related to burden on Exchanges
and employers. We intend for
Exchanges to contact employers in a
standardized manner and only ask for
information that is necessary for
verifying access to qualifying employersponsored coverage. We do not include
a timing standard for employers to
respond to Exchange inquiries; however
we expect that employers will respond
to Exchange inquiries in a timely
manner. With that stated, as proposed
and finalized in § 155.320(d)(3)(iii)(F),
after a period of 90 days, the Exchange
will conclude the sample-based review.
Regarding the recommendation that
final regulations permit employers to
designate third-party administrators to
respond and act on their behalf for this
verification, we note that this rule
finalizes standards related to Exchanges
and therefore standards regarding
activities of employers are outside the
scope of this regulation. However, we
believe that this would be a feasible
approach, as long as it is consistent with
any other authorities that may govern
the delegation of employer
responsibilities to other entities.
We also acknowledge the comment
expressing the concern that contacting
employers might create risks for
employees who may have a very weak
position or status with employers.
Section 18C of the Fair Labor Standards
Act, as added by section 1558 of the
Affordable Care Act, provides
protections for employees that prohibit
discrimination because the employee
has received advance payments of the
premium tax credit or cost-sharing
reductions, and for other specified
reasons.
Allowing an individual to opt out of
the sampling process under
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§ 155.320(d)(3)(iii) would prevent the
Exchange from receiving accurate
information for some individuals and
increase the potential for a tax liability
for the tax filer at tax filing. The opt-out
process would also compromise the
randomness, and potentially the
statistical validity of the sample.
Accordingly, we do not adopt this
suggestion.
Comment: We received several
comments strongly supporting the
approach in § 155.320(d)(3)(iii)(C),
reflecting the statutory requirement in
section 1411(e)(4) of the Affordable Care
Act, allowing an individual to receive
advance payments of the premium tax
credits and cost-sharing reductions
during the 90-day sampling period if the
individual is otherwise qualified. One
commenter supported the recognition
that applicants should be made aware
that any advance payments of the
premium tax credit could be subject to
reconciliation. We also received
comments in support of the provision in
§ 155.320(d)(3)(iii)(F) allowing the
Exchange to use an applicant’s
attestation if no information is received
from the employer. Another commenter
noted that the burden of resolving
inconsistencies should fall first on the
Exchanges and only reach individuals
when the Exchanges have exhausted all
available means to resolve the
inconsistency.
Response: We believe it is important
for the eligibility determination process
to be consistent in how and when the
Exchange requests supporting
documentation throughout the
eligibility determination process and to
avoid unnecessary delay in eligibility
determinations. We agree with
commenters regarding the importance of
collecting an attestation from a tax filer
regarding his or her understanding of
reconciliation prior to making advance
payments of the premium tax credit,
and therefore maintain this in the final
rule. Additionally, we are finalizing our
proposal to rely on an applicant’s
attestation if the Exchange is unable to
obtain the necessary information from
an employer.
Comment: One commenter was
concerned that the timeframe for
employers to provide information
(within 90 days of notice regarding the
Exchange’s intent to verify the
applicant’s enrollment in an eligible
employer-sponsored plan or eligibility
for qualifying coverage through an
eligible employer-sponsored plan) is too
long and recommended shortening this
period to 30 days.
Response: In proposed section
§ 155.320(d)(3)(iii), which we maintain
in the final rule, we provide that an
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Exchange will proceed with an
applicant’s eligibility determination
during the sampling process and ensure
that advance payments of the premium
tax credit and cost-sharing reductions
are provided on behalf of an applicant
who is otherwise qualified for such
payments and reductions. This process
is intended to ensure that eligibility
determinations are not delayed due to
the Exchange not being able to contact
an employer. Under our authority under
section 1411(a) and (d) of the Affordable
Care Act and after consideration of a
shorter timeframe, we came to the
conclusion that 90 days is consistent
with other similar processes, such as the
inconsistency period specified in
§ 155.315(f), and will also allow an
appropriate opportunity for receiving a
response from employers.
Comment: Commenters supported the
option to allow an Exchange to fulfill
the requirements of this verification by
relying on HHS to perform it. One
commenter noted that this option is
particularly helpful as no acceptable
data sources will be available in their
state by October 1, 2013. One
commenter was pleased with this
provision, noting that it welcomed
efforts to reduce administrative and cost
burdens involved with Exchange
eligibility determination processes. One
commenter expressed the need for more
information from HHS specifying the
steps it will take to complete this
verification, and detail on the particular
information HHS anticipates it will
need. One commenter suggested a
provision be included in the agreement
between HHS and the Exchange to hold
applicants harmless if a glitch in
communication occurs. The commenter
also suggested that consumers should
not be required to submit duplicative
information. One commenter asked that
HHS consider expanding its employersponsored plan enrollment and
eligibility verification process to include
the sending of notices to individuals
and employers described in § 155.310(g)
and (h), which occurs after an eligibility
determination is made.
Response: After reviewing and
considering the appropriate public
comments and completing a technical
analysis, we have concluded that the
service described in the proposed rule is
not feasible for implementation for the
first year of operations. This service
would involve a large amount of
systems development on both the state
and federal side, which cannot occur in
time for October 1, 2013. As such, in the
final rule, we maintain the proposed
language, with a clarification that the
option to rely on HHS to perform this
verification is effective for eligibility
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determinations that are effective on or
after January 1, 2015—meaning that the
Exchange will be able to rely on HHS to
perform this function as part of the
eligibility determination system under
section 1411 of the Affordable Care Act
beginning with open enrollment for the
2015 plan year.
To provide relief to state-based
Exchanges that were planning to rely on
this service, we note that we are also
delaying the date by which an Exchange
must implement the sample-based
review. For eligibility determinations
for insurance affordability programs that
are effective before January 1, 2015, we
added paragraph (d)(3)(iv) to specify
that if the Exchange does not have any
of the information specified in
§ 155.320(d)(2)(i) through (d)(2)(iii) for
an applicant, the Exchange may accept
the applicant’s attestation regarding
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan for the benefit
year for which coverage is requested
without further verification, instead of
following the procedure in
§ 155.320(d)(3)(iii).
While we believe it is important for
Exchanges to implement the procedure
in § 155.320(d)(3)(iii) to support
program integrity and minimize
financial risks on behalf of the tax filer
at reconciliation, we acknowledge that
some Exchanges may not have the
resources and operational capability to
conduct the sampling process in the
first year. We note that the FFE will
implement the verification process as
specified in § 155.320(d).
For October 1, 2013, we expect that
Exchanges will use OPM data provided
by HHS and available through the hub
and SHOP data available through the
SHOP that corresponds to the
individual market Exchange to identify
inconsistencies with attested
information, and follow the process
established in § 155.315(f) to resolve any
such inconsistencies. We plan to
continue working closely with
Exchanges, and may propose regulatory
amendments as necessary, to implement
an increasingly effective verification
process over time.
We also note that we considered
whether the distribution of notices
could be part of a future service
performed by HHS. The eligibility
notices cited by the commenter involve
information beyond what is involved
with this verification service, including
individual eligibility results, and the
commenter’s proposal therefore would
add significant complexity to an
already-complex service. Accordingly,
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we are finalizing this provision as
proposed.
Comment: We solicited comment
regarding the feasibility of making the
necessary systems connections to
support the verification of enrollment in
an eligible employer-sponsored plan
and eligibility for qualifying coverage in
an eligible employer-sponsored plan by
October 1, 2013, and whether
alternative approaches should be
considered for the first year of
operations. Several commenters
expressed general support of the
approach to verifying access to
qualifying employer-sponsored
coverage. However, one commenter
expressed concern over the complexity
of the verification procedures and
questioned whether Exchanges will be
able to implement these processes
consistently by October 1, 2013. A small
number of commenters recommended
that HHS consider limiting verification
to those situations in which it is
essential to comply with the Affordable
Care Act. One commenter agreed with
the recommendation that the proposed
strategy for verification should be
temporary and that it should be
revisited in 2016 when more data
become available.
Response: We appreciate feedback
from commenters on the proposed
approach. We acknowledge the timing
concerns with implementing the
policies in the proposed rule for October
1, 2013 and will continue to work with
Exchanges to develop interim solutions
within the general construct of these
regulations and related guidance. We
believe that the proposed approach is
minimally burdensome, particularly
based on the approval of use of a
sample-based review provided in
§ 155.320(d)(3)(iii) instead of an
inconsistency process, and another
approach would necessitate manual
review for a larger number of
individuals. Accordingly, in the final
rule, we maintain the provisions
proposed in § 155.320(d) with
continued anticipation that the strategy
will evolve as additional data and data
sources become available and as more
information is gained when the samplebased review is implemented.
Comment: One commenter
recommended that HHS allow
Exchanges the flexibility to define the
factors that would trigger the samplebased review and how to conduct the
necessary investigations. Another
commenter proposed that Exchanges
should have flexibility to use whatever
information they have at their disposal
to identify individuals who are likely to
have employer-sponsored coverage and
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to conduct a minimum number of
follow up reviews.
Response: We recognize that some
Exchanges may have access to
additional data sources that could be
useful for these purposes. We note that
proposed § 155.320(d)(2)(i), which we
are finalizing as proposed, allows the
use of electronic data sources that are
approved by HHS, which could include
state-based or state-developed data
sources. We encourage states to work
with HHS to incorporate these data
sources and other existing processes
into the Exchange verification process.
Comment: We received several
comments on standards related to
notices proposed throughout § 155.320.
Commenters suggested that any notices
be clearly written in plain language at
an appropriate reading level for
employees with limited education and
LEP individuals. One commenter
recommended that notice of applicants’
appeal rights be provided to applicants
if information from an employer results
in a change to their eligibility status.
Specifically regarding the notice
described in § 155.320(d)(3)(iii), one
commenter suggested the notice clearly
specify that the employee was selected
as part of a purely random sample,
rather than due to any indication of
misinformation or inappropriate action
on the part of the employee.
Additionally, one commenter supported
HHS developing notices and otherwise
educating employers to help employers
understand their potential tax liabilities.
Finally, one commenter urged Exchange
personnel, Navigators, certified
application counselors and all consumer
assistance personnel to be trained on
these verification procedures.
Response: All notices described in
this part are subject to the general
notices standards under § 155.230,
which include standards related content
provided in the notice, including notice
of appeal rights, and that the notices
must conform to accessibility and
readability standards. We agree that
information regarding this verification
will be important for Navigators and
other entities helping consumers apply
for coverage and intend to include
information about this verification
process related in training materials and
other guidance documents produced by
HHS.
Comment: One commenter raised
concerns over the potential for
confusion that could result from
unnecessary notifications to employers
by Exchanges, for example, when
employers receive the notice specified
in § 155.310(h) regarding potential tax
liability under § 4980H of the Code even
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though the employer may not in fact
have any tax liability.
Response: The proposed rule did not
modify the requirements related to the
employer notice as described in
§ 155.310(h) and therefore the comment
is outside of the scope of this rule.
Comment: One commenter
recommended that the verification
process and information supplied
should be considered confidential, and
recommended that the final rule include
language clarifying this and prohibiting
the sharing of this information with
anyone not directly required to verify
the information. The commenter
specified that the employer
representative verifying the information
at request of the Exchange should be
prohibited from sharing the Exchange’s
request for the information with any
person not directly responsible for
providing the information.
Response: We agree with the
suggestion that information supplied
during the verification process
described in § 155.320(d)(3)(iii) should
be protected and not disclosed to
unauthorized parties. When an
Exchange reaches out to an employer to
confirm whether an applicant is
enrolled in an eligible employersponsored plan or eligible for qualifying
coverage in an eligible employersponsored plan, we do not intend for
the Exchange staff to disclose the
employee’s household income or any
other taxpayer information, except the
employee’s name or other identifying
information. The employer would need
to identify the employee to provide the
Exchange with information about the
plan options available to the employee.
The Exchange would rely on
information provided by the employee
or employer when communicating with
the employer, so that only the
appropriate employer representatives
are consulted during the sample-based
review. We also note that like all
information created, collected, used, or
disclosed by the Exchange, information
regarding employer-sponsored coverage
is subject to the privacy and security
protections established in § 155.260.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.320(c) without
modification. We are finalizing the
provisions proposed in § 155.320(d),
with a few modifications. In paragraph
(d)(2)(iii), we clarify that the Exchange
must obtain any available data from the
SHOP that corresponds to the state in
which the Exchange is operating. In
paragraph (d)(3)(iii), we modify
language to specify that the Exchange
must select a statistically significant
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random sample of applicants for whom
the Exchange does not have any of the
information specified in paragraphs
(d)(2)(i) through (d)(2)(iii). Based on
comments suggesting that employment
data only be used to prompt applicants
to encourage accurate attestations, we
removed paragraph (d)(2)(iv).
Additionally, we clarified paragraph
(d)(4) to specify that the ability for the
Exchange to satisfy the provisions of
paragraph (d) by relying on HHS is
effective for eligibility determinations
for advance payments of the premium
tax credit and cost-sharing reductions
that are effective on or after January 1,
2015, and to clarify that the division of
responsibilities under this option is
subject to guidance issued by the
Secretary. To accommodate this change,
we added paragraph (d)(3)(iv) to clarify
that for eligibility determinations for
advance payments of the premium tax
credit and cost-sharing reductions that
are effective before January 1, 2015, if
the Exchange does not have any of the
information specified in paragraphs
(d)(2)(i) through (d)(2)(iii) for an
applicant, the Exchange may accept an
applicant’s attestation regarding
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan for the benefit
year for which coverage is requested,
without further verification under
paragraph (d)(3)(iii) of this section.
Additionally, we deleted paragraph
(d)(4)(iv) to remove the agreement
associated with having HHS conduct
this verification. Finally, we removed
paragraph (e) and redesignated
paragraph (f) as paragraph (e). As a
result of the consolidation of former
paragraphs (d) and (e) in paragraph (d)
of this final rule, we also make a
technical correction to § 155.615(f)(2)(i)
to modify the cross-reference in that
provision to reference § 155.320(d).
12. Eligibility Redetermination During a
Benefit Year (§ 155.330)
In § 155.330, we proposed to amend
paragraph (d)(1) to clarify that the
Exchange would only conduct periodic
examination of data sources to identify
eligibility determinations for Medicare,
Medicaid, CHIP, or the BHP, for
enrollees on whose behalf advance
payments of the premium tax credit or
cost-sharing reductions are being
provided. We also proposed revising
paragraph (e) to specify how the
Exchange would proceed when data
matching indicates that an individual is
deceased, such that the Exchange would
modify eligibility status to account for
the data after 30 days without a
response to the notice sent. In situations
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where the Exchange identifies updated
information regarding income, family
size, or family composition, except
information regarding death, we
clarified that the enrollee-reported
information would be subject to
verification.
We also solicited comments about
adding a provision to specify that
Exchanges would include language in
the eligibility determination notice after
a redetermination resulting in a change
in an enrollee’s level of cost-sharing
reductions to also describe the specific
changes to an enrollee’s deductible, copays, coinsurance, and other forms of
cost-sharing reductions if they remained
enrolled in the same QHP.
We proposed to amend paragraph (f)
to incorporate changes as a result of
eligibility appeals decisions, as well as
changes that affect only enrollment or
premiums, but do not affect eligibility.
The proposed changes to paragraph (f)
were designed to align eligibility
effective dates and enrollment effective
dates with one another, and to
accommodate the limited situations in
which retroactive eligibility may be
necessary.
In paragraph (f)(1), we proposed that
changes resulting from a
redetermination, from an appeal
decision, or affecting enrollment or
premiums only, be implemented on the
first day of the month following notice
of the change. In paragraph (f)(2), we
proposed that the Exchange may
determine a reasonable point in a
month, no earlier than the 15th, after
which a change will not be effective
until the first day of the month after the
month specified in paragraph (f)(1).
In paragraph (f)(3), we proposed that
the Exchange must implement changes
resulting in a decreased amount of
advance payments of the premium tax
credit or cost-sharing reductions that
occur after the 15th of the month, on the
first day of the month after the month
specified in paragraph (f)(1). In
paragraph (f)(4), we proposed that the
Exchange must implement changes that
result in an increased level of costsharing reductions that occur after the
15th of the month, on the first day of the
month after the month specified in
paragraph (f)(1). Changes that result in
an increased amount of advance
payments of the premium tax credit
would be implemented under
paragraphs (f)(1) and (f)(2).
In paragraph (f)(5), we proposed that
the Exchange implement a change
associated with birth, adoption,
placement for adoption, marriage, or
loss of minimum essential coverage, on
the coverage effective dates described in
§ 155.420(b)(2)(i) and (ii). In paragraph
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(f)(6), we proposed that the Exchange
may implement a change associated
with the events described in
§ 155.420(d)(4), (d)(5), and (d)(9) on an
effective date that is based on the
specific circumstances of each situation.
In redesignated paragraph (f)(7), we
proposed to maintain the existing
language of what was originally
paragraph (f)(3).
Comment: Commenters expressed
general support for HHS’ proposal
regarding when the Exchange
determines through periodic data
matching that an individual is deceased.
One commenter sought clarification
about whether the Exchange could
terminate coverage retroactively to the
date of death to align with non-group
market standards.
Response: In response to comments,
we clarify in finalizing § 155.430(d) that
the Exchange will terminate coverage
retroactively to the date of death. This
revision is discussed in more detail in
the response to comments regarding that
provision below.
Comment: Multiple commenters
expressed strong support for including a
provision in the final rule such that
Exchange would include language
regarding a change in an enrollee’s level
of cost-sharing reductions as a result of
a redetermination in the eligibility
determination notice sent to the
enrollee. Several commenters requested
that the notice also include information
about the enrollee’s eligibility for a
special enrollment period as well as the
deadline to make a decision to select a
new plan if they so desired.
Commenters also recommended that the
notice include the potentially negative
financial impact of changing QHPs. One
commenter requested additional
guidance regarding the implementation
of cost-sharing reductions generally, and
another stated that it could not comply
with such a proposed change in
Exchange design at this stage.
Response: We clarify that
§ 155.230(a)(1) specifies that the
Exchange will provide language in the
eligibility determination notice to the
enrollee explaining the action reflected
in the notice, which in this case
includes the fact that an enrollee has
been determined eligible for a new costsharing reduction level, his or her
eligibility for a special enrollment
period, the requisite deadlines, and the
possible ramifications if an enrollee
decides to change QHPs (for example,
deductible resetting, whereby an
individual who had accrued expenses
towards the deductible cap for his or her
previous QHP would have to start again
from $0 in making cost-sharing
payments towards the deductible and
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out-of-pocket limit). Since regulations
do not specify that the Exchange will
provide detailed, plan-specific
information on cost-sharing reductions
after initial plan selection, we will not
require that it be provided by the
Exchange when a change occurs. Rather,
we expect that QHPs will make this
information available. We will also not
specify that the Exchange will describe
the specific changes that could occur in
different plans, which could require as
many variations as there are plans.
Exchanges maintain the flexibility to
provide more detail. HHS provided
general guidance regarding the
implementation of cost-sharing
reductions in subpart E of the final
Payment Notice at 78 FR 15410, 15474
et. seq.
Comment: Commenters generally
supported the effective dates we
proposed in § 155.330(f). Several
commenters urged HHS to prioritize
continuity of coverage in defining
effective dates. Other commenters
cautioned against requiring eligibility
effective dates that would necessitate
the return or repayment of claims,
premiums, advance payments of the
premium tax credit, or cost-sharing
reduction payments.
Response: We appreciate the
importance of continuity of coverage, as
well as the importance of clarity for
consumers. As such, we are finalizing
the provisions proposed in § 155.330(f),
with two modifications for clarity. First,
we consolidate the provisions formerly
proposed in § 155.330(f)(3) and
§ 155.330(f)(4) into a single provision
covering decreases in advance payments
of the premium tax credit and changes
in cost-sharing reductions. Second, we
remove the requirement formerly
proposed in § 155.330(f)(7), because the
termination of coverage requirement in
§ 155.430(d)(3) renders § 155.330(f)(7)
duplicative.
Comment: Commenters requested that
HHS require transparency and plain
language in communicating effective
dates to consumers, given the
complexity of changing benefits,
programs, and coverage.
Response: We agree that transparency
and plain language are of the upmost
importance, and urge states and QHP
issuers to share successful
communication strategies among one
another. We note that § 155.230(b)
specifies that all notices will be in plain
language. HHS will also share model
notice language for Exchanges to adapt
to their specific needs.
Comment: Some commenters
questioned why advance payments of
the premium tax credit and cost-sharing
reductions could not always be
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implemented as of the first of the
following month.
Response: The 15th-of-the-month
cutoff specified in § 155.330(f)(3)
concerning changes that result in a
decreased amount of advance payments
of the premium tax credit and changes
in levels of eligibility for cost-sharing
reductions aims to prevent consumers
from incurring financial liabilities that
may result from such changes in
eligibility, which could also be very
problematic for QHP issuers to
implement. However, as noted above,
Exchanges have flexibility to set a
reasonable cut-off date for implementing
changes that result in an increased level
of advance payments of the premium
tax credit, such that they could always
be implemented on the first day of the
following month, Accordingly, we are
finalizing this provision as proposed.
Comment: Some commenters sought
reassurance that Exchanges would
remain the system of record—the final
authority on applicants’ and enrollees’
eligibility for enrollment through the
Exchange and receipt of advance
payments of the premium tax credit and
cost-sharing reductions—and that all
changes would be communicated to
QHP issuers. Some commenters also
requested flexibility for issuers to
communicate changes to enrollees,
consistent with current practices.
Response: Exchanges are intended to
be the final authority on applicants’ and
enrollees’ eligibility for enrollment in a
QHP through the Exchange, advance
payments of the premium tax credit,
and cost-sharing reductions (subject to
applicable appeals). As specified in
§ 155.310(g) and § 155.400(b)(1),
Exchanges will communicate
information about all eligibility and
enrollment changes to both enrollees
and their health insurance issuers in a
timely fashion. We also encourage QHP
issuers to communicate transparently
with enrollees regarding changes to
their coverage, including how changes
in an enrollee’s eligibility for costsharing reductions may affect the
enrollee’s out-of-pocked costs related to
coverage, provided that such
communications are not confusing for
consumers.
Comment: Commenters supported our
proposal in paragraph (f)(4) of this
section to align enrollment effective
dates with eligibility effective dates, but
sought clarification on eligibility
effective dates for individuals who opt
not to select a new plan upon
experiencing one of the special
enrollment period triggering events
described in § 155.420(b)(2).
Response: We clarify that the
eligibility effective dates in
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§ 155.330(f)(4) apply only in situations
in which an individual uses the special
enrollment period to select a plan upon
experiencing one of the triggering events
described in § 155.420(b)(2). Eligibility
for individuals who experience a change
related to marriage, birth, adoption,
placement in foster care, or loss of
minimum essential coverage, and who
opt to maintain their existing QHP,
follows the effective dates otherwise
specified within § 155.330(f).
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.330, with some
modifications. First, we clarified that
the effective dates in paragraph (f)(1)(ii)
are based on the date specified in the
appeal decision, and removed crossreferences to appeals provisions in
paragraph (f)(1)(ii), as we are not
finalizing provisions related to
eligibility appeals at this time. However,
we maintain the substance of the
provision, and intend to replace the
cross-references when we finalize
subpart F. Second, we consolidated the
provisions formerly proposed in
§ 155.330(f)(3) and § 155.330(f)(4) into a
single requirement in paragraph (f)(3)
for decreases in advance payments of
the premium tax credit and changes in
cost-sharing reductions. Third, we
modified newly designated (f)(4) to
clarify that the Exchange will
implement a change associated with the
events described in § 155.420(b)(2)(i)
and (ii) of this part on the effective dates
described in § 155.420(b)(2)(i) and (ii) of
this part respectively, instead of on the
first day of the following month. Fourth,
we removed the requirement formerly
proposed in § 155.330(f)(7), because the
termination of coverage requirement in
§ 155.430(d)(3) renders § 155.330(f)(7)
duplicative.
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13. Annual Eligibility Redetermination
(§ 155.335)
In § 155.335, we proposed to amend
paragraphs (a), (b), (c), (e), (f), (g), (h),
(k), and (l) of this section to specify that
subject to the limitations specified in
paragraph (l) and new paragraph (m),
the Exchange will conduct an annual
eligibility redetermination for all
qualified individuals, not only those
who are enrolled in a QHP. Our
proposal was to replace the word
‘‘enrollee’’ with the term ‘‘qualified
individual’’ in these paragraphs.
We proposed to amend paragraph (b)
to include data regarding Social
Security benefits as defined under 26
CFR 1.36B–1(e)(2)(ii). This reflects the
revision we proposed to make in
§ 155.320(c)(1)(i)(A).
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We proposed to make technical
corrections to paragraph (l) to specify
that, if the Exchange does not have
authorization to use a qualified
individual’s tax information, the
Exchange will redetermine the qualified
individual’s eligibility only for
enrollment in a QHP through the
Exchange.
We proposed to add new paragraph
(m), which would provide that, if a
qualified individual does not select a
QHP before the redetermination
described in this section, and is not
enrolled in a QHP through the Exchange
at any time during the benefit year for
which such redetermination is made,
the Exchange must not automatically
conduct a subsequent redetermination
of his or her eligibility for a future
benefit year.
Comment: Commenters supported
HHS’ proposal to allow all qualified
individuals to be redetermined for
eligibility for enrollment in a QHP
through the Exchange, regardless of
whether they have enrolled in a QHP
through the Exchange during the
coverage year. Several commenters
recommended omitting § 155.335(m),
the special rule, to allow states to
continue redeterminations for nonenrolled qualified individuals, for at
least 3 more years.
Response: We continue to believe that
one redetermination for a qualified
individual who does not select a QHP
represents an appropriate balance
between providing consumers with a
streamlined ability to obtain coverage
and the burden on the Exchange
associated with redeterminations and on
consumers who are not interested in
enrolling. We intend to monitor take-up
rates within the FFE and encourage
state-based Exchanges to do the same, as
this data will inform whether changes to
this policy might be appropriate in the
future. Accordingly, we are finalizing
this provision as proposed.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.335 of the proposed
rule without modification, except we
reserve paragraphs (c)(1) and (c)(2) as
we continue to evaluate the appropriate
information that will be included in the
annual redetermination notice, and
modify paragraph (c)(3) such that the
previous reference to paragraph (c)(1),
which is now reserved, instead refers to
paragraph (b), which accurately refers to
the updated information being retrieved
by the Exchange.
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14. Administration of Advance
Payments of the Premium Tax Credit
and Cost-Sharing Reductions (§ 155.340)
In § 155.340, we proposed technical
corrections in paragraphs (b) and (c) to
replace the reference to section 36B of
the Code to the applicable Treasury
regulation. We did not receive specific
comments on this section, and are thus
finalizing the provision as proposed.
Summary of Regulatory Changes
We are finalizing the technical
corrections proposed in § 155.340 of the
proposed rule to specify the appropriate
definition of minimum value.
15. Coordination With Medicaid, CHIP,
the Basic Health Program, and the Preexisting Condition Insurance Plan
(§ 155.345)
In § 155.345, we proposed to make a
technical correction to paragraph (a) to
clarify that the agreements that the
Exchange enters into with the agencies
administering Medicaid, CHIP, and the
BHP, if applicable, must include a clear
delineation of the responsibilities of
each ‘‘agency’’ as opposed to each
‘‘program.’’ We proposed to amend
paragraph (a)(2) to specify that the
agreement the Exchange enters into with
other agencies administering insurance
affordability programs addresses the
responsibilities of each agency to ensure
prompt determinations of eligibility and
enrollment in the appropriate program
without undue delay, based on the date
the application is submitted to, or
redetermination is initiated by, the
Exchange or another agency
administering an insurance affordability
program. We proposed to change the
ordering of agencies listed for purposes
of clarity. We also proposed to
redesignate paragraph (a)(3) as
paragraph (a)(4), and add a new
paragraph (a)(3) to ensure that, as of
January 1, 2015, the agreement
delineates responsibilities for the
provision of a combined eligibility
notice, as defined in § 435.4, to
individuals and members of the same
household, to the extent feasible, for
enrollment in a QHP through the
Exchange and for all insurance
affordability programs. Section
155.345(a)(3)(i) proposed that prior to
January 1, 2015, the notice include
coordinated content, as defined in
§ 435.4, while § 155.345(a)(3)(ii) and
(g)(7) addressed the implementation of a
combined eligibility notice requirement
as of January 1, 2015.
We proposed a phased-in approach
for the provision of a combined
eligibility notice in cases where the
Exchange is performing assessments of
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eligibility for Medicaid and CHIP based
on MAGI.
We noted that, based on the
operational readiness of the Exchange
and other agencies administering
insurance affordability programs,
combined eligibility notices may be
implemented earlier that January 1,
2015, but that in states where the FFE
is conducting assessments rather than
final determinations of eligibility, the
FFE will only be able to provide an
eligibility notice that includes
coordinated content prior to January 1,
2015 (and not combined eligibility
notices) for eligibility determinations
made by the FFE.
We proposed to make a technical
correction in paragraph (f) to cite to the
applicable Treasury regulation instead
of Section 36B of the Code.
We proposed a series of technical
corrections throughout paragraphs (f)
and (g) to clarify various provisions and
to redesignate paragraphs as necessary
to accommodate the changes described
in the proposed rule. We proposed to
add paragraph (g)(7) to require
combined eligibility notices effective
January 1, 2015.
Comment: We received comments
recommending that notices be
consolidated and coordinated for all
family members applying together even
when individuals are eligible for
different programs, at the very least for
the initial eligibility determination
notice. Commenters suggested that all
notices need to clearly state by name all
individuals to whom the notice applies,
especially when notices are regarding
termination. Some commenters
indicated that the notice with
coordinated content should clearly
inform an individual what he or she is
or may be eligible for, and should never
begin with the ineligibility information.
Commenters suggested that all
agreements between the Exchange and
the agencies administering Medicaid
and CHIP be approved by HHS and be
made publicly available, including on a
public Web site. Some commenters
stated that the public should be given an
opportunity to provide input on the
agreements and any changes that are
made to the agreements.
Response: We are finalizing this
section as proposed, with minor
modifications to reserve two provisions
for finalization at a future date. We
anticipate that initial eligibility
determination notices will be
consolidated for family members who
apply together. Additionally, we expect
that information about the program for
which an individual is eligible, if any,
will be displayed in notices before
information about programs for which
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the individual is not eligible. We are
reserving paragraphs (a)(3) and (g)(7),
regarding coordinated content and
combined notices, respectively, which
we intend to finalize at a later date with
the parallel Medicaid provisions. The
Federally-facilitated Exchange will
provide coordinated content in notices
for October 1, 2013. We will take these
recommendations into consideration as
we develop model eligibility
determination notices. We are not
specifying that agreements between
Medicaid and CHIP agencies and
Exchanges be approved by HHS, as we
think that the standards included in
regulation represent an appropriate
level of federal oversight at this time.
However, we will work with Exchanges
to monitor operations over time, and
reevaluate this decision as needed.
Comment: Many commenters
expressed support for combined
eligibility notices. Some commenters
expressed general support of the phased
in approach for combined eligibility
notices, but strongly recommended
minimizing the delay in the
implementation of combined notices so
that it only affects the initial annual
open enrollment period. Commenters
suggested that the requirement for a
combined eligibility notice should be
effective for redetermination notices and
eligibility notices for the open
enrollment period beginning on October
15, 2014. Some commenters were
supportive of the January 1, 2015
implementation date of combined
eligibility notices, while others
recommended a January 1, 2016
implementation date. One commenter
recommended that the effective date be
set as January 1, 2014, and that HHS
allow those states that cannot update
their technology in time for January
2014 to seek approval from HHS for
delaying implementation, rather than a
nationwide delay in implementation.
Many commenters asked HHS to
reiterate that the phased-in approach
does not diminish the principles of the
Affordable Care Act to promote
coordination between the Exchange,
Medicaid, and CHIP, beginning in
October 2013.
Response: We appreciate commenters’
suggestions. We intend to finalize this
provision at a future date with the
parallel Medicaid provision, and so
have reserved paragraph (g)(7) for the
purposes of this rule. The Federallyfacilitated Exchange will provide
coordinated content in notices for
October 1, 2013.
Comment: Several commenters noted
that state flexibility is important in
determining when to issue combined or
separate, coordinated eligibility notices.
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One commenter opposed the
requirement for agencies administering
insurance affordability programs to
provide coordinated content in notices
before January 1, 2014, and specifically
recommended that at initial annual
open enrollment each agency should be
responsible for issuing its own
eligibility determination notice based on
the eligibility determination completed
for the program or programs that agency
administers, without regard for the other
insurance affordability programs. Many
other commenters, however, expressed
support for a coordinated eligibility
notice prior to the implementation of a
combined eligibility notice. Another
commenter believed that the state is best
suited to determine which agency
should provide the notice of eligibility
determination, and opposed to the
requirement under § 155.345(a)(3)(ii)
that the combined eligibility notice be
provided by the agency that makes the
last determination of eligibility. One
commenter noted that HHS should
consider additional situations where a
combined eligibility notice is feasible,
but not beneficial to the applicant(s).
Another commenter suggested that HHS
consider additional flexibility for
notices to be sent immediately for
consumers who receive a final eligibility
determination, and include an
explanation in the notice about the
status of any other determinations that
are in progress for other applicants in
the household.
Many commenters stated that HHS
should ensure that the combined
eligibility notice includes complete
information about Medicaid appeal
rights. Other commenters stated that the
combined eligibility notice should
include a statement that the individual
might be eligible for additional benefits
and more affordable coverage through
Medicaid, and specify how the
individual can be screened for Medicaid
eligibility.
Response: In the proposed rule, HHS
noted two situations in which the
combined eligibility notice would not
be advantageous for consumers, and
HHS sought comment on additional
situations in which the combined
eligibility notice would not be
advantageous. As one commenter
suggested, HHS explained one situation
in which a combined eligibility notice is
not appropriate is where multiple
family members apply together, and
some members receive a final eligibility
determination while other members
need to be transferred to a different
agency for a final determination to be
made for other insurance affordability
programs. We will work closely with
states to determine when the issuance of
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a combined eligibility notice is not
appropriate, including situations in
which it is not advantageous for the last
agency that makes a determination of
eligibility based on MAGI to issue a
combined eligibility notice.
Furthermore, we clarify that while the
Exchange will make determinations or
assessments of MAGI-based eligibility
for Medicaid and CHIP in accordance
with § 155.305(c) and (d), and
§ 155.302(b), the Exchange is not
required to complete the Medicaid and
CHIP enrollment process for eligible
individuals.
We expect that combined eligibility
notices will include a description of
appeal rights in accordance with
§ 155.230(a)(5), including Medicaid
appeal rights, as well as information
about how an individual can request a
full eligibility determination from the
state Medicaid or CHIP agency. And, as
noted above, we intend to finalize
paragraphs (a)(3) and (g)(7) at a future
date alongside parallel Medicaid
provisions, and we are reserving these
paragraphs for the purposes of this final
rule.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.345 of the proposed
rule with a few minor modifications. We
reserve §§ 155.345(a)(3) and (g)(7) for
finalization at a later date. Pursuant to
the discussion in the preamble
associated with 42 CFR 431.10(c) and
(d), we add new paragraph (h) to clarify
that the Exchange and the Exchange
appeals entity must adhere to the
eligibility determination or appeals
decision for Medicaid or CHIP made by
the State Medicaid or CHIP agency, or
the appeals entity for such agency,
which is consistent regardless of
whether the Exchange is making
eligibility determinations or
assessments for Medicaid and CHIP.
Accordingly, we redesignate previous
paragraphs (h) and (i) as paragraphs (i)
and (j).
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16. Special Eligibility Standards and
Process for Indians (§ 155.350)
In § 155.350, we proposed to make a
technical correction in paragraph (a)(1)
to replace the reference to section 36B
of the Code with a reference to the
applicable Treasury regulation. We did
not receive specific comments on this
section, and are thus finalizing the
provision as proposed.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.350 of the proposed
rule without modification.
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17. Enrollment of Qualified Individuals
Into QHP’s (§ 155.400)
In § 155.400, we proposed to add
paragraph (b)(3) to clarify the
requirement that the Exchange send
updated eligibility and enrollment
information for all enrollment-related
transactions to HHS promptly and
without undue delay. This added
further specificity to the existing
requirement that the Exchange send
eligibility and enrollment information to
HHS under paragraph (b)(1) of this
section. After considering several
comments in response to this proposal,
we are finalizing the provision as
proposed.
Comment: Commenters were
supportive of the proposal that the
Exchange would send updated
information for all enrollment-related
transactions to HHS promptly and
without undue delay. One commenter
sought clarification about cancellations,
and wanted to ensure that QHP issuers
did not violate the Affordable Care Act’s
ban on discrimination in coverage of
benefits related to preexisting
conditions. Another commenter
inquired about whether the specific
issuer reporting requirements associated
with this provision may vary according
to the different Exchange models.
Response: We note that the
cancellations by QHP issuers referred to
in the preamble to this provision in the
proposed rule could occur for various
reasons, such as when an individual
voluntarily cancels his or her health
insurance selection before the coverage
effective date. In terms of issuer
reporting requirements, each Exchange
maintains flexibility to determine its
own issuer reporting requirements
relative to enrollment transactions,
consistent with the law and applicable
regulations. This provision specifically
addresses only the requirement that the
Exchanges report updated eligibility and
enrollment information to HHS.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.400 of the proposed
rule without modification.
18. Special Enrollment Periods
(§ 155.420)
In § 155.420, we proposed to clarify
the scope of the special enrollment
periods throughout this section and add
paragraph (a)(2) clarifying that our usage
of ‘‘dependent’’ refers to any individual
who is or who may become eligible for
coverage under the terms of a QHP
because of a relationship to a qualified
individual enrollee.
We proposed to amend paragraph (b)
to specify that the effective dates
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described therein apply both to
qualified individuals first enrolling in a
QHP through the Exchange through a
special enrollment period, as well as to
current enrollees. As the effective dates
regarding advance payments of the
premium tax credit and cost-sharing
reductions are now addressed in
§ 155.330(f), we proposed removing
such language in paragraph (b)(2)(i). We
also solicited comments as to whether
we should expand the special effective
dates in paragraph (b)(2)(i) concerning
birth, adoption, or placement of
adoption to cover children placed in
foster care as well, which would also
necessitate a corresponding change to
the triggering events described within
paragraph (d)(2) that specifically
address that special enrollment period.
We proposed to add paragraph
(b)(2)(iii) regarding the effective dates
for a special enrollment period under
paragraphs (d)(4), (d)(5), and (d)(9) to
align with a similar provision proposed
in § 155.330(f). This would ensure that
the Exchange could tailor an effective
date based on the circumstances
surrounding an error by the Exchange,
a contract violation by the QHP issuer,
or other ‘‘exceptional circumstances’’.
To align the effective dates under this
section with the effective dates for
eligibility as proposed in § 155.330(f),
we proposed to add paragraph (b)(4) to
ensure that the Exchange adhere the
modified effective dates related to
advance payments of the premium tax
credit and cost-sharing reductions
proposed in § 155.330(f). As such, we
proposed to remove language in
paragraphs (b)(2) and (b)(3) that
previously addressed this issue.
We also proposed to amend paragraph
(d) to specify which triggering events
will allow a qualified individual or
enrollee, or his or her dependent to
qualify for a special enrollment period.
This was designed to permit all
members of a household, in certain
situations, to enroll in or change QHP’s
together in response to an event
experienced by one member of the
household, and we proposed technical
corrections throughout paragraph (d) to
ensure that the revised language allows
for the dependent to qualify for a special
enrollment period as well, subject to
whether the QHP covers the dependent.
While we did not modify the scope of
each triggering event described within
paragraph (d), we solicited comments
regarding whether we should permit
such movement of related individuals
for other special enrollment periods.
We proposed to add language
specifying that the triggering event in
the case of a QHP decertification is the
date of the notice of decertification,
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whereas the triggering event in all other
cases associated with a qualified
individual or his or her dependent
losing minimum essential coverage is
the date the individual or dependent
loses eligibility for minimum essential
coverage.
We also proposed to amend
paragraphs (d)(6)(i) and (ii) to specify
that the Exchange will provide a special
enrollment period for an enrollee or his
or her dependent enrolled in the same
QHP who is determined newly eligible
or newly ineligible for advance
payments of the premium tax credit or
who experiences a change in eligibility
for cost-sharing reductions. We also
modified the language within paragraph
(d)(6)(iii) to allow a qualified individual
or his or her dependent who is enrolled
in qualifying coverage in an eligible
employer-sponsored plan and who are
determined newly eligible for advance
payments of the premium tax credit to
qualify for this special enrollment
period prior to when he or she will
cease to be eligible for qualifying
coverage in an eligible employersponsored plan, provided that eligibility
for advance payments of the premium
tax credit and cost-sharing reductions
are not available for an individual who
is enrolled in an eligible employersponsored plan. Allowing these
qualified individuals or dependents to
be determined eligible for this special
enrollment period up to 60 days prior to
the end of his or her employersponsored coverage protects them from
potential gaps in coverage.
Finally, we proposed to add a new
paragraph (d)(10) to provide a special
enrollment period for a qualified
individual or his or her dependent that
is enrolled in an eligible employersponsored plan that does not provide
qualifying coverage, and is allowed to
terminate his or her existing coverage.
The Exchange would allow such an
individual to access this special
enrollment period up to 60 days prior to
the end of his or her coverage in an
eligible employer-sponsored plan, to
protect them from potential gaps in
coverage.
Comment: Several commenters
supported our clarification in paragraph
(a) aligning the definition of
‘‘dependent’’ to refer to those family
members that would be eligible to enroll
in coverage under a QHP, and
commended HHS for allowing
dependents to change QHPs or enroll in
a new QHP together with their family
members for certain special enrollment
periods when eligible. Some
commenters wanted to ensure that
family members would be adequately
informed about the benefits of enrolling
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in plans together as well as the potential
drawbacks of failing to do so. However,
several comments also raised concerns
that this proposed definition was too
plan-specific and would ultimately lead
to greater confusion among families in
terms of eligibility for special
enrollment periods. Other commenters
sought flexibility for the definition of
‘‘dependent’’ to correspond with state
law, as opposed to a potentially
narrower definition set by a QHP issuer.
Response: We believe that clarifying
that the meaning of ‘‘dependent’’ aligns
with 26 CFR 54.9801–2, the regulation
implementing section 9801(f) of the
Code, throughout this section, including
for the special enrollment periods not
specified in section 9801(f) of the Code,
helps to promote efficient operations
and uniform standards to guide QHP
issuers and Exchanges. Furthermore,
this will ensure that state laws regarding
the definition of ‘‘dependent’’ will be
maintained within the Exchange, as this
does not contradict state laws, but rather
corresponds with state laws that already
require issuers cover certain
dependents. We intend to provide the
appropriate information through the
eligibility determination notice to an
individual and their family members to
adequately inform them of all of their
options when determined eligible for a
special enrollment period.
Comment: Some commenters
supported our proposal to expand
certain special enrollment periods to
dependents to allow family members to
enroll in a new QHP together in
response to an event experience by one
member of the tax household, while
others sought clarification or an
expansion of this approach to other
triggering events. Commenters requested
clarification as to whether the proposed
rules sought to limit the applicability of
special enrollment periods to
dependents enrolled in the same QHP
with an enrollee, or to members of the
tax household who may be receiving a
portion of the advance payments of the
premium tax credit, as well as if
paragraph (d)(2) limited the special
enrollment period to only the qualified
individual and the ‘‘new’’ dependent.
Other commenters recommended that
the special enrollment period in
paragraph (d)(3) related to citizenship or
immigration status should apply both to
the individual who is newly qualified
along with eligible dependents.
Response: As noted above regarding
the definition of ‘‘dependent’’, family
members eligible to enroll in a QHP are
determined eligible for a special
enrollment period when specified in
paragraph (d) of this section. This is not
limited to only those members of a tax
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household on whose behalf advance
payments of the premium tax credit are
provided or who are enrolled in the
same QHP. When a family member who
experiences any of the triggering events
in paragraph (d) of this section, that
includes dependents in addition to
qualified individuals or enrollees,
selects a QHP as part of a special
enrollment period, the Exchange will
permit all members of the tax household
to enroll together assuming they are all
eligible to enroll in the particular QHP.
If a specific family member experiences
a triggering event, but fails to select a
QHP within the relevant special
enrollment period, his or her dependent
does not have the ability to choose a
different QHP during this period
separately. Furthermore, in response to
comments, we clarify that the special
enrollment period in paragraph (d)(3) of
this section, related to citizenship or
immigration status, will apply to both
the individual who is newly qualified as
well as his or her dependents, if eligible
for coverage under a QHP. We note that
the special enrollment period described
in paragraph (d)(3) only applies to an
individual who was not previously a
citizen, national, or lawfully present, as
opposed to an individual switching
between one of these statuses.
Comment: In response to HHS’
solicitation for comments regarding
modifying the special effective dates in
paragraph (b)(2), which correspond
directly to the triggering events
described within paragraph (d)(2), many
commenters urged HHS to include the
placement of a foster child as a
triggering event within the special
enrollment period. Several commenters
also raised concerns about our proposed
modifications to the triggering event for
the special enrollment period described
in paragraph (d)(6), related to being
newly eligible or ineligible for advance
payments of the premium tax credit, or
a change in eligibility for cost-sharing
reductions. Some commenters opposed
our proposal that only enrollees would
be eligible for this special enrollment
period if newly eligible or ineligible for
advance payments of the premium tax
credit instead of qualified individuals at
any point during the coverage year, and
recommended that we not finalize this
proposal in favor of retaining the
language adopted in the Exchange final
rule.
Response: We appreciate the
comments regarding placement in foster
care as it related to special effective
dates, and will add language in
paragraph (b)(2) to include the
placement of a foster child as one of the
triggering events listed therein, as well
as make the corresponding change
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regarding the special enrollment period
in paragraph (d)(2). We note, however,
that due to the availability of Medicaid
to foster children, it is unclear how
frequently this special enrollment
period will be used. Due to ongoing
considerations regarding the risk pool,
we are finalizing our proposed
modifications to paragraph (d)(6) to
specify that this special enrollment
period only applies to those individuals
who are already enrolled in a QHP
through the Exchange.
Comment: Multiple commenters
expressed general support for the
modifications we proposed to special
enrollment periods throughout
paragraph (d), including our proposal to
allow a prospective special enrollment
period for qualified individuals enrolled
in eligible employer-sponsored coverage
to prevent gaps in coverage. In regards
to the proposed revision to paragraph
(d)(6)(iii) related to employer-sponsored
coverage, some commenters suggested
that the triggering event should not be
limited to when an individual is
enrolled in employer-sponsored
coverage, but should also cover nonenrolled individuals whose offer of
employer-sponsored coverage does not
meet the affordability or minimum
value standards. Other commenters
wanted HHS to allow a qualified
individual to be determined eligible for
advance payments of the premium tax
credit within the window of their
special enrollment period, but prior to
when their employer-sponsored
coverage ended.
Response: We believe that individuals
with an affordable offer of employersponsored coverage that meets
minimum value should be encouraged
to enroll in a plan with their employer.
If after enrolling, their lowest-cost selfonly plan option changes during the
coverage year such that it no longer
meets the affordability and minimum
value standards, and an individual
reports this to the Exchange, the
Exchange will accordingly determine
them eligible for a special enrollment
period under paragraph (d)(6). As such,
this provision creates incentives for
individuals to enroll in affordable
employer-sponsored coverage, while
also minimizing potential gaps in
coverage if a change in coverage occurs
during the year such that an applicant
would be newly eligible for advance
payments of the premium tax credit if
their employer terminates coverage or
changes their plan options. In addition,
we are consolidating proposed
paragraph (d)(10), which provided a
special enrollment period to an
individual who was enrolled in nonqualifying coverage in an eligible
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employer-sponsored plan, into
paragraph (d)(6) and modifying it to
clarify that consistent with the
eligibility standards for advance
payments of the premium tax credit, the
special enrollment period is available
for an individual who is enrolled in any
eligible employer-sponsored plan, and
is not eligible for qualifying coverage in
an eligible employer-sponsored plan.
For example, this modification ensures
that an individual who is enrolled in
family coverage but for whom the
lowest-cost self-only plan is
unaffordable in accordance with the
Code can access this special enrollment
period, as intended in the proposed
regulation. We will maintain the
prospective ability for an enrollee to
select a QHP up to 60 days before their
eligible employer-sponsored coverage
ends or their employer allows him or
her to drop coverage if the lowest-cost
self-only plan offer is non-qualifying.
We note that the Exchange cannot
provide an individual with advance
payments of the premium tax credit
while he or she is enrolled in eligible
employer-sponsored coverage, as
specified in 26 CFR 1.36B–2(a)(2).
Comment: A few commenters raised
concerns regarding the notice that
individuals would receive if determined
eligible for a special enrollment period,
and wanted to ensure that the notice
would prevent confusion by providing
clear guidance to individuals by helping
them understand the premiums they
would be responsible for, and to help
them enroll in a QHP in a timely
fashion.
Response: The Exchange will not have
information regarding actual premiums
at the time of an initial eligibility
determination notice, since an
individual will not have selected a plan
at that point. HHS also developed model
notices, released alongside this final
rule, that reflect how an Exchange
should clearly communicate an
individual’s eligibility for an SEP and
the instructions for how he or she can
enroll in a QHP.
Comment: Several commenters also
urged HHS to specify additional
triggering events for special enrollment
periods. Some commenters
recommended additional triggering
events described in Medicare Part D,
unaffordable rate increases, and
misinformation provided to an
individual regarding minimum essential
coverage or advance payments of the
premium tax credit or cost-sharing
reductions. One commenter wanted
HHS to include any change in family
size as a triggering event, raising
particular concerns about pregnancy to
allow a woman enrolled in a
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catastrophic plan to change QHPs prior
to the birth of a newborn. Several
commenters requested that HHS clarify
that certain triggering events would
qualify as a special enrollment period
under ‘‘exceptional circumstances’’
described in paragraph (d)(9) of this
section, such as provider religious
objections to covering certain health
services to women.
Response: We believe that the current
special enrollment periods previously
proposed appropriately account for
changes in circumstances that
necessitate when individuals would
need to select a new or different QHP
and balance these needs with
considerations regarding the risk pool.
In addition, we note that § 147.104(b)(2)
specifies that in 2014, an Exchange must
provide a special enrollment period for
individuals enrolled in non-calendar
year individual health insurance
policies beginning on the date that is 30
days prior to the date the policy year
ends in 2014.
Furthermore, a state may establish
additional special enrollment periods to
supplement those described in this
section as long as they are more
consumer protective than those
contained in this section and otherwise
comply with applicable laws and
regulations.
HHS intends to issue further guidance
related to how Exchanges will
determine the triggering events that
constitute ‘‘exceptional circumstances’’
under paragraph (d)(9) of this section.
For the issue raised regarding provider
religious objections, we believe that
there are other remedies available to
consumers who encounter such
situations.
Comment: One commenter sought
clarification that the special enrollment
periods only apply to the individual
market as opposed to the small group
market.
Response: We confirm that the
language in § 155.420 regarding special
enrollment periods only applies in its
entirety to the individual market.
Separate provisions pertain to the small
group market as discussed at
§ 155.725(a)(3), which excludes
§ 155.420(d)(3) and (d)(6).
Comment: Some commenters raised
concerns regarding our proposals within
this section that pertain to effective
dates. Commenters requested
clarification on whether the effective
dates related to errors by the Exchange
or contract violations by QHP issuers
would involve setting retroactive
enrollment dates. Some commenters
suggested that the Exchange provide
flexibility to individuals related to
retroactivity for errors as some
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individuals may not want the Exchange
to implement an earlier effective date. If
allowing for retroactivity, commenters
urged that the Exchange’s flexibility
related to errors or contract violations
should only be provided to correct the
unfair outcome. Commenters asked that
the effective date be set for the
individual on what it would have been
without the error, and requested that the
Exchange only set the effective date
according to paragraph (b)(1) of this
section if the date on which the
determination would have been
effective without the error cannot be
ascertained. Several commenters also
raised concerns about HHS’ proposal to
remove the language about effective
dates for advance payments of the
premium tax credit and cost-sharing
reductions within this section. Some
commenters worried about an Exchange
instituting earlier effective dates under
paragraph (b)(3) of this section,
particularly the FFE in 2014.
Response: Outside of a technical
correction within paragraph (b)(3) of
this section, we did not propose any
changes to the provision related to the
Exchange instituting earlier effective
dates if all participating QHP issuers
agree to effectuate coverage in a shorter
timeframe. We believe that there are
sufficient regulatory safeguards for QHP
issuers in 2014 if they inform the
Exchange that they are not prepared to
institute earlier effective dates. In terms
of the Exchange’s flexibility related to
retroactive eligibility and enrollment in
cases of errors or contract violations, we
note that the outcome is still contingent
on an individual selecting a QHP when
determined eligible for a special
enrollment period. This preserves the
ability for an individual to choose to
enroll on a particular date, or to choose
not to enroll.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.420 of the proposed
rule with the following modifications.
First, in paragraphs (b)(2)(i) and (d)(2),
we expand the special enrollment
period and special effective dates for
birth, adoption, and placement for
adoption to also include placement in
foster care. Second, in paragraph (d)(3),
we clarify that the special enrollment
period for an individual who was not a
citizen, national, or lawfully present
non-citizen and gains such status also
applies to his or her dependents, if
eligible under the Exchange eligibility
rules. Third, we modify paragraph (d)(6)
to incorporate the special enrollment
period proposed in paragraph (d)(10),
with modifications to reflect that it
accommodates individuals who are
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enrolled in an eligible employersponsored plan, but are not eligible for
qualifying coverage in an eligible
employer-sponsored plan. Accordingly,
we delete paragraph (d)(10).
19. Termination of Coverage (§ 155.430)
In § 155.430, we proposed to amend
paragraph (b)(1) to clarify that it
specifically refers to enrollee-initiated
terminations. We proposed to add
paragraph (b)(1)(i) to account for
circumstances in which, through
periodic data matching, an Exchange
finds an enrollee eligible for other
minimum essential coverage, thus
resulting in the enrollee’s ineligibility
for advance payments of the premium
tax credit. We also proposed in
paragraph (b)(1)(ii), that at the time of
plan selection, the Exchange would
provide a qualified individual with the
opportunity to choose to remain
enrolled in a QHP if the Exchange
identifies that he or she has become
eligible for other minimum essential
coverage, and the enrollee does not
request a termination in accordance
with paragraph (b)(1)(i).
We proposed to amend paragraph
(d)(1) to specify that changes in advance
payments of the premium tax credit and
cost-sharing reductions, including
terminations, adhere to the effective
dates specified in § 155.330(f).
Comment: Several commenters
cautioned against requiring retroactive
termination effective dates that would
necessitate the return or repayment of
claims, premiums, advance payments of
the premium tax credit, or cost-sharing
reduction payments. However, other
commenters urged HHS to modify
termination effective dates in
§ 155.430(d) such that for qualified
individuals who gained, or were going
to gain other coverage, the termination
effective dates would be the day before
the other coverage begins, regardless of
when the enrollee notifies the Exchange
of his or her other coverage.
Response: We appreciate the
comments concerning this provision,
and have modified the termination
effective date at § 155.430(d)(2)(iii) for
enrollee-requested terminations such
that QHP issuers and Exchanges may
only terminate coverage effective on or
after the date on which the enrollee
requests termination, and not
retroactively. We have also clarified in
§ 155.430(d)(2)(iv) that the last day of
coverage in a QHP for an enrollee who
is determined eligible for Medicaid,
CHIP or the BHP is the day before the
individual is determined eligible for
such coverage, rather than retroactive to
the Medicaid or CHIP eligibility
effective date.
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Comment: One commenter
recommended amending § 155.430(d) to
specify that changes in eligibility,
including terminations, must adhere to
the effective dates specified in
§ 155.330(f), to ensure alignment of
processes.
Response: We agree with the
commenter, and have modified the
termination effective dates in
§ 155.430(d)(3) to cross-reference
§ 155.330(f).
Comment: Commenters sought
clarification of why an enrollee who is
eligible for other minimum essential
coverage would elect to remain enrolled
in a QHP without advance payments of
the premium tax credit.
Response: While 26 CFR 1.36B–2
specifies that premium tax credits are
not available to support enrollment in a
QHP through the Exchange for an
individual who is eligible for other
minimum essential coverage, such an
individual is free to remain enrolled in
a QHP through the Exchange, without
advance payments of the premium tax
credit and cost-sharing reductions, if he
or she remains eligible for enrollment in
a QHP through the Exchange. It is
possible that an individual would want
to maintain enrollment without advance
payments of the premium tax credit and
cost-sharing reductions for continuity of
coverage reasons. As we proposed in
155.430(b)(2)(ii), the Exchange must
provide an opportunity at the time of
QHP selection for an individual to
choose to remain enrolled in a QHP if
he or she has become eligible for other
minimum essential coverage. If the
individual does not choose to remain
enrolled in a QHP upon such a change,
the Exchange would initiate termination
upon completion of the redetermination
process specified in § 155.330.
Comment: Commenters recommended
that in addition to the opportunity at
plan selection, enrollees should be
given a second opportunity to elect to
remain enrolled in a QHP without
advance payments of the premium tax
credit and cost-sharing reductions when
the Exchange finds the enrollee is
eligible for other minimum essential
coverage through a periodic data match.
Response: Exchanges are free to
provide additional opportunities for
individuals to request termination, or to
request to remain enrolled in a QHP
without advance payments of the
premium tax credit or cost-sharing
reductions, upon losing eligibility for
such benefits. In paragraph (b)(1)(ii), we
have clarified that the opportunity
provided at the time of plan selection is
effective both in cases of periodic data
matching as well as when an enrollee
reports gaining eligibility for other
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minimum essential coverage that would
make him or her ineligible for advance
payments of the premium tax credit and
cost-sharing reductions.
Comment: A commenter raised a
concern that the proposed revision to
the termination provision in
§ 155.430(b)(2) broadly permits an
individual whose coverage was already
effectuated during the initial open
enrollment period to notify the
Exchange or QHP issuer of his or her
termination of coverage, and switch
QHPs.
Response: Individuals are free to
terminate enrollment in a QHP through
the Exchange at any time. Individuals
who wish to begin other coverage in a
QHP through the Exchange must be
within an open or special enrollment
period to do so. Each Exchange has the
flexibility to decide whether to allow
enrollees for whom coverage has been
effectuated to change QHPs during any
remaining time in an open or special
enrollment period. For October 1, 2013,
the FFE will not permit an enrollee to
change QHPs in such a situation. As
noted above, such an individual may
qualify for a new special enrollment
period as specified in 45 CFR 155.420.
Comment: One commenter noticed
that the proposed provisions did not
clarify whether the Exchange would be
permitted to terminate coverage
retroactively to the date of death. The
commenter recommended that the
Exchanges have the flexibility to align
with non-group market standards, and
allow for retroactive terminations when
the Exchange obtains updated
information regarding a death.
Response: We agree with the
commenter, and have added paragraph
§ 155.430(d)(7) to clarify that in the case
of termination due to death, the last day
of coverage is the date of death, which
means that coverage could be
terminated retroactively.
Comment: A commenter noticed that
there were conflicting provisions
regarding terminations at § 155.430 and
§ 156.270(b). Section 156.270(b)
specifies that QHP issuers must notify
both the Exchange and enrollees of the
effective date and reason for termination
at least 30 days prior to the last day of
coverage, and § 155.430(d) specifies that
in some cases, QHP issuers may
effectuate termination in fewer than 30
days.
Response: We have modified
§ 156.270(b) in this final rule to align
the coverage termination standards for
Exchanges and QHP issuers. We have
also clarified that QHP issuers will
promptly notify both enrollees and the
Exchange of the termination reason and
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termination effective date when the
QHP initiates a termination.
Summary of Regulatory Changes
We are finalizing the provisions
proposed in § 155.430 of the proposed
rule, with the following modifications:
We modified paragraph (b)(1)(ii) to
specify that the opportunity provided by
the Exchange at the time of plan
selection for an individual to choose to
remain enrolled in a QHP if he or she
becomes eligible for other minimum
essential coverage applies both to
situations in which eligibility for other
minimum essential coverage is
identified via a periodic data match, as
well as situations in which the
individual reports the change to the
Exchange. We modified the termination
effective date provision at paragraph
(d)(2)(iii), for enrollee-requested
terminations, such that QHP issuers and
Exchanges may only terminate
prospectively, not retroactively. We
modified paragraph (d)(2)(iv), which
concerns terminations for enrollees who
are determined eligible for Medicaid,
CHIP or the BHP, such that the last day
of coverage is the day before the
individual is determined eligible for
such coverage, rather than retroactive to
the Medicaid or CHIP eligibility
effective date. We also modified the
termination effective dates in paragraph
(d)(3) to cross-reference § 155.330(f). We
added paragraph (d)(7) to clarify that in
the case of termination due to death, the
last day of coverage is the date of death.
In addition, we are finalizing an
amendment to § 156.270(b) to align the
coverage termination requirements for
Exchanges and QHP issuers.
D. Medicaid Premiums and Cost
Sharing
1. Responses to General Comments
(§ 447.51 through § 447.57)
Comment: Many commenters
supported the streamlined and
consolidated approach to the revised
cost sharing rules. One commenter
believed that removing the distinction
between the requirements of
sections1916 and 1916A of the Act was
confusing and lost some of the
differences in the statutory provisions.
The commenter was also concerned that
under the revised rules, states will no
longer have to explicitly invoke the use
of alternative (section 1916A of the Act)
cost sharing through the state plan
amendment process. One commenter
stated that CMS should not provide
more specific requirements in the
regulations to give states more
flexibility.
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Response: We maintain the
streamlined and consolidated structure
in the final regulation, which we believe
is consistent with the flexibilities and
limitations provided in both sections
1916 and 1916A of the Act. We believe
that consolidation will simplify the
rules for beneficiaries, providers, and
states, and will also simplify the state
plan amendment (SPA) process. States
will continue to be required to submit
a SPA to impose new or revised cost
sharing or premiums, and CMS will
review such SPAs to ensure compliance
with the regulations and statute.
Comment: Two commenters
recommended that rather than remove
current § 447.58 and reserve it, this
provision should be used to implement
the long-standing statutory provision
that the cost sharing provisions of
sections 1916 and 1916A of the Act
cannot be waived unless a state meets
the criteria required under section
1916(f) of the Act.
Response: The terms of section
1916(f) of the Act, relating to the
requirements states must meet for the
Secretary to approve a waiver of the cost
sharing provisions of sections 1916 and
1916A of the Act are clear. We do not
believe it is necessary at this time to
issue regulations setting forth the
Secretary’s substantive authority under
section 1115 of the Act, and such an
action would be outside of the scope of
this rulemaking. We note that we issued
procedural regulations at 77 FR 11678
(Feb. 27, 2012) governing demonstration
applications in accordance with section
1115(d) of the Act (as added by section
10201(i) of the Affordable Care Act).
Comment: One commenter stated that
given the statutory constraints
implemented in the regulations, states
should be given additional flexibility
through the use of a standard waiver
template applicable to newly eligible
adults. One commenter stated that for
MAGI-based eligibility groups, states
should be able to impose premiums and
cost sharing on individuals with income
over 100 percent of the FPL that is
equivalent to what those individuals
would be subject to if they were
enrolled in the Exchange.
Response: Section 1916A of the Act
and these regulations provide
considerable flexibility for states to
impose cost sharing on individuals with
income over 100 percent of the FPL,
including the ability to target cost
sharing, charge higher amounts, and
make the cost sharing enforceable. But
the statute provides for cost sharing
protections for the Medicaid population
that are not the same as the protections
for individuals enrolled in coverage
through the Exchange. To waive the
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Medicaid cost sharing requirements and
go beyond the flexibilities provided in
section 1916A of the Act for individuals
covered under the state plan, the
Secretary must find that the
requirements of section 1916(f) of the
Act have been met. We do not believe
that a template for waiving the cost
sharing requirements in accordance
with section 1916(f) of the Act is needed
at this time. Except for certain specified
eligibility groups, sections 1916 and
1916A of the Act limit premiums
imposed under the state plan on those
with income over 150 percent of the
FPL.
Comment: One commenter noted that
it appears we left in place §§ 447.66
through 447.82 of the current
regulations and suggested that CMS
remove these sections.
Response: This was a drafting error
and we have removed those sections in
the final rule. Those sections reflected
alternative premiums and cost sharing
requirements under section 1916A of
the Act that have been integrated into
new streamlined cost sharing
regulations that reflect both sections
1916 and 1916A of the Act.
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2. Definitions (§ 447.51)
We proposed to add a definition for
premiums, which includes enrollment
fees and other similar charges. We also
proposed to add a definition for cost
sharing to encompass deductibles,
copayments, coinsurance, and other
similar charges. Because each of these
charges would be included within cost
sharing, we proposed to remove
separate requirements related to
deductibles, copayments, and
coinsurance; instead all cost sharing
would be subject to a single set of rules.
We also proposed new definitions for
purposes of the premium and cost
sharing regulations for preferred drugs,
emergency and non-emergency services,
and alternative non-emergency service
providers, since the cost sharing rules
vary for these items and services. We
received the following comments
concerning the proposed definitions:
Comment: Several commenters
recommended that we revise the
definition of alternative non-emergency
service provider at § 447.54 to mean ‘‘a
Medicaid-participating provider, such
as a physician’s office, health care
clinic, community health center,
hospital outpatient department, or
similar provider that is actually
available and accessible and can
provide clinically appropriate services
for the diagnosis or treatment of a nonemergency condition in a timely
manner.’’
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Response: We are finalizing the
definition as proposed in § 447.51. The
revisions suggested by the commenters
regarding the alternative non-emergency
provider being available and accessible
and being able to provide for the
diagnosis or treatment of a nonemergency condition are implicit in the
requirements that must be met at
§ 447.54(d) before the imposition of cost
sharing for non-emergency use of the
ED. However, we have revised the
definition of non-emergency services for
clarity; this revision is not a substantive
change.
Comment: Several commenters
recommended that we remove the term
‘‘coinsurance’’ from the definition of
cost sharing at § 447.51, since few states
charge coinsurance and the statute does
not use the term. They discussed that
eliminating the term ‘‘coinsurance’’
would further the goal of simplification.
Response: We agree that very few
states elect the option to charge
coinsurance, but it is still an option
available to states under the statute,
which allows for other ‘‘similar
charges.’’ Therefore we are maintaining
the term ‘‘coinsurance’’ in the definition
of cost sharing in the final rule. With the
streamlining of the regulations in this
final rule, states that do elect to charge
coinsurance must ensure it does not
exceed the limits defined in § 447.52–
54.
Comment: We solicited comments on
whether we should add definitions of
‘‘inpatient stay’’ and ‘‘outpatient
services’’ to take into account situations
in which an individual is discharged
and soon thereafter returns to an
inpatient facility for continued
treatment of the same condition. One
commenter supported the inclusion of a
definition of ‘‘inpatient stay’’ and
recommended that we adopt the
approach taken in Medicare to define a
‘‘benefit period’’ and prohibit a second
copay for any inpatient stay within the
same benefit period. Some commenters
also supported the addition of a
definition of ‘‘outpatient services’’
giving states broad flexibility to
determine which services may be
subject to cost sharing. No commenters
opposed adding definitions of these
terms.
Response: We are adding a definition
of ‘‘inpatient stay’’ in the final rule at
§ 447.51 to mean the services received
during a continuous period of inpatient
days in either a single medical
institution or multiple medical
institutions, and also to include a return
to an inpatient institution after a brief
period when the return is for treatment
of a condition that was present in the
initial period. We also add that the
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definition of ‘‘inpatient’’ has the same
meaning as in § 440.2. We believe this
is in the best interest of beneficiaries
with chronic conditions who may have
frequent visits to the hospital or other
institution for treatment of the same
condition, and is consistent with the
limitations on cost sharing established
in the statute. We also add a definition
of ‘‘outpatient services’’ for purposes of
cost sharing to mean any service or
supply not meeting the definition of an
inpatient stay. This definition will
include cost sharing for any services
outside an institutional setting, not
otherwise exempt by statute or
regulations, excluding drugs and nonemergency use of the hospital
emergency department which are
defined separately. We note that these
definitions are applicable only to cost
sharing and do not constitute any
change in definition specific to the
provision of benefits or services.
Comment: One commenter requested
CMS provide additional information to
states regarding how the proposed
definition of cost sharing will affect the
offset to expenses that states can report
for Medicaid FFP (§ 447.51).
Response: Nothing in the definition of
‘‘cost sharing’’ at § 447.51 changes the
rule related to FFP. Per § 447.56(e),
which is unchanged from current rules,
no FFP is available for any premiums or
cost sharing that should have been paid
by the beneficiary, except for amounts
that the agency pays as bad debts of
providers who are paid in accordance
with Medicare reasonable cost
principles.
Comment: One commenter
recommended revising the definition of
a premium at § 447.51 to exclude
enrollment fees because premiums are
generally applied on an annual or
periodic basis whereas enrollment fees
are generally a onetime payment. The
commenter recommends that states
should have the flexibility to require an
enrollment fee in addition to premiums.
Response: The statute defines a
premium to include any enrollment fee
or similar charge, and therefore the
limitations on total premium charges
include both premiums and enrollment
fees. As the Secretary does not have the
authority to change this requirement, we
are finalizing the definition of
premiums as proposed. States do have
the flexibility to impose both a monthly
premium and an initial enrollment fee
within the limitations for premiums
described in this rule.
3. Update to Maximum Nominal Cost
Sharing (§ 447.52)
We proposed to implement sections
1916(a)(3) and (b)(3) of the Act relating
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to nominal cost sharing, and to revise
the maximum amount of nominal cost
sharing for outpatient services. For
beneficiaries with incomes at or below
100 percent of the FPL, cost sharing for
outpatient services may not exceed
nominal. For those with income above
100 percent of the FPL, cost sharing can
either be limited to nominal or may
extend up to 10 or 20 percent of the cost
of the service, depending on the income
of the beneficiary. Currently, maximum
allowable nominal cost sharing is tied to
what the agency pays for the service, not
to exceed $3.90 for services for which
the state pays more than $50. Because
this can be confusing and burdensome
for states, providers, and beneficiaries,
we proposed to allow instead a flat $4
maximum allowable charge for
outpatient services. This is a modest
$0.10 increase from the current
maximum, and as we noted as a basis
for the proposed rule, the majority of
state services are reimbursed at more
than $50. The proposed changes are
discussed in more detail in the January
22, 2013 Medicaid Eligibility Expansion
proposed rule (78 FR 4658 and 4659).
We received the following comments
concerning the proposed update to the
maximum nominal cost sharing
provisions:
Comment: Many commenters wanted
CMS to eliminate cost sharing for
Medicaid beneficiaries altogether
because of the extensive research
showing that cost sharing on lowincome populations creates barriers to
accessing needed care, with particular
consequence for those with special
health care needs. One commenter
recommended that CMS revise the cost
sharing regulations to align with the
lowest eligibility threshold for Medicaid
based on modified adjusted gross
income created by the Affordable Care
Act (for example, 133 percent of the
FPL) and create two tiers of cost
sharing—one for those with income at
or below 133 percent of the FPL and one
for those with income above 133 percent
of the FPL. One other commenter
recommended that individuals with
income below 133 percent of the FPL
should be exempt from cost sharing.
Response: We recognize the studies
indicating that cost sharing may impact
beneficiaries’ access to needed and
prescribed services, given the low
incomes of most of those who are
enrolled in Medicaid. However, the
statute authorizes states to impose cost
sharing, subject to certain limitations.
Additionally, the Affordable Care Act
did not modify the cost sharing
provisions of sections 1916 and 1916A
of the Act. Section 1916A of the Act
distinguishes between individuals with
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income at or below 100 percent of the
FPL, those with income above 100 and
at or below 150 percent of the FPL, and
those with income above 150 percent of
the FPL. We do not have the authority
to revise the income thresholds set out
in statute or to preclude states from
imposing cost sharing on individuals
with income under 133 percent of the
FPL consistent with the limitations in
sections 1916 and 1916A of the Act, as
implemented in these regulations. States
do not, of course, have to implement
cost sharing to the extent authorized by
the statute, and most do not do so. We
note that in § 447.51 of the final rule we
add a definition of Federal poverty level
(FPL) to use the acronym throughout the
regulation. No substantive change is
intended.
Comment: Several commenters stated
that cost sharing is unnecessary in the
context of managed care because the
point of managed care is to manage
utilization and ensure care is provided
in the most appropriate settings. The
commenters argue that managed care
already achieves the goals that states are
attempting to achieve through cost
sharing and that cost sharing interferes
with the medical management
effectuated through managed care
programs. Another commenter believed
the rules did not provide enough
flexibility in the managed care context.
One commenter requested that CMS
clarify that Medicaid agencies can
permit managed care organizations to
not impose cost sharing on enrollees.
Response: While managed care can
play a role in ensuring more appropriate
utilization of health care services, the
statute does not limit the imposition of
cost sharing to fee-for-service delivery
systems. In general, states may not
establish different cost sharing
requirements for beneficiaries served by
a fee-for-service versus a managed care
delivery system unless all beneficiaries
have the same opportunity to participate
in fee-for-service versus managed care
and to enjoy the benefits of lower cost
sharing imposed under one service
delivery mechanism versus the other.
Section 4708(b) of the Balanced Budget
Act of 1997 specifically removed the
statutory cost sharing exemption for
enrollees in managed care organizations.
Managed care organizations may choose
not to impose state plan cost sharing on
their members, but the state must still
consider the amount of cost sharing
under the state plan in determining the
actuarial soundness of the capitated
payment to the managed care
organization. Section 1916A of the Act
allows states to target cost sharing to
specified eligibility groups, as described
at § 447.52(d) of this final rule, and
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states may target cost sharing
specifically to those eligibility groups
who may be enrolled in managed care,
but the targeting must be based on the
eligibility group and not solely on the
basis of enrollment in managed care.
However, states may charge different copays to incentivize the use of certain
care models—for example lower co-pays
to encourage use of primary care
medical homes or other patient-centered
coordinated care models—to the extent
that those models provide a different
service from those offered at a more
traditional medical provider, and the
particular model of care is broadly
available to beneficiaries. This is
permissible because the state is
differentiating co-payments based on
the service provided, and because all
individuals have the choice to receive
such services, comparability is met.
Comment: Some commenters
recommended that CMS should restore
the use of the term ‘‘nominal,’’ as that
term is used in the existing regulations.
They argue that the Act specifically
limits cost sharing to ‘‘nominal’’
amounts and directs the Secretary to
determine what constitutes a ‘‘nominal’’
amount each year to ensure that cost
sharing amounts are not onerous for
beneficiaries.
Response: The streamlining proposed
does not negate the requirements at
section 1916 of the Act that cost sharing
for certain populations be nominal in
amount. Section 1916 of the Act gives
the Secretary authority to define
nominal cost sharing, which we do at
proposed §§ 447.52, 447.53 and 447.54.
The amounts described in these sections
are the maximum that can be imposed
on individuals with income at or below
100 percent of the FPL, since these
individuals may not be subject to the
higher cost sharing allowable under
section 1916A of the Act. The proposed
amounts will be updated annually based
on the CPI–U, starting October 1, 2015.
As mentioned, in streamlining the
regulations implementing sections 1916
and 1916A of the Act, we did not use
the term ‘‘nominal’’ in the regulatory
text, but the amounts permitted were set
based on the determination that they
were nominal amounts.
Comment: Many commenters agreed
with severing the tie between maximum
cost sharing amounts and what the
agency pays for the service but believed
that a flat $4 maximum amount
proposed at § 447.52 was too
burdensome for Medicaid beneficiaries
with income at or below 100 percent of
the FPL. Many commenters
recommended that CMS should set
maximum cost sharing amounts based
on the income and health status of the
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beneficiaries and recommended using
Medicare as a model, which establishes
two tiers for Part D copayments for
individuals with income at or below 100
percent of the FPL and individuals with
incomes over 100 percent of the FPL,
and recommend the Medicaid cost
sharing maximum should be limited to
$2.10 for those at or below 100 percent
of the FPL which is the approximate
average of the FY 2013 maximum
copayment amounts.
Response: Sections 1916 and 1916A
of the Act allow for different levels of
cost sharing for individuals with income
at or below 100 percent of the FPL
versus those with income over 100
percent of the FPL, similar to the twotiered structure established for Medicare
Part D which the commenters
recommend. Section 1916A of the Act
further differentiates maximum cost
sharing levels for those with income
above 100 or at or below 150 percent of
the FPL and those with income over 150
percent of the FPL. Current regulations
already allow states to charge all nonexempt beneficiaries up to $3.90 for
many services, and as described
previously, we believe the $4 maximum
charge is comparable, particularly given
that the next update to this nominal
amount has been postponed under this
rule until October 1, 2015. We also note
that while this is the maximum level at
which states may set their cost sharing
obligations, they may establish lower
levels of cost sharing.
We note that under current
regulations at § 447.56, states have the
option to establish different cost sharing
charges for individuals at different
income levels. We inadvertently omitted
this section from the proposed rule and
are restoring this option in the final rule
at § 447.52(g). We specify in the final
rule that if the state imposes cost
sharing charges that vary by income, it
must ensure that lower income
individuals have lesser cost sharing
than higher income individuals.
Comment: One commenter expressed
concern that the simplified $4
maximum for individuals with income
at or below 100 percent of the FPL
would create a disparity with the
percentage-based maximum cost sharing
for individuals with income above 100
percent of the FPL.
Response: It was not our intent to
establish a cost sharing system under
which lower income beneficiaries could
be subjected to higher cost sharing than
their higher income counterparts. Our
intent was to define maximum nominal
cost sharing, as described under
sections 1916(a)(3) and (b)(3) of the Act,
as $4 for outpatient services. If a state
seeks to use the authority provided
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under section 1916 of the Act to impose
nominal cost sharing on individuals
with income at or below 100 percent of
the FPL, such cost sharing must also be
applied to individuals with income
above 100 percent of the FPL. Section
1916 of the Act does not allow for
targeted cost sharing on different groups
of individuals, so any cost sharing
established under this authority is
applicable to all non-exempt
individuals. The 10 and 20 percent
maximums established for individuals
with income over 100 percent of the
FPL are specific to cost sharing
established under the authority of
section 1916A of the Act. This authority
specifically allows for cost sharing of up
to 10 percent of the cost of the service
for individuals above 100 and at or
below 150 percent of the FPL and 20
percent for individuals with income
above 150 percent of the FPL, with
slightly different maximums for drugs
and non-emergency use of the
emergency department. For a specific
outpatient service, a state may establish
nominal cost sharing under the
authority of section 1916 of the Act for
all non-exempt individuals covered
under the state plan in an amount not
to exceed $4 (as adjusted for inflation),
and the state may also establish targeted
cost sharing for specified individuals
under section 1916A of the Act for that
same outpatient service, in an amount
not to exceed 10 percent of the cost of
the service. In such a case, the cost
sharing imposed under the section 1916
authority may not exceed 10 percent of
the cost of the service if that amount is
less than the maximum nominal amount
allowed for individuals with income
under 100 percent of the FPL, because
the state must ensure that lower income
individuals are charged less than
individuals with higher income, as
described at § 447.52(g).
Comment: We solicited comments on
the best approach to cost sharing for an
inpatient stay for individuals with
income at or below 100 percent of the
FPL. We indicated we were considering
a maximum cost sharing amount less
than what is allowed in current
regulation. Most commenters believed
that the current regulations allowing
cost sharing of up to 50 percent of what
the agency pays for the first day of
inpatient care was too great a burden for
individuals at this income level. A few
commenters recommended a maximum
copayment of $10, one commenter
recommended $100, and many
recommended that the cost sharing for
inpatient care should be the same as for
outpatient services and be limited to $4.
Response: We are revising the
regulations to limit maximum cost
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sharing charges for an inpatient stay, for
individuals with income at or below 100
percent the FPL, to $75. This $75 limit
will encompass most hospital cost
sharing established by state Medicaid
programs today and will align with the
ratio of cost sharing for inpatient versus
outpatient services with similar charges
provided under private insurance plans.
To provide a transition period for the
small number of states with existing
inpatient cost sharing exceeding $75, we
are adding a new paragraph at
§ 447.52(b)(2). Under paragraph (b)(2),
states with inpatient cost sharing that
exceeds $75, as of July 15, 2013, must
submit a plan to CMS that provides for
reducing inpatient cost sharing to $75
by July 1, 2017. We redesignate the
succeeding paragraphs, accordingly.
Comment: We solicited comments on
whether we should define nominal cost
sharing differently for community-based
long term services and supports (LTSS)
due to the frequency with which these
services are provided and utilized by
beneficiaries. Many commenters
supported a separate approach to LTSS
because they are concerned about the
financial burden that an individual
needing these services could face if a
state were allowed to charge up to $4 for
each service and most recommended
that such services be exempted from
cost sharing. Commenters were also
concerned that allowing cost sharing for
LTSS would discourage individuals
from utilizing LTSS and leave many to
opt for institutional care, which is more
costly for states in the long run. Some
commenters recommended that
consideration be given to limiting the
number of copayments permitted per
week, month, or other specified
timeframe for those with significant
service needs, including adults with
serious mental illness. One commenter
opposed establishing different limits for
community-based long term services
and supports as it would be
administratively burdensome for states.
This commenter also pointed out that
no specific mention is made in the
regulations to long-term care
community-based services provided
under sections 1915(c), 1915(d), 1915(i),
or 1915(k) of the Act. The commenter
suggested that perhaps these defined
packages are the more appropriate
starting place if separate cost-sharing
rules for these services are considered,
but we need to take into account the fact
that some individuals already contribute
to the cost of these services in
accordance with the post-eligibility
treatment of income rules under part
435 subpart H.
Response: We agree with commenters
that additional protections for non-
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exempt individuals receiving
community-based LTSS are appropriate
to ensure that receiving care in the
community, rather than in an
institution, remains a financially viable
option for such individuals, but the
statute does not authorize the Secretary
to require an exemption. We note that
few states now impose cost sharing on
LTSS. We encourage all states to
consider the significant consequences of
imposing cost sharing on such services,
and remind states that they are required
to comply with the Americans with
Disabilities Act and Section 504 of the
Rehabilitation Act as interpreted in the
Olmstead v. L.C. and E.W (‘‘Olmstead’’)
to ensure they are not placing
individuals at risk of
institutionalization. While we are not
directing an exemption for LTSS, we
agree with commenters that additional
protections are necessary for individuals
with high service needs, and we are
revising the proposed aggregate limit for
premiums and cost sharing to protect all
beneficiaries with high medical needs.
As discussed further under § 447.56, the
5 percent aggregate limit applies to all
individuals regardless of income. In
addition, if premiums and cost sharing
could exceed 5 percent of family
income, states are required to have a
mechanism to track such premiums and
cost sharing in a manner that does not
rely on beneficiaries. To provide
protections to individuals with high
service needs and ensure their cost
sharing does not exceed the aggregate
limit, we encourage states to consider
prospectively ending a beneficiary’s cost
sharing obligation at a specified time of
the applicable month or quarter given
the frequency of utilization and the
predictability of services provided
under an approved plan of care, for
example. We note that such an approach
must take into account the cost sharing
for items or services that may be
received outside the plan of care, such
as drugs for example, which would also
contribute to the 5 percent aggregate
limit.
We considered different options for a
separate definition of nominal cost
sharing specific to LTSS but have
determined the most effective way to
ensure ongoing affordability of care for
beneficiaries who are frequent and
regular consumers of care, including but
not limited to those who need LTSS, is
to ensure that there is an effective
aggregate cap on cost sharing. Aggregate
out of pocket limits are a common
practice in the commercial market and
we believe the extension of the
aggregate limit is consistent with
industry practice and will provide the
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greatest protections for beneficiaries,
consistent with statutory provisions,
while still maintaining states’ flexibility
to establish appropriate cost sharing
mechanisms for their programs.
Comment: One commenter believed
that proposed § 447.52(b)(2), which
relates to maximum allowable cost
sharing when the state does not have
fee-for-service payment rates, is
confusing and could be read to only
apply to those with income at or below
100 percent of the FPL.
Response: We agree and have revised
the paragraph, redesignated in this final
rule as § 447.52(b)(3), to be clear that,
‘‘in states that do not have fee-forservice payment rates, any cost sharing
imposed on individuals at any income
level may not exceed the maximum
amount established for individuals with
income at or below 100 percent of the
FPL.’’ The same clarification to the
regulation text is made at § 447.53(c).
Comment: Some commenters
recommended that the Secretary
provide states the flexibility to
determine the cost sharing methodology
that best aligns with their delivery
system and provider categories, for
example allowing flat co-payments and
premiums, co-payments based on a
percentage of what the agency pays for
the service, or premiums calculated as
a percentage of family income.
Response: The regulations at
proposed §§ 447.52, 447.53 and 447.54
establish maximum limits on the cost
sharing that states can impose. While
we are no longer requiring that the
maximum cost sharing amounts be
based on what the agency pays for the
service, nothing in the regulations
preclude states from setting their cost
sharing amounts on such basis provided
that the amounts charged do not exceed
maximum permissible levels. Similarly,
provided that the specific limits set out
in the statute and codified in the
regulations—including the aggregate
limit not to exceed 5 percent of family
income—are respected, states have the
flexibility under § 447.55 to structure
premiums in the manner suggested,
although, as noted, statutory authority
to impose premiums is limited.
Comment: We received several
comments suggesting we clarify that
states can apply different levels of cost
sharing for their current Medicaid
populations as compared to adults who
will become eligible under the adult
group.
Response: In general, any cost sharing
established under the state plan must
apply to all beneficiaries who are not
specifically exempted per the
requirements at § 447.56(a) to ensure
comparability. There are two exceptions
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to this requirement, as follows. First,
states may vary the cost sharing
obligation by income level, reflected at
§ 447.52(g) of the final rule, such that
individuals with family income below a
certain threshold could be subject to
lower cost sharing than those at higher
income levels. A state could, for
example, decide not to impose cost
sharing on individuals with incomes
below 50 percent of the FPL, and to
impose a $1 copayment on individuals
with income above 50 percent of the
FPL. We note that states should have
adequate processes in place to ensure
providers and beneficiaries are aware of
who can be charged what cost sharing
so it is appropriately applied. Second,
reflected at § 447.52(d), as redesignated
in the final rule, states may establish
different levels of cost sharing for
targeted groups of individuals with
income above 100 percent of the FPL. In
this final rule, we clarify that for cost
sharing imposed for non-preferred drugs
and non-emergency services furnished
in an ED, states may target to specified
individuals with income below 100
percent of the FPL as well as those
above, as discussed below. Thus, states
could impose different cost sharing on
individuals eligible in the new Adult
group, or any other eligibility group,
with income greater than 100 percent of
the FPL than that imposed on other
beneficiaries.
Comment: One commenter stated that
proposed § 447.52(f), which lists the
information that must be included in
the state plan for each cost sharing
charge imposed, is revised from the
current regulations at§ 447.53(d) but
that we did not provide a rationale for
the revisions.
Response: We consolidated the state
plan requirements currently contained
in §§ 447.53(d) and 447.68 into one new
section, redesignated as § 447.52(i) in
the final regulation. The state plan
requirements for tracking beneficiary
cost sharing related to the aggregate
limit are contained in § 447.56(f)(2) of
this final rule. In consolidating the state
plan requirements for cost sharing
under the authority of both sections
1916 and 1916A of the Act, we sought
generally to maintain the current
requirements, while removing any
unnecessary regulatory provisions. For
example, we removed the requirement
that states describe the basis for
determining the charge, because these
regulations no longer require states to
base their cost sharing charges on what
the agency pays for the service and this
provision was no longer necessary. We
note that we are making minor technical
changes to paragraph § 447.52(i)(4) to
improve the structure of the paragraph
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and delete extraneous language. No
substantive changes are intended.
Comment: One commenter
recommended that CMS require that
state plans identify whether a cost
sharing charge is being imposed under
the authority of section 1916 or section
1916A of the Act.
Response: With the streamlining of
the regulations we do not believe it is
necessary for states to specify what
authority they are relying on to impose
cost sharing. In their state plan, the
states seeking to impose or continue
cost sharing will need to detail who will
be subject to cost sharing, for what
service, how much, and whether
providers may deny services for lack of
payment. We will review state plan
amendments to ensure compliance with
sections 1916 and 1916A of the Act and
these regulations.
Comment: One commenter requested
that we clarify that the regulation
authorizes states to allow providers to
deny services for nonpayment of cost
sharing, but does not confer authority
on states to require providers to do so.
One commenter recommended that we
include a provision that providers are
not prevented from reducing or waiving
the application of a cost sharing
requirement on a case-by-case basis.
Response: The requirements at
§§ 447.52(e)(1) and (e)(2), as
redesignated in this final rule, are clear
that, while states may allow providers to
deny services to individuals with
income above 100 percent of the FPL
who have failed to pay cost sharing
charges, states are not required to permit
providers to do so (and providers may
only deny services if the state opts to
permit them to do so). Further,
§ 447.52(e)(3) is clear that even if the
state exercises this option, providers are
not prohibited from nonetheless electing
to provide the service to individuals
who do not pay their cost sharing
obligations. This is not at state option—
it is a provider option—and we do not
believe it is necessary to be included in
the state plan.
Comment: A few commenters
suggested that the regulations authorize
states to allow providers to deny
services for non-payment of cost sharing
charges in more situations, including for
those with income at or below 100
percent of the FPL. The commenters
believe that such provider enforcement,
particularly in the context of
nonemergency use of the emergency
room, would be appropriate.
Response: We are unable to extend
the scope of the regulations beyond the
statutory authority provided in sections
1916 and 1916A of the Act, both of
which only allow states to impose
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provider-enforceable cost sharing to
non-exempt individuals with income
over 100 percent of the FPL and thereby
assure the provision of services to lower
income individuals who may not be
able to afford the charge. These
provisions of sections 1916 and 1916A
of the Act cannot be waived unless the
state meets the requirements of section
1916(f) of the Act.
Comment: One commenter
recommended that the table at
§ 447.52(b) be clarified to clearly specify
that the amounts are maximum amounts
to correspond with the language in
§ 447.52(b).
Response: We agree with the
commenter and have made the revision
to §§ 447.52(b), 447.53(b) and 447.54(b).
Comment: One commenter asked if
cost sharing must be imposed or if it is
an allowable activity.
Response: States are not required to
impose cost sharing, it is an option.
Some states do not impose cost sharing.
Furthermore, if a state does impose cost
sharing, it has the option to charge less
than the maximum amounts. Many
states do so today.
Comment: One commenter requested
clarification as to whether § 447.52(e)
(relating to the prohibition against
multiple charges) includes premiums.
Response: § 447.52(e) has been
redesignated as § 447.52(f) in this final
rule and pertains to cost sharing only,
which is defined in § 447.51 to include
any copayment, coinsurance, deductible
or similar charge. Premiums are not
encompassed in this definition, and
states may impose both a premium and
cost sharing on a given individual
subject to the applicable conditions on
such charges.
Comment: One commenter
recommended revising the rule to allow
states to waive or reduce cost-sharing
for outpatient services delivered by
designated high-value providers or in
high-value care settings, even if those
services may otherwise be subject to
cost-sharing. One commenter requested
clarification that the cost sharing rules
may not be applied to different types of
practitioners based on their licensure
and that cost sharing within a category
of services is not used to discriminate
against health care practitioners acting
within their state-defined licensure.
Response: Nothing in the regulations
prevents a state from determining which
services are subject to cost sharing and
the amount charged, or by what type of
provider the service is delivered. As
suggested by the commenter, states
could differentiate cost sharing for
services provided by a designated high
value provider as long as the state
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ensures that all beneficiaries have
access to such providers.
Comment: One commenter
recommended that we include in the
final rule, language currently at § 447.60
that was omitted from the proposed
rule, which requires that any cost
sharing charges imposed by managed
care organization on Medicaid enrollees
be in accordance with the requirements
set forth in the regulations.
Response: We agree with the
commenter. The omission of this
provision was not intentional and we
have included this requirement in the
final rule at § 447.52(h).
Comment: One commenter believed
that if deductibles are an option for a
state, they should be administered at an
individual level on an annual basis
because the commenter believes
monthly and/or family-level deductibles
are complex, confusing, and not the
standard generally used by health plans
especially when combined with other
cost sharing.
Response: Deductibles are permitted
at an individual level under the statute
and these regulations. Any deductible
imposed by a state must be within the
maximum amounts established in
§§ 447.52–54, and subject to the
aggregate limit described in § 447.56(f)
of this final rule.
4. Higher Cost Sharing Permitted for
Individuals With Incomes Above 100
Percent of the FPL (§ 447.52)
We proposed to consolidate the
current multiple cost sharing rules
implementing sections 1916 and 1916A
of the Act, respectively, into one set of
streamlined cost sharing regulations for
both statutory authorities at proposed
§ 447.52. Under section 1916 of the Act,
states may impose nominal cost sharing
on individuals not exempted by the
statute. Under section 1916A of the Act,
statute states may impose cost sharing at
higher than nominal levels for
nonexempt individuals with incomes
above 100 percent of the FPL. For
individuals with income above 100 and
at or below 150 percent of the FPL,
section 1916A of the Act permits cost
sharing for nonexempt services up to 10
percent of the cost paid by the state for
such services. (Different rules, discussed
below, pertain to cost sharing for drugs
and emergency department services).
For individuals with income above 150
percent of the FPL, such cost sharing
may not exceed 20 percent of the cost
paid by the state. We received the
following comments concerning the
proposed provision for higher cost
sharing permitted for individuals with
incomes above 100 percent of the FPL:
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Comment: A few commenters were
concerned that we proposed to permit
cost sharing for children.
Response: We did not propose new
policy in the proposed rule related to
cost sharing for children. Section 1916A
of the Act permits states to impose cost
sharing on certain children by
exempting children covered under
mandatory eligibility categories. This
statutory option, implemented at
§ 447.70 of the current regulations, is
retained in this rulemaking at
§ 447.56(a)(1)(i) through (VI). We
revised the description of children who
are exempt from premiums and cost
sharing at § 447.56(a)(1)(i)(iii) to reflect
the consolidation of different statutory
eligibility groups for children under a
single regulatory section at § 435.118 of
the March 2012 final rule. We also made
a technical change to the description of
children exempt from premiums and
cost sharing under § 447.56(a)(1)(i)(iv) to
reflect the changes in the types of
assistance available under Title IV–E of
the Act. These are not substantive
changes and are intended solely to assist
states in appropriately identifying those
children who may be charged premiums
and cost sharing and exempting those
who may not, as described in the
statute.
Comment: One commenter
recommended that CMS specify health
centers’ statutory responsibility related
to the grants provided under section 330
of the Public Health Services Act
(PHSA) to provide services regardless of
ability to pay and clarify that states may
not impose on health centers any
obligations that conflict with these
requirements. The same commenter also
recommended that CMS add an
exception at § 447.56(c)(3), entitling
FQHCs to full Medicaid payment in
situations in which they are required to
collect cost sharing that would directly
conflict with the section 330
requirements to waive a portion of the
Medicaid cost sharing, and at
§ 447.56(e)(1) to authorize FFP for cost
sharing amounts waived by an FQHC.
At a minimum, the commenter
recommends that CMS and HRSA issue
joint guidance to minimize the tension
between the Medicaid and section 330
of the PHSA regulations concerning
patient payment obligations for services
provided by FQHCs.
Response: The obligations of FQHCs
related to their section 330 grants, as
well as reimbursement to FQHCs, are
beyond the scope of this regulation.
This regulation does not require that
FQHCs bill patients for cost sharing, but
it does require that the payment to the
provider take into account the cost
sharing obligation. This requirement
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that states deduct a beneficiary’s cost
sharing obligation from the payment to
providers is not new policy. It is
contained in current regulations at
§§ 447.57 and 447.82, redesignated at
§ 447.56(c) in this final rule. FQHC
services are not specified as exempt
from cost sharing under sections 1916 or
1916A of the Act and we do not believe
that the Secretary has authority to
mandate that states nonetheless exempt
such services from cost sharing based on
FQHCs’ section 330 obligations. States,
however, do have the flexibility to
exempt particular services (including
FQHC services) from cost sharing and/
or to adjust the amount of cost sharing
imposed, consistent with the
regulations.
Comment: Some commenters
recommended permitting flat-dollar
copayments for all income groups,
which they think would be easiest for
enrollees and providers to understand
and for Medicaid plans to administer.
One commenter requested that we
clarify how a limit based on 10 percent
of the cost the agency pays for the
service for individuals with family
income above 100 percent but at or
below 150 percent of the FPL and 20
percent of the cost the agency pays for
the service for individuals with income
over 150 percent of the FPL, would
apply to FQHC services reimbursed
under the prospective payment system
(PPS). The commenter is concerned that
because the amount of reimbursement
under the PPS varies by health center,
the maximum allowable cost sharing
obligation for a particular service or
visit would differ from health center to
health center, and that this would be
administratively burdensome for states,
managed care plans, and providers;
inequitable for beneficiaries; and could
impede access to FQHC services. The
commenter recommends that we revise
the rule to provide that the maximum
cost sharing for all individuals for
FQHC services reimbursed under the
PPS rate be the same as the maximum
rate for individuals with income at or
below 100 percent of the FPL.
Response: Section 1916A of the Act
sets the maximum allowable cost
sharing for individuals with income
over 100 percent and at or below 150
percent of the FPL at 10 percent of what
the agency pays for the service and for
individuals with income over 150
percent of the FPL, at 20 percent of what
the agency pays. We do not have the
authority to change the maximum
amount to a flat fee. We note that these
percentages represent the maximum
allowable charges. States have the
flexibility to establish lesser cost sharing
amounts for any service, and they may
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use a flat fee as long as it does not
exceed the maximum level permitted. In
determining the cost sharing for a
particular service, states also can use the
average payment made for the service
across providers or units of the service
to develop a consistent cost sharing
amount within the maximum amount
allowed by statute and regulation.
Comment: One commenter asked for
clarification regarding the definitions of
income that states should use in setting
cost sharing charges, other than to say
that the definitions of household
income in § 435.603 should be used in
determining the aggregate limit on costsharing. The commenter sought further
clarification on the meaning of ‘‘family
income’’ and suggested that states be
required to describe their methodology
in their state plan for approval by the
Secretary as reasonable.
Response: In the interest of
streamlining the requirements and
reducing administrative burden, we are
not requiring states to include, in their
state plans, the methodology for
determining income specific to
premiums and cost sharing. For
individuals whose financial eligibility is
determined based on modified adjusted
gross income (MAGI), ‘‘family income’’
for the purposes of imposing premiums
or cost sharing or for defining the
aggregate limit means ‘‘household
income’’ using MAGI-based methods, as
set forth in § 435.603. For individuals
who are exempt from MAGI under
section 1902(e)(14)(D) of the Act,
implemented at § 435.603(j) of the
regulations, we are still examining
options related to income
determinations.
Comment: One commenter stated that
we do not have the authority to allow
targeted cost sharing because it would
violate comparability and recommended
that we delete proposed § 447.52(c),
relating to ‘‘targeted cost sharing.’’
Another commenter stated that
additional targeting and variation of cost
sharing within groups would add
unnecessary complexity and should not
be used.
Response: We are retaining the option
for states to target cost sharing to
specified groups of individuals.
Comparability is required for cost
sharing imposed under section 1916 of
the Act. However, section 1916A(a)(1) of
the Act provides that, ‘‘a State, at its
option and through a state plan
amendment, may impose premiums and
cost sharing for any group of individuals
(as specified by the State) and for any
type of services . . . and may vary such
premiums and cost sharing among such
groups or types, consistent with the
limitations established under this
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section.’’ This provision is codified in
current regulations at § 447.62(a).
Therefore, at redesignated § 447.52(d) of
the final rule states may apply targeted
cost sharing on specified groups of
individuals; such cost sharing is limited
to individuals with income over 100
percent of the FPL, per the requirements
of section 1916A of the Act. We have
revised § 447.52(d), adding paragraphs
(1) and (2) to clarify that for cost sharing
imposed for non-preferred drugs and
non-emergency services furnished in an
ED, the state may target to individuals
below 100 percent of the FPL as well as
those above, as allowed by section
1916A of the Act.
Comment: We solicited comments on
whether the regulations should specify
ways in which states may target
different defined groups of individuals
(with income over 100 percent of the
FPL) for differential cost sharing under
proposed § 447.52(c). One commenter
suggested that the regulation should
make it clear that targeting must be
reasonable, that individuals with lower
incomes may not be charged more than
those with higher incomes, and that
targeting may not discriminate based on
gender, physical or mental disability,
age, race, ethnicity, or any other
protected classification. Another
commenter requested that the Secretary
include criteria that must be considered
by states in targeting cost sharing to
particular types of beneficiaries.
Response: Section 1916A of the Act
gives states authority to target premiums
and cost sharing to any group of
individuals with income above 100
percent of the FPL (for cost sharing
imposed for non-preferred drugs or nonemergency use of the emergency
department, states can target to
individuals at all income levels as
discussed above), and to vary such
premiums and cost sharing among the
groups. In examining all the possible
ways in which targeting could be
applied, we believe targeting based on
eligibility group or income level are the
only targeting methods consistent with
section 1916A of the Act, which will not
lead to discriminatory practices. Thus,
states can choose to impose premiums
or cost sharing on individuals with
income above 100 percent of the FPL in
particular eligibility groups and to vary
them by income level within the group.
States may not target solely on the basis
of delivery system—managed care, feefor-service, and primary care case
management—but may target eligibility
groups covered through a specific
service delivery system like managed
care. States may not target based on
disease-type or chronic condition. We
note that states can impose cost sharing
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on whichever non-exempt service they
choose for individuals at any income
level subject to limitations in the
regulations, and are not required to
impose cost sharing on all non-exempt
services in the state plan. For the
recommendation regarding lower
income versus higher income
individuals, as noted above, we added
§ 447.52(g) to specify that if a state
imposes income-related charges, it may
not impose a higher charge for lowerincome individuals than is charged for
higher-income individuals.
5. Cost Sharing for Drugs (§ 447.53)
We proposed to establish a single
provision governing cost sharing for
drugs which would apply to nonexempt
individuals at all income levels. To
provide additional flexibility to states,
and to further encourage the use of
preferred drugs, we proposed to define
‘‘nominal cost sharing’’ as no more than
$8 for non-preferred drugs and $4 for
preferred drugs for individuals with
income at or below 150 percent of the
FPL. For individuals with family
income above 150 percent of the FPL,
per section 1916A(c) of the Act, a higher
cost sharing charge may be established
for non-preferred drugs, not to exceed
20 percent of the cost the agency pays
for the drug. While states may not
impose cost sharing on exempt
individuals for preferred drugs, states
may elect to impose cost sharing for
non-preferred drugs on individuals who
are otherwise exempt up to the nominal
cost sharing amount. Cost sharing for a
non-preferred drug must be limited to
the amount imposed for a preferred drug
if the individual’s prescribing provider
determines that the preferred drug for
treatment of the same condition either
will be less effective for the individual
or will have adverse effects for the
individual or both. Under the proposed
rule, states would have the flexibility to
apply differential cost sharing for
preferred versus non-preferred drugs.
For example, a state may charge $1 for
preferred and $5 for non-preferred drugs
or $0 for preferred and $8 for nonpreferred drugs. We received the
following comments concerning the
proposed cost sharing for drugs
provisions:
Comment: A few commenters
suggested we take an approach that
distinguishes between formulary generic
and formulary brand drugs (instead of
preferred and non-preferred). One
commenter noted that this approach
may be more helpful in the managed
care context. One commenter requested
clarification as to whether the
requirement that all drugs be considered
preferred for cost sharing purposes if the
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agency does not differentiate between
preferred and non-preferred, is a de
facto preferred status. The commenter
was concerned that this could result in
lower cost sharing for more expensive
brand name drugs that are not identified
by the state as non-preferred. One
commenter was opposed to the
definition of preferred drugs at
proposed § 447.51 to include all drugs if
the agency does not differentiate
between preferred and non-preferred
drugs.
Response: Section 1916A of the Act
allows states to have different cost
sharing levels for preferred and nonpreferred drugs, but does not speak to
generic versus brand name drugs. States
may use a variety of methods to
determine preferred and non-preferred
drugs including whether the drug is a
brand or generic. States also maintain
other cost control measures, such as
mandatory generic substitution policies.
The definition of preferred drugs, which
includes all drugs if the agency does not
differentiate between preferred and nonpreferred drugs, is consistent with
section 1916A(c) of the Act and current
regulations at § 447.70(a).
Comment: Several commenters
disagreed with the proposed policy to
allow cost sharing for up to $4 for
preferred drugs and $8 for non-preferred
drugs. They described research showing
that even low prescription drug
copayments may cause very low income
people to defer filling prescriptions. The
commenters argue that Medicaid
beneficiaries cannot be incentivized to
select a preferred drug, as is
accomplished with some success among
middle class consumers; instead, with
such high cost sharing differentials,
Medicaid enrollees will go without the
‘‘non-preferred’’ drug even if it is
medically necessary and would work far
more effectively than a preferred drug.
These commenters recommend that
CMS define nominal drug cost sharing
in relation to the income and health
status of the Medicaid population and
amend the table at § 447.53(b) to
establish maximum cost sharing as
follows: individuals with family income
at or below 150 percent of the FPL—
Preferred drugs: $1.10, Non-preferred
drugs: $3.30; individuals with family
income exceeding 150 percent of the
FPL—Preferred drugs: $1.10; Nonpreferred drugs: $4.20. Two other
commenters expressed concern with the
$8 copay for non-preferred drugs if
states have latitude to classify most or
all of the brand-name drugs in a
therapeutic class as non-preferred. One
commenter stated the proposed increase
in cost sharing is unnecessary because
states already have many tools to
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control prescription drug costs and have
high utilization of generic drugs. Other
commenters appreciated the flexibility
proposed for cost sharing. One
commenter welcomed the increased
maximum cost sharing, and one
commenter stated that allowing states to
charge higher cost sharing for nonpreferred drugs, when effective, lowercost alternatives are available, is a
reasonable policy.
Response: We agree that cost sharing
is just one of many tools that states may
use to manage drug utilization, and
states may determine that higher cost
sharing does not enhance their efforts to
promote the use of preferred drugs.
However, we also agree that it is a tool
permitted under the statute. In the final
rule we are maintaining the option for
states to impose cost sharing of up to $4
for preferred drugs and $8 for nonpreferred drugs for all individuals,
including those with income at or below
150 percent of the FPL, and for those
with income above 150 percent of the
FPL, to continue to establish higher
non-preferred drug cost sharing of up to
20 percent of the cost of the drug. As
described at § 447.53(e), as revised in
the final rule, if a prescriber finds that
the non-preferred drug is medically
necessary, the state must have a process
in place to limit cost sharing for that
drug to the amount for preferred drugs.
Comment: One commenter suggested
that the final rule require a cap on cost
sharing for non-preferred drugs as a
necessary protection for this vulnerable
population.
Response: The 5 percent aggregate
limit on cost sharing in the current
regulation and included in this final
regulation at § 447.56(f) applies to all
cost sharing, including that for nonpreferred drugs. States have the option
to establish additional cost sharing
limits for particular services, such as
drugs at § 447.56(f)(5) of the final rule,
but we do not have the authority to
mandate a cost sharing cap specific to
non-preferred drugs.
Comment: A few commenters stated
that CMS was circumventing the
statutory requirements of section 1916A
of the Act by setting two different
maximum ‘‘nominal’’ amounts for
preferred and non-preferred drugs
because the Act requires that cost
sharing for all drugs imposed on
individuals with income under 150
percent of the FPL must not exceed the
‘‘nominal’’ cost sharing as otherwise
determined under section 1916 of the
Act. Additionally, the commenter notes
that section 1916A of the Act explicitly
allows states to charge up to twice the
nominal amount for non-emergency care
furnished in an emergency department,
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so if Congress intended to allow the
same for non-preferred drugs, Congress
would have provided such an option in
the statute.
Response: Section 1916 of the Act
gives the Secretary the authority to
define nominal cost sharing. There is
nothing in the statute which requires a
single definition of what is considered
to be nominal. Moreover, the general
cost differential between preferred and
non-preferred drugs merits a different
nominal maximum for each type,
therefore we believe it is appropriate to
establish a $4 nominal maximum for
preferred drugs and an $8 nominal
maximum for non-preferred drugs.
Comment: One commenter expressed
concern for vulnerable populations that
require certain classes of drugs, such as
HIV antiretroviral drugs, and
recommended they be available at the
‘‘preferred’’ drug cost-sharing level.
Response: States have the discretion
to designate which covered drugs
within each class of drugs will be
considered preferred or non-preferred.
Beneficiaries must always have access
to necessary drugs at the preferred drug
rate because a given drug cannot be
considered non-preferred unless the
state has an equivalent drug available at
the preferred rate. In addition,
§ 447.53(e), as revised in this final rule,
requires states to provide a nonpreferred drug at the preferred drug cost
sharing level, if the prescribing provider
determines that the preferred drug
would be less effective or have adverse
effects on the individual.
Comment: A few commenters
recommended that we convert the nonpreferred prescription drug copayment
to a flat dollar amount for individuals
with incomes over 150 percent of the
FPL instead of basing cost sharing on
what the agency pays for the drug.
Response: As discussed above, section
1916A of the Act sets the maximum
allowable non-preferred drug cost
sharing level for individuals with
income over 150 percent of the FPL at
20 percent of what the agency pays for
the drug. CMS does not have the
authority to change the maximum
amount allowed to a flat fee, but states
may construct their charges as flat fees
as long as such fees are within the
maximums established by law.
Comment: One commenter supported
the proposed increase of allowable cost
sharing for non-preferred drugs when
Medicaid recipients and not Medicaid
pharmacy providers bear responsibility
for the higher cost sharing. The
commenter requested that, when
enhanced cost sharing for prescription
drugs is implemented, we mandate
states to condition services on the
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payment of such cost sharing.
Alternatively, the commenter requested
that CMS mandate states to develop a
mechanism whereby participating
pharmacies can submit unpaid cost
sharing amount to the state for payment.
One commenter recommended that HHS
require states to implement cost sharing
provisions for prescription drugs and to
permit providers to withhold
medication (whether preferred or nonpreferred) from beneficiaries for failure
to pay cost sharing.
Response: The imposition of
premiums or cost sharing is an option
permitted states under sections 1916
and 1919A of the Act and cannot be
mandated by the Secretary. The statute
stipulates that providers, including
pharmacies, may not deny services to
individuals with income at or below 100
percent of the FPL due to inability to
pay their cost sharing obligation. States
have the option to allow providers to
deny services to individuals with
income over 100 percent of the FPL if
they do not pay required cost sharing.
If a state opts to allow providers to deny
services if the individual does not pay
the cost sharing, this must be indicated
in their state plan. Regardless of
whether an individual pays the cost
sharing, states must deduct the payment
made to the provider by the amount of
the individual’s cost sharing obligation
in accordance with § 447.56(c) of this
final rule. We do not have the statutory
authority to alter these requirements in
the manner being suggested by the
commenters.
Comment: One commenter requested
clarification as to whether states have
the option to impose cost sharing for
non-preferred drugs on individuals
otherwise exempt from cost sharing.
One commenter recommended that
states should have the option to impose
cost sharing on exempt individuals for
certain classes of prescription drugs that
the state identifies as elective or
controversial, such as narcotics.
Response: Section 1916A of the Act
allows states to impose cost sharing for
non-preferred drugs on otherwise
exempt individuals, provided that such
cost sharing does not exceed a nominal
amount. At § 447.53(b) of the final rule,
we have defined nominal cost sharing
for preferred drugs as no more than $4
and for non-preferred drugs at no more
than $8. We are revising § 447.53(d) in
the final rule to clarify that cost sharing
for non-preferred drugs imposed on
otherwise exempt populations cannot
exceed the nominal amount defined in
§ 447.53(b) in accordance with section
1916A(c) of the Act. While states may
impose cost sharing on some drugs and
not other drugs, all cost sharing must be
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consistent with the requirements of
§ 447.53(b) and, if there are no drugs
identified as non-preferred drugs in a
class, cost sharing for drugs in that class
cannot exceed the nominal amounts for
preferred drugs. Identification of
‘‘elective’’ or ‘‘controversial’’ drugs is
beyond the scope of this regulation.
Comment: A few commenters stated
that the proposed cost-effectiveness
standard for determining which drugs
are non-preferred is inappropriate and
does not include the anti-discrimination
protections contained in the Affordable
Care Act. The commenter believed that
this standard would threaten access to
needed treatment and would result in
broad, one-size-fits-all policies that do
not reflect important differences in
individual beneficiary needs and
circumstances. One commenter
recommended that the definition of
preferred drugs not be restricted to lowcost or exclusively generic agents, and
should encourage the inclusion of highvalue brand agents, especially when a
generic equivalent is not available. The
commenter believed that preferred and
non-preferred drugs should be chosen
based on clinical value, not solely on
the basis of acquisition price. One
commenter recommended that the
definition of preferred and nonpreferred drugs be determined based on
clinical assessment of the individual.
One commenter recommended that the
definition of preferred drugs be
expanded to include the generic
equivalent of brand named drugs.
Response: The definition of preferred
drugs for cost sharing purposes at
§ 447.51 does not prescribe the type of
drugs that the state designates as
preferred or non-preferred, and
requiring the inclusion of certain drugs
on a state’s preferred drug list is beyond
the scope of this regulation. However
we do not believe that preferred drug
programs limit individuals’ access to
necessary drugs. These regulations
require that states establish a process
through which a beneficiary can access
a non-preferred drug, which his or her
provider has determined to be medically
necessary for the beneficiary, with cost
sharing limited to the amount
applicable to preferred drugs. We
believe that this policy would not
violate any non-discrimination
standards since all beneficiaries are
subject to the Medicaid requirements of
the preferred drug list, which direct that
it be developed in a manner that does
not discriminate against any particular
class of individual, or type of disability
or disease. In addition, as previously
noted in guidance (SMDL #04–006,
September 9, 2004), states need to
assure that patients continue to have
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access to needed medications so in
addition to cost considerations, a
preferred drug list should be based on
clinical criteria that considers the
efficacy of the drug to others in that
class.
Comment: Several commenters were
concerned that allowing states to
impose cost sharing of up to 20 percent
of what the agency pays for a nonpreferred drug, for individuals with
income over 150 percent of the FPL,
would be overly burdensome for
individuals with chronic conditions.
Response: Section 1916A(2)(B) of the
Act provides for the flexibility to
impose cost sharing at these levels for
individuals with incomes above 150
percent of the FPL. We did not propose
to change this flexibility, which is
codified at § 447.74 of the current
regulations, and is moved to § 447.53 in
this final rule. The Secretary does not
have the authority to change or reduce
the percentage of the cost of the item or
service that is the maximum allowable
cost sharing because the statute is clear.
We note that such cost sharing is subject
to the aggregate limit codified at
§ 447.56(f) of this final rule.
Comment: Several commenters
suggested that we revise § 447.53(e) to
provide more detailed requirements for
the process states must have in place to
allow for cost sharing at the preferred
drug level, in the case of a non-preferred
drug that the prescribing provider has
determined would be less effective or
may adversely affect the individual. The
commenters stated that any process
should take into account the electronic
claims processing used by pharmacies
and pharmacists and should be easy for
the prescriber to invoke. Several
commenters also recommended that
states be required to describe their
process in the state plan and provider
manuals. One commenter believed that
this requirement undermined the intent
of the regulations to encourage the use
of less expensive preferred drugs
because for a state to actually cover a
non-preferred drug, the prescriber
already has to receive priorauthorization, meaning most, if not all
non-preferred drugs would have to be
provided at the lower cost sharing
amount.
Response: States must have a process
in place for providing prior
authorization of medically necessary
drugs that meets the existing
requirements at section 1927(d)(5) of the
Act, therefore we are not prescribing
additional requirements in this
regulation or requiring states to describe
the process in their state plan. However,
we are revising the final rule to add the
word ‘‘timely’’ to the process states
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must use to allow for cost sharing at the
preferred drug level in accordance with
the section 1927 of the Act. We will
monitor state implementation and
determine whether additional guidance
is necessary.
6. Cost Sharing for Emergency
Department (ED) Services (§ 447.54)
Sections 1916(a)(3) and 1916(b)(3) of
the Act, allow states to obtain a waiver
to impose cost sharing for nonemergency use of the ED that does not
exceed twice the nominal amount for
other outpatient services. Section
1916A(e)(2)(A) of the Act also allows
cost sharing for individuals with income
above 100 percent of the FPL and at or
below 150 percent the FPL in an amount
not to exceed twice the nominal amount
as determined by the Secretary. We
proposed to consolidate current
regulations at § 447.54(b) and § 447.72
related to non-emergency use of the ED
into proposed § 447.54. To facilitate
states’ ability to utilize flexibility
provided in existing regulations, for all
individuals with income at or below 150
percent of the FPL, we proposed to
allow cost sharing of no more than $8,
which represents twice nominal, for
non-emergency use of the ED without
requiring a waiver. The proposed
changes are discussed in more detail in
the January 22, 2013 Medicaid
Eligibility Expansion proposed rule (78
FR 4659 and 4660). We received the
following comments concerning the
proposed provision for cost sharing
specific to non-emergency use of the ED:
Comment: Many commenters opposed
the policy to allow up to $8 for nonemergency use of the ED because it
might cause individuals with incomes at
or below 150 percent of the FPL to
forego necessary services, including
potentially lifesaving services, and
because many Medicaid beneficiaries go
to the ED because they lack access to
regular sources of primary care.
Foregoing necessary services may result
in adverse health outcomes requiring
more expensive care later. Many
commenters recommended that the
maximum allowable cost sharing should
be set at $3.30 for individuals with
family income at or below 100 percent
of the FPL, $6.30 for individuals with
family income from 101–150 percent of
the FPL and $12.00 for individuals with
family income above 150 percent of the
FPL. Several other commenters
recommended that the maximum
allowable cost sharing amount for nonemergency use of the ED be limited to
$4 to align with what is proposed for
other services. Several commenters
recommended that CMS allow states the
flexibility to impose cost sharing for
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non-emergency use of the ED that
exceeds $8, to decrease inappropriate
use of the ED. One commenter
recommended that up to three times the
outpatient services copayment (rather
than two) should be allowed in states
that are working to expand access to
alternative options for care. Many
commenters recommended that for
individuals with family income at or
below 100 percent of the FPL, we revise
the regulations to allow cost sharing for
non-emergency use of the ED, only
when no cost sharing (rather than lesser
cost sharing) is imposed to receive such
care through an outpatient department
or other alternative health care provider
in the geographic area of the hospital ED
involved.
Response: We believe it is important
for states to have options to incentivize
care in the most appropriate settings
and to encourage individuals to develop
a regular source of care, to the extent
that beneficiaries are assured timely
access to needed care. One option to
achieve this is through cost sharing
initiatives, therefore, we are finalizing
§ 447.54(b) as proposed, however we
note that we have made some minor
technical changes in the final rule to
spell out the term emergency
department instead of using the
acronym ED and to refer to nonemergency services instead of treatment.
The technical changes are for
clarification only and are not intended
to be substantive. The $8 maximum for
non-emergency use of the ED is twice
the nominal amount for outpatient
services, which is the maximum
allowable cost sharing permitted under
sections 1916 and 1916A of the Act for
individuals with income at or below 150
percent of the FPL. The statute does not
limit the amount states can impose for
non-emergency use of the ED on
individuals with income over 150
percent of the FPL (other than through
the aggregate cap of 5 percent of family
income), and we do not have the
authority to limit such cost sharing
through regulation. Section 1916 of the
Act requires that there be an accessible
alternative provider to provide the
services, but does not require that there
be no cost sharing for such services and
section 1916A of the Act requires there
be lesser cost sharing for services
provided by the alternative provider, or
no cost sharing if the cost sharing is
being applied to an otherwise exempt
individual. To streamline the
requirements to make it
administratively feasible for states to
meet this requirement, we are
maintaining the proposed policy in the
final rule that services provided by an
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alternative provider must be available
with lesser cost sharing or no cost
sharing only if the individual is
otherwise exempt from cost sharing. We
note that for individuals with income at
or below 100 percent of the FPL the
state may not allow a provider—
including a hospital ED—to deny
services in the event that an individual
is unable to pay the cost sharing.
We note that in the final rule we are
deleting § 431.57 of this subchapter
relating to the waiver of cost sharing
requirements for states to impose cost
sharing for non-emergency services
furnished in an ED. This language is
redundant with § 447.54(b) of the final
rule, which allows states may impose
cost sharing up to twice the nominal
amount for such services through the
state plan. In addition to this technical
change, we updated the citations to the
cost sharing regulations at §§ 435.121,
435.831, 436.831, 438.108, 440.250,
447.15, 447.20, and 457.540.
Comment: One commenter
recommended that CMS make public
the amount of documented Medicaid
savings in states that have imposed cost
sharing for non-emergency use of the
ED.
Response: We are not revising the rule
to require states to document savings.
However, we will examine available
options for sharing best practices and
other data available from states with
successful ED diversion programs.
Comment: Several commenters noted
a drafting error at § 447.54(c), which
they believe should be revised to read:
‘‘. . . not to exceed the maximum
amount established in paragraph (b) of
this section. . .’’ The commenters also
believed we made an error in
§ 447.54(d), which they think should
read ‘‘. . . to impose cost sharing under
paragraph (a), (b) or (c) of this section
of non-emergency. . . .’’
Response: We agree that there was a
drafting error in paragraph (c) and have
corrected the provision in this final rule.
However, paragraph (d) was written as
intended, and is finalized as proposed.
Paragraphs (a) and (c) provide the
authority to impose cost sharing, while
paragraph (b) describes the maximum
allowable amounts.
Comment: One commenter
recommended that cost sharing for nonemergency use of the ED should be
permitted for any visit to the ED that
does not result an inpatient stay.
Response: Sections 1916 and 1916A
of the Act prohibit cost sharing for
emergency services. As there are many
emergency conditions and services that
do not result in an inpatient stay, the
commenters’ suggested policy would
violate the statute.
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Comment: Many commenters
recommended that states that impose
cost sharing for non-emergency services
provided in an ED be required to permit
newly-enrolled individuals to make at
least one non-emergency ED visit before
requiring them to pay this cost-sharing
obligation.
Response: States have the option to
establish such a policy under current
regulations and the new rule as
finalized, but we do not think it
appropriate to require it.
Comment: Some commenters
suggested that we designate
underserved areas and/or certain
periods of time in which insufficient
access warrants exemption from cost
sharing for non-emergency use of the
ED.
Response: Per § 447.54(d), before
imposing cost sharing for nonemergency use of the ED, the hospital
must provide the individual with a
name of and location of an available and
accessible provider and provide a
referral to coordinate scheduling. If
geographical or other circumstances
prevent the hospital from meeting this
requirement, the cost sharing may not
be imposed.
Comment: Several commenters asked
that we refrain from adding more
specificity or requirements in the
regulation itself, for example imposing
further requirements or pre-conditions
on a state’s authority to impose cost
sharing for non-emergency services
provided in an ED, which they believed
would limit the ability of states to
account for variation across states. A
few commenters were concerned that
we had added a new requirement in
stipulating that hospitals ensure that an
alternative provider is available to
provide needed services with lesser or
no cost sharing. They were concerned
the use of the term ‘‘ensure’’ in
proposed § 447.54(d)(2)(ii) would
require hospitals to ‘‘ensure’’ something
beyond their control, presenting
unnecessary administrative burden for
state administrators and hospitals. Many
commenters stated that CMS should
remove the requirements at proposed
§ 447.54(d)(2)(iii) that ED staff provide a
referral and coordinate scheduling with
an available and accessible alternative
non-emergency services provider,
because it is administratively
burdensome and takes time and
resources away from patient care. In
addition, they argue that compliance is
infeasible given hospitals’ limited
access to current, accurate information
on the availability of appointments with
other providers. The commenters
believed that these requirements will
make it difficult for states to take up the
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option afforded under the statute and
that it would be less costly for an ED to
provide treatment for the nonemergency conditions than to
coordinate a referral. One commenter
stated that the requirement to provide a
referral is unnecessary because in many
state managed care programs, every
enrollee has a primary care provider and
24-hour call-in lines are available,
enabling hospitals providing the care to
contact either the enrollee’s primary
care provider or the 24-hour call-in line
as an alternative to following the steps
listed in § 447.54(d). Another
commenter stated that the language in
proposed § 447.54(d)(2)(iii) differs from
the requirement at current
§ 447.80(b)(2)(iii), and that the revised
language would impose additional
burdens on states’ ability to effectively
implement cost sharing. The commenter
noted that current § 447.80(b)(2)(iii)
requires hospitals to provide ‘‘a referral
to coordinate scheduling of treatment by
an available and accessible alternative
non-emergency services provider,’’
while proposed § 447.54(d)(2)(iii)
requires hospitals to ‘‘coordinate
scheduling and provide a referral for
treatment by this provider.’’
Response: We did not intend to add
additional requirements for hospitals
related to cost sharing for nonemergency use of the ED. Rather, our
intent was to clarify the existing
language. To eliminate any confusion,
we are replacing the word ‘‘ensure’’
with ‘‘determine’’ in § 447.54(d)(2)(iii),
as redesignated in the final regulation.
This is consistent with the statutory
requirement that before collecting cost
sharing for non-emergency use of the
ED, hospitals must provide individuals
with the name and location of an
available and accessible provider that
can provide the service with lesser or no
cost sharing. States share in this
responsibility, of course, and will need
to work with hospitals to ensure that
hospitals are able to determine whether
such care is available and accessible.
The goal underlying the policy is to
ensure that the right care is provided at
the right time in an appropriate setting.
The language in proposed
§ 447.54(d)(2)(iii), redesignated at
§ 447.54(d)(2)(iv) of this final rule, was
intended to clarify the referral
requirement, which is in current
regulation at § 447.80(b)(2), and which
reflects statutory language. We did not
intend to change the substance of the
rule. However, to avoid any confusion
we are revising § 447.54(d)(2)(iv) to
reinstate the language from the current
rule that hospitals must provide a
referral to coordinate scheduling for
treatment by an alternative provider. To
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confirm that the alternative nonemergency services provider is ‘‘actually
available and accessible’’ as required by
statute, it is important that scheduling
be done onsite, with the beneficiary
present, to the maximum extent
possible. We recognize that this may not
be possible during certain hours of the
night, in which case follow-up
scheduling may be necessary. Hospitals
can and should take advantage of the
existence of a call line and assigned
primary care providers in satisfying the
coordination requirements in the statute
and regulations, and states should
assure, before imposing such cost
sharing, that procedures are in place
that can facilitate hospitals’ ability to
carry out these responsibilities,
including outside of regular business
hours.
Comment: One commenter requested
clarification of the referral requirement,
including whether a patient should have
a scheduled appointment, or just the
information necessary to make an
appointment, with an alternative
provider when he or she leaves the
hospital; whether community clinics or
FQHCs may serve as alternative, nonemergency providers for referral from
the ED; and the appropriate process for
completing a referral when physician
offices are closed. One commenter
requested that we define ‘‘timely
manner’’ in proposed § 447.54(d)(2)(ii).
Response: The regulations are not
prescriptive on the exact process to be
used by hospitals. States have flexibility
to establish processes to meet the
coordination goals in the statute and
regulations in a manner that best
accommodates their systems and
provider networks. The extent to which
a state relies on managed care or
establishes patient centered medical
homes, for example, may impact how a
state would meet the requirements in
the regulation. As noted above,
whenever possible, hospitals should
attempt to schedule the appointment
while the patient is present, but if that
is not feasible, the hospital would need
to follow up to ensure that an
alternative provider is ‘‘actually
available and accessible’’ in a timely
manner, as required by statute.
Section 1916A (e)(4)(B) of the Act
describes an alternative non-emergency
services provider as one ‘‘that can
provide clinically appropriate services
for the diagnosis or treatment of a
condition contemporaneously with the
provision of the non-emergency services
that would be provided in an emergency
department.’’ Any Medicaid
participating providers, including
clinics that can do so, are acceptable.
Because we do not think that there is a
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uniform definition of timeliness that is
appropriate for all situations, we are not
defining ‘‘timely manner’’ in the
regulation. In meeting a general
timeliness standard, however, states
should direct hospitals to consider the
medical needs of the individual to
assess (1) whether care is needed right
away or if a short delay in treatment
would be sufficient, and (2) any
particular challenges the person may
face in accessing follow-up care, such as
leave from employment, child care, or
ability to receive language assistance
services or accessible care for people
with disabilities. States will need to
work with the hospitals, non-emergency
providers, and managed care
organizations participating in their
Medicaid programs to design a referral
network and system that fulfills the
statutory requirements prior to imposing
cost sharing amounts for non-emergency
services provided by a hospital ED. The
intent of this provision is to provide an
additional tool to ensure that care is
provided in a timely and appropriate
manner to drive better quality at lower
costs. It is not to be implemented in a
way that results in people not getting
the care they need.
Comment: One commenter believed
that we omitted from proposed
§ 447.54(d) some of the statutory
requirements that hospitals must meet
before collecting cost sharing for nonemergency use of the ED, including the
obligation to inform the recipient that
he or she does not have an emergency
medical condition and the requirement
to notify the recipient of the applicable
cost sharing for treatment of a nonemergency condition in the ED.
Response: We did not omit any of the
statutory requirements in the proposed
rule. The requirement that the hospital
inform individuals whether or not they
need emergency services, and of the cost
sharing obligation to receive services in
the ED is implicit in the requirements
that the assessment be performed and
that the hospital provide the individual
with the name and location of an
available and accessible alternative
provider that can provide services with
lesser or no cost sharing. We do not see
a need to state as much explicitly in the
text of the regulation. However, for
clarity, we have added a new paragraph
(i) at § 447.54(d)(2) requiring hospitals
to ‘‘inform the individual of the amount
of his or her cost sharing obligation for
non-emergency services provided in the
emergency department.’’ Proposed
§§ 447.54(d)(2)(i) through (iii) are
redesignated in this final rule as
§§ 447.54(d)(2)(ii) through (iv),
respectively.
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Comment: A few commenters
recommended that the Secretary ensure
that the safeguards at § 447.54(d) are
observed by states that impose cost
sharing for non-emergency use of the
ED.
Response: We will ensure through the
state plan amendment process that the
requirements of § 447.54(d) are met, and
expect to oversee implementation to the
extent feasible.
Comment: One commenter
recommended that the final rule include
requirements for oversight and reporting
to ensure that higher cost-sharing is not
imposed without verification of the
availability of alternative providers able
to furnish non-emergency care. In
addition, the commenter recommended
enhanced requirements for verification
in rural and other areas with a shortage
of primary care physicians and
specialists that will see Medicaid
patients that there is available and
accessible care by an alternative
provider. A few commenters
recommended that, at a minimum, the
ED should be required to specify what
the particular patient’s cost-sharing
obligation will be, including in the case
of a patient with income above 150
percent of the FPL, that the patient may
be responsible for 100 percent of the
charges. The commenter also believed
that, prior to an emergency room
providing non-emergency care to a
Medicaid beneficiary the hospital
should be required to obtain written
consent from the individual to receive
the non-emergency care in the ED and
to take responsibility for any costsharing obligation for such care.
Response: The statute, codified at
§ 447.54(d) in this rulemaking, sets forth
clear requirements that states must
effectuate to establish cost sharing for
non-emergency use of the ED, including
a requirement that hospitals provide
information on available and accessible
providers who can provide the needed
non-emergency services with lesser or
no cost sharing. States must ensure that
hospitals are able to meet these
requirements, whether in a rural,
suburban, or urban setting. We ensure
that states are in compliance with the
statute and regulations through the state
plan amendment process and will
consider whether further reporting is
necessary for oversight purposes. For
cost sharing for individuals with income
above 150 percent of the FPL, we note
that the statute does not require states
to make such patients responsible for
100 percent of the charges for nonemergency use of the ED, but also does
not limit the cost sharing that states can
impose on individuals in this income
bracket for non-emergency use of the
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ED. At proposed § 447.52(b)(3), finalized
in this rulemaking at § 447.52(c), any
cost sharing imposed for any service
may not equal or exceed the amount the
agency pays for the service; such cost
sharing is also limited by the 5 percent
aggregate limit described at § 447.56(f).
Comment: Several commenters stated
that the rule does not provide a clear
methodology for determining ‘‘nonemergency’’ status. One commenter
highlighted the preamble discussion in
the proposed regulation about the
difficulty in determining whether a
service is needed to address an
emergency situation based on Current
Procedural Terminology (CPT) codes
alone, and the lack of guidance on other
standards that could be used, and
requested that CMS more clearly define
‘‘non-emergency’’ or provide states
latitude to define as needed. Another
commenter shared our concerns about
CPT codes and noted that, while the
imposition of non-emergency ED cost
sharing is not administratively feasible
without some type list, any protocols
must also avoid violation of the
emergency screening requirements
under the Emergency Medical
Treatment and Active Labor Act
(EMTALA). One commenter stated that
the EMTALA requirements are
sufficient to determine which
individuals should be subject to cost
sharing for non-emergency use of the
ED, and that states should not have to
describe the processes in the state plan.
Another commenter expressed concern
about beneficiaries’ general ability to
distinguish between ‘‘emergency’’ and
‘‘non-emergency’’ symptoms. The
commenter was concerned that
adequate protections be in place to
ensure that beneficiaries are not
punished for seeking emergency care
when doing so is appropriate under a
prudent layperson standard. Another
commenter agreed that in distinguishing
between ‘‘emergency’’ and ‘‘nonemergency’’ conditions, hospitals must
use the prudent layperson definition,
not a discharge diagnosis. One
commenter stated clinical reviews of ER
claims to look at presenting conditions
such as chest pain seem would be
administratively burdensome, and could
delay treatment, referral, or payment to
providers. Other commenters requested
that we either clearly define ‘‘nonemergency’’ services or provide states
with the latitude to define them as
needed, and several commenters asked
us to maintain the maximum level of
flexibility in the rule to facilitate
appropriate and feasible
implementation of non-emergency ED
cost sharing.
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Response: ‘‘Non-emergency’’ services
are defined at § 447.51, which cross
references to the current definition of
emergency services at § 438.114. This
definition relies on a prudent layperson
standard, in that a medical condition
manifests itself by acute symptoms of
sufficient severity that a prudent
layperson that possesses an average
knowledge of health and medicine
could deduce that they need emergency
medical attention. We agree that it is
difficult to implement a system to
differentiate non-emergency from
emergency services for cost sharing
purposes in a way that ensures
beneficiary protections consistent with
the prudent layperson standard. We
continue to believe that the use of
diagnosis and procedure codes alone is
not an appropriate process for
determining non-emergency services, as
doing so would not adequately protect
beneficiaries legitimately seeking ED
services based on the prudent layperson
standard, for whom a CPT code assigned
after care is provided may indicate a
non-emergency condition. We sought
comments on feasible methodologies for
states and hospitals to use to make this
distinction, but did not receive any
recommendations. Therefore, we are not
making any revisions in the final rule to
prescribe how states can and should
distinguish between ‘‘emergency’’ and
‘‘non-emergency’’ conditions for cost
sharing purposes. We remain open to
states’ proposals for distinguishing
between ‘‘emergency’’ and ‘‘nonemergency’’ conditions and will review
such proposals through the state plan
amendment process. As successful
models emerge we will develop further
guidance.
Comment: One commenter asked if
would be reasonable to have the
Medicaid agency reimburse hospitals for
the medical screening that they must
conduct. Another commenter asked if a
hospital could be reimbursed for
providing a referral and giving advice
on other appropriate providers.
Response: To the extent the provider
properly bills the Medicaid agency for
an assessment or evaluation conducted
on a Medicaid beneficiary, the provider
would be entitled to payment for the
service as provided for in the state’s
Medicaid State plan. States may also
establish payment specifically for the
medical screening exam required by
EMTALA and/or for coordination of
referrals to alternative non-emergency
services providers.
Comment: One commenter suggested
that CMS allow hospitals to charge the
maximum allowable cost-sharing
amount for non-emergent care, and then
refund the beneficiary if needed. The
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commenter expressed concern that
hospitals will not be able to impose cost
sharing on beneficiaries after they have
left the ED.
Response: The statute requires that
before providing and imposing cost
sharing for non-emergency services in
an ED, the hospital must inform the
beneficiary of the cost sharing obligation
tied to those services and provide the
name and location of an available,
accessible, alternative provider that can
provide the services with no or lesser
cost sharing. This allows the beneficiary
to forgo treatment in the ED if they do
not have the ability to pay the cost
sharing. If the individual decides to stay
and receive the services at the ED, the
hospital can impose the cost sharing
while the person is still present.
Comment: One commenter stated that
for hospitals, the collection of Medicaid
cost-sharing amounts for non-emergency
care in ED settings can prove difficult,
leading to lack of payment and increases
in bad debt.
Response: The statute allows states to
impose cost sharing for non-emergency
care in an ED and sets out the
requirements that hospitals must meet
to collect such cost sharing. We do not
have the authority to take away this
option or ignore the statutory
requirements and will work with states
and the hospital community to share
best practices and potentially issue
further guidance.
Comment: One commenter requested
clarification as to whether urgent care
centers are subject to the guidelines for
cost sharing for non-emergency use of
the ED.
Response: No, this rule only pertains
to non-emergency services furnished in
an ED.
Comment: A few commenters
supported what they believed was a
new option regarding cost sharing for
non-emergency services provided in the
ED to beneficiaries who are otherwise
exempt from cost sharing.
Response: This is not a new option.
This is a statutory option described at
section 1916A(e)(2)(B) of the Act and
codified in current regulations at
§ 447.70(b).
Comment: One commenter stated that
instead of focusing on cost sharing,
which could result in harm to patients,
we should focus on best practices for
medically sound ways of reducing
unnecessary emergency department
visits, such as electronic exchange of
patient information, care coordination,
patient education on appropriate use of
the ED, and guidelines for prescribing
narcotics. One commenter was
concerned that focusing on cost sharing
does not address why patients seek care
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in an ED, and that hospitals trying to
decrease non-emergency ED use will
inadvertently run afoul of either
EMTALA or their state’s emergency
access rules. The commenter
recommended that some form of safe
harbor be established for hospitals
trying, in good faith, to encourage the
most appropriate use of resources for
non-emergency care.
Response: We agree that there are
many strategies which states can and
have implemented to address the
problem of non-emergency use of
hospital EDs. However, whether or not
cost sharing is the most effective way to
address non-emergency use of the ED, it
is an option provided to states in the
statute. We are available to work with
all states in exploring the full range of
options to reduce non-emergency use of
the ED, and to share best practices
which emerge.
7. Premiums (§ 447.55)
We proposed one simplified,
consolidated section of the regulations
to implement the options authorized
under sections 1916 and 1916A of the
Act relating to the imposition of
premiums on individuals with family
income above 150 percent of the FPL,
and describe the options to impose
premiums for specific populations. The
proposed changes are discussed in more
detail in the January 22, 2013 Medicaid
Eligibility Expansion proposed rule (78
FR 4660). We received the following
comments concerning the proposed
premiums provisions:
Comment: Several commenters
recommended that we revise proposed
§ 447.55(a)(2) to clarify that states are
allowed to impose premiums on
qualified disabled and working
individuals if the individual’s income
exceeds 150 percent of FPL. The
commenters also noted that proposed
§ 447.55(c) does not reflect statutory
requirements in section 1916 of the Act
that limit aggregate premium expenses
for individuals provided medical
assistance under section
1902(a)(10)(A)(ii)(XV) or
1902(a)(10)(A)(ii)(XVI) of the Act and
the Ticket to Work and Work Incentives
Improvement Act of 1999 (TWWIIA), to
no more than 7.5 percent of the
individual’s family income for those
whose annual income does not exceed
450 percent of the FPL.
Response: We agree with the
commenters. Due to a drafting error, the
allowable premiums and limitations
described at proposed § 447.55 were not
clear. We have revised paragraph (a) and
paragraph (c) (redesignated as paragraph
(b) for clarity), of § 447.55 to address
this error. Paragraph (b)(1) describes the
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limitations on prepayment; paragraph
(b)(2) describes the options for
terminating an individual for failure to
pay, paragraph (b)(3) describes the
statutory requirements noted by the
commenter for individuals receiving
medical assistance under TWWIIA, and
paragraph (b)(4) describes the state’s
option to waive premiums for any
individual or family. In addition to
these clarifications, we revised the
description of pregnant women who
may be charged premiums at
§ 447.55(a)(1) to reflect the
consolidation of different statutory
eligibility groups for pregnant women
under a single regulatory section at
§ 435.116 of the March 2012 final rule.
This is not a substantive change and is
intended solely to assist states in
appropriately identifying those
beneficiaries who may be charged
premiums, as described in the statute.
As noted above, we made a similar
revision to the description of children
who are exempt from premiums and
cost sharing at § 447.56(a)(1)(i) through
(iii) of this final rule.
Comment: Several commenters
recommended that § 447.55 be revised
to clarify that premiums can only be
imposed on medically needy
individuals after their spend-down
amount is met and they are receiving
Medicaid; they cannot be included as
part of the spend down.
Response: An individual cannot be
subject to a premium unless he or she
is eligible for Medicaid. States may not
impose a premium until the month in
which the individual has met his or her
spend-down and becomes eligible.
Comment: Several commenters
recommended that the regulations
require a process for waiving premiums
in cases of undue hardship; and that the
process adopted by a state should be set
forth in the state plan and reflected in
state law and other public documents.
One commenter asked for CMS to
provide examples of ‘‘hardship.’’
Response: The decision to waive
premiums due to hardship is a matter of
state policy. Such policies do not
require prior authorization from the
Secretary. Therefore we are not revising
the regulations as suggested.
Comment: One commenter stated that
‘‘sliding scale’’ premiums imposed on
the medically needy under § 457.55
must actually ‘‘slide’’ so that there is a
lowest-income group of individuals for
whom there is no premium and that
premiums for higher income individuals
increase linearly or quasi-linearly up to
$20 for those at or near 150 percent of
the FPL. One commenter stated the $20
allowable premium should be removed
from the regulation.
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Response: Section 1916 of the Act
expressly permits states to impose
premiums on medically needy
individuals on a sliding scale, but does
not require that the lowest income
medically needy individuals are
charged $0 premiums. Current
regulations at § 447.52 allow for
premiums on a sliding-scale basis up to
$19, and we are finalizing the proposal
to increase that amount to $20. We have
revised the regulations at § 447.55(a)(5)
to clarify that, if premiums are imposed
on medically needy individuals on a
sliding scale, the agency must impose
an appropriately higher premium for
individuals at higher levels of income,
with $20 being the maximum allowable
premium at the highest income level.
States may choose to set their highest
premium at a level below $20.
Comment: One commenter asked for
clarification of the consequences for
‘‘non-payment’’ that are described at
proposed § 447.55(c)(1)(ii) and (2)(ii).
The commenter recommends that
termination be allowed for failure to
make full payment, and that partial
payment is not adequate to prevent
termination from the program.
Response: As noted previously, due to
a drafting error, we have revised
§ 447.55(c) (redesignated as paragraph
(b) of the final rule) to clarify the
consequences for non-payment for all
individuals subject to premiums. As
described in paragraph (2), except for
medically needy individuals, states
have the option to terminate any
individual who has failed to pay all or
part of his or her premium obligation.
The state may not terminate an
individual prior to 60 days after the
failure to pay the premium. The state
may not terminate an individual who,
during that time period, has paid the
premium due in full. To reiterate
current policy, we also added a new
paragraph (5) to § 447.56(b) to indicate
that no further consequences can be
applied for non-payment of Medicaid
premiums, including ‘‘lock-out’’
periods. We note that we redesignated
paragraph (c) as paragraph (b) in the
final rule to move the state plan
requirements after the section related to
consequences for non-payment. This
change is to improve the flow of the
regulation and is not intended to be
substantive.
Comment: One commenter was
concerned that proposed § 447.55(c)
would permit states to terminate
Medicaid coverage for failure to pay
premiums for as little as 60 days. While
the commenter calls this an
improvement over the current
regulation, which they believe does not
establish any minimum grace period,
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the commenter believed that states
should be encouraged to work with
beneficiaries on a payment schedule to
avoid a termination.
Response: Proposed § 447.55(c),
redesignated as § 447.55(b) in the final
rule, does not represent new policy.
This option, established under both
sections 1916 and 1916A of the Act, is
currently codified at § 447.80 for
individuals with income over 150
percent of the FPL who are subject to
premiums under section 1916A of the
Act. In this final rule, we are simply
codifying the requirements as they
relate to premiums imposed under the
authority of section 1916(c) of the Act.
8. Limitations on Premiums and Cost
Sharing (§ 447.56)
We proposed a single streamlined
approach to implement the limitations
on premium and cost sharing
established under sections 1916 and
1916A of the Act wherever the policies
align. Sections 1916(a), (b), and (j), and
1916A(b)(3) of the Act specify certain
groups of individuals as exempt from
premiums and/or cost sharing,
including certain children, pregnant
women, certain American Indians and
Alaska Natives (AI/ANs), certain
individuals residing in an institution,
individuals receiving hospice care and
individuals eligible under the optional
eligibility group for individuals with
breast and cervical cancer under
§ 435.213 of this part. The proposed
changes are discussed in more detail in
the January 22, 2013 Medicaid
Eligibility Expansion proposed rule (78
FR 4660 and 4661). We received the
following comments concerning the
proposed limitations on premiums and
cost sharing provisions:
Comment: Two commenters
recommended that proposed § 447.54(c),
which permits states to impose cost
sharing for non-emergency use of the ED
on individuals otherwise exempt from
cost sharing, should not apply to AI/AN
beneficiaries who are exempt from cost
sharing.
Response: We are finalizing the
regulation as proposed. Sections
1916A(c)(2)(B) and 1916A(e)(2)(B) of the
Act permit states to charge nominal cost
sharing to individuals otherwise exempt
from cost sharing under section
1916A(b)(3)(B) of the Act for nonpreferred drugs and non-emergency use
of an ED. There is no differential
treatment under the statute for AI/ANs
as compared to other individuals who
are otherwise exempt from cost sharing.
However, such cost sharing must be
limited to the nominal and neither a
pharmacy nor a hospital ED may deny
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services if the individual does not pay
the cost sharing.
Comment: We solicited comments
about requiring states to periodically
renew an AI/AN’s cost sharing
exemption based on current or previous
use of a service from an Indian health
care provider or through referral under
contract health services. A number of
commenters supported proposed
§ 447.56(a)(1)(vii) to exempt AI/ANs
who are currently receiving, or have
ever received a service from an Indian
health care provider or through referral
under contract health services from any
cost sharing. Several commenters were
concerned that requiring renewal of
status for the exemption would be
administratively burdensome for both
AI/AN individuals and state Medicaid
agencies and could lead to exempt
individuals being subject to
impermissible cost sharing. A few
commenters recommended that if
renewal of the AI/AN exemption status
is required, that such renewal be limited
to no more than once every three years,
which is the period of time used by IHS
for determining ‘‘active users’’ in an IHS
or tribal service unit. No commenters
supported a renewal policy for AI/AN
exemption.
Response: We are adopting the AI/AN
exemption as proposed because we do
not see any particular utility in
requiring renewal of status, since the
underlying eligibility for IHS or tribal
health services is unlikely to change,
and we agree that renewal of status can
be burdensome for both the beneficiary
and the provider. Once the exemption
for an individual at § 447.56(a)(1)(x), as
redesignated in this final rule, is
established, a renewal of such
exemption will not be necessary. We
note that we added a definition of
contract health service at § 447.51 for
clarity and made a technical correction
under the definition of Indian to reflect
revised citations to 25 U.S.C due to
changes made by the Affordable Care
Act. We do not intend these to be
substantive changes to the regulations.
Comment: One commenter
recommended we permit states to
implement specific processes to track
separate cost sharing for AI/ANs related
to the 5 percent aggregate limit as
permitted by current regulation.
Response: We do not see a need for
states to separately track cost sharing for
AI/AN beneficiaries, the majority of
whom are exempt from cost sharing
under the regulations. For any
individuals permissibly subject to cost
sharing, the same 5 percent aggregate
limit applied to other beneficiaries, and
the same requirement to track cost
sharing charges, would apply.
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Comment: A few commenters
suggested states should have broad
latitude in applying verification
procedures to exempt AI/ANs who are
eligible for or currently or have ever
received a service from an Indian
provider or through referral under
contract health services (CHS) from
premiums and cost sharing respectively,
and that procedures that create the least
burden on individuals, including
electronic processes, be employed by
states. They recommended that selfattestation of status for the AI/AN cost
sharing exemption be permitted, that if
verification is required that electronic
data matching should be used to the
maximum extent possible, and that we
provide a list of possible documents
which states could use when electronic
verification is not available.
Response: There are no specific
federal requirements regarding the
process for verifying premiums and cost
sharing exemptions for AI/ANs. States
have flexibility to establish their own
processes for verifying who is eligible to
receive or has ever received a service
from an Indian provider or through
referral under CHS, including the use of
self-attestation, electronic data matches
or reasonable paper documentation, as
long as the process is not unduly
burdensome on AI/ANs.
Comment: One commenter requested
that CMS clarify that family planning
supplies are exempt from differential
cost-sharing for non-preferred drugs.
Another commenter recommended that
CMS clarify that the limitations on
premiums and cost sharing also apply to
family planning-related services,
including office visits. Commenters
believed that this clarification is
particularly important for coverage of
family planning under the state plan,
permitted under section
1902(a)(10)(A)(ii)(XXI) of the Act, as
added by section 2303 of the Affordable
Care Act, which defines ‘‘medical
assistance’’ covered under this option to
include both family planning and family
planning-related services.
Response: Under sections 1916 and
1916A of the Act and § 447.53 and
§ 447.70 of the current regulation,
family planning services and supplies,
including contraceptives and
pharmaceuticals for which the state
properly claims or could claim at an
enhanced federal match, are exempt
from cost sharing. We did not propose
any changes to this exemption, which is
codified at § 447.56(a)(2)(ii) of this final
rule. We do not have the statutory
authority to require states to exempt
‘‘family planning-related services,’’
which are a separate category of
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services, but states have the option to do
so.
Comment: One commenter requested
that we clarify that pregnant women
receiving services during a period of
presumptive eligibility are also exempt
from premiums and cost sharing.
Response: Individuals who are
receiving benefits during a presumptive
eligibility period, but who have not yet
been determined Medicaid eligible by
the agency, based on a regular
application, including pregnant women,
may not be subjected to the premiums.
In addition, all pregnancy-related
services are exempt from cost sharing,
including during a period of
presumptive eligibility. As described in
the March 2012 final eligibility rule,
‘‘Pregnancy related services’’ is
presumed to include all services
otherwise covered under the state plan
unless the state has justified
classification of a service as not
pregnancy-related in its state plan.
Comment: Many commenters
supported the provision in proposed
§ 447.56(a)(1)(v) to give states the option
to exempt individuals from cost sharing
if they are receiving long term services
and supports in a home or communitybased setting and are required to
contribute to the cost of care in a
manner similar to the post-eligibility
treatment of income for institutionalized
individuals under part 435 subpart H of
the regulations. Many commenters
recommended that we require states to
exempt such individuals because
imposing cost sharing could push
individuals into more restrictive settings
in violation of the requirements of the
Americans with Disabilities Act (ADA),
as applied by the Supreme Court in the
Olmstead decision. A few commenters
recommended that we require states to
exempt all individuals receiving
services in a home and communitybased setting regardless of whether they
are required to contribute to the cost of
their care. Finally, one commenter
asked that we clarify that we are not
proposing to extend the same posteligibility treatment of income rules
used for institutional services to
individuals receiving services in a home
and community-based setting who, in
addition to any contribution for the cost
of their care, also generally have to
cover other basic living expenses, such
as for housing and food, and would not
be able to cover such expenses if they
were required to contribute all but a
nominal amount of their income to
cover the cost of the services received,
as is the case for institutionalized
individuals.
Response: As noted above, we do not
see a statutory basis to require this
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exemption, therefore in the final rule, at
§ 447.56(a)(1)(viii), as redesignated, we
maintain the option for states to exempt
individuals receiving services in a home
and community-based setting, whose
medical assistance is reduced by
amounts reflecting available income
other than required for personal needs.
This option is consistent with state
authority under section 1916A of the
Act to target cost sharing to specified
groups. In addition, states may target
cost sharing at particular types of
services, and could determine not to
impose cost sharing on home and
community-based services. We also note
that if an individual has his or her
medical assistance reduced to account
for available income, the individual
would be able to deduct any premiums
or cost sharing from the calculation of
available income used to determine the
level of medical assistance provided.
There would be no modification of
current regulations relating to posteligibility treatment of income or shareof-cost. Again, we remind states of their
obligations under Olmstead.
Comment: One commenter
recommended that former foster care
children covered under § 435.150
should be exempt from premiums and
cost sharing. Several commenters
recommended that states be given the
express option to exclude medically
frail individuals from cost sharing.
Response: While we understand that
these are populations upon which states
may not wish to impose cost sharing, we
do not see a clear basis to support a
federally-mandated exemption. States
are free to use targeted cost sharing, in
accordance with § 447.52(d), to limit the
impact of cost sharing as needed to
address issues of non-exempt
populations that the state determines
are particularly vulnerable.
Comment: One commenter requested
clarification on the provision at
§ 447.56(c)(3), which is specific to
providers that the agency reimburses
under Medicare reasonable cost
reimbursement principles. The
commenter asked whether the policy
that an agency may increase its payment
to offset uncollected deductible,
coinsurance, copayment, or similar
charges that are bad debts of such
providers was a change or consistent
with current law.
Response: This policy is contained in
the current regulations at § 447.57(b).
However, consistent with the new
definition of cost sharing included at
§ 447.51 of this final rule, we are
replacing the reference to ‘‘deductible,
coinsurance, copayment, or similar’’
with ‘‘cost sharing’’ in the final rule.
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Comment: Many commenters
recommended that we amend sections
1916 and 1916A of the Act to clarify
that the preventive services included in
the EHBs are exempt from cost sharing,
because low income individuals
enrolled in Medicaid ABPs may be
responsible for cost sharing for some of
the preventive services that are available
to higher income individuals in the
private market with no cost sharing.
Response: Section 1916A of the Act
and the final rule at § 447.56(a)(2)(iii) do
require exemption of preventive
services for children under age 18. At a
minimum such services must include
those specified at § 457.520, which
reflect the well-baby and well child care
and immunizations in the Bright
Futures guidelines issued by the
American Academy of Pediatrics. We do
not see a basis to broaden this statutory
exemption under the Medicaid program
to extend to preventive services for
older individuals. States have the
flexibility to exempt additional services
from cost sharing and could determine
to exempt preventive services for all
beneficiaries.
Comment: Many commenters
recommended that we exempt services
associated with ‘‘never events’’ from
cost sharing.
Response: We agree with commenters
that services associated with ‘‘never
events’’ should not be subject to cost
sharing. In accordance with
§ 447.26(c)(1), ‘‘no medical assistance
will be paid for ‘‘provider preventable
conditions’’ as defined in this section.
We interpret medical assistance in this
context to include any state plan
imposed cost sharing, and providers,
who are not permitted to claim
reimbursement from the agency for
these services, also are not entitled to
charge the beneficiary any cost sharing
amount. To clarify this requirement, we
have included provider-preventable
services, also known as ‘‘never events,’’
among the list of exempted services at
§ 447.56(a)(2)(v).
Comment: One commenter
recommended that we revise
§ 447.56(a)(2)(iv) to require that all
services provided to pregnant women be
considered as pregnancy-related, except
those services specifically identified in
the state plan as not being related to the
pregnancy, only if the state is able to
justify and the Secretary concurs, that
the service is not pregnancy-related.
Response: States have the discretion
to determine pregnancy-related services
within the parameters of § 440.210(a)(2).
We are seeking to align the standard
related to cost sharing with what is
required for the provision of pregnancyrelated services, and maintain in the
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final rule that all services provided to
pregnant women will be considered
pregnancy related unless the state has
justified classification of a service as not
pregnancy-related in its state plan.
Comment: One commenter asked that
we clarify what is meant by
‘‘nonexempt’’ and ‘‘otherwise exempt
populations,’’ per the reference to
allowing states to impose cost-sharing at
higher than nominal levels for
nonexempt individuals and applying
cost sharing to otherwise exempt
populations at § 447.56.
Response: Exempt populations are
defined at sections 1916(a), (b) and (j)
and 1916A(b) of the Act and at § 447.53
and § 447.70 of the current regulations.
These populations are exempt from cost
sharing under section 1916 and
1916A(a) of the Act, respectively, but
are not exempt from cost sharing under
section 1916A(c) or (e) of the Act, which
pertain to alternative cost sharing for
non-preferred drugs and non-emergency
use of the ED. These exemptions were
consolidated at § 447.56(a) of the
proposed rule and maintained in the
final rule. When using the term
‘‘nonexempt’’ we are referring to
beneficiaries who do not fall into one of
the groups exempted under § 447.56(a)
of the final rule and therefore may be
subject to cost sharing. ‘‘Otherwise
exempt populations’’ refers to those
populations that are generally required
to be exempted from cost sharing but are
not exempt from cost sharing under
section 1916A(c) or (e) of the Act.
Section 1916A of the Act allows states
to impose cost sharing for drugs and
non-emergency use of the ED on
‘‘otherwise exempt populations,’’
meaning that such cost sharing may be
imposed on beneficiaries who are
exempted from all other cost sharing per
§ 447.56(a).
Comment: Many commenters were
concerned that the aggregate limit
described in proposed § 447.56(f) does
not apply to individuals with income at
or below 100 percent of the FPL.
Another commenter was concerned that
these rules created a new requirement
for states to apply the aggregate limit to
cost sharing imposed under section
1916 of the Act. A few commenters
urged the Secretary to lower the
aggregate limit to something less than 5
percent.
Response: Under sections 1916 and
1916A of the Act, aggregate premiums
and cost sharing imposed may not
exceed 5 percent of an individual’s
income. This is a statutory limit and we
do not have the authority to require
states to apply a lower cap. However,
we are revising the final regulation at
§ 447.56(f)(1), and redesignating the
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succeeding paragraphs accordingly, to
provide that the aggregate limit applies
to all premiums and cost sharing
incurred by all individuals in the
Medicaid household, at all income
levels. At § 447.56(f)(2) of the final rule,
we maintain the requirement in current
regulation that states must track all
incurred Medicaid premiums and cost
sharing for all members of the Medicaid
household, if such premiums and cost
sharing could place any family member
at risk of reaching the aggregate limit.
Comment: Many commenters
recommended we revise proposed
§ 447.56(f)(3) to require states to inform
beneficiaries, at risk of reaching the
aggregate limit, of the automated
process used to track premiums and cost
sharing, and how they can obtain
ongoing information about how far they
are from reaching the limit.
Response: Section 447.56(f)(2), as
redesignated in this final rule, requires
that if a state imposes cost sharing that
could result in individuals reaching the
aggregate limit, the state must describe
their process for tracking the premiums
and cost sharing in their state plan.
Current regulations at § 447.64(d)(2),
redesignated at§ 447.56(f)(3) in this final
rule, do require the state to notify
beneficiaries and providers when the
beneficiary reaches the cap. We are
revising this paragraph to restore
language currently in § 447.68(d) that
was inadvertently removed in the
proposed rule indicating that the state
must inform beneficiaries and providers
of the beneficiaries’ aggregate limit.
States must also have a process in place
for beneficiaries to request a
reassessment of their aggregate limit. We
believe these rules provide the best
balance between minimizing
administrative burden on states and
modernizing the Medicaid program to
ensure beneficiaries are not charged
amounts in excess of the aggregate. We
do not believe these rules prevent states
from establishing processes by which
beneficiaries can regularly check their
status regarding the aggregate limit. To
allow states flexibility, we are not
specifying the mechanisms by which
such notifications must occur.
Comment: One commenter
recommended that the regulation
should use a single, annual (not
monthly) cost sharing maximum, such
as that used for the Part D low-income
subsidy, since renewals are completed
on an annual basis, and therefore costsharing maximums are most effectively
implemented on a well-established
calendar-year basis.
Response: Section 1916A of the Act
requires that the aggregate limit be
applied on a monthly or quarterly basis
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as determined by the state; an annual
limit is not permitted under the statute.
Comment: One commenter requested
that we clarify what is meant by
‘‘premiums or cost sharing rules that
could place beneficiaries at risk of
reaching the aggregate family limit’’ in
proposed § 447.56(f)(3).
Response: If a state imposes
premiums and/or cost sharing at a level
that could result in cumulative
premiums and cost sharing exceeding 5
percent of a beneficiary’s family income
(for all family members on Medicaid,
over the course of a month or quarter as
determined by the state), the state must
implement an effective tracking
mechanism to ensure the cap is not
exceeded. For example, a state may
establish a prescription drug copayment
targeted to individuals with family
income above 150 percent of the FPL,
and set the copay at $1 for preferred
drugs and $2 for non-preferred drugs. If
this is the only cost sharing to which
these individuals are subject, and they
do not pay a premium, then it is
unlikely that any beneficiary would
accumulate cost sharing charges in
excess of 5 percent of his or her family
income, and the state would not have to
establish a tracking mechanism.
However, if these same beneficiaries
were also assessed a premium of 4
percent of family income, beneficiaries
may be at risk of reaching the aggregate
limit and the state would need to
establish a tracking mechanism. Anyone
with income under 100 percent of the
FPL, who is subject to any cost sharing
would likely be at risk of reaching the
aggregate limit and a tracking
mechanism would likely be required.
We will work with states to determine
their need for a tracking mechanism
through the state plan amendment
process.
We note that if more than one
Medicaid beneficiary resides in a
household, then the premiums or
copayments of each beneficiary in the
household would count toward the
aggregate limit. We do not specifically
define when cost sharing may place
beneficiaries at risk of reaching the
aggregate limit, because of the many
different combinations of cost sharing
and premium charges which it would be
possible for states to impose. We will
monitor state compliance through the
state plan amendment process.
Comment: One commenter requested
further guidance on ways to track cost
sharing for beneficiaries who change
plans during the year.
Response: For individuals who
change plan mid-year, the state must
establish a mechanism to continue
tracking through the transition to ensure
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that they do not exceed the cap.
Alternatively, a state could suspend any
additional cost sharing until the next
monthly or quarterly period begins. We
have in the past encouraged, and
continue to encourage, states to track
cost sharing through their Medicaid
Management Information System
(MMIS). As we review state plan
amendments and conduct audits, we
will share best practices that emerge
among states to promote effective and
efficient tracking systems.
Comment: Many commenters
recommended that we remove the
requirement at proposed § 447.56(f)(3)
that states have an automated
mechanism for tracking each family’s
incurred premiums and cost sharing
because it is costly and presents a
substantial administrative and
operational burden on state Medicaid
agencies, their contractors, and
providers. Instead, the commenters
recommended that the state should have
an opportunity to develop its own
mechanism for tracking a Medicaid
enrollee’s premium and cost sharing
spending. A few commenters also
recommended that states should have
the option of having the enrollees track
their own information. One commenter
asked that we clarify that a state that
delegates responsibility for the
administration of cost sharing to
managed care organizations must ensure
the availability of complete and timely
information necessary for performing
this role.
Response: We have revised
§ 447.56(f)(2) in this final rule to remove
the word ‘‘automated’’ and replace it
with ‘‘effective.’’ CMS will review state
proposals through the state plan
amendment process to ensure that
tracking mechanisms employed by
states are effective in ensuring that
incurred premiums and cost sharing do
not exceed the aggregate limit and that
the tracking mechanism does not rely on
beneficiaries. We note that under
current regulations states must account
for cost sharing amounts in their MMIS
to ensure appropriate provider payment
and must calculate each family’s
aggregate limit—from data in the state’s
eligibility system—and provide that
information to the beneficiary. States
may claim federal matching funds to
update their MMIS and eligibility
systems as necessary to implement a
tracking system that uses the data
already available in their systems to
implement the aggregate limit. States
have the flexibility to develop any
effective process that does not rely on
beneficiaries, and contains timely and
accurate information so that
beneficiaries do not exceed their
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aggregate limits. In addition, a state may
delegate this responsibility, as
appropriate, to their managed care
organizations although we are not
requiring that they do so. Tracking of
premiums and cost sharing is standard
industry practice among health plans,
including those that participate in the
Medicaid program, and is consistent
with implementing the requirements of
the Affordable Care Act out-of-pocket
limits for all Americans, which will
require tracking by all private health
insurance plans.
Comment: One commenter stated that
the flexibilities provided in the
proposed rule, including the higher cost
sharing limits, are negated by the
continued application of the aggregate
limit. The commenter argues that the
high cost sharing limits effectively will
serve as a provider rate cut, which will
trigger further decrease in access to
health care for Medicaid beneficiaries.
The commenter recommends that we
allow exceptions to the 5 percent
aggregate limit and the automated
tracking requirements, allowing states to
propose in their state plan reasonable
assumptions and methodologies to limit
maximum out-of-pocket costs at an
individual or family level. The
commenter believed such an approach,
coupled with provisions for exceptions
and an appeals process involving clear
timelines to preserve access to care,
would be consistent with the spirit of
the statute.
Response: We do not understand the
connection that the commenter is
making between the aggregate limit and
effective provider reimbursement rates.
Once the limit is reached, the
beneficiary may not be charged any cost
sharing amounts, and providers will be
paid the full reimbursement rate by the
state. Regardless, the application of an
aggregate limit, which is common
practice in commercial insurance as
well, is required by section 1916A of the
Act, as added by the Deficit Reduction
Act of 2005; we do not have authority
to eliminate this requirement through
regulation.
9. Beneficiary and Public Notice
Requirements (§ 447.57)
We proposed to codify existing policy
to ensure that beneficiaries, providers,
and the general public all have access to
effective notice of Medicaid premium
and cost sharing charges. Appropriate
vehicles for providing notice might
include the agency Web site,
newspapers with wide circulation, web,
and print media reaching racial, ethnic,
and linguistic minorities, stakeholder
meetings, and formal notice and
comment in accordance with the state’s
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administrative procedures. We received
the following comments concerning the
proposed provisions for beneficiary and
public notice requirements:
Comment: One commenter asked for
clarification on what constitutes a
method to which applicants,
beneficiaries, and providers are ‘‘likely
to have access,’’ and whether
publication on a state Web site would be
an acceptable method. One commenter
strongly disagreed that state legislative
hearings do not provide sufficient
public, beneficiary and provider notice
and recommended that such hearings be
included as one of the options for
providing sufficient notice.
Response: To allow flexibility for
different state processes while ensuring
provision of meaningful notice, we are
not prescribing the particular method or
format that states must use to provide
the required notice, but instead
proposed parameters at § 447.57,
finalized with one revision (discussed
below) in this rulemaking, regarding
what constitutes sufficient notice. We
provided examples of acceptable
methods in the preamble to the
proposed rule, including notice on the
state agency’s Web site. As stated in the
preamble to the proposed rule, we do
not believe that legislation discussed at
a hearing or posted on a Web site is
adequate, since state legislation and
legislative hearings often are not
accessible or understandable to many
beneficiaries, providers or other
interested members of the public.
Comment: Many commenters
supported the proposal to require that
states provide additional public notice if
proposed cost sharing is substantially
modified during the state plan
amendment (SPA) approval process.
Many of these same commenters also
recommended that we require states to
provide at least a 30-day comment
period on any revisions to a SPA
involving premiums or cost sharing
charges. A few commenters were
concerned that the proposed rule would
be too burdensome on states and
recommended that no additional public
notice requirements be imposed on
states.
Response: We have revised the
regulations at § 447.57(c) to require
states to provide additional public
notice if proposed cost sharing is
substantially modified during the SPA
approval process. We are also applying
this rule to premiums that are
substantially modified during the SPA
process. We are not, however, accepting
the recommendation that states should
have to provide a second 30 day
comment period for any revisions made
to the state’s cost sharing policy during
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the SPA approval process, as we believe
this would be overly burdensome on
states and significantly delay the SPA
process.
III. Provisions of the Final Regulations
For the most part, this final rule
incorporates the provisions of the
proposed rule. We received many
comments about the complexity of the
proposed rules and the significance of
the changes that need to be made to
fully implement the provisions of the
Affordable Care Act. Many commenters
were concerned about the short
timeframes for implementation and
about states’ ability to make needed
changes to policy, operations, and
information technology systems. We
recognize that the timing of this rule
may result in implementation
challenges, especially from a systems
perspective. Therefore, we have
evaluated the provisions of the January
proposed rule that are necessary to meet
the deadlines and are finalizing in this
rule only those provisions that we
believe states will be reasonably able to
(or have already been planning to)
implement by January 1, 2014.
Remaining provisions will be finalized
in future rulemaking. Those provisions,
included in this final rule, that differ
from the proposed rule are as follows:
Change to § 431.10
that an individual’s election to receive
notices electronically is confirmed by
regular mail and that the individual is
informed of his or her right to change
such election.
Change to § 435.923
• Clarified in § 435.923(a) that any
authorization granted under operation
of state law may serve in place of
written authorization by the applicant
or beneficiary.
Change to § 435.1015
• Clarified that states are required to
consider the cost sharing requirements
of the private health plan when
determining whether premium
assistance is a cost-effective option.
Changes to § 435.1110
• Revised § 435.1110(c)(1) to make
clear that states electing to limit the
presumptive eligibility determinations
which hospitals can make must permit
the hospitals to make presumptive
eligibility determinations based on
income for all of the populations
included in § 435.1102 and § 435.1103.
• Adding paragraph (d)(3) to provide
that the agency may disqualify a
hospital as a qualified hospital only
after it has first provided the hospital
with additional training or taken other
reasonable corrective action measures.
• Clarified responsibilities of single
state agency related to delegation of fair
hearings.
Change to § 435.1200
Change to § 431.201
Changes to § 447.51
• Added the definition of ‘‘send.’’
Change to § 431.205
• Clarified language in § 431.205(b).
Change to § 431.206
• Clarified in § 431.206(d) that an
individual has a right to a hearing before
the Medicaid agency instead of the
Exchange or Exchange appeals entity.
Change to § 435.603
• Specified in § 435.603(d)(4) that the
5 percent disregard should be applied to
the highest income standard in the
applicable Title of the Act under which
the individual may be determined
eligible using MAGI-based
methodologies.
Change to § 435.908
• Deleted paragraph
§ 435.908(c)(3)(i).
Change to § 435.918
• Allowed for delayed
implementation of electronic notices
and required that the Agency ensure
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• Codified § 435.1200(d)(5) of
proposed rule at § 435.1200(d)(6).
• Added definition of ‘‘inpatient
stay’’ and ‘‘outpatient services.’’
• Added definition of Federal poverty
level (FPL) to use the acronym
throughout the regulation. No
substantive change is intended.
• Added a definition of contract
health service, for clarity (not a
substantive change to the regulations).
Changes to § 447.52
• Revised the maximum cost sharing
allowed for an inpatient stay to $75 and
added a new paragraph at (b)(2), to
require states with inpatient cost
sharing that exceeds the amount in the
final rule, as of July 15, 2013, to submit
a plan to CMS that provides for
reducing inpatient cost sharing to $75
on or before July 1, 2017.
• Revised paragraph (b)(3) to be clear
that, ‘‘in states that do not have fee-forservice payment rates, any cost sharing
imposed on individuals at any income
level may not exceed the maximum
amount established for individuals with
income at or below 100 percent of the
FPL.
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• Revised § 447.52(d), adding
paragraphs (1) and (2) to clarify that for
cost sharing imposed for non-preferred
drugs and for non-emergency services
provided in a hospital emergency
department under, the agency may
target to a specified group of individuals
regardless of income.
• Added and amended paragraph (g)
to restore the option to establish
different cost sharing charges for
individuals at different income levels.
• Added paragraph (h) to restore
requirement that any cost sharing
charges imposed by managed care
organization on Medicaid enrollees be
in accordance with the requirements set
forth in the regulations.
• Added paragraph (i) to consolidate
the state plan requirements currently
contained in § 447.53(d) and § 447.68.
Changes to § 447.53
• Revised paragraph (d) to clarify that
cost sharing for non-preferred drugs
imposed on otherwise exempt
populations cannot exceed the nominal
amount defined in § 447.53(b) in
accordance with section 1916A(c) of the
Act.
• Revised paragraph (e) to require
that states must have a timely process to
allow for cost sharing at the preferred
drug level if the prescribing provider
determines that the preferred drug
would be less effective or have adverse
effects on the individual to ensure that
access to necessary drugs is not delayed.
Changes to § 447.54
• Amended paragraph (d)(2)(iii) to
replace the word ‘‘ensure’’ with
‘‘determine.’’
• Added new paragraph (i) at
§ 447.54(d)(2) requiring hospitals to
inform the individual of the amount of
his or her cost sharing obligation for
non-emergency services provided in the
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Changes to § 447.55
• Due to a drafting error we revised
this section to accurate reflect who can
be charged premiums and what
consequences for non-payment exist for
specified groups.
• Revised at paragraph (a)(1) the
description of pregnant women who can
be charged premiums to reflect the
consolidation of different statutory
eligibility groups for pregnant women
under a single regulatory section at
§ 435.116 of the March 2012 final rule.
This is not a substantive change and is
intended solely to assist states in
appropriately identifying those pregnant
women who may be charged as
described in the statute.
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• Revised paragraph (a)(5) to clarify
that, if premiums are imposed on a
sliding scale, the agency must impose
an appropriately higher premium for
individuals at higher levels of income,
with $20 being the maximum allowable
premium at the highest income level.
• Added a new paragraph (5) to
§ 447.55(b) to indicate that no further
consequences can be applied for nonpayment of Medicaid premiums,
including ‘‘lock-out’’ periods.
Changes to § 447.56
• Revised at paragraph (a)(1)(i) the
description of children who are exempt
from premiums and cost sharing at
§ 447.56(a)(1)(i) through (iii) and (iv) to
reflect the consolidation of different
statutory eligibility groups for children
under a single regulatory section at
§ 435.118 of the March 2012 final rule,
and to reflect the changes in the types
of assistance available under Title IV–E
of the Act. These are not substantive
changes and are intended solely to assist
states in appropriately identifying those
children who may be charged premiums
and cost sharing and exempting those
who may not, as described in the
statute.
• Amended paragraph (a)(2)(v) to
include provider-preventable services,
also known as ‘‘never events,’’ among
the list of exempted services.
• Revised paragraph (f)(2) to restore
language currently in § 447.68(d) that
was inadvertently removed in the
proposed rule indicating that the state
must inform beneficiaries and providers
of the beneficiaries’ aggregate limit.
Changes to § 447.57
• Revised language at paragraph (c) to
require states to provide additional
public notice if proposed cost sharing is
substantially modified during the SPA
approval process.
Change to § 457.110
• Required that states provide
individuals with a choice to receive
notices and information required under
this subpart and subpart K of this part,
in electronic format or by regular mail.
Change to § 457.570
• Adding paragraph (c)(2).
Change to § 457.810
• Added language requiring
protections against substitution of
coverage in states that operate premium
assistance programs.
Changes to § 155.20
• Clarifies the definition of advance
payments of the premium tax credit.
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Changes to § 155.200
• Removes the reference to subpart F,
as it will be finalized in a future rule.
Changes to § 155.227
• Clarifies that for the purpose of
§ 155.227, the terms ‘‘applicant’’ and
‘‘enrollee’’ describe people on whose
behalf authorized representatives are
acting, and that the term ‘‘person’’
describes an individual acting as an
authorized representative.
• Clarifies that authorized
representatives are permitted to provide
assistance in the individual and SHOP
Exchanges, as well as for individuals
seeking an exemption from the shared
responsibility payment.
• Adds language ensuring that the
Exchange provides information to both
the applicant or enrollee and the
authorized representative regarding the
powers and duties of an authorized
representative.
• Adds language allowing an
Exchange to permit an applicant or
enrollee to authorize their
representative to perform fewer than all
of the activities described in this
section, provided that the Exchange
tracks the specific permissions of each
authorized representative.
• Clarifies that an authorized
representative will notify the Exchange
and the applicant or enrollee on whose
behalf he or she is acting when the
authorized representative no longer has
legal authority to act on behalf of the
applicant or enrollee.
• Clarifies that the Exchange, not the
applicant or enrollee, will notify the
authorized representative when an
applicant or enrollee notifies the
Exchange that an authorized
representative is no longer acting on his
or her behalf.
• Removes the provision that
organizations as well as staff and
volunteers of organizations must enter
an agreement with the Exchange.
Changes to § 155.230
• Clarifies electronic notice standards
for an individual market Exchange, and
specifies that the individual market
Exchange may choose to delay the
implementation of the process described
in § 435.918(b)(1) regarding sending a
mailed confirmation of the choice to
receive electronic notices.
• Adds standards to distinguish
notice standards for a SHOP and adds
language to allow an employer or
employee in any SHOP to elect to
receive electronic notices.
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Changes to § 155.300
• Clarifies the appropriate crossreference for the definition of minimum
value.
Changes to § 155.302
• Clarifies that any contracting
arrangement for eligibility
determinations for Medicaid and CHIP
is subject to the standards in
§ 431.10(c)(2).
• Clarifies that the Exchange appeals
entity, in addition to the Exchange,
must adhere to the eligibility
determination or appeals decision for
Medicaid or CHIP made by the
Medicaid or CHIP agency, or the appeals
entity for such agency.
• Specifies that the agreement under
§ 155.302(b)(6) will be made available to
HHS upon request.
Changes to § 155.305
• Removes the clause ‘‘unless another
Exchange verifies that the individual
meets the residency standard of such
Exchange’’ related to temporary
residence.
• Clarifies that an applicant must be
eligible for enrollment in a QHP through
the Exchange to be determined eligible
for enrollment through the Exchange in
a QHP that is a catastrophic plan.
Changes to § 155.310
• Clarifies that the provision
regarding duration of eligibility
determinations without enrollment only
refers to an applicant who is determined
eligible for enrollment in a QHP through
the Exchange.
tkelley on DSK3SPTVN1PROD with RULES2
Changes to § 155.315
• Modifies procedures for situations
in which key data sources are
unavailable and not reasonably
expected to be available within 1 day,
such that the Exchange will make an
eligibility determination based on an
applicant’s attestation and trigger the
inconsistency period in paragraph (f).
• Clarifies that the Exchange will
accept an applicant’s attestation
regarding three specific factors of
eligibility when electronic data is
required but it is not reasonably
expected that data sources will be
available within 1 day of the initial
request to the data source, and that for
purposes of eligibility for advance
payments of the premium tax credit and
cost-sharing reductions, other sections
in this subpart already address
situations in which data regarding
MAGI-based income is unavailable.
• Clarifies that paragraph (f)(5)(i) of
this section will follow the effective
dates specified in § 155.330(f).
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• Modifies the language concerning
the verification related to eligibility for
enrollment through the Exchange in a
QHP that is a catastrophic plan for the
purpose of clarity.
Changes to § 155.320
• Clarifies that the Exchange must
obtain any available data from the SHOP
that corresponds to the State in which
the Exchange is operating.
• Modifies language to specify that
the Exchange must select a statistically
significant random sample of applicants
for whom the Exchange does not have
any of the information specified in
paragraphs (d)(2)(i) through (d)(2)(iii).
• Removes language specifying that
the Exchange must use any available
data regarding employment of an
applicant and members of his or her
household.
• Specifies that for eligibility for
enrollment in a QHP through the
Exchange that is effective before January
1, 2015, if the Exchange does not have
any of the information specified in
paragraphs (d)(2)(i) through (d)(2)(iii)
for an applicant, the Exchange may
accept an applicant’s attestation
regarding enrollment in an eligible
employer-sponsored plan and eligibility
for qualifying coverage in an eligible
employer-sponsored plan for the benefit
year for which coverage is requested
without further verification, instead of
following sampling procedures.
• Clarifies that the ability for the
Exchange to satisfy the provisions of
paragraph (d) of this section by relying
on HHS is effective for eligibility for
enrollment in a QHP through the
Exchange that is effective on or after
January 1, 2015, and clarifies that the
division of responsibilities under this
option is subject to guidance issued by
the Secretary.
• Removes language concerning the
agreement associated with having HHS
conduct this verification.
• Removes duplicative crossreferences regarding termination of
coverage.
Changes to § 155.340
• Clarifies the appropriate crossreference for the minimum value
standard.
Changes to § 155.345
• Reserves paragraphs (a)(3) and (g)(7)
for future finalization.
• Clarifies that the Exchange and
Exchange appeals entity will adhere to
the eligibility determination or appeals
decision relating to an individual’s
eligibility for Medicaid or CHIP made by
the state’s Medicaid or CHIP agency or
the appeals entity for such agency.
Changes to § 155.420
• Clarifies that the special effective
dates for birth, adoption, and placement
for adoption also apply to placement in
foster care.
• Expands special enrollment period
for birth, adoption, and placement for
adoption to also include placement in
foster care.
• Clarifies that the special enrollment
period for an individual who was not a
citizen, national, or lawfully present
non-citizen and gains such status also
applies to his or her dependents, if
eligible for coverage through the
Exchange.
• Modifies the special enrollment
period for enrollees newly eligible or
ineligible for advance payments of the
premium tax credit or who experience
a change in eligibility for cost-sharing
reductions to reflect that the special
enrollment period accommodates
individuals enrolled in an eligible
employer-sponsored plan, but not
eligible for qualifying coverage in an
eligible employer-sponsored plan.
Changes to § 155.430
• Modifies language to allow
applicants and enrollees to request
termination from their QHP, in the
Changes to § 155.330
event they report access to other
• Removes cross-references to appeals minimum essential coverage and
provisions, and clarifies that an
become ineligible for advance payments
Exchange must implement changes
of the premium tax credit and costresulting from an appeal decision on the sharing reductions.
date specified in the appeal decision.
• Modifies standards for enrollee• Consolidates standards for
requested termination effective dates,
decreases in advance payments of the
such that QHP issuers and Exchanges
premium tax credit and changes in cost- may only terminate prospectively, and
sharing reductions.
not retroactively.
• Clarifies that terminations for
• Specifies that a change associated
enrollees who are determined eligible
with birth, adoption, placement for
for Medicaid, CHIP or the BHP, such
adoption and placement in foster care
that the last day of coverage is the day
must be implemented on the coverage
before the individual is determined
effective date described in
eligible for such coverage, rather than
§ 155.420(b)(2)(i) and (ii).
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retroactive to the Medicaid or CHIP
eligibility effective date.
• Aligns termination effective dates to
appropriately cross-reference with
eligibility effective dates.
• Adds language to clarify that in the
case of termination due to death, the last
day of coverage is the date of death.
Changes to § 156.270
• Modifies coverage termination
requirements such that standards for
QHP issuers align with those for
Exchanges.
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IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide 60day notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. To fairly evaluate whether an
information collection should be
approved by OMB, section 3506(c)(2)(A)
of the Paperwork Reduction Act of 1995
requires that we solicit comment on the
following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
In the January 22, 2013 (78 FR 4593)
proposed rule, we requested public
comment on each of the rule’s
information collection requirements
(ICRs). The comments and our response
are discussed below.
Background
This final rule continues to
implement key provisions of the
Affordable Care Act including the
completion of the streamlining of
eligibility for children, pregnant
women, and adults that were initiated
in the Medicaid eligibility final rule
published on March 23, 2012 (77 FR
17144). This rule also modifies CHIP
rules relating to substitution of coverage
and premium lock-out periods, which
are important to a coordinated system of
coverage across programs. Finally, this
rule includes provisions related to
authorized representatives, the
procedures for verifying access to
qualifying employer-sponsored
coverage, catastrophic coverage and
other provisions related to eligibility
and enrollment.
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The policies in this rule will result in
a reduction in burden for individuals
applying for and renewing coverage, as
well as for states. The Medicaid program
and CHIP will be made easier for states
to administer and for individuals to
navigate by streamlining Medicaid
eligibility and simplifying Medicaid and
CHIP eligibility rules for most
individuals. Even though there are
short-term burdens associated with the
implementation of the final rule, the
Medicaid program and CHIP will be
easier for states to administer over time
due to the streamlined eligibility and
coordinated efforts for Medicaid, CHIP,
and the new affordable insurance
exchanges.
The final rule also continues to
implement provisions related to the
establishment of Exchanges. This final
rule: (1) Specifies standards related to
authorized representatives, (2) outlines
criteria related to the verification of
enrollment in and eligibility for
minimum essential coverage through an
eligible employer-sponsored plan, and
(3) further specifies or amend standards
related to other eligibility and
enrollment provisions. The description
of the burden estimates associated with
these provisions is included in the
information collection requirements
outlined in section D.
Section A outlines the information
collection requirements that involve
Medicaid and CHIP eligibility and
enrollment. Section B outlines the
information collection requirements that
involve Exchange eligibility and
enrollment.
We used data from the Bureau of
Labor Statistics to derive average costs
for all estimates of salary in establishing
the information collection requirements.
Salary estimates include the cost of
fringe benefits, calculated at 35 percent
of salary, which is based on the June
2012 Employer Costs for Employee
Compensation report by the U.S. Bureau
of Labor Statistics.
A. Medicaid and CHIP Information
Collection Requirements (ICRs) To Be
Addressed Through Separate Notices
and Comment Process Under the
Paperwork Reduction Act
1. ICRs Regarding State Plan
Amendments
1a. Sections 431.10, 431.11, 431.206,
431.211, 431.213, 431.230, 431.231,
431.240, 435.110, 435.116, 435.603,
435.907, 435.908, 435.918, 435.1101,
435.1102, 435.1103, 435.1110, 435.1200,
435.1205, 440.130, 440.210, 440.220,
440.305, 440.315, 440.330, 440.335,
440.345, 447.52–54, 457.110, 457.340,
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457.350, 457.351, 457.355, 457.570, and
457.805
These amendments to the Medicaid
and CHIP state plans are necessary to
reflect changes in statute and federal
policy. While we are aware of the need
to estimate the PRA burden associated
with the submission of state plan
amendments related to the provisions
identified above, those amendments
will be addressed as part of the
electronic state plan filing process being
developed by CMS (the MACPro
system) and submitted to OMB for
approval under OCN 0938–1188 (CMS–
10434).
1b. Sections 435.113, 435.114, 435.223,
and 435.510
Since we are eliminating the
provisions in §§ 435.113, 435.114,
435.223, and 435.510, states will no
longer be required to submit state plan
amendments related to those provisions.
The provisions have been approved by
OMB under OCN 0938–1147).
B. Medicaid Eligibility and Enrollment
1. ICRs Regarding Delegation of
Eligibility Determinations and Appeals
(§§ 431.10(c), 431.11. and 457.1120)
In § 431.10(c), a state may delegate
authority to make eligibility
determinations and to conduct fair
hearings. States generally have written
agreements with various entities for
similar purposes. Under this final rule,
agreements may need to be modified or
new agreements established. However,
states that use the same agency to
administer more than one program (for
example, Medicaid and the Exchange)
will not need an agreement for the
determination of eligibility by that
agency.
Delegation of eligibility
determinations was approved under
OMB control number 0938–1147. This
rule sets out changes in the existing
requirement related to the type of
agencies that can make Medicaid and
CHIP eligibility determinations. These
amendments do not change the burden
associated with the requirement.
Medicaid and CHIP agencies will need
to establish new agreements to delegate
authority to conduct eligibility appeals.
The burden associated with the
delegation of appeals is the time and
effort necessary for the Medicaid and
CHIP agencies to create and execute the
agreements with the organization to
which they are delegating authority.
There are 53 Medicaid agencies (the
50 states, the District of Columbia,
Northern Mariana Islands, and
American Samoa) and 43 CHIP agencies,
for a total of 96 agencies. For the
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purpose of developing the cost, we
estimate that half of these agencies will
establish an agreement with an
organization to conduct fair hearings.
We estimate a one-time burden of 50
hours to develop an agreement that can
be used with the organization. It will
take an additional 10 hours for
Medicaid and 10 hours for a separate
CHIP agency to negotiate and execute
the agreement with the organization for
a total time burden of 2,880 hours [(53
+ 43)/2 × (50 + 10)] across all
agreements. For the purpose of the cost,
we estimate it will take a health policy
analyst 40 hours at $49.35 an hour and
a senior manager 10 hours at $79.08 an
hour to complete the model agreement
(for a total of $2,764.80) plus 10
additional hours ($49.35) for a health
policy analyst to execute a completed
agreement with each organization. The
estimated cost for each agreement is
$3,258.30 for a total cost of $156,398.40.
2. ICRs Regarding Fair Hearing
Processes (§§ 431.205(e), and 431.206(d)
and (e))
In §§ 431.205(e) and 431.206(e), the
hearing system and information must be
accessible to persons who are limited
English proficient and to persons with
disabilities. While states are required to
make the hearing system accessible, we
believe the associated burden is exempt
from the PRA (see 5 CFR 1320.3(b)(2))
since we believe that the time, effort,
and financial resources necessary to
comply with this requirement will be
incurred by persons during the normal
course of their activities and should,
therefore, be considered as a usual and
customary business practice.
In § 431.206(d), states are required to
inform individuals that they may have
their hearing before the agency (instead
of the Exchange or the Exchange appeals
entity) and the method by which the
individual may make such election.
There are 53 Medicaid agencies (the 50
states, the District of Columbia,
Northern Mariana Islands, and
American Samoa) and 43 CHIP agencies
for a total of 96 agencies that will be
subject to this requirement. The burden
associated with providing this choice is
developing the process and workflow to
enable the choice and sending the
request for the fair hearing to the
appropriate agency. We estimate it will
take each agency an average of 70 hours
to create the process and workflow
required in providing the choice. For
the purpose of the cost, we estimate it
will take a health policy analyst 40
hours at $49.35 an hour, a senior
manager 10 hours at $79.08 an hour,
and a computer programmer 20 hours at
$52.50 to complete the process and
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workflow. The estimated cost for each
agency is $3814.80. The total estimated
cost is $366,220.80.
3. ICRs Regarding Application
Counselors (§ 435.908(c))
In § 435.908(c), states have the option
to authorize certain staff and volunteers
of organizations to act as certified
application counselors. The burden
associated with the requirements to
assist individuals with the application
process is the time and effort necessary
for the state to create agreements with
these organizations, to create a
registration process for assistors, and to
train staff on the eligibility and
confidentiality rules and requirements
and how to assist applicants with the
completing the application.
We estimate the 50 states, the District
of Columbia, Northern Mariana Islands,
and American Samoa will establish
agreements with on average 20
organizations in their state or territory
for a total of 1,060 agreements related to
application assistance. As part of this
estimate, we assumed that state
Medicaid and CHIP agencies will be
party to the same agreements and,
therefore, will not establish separate
agreements.
The first burden associated with this
provision is the time and effort
necessary for the state Medicaid and
CHIP agencies to establish an
agreement. To develop an agreement,
we estimate that it will take each of the
53 states and territories 50 hours to
develop a model agreement. For the
purpose of the cost, we estimate it will
take a health policy analyst 40 hours at
$49.35 an hour and a senior manager 10
hours at $79.08 to develop an
agreement. The estimated cost is
$2,764.80 (per state) or $146,534.40
(total) while the total annual hour
burden is 2,650 hours.
To negotiate and complete the
agreement, we estimate that each of the
53 states/territories will execute 20
agreements. For the purpose of the cost,
we estimate it will take a health policy
analyst 10 hours at $49.35 an hour to
execute each agreement. The estimated
cost is $9,870 (per state) or $523,110
(total) while the total annual hour
burden is 10,600 hours.
To develop and execute the model
agreements, the total cost is $669,644.40
for 13,250 hours of labor.
The next burden associated with this
provision is the time and effort
necessary for the 53 states and
territories to establish the registration
process and workflow for the
application counselors. We estimate it
will take each state or territory an
average of 70 hours (3,710 total hours)
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to create the registration process and
workflow for the application counselors.
For the purpose of the cost, we estimate
it will take a health policy analyst 40
hours, at $49.35 an hour, a senior
manager 10 hours, at $79.08 an hour,
and a computer programmer 20 hours at
$52.50 to complete the registration
process and workflow. The estimated
cost for each state or territory is
$3,814.80. The total estimated cost is
$202,184.40.
The next burden associated with this
provision is the time and effort
necessary for the 53 state Medicaid and
CHIP agencies to provide training to the
application counselors. For the purpose
of the cost, we estimate it will take a
training specialist 40 hours at $26.64 an
hour and a training and development
manager 10 hours at $64.43 an hour to
develop training materials for the
application counselors, for a total time
burden of 2,650 hours. The estimated
cost for each state or territory is
$1,709.90. The total estimated cost is
$90,624.70.
Lastly, we estimate that each state or
territory will offer 50 hours of training
sessions to train individuals to assist
applicants with Medicaid and CHIP
applications for a total time burden of
2650 hours. For the purpose of the cost,
we estimate it will take a training
specialist 50 hours at $26.64 an hour to
train the application counselors. The
estimated cost for each agency is $1,332.
The total estimated cost is $70,596.
4. ICRs Regarding Eligibility
Determination Notices (§ 435.918,
§ 457.110)
In § 435.918 and § 457.110, states
must electronically provide notices to
individuals when elected.
The burden associated with the
requirements to deliver notices is the
time necessary for the state staff to: (1)
Familiarize themselves with the
requirements related to notices; (2)
develop the language for approval,
denial, termination, suspension, and
change of benefits notices; and (3)
program the language in the Medicaid
and CHIP notice systems so that the
notice can be populated and generated
based on the outcome of the eligibility
determination and be delivered in an
electronic format.
We estimate 53 state Medicaid
agencies (the 50 states, the District of
Columbia, Northern Mariana Islands,
and American Samoa) and 43 CHIP
agencies (in states that have a separate
or combination CHIP), totaling 96
agencies, will be subject to this
requirement. We estimate that it will
take each Medicaid and CHIP agency
194 hours annually to develop,
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automate, and distribute the notice of
eligibility determination. For the
purpose of the cost burden, we estimate
it will take a health policy analyst 138
hours at $49.35 an hour, a senior
manager 4 hours at $79.08, an attorney
20 hours at $90.14, and a computer
programmer 32 hours at $52.50 to
complete the notices. The estimated cost
burden for each agency is $10,609.42.
The total estimated cost burden is
$1,018,504.30, and the total annual hour
burden is 18,624 hours.
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5. ICRs Regarding Authorized
Representatives (§ 435.923(a))
Section 435.923(a) sets out minimum
requirements for the designation of
authorized representatives. We are also
applying these provisions to state CHIP
agencies through the addition of a cross
reference in § 457.340.
We are aware of the need to estimate
the PRA burden associated with the
collection of information related to
authorizing an individual to act as a
representative of an applicant, to permit
self-attestation for individuals who do
not have access to documentation, and
the citizenship and immigration
verification requirements. These
requirements were addressed as part of
the single, streamlined application
under OCN 0938–1191 (CMS–10440).
6. ICRs Regarding Presumptive
Eligibility Determined by Hospitals
(§ 435.1110)
Under § 435.1110(d)(1), states may
establish state-specific standards for
qualified hospitals that conduct
presumptive eligibility determinations
related to the success of assisting
individuals determined presumptively
eligible who submit a regular
application and/or are approved for
eligibility by the agency. States also
have a great deal of flexibility in
determining and implementing the
standards appropriate for their programs
as well as appropriate corrective action
measures for hospitals which do not
meet the state standards.
This change is necessary to reflect
changes in federal policy. A state’s
election of state-specific standards will
affect their Medicaid state plan. While
we are aware of the need to estimate the
burden associated with the submission
of the state plan amendment, that
amendment will be addressed under the
electronic state plan filing process being
developed by CMS (the MACPro
system) and submitted to OMB for
approval under OCN 0938–1188 (CMS–
10434). The amendment and its
estimated burden will also be made
available for public comment through
the PRA process.
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In §§ 435.1101(b) and 457.355 (by
reference to § 435.1101), states are
required to provide qualified entities
with training in all applicable policies
and procedures related to presumptive
eligibility. The burden associated with
this provision is the time and effort
necessary for the states and territories to
provide training to the hospitals. We
estimate 50 states, the District of
Columbia, Northern Mariana Islands,
and American Samoa will be subject to
this requirement. As part of this
estimate, we assumed that state
Medicaid agencies and CHIP agencies,
where there are separate agencies, will
develop and use the same training.
For the purpose of the cost, we
estimate it will take a training specialist
40 hours at $26.64 an hour and a
training and development manager 10
hours at $64.43 an hour to develop
training materials for the qualified
entities, for a total time burden of 2,650
hours. The estimated cost for each state
or territory is $1,709.90. The total
estimated cost is $90,624.70.
We also estimate that each state or
territory will offer 50 hours of training
sessions to qualified entities, for a total
time burden of 2,650 hours. For the
purpose of the cost, we estimate it will
take a training specialist 50 hours at
$26.64 an hour to train the qualified
entities. The estimated cost for each
agency is $1,332. The total estimated
cost is $70,596.
7. ICRs Regarding ABP SPA-Related
Requirements (§§ 440.305, 440.315,
440.330, 440.335, 440.345, 440.347,
440.360, and 440.386)
In the proposed rule, CMS requested
comment on habilitative services
(§ 440.347(d)) and on the ‘‘medically
frail’’ definition (§ 440.315(f)).
Comments and CMS’ response can be
found in section B.3.a of this preamble.
We also requested comment on essential
health benefits (rehabilitative and
habilitative services and devices)
(§ 440.347). See section II.B. of this
preamble for the comments and our
response. Additional comments were
solicited for exempt individuals
(modifying definition of ‘‘medically
frail’’) (§ 440.315). Comments and CMS’
response can be found in the ABP
portion of this preamble.
CMS also received many comments
on the proposed changes to: (1) The
public notice requirement in § 440.386
(see section II.B.7.b. of this preamble for
the comment and our response); (2)
public notice in § 440.386 and
prescription drug coverage in
§ 440.345(f) (see section II.B.3.i. of this
preamble for the comment and our
response); (3) essential health benefits
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(non-discrimination policy) under
§ 440.347 (see section II.B.2.d of this
preamble); and (4) EPSDT and other
required benefits (family planning
services and supplies) under § 440.345
(see the comments and responses
section of the ABP portion of this
preamble). As a result of comments
received, CMS is finalizing the public
notice requirements in this final rule
without change.
We also received a number of
comments requesting clarification to our
statement in the preamble that the
section 1927 requirements apply to the
ABP prescription drug benefit.
Specifically, commenters requested
clarification, as part of this final rule, as
to how section 1927 of the Act applies
to prescription drug coverage under the
ABP since ABP requirements for
prescription drug coverage must meet
the minimum EHB prescription drug
requirements at section 1937 of the Act.
Based upon those comments, we have
clarified in the regulation that when
states pay for covered outpatient drugs
under a state’s ABP, the section 1927
requirements apply. There is no
additional information collection
burden associated with this
clarification.
While this rule has finalized policy
related to these provisions, these
policies do not result in any additional
information collection requirements.
Rather, the policy clarifications are
interpretations of information that is
already being collected.
The information collection
requirements and burden estimates
associated with §§ 440.305, 440.315,
440.330, 440.335, 440.345, 440.347,
440.360, and 440.386 have been
approved by OMB through March 31,
2016, under OCN 0938–1188 (CMS–
10434). This rule will not impose any
new or revised SPA-related reporting,
recordkeeping, or third party disclosure
requirements and, therefore, does not
require additional OMB review under
the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
8. ICRs Regarding Cost Sharing and
Premiums (§§ 447.52, 447.53, 447.54,
447.55 and 447.56)
The Deficit Reduction Act of 2005
(DRA) established a new section 1916A
of the Act, which gives states additional
flexibility, allowing for alternative
premiums and cost sharing, beyond
what is allowed under section 1916 of
the Act, for somewhat higher income
beneficiaries. Such alternative cost
sharing may be targeted to specific
groups of beneficiaries and payment
may be required as a condition of
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providing services. Thus, in accordance
with the DRA we reviewed and made
changes to the current cost sharing and
premiums regulations under §§ 447.52
through 447.56.
In a review of these sections we found
that 45 states including the District of
Columbia impose cost-sharing and 40
states impose premiums on
beneficiaries. While these provisions are
subject to the PRA, we believe that any
changes a state makes to its current state
plan under any of these sections is a
usual and customary practice under 5
CFR 1320.3(b)(2) and, as such, the
burden associated with it is exempt
from the PRA.
For those states electing to impose
cost-sharing or premiums for the first
time will only need to submit a state
plan amendment one time for review.
We estimate it will take each agency in
this circumstance an average of 2 hours
to fill out the state plan pre-print for
either cost-sharing or premiums and
submit it for approval. Thus we
anticipate six states may impose costsharing and 11 states and the District of
Columbia may impose premiums on
beneficiaries. For the purpose of the cost
burden, we estimate it will take a health
policy analyst 1 hour at $49.35 an hour
and a senior manager 1 hour at $79.08
an hour to complete the process and
submission of each new state plan
amendment. The estimated cost burden
for each agency is $128.43. The total
estimated cost burden is $2,183.31.
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9. ICRs Regarding Beneficiary and
Public Notice Requirements (§ 447.57)
In § 447.57(a), 53 Medicaid agencies
will be required to make available a
public schedule describing current
premiums and cost sharing
requirements containing the information
in paragraphs (a)(1) through (6). In
§ 447.57(b), agencies are required to
make the public schedule available to
those identified in paragraphs (b)(1)
through (4).
Prior to submitting a SPA for
Secretary approval to establish or
modify existing premiums or cost
sharing or change the consequences for
non-payment, § 447.57(c) requires that
the state: (1) Provide the public with
advance notice of the SPA (specifying
the amount of premiums or cost sharing
and who is subject to the charges); (2)
provide a reasonable opportunity to
comment on SPAs that propose to
substantially modify premiums and cost
sharing; (3) submit documentation to
demonstrate that these requirements
were met; and (4) provide additional
public notice if cost sharing is modified
during the SPA approval process.
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In § 447.57(d), the information must
be provided in a manner that ensures
that affected beneficiaries and providers
are likely to have access to the notice
and are able to provide comments on
proposed state plan amendments.
We estimate it will take each
Medicaid agency an average of 6 hours
to create the process and workflow
required in providing the schedule and
notice. For the purpose of the cost
burden, we estimate it will take a health
policy analyst 4 hours at $49.35 an hour
and a senior manager 2 hours at $79.08
an hour to complete the process and
workflow. The estimated cost burden for
each agency is $355.56. The total
estimated cost burden is $18,844.68.
C. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
For purposes of presenting an
estimate of paperwork burden, we
reflect the participation of 18 StateBased Exchanges. It is important to note
that the Exchange provisions found in
part 155, subparts D and E discussed
below involve several information
collections that will occur through the
single, streamlined application for
enrollment in a QHP and for insurance
affordability programs described in
§ 155.405. We have accounted for the
burden associated with these collections
in the Supporting Statement for Data
Collection to Support Eligibility
Determinations for Insurance
Affordability Programs and Enrollment
through Health Benefits Exchanges,
Medicaid, and Children’s Health
Insurance Program Agencies (CMS–
10440; OCN 0938–1191).
We also highlight that the Supporting
Statement includes several information
collections from regulatory provisions
finalized in the Exchange final rule (77
FR 18310). We have included these
information collections in this PRA
package to address PRA requirements
related to those provisions as they were
not included in the information
collection section of the Exchange final
rule.
Lastly, we have not included
information regarding information
collections associated with certified
application counselors, eligibility
appeals, and SHOP coordination with
individual market Exchanges, which we
will finalize at a future date with the
corresponding regulatory provisions.
1. ICRs Regarding Authorized
Representatives (§ 155.227)
Section 155.227(a) provides that an
applicant or enrollee, subject to
applicable privacy and security
requirements, may designate an
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individual person or organization as his
or her authorized representative. One
method for designating an authorized
representative is by submitting legal
documentation of the representative’s
authority. Exchanges have the option to
make available an ‘‘Appointment of
Authorized Representative Form’’ at the
time of application or anytime thereafter
for an individual to designate an
authorized representative. Such a form
would collect identifying and contact
information about the applicant,
enrollee, and requested authorized
representative. Requested data elements
would include the following for both
the applicant or enrollee and the
requested representative: name, address,
phone number, email address, date of
birth, and relationship. The applicant,
enrollee, or authorized representative
could obtain the form from the
Exchange Web site or from an assister
(such as a Navigator, non-Navigator inperson assister, etc.), and could submit
it to the Exchange by mail or online at
any time. We expect that the Exchange
would use this information to authorize
the authorized representative to act on
behalf of the applicant or enrollee. An
authorized representative could also
submit this form if the applicant or
enrollee is unable to do so.
HHS is currently developing a model
Appointment of Authorized
Representative Form to be used by the
Federally-facilitated Exchanges and will
make that form available to State-based
Exchanges, which would also decrease
the burden on State-based Exchanges to
develop such a form. If a state opts not
to use the form provided by HHS, we
estimate the burden associated for the
time and effort necessary for a Statebased Exchange to develop the
Appointment of Authorized
Representative Form to be 30 hours.
This includes a 10 hours from a midlevel health policy analyst at an hourly
cost of $49.35 and 10 hours from an
operations analyst at an hourly cost of
$54.45 for drafting the form with 4
hours of managerial oversight at an
hourly cost of $79.08 and 6 hours of
legal review at an hourly cost of $90.14.
The estimated cost per State-based
Exchange is $1,895, for a total cost of
$34, 113 for 18 State-based Exchanges.
For an applicant, enrollee, or
prospective authorized representative,
we estimate that it will take up to 5
minutes to review instructions and
complete an Appointment of
Authorized Representative Form. While
we expect most applicants, enrollees, or
prospective authorized representatives
to complete the Authorized
Representative Form, an applicant,
enrollee, or prospective authorized
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representative may also comply with
this provision by providing the
necessary information online, by phone,
by mail, or in-person. We expect a
similar burden on the applicant,
enrollee, or authorized representative to
comply with this provision through
such means. If the applicant, enrollee,
or authorized representative chooses to
submit an ‘‘Appointment of Authorized
Representative Form,’’ the burden for a
State-based Exchange to process the
submitted information will be
approximately 10 minutes at a cost of
$3.39 per submission. We anticipate
that an eligibility support staff person
will scan, digitize, and link the form to
an applicant’s or enrollee’s account,
review the submitted information, and
update the authorized representative’s
and applicant’s or enrollee’s account, if
applicable.
2. ICRs Regarding Notices (§§ 155.302,
155.310, 155.315, 155.320, 155.330,
155.335, 155.345, 155.355, 155.410,
155.715, 155.720, 155.725, and
155.1080)
Several provisions in subparts D and
E outline specific scenarios in which the
Exchange will send a notice to
individuals and employers throughout
the eligibility and enrollment process.
HHS is currently developing model
eligibility determination notices and
several other models for notices
described in 45 CFR parts 155, 156, and
157 which will decrease the burden on
Exchanges to establish such notices. For
some notices, the Exchange will include
specific notice text in another notice,
such as the eligibility determination
notice, rather than send an entirely
separate notice (effectively, two notices
are combined into one). The purpose of
these notices is to alert the individuals
and employers who receive the notice of
actions taken by the Exchange. When
possible, we anticipate that the
Exchange will consolidate notices when
multiple members of a household are
applying together and receive an
eligibility determination at the same
time. The notice may be in paper or
electronic format but must be in writing
and sent after an eligibility
determination has been made by the
Exchange. We anticipate that a large
volume of enrollees will request
electronic notification while others will
opt to receive the notice by mail. As a
result of certain enrollees opting to
receiving the notice by mail in some
instances, we estimated the associated
mailing costs for the time and effort
needed to mail notices in bulk to
enrollees as appropriate.
We expect that the electronic
eligibility determination notice will be
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dynamic and include information
tailored to all possible outcomes of an
application throughout the eligibility
determination process. To develop the
paper and electronic notices, Exchange
staff will need to learn eligibility rules
and draft notice text for various decision
points, follow up, referrals, and appeals
procedures. A health policy analyst,
senior manager, and legal counsel will
review the notice. The Exchange will
then engage in review and editing to
incorporate changes from the
consultation and user testing including
review to ensure compliance with plain
writing, translation, and readability
standards. We intend that Exchanges
will work closely with the state
Medicaid or CHIP agency to develop
coordinated notices. Finally, a
developer will program the template
notice into the eligibility system so that
the notice may be populated and
generated in the correct format
according to an individual’s preference
to receive notices, via paper or
electronically, as the applicant moves
through the eligibility process.
If a state opts not to use the model
notices provided by HHS, we estimate
that the Exchange effort related to the
development and implementation of the
eligibility notice will necessitate 44
hours from a health policy analyst at an
hourly cost of $49.35 to learn eligibility
rules and draft notice text; 20 hours
from an attorney at an hourly cost of
$90.14 and 4 hours from a senior
manager at an hourly cost of $79.08 to
review the notice; and 32 hours from a
computer programmer at an hourly cost
of $52.50 to conduct the necessary
development. In total, we estimate that
this will take a total of 100 hours for
each Exchange, at a cost of
approximately $5,971 per Exchange and
a total cost of $107,478 for 18 StateBased Exchanges. We expect that the
burden on the Exchange to maintain this
notice will be significantly lower than to
develop it.
Section 155.310(h) specifies that the
Exchange will notify an employer that
an individual in an employee’s tax
household has been determined eligible
for advance payments of the premium
tax credit and/or cost-sharing reductions
based in part on the employer not
offering minimum essential coverage or
not offering qualifying coverage in an
eligible employer-sponsored plan. Upon
making such an eligibility
determination, the Exchange will send a
notice to the employer with information
identifying the employee, along with a
notification that the employer may be
liable for the payment under section
4980H of the Code, and that the
employer has a right to appeal this
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determination. Because this notice will
be sent to an employer at the address as
provided by an application filer on the
application, we anticipate all of these
notices will be sent by mail. As a result,
we estimated the associated mailing
costs for the time and effort needed to
mail notices in bulk to employers. Like
the eligibility notice, the employer
notice above will be developed and
programmed into the eligibility system.
However, unlike the eligibility notice,
we expect the information on the
employer notice to be minimal in
comparison to the eligibility notice and
therefore the burden on the Exchange to
develop the notice to be substantially
less. Further, as with the individual
eligibility notice, HHS will provide
model notice text for Exchanges to use
in developing this notice.
3. ICRs Regarding Verification of
Enrollment in an Eligible EmployerSponsored Plan and Eligibility for
Qualifying Coverage in an Eligible
Employer-Sponsored Plan (§ 155.320)
Section 155.320(d) proposes the
process for the verification of
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan. Paragraph
(d)(2) specifies that the Exchange will
obtain relevant data from any electronic
data source available to the Exchange
which has been approved by HHS, as
well as data from certain specified
electronic data sources. This will
involve the development and execution
of data sharing agreements; however,
this burden is already captured in the
data sharing agreements described in
§ 155.315. As these verification
activities will all be electronic, we do
not expect for there to be any additional
burden than that which is required to
design the overall eligibility and
enrollment system.
Paragraph (d)(3)(iii)(A) proposes that
the Exchange provide notice to certain
applicants indicating that the Exchange
will be contacting any employer
identified on the application to verify
whether the applicant is enrolled in an
eligible employer-sponsored plan or is
eligible for qualifying coverage in an
eligible employer-sponsored plan for the
benefit year for which coverage is
requested. The burden associated with
this notice to certain applicants is
addressed in 155.310(g) as this will not
be a separate notice, but incorporated
into the eligibility determination notice
described in the above paragraph.
In paragraph (d)(3)(iii)(D), we propose
that the Exchange make reasonable
attempts to contact any employer to
which the applicant attested
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employment to verify whether the
applicant is enrolled in an eligible
employer-sponsored plan or is eligible
for qualifying coverage in an eligible
employer-sponsored plan for the benefit
year for which coverage is requested.
We note that the flexibility we provide
to State-Based Exchanges for the first
year of operations will significantly
reduce the burden of this information
collection in the first year.
It is difficult to estimate the burden
associated with this information
collection as the calculation involves
identifying the number of individuals
for whom employer-sponsored coverage
information will be unavailable. As
such, below, we estimate the time and
cost associated with the Exchange
making a reasonable attempt to contact
one employer. We estimate the time
associated with this information
collection to be a total of 2.2 hours per
employer at a total cost of $34.
4. ICRs Regarding Electronic
Transmissions (§§ 155.310, 155.315,
155.320, and 155.340)
Sections 155.310, 155.315, 155.320,
155.330, and 155.340 involve the
electronic transmission of data to
determine eligibility for enrollment in a
QHP and for insurance affordability
programs. Section 155.310(d)(3)
specifies that the Exchange must notify
the state Medicaid or CHIP agency and
transmit all information from the
records of the Exchange for an applicant
determined eligible for Medicaid or
CHIP to the Medicaid or CHIP agency to
ensure that the Medicaid or CHIP
agency can provide the applicant with
coverage promptly and without undue
delay. This applicant information will
be transmitted electronically from the
Exchange to the agency administering
Medicaid or CHIP once a determination
has been made that the applicant is
eligible for such program. The purpose
of this data transmission is to notify the
agency administering Medicaid or CHIP
that an individual is newly eligible and
thus the agency should facilitate
enrollment in a plan or delivery system.
Data will be transmitted through a
secure electronic interface.
Sections 155.315 and 155.320 include
transactions necessary to verify
applicant information. We expect there
to be no transactional burden associated
with the electronic transactions needed
to implement §§ 155.315 and 155.320.
As these transmission functions will all
be electronic, we do not expect for there
to be any additional burden than that
which is required to design the overall
eligibility and enrollment system.
In § 155.340, the Exchange must
provide the relevant information, such
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as the dollar amount of the advance
payment and the cost-sharing
reductions eligibility category, to enable
advance payments of the premium tax
credit and cost-sharing reductions,
reconciliation of the advance payments
of the premium tax credit, and
administration of the employer
responsibility requirements. As we
anticipate that these transmissions of
information will all be electronic, we do
not expect for there to be any additional
burden than that which is required to
design the overall eligibility and
enrollment system.
5. ICRs Regarding Reporting Changes
(§§ 155.315, 155.330, and 155.335)
Section 155.315(f) outlines the
process for resolving inconsistencies
identified through the verification
process. In § 155.330(c)(1), we state that
the Exchange will verify any
information reported by an enrollee in
accordance with the processes specified
in §§ 155.315 and 155.320 prior to using
such information in an eligibility
redetermination. Section 155.335(e)
provides that the Exchange will require
a qualified individual to report any
changes for the information listed in the
notice described in § 155.335(c) of this
section within 30 days from the date of
the notice. It is not possible at this time
to provide estimates for the number of
applicants for whom a reported change
will necessitate the adjudication of
documentation, but we anticipate that
this number will decrease as applicants
become more familiar with the
eligibility process and as more data
become available. As such, for now, we
note that the burden associated with
this provision is one hour for an
individual to collect and submit
documentation, and 12 minutes (or 0.2
hours) for eligibility support staff at an
hourly cost of $28.66 to review the
documentation.
6. ICRs Regarding Enrollment and
Termination (§§ 155.400, 155.405, and
155.430)
In part 155, subpart E, we describe the
requirements for Exchanges in
connection with enrollment and
disenrollment of qualified individuals
through the Exchange. These
information collections are associated
with sending eligibility and enrollment
information to QHP issuers and to HHS,
maintaining records of all enrollments
in QHPs through the Exchange,
reconciling enrollment information with
QHP issuers and HHS, and retaining
and tracking coverage termination
information. The burden estimates
associated with these provisions include
the time and cost to meet these record
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requirements. We estimate that it will
take 142 hours annually for an Exchange
to meet these recordkeeping
requirements for a total of 2,556 hours
for 18 State-Based Exchanges.
In the case of the requirement related
to termination standards, the burden
includes estimates related to the
maintenance and transmission of
coverage termination information, as
well as the time and effort needed to
develop the system to collect and store
the information. We estimate that it will
take 30 hours of a health policy analyst
at an hourly rate of $58.05, 20 hours for
a computer programmer at an hourly
rate of $52.50, and 20 hours for an
operations analyst at an hourly rate of
$54.45 for a total of 70 hours annually
per Exchange and a total of 1,260 hours
for 18 Exchanges, for the time and effort
to meet this standard. We estimate a
cost of $3,881 for one Exchange and a
total cost of 69,858 for 18 State-Based
Exchanges.
7. ICRs Regarding Agreements
(§§ 155.302 and 155.345)
Section 155.345(a) specifies that an
Exchange and the corresponding state
Medicaid and CHIP agencies will enter
in to an agreement regarding the
coordination of eligibility
determinations, and § 155.302(b)(6)
specifies that to the extent that an
Exchange is making assessments of
eligibility for Medicaid and CHIP, rather
than determinations, the Exchange will
enter into an agreement with the state
Medicaid and CHIP agencies regarding
this arrangement. These agreements are
necessary to minimize burden on
individuals, ensure prompt
determinations of eligibility and
enrollment in the appropriate program
without undue delay and to provide
standards for transferring an application
between the Exchange and other entities
administering insurance affordability
programs. The specific number of
agreements needed may vary depending
on how states choose to divide
responsibilities regarding eligibility
determinations; where the Exchange is
making assessments, we expect that the
agreement described in § 155.302(b)(6)
will be combined with the agreement in
§ 155.345(a).
The burden associated with this
provision is the time and effort
necessary for the Exchange to establish
or modify an agreement for eligibility
determinations and coordination of
eligibility and enrollment functions. If
an Exchange chooses to draft separate
agreements for each insurance
affordability program, then the estimate
will likely increase.
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In either case, we estimate it will take
each Exchange an average of 105 hours
to create a new agreement, although we
assume that such agreements will be
largely standardized across states, and
that HHS will provide model
agreements for state Medicaid and CHIP
agencies and the Exchange to use. This
includes a mid-level health policy
analyst and an operations analyst
reviewing the agreement with
managerial oversight and
comprehensive review of the agreement
by operations analyst. We estimate a
cost of $6,733 per Exchange.
8. ICRs Regarding Notices From QHP
Issuers (§§ 156.260, 156.265, 156.270,
and 156.290)
First, § 156.260(b) provides that QHP
issuers will notify a qualified individual
of his or her effective date of coverage,
in accordance with the effective dates of
coverage established by the Exchange in
accordance with § 155.410(c) and (f).
Second, under § 156.270(b), QHP issuers
will send a notice of termination of
coverage to an enrollee if the enrollee’s
coverage in the QHP is being terminated
in accordance with § 155.430(b)(1)(i),
(b)(2)(ii) or (b)(2)(iii). Third, § 156.270(f)
provides that QHP issuers will provide
enrollees with a notice about the grace
period for non-payment of premiums.
QHP issuers will send this notice to
enrollees who are delinquent on
premium payments. Fourth, § 156.265(e)
provides that QHP issuers will provide
new enrollees with an enrollment
information package, which we
anticipate that issuers may combine
with the notification of coverage
effective date described in § 156.260(b).
Lastly, under § 156.290(b), QHP issuers
will provide a notice to enrollees if the
issuer elects not to seek recertification
of a QHP.
We anticipate that some of the above
QHP issuer required notices are similar
in nature to the notices that issuers
currently send to enrollees. For
example, it is standard practice for
issuers to provide new enrollees with
information about their enrollment in a
plan, their effective date of coverage,
and if and when their coverage is
terminating. Accordingly, we anticipate
that QHP issuers will review, update,
and revise notice templates that they
utilize currently as they work to address
the notice requirements described below
and to ensure that the notices include
the appropriate information. Similar to
notices that will be issued by the
Exchange, we expect that for QHPissued notices, an analyst will develop
text, and a peer analyst, manager, and
legal counsel for the issuer will review
the notices, including a review to ensure
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compliance with plain writing, language
access, and readability standards as
required under § 156.250(c). Finally, a
developer will need to incorporate
programming changes into the issuer’s
noticing system to account for the
changes and updates that will be
necessary to ensure that the QHP issuer
is in compliance with the notice
standards set forth in this rule and to
ensure the notice can be populated and
generated according to an individual’s
preference to receive notices. We
estimate that the burden related to the
development and implementation of
this notice will necessitate 44 hours
from a health policy analyst at an hourly
cost of $49.35 to learn appeals rules and
draft notice text; 20 hours from an
attorney at an hourly cost of $90.14 and
four hours from a senior manager at an
hourly cost of $79.08 to review the
notice; and 32 hours from a computer
programmer at an hourly cost of $52.50
to conduct the necessary development.
In total, we estimate that this will take
a total of 100 hours for each QHP issuer,
at a cost of approximately $5,971 per
issuer. We expect that the burden on
QHP issuers to maintain this notice will
be significantly lower than to develop it.
However, we believe that the burden
estimate described under § 155.310(g)
likely represents an upper bound
estimate of the burden on issuers to
develop each of these notices as in some
cases the notice described under
§ 155.310(g) will be somewhat more
dynamic to address the additional
information we expect to be included in
that notice.
Since the above estimate applies to
one notice, and we described 5 notices
under part 156, the total burden
estimate is $40,710. Due to uncertainty
regarding the number of individuals
who will choose to receive paper
notices, as well as some uncertainty
regarding the frequency of
circumstances that will trigger notices
in accordance with this part, we have
only included an estimate of the
printing and mailing costs for a QHP
issuer to send one notice to a qualified
individual or enrollee.
9. ICRs Regarding Notices and ThirdParty Disclosures in the SHOP
(§§ 157.205(e) and (f))
45 CFR part 157 includes several
instances in which qualified employers
participating in the SHOP Exchange will
need to provide information to
employees or to the SHOP Exchange.
We include the data elements for these
notifications in appendix A of this PRA
package. For the individual market
Exchange, we anticipate that a large
share of enrollees will elect to receive
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42293
electronic notices while the rest will
receive notices by mail. We do not make
this assumption for notices described
here as we expect that qualified
employers would provide notices to
employees in whatever format the
qualified employer usually provides
notices to employees; in paper,
electronically, or in a combination of
both formats. We estimate that the
associated printing costs for paper
notices will be approximately $0.10 per
notice. We do not take mailing costs
into consideration for notices provided
by qualified employers, as we expect
that if qualified employers provide
notices in paper format, the employer
may provide the employee with the
notice in person, instead of mailing the
notice. We do not have a reasonable way
to estimate total printing costs for
notices provided by qualified employers
in the SHOP Exchange due to
uncertainty regarding the number of
employees who will choose to receive
paper notices, as well as some
uncertainty regarding the frequency of
circumstances that will trigger notices
in accordance with this part.
First, § 157.205(e) specifies that a
qualified employer provide an employee
with information about the enrollment
process. A qualified employer will
inform each employee that he or she has
an offer of coverage through the SHOP
Exchange, and instructions for how the
employee can apply for and enroll in
coverage. We anticipate that the
qualified employer will also provide
information about the acceptable
formats in which an employee may
submit an application; online, on paper,
or by phone, as described under
§ 157.205(c). If the employee being
offered coverage was hired outside an
initial or annual enrollment period, the
notice will also inform the employee if
he or she is qualified for a special
enrollment period. Second, in
§ 157.205(f) we provide that a qualified
employer will notify the SHOP
Exchange regarding an employee’s
change in eligibility for enrollment in a
QHP through the SHOP Exchange,
including when a dependent or
employee is newly eligible, or is no
longer eligible.
We expect that the information that
qualified employers will provide to
employees and the SHOP Exchange, as
described above, will be somewhat
standardized. Additionally, we
anticipate that qualified employers will
generate notices using a manual process.
We expect that for a qualified employer
to establish a notice, the qualified
employer will need 20 hours from a
human resources specialist at an hourly
cost of $40.68 to develop the text; and
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four hours from a human resources
manager at an hourly cost of $75.01 and
ten hours from an attorney at an hourly
cost of $90.14 to review the notices. We
do not anticipate that a developer will
be needed to develop the notices
described in this part since we expect
that in most cases, these notices will be
manually generated on demand.
Accordingly, we expect that the burden
hours for developing each of the notices
will be approximately 34 hours, for a
total of 68 hours per qualified employer,
at a total cost of $4,030. We expect that
the burden on the qualified employer to
maintain the notices will be
significantly lower than to develop the
notices.
D. Summary of Annual Burden
Estimates
TABLE 1—PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
OMB & CMS ID
#s
42 CFR 431.10,
431.11, and
457.1120.
§§ 435.917,
435.918,
457.110, and
457.340.
§§ 435.923 and
457.340 (develop and execute agreements).
§§ 435.923 and
457.340 (create
registration
process and
work flow).
§§ 435.923 and
457.340 (develop training
materials).
§§ 435.923 and
457.340 (train
application
assistors).
§§ 435.1101(b)
and 457.355.
§ 447.57 ...............
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Regulation section(s)
OCN 0938–New;
CMS–10456.
48
OCN 0938–New;
CMS–10456.
§ 155.227 (ICRs
Regarding Authorized Representatives).
§§ 155.302,
155.310,
155.315,
155.320,
155.330,
155.335,
155.345,
155.410,
155.715,
155.720,
155.725, and
155.1080 (ICRs
Regarding Notices).
§ 155.320 (ICRs
Regarding
Verification of
Enrollment in an
Eligible Employer-Sponsored Plan and
Eligibility for
Qualifying Coverage in an Eligible EmployerSponsored
Plan).
VerDate Mar<15>2010
Burden per response (hours)
Total annual
burden (hours)
48
60
2,880
3,258 (per respondent).
96
96
194
18,624
10,609 (per respondent).
1,018,504
OCN 0938–New;
CMS–10456.
53
1060
12.5
13,250
12,635 (per respondent).
669,644
OCN 0938–New;
CMS–10456.
53
53
70
3,710
3,815 (per respondent).
202,184
OCN 0938–New;
CMS–10456.
53
53
50
2,650
1,710 (per respondent).
90,625
OCN 0938–New;
CMS–10456.
53
53
50
2,650
1,332 (per respondent).
70,596
OCN 0938–New;
CMS–10456.
0938–New; CMS–
10456.
OCN 0938–New;
CMS–10400.
53
53
50
2,650
90,625
53
53
6
318
18
18
30
540
1,710 (per respondent).
210 (per respondent).
1,895 (per respondent).
OCN 0938–New;
CMS–10400.
18
18
100
1,800
5,971 (per respondent).
107,478
OCN 0938–New;
CMS–10400.
1
........................
2.2
........................
34 (for one respondent).
........................
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Respondents
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(total)
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E:\FR\FM\15JYR2.SGM
Labor cost of
reporting ($)
15JYR2
Total cost ($)
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42295
TABLE 1—PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS—Continued
Regulation section(s)
OMB & CMS ID
#s
§§ 155.315, 155.
330, 155.335
(ICRs Regarding Reporting
Changes).
§§ 155.400 and
405 (ICRs Regarding Enrollment).
§ 155.430 (ICRs
Regarding Termination).
§§ 155.302,
155.345 (ICRs
Regarding
Agreements).
§§ 156.260,
156.265,
156.270, and
156.290 (ICRs
Regarding Notices from QHP
Issuers).
§ 157.205(e) and
(f) (ICRs Regarding Notices
and Third Party
Disclosures in
the SHOP).
OCN 0938–New;
CMS–10400.
18
OCN 0938–New;
CMS–10400.
Total .............
Burden per response (hours)
Total annual
burden (hours)
Labor cost of
reporting ($)
18
.2
........................
29 (for one respondent).
5.73
18
18
142
2,556
7,254 (per respondent).
136,314
OCN 0938–New;
CMS–10400.
18
18
70
1,260
3,881 (per respondent).
69,858
OCN 0938–New;
CMS–10400.
18
18
105
1,890
6,733 (per respondent).
121,194
OCN 0938–New;
CMS–10400.
18
18
100
1,800
5,971 (per respondent).
107,478
OCN 0938–New;
CMS–10400.
........................
........................
68
........................
4,030 (per respondent).
........................
.............................
........................
........................
........................
55,578
Respondents
Responses
(total)
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E. Submission of PRA-Related
Comments
PRA-specific comments must be
received by August 5, 2013.
We have submitted a copy of this final
rule to OMB for its review of the rule’s
information collection and
recordkeeping requirements. These
requirements are not effective until they
have been approved by the OMB.
To obtain copies of the supporting
statement and any related forms for the
proposed paperwork collections
referenced above, access the CMS Web
site at https://www.cms.gov/Regulationsand-Guidance/Legislation/
PaperworkReductionActof1995/PRAListing.html, or call the Reports
Clearance Office at 410–786–1326.
We invite public comments on these
potential information collection
requirements. If you comment on these
information collection and
recordkeeping requirements, please do
either of the following:
1. Submit your comments
electronically as specified in the
ADDRESSES section of this final rule; or
2. Submit your comments to the
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Attention: CMS Desk Officer,
(CMS–2334–P) Fax: (202) 395–6974; or
Email: OIRA_submission@omb.eop.gov.
V. Regulatory Impact Analysis
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A. Overall Impact
We have examined the impact of this
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 rules with
economically significant effects ($100
million or more in any 1 year). The
Office of Management and Budget has
determined that this rulemaking is
‘‘economically significant’’ within the
meaning of section 3(f)(1) of Executive
Order 12866, because it is likely to have
an annual effect of $100 million in any
one year. Accordingly, we have
prepared a Regulatory Impact Analysis
that presents the costs and benefits of
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...........................
Total cost ($)
2,886,146.73
this rulemaking. The RIA published
with the March 2012 Medicaid
eligibility final rule detailed the impact
of the Medicaid eligibility changes
related to implementation of the
Affordable Care Act. The majority of
Medicaid eligibility provisions included
in this final rule were described in that
detailed RIA and do not need to be
repeated here. In the April 30, 2010
final rule on State Flexibility for
Medicaid Benefit Packages, the
assumptions utilized in modeling the
estimated economic impact of the
associated provisions took into
perspective the costs of the benefit
package for the new adult group.
Coverage of these benefits was already
accounted for in the April 30, 2010 final
rule, and therefore, does not need to be
repeated here.
For coverage beginning on or after
January 1, 2014, individuals and small
businesses will be able to purchase
private health insurance—known as
qualified health plans—through
competitive marketplaces called
Affordable Insurance Exchanges, or
‘‘Exchanges.’’ This final rule: (1)
outlines criteria related to the
verification of enrollment in an eligible
employer-sponsored plan and eligibility
for qualifying coverage in an eligible
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employer-sponsored plan in connection
with advance payments of the premium
tax credit and cost-sharing reductions;
and (2) further specifies or amends other
eligibility and enrollment provisions to
provide detail necessary for state
implementation. This rule continues to
afford states substantial discretion in the
design and operation of the Exchange
established by a state, with greater
standardization provided where
directed by the statute or where there
are compelling practical, efficiency or
consumer protection reasons.
B. Estimated Impact of the Medicaid
Premium and Cost Sharing Provisions
The provisions in this final rule
related to Medicaid premiums and cost
sharing clarify and update existing
flexibilities and provide new flexibility
for states for cost sharing for outpatient
services, drugs, and non-emergency use
of the emergency department. As states
contemplate the changes required under
the Affordable Care Act, more states
may consider utilizing these flexibilities
to either establish or expand cost
sharing. We believe these proposed
policies will encourage less costly care
and decreased use of unnecessary
services, which will reduce state and
federal costs for the specified services.
The following chart summarizes our
estimate of the anticipated effects of this
final rule.
TABLE 2—ESTIMATED TOTAL IMPACT OF CHANGES IN MAXIMUM MEDICAID COST SHARING, FY 2014–2018
[In millions of dollars]
Year
2014
2015
2016
2017
2018
2014–2018
Federal .............................
State .................................
¥25
¥15
¥45
¥30
¥70
¥45
¥70
¥45
¥70
¥50
¥280
¥185
Total ..........................
¥40
¥75
¥115
¥115
¥120
¥465
Source: CMS’ Office of the Actuary
We estimate that this final rule will
result in total savings of $465 million
over 5 years, including $280 million in
cost savings to the federal government
and $185 million in savings to states.
These savings may be attributed
primarily to the increased maximum
allowable cost sharing for outpatient
services, drugs, and non-emergency use
of the emergency department. Such
savings are offset only nominally by the
decreased maximum allowable cost
sharing for an inpatient stay. In addition
to direct savings from increased cost
sharing, we assume some declines in
utilization as enrollees subject to new
cost sharing requirements choose to
decrease their use of services.
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C. Estimated Impact of Exchange
Provisions
The provisions in this final rule
amend select provisions of the Exchange
Establishment final rule (77 FR 18319,
March 27, 2012). Our approach in this
regulatory impact analysis was to build
off of the analysis presented in the
Exchange Establishment final rule,
available at https://cciio.cms.gov/
resources/files/Files2/03162012/hie3rria-032012.pdf. We do not believe the
provisions in this final rule significantly
alter our prior estimates of the impact of
Exchanges on the budget or on
enrollment in health insurance, and
therefore, this final rule does not
significantly alter the regulatory impact
analysis drafted as part of such
rulemaking. This section summarizes
benefits and costs of the Exchange
provisions presented in this final rule.
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1. Methods of Analysis
The estimates in this analysis reflect
estimates from the FY 2014 President’s
Budget for State Planning and
Establishment Grants, which
incorporate the costs associated with
state implementation of the provisions
proposed in this rule.
2. Benefits of the Proposed Regulation
The provisions included in this final
rule amend provisions of the Exchange
Establishment final rule. We do not
believe the modifications made
significantly alter the benefits associated
with these provisions. Therefore, we
refer to the benefits discussion included
in the regulatory impact analysis
associated with the Exchange
Establishment final rule for a full
analysis. The Exchange Establishment
final rule regulatory impact analysis can
be found at https://cciio.cms.gov/
resources/files/Files2/03162012/hie3rria-032012.pdf.
3. Costs of the Proposed Regulation
The Affordable Care Act and the
implementing regulations found in
subpart D of this final rule and the
Exchange Establishment final rule
provide for a streamlined system based
on simplified eligibility rules, and an
expedited process that will facilitate
enrollment of eligible individuals and
minimize costs to states, Exchanges and
to the federal government. To support
this new eligibility structure, states
seeking to operate Exchanges are
expected to build new or modify
existing information technology (IT)
systems. We believe that how each state
builds and assembles the components
necessary to support its Exchange and
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Medicaid infrastructure will vary and
depend on the level of maturity of
current systems, current governance and
business models, size, and other factors.
It is important to note that, although
states have the option to establish and
operate an Exchange, there is no federal
requirement that each state establish an
Exchange. We believe the proposed
provisions provide options and
flexibility to states that minimize costs
and burden on Exchanges, consumers,
employers and other entities. We also
believe that overall administrative costs
may increase in the short term as states
build IT systems; however, in the long
term, states may see savings through the
use of more efficient systems.
Any administrative costs incurred in
the development of IT infrastructure to
support the Exchange may be funded
through Exchange Planning and
Establishment Grants to states. The
federal government expects that these
grants will fund the development of IT
systems that can be used by many states
who either develop their own
Exchanges or who partner with the
federal government to provide a subset
of Exchange services.3 Costs for IT
infrastructure that will also support
Medicaid must be allocated to
Medicaid, but are eligible for a 90
percent federal matching rate to assist in
development.4
3 For example, CMS has awarded a number of
Early Innovator grants to develop efficient and
replicable IT systems that can provide the
foundation for other states’ work in this area. These
amounts vary from $6 million to $48 million per
state.
4 Medicaid Program; Federal Funding for
Medicaid Eligibility Determination and Enrollment
Activities, Final rule, 75 FR 21950 (April 19, 2011).
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In general, as noted in our discussion
of benefits, we anticipate that the final
rule will increase take-up of health
insurance; therefore, one type of ruleinduced cost will be associated with
providing additional medical services to
newly-enrolled individuals. A recent
study found that insured individuals
received more hospital care and more
outpatient care than their uninsured
counterparts.5
Below we include estimated federal
government payments related to grants
for Exchange startup. States’ initial costs
due to the creation of Exchanges will be
42297
funded by these grants. Performing
eligibility determinations is a minimum
function of the Exchange; therefore the
Exchange costs to develop the
infrastructure for the provisions
included in this final rule are covered
by these grant outlays.
TABLE 3—ESTIMATED FEDERAL GOVERNMENT OUTLAYS FOR THE AFFORDABLE INSURANCE EXCHANGES FY 2013–
FY2017
[In billions of dollars]
Year
2013
2014
2015
2016
2017
2013–2017
Grant Authority for Exchange Start up a ..........................
1.5
2.1
1.7
0.8
0.2
6.2
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a FY
2014 President’s Budget.
D. Alternatives Considered
We considered two alternatives to the
Exchange provisions.
• Alternative #1: Require paper
documentation to verify access to
employer-sponsored coverage.
Section 155.320(d) of the final rule
provides a process for verification
related to enrollment in an eligible
employer-sponsored plan and eligibility
for qualifying coverage in an eligible
employer-sponsored plan. The proposed
process relies on available electronic
data sources, with the use of paper
documentation in situations in which
information submitted by an applicant
is not reasonably compatible with
information in electronic data sources,
along with a sample-based review for
situations in which no data is available.
The alternative model we considered
would require the Exchange to require
individuals to submit paper
documentation to verify this
information in all circumstances. This
may increase the burden on individuals
to submit this documentation to the
Exchange, which may not be readily
available to the applicant, but on
employers, who will have to produce
this information at the request of
applicants, and will also require
additional time and resources for
Exchanges to accept and process the
paper documentation needed for an
eligibility determination. In addition, it
could ultimately increase the amount of
time it will take for an individual to
receive health coverage through the
Exchange or an insurance affordability
program, could reduce the number of
states likely to operate an Exchange due
to increased administrative costs, and
could dissuade individuals from seeking
coverage through the Exchange.
• Alternative #2: Require Paper
Notices from the Exchange
In § 155.230(d), we provide that the
Exchange will provide the option to an
individual or employer to receive
notices electronically. We anticipate
that this will be accommodated by the
Exchange generating electronic notices,
storing them on a secure Web site, and
notifying individuals and employers
through a generic email or text message
communication that a notice is available
for review.
The alternative model would require
the Exchange to send all notices in
paper form via US mail. This would
significantly increase administrative
costs for printing and mailing, and also
generate significant volumes of
undeliverable mail which would be
returned to the Exchange.
5 Finkelstein, A. et al., (2011). The Oregon Health
Insurance Experiment: Evidence from the First
is difficult to project, especially for
people who are currently not in the
health care system—the population
targeted for the Medicaid eligibility
changes and new insurance affordability
programs. Such individuals could have
pent-up demand and thus have costs
that may be initially higher than other
enrollees in health coverage, while they
might also have better health status than
those who have found a way (for
example, ‘‘spent down’’) to enroll in
Medicaid.
For the Exchange provisions, we use
the President’s Fiscal Year 2014 Budget
as an estimate of the costs associated
with the Exchange provisions. It is
difficult to isolate the effects associated
with these particular provisions of the
Affordable Care Act, and therefore, in
this analysis, we discuss the evidence
relating to the provisions of this final
rule in combination with related
provisions of the Affordable Care Act.
Further, with limited previous data and
experiences, there is even greater
uncertainty than in estimating the
implications of modifying a previously
existing program. Accordingly, we
supplement the regulatory impact
analysis with a qualitative discussion on
the specific provisions of this rule.
Year,’’ National Bureau of Economic Research
Working Paper Series, 17190.
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Summary of Costs for Each Alternative
The paper-driven process outlined
under alternatives 1 and 2 would
ultimately increase the amount of time
it would take for an individual to
receive health coverage through the
Exchange or an insurance affordability
program, would increase administrative
costs, and would dissuade individuals
from seeking coverage through the
Exchange.
E. Limitations of the Analysis
A number of challenges face
estimators in projecting the Exchange,
Medicaid, and CHIP benefits and costs
under the Affordable Care Act and its
implementing regulations, including
this final rule. Health care cost growth
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F. Accounting Statement
As required by OMB Circular A–4
(available at https://
www.whitehouse.gov/omb/
circulars_a004_a-4/), in Table X we
have prepared an accounting statement
table showing the classification of the
impacts associated with implementation
of this final rule.
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TABLE 4—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED NET COSTS AND TRANSFERS
[In millions]
Units
Category
Estimates
Year dollar
Discount rate
Period covered
Benefits
Annualized Monetized ($million/year) ................
Not Estimated .................................
Not Estimated .................................
2012
2012
7%
3%
2013–2017
2013–2017
Qualitative ...........................................................
The Exchanges, combined with other actions being taken to implement the Affordable Care
Act, will improve access to health insurance, with numerous positive effects, including reduced morbidity and fewer medical bankruptcies. The Exchange will also serve as a distribution channel for insurance reducing administrative costs as a part of premiums and providing
comparable information on health plans to allow for a more efficient shopping experience.
Costs*
Annualized Monetized ($million/year) ................
1,311 ...............................................
1,283 ...............................................
2012
2012
7%
3%
2013–2017
2013–2017
Qualitative ...........................................................
Unquantified costs include State implementation costs above the amount covered by Federal
grants; and increased medical costs associated with more widespread enrollment in health
insurance.
Transfers
Annualized Monetized ($million/year) ................
54.4 .................................................
55.3 .................................................
From Whom to Whom ........................................
Annualized Monetized ($million/year) ................
2013
2013
7%
3%
2014–2018
2014–2018
7%
3%
2014–2018
2014–2018
Beneficiaries to Federal Government
35.8 .................................................
36.5 .................................................
From Whom to Whom ........................................
2013
2013
Beneficiaries to State Governments
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* These costs include grant outlays to States to establish Exchanges; most of these Exchange-establishment costs been included in the accounting statement for the Exchange final rule.
G. Regulatory Flexibility Analysis
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 final rule on small
entities, unless the head of the agency
can certify that the rule will not have a
significant economic impact on a
substantial number of small entities.
The Act generally defines a ‘‘small
entity’’ as (1) a proprietary firm meeting
the size standards of the Small Business
Administration (SBA); (2) a not-forprofit organization that is not dominant
in its field; or (3) a small government
jurisdiction with a population of less
than 50,000. States and individuals are
not included in the definition of ‘‘small
entity.’’ HHS uses as its measure of
significant economic impact on a
substantial number of small entities a
change in revenues of more than 3 to 5
percent.
As discussed above, this final rule is
necessary to implement certain
standards related to the establishment
and operation of Exchanges as
authorized by the Affordable Care Act.
Specifically, this final rule: (1) provides
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criteria related to the verification of
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan; and (2)
further specifies or amends standards
related to other eligibility and
enrollment provisions to provide detail
necessary for state implementation.
The intent of this rule is to continue
to afford states substantial discretion in
the design and operation of an
Exchange, with greater standardization
provided where directed by the statute
or where there are compelling practical,
efficiency or consumer protection
reasons.
For the purposes of the regulatory
flexibility analysis, we expect the
following types of entities to be affected
by this final rule—(1) QHP issuers; and
(2) employers. We believe that health
insurers will be classified under the
North American Industry Classification
System (NAICS) Code 524114 (Direct
Health and CMS–9989–P 166 Medical
Insurance Carriers). According to SBA
size standards, entities with average
annual receipts of $7 million or less will
be considered small entities this NAICS
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code. Health issuers could also possibly
be classified in 621491 (HMO Medical
Centers) and, if this is the case, the SBA
size standard will be $30 million or less.
1. QHP Issuers
This rule proposes standards for
Exchanges that affect eligibility
determinations for enrollment in a QHP
through the Exchange, advance
payments of the premium tax credit,
cost-sharing reductions, Medicaid, and
CHIP. Although these standards are for
Exchanges, they also affect health plan
issuers that choose to participate in an
Exchange. QHP issuers receive
information from an Exchange about an
enrollee to enable the QHP issuer to
process the correct level of advance
payments of the premium tax credit and
cost-sharing reductions. The issuer of
the QHP will adjust an enrollee’s net
premium to reflect the advance
payments of the premium tax credit, as
well as make any changes required to
ensure that cost-sharing reflects the
appropriate level of reductions. QHP
issuers benefit significantly from
advance payments of the premium tax
credit and cost-sharing reductions, but
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may face some administrative costs
relating to receiving enrollee
information from an Exchange.
As discussed in the Web Portal
interim final rule (75 FR 24470, 24481
(May 5, 2010), HHS examined the health
insurance industry in depth in the
Regulatory Impact Analysis we prepared
for the final rule on establishment of the
Medicare Advantage program published
on August 3, 2004 (69 FR 46866). In that
analysis we determined that there were
few, if any, insurance firms
underwriting comprehensive health
insurance policies (in contrast, for
example, to travel insurance policies or
dental discount policies) that fell below
the size thresholds for ‘‘small’’ business
established by the SBA (currently $7
million in annual receipts for health
insurers, based on North American
Industry Classification System Code
524114).6
Additionally, as discussed in the
Medical Loss Ratio interim final rule (75
FR 74918), the Department 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, the Department used total
Accident and Health (A&H) earned
premiums as a proxy for annual
receipts. The Department estimated that
there were 28 small entities with less
than $7 million in accident and health
earned premiums offering individual or
group comprehensive major medical
coverage; however, this estimate may
overstate the actual number of small
health insurance issuers offering such
coverage, because it does not include
receipts from these companies’ other
lines of business.
2. Employers
The establishment of SHOP in
conjunction with tax incentives for
eligible employers will provide new
opportunities for employers to offer
affordable health insurance to their
employees. A detailed discussion of the
impact on employers related to the
establishment of the SHOP is found in
the RIA for the Exchange final rule, 77
FR 18010 (March 23, 2012) and
available at https://cciio.cms.gov/
resources/files/Files2/03162012/hie3rria-032012.pdf.
Except in the Exchange provisions,
few of the entities that meet the
6 Table of Size Standards Matched To North
American Industry Classification System Codes,’’
effective November 5, 2010, U.S. Small Business
Administration, available at https://www.sba.gov.
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18:54 Jul 12, 2013
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definition of a small entity as that term
is used in the RFA (for example, small
businesses, nonprofit organization, and
small governmental jurisdictions with a
population of less than 50,000) will be
impacted directly by this final rule.
Individuals and states are not included
in the definition of a small entity. In
addition, the impact of the majority of
this rule was addressed in the RIA
accompanying the March 2012
Medicaid eligibility rule (77 FR 17144,
March 23, 2012). Therefore, the
Secretary has determined that this final
rule will not have a significant
economic impact on a substantial
number of small entities, and we have
not prepared a regulatory flexibility
analysis.
Additionally, section 1102(b) of the
Act requires us to prepare a regulatory
impact analysis if a final rule may have
a significant economic impact on the
operations of a substantial number of
small rural hospitals. This analysis must
conform to the provisions of section 604
of the RFA. For purposes of section
1102(b) of the Act, we define a small
rural hospital as a hospital that is
located outside of a metropolitan
statistical area and has fewer than 100
beds. We are not preparing an analysis
for section 1102(b) of the Act because
the Secretary has determined that this
final rule will not have a direct
economic impact on the operations of a
substantial number of small rural
hospitals.
H. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits before issuing any
rule whose mandates require spending
in any 1 year of $100 million in 1995
dollars, updated annually for inflation,
by state, local, or tribal governments, in
the aggregate, or by the private sector. In
2013, that threshold is approximately
$141 million. This final rule does not
mandate expenditures by state
governments, local governments, tribal
governments, in the aggregate, or the
private sector, of $140 million. The
majority of state, local, and private
sector costs related to implementation of
the Affordable Care Act were described
in the RIA accompanying the March
2012 Medicaid eligibility rule (77 FR
17144, March 23, 2012). Furthermore,
the final rule does not set any mandate
on states to set up an Exchange.
I. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a final
rule that imposes substantial direct
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42299
effects on states, preempts state law, or
otherwise has federalism implications.
We wish to note again that the impact
of changes related to implementation of
the Affordable Care Act were described
in the RIA of the March 2012 Medicaid
eligibility rule (77 FR 17144, March 23,
2012). As discussed in the March 2012
RIA, we have consulted with states to
receive input on how the various
Affordable Care Act provisions codified
in this final rule will affect states. We
continue to engage in ongoing
consultations with Medicaid and CHIP
Technical Advisory Groups (TAGs),
which have been in place for many
years and serve as a staff level policy
and technical exchange of information
between CMS and the states. Through
consultations with these TAGs, we have
been able to get input from states
specific to issues surrounding the
changes in eligibility groups and rules
that will become effective in 2014.
Because states have flexibility in
deciding whether to implement an
Exchange and, if a State opts to, in the
design of its Exchange, state decisions
will ultimately influence both
administrative expenses and overall
premiums. However, because states are
not required to create an Exchange,
these costs are not mandatory. For states
electing to create an Exchange, the
initial costs of the creation of the
Exchange will be funded by Exchange
Planning and Establishment Grants.
After this time, Exchanges will be
financially self-sustaining with revenue
sources left to the discretion of the state.
In the Department’s view, while this
final rule does not impose substantial
direct effects on state and local
governments, it has federalism
implications due to direct effects on the
distribution of power and
responsibilities among the state and
federal governments relating to
determining standards relating to health
insurance coverage (that is, for QHPs)
that is offered in the individual and
small group markets. Each state electing
to establish a State-Based Exchange
must adopt federal standards contained
in the Affordable Care Act and in this
final rule, or have in effect a state law
or regulation that implements these
federal standards. However, the
Department anticipates that the
federalism implications (if any) are
substantially mitigated because states
have choices regarding the structure and
governance of their Exchanges.
Additionally, the Affordable Care Act
does not require states to establish an
Exchange; but if a state elects not to
establish an Exchange or the state’s
Exchange is not approved, HHS will
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establish and operate an Exchange in
that state. Additionally, states will have
the opportunity to participate in state
Partnership Exchanges that will allow
states to leverage work done by other
states and the federal government.
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, the Department has engaged in
efforts to consult with and work
cooperatively with affected states,
including participating in conference
calls with and attending conferences of
the National Association of Insurance
Commissioners and consulting with
state officials on an individual basis.
In accordance to the requirements set
forth in section 8(a) of Executive Order
13132, and by the signatures affixed to
this regulation, the Department certifies
that CMS has complied with the
requirements of Executive Order 13132
for the attached proposed regulation in
a meaningful and timely manner.
J. Congressional Review Act
This final rule is subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801 et seq.), which specifies that
before a rule can take effect, the federal
agency promulgating the rule shall
submit to each House of the Congress
and to the Comptroller General a report
containing a copy of the rule along with
other specified information, this final
rule, and has been transmitted to
Congress and the Comptroller General
for review.
In accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
List of Subjects
42 CFR Part 431
Grant programs—health, Health
facilities, Medicaid, Privacy, Reporting
and recordkeeping requirements.
42 CFR Part 435
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Aid to Families with Dependent
Children, Grant programs-health,
Medicaid, Reporting and recordkeeping
requirements, Supplemental Security
Income (SSI), Wages.
Aid to Families with Dependent
Children, Grant programs—health,
Guam, Medicaid, Puerto Rico,
Supplemental Security Income (SSI),
and Virgin Islands.
18:54 Jul 12, 2013
■
42 CFR Part 440
Grant programs—health, Medicaid.
§ 431.10
42 CFR Part 447
Accounting, Administrative practice
and procedure, Drugs, Grant programs—
health, Health facilities, Health
professions, Medicaid, Reporting and
recordkeeping requirements, Rural
areas.
42 CFR Part 457
Administrative practice and
procedure, Grant programs—health,
Health insurance, Reporting and
recordkeeping requirements.
45 CFR Part 155
Administrative practice and
procedure, Advertising, 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, 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 Centers for Medicare &
Medicaid Services amends 42 CFR
chapter IV as set forth below:
PART 431—STATE ORGANIZATION
AND GENERAL ADMINISTRATION
42 CFR Part 436
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42 CFR Part 438
Grant programs—health, Medicaid,
and Reporting and recordkeeping
requirements.
Jkt 229001
1. The authority citation for part 431
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act, (42 U.S.C. 1302).
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2. Section 431.10 is amended by
revising paragraph (a), adding paragraph
(b)(3), and revising paragraphs (c), (d),
and (e) to read as follows:
Single State agency.
(a) Basis, purpose, and definitions. (1)
This section implements section
1902(a)(4) and (5) of the Act.
(2) For purposes of this part—
Appeals decision means a decision
made by a hearing officer adjudicating
a fair hearing under subpart E of this
part.
Exchange has the meaning given to
the term in 45 CFR 155.20.
Exchange appeals entity has the
meaning given to the term ‘‘appeals
entity,’’ as defined in 45 CFR 155.500.
Medicaid agency is the single State
agency for the Medicaid program.
(b) * * *
(3) The single State agency is
responsible for determining eligibility
for all individuals applying for or
receiving benefits in accordance with
regulations in part 435 of this chapter
and for fair hearings filed in accordance
with subpart E of this part.
(c) Delegations. (1) Subject to the
requirement in paragraph (c)(2) of this
section, the Medicaid agency—
(i)(A) May, in the approved state plan,
delegate authority to determine
eligibility for all or a defined subset of
individuals to—
(1) The single State agency for the
financial assistance program under title
IV–A (in the 50 States or the District of
Columbia), or under title I or XVI
(AABD), in Guam, Puerto Rico, or the
Virgin Islands;
(2) The Federal agency administering
the supplemental security income
program under title XVI of the Act; or
(3) The Exchange.
(B) Must in the approved state plan
specify to which agency, and the
individuals for which, authority to
determine eligibility is delegated.
(ii) Delegate authority to conduct fair
hearings under subpart E of this part for
denials of eligibility for individuals
whose income eligibility is determined
based on the applicable modified
adjusted gross income standard
described in § 435.911(c) of this chapter,
to an Exchange or Exchange appeals
entity, provided that individuals who
have requested a fair hearing of such a
denial are given a choice to have their
fair hearing instead conducted by the
Medicaid agency.
(2) The Medicaid agency may delegate
authority to make eligibility
determinations or to conduct fair
hearings under this section only to a
government agency which maintains
personnel standards on a merit basis.
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(3) The Medicaid agency—
(i) Must ensure that any agency to
which eligibility determinations or
appeals decisions are delegated—
(A) Complies with all relevant Federal
and State law, regulations and policies,
including, but not limited to, those
related to the eligibility criteria applied
by the agency under part 435 of this
chapter; prohibitions against conflicts of
interest and improper incentives; and
safeguarding confidentiality, including
regulations set forth at subpart F of this
part.
(B) Informs applicants and
beneficiaries how they can directly
contact and obtain information from the
agency; and
(ii) Must exercise appropriate
oversight over the eligibility
determinations and appeals decisions
made by such agencies to ensure
compliance with paragraphs (c)(2) and
(c)(3)(i) of this section and institute
corrective action as needed, including,
but not limited to, rescission of the
authority delegated under this section.
(iii) If authority to conduct fair
hearings is delegated to the Exchange or
Exchange appeals entity under
paragraph (c)(1)(ii) of this section, the
agency may establish a review process
whereby the agency may review fair
hearing decisions made under that
delegation, but that review will be
limited to the proper application of
federal and state Medicaid law and
regulations, including sub-regulatory
guidance and written interpretive
policies, and must be conducted by an
impartial official not directly involved
in the initial determination.
(d) Agreement with Federal, State or
local entities making eligibility
determinations or appeals decisions.
The plan must provide for written
agreements between the Medicaid
agency and the Exchange or any other
State or local agency that has been
delegated authority under paragraph
(c)(1)(i) of this section to determine
Medicaid eligibility and for written
agreements between the agency and the
Exchange or Exchange appeals entity
that has been delegated authority to
conduct Medicaid fair hearings under
paragraph (c)(1)(ii) of this section. Such
agreements must be available to the
Secretary upon request and must
include provisions for:
(1) The relationships and respective
responsibilities of the parties, including
but not limited to the respective
responsibilities to effectuate the fair
hearing rules in subpart E of this part;
(2) Quality control and oversight by
the Medicaid agency, including any
reporting requirements needed to
facilitate such control and oversight;
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(3) Assurances that the entity to
which authority to determine eligibility
or conduct fair hearings will comply
with the provisions set forth in
paragraph (c)(3) of this section.
(4) For appeals, procedures to ensure
that individuals have notice and a full
opportunity to have their fair hearing
conducted by either the Exchange or
Exchange appeals entity or the Medicaid
agency.
(e) Authority of the single State
agency. The Medicaid agency may not
delegate, to other than its own officials,
the authority to supervise the plan or to
develop or issue policies, rules, and
regulations on program matters.
■ 3. Section 431.11 is amended by—
■ A. Removing paragraph (b).
■ B. Redesignating paragraphs (c) and
(d), as paragraphs (b) and (c),
respectively.
■ C. Revising newly redesignated
paragraphs (b) and (c).
The revisions read as follows:
§ 431.11
Organization for administration.
*
*
*
*
*
(b) Description of organization. (1)
The plan must include a description of
the organization and functions of the
Medicaid agency.
(2) When submitting a state plan
amendment related to the designation,
authority, organization or functions of
the Medicaid agency, the Medicaid
agency must provide an organizational
chart reflecting the key components of
the Medicaid agency and the functions
each performs.
(c) Eligibility determined or fair
hearings decided by other entities. If
eligibility is determined or fair hearings
decided by Federal or State entities
other than the Medicaid agency or by
local agencies under the supervision of
other State agencies, the plan must
include a description of the staff
designated by those other entities and
the functions they perform in carrying
out their responsibilities.
§ 431.57
[Removed]
4. Section 431.57 is removed.
5. Section 431.201 is amended by
adding the definition of ‘‘send’’ in
alphabetical order to read as follows:
§ 431.205
42301
Provision of hearing system.
*
*
*
*
*
(b) * * *
(1) A hearing before—
(i) The Medicaid agency; or
(ii) For the denial of eligibility for
individuals whose income eligibility is
determined based on the applicable
modified adjusted gross income
standard described in§ 435.911(c) of this
chapter, the Exchange or Exchange
appeals entity to which authority to
conduct fair hearings has been delegated
under § 431.10(c)(1)(ii), provided that
individuals who have requested a fair
hearing are given the choice to have
their fair hearing conducted instead by
the Medicaid agency; at state option the
Exchange or Exchange appeals entity
decision may be subject to review by the
Medicaid agency in accordance with
§ 431.10(c)(3)(iii); or
(2) An evidentiary hearing at the local
level, with a right of appeal to the
Medicaid agency.
*
*
*
*
*
■ 7. Section 431.206 is amended by
adding paragraphs (d) and (e) to read as
follows:
§ 431.206 Informing applicants and
beneficiaries.
*
*
*
*
*
(d) If, in accordance with
§ 431.10(c)(1)(ii), the agency has
delegated authority to the Exchange or
Exchange appeals entity to conduct the
fair hearing, the agency must inform the
individual in writing that—
(1) He or she has the right to have his
or her hearing before the agency, instead
of the Exchange or the Exchange appeals
entity; and
(2) The method by which the
individual may make such election;
(e) The information required under
this section may be provided in
electronic format in accordance with
§ 435.918 of this chapter.
8. Section 431.211 is revised to read
as follows:
■
■
§ 431.211
■
The State or local agency must send
a notice at least 10 days before the date
of action, except as permitted under
§§ 431.213 and 431.214.
§ 431.201
Definitions.
*
*
*
*
*
Send means deliver by mail or in
electronic format consistent with
§ 435.918 of this chapter.
*
*
*
*
*
■ 6. Section 431.205 is amended by
revising paragraphs (b)(1) and (2) to read
as follows:
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Advance notice.
9. Section 431.213 is amended by
revising the introductory text to read as
follows:
■
§ 431.213
Exceptions from advance notice.
The agency may send a notice not
later than the date of action if—
*
*
*
*
*
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[Amended]
10. In § 431.230, amend paragraph (a)
introductory text by removing the term
‘‘mails’’ and adding in its place the term
‘‘sends’’.
■ 11. Section 431.231 is amended by
revising the section heading and
paragraph (c)(2) to read as follows:
■
§ 431.231
Reinstating services.
*
*
*
*
*
(c) * * *
(2) The beneficiary requests a hearing
within 10 days from the date that the
individual receives the notice of action.
The date on which the notice is received
is considered to be 5 days after the date
on the notice, unless the beneficiary
shows that he or she did not receive the
notice within the 5-day period; and
*
*
*
*
*
■ 12. Section 431.240 is amended by
adding paragraph (c) to read as follows.
§ 431.240
Conducting the hearing.
*
*
*
*
*
(c) A hearing officer must have access
to agency information necessary to issue
a proper hearing decision, including
information concerning State policies
and regulations.
PART 435—ELIGIBILITY IN THE
STATES, DISTRICT OF COLUMBIA,
THE NORTHERN MARIANA ISLANDS,
AND AMERICAN SAMOA
13. The authority citation for part 435
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302).
14. Section 435.110 is amended by
eepublishing paragraph (c) introductory
text and revising paragraph (c)(1) to read
as follows:
■
§ 435.110 Parents and other caretaker
relatives.
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*
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(c) Income standard. The agency must
establish in its State plan the income
standard as follows:
(1) The minimum income standard is
a State’s AFDC income standard in
effect as of May 1, 1988 for the
applicable family size converted to a
MAGI-equivalent standard in
accordance with guidance issued by the
Secretary under section 1902(e)(14)(A)
and (E) of the Act.
*
*
*
*
*
■ 15. Section 435.116 is amended by
republishing paragraph (d)(4)
introductory text and revising paragraph
(d)(4)(i) to read as follows:
§ 435.116
Pregnant women.
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*
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(d) * * *
(4) Applicable income limit for full
Medicaid coverage of pregnant women.
For purposes of paragraph (d)(1) of this
section—
(i) The minimum applicable income
limit is the State’s AFDC income
standard in effect as of May 1, 1988 for
the applicable family size converted to
a MAGI-equivalent standard in
accordance with guidance issued by the
Secretary under section 1902(e)(14)(A)
and (E) of the Act.
*
*
*
*
*
■ 16. Section 435.119 is amended by
revising the introductory text in
paragraph (b) to read as follows:
(4) Effective January 1, 2014, in
determining the eligibility of an
individual using MAGI-based income, a
state must subtract an amount
equivalent to 5 percentage points of the
Federal poverty level for the applicable
family size only to determine the
eligibility of an individual for medical
assistance under the eligibility group
with the highest income standard using
MAGI-based methodologies in the
applicable Title of the Act, but not to
determine eligibility for a particular
eligibility group.
*
*
*
*
*
■ 19. Section 435.907 is amended by
adding paragraph (h) to read as follows.
§ 435.119 Coverage for individuals age 19
or older and under age 65 at or below 133
percent FPL.
§ 435.907
Application.
17. In § 435.121, amend paragraph
(f)(1)(iii) by removing the reference
‘‘§ 447.52 or § 447.53’’ and by adding in
its place the reference ‘‘§ 447.52,
§ 447.53, or § 447.54’’.
■ 18. Section 435.603 is amended by—
■ A. In paragraph (b), adding the
definitions of ‘‘Child,’’ ‘‘Parent,’’ and
‘‘Sibling’’ in alphabetical order.
■ B. Revising paragraphs (c) and (d)(1).
■ C. Adding paragraph (d)(4).
The revisions and additions read as
follows:
*
*
*
*
(h) Reinstatement of withdrawn
applications. (1) In the case of
individuals described in paragraph
(h)(2) of this section, the agency must
reinstate the application submitted by
the individual, effective as of the date
the application was first received by the
Exchange.
(2) Individuals described in this
paragraph are individuals who—
(i) Submitted an application described
in paragraph (b) of this section to the
Exchange;
(ii) Withdrew their application for
Medicaid in accordance with 45 CFR
155.302(b)(4)(A);
(iii) Are assessed as potentially
eligible for Medicaid by the Exchange
appeals entity.
■ 20. Section 435.908 is amended by
adding paragraph (c) to read as follows:
§ 435.603 Application of modified adjusted
gross income (MAGI).
*
§ 435.908
renewal.
*
*
*
*
*
*
(b) Eligibility. Effective January 1,
2014, the agency must provide Medicaid
to individuals who:
*
*
*
*
*
§ 435.121
[Amended]
■
*
*
*
*
(b) * * *
Child means a natural or biological,
adopted or step child.
*
*
*
*
*
Parent means a natural or biological,
adopted or step parent.
Sibling means natural or biological,
adopted, half, or step sibling.
*
*
*
*
*
(c) Basic rule. Except as specified in
paragraph (i), (j), and (k) of this section,
the agency must determine financial
eligibility for Medicaid based on
‘‘household income’’ as defined in
paragraph (d) of this section.
(d) * * *
(1) General rule. Except as provided
in paragraphs (d)(2) through (d)(4) of
this section, household income is the
sum of the MAGI-based income, as
defined in paragraph (e) of this section,
of every individual included in the
individual’s household.
*
*
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*
*
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*
Assistance with application and
*
*
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*
(c) Certified Application Counselors.
(1) At State option, the agency may
certify staff and volunteers of Statedesignated organizations to act as
application assisters, authorized to
provide assistance to applicants and
beneficiaries with the application
process and during renewal of
eligibility. To be certified, application
assisters must be—
(i) Authorized and registered by the
agency to provide assistance at
application and renewal;
(ii) Effectively trained in the
eligibility and benefits rules and
regulations governing enrollment in a
QHP through the Exchange and all
insurance affordability programs
operated in the State, as implemented in
the State; and
(iii) Trained in and adhere to all rules
regulations relating to the safeguarding
and confidentiality of information and
prohibiting conflict of interest,
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including regulations set forth at part
431, subpart F of this chapter, and at 45
CFR 155.260(f), regulations relating to
the prohibition against reassignment of
provider claims specified in § 447.10 of
this chapter, and all other State and
Federal laws concerning conflicts of
interest and confidentiality of
information.
(2) For purposes of this section,
assistance includes providing
information on insurance affordability
programs and coverage options, helping
individuals complete an application or
renewal, working with the individual to
provide required documentation,
submitting applications and renewals to
the agency, interacting with the agency
on the status of such applications and
renewals, assisting individuals with
responding to any requests from the
agency, and managing their case
between the eligibility determination
and regularly scheduled renewals.
Application assisters may be certified by
the agency to act on behalf of applicants
and beneficiaries for one, some or all of
the permitted assistance activities.
(3) If the agency elects to certify
application assisters, it must establish
procedures to ensure that—
(i) Applicants and beneficiaries are
informed of the functions and
responsibilities of certified application
assisters;
(ii) Individuals are able to authorize
application assisters to receive
confidential information about the
individual related to the individual’s
application for or renewal of Medicaid;
and
(iii) The agency does not disclose
confidential applicant or beneficiary
information to an application assister
unless the applicant or beneficiary has
authorized the application assister to
receive such information.
(4) Application assisters may not
impose, accept or receive payment or
compensation in any form from
applicants or beneficiaries for
application assistance.
■ 21. Section 435.918 is added to read
as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 435.918
Use of electronic notices.
(a) Effective no earlier than October 1,
2013 and no later than January 1, 2015,
the agency must provide individuals
with a choice to receive notices and
information required under this part or
subpart E of part 431 of this chapter in
electronic format or by regular mail and
must be permitted to change such
election.
(b) If the individual elects to receive
communications from the agency
electronically, the agency must—
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(1) Ensure that the individual’s
election to receive notices electronically
is confirmed by regular mail.
(2) Ensure that the individual is
informed of his or her right to change
such election to receive notices through
regular mail.
(3) Post notices to the individual’s
electronic account within 1 business
day of notice generation.
(4) Send an email or other electronic
communication alerting the individual
that a notice has been posted to his or
her account. The agency may not
include confidential information in the
email or electronic alert.
(5) Send a notice by regular mail
within three business days of the date
of a failed electronic communication if
an electronic communication is
undeliverable.
(6) At the individual’s request,
provide through regular mail any notice
posted to the individual’s electronic
account.
■ 22. Section 435.923 is added to read
as follows:
§ 435.923
Authorized Representatives.
(a)(1) The agency must permit
applicants and beneficiaries to designate
an individual or organization to act
responsibly on their behalf in assisting
with the individual’s application and
renewal of eligibility and other ongoing
communications with the agency. Such
a designation must be in accordance
with paragraph (f) of this section,
including the applicant’s signature, and
must be permitted at the time of
application and at other times.
(2) Authority for an individual or
entity to act on behalf of an applicant or
beneficiary accorded under state law,
including but not limited to, a court
order establishing legal guardianship or
a power of attorney, must be treated as
a written designation by the applicant or
beneficiary of authorized representation.
(b) Applicants and beneficiaries may
authorize their representatives to—
(1) Sign an application on the
applicant’s behalf;
(2) Complete and submit a renewal
form;
(3) Receive copies of the applicant or
beneficiary’s notices and other
communications from the agency;
(4) Act on behalf of the applicant or
beneficiary in all other matters with the
agency.
(c) The power to act as an authorized
representative is valid until the
applicant or beneficiary modifies the
authorization or notifies the agency that
the representative is no longer
authorized to act on his or her behalf,
or the authorized representative informs
the agency that he or she no longer is
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42303
acting in such capacity, or there is a
change in the legal authority upon
which the individual or organization’s
authority was based. Such notice must
be in accordance with paragraph (f) of
this section and should include the
applicant or authorized representative’s
signature as appropriate.
(d) The authorized representative—
(1) Is responsible for fulfilling all
responsibilities encompassed within the
scope of the authorized representation,
as described in paragraph (b)(2) of this
section, to the same extent as the
individual he or she represents;
(2) Must agree to maintain, or be
legally bound to maintain, the
confidentiality of any information
regarding the applicant or beneficiary
provided by the agency.
(e) The agency must require that, as a
condition of serving as an authorized
representative, a provider or staff
member or volunteer of an organization
must affirm that he or she will adhere
to the regulations in part 431, subpart F
of this chapter and at 45 CFR 155.260(f)
(relating to confidentiality of
information), § 447.10 of this chapter
(relating to the prohibition against
reassignment of provider claims as
appropriate for a facility or an
organization acting on the facility’s
behalf), as well as other relevant State
and Federal laws concerning conflicts of
interest and confidentiality of
information.
(f) For purposes of this section, the
agency must accept electronic,
including telephonically recorded,
signatures and handwritten signatures
transmitted by facsimile or other
electronic transmission. Designations of
authorized representatives must be
accepted through all of the modalities
described in § 435.907(a).
■ 23. Add an undesignated center
heading and 435.1015 to read as
follows:
FFP for Premium Assistance
§ 435.1015 FFP for premium assistance for
plans in the individual market.
(a) FFP is available for payment of the
costs of insurance premiums on behalf
of an eligible individual for a health
plan offered in the individual market
that provides the individual with
benefits for which the individual is
covered under the State plan, subject to
the following conditions:
(1) The insurer is obligated to pay
primary to Medicaid for all health care
items and services for which the insurer
is legally and contractually responsible
under the individual health plan, as
required under part 433 subpart D of
this chapter;
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(2) The agency furnishes all benefits
for which the individual is covered
under the State plan that are not
available through the individual health
plan;
(3) The individual does not incur any
cost sharing charges in excess of any
amounts imposed by the agency under
subpart A of part 447; and
(4) The total cost of purchasing such
coverage, including administrative
expenditures, the costs of paying all cost
sharing charges in excess of the amounts
imposed by the agency under subpart A
of part 447, and the costs of providing
benefits as required by (a)(2) of this
section, must be comparable to the cost
of providing direct coverage under the
State plan.
(b) A State may not require an
individual to receive benefits through
premium assistance under this section,
and a State must inform an individual
that it is the individual’s choice to
receive either direct coverage under the
Medicaid State plan or coverage through
premium assistance for an individual
health plan. A State must require that an
individual who elects premium
assistance obtain through the insurance
coverage all benefits for which the
insurer is responsible and must provide
the individual with information on how
to access any additional benefits and
cost sharing assistance not provided by
the insurer.
Subpart L—Options for Coverage of
Special Groups under Presumptive
Eligibility
24. The heading for subpart L is
revised as set forth above.
■ 25. Section 435.1102 is amended by—
■ A. Revising the section heading.
■ B. Revising paragraph (a).
■ C. Removing ‘‘and’’ at the end of
paragraph (b)(2)(iv)(B) and adding
‘‘and’’ at the end of paragraph
(b)(2)(v)(B);
■ D. Adding paragraph (b)(2)(vi).
■ E. Revising paragraph (b)(3).
■ F. Removing paragraph (b)(4).
■ G. Adding paragraphs (d) and (e).
■ The revisions and additions read as
follows:
■
tkelley on DSK3SPTVN1PROD with RULES2
§ 435.1102 Children covered under
presumptive eligibility.
(a) The agency may elect to provide
Medicaid services for children under
age 19 or a younger age specified by the
State during a presumptive eligibility
period following a determination by a
qualified entity, on the basis of
preliminary information, that the
individual has gross income (or, at state
option, a reasonable estimate of
household income, as defined in
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§ 435.603 of this part, determined using
simplified methods prescribed by the
agency) at or below the income standard
established by the State for the age of
the child under § 435.118(c) or under
§ 435.229 if applicable and higher.
(b) * * *
(2) * * *
(vi) Do not delegate the authority to
determine presumptive eligibility to
another entity.
(3) Establish oversight mechanisms to
ensure that presumptive eligibility
determinations are being made
consistent with the statute and
regulations.
*
*
*
*
*
(d) The agency—
(1) May require, for purposes of
making a presumptive eligibility
determination under this section, that
the individual has attested to being, or
another person who attests to having
reasonable knowledge of the
individual’s status has attested to the
individual being, a—
(i) Citizen or national of the United
States or in satisfactory immigration
status; or
(ii) Resident of the State; and
(2) May not—
(i) Impose other conditions for
presumptive eligibility not specified in
this section; or
(ii) Require verification of the
conditions for presumptive eligibility.
(e) Notice and fair hearing regulations
in subpart E of part 431 of this chapter
do not apply to determinations of
presumptive eligibility under this
section.
■ 26 Section 435.1103 is added to
Subpart L read as follows:
§ 435.1103 Presumptive eligibility for other
individuals.
(a) The terms of § 435.1101 and
§ 435.1102 apply to pregnant women
such that the agency may provide
Medicaid to pregnant women during a
presumptive eligibility period following
a determination by a qualified entity
that the pregnant woman has income at
or below the income standard
established by the State under
§ 435.116(c), except that coverage of
services provided to such women is
limited to ambulatory prenatal care and
the number of presumptive eligibility
periods that may be authorized for
pregnant women is one per pregnancy.
(b) If the agency provides Medicaid
during a presumptive eligibility period
to children under § 435.1102 or to
pregnant women under paragraph (a) of
this section, the agency may also apply
the terms of §§ 435.1101 and 435.1102
to the individuals described in one or
more of the following sections of this
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part, based on the income standard
established by the state for such
individuals and providing the benefits
covered under that section: §§ 435.110
(parents and caretaker relatives),
435.119 (individuals aged 19 or older
and under age 65), 435.150 (former
foster care children), and 435.218
(individuals under age 65 with income
above 133 percent FPL).
(c)(1) The terms of §§ 435.1101 and
435.1102 apply to individuals who may
be eligible under § 435.213 of this part
(relating to individuals with breast or
cervical cancer) or § 435.214 of this part
(relating to eligibility for limited family
planning benefits) such that the agency
may provide Medicaid during a
presumptive eligibility period following
a determination by a qualified entity
described in paragraph (c)(2) of this
section that—
(i) The individual meets the eligibility
requirements of § 435.213; or
(ii) The individual meets the
eligibility requirements of § 435.214,
except that coverage provided during a
presumptive eligibility period to such
individuals is limited to the services
described in § 435.214(d).
(2) Qualified entities described in this
paragraph include qualified entities
which participate as providers under
the State plan and which the agency
determines are capable of making
presumptive eligibility determinations.
■ 27. Section 435.1110 is added to
Subpart L to read as follows:
§ 435.1110 Presumptive eligibility
determined by hospitals.
(a) Basic rule. The agency must
provide Medicaid during a presumptive
eligibility period to individuals who are
determined by a qualified hospital, on
the basis of preliminary information, to
be presumptively eligible subject to the
same requirements as apply to the State
options under §§ 435.1102 and
435.1103, but regardless of whether the
agency provides Medicaid during a
presumptive eligibility period under
such sections.
(b) Qualified hospitals. A qualified
hospital is a hospital that—
(1) Participates as a provider under
the State plan or a demonstration under
section 1115 of the Act, notifies the
agency of its election to make
presumptive eligibility determinations
under this section, and agrees to make
presumptive eligibility determinations
consistent with State policies and
procedures;
(2) At State option, assists individuals
in completing and submitting the full
application and understanding any
documentation requirements; and
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(3) Has not been disqualified by the
agency in accordance with paragraph (d)
of this section.
(c) State options for bases of
presumptive eligibility. The agency
may—
(1) Limit the determinations of
presumptive eligibility which hospitals
may elect to make under this section to
determinations based on income for all
of the populations described in
§ 435.1102 and § 435.1103; or
(2) Permit hospitals to elect to make
presumptive eligibility determinations
on additional bases approved under the
State plan or an 1115 demonstration.
(d) Disqualification of hospitals. (1)
The agency may establish standards for
qualified hospitals related to the
proportion of individuals determined
presumptively eligible for Medicaid by
the hospital who:
(i) Submit a regular application, as
described in § 435.907, before the end of
the presumptive eligibility period; or
(ii) Are determined eligible for
Medicaid by the agency based on such
application.
(2) The agency must take action,
including, but not limited to,
disqualification of a hospital as a
qualified hospital under this section, if
the agency determines that the hospital
is not—
(i) Making, or is not capable of
making, presumptive eligibility
determinations in accordance with
applicable state policies and
procedures; or
(ii) Meeting the standard or standards
established by the agency under
paragraph (d)(1) of this section.
(3) The agency may disqualify a
hospital as a qualified hospital under
this paragraph only after it has provided
the hospital with additional training or
taken other reasonable corrective action
measures to address the issue.
■ 28. Section 435.1200 is amended by
revising paragraph (d)(6) to read as
follows:
§ 435.1200 Medicaid Agency
responsibilities for a coordinated eligibility
and enrollment process with other
insurance affordability programs
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(d) * * *
(6) Notify such program of the final
determination of the individual’s
eligibility or ineligibility for Medicaid.
*
*
*
*
*
■ 29. Section 435.1205 is added to read
as follows:
§ 435.1205 Alignment with exchange initial
open enrollment period.
(a) Definitions. For purposes of this
section—
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Eligibility based on MAGI means
Medicaid eligibility based on the
eligibility requirements which will be
effective under the State plan, or waiver
of such plan, as of January 1, 2014,
consistent with §§ 435.110 through
435.119, 435.218 and 435.603.
(b) Medicaid agency responsibilities to
achieve coordinated open enrollment.
For the period beginning October 1,
2013 through December 31, 2013, the
agency must
(1) Accept all of the following:
(i) The single streamlined application
described in § 435.907.
(ii) Via secure electronic interface, an
electronic account transferred from
another insurance affordability program.
(2) For eligibility based on MAGI,
comply with the terms of § 435.1200 of
this part, such that—
(i) For each electronic account
transferred to the agency under
paragraph (c)(1)(ii) of this section, the
agency consistent with either of the
following:
(A) Section 435.1200(c), accepts a
determination of Medicaid eligibility
based on MAGI, made by another
insurance affordability program.
(B) Section 435.1200(d), determines
eligibility for Medicaid based on MAGI.
(ii) Consistent with § 435.1200(e), for
each single streamlined application
submitted directly to the agency under
paragraph (b)(1)(i) of this section—
(A) Determine eligibility based on
MAGI; and
(B) For each individual determined
not Medicaid eligible based on MAGI,
determine potential eligibility for other
insurance affordability programs, based
on the requirements which will be
effective for each program, and transfer
the individual’s electronic account to
such program via secure electronic
interface.
(iii) Provide notice and fair hearing
rights, in accordance with § 435.917 of
this part, part 431 subpart E of this
chapter, and § 435.1200 for those
determined ineligible for Medicaid.
(3) For each individual determined
eligible based on MAGI in accordance
with paragraph (c)(2) of this section—
(i) Provide notice, including the
effective date of eligibility, to such
individual, consistent with § 435.917 of
this part, and furnish Medicaid.
(ii) Apply the terms of § 435.916
(relating to beneficiary responsibility to
inform the agency of any changes in
circumstances that may affect eligibility)
and § 435.952 (regarding use of
information received by the agency).
The first renewal under § 435.916 of this
part may, at State option, be scheduled
to occur anytime between 12 months
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42305
from the date of application and 12
months from January 1, 2014.
(4) For eligibility effective in 2013, for
all applicants—
(i) Consistent with the requirements
of subpart J of this part, and applying
the eligibility requirements in effect
under the State plan, or waiver of such
plan, as of the date the individual
submits an application to any insurance
affordability program—
(A) Determine the individual’s
eligibility based on the information
provided on the application or in the
electronic account; or
(B) Request additional information
from the individual needed by the
agency to determine eligibility based on
the eligibility requirements in effect on
such date, including on a basis excepted
from application of MAGI-based
methods, as described in § 435.603, and
determine such eligibility if such
information is provided; and
(C) Furnish Medicaid to individuals
determined eligible under this clause or
provide notice and fair hearing rights in
accordance with part 431 subpart E of
this part if eligibility effective in 2013
is denied; or
(ii) Notify the individual of the
opportunity to submit a separate
application for coverage effective in
2013 and information on how to obtain
and submit such application.
PART 436—ELIGIBILITY IN GUAM,
PUERTO RICO, AND THE VIRGIN
ISLANDS
30. The authority citation for part 436
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302).
§ 436.831
[Amended]
31. In § 436.831, amend paragraph
(e)(1) by removing the reference
‘‘§ 447.51 or § 447.53’’ and by adding in
its place the reference ‘‘§ 447.52,,
§ 447.53, or § 447.54’’.
■
PART 438—MANAGED CARE
32. The authority citation for part 483
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302).
§ 438.108
[Amended]
33. Section 438.108 is amended by
removing the reference ‘‘§§ 447.50
through 447.60’’ and by adding in its
place the reference ‘‘§§ 447.50 through
447.57’’.
■
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PART 440—SERVICES: GENERAL
PROVISIONS
34. The authority citation for part 440
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302).
35. Section 440.130 is amended by
revising paragraph (c) to read as follows:
■
§ 440.130 Diagnostic, screening,
preventive, and rehabilitative services.
*
*
*
*
*
(c) Preventive services means services
recommended by a physician or other
licensed practitioner of the healing arts
acting within the scope of authorized
practice under State law to—
(1) Prevent disease, disability, and
other health conditions or their
progression;
(2) Prolong life; and
(3) Promote physical and mental
health and efficiency.
*
*
*
*
*
■ 36. Section 440.305 is amended by
revising paragraphs (a) and (b) and
removing paragraph (d).
The revisions read as follows:
§ 440.305
Scope.
(a) General. This subpart sets out
requirements for States that elect to
provide medical assistance to certain
Medicaid eligible individuals within
one or more groups of individuals
specified by the State, through
enrollment of the individuals in
coverage, identified as ‘‘benchmark’’ or
‘‘benchmark-equivalent.’’ Groups must
be identified by characteristics of
individuals rather than the amount or
level of FMAP.
(b) Limitations. A State may only
apply the option in paragraph (a) of this
section for an individual whose
eligibility is based on an eligibility
category under section 1905(a) of the
Act that could have been covered under
the State’s plan on or before February 8,
2006, except that individuals who are
eligible under section
1902(a)(10)(A)(i)(VIII) of the Act must
enroll in an Alternative Benefit Plan to
receive medical assistance.
*
*
*
*
*
■ 37. Section 440.315 is amended by
revising the introductory text and
paragraphs (f) and (h) to read as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 440.315
Exempt individuals.
Individuals within one (or more) of
the following categories are exempt
from mandatory enrollment in an
Alternative Benefit Plan, unless the
individuals are eligible under section
1902(a)(10)(A)(i)(VIII) of the Act.
Individuals in that eligibility group who
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meet the conditions for exemption must
be given the option of an Alternative
Benefit Plan that includes all benefits
available under the approved State plan.
*
*
*
*
*
(f) The individual is medically frail or
otherwise an individual with special
medical needs. For these purposes, the
State’s definition of individuals who are
medically frail or otherwise have special
medical needs must at least include
those individuals described in
§ 438.50(d)(3) of this chapter,
individuals with disabling mental
disorders (including children with
serious emotional disturbances and
adults with serious mental illness),
individuals with chronic substance use
disorders, individuals with serious and
complex medical conditions,
individuals with a physical, intellectual
or developmental disability that
significantly impairs their ability to
perform 1 or more activities of daily
living, or individuals with a disability
determination based on Social Security
criteria or in States that apply more
restrictive criteria than the
Supplemental Security Income program,
the State plan criteria.
*
*
*
*
*
(h) The individual is eligible and
enrolled for Medicaid under § 435.145
of this chapter based on current
eligibility for assistance under title IV–
E of the Act or under § 435.150 of this
chapter based on current status as a
former foster care child.
*
*
*
*
*
■ 38. Section 440.330 is amended by
revising paragraph (d) to read as
follows:
§ 440.330 Benchmark health benefits
coverage.
*
*
*
*
*
(d) Secretary-approved coverage. Any
other health benefits coverage that the
Secretary determines, upon application
by a State, provides appropriate
coverage to meet the needs of the
population provided that coverage.
Secretarial coverage may include
benefits of the type that are available
under 1 or more of the standard
benchmark coverage packages defined
in paragraphs (a) through (c) of this
section, State plan benefits described in
section 1905(a), 1915(i), 1915(j), 1915(k)
or section 1945 of the Act, any other
Medicaid State plan benefits enacted
under title XIX, or benefits available
under base benchmark plans described
in 45 CFR 156.100.
(1) States wishing to elect Secretaryapproved coverage should submit a full
description of the proposed coverage
(including a benefit-by-benefit
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comparison of the proposed plan to one
or more of the three other benchmark
plans specified above or to the State’s
standard full Medicaid coverage
package), and of the population to
which coverage will be offered. In
addition, the State should submit any
other information that will be relevant
to a determination that the proposed
health benefits coverage will be
appropriate for the proposed
population.
(2) [Reserved]
■ 39. Section 440.335 is amended by—
■ A. Adding paragraphs (b)(7)and (8).
■ B. Revising paragraph (c)(1).
■ C. Removing paragraph (c)(3).
The revisions and additions read as
follows:
§ 440.335 Benchmark-equivalent health
benefits coverage.
*
*
*
*
*
(b) * * *
(7) Prescription drugs.
(8) Mental health benefits.
(c) * * *
(1) In addition to the types of benefits
of this section, benchmark-equivalent
coverage may include coverage for any
additional benefits of the type which are
covered in 1 or more of the standard
benchmark coverage packages described
in § 440.330(a) through (c) or State plan
benefits, described in section 1905(a),
1915(i), 1915(j), 1915(k) and 1945 of the
Act, any other Medicaid State plan
benefits enacted under title XIX, or
benefits available under basebenchmark plans described in 45 CFR
156.100.
*
*
*
*
*
■ 40. Section 440.345 is amended by
revising the section heading and adding
paragraphs (b) through (f) to read as
follows:
§ 440.345
benefits.
EPSDT and other required
*
*
*
*
*
(b) Family planning. Alternative
Benefit Plans must include coverage for
family planning services and supplies.
(c) Mental health parity. Alternative
Benefit Plans that provide both medical
and surgical benefits, and mental health
or substance use disorder benefits, must
comply with the Mental Health Parity
and Addiction Equity Act.
(d) Essential health benefits.
Alternative Benefit Plans must include
at least the essential health benefits
described in § 440.347, and include all
updates or modifications made
thereafter by the Secretary to the
definition of essential health benefits.
(e) Updating of benefits. States are not
required to update Alternative Benefit
Plans that have been determined to
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include essential health benefits as of
January 1, 2014, until December 31,
2015. States will adhere to future
guidance for updating benefits beyond
that date, as described by the Secretary.
(f) Covered outpatient drugs. To the
extent states pay for covered outpatient
drugs under their Alternative Benefit
Plan’s prescription drug coverage, states
must comply with the requirements
under section 1927 of the Act.
■ 41. Section 440.347 is added to read
as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 440.347
Essential health benefits.
(a) Alternative Benefit Plans must
contain essential health benefits
coverage, including benefits in each of
the following ten categories, consistent
with the applicable requirements set
forth in 45 CFR part 156:
(1) Ambulatory patient services;
(2) Emergency services;
(3) Hospitalization;
(4) Maternity and newborn care;
(5) Mental health and substance use
disorders, including behavioral health
treatment;
(6) Prescription drugs;
(7) Rehabilitative and habilitative
services and devices, except that such
coverage shall be in accordance with
§ 440.347(d);
(8) Laboratory services;
(9) Preventive and wellness services
and chronic disease management; and
(10) Pediatric services, including oral
and vision care, in accordance with
section 1905(r) of the Act.
(b) Alternative Benefit Plans must
include essential health benefits in one
of the state options for establishing
essential health benefits described in 45
CFR 156.100, subject to
supplementation under 45 CFR
156.110(b) and substitution as permitted
under 45 CFR 156.115(b).
(c) States may select more than one
base benchmark option for establishing
essential health benefits in keeping with
the flexibility for States to implement
more than one Alternative Benefit Plan
for targeted populations.
(d) To comply with paragraph (a) of
this section, Alternative Benefit Plan
coverage of habilitative services and
devices will be based on the habilitative
services and devices that are in the
applicable base benchmark plan. If
habilitative services and devices are not
in the applicable base benchmark plan,
the state will define habilitative services
and devices required as essential health
benefits using the methodology set forth
in 45 CFR 156.115(a)(5).
(e) Essential health benefits cannot be
based on a benefit design or
implementation of a benefit design that
discriminates based on an individual’s
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age, expected length of life, present or
predicted disability, degree of medical
dependency, quality of life or other
health conditions.
42. Section 440.360 is revised to read
as follows:
§ 440.360 State plan requirements for
providing additional services.
In addition to the requirements of
§ 440.345, the State may elect to provide
additional coverage to individuals
enrolled in Alternative Benefit Plans,
except that the coverage for individuals
eligible only through section
1902(a)(10)(A)(i)(VIII) of the Act is
limited to benchmark or benchmarkequivalent coverage. The State must
describe the populations covered and
the payment methodology for these
benefits. Additional benefits must be
benefits of the type, which are covered
in 1 or more of the standard benchmark
coverage packages described in
§ 440.330(a) through (c) or State plan
benefits including those described in
sections 1905(a), 1915(i), 1915(j),
1915(k) and 1945 of the Act and any
other Medicaid State plan benefits
enacted under title XIX, or benefits
available under base benchmark plans
described in 45 CFR 156.100.
■ 43. Section 440.386 is added to read
as follows:
§ 440.386
Public notice.
Prior to submitting to the Centers for
Medicare and Medicaid Services for
approval of a State plan amendment to
establish an Alternative Benefit Plan or
an amendment to substantially modify
an existing Alternative Benefit Plan, a
state must have provided the public
with advance notice of the amendment
and reasonable opportunity to comment
for such amendment, and have included
in the notice a description of the
method for assuring compliance with
§ 440.345 related to full access to EPSDT
services, and the method for complying
with the provisions of section 5006(e) of
the American Recovery and
Reinvestment Act of 2009.
PART 447—PAYMENTS FOR
SERVICES
44. The authority citation for part 447
continues to read as follows:
■
Authority: Section 1102 of the Social
Security Act (42 U.S.C. 1302).
45. Section 447.15 is revised to read
as follows:
■
§ 447.15 Acceptance of State payment as
payment in full.
A State plan must provide that the
Medicaid agency must limit
participation in the Medicaid program
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to providers who accept, as payment in
full, the amounts paid by the agency
plus any deductible, coinsurance or
copayment required by the plan to be
paid by the individual. The provider
may only deny services to any eligible
individual on account of the
individual’s inability to pay the cost
sharing amount imposed by the plan in
accordance with § 447.52(e). The
previous sentence does not apply to an
individual who is able to pay. An
individual’s inability to pay does not
eliminate his or her liability for the cost
sharing charge.
§ 447.20
[Amended]
46. In § 447.20, amend paragraphs
(a)(1) and (2) by removing the reference
‘‘§§ 447.53 through 447.56’’ wherever it
occurs and adding in its place the
reference ‘‘§§ 447.52 through 447.54’’.
■ 47a. Remove the undesignated center
headings which appear above §§ 447.50,
447.51, 447.53, 447.59, and 447.62.
■ 47b. Add a new undesignated center
above revised §§ 447.50 through 447.57
to read as follows:
■
Medicaid Premiums and Cost Sharing
Sec.
447.50 Premiums and cost sharing: Basis
and purpose.
447.51 Definitions.
447.52 Cost sharing.
447.53 Cost sharing for drugs.
447.54 Cost sharing for services furnished
in a hospital emergency department.
447.55 Premiums.
447.56 Limitations on premiums and cost
sharing.
447.57 Beneficiary and public notice
requirements.
Medicaid Premiums and Cost Sharing
§ 447.50 Premiums and cost sharing:
Basis and purpose.
Sections 1902(a)(14), 1916 and 1916A
of the Act permit states to require
certain beneficiaries to share in the costs
of providing medical assistance through
premiums and cost sharing. Sections
447.52 through 447.56 specify the
standards and conditions under which
states may impose such premiums and
or cost sharing.
§ 447.51
Definitions
As used in this part—
Alternative non-emergency services
provider means a Medicaid provider,
such as a physician’s office, health care
clinic, community health center,
hospital outpatient department, or
similar provider that can provide
clinically appropriate services in a
timely manner.
Contract health service means any
health service that is:
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(1) Delivered based on a referral by, or
at the expense of, an Indian health
program; and
(2) Provided by a public or private
medical provider or hospital that is not
a provider or hospital of the IHS or any
other Indian health program
Cost sharing means any copayment,
coinsurance, deductible, or other similar
charge.
Emergency services has the same
meaning as in § 438.114 of this chapter.
Federal poverty level (FPL) means the
Federal poverty level updated
periodically in the Federal Register by
the Secretary of Health and Human
Services under the authority of 42
U.S.C. 9902(2).
Indian means any individual defined
at 25 U.S.C. 1603(13), 1603(28), or
1679(a), or who has been determined
eligible as an Indian, under 42 CFR
136.12. This means the individual:
(1) Is a member of a Federallyrecognized Indian tribe;
(2) Resides in an urban center and
meets one or more of the following four
criteria:
(i) Is a member of a tribe, band, or
other organized group of Indians,
including those tribes, bands, or groups
terminated since 1940 and those
recognized now or in the future by the
State in which they reside, or who is a
descendant, in the first or second
degree, of any such member;
(ii) Is an Eskimo or Aleut or other
Alaska Native;
(iii) Is considered by the Secretary of
the Interior to be an Indian for any
purpose; or
(iv) Is determined to be an Indian
under regulations promulgated by the
Secretary;
(3) Is considered by the Secretary of
the Interior to be an Indian for any
purpose; or
(4) Is considered by the Secretary of
Health and Human Services to be an
Indian for purposes of eligibility for
Indian health care services, including as
a California Indian, Eskimo, Aleut, or
other Alaska Native.
Indian health care provider means a
health care program operated by the
Indian Health Service (IHS) or by an
Indian Tribe, Tribal Organization, or
Urban Indian Organization (otherwise
known as an I/T/U) as those terms are
defined in section 4 of the Indian Health
Care Improvement Act (25 U.S.C. 1603).
Inpatient stay means the services
received during a continuous period of
inpatient days in either a single medical
institution or multiple medical
institutions, and also includes a return
to an inpatient medical institution after
a brief period when the return is for
treatment of a condition that was
present in the initial period. Inpatient
has the same meaning as in § 440.2 of
this chapter.
Non-emergency services means any
care or services that are not considered
emergency services as defined in this
section. This does not include any
services furnished in a hospital
emergency department that are required
to be provided as an appropriate
medical screening examination or
stabilizing examination and treatment
under section 1867 of the Act.
Outpatient services for purposes of
imposing cost sharing means any
service or supply not meeting the
definition of an inpatient stay.
Preferred drugs means drugs that the
state has identified on a publicly
available schedule as being determined
by a pharmacy and therapeutics
committee for clinical efficacy as the
most cost effective drugs within each
therapeutically equivalent or
therapeutically similar class of drugs, or
all drugs within such a class if the
agency does not differentiate between
preferred and non-preferred drugs.
Premium means any enrollment fee,
premium, or other similar charge.
§ 447.52
Cost sharing.
(a) Applicability. Except as provided
in § 447.56(a) (exemptions), the agency
may impose cost sharing for any service
under the state plan.
(b) Maximum Allowable Cost Sharing.
(1) At State option, cost sharing
imposed for any service (other than for
drugs and non-emergency services
furnished in an emergency department,
as described in §§ 447.53 and 447.54
respectively) may be established at or
below the amounts shown in the
following table (except that the
maximum allowable cost sharing for
individuals with family income at or
below 100 percent of the FPL shall be
increased each year, beginning October
1, 2015, by the percentage increase in
the medical care component of the CPI–
U for the period of September to
September of the preceding calendar
year, rounded to the next higher 5-cent
increment):
Maximum allowable cost sharing
Services
Individuals with
family income
≤100% of the FPL
tkelley on DSK3SPTVN1PROD with RULES2
Outpatient Services (physician visit,
physical therapy, etc.).
Inpatient Stay .........................................
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Individuals with family income
>150% of the FPL
$4
10% of cost the agency pays ...............
20% of cost the agency pays.
75
(2) States with cost sharing for an
inpatient stay that exceeds $75, as of
July 15, 2013, must submit a plan to
CMS that provides for reducing
inpatient cost sharing to $75 on or
before July 1, 2017.
(3) In states that do not have fee-forservice payment rates, any cost sharing
imposed on individuals at any income
level may not exceed the maximum
amount established, for individuals
with income at or below 100 percent of
the FPL described in paragraph (b)(1) of
this section.
VerDate Mar<15>2010
Individuals with family income
101–150% of the FPL
10% of total cost the agency pays for
the entire stay.
20% of total cost the agency pays for
the entire stay.
(c) Maximum cost sharing. In no case
shall the maximum cost sharing
established by the agency be equal to or
exceed the amount the agency pays for
the service.
(d) Targeted cost sharing. (1) Except
as provided in paragraph (d)(2) of this
section, the agency may target cost
sharing to specified groups of
individuals with family income above
100 percent of the FPL.
(2) For cost sharing imposed for nonpreferred drugs under § 447.53 and for
non-emergency services provided in a
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hospital emergency department under
§ 447.54, the agency may target cost
sharing to specified groups of
individuals regardless of income.
(e) Denial of service for nonpayment.
(1) The agency may permit a provider,
including a pharmacy or hospital, to
require an individual to pay cost sharing
as a condition for receiving the item or
service if—
(i) The individual has family income
above 100 percent of the FPL,
(ii) The individual is not part of an
exempted group under § 447.56(a), and
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(iii) For cost sharing imposed for nonemergency services furnished in an
emergency department, the conditions
under § 447.54(d) of this part have been
satisfied.
(2) Except as provided under
paragraph (e)(1) of this section, the state
plan must specify that no provider may
deny services to an eligible individual
on account of the individual’s inability
to pay the cost sharing.
(3) Nothing in this section shall be
construed as prohibiting a provider from
choosing to reduce or waive such cost
sharing on a case-by-case basis.
(f) Prohibition against multiple
charges. For any service, the agency
may not impose more than one type of
cost sharing.
(g) Income-related charges. Subject to
the maximum allowable charges
specified in §§ 447.52(b), 447.53(b) and
447.54(b), the plan may establish
different cost sharing charges for
individuals at different income levels. If
the agency imposes such income-related
charges, it must ensure that lower
income individuals are charged less
than individuals with higher income.
(h) Services furnished by a managed
care organization (MCO). Contracts with
MCOs must provide that any costsharing charges the MCO imposes on
Medicaid enrollees are in accordance
with the cost sharing specified in the
state plan and the requirements set forth
in §§ 447.50 through 447.57.
(i) State Plan Specifications. For each
cost sharing charge imposed under this
part, the state plan must specify—
(1) The service for which the charge
is made;
(2) The group or groups of individuals
that may be subject to the charge;
(3)The amount of the charge;
(4) The process used by the state to—
(i) Ensure individuals exempt from
cost sharing are not charged,
(ii) Identify for providers whether cost
sharing for a specific item or service
may be imposed on an individual and
whether the provider may require the
individual, as a condition for receiving
the item or service, to pay the cost
sharing charge; and
(5) If the agency imposes cost sharing
under § 447.54, the process by which
hospital emergency room services are
identified as non-emergency service.
§ 447.53
Cost sharing for drugs.
(a) The agency may establish
differential cost sharing for preferred
and non-preferred drugs. The provisions
in § 447.56(a) shall apply except as the
agency exercises the option under
paragraph (d) of this section. All drugs
will be considered preferred drugs if so
identified or if the agency does not
differentiate between preferred and nonpreferred drugs.
(b) At state option, cost sharing for
drugs may be established at or below the
amounts shown in the following table
(except that the maximum allowable
cost sharing shall be increased each
year, beginning October 1, 2015, by the
percentage increase in the medical care
component of the CPI–U for the period
of September to September of the
preceding calendar year, rounded to the
next higher 5-cent increment. Such
increase shall not be applied to any cost
sharing that is based on the amount the
agency pays for the service):
Maximum allowable cost sharing
Services
Individuals with
family income
≤150% of the FPL
Preferred Drugs ......................................................................................................
Non-Preferred Drugs ..............................................................................................
(c) In states that do not have fee-forservice payment rates, cost sharing for
prescription drugs imposed on
individuals at any income level may not
exceed the maximum amount
established for individuals with income
at or below 150 percent of the FPL in
paragraph (b) of this section.
(d) For individuals otherwise exempt
from cost sharing under § 447.56(a), the
agency may impose cost sharing for
non-preferred drugs, not to exceed the
maximum amount established in
paragraph (b) of this section.
(e) In the case of a drug that is
identified by the agency as a nonpreferred drug within a therapeutically
equivalent or therapeutically similar
class of drugs, the agency must have a
$4
8
timely process in place so that cost
sharing is limited to the amount
imposed for a preferred drug if the
individual’s prescribing provider
determines that a preferred drug for
treatment of the same condition either
will be less effective for the individual,
will have adverse effects for the
individual, or both. In such cases the
agency must ensure that reimbursement
to the pharmacy is based on the
appropriate cost sharing amount.
§ 447.54 Cost sharing for services
furnished in a hospital emergency
department.
(a) The agency may impose cost
sharing for non-emergency services
provided in a hospital emergency
Individuals with family income >150% of
the FPL
$4.
20% of the cost the agency pays.
department. The provisions in
§ 447.56(a) shall apply except as the
agency exercises the option under
paragraph (c) of this section.
(b) At state option, cost sharing for
non-emergency services provided in an
emergency department may be
established at or below the amounts
shown in the following table (except
that the maximum allowable cost
sharing identified for individuals with
family income at or below 150 percent
of the FPL shall be increased each year,
beginning October 1, 2015, by the
percentage increase in the medical care
component of the CPI–U for the period
of September to September of the
preceding calendar year, rounded to the
next higher 5-cent increment):
Maximum allowable cost sharing
tkelley on DSK3SPTVN1PROD with RULES2
Services
Individuals with
family income
≤150% of the
FPL
Individuals with
family income
>150% of the
FPL
Non-emergency Use of the Emergency Department ........................................................................................
$8 .....................
No Limit.
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(c) For individuals otherwise exempt
from cost sharing under § 447.56(a), the
agency may impose cost sharing for
non-emergency use of the emergency
department, not to exceed the maximum
amount established in paragraph (b) of
this section for individuals with income
at or below 150 percent of the FPL.
(d) For the agency to impose cost
sharing under paragraph (a) or (c) of this
section for non-emergency use of the
emergency department, the hospital
providing the care must—
(1) Conduct an appropriate medical
screening under § 489.24 subpart G to
determine that the individual does not
need emergency services.
(2) Before providing non-emergency
services and imposing cost sharing for
such services:
(i) Inform the individual of the
amount of his or her cost sharing
obligation for non-emergency services
provided in the emergency department;
(ii) Provide the individual with the
name and location of an available and
accessible alternative non-emergency
services provider;
(iii) Determine that the alternative
provider can provide services to the
individual in a timely manner with the
imposition of a lesser cost sharing
amount or no cost sharing if the
individual is otherwise exempt from
cost sharing; and
(iv) Provide a referral to coordinate
scheduling for treatment by the
alternative provider.
(e) Nothing in this section shall be
construed to:
(1) Limit a hospital’s obligations for
screening and stabilizing treatment of an
emergency medical condition under
section 1867 of the Act; or
(2) Modify any obligations under
either state or federal standards relating
to the application of a prudentlayperson standard for payment or
coverage of emergency medical services
by any managed care organization.
tkelley on DSK3SPTVN1PROD with RULES2
§ 447.55
Premiums.
(a) The agency may impose premiums
upon individuals whose income
exceeds 150 percent of the FPL, subject
to the exemptions set forth in
§ 447.56(a) and the aggregate limitations
set forth in § 447.56(f) of this part,
except that:
(1) Pregnant women described in
described in paragraph (a)(1)(ii) of this
section may be charged premiums that
do not exceed 10 percent of the amount
by which their family income exceeds
150 percent of the FPL after deducting
expenses for care of a dependent child.
(i) The agency may use state or local
funds available under other programs
for payment of a premium for such
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pregnant women. Such funds shall not
be counted as income to the individual
for whom such payment is made.
(ii) Pregnant women described in this
clause include pregnant women eligible
for Medicaid under § 435.116 of this
chapter whose income exceeds the
higher of –
(A) 150 percent FPL; and
(B) If applicable, the percent FPL
described in section 1902(l)(2)(A)(iv) of
the Act up to 185 percent FPL.
(2) Individuals provided medical
assistance only under sections
1902(a)(10)(A)(ii)(XV) or
1902(a)(10)(A)(ii)(XVI) of the Act and
the Ticket to Work and Work Incentives
Improvement Act of 1999 (TWWIIA),
may be charged premiums on a sliding
scale based on income.
(3) Disabled children provided
medical assistance under section
1902(a)(10)(A)(ii)(XIX) of the Act in
accordance with the Family
Opportunity Act, may be charged
premiums on a sliding scale based on
income. The aggregate amount of the
child’s premium imposed under this
paragraph and any premium that the
parent is required to pay for family
coverage under section 1902(cc)(2)(A)(i)
of the Act, and other cost sharing
charges may not exceed:
(i) 5 percent of the family’s income if
the family’s income is no more than 200
percent of the FPL.
(ii) 7.5 percent of the family’s income
if the family’s income exceeds 200
percent of the FPL but does not exceed
300 percent of the FPL.
(4) Qualified disabled and working
individuals described in section 1905(s)
of the Act, whose income exceeds 150
percent of the FPL, may be charged
premiums on a sliding scale based on
income, expressed as a percentage of
Medicare cost sharing described at
section 1905(p)(3)(A)(i) of the Act.
(5) Medically needy individuals, as
defined in §§ 435.4 and 436.3 of this
chapter, may be charged on a sliding
scale. The agency must impose an
appropriately higher charge for each
higher level of family income, not to
exceed $20 per month for the highest
level of family income.
(b) Consequences for non-payment.
(1) For premiums imposed under
paragraphs (a)(1), (a)(2), (a)(3) and (a)(4)
of this section, the agency may not
require a group or groups of individuals
to prepay.
(2) Except for premiums imposed
under paragraph (a)(5) of this section,
the agency may terminate an individual
from medical assistance on the basis of
failure to pay for 60 days or more.
(3) For premiums imposed under
paragraph (a)(2) of this section—
PO 00000
Frm 00152
Fmt 4701
Sfmt 4700
(i) For individuals with annual
income exceeding 250 percent of the
FPL, the agency may require payment of
100 percent of the premiums imposed
under this paragraph for a year, such
that payment is only required up to 7.5
percent of annual income for
individuals whose annual income does
not exceed 450 percent of the FPL.
(ii) For individuals whose annual
adjusted gross income (as defined in
section 62 of the Internal Revenue Code
of 1986) exceeds $75,000, increased by
inflation each calendar year after 2000,
the agency must require payment of 100
percent of the premiums for a year,
except that the agency may choose to
subsidize the premiums using state
funds which may not be federally
matched by Medicaid.
(4) For any premiums imposed under
this section, the agency may waive
payment of a premium in any case
where the agency determines that
requiring the payment will create an
undue hardship for the individual or
family.
(5) The agency may not apply further
consequences or penalties for nonpayment other than those listed in this
section.
(c) State plan specifications. For each
premium, enrollment fee, or similar
charge imposed under paragraph (a) of
this section, subject to the requirements
of paragraph (b) of this section, the plan
must specify—
(1) The group or groups of individuals
that may be subject to the charge;
(2) The amount and frequency of the
charge;
(3) The process used by the state to
identify which beneficiaries are subject
to premiums and to ensure individuals
exempt from premiums are not charged;
and
(4) The consequences for an
individual or family who does not pay.
§ 447.56 Limitations on premiums and
cost sharing.
(a) Exemptions. (1) The agency may
not impose premiums or cost sharing
upon the following groups of
individuals:
(i) Individuals ages 1 and older and
under age 18 eligible under § 435.118 of
this chapter.
(ii) Infants under age 1 eligible under
§ 435.118 of this chapter whose income
does not exceed the higher of—
(A) 150 percent FPL (for premiums) or
133 percent FPL (for cost sharing); and
(B) If applicable, the percent FPL
described in section 1902(l)(2)(A)(iv) of
the Act up to 185 percent FPL.
(iii) Individuals under age 18 eligible
under § 435.120–§ 435.122 or § 435.130
of this chapter.
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(iv) Children for whom child welfare
services are made available under Part
B of title IV of the Act on the basis of
being a child in foster care and
individuals receiving benefits under
Part E of that title, without regard to age.
(v) At state option, individuals under
age 19, 20 or age 21, eligible under
§ 435.222 of this chapter.
(vi) Disabled children, except as
provided at § 447.55(a)(4) (premiums),
who are receiving medical assistance by
virtue of the application of the Family
Opportunity Act in accordance with
sections 1902(a)(10)(A)(ii)(XIX) and
1902(cc) of the Act.
(vii) Pregnant women, except for
premiums allowed under § 447.55(a)(1)
and cost sharing for services specified in
the state plan as not pregnancy-related,
during the pregnancy and through the
postpartum period which begins on the
last day of pregnancy and extends
through the end of the month in which
the 60-day period following termination
of pregnancy ends.
(viii) Any individual whose medical
assistance for services furnished in an
institution, or at state option in a home
and community-based setting, is
reduced by amounts reflecting available
income other than required for personal
needs.
(ix) An individual receiving hospice
care, as defined in section 1905(o) of the
Act.
(x) An Indian who is eligible to
receive or has received an item or
service furnished by an Indian health
care provider or through referral under
contract health services is exempt from
premiums. Indians who are currently
receiving or have ever received an item
or service furnished by an Indian health
care provider or through referral under
contract health services are exempt from
all cost sharing.
(xi) Individuals who are receiving
Medicaid because of the state’s election
to extend coverage as authorized by
§ 435.213 of this chapter (Breast and
Cervical Cancer).
(2) The agency may not impose cost
sharing for the following services:
(i) Emergency services as defined at
section 1932(b)(2) of the Act and
§ 438.114(a) of this chapter;
(ii) Family planning services and
supplies described in section
1905(a)(4)(C) of the Act, including
contraceptives and pharmaceuticals for
which the State claims or could claim
Federal match at the enhanced rate
under section 1903(a)(5) of the Act for
family planning services and supplies;
(iii) Preventive services, at a
minimum the services specified at
§ 457.520 of chapter D, provided to
children under 18 years of age
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regardless of family income, which
reflect the well-baby and well child care
and immunizations in the Bright
Futures guidelines issued by the
American Academy of Pediatrics; and
(iv) Pregnancy-related services,
including those defined at
§§ 440.210(a)(2) and 440.250(p) of this
chapter, and counseling and drugs for
cessation of tobacco use All services
provided to pregnant women will be
considered as pregnancy-related, except
those services specifically identified in
the state plan as not being related to the
pregnancy.
(v) Provider-preventable services as
defined in § 447.26(b).
(b) Applicability. Except as permitted
under § 447.52(d) (targeted cost
sharing), the agency may not exempt
additional individuals from cost sharing
obligations that apply generally to the
population at issue.
(c) Payments to providers. (1) Except
as provided under paragraphs (c)(2) and
(c)(3) of this section, the agency must
reduce the payment it makes to a
provider by the amount of a
beneficiary’s cost sharing obligation,
regardless of whether the provider has
collected the payment or waived the
cost sharing.
(2) For items and services provided to
Indians who are exempt from cost
sharing under paragraph (a)(1)(x) of this
section, the agency may not reduce the
payment it makes to a provider,
including an Indian health care
provider, by the amount of cost sharing
that will otherwise be due from the
Indian.
(3) For those providers that the agency
reimburses under Medicare reasonable
cost reimbursement principles, in
accordance with subpart B of this part,
an agency may increase its payment to
offset uncollected cost sharing charges
that are bad debts of providers.
(d) Payments to managed care
organizations. If the agency contracts
with a managed care organization, the
agency must calculate its payments to
the organization to include cost sharing
established under the state plan, for
beneficiaries not exempt from cost
sharing under paragraph (a) of this
section, regardless of whether the
organization imposes the cost sharing
on its recipient members or the cost
sharing is collected.
(e) Payments to states. No FFP in the
state’s expenditures for services is
available for—
(1) Any premiums or cost sharing
amounts that recipients should have
paid under §§ 447.52 through 447.55
(except for amounts that the agency
pays as bad debts of providers under
paragraph (c)(3) of this section; and
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42311
(2) Any amounts paid by the agency
on behalf of ineligible individuals,
whether or not the individual had paid
any required premium, except for
amounts for premium assistance to
obtain coverage for eligible individuals
through family coverage that may
include ineligible individuals when
authorized in the approved state plan.
(f) Aggregate limits. (1) Medicaid
premiums and cost sharing incurred by
all individuals in the Medicaid
household may not exceed an aggregate
limit of 5 percent of the family’s income
applied on either a quarterly or monthly
basis, as specified by the agency.
(2) If the state adopts premiums or
cost sharing rules that could place
beneficiaries at risk of reaching the
aggregate family limit, the state plan
must indicate a process to track each
family’s incurred premiums and cost
sharing through an effective mechanism
that does not rely on beneficiary
documentation.
(3) The agency must inform
beneficiaries and providers of the
beneficiaries aggregate limit and notify
beneficiaries and providers when a
beneficiary has incurred out-of-pocket
expenses up to the aggregate family
limit and individual family members are
no longer subject to cost sharing for the
remainder of the family’s current
monthly or quarterly cap period.
(4) The agency must have a process in
place for beneficiaries to request a
reassessment of their family aggregate
limit if they have a change in
circumstances or if they are being
terminated for failure to pay a premium.
(5) Nothing in paragraph (f) shall
preclude the agency from establishing
additional aggregate limits, including
but not limited to a monthly limit on
cost sharing charges for a particular
service.
§ 447.57 Beneficiary and public notice
requirements.
(a) The agency must make available a
public schedule describing current
premiums and cost sharing
requirements containing the following
information:
(1) The group or groups of individuals
who are subject to premiums and/or
cost sharing and the current amounts;
(2) Mechanisms for making payments
for required premiums and cost sharing
charges;
(3) The consequences for an applicant
or recipient who does not pay a
premium or cost sharing charge;
(4) A list of hospitals charging cost
sharing for non-emergency use of the
emergency department; and
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(5) A list of preferred drugs or a
mechanism to access such a list,
including the agency Web site.
(b) The agency must make the public
schedule available to the following in a
manner that ensures that affected
applicants, beneficiaries, and providers
are likely to have access to the notice:
(1) Beneficiaries, at the time of their
enrollment and reenrollment after a
redetermination of eligibility, and when
premiums, cost sharing charges, or
aggregate limits are revised, notice to
beneficiaries must be in accordance
with § 435.905(b) of this chapter;
(2) Applicants, at the time of
application;
(3) All participating providers; and
(4) The general public.
(c) Prior to submitting to the Centers
for Medicare & Medicaid Services for
approval a state plan amendment (SPA)
to establish or substantially modify
existing premiums or cost sharing, or
change the consequences for nonpayment, the agency must provide the
public with advance notice of the SPA,
specifying the amount of premiums or
cost sharing and who is subject to the
charges. The agency must provide a
reasonable opportunity to comment on
such SPAs. The agency must submit
documentation with the SPA to
demonstrate that these requirements
were met. If premiums or cost sharing
is substantially modified during the
SPA approval process, the agency must
provide additional public notice.
§§ 445.58 through 447.82
[Removed]
47c. Remove §§ 445.58 through
447.82.
■
PART 457—ALLOTMENTS AND
GRANTS TO STATES
48. The authority citation for part 457
continues to read as follows:
■
Authority: Section 1102 of the Social
Security Act (42 U.S.C. 1302).
49. Section 457.10 is amended by
adding the definitions of ‘‘Exchange
appeals entity,’’ and ‘‘Premium Lock
Out’’ to read as follows:
■
§ 457.10
Definitions and use of terms.
tkelley on DSK3SPTVN1PROD with RULES2
*
*
*
*
*
Exchange appeals entity has the
meaning given to the term ‘‘appeals
entity,’’ as defined in 45 CFR 155.500.
*
*
*
*
*
Premium Lock-Out is defined as a
State-specified period of time not to
exceed 90 days that a CHIP eligible
child who has an unpaid premium or
enrollment fee (as applicable) will not
be permitted to reenroll for coverage in
CHIP. Premium lock-out periods are not
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applicable to children who have paid
outstanding premiums or enrollment
fees.
*
*
*
*
*
50. Section 457.110 is amended by
adding paragraph (a)(1) and a reserved
paragraph (a)(2) to read as follows:
■
(6) Notify such program of the final
determination of the individual’s
eligibility or ineligibility for CHIP.
*
*
*
*
*
■ 53. Section 457.350 is amended by
revising paragraphs paragraph (i) to read
as follows:
§ 457.110 Enrollment assistance and
information requirements.
(a) * * *
(1) The State may provide individuals
with a choice to receive notices and
information required under this subpart
and Subpart K of this part, in electronic
format or by regular mail, provided that
the State establish safeguards in
accordance with § 435.918 of this
chapter.
(2) [Reserved]
*
*
*
*
*
§ 457.350 Eligibility screening and
enrollment in other insurance affordability
programs.
*
51. Section § 457.340 is amended by
revising paragraph (a) and adding
paragraph (d)(3) to read as follows:
■
§ 457.340
CHIP.
Application for and enrollment in
(a) Application and renewal
assistance, availability of program
information, and Internet Web site. The
terms of § 435.905, § 435.906,
§ 435.907(h), § 435.908, and
§ 435.1200(f) of this chapter apply
equally to the State in administering a
separate CHIP.
*
*
*
*
*
(d) * * *
(3) In the case of individuals subject
to a period of uninsurance under this
part, the state must identify and
implement processes to facilitate
enrollment of CHIP-eligible children
who have satisfied a period of
uninsurance (as described under
§ 457.805). To minimize burden on
individuals, a state may not require a
new application or information already
provided by a family immediately
preceding the beginning of a waiting
period. States must also ensure that the
proper safeguards are in place to
prevent a disruption in coverage for
children transitioning from coverage
under another insurance affordability
program after the completion of a period
of uninsurance.
*
*
*
*
*
52. Section 457.348 is amended by
adding paragraph (c)(6) to read as
follows:
■
§ 457.348 Determinations of Children’s
Health Insurance Program eligibility by
other insurance affordability programs.
*
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*
*
(c) * * *
Frm 00154
*
Fmt 4701
*
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*
*
*
*
(i) Applicants found potentially
eligible for other insurance affordability
programs. For individuals identified in
paragraph (b)(3) of this section,
including during a period of
uninsurance imposed by the state under
§ 457.805, the state must—
(1) Promptly and without undue
delay, consistent with the timeliness
standards established under
§ 457.340(d), transfer the electronic
account to the applicable program via a
secure electronic interfaces.
(2) [Reserved.]
(3) In the case of individuals subject
to a period of uninsurance under this
part, the state must notify such program
of the date on which such period ends
and the individual is eligible to enroll
in CHIP.
*
*
*
*
*
■ 54. Section 457.370 is added to read
as follows:
§ 457.370 Alignment with Exchange initial
open enrollment period.
The terms of § 435.1205 apply equally
to the State in administering a separate
CHIP, except that the State shall make
available and accept the application
described in § 457.330, shall accept
electronic accounts as described in
§ 457.348, and furnish coverage in
accordance with § 457.340.
§ 457.540
[Amended]
55. In § 457.540, amend paragraph (a)
by removing the reference ‘‘§ 447.52’’
and by adding in its place the reference
‘‘§ 447.52, § 447.53, or § 447.54’’.
■ 56. Section 457.570 is amended by
revising paragraph (c) and adding
paragraph (d) to read as follows:
■
§ 457.570
Disenrollment protections.
*
*
*
*
*
(c) The State must ensure that
disenrollment policies, such as policies
related to non-payment of premiums, do
not present barriers to the timely
determination of eligibility and
enrollment in coverage of an eligible
child in the appropriate insurance
affordability program. A State may not—
(1) Establish a premium lock-out
period that exceeds 90-days in
accordance with § 457.10 of this part.
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(2) Continue to impose a premium
lock-out period after a child’s past due
premiums have been paid.
(3) Require the collection of past due
premiums or enrollment fees as a
condition of eligibility for reenrollment
once the State-defined lock out period
has expired, regardless of the length of
the lock-out period.
(d) The State must provide the
enrollee with an opportunity for an
impartial review to address
disenrollment from the program in
accordance with § 457.1130(a)(3).
■ 57. Section 457.805 is revised to read
as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 457.805 State plan requirement:
Procedures to address substitution under
group health plans.
(a) State plan requirements. The state
plan must include a description of
reasonable procedures to ensure that
health benefits coverage provided under
the State plan does not substitute for
coverage provided under group health
plans as defined at § 457.10.
(b) Limitations. (1) A state may not,
under this section, impose a period of
uninsurance which exceeds 90 days
from the date a child otherwise eligible
for CHIP is disenrolled from coverage
under a group health plan.
(2) A waiting period may not be
applied to a child following the loss of
eligibility for and enrollment in
Medicaid or another insurance
affordability program.
(3) If a state elects to impose a period
of uninsurance following the loss of
coverage under a group health plan
under this section, such period may not
be imposed in the case of any child if:
(i) The premium paid by the family
for coverage of the child under the
group health plan exceeded 5 percent of
household income;
(ii) The child’s parent is determined
eligible for advance payment of the
premium tax credit for enrollment in a
QHP through the Exchange because the
ESI in which the family was enrolled is
determined unaffordable in accordance
with 26 CFR 1.36B–2(c)(3)(v).
(iii) The cost of family coverage that
includes the child exceeds 9.5 percent
of the household income.
(iv) The employer stopped offering
coverage of dependents (or any
coverage) under an employer-sponsored
health insurance plan;
(v) A change in employment,
including involuntary separation,
resulted in the child’s loss of employersponsored insurance (other than
through full payment of the premium by
the parent under COBRA);
(vi) The child has special health care
needs; and
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(vii) The child lost coverage due to
the death or divorce of a parent.
58. Section 457.810 is amended by
revising paragraph (a) to read as follows:
■
§ 457.810 Premium assistance programs:
Required protections against substitution.
*
*
*
*
*
(a) Period without coverage under a
group health plan. For health benefits
coverage provided through premium
assistance for group health plans, the
following rules apply:
(1) Any waiting period imposed under
the state child health plan prior to the
provision of child health assistance to a
targeted low-income child under the
state plan shall apply to the same extent
to the provision of a premium assistance
subsidy for the child and shall not
exceed 90 days.
(2) States must permit the same
exemptions to the required waiting
period for premium assistance as
specified under the state plan at
§ 457.805(a)(2), and § 457.805(a)(3) for
the provision of child health assistance
to a targeted low-income child.
*
*
*
*
*
Title 45
For the reasons set forth in the
preamble, the Department of Health and
Human Services amends 45 CFR subtitle
A, subchapter B, as set forth below:
PART 155—EXCHANGE
ESTABLISHMENT STANDARDS AND
OTHER RELATED STANDARDS
UNDER THE AFFORDABLE CARE ACT
59. The authority citation for part 155
is revised to read as follows:
■
Authority: Sections 1301, 1302, 1303,
1304, 1311, 1312, 1313, 1321, 1322, 1331,
1332, 1334, 1402, 1413, 1321, 1322, 1331,
1332, 1334, 1402, 1411, 1412, 1413 of the
Affordable Care Act, Pub. L 111–148, 124
Stat 199.
60. Section 155.20 is amended by
revising the definitions of ‘‘Advance
payments of the premium tax credit,’’
and adding a definition of ‘‘Catastrophic
plan’’ to read as follows:
■
§ 155.20
Definitions.
*
*
*
*
*
Advance payments of the premium
tax credit means payment of the tax
credit authorized by 26 U.S.C. 36B and
its implementing regulations, which are
provided on an advance basis to an
eligible individual enrolled in a QHP
through an Exchange in accordance
with section 1412 of the Affordable Care
Act.
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*
*
*
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Catastrophic plan means a health
plan described in section 1302(e) of the
Affordable Care Act.
*
*
*
*
*
■ 61. Section 155.105 is amended by
revising paragraph (b)(2) to read as
follows:
§ 155.105
Approval of a State Exchange.
*
*
*
*
*
(b) * * *
(2) The Exchange is capable of
carrying out the information reporting
requirements of 26 CFR 1.36B–5;
*
*
*
*
*
■ 62. Section 155.227 is added to read
as follows:
§ 155.227
Authorized representatives.
(a) General rule. (1) The Exchange
must permit an applicant or enrollee in
the individual or small group market,
subject to applicable privacy and
security requirements, to designate an
individual person or organization to act
on his or her behalf in applying for an
eligibility determination or
redetermination, under subpart D, G, or
H of this part, and in carrying out other
ongoing communications with the
Exchange.
(2) Designation of an authorized
representative must be in a written
document signed by the applicant or
enrollee, or through another legally
binding format subject to applicable
authentication and data security
standards. If submitted, legal
documentation of authority to act on
behalf of an applicant or enrollee under
State law, such as a court order
establishing legal guardianship or a
power of attorney, shall serve in the
place of the applicant’s or enrollee’s
signature.
(3) The Exchange must ensure that the
authorized representative agrees to
maintain, or be legally bound to
maintain, the confidentiality of any
information regarding the applicant or
enrollee provided by the Exchange.
(4) The Exchange must ensure that the
authorized representative is responsible
for fulfilling all responsibilities
encompassed within the scope of the
authorized representation, as described
in this section, to the same extent as the
applicant or enrollee he or she
represents.
(5) The Exchange must provide
information both to the applicant or
enrollee, and to the authorized
representative, regarding the powers
and duties of authorized
representatives.
(b) Timing of designation. The
Exchange must permit an applicant or
enrollee to designate an authorized
representative:
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(1) At the time of application; and
(2) At other times and through
methods as described in § 155.405(c)(2).
(c) Duties. (1) The Exchange must
permit an applicant or enrollee to
authorize his or her representative to:
(i) Sign an application on the
applicant or enrollee’s behalf;
(ii) Submit an update or respond to a
redetermination for the applicant or
enrollee in accordance with § 155.330 or
§ 155.335;
(iii) Receive copies of the applicant’s
or enrollee’s notices and other
communications from the Exchange;
and
(iv) Act on behalf of the applicant or
enrollee in all other matters with the
Exchange.
(2) The Exchange may permit an
applicant or enrollee to authorize a
representative to perform fewer than all
of the activities described in paragraph
(c)(1) of this section, provided that the
Exchange tracks the specific
permissions for each authorized
representative.
(d) Duration. The Exchange must
consider the designation of an
authorized representative valid until:
(1) The applicant or enrollee notifies
the Exchange that the representative is
no longer authorized to act on his or her
behalf using one of the methods
available for the submission of an
application, as described in
§ 155.405(c). The Exchange must notify
the authorized representative of such
change; or
(2) The authorized representative
informs the Exchange and the applicant
or enrollee that he or she no longer is
acting in such capacity. An authorized
representative must notify the Exchange
and the applicant or enrollee on whose
behalf he or she is acting when the
authorized representative no longer has
legal authority to act on behalf of the
applicant or enrollee.
(e) Compliance with State and Federal
law. The Exchange must require an
authorized representative to comply
with applicable state and federal laws
concerning conflicts of interest and
confidentiality of information.
(f) Signature. For purposes of this
section, designation of an authorized
representative must be through a written
document signed by the applicant or
enrollee, or through another legally
binding format, as described in
§ 155.227(a)(2), and must be accepted
through all of the modalities described
in § 155.405(c).
■ 63. Section 155.230 is amended by
revising paragraph (a) and adding
paragraph (d) to read as follows:
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§ 155.230
notices.
General standards for Exchange
(a) General requirement. Any notice
required to be sent by the Exchange to
individuals or employers must be
written and include:
(1) An explanation of the action
reflected in the notice, including the
effective date of the action.
(2) Any factual findings relevant to
the action.
(3) Citations to, or identification of,
the relevant regulations supporting the
action.
(4) Contact information for available
customer service resources.
(5) An explanation of appeal rights, if
applicable.
*
*
*
*
*
(d) Electronic notices. (1) The
individual market Exchange must
provide required notices either through
standard mail, or if an individual or
employer elects, electronically,
provided that the requirements for
electronic notices in 42 CFR 435.918 are
met, except that the individual market
Exchange is not required to implement
the process specified in 42 CFR
435.918(b)(1) for eligibility
determinations for enrollment in a QHP
through the Exchange and insurance
affordability programs that are effective
before January 1, 2015.
(2) The SHOP must provide required
notices either through standard mail, or
if an employer or employee elects,
electronically, provided that the
requirements for electronic notices in 42
CFR 435.918(b)(2) through (5) are met
for the employer or employee.
■ 64. Section 155.300(a) is amended by
removing the definition of ‘‘Adoption
taxpayer identification number’’ and
revising the definitions of ‘‘Minimum
value,’’ ‘‘Modified Adjusted Gross
Income (MAGI),’’ and ‘‘Qualifying
coverage in an eligible employersponsored plan’’ to read as follows:
§ 155.300 Definitions and general
standards for eligibility determinations.
(a) * * *
Minimum value when used to
describe coverage in an eligible
employer-sponsored plan, means that
the employer-sponsored plan meets the
standards for coverage of the total
allowed costs of benefits set forth in
§ 156.145.
Modified Adjusted Gross Income
(MAGI) has the same meaning as it does
in 26 CFR 1.36B–1(e)(2).
*
*
*
*
*
Qualifying coverage in an eligible
employer-sponsored plan means
coverage in an eligible employersponsored plan that meets the
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affordability and minimum value
standards specified in 26 CFR 1.36B–
2(c)(3).
*
*
*
*
*
■ 65. Section 155.302 is amended by
revising paragraphs (a), (b), and (d) to
read as follows:
§ 155.302 Options for conducting eligibility
determinations.
(a) Options for conducting eligibility
determinations. The Exchange may
satisfy the requirements of this
subpart—
(1) Directly or through contracting
arrangements in accordance with
§ 155.110(a), provided that any
contracting arrangement for eligibility
determinations for Medicaid and CHIP
is subject to the standards in 42 CFR
431.10(c)(2); or
(2) Through a combination of the
approach described in paragraph (a)(1)
of this section and one or both of the
options described in paragraph (b) or (c)
of this section, subject to the standards
in paragraph (d) of this section.
(b) Medicaid and CHIP.
Notwithstanding the requirements of
this subpart, the Exchange may conduct
an assessment of eligibility for Medicaid
and CHIP, rather than an eligibility
determination for Medicaid and CHIP,
provided that—
(1) The Exchange makes such an
assessment based on the applicable
Medicaid and CHIP MAGI-based income
standards and citizenship and
immigration status, using verification
rules and procedures consistent with 42
CFR parts 435 and 457, without regard
to how such standards are implemented
by the State Medicaid and CHIP
agencies.
(2) Notices and other activities
required in connection with an
eligibility determination for Medicaid or
CHIP are performed by the Exchange
consistent with the standards identified
in this subpart or the State Medicaid or
CHIP agency consistent with applicable
law.
(3) Applicants found potentially
eligible for Medicaid or CHIP. When the
Exchange assesses an applicant as
potentially eligible for Medicaid or
CHIP consistent with the standards in
paragraph (b)(1) of this section, the
Exchange transmits all information
provided as a part of the application,
update, or renewal that initiated the
assessment, and any information
obtained or verified by the Exchange to
the State Medicaid agency or CHIP
agency via secure electronic interface,
promptly and without undue delay.
(4) Applicants not found potentially
eligible for Medicaid and CHIP. (i) If the
Exchange conducts an assessment in
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accordance with paragraph (b) of this
section and finds that an applicant is
not potentially eligible for Medicaid or
CHIP based on the applicable Medicaid
and CHIP MAGI-based income
standards, the Exchange must consider
the applicant as ineligible for Medicaid
and CHIP for purposes of determining
eligibility for advance payments of the
premium tax credit and cost-sharing
reductions and must notify such
applicant, and provide him or her with
the opportunity to—
(A) Withdraw his or her application
for Medicaid and CHIP, unless the
Exchange has assessed the applicant as
potentially eligible for Medicaid based
on factors not otherwise considered in
this subpart, in accordance with
§ 155.345(b), and provided that the
application will not be considered
withdrawn if he or she appeals his or
her eligibility determination for advance
payments of the premium tax credit or
cost-sharing reductions and the appeals
entity described in § 155.500(a) finds
that the individual is potentially eligible
for Medicaid or CHIP; or
(B) Request a full determination of
eligibility for Medicaid and CHIP by the
applicable State Medicaid and CHIP
agencies.
(ii) To the extent that an applicant
described in paragraph (b)(4)(i) of this
section requests a full determination of
eligibility for Medicaid and CHIP, the
Exchange must—
(A) Transmit all information provided
as a part of the application, update, or
renewal that initiated the assessment,
and any information obtained or
verified by the Exchange to the State
Medicaid agency and CHIP agency via
secure electronic interface, promptly
and without undue delay; and
(B) Consider such an applicant as
ineligible for Medicaid and CHIP for
purposes of determining eligibility for
advance payments of the premium tax
credit and cost-sharing reductions until
the State Medicaid or CHIP agency
notifies the Exchange that the applicant
is eligible for Medicaid or CHIP.
(5) The Exchange and the Exchange
appeals entity adheres to the eligibility
determination or appeals decision for
Medicaid or CHIP made by the State
Medicaid or CHIP agency, or the appeals
entity for such agency.
(6) The Exchange and the State
Medicaid and CHIP agencies enter into
an agreement specifying their respective
responsibilities in connection with
eligibility determinations for Medicaid
and CHIP, and provide a copy of such
agreement to HHS upon request.
*
*
*
*
*
(d) Standards. To the extent that
assessments of eligibility for Medicaid
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and CHIP based on MAGI or eligibility
determinations for advance payments of
the premium tax credit and cost-sharing
reductions are made in accordance with
paragraphs (b) or (c) of this section, the
Exchange must ensure that—
(1) Eligibility processes for all
insurance affordability programs are
streamlined and coordinated across
HHS, the Exchange, the State Medicaid
agency, and the State CHIP agency, as
applicable;
(2) Such arrangement does not
increase administrative costs and
burdens on applicants, enrollees,
beneficiaries, or application filers, or
increase delay; and
(3) Applicable requirements under 45
CFR 155.260, 155.270, and 155.315(i),
and section 6103 of the Code for the
confidentiality, disclosure,
maintenance, and use of information are
met.
■ 66. Section 155.305 is amended by—
■ A. Revising paragraphs (f)(1)(i),
(f)(1)(ii)(B), (f)(2)(ii), (f)(2)(iii), (f)(3), and
(f)(5).
■ B. Adding paragraphs (a)(3)(v), and
(h).
The revisions and additions read as
follows:
§ 155.305
Eligibility standards.
(a) * * *
(3) * * *
(v) Temporary absence. The Exchange
may not deny or terminate an
individual’s eligibility for enrollment in
a QHP through the Exchange if the
individual meets the standards in
paragraph (a)(3) of this section but for a
temporary absence from the service area
of the Exchange and intends to return
when the purpose of the absence has
been accomplished.
*
*
*
*
*
(f) * * *
(1) * * *
(i) He or she is expected to have a
household income, as defined in 26 CFR
1.36B–1(e), of greater than or equal to
100 percent but not more than 400
percent of the FPL for the benefit year
for which coverage is requested; and
(ii) * * *
(B) Is not eligible for minimum
essential coverage, with the exception of
coverage in the individual market, in
accordance with section 26 CFR 1.36B–
2(a)(2) and (c).
(2) * * *
(ii) He or she is expected to have a
household income, as defined in 26 CFR
1.36B–1(e) of less than 100 percent of
the FPL for the benefit year for which
coverage is requested; and
(iii) One or more applicants for whom
the tax filer expects to claim a personal
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42315
exemption deduction on his or her tax
return for the benefit year, including the
tax filer and his or her spouse, is a noncitizen who is lawfully present and
ineligible for Medicaid by reason of
immigration status, in accordance with
26 CFR 1.36B–2(b)(5).
(3) Enrollment required. The
Exchange may provide advance
payments of the premium tax credit on
behalf of a tax filer only if one or more
applicants for whom the tax filer attests
that he or she expects to claim a
personal exemption deduction for the
benefit year, including the tax filer and
his or her spouse, is enrolled in a QHP
that is not a catastrophic plan, through
the Exchange.
*
*
*
*
*
(5) Calculation of advance payments
of the premium tax credit. The
Exchange must calculate advance
payments of the premium tax credit in
accordance with 26 CFR 1.36B–3.
*
*
*
*
*
(h) Eligibility for enrollment through
the Exchange in a QHP that is a
catastrophic plan. The Exchange must
determine an applicant eligible for
enrollment in a QHP through the
Exchange in a QHP that is a catastrophic
plan as defined by section 1302(e) of the
Affordable Care Act, if he or she has met
the requirements for eligibility for
enrollment in a QHP through the
Exchange, in accordance with
§ 155.305(a), and either—
(1) Has not attained the age of 30
before the beginning of the plan year; or
(2) Has a certification in effect for any
plan year that he or she is exempt from
the requirement to maintain minimum
essential coverage under section 5000A
of the Code by reason of—
(i) Section 5000A(e)(1) of the Code
(relating to individuals without
affordable coverage); or
(ii) Section 5000A(e)(5) of the Code
(relating to individuals with hardships).
■ 67. Section 155.310 is amended by—
■ A. Redesignating paragraph (i) as
paragraph (j).
■ B. Adding new paragraph (i).
■ C. Revising newly redesignated
paragraph (j).
The addition and revision read as
follows:
§ 155.310
Eligibility process.
*
*
*
*
*
(i) Certification program for
employers. As part of its determination
of whether an employer has a liability
under section 4980H of the Code, the
Internal Revenue Service will adopt
methods to certify to an employer that
one or more employees has enrolled for
one or more months during a year in a
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QHP for which a premium tax credit or
cost-sharing reduction is allowed or
paid.
(j) Duration of eligibility
determinations without enrollment. To
the extent that an applicant who is
determined eligible for enrollment in a
QHP through the Exchange does not
select a QHP within his or her
enrollment period, or is not eligible for
an enrollment period, in accordance
with subpart E, and seeks a new
enrollment period prior to the date on
which his or her eligibility is
redetermined in accordance with
§ 155.335, the Exchange must require
the applicant to attest as to whether
information affecting his or her
eligibility has changed since his or her
most recent eligibility determination
before determining his or her eligibility
for a special enrollment period, and
must process any changes reported in
accordance with the procedures
specified in § 155.330.
■ 68. Section 155.315 is amended by
revising paragraphs (b)(2), (f)
introductory text, (f)(4) introductory
text, and (f)(5) and by adding paragraphs
(f)(6) and (j) to read as follows:
§ 155.315 Verification process related to
eligibility for enrollment in a QHP through
the Exchange.
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*
*
*
*
*
(b) * * *
(2) To the extent that the Exchange is
unable to validate an individual’s Social
Security number through the Social
Security Administration, or the Social
Security Administration indicates that
the individual is deceased, the
Exchange must follow the procedures
specified in paragraph (f) of this section,
except that the Exchange must provide
the individual with a period of 90 days
from the date on which the notice
described in paragraph (f)(2)(i) of this
section is received for the applicant to
provide satisfactory documentary
evidence or resolve the inconsistency
with the Social Security Administration.
The date on which the notice is received
means 5 days after the date on the
notice, unless the individual
demonstrates that he or she did not
receive the notice within the 5 day
period.
*
*
*
*
*
(f) Inconsistencies. Except as
otherwise specified in this subpart, for
an applicant for whom the Exchange
cannot verify information required to
determine eligibility for enrollment in a
QHP through the Exchange, advance
payments of the premium tax credit,
and cost-sharing reductions, including
when electronic data is required in
accordance with this subpart but data
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for individuals relevant to the eligibility
determination are not included in such
data sources or when electronic data
from IRS, DHS, or SSA is required but
it is not reasonably expected that data
sources will be available within 1 day
of the initial request to the data source,
the Exchange:
*
*
*
*
*
(4) During the periods described in
paragraphs (f)(1) and (f)(2)(ii) of this
section, must:
*
*
*
*
*
(5) If, after the period described in
paragraph (f)(2)(ii) of this section, the
Exchange remains unable to verify the
attestation, the Exchange must
determine the applicant’s eligibility
based on the information available from
the data sources specified in this
subpart, unless such applicant qualifies
for the exception provided under
paragraph (g) of this section, and notify
the applicant of such determination in
accordance with the notice
requirements specified in § 155.310(g),
including notice that the Exchange is
unable to verify the attestation.
(6) When electronic data to support
the verifications specified in
§ 155.315(d) or § 155.320(b) is required
but it is not reasonably expected that
data sources will be available within 1
day of the initial request to the data
source, the Exchange must accept the
applicant’s attestation regarding the
factor of eligibility for which the
unavailable data source is relevant.
*
*
*
*
*
(j) Verification related to eligibility for
enrollment through the Exchange in a
QHP that is a catastrophic plan. The
Exchange must verify an applicant’s
attestation that he or she meets the
requirements of § 155.305(h) by—
(1) Verifying the applicant’s
attestation of age as follows—
(i) Except as provided in paragraph
(j)(1)(iii) of this section, accepting his or
her attestation without further
verification; or
(ii) Examining electronic data sources
that are available to the Exchange and
which have been approved by HHS for
this purpose, based on evidence
showing that such data sources are
sufficiently current and accurate, and
minimize administrative costs and
burdens.
(iii) If information regarding age is not
reasonably compatible with other
information provided by the individual
or in the records of the Exchange, the
Exchange must examine information in
data sources that are available to the
Exchange and which have been
approved by HHS for this purpose based
on evidence showing that such data
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sources are sufficiently current and
accurate.
(2) Verifying that an applicant has a
certification of exemption in effect as
described in § 155.305(h)(2).
(3) To the extent that the Exchange is
unable to verify the information
required to determine eligibility for
enrollment through the Exchange in a
QHP that is a catastrophic plan as
described in paragraphs (j)(1) and (2) of
this section, the Exchange must follow
the procedures specified in § 155.315(f),
except for § 155.315(f)(4).
■ 69. Section 155.320 is amended by—
■ A. Revising paragraphs (c)(1)(i)
heading, (c)(1)(i)(A), (c)(1)(ii),
(c)(3)(i)(D), (c)(3)(ii)(A), (c)(3)(iii)(A) and
(B), (c)(3)(vi), (c)(3)(vii), (c)(3)(viii), and
(d).
■ B. Adding paragraphs (c)(3)(i)(E) and
(c)(3)(iii)(C).
■ C. Removing paragraph (e).
■ D. Redesignating paragraph (f) as
paragraph (e).
The revisions and additions read as
follows:
§ 155.320 Verification process related to
eligibility for insurance affordability
programs.
*
*
*
*
*
(c) * * *
(1) * * *
(i) Data regarding annual household
income. (A) For all individuals whose
income is counted in calculating a tax
filer’s household income, as defined in
26 CFR 1.36B–1(e), or an applicant’s
household income, calculated in
accordance with 42 CFR 435.603(d), and
for whom the Exchange has a Social
Security number, the Exchange must
request tax return data regarding MAGI
and family size from the Secretary of the
Treasury and data regarding Social
security benefits described in 26 CFR
1.36B–1(e)(2)(iii) from the
Commissioner of Social Security by
transmitting identifying information
specified by HHS to HHS.
*
*
*
*
*
(ii) Data regarding MAGI-based
income. For all individuals whose
income is counted in calculating a tax
filer’s household income, as defined in
26 CFR 1.36B–1(e), or an applicant’s
household income, calculated in
accordance with 42 CFR 435.603(d), the
Exchange must request data regarding
MAGI-based income in accordance with
42 CFR 435.948(a).
*
*
*
*
*
(3) * * *
(i) * * *
(D) If the Exchange finds that an
applicant’s attestation of a tax filer’s
family size is not reasonably compatible
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with other information provided by the
application filer for the family or in the
records of the Exchange, with the
exception of the data described in
paragraph (c)(1)(i) of this section, the
Exchange must utilize data obtained
through other electronic data sources to
verify the attestation. If such data
sources are unavailable or information
in such data sources is not reasonably
compatible with the applicant’s
attestation, the Exchange must request
additional documentation to support the
attestation within the procedures
specified in § 155.315(f).
(E) The Exchange must verify that
neither advance payments of the
premium tax credit nor cost-sharing
reductions are being provided on behalf
of an individual using information
obtained by transmitting identifying
information specified by HHS to HHS.
*
*
*
*
*
(ii) * * *
(A) The Exchange must compute
annual household income for the family
described in paragraph (c)(3)(i)(A) of
this section based on the data described
in paragraph (c)(1)(i) of this section;
*
*
*
*
*
(iii) * * *
(A) Except as specified in paragraph
(c)(3)(iii)(B) and (C) of this section, if an
applicant’s attestation, in accordance
with paragraph (c)(3)(ii)(B) of this
section, indicates that a tax filer’s
annual household income has increased
or is reasonably expected to increase
from the data described in paragraph
(c)(3)(ii)(A) of this section for the benefit
year for which the applicant(s) in the
tax filer’s family are requesting coverage
and the Exchange has not verified the
applicant’s MAGI-based income through
the process specified in paragraph
(c)(2)(ii) of this section to be within the
applicable Medicaid or CHIP MAGIbased income standard, the Exchange
must accept the applicant’s attestation
regarding a tax filer’s annual household
income without further verification.
(B) If data available to the Exchange
in accordance with paragraph (c)(1)(ii)
of this section indicate that a tax filer’s
projected annual household income is
in excess of his or her attestation by a
significant amount, the Exchange must
proceed in accordance with
§ 155.315(f)(1) through (4).
(C) If other information provided by
the application filer indicates that a tax
filer’s projected annual household
income is in excess of his or her
attestation by a significant amount, the
Exchange must utilize data available to
the Exchange in accordance with
paragraph (c)(1)(ii) of this section to
verify the attestation. If such data is
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unavailable or are not reasonably
compatible with the applicant’s
attestation, the Exchange must proceed
in accordance with § 155.315(f)(1)
through (4).
*
*
*
*
*
(vi) Alternate verification process for
decreases in annual household income
and situations in which tax return data
is unavailable. If a tax filer qualifies for
an alternate verification process based
on the requirements specified in
paragraph (c)(3)(iv) of this section and
the applicant’s attestation to projected
annual household income, as described
in paragraph (c)(3)(ii)(B) of this section,
is greater than ten percent below the
annual household income computed in
accordance with paragraph (c)(3)(ii)(A)
of this section, or if data described in
paragraph (c)(1)(i) of this section is
unavailable, the Exchange must attempt
to verify the applicant’s attestation of
the tax filer’s projected annual
household income by following the
procedures specified in paragraph
(c)(3)(vi)(A) through (G) of this section.
(A) Data. The Exchange must
annualize data from the MAGI-based
income sources specified in paragraph
(c)(1)(ii) of this section, and obtain any
data available from other electronic data
sources that have been approved by
HHS, based on evidence showing that
such data sources are sufficiently
accurate and offer less administrative
complexity than paper verification.
(B) Eligibility. To the extent that the
applicant’s attestation indicates that the
information described in paragraph
(c)(3)(vi)(A) of this section represents an
accurate projection of the tax filer’s
household income for the benefit year
for which coverage is requested, the
Exchange must determine the tax filer’s
eligibility for advance payments of the
premium tax credit and cost-sharing
reductions based on the household
income data in paragraph (c)(3)(vi)(A) of
this section.
(C) Increases in annual household
income. If an applicant’s attestation, in
accordance with paragraph (c)(3)(ii)(B)
of this section, indicates that a tax filer’s
annual household income has increased
or is reasonably expected to increase
from the data described in paragraph
(c)(3)(vi)(A) of this section to the benefit
year for which the applicant(s) in the
tax filer’s family are requesting coverage
and the Exchange has not verified the
applicant’s MAGI-based income through
the process specified in paragraph
(c)(2)(ii) of this section to be within the
applicable Medicaid or CHIP MAGIbased income standard, the Exchange
must accept the applicant’s attestation
for the tax filer’s family without further
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42317
verification, unless the Exchange finds
that an applicant’s attestation of a tax
filer’s annual household income is not
reasonably compatible with other
information provided by the application
filer or available to the Exchange in
accordance with paragraph (c)(1)(ii) of
this section, in which case the Exchange
must request additional documentation
using the procedures specified in
§ 155.315(f).
(D) Decreases in annual household
income and situations in which
electronic data is unavailable. If
electronic data are unavailable or an
applicant’s attestation to projected
annual household income, as described
in paragraph (c)(3)(ii)(B) of this section,
is more than ten percent below the
annual household income as computed
using data sources described in
paragraphs (c)(3)(vi)(A) of this section,
the Exchange must follow the
procedures specified in § 155.315(f)(1)
through (4).
(E) If, following the 90-day period
described in paragraph (c)(3)(vi)(D) of
this section, an applicant has not
responded to a request for additional
information from the Exchange and the
data sources specified in paragraph
(c)(1) of this section indicate that an
applicant in the tax filer’s family is
eligible for Medicaid or CHIP, the
Exchange must not provide the
applicant with eligibility for advance
payments of the premium tax credit,
cost-sharing reductions, Medicaid, CHIP
or the BHP, if a BHP is operating in the
service area of the Exchange.
(F) If, at the conclusion of the period
specified in paragraph (c)(3)(vi)(D) of
this section, the Exchange remains
unable to verify the applicant’s
attestation, the Exchange must
determine the applicant’s eligibility
based on the information described in
paragraph (c)(3)(ii)(A) of this section,
notify the applicant of such
determination in accordance with the
notice requirements specified in
§ 155.310(g), and implement such
determination in accordance with the
effective dates specified in § 155.330(f).
(G) If, at the conclusion of the period
specified in paragraph (c)(3)(vi)(D) of
this section, the Exchange remains
unable to verify the applicant’s
attestation for the tax filer and the
information described in paragraph
(c)(3)(ii)(A) of this section is
unavailable, the Exchange must
determine the tax filer ineligible for
advance payments of the premium tax
credit and cost-sharing reductions,
notify the applicant of such
determination in accordance with the
notice requirement specified in
§ 155.310(g), and discontinue any
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advance payments of the premium tax
credit and cost-sharing reductions in
accordance with the effective dates
specified in § 155.330(f).
(vii) For the purposes of paragraph
(c)(3) of this section, ‘‘household
income’’ means household income as
specified in 26 CFR 1.36B–1(e).
(viii) For the purposes of paragraph
(c)(3) of this section, ‘‘family size’’
means family size as specified in 26
CFR 1.36B–1(d).
*
*
*
*
*
(d) Verification related to enrollment
in an eligible employer-sponsored plan
and eligibility for qualifying coverage in
an eligible employer-sponsored plan. (1)
General requirement. The Exchange
must verify whether an applicant
reasonably expects to be enrolled in an
eligible employer-sponsored plan or is
eligible for qualifying coverage in an
eligible employer-sponsored plan for the
benefit year for which coverage is
requested.
(2) Data. The Exchange must—
(i) Obtain data about enrollment in
and eligibility for an eligible employersponsored plan from any electronic data
sources that are available to the
Exchange and which have been
approved by HHS, based on evidence
showing that such data sources are
sufficiently current, accurate, and
minimize administrative burden.
(ii) Obtain any available data
regarding enrollment in employersponsored coverage or eligibility for
qualifying coverage in an eligible
employer-sponsored plan based on
federal employment by transmitting
identifying information specified by
HHS to HHS for HHS to provide the
necessary verification using data
obtained by HHS.
(iii) Obtain any available data from
the SHOP that corresponds to the State
in which the Exchange is operating.
(3) Verification procedures. (i) Except
as specified in paragraphs (d)(3)(ii) or
(iii) of this section, the Exchange must
accept an applicant’s attestation
regarding the verification specified in
paragraph (d) of this section without
further verification.
(ii) If an applicant’s attestation is not
reasonably compatible with the
information obtained by the Exchange
as specified in paragraphs (d)(2)(i)
through (iii) of this section, other
information provided by the application
filer, or other information in the records
of the Exchange, the Exchange must
follow the procedures specified in
§ 155.315(f).
(iii) Except as specified in paragraph
(d)(3)(iv) of this section, if the Exchange
does not have any of the information
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specified in paragraphs (d)(2)(i) through
(iii) of this section for an applicant, the
Exchange must select a statistically
significant random sample of such
applicants and—
(A) Provide notice to the applicant
indicating that the Exchange will be
contacting any employer identified on
the application for the applicant and the
members of his or her household, as
defined in 26 CFR 1.36B–1(d), to verify
whether the applicant is enrolled in an
eligible employer-sponsored plan or is
eligible for qualifying coverage in an
eligible employer-sponsored plan for the
benefit year for which coverage is
requested;
(B) Proceed with all other elements of
the eligibility determination using the
applicant’s attestation, and provide
eligibility for enrollment in a QHP to the
extent that an applicant is otherwise
qualified;
(C) Ensure that advance payments of
the premium tax credit and cost-sharing
reductions are provided on behalf of an
applicant who is otherwise qualified for
such payments and reductions, as
described in § 155.305, if the tax filer
attests to the Exchange that he or she
understands that any advance payments
of the premium tax credit paid on his or
her behalf are subject to reconciliation;
(D) Make reasonable attempts to
contact any employer identified on the
application for the applicant and the
members of his or her household, as
defined in 26 CFR 1.36B–1(d), to verify
whether the applicant is enrolled in an
eligible employer-sponsored plan or is
eligible for qualifying coverage in an
eligible employer-sponsored plan for the
benefit year for which coverage is
requested;
(E) If the Exchange receives any
information from an employer relevant
to the applicant’s enrollment in an
eligible employer-sponsored plan or
eligibility for qualifying coverage in an
eligible employer-sponsored plan, the
Exchange must determine the
applicant’s eligibility based on such
information and in accordance with the
effective dates specified in § 155.330(f),
and if such information changes his or
her eligibility determination, notify the
applicant and his or her employer or
employers of such determination in
accordance with the notice
requirements specified in § 155.310(g)
and (h);
(F) If, after a period of 90 days from
the date on which the notice described
in paragraph (d)(3)(iii)(A) of this section
is sent to the applicant, the Exchange is
unable to obtain the necessary
information from an employer, the
Exchange must determine the
applicant’s eligibility based on his or
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her attestation(s) regarding coverage
provided by that employer.
(G) To carry out the process described
in paragraph (d)(3)(iii) of this section,
the Exchange must only disclose an
individual’s information to an employer
to the extent necessary for the employer
to identify the employee.
(iv) For eligibility determinations for
advance payments of the premium tax
credit and cost-sharing reductions that
are effective before January 1, 2015, if
the Exchange does not have any of the
information specified in paragraphs
(d)(2)(i) through (iii) of this section for
an applicant, the Exchange may accept
an applicant’s attestation regarding
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan for the benefit
year for which coverage is requested
without further verification, instead of
following the procedure in paragraph
(d)(3)(iii) of this section.
(4) Option to rely on verification
performed by HHS. For eligibility
determinations for advance payments of
the premium tax credit and cost-sharing
reductions that are effective on or after
January 1, 2015, the Exchange may
satisfy the provisions of paragraph (d) of
this section by relying on a verification
process performed by HHS, provided
that—
(i) The Exchange sends the notices
described in § 155.310(g) and (h);
(ii) Other activities required in
connection with the verifications
described in this paragraph are
performed by the Exchange in
accordance with the standards
identified in this subpart or in
accordance with guidance issued by the
Secretary; and
(iii) The Exchange provides all
relevant application information to HHS
through a secure, electronic interface,
promptly and without undue delay.
*
*
*
*
*
■ 70. Section 155.330 is amended by
revising paragraphs (d)(1)(ii), (e)(2), and
(f), and by removing paragraph (e)(3).
The revisions read as follows:
§ 155.330 Eligibility redetermination during
a benefit year.
*
*
*
*
*
(d) * * *
(1) * * *
(ii) For an enrollee on whose behalf
advance payments of the premium tax
credit or cost-sharing reductions are
being provided, eligibility
determinations for Medicare, Medicaid,
CHIP, or the BHP, if a BHP is operating
in the service area of the Exchange.
*
*
*
*
*
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(e) * * *
(2) Data matching. (i) If the Exchange
identifies updated information
regarding death, in accordance with
paragraph (d)(1)(i) of this section, or
regarding any factor of eligibility not
regarding income, family size, or family
composition, the Exchange must—
(A) Notify the enrollee regarding the
updated information, as well as the
enrollee’s projected eligibility
determination after considering such
information.
(B) Allow an enrollee 30 days from
the date of the notice to notify the
Exchange that such information is
inaccurate.
(C) If the enrollee responds contesting
the updated information, proceed in
accordance with § 155.315(f) of this
part.
(D) If the enrollee does not respond
within the 30-day period specified in
paragraph (e)(2)(i)(B), proceed in
accordance with paragraphs (e)(1)(i) and
(ii) of this section.
(ii) If the Exchange identifies updated
information regarding income, family
size, or family composition, with the
exception of information regarding
death, the Exchange must—
(A) Follow procedures described in
paragraph (e)(2)(i)(A) and (B) of this
section; and
(B) If the enrollee responds
confirming the updated information,
proceed in accordance with paragraphs
(e)(1)(i) and (ii) of this section.
(C) If the enrollee does not respond
within the 30-day period specified in
paragraph (e)(2)(i)(B) of this section,
maintain the enrollee’s existing
eligibility determination without
considering the updated information.
(D) If the enrollee provides more upto-date information, proceed in
accordance with paragraph (c)(1) of this
section.
*
*
*
*
*
(f) Effective dates. (1) Except as
specified in paragraphs (f)(2) through
(f)(5) of this section, the Exchange must
implement changes—
(i) Resulting from a redetermination
under this section on the first day of the
month following the date of the notice
described in paragraph (e)(1)(ii) of this
section; or
(ii) Resulting from an appeal decision,
on the date specified in the appeal
decision; or
(iii) Affecting enrollment or premiums
only, on the first day of the month
following the date on which the
Exchange is notified of the change;
(2) Except as specified in paragraphs
(f)(3) through (5) of this section, the
Exchange may determine a reasonable
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point in a month after which a change
described in paragraph (f)(1) of this
section will not be effective until the
first day of the month after the month
specified in paragraph (f)(1) of this
section. Such reasonable point in a
month must be no earlier than the 15th
of the month.
(3) Except as specified in paragraphs
(f)(4) and (5) of this section, the
Exchange must implement a change
described in paragraph (f)(1) of this
section that results in a decreased
amount of advance payments of the
premium tax credit, or a change in the
level of cost-sharing reductions, and for
which the date of the notices described
in paragraphs (f)(1)(i) and (ii) of this
section, or the date on which the
Exchange is notified in accordance with
paragraph (f)(1)(iii) of this section is
after the 15th of the month, on the first
day of the month after the month
specified in paragraph (f)(1) of this
section.
(4) The Exchange must implement a
change associated with the events
described in § 155.420(b)(2)(i) and (ii)
on the coverage effective dates
described in § 155.420(b)(2)(i) and (ii),
respectively.
(5) Notwithstanding paragraphs (f)(1)
through (f)(4) of this section, the
Exchange may provide the effective date
of a change associated with the events
described in § 155.420(d)(4), (d)(5), and
(d)(9) based on the specific
circumstances of each situation.
■ 71. Section 155.335 is amended by
revising paragraphs (a), (b), (c), (e), (f),
(g), (h), (k)(1), and (l), and adding
paragraph (m) to read as follows:
§ 155.335 Annual eligibility
redetermination.
(a) General requirement. Except as
specified in paragraphs (l) and (m) of
this section, the Exchange must
redetermine the eligibility of a qualified
individual on an annual basis.
(b) Updated income and family size
information. In the case of a qualified
individual who requested an eligibility
determination for insurance
affordability programs in accordance
with § 155.310(b) of this part, the
Exchange must request updated tax
return information, if the qualified
individual has authorized the request of
such tax return information, data
regarding Social Security benefits, and
data regarding MAGI-based income as
described in § 155.320(c)(1) of this part
for use in the qualified individual’s
eligibility redetermination.
(c) Notice to qualified individual. The
Exchange must provide a qualified
individual with an annual
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42319
redetermination notice including the
following:
(1) [Reserved]
(2) [Reserved]
(3) The qualified individual’s
projected eligibility determination for
the following year, after considering any
updated information described in
paragraph (b) of this section, including,
if applicable, the amount of any advance
payments of the premium tax credit and
the level of any cost-sharing reductions
or eligibility for Medicaid, CHIP or BHP.
*
*
*
*
*
(e) Changes reported by qualified
individuals. (1) The Exchange must
require a qualified individual to report
any changes for the information listed in
the notice described in paragraph (c) of
this section within 30 days from the
date of the notice.
(2) The Exchange must allow a
qualified individual, or an application
filer, on behalf of the qualified
individual, to report changes via the
channels available for the submission of
an application, as described in
§ 155.405(c)(2).
(f) Verification of reported changes.
The Exchange must verify any
information reported by a qualified
individual under paragraph (e) of this
section using the processes specified in
§ 155.315 and § 155.320, including the
relevant provisions in those sections
regarding inconsistencies, prior to using
such information to determine
eligibility.
(g) Response to redetermination
notice. (1) The Exchange must require a
qualified individual, or an application
filer, on behalf of the qualified
individual, to sign and return the notice
described in paragraph (c) of this
section.
(2) To the extent that a qualified
individual does not sign and return the
notice described in paragraph (c) of this
section within the 30-day period
specified in paragraph (e) of this
section, the Exchange must proceed in
accordance with the procedures
specified in paragraph (h)(1) of this
section.
(h) Redetermination and notification
of eligibility. (1) After the 30-day period
specified in paragraph (e) of this section
has elapsed, the Exchange must—
(i) Redetermine the qualified
individual’s eligibility in accordance
with the standards specified in
§ 155.305 using the information
provided to the qualified individual in
the notice specified in paragraph (c) of
this section, as supplemented with any
information reported by the qualified
individual and verified by the Exchange
in accordance with paragraphs (e) and
(f) of this section.
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(ii) Notify the qualified individual in
accordance with the requirements
specified in § 155.310(g).
(iii) If applicable, notify the qualified
individual employer, in accordance
with the requirements specified in
§ 155.310(h).
(2) If a qualified individual reports a
change for the information provided in
the notice specified in paragraph (c) of
this section that the Exchange has not
verified as of the end of the 30-day
period specified in paragraph (e) of this
section, the Exchange must redetermine
the qualified individual’s eligibility
after completing verification, as
specified in paragraph (f) of this section.
*
*
*
*
*
(k) * * *
(1) The Exchange must have
authorization from a qualified
individual to obtain updated tax return
information described in paragraph (b)
of this section for purposes of
conducting an annual redetermination.
*
*
*
*
*
(l) Limitation on redetermination. To
the extent that a qualified individual
has requested an eligibility
determination for insurance
affordability programs in accordance
with § 155.310(b) and the Exchange
does not have an active authorization to
obtain tax data as a part of the annual
redetermination process, the Exchange
must redetermine the qualified
individual’s eligibility only for
enrollment in a QHP and notify the
enrollee in accordance with the timing
described in paragraph (d) of this
section. The Exchange may not proceed
with a redetermination for insurance
affordability programs until such
authorization has been obtained or the
qualified individual continues his or her
request for an eligibility determination
for insurance affordability programs in
accordance with § 155.310(b).
(m) Special rule. The Exchange must
not redetermine a qualified individual’s
eligibility in accordance with this
section if the qualified individual’s
eligibility was redetermined under this
section during the prior year, and the
qualified individual was not enrolled in
a QHP through the Exchange at the time
of such redetermination, and has not
enrolled in a QHP through the Exchange
since such redetermination.
■ 72. Section 155.340 is amended by
revising paragraphs (b) heading, (b)(1),
and (c) to read as follows:
§ 155.340 Administration of advance
payments of the premium tax credit and
cost-sharing reductions.
*
*
*
*
*
(b) Requirement to provide
information related to employer
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responsibility. (1) In the event that the
Exchange determines that an individual
is eligible for advance payments of the
premium tax credit or cost-sharing
reductions based in part on a finding
that an individual’s employer does not
provide minimum essential coverage, or
provides minimum essential coverage
that is unaffordable, within the standard
of 26 CFR 1.36B–2(c)(3)(v), or provide
minimum essential coverage that does
not meet the minimum value standard
of § 156.145, the Exchange must
transmit the individual’s name and
taxpayer identification number to HHS.
*
*
*
*
*
(c) Requirement to provide
information related to reconciliation of
advance payments of the premium tax
credit. The Exchange must comply with
the requirements of 26 CFR 1.36B–5
regarding reporting to the IRS and to
taxpayers.
*
*
*
*
*
■ 73. Section 155.345 is amended by—
■ A. Revising paragraphs (a)
introductory text and (a)(2).
■ B. Redesignating paragraph (a)(3) as
paragraph (a)(4).
■ C. Adding reserved paragraph (a)(3).
■ D. Revising paragraphs (f)
introductory text, (g) introductory text,
and (g)(2) through (5).
■ E. Adding paragraph (g)(6).
■ F. Redesignating paragraphs (h) and
(i) as paragraphs (i) and (j).
■ G. Adding new paragraph (h).
The revisions and addition read as
follows:
§ 155.345 Coordination with Medicaid,
CHIP, the Basic Health Program, and the
Pre-existing Condition Insurance Plan.
(a) Agreements. The Exchange must
enter into agreements with agencies
administering Medicaid, CHIP, and the
BHP, if a BHP is operating in the service
area of the Exchange, as are necessary to
fulfill the requirements of this subpart
and provide copies of any such
agreements to HHS upon request. Such
agreements must include a clear
delineation of the responsibilities of
each agency to—
*
*
*
*
*
(2) Ensure prompt determinations of
eligibility and enrollment in the
appropriate program without undue
delay, based on the date the application
is submitted to or redetermination is
initiated by the Exchange or the agency
administering Medicaid, CHIP, or the
BHP;
(3) [Reserved]
(4) Ensure compliance with
paragraphs (c), (d), (e), and (g) of this
section.
*
*
*
*
*
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(f) Special rule. If the Exchange
verifies that a tax filer’s household
income, as defined in 26 CFR 1.36B–
1(e), is less than 100 percent of the FPL
for the benefit year for which coverage
is requested, determines that the tax
filer is not eligible for advance
payments of the premium tax credit
based on § 155.305(f)(2), and one or
more applicants in the tax filer’s
household has been determined
ineligible for Medicaid and CHIP based
on income, the Exchange must—
*
*
*
*
*
(g) Determination of eligibility for
individuals submitting applications
directly to an agency administering
Medicaid, CHIP, or the BHP. The
Exchange, in consultation with the
agency or agencies administering
Medicaid, CHIP, and the BHP if a BHP
is operating in the service area of the
Exchange, must establish procedures to
ensure that an eligibility determination
for enrollment in a QHP, advance
payments of the premium tax credit,
and cost-sharing reductions is
performed when an application is
submitted directly to an agency
administering Medicaid, CHIP, or the
BHP if a BHP is operating in the service
area of the Exchange. Under such
procedures, the Exchange must—
*
*
*
*
*
(2) Notify such agency of the receipt
of the information described in
paragraph (g)(1) of this section and final
eligibility determination for enrollment
in a QHP, advance payments of the
premium tax credit, and cost-sharing
reductions.
(3) Not duplicate any eligibility and
verification findings already made by
the transmitting agency, to the extent
such findings are made in accordance
with this part.
(4) Not request information or
documentation from the individual
already provided to another agency
administering an insurance affordability
program and included in the
transmission of information provided on
the application or other information
transmitted from the other agency.
(5) Determine the individual’s
eligibility for enrollment in a QHP,
advance payments of the premium tax
credit, and cost-sharing reductions,
promptly and without undue delay, and
in accordance with this subpart.
(6) Follow a streamlined process for
eligibility determinations regardless of
the agency that initially received an
application.
(h) Adherence to state decision
regarding Medicaid and CHIP. The
Exchange and the Exchange appeals
entity must adhere to the eligibility
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determination or appeals decision for
Medicaid or CHIP made by the State
Medicaid or CHIP agency, or the appeals
entity for such agency.
*
*
*
*
*
■ 74. Section 155.350 is amended by
revising paragraph (a)(1)(ii) to read as
follows:
§ 155.350 Special eligibility standards and
process for Indians.
(a) * * *
(1) * * *
(ii) Is expected to have a household
income, as defined in 26 CFR 1.36B–1(e)
that does not exceed 300 percent of the
FPL for the benefit year for which
coverage is requested.
*
*
*
*
*
■ 75. Section 155.400 is amended by
adding paragraph (b)(3) to read as
follows:
§ 155.400 Enrollment of qualified
individuals into QHPs.
*
*
*
*
*
(b) * * *
(3) Send updated eligibility and
enrollment information to HHS
promptly and without undue delay, in
a manner and timeframe as specified by
HHS.
*
*
*
*
*
■ 76. Section 155.420 is amended by
revising paragraphs (a), (b)(2), (b)(3),
adding paragraph (b)(4), and revising
paragraph (d) to read as follows:
tkelley on DSK3SPTVN1PROD with RULES2
§ 155.420
Special enrollment periods.
(a) General requirements. (1) The
Exchange must provide special
enrollment periods consistent with this
section, during which qualified
individuals may enroll in QHPs and
enrollees may change QHPs.
(2) For the purpose of this section,
‘‘dependent’’, has the same meaning as
it does in 26 CFR 54.9801–2, referring
to any individual who is or who may
become eligible for coverage under the
terms of a QHP because of a relationship
to a qualified individual or enrollee.
(b) * * *
(2) Special effective dates. (i) In the
case of birth, adoption, placement for
adoption, or placement in foster care,
the Exchange must ensure that coverage
is effective for a qualified individual or
enrollee on the date of birth, adoption,
placement for adoption, or placement in
foster care.
(ii) In the case of marriage, or in the
case where a qualified individual loses
minimum essential coverage, as
described in paragraph (d)(1) of this
section, the Exchange must ensure that
coverage is effective for a qualified
individual or enrollee on the first day of
the following month.
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(iii) In the case of a qualified
individual or enrollee eligible for a
special enrollment period as described
in paragraphs (d)(4), (d)(5), or (d)(9) of
this section, the Exchange must ensure
that coverage is effective on an
appropriate date based on the
circumstances of the special enrollment
period, in accordance with guidelines
issued by HHS. Such date much be
either—
(A) The date of the event that
triggered the special enrollment period
under (d)(4), (d)(5), or (d)(9) of this
section; or
(B) In accordance with the regular
effective dates specified in paragraph
(b)(1) of this section.
(3) Option for earlier effective dates.
Subject to the Exchange demonstrating
to HHS that all of its participating QHP
issuers agree to effectuate coverage in a
timeframe shorter than discussed in
paragraph (b)(1) or (b)(2)(ii) of this
section, the Exchange may do one or
both of the following for all applicable
individuals:
(i) For a QHP selection received by
the Exchange from a qualified
individual in accordance with the dates
specified in paragraph (b)(1) or (b)(2)(ii)
of this section, the Exchange may
provide a coverage effective date for a
qualified individual earlier than
specified in such paragraphs.
(ii) For a QHP selection received by
the Exchange from a qualified
individual on a date set by the Exchange
after the fifteenth of the month, the
Exchange may provide a coverage
effective date of the first of the following
month.
(4) Advance payments of the premium
tax credit and cost-sharing reductions.
Notwithstanding the standards of this
section, the Exchange must ensure that
advance payments of the premium tax
credit and cost-sharing reductions
adhere to the effective dates specified in
§ 155.330(f).
*
*
*
*
*
(d) The Exchange must allow a
qualified individual or enrollee, and,
when specified below, his or her
dependent, to enroll in or change from
one QHP to another if one of the
following triggering events occur:
(1) The qualified individual or his or
her dependent loses minimum essential
coverage:
(i) In the case of a QHP
decertification, the triggering event is
the date of the notice of decertification
as described in § 155.1080(e)(2); or
(ii) In all other cases, the triggering
event is the date the individual or
dependent loses eligibility for minimum
essential coverage;
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Frm 00163
Fmt 4701
Sfmt 4700
42321
(2) The qualified individual gains a
dependent or becomes a dependent
through marriage, birth, adoption,
placement for adoption, or placement in
foster care.
(3) The qualified individual, or his or
her dependent, which was not
previously a citizen, national, or
lawfully present individual gains such
status;
(4) The qualified individual’s or his or
her dependent’s, enrollment or nonenrollment in a QHP is unintentional,
inadvertent, or erroneous and is the
result of the error, misrepresentation, or
inaction of an officer, employee, or
agent of the Exchange or HHS, or its
instrumentalities as evaluated and
determined by the Exchange. In such
cases, the Exchange may take such
action as may be necessary to correct or
eliminate the effects of such error,
misrepresentation, or inaction;
(5) The enrollee or, his or her
dependent adequately demonstrates to
the Exchange that the QHP in which he
or she is enrolled substantially violated
a material provision of its contract in
relation to the enrollee;
(6) Newly eligible or ineligible for
advance payments of the premium tax
credit, or change in eligibility for costsharing reductions. (i) The enrollee is
determined newly eligible or newly
ineligible for advance payments of the
premium tax credit or has a change in
eligibility for cost-sharing reductions;
(ii) The enrollee’s dependent enrolled
in the same QHP is determined newly
eligible or newly ineligible for advance
payments of the premium tax credit or
has a change in eligibility for costsharing reductions; or
(iii) A qualified individual or his or
her dependent who is enrolled in an
eligible employer-sponsored plan is
determined newly eligible for advance
payments of the premium tax credit
based in part on a finding that such
individual is ineligible for qualifying
coverage in an eligible-employer
sponsored plan in accordance with 26
CFR 1.36B–2(c)(3), including as a result
of his or her employer discontinuing or
changing available coverage within the
next 60 days, provided that such
individual is allowed to terminate
existing coverage. The Exchange must
permit an individual who is enrolled in
an eligible employer-sponsored plan
and will lose eligibility for qualifying
coverage in an eligible employersponsored plan within the next 60 days
to access this special enrollment period
prior to the end of his or her existing
coverage, although he or she is not
eligible for advance payments of the
premium tax credit until the end of his
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Federal Register / Vol. 78, No. 135 / Monday, July 15, 2013 / Rules and Regulations
or her coverage in an eligible employersponsored plan;
(7) The qualified individual or
enrollee, or his or her dependent, gains
access to new QHPs as a result of a
permanent move;
(8) The qualified individual who is an
Indian, as defined by section 4 of the
Indian Health Care Improvement Act,
may enroll in a QHP or change from one
QHP to another one time per month;
(9) The qualified individual or
enrollee, or his or her dependent,
demonstrates to the Exchange, in
accordance with guidelines issued by
HHS, that the individual meets other
exceptional circumstances as the
Exchange may provide;
*
*
*
*
*
■ 77. Section 155.430 is amended by
revising paragraphs (b)(1), (d)(1),
(d)(2)(iii), (d)(2)(iv), (d)(3), and by
adding paragraph (d)(7) to read as
follows:
§ 155.430
Termination of coverage.
*
*
*
*
(b) * * *
(1) Enrollee-initiated terminations. (i)
The Exchange must permit an enrollee
to terminate his or her coverage in a
QHP, including as a result of the
enrollee obtaining other minimum
essential coverage, with appropriate
notice to the Exchange or the QHP.
(ii) The Exchange must provide an
opportunity at the time of plan selection
for an enrollee to choose to remain
enrolled in a QHP if he or she becomes
eligible for other minimum essential
coverage and the enrollee does not
request termination in accordance with
paragraph (b)(1)(i) of this section. If an
enrollee does not choose to remain
enrolled in a QHP in such a situation,
the Exchange must initiate termination
of his or her coverage upon completion
of the redetermination process specified
in § 155.330.
*
*
*
*
*
(d) * * *
(1) For purposes of this section—
tkelley on DSK3SPTVN1PROD with RULES2
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(i) Reasonable notice is defined as at
least fourteen days before the requested
effective date of termination; and
(ii) Changes in eligibility for advance
payments of the premium tax credit and
cost sharing reductions, including
terminations, must adhere to the
effective dates specified in § 155.330(f).
(2) * * *
(iii) On a date on or after the date on
which the termination is requested by
the enrollee, subject to the
determination of the enrollee’s QHP
issuer, if the enrollee’s QHP issuer
agrees to effectuate termination in fewer
than fourteen days, and the enrollee
requests an earlier termination effective
date.
(iv) If the enrollee is newly eligible for
Medicaid, CHIP, or the BHP, if a BHP
is operating in the service area of the
Exchange, the last day of QHP coverage
is the day before the individual is
determined eligible for Medicaid, CHIP,
or the BHP.
(3) In the case of a termination in
accordance with paragraph (b)(2)(i) of
this section, the last day of QHP
coverage is the last day of eligibility, as
described in § 155.330(f), unless the
individual requests an earlier
termination effective date per paragraph
(b)(1) of this section.
*
*
*
*
*
(7) In the case of a termination due to
death, the last day of coverage is the
date of death.
*
*
*
*
*
■ 78. Section 155.615 is amended by
revising paragraph (f)(2)(i) to read as
follows:
§ 155.615 Verification process related to
eligibility for exemptions.
*
*
*
*
*
(f) * * *
(2) * * *
(i) For any applicant who requests an
exemption based on the hardship
described in § 155.605(g)(2), the
Exchange must verify the unavailability
of affordable coverage through the
procedures used to determine eligibility
for advance payments of the premium
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Fmt 4701
Sfmt 9990
tax credit, as specified in subpart D of
this part, including the procedures
described in § 155.315(c)(1), and the
procedures used to verify eligibility for
qualifying coverage in an eligible
employer-sponsored plan, as specified
in § 155.320(d), except as specified in
§ 155.615(f)(2)(ii).
*
*
*
*
*
PART 156—HEALTH INSURANCE
ISSUER STANDARDS UNDER THE
AFFORDABLE CARE ACT, INCLUDING
STANDARDS RELATED TO
EXCHANGES
79. The authority citation for part 156
continues to read as follows:
■
Authority: Sections 1301, 1302, 1303,
1304, 1311, 1312, 1313, 1321, 1322, 1324,
1334, 1341, 1342, 1343, 1402, 1413, 1321,
1322, 1331, 1332, 1334, 1341, 1342, 1343,
1401, and 1402 of the Affordable Care Act,
Pub. L 111–148, 124 Stat 199.
80. Section 156.270 is amended by
revising paragraph (b) to read as follows:
■
§ 156.270 Termination of coverage for
qualified individuals.
*
*
*
*
*
(b) Termination of coverage notice
requirement. If a QHP issuer terminates
an enrollee’s coverage in accordance
with § 155.430(b)(1)(i), (ii), or (iii), the
QHP issuer must, promptly and without
undue delay:
(1) Provide the enrollee with a notice
of termination of coverage that includes
the termination effective date and
reason for termination.
(2) [Reserved]
*
*
*
*
*
Dated: May 28, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: May 31, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2013–16271 Filed 7–5–13; 11:15 am]
BILLING CODE 4120–01–P
E:\FR\FM\15JYR2.SGM
15JYR2
]]>Agencies
[Federal Register Volume 78, Number 135 (Monday, July 15, 2013)]
[Rules and Regulations]
[Pages 42159-42322]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16271]
[[Page 42159]]
Vol. 78
Monday,
No. 135
July 15, 2013
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
42 CFR Parts 431, 435, 436, et al.
Office of the Secretary
45 CFR Parts 155 and 156
-----------------------------------------------------------------------
Medicaid and Children's Health Insurance Programs: Essential Health
Benefits in Alternative Benefit Plans, Eligibility Notices, Fair
Hearing and Appeal Processes, and Premiums and Cost Sharing; Exchanges:
Eligibility and Enrollment; Final Rule
Federal Register / Vol. 78 , No. 135 / Monday, July 15, 2013 / Rules
and Regulations
[[Page 42160]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 431, 435, 436, 438, 440, 447, and 457
Office of the Secretary
45 CFR Parts 155 and 156
[CMS-2334-F]
RIN 0938-AR04
Medicaid and Children's Health Insurance Programs: Essential
Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair
Hearing and Appeal Processes, and Premiums and Cost Sharing; Exchanges:
Eligibility and Enrollment
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule implements 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. This final rule finalizes new Medicaid eligibility
provisions; finalizes changes related to electronic Medicaid and the
Children's Health Insurance Program (CHIP) eligibility notices and
delegation of appeals; modernizes and streamlines existing Medicaid
eligibility rules; revises CHIP rules relating to the substitution of
coverage to improve the coordination of CHIP coverage with other
coverage; and amends requirements for benchmark and benchmark-
equivalent benefit packages consistent with sections 1937 of the Social
Security Act (which we refer to as ``alternative benefit plans'') to
ensure that these benefit packages include essential health benefits
and meet certain other minimum standards. This rule also implements
specific provisions including those related to authorized
representatives, notices, and verification of eligibility for
qualifying coverage in an eligible employer-sponsored plan for
Affordable Insurance Exchanges. This rule also updates and simplifies
the complex Medicaid premium and cost sharing requirements, to promote
the most effective use of services, and to assist states in identifying
cost sharing flexibilities. It includes transition policies for 2014 as
applicable.
DATES: The effective date for the additions of 42 CFR 435.118, 435.603,
435.911, 435.949, 435.956, 435.1200, 457.315, 457.330 and 457.348;
amendments to 42 CFR 431.10, 431.11, 435.110, 435.116, 435.119,
435.907, 435.916, 435.940, 435.945, 435.948, 435.952, 457.340 and
457.350; the removal of 42 CFR 435.953 and 435.955; and the
redesignation of 42 CFR 435.911 through 435.914 as 42 CFR 435.912
through 435.915 in CMS-2349 (FR Doc. 2012-6560) published on March 23,
2012, which were to become effective in January 1, 2014 are now
effective October 1, 2013.
Other provisions of this final rule that are codified in title 42
of the Code of Federal Regulations are effective January 1, 2014 with
the exception of amendments to the following which are effective on
October 1, 2013: 42 CFR 431.10, 431.11, 431.201, 431.205, 431.206,
431.211, 431.213, 431.230, 431.231, 431.240, 435.119, 435.603, 435.907,
435.918, 435.1200, 457.110, 457.348, and 457.350; and the addition of
42 CFR 435.1205 and 457.370, which are effective on October 1, 2013.
Regulations in this final rule that are codified in title 45 of
Code of Federal Regulations are effective on September 13, 2013.
FOR FURTHER INFORMATION CONTACT:
Sarah deLone, (410) 786-0615, or Stephanie Kaminsky, (410) 786-4653,
for provisions related to revisions to eligibility notice and fair
hearing appeal processes and additional eligibility changes for
Medicaid and CHIP.
Melissa Harris, (410) 786-3397, for provisions related to essential
health benefits.
Leigha Basini, (301) 492-4307, for provisions related to Affordable
Insurance Exchanges.
SUPPLEMENTARY INFORMATION:
Executive Summary
This final rule implements 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). This
rule reflects new statutory eligibility provisions, implements changes
related to Medicaid and the Children's Health Insurance Program (CHIP)
eligibility notices, delegation of appeals, and other related
administrative procedures with similar procedures used by other health
coverage programs authorized under the Affordable Care Act. This final
rule also modernizes and streamlines existing rules.
This final rule amends the requirements applicable to Medicaid
benefit packages that provide benchmark or benchmark-equivalent
coverage, to include requirements to meet new minimum standards,
including the provision of essential health benefits, as required by
the Affordable Care Act. In an effort to bring consistency and clarity
to part 440, we are removing the terms ``benchmark and benchmark-
equivalent plan'' where they appear together and are replacing these
terms with ``Alternative Benefit Plan'' (ABP).
Beginning in calendar year 2014, individuals and small businesses
will be able to purchase private health insurance through competitive
marketplaces called Affordable Insurance Exchanges, or ``Exchanges.''
This final rule: (1) Specifies standards related to authorized
representatives, (2) outlines criteria related to the verification of
enrollment in and eligibility for minimum essential coverage through an
eligible employer-sponsored plan, and (3) further specifies or amends
other eligibility and enrollment provisions. This final rule does not
address proposed provisions regarding Exchange eligibility appeals, to
provide additional time for the careful development of standards that
can be effectively implemented, particularly for those regarding
coordination with Medicaid and CHIP. Additionally, this final rule does
not address proposed provisions regarding the Children's Health
Insurance Program Reauthorization Act of 2009 (CHIPRA), certified
application counselors in an Exchange and SHOP coordination with
individual market Exchanges. We intend to address these provisions in a
future issuance. The intent of this final rule is to afford each state
substantial discretion in the design and operation of the Exchange
established by the state, with greater standardization provided where
directed by the statute or where there are compelling practical,
efficiency or consumer protection reasons.
This final rule also updates and simplifies the complex Medicaid
premium and cost sharing requirements to promote the most effective use
of services and to assist states in identifying cost sharing
flexibilities.
Finally, this final rule provides notice that we are considering,
for purposes of the initial open enrollment period for enrollment in a
Qualified Health Plan through the Exchange, whether various provisions
of the Medicaid and CHIP regulations should be effective October 1,
2013, or whether a later effective date is appropriate.
In this final rule, we do not address all of the proposed
regulatory changes to 42 CFR parts 431, 435 and 457. We are focusing on
those changes that are most
[[Page 42161]]
needed to implement the changes made by the Affordable Care Act
starting in 2014. We intend to address certain of the other provisions
in future rulemaking.
Table of Contents
To assist readers in referencing sections contained in this
document, we are providing the following table of contents.
Executive Summary
I. Background
A. Medicaid Eligibility Final Rule Part II
B. Essential Health Benefits in Alternative Benefit Plans
C. Exchanges: Eligibility and Enrollment
D. Medicaid Premiums and Cost Sharing
II. Provisions of the Proposed Regulations and Analysis of and
Responses to Public Comments
A. Medicaid Eligibility Expansion Part II
1. Responses to General Comments
2. Appeals--Delegation of Authority To Conduct Medicaid Fair
Hearings
3. Notices
4. Medicaid Enrollment Changes Under the Affordable Care Act
Needed to Achieve Coordination with the Exchange
5. Medicaid Eligibility Requirements and Coverage Options
Established by Other Federal Statutes
6. Coordinated Medicaid/CHIP Open Enrollment Process
7. Children's Health Insurance Program Changes
8. Premium Assistance
9. Changes to Modified Adjusted Gross Income and MAGI Screen
10. Single State Agency--Delegation of Eligibility
Determinations to Exchanges
11. Conversion of Federal Minimum Income Standards for Section
1931 of the Act
B. Essential Health Benefits in Alternative Benefit Plans
1. General Comments
2. Alignment With Essential Health Benefits Provisions
3. Modifications in Applying the Provisions of This Final Rule
to Medicaid
4. All Other Title XIX Provisions Apply
5. Preventive Services as an EHB
6. Other Changes To Simplify, Modernize, and Clarify Medicaid
Benchmark Requirements and Coverage Requirements
7. Summary
C. Exchanges: Eligibility and Enrollment
1. Definitions
2. Approval of a State Exchange
3. Functions of an Exchange
4. Authorized Representatives
5. General Standards for Exchange Notices
6. Definitions and General Standards for Eligibility
Determinations
7. Options for Conducting Eligibility Determinations
8. Eligibility Standards
9. Eligibility Process
10. Verification Process Related to Eligibility for Enrollment
in a QHP Through the Exchange
11. Verifications Related to Eligibility for Insurance
Affordability Programs
12. Eligibility Redetermination During a Benefit Year
13. Annual Eligibility Redetermination
14. Administration of Advance Payments of the Premium Tax Credit
and Cost-Sharing Reductions
15. Coordination With Medicaid, CHIP, the Basic Health Program,
and the Pre-Existing Condition Insurance Plan
16. Special Eligibility Standards and Process for Indians
17. Enrollment of Qualified Individuals Into QHP's
18. Special Enrollment Periods
19. Termination of Coverage
D. Medicaid Premiums and Cost Sharing
1. Responses to General Comments
2. Definitions
3. Update to Maximum Nominal Cost Sharing
4. Higher Cost Sharing Permitted for Individuals With Incomes
Above 100 Percent of the FPL
5. Cost Sharing for Drugs
6. Cost Sharing for Emergency Department (ED) Services
7. Premiums
8. Limitations on Premiums and Cost Sharing
9. Beneficiary and Public Notice Requirements
III. Provisions of the Final Regulations
IV. Collection of Information Requirements
V. Regulatory Impact Analysis
Regulations Text
Acronyms and Terms
Because of the many organizations and terms to which we refer by
acronym in this final rule, we are listing these acronyms and their
corresponding terms in alphabetical order below:
[the] Act Social Security Act
Affordable Care Act The Affordable Care Act of 2010 (which is
the collective term for the Patient Protection and Affordable Care
Act (Pub. L. 111-148) and the Health Care and Education
Reconciliation Act (Pub. L. 111-152))
AFDC Aid to Families with Dependent Children
BBA Balanced Budget Act of 1997
BHP Basic Health Program
CHIP Children's Health Insurance Program
CHIPRA Children's Health Insurance Program Reauthorization Act of
2009
CMS Centers for Medicare & Medicaid Services
[the]Code Internal Revenue Code of 1986
DHS Department of Homeland Security
DOL U.S. Department of Labor
DRA Deficit Reduction Act of 2005
EITC Earned Income Tax Credit
EPSDT Early and periodic screening, diagnosis, and treatment
FEHBP Federal Employees Health Benefits Program (5 U.S.C. 8901, et
seq.)
FFE Federally-facilitated Exchange
FFP Federal financial participation
FMAP Federal medical assistance percentage
FPL Federal poverty level
HCERA Health Care and Education Reconciliation Act of 2010 (Pub. L.
111-152, enacted March 30, 2010)
HHS [U.S. Department of] Health and Human Services
IHS Indian Health Service
INA Immigration and Nationality Act
IRA Individual Retirement Account
IRC Internal Revenue Code of 1986
IRS Internal Revenue Service
MAGI Modified adjusted gross income
MEC Minimum Essential Coverage
MMEA Medicare & Medicaid Extenders Act of 2010 (Pub. L. 111-309,
enacted December 15, 2010)
OMB Office of Management and Budget
OPM U.S. Office of Personnel Management
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1995
PRWORA Personal Responsibility and Work Opportunity Reconciliation
Act of 1996
QHP Qualified Health Plan
Secretary Secretary of HHS
SEP Special enrollment period
SHOP Small Business Health Options Program
SMD State Medicaid Director
SNAP Supplemental Nutrition Assistance Program
SPA State Plan Amendment
SSA Social Security Administration
SSI Supplemental Security Income
SSN Social Security number
TANF Temporary Assistance for Needy Families
I. Background
A. Medicaid Eligibility Final Rule Part II
The Patient Protection and Affordable Care Act (Pub. L. 111-148,
enacted on March 23, 2010), was amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March
30, 2010). These laws are collectively referred to as the Affordable
Care Act. In addition, section 205 of the Medicare & Medicaid Extenders
Act of 2010 (Pub. L. 111-309, enacted December 15, 2010) (MMEA) and the
Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96,
enacted February 22, 2012) made additional amendments to the Social
Security Act (the Act) provisions affected by the Affordable Care Act.
The Affordable Care Act extends and simplifies Medicaid
eligibility, and on March 23, 2012, we issued a final rule (referred to
as the ``Medicaid Eligibility final rule'') addressing certain key
Medicaid and CHIP eligibility, enrollment, and renewal issues.
This final rule provides states with additional flexibility and
guidance for delegation of appeals and implementation of electronic
notices, and modernizes administrative procedures to further promote
coordination across multiple health coverage programs, including
enrollment in a qualified health plan
[[Page 42162]]
through the Exchange with advance payments of the premium tax credits
and cost-sharing reductions, as authorized by the Affordable Care Act,
Medicaid and the Children's Health Insurance Program (CHIP). These
coverage programs are collectively referred to as ``insurance
affordability programs.'' For more information on the legislative
overview, please refer to the Medicaid, CHIP, and Exchanges proposed
rule (78 FR 4594).
B. Essential Health Benefits in Alternative Benefit Plans
For plan, policy, or coverage years (as applicable) beginning in
2014, most health insurance coverage \1\ in the individual and small
group markets, Medicaid benchmark and benchmark-equivalent plans (now
also known as Alternative Benefit Plans (ABPs)), and Basic Health
Programs (if applicable) will be required to cover essential health
benefits (EHBs), consistent with the definition under section 1302 of
the Affordable Care Act and implementing regulations at 45 CFR Parts
147, 155, and 156, Patient Protection and Affordable Care Act;
Standards Related to Essential Health Benefits, Actuarial Value, and
Accreditation; Final Rule. Under that definition, EHBs include items
and services in 10 statutory benefit categories, such as
hospitalization, prescription drugs, and maternity and newborn care,
and are equal in scope of benefits to a typical employer plan, which
will constitute minimum coverage in an ABP.
---------------------------------------------------------------------------
\1\ For more information on status as a grandfathered health
plans under the Affordable Care Act, please see Interim Final Rule,
``Group Health Plans and Health Insurance Coverage Relating to
Status as a Grandfathered Health Plan Under the Patient Protection
and Affordable Care Act.'' Available at https://cciio.cms.gov/resources/regulations/#gp.
---------------------------------------------------------------------------
C. Exchanges: Eligibility and Enrollment
1. Legislative Overview
Section 1311(b) and section 1321(b) of the Affordable Care Act
provide that each state has the opportunity to establish an Exchange
that: (1) Facilitates the purchase of insurance coverage by qualified
individuals through qualified health plans (QHPs); (2) assists
qualified employers with the enrollment of their employees in QHPs; and
(3) meets other standards specified in the Affordable Care Act. Section
1311(k) of the Affordable Care Act specifies that Exchanges may not
establish rules that conflict with or prevent the application of
regulations promulgated by the Secretary under subtitle D of title I of
the Affordable Care Act. Section 1311(d) of the Affordable Care Act
describes the minimum functions of an Exchange, including the
certification of QHPs.
Section 1321 of the Affordable Care Act discusses state flexibility
in the operation and enforcement of Exchanges and related requirements.
Section 1321(c)(1) directs the Secretary to establish and operate an
Exchange within each state that either: (1) does not elect to establish
an Exchange, or (2) as determined by the Secretary on or before January
1, 2013, will not have an Exchange operational by January 1, 2014.
Section 1321(a) also provides broad authority for the Secretary to
issue regulations setting standards to implement the statutory
requirements related to Exchanges, QHPs, and other standards under
title I of the Affordable Care Act.
Section 1401 of the Affordable Care Act creates new section 36B of
the Internal Revenue Code of 1986 (the Code), which provides for a
premium tax credit for eligible individuals who enroll in a QHP through
an Exchange. Section 1402 of the Affordable Care Act establishes
requirements for reducing the cost-sharing obligations of eligible
individuals who enroll in a QHP through an Exchange, including special
cost-sharing rules for certain Indians.
Under section 1411 of the Affordable Care Act, the Secretary is
directed to establish a program for determining whether an individual
meets the eligibility standards for enrollment in QHPs through the
Exchange, advance payments of the premium tax credit, cost-sharing
reductions, and exemptions from the shared responsibility payment under
section 5000A of the Code.
Sections 1412 and 1413 of the Affordable Care Act and section 1943
of the Social Security Act (the Act), as added by section 2201 of the
Affordable Care Act, contain additional provisions regarding
eligibility for advance payments of the premium tax credit and cost-
sharing reductions, as well as provisions regarding simplification and
coordination of eligibility determinations and enrollment with other
insurance affordability programs.
This final rule supplements and amends provisions originally
published as the March 27, 2012 rule titled ``Patient Protection and
Affordable Care Act; Establishment of Exchanges and Qualified Health
Plans; Exchange Standards for Employers'' (hereafter referred to as
``Exchange Final Rule'') (77 FR 18310) which encompasses key functions
of Exchanges related to eligibility and enrollment.
Unless otherwise specified, the provisions in this final rule
related to the establishment of minimum functions of an Exchange are
based on the general authority of the Secretary under section
1321(a)(1) of the Affordable Care Act.
2. Stakeholder Consultation and Input
HHS has consulted with interested stakeholders on policies related
to the eligibility provisions and Exchange functions. HHS held a number
of listening sessions with consumers, providers, employers, health
plans, and state representatives to gather public input, and released
several documents for public review and comment. HHS also released a
bulletin that outlined our intended regulatory approach to verifying
access to employer-sponsored coverage and sought public comment on the
specific approaches.
Finally, HHS consulted with stakeholders through regular meetings
with the National Association of Insurance Commissioners (NAIC),
regular contact with states through the Exchange grant process,
consultation with Medicaid directors, and meetings with tribal leaders
and representatives, health insurance issuers, trade groups, consumer
advocates, employers, and other interested parties.
We considered input from these stakeholder meetings and in response
to the bulletin on verifying access to employer-sponsored coverage, as
well as comments provided in response to the proposed rule as we
developed the policies in this final rule.
3. Structure of the Final Rule
The regulations related to Exchanges and QHPs outlined in this
final rule are codified at 45 CFR parts 155 and 156. Part 155 outlines
the standards related to eligibility for insurance affordability
programs to facilitate a streamlined process for eligibility for
enrollment in a QHP through the Exchange and in insurance affordability
programs. Part 156 outlines the standards for health insurance issuers
for participation in an Exchange. This final rule:
Revises existing definitions and finalizes new definitions
to 45 CFR part 155 subpart A.
Provides a technical correction to 45 CFR part 155 subpart
B.
Finalizes standards related to authorized representatives
under 45 CFR part 155 subpart C.
Finalizes standards related to eligibility determinations
for enrollment in a QHP and for insurance affordability programs under
45 CFR part 155 subpart D.
Finalizes standards related to enrollment-related
transactions, special enrollment periods, and terminations under 45 CFR
part 155 subpart E.
[[Page 42163]]
Finalizes standards related to termination of coverage
under 45 CFR part 156 subpart C.
4. Alignment With Related Rules and Published Information
As noted above, on March 27, 2012, we published the Exchange final
rule. This final rule revises and supplements the Exchange final rule,
including by finalizing Exchange and Medicaid provisions associated
with the eligibility changes under the Affordable Care Act of 2010.
D. Medicaid Premiums and Cost Sharing
Section 1916 of the Act describes long-standing limitations and
requirements applicable in states that elect to provide for premiums
and other cost sharing under Medicaid. Under section 1916 of the Act,
certain individuals are protected from premiums and cost sharing, and
cost sharing cannot be imposed on certain services. Permissible cost
sharing under section 1916 of the Act is limited to ``nominal'' amounts
(except in some circumstances for non-emergency use of a hospital
emergency room). Section 1916 of the Act also establishes authority for
states to impose premiums on medically needy beneficiaries and specific
groups of individuals with family incomes above 150 percent of the
federal poverty level (FPL). The Deficit Reduction Act of 2005 (DRA)
established a new section 1916A of the Act, which gives states
additional flexibility, allowing for alternative premiums and cost
sharing beyond what is permitted under section 1916 of the Act for
somewhat higher income beneficiaries. Such alternative cost-sharing
approaches may be targeted to specific groups of individuals and
payment may be required as a condition of providing services. All
premiums and cost sharing imposed under sections 1916 and 1916A of the
Act cannot exceed 5 percent of a family's income. For more background
information on the streamlined and expanded flexibility regarding
premiums and cost sharing, please refer to (78 FR 4657 and 78 FR 4658).
We initially implemented the DRA authorities through regulations
that mirrored the dual statutory provisions by adding a set of
additional regulations on alternative cost sharing under section 1916A
of the Act to existing regulations setting forth the framework for cost
sharing under section 1916 of the Act. We believe states found this
duality confusing and, in this final rule, we have integrated the two
statutory authorities for premiums and cost sharing (sections 1916 and
1916A of the Act) into a unified framework.
II. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments
A. Medicaid Eligibility Part II Final Rule
In the January 22, 2013 Federal Register (78 FR 4594), we published
the proposed rule entitled ``Essential Health Benefits in Alternative
Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes
for Medicaid and Exchange Eligibility Appeals and Other Provisions
Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP,
and Medicaid Premiums and Cost Sharing.''
We received a total of 741 timely comments from individuals, state
Medicaid and CHIP agencies, advocacy groups, tribes and tribal
organizations, policy and research organizations, health care
providers, employers, insurers, and health care associations. The
comments ranged from general support or opposition to the proposed
provisions to very specific questions or comments regarding the
proposed changes.
In this final rule, we are only addressing some of the provisions
of the proposed rule. We are reserving action on other provisions and
intend to address those provisions in a subsequent final rule. We
discuss below only those public comments associated with provisions
addressed in this final rule.
We have revised some of the proposed regulations after careful
consideration of the comments received. Some comments were outside the
scope of the proposed rule, and therefore, are not addressed in this
final rule. In some instances, commenters raised policy or operational
issues that will be addressed through forthcoming regulatory and
subregulatory guidance to be provided subsequent to this final rule;
therefore, some, but not all comments are addressed in the preamble to
this final rule.
Brief summaries of the proposed provisions that are being finalized
in this rule, a summary of the public comments we received on those
provisions (except specific comments on the paperwork burden or the
economic impact analysis), and our responses to the comments are as
follows. Comments related to the paperwork burden and the impact
analyses are addressed in the ``Collection of Information
Requirements'' and ``Regulatory Impact Analysis'' sections in this
final rule.
The following sections summarize comments about the rule in
general, as well as specific comments about certain policies. It should
be noted that the summarized comments are structured to explain the
provisions being finalized and do not necessarily follow the order of
the regulation text:
1. Responses to General Comments
Generally, commenters were supportive of the policies in the
proposed rule to continue the process of streamlining Medicaid and CHIP
eligibility rules, policies and procedures; to support a consumer
friendly approach, and provide increased flexibility for states.
Comment: Several commenters were concerned about the complexity of
the proposed rules and the significance of the changes that need to be
made to fully implement the provisions of the Affordable Care Act. Many
commenters were concerned about the short timeframes for implementation
and about states' ability to make needed changes to policy, operations,
and information technology systems.
Response: We recognize that the timing of this final rule may
result in implementation challenges, especially from a systems
perspective. As such, we have evaluated the provisions of the January
proposed rule and are finalizing in this rule only those provisions
that we believe states are already in the process of implementing or
must be finalized to meet statutory deadlines. The remaining provisions
of the proposed rule will be addressed at a later date.
We will continue to work with states to support their
implementation efforts, ensure successful partnerships between states
and the federal government. We will also continue to offer intensive
technical assistance and support to states, and facilitate sharing of
experience and knowledge across states. Consistent with one commenter's
recommendation, we will also utilize other tools, including
subregulatory guidance and the State Operations and Technical
Assistance (SOTA) initiative to address additional state questions that
arise.
2. Appeals--Delegation of Authority To Conduct Medicaid Fair Hearings
We proposed to implement sections 1413 and 2201 of the Affordable
Care Act in part through procedures to coordinate Medicaid fair
hearings under section 1902(a)(3) of the Act concerning eligibility for
populations whose income is determined using modified adjusted gross
income (MAGI)-based methodologies of the Act with appeals
[[Page 42164]]
of eligibility determinations that are made using MAGI-based
methodologies by Exchanges for advance payment of premium tax credits
and cost-sharing reductions under section 1411(f) of the Affordable
Care Act. Consistent with the requirements to streamline and coordinate
eligibility determinations, under section 1943(b)(3) of the Act, as
added by section 2201 of the Affordable Care Act, we proposed to
provide states with an option to delegate the authority to conduct
appeals to an Exchange or Exchange appeals entity. The option is
similar to the option states have to delegate Medicaid eligibility
determinations to an Exchange under Sec. 431.10. We also proposed
changes to existing regulations at part 431 subpart E to support
further modernization and streamlining of the Medicaid fair hearing
process.
In this final rule, we are finalizing the provisions of our
proposed rule related to delegation of authority to conduct Medicaid
fair hearings to an Exchange and an Exchange appeals entity at sections
Sec. Sec. 431.10, 431.205(b), 431.206(d) and (e), 431.240 and the
proposed rule related to reinstatement of an application at Sec. Sec.
435.907(h) and 457.340(a). As discussed in section II.A.3. of this
final rule (relating to notices), we also are adopting proposed
revisions to the current regulations at sections Sec. Sec. 431.211,
431.213, 431.230, and 431.231, related to modernizing the process of
providing notices to applicants and beneficiaries of their fair hearing
rights and decisions. In addition to providing substantive comments on
the proposed regulations related to coordination of appeals across the
Exchange, Medicaid and CHIP, a number of commenters requested delayed
implementation of those provisions. To provide states with additional
time to consider and effectuate implementation of such coordination, as
well as to provide us with additional time to consider the comments
received, we are not addressing proposed provisions at Sec. Sec.
431.200, 431, 201, 431.205(e), 431.206(b), (c)(2), (e) as it relates to
accessibility under Sec. 435.905(b), 431.210, 431.220, 431.221,
431.224, 431.232, 431.241, 431.242, or 431.244. Further, we are not
addressing the definitions related to appeals proposed in 435.4, nor
the provisions related to coordination of appeals in Sec. 435.1200. We
expect to address these proposed provisions in a subsequent rulemaking.
Until final regulations are released, current rules in part 431,
subpart E continue to apply. We note that while we are not finalizing
our proposed rules relating to accessibility in the fair hearing
process or as it relates appeals and notices at Sec. 431.205(e) and
Sec. 431.206(e) at this time, fair hearing processes and notices must
continue to be provided in an accessible manner in accordance with
relevant federal statutes, including the Americans with Disabilities
Act and Title VI of the Civil Rights Act of 1964, as well as any
applicable state laws.
We received the following comments regarding the proposed
regulations related to delegation of fair hearings and reinstatement of
applications in certain circumstances, which we are addressing in this
rulemaking:
Comment: Many commenters supported our approach to permit
delegation of fair hearings to an Exchange or Exchange appeals entity
so that an integrated hearing could be conducted to address Medicaid
and Exchange-related eligibility issues together. We also received
comments supporting the proposals to streamline and simplify our
current fair hearings rules. While not providing specific
recommendations, the commenters asked that we consider additional
measures to coordinate Medicaid and Exchange eligibility appeals even
more effectively. A few commenters requested that the final rule
maintain state flexibility for states to retain the Medicaid appeals
function within the Medicaid agency.
Several commenters were concerned that our proposed rules require
duplicative processes because states must maintain the infrastructure
and capacity to hear MAGI-based appeals, even if the state delegates
the authority to conduct fair hearings to an Exchange. One commenter
requested that we eliminate the requirement at proposed Sec.
431.10(c)(1)(ii) and Sec. 431.205(b)(1)(ii) that an individual be
provided an opportunity to request a fair hearing before the Medicaid
agency when the state has otherwise delegated authority to conduct the
individual's fair hearing to the Exchange, and instead make this
provision a state option. The commenter believed that this requirement
would undermine the efficiencies achieved through delegation. Another
commenter recommended that only one hearing opportunity be made
available to individuals, instead of requiring a hearing if determined
ineligible for Medicaid and a hearing related to the eligibility for
advance payment of premium tax credits and cost-sharing reductions.
Response: We appreciate the support for the proposal to permit
states to delegate MAGI-based eligibility appeals to an Exchange or
Exchange appeals entity. We note that such delegation is at state
option. States are not required to delegate such authority, but may
continue to have the Medicaid agency conduct all Medicaid fair
hearings.
We understand commenters' concern about duplication of effort in
requiring that Medicaid agencies retain an infrastructure independent
of the Exchange appeals process to conduct MAGI-based Medicaid
eligibility appeals when the state has delegated authority for MAGI-
based eligibility appeals to an Exchange. There are two key reasons why
the Medicaid agency must maintain its own appeals infrastructure.
First, an individual whose application for Medicaid is denied or not
acted upon with reasonable promptness has a right under section
1902(a)(3) of the Act to an opportunity for a fair hearing before the
Medicaid agency. We do not anticipate that individuals will necessarily
prefer to have their appeal heard by the Medicaid agency, but the
statute requires that the option be provided in such delegation through
our regulations. Second, in a state where the Federally-facilitated
Exchange (FFE) is operating, the HHS appeals entity will only conduct
appeals related to MAGI-based eligibility determinations made by the
FFE. Thus, in states where the FFE is operating, the Medicaid agency
will need to conduct all Medicaid fair hearings related to MAGI-based
eligibility determinations made by the Medicaid agency. For these
reasons, we are finalizing the requirement as proposed.
States have options to streamline the appeals infrastructure and
reduce the number of appeals that will come before the Medicaid agency,
in addition to the options to delegate Medicaid appeals authority under
this final rule as discussed above. In a state that has established a
state-based Exchange, the state Medicaid agency may delegate authority
to conduct fair hearings of MAGI-based determinations to the state-
based Exchange by requesting a waiver under the Intergovernmental
Cooperation Act of 1968 (ICA), as long as the state-based Exchange is a
state agency and the state can assure sufficient oversight of the
delegated fair hearing process. As we noted in the preamble to the
proposed rule, when a state has an ICA waiver permitting delegation of
fair hearings to another state agency, the state is not required to
offer individuals an option to have their hearing conducted by the
Medicaid agency.
In states where the FFE is operating, a state Medicaid agency that
allows the FFE to make a Medicaid eligibility
[[Page 42165]]
determination delegating such authority under Sec. 431.10(c)(1)(i) has
appeal delegation options not available to a State that proceeds with
the assessment model. If the Medicaid agency authorizes the FFE to make
MAGI-based eligibility determinations, the agency may also delegate
authority to the HHS appeals entity to conduct fair hearings related to
determinations of Medicaid ineligibility made by the FFE, establishing
an integrated appeals process with simultaneous appeals related to a
determination of advance payments of the premium tax credits or cost-
sharing reductions. The Medicaid agency would still need to maintain
the ability to conduct fair hearings for eligibility determinations and
denials made by the Medicaid agency, as well as when delegations are
made under these regulations for individuals who opt out of a
coordinated appeal before the Exchange or Exchange appeals entity, and
specifically request a hearing before the Medicaid agency. States will
also need to continue to conduct fair hearings related to non-MAGI
based eligibility determinations, as well as fair hearings related to
termination, suspension, or reduction of covered benefits and other
adverse determinations.
Finally, with respect to the recommendation that a right to only
one hearing be made available, we note that there are two separate
statutory authorities for appeals related to Medicaid and enrollment in
a QHP and eligibility for APTC and cost sharing reductions, at section
1902(a)(3) of the Act and section 1411(f) of the Affordable Care Act,
respectively. While we permit states to integrate these hearings and
processes as much as possible, both state Medicaid agencies and the
Exchange have distinct responsibilities to provide for such hearings,
and we do not have authority to eliminate individuals' statutory
rights, or a Medicaid agency's or Exchange's statutory responsibility.
We note that we are not addressing in this final rule the proposed
requirements relating to coordination of notices. Those proposed rules
will be addressed in future rulemaking.
Comment: Several commenters requested clarification of our
proposals on delegation of Medicaid appeals to the FFE, a state-based
Exchange, or a state with a partnership with the FFE. In addition,
commenters sought clarification regarding when an individual's appeals
rights are triggered in states which have delegated authority to make
Medicaid eligibility determinations to the Exchange versus states in
which the Exchange will make only an assessment of potential Medicaid
eligibility. A few commenters requested clarification about whether a
delegation of authority to conduct Medicaid fair hearings to a state-
based Exchange would extend to an appeal to the HHS appeals entity. The
commenters were concerned that appeals could not be coordinated at the
HHS appeals entity, rendering meaningless any efforts to achieve
coordination at the state level.
Response: States may choose to delegate authority to conduct
Medicaid fair hearings for MAGI-based eligibility determinations to the
Exchange operating in the state regardless of whether the Exchange is
the FFE, the state-based Exchange or a partnership between the state
and the FFE in accordance with the final rules at Sec. 431.10(c) and
(d). There is no difference in the delegation authority under the
regulations, as proposed or as finalized, based on the type of
Exchange. In accordance with such delegation, the Exchange or Exchange
appeals entity may provide a fair hearing on Medicaid issues, but
individuals must have the option to have their Medicaid fair hearing
heard directly before the single state agency. As discussed below,
states with state-based Exchanges that are state governmental agencies
also have an additional way to coordinate appeals, beyond delegation
under our rules, through a waiver granted under the Intergovernmental
Cooperation Act. Under such a waiver, individuals would not have a
right to have their Medicaid appeal heard by the single state agency.
In a state that has delegated authority to the Exchange to make
Medicaid eligibility determinations based on MAGI, individuals have the
right to request a fair hearing when the Exchange has determined the
individual ineligible for Medicaid based on MAGI. Thus, the
determination of ineligibility by the Exchange will trigger the
individual's appeal rights. If the state has delegated authority to the
Exchange to conduct fair hearings under these regulations, such an
individual found ineligible for Medicaid by the Exchange could request
a fair hearing at the Exchange or Exchange appeals entity so that there
would be one integrated hearing conducting the Exchange-related and
Medicaid appeals at the same time, or the individual may instead
request his or her Medicaid issue be heard at the Medicaid agency. If,
an individual who is found by the Exchange to be not eligible for
Medicaid based on MAGI seeks a determination based on non-MAGI
criteria, the individual's electronic account is transferred to the
Medicaid agency for a full evaluation by the agency in accordance with
Sec. 155.345(b) or (c) of the March 2012 Exchange eligibility final
rule. If the Medicaid agency still determines the individual
ineligible, he or she would be able to appeal that decision using the
Medicaid agency's fair hearing process.
In states in which the Exchange will make an assessment of Medicaid
eligibility, and will not make final Medicaid eligibility
determinations or denials, an assessment of ineligibility for Medicaid
based on MAGI will not trigger Medicaid appeal rights. This is because
an assessment is not a final Medicaid eligibility determination. As
indicated in Sec. 155.302(b)(4) of the March 2012 Exchange rule, as
revised in this rulemaking, applicants assessed by the Exchange as not
potentially eligible for Medicaid based on MAGI but as potentially
eligible for Medicaid on another basis will be transferred to the
Medicaid agency for a full Medicaid determination; for these
applicants, Medicaid appeal rights will be triggered when the Medicaid
agency makes a final eligibility determination. Under Sec.
155.302(b)(4), applicants assessed as not potentially eligible for
Medicaid on any basis will have a choice whether to withdraw their
Medicaid application or obtain a full determination by the Medicaid
agency. If the applicant withdraws his or her Medicaid application, a
final determination or denial of Medicaid will not be made, and
therefore no appeal rights arise at that point. (The applicant will
have the ability to reinstate their Medicaid application in certain
circumstances, discussed more fully below). When an applicant obtains a
formal determination by the Medicaid agency, the Medicaid agency's
determination will trigger appeal rights, if applicable.
Finally, if a state agency delegates authority to conduct MAGI-
based eligibility appeals to an Exchange, including a state-based
Exchange, in accordance with Sec. 431.10(c) and (d) of this final
rule, such a delegation would extend to any government agency
adjudicating an Exchange appeal, including the HHS appeals entity. We
note, however, that if a state delegates authority to conduct fair
hearings through an ICA waiver to another state agency, including a
state-based Exchange or state-based Exchange appeals entity, Medicaid
decisions made by that entity could not be appealed to the HHS appeals
entity. The ICA waiver is a waiver of single state agency requirements
that permits alternative arrangements of state agency functions to
another state agency. Once
[[Page 42166]]
such an agency has issued a decision after a Medicaid fair hearing,
that Medicaid decision would be the final decision of the Medicaid
agency and thus no further right of appeal would be available to the
individual. If the individual decided to appeal his or her advance
payment of premium tax credit, cost-sharing reduction or Exchange
eligibility decision to the HHS appeals entity, that entity would need
to adhere to the Medicaid appeals entity decision under Sec.
155.302(b)(5), as revised in this final rule, and Sec. 155.345(h)
which will prevent inconsistent decisions between the HHS appeals
entity and the state-based Exchange or Exchange appeals entity.
Comment: Many commenters requested clarification on the scope of
fair hearings that may be delegated from a Medicaid agency to an
Exchange or Exchange appeals entity. Commenters specifically requested
clarification regarding whether fair hearings of eligibility
determinations on bases other than MAGI may be delegated to an Exchange
or Exchange appeals entity, and whether findings other than MAGI-based
income determinations may be delegated to an Exchange or Exchange
appeals entity.
Response: The term ``MAGI-based determinations'' is used to refer
to determinations in which financial eligibility is determined using
the MAGI-based methods described in Sec. 435.603 of the March 2012
final Medicaid eligibility rule. However, in accordance with Sec.
435.911(c) of the March 2012 final Medicaid eligibility rule, a
determination of eligibility based on MAGI also entails a determination
that an individual meets the non-financial conditions of eligibility,
including state residency and citizenship or satisfactory immigration
status, and the denial of eligibility for an individual considered for
coverage under a MAGI-based eligibility group may be based on failure
to meet any of the financial or non-financial conditions of
eligibility. A delegation of fair hearing authority under Sec.
431.10(c)(1)(ii) to an Exchange or Exchange appeals entity regarding a
denial of MAGI-based eligibility will need to address any or all of the
bases of denial, just as a fair hearing conducted by the Medicaid
agency would. We note that we have made some technical modifications to
the regulation text at Sec. 431.10(c)(1)(ii) to help clarify this
point. As also noted in the preamble to the proposed rule, we remind
states that while all appeals for an individual with a MAGI-based
eligibility determination may be delegated to an Exchange or Exchange
appeals entity under the regulation at Sec. 431.10(c)(1)(ii), the FFE
will only accept a delegation of appeals involving determinations
rendered by the FFE.
The permissible scope of delegation under Sec. 431.10(c)(1)(ii) to
an Exchange or Exchange appeals entity is limited to appeals of MAGI-
based eligibility determinations. Appeals related to denials of
eligibility for individuals excepted from application of MAGI-based
methodologies (for example, eligibility based on disability) may not be
delegated under the regulation. As discussed above, states may delegate
such appeals to another state agency, including a state-based Exchange,
by requesting an ICA waiver.
Comment: One commenter asked whether there is a timeframe under
which the individual must request a fair hearing before the Medicaid
agency to effectuate the requirement under Sec. 431.10(c)(1)(ii) that
the state agency must provide an individual an option to have his or
her Medicaid appeal conducted at the Medicaid agency when delegating
authority to conduct fair hearings to an Exchange or Exchange appeals
entity.
Response: An individual must be provided the opportunity to opt to
have his or her Medicaid appeal adjudicated at a hearing conducted at
the Medicaid agency, instead of having his or her appeal for both
enrollment in a QHP and eligibility for APTC and CSR and eligibility
for Medicaid addressed at an integrated hearing at the Exchange or
Exchange appeals entity. Section 431.206(d) specifies that the
individual must be informed of how to exercise this right. We note that
we clarify our proposed regulation at Sec. 431.206(d) to require that
individuals must be informed of this option in writing. We are revising
the regulation text at Sec. 431.10(c)(1)(ii) to clarify that the
request for a hearing before the Medicaid agency would need to be
requested instead of the Exchange hearing. While we are not specifying
a specific timeframe, we would expect that if an individual was opting
for a hearing before the Medicaid agency, that request would be made at
the time that the individual is requesting a hearing. Thus, we finalize
these proposed regulations with these minor modifications.
Comment: Many commenters believed that delegation of fair hearing
authority under the regulation should be permitted. Some of the
commenters emphasized the need to permit delegation only in the
simplest manner reducing burden to the consumer, and without any
duplication of appeals processes. A few commenters suggested we permit
delegation under the regulation only to an independent state agency
employing Administrative Law Judges, and that delegation to any other
state agency still require an ICA waiver to ensure transparency and
opportunity for stakeholder input. A few commenters asked for
clarification of the conditions and process required when requesting an
ICA waiver. One commenter opposed delegation of authority to conduct
fair hearings to any other state or Exchange entity stating that any
delegation is duplicative, as state agencies still will be required to
conduct Medicaid MAGI-based hearings.
Response: Under proposed Sec. 431.10(c)(1)(ii), states would be
able to delegate authority to conduct MAGI-based fair hearings to an
Exchange or Exchange appeals entity, but to delegate Medicaid fair
hearings to another state agency, states would need to request an ICA
waiver. We sought comment on whether states also should be permitted to
delegate authority to conduct fair hearings to another state agency
under the regulation.
The purpose of the proposed rule is to promote coordination of
appeals and simplification of the appeals process by permitting
delegation of Medicaid appeals to the Exchange or Exchange appeals
entity. Because coordination between insurance affordability programs
is a key goal of the Affordable Care Act, we are finalizing, with minor
modifications, the proposed regulations at Sec. 431.10(c)(1)(ii) and
at Sec. 431.205(b)(1)(ii) to permit delegation of authority to conduct
Medicaid fair hearings for denials of MAGI-based eligibility to the
Exchange or Exchange appeals entity, including the FFE, state-based
Exchange or HHS or state-based Exchange appeals entity, provided these
entities are government agencies or public authorities that maintain
personnel standards on a merit basis. After consideration of the
comments, we have determined not to extend authority to delegate
Medicaid fair hearings to state agencies other than a state-based
Exchange or an Exchange appeals entity under the regulations because it
is already allowed through an ICA waiver. We note that the main goal
and justification for the delegation of fair hearings under the
regulation is to achieve coordination across insurance affordability
programs, something which would not be served by delegation to another
state agency. Furthermore, Medicaid agencies already can delegate
conduct of fair hearings to other state agencies through an ICA waiver,
and there is nothing additional that states would be able to accomplish
[[Page 42167]]
through delegation under the regulation as opposed to an ICA waiver.
Indeed, the flexibility available to states under an ICA waiver is
greater than that which is available under the regulation since
delegation of fair hearings under an ICA waiver does not require that
states provide individuals a right to opt for a hearing before the
Medicaid agency, nor would the delegation be limited to MAGI-related
appeals.
We have and will continue to apply similar conditions to the
delegation of fair hearings under an ICA waiver as those we require
under Sec. 431.10(c) and (d). As explained in the proposed rule, an
ICA waiver may be requested through a straightforward process using a
state plan amendment (SPA), and CMS staff is available to provide
technical assistance to states in completing that process. We note that
our rules relating to hearing officers do not require that hearing
officers be Administrative Law Judges or set any particular
qualifications for hearing officers other than impartiality. States
have flexibility to set such requirements in implementing fair hearings
as they see appropriate. Thus, we do not set standards regarding the
qualifications of hearing officers for states that delegate authority
to conduct fair hearings or specify rules if the state agency employs
Administrative Law Judges in this final rule.
Comment: One commenter expressed concern that the proposal to
remove Sec. 431.10(e)(2) and (e)(3) weakens the single state agency
authority when delegating authority to conduct appeals to another
agency. Other commenters supported the removal of those paragraphs
because they are inconsistent with the goals of delegation of authority
of appeals.
Response: We are finalizing our proposal to remove paragraphs Sec.
431.10(e)(2) and (e)(3) as they are inconsistent with the option to
delegate the authority to conduct fair hearings to an Exchange. We
believe that the proposed language in Sec. 431.10(e), which we are
finalizing without modification, clearly provides that only the
Medicaid agency may develop and issue rules and policy related to the
Medicaid program.
Comment: Several commenters requested clarification of the kinds of
conclusions of law that could be subject to review by the agency under
Sec. 431.10(c)(3)(iii). They also asked how the agency review process
a state may establish to decisions made by an Exchange or Exchange
appeals entity conducting Medicaid fair hearings under this provision
relates to the ``trumping rule'' at Sec. 155.302(b)(5), which provides
that if an appeals decision rendered by the Exchange or Exchange
appeals entity conflicts with a fair hearing decision concerning the
same individual rendered by the Medicaid agency, the Exchange must
adhere to the Medicaid fair hearing decision. A number of commenters
supported the limitation of the agency review process to conclusions of
law. One commenter requested that the option be extended to findings of
fact. Others recommend that the option be eliminated altogether. These
commenters discussed that any review by the state agency of a hearing
officer's legal or factual conclusions would violate the due process
protections afforded under Goldberg v. Kelly to have the appeal decided
by a neutral arbiter. One commenter suggested that the regulation at
Sec. 431.10(c) specify the timeframe in which the Exchange or Exchange
appeals entity be required to issue a decision for the state agency to
complete its review within the time limits set forth in Sec. 431.244.
Response: We are finalizing this provision as proposed with minor
revisions to clarify the scope of the review process. We note the
provision at Sec. 431.10(c)(3)(iii) is a state option for Medicaid
agencies to establish a process that permits a limited review of the
decisions made by the Exchange or Exchange appeals entity to ensure
Medicaid fair hearings are made with the proper application of federal
and state Medicaid law and regulations, including subregulatory
guidance and written interpretive policies. The proposed regulation
text is being revised to clarify the scope of what the agency may
review would be limited to the legal conclusions made during the fair
hearing to ensure that they appropriately apply federal and state
Medicaid law and regulations, including subregulatory guidance and
written interpretive policies properly and that the review process be
conducted by an impartial official who was not directly involved in the
initial determination.
By way of example, suppose that the Exchange hearing officer finds
that an individual has $800 in wages and $200 in child support income
each month and, based on these amounts, concludes that the individual's
MAGI-based household income is $1,000 per month. Suppose also that the
applicable income standard for the applicable household size for this
individual is $900 per month, and that the hearing officer upholds the
initial denial of eligibility. The findings of $800 in wages and $200
of child support per month would be factual findings, which the
Medicaid agency could not review under the option provided at Sec.
431.10(c)(3)(iii). However, the hearing officer's inclusion of the
wages and child support income in total MAGI-based household income
involves an application of MAGI-based methodologies, described in Sec.
435.603 of the March 2012 Medicaid eligibility final rule, as
implemented by the state, which would be reviewable as a conclusion of
law. In this case, the inclusion of wages would be correct, but the
inclusion of child support income would be incorrect, and the agency
upon finding such an erroneous application of state or federal rules
could reverse the hearing officer's decision to conclude that, based on
household income of $800, the individual is Medicaid eligible.
Because of the important role that an impartial hearing officer
plays in evaluating evidence and weighing credibility in making
findings of fact, we are not extending the option at Sec.
431.10(c)(3)(iii) to include agency review of findings of fact. We note
that fair hearings conducted under a delegation of authority in
accordance with Sec. 431.10(c)(1)(ii) must be conducted in accordance
with Sec. 431.10(d)(1), which requires that the delegation agreement
between the agency and the Exchange or Exchange appeals entity must set
forth the responsibilities of each party to effectuate the provisions
of part 431 subpart E of the regulations. Section 431.205(d) provides
that the fair hearing process under subpart E must meet the due process
standards set forth in Goldberg v. Kelly, 397 U.S. 254 (1970), which
requires that any review process be conducted by an impartial official,
and be based solely on the information and evidence in the record. We
have made a minor modification to Sec. 431.205(b)(1)(ii) to clarify
that the hearing process provided through delegation of authority to
conduct a fair hearing to an Exchange or Exchange appeals entity would
include the review by the agency of the Exchange or Exchange appeal
entity's application of federal and state Medicaid law and regulations,
if such review is elected by the state under Sec. 431.10(c)(3)(iii)
and conducted by an impartial official who was not directly involved in
the initial determination. We note also that the state's election under
Sec. 435.10(c)(3)(iii) to conduct this limited review does not create
a right for the individual to request or receive a de novo hearing
before the agency.
The review process that can be established under Sec.
431.10(c)(3)(iii) functions completely independently from the
``trumping rule'' at Sec. 155.302(b)(5) of the Exchange proposed rule.
The former comes into
[[Page 42168]]
play when an individual's fair hearing has been delegated to, and is
heard by, the Exchange or Exchange appeals entity. The ``trumping
rule'' at Sec. 155.302(b)(5) as modified by this rulemaking and at
Sec. 155.345(h) is invoked when the Medicaid agency has conducted the
Medicaid fair hearing relating to the appeal of a denial of Medicaid
eligibility and the Exchange or Exchange appeals entity also has
conducted a hearing related to an appeal of an award of advance
payments of premium tax credits. Similar to the ``trumping rule'' at
Sec. 155.302(b)(5) of the March 2012 Exchange final rule relating to
initial eligibility determinations, if the Medicaid agency's fair
hearing decision conflicts with the Exchange appeals decision, the
Exchange must adhere to the Medicaid agency or fair hearing decision
for Medicaid eligibility under Sec. 155.302(b)(5) and Sec.
155.345(h).
Finally, we do not believe it is necessary to require in the
Medicaid regulations specified timeframes within which an Exchange, in
conducting a delegated fair hearing, must transmit a decision to the
Medicaid agency. Instead, as part of the agreement required under Sec.
431.10(d), in delegating the fair hearing authority to the Exchange or
Exchange appeals entity, the parties will need to stipulate each
party's responsibilities to ensure that the time frames established
under Sec. 431.244(f) are met.
Comment: One commenter sought clarification of whether the review
process of appeal decisions made by the Exchange which the commenter
expressed as ``required'' at Sec. 431.10(c)(3)(iii) is considered in
the agency's quality assurance Payment Error Rate Measurement (PERM)
sampling.
Response: The regulation at Sec. 431.10(c)(3)(iii) does not set a
requirement, but provides states an option to establish a review
process of appeal decisions as a part of its oversight of the
delegation of authority to conduct fair hearings to an Exchange or
Exchange appeals entity. We note the agency has other means to oversee
its delegation of authority to conduct hearings. Implications for PERM
are beyond the scope of this regulation; we intend to issue additional
guidance on PERM.
Comment: Many commenters supported the reinstatement of an
individual's Medicaid application at Sec. 435.907(h) when the
individual had withdrawn his or her application after an assessment of
Medicaid ineligibility by the Exchange, appealed the level of APTC and
CSR awarded by the Exchange, and the Exchange or Exchange appeals
entity reversed the initial assessment and found the individual to be
potentially eligible for Medicaid. A few commenters sought
clarification regarding the retroactive nature of the reinstatement
effective as of the date the individual submitted the application to
the Exchange. Another commenter asked how this provision relates to the
timeliness requirements for Medicaid agencies to process an application
under Sec. 435.912 of the March 2012 Medicaid eligibility final rule.
A few commenters raised a concern that if an Exchange appeals entity
hearing officer upholds the finding of eligibility for advance payment
for premium tax credit, the reinstatement would not take effect. These
commenters recommended that the Medicaid application be reinstated
whenever an individual files an appeal with the Exchange or Exchange
appeals entity to capture a broader set of individuals who may be
eligible for Medicaid or CHIP.
Response: We appreciate the support for the provision at Sec.
435.907(h) to reinstate the Medicaid application of an individual who
has withdrawn his or her Medicaid application upon initial assessment
of Medicaid ineligibility by the Exchange, but who is subsequently
assessed as potentially Medicaid eligible following an appeal related
to an award of advance payments of the premium tax credits or cost
sharing reductions. We are finalizing this provision as proposed,
except to clarify that the 45-day or 90-day timeliness standards do not
apply to these reinstated applications. By the time the Exchange appeal
decision is rendered, 45 or 90 days from the date of application may
already have elapsed, making compliance by the Medicaid agency
unrealistic. Instead we clarify that the timeliness standards required
under Sec. 435.912 of the March 2012 Medicaid eligibility final rule
apply based on the date the application is reinstated. However, we note
that the 45 and 90 days prescribed in the regulation represent the
outer limit for all applications. In the case of a reinstated
application which has been the subject of an Exchange appeal, we would
expect that the individual's electronic account would be comprehensive,
and that considerably less time would be needed for the Medicaid agency
to act on the case. We would expect states to take this into account in
establishing timeliness standards for prompt determinations on
reinstated applications under Sec. 435.911(c) and Sec. 435.912 of the
March 2012 Medicaid eligibility final rule. The reinstated application
must be made effective retroactive to the date the individual submitted
his or her application to the Exchange (not the date the application is
reinstated) to protect the effective date of coverage required under
Sec. 435.914 of the current regulations (redesignated at Sec. 435.915
in the March 2012 Medicaid eligibility final rule). We also proposed a
similar application reinstatement provision for CHIP at Sec.
457.340(a), which we are finalizing as proposed with a minor
modification to remove the reference to Sec. 435.909 which was
inadvertently inserted in the proposed rule and has no relationship to
CHIP. We note that states also will need to develop reasonable
timeliness standards for such reinstated applications in accordance
with Sec. 457.340(d) of the March 2012 Medicaid eligibility final
rule.
We have not modified the proposed regulation text to reinstate the
Medicaid or CHIP application of every individual who has withdrawn his
or her Medicaid or CHIP application in accordance with Sec.
155.302(b)(4) of the March 2012 Exchange final eligibility rule and who
then subsequently appeals the determination of eligibility for advance
payments of the premium tax credits or cost-sharing reductions at Sec.
435.907(h) and Sec. 457.340(a). We believe that the interests of
individuals filing an Exchange appeal who should have been assessed as
potentially Medicaid eligible by the Exchange, but who nonetheless
withdrew their Medicaid application following the Exchange's
assessment, will be protected through the Exchange appeals process
because the Medicaid application for those assessed potentially
Medicaid eligible will be reinstated, and their account transferred to
the Medicaid agency for a full determination. On the other hand, to
reinstate the Medicaid application of every applicant for whom the
Exchange appeals processes ultimately confirms the initial assessment
of Medicaid ineligibility made by the Exchange--regardless of how high
above the Medicaid income standard the individual's income may be--
would create confusion for individuals and impose, we believe,
unnecessary administrative burden on state Medicaid agencies. We expect
to work closely with Exchanges to ensure accurate assessments of
Medicaid and CHIP eligibility in accordance with federal regulations.
Comment: One commenter sought clarification of when Medicaid
agencies will have to decide whether or not to delegate eligibility
determinations or fair hearings to the Exchange, and whether there will
be additional
[[Page 42169]]
requirements if the agency chooses not to delegate such responsibility.
Response: There is no deadline to elect to delegate eligibility
determinations or appeals to an Exchange or Exchange appeals entity. As
discussed in section II.A.6. of preamble, the regulation permitting
delegation of eligibility and fair hearings goes into effect on October
1, 2013. Once a state decides to delegate authority to conduct
eligibility or appeals, it must indicate such an election through the
state plan, establish a written agreement with the Exchange or Exchange
appeals entity, and otherwise comply with the provisions set forth in
the regulation. A state may revoke its delegation at a later time
through the same process. Whether or not a state chooses to delegate
authority, it must comply with the provisions of Sec. 435.1200, Sec.
457.348 and Sec. 457.350, issued in the March 2012 Medicaid
eligibility final rule, to ensure coordination across all insurance
affordability programs and a seamless consumer experience. We proposed
revisions to these provisions in the January 2013 proposed rule to
address the agencies' responsibilities to coordinate notices and
appeals, but are not finalizing them in this final rule.
Comment: One commenter questioned whether a state might be able to
obtain the enhanced matching funds for systems enhancement at a 90/10
match for enhancement of their appeals systems. Another commenter asked
for clarification as to whether federal financial participation (FFP)
would be available for appeals delegated to an Exchange.
Response: The enhanced FFP match rate of 90/10 for the design,
development, and installation of eligibility systems is available only
for components of the Medicaid Management Information System (MMIS),
including eligibility and enrollment systems through the end of 2015,
subject to meeting the seven conditions and standards outlined in the
April 19, 2011 final rule at 74 FR 21950. A 75/25 match rate is
available for operations and maintenance of these systems. Appeals
systems do not qualify for enhanced funding under these rules. Instead,
FFP at a 50/50 rate is available. For more details on 75/25 match rate
discussion, see https://www.medicaid.gov/State-Resource-Center/FAQ-Medicaid-and-CHIP-Affordable-Care-Act-ACA-Implementation/Downloads/Affordable-Care-Act_-Newest-Version.pdf. The availability of FFP and
responsibility for funding subject to cost allocation rules applies to
administration of fair hearings in the same manner as any other context
and is not affected by the state's delegation decision.
Comment: A few commenters suggested that we revise Sec. 431.240 to
require that hearing officers who adjudicate Medicaid fair hearings
abide by specific ethical standards, either the National Association of
Hearing Officials' Model Code of Ethics or the National Association of
Administrative Law Judiciary's Model Code of Judicial Conduct for State
Administrative Law Judges. We did not receive any comments related to
our proposed modification of Sec. 431.240 related to access to
information.
Response: As discussed above, existing regulation at Sec. 431.240
require hearing officers to be impartial. Additionally, existing
regulations at Sec. 431.205 require hearing systems to comport with
due process standards of Goldberg v. Kelly, 397 U.S. 254 (1970).
Current regulations do not require hearing officers to belong to a
particular profession, and we did not propose to modify this policy in
the proposed rule. Therefore, we are not making any changes to Sec.
431.240 in response to this comment. However, as noted above, we are
addressing this comment, in part, by including that an impartial
decision-maker must be used if a state is electing to establish a
review process of legal conclusions made by hearing officers operating
under delegated fair hearing authority. We also encourage states to
examine this issue further and to ensure that the requirement to
utilize impartial hearing officers at Sec. 431.240 are adhered to when
conducting fair hearings. We finalize Sec. 431.240(c) without
modification.
3. Notices
a. Electronic Notices (Sec. 435.918)
Current notice regulations require paper-based, written notices. To
establish a more timely and effective notification process, proposed
Sec. 435.918 would direct states to provide individuals with the
option to receive notices through a secure, electronic format in lieu
of written notice by regular mail. Consumer safeguards were proposed to
ensure that individuals make a conscious choice to receive notices in
electronic format, and would be able to opt-in and opt-out of their
election. We solicited comments regarding the proposed consumer
safeguards. In addition, we requested comments on whether other types
of communications, in addition to eligibility notices, should be
offered in electronic format. We are finalizing Sec. 431.206(e), to
permit beneficiaries to receive notices regarding fair hearings
electronically, consistent with proposed Sec. 435.918. We note that we
are not addressing in this final rule comments related to accessibility
of fair hearing notices. We will consider these comments and this
portion of Sec. 431.206(e) when we finalize our rules related to
accessibility for individuals who are limited English proficient and
individuals with disabilities in a future rulemaking. We also proposed
modifications to Sec. Sec. 431.211, 431.213, 431.230, and 431.231 to
update and modernize the language in the regulation to remove the term
``mail'' and instead use ``send,'' to reflect the option for
beneficiaries to receive notices electronically, consistent with the
consumer protections in proposed Sec. 435.918. We proposed in Sec.
457.110(a)(1) the same consumer option and protections for electronic
notices in CHIP, and we are making technical changes in the final rule
to better align the provisions. A modification was also proposed to
paragraph (a) in Sec. 457.110 regarding the accessibility of
information for individuals who are limited English proficient and
individuals with disabilities. However, we will finalize this provision
in future rulemaking.
We received many comments regarding the requirement to provide
individuals with the option to receive notices electronically, the
majority of which supported this option as an important part of
modernizing the notification process provided that strong consumer
protections are in place.
Comment: We received many comments regarding proposed Sec.
435.918(a)(1), which would require the agency to confirm by regular
mail the individual's election to receive notices electronically. Some
commenters recommended, instead, allowing electronic confirmation for
individuals applying on-line. One commenter suggested that in states
with a FFE, the FFE should be responsible for issuing all mailed
confirmations. Also, several commenters were concerned that the
proposed written confirmation actually required individuals to choose
receipt of electronic notices twice, and that this would be confusing
and burdensome for the agency and these consumers. Many other
commenters encouraged CMS to maintain the requirement to confirm an
individual's election through regular mail to ensure that individuals
have made an informed decision, and to provide them with an opportunity
to change their election. One commenter suggested that the mailed
confirmation include a list of the types of notices that
[[Page 42170]]
the agency will send in electronic format.
Response: Proposed section Sec. 435.918(a)(1), redesignated Sec.
435.918(b)(1) in our final rule, requires the agency to send, via
regular mail, written confirmation that an individual has elected to
receive electronic notices and that forthcoming notices will be
delivered electronically. This communication must also instruct the
individual on how to change this election if the individual made the
initial choice inadvertently or wishes to change his or her mind. The
purpose of the mailed communication is to affirm the individual's
choice and allow the individual an early opportunity to opt-out of
receiving notices in electronic format. The individual does not have to
respond to this written notice to complete his or her election to
receive electronic notices; he or she need only respond if he or she
wanted to change the initial election. Therefore, there will not be any
need for individuals to request electronic notices twice, as some
commenters thought. We are clarifying at Sec. 435.918(b)(1) of the
final regulation that it is the agency's responsibility to ensure that
the individual's election to receive notices electronically is
confirmed by regular mail, since the individual will receive all future
communication from the Medicaid agency including information on how to
establish an electronic account with the state, if he or she has not
already done so. If a different arrangement makes more sense in a given
state, the Medicaid agency and Exchange can delegate this
responsibility to the other agency in the agreement entered into under
Sec. 435.1200(b)(3). We are not requiring that this communication
specify which types of notices will be delivered in electronic format,
but suggest that states take this under consideration as it would
enable individuals to better anticipate the type of notices that will
be posted to an electronic account. We anticipate, based on one state's
experience piloting electronic notices, few individuals will revert
back to paper notices. However, given that electronic notification will
be a new approach for many individuals, we believe this is an important
consumer protection to ensure that individuals make a deliberate choice
regarding the format in which they receive information. In future
years, when electronic notices are more prevalent, we will revisit
whether written confirmation of the individuals choice to receive
notices in electronic format is still a relevant consumer protection.
Comment: Several commenters requested that electronic notices be
the default method for notice delivery such that if an individual fails
to indicate whether he or she prefers an electronic or paper format for
notices, notices would automatically be provided electronically. One
commenter suggested that electronic notices should be the default for
specific populations, such as those individuals determined eligible
through an Exchange Web site.
Response: We maintain that electronic notices should be provided
only if the individual affirmatively opts for such notices. The default
approach makes an assumption that the individual has the technology to
regularly retrieve notices posted to his or her electronic account.
Even if an individual applies through an Exchange Web site, the
individual may not have regular access to technology to enable ongoing
retrieval of electronic notices. Consequently, we do not believe this
change is appropriate at this time as it could pose a barrier to
applicants and beneficiaries with limited access to technology.
Comment: Several commenters recommended that Medicaid and CHIP
eligibility notices be provided in both electronic and in paper format
until an individual indicates in writing that they no longer wish to
receive such notices by regular mail. Some commenters also recommended
that all notices regarding adverse actions always be sent in paper
format via regular mail to allow for additional protection against
delivery error. One commenter recommended that hearing scheduling
notices should always be sent via regular mail to ensure adequate
hearing slot availability.
Response: We are concerned that requiring agencies to provide dual
electronic and paper notices may pose an administrative burden for some
states. While we require that agencies provide individuals with a
choice to receive notices in electronic format in lieu of paper format,
at state option, all notices or a subset of notices, such as those
relating to adverse actions, could be provided in dual formats. We
appreciate the concern expressed for ensuring consumer protections
against delivery error. In Sec. 435.918(a)(4), the agency is required
to send an email or other electronic communication alerting the
individual that a notice has been posted to his or her account. To
guard against delivery error, if the required alert is returned as
undeliverable, the agency must send such notice by regular mail within
three business days of the date of the failed electronic communication.
This requirement has been further clarified by a revision to Sec.
435.918(a)(5). We believe that electronic notices are likely to
increase receipt of important eligibility information, as individuals
will have greater flexibility to access notices regardless of changes
to their postal address.
Comment: We received a few comments that recommended we amend Sec.
435.918 to include specific language noting the importance of ensuring
that the notice must be accessible to persons who are limited English
proficient and individuals with disabilities.
Response: We agree that all eligibility notices must be accessible
to persons who are limited English proficient and individuals with
disabilities, and we will be addressing such rules in future
rulemaking.
Comment: One commenter requested clarification on what constitutes
an ``undeliverable'' communication in Sec. 435.918(a)(5).
Response: ``Non-delivery reports'' are system messages that report
the delivery status to the sender. We expect that if the agency
receives a non-delivery report, this constitutes an undeliverable
communication.
Comment: One commenter requested clarification regarding how to
date a paper version of an electronic notice. When an electronic
communication is undeliverable, indicating an individual may not be
aware of an electronic notice posted to his or her account, Sec.
435.918(a)(5) requires that the agency send a paper version of the
electronic notice within three business days. The commenter, noting the
ability to send the paper version of the electronic notice within 24
hours, supported maintaining the same date on both notices.
Response: It is important for the date of the paper notice to
reflect the date it is sent, not the date of the undelivered electronic
notice. We anticipate that while some states may be able to issue a
paper version of the electronic notice within 24 hours, other states
may take up to the required limit of 3 days. Individuals are given a
limited time to take action, such as requesting a date for a hearing,
and this is based on the date the notice is sent to the individual.
Comment: One commenter requested clarification as to whether
agencies are required to monitor an individual's account to determine
if a notice was accessed.
Response: We are not requiring that agencies monitor accounts to
determine whether notices are accessed. If the electronic alert is not
undeliverable, the agency should assume an individual is able to access
his or her notice.
Comment: One commenter recommended that we include a
[[Page 42171]]
requirement that allows the agency to limit the number of times an
individual can request that an electronic notice be provided in paper
format.
Response: We believe that it is an important consumer protection to
allow individuals to request notices in a paper format. Some
individuals may not have the technology available to readily print
notices from an electronic account.
Comment: A number of commenters supported offering additional types
of communications through an electronic format. In addition to
eligibility notices and information specified in subpart E of part 431,
there are other communications that occur between an individual and the
Medicaid or CHIP agency. Some of these communications include requests
for additional information, annual renewal forms and reminders, premium
payment information, and information on covered services.
Response: We do not believe it is necessary to amend Sec.
435.918(a) to include other types of communications. In Sec.
435.918(a), we specify that eligibility notices and information in part
435, and notices and information required under subpart E of part 431,
be provided in electronic format. For example, information on covered
services must be available electronically in addition to paper format,
as required by Sec. 435.905(a). Annual renewal forms must also be
offered in electronic format in accordance with Sec. 435.916. We do
not think it is appropriate or operationally feasible to require other
types of communications to be provided electronically. We encourage
states with the capacity to provide additional communications
electronically, and with beneficiaries preferring that mode of
communication, to do so, as long as in compliance with any existing
regulations that govern the type of communication.
Comment: One commenter asked whether proposed Sec. 435.918(b),
which asserts that the agency may only provide electronic notices if
the individual elected to receive electronic notices and must be
permitted to change such election at any time, is duplicative of
paragraph Sec. 435.918(a).
Response: We agree with the commenter, and the provision has been
amended by removing redundant language in Sec. 435.918(b)(1) and Sec.
435.918(b)(2).
Comment: A number of commenters requested a later effective date
for implementing electronic notices.
Response: We recognize that states are at different places in the
development of their eligibility and enrollment systems, and that the
technology needs to be in place to offer beneficiaries and applicants
the option to receive notices electronically. We have amended Sec.
435.918(a) to delay the requirement to provide notices electronically
until January 1, 2015, but permit states to implement October 1, 2013
if their systems are ready.
Comment: One commenter suggested that we clarify whether ``send''
in Sec. 431.230 means send by mail or in electronic format consistent
with Sec. 435.918.
Response: Under proposed Sec. 431.206(e), all information required
under subpart E of part 431 must be provided in electronic format in
accordance with Sec. 435.918, if an individual elects to receive such
information in electronic format. To further clarify, we have added to
Sec. 431.201, that the definition of ``send'' means deliver by mail or
in electronic format consistent with Sec. 435.918.
Comment: One commenter requested clarification regarding Sec.
431.231(c)(2), which provides beneficiaries 10 days to request a
hearing from receipt of the notice of action. The date on which the
notice is received is considered to be 5 days after the date on the
notice, unless the beneficiary shows that he or she did not receive the
notice within the 5-day period. The commenter specifically requested
clarification regarding how an individual might show proof that they
did not receive an electronic notice within the 5-day time period.
Response: We understand the concern expressed by the commenter, but
do not believe that this issue is specific to the receipt of electronic
notices, but receipt of notices in general. It is challenging for an
individual to provide proof of a negative, however, it is important to
provide individuals with the opportunity to demonstrate that they did
not receive notices. One example of how an individual might demonstrate
that he did not receive an electronic eligibility notice is by
providing documentation that he closed the email account on record with
the agency. If an individual cannot receive the emailed alert that a
notice is posted to the electronic account, the individual is not in
receipt of the notice.
Comment: A few commenters requested that we define whether the ``5
days'' Sec. 431.231(c)(2) refers to calendar days or business days.
Response: We are not defining whether the ``5 days'' refers to
calendar days or business days, but allow states the flexibility to
define this in their operating procedures.
b. Coordinated Notices (Sec. 435.1200)
For individuals whose electronic account is transferred to the
Medicaid agency for a determination of eligibility from another
insurance affordability program, Sec. 435.1200(d)(6) of the March 2012
Medicaid eligibility final rule directs that the Medicaid agency notify
such other program of its final determination of eligibility or
ineligibility only for individuals who have enrolled in the other
program pending completion of the agency's final determination. We
proposed to redesignate and modify this requirement at Sec.
435.1200(d)(5) to require that the Medicaid agency notify the other
program of the final determination of Medicaid eligibility or
ineligibility for all individuals whose electronic account was
transferred from another insurance affordability program. The same
requirement was proposed for CHIP at Sec. 457.348(d)(5). No comments
were received regarding these specific provisions. We also proposed a
number of other changes to Sec. 435.1200 and Sec. 457.348 relating to
coordination of notices and appeals. In this final rule, we are
codifying Sec. 435.1200(d)(5) of the proposed rule at paragraph Sec.
435.1200(d)(6). Other proposed changes to Sec. 435.1200 of the March
2012 Medicaid final eligibility rule, including the redesignation of
paragraph (d)(6), as appropriate, will be addressed in subsequent
rulemaking. We are also finalizing proposed Sec. 457.348(d)(5) as
Sec. 457.348(c)(6), but other proposed changes to Sec. 457.348 will
be addressed in subsequent rulemaking.
4. Medicaid Enrollment Changes Under the Affordable Care Act Needed To
Achieve Coordination With the Exchange
a. Certified Application Counselors (Sec. 435.908 and Sec. 457.340)
Many state Medicaid and CHIP agencies have a long history of
supporting providers and other organizations to assist individuals in
applying for and maintaining coverage. Commonly referred to as
``application assisters'' and referred to in this rulemaking as
``certified application counselors,'' these organizations and
individuals provide direct assistance to individuals seeking coverage,
and can play a key role in promoting enrollment among low-income
individuals. The proposed regulations at Sec. 435.908(c) sought to
ensure that certified application counselors, whom we expect to
continue to play an important role in facilitating enrollment in the
expanded coverage options available under the Affordable Care Act, will
have
[[Page 42172]]
the training and skills necessary to provide reliable, effective
assistance to consumers. We proposed basic standards for states to
certify application counselors, which we believe are consistent with
the practice in many states today. These standards include proposed
procedures to ensure that these trained certified application
counselors have clear authority to access and protect confidential
information about individuals they serve, and with that authority have
a special relationship with the Medicaid agency that enables the
counselors to track and monitor applications. The proposed regulations
at Sec. 435.908(c), as finalized in this rulemaking, are applicable to
CHIP, as well under Sec. 457.340(a) of the March 2012 Medicaid
eligibility final rule; no revisions are needed or made to Sec.
457.340(a). We received the following comments concerning the proposed
certified application counselor provisions:
Comment: We received a few comments expressing support for the
proposed requirement that states have a designated web portal for use
by certified application counselors that has a secure mechanism for
granting rights for only those activities the certified application
counselor is certified to perform. Commenters stated that such a portal
will increase the proportion of applications that are submitted
electronically, thereby providing more applicants with access to
electronic verification and real-time eligibility while increasing the
state's administrative efficiency. Other commenters also recommended a
clarification that states may use the same portal for Navigators and
non-Navigator assistance personnel authorized under 45 CFR 155.205(d)
and (e) with proper assignment of rights and functionality.
Response: We appreciate the support for the establishment of a
designated web portal for use only by properly trained and certified
application counselors. However, given the systems challenges states
face in preparing for the initial open enrollment period and starting
up the new system of insurance affordability programs, we are concerned
that requiring such a portal could disrupt well-functioning application
counselor programs that exist today. Therefore, while we encourage
states to consider such portals as an effective vehicle for
administering and overseeing certified application counselor programs,
we are removing from the final rule the requirement that such portals
be established as proposed at Sec. 435.908(c)(3)(i). Although not
required, states may elect to develop these portals to support the work
of certified application counselors.
Comment: One commenter requested that we issue guidance on the
availability of federal funding to help support grants or payments to
certified application counselors--in particular information about how
Medicaid administrative claiming can be used to match community-based
investments in application assistance.
Response: FFP is available for state expenditures to certify and
support certified application counselors, but, since community-based
application counselors are not state or local employees, FFP is not
available for salaries or other direct costs of certified application
counselors.
Comment: Many commenters requested that we require that certified
application counselors be trained to provide culturally and
linguistically competent services. They believed that it is not
sufficient to remind Medicaid and CHIP agencies of their responsibility
to ensure access to individuals with limited English proficiency and
those living with disabilities, and urged us to provide states with
specific guidance and examples of how to fulfill this responsibility.
Some commenters recommended that to be certified, application
counselors must be trained in providing culturally and linguistically
appropriate services. Some commenters recommended that we require
training for application counselors include accommodating the health
care needs of specific populations, such as children.
Response: Consistent with title VI of the Civil Rights Act of 1964,
the Americans with Disabilities Act, and other civil rights laws, state
Medicaid and CHIP agencies must ensure that their programs are
accessible to individuals with limited English proficiency and
individuals with disabilities. This responsibility is codified, in
part, at Sec. 435.905(b), Sec. 435.907(g), Sec. 435.908(a), and
Sec. 457.330 (incorporating by reference the requirements of Sec.
435.907) of the March 2012 Medicaid eligibility final rule, and is also
contained in non-Medicaid specific regulations implementing the
Americans with Disabilities Act and other civil rights laws. Note that
clarifying changes were proposed in the January 2013 proposed rule to
the accessibility standard in Sec. 435.905(b); those proposed changes
are not addressed in this final rule, but we intend to address them in
subsequent rulemaking. State agencies can use certified application
counselors as a tool in meeting their responsibilities to make their
programs accessible to individuals with limited English proficiency and
individuals with disabilities. But, while some organizations providing
application assistance to individuals applying for coverage under an
insurance affordability program may be subject to civil rights laws
independent of the fact that they are serving as a certified
application assistor (for example, as a condition of accepting federal
funding), we do not believe it appropriate to hold them responsible for
meeting the accessibility standards established for state Medicaid and
CHIP agencies under our regulations.
Moreover, to require a community organization or provider with a
mission to provide targeted assistance to one segment of the population
to also be able to provide assistance to all others, would threaten the
participation of valuable state partners in maximizing enrollment
across the state's entire population.
Comment: Some commenters supported the option provided to states to
certify application counselors. These commenters pointed to existing
programs in which states work with community organizations to expand
enrollment, and that state flexibility to continue current, successful
programs is important. Other commenters recommended that certification
of application counselors be required for all Medicaid and CHIP
agencies. These commenters discussed that there will be organizations
providing application assistance in every state, that these
organizations need to be trained, and that consumers need to know who
is available to provide competent assistance.
Response: We agree that a network of application counselors can be
a valuable asset and can support states' outreach and enrollment
efforts. We urge all states to consider working with interested
organizations and providers in creating an application counselor
program. However, we believe states are best able to determine the need
for such a program, and we do not believe it is necessary to require
that state Medicaid programs create such programs.
Comment: We received a number of comments on certified application
counselors and requirements related to conflicts of interest. Some
commenters stated that in addition to receiving training on conflict of
interests, certified application counselors should be contractually
required to serve in the best interests of clients and to disclose any
existing relationships with qualified health plans or insurance
affordability
[[Page 42173]]
programs to consumers. Some commenters recommended that health
insurance issuers, their subsidiaries and licensed insurance brokers
and agents be explicitly excluded from being certified as certified
application counselors given their inherent financial conflict of
interest.
Response: We are clarifying the language in Sec.
435.908(c)(1)(iii) to make clear that certified application counselors
must adhere to all rules prohibiting conflicts of interest. States may
not certify any organization or individual who does not meet this
standard, or who may be motivated to act in a manner contrary to best
interest of the individual being helped. Thus, any organization that
the state finds to have an inherent conflict could not, under the
proposed regulation, be certified as an application counselor. We do
not believe it necessary or appropriate to identify specific types of
organizations as categorically barred from serving as application
counselors and are finalizing this regulation as proposed.
Comment: A few commenters requested that we require states to
maintain a current list of certified application counselors on the
agency Web site, and the list should include any limitations on
services that they are certified to provide. Commenters suggested that
it will be important for consumers to not only be informed of the
functions and responsibilities of certified application assisters, as
required in Sec. 435.908(c)(3)(i), but to also know who is certified
and whether there are any limitations on the services each certified
application counselor is certified to provide.
Response: We encourage states to adopt the practice recommended by
the commenter, as an effective mechanism to connect consumers with
needed assistance. However, utilization of certified application
counselors is at state option, and while we believe such a mechanism
will enhance consumers' ability to identify resources available to help
with applications we do not think it appropriate to require states to
post a current list of counselors on their Web site. We note that such
a requirement could deter some states from creating or expanding their
application counselor program if they do not have the resources to
create and maintain such a list.
Comment: A commenter asked CMS to clarify that states can meet
their outstationing requirements under Sec. 435.904 with application
counselors at the appropriate locations. They suggested that given the
overlap of functions described it would seem inefficient to maintain
separate systems of assistance.
Response: States may be able to use certified application
counselors to help meet the outstationing requirements set forth in
current regulations at Sec. 435.904, under which state Medicaid
agencies are required to provide pregnant women and children an
opportunity to apply for coverage at designated ``outstation
locations.'' Section 435.904(e) requires that, except for outstation
locations that are infrequently used by the pregnant women and children
targeted under the regulation, the state agency must have staff
available at each outstation location. Under paragraph (e)(3) of that
section, properly trained provider or contractor staff or volunteers--
which could include organizations, staff and volunteers certified as
application counselors--may be used in lieu of, or as a supplement to,
agency staff to meet this requirement, subject to certain conditions
set forth in the regulation.
Comment: Commenters asked for clarification on the overlap of
functions and certification requirements between certified application
counselors in Medicaid and application counselors as proposed for the
Exchange at Sec. 155.225.
Response: Although the exact language of the Exchange application
counselor regulation at proposed 45 CFR 155.225 (which is not being
finalized in this rulemaking) and that of the Medicaid regulation at
Sec. 435.908(c) differ, the policies reflected are consistent. The
main substantive difference is that the Exchange regulation at proposed
45 CFR 155.225 would not permit certified application counselors to
limit the activities that they agree to perform, but instead would
require them to perform all assistance activities identified in the
regulation, whereas states can permit Medicaid and CHIP application
counselors to elect to limit the activities which they will perform for
applicants.
As noted in the preamble to the proposed rule, we remind the
commenters that state Medicaid and CHIP agencies and the Exchange are
charged under Sec. 435.1200 and Sec. 457.348 of the Medicaid
eligibility final rule and proposed Sec. 155.345 of the Exchange rule
to enter into agreements with each other to create a seamless and
coordinated application and enrollment process across all insurance
affordability programs, and the state agencies and the Exchange should
consider such coordination in developing their application counselor
programs. States could elect, for example, to create a single
certification process for all insurance affordability programs, or each
program could accept application counselors certified by another
program. To the extent to which an application counselor is certified
by one program but not the other, the counselor would assist the
individual in submitting the single streamlined application for all
insurance affordability programs to the entity by which they are
certified. It is important to note that regardless of the entity to
which the application counselor submits the application, the
application will be evaluated for eligibility in QHPs and all insurance
affordability programs.
Comment: One commenter requested more information about the
development and review of training materials for certified application
counselors. This commenter stated that although the regulations provide
that any individual providing customer service must be trained in a
host of areas related to the insurance affordability programs, no
specificity is provided about the development and review of the
materials, and they requested clarification on whether states will have
the opportunity to review and comment on materials prior to their use.
We also received comments that recommended we require certified
application counselors to apply for recertification annually or
biannually to ensure that they are qualified and up to date on changes
in policy and procedures.
Response: Under Sec. 435.908(c)(1)(ii) and (iii), states must
ensure that application counselors are properly trained prior to
certification, and we expect states will need to develop training and
any training materials to be used to satisfy this requirement. We note
that materials will be developed by HHS for use by certified
application counselors registered with an FFE, including State
Partnership Exchanges, and state Medicaid and CHIP agencies may adapt
such materials to support their training efforts. FFP is available for
costs to the state of conducting training or testing of certified
application counselors, including any costs to the state for
preparation and assembly of training materials. Being effectively
trained in the rules and regulations of the different insurance
affordability programs in accordance with Sec. 435.908(c)(1)(ii)
necessarily requires keeping abreast of any pertinent changes in those
rules, and under these regulations states will need to ensure that
application counselors are kept up-to-date. However, there are
different ways to accomplish this goal--annual or periodic
recertification is one-way, refresher trainings or written
communications may be another--and we believe states should have
flexibility
[[Page 42174]]
in determining the process that best works in each state.
Comment: A few commenters recommended that applicants and enrollees
be able to opt to designate their certified application counselor to
receive copies of notices, or to access electronic notices in the
client account.
Response: As discussed in the preamble of the proposed rule, the
certified application counselor program is not designed to provide the
level of personal assistance to applicants and beneficiaries that is
provided by an authorized representative, discussed in the next section
in the preamble. However, there is nothing to prevent an applicant or
beneficiary from designating a certified application counselor to also
serve as his or her authorized representative, and for such counselor
to assume that function, in accordance with Sec. 435.923, as finalized
in this rulemaking.
Comment: One commenter suggested that regulations governing
application assistance are not necessary. The commenter believed that,
absent any evidence that application counselors currently working in
states to help individuals apply for Medicaid do not have the training
and skills necessary to provide reliable, effective assistance to
consumers, or would not meet confidentiality requirements, there is no
reason to regulate state practices in this area.
Response: We recognize the successful development of application
assistor, or application counselor, programs by many states without the
existence of federal regulations, and have aimed to develop regulations
that will not disrupt existing, successful programs and practice.
However, given the significant changes to the availability of and
access to affordable health coverage created under the Affordable Care
Act--including the advent of coverage in a QHP through the Exchange,
with premium tax credits and cost sharing reductions available to
qualifying individuals, the coordinated eligibility and enrollment
process required across all insurance affordability programs, and the
expansion in use of online applications, with the possibility
confidential information being returned to consumers in real time
through an electronic interface--we believe that establishment of
baseline federal standards, to be applied consistently across states
and programs, is important to safeguarding consumer interests and
ensuring the integrity of the assistance provided.
b. Authorized Representatives (Sec. 435.923)
We proposed regulations intended to be consistent with current
state policy and practice, regarding the definition, designation, and
responsibilities of ``authorized representatives'' to act on behalf of
applicants and beneficiaries in applying for and maintaining coverage.
Authorized representatives have historically provided valuable support
to individuals needing help navigating the application and enrollment
process, as well as ongoing communications with the agency,
particularly to seniors and individuals with disabilities, and we
expect their role to continue. We proposed to define the term
``authorized representative'' as an individual or organization that
acts responsibly on behalf of an applicant or beneficiary in assisting
with the individual's application and renewal of eligibility and other
ongoing communications with the Medicaid or CHIP agency. Under current
regulations at Sec. 435.907, retained in the March 2012 Medicaid
eligibility final rule, states must accept applications from authorized
representatives acting on behalf of an applicant. We received the
following comments concerning proposed provisions relating to
authorized representatives:
Comment: One commenter requested clarification on whether states
may enforce additional requirements not specifically listed in the
federal regulations on authorized representatives. An example of this
would be state specific regulations governing who may serve as an
authorized representative for individuals who are not medically or
legally competent.
Response: Under proposed Sec. 435.923(a), legal documentation of
authority to act on behalf of an applicant or beneficiary under state
law, such as a court order establishing legal guardianship or power of
attorney may serve in place of a written designation from the applicant
or beneficiary, signed and submitted in accordance with Sec.
435.923(f). Under the regulation, however, states may not limit
authorized representatives to individuals identified in such a legal
document or granted authorization under operation of state law or
otherwise impose requirements other than those listed in Sec. 435.923
on other individuals whom an applicant or beneficiary wishes to have
serve as his or her authorized representative. We have separated the
regulation text as proposed at Sec. 435.923(a) at Sec. 435.923(a)(1)
and Sec. 435.923(a)(2).
Comment: We received a number of comments regarding who may serve
as an authorized representative. One commenter recommended that
organizations should not be permitted to be designated as authorized
representatives. Another commenter recommended that we allow states to
decide whether to permit organizations to be authorized
representatives. The commenter suggested that by permitting only
individuals to serve as authorized representatives, states will be
better able to ensure transparency and accountability of the authorized
representative. Another commenter recommended that we add a definition
of organization to Sec. 435.923(e) to clarify what types of
organizations may act as authorized representatives, for example, only
non-profit organizations.
Response: We believe that there are situations in which an
individual may need an organization to serve as his or her authorized
representative and it is appropriate for an organization to serve in
this capacity, such as for individuals residing in a nursing home who
do not have family available to assist them. We are finalizing the
regulation as proposed in this regard. Protections at proposed Sec.
435.923(e), finalized in this rulemaking, are designed to ensure that
organizations serving as an authorized representative adhere to laws
and regulations relating to conflicts of interest and act in the best
interest of the individual.
Comment: We received a number of comments related to the timeframe
for designation of authorized representatives. One commenter
recommended that states be given options or flexibility in this area,
explaining that states may wish to make the designation of the
authorized representative last for 12 months by default, for example,
unless the applicant or beneficiary designates otherwise. Another
commenter recommended that we add that the authorization is valid until
the application is denied or benefits are terminated and the appeal
process is completed.
Response: Our regulations clearly state that applicants and
beneficiaries are able to change authorized representatives at any
time. States may not make a designation automatically expire such that
an individual would need to redesignate an authorized representative
after a given period of time. However, they are allowed to provide
beneficiaries with the opportunity to change their authorized
representative at the renewal point. For example, states can indicate
that a beneficiary has an authorized
[[Page 42175]]
representative and remind the individual that they may keep or change
the representative on the renewal document.
Comment: One commenter asked for clarification on whether the scope
of the authorization is defined by the beneficiary or applicant, or
whether, once invoked, the representative assumes all of the duties
named in the regulations, including ``all other matters'' with either
agency.
Response: We clarify that the scope of the authorization is defined
by the Medicaid applicant or beneficiary.
Comment: We received a number of comments on Sec. 435.923(c),
specifically related to the fact that the designation of an authorized
representative can only be revoked in writing. Commenters suggested
that it would be more appropriate and efficient to allow the
designation to be revoked by all of the modalities by which it can be
made in the first place.
Response: We agree with the commenter's suggestion and have revised
the regulation text accordingly.
Comment: One commenter requested clarification on whether the
permissions given the authorized representative may be granted in part,
for example in tiers, if an applicant so chooses. The commenter
suggested that an applicant may wish to authorize someone to sign his
or her application, but not to receive his or her notices, for example.
Response: We are clarifying that the permissions given to the
authorized representative may be granted in part. The proposed
regulation allows applicants and beneficiaries to designate an
individual or organization to act on their behalf and that the scope of
authorization is defined by the applicant or beneficiary.
Comment: One commenter asked us to confirm that the definition
provided for authorized representatives is the same definition that the
Social Security Administration uses.
Response: We clarify that the definition is not the same.
Comment: A few commenters requested additional clarification
regarding situations in which an individual is unable to personally
elect an authorized representative due to medical incapacity. One
commenter agreed that written designation by the individual or legal
documentation should be obtained in most instances, but the proposed
rule may be overly restrictive in that it could result in unreasonable
delay in determining some individuals' eligibility for Medicaid. The
commenter recommends that states be given the authority to waive this
regulation in instances when obtaining legal documentation to allow
individuals or organizations to act as authorized representatives would
be difficult. Another commenter suggested that legal documentation of
authority to act on behalf of an application or beneficiary under state
law, such as court order establishing legal guardianship or a power of
attorney, should serve in place of written authorizations by the
applicant or beneficiary.
Response: Under section Sec. 435.923(a), legal documentation of
authority to act on behalf of an applicant or beneficiary under state
law, such as a court order establishing legal guardianship or power of
attorney may serve in place of the applicant or beneficiary's
designation. The option to submit such documentation is intended to
enable applicants who do not have the capacity to provide a signature
to authorize representation.
5. Medicaid Eligibility Requirements and Coverage Options Established
by Other Federal Statutes
a. Presumptive Eligibility for Children (Sec. 435.1102)
We proposed to revise existing regulations to align with the
adoption of MAGI-based methodologies.
Comment: One commenter suggested that presumptive eligibility could
be better streamlined by using only a gross income standard for
eligibility determinations.
Response: Current regulations allow states to use either gross
income or to have qualified entities make a closer approximation of the
countable family income, which would be used for a regular
determination by the state agency, by applying simple disregards. We
believe it is appropriate to retain this flexibility for states once
MAGI-based methodologies are in place. Therefore, we are codifying the
flexibility of states in Sec. 435.1102(a), as proposed, to direct
qualified entities to use either gross income or to apply simplified
methods, as prescribed by the state, to better approximate MAGI-based
household income, as defined in Sec. 435.603 of the March 2012 final
rule.
Comment: Many commenters objected to the state option to obtain an
attestation of citizenship or satisfactory immigration status, or state
residency as part of a presumptive eligibility determination. They
suggested that requiring an attestation of immigration status would
likely deter some potentially eligible individuals who often need
urgent access to health care services from receiving care. Further the
commenters suggested that the rules on immigration status are detailed
and complex, and qualified entities cannot reasonably be expected to
understand or explain them to individuals being asked to attest their
status. Some commenters stated that states should have the option to
request self-attestation of citizenship.
Response: We clarify that our proposed rule gave states the option
to require qualified entities or qualified hospitals to request this
information but did not require it. We believe that this option is
important in the context of extending the ability to conduct
presumptive eligibility determinations to hospitals because it limits
the possibility that individuals who are not citizens or qualified
immigrants or residents of the state are found eligible on a
presumptive basis, receive expensive services, only ultimately to be
determined ineligible for Medicaid. Therefore, we are retaining the
language as proposed and maintain this provision as a state option.
Comment: One commenter requested that we add current foster care
children as a presumptive eligibility group in our final regulation.
Response: We clarify that former foster children are already a
population that is eligible to be determined presumptively eligible. We
do not currently have the authority to add current foster care children
as a presumptive eligibility group, but this is unnecessary because
current foster children are automatically eligible for Medicaid and do
not need to be determined presumptively eligible.
b. Presumptive Eligibility for Other Individuals (Sec. 435.1103)
Comment: Some commenters stated that states should have the option
to elect how many presumptive eligibility periods should be allowed for
each pregnancy. Others supported our proposed rule to permit only one
presumptive eligibility period per pregnancy.
Response: We believe that providing pregnant women with one
presumptive eligibility period per pregnancy is reasonable in
accordance with section 1920 of the Act, under which pregnant women may
receive ambulatory prenatal care during a presumptive eligibility
period, defined as continuing through the date a full Medicaid
determination is made under the State plan, or, if a woman does not
submit a regular application through the end of the month following the
month during which the presumptive eligibility determination was made.
Therefore, we are finalizing the regulation as proposed to provide one
presumptive eligibility
[[Page 42176]]
period for pregnant women per pregnancy.
c. Presumptive Eligibility Determined by Hospitals (Sec. 435.1110)
We proposed to add Sec. 435.1110 to implement section
1902(a)(47)(B) of the Act, added by the Affordable Care Act, to give
hospitals the option to determine presumptive eligibility for Medicaid.
The statute provides hospitals participating in Medicaid with this
option whether or not the state has elected to permit qualified
entities of the state's selection to make presumptive eligibility
determinations for children, pregnant women or other specific
populations under other sections of the statute.
We received the following comments concerning the hospital
presumptive eligibility provisions:
Comment: We received many comments related to the establishment of
standards under proposed Sec. 435.1110(d)(1) for hospitals that opt to
make presumptive eligibility determinations. Some commenters encouraged
CMS to provide states with maximum flexibility to implement presumptive
eligibility standards for hospitals, while other commenters stated that
the Secretary should establish federal standards applicable to
hospitals making presumptive eligibility determinations in all states.
Other commenters supported the flexibility given to state agencies to
establish standards, and some stated that states should have even
broader authority to establish clear criteria and qualifications which
hospitals would have to meet to make presumptive eligibility
determinations. Some believe that the Secretary should establish
minimum federal standards and qualifications, with the state option to
impose additional standards. Commenters generally requested additional
guidance to states on how they must work with hospitals that elect to
make presumptive eligibility determinations. Finally, some commenters
stated that the Secretary should establish federal standards for
hospitals that opt to make presumptive eligibility determinations under
Sec. 435.1110 of the regulations, related to the proportion of
individuals determined presumptively eligible by the hospital that
submits a regular application and the percent of such individuals who
are ultimately determined eligible by the agency. Commenters suggested
that states should use the federal standards to determine which
hospitals are capable of making presumptive eligibility determinations.
Response: We are finalizing Sec. 435.1110(d)(1) as proposed.
Oversight of qualified entities making presumptive eligibility
determinations, including qualified hospitals under Sec. 435.1110, is
a state responsibility. Under Sec. 435.1110(d)(1), states may
establish state-specific standards for qualified hospitals that conduct
presumptive eligibility determinations related to the success of
assisting individuals determined presumptively eligible who submit a
regular application and/or are approved for eligibility by the agency.
We believe this is an area more appropriate for state flexibility, than
for imposition of a uniform federal standard for all participating
hospitals across all states. Therefore, we are finalizing Sec.
435.1110(d), as proposed. We will monitor implementation and consider
whether further guidance is warranted.
Per Sec. 435.1110(d)(2), which we also are finalizing as proposed,
state agencies are required to take appropriate correction action for
any hospital that does not meet the standards established by the state
or which the state otherwise determines is not making, or is not
capable or making, presumptive eligibility determinations in accordance
with state policies and procedures. In fulfilling their responsibility
under Sec. 435.1110(d)(2), states may develop other proficiency
standards, training and audits, with which hospitals would need to
comply, to be authorized to make presumptive eligibility determinations
in the state.
Comment: We received many comments on the populations for which
hospitals can make presumptive eligibility determinations. Some
commenters stated that hospitals should be allowed to make presumptive
eligibility determinations for all of the patient populations they
serve. Some commenters recommended that states be given the option to
elect and limit the populations that may be determined presumptively
eligible by hospitals. Some commenters stated that the preamble did not
align with the regulation text relating to this issue in the proposed
rule. Many commenters requested additional clarification on the
populations for which hospitals may make presumptive eligibility
determinations.
Response: We intended to propose that qualified hospitals must be
permitted to make presumptive eligibility determinations based on
income for all of the populations for which presumptive eligibility may
be available in accordance with Sec. 435.1102 and Sec. 435.1103. The
specific reference to children, pregnant women, parents and caretaker
relatives, and other adults in proposed Sec. 435.1110(c)(1) was not
intended to eliminate presumptive eligibility determinations by
hospitals for other populations included in Sec. 435.1103 (that is,
former foster care recipients or women with breast or cervical cancer
or individuals seeking coverage of family planning services). We are
revising the regulation text at Sec. 435.1110(c)(1) to clarify that
states electing to limit the presumptive eligibility determinations
which hospitals can make must permit the hospitals to make presumptive
eligibility determinations based on income for all of the populations
included in Sec. 435.1102 and Sec. 435.1103. Under Sec.
435.1110(c)(2), which we finalize as proposed in this rulemaking,
states may also permit hospitals to make presumptive eligibility
determinations for populations for which income is not the only factor
of eligibility (for example, for individuals who may be eligible under
an eligibility group based on disability, or individuals eligible under
a demonstration project approved under section 1115 of the Act).
Comment: A commenter expressed that hospitals wishing to make
presumptive eligibility determinations should be required to attend
training on policies and procedures established by the states. The
commenter suggested that this was important to maximize the likelihood
that eligible individuals complete the full Medicaid eligibility
process. They supported the proposed rule that states may require
hospitals electing to make presumptive eligibility determinations to
assist individuals in completing and submitting the full application
and understanding any documentation requirements.
Response: In accordance with Sec. 435.1110(a) of the proposed
rule, finalized as proposed in this rulemaking, states are required to
provide Medicaid during a presumptive eligibility period, to
individuals who are determined to be presumptively eligible by a
qualified hospital, subject to the same requirements as apply to the
State options under Sec. Sec. 435.1102 and 435.1103 regardless of
whether the state otherwise has opted to provide Medicaid during a
presumptive eligibility period under either of those sections. While
not necessarily requiring establishment of a formal training program,
current regulations at Sec. 435.1102(b) require states to provide
qualified entities with information on relevant state policies and
procedures and how to fulfill their responsibilities in making
presumptive eligibility determinations. This requirement is unchanged
in this rulemaking and will apply in the case of hospitals electing to
[[Page 42177]]
be a qualified hospital under Sec. 435.1110. If a hospital does not
follow state policies and procedures, or is not successful in helping
individuals to submit regular applications in accordance with standards
established by the state, proposed Sec. 435.1110(d)(2) would require
states to institute appropriate corrective action, including (but not
requiring) termination of the hospital as a qualified hospital. We are
revising proposed Sec. 435.1110(d) by adding paragraph (d)(3) to
provide that the agency may disqualify a hospital as a qualified
hospital only after it has first provided the hospital with additional
training or taken other reasonable corrective action measures.
Comment: A few commenters requested that states should be able to
receive 100 percent FMAP for any recoupments or disallowances CMS may
seek related to an improper eligibility determination by a hospital.
One commenter questioned whether a state can make a qualified hospital
liable when a presumptive eligibility determination results in a denial
for a full Medicaid category.
Response: Under existing regulations, there is no recoupment for
Medicaid provided during a presumptive eligibility period resulting
from erroneous determinations made by qualified entities. Payment for
services is guaranteed during a presumptive eligibility period; without
such a guarantee, providers could not rely on the determination. Under
this provision, states will not be permitted to recoup money from the
hospital (and CMS will not recoup FFP from the state). However, under
Sec. 425.1110(d)(2), a state may disqualify a hospital from conducting
presumptive eligibility determinations if the state finds that the
hospital is not making, or is not capable of making, accurate
presumptive eligibility determinations in accordance with applicable
state policies and procedures. Such a disqualification is permitted
only after the state has provided additional training or taken
reasonable corrective action measures to address the issue. Finally, we
clarify that states may not make a qualified hospital liable when an
individual who was found presumptively eligible by the hospital submits
a full application and is subsequently denied Medicaid eligibility.
Comment: Some commenters requested that for individuals determined
presumptively eligible by a hospital for the adult group under Sec.
435.119 of the March 2012 Medicaid final eligibility rule, a state
should receive 100 percent federal funding for services provided unless
and until the individual completes the eligibility process and is
determined not ``newly eligible'' or eligible for coverage under the
adult group. Commenters suggested that enhanced federal funding is
necessary because there will not be sufficient information available to
determine whether the presumptively eligible individual should be
claimed at 100 percent federal funding or the state's regular FMAP at
the time of the initial presumptive eligibility determination.
Response: While we understand the commenters' concerns, there is no
basis to provide the 100 percent FMAP during a presumptive eligibility
period. The state would receive the increased FMAP provided under the
Affordable Care Act only for individuals who the state determines
actually (not presumptively) qualify for Medicaid under the adult group
and are determined to be ``newly eligible.'' The methodology for such
claims is set forth in the final FMAP regulation (78 FR 19918).
However, states may retroactively adjust claiming to receive the
enhanced matching rate for individuals determined presumptively
eligible who subsequently complete a regular application, are
determined by the state to be eligible for Medicaid under the adult
group and are found to be ``newly eligible.'' Such retroactive
adjustment may extend back to the first month of the month in which the
regular application was filed or up to 3 months prior to the month of
application in accordance with Sec. 435.914 of the regulations
(redesignated at Sec. 435.915 in the March 2012 Medicaid final
eligibility rule).
Comment: One commenter requested that we confirm that Sec.
435.1110(b)(2) of the proposed rule gives states the option to require
that to participate as a qualified hospital, a hospital must assist
individuals in completing and submitting the full application and help
individuals understand any documentation requirements. The commenter
suggested that this function is the same as that of an application
counselor and requests clarification on whether a state could also
require that a hospital that performs presumptive eligibility
determinations must follow regulations in Sec. 435.908 relating to
certified application counselors.
Response: Although we are not requiring hospitals that perform
presumptive eligibility determinations to also furnish services of
certified application counselors, states may impose specific
requirements on hospitals to ensure that they fulfill their role in
assisting individuals with completing and submitting the full
application. At a minimum, states have a responsibility to ensure that
an individual determined presumptively eligible by qualified hospitals
is informed about how to apply and can obtain an application.
Comment: We received several comments on the viability of
presumptive eligibility determinations with the advent of real-time
eligibility determinations. One commenter recommended that states
should have the latitude to require hospitals to use the state's online
application system and determine presumptive eligibility only if a
real-time full eligibility determination cannot be made. Another
commenter suggested that if eligibility can be determined in real-time,
then there is no need for presumptive eligibility, and asked us to
clarify whether the state could terminate use of presumptive
eligibility without violating the Affordable Care Act's Maintenance of
Medicaid Eligibility requirements, as added by section 2001(b) of the
Affordable Care Act (codified at sections 1902(a)(74) and 1902(gg) of
the Social Security Act (the Act).
Response: We agree that the promise of real-time eligibility
determinations makes the role of presumptive eligibility different than
it has been in the past. In situations in which the individual files a
regular application right away, the presumptive eligibility period
would likely be considerably shorter--and eliminated altogether, as a
practical matter, if a real-time determination is made. However, even
with the most modernized systems, there inevitably will be individuals
for whom a real-time eligibility determination will not be possible.
There also will be individuals who will not be comfortable with the
online application, and will instead opt to use the paper application.
In such situations and for such individuals, presumptive eligibility
remains a useful tool to facilitate prompt coverage and enrollment in
the program. States have flexibility to minimize the length of
presumptive eligibility periods by requiring that hospitals and other
qualified entities assist individuals in submitting the single
streamlined application online. States may not terminate use of
presumptive eligibility for pregnant women or individuals with breast
or cervical cancer prior to 2014 or for children prior to October 1,
2019 without violating maintenance of effort.
Comment: One commenter requested clarification on how hospital
presumptive eligibility will interact with eligibility in breast and
cervical cancer groups.
[[Page 42178]]
Response: If a state has elected to provide presumptive eligibility
for individuals with breast or cervical cancer under Sec.
435.1103(c)(2), it can limit qualified entities under that section to
providers which conduct screenings for breast and cervical cancer under
the state's Centers for Disease Control and Prevention (CDC) breast and
cervical cancer early detection program (BCCEDP), and if it has done
so, the state may limit hospitals which may determine presumptive
eligibility for individuals with breast or cervical cancer on that
basis to hospitals that conduct screenings under the state's BCCEDP. In
states that do not opt to provide presumptive eligibility for
individuals with Breast or Cervical Cancer under Sec. 435.1103(c),
states similarly may limit hospitals' ability to determine presumptive
eligibility for individuals with breast or cervical cancer under Sec.
435.1110 to those that conduct screenings under the state's BCCEDP.
6. Coordinated Medicaid/CHIP Open Enrollment Process (Sec. 435.1205
and Sec. 457.370)
We proposed to implement section 1943 of the Act and section 1413
of the Affordable Care Act to require that Medicaid and CHIP agencies
begin accepting the single streamlined application during the initial
open enrollment period to ensure a coordinated transition to new
coverage that will become available in Medicaid and through the
Exchange in 2014. Our proposed rule seeks to ensure that no matter
where applicants submit the single, streamlined application during the
initial open enrollment period, they will receive an eligibility
determination for all insurance affordability programs and be able to
enroll in appropriate coverage for 2014, if eligible, without delay.
Comment: Many commenters supported the proposal in Sec.
435.1205(c)(1) that Medicaid and CHIP agencies to begin accepting the
single streamlined application and MAGI determinations from the
Exchange and to process MAGI eligibility starting in October 2013.
Commenters believe this is necessary to ensure coordination with the
Exchange, and to facilitate a seamless transition to the new coverage
that will become available in Medicaid and through the Exchanges in
2014. Many commenters acknowledged that the public will be hearing
about new coverage options throughout the summer and fall of 2013, and
expressed concern that it would result in confusion if, when people
went to apply for coverage and were found eligible for Medicaid (or
their children eligible for Medicaid or CHIP), they were told to return
several months later and submit a new application.
Response: We agree with the commenters that acceptance of the
single streamlined application by state Medicaid and CHIP agencies
starting in October 2013 is needed to ensure coordination with the
Exchange, and in facilitating new coverage that will be available to
Medicaid-eligible eligible individuals in January 2014. Therefore, we
are finalizing the rule as proposed and confirm that individuals may
not be required to return in January to reapply.
Comment: Some commenters expressed concern that it is unreasonable
to require states to comply with the prescribed time frames for
coordinated enrollment with the Exchange in the proposed rule. They
noted that states must make major policy, operations, and systems
changes to implement federal requirements, which will impact agency
eligibility staff, vendors, clients, and other stakeholders. Pending
final and complete federal guidance, it is a significant challenge for
states to develop policies, design efficient business processes, build
systems and new interfaces, and effectively communicate changes to
clients and stakeholders by the proposed federal implementation dates.
One commenter noted that its state legacy system cannot process or
transfer electronic accounts, which means that the proposed rule has
effectively shortened the timeframe to implement its new eligibility
system by 3 months. Another commenter noted that Medicaid eligibility
systems, policies and staff are not structured to operate in a time-
limited open enrollment environment or to apply competing eligibility
criteria concurrently, and cannot be changed to do so with only a few
months' notice.
Commenters recommended that Medicaid agencies not be required to
begin accepting streamlined applications or determinations from the
Exchange prior to January 1, 2014. Instead, during the initial open
enrollment from October 1, 2013 to December 31, 2013, commenters
requested that at state option, individuals may be required to apply
separately to the Medicaid agency and to the Exchange and to have their
eligibility determined by the corresponding agency. One state
suggested, as an alternative, the information exchanged will be limited
to only the Medicaid-specific information that is included in the
single streamlined application.
Response: We appreciate the operational challenges states face in
preparing for implementation of the Affordable Care Act, but we believe
that these effective dates are central to the success of open
enrollment and we have consistently targeted the October 1 date as we
have worked with states to finance and develop their IT systems. We
have identified a set of seven critical success factors that states
must meet by October 1 in an attempt to prioritize what must be
accomplished within this timeframe. We have regularly shared these with
states via webinars, on the CALT at https://calt.cms.gov/sf/go/doc16369?nav=1, through State Operational Technical Assistance (SOTA)
calls and in IT gate reviews. These include the following: (1) Ability
to accept application data, (2) MAGI rules engine in eligibility
system, (3) MAGI Conversion, (4) Submission of state income thresholds
and flexibilities, (5) Connection to Federally Facilitated Exchange (or
establishment of State Based Exchange), (6) Connection to Federal Data
Services Hub, and (7) Ability to confirm Minimum Essential Coverage.
We recognize the efforts that states are making across a broad
range of areas, and have released regulations, information technology
(IT) guidance, funding opportunities, business process models and other
tools to assist states as they design, develop, implement, and operate
new systems. We will continue to help states fully comply with all
relevant eligibility and enrollment changes, as well as achieve the
necessary degree of interoperability between IT components in the
federal and state entities that work together to provide health
insurance coverage through Medicaid and CHIP, and Exchanges. We are
finalizing the regulation as proposed.
Comment: Several commenters expressed concern that, in the states
which are relying on the FFE and will not be ready to implement the
single, streamlined application by October 2013, there is a significant
risk that people who apply for coverage through the FFE will be told
that they are likely eligible for Medicaid or CHIP, and be sent away
without any real opportunity to enroll in coverage or complete the
application process. These commenters recommended that HHS strengthen
this provision by setting forth a specific timeframe and set of
procedures that states must follow to ensure that they are ready to
implement the single, streamlined application when open enrollment
begins in October 2013. Specifically, they recommended modifying the
final rule to require states
[[Page 42179]]
relying on the FFE to submit information, by September 1, 2013, on
whether they intend to: (1) accept the FFE's determinations of
Medicaid/CHIP eligibility; or (2) to treat the FFE's finding as an
assessment and complete the eligibility determination themselves. In
addition, they recommend including a provision to clearly outline that
before a state can elect the option to treat the FFE's findings as an
assessment, the state must demonstrate that it is (or will be by
October 2013) capable of acting upon such assessments in full
accordance with federal law.
Response: We have a process in place for working with states on
implementation, including the adoption of mitigation strategies where
necessary. We do not believe that a change in the regulations is needed
to effectuate these strategies.
Comment: Many commenters believe that it would be time-consuming
and impractical to require states to evaluate all cases for eligibility
effective in 2013, but that there is a subset of cases that states
should be required to evaluate. Specifically, parents whose MAGI-based
income falls very close to the state's current income eligibility
threshold for parents should be evaluated based on 2013 eligibility
rules. Commenters suggested HHS provide guidance to states on the
appropriate MAGI income threshold to use for determining whether an
individual appears to be potentially eligibility under 2013 rules and
should be assessed for eligibility using those rules. Some commenters
also believe that states should be required to inform people when it
appears that their children qualify for coverage under 2013 Medicaid
and CHIP rules because families are more likely to pursue applications
if they believe that their children will be found eligible for
coverage. Finally, a few commenters believed states should be given the
option to notify a subset of applicants about the process to apply for
coverage with an effective date in 2013 (for example, only those
applicants who appear to be potentially eligible under 2013 rules based
on the available information provided on the single streamlined
application).
Some commenters stated that they are already planning for an
October 2013 implementation date of MAGI eligibility and requested that
states be given this option without need for a waiver. These commenters
recommend states have flexibility in handling applications based on
2013 rules for assessing 2014 coverage. States should be allowed to
request applicants submit supplemental form that includes additional
information to make MAGI determination, or to redirect applicants to
new application; or, states should have flexibility to process
applications using 2013 rules and determine eligibility based on MAGI
proxy when possible.
Response: We recognize the challenge of appropriately evaluating
all applications submitted during the open enrollment period under both
the MAGI-based rules effective January 1, 2014 and under rule in effect
in 2013. However, all applicants must have the opportunity to have
their Medicaid eligibility assessed based on existing Medicaid rules
for 2013 as well as for prospective enrollment effective January 2014.
At a minimum under the regulation at Sec. 435.1205(c)(4)(ii), states
must inform individuals who submit the single streamlined application
during October-December 2013 that coverage may be available in 2013,
but that a different application will need to be completed for
consideration of such coverage, and how the individual can obtain and
submit such application. Alternatively, under Sec. 435.1205(c)(4)(i),
states can use the information on the single streamlined application
submitted to make a determination of eligibility effective in 2013,
based on 2013 rules, following up with the individual to obtain
additional information if needed through additional questions or use of
a supplemental form, if needed. States also can pursue a combination of
these strategies--using the process outlined in Sec. 435.1205(c)(4)(i)
for targeted individuals more likely to be found eligible under 2013
rules (for example, parents and caretaker relatives with MAGI-based
income within a threshold margin of the applicable income standard and
individuals indicating potential disability on the single streamlined
application), while directing those not seen as likely-eligible under
the 2013 rules to submit a separate application in accordance Sec.
435.1205(c)(4)(ii).
States may wish to avoid having to operate two sets of rules for
children, parents and caretaker relatives, pregnant women and other
non-disabled, non-elderly adults that may be eligible for Medicaid
enrollment during this period. To address this, we are offering states
the opportunity to begin using the new MAGI-based methodology for these
populations effective October 1, 2013, to coincide with the start of
the open enrollment period. See State Health Official Letter
13-003: Facilitating Medicaid and CHIP Enrollment and Renewal
in 2014 at https://www.medicaid.gov/Federal-Policy-Guidance/Downloads/SHO-13-003.pdf.
Comment: One commenter stated that requiring post-eligibility data
matching to ensure continued eligibility as of January 1, 2014 for
individuals determined not eligible in October-December but eligible in
January, creates an enormous burden during a time when new systems are
being implemented and states will be experiencing the largest influx of
newly eligible individuals into their system. The commenter noted this
would create duplication of efforts when an individual who was
determined eligible prior to January is already notified of their
reporting requirements and states should be allowed to rely on
recipients reporting rather than handling the same cases twice in a 3-4
month timeframe.
Response: Post-eligibility data matching is an option for states to
ensure continued eligibility as of January 1, 2014 and/or through the
first regularly-scheduled renewal. It is not required. The agency also
has the option to schedule the first renewal for individuals who apply
during the open enrollment period, and determined eligible effective
January 1, 2014, to occur anytime between 12 months from the date of
application and January 1, 2015. Consistent with Sec. 435.916,
beneficiaries are required to report any change in circumstances that
may impact their eligibility. In the absence of any reported change
that could affect eligibility, no post-eligibility data matching is
required.
Comment: One commenter requested that CMS clarify Sec.
435.1205(c)(3)(ii) that this state option [to schedule the first
renewal under Sec. 435.916 to occur anytime between 12 months from the
date of application and January 1, 2015] authorizes less than annual
periods of coverage/eligibility before renewal in instances where
renewal date is set before January 1, 2015.
Response: This option does allow for less than 1 year of coverage
for a limited time. For example, if someone applies on November 1,
2013, and is determined eligible for coverage to begin January 1, the
state may schedule renewal on November 1, 2014. This would result in
less than a year of coverage. This one-time option is intended to
provide for ease of administration in the renewal of coverage for a
large number of individuals whose coverage begins on January 1, 2014
and would otherwise need to be renewed at the same time.
Comment: We sought comments in the proposed rule on which sections
of both this rulemaking as well as the March 2012 Medicaid eligibility
final regulation need to be effective October 1, 2013 (as opposed to
January 1, 2014) to enable states to meet their
[[Page 42180]]
responsibilities under Sec. 435.1205 and Sec. 457.370 of this
rulemaking. We received no comments in response to this request.
Response: In the absence of any comments regarding this question,
we have determined that the following provisions of the March 2012
Medicaid eligibility final rule are effective October 1, 2013 for
purposes of effectuating Sec. 435.1205 and Sec. 457.370 of this final
regulation during the initial open enrollment period beginning October
1, 2013:
Sections 435.603, 435.911, 435.1200, 457.315, 457.330 and
457.348;
Amendments to Sec. Sec. 431.10, 431.11, 435.110, 435.116,
435.119, 435.907, 435.916, 435.940-435.956, 457.340 and 457.350, and
the redesignation of Sec. 435.911 through Sec. 435.914 as Sec.
435.912 through Sec. 435.915.
In addition, the following provisions of this final rule are
effective October 1, 2013: Sec. Sec. 435.918, 435.1205, 457.370, and
revisions to Sec. Sec. 431.10, 431.11, 431.201, 431.205, 431.206,
431.211, 431.213, 431.230, 431.231, 431.240, 435.119, 435.603, 435.907,
435.1200, 457.110(a)(1), 457.348, and 457.350.
Although effective for purposes of codification in the Code of
Federal Regulations October 1, 2013 for application during the initial
October 1-December 31 open enrollment period, absent a waiver under
Sec. 1115 of the Social Security Act approved by the Secretary,
financial eligibility based on MAGI-based methodologies codified at
Sec. 435.603 and Sec. 457.315 and eligibility for adults under Sec.
435.119 are not effective under the Affordable Care Act until January
1, 2014. Technical revisions to Sec. 435.119 to retain the
applicability date of January 1, 2014, even as the effective date of
that section is moved to October 1, 2013, are made in this rulemaking.
No revisions to Sec. 435.603 or Sec. 457.315 are required, as those
sections, as published in the March 2012 Medicaid final eligibility
rule, already provide for the January 1 applicability date.
7. Children's Health Insurance Program Changes
a. CHIP Waiting Periods (Sec. 457.340, Sec. 457.350, Sec. 457.805
and Sec. 457.810)
We proposed revisions to existing regulations regarding prevention
of substitution of coverage at Sec. 457.805 to limit the use of CHIP
waiting periods to a maximum of 90 days. This policy aligns with
section 1201 of the Affordable Care Act, which amended section 2708 of
the Public Health Service Act to prohibit waiting periods exceeding 90
days for health plans and health insurance issuers offering group or
individual coverage. This standard, though not directly applicable to
CHIP, is currently exceeded in roughly half of the states that impose
CHIP waiting periods today. We also proposed to require several
exemptions to waiting periods, consistent with policies that many
states have in place today, such as for individuals working for
employers that stopped offering coverage of dependents. We received the
following comments on our proposed waiting period policy as described
below.
Comment: Many commenters urged CMS to eliminate waiting periods on
January 1, 2014, rather than permit states to continue to impose
waiting periods of any length of time for children. A few commenters
encouraged CMS to retain its current policy of providing states with
the discretion to maintain waiting periods and establish their own
procedures to minimize displacement of private insurance, and some
states expressed their intent to eliminate waiting periods in their
CHIP programs in 2014. One commenter suggested that waiting periods be
applied only to children with family incomes above 200 percent of the
FPL. Commenters' concerns with the proposed 90-day waiting period were
related to the administrative burden of waiting periods for state CHIP
agencies and Exchanges, potential hindrances to streamlined and
coordinated enrollment, disruptions in continuity of care for children
and a lack of evidence of substitution.
Response: While we acknowledge the commenters' concerns related to
the continuation of waiting periods for children in 2014, we also see a
need to permit states flexibility to determine an appropriate
substitution prevention strategy, with a full range of options from
monitoring to imposition of waiting periods up to 90 days. Some states
have already eliminated their CHIP waiting periods and we encourage
other states to consider taking this step. Nothing in this final rule
precludes a state from doing so. States may also elect to eliminate
waiting periods specifically for children at lower income levels and/or
identify additional exemptions to the waiting period beyond those
required in this rule. Therefore, to maintain states' flexibility in
identifying substitution strategies while also limiting the period of
time a child may not be eligible for CHIP due to a waiting period, we
are finalizing the provisions at Sec. 457.350, Sec. 457.805 and Sec.
457.810 as proposed to permit states to impose a waiting period of no
more than 90 days, with certain specified exemptions. We note that this
policy is consistent with the 90-day maximum waiting period described
in Section 1201 of the Affordable Care Act.
Comment: Many commenters were concerned that the proposed policy
for a maximum 90-day waiting period would require states and Exchanges
to set up administratively complicated processes to temporarily enroll
children in QHPs and to receive APTCs and CSRs while awaiting CHIP
eligibility during the waiting period. Several commenters expressed
concerns with the administrative complexity of the interactions that
must occur between the Exchange and the CHIP agency if a waiting period
is in place, including the requirement at Sec. 457.350 for the CHIP
agency to send the electronic record back to the Exchange for
enrollment in a QHP if the child is determined not eligible for CHIP.
These commenters also expressed concern that these potential
complications do not align with the streamlined eligibility and
enrollment process envisioned by the Affordable Care Act. Many
commenters stated that requiring the change to a 90-day maximum waiting
period policy would be administratively burdensome and costly to states
at a time when information technology systems are already overburdened
in preparation for significant eligibility changes in 2014. Some
commenters highlighted that it is likely that some state systems will
not have the capacity to track children who are locked out of CHIP
during a waiting period and others expressed concern as to whether
states or the Federal government have the capacity to smoothly
implement waiting periods in the manner suggested in the proposed rule
without a disruption in coverage for children. Some commenters also
indicated that if waiting periods were to exist in 2014, state CHIP
agencies would need to both track when these children would become
eligible for CHIP and also initiate action to enroll children in the
program.
Response: For states that opt to apply a waiting period in 2014, we
agree that transitioning a child from one insurance affordability
program to another upon the conclusion of a 90-day waiting period may
present operational challenges. States must take into consideration
their system capabilities and weigh the perceived benefits of opting to
have a waiting period against any additional administrative or system
requirements needed to effectuate a seamless transition of such
children from coverage in the Exchange and APTC to the state's CHIP at
the conclusion of the 90-day period. We agree that CHIP agencies will
need to track when these children become
[[Page 42181]]
eligible for CHIP as required at Sec. 457.350. In addition, we have
further clarified at Sec. 457.340(d)(4), that without requiring new
applications or information previously provided, CHIP agencies must
implement processes to ensure a smooth transition for children from
coverage through the Exchange to CHIP at the end of a waiting period,
as well as facilitate the enrollment of otherwise CHIP-eligible
children who have satisfied the waiting period, but who were not
covered in the Exchange. For example, a state could automatically
enroll a previously determined CHIP-eligible child at the end of the
waiting period without requesting any additional information from the
family. Another option would be for a state to suspend applications for
all children subject to a waiting period. Once these children have
completed the waiting period, the state would then reactivate the
application and determine whether the child is eligible for CHIP based
on the information previously provided on the application. There is
nothing in the above options that precludes a state from checking data
sources for updated information or processing a change in circumstances
reported by the family.
Comment: Many commenters stressed that waiting periods of any
length could negatively impact children's access to continuous and
coordinated health coverage. For example, commenters expressed concern
that the proposed rule permitting CHIP-eligible children to enroll in
qualified health plans (QHPs) in the Exchange during a waiting period,
and subsequently enroll in CHIP at the end of a waiting period, will
stimulate churning between QHPs and CHIP. These commenters emphasized
that disruptions in coverage will impact the health status of children
who are left uninsured and/or may have to change plans or providers.
Some commenters stated that movement between plans and programs will
inhibit the QHPs' ability to measure the quality of care provided to
children, and makes it difficult to hold plans accountable for
improvements in quality outcomes for children over time.
Response: We acknowledge that the use of waiting periods may create
delays in eligibility for CHIP and increase the likelihood of churning
between the Exchange and CHIP, which could result in disruptions in
coverage that could negatively impact the health status of children.
Therefore, this final rule confirms states' ability to eliminate
waiting periods to accommodate these concerns. In addition, the final
rule codifies the limitation of waiting periods to a maximum of 90
days, to be consistent with waiting periods under section 1201 of the
Affordable Care Act. We encourage states to examine the costs and
benefits of imposing a waiting period in the context of the Affordable
Care Act. To make the transition from Exchange coverage to CHIP as
smooth as possible for children, states that do choose to maintain
waiting periods will need to meet the requirements at Sec. 457.350(i),
including providing notification to the appropriate insurance
affordability program (for example, the Exchange) promptly and without
undue delay of the date on which the waiting period will end and the
child will be eligible to enroll in CHIP. We will provide states with
technical assistance in this area.
Comment: Several commenters indicated that while there were initial
concerns upon implementation of CHIP in the late 1990s that the
incentives for substitution of public coverage for private coverage
would be significant, states and researchers have had ample opportunity
to examine this issue over the last 15 years. These commenters stated
that numerous studies have shown that substitution is difficult to
measure, there continues to be much conjecture regarding the degree to
which substitution occurs, and that there is no evidence that
procedures like waiting periods actually prevent substitution. These
commenters also noted that there is evidence that uninsured children,
including children in waiting periods, frequently forego medical
services due to high out-of-pocket costs.
One state reported that during an almost 15-year period, there has
been no evidence that crowd out is a concern, including for children at
higher income levels. The commenter reported that the percentage of
children in families who dropped their employer sponsored coverage and
substituted it for CHIP has been consistently below 2 percent since the
inception of CHIP. This commenter recommended that we permit monitoring
of crowd out at all income levels rather than continuing to require a
substitution strategy, such as a waiting period, for higher income
children. Another commenter stated that in their experience in
operating CHIP, nearly all families with former employer-sponsored
insurance meet at least one of the exemptions to waiting periods
included in its CHIP state plan.
Response: We recognize that there is a robust but inconclusive
evidence base in the literature calling into question the prevalence of
substitution. And, we are therefore, revising our existing regulations
to provide states with flexibility to determine how best to operate
their CHIP programs. The preamble of the existing regulation (66 FR
2490, January 11, 2001) required that states that provide CHIP coverage
to children at or below 200 percent of the Federal poverty level (FPL)
must have procedures for monitoring the rate of substitution of
coverage, between 200 and 250 percent of the FPL must monitor
substitution and identify specific strategies to limit substitution if
levels become unacceptable, and for coverage above 250 percent of the
FPL states must describe how substitution is monitored and implement
specific strategies to prevent substitution. We clarify in this final
rule that effective January 1, 2014, monitoring of substitution is a
sufficient approach for addressing substitution at all income levels.
We expect that if this monitoring demonstrates a high rate of
substitution, a state will consider strategies such as improving public
outreach about the range of health coverage options that are available
in that state.
Comment: Some commenters requested that CMS provide clarity
regarding the criteria for specific exemptions (for example, children
with special health care needs), and suggested additional types of
mandatory exemptions at the Federal level (for example, employees that
have employers that have changed health plans or products). Some
commenters noted that states have previously implemented many of the
proposed required exemptions and that the majority of applicants
already qualify for state-identified exemptions to the waiting period.
Response: As noted by some commenters, many of the mandatory
exemptions in the proposed rule have previously been instituted by
states on a voluntary basis and have been effective. Therefore, we are
adopting in our final rule the proposed exemptions at Sec. 457.805. In
addition, and as discussed in the preamble of our proposed rule, we are
adding an affordability exemption at Sec. 457.805(a)(i) for cases when
a child's parent is determined eligible for APTC for enrollment in a
QHP through the Exchange because the employer-sponsored insurance (ESI)
in which the family was enrolled is determined unaffordable in
accordance with 26 CFR 1.36B-2(c)(3)(v). We consider this exemption to
be essential to preventing families from having to choose between
continuing ESI that has been determined to be unaffordable for the
parent, and thereby forgoing premium tax credits and cost-sharing
reductions for enrollment in an QHP, or dropping the ESI and allowing
their child to go without coverage for a period of time to
[[Page 42182]]
qualify for CHIP. We note that states continue to have the flexibility
to provide additional exemptions beyond those specified in this final
rule, but other than the affordability exemption at Sec.
457.805(a)(i), there will be no additional exemptions added in this
final rule. We note that we intend to issue further sub-regulatory
guidance related to criteria for required waiting period exemptions.
Comment: One commenter requested that CMS delay the effective date
of this provision to give states adequate time to make the necessary
changes related to its waiting period policy, such as a change in state
law and/or budget.
Response: This provision will be effective on January 1, 2014
unless a change in state law is needed for a state to comply with this
provision. Specifically, for states with annual legislative sessions,
the effective date for the application of the 90-day maximum waiting
period and required exemptions must be no later than the first day of
the next fiscal year beginning after the close of the first regular
session of the 2014 state legislature. For states that have a 2-year
legislative session, each year of the session is considered a separate
regular session for this purpose.
b. Limiting CHIP Premium Lock-Out Periods (Sec. 457.570)
We proposed to define a CHIP premium lock-out as a period not
exceeding 90 days when, at state option, a CHIP eligible child may not
be permitted to reenroll in coverage if they have unpaid premiums or
enrollment fees. Following a premium lock-out period, we proposed that
the child must be permitted to enroll without regard to past due
premiums. We proposed at Sec. 457.570 to permit states to impose
premium lock-out periods only for families that have not paid
outstanding premiums or enrollment fees, and only up to a 90-day
period. We also specified that a premium lock-out period must end once
a family has paid the premium or enrollment fee. We also invited
comments on any alternative late payment policies to encourage families
to make their CHIP premium payments in a timely manner to avoid gaps in
coverage. We received the following comments concerning the proposed
lock-out period provision.
Comment: The majority of commenters supported the proposed rule
requiring reasonable notice of non-payment, limiting the use of lock-
outs only for non-payment of premiums (and only as long as the non-
payment continues, and subject to a 90-day maximum), and disallowing
states from requiring payment of outstanding premiums at the end of the
lock-out period before re-enrollment. In particular, commenters
strongly supported that the CHIP agency must review the family's
circumstances (Sec. 435.570(b)) to determine if their income has
declined, making the child eligible for Medicaid or a lower cost-
sharing category. Some commenters also strongly opposed the imposition
of lock-out periods for any length of time for a CHIP child, and urged
CMS to modify Sec. 457.570 to ban lock-out periods. These commenters
indicated that lock-outs are contrary to the goals of a reformed health
system, as well as the health of children. Some commenters stressed
that a quarter of a year without health insurance can have a
significant impact on a child's healthy development, a child should not
be subject to penalties for a failure to pay by another family member,
and the Affordable Care Act recognizes that children should connect
with their medical home eight times in the first year of life alone.
One commenter also stated that lock-out periods in CHIP create
disruptions in care, burdens on families, unnecessarily increase
administrative costs, and that the elimination of lock-out periods is
an important consumer protection.
A few commenters asked whether the process of premium collection
and debt forgiveness will be aligned with the premium collection
regulations for the Exchange.
Response: In response to the support of our proposed rule by the
majority of commenters, and comments received by states related to the
need to continue to have non-payment of premium policies in place to
manage program costs (as described below), we are adopting in our final
rule the proposed provisions that authorized states to institute a
maximum 90-day lock-out period for non-payment of premiums. Lock-outs
are permitted for non-payment of premiums, but only as long as the non-
payment continues and subject to a 90-day maximum. We also want to
clarify that requirements related to reasonable notice of nonpayment,
and review of the family's circumstances to determine if their income
has declined (for example, making the child eligible for Medicaid or a
lower cost-sharing category), are existing regulatory provisions that
we have not modified by this rulemaking.
We appreciate the concerns expressed by some commenters with regard
to the potential impact of any lock-out period on children, and for
these reasons, we also adopted in the final rule the proposed
restriction that lock-out periods may only apply to families who have
not paid their premiums, and must end if a family pays its past due
premium. We have also maintained the requirement that children must be
permitted to enroll in CHIP subsequent to a 90-day lock-out period
regardless of whether the family continues to owe past due premiums. In
addition, we are also including requirements for non-payment of premium
that are intended to align CHIP policies with policies applicable in
the Exchange, to the extent possible. In CHIP and for those individuals
with APTC in the Exchange, individuals are provided with a premium
payment grace period, may be disenrolled for non-payment of premiums,
and will not be required to pay past due premiums to reenroll in
coverage. Exchange eligible individuals will have a longer grace period
(90 days as opposed to 30 days) than CHIP, but will not be permitted to
enroll in coverage until the next open enrollment period. Therefore,
the amount of time an individual may have to wait before reenrollment
in a Qualified Health Plan will vary, depending on when the premiums
are missed in relation to the next scheduled open enrollment period,
but will be no longer than 90 days for a child in CHIP.
We note that neither CHIP nor the Exchange have explicit rules
governing debt forgiveness policies. More information on the Exchange
rules related to non-payment of premiums is available at https://www.gpo.gov/fdsys/pkg/FR-2012-03-27/pdf/2012-6125.pdf.
Comment: A few commenters requested clarification on policies
governing non-payment of premiums. They requested clarification on
policies related to ``forgiving'' past due premiums and enrollment
fees, as well as whether a state can continue to try to obtain the
outstanding premium amount without affecting eligibility. One commenter
indicated that funds should be recoverable using a debt collection
process. The same commenter also asked how many cycles of premium
forgiveness would be allowed for an individual. Another commenter asked
CMS to generally clarify what steps states and health plans would be
permitted to take in situations in which a CHIP enrollee re-enrolls
after a lock-out period and again does not pay premiums.
Response: We believe that disenrolling a child from coverage and
potentially requiring a child to go without coverage up to 90 days
(assuming the family has not paid the premium or enrollment fee), is a
significant deterrence to prevent a family from establishing a pattern
of non-payment of premiums and re-enrollment. Therefore, this rule does
not place a limit/cap on the number of times
[[Page 42183]]
an individual may be re-enrolled after non-payment of their premiums.
Nothing in this rule precludes a state from electing to establish
policies for collecting debt from families that have not made their
premium payments. Nor does this rule preclude states and health plans
from offering incentives to encourage timely payment of premiums.
Comment: Some commenters recommended that states only be permitted
to terminate coverage during a continuous eligibility period for
failure to pay premiums as proposed at Sec. 457.342(b) after complying
with the disenrollment protections at Sec. 457.570. Several commenters
stressed that the proposed rule should be strengthened to capture the
intent noted in the preamble that ``prohibiting a child from enrollment
after the family pays the unpaid premium or enrollment fee is counter
to promoting enrollment in and continual coverage.'' Some commenters
also recommended that the final rule specify that if a family pays its
outstanding premium between the end of their payment grace period and
before the end of the lock-out period, the child be reinstated back to
the effective end date with no gap in coverage and no loss of 12-month
continuous eligibility (if applicable).
Response: We agree that coverage terminations occurring during a
continuous eligibility period for failure to pay premiums can be
implemented only after complying with the disenrollment protections at
Sec. 457.570, and we have modified Sec. 457.342(b) to clarify this
requirement. In addition to the preamble language describing that
families that pay their premiums or enrollment fees prior to the end of
a lock-out period must be re-enrolled in CHIP, we have also specified
this requirement at Sec. 457.570(c)(2) under this final rule. Section
2103(e)(3) of the Act describes a statutory premium grace period during
which CHIP enrollees may pay their monthly premiums before being
disenrolled. This provision requires States to grant individuals
enrolled in separate child health programs a 30-day grace period, from
the beginning of a new coverage period, to pay any required premium
before enrollment may be terminated. The new coverage period begins the
month following the last period for which a premium was paid. Aside
from these requirements, states have, and will continue to have,
flexibility to determine when coverage can be reinstated. As specified
in our proposed rule at Sec. 457.342(b), continuous eligibility may be
terminated for failure to pay required premiums or enrollment fees.
Comment: Some commenters expressed concerns for potential
unintended consequences of the proposed policies. One commenter stated
that the proposed rule creates an incentive for individuals who are
otherwise able to pay their premium to cycle through CHIP eligibility
every other three month period and encourages gaps in access to medical
services for children, who may subsequently present to the CHIP with
higher acuity levels and higher cost needs. The commenter also stated
that the proposed rule increases costs for states and the federal
government, and diminishes health outcomes for children. The commenter
encouraged CMS to continue to require member accountability in the CHIP
program by allowing the collection of outstanding premiums in the
presence of a 90-day grace period. Another commenter objected to the
proposed rule to limit lock-out periods to 90 days and allow an
individual to re-enroll upon payment of past due premiums, regardless
of whether the lock-out period has expired. The commenter stated that
this approach creates adverse selection, in that families may stop
paying their premium when they may not have immediate health care
needs, and then again pay their premiums only when they are in need of
health care. Additionally, this commenter stated individuals should be
required to pay any past due premiums as a condition of retaining
eligibility for CHIP, even after a lock-out period has been satisfied.
This commenter also stated that the proposed rule discards the plain
statutory authority of title XXI that delegates this policy to states.
Another commenter noted that CHIP is a ``stepping stone'' between
Medicaid and employer-sponsored insurance or Exchange coverage, and
that premiums in its current CHIP are minimal in comparison to
employer-based coverage and private coverage. The commenter requested
that premiums not be waived in states with requirement to repay
outstanding premiums and no lock-out period. The commenter stated that
waiving premiums does not promote responsibility, intrinsic value, or
the effective management of program costs for states.
Response: The goal of allowing coverage for families that make
current payments must be balanced with the concern that families will
game the system to try to obtain coverage without paying premiums. We
agree that there may be situations where families either elect, or are
unable to pay their premiums multiple times during a given year.
However, we are not aware of any evidence that these situations
represent a significant number of cases. And, as stated in our response
to the comment above, as long as states adhere to regulations at Sec.
457.570, nothing in this rule precludes a state from continuing to
establish policies for collecting debt from families that have not made
their premium payments. We also encourage states to continue
implementing approaches for simplifying premium payment arrangements
and coping with administrative concerns families may have, and we
continue to encourage states in this area to minimize the number of
families that are disenrolled for non-payment of premiums.
Comment: One commenter stated that if CHIP lock-out periods are
allowed in 2014, CMS should prohibit states that use this option from
requiring children subject to a lock-out period to reapply for coverage
and that a child returning to coverage following a lock-out period
should be handled in the same manner as a renewal. The commenter
believes that because such children were eligible for CHIP apart from
non-payment of premiums or enrollment fees, the state agency should be
able to reassess eligibility based on available electronic data sources
and families should only be asked for additional information if what
has already been provided and currently available electronic data are
not sufficient to establish eligibility.
Response: While we encourage states to consider the potential
administrative cost savings and reduced burden on families that could
result from assigning a pending eligibility status to a child for non-
payment of premiums rather than requiring a new application, we will
continue to permit states to have the flexibility to make this
decision.
Comment: One commenter requested clarification on whether a child
can receive APTC or CSR during a premium lock-out period.
Response: We anticipate that this issue will be addressed in
further guidance from the Department of Treasury.
Comment: The preamble to our proposed rule specified that a state
may not require the collection of past due premiums or enrollment fees
as a condition of eligibility for reenrollment once the lock-out period
has expired, regardless of the length of the lock-out period. One
commenter recommended that this policy also be specified in Sec.
457.570(c)(2).
Response: Section 457.570(c)(2) clearly specifies that ``a state
may not require the collection of past due premiums or enrollment fees
as a condition of eligibility for reenrollment
[[Page 42184]]
once the State-defined lock out period has expired, regardless of the
length of the lock-out period.'' We have not made any modifications to
this section.
Comment: Some commenters indicated that providing multiple ways to
pay premiums and sending multiple, non-threatening payment due
reminders are helpful in encouraging payment. These commenters
suggested that CMS consider future sub-regulatory guidance to states to
promote best practices in premium payments.
Response: Most CHIPs report efforts to facilitate payment of
premiums and enrollment fees, easing the process for families, and the
majority of states also send multiple payment due reminders and allow a
variety of payment methods (such as allowing families to make payments
at multiple locations). We will consider issuing further sub-regulatory
guidance in this area.
8. Premium Assistance (Sec. 435.1015)
We proposed to codify the last sentence of section 1905(a) of the
Act that authorizes payment of ``other insurance premiums for medical
or any other type of remedial care or the cost thereof'' to support
enrollment of individuals eligible for Medicaid in plans in the
individual market, including enrollment in QHPs doing business on the
Exchange. Premium assistance is one mechanism for facilitating the
coordinated system of coverage between Medicaid, CHIP, and the Exchange
in 2014. It provides an option for states to assist families who wish
to enroll in the same health plan when some family members are eligible
for either Medicaid or CHIP while other family members obtain coverage
in the Exchange with advance payments of the premium tax credit, and it
can provide a way to minimize the extent to which individuals have to
change plans when their circumstances change such that their
eligibility for an affordable health insurance plan changes. The
proposed rule reflected longstanding statutory provisions in light of
the new coverage options available in 2014. We received the following
comments to proposed premium assistance provisions:
Comment: Many commenters were supportive of states' ability to use
premium assistance authority to purchase private insurance coverage for
health plans in the individual market, including QHPs doing business on
the Exchange. At the same time, however, they emphasized the importance
of ensuring that Medicaid and CHIP-eligible individuals receive the
full scope of services to which they are guaranteed in Medicaid and
CHIP, such as the full range of pediatric services provided in Medicaid
and CHIP. Commenters urged CMS to take steps to ensure that states
provide families and individuals with all of the information they need
regarding the benefits to which they are entitled. They noted that the
information states track to ensure cost-effectiveness should also be
used to assess whether children and adults are receiving the full
package of Medicaid or CHIP services. One commenter suggested that
states should be required to ensure that beneficiaries experience a
seamless enrollment process and that they have a single insurance card
and point of contact for all benefits.
Response: Under all premium assistance arrangements, Medicaid and
CHIP-eligible individuals remain Medicaid or CHIP beneficiaries and
continue to be entitled to all Medicaid/CHIP benefits and cost sharing
protections. Thus, we require at Sec. 435.1015(a)(2) and (a)(3) that
the state agency furnish all benefits covered under the state plan that
are not available through the individual health plan and also that the
individual does not incur any cost sharing in excess of that allowed in
Medicaid. We expect states to have mechanisms in place to ensure that
beneficiaries understand their available choices of either direct state
plan coverage or coverage through premium assistance for an individual
health plan, including a QHP in the Exchange, under the premium
assistance option, as well as how to access any additional benefits or
cost sharing assistance. Therefore, we have revised Sec. 435.1015(b)
to include provisions requiring informed choice and information on the
process for accessing additional benefits and help with cost sharing,
if the individual elects to receive coverage through the premium
assistance option. We do not believe, however, that it is appropriate
to direct through rulemaking the specific procedures states must employ
to provide any necessary ``wraparound'' benefits or cost sharing; under
the state plan option, states have the flexibility to determine how
best to meet these cost sharing and benefit responsibilities. We have
also clarified in Sec. 435.1015(b) that states must require that
individuals who have elected to receive premium assistance must obtain
covered items and services through the individual health plan to the
extent that the insurer is contractually or otherwise responsible to
pay for such benefits.
Comment: Some commenters expressed specific concerns about cost
sharing policies and urged CMS to consider putting additional
beneficiary protections in place specific to premium assistance to
ensure that people understand the cost sharing differences between
Medicaid and CHIP and QHPs. They recommended that we create
requirements for coordination between Medicaid and the QHP issuer to
ensure that people do not exceed permissible cost sharing and asked CMS
to provide guidance on how to monitor cost sharing.
Response: We expect states to have mechanisms in place to provide
benefits that wrap around health plan coverage to the extent that the
health plan offers fewer benefits, or has greater cost sharing
requirements than in Medicaid or CHIP. These mechanisms will need to be
coordinated with the health plan to successfully implement a premium
assistance program. As noted above, we are requiring at Sec.
435.1015(b) that states inform individuals how to access additional
benefits not provided by the insurer, and also inform individuals how
to receive cost sharing assistance. We are not proposing any specific
requirements about the way in which such coordination can be
effectuated, however, because we believe that states should have
flexibility to develop effective coordination procedures consistent
with state systems and procedures, including variation in state health
care delivery systems.
Comment: Many commenters requested clarification of the cost-
effectiveness test for premium assistance. They stressed the importance
of a strong cost-effectiveness test to ensure that taxpayer dollars are
spent wisely and also that beneficiaries do not lose important benefits
and cost sharing protections. They were concerned that the proposed
rule could be interpreted to include only the cost of premiums to
purchase coverage and not to include in the test the costs associated
with paying copayments, deductibles, and other cost sharing
requirements. They believe that this should be clarified in the final
rule to explicitly include cost sharing. Other commenters stated that
this cost-effective analysis should be performed on an annual basis to
ensure that the premium assistance program remains cost-effective even
if Medicaid and the individual market experience different rates of
cost growth.
Response: Consistent with our approach to cost-effectiveness in all
premium assistance authorities, we intend for states to consider the
cost sharing requirements of the private health plan (and therefore the
cost of providing the cost sharing protections) when determining
whether premium assistance is a cost-effective option, and we agree
that this should be clarified. Therefore, we are revising Sec.
435.1015(a)(4) accordingly. States
[[Page 42185]]
implementing premium assistance must describe their cost-effectiveness
methodology, and to the extent that such a methodology relies on annual
per person costs, we would expect states to be re-running the analysis
at least annually, as new cost data is available.
Comment: Many commenters requested additional detail on how the
option would be operationalized by state Medicaid agencies, Exchanges,
and QHPs. One noted that successful premium assistance programs require
robust data sharing, data mining, automated calculations using cost-
effective algorithms, and strong relationships with private insurers.
Some commenters requested that CMS provide states with a template or
other tools to simplify the implementation of premium assistance.
Response: We will continue to provide technical assistance to
states on the operational aspects of pursuing this premium assistance
approach, relying on the experience states have had over the years
implementing premium assistance.
Comment: Some commenters stated that families should have the
choice of either premium assistance or direct Medicaid state plan
coverage, even when premium assistance is cost-effective for the state,
and they supported the proposed rule's provision that states may not
require enrollment in premium assistance as a condition of Medicaid
eligibility. Other commenters requested that CMS remove the voluntary
participation requirement either entirely, or if this requirement is
retained, they asked that states be allowed to make participation in
premium assistance mandatory for certain Medicaid enrollees, such as
adults up to 138 percent of the FPL who would be part of the state's
Medicaid expansion population, or for pregnant women with incomes above
133 percent of the FPL.
Response: Consistent with the statute, we are retaining the
provision at Sec. 435.1015(b) that states may not require a Medicaid-
eligible individual, as a condition of receiving Medicaid benefits, to
enroll in a health plan in the individual market through a premium
assistance arrangement. Enrollment in individual market coverage is not
a statutory condition for eligibility. We are also clarifying in Sec.
435.1015(b) that states must require that individuals who have elected
to receive premium assistance must obtain covered items and services
through the individual health plan to the extent that the insurer is
contractually or otherwise responsible to pay for such benefits. This
is consistent with the provision in section 1902(a)(17) of the Act
that, in determining the amount of medical assistance, states may
consider available resources, and the provision in section 1902(a)(25)
of the Act that requires that states ensure that liable third parties
pay primary to Medicaid. We address the issue of requiring enrollment
in premium assistance for certain populations in the last response in
this section.
Comment: Several commenters expressed concern that permitting state
Medicaid programs to establish premium assistance programs could affect
premiums in the Exchange. Some commenters recommended that CMS revise
the proposed Sec. 435.1015(a)(4) to require that premium assistance
not increase federal costs and not increase premiums in the individual
market.
Response: Medicaid beneficiaries enrolled in a QHP would be
included in the individual market single risk pool of the health
insurance issuer of the plan in which they are enrolled, just as any
other individual obtaining coverage through such plans. Sec.
435.1015(a)(4) requires the cost of premium assistance to be
``comparable'' to the cost of providing direct coverage under the state
plan. We do not use a more restrictive word to allow flexibility
because the amount, duration, and scope of the QHP coverage, or the
nature of the QHP service delivery system, might be different from
direct coverage under the state plan.
Comment: Some commenters stated that CMS must take additional steps
to ensure that states do not steer family members of Medicaid-eligible
individuals into less expensive plans to accommodate a premium
assistance model and also to ensure that any enrollees who will be
using premium tax credits have sufficient choice in QHPs. The
commenters stated that regulations should require states to remain
impartial in providing all available information on all QHPs so the
family can choose the best plan or plans for the entire family, and
also that Navigators, application assisters, and application counselors
must be trained on the premium assistance program and provide impartial
assistance to families.
Response: As noted above (and at Sec. 435.1015(b)), when a state
implements the state plan premium assistance option, the beneficiary's
participation must be voluntary. We also expect states to ensure that
application assisters and certified application counselors comply with
the requirements in Sec. 435.908 of this part and Sec. 457.340 under
subpart C of part 457, which include requirements that they be
effectively trained in the eligibility and benefits rules and
regulations governing enrollment in a QHP through the Exchange and all
insurance affordability programs operated in the state. In addition,
the Exchange regulations at 45 CFR 155.210 require that Exchange
Navigators provide impartial information and assistance. A Medicaid or
CHIP enrollee who is receiving benefits in whole or in part through a
premium assistance arrangement with a QHP will not be eligible for a
premium tax credit under section 36B of the Internal Revenue Code
because such credits are not available to individuals who, for the
coverage month, are eligible for minimum essential coverage through
Medicaid or CHIP.
Comment: A few commenters questioned whether section 1905(a)(29) of
the Act creates the authority for premium assistance in the individual
market. Many commenters recommended that CMS eliminate the proposed
policy to allow premium assistance for plans in the individual market,
or otherwise tightly circumscribe it, citing cost concerns, as well as
concerns about the operational complexity and potential consumer
confusion for consumers created by the ``wrap'' requirement.
Response: As we stated in the preamble of the proposed rule (78 FR
4624 and 4625), in section 1905(a)(29) of the Act, ``medical
assistance'' is defined to include payment of part or all of the cost
of ``other insurance premiums for medical or any other type of remedial
care or the cost thereof.'' We have interpreted this provision to
permit payment of FFP for premiums for health plans for Medicaid-
eligible individuals, provided the state determines it cost-effective
to do so. CMS has approved state premium assistance programs under this
authority prior to the enactment of the Affordable Care Act. The
Affordable Care Act provided for new rules regulating the operation of
the individual and small group insurance markets, and expanded access
to insurance coverage through QHPs participating in the Exchange. This
results in new opportunities for states to deliver Medicaid coverage
through the purchase of private health insurance in the individual
market. Our goal is to work with states to ensure that their premium
assistance approaches result in a cost-effective, seamless, and
coordinated system of health care for beneficiaries.
Comment: Several commenters recommended delaying implementation of
premium assistance until rates are determined for QHPs in the Exchange,
and the individual market has settled from the changes it will
experience in
[[Page 42186]]
2014, and states have experience implementing the Medicaid expansion.
Response: As we noted above, premium assistance is an option
available under current law. Some states have already expressed
interest in using the premium assistance model to deliver benefits to
their Medicaid expansion beneficiaries through QHPs doing business on
the Exchange. In addition, beginning in 2014, some low-income children
will be covered by Medicaid or CHIP while their parents obtain coverage
in the Exchange with advance payments of the premium tax credit, and
premium assistance provides an opportunity for state Medicaid and CHIP
programs to offer coverage to such families through the same plan, even
if supported by different payers. It also provides opportunities for
continuity of care by increasing the likelihood that individuals could
remain in the same health plan when moving back and forth between
Medicaid and Exchange coverage due to fluctuations in income or other
changes in circumstances. We are not establishing new authority but
rather ensuring that the existing authority reflects the new coverage
options in the individual and small group markets established by the
Affordable Care Act.
Comment: Many commenters supported the retention of the proposed
regulation text that makes FFP available for payment of health plan
premiums for ``individuals'' eligible for Medicaid. They believe that
this language supports the enrollment of Medicaid-eligible individuals
in individual market plans, including plans offering family coverage,
while not incorporating limiting definitions of ``family'' that would
unnecessarily limit the benefits of the rule to individuals in families
that do not comprise a taxpayer household. One commenter asked for CMS
to clarify the meaning of ``family'' as used in the premium assistance
section of the preamble of the proposed rule. The commenter also
questioned whether this option is limited to Medicaid and CHIP-eligible
individuals who have family members enrolled in an individual health
plan, and if so, asked if we proposed to limit this option to members
of the same tax household, MAGI assistance group, or to immediate
family members.
Response: We have not proposed a definition of ``family'' that is
unique to premium assistance. Regulations at Sec. 435.603 of this part
(and at Sec. 457.301 and Sec. 457.315 under subpart C of part 457 for
CHIP) contain definitions and requirements related to family size,
household, and MAGI-based income for the purposes of Medicaid and CHIP
eligibility determinations.
The premium assistance option permits Medicaid or CHIP funds to be
used to deliver coverage to Medicaid or CHIP-eligible individuals
through the purchase of private health insurance, and it is not limited
to Medicaid or CHIP-eligible individuals who have family members
enrolled in a QHP. In some cases, the Medicaid or CHIP beneficiary
could be enrolled in a health plan that provides individual coverage
only, while in other situations, the Medicaid or CHIP beneficiary would
be enrolled in a health plan that provides family coverage, depending
on the categories of family coverage offered in the Exchange.
Comment: Some commenters, who were in favor of the continued
authorization of premium assistance programs, stated that states should
be allowed to determine how to make the concept work and urged CMS to
allow complete state flexibility in designing and implementing benefit
structures and cost sharing requirements.
Response: Individuals receiving coverage through premium assistance
are Medicaid beneficiaries and are entitled to the full range of
protections, including benefits and cost sharing, available under the
law. States have flexibility under the state plan option to design how
they will effectuate the coverage that is required while meeting
applicable statutory and regulatory requirements. To the extent a state
needs additional flexibility, the state may wish to explore
demonstration options under section 1115 of the Act.
Comment: Several commenters recommended that premium assistance
programs might require, or best be operated under, a Medicaid section
1115 demonstration.
Response: States have the flexibility to adopt premium assistance
as an option under the state plan if it is voluntary for beneficiaries
and adheres to all applicable statutory and regulatory provisions.
Enrollment in individual market coverage is not a statutory condition
of eligibility. Some states have expressed interest in submitting
proposals for section 1115 demonstrations to require enrollment in
premium assistance and to allow for consideration of a broader range of
factors when cost-effectiveness is assessed. In response to these
inquiries, we will consider approving a limited number of premium
assistance demonstrations that are determined to further the objectives
of the Medicaid program and which will test these new arrangements and
inform policy. For states that implement premium assistance through a
section 1115 demonstration, which could include mandatory enrollment
into premium assistance, we will only consider demonstrations under
which states make arrangements with the health plan to provide
wraparound benefits and cost sharing assistance. For further
information on the section 1115 option, including guidelines for
proposals, please refer to Premium Assistance Frequently Asked
Questions (FAQs) that CMS issued on March 29, 2013, available at https://medicaid.gov/State-Resource-Center/FAQ-Medicaid-and-CHIP-Affordable-Care-Act-ACA-Implementation/Downloads/FAQ-03-29-13-Premium-Assistance.pdf
9. Changes to Modified Adjusted Gross Income and MAGI Screen
We proposed to implement sections 1902(e)(14) and 1943 of the Act,
and section 1413 of the Affordable Care Act as they pertain to the
definition of ``modified adjusted gross income'' (MAGI) and ``household
income'' in section 36B(d)(2) of the Internal Revenue Code of 1986
(``36B definitions''). We also proposed a modification to previously
issued regulations implementing section 1902(e)(14)(I) of the Act. The
proposed rule applied the 5 percent disregard established by the Act
for purposes of determining the income eligibility of an individual for
medical assistance whose eligibility is determined based on MAGI,
provided the determination was for the eligibility group with the
highest income standard under which the individual could be determined
eligible using MAGI-based methodologies. The proposed changes are
discussed in more detail in the January 22, 2013 Medicaid Eligibility
proposed rule (78 FR 4625 through 4627). We received the following
comments concerning the proposed changes to MAGI provisions:
Comment: Some commenters supported the proposal to apply the 5
percent disregard only to the highest income threshold under a MAGI-
group available for the individual and the related impact on the number
of individuals for whom states will be able to claim the ``newly
eligible'' enhanced match rate.
Response: The Affordable Care Act established a 5 percentage point
of the FPL disregard ``for the purposes of determining income
eligibility'' for individuals whose eligibility is based on MAGI. The
objective of the proposal is to balance giving beneficiaries the
benefit of the disregard for eligibility purposes, with the intent to
give states the opportunity to claim enhanced match for all newly
eligible individuals
[[Page 42187]]
if the state chooses to extend coverage to the new adult group. We
propose doing so by ensuring that the disregard is applied to the
income calculation of individuals for whom the disregard matters for a
determination of eligibility for Medicaid under MAGI-based rules--that
is, those for whom the application of the disregard means the
difference between being eligible for Medicaid and being ineligible.
These individuals are those whose income is within 5 FPL percentage
points of the highest net income standard for which they can obtain
Medicaid eligibility under MAGI-based income rules. The disregard would
not be applied for a determination of eligibility for a particular
eligibility group, but rather for eligibility for Medicaid.
Comment: One commenter questioned whether the proposed policy is
consistent with federal law, which the commenter views as entitling all
applicants to the 5 percent disregard. The commenter stated that our
proposed policy could affect beneficiaries' cost sharing or benefits
because it could result in a change in their eligibility groups. Some
commenters noted that, for example, some parents could receive ABP
coverage instead of the traditional Medicaid benefit package. The
commenters noted, however, that this concern should be minimal since
newly eligible adults who are medically frail and likely to need
additional services covered under the regular Medicaid benefit package
would have a choice of benefit package, between what is offered through
an ABP that is based on section 1937 requirements, inclusive of EHB's,
and ABP coverage that is not subject to section 1937 requirements, and
includes the services approved in the state's Medicaid plan. Other
commenters cited concerns about pregnant women and categories that
offer only limited pregnancy-related services.
Response: The proposal to apply the 5 percent disregard to
determine Medicaid eligibility rather than eligibility for a particular
category is consistent with section 1902(e)(14)(I) of the Act. It is
not necessarily the case that not applying the 5 percent disregard for
purposes of determining eligibility category would result in moving
individuals into a different eligibility group with different benefit
and possibly cost-sharing rules because if the 5 percent disregard were
applied as a general disregard, states would set income eligibility
standards at levels that would compensate for that impact. For example,
if the 5 percent disregard was applied generally, states might set the
income eligibility standard for parents at a level 5 percent less than
they would otherwise. Moreover, any adverse impact of a shift of
beneficiaries from the parent group to the new adult group with
coverage through an ABP will be minimized by the medically frail
exception to benchmark coverage limitations. For pregnant women with
income at the border between full benefits and pregnancy-related
benefits, although the absence of the disregard may result in a
pregnancy-related benefit package instead of full benefits, our March
2012 rule revised Sec. 435.116(d)(3) to clarify that a State's
coverage of pregnancy-related services must be consistent with Sec.
440.210(a)(2) and Sec. 440.250(p), which allows States to provide
additional services related to pregnancy to pregnant women (see 77 FR
17149).
Comment: Several commenters recommended that CMS not revise the
MAGI disregard rules. They raised concerns that there is too little
time for states to make the systems and business process updates
required to comply with the October 1, 2013 open enrollment period.
They noted that the proposed rule requires more complex programming
compared to simply adding 5 percent to all MAGI-based categories and
that this policy could impact a state's ability to implement the MAGI
requirements timely. In addition, they noted that although the 90/10
matching funds are available to make such systems-related changes,
states must still finance 10 percent of the cost of these changes
despite experiencing severe budgetary issues.
Response: We understand that many states relied upon the March 2012
final eligibility rule when planning their eligibility system builds
for 2014. We appreciate that it may be difficult at this point in time
to make programming changes for eligibility systems and have those
changes take effect by January 1, 2014. In light of this challenge, we
are finalizing our proposal, but we will not take any compliance
actions for states whose systems cannot accommodate this eligibility
determination requirement. We will approve eligibility determination
systems even if as of January 1, 2014, the system applies the 5 percent
disregard across the board to all individuals whose eligibility is
determined using MAGI-based rules, based on a state's assurance that by
January 1, 2015 the state will update the system to apply the disregard
only for a determination of eligibility for Medicaid under MAGI-based
rules.
Comment: Some commenters requested that states that are not
expanding to cover the new adult group--and thus not claiming enhanced
FMAP--should have the option to use the new calculation and continue to
apply the 5 percent across- the-board disregard. Others requested that
all states be given the option to apply the 5 percent disregard only to
the highest income threshold under MAGI as proposed in our proposed
rule.
Response: We believe that applying the 5 percent FPL disregard to
determine eligibility based on overall eligibility rather than
eligibility group is the best interpretation of section 1902(e)(14)(I)
of the Act. Therefore, we are adopting our proposed policy as final,
subject to the flexibility in implementation schedules discussed above.
Comment: One commenter asked whether the 5 percent MAGI income
disregard would be applicable to only eligibility for the coverage
group or whether it would also be applicable to cost-sharing or premium
determinations --within the coverage group.
Response: Under this final rule, the 5 percent disregard under
section 1902(e)(14)(I) of the Act applies to income determinations
relative to Medicaid eligibility. It does not apply to determine into
which eligibility group an individual should be placed. Nor is it
intended to be applied to determine income for premium or cost-sharing
payments.
Comment: One commenter requested clarification about whether, in a
state that implements the eligibility expansion under section 2001 of
the Affordable Care Act (that is, adopts the adult group), the state
would need to apply the 5 percent disregard to a parent or caretaker
relative age 65 or older that was not eligible for the expansion group.
Response: The 5 percent disregard is not applied based on an
eligibility group, but based on whether the disregard would affect
MAGI-based income eligibility for Medicaid as stated above. In the case
of a parent or caretaker relative age 65 or older, the 5 percent
disregard would be applied in determining MAGI-based income if the
individual would otherwise be ineligible based on income. For example,
if the parent/caretaker eligibility standard in a state was 80 percent
of FPL and the individual's income before application of the disregard
put them over the 80 percent standard, the 5 percent disregard would be
applied and the individual would be eligible if the disregard brought
their countable income below 80 percent of the FPL.
Comment: Another commenter asked for clarification of whether the 5
percent is only applied when an individual would not be eligible in
another group
[[Page 42188]]
or if it would apply to all individuals being determined for
eligibility in the group. The commenter specifically asked about
whether the 5 percent disregard would be applied to keep family
coverage in the Transitional Medical Assistance (TMA) group.
Response: TMA is beyond the scope of this rulemaking. TMA will be
addressed in future guidance.
Comment: Several commenters questioned whether applying the 5
percent disregard to the MAGI income standards equivalent being
produced through the process generally referred to as `MAGI conversion'
creates a double counting of the disregard. Other commenters asked
whether states are being required to expand their income levels for
pregnant women and children by 5 percent due to application of the
disregard.
Response: We considered carefully the requirements in section
1902(e)(14)(A) of the Act in our December 2012 guidance to states on
the establishment of converted MAGI-based income standards equivalent
to levels used at the enactment of the Affordable Care Act (``MAGI
conversion''). See https://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO12003.pdf. Under this guidance, converted MAGI-based
income standards are set without regard to the 5 percent disregard,
since the MAGI income conversion requirements in section 1902(e)(14)(A)
of the Act are independent of the 5 percent disregard at section
1902(e)(14)(I) of the Act. MAGI-equivalent income standards are
established taking into account disregards that are currently in effect
but which will no longer be in effect under MAGI. As a result, there is
no double-counting of the 5 percent disregard. The 5 percent disregard
would apply once when calculating an individual's MAGI-based income if
the individual would otherwise be ineligible.
Comment: Several commenters requested clarification regarding how
the 5 percent disregard under MAGI applies to applicants under a
separate CHIP program. Similarly, commenters asked how the 5 percent
disregard is applied to individuals at the boundary between Medicaid
and CHIP eligibility.
Response: The 5 percent disregard should be applied to individuals
who may be eligible for the highest income standard under the
applicable Title of the Act (for example, Title XIX or Title XXI) for
which the individual may be determined eligible using MAGI-based
methodologies. Therefore, in states that have separate CHIP programs,
the income disregard should be applied both for the highest Title XIX
eligibility group available to the child, as well as to the separate
CHIP program to cover similarly situated children at a higher income
standard. The result would be that children with a MAGI in the 5
percent band above the Medicaid income standard at issue would be
determined eligible for Medicaid. To clarify, we are modifying the
language in the final rule at Sec. 435.603(d)(4) to specify that the 5
percent disregard should be applied to the highest income standard in
the applicable Title of the Act under which the individual may be
determined eligible using MAGI-based methodologies. We do not believe
this will impact the children for whom the state can claim enhanced
match, because the state can claim enhanced match for any child whose
income is greater than the upper income threshold under Medicaid on
March 31, 1997, whether that child is covered under Title XIX or Title
XXI.
Comment: One commenter asked whether there is any reason it would
not be permissible for a state to program its eligibility system to
build in the 5 percent disregard and effectively set the income limit
at 5 percent higher than the state's established limit for MAGI related
eligibility groups.
Response: Because the disregard is applied at the individual level,
increasing the eligibility income standard for a group would not be the
best way to program an eligibility system. Furthermore, doing so would
be inconsistent with the statutory purpose of developing a uniform
income determination methodology applicable in all states, which could
be applied by the Exchange as well as the State Medicaid or CHIP
agency. Therefore, this would not be permissible. Instead if the
eligibility system cascades sequentially through possible eligibility
options, it should apply the 5 percent as one last eligibility step,
only when the system has returned a determination of ineligibility
because the individual is over scale for income.
10. Single State Agency--Delegation of Eligibility Determinations to
Exchanges (Sec. 431.10 and Sec. 431.11)
We proposed to revert to the policy proposed in the Medicaid
eligibility proposed rule published on August 17, 2011 (76 FR 51148),
that single state Medicaid agencies will be limited to delegating
eligibility determinations to Exchanges that are government agencies
maintaining personnel standards on a merit basis. We retained many of
the provisions strengthening the control and oversight responsibilities
of the single state agency including the authority to issue policies,
rules and regulations on program matters and to exercise discretion in
the administration or supervision of the plan. We also proposed to make
changes to Sec. 431.11 regarding state organization. We received the
following comments concerning the proposed changes to the single state
agency provisions:
Comment: The majority of commenters strongly support the decision
to revert to the policy originally proposed in the August 2011 Medicaid
eligibility rule that delegation of the authority to determine
eligibility for Medicaid is limited to Exchanges that are government
agencies maintaining personnel standards on a merit basis. One state
specifically commented that it supports this change as it allows states
to maintain program integrity. Several other commenters noted that this
construct has been a consistent legal interpretation for many decades.
Other commenters noted that many state Medicaid employees are trained
social workers who have the knowledge and experience to help our
country's most vulnerable citizens, ensuring consistency and
accessibility to benefits.
Response: We appreciate commenters support for our proposed policy,
and therefore, we are adopting in this final rule the policy that
delegation of the authority to determine eligibility for Medicaid is
limited to Exchanges that are government agencies maintaining personnel
standards on a merit basis. This is the policy that we originally
proposed in our August 2011 proposed rule and that was re-proposed in
the January 2013 proposed rule. We believe that under the best read of
the statute, determining Medicaid eligibility is an inherently
governmental function that must be performed by governmental agencies.
For purposes of delegation, we are treating a quasi-governmental
entity or public authority running an Exchange and employing merit
system protection principles as a government agency such that
delegation to it would be permitted. Although we were explicit in the
proposed regulation at Sec. 431.10(c)(1)(i)(B), Sec. 431.10(c)(2) and
Sec. 431.10(c)(3)(i) regarding authority to delegate to public
authorities, we are deleting these references to public authorities in
the final rule to conform with the Exchange regulation which only
explicitly requires at Sec. 155.20 that Exchanges be governmental
agencies or non-profit entities established by a state.
Comment: Some commenters wrote that they especially appreciate the
recognition that Medicaid agencies would not be parties to contractual
[[Page 42189]]
relationships between the Exchange and an entity engaged by the
Exchange to determine eligibility, which would make it impossible for
the Medicaid agency to provide appropriate oversight. They support
maintaining the requirement that the Medicaid agency provide oversight
when responsibility for the eligibility determination is delegated to
another agency, because monitoring and oversight is necessary
regardless of whether the delegation is to a government or non-
government agency. They recommended that such oversight should include
review of a sample of eligibility decisions made by the Exchange,
scrutiny of the ``logic'' used in information technology systems to
ensure that Medicaid policy is being applied in an accurate manner,
regular observations of the processes used by the Exchange in making
eligibility determinations, participation by Medicaid agency staff in
training of Exchange staff, and monitoring of complaints and appeals.
Many commenters suggested more specific requirements in regulation that
should be added to Sec. 431.10(d), specifying the oversight and
monitoring required in the agreement between the Medicaid agency and
Exchange or Exchange appeals entity include training for the Exchange
or Exchange appeals entity, as well as monitoring of the systems being
built.
Response: We agree that the single state agency should be required
to provide oversight when responsibility for the eligibility
determination is delegated to another agency and are finalizing our
proposal requiring this. We appreciate the commenter's various
suggestions regarding quality control and oversight by the Medicaid
agency and believe they are within the ambit of what is intended by
Sec. 431.10(c)(3)(ii), requiring the Medicaid agency to exercise
appropriate oversight over the eligibility determinations and appeals
decisions made by such agencies to ensure compliance with paragraphs
(c)(2) and (c)(3)(i) of this section and institute corrective action as
needed. We believe Sec. 431.10(c)(3)(ii) can be exercised in various
ways including those suggested by the commenters. We also agree that
participation by Medicaid agency staff in training of Exchange staff
would be valuable. We believe that the requirements in Sec. 431.10(d)
which specify the requirements for the agreement between the Medicaid
agency and the Exchange or Exchange appeals entity include the
requisite quality control and oversight language.
Comment: Many commenters recommended ways to ensure a coordinated
system by engaging non-profits and private contractors in the process
of supporting the Medicaid and CHIP eligibility determination, while
not allowing them to determine eligibility. Recommendations included
providing assistance to consumers with the application and enrollment
process as certified application counselors and operating call centers,
providing basic information to potential applicants. One commenter
suggested that any contract over the amount of $1 million entered into
by the State for services which support eligibility determination, such
as data-matching or application/eligibility screening, be submitted to
the Department of Health and Human Services for review.
Response: We agree that certified application counselors and call
center administration are ways to engage non-profits and private
contractors in the Medicaid eligibility process while assuring all
final eligibility determinations are made by governmental entities.
However, we do not believe it necessary to subject state contracts for
support services related to eligibility determinations to special
oversight rules. We believe that the single state agency's
responsibility for determining and/or overseeing eligibility
determinations includes oversight of such support functions.
Comment: One commenter noted that, while there is value in
continuing the role of public employees in Medicaid eligibility
determinations, this decision can be expected to have the inadvertent
effect of requiring ``hand offs'' in some states between privatized
Exchanges and Medicaid agencies. Specifically, in states operating a
privatized Exchange, the Exchange will now be unable to conduct a full
Medicaid determination, which means that an individual who applies for
coverage via an Exchange and is found likely eligible for Medicaid will
be ``bounced'' to the Medicaid agency for a final determination.
Families with children, in particular, are likely to be ``bounced''
because they are eligible for Medicaid or CHIP at far higher income
levels than adults in all states. As a result the commenter recommended
that Sec. 435.1200(d) include a new subpart requiring states to report
to HHS and to make publicly available data on the share of applicants
who are determined potentially eligible for Medicaid or CHIP by an
Exchange who are eventually enrolled. Moreover, they recommended that
procedures should be outlined for HHS to evaluate the data and take
corrective action if data revealed that significant numbers of people
are ``falling through the cracks'' because they must navigate multiple
agencies when trying to secure coverage for themselves or their
children.
Response: States will be required to establish performance
standards in their state plans in accordance with Sec. 435.912. To
further this work, earlier this year, we issued a request for
information (RFI) regarding performance indicators for Medicaid and
CHIP business functions. The RFI explained that CMS intends to begin
collecting and reporting on information including data regarding
individual (applicant and beneficiary) experience with eligibility and
enrollment. One of the indicators proposed under the eligibility and
enrollment domain was ``accurate eligibility determinations,''
including a proposed ``accurate transfer rate''. The accurate transfer
rate would be measured by the percent of individuals transferred to
Medicaid, CHIP, or the Exchange, as applicable, who are determined
eligible by that agency. We are currently reviewing the comments
received and finalizing our proposal for implementation of performance
reporting. For further information about the RFI, see our Web site at
https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Data-and-Systems/Downloads/RFI-Performance-Indicators-1-24-13.pdf.
Comment: One commenter requested that we provide public access to
agreements between the Medicaid agency and other entities conducting
determinations. Some commenters also requested that we require public
posting of the agreements on internet Web sites.
Response: We have provided in Sec. 431.10(d) that agreements with
federal, state or local entities making eligibility determinations or
appeals decisions be available to the Secretary upon request. To the
extent that the Secretary requests and obtains a copy of an agreement
under Sec. 431.10(d), the public can request a copy of the agreement
through the Freedom of Information Act, 5 U.S.C. 552. These agreements
may also be obtained at the state level under state freedom of
information act laws.
Comment: Some commenters opposed this policy reversal from the
previous Medicaid eligibility rule, and noted that, since that rule was
issued, several states have relied on it to inform their decisions on
establishing a State-Based Exchange, as well as to plan for Exchange
and Medicaid systems and operations in future years. They believe these
decisions and activities cannot easily be amended or changed in a short
timeframe, and this policy change could have a major impact on the work
states have completed, as well as their future
[[Page 42190]]
plans. They requested that CMS revoke the proposed change.
Response: We appreciate the challenges facing states, which is why
we signaled nearly a year ago on May 16, 2012, in guidance titled
``General Guidance on Federally-facilitated Exchanges'' our intent, in
light of public comments received on the final Medicaid and Exchange
eligibility regulations, to propose further comment regarding ways that
States could ensure coordinated systems when engaging non-profits and
private contractors in the process of making Medicaid eligibility
evaluations, while having government agencies make eligibility
determinations. See https://cciio.cms.gov/resources/files/ffe_guidance_final_version_051612.pdf. We have also shared our intent to
propose revised rules in webinars with states on the eligibility rules
and in individual state meetings.
11. Conversion of Federal Minimum Income Standards for Section 1931 of
the Act (Sec. 435.110 and Sec. 435.116)
We proposed to require conversion of the federal minimum income
standard for section 1931 of the Act to comport with the new rules
regarding modified adjusted gross income (MAGI) that will take effect
on January 1, 2014. Sections 1902(e)(14)(A) and (E) of the Act ensure
that, in the aggregate, individuals who would have been eligible under
Medicaid rules in effect prior to the Affordable Care Act remain
eligible once the new MAGI-based methodologies go into effect. Our
proposal to direct conversion of the federal minimum standard for
section 1931 implements the conversion requirements in the statute more
consistently, which is particularly important in light of the Supreme
Court's decision in National Federation of Independent Business v.
Sebelius, ---- U.S. ----; 132 S. Ct. 2566; 183 L.Ed. 2d 450 (2012). The
proposed changes are discussed in more detail in the January 22, 2013
proposed rule (78 FR 4628 and 4629).
We received no comments on our proposed policy to convert the
federal minimum standard for section 1931 of the Act, and therefore,
are finalizing our proposal in Sec. 435.110. This policy relates to
the coverage levels for parents and caretaker relatives in states that
do not implement the eligibility expansion in section 2001 of the
Affordable Care Act to provide coverage for the low-income adult group.
In addition, because pregnancy benefits for pregnant women under Sec.
435.116(d)(4)(i) are tied to the same May 1, 1988 AFDC income standard
for the applicable family size, we are finalizing our proposal in Sec.
435.116 that this income limit should also be converted.
B. Essential Health Benefits in Alternative Benefit Plans
Section 1937 of the Act provides states with the flexibility to
amend their Medicaid state plans to provide for the use of benefit
packages other than the standard Medicaid state plan benefit package
offered in that state, for certain populations defined by the state.
These ABPs are based on benchmark or benchmark-equivalent packages.
There are four benchmark packages described in section 1937 of the Act:
The benefit package provided by the Federal Employees
Health Benefit plan (FEHB) Standard Blue Cross/Blue Shield Preferred
Provider Option;
State employee health coverage that is offered and
generally available to state employees;
The health insurance plan offered through the Health
Maintenance Organization (HMO) with the largest insured commercial non-
Medicaid enrollment in the state; and
Secretary-approved coverage, which is a benefit package
the Secretary has determined to provide coverage appropriate to meet
the needs of the population provided that coverage.
Benchmark-equivalent coverage is provided when the aggregate
actuarial value of the proposed benefit package is at least actuarially
equivalent to the coverage provided by one of the benefit packages
described above, for the identified Medicaid population to which it
will be offered. Section 1937 of the Act further provides that certain
categories of benefits must be provided in any benchmark-equivalent
plan, and other categories of benefits must include ``substantial
actuarial value'' compared to the benchmark package.
That said, we appreciate that it may be difficult at this point to
make changes to the ABP that take effect by January 1, 2014. In light
of this challenge, we will partner with states to work as quickly as
possible to come into full compliance with these provisions. We do not
intend to pursue compliance actions on these issues to the extent that
states are working toward but have not completed a transition to the
new ABPs on January 1, 2014.
Conforming Changes to Medicaid To Align With Essential Health Benefits
We proposed to implement section 2001(c) of the Affordable Care Act
that modifies the benefit provisions of section 1937 of the Act.
Specifically, section 2001(c) of the Affordable Care Act added mental
health benefits and prescription drug coverage to the list of benefits
that must be included in benchmark-equivalent coverage; required the
provision of Essential Health Benefits (EHBs) beginning in 2014; and
directed that section 1937 benefit plans that include medical/surgical
benefits and mental health and/or substance use disorder benefits
comply with the Paul Wellstone and Pete Domenici Mental Health Parity
and Addiction Equity Act of 2008 (MHPAEA).
In addition, we proposed to implement section 1902(k)(1) of the
Act, which requires that medical assistance for, the new eligibility
adult group for low-income adults under section 1902(a)(10)(A)(i)(VIII)
of the Act must receive medical assistance provided through an ABP
(which must include coverage of EHBs as of the same date).
We also proposed to implement section 1937(a)(2)(B)(viii) of the
Act, which provides that individuals in the new mandatory eligibility
group for former foster care children under age 26 are exempt from
mandatory enrollment in an ABP.
We proposed to implement section 1937(b)(7) of the Act, which
provides that medical assistance to individuals described in section
1905(a)(4)(C) of the Act (individuals of child bearing age) through
enrollment in an ABP shall include family planning services and
supplies.
We proposed to codify in Sec. 440.345(e) the process to determine
how often states would need to update ABPs after December 31, 2015.
We also proposed to add a new Sec. 440.347 to incorporate section
2001(c)(5) of the Affordable Care Act.
Furthermore, anti-discrimination provisions found at section
1302(b)(4) of the Affordable Care Act were proposed to be codified
Sec. 440.347(e).
1. General Comments
Comment: One commenter stated they support the structure for
implementing EHBs as proposed.
Response: CMS appreciates the support.
2. Alignment With Essential Health Benefits Provisions
a. Scope of Alternative Benefit Plans (Sec. 440.305)
We proposed to add the new adult eligibility group as an
eligibility group that must receive benefits consistent with section
1937 of the Act. We also proposed that groups provided ABP coverage
under section 1937 of the Act may be identified based on individual
characteristics and not by the amount or level of FMAP funding.
[[Page 42191]]
Comment: Many commenters commended the addition of language
prohibiting states from targeting Medicaid expansion populations solely
on the basis of applicable matching rate. In addition, many commenters
applauded language proposing to codify the flexibility HHS has given to
states to use the Secretary-approved option in section 1937 of the Act
to extend comprehensive Medicaid coverage to the newly-eligible
expansion population. The commenters further urged CMS to partner with
states to ensure that this population's full range of mental health and
substance use needs and other health needs will be met.
Response: We thank the commenters for their support.
Comment: One commenter questioned the inclusion of the sentence
which states, ``Enrollment in ABPs must be based on the characteristics
of the individual rather than the amount or level of federal matching
funds.'' The commenter stated this to be an unnecessary statement since
eligibility for FMAP is based on eligibility category. It is unclear
why enrollment in a benchmark plan would impact FMAP.
Response: People who qualify for eligibility under the new adult
eligibility group will be determined to be either newly eligible or
already eligible. For Medicaid coverage provided to the newly eligible
population, the state will receive 100 percent FMAP in 2014 and for
those who are determined to be eligible under December 2009 state
rules, the state will receive its otherwise applicable FMAP. We
included this language to clarify that states may not design different
benefit packages based on the level of FFP they will receive, but
rather the benefit package should be designed based on the medical
needs of the population being served.
Comment: One commenter believed that the use of ABPs will assist
states with expanding coverage in a meaningful way. However, the new
adult population may have unique health care needs, including a high
incidence of behavioral health and social issues. The commenter
believed that the use of the ABPs would be most beneficial if they are
used to tailor the scope of services and alignment of benefits to
ensure adequate delivery systems for high need populations.
Response: Section 1937 of the Act offers flexibility for states to
provide medical assistance by designing different benefit packages plan
for different groups of eligible individuals. We agree with the
commenter that ABPs can be successfully designed to meet the needs of
the new adult population, including those with varying health care
needs. As long as each benefit package contains all of the EHBs, much
flexibility exists for states to meet the needs of beneficiaries.
Comment: One commenter was concerned that individuals age 50 to 64
may not be provided EHBs that are at least equal to those available to
high-income individuals who purchase coverage on the commercial
markets.
Response: We understand that there could be some variation in EHBs
as defined for the individual market and for Medicaid based on the
selection of different benchmark plans to define EHBs. But the
flexibility to select different benchmark plans to define EHBs for
Medicaid ABPs will allow states to address the unique needs of each
circumstance and promote administrative simplicity, while still
providing a floor for coverage. As long as that floor is met, Medicaid
beneficiaries in the new adult group can also receive benefits from the
selected coverage options under section 1937 of the Act or through
substitution of benefits.
Comment: One commenter stated it is important that all individuals
obtaining Medicaid coverage under the Affordable Care Act receive
health coverage appropriate for their needs, including strong coverage
for mental health and substance use disorders. The commenter also wrote
it is important that traditionally Medicaid eligible populations that
may be enrolled in ABPs are guaranteed adequate coverage.
Response: ABP flexibility is an option that states can choose to
use in redesigning their current Medicaid benefit program. The
requirement that ABPs include EHBs and comply with mental health parity
requirements ensures a minimum level of sufficiency of the coverage.
Comment: One commenter requested that HHS require or give states
the option to provide EPSDT coverage to 19- and 20-year olds who
qualify for the new adult group.
Response: The existing provisions of Sec. 440.345 require states
to make available EPSDT services as defined in section 1905(r) of the
Act that are medically necessary for those individuals under age 21 who
are covered under the State plan. We did not propose to change this
requirement. To the extent that any medically necessary EPSDT services
are not covered through the ABP plan, states must supplement the ABP
plan to ensure access to these services. EPSDT provisions apply to 19-
and 20-year olds who qualify for the new adult group.
Comment: One commenter believed that the Affordable Care Act
provided an unprecedented opportunity to improve access to somatic and
behavioral health treatment for the ``jail-involved'' population. The
commenter noted that up to 6 million incarcerated individuals have
income below 133 percent which would make them newly eligible for
Medicaid under the Affordable Care Act. These individuals could
represent up to \1/3\ of the newly eligible population, underscoring
the importance of considering the particular circumstances of
incarcerated individuals in implementation of the Affordable Care Act.
Response: Paragraph (A) following section 1905(a)(29) of the Act
and implementing regulations at Sec. 435.1009, specify that Medicaid
is prohibited from making payments for care or services for any
individual who is an inmate of a public institution, except as an
inpatient in a medical institution. We read this prohibition to apply
generally to medical assistance, whether provided through the regular
coverage plan or through an ABP. Regular coverage or regular Medicaid
benefit package is defined as Medicaid state plan services including
services defined in section 1905(a), 1915(i), 1915(j) and 1945
authorities. Thus, while we agree with the commenter that incarcerated
individuals may be eligible for Medicaid, they would not be entitled to
ABP benefits inconsistent with the payment exclusion. We note that this
is consistent with the exclusion of incarcerated individuals from
eligibility to enroll in coverage through the Exchanges. It is also
consistent with the responsibility under the Eighth Amendment of the
United States Constitution of governmental entities to provide
necessary medical care to individuals who they are holding as inmates,
which effectively creates a liable third party for such care.
States should suspend, rather than terminate, the Medicaid
eligibility of individuals who are enrolled in Medicaid when entering a
public institution, so as to ensure ease of reinstitution of coverage
post-release. Additionally, if an individual is not already enrolled in
Medicaid, states can enroll eligible individuals prior to their release
so that the individual can receive Medicaid covered services in a
timely manner upon discharge.
Comment: One commenter believed that the new eligibility category
is likely to attract younger and healthier populations than traditional
Medicaid. The commenter believed that a percentage of those who are
newly eligible will acquire a condition or
[[Page 42192]]
disability after they are enrolled in an ABP. The commenter recommended
that HHS standardize an effective process for ensuring that
beneficiaries whose health status changes have the opportunity to
access in a timely manner other ABP or traditional state Medicaid plans
which meet their needs. The following standards were suggested: A
process for participants to request and receive clinically appropriate
benefits not routinely covered by the plan; a process for participants
to request and receive coverage for benefits beyond the limits set by
the plan where extraordinary circumstances exist; and a process for
participants to request and receive coverage of specialty care not
routinely coverage by the plan when medically necessary and
appropriate.
Response: As noted, states have the flexibility to define different
benefit packages to meet the needs of disparate populations. In
addition, individuals in the new adult group meeting the exemption
criterion found in section 1937 of the Act have the ability to choose
between ABP benchmark coverage designed by the state using the rules of
section 1937 of the Act including EHBs as a minimum level of coverage,
or ABP benchmark coverage defined as the state's approved regular state
plan benefit package, which is not subject to the requirements of
section 1937 of the Act.
Comment: One commenter supported providing states with flexibility
to add state plan benefits and services found in base-benchmark plans
to benchmark-equivalent benefits. The commenter also believed it would
helpful to clarify that adding such benefits would be possible and
appropriate for individuals in the Medicaid expansion group.
Response: We appreciate the commenter's support, and clarify here
that individuals in the new adult group can receive benchmark-
equivalent coverage or Secretary-approved coverage which can include a
broader range of services than in public employee or commercial
benchmark coverage options.
Comment: One commenter interpreted the proposed rule to say that
individuals who are newly eligible adults--and not deemed medically
frail--do not qualify for additional services above and beyond what is
required under section 1937 of the Act and the EHB. Based on that
interpretation, if a state wanted to provide wrap around services for a
particular population, in which some of the newly eligible would fall
under, it would not be allowable unless the state created a Secretary-
approved plan that incorporates the benefits into the underlying plan.
The commenter requested that CMS clarify and/or confirm the
interpretation of this provision.
Response: We confirm that the individual's interpretation is
correct. Section 1902(k)(1) of the Act provides that individuals in the
new adult group receive benchmark or benchmark-equivalent coverage
subject to the requirements of section 1937 of the Act (except that
individuals who would otherwise be exempt may choose to receive
benchmark or benchmark-equivalent coverage that is not limited by
section 1937 of the Act, and thus have the option of benchmark or
benchmark-equivalent coverage that is equal to the Medicaid benefit
package otherwise available). Such coverage can be in the form of
Secretary-approved coverage, which may, at state option, include a
broader range of services than public employee or commercial benchmark
options.
Comment: Many commenters requested CMS clarify that the federal
matching rate is based on the individual and not the services provided.
A few commenters requested clarification that services provided through
the Secretary-approved ABP process for Medicaid expansion individuals
will be covered at the enhanced rate and that Medicaid expansion
individuals who are exempted into traditional Medicaid coverage will
also be covered at the enhanced rate.
Response: We clarify that the enhanced FMAP rate for newly eligible
individuals is available for all services they receive. The matching
rate is based on the individual, not on the services provided to them.
Comment: One commenter urged HHS to clarify the flexibility that
states will have to design multiple ABPs targeting specific
populations. The commenter understands this provision will allow states
to put in place ABPs for sub-populations within the newly eligible
group (that is, people living with chronic viral hepatitis or other
chronic conditions) and urges CMS to clarify that this is an
appropriate use of the ABP flexibility.
Response: Section 1937 of the Act provides states with significant
flexibility to design Medicaid benefit coverage under the State plan.
There are many options in selecting an ABP, and states may offer
different ABPs to different targeted populations (except that, as
discussed elsewhere, targeting cannot be based on the amount or level
of federal matching funding). Section 1937 of the Act provides states
with the statutory construct to provide an ABP without regard to
requirements at sections 1902(a)(1) (related to state-wideness) and
1902(a)(10)(B) (related to comparability) of the Act. This flexibility
is provided at Sec. 440.376 and Sec. 440.380, respectively.
Comment: One commenter was unclear why the term ABP is being used.
The Affordable Care Act references ABPs specifically for evaluation of
the ABPs as required under the Class Independence Advisory Council.
Other sections reference alternative benefits or programs specifically
under section 1937 of the Act or the establishment of Basic Health
Plans. The commenter believed the use of the term is confusing and
unnecessary since benchmark plans are not alternative plans or programs
as originally identified in the law. Another commenter found Sec.
440.305 confusing as paragraph (a) refers to ``benchmark and benchmark-
equivalent'' however paragraph (b) refers to ABP. The commenter
suggested revising paragraph (a) by replacing benchmark and benchmark-
equivalent with ABP.
Response: The Deficit Reduction Act of 2005 amended the Act by
adding a new section 1937 of the Act to provide for the use of benefit
packages other than the standard benefit package, namely benchmark and
benchmark-equivalent packages. The Affordable Care Act made statutory
changes to section 1937 of the Act, one of which is the requirement
that section 1937 coverage packages include EHBs. We issued regulations
outlining how the precise parameters of EHBs will be established in the
non-grandfathered plans in the individual and small group markets and,
to some degree, how they will be implemented in section 1937 coverage
plans. In that regulation, the term ``base-benchmark'' was used to
refer to the base plan used by states to determine EHBs for coverage
plans in the non-grandfathered plans in the individual and small group
markets. That base-benchmark plan becomes the EHB-benchmark plan after
it is supplemented with any missing categories of EHBs. In an effort to
prevent confusion between the term ``benchmark'' used for the non-
grandfathered plans in the individual and small group markets, and the
use of ``benchmark'' by section 1937 coverage plans, we chose from the
statutory construct of section 1937 of the Act the term ``Alternative
Benefit Plan'' (ABP) to hereafter refer to Medicaid benchmark and
benchmark-equivalent plans as ABP.
Comment: One commenter indicated that there was no adult group
under section 1902(a)(10)(A)(i)(VIII) of the Act on or before February
8, 2006 so the
[[Page 42193]]
exception in subsection (b) does not appear to fit.
Response: Section 6044 of the Deficit Reduction Act of 2005 amended
Title XIX by adding a new section 1937 of the Act that allows States to
amend their Medicaid State plan to provide for ABPs and limits
application of this provision to individuals whose eligibility is based
on an eligibility category under section 1905(a) of the Act that could
have been covered under the State's plan on or before February 8, 2006.
In 2010, section 2001(a)(1) of the Affordable Care Act amended Title
XIX to establish a new optional adult eligibility group for low-income
adults age 19 to 64. Effective January 1, 2014, States that implement
this new eligibility group must provide medical assistance for that
group through an ABP. As specified, all provisions of section 1937 of
the Act apply to the new adult eligibility group except that those
individuals in the new adult group who meet the exemption criteria will
have a choice between ABP benchmark benefits as defined by the state
under the rules of section 1937 of the Act and ABP benchmark benefits
defined as the state's approved Medicaid state plan, without regards to
the rules of section 1937 of the Act.
Comment: A few commenters believed the final rule should clarify
that an ABP designed for individuals within the new adult eligibility
group can align with traditional Medicaid coverage through the process
of designing of a Secretary-approved plan.
Response: We understand the importance of this issue, and reiterate
guidance here. Secretary-approved coverage, which can include the full
regular Medicaid state plan benefit package, is one of the four
statutorily specified coverage benchmarks available under section 1937
of the Act. States can choose to use Secretary-approved coverage to
significantly align the benefits offered to the new adult eligibility
group with the regular state Medicaid package. Like with the other
three statutorily specified coverage benchmarks, the Secretary-approved
coverage must include EHBs as described in section 1302(b) of the
Affordable Care Act and applicable regulations. In all cases, EHBs are
first defined as the benefits from the base benchmark plan and
supplemented with benefits from other base benchmark plans as
necessary. CMS is clarifying in this rule that substitution of benefits
as defined at Sec. 156.115(b) is applicable to EHBs in ABPs. We
believe that states will appreciate this added flexibility.
Substitution of benefits can occur benefit by benefit. The benefits
must fit into the same EHB category and the benefits being interchanged
must be actuarially equivalent. Benefits do not have to be similar in
nature, they must only be in the same EHB category and actuarially
equivalent. Furthermore, states may substitute more than one benefit
that when combined are actuarially equivalent to a single benefit.
States may use their Medicaid state plan benefits for substitution if
the state plan benefit is actuarially equivalent and in the same EHB
category of benefit that will be replaced.
Comment: Consistent with the provisions of sections 1902(k)(1) and
1903(i)(36) of the Act, the commenter requested that CMS confirm that
the coverage for individuals eligible only through section
1902(a)(10)(A)(i)(VIII) of the Act is limited to benchmark or
benchmark-equivalent coverage.
Response: That is correct. This still leaves states with
significant flexibility to design coverage using the options of
benchmark coverage, which includes Secretary-approved coverage, and
benchmark equivalent coverage. Section 1937 of the Act must also
provide EHBs, which through selection of a base-benchmark plan,
supplementation and substitution, will be used to define the EHBs. EHBs
are then incorporated with the section 1937 benchmark coverage to lead
to a complete benefit package.
Comment: Several commenters stated that the option to offer
specialized benefit packages, in the form of more than one ABP, to
different target populations creates an administrative burden and
confusion for families. The option to offer specialized benefit
packages might require more than one design process and public notice;
additional actuarial analyses of the different benefit packages for
rate setting; an extra process for tracking individuals; and a state's
contracted MCOs would have to manages different benefit packages.
Response: The flexibility to provide specialized benefit packages
to one or more targeted populations is at the option of the state. Each
state will determine whether it is appropriate or administratively
feasible to design and offer different benefit packages for different
groups of beneficiaries.
Comment: One commenter was concerned with the disparities in
coverage that the proposed EHB policy would create. That is, the
guidance suggests that the policy only mandatorily applies to the newly
eligible category of adults. In states that wish to take up the new
expansion option this creates a situation in which the higher income
expansion population will receive a more generous benefit package than
the existing population would receive.
Response: We understand the commenter's concern, and it is true
that the benefit package may be different because of the requirement
that ABPs provide EHBs. However, it is not clear that the ABP benefit
package provided to the new adult eligibility group will be more
generous than the existing Medicaid benefit package. In addition, we
remind readers that the EHB requirements apply to all individuals
receiving services through an ABP, not just those in the new adult
group.
Summary: We did not make any changes to proposed regulation text as
a result of comments in this section.
b. Exempt Individuals (Former Foster Care Children) (Sec. 440.315)
We proposed to implement section 1937(a)(2)(B)(viii) of the Act,
added by section 2004 of the Affordable Care Act, as amended by section
10201(a) of the Affordable Care Act, by providing that individuals
eligible under section 1902(a)(10)(A)(i)(IX) of the Act will be exempt
from mandatory enrollment in an ABP.
Comment: Many commenters commended HHS for confirming that the new
former foster care children group is exempt from mandatory enrollment.
Many other commenters expressed support for affirming at Sec.
440.315(h) that former foster care children are statutorily exempt from
mandatory enrollment in an ABP, and therefore, can access the full
Medicaid benefit, including EPSDT services, up to age 21.
Response: We appreciate commenter support. Individuals under age 21
receive EPSDT either through the ABP or as additional coverage that
supplements the ABP.
Comment: One commenter wrote that while the proposed rule clarifies
that former foster care youth up to age 26 are eligible for full
Medicaid benefits, may not be mandated into an ABP, and will have
access to full EPSDT services up to age 21, after age 21, former foster
care youth will no longer have access to EPSDT benefits and requested
clarification as to the meaning of ``full Medicaid benefits.''
According to the commenter, the American Academy of Pediatrics recently
reported that children in foster care experience significantly higher
rates of medical and mental health challenges, and therefore, believes
that youth aging out of foster care require comprehensive health
coverage that recognizes their unique needs. Once a youth turns 21 they
lose EPSDT coverage but continue to have the same health needs. The
commenter
[[Page 42194]]
therefore requested that CMS define ``full Medicaid benefits'' to
include benefits akin to EPSDT, including dental coverage, mental
health services and physical health care.
One commenter stated she appreciates the clarification that former
foster care children are exempt from mandatory enrollment in an ABP and
that they will receive full Medicaid benefits. However, it is not clear
whether this means they can receive EPSDT. The commenter urged CMS to
consider mandating, or at a minimum, allowing states to provide EPSDT
benefits for this at risk population because in a majority of states
oral health is not part of the adult Medicaid benefit package and
evidence suggests that roughly 35 percent of children in foster care
have significant oral health problems. Making sure oral health issues
are addressed as former foster care youth move into adulthood will have
a significant impact.
Response: We acknowledge that children in foster care generally
experience significantly higher rates of medical and mental health
challenges and that these health challenges often continue after aging
out of foster care. For this reason, Congress provided statutory
protection for an individual who receives aid or assistance under part
B of title IV of the Act for children in foster care or an individual
for whom adoption or for whom foster care assistance is made available
under part E of title IV of the Act, without regard to age, by
exempting these individuals from mandatory enrollment in an ABP.
Under the existing provisions of Sec. 440.345, States must make
available EPSDT services, as defined in section 1905(r) of the Act, for
those individuals under age 21 who are enrolled in an ABP. To the
extent that medically necessary EPSDT services are not otherwise
covered through the ABP for individuals under 21, states are required
to supplement the ABP to ensure access to these services. However,
there is no statutory authority to require states to provide EPSDT
services beyond age 21. We note that states have the flexibility to
design an ABP targeted to former foster care children that provides a
more comprehensive array of health coverage than is provided through
the regular state plan and to offer voluntary enrollment in such a
plan. Through the ABP option, states can provide this population with
oral health and other services not otherwise available to adults
through State plan coverage.
Summary: We have not changed proposed regulation text as a result
of comments received in this section.
c. Benchmark-Equivalent Health Benefits Coverage (Prescription Drugs
and Mental Health Benefits) (Sec. 440.335)
We proposed to implement section 2001(c) of the Affordable Care Act
that added mental health benefits and prescription drug coverage to the
list of benefits that must be included in benchmark-equivalent
coverage.
Comment: Many commenters were supportive of paragraphs (b)(7) and
(b)(8) implementing the statutory requirements for benchmark-equivalent
coverage to include prescription drugs and mental health benefits. A
few commenters commended the broad list of services included in the
proposed rule.
Response: We agree that the inclusion of prescription drugs and
mental health benefits as defined within ABPs are important and
necessary and we appreciate the support of commenters regarding the
coverage of the benchmark-equivalent health benefits.
Comment: A few commenters were pleased that HHS listed services
that can be vital to people with disabilities and chronic health
conditions as allowable in benchmark-equivalent and Secretary-approved
coverage.
Response: We acknowledge the special medical needs of individuals
with chronic health conditions. The final rule provides a clear path to
coverage for chronic disease management under Sec. 440.347.
Comment: A number of commenters requested that CMS clarify
paragraph (c)(1). The commenters believed that CMS is suggesting it
will use a similar policy for benchmark-equivalent coverage as it does
for Secretary-approved coverage and, thus, allow addition of benefits
through the benchmark-equivalent coverage process. The commenters
believed there is no legal impediment to this approach and supported
it. The commenters urged CMS to confirm this interpretation.
Response: We confirm this interpretation. The rule provides states
the flexibility to include coverage for benefits beyond the required
coverage and allows for states to create benchmark-equivalent coverage
that can include benefits not available through the benchmark options.
Comment: Numerous commenters were confused by the language in Sec.
440.335(c)(1) allowing addition of services available in ``2 or more''
benchmark options, as opposed to the language of ``1 or more'' which
appears in Sec. 440.330 and in current regulation. The commenters
believed this may be a clerical error and recommended the ``1 or more''
language to maximize state flexibility.
Response: A clerical error was made in Sec. 440.335(c)(1). The
regulation has been corrected to read, ``. . . for any additional
benefits of the type which are covered in 1 or more of the standard
benchmark . . .''
Comment: One commenter was concerned that only provision Sec.
440.335(c)(1) was being amended leaving (c)(2) and (c)(3) intact. The
commenter believed this will result in conflict with newly added Sec.
440.335(b)(7) and (8) as these provisions provided that four benefits
(prescription drugs, mental health, vision and hearing services) must
represent 75 percent of the actuarial value and are not required to be
covered.
Response: We disagree that the existing provision Sec.
440.335(c)(2) will conflict with Sec. 440.335(b)(7) and (b)(8). The
actuarial value of the coverage for prescription drugs, mental health
services; vision services; and hearing services must still be at least
75 percent of the actuarial value of the coverage for that category of
service in the benchmark plan used for comparison by the state.
However, provision Sec. 440.335(c)(3) is in conflict with Sec.
440.335(b)(7) and (b)(8). The state will, by default, meet the
conditions of (c)(3) because prescription drugs and mental health
services are now required benchmark-equivalent coverage and states will
not have an option to provide such coverage as regulation currently
allows. States also have the ability to add vision and hearing services
through new requirements for additional coverage at Sec. 440.335(c),
for individuals not in the new adult group. Individuals in the new
adult group can receive these vision and hearing services, at state
option, through the use of Secretary-approved coverage. Therefore, we
have stricken Sec. 440.335(c)(3) from the final rule.
Summary: As a result of comments received in response to the
proposed regulation, CMS has deleted Sec. 440.335(c)(3) from the final
rule. Additionally, an error was made in Sec. 440.335(c)(1). The
regulation has been corrected to read, ``. . . for any additional
benefits of the type which are covered in 1 or more of the standard
benchmark coverage packages described in Sec. 440.330(a) through (c)
of this part or State plan benefits . . .'' Otherwise, CMS has not made
any changes to this section.
d. EPSDT and Other Required Benefits (Family Planning Services and
Supplies) (Sec. 440.345)
We proposed to codify section 2303(c) of the Affordable Care Act by
adding
[[Page 42195]]
paragraph (b) to Sec. 440.345 to provide that ABP coverage provided to
individuals described in section 1905(a)(4)(C) of the Act (individuals
of child bearing age), include family planning services and supplies.
Comment: Many commenters thanked CMS for codifying the important
provision requiring that ABP coverage provided to individuals of child-
bearing age include family planning services and supplies. This will
help insure that Medicaid beneficiaries can access essential family
planning services and supplies regardless of the type of Medicaid plan
in which they are enrolled.
Response: We thank the commenters for their support.
Comment: One commenter requested further clarification as to the
specific services and supplies that fall into this category.
Clarification was also requested on which services are covered for
individuals of child bearing age, including minors who can be
considered to be sexually active, who are eligible under the state
plan, and who want such services required under section 1905(a)(4)(C)
of the Act. Because family planning services are not clearly defined in
federal law or regulation, the commenter urged CMS to clarify in this
rule that family planning services and supplies include but are not be
limited to: examination and treatment by medical professionals;
medically appropriate laboratory examinations and tests; counseling
services and patient education; medically approved methods; procedures,
pharmaceutical supplies; and devices to prevent contraception and
infertility services, including sterilization reversal.
Several recommended HHS clarify family planning to specify coverage
of section 1905(a)(4)(C) of the Act services and supplies and require
states to assure compliance with section 1902(a)(23) of the Act freedom
of choice for family planning services and supplies, since it is likely
that many states will contract with managed care organizations, some of
which may have no Medicaid experience. They believe that explicitly
requiring freedom of choice will increase the likelihood that all plans
will comply with the freedom of choice requirement.
Response: Family planning services and supplies are described in
section 1905(a)(4)(C) of the Act. We have chosen not to use this rule
as the vehicle for issuing additional guidance on family planning
services, as such guidance would need to have broader implications than
this rule provides. In addition, we do not believe it is necessary to
address issues relating to beneficiary choice of family planning
provider in this provision, since this provision deals only with
coverage issues under an ABP, and not with issues such as freedom of
choice of provider. That issue is separately addressed in our
regulations at Sec. 431.51 and Sec. 441.20.
Comment: One commenter addressed section 2(B)(1) of the preamble,
specifically the statement ``Consistent with the current law, states
have the flexibility within those statutory and regulatory constructs
to adopt prior authorization and other utilization control measures, as
well as policies that promote the use of generic drugs.'' The commenter
is concerned that the interpretation of this statement could provide
too much flexibility for states in the use of utilization control
measures, creating a barrier to necessary family planning supplies for
Medicaid enrollees, as women need access to the full range of
contraceptive methods to utilize the method most effective for them.
The commenter requested HHS to issue sub-regulatory guidance that
prohibits barriers to the full range of FDA-approved contraceptive
methods guaranteed under the Affordable Care Act.
Response: Prior authorization and utilization control measures are
common practices used within regular Medicaid, public employee, and
commercial insurance products. Benefit packages designed within ABPs
also have this flexibility. These approaches should not be used as a
barrier to needed services. This proposed rule and final rule added the
Affordable Care Act requirement that all ABPs must include coverage of
family planning services and supplies. Nothing in the final rule
authorizes deviation from the protection of beneficiary free choice of
family planning provider, consistent with section 1902(a)(23) of the
Act and Sec. 431.51, or an exception to the requirement at Sec.
441.20 that the state plan provide that beneficiaries are protected
from coercion or mental pressure and are free to choose the method of
family planning to be used.
Comment: One commenter wrote that discrimination in benefit plan
design is a persistent practice in the insurance industry and the
exclusion of treatment for infertility is one example. Infertility
affects an estimated 12 percent of women of child bearing age and
infertility treatments are more commonly prescribed for women than for
men. Another commenter recommended that the list of required categories
of services for benchmark-equivalent coverage incorporate each of the
benefits including family planning services and supplies required under
EHB as specified in Sec. 440.347(a) for consistency and clarity and to
ensure consumer protections.
Response: Coverage of infertility services is generally at the
option of the state. However, coverage of infertility services becomes
part of the ABP benefit package either: (1) if the state selects a
coverage plan under section 1937 of the Act that includes such coverage
or chooses to include such coverage as part of a benchmark-equivalent
coverage plan; or, (2) if the base-benchmark plan chosen by the State
to define EHBs covers infertility treatment in an EHB category, unless
the state elects the option set forth in 45 CFR 156.115(b) to
substitute actuarially equivalent benefits in defining EHBs. We are
reiterating here that CMS is clarifying in this rule that substitution
of benefits as defined at 45 CFR 156.115(b) is applicable to EHBs in
ABPs. We believe that states will appreciate this added flexibility.
Under 45 CFR 156.115(b)(1), substitution of benefits can occur benefit
by benefit. The benefits must fit into the same EHB category and the
benefits being interchanged must be actuarially equivalent.
Furthermore, states may substitute more than one benefit that when
combined are actuarially equivalent to a single benefit. States may use
their Medicaid state plan benefits for substitution if the state plan
benefit is actuarially equivalent and in the same category of benefit
that will be replaced. We do believe it is necessary to explicitly list
the EHB categories in the regulation text for benchmark-equivalent
coverage, as section 1937 of the Act was amended to require both
benchmark and benchmark-equivalent coverage to include all EHBs. States
will identify substituted benefits in the ABP SPA when submitted to
CMS.
Summary: We will not be making changes to proposed regulation text
as a result of comments received.
e. EPSDT and Other Required Benefits (Mental Health Parity) (Sec.
440.345)
Section 2001(c) of the Affordable Care Act directed that benefit
plans under section 1937 of the Act that include medical and surgical
benefits and mental health and/or substance use disorder benefits
comply with MHPAEA and we codified this at Sec. 440.345(c) in the
proposed rule.
Comment: Almost all commenters expressed support for the
requirement in Sec. 440.345(c) requiring that mental health or
substance abuse benefits must be provided by ABPs and must comply with
MHPAEA. Many also commended CMS for clarifying that ABPs must include
mental health parity as this will
[[Page 42196]]
lead to the provision of necessary services to millions of individuals.
A number of commenters wrote about how extremely important it is that
all individuals gaining Medicaid eligibility under the Affordable Care
Act receive coverage appropriate for their needs including strong
coverage of mental health and substance use disorders. Many expressed
their appreciation for CMS's strong support for this provision. Many
stated that they appreciated the proposed rule's explicit recognition
of the Affordable Care Act requirement that ABPs must provide the EHBs,
including mental health and substance use disorder (MH/SUD) services.
Response: CMS thanks the commenters for their support on the
language in the regulation.
Comment: Some commenters asked CMS to provide additional detail on
how the requirements of MHPAEA apply to ABPs including details on how
to supplement benchmark or benchmark-equivalent coverage to bring it
into compliance with parity and how to identify violations in parity
compliance. Commenters requested clarification that MHPAEA requires
ABPs to offer the same scope of MH/SUD services as medical services,
including adequate prescription drug coverage.
Response: On January 16, 2013, CMS released a State Health Official
Letter regarding the application of MHPAEA to Medicaid MCOs, CHIP, and
ABPs. This guidance specifically states that all Medicaid ABPs
(including Secretary-approved coverage) must meet the parity
requirements, regardless of whether services are delivered in managed
care or non-managed care arrangements. This includes ABPs for
individuals in the new low-income Medicaid expansion group, effective
January 1, 2014.
Comment: Many commenters wrote that more than just requiring
compliance was needed in this final rule because of the documented
disparity between coverage of medical surgical benefits and coverage of
MH/SUD services in commercial and employer health coverage. With about
one quarter of adults suffering from a diagnosed mental health
disorder, disparity in services and cost sharing has wide ranging
impact. Some stated that studies and literature indicate deficits in
employer coverage of mental health benefits and that limits on MH/SUD
services were lower than those for medical surgical benefits. Some
commenters stated that in clarifying the application of mental health
parity CMS should make clear that if psychiatric rehabilitation
services are provided, so must psychiatric habilitation be required,
and that CMS should assure that a robust package of mental health
coverage is part of ABPs. Commenters indicated that supplementation,
substitution, parity and other protections are the best approaches for
EHBs to meet the complex health needs of the low-income adults who will
gain Medicaid eligibility under expansion. The commenters encouraged
CMS to do whatever is within its authority to encourage all plans to
expand their mental health and substance use disorder treatment to
provide better care by providing the full range of MH/SUD services and
to ultimately reduce costs and unnecessary loss of productivity and
life.
Response: States must offer services in all ten EHB categories,
including MH/SUD services, and must provide such MH/SUD services in a
manner that complies with the parity requirements of MHPAEA. We do not
intend to require or request states to include specific services within
EHB categories offered by their ABP. As states determine their ABP
service package, states must use all of the EHB services from the base-
benchmark plan selected by the state to define EHBs for Medicaid,
substituting or supplementing as necessary. We believe this will allay
concerns expressed by commenters, as commercial plans must also adhere
to mental health parity requirements.
Comment: One commenter wrote that final MHPAEA regulations are not
yet released, and therefore, CMS should provide a detailed framework
for determining and enforcing parity compliance in this final rule. The
commenter recommended that HHS establish a clear process for how states
can modify a plan to ensure parity compliance if it is not compliant;
clarify that the term ``treatment limitation'' includes both
quantitative and non-quantitative treatment limitations and includes
limits on scope of service and duration of treatment; require full
disclosure of benefit and medical management criteria from states and
plans to ensure MHPAEA compliance in ABPs; ensure that ABPs may not
apply a financial requirement or treatment limitation, as specified in
MHPAEA; include examples of parity violations and detailed information
on how to supplement coverage that falls short of the parity
requirements; and review all ABPs to ensure compliance with MHPAEA.
Response: The January 16, 2013 CMS State Health Officials Letter
provided a framework for States to apply MHPAEA to ABPs. Since the
release of this State Health Officials Letter, we have also provided
technical assistance to states regarding the application of MHPAEA to
ABPs prior to submission of the ABP state plan amendments.
Comment: A commenter requested that we clarify the applicability of
mental health parity to Medicaid managed care organizations that
provide benchmark or benchmark-equivalent coverage. The commenter
wanted to know if states would be required to provide services (for
example; rehabilitation, habilitation, substance abuse services, etc.)
that are optional services for Medicaid programs if they are not
currently covered.
Response: The January 16, 2013 State Health Official Letter
specifically states that all Medicaid ABPs (including Secretary-
approved coverage) must meet the parity requirements, regardless of
whether services are delivered in managed care or non-managed care
arrangements. In addition, under Sec. 440.347, ABPs must include MH/
SUD services regardless of whether they are currently covered in the
state's Medicaid plan.
Comment: One commenter requested that CMS clarify the guidelines
concerning ABP benefit substitutions that involve mental health
benefits. One wrote that substitutions should not be allowed if they
would diminish the value of the mental health coverage provided by the
EHB-benchmark plan on which ABP benefits are based. The commenter
recommended that this issue be carefully monitored; if possible, CMS
should develop an easily applied, objective test to evaluate whether a
proposed benefit substitution would reduce the value of mental health
coverage compared to the mental health coverage provided by the EHB
benchmark plan. Additionally, some commenters stated there still is
confusion about how to apply the parity requirements. Commenters
encouraged CMS to issue explicit guidance on whether benchmark plans
will be evaluated for compliance with parity requirements as necessary
before they are approved by CMS as ABPs.
Response: As discussed above and below in the summary, substitution
will be allowed according to provisions at 45 CFR 156.115(b) except
that states will perform substitution rather than issuers. We will
review all ABP state plan amendment requests from states against
applicable federal laws and regulations, including MHPAEA.
Comment: Some commenters wrote that because they are not
specifically enumerated in MHPAEA, inpatient mental health substance
abuse disorder (MH/SUD) services are often not
[[Page 42197]]
covered. Many commenters stated that the definition of ``inpatient'' in
the Interim Final Rules implementing MHPAEA leaves the definition up to
the state and insurance companies. This is important and unfortunate
because it allows for avoidance of MHPAEA and invites litigation. A
number of commenters stated that HHS can easily rectify this deficiency
by explicitly mandating residential coverage as an ``inpatient service
which must be offered on par with medical/surgical coverage.'' Some
urged CMS to explicitly restate the requirement that all Medicaid ABPs
must cover MH/SUD services. A number of comments stated that inpatient
services must be defined as including residential services, including
Institutions for Mental Diseases (IMDs). HHS can improve the
interpretation of relevant definitions by incorporating by reference
those definitions as set forth by the American Psychiatric Association
in its Diagnostic and Statistical Manual of Mental Disorders. By
offering a federal floor of required services states can take comfort
that they have met the mandated requirement. One commenter wrote that
IMD restrictions present an access barrier for the expansion population
and the Affordable Care Act is clear that ABPs should include the EHB
hospitalization and mental health services that are included in
commercial coverage that must cover EHB. Another commenter wrote that
HHS should prohibit ABPs from including mental health benefits that are
subject to higher limitations on amount, scope, and duration than
benefits intended for physical/medical conditions, or narrowly
specifying that mental health services cannot be a component of other
EHB categories, such as the mental health rehabilitation needs that are
required following a traumatic medical event.
Response: States must offer services in all ABPs that reflect the
ten EHB categories, including MH/SUD services. We do not intend to
require states to include specific services within EHB categories
offered through an ABP. Nor are we specifically requiring coverage of
any particular residential mental health services as part of
``inpatient services,'' provided that the coverage complies with
MHPAEA. States may, however, be required to provide residential mental
health services that are included in the section 1937 coverage plan
that is the basis for the ABP, or that is included in the base-
benchmark plan selected by states to define EHBs for Medicaid.
We clarify, however, that the IMD payment exclusion does apply to
all medical assistance, even medical assistance furnished through an
ABP. This means that FFP is not available for any services, including
services provided through an ABP, furnished to an individual under age
65 who resides in an IMD, except for inpatient psychiatric hospital
services furnished to individuals under age 21. Finally, we clarify
that the requirement that all ABPs comply with MHPAEA includes
compliance with MHPAEA requirements regarding treatment limits.
Comment: A commenter wrote that under the traditional Medicaid
program, the term ``medical assistance'' does not include care or
services for any individual who is a patient in an institution for
mental disease, but benchmark coverage does not have an express
exclusion of care and services for such individuals. The commenter
asserted that for benchmark coverage, which includes coverage for EHBs,
exclusion of these same services for patients residing in an IMD would
directly conflict with the plain language of the law because section
1937 of the Act provides for no exception for individuals between ages
of 21 and 65 residing in an IMD, but does contain an exemption from
other provisions of Title XIX (to which the IMD exclusion applies). The
commenter states that just as an ABP is exempt from complying with the
requirements related to state-wideness and comparability in the
Medicaid statute because they conflict with the benchmark authority, so
too is the plan exempt from complying with the IMD exclusion which
cannot be applied in a consistent manner with the EHB requirements. The
commenter also added that, just as application of the IMD exclusion to
an ABP would be ``directly contrary'' to a state's ability to offer
EHBs, the exclusion is also contrary to any of the benchmark/benchmark-
equivalent coverage described in the statute. Another commenter argued
the same points and also stated that the IMD exclusion is not
consistent with the definition of an ABP to include, among a selection
of plans, the health insurance plan offered through the HMO that has
the largest insured commercial non-Medicaid enrollment in the state. As
such coverage would necessarily be available on par to individuals
residing inside and outside of an IMD, the commenter asserted that
Congress never intended the IMD exclusion to apply to Medicaid
beneficiaries enrolled in an ABP.
Response: We do not agree with the commenters' statements that the
IMD exclusion does not apply to medical assistance furnished through an
ABP. The IMD exclusion is not a service or benefit exclusion. It is a
payment exclusion that applies to all Medicaid services provided to an
individual residing in an IMD, not solely a payment exclusion for
services provided in or by an IMD. The statute excludes services
furnished to residents of an IMD from the term ``medical assistance,''
and we read this exclusion to apply whether medical assistance is
furnished through regular coverage or through an ABP. (Above we clarify
that we have a parallel reading of the similar payment exclusion for
inmates of a public institution.) Thus, we clarify that the IMD payment
exclusion applies to coverage offered through ABPs. Benefits furnished
through ABPs can be structured so that individuals have inpatient
options for mental health treatment outside of IMDs, but to the extent
that an individual resides in an IMD, the IMD exclusion would apply. We
are not aware of any contrary congressional intent, and this position
is consistent with the express statutory exclusion from the definition
of medical assistance.
Comment: A few commenters stated that MH/SUD services are sometimes
provided in facilities that are considered an institution of mental
disease for which FFP is excluded and requested that CMS reconcile the
requirement that these services must be provided as an EHB.
Response: For the reasons discussed above, we are clarifying that
the IMD payment exclusion does apply to medical assistance furnished
through ABPs. We expect that ABPs will ensure that coverage for MH/SUD
services is available consistent with MHPAEA and the final regulations
that govern EHBs under Medicaid. There may be options for inpatient
services other than inpatient services in IMDs that states may wish to
consider to meet MHPAEA obligations under ABPs.
Comment: One commenter stated that exclusions for otherwise-covered
benefits such as mental health services that treat eating disorders and
gender disorders should not be permitted, as these exclusions carve out
coverage explicitly on the basis of health condition and are
discriminatory.
Response: We will review ABP state plan amendments to ensure their
compliance with applicable federal statutes and regulations, including
MHPAEA, and EHB anti-discrimination provisions.
Comment: One commenter stated that healthcare providers who provide
MH/SUD treatment services were encouraged by the passage of MHPAEA but
many states and insurance companies are ``stonewalling'' implementation
and inclusion of MH/
[[Page 42198]]
SUD treatment as a mandate. EHB requirements will not correct this
problem unless HHS rules provide better clarity regarding
implementation of parity, in particular inclusion of inpatient
services.
Response: MHPAEA does not require the provision of specific MH/SUD
services. Rather, it requires these services to be provided in parity
with medical/surgical services, when benefit packages include both sets
of services. The release of the January 13, 2013 State Health Official
Letter has provided initial guidance to states and managed care plans
regarding the application of MHPAEA to the Medicaid program. We believe
that guidance provides useful information to states regarding their
efforts to apply MHPAEA to their Medicaid ABPs. In addition, CMS is
reminding commenters that inpatient hospitalization is a required EHB
for ABPs.
Comment: One commenter stated that Medicaid regulations should
employ the same disorder carve-outs for the expansion population as
used for existing populations and remain in compliance with federal
parity laws. Further, states should not be required to provide
different or additional MH/SUD benefits to the expansion populations
than what is furnished to existing beneficiaries.
Response: This regulation does not prohibit states from using their
current delivery systems or designing new delivery systems to offer
EHBs, including MH/SUD services. States are required to offer MH/SUD
services consistent with the process set forth in this regulation
regarding the development of ABPs and MHPAEA. Because of the need to
select a public employee or commercial plan to define EHBs for
Medicaid, there could be differences between the ABP benefit package
and the services otherwise offered in the regular Medicaid coverage
package.
Comment: Many commenters strongly urged CMS to release final MHPAEA
regulations as soon as possible and to include how to apply parity to
EHBs and ABPs and to give examples of violations. A commenter stated
that without the final rule on MHPAEA, effective compliance will not be
possible. Another commenter requested prompt release of additional
guidance referenced in the January 13, 2013 State Health Official
Letter, concerning any requirements to apply parity principles across
multiple managed care delivery systems and urged a flexible approach to
measuring parity in carve-out setting in promotion of continuity for
existing arrangements and authorities.
Response: A response on the timing of a final MHPAEA regulation is
beyond the scope of this regulation.
Comment: One commenter wrote that insurance companies have sought
to avoid implementation of MHPAEA and states that do not currently
require mental health parity may be concerned that compliance will
result in the state incurring the costs associated with the expansion
of state mandates. Two commenters stated that there are lingering
concerns with some of the parity language in the proposed regulation,
which states in Sec. 440.345 that ABPs that provide both medical and
surgical benefits, and mental health or substance use disorder
benefits, must comply with MHPAEA. CMS should revise this language to
make it clearer and more accurate. The commenters asserted that MHPAEA
does not apply to coverage under section 1937 of the Act that is
delivered in a non-managed care arrangement; rather the Affordable Care
Act extended the protections of MHPAEA to this coverage without
amending MHPAEA. Specifically, regarding coverage under section 1937 of
the Act, the Affordable Care Act requires that ``the financial
requirements and treatment limitations applicable to such mental health
or substance use disorder benefits comply with the requirements of
section 2705(a) of the PHS Act (MHPAEA) in the same manner as such
requirements apply to a group health plan'' and the final rule should
include similar language.
Response: It is unclear exactly what the commenter is asking, in
terms of incurring expenses associated with state benefit requirements.
Therefore, we will not be able to respond to this comment at this time.
We disagree with the commenters' assertion that mental health parity
requirements do not apply to ABPs using non-managed care delivery
systems. Parity requirements apply to all ABPs, regardless of the use
of managed care.
Comment: One commenter wrote that because of changes in the income
eligibility standards we expect Medicaid expansion is more likely to
enroll individuals who are working but have no insurance and who need
this coverage to access treatment to maintain employment. People with
addictions enter treatment at different phases and will use different
parts of the continuum, and elimination of any part of the continuum
would violate MHPAEA and cost human lives. The commenter urged CMS to
adopt the same standards set forth in the proposed rule for the
Affordable Care Act standards related to EHB, Actuarial Value, and
Accreditation for purposes of Medicaid ABPs. Additionally, the
commenter stated that MHPAEA holds out the promise that everyone will
be able to get help but strong enforcement of MHPAEA is necessary.
Response: It is unclear exactly what the commenter is asking.
Therefore, we will not be able to respond to this comment at this time.
Comment: A commenter wrote that this rule as proposed rule fails to
link MHPAEA compliance to adherence to the Interim Final Rule which
operationalizes MHPAEA. The previously issued Proposed Rule for
Standards Related to Essential Health Benefits, which addressed the
design of EHBs for commercial market insurance beneficiaries, made
specific reference to the Interim Final Rule effectuating MHPAEA. The
proposed rule simply says the EHBs of ABPs must comply with MHPAEA. The
commenter questioned whether this lack of direct reference to the
existing law mean Medicaid ABPS need not comply with all provisions of
the Interim Rule. The commenter strongly urges CMS to clarify whether
or not these ABPs must comply with all provisions of the Interim Final
Rule and what if any law, in whole, or in part, it will use to assess
ABP compliance with MHPAEA.
Response: On January 16, 2013, CMS released a State Health Official
Letter regarding the application of MHPAEA to Medicaid MCOs, CHIP, and
ABPs. This guidance specifically states that all Medicaid ABPs,
including Secretary-approved coverage, must meet the parity
requirements, regardless of whether services are delivered in managed
care or non-managed care arrangements.
Comment: Several commenters wrote that exclusions of mental health,
substance use disorders and behavioral health treatments that fail to
meet the parity standards required by MHPAEA are discriminatory.
Despite existing parity requirements state implementation and
enforcement of MHPAEA has varied widely and patients seeking metal
health services are frequently subjected to excessive and inappropriate
non-quantitative limitations. Another commenter stated that CMS should
identify a standard to determine whether the coverage provided complies
with non-discrimination provisions of the Affordable Care Act.
Response: As stated in the January 13th State Health Official
Letter, ABPs must comply with MHPAEA.
Comment: One commenter suggested that the goal of Affordable Care
Act coverage was to include the 10 EHBs including mental health and
substance use disorder services.
[[Page 42199]]
Response: We agree with the commenter that one goal of Affordable
Care Act coverage was to include coverage of the 10 EHB categories,
including mental health and substance use disorder services in ABPs. We
support providing a floor of coverage to Medicaid beneficiaries. As
mental health parity also applies, this will lead to parity among
mental health and substance use services and other medical and surgical
services.
Summary: We will not be making changes to proposed regulation text
as a result of these comments. However, we are clarifying that the
payment exclusion for services provided to individuals residing in an
institute of mental disease (IMD) continues to apply to all individuals
participating in ABPs. This is important because many commercial
products offer coverage of residential services in settings that for
Medicaid purposes are considered IMDs, and federal matching funds will
not be available for medical assistance for individuals who reside in
such settings.
f. EPSDT and Other Required Benefits (ABPs Include EHBs and All Updates
and Modifications) (Sec. 440.345)
We proposed at Sec. 440.345(d) the requirement that ABPs provide
EHBs and include all updates and modifications thereafter by the
Secretary to the definition of EHBs.
Comment: Several commenters wrote that the revisions make Federally
Qualified Health Center (FQHC) requirements within ABPs less clear. The
EHBs are the floor of ABP coverage and that the requirement to provide
EHBs within ABP does not circumvent existing requirements within
section 1937 of the Act, which includes coverage of FQHCs. The
commenter stated to identify that the regulation as drafted is
confusing as subsections (a) describing the requirement that at least
the ten categories of EHBs be included in section 1937 of the Act and
(b) describing the requirements to include the benefits covered in one
of the state selected benchmark plans and subsection (a) does not
indicate that it is a floor. The commenters requested that CMS
reiterate or clarify revisions to the regulation to reaffirm this.
Response: There are several benefits specified by section 1937 of
the Act that are required in addition to EHBs. We did not change Sec.
440.365, which reflects section 1937(b)(4) of the Act, providing that
states must assure access to these services through the benchmark or
benchmark-equivalent coverage or otherwise, to rural health clinic
services and FQHC services, even if the state does not contract with an
FQHC or rural health clinic and that payment for these services must be
made in accordance with the payment provisions of section 1902(bb) of
the Act. The inclusion of EHBs within section 1937 of the Act
establishes a minimum level for benefits, to which other benefits
required as part of section 1937 of the Act are added.
Comment: Many commenters were supportive of the Affordable Care
Act's application of EHB requirements to ABPs and providing a floor of
benefits. Some commenters also supported inclusion of updates and
modifications made thereafter. Some commenters went further to support
the inclusion of mental health and substance use disorder benefits as
consistent with the MHPAEA.
One commenter generally supported implementing EHBs in ABPs to
provide a stable set of core services for people receiving benefits in
the ABP, and to help align the rules for patients and providers to
ensure continuity of care. This is important for people who will churn
between Medicaid, the commercial markets and potentially a state basic
health plan.
Response: CMS appreciates the support of commenters.
Comment: A few commenters identified that EHB definitions will
affect how individuals maintain access to health care, services and
drugs and biologicals that they need.
Response: We agree with these commenters. The new coverage will
likely be different from the coverage that beneficiaries receive today.
States will have discretion regarding how to define EHBs using the
process outlined in this regulation, namely selecting the base-
benchmark plan to define EHBs. For Medicaid, we remind readers that
EHBs are only the floor for coverage, and states have options for
offering coverage that exceeds this floor. States can also add
additional coverage for beneficiaries receiving ABPs who are not
eligible for the new adult group.
Comment: One commenter suggested that home care services should be
included in the Medicaid ABP to the same extent that they are included
in the existing regular Medicaid program.
Response: The rules for establishing coverage are different between
the regular state Medicaid program and flexibility provided within
section 1937 of the Act. States must provide home health services as a
mandatory benefit in the regular Medicaid state plan. This is not a
minimum requirement for coverage under of section 1937 of the Act and
is not required as an element of EHBs.
Comment: One commenter requested clarification that the Affordable
Care Act established a floor of coverage using EHBs. Benefits should
not be limited solely to EHBs as no ceiling was established. The
Affordable Care Act only restricts costs for state mandated benefits
from being passed onto the federal government via the EHBs.
Response: Yes, EHBs are considered a minimum level of coverage.
ABPs are not limited solely to EHB benefits; ABPs are constructed based
on the coverage plan under section 1937 of the Act selected by the
state, including EHBs based on the state selected base benchmark plan,
supplemented as necessary and subject to substitution of actuarially
equivalent benefits as permitted under 45 CFR 156.115(b). The section
1937 coverage plan selected by the state can include a Secretary-
approved coverage plan that may include benefits that are not available
under other section 1937 coverage options. Furthermore, ABPs are
required to cover certain benefits including rural health clinics,
FQHCs, and family planning services and supplies. EPSDT services for
individuals below age 21 also apply within section 1937 of the Act.
MHPAEA also applies to the provision of MH/SUD services.
Comment: One commenter requested that CMS consider adding an EHB
requirement for hospitals and pediatricians to conduct risk assessments
of all newborns for severe respiratory syncytial virus (RSV) disease.
Response: These services can be covered if states select coverage
options that cover such services. Furthermore, children must receive
all EPSDT services as part of the ABP, and states may consider such
risk assessments to be part of the required EPSDT screening services.
For the new adult group, only 19- and 20-year olds will be covered by
EPSDT. There are both requirements and flexibility for states in both
selecting plans and constructing EHBs and section 1937 coverage
options. Please refer to the summary at the end of this section for
further discussion of these steps and flexibilities.
Summary: We have not made any changes to regulation text, based on
public comments received.
g. EPSDT and Other Required Benefits (Process for Updating EHBs) (Sec.
440.345)
In Sec. 440.345(e), we proposed that the ABPs that include EHBs
will remain effective through December 31, 2015 without a need for
updating. We also proposed that we will consult with states and
stakeholders and evaluate the
[[Page 42200]]
process to determine updates to the ABPs after that date.
Comment: Several commenters offered support of the intent of our
proposed policy concerning the updating of ABPs that have been
determined to include EHBs as of January 1, 2014. One commenter
supported the Department's intent to issue future guidance for updating
EHB benefits for 2016 and subsequent years. Similarly, another
commenter indicated support of the alignment of the transition period
for updating ABPs with the transition period designated for updating
EHBs in 45 CFR Part 156.
Response: We appreciate the support.
Comment: A few commenters indicated concern that imposing a
requirement to update section 1937 benchmark plans would add
significant new workload for states. One commenter believed that there
is currently no statutory requirement to make updates to section 1937
plans, and suggested that the Secretary allow for grandfathering of
currently offered section 1937 benchmark benefit plans. Many commenters
also recommended that HHS reserve some authority to resolve significant
problems with the benefits package during this time period by revising
the proposed provision to add that states with approved ABPs as of
January 1, 2014 do not have to update benefits until December 31, 2015,
``unless the Secretary determines that there are exceptional
circumstances to update a plan.'' Several commenters urged the
Department to set up a formal mechanism to ensure that adequate data is
collected for ABPs in 2014 and 2015 to inform updating benefits in 2016
through a transparent process in which consumers help guide any
necessary changes. Similarly, several other commenters urged the
Department to consider a more robust stakeholder engagement in all
aspects of processes used to assess the current EHB approach and
whether to adopt a new approach in 2016.
Response: CMS has been working with states to submit state plan
amendments using a standardized template that includes the information
needed for approval from CMS. The CMS review process allows for
resolution of issues identified within the ABP prior to approval. We
aligned the timeframes with CMS policy to allow for implementation
efficiencies. As we develop the process, we will take into account
balancing potential workload of the state and CMS and the need for
information to keep the ABP current with changing commercial market
products. It is important for ABPs to stay current with changes in the
base-benchmark as well as with public employee or commercial plans that
may have been selected as section 1937 coverage options. Commercial
plans are usually updated annually. All ABP SPAs are required to have
public notice and approved SPAs will be placed on a CMS Web site. We
are also updating the Medicaid Statistical Information System (MSIS) to
improve the quality, accuracy, and timeliness of data submitted to CMS
by states. That said, we appreciate that it may be difficult at this
point to make changes to the ABP that take effect by January 1, 2014.
In light of this challenge, we will partner with states to work as
quickly as possible to come into full compliance with these provisions.
We do not intend to pursue compliance actions on these issues to the
extent that states are working toward but have not completed a
transition to the new ABPs on January 1, 2014.
Comment: One commenter indicated that the applicability of the
proposed provision was unclear when applied to states that choose not
to expand coverage as of January 1, 2014, but might choose to offer a
benchmark benefit plan prior to December 31, 2015.
Response: These provisions apply to all existing and new ABPs that
have an effective date of January 1, 2014 or later.
Summary: We will not be making changes to proposed regulation text
as a result of comments received.
h. Essential Health Benefits (Sec. 440.347)
We proposed to add EHBs within section 1937 of the Act and that
individuals in the new adult group who meet the criteria for exemption
from mandatory enrollment will receive a choice of benchmark coverage
defined as the benefit package using section 1937 rules or the state's
approved Medicaid state plan that is not subject to the section 1937
rules. We proposed a process for establishing EHBs within an ABP that
is consistent with the general provisions for established EHBs in the
individual and small group market, but reflects the particular
circumstances of Medicaid. In particular, the process reflects the fact
that the state establishes coverage rather than an insurance issuer,
and that the coverage is consistent with the requirements of section
1937 of the Act. We also proposed that, while EHBs will be defined by
the state using a selected base benchmark from the list of those plans
that can be chosen to define EHBs in the individual and small group
market, the base benchmark plan for defining EHBs for Medicaid can be
different than the base benchmark plan chosen for the commercial
market. We further proposed that there could be more than one base
benchmark plan for defining EHBs for Medicaid ABPs.
Comment: One commenter stated they support the structure for
implementing Essential Health Benefits as proposed.
Response: CMS appreciates the support.
Comment: One commenter supported Sec. 440.347, which allows states
to have more than one ABP to reflect the health care needs of a
targeted population and use a different base benchmark plan for each
ABP. A few commenters supported HHS implementing the statutory
requirements to at a minimum include EHBs. One commenter supported the
general approach to coverage of EHBs. Another commenter supported
states having broad flexibility to choose a benchmark plan, including
the same options available in the commercial market and the ability to
use a different plan from the one that was selected for the state's
commercial plans. This commenter also recommended that the state's
Medicaid State Plan be considered for Secretary-approved coverage for
the ABPs. They requested clarification of the timeframe for approval of
Secretary-approved plans.
Response: We appreciate the support of our policy to allow states
the flexibility to use different base benchmarks in Medicaid from those
used for the non-grandfathered plans in the individual and small group
markets.
We confirm that Secretary-approved coverage is part of the ABP
template, and can include the full coverage otherwise available under
the approved state plan, as long as all requirements of this regulation
are met. The entire template is considered a state plan amendment to be
completed and submitted by the state to CMS for approval. The timing of
action on state plan amendments is addressed in our regulations at
Sec. 430.16, which include one 90-day review period, the option for
CMS to request additional information, and an additional 90-day review
period.
Comment: One commenter requested that HHS clarify that states can
design ABPs for subpopulations within the newly eligible group.
Response: We confirm that states can offer different ABPs to
subpopulations within the newly eligible group. Under section
1937(a)(1)(A) of the Act, coverage through an ABP can be offered to
``groups specified by the State'' without regard to the comparability
or statewideness requirements at section 1902(a)(10)(B) of the Act and
Sec. 440.240. (Other requirements, such as civil rights protections,
still apply and may affect the nature of the groups that a state may
specify.) As a result, states may offer ABPs that are appropriate for
the unique
[[Page 42201]]
characteristics of subgroups of the new adult group; for example,
states may offer different ABPs to individuals in different geographic
regions, or to individuals who have particular medical, service or
support needs.
Comment: The flexibility for states to select EHBs at Sec.
440.347(b) and (c) to achieve targeting of populations causes more harm
than good according to some commenters. The commenters believe that
states already have significant flexibility to target ABPs through the
Secretary-approved process and the targeting flexibility adds little
but creates confusion. CMS would be better served in terms of
administrative simplicity, oversight, and consumer understanding if one
EHB standard was applicable in the commercial markets and ABPs. These
commenters recommend that HHS require states to use the state-selected
base benchmark plan that applies for the commercial markets for ABPs as
well. Another commenter believes that EHBs should establish a minimum
floor of coverage and that all plans should be required to use the
state-selected base-benchmark plan that applies for the commercial
markets for purposes of section 1937 of the Act as well. This will
reduce administrative burden and better align standards between EHB in
the commercial markets and in Medicaid.
Response: The flexibility provided at Sec. 440.347(b) and (c)
permits states to design different benefit packages that at a minimum
include EHBs. Alternatively, one benefit package could be used for
multiple populations. States also have the choice to use the same base
benchmark in ABPs and the commercial markets, which would result in
aligning standards for EHB in coverage under ABPs and the commercial
markets. We have adopted policies that would maximize state flexibility
while ensuring sufficient coverage for beneficiaries.
Comment: One commenter is seeking clarification of the phrase set
forth in Sec. 440.347 ``consistent with the requirements set forth in
45 CFR [part] 156'', particularly if it adds obligations to the
requirement to select a benchmark plan that includes benefits in each
of the ten EHB categories. A few commenters request clarification of
the specific provisions of 45 CFR Part 156 related to EHB that apply.
Response: This regulation is consistent with the EHB requirements
under 45 CFR Part 156, but specifically addresses the application of
those requirements for purposes of compliance with section 1937 of the
Act as amended by section 2001(c) of the Affordable Care Act. The base-
benchmark plans for defining EHBs include the same choices in both
Medicaid and the non-grandfathered plans in the individual and small
group markets. States may choose a different base benchmark plan for
Medicaid than for the individual and small group markets. But,
recognizing that Medicaid coverage is provided in a different context
than coverage in the individual and small group markets, we provide
that states may choose a different base benchmark plan for Medicaid
than the individual and small group markets, and may choose more than
one base benchmark plan for Medicaid. We also provide that states
exercise the options available in the individual and small group market
to insurance issuers. This regulation identifies those aspects of 45
CFR part 156 that are modified within Medicaid under the section of the
preamble entitled ``Modifications in Applying the Provisions of This
Proposed Rule to Medicaid.''
Comment: Several commenters suggested that the list of required
categories of services for benchmark-equivalent coverage include the
EHBs as specified in Sec. 440.347(a) for consistency and clarity as
ABP coverage must include at least the EHBs. Another commenter
suggested that CMS should pursue parity between Medicaid state plan
benefits and the new ABP for newly eligible adults to assist with
``churn'' between Medicaid and the commercial markets.
Response: Section 1302 of the Affordable Care Act establishes EHBs
that must be provided as part of benchmark benefit coverage. A
benchmark-equivalent benefit package must be actuarially equivalent to
the benchmark plan that is chosen. We do not believe it is necessary to
specifically add the EHB categories to benchmark-equivalent coverage
because we are instead setting out procedures to ensure that coverage
includes EHBs that govern both benchmark and benchmark-equivalent
coverage.
Comment: Section 440.347(c) allows states to select more than one
EHB option for ABPs. A few commenters urged CMS to limit states to
choosing a single EHB option for Medicaid to provide a floor of
benefits. They asserted that Congress intended consistency among ABPs
by applying EHB requirements to them. Some commenters asserted that
allowing for selection of multiple options will create unnecessary
administrative burdens on state Medicaid programs and this commenter
suggests that there should be only one EHB benchmark option for ABPs.
But other commenters agreed with our proposed rule that, because ABPs
serve a different population than private health plans, the single EHB
benchmark does not need to be the same as the one chosen for the
state's individual and small group market. Another commenter asked that
CMS clarify that states do not have the flexibility to vary amount,
duration, and scope of benefits within populations on a plan-by-plan
basis as currently allowed, which would only increase complexity. This
commenter also requested clarification related to whether the limited
authority provided through the DRA and now expanded through this rule
can be superseded by section 1115 authority. This commenter also
responded that a state may try to combine flexibilities for EHB, ABP,
premium assistance, and amount, duration, and scope to shift to a model
that has not been adequately explored for unintended consequences.
Response: While it is true that coverage of EHBs will be required
for non-grandfathered plans offered in both the individual and small
group markets and Medicaid, we think it is important to provide states
flexibility to define EHBs as appropriate in each context. In the non-
grandfathered plans offered in the individual and small group markets,
states have some flexibility to define EHBs through selection of a base
benchmark plan. For Medicaid coverage, we believe that additional
flexibility will enable states to tailor coverage to the needs of the
Medicaid population. While states can, for simplicity, choose one
standard to determine EHB in both the individual and group markets and
in Medicaid, they are not required to do so. We are permitting states
flexibility to choose a single standard or multiple standards for EHB
in Medicaid to ensure a full range of coverage options. States must
determine whether multiple standards would result in administrative
burdens. We are reminding states that the floor of coverage is EHBs
defined by the benefits, including limitations on amount, duration, and
scope, from the selected base benchmark plan (but states may be
required to, or may have options to, cover benefits above that floor
consistent with section 1937 of the Act). Please refer to the summary
at the end of this section for further discussion of these steps and
flexibilities.
Comment: Several commenters recommend that the Department ensure
that Secretary-approved coverage is actuarially equivalent to the other
benchmark coverage options. These commenters support the clarification
that Secretary-approved coverage must provide robust benefits. However,
these commenters indicate that it is important
[[Page 42202]]
for Secretary-approved coverage to provide the same level of coverage
as other benchmark plan options to prevent newly eligible people from
receiving lesser coverage.
Response: This rule is not intended to change the assessment of
Secretary-approved coverage, except to the extent that it must include
EHBs. The standard that we apply for assuring the sufficiency of the
benefit package established using Secretary-approved coverage is
whether the benefits are appropriate to meet the needs of the
population provided that coverage, as outlined in Sec. 440.330(d).
EHBs establish a floor of benefits for ABP populations and must be
provided with Secretary-approved coverage as with any ABP. Secretary-
approved coverage permits states flexibility to design a benefit plan
that might differ from the other options available under section 1937
of the Act. As mentioned previously, in all cases a state must first
select a base benchmark to define EHBs. The EHBs in the base benchmark
plan serve as the minimum floor of coverage that is supplemented for
any missing EHBs. Using substitution, states may achieve a benefit
package that includes benefits from the regular state plan.
Comment: One commenter believed that extending full Medicaid
benefits to the newly-eligible expansion population, supplemented as
needed to comply with the EHB, parity, and other protections in the
law, is the best approach for meeting the complex health needs of low-
income adults who will gain Medicaid eligibility under the expansion.
The commenter urged CMS to work with States to ensure that this
population's full range of substance use disorders and mental health
needs and other health needs will be met. The commenter further
suggested that CMS include language in the final rule that explicitly
restates the requirement that all Medicaid ABPs must cover mental
health services and substance use disorder services for all enrollees.
Response: States have much flexibility, but are not required to use
benefits from their regular Medicaid benefit package for the new adult
coverage group, as long as EHBs are assured. The statute and regulation
direct that mental health parity requirements and EHB requirements,
including the provision of mental health and substance use services, be
met. In some circumstances, we anticipate that the coverage furnished
to the new adult coverage group may include certain benefits, such as
certain substance abuse treatment services, that the state has elected
not to cover under the state's regular Medicaid benefit package.
Comment: The commenter stated general agreement with the approach
that CMS has recommended for the ABP to be offered to certain
populations under the expansion of Medicaid. The commenter requested
clarification that the state would choose an ABP from four benchmark
packages and would compare that choice to the private market EHB,
supplementing coverage of the ABP if necessary to ensure that all EHB
categories are included.
Response: There are both requirements and flexibility for states in
constructing EHBs and section 1937 coverage options. Please refer to
the summary at the end of this section for further discussion of these
steps and flexibilities.
Comment: One commenter would like to underscore the importance of
promoting seamless coverage among low-income individuals. Many of the
individuals newly eligible for Medicaid in 2014 are likely to have
fluctuations in income, and therefore are likely to ``churn'' between
Medicaid and subsidized Exchange insurance coverage. This churn could
result in treatment disruptions among patients and create
administrative complexity for Exchanges, plans, and providers. Thus,
promoting seamless coverage for this population and ensuring
coordination of care during coverage transitions will be critical.
Response: We appreciate the circumstances that the commenter
identified for individuals that may have fluctuations in income. States
have options for minimizing treatment disruptions and CMS will work
with states to promote continuity of care.
Comment: One commenter urges CMS to consider revising certain
sections of the proposed rule to allow states the greatest opportunity
to develop ABPs that are reflective of the population that they serve
and ensure the long-term financial sustainability of this category of
eligibility. This commenter believes that the proposed regulations
create a cumbersome and confusing process and appear to strongly
incentivize states to essentially mirror state plan benefits. This
commenter wants maximum creativity to define the benefit package that
will be provided to the newly eligible population, and encourages CMS
to use this opportunity to allow for greater innovation at the state
level by allowing design of benefit packages that simply take pieces of
both Medicaid and the commercial market while also covering all EHBs.
This approach will lead states to compare Medicaid to private and
commercial market benefits and potentially add benefits to the Medicaid
state plan.
Response: We believe that the regulations offer significant
flexibility for states to create benefit packages for all or for
different groups of its newly eligible population. Appropriate benefit
package design for the population's needs may contribute to long-term
financial stability.
Comment: A few commenters were concerned with disparities in
coverage as the guidance suggests that the policy only mandatorily
applies to the newly eligible category of adults. In states that expand
their Medicaid programs to include these new categories of eligibility,
they note that a higher income expansion population will receive a more
generous package than existing populations. This will create a churn in
Medicaid where states will likely have to expand coverage for all adult
populations within Medicaid to prevent churn. They assert that this
would result in significant financial cost to states to expand benefits
to all adults as new benefits for the existing population are
ineligible for the enhanced match offered under the Affordable Care Act
for the newly eligible expansion population.
Response: The Medicaid statute provides that coverage may be
different for those people who receive coverage through an ABP
established under section 1937 and those who receive regular Medicaid
coverage. People in the new adult group must receive benchmark or
benchmark-equivalent benefits, including EHBs. Consistent with the
statute, the rules promulgated in this regulation will apply to all
ABPs, not just for those people in the new adult group. As long as ABP
(including EHB) requirements are met, states have significant
flexibility in designing benefit package options that approximate
regular state plan benefits.
Comment: Many commenters recommended that ABPs provide appropriate
coverage to meet the needs of the population in all ten EHB categories
as per the general requirements of Sec. 440.330. These commenters
suggest that the lack of a minimum standard in each of the ten
categories is a flaw in the Exchange EHB standard that gets further
magnified in Medicaid. For women's health, this is particularly
important in terms of preventive services, prescription drugs, and
maternity care. Several commenters support the EHB requirement as a
strong floor for ABPs and indicate that states should have ample
flexibility to add to the floor. These commenters also provided
recommended regulatory language for Sec. 440.347(a) through (c).
Response: EHBs are a floor to coverage and states have flexibility
to
[[Page 42203]]
design an ABP that includes coverage above the minimum level of EHBs.
Section 1302(b)(2) of the Affordable Care Act directs the Secretary to
determine EHBs by reference to benefits typically offered in the group
market, which is the same standard that we are applying in Medicaid by
requiring that states determine EHBs by selecting a base benchmark from
among the regulatory options described in Sec. 156.100. All benefits
within the base benchmark that defines EHBs will need to be
incorporated into the ABP, supplemented as necessary and subject to
substitution of actuarially equivalent benefits as permitted under 45
CFR 156.115(b). But the ABP can include other benefits based on the
state choice of coverage option.
For groups other than those in the new adult group, states can also
offer additional benefits to supplement the benchmark or benchmark
equivalent coverage that includes EHB and other required services.
Sections 1902(k)(1) and 1903(i)(26) clarify that individuals in the new
adult group receive benchmark or benchmark-equivalent coverage (that
includes EHB and other required services and, as we explain below, for
individuals who would otherwise be exempt from enrollment in an ABP,
the option to receive an ABP that consists of regular Medicaid
coverage). We intend to issue an ABP state plan amendment template and
corresponding implementation guides for the states to use when
submitting ABP state plan amendments.
Comment: One commenter supports requiring coverage of all ten EHBs,
as this will go a long way toward ensuring that Medicaid participants
have adequate health care coverage. They request that HHS define the
scope and services within each of the ten benefit categories to ensure
that the covered services are at a minimum the same and provide a level
of guaranteed coverage. This is necessary to ensure that there is
adequate coverage within categories and balance between categories, and
necessary to determine if ABPs are equivalent to the EHB package and
comply with Affordable Care Act.
Response: We thank the commenter for the support.
Comment: One commenter indicated that ABPs should include an array
of home care services that exist in traditional Medicaid benefit
programs to comply with the American with Disabilities Act and Supreme
Court Olmstead decision. To the extent that EHBs include institutional
care or inpatient settings, a state must offer a choice of ``the least
restrictive environment.'' Similarly, states that choose to provide
services to individuals enrolled in ABPs that involve care in an
institution should be required to include home and community-based care
as well.
Response: Section 1902(k)(1) of the Act provides that medical
assistance for the new adult eligibility group is limited to benchmark
and benchmark-equivalent coverage. Section 1902(k)(1) of the Act also
provides an exception to the requirements of section 1937 of the Act
for individuals who would be described in the exemptions at section
1937(a)(2) of the Act. This means that individuals in the new adult
eligibility group that otherwise meet the exemption criteria are
required to be enrolled in benchmark or benchmark-equivalent coverage,
but their benchmark or benchmark-equivalent coverage is not limited by
the requirements of section 1937 of the Act. Therefore, these
individuals must have a choice to receive ABP benefits as defined by
the state applying the requirements of section 1937 of the Act using
benchmark or benchmark-equivalent coverage (including EHBs and other
required coverage) or ABP benefits defined without regard to the
requirements of section 1937 of the Act, which consists of regular
Medicaid coverage under the state plan. Home care is not a standardized
term in Medicaid, so clarification would be needed to determine which
Medicaid benefit category is actually applicable.
We agree that states are obligated to comply with the Americans
with Disabilities Act and the Olmstead decision.
Comment: One commenter requests that crisis services be included in
the mental health and substance abuse services category in the EHB
package. This commenter requests that it be offered by qualified health
plans and in new Medicaid expansion benefits in each state. These are
important services to the safety net and for 24/7 crisis care, suicide
prevention and access to emergency health care services, especially in
communities where emergency mental health clinics or mobile health
services are unavailable.
Response: CMS is not requiring specific services to be included in
any of the EHB categories, but all ABPs must include all EHBs defined
through the process described in our regulations.
Comment: Several commenters suggest that EHBs should comply with a
consistent standard across ABPs as they are concerned that the proposed
rule allows for states to select more than one option for establishing
EHB to implement multiple ABPs for targeted populations. These
commenters also recognize the need for states to target populations to
address specific health care needs.
Response: We are providing flexibility for states to select base
benchmark plans in Medicaid that are different than the one selected
for the individual and small group market, and to select multiple base
benchmark plans, to maximize the ability for states to define ABPs that
serve the unique needs of Medicaid populations and subpopulations.
Comment: One commenter requested CMS include autism coverage in the
EHB package to correct the omission. Lack of coverage can create
significant financial burden on families and discourages autism
professionals from practice. Families also may decide to not pursue
treatment.
Response: States have choices in determining in the benefit package
that will be covered in their state within federal guidelines, but all
ABPs must provide for coverage of EPSDT services for individuals under
the age of 21. We expect that services to treat autism may be covered
through a variety of coverage categories and many would be included in
a state's ABP either because the services are within the section 1937
coverage option or included as part of EHBs.
Comment: One commenter applauds HHS for including coverage of the
full package of EHBs, as it includes coverage of screening and brief
counseling for domestic and interpersonal violence, in the Medicaid
ABPs.
Response: We thank the commenter for the support. While it is not
certain that every ABP will include counseling for domestic and
interpersonal violence, such services will be provided if they are part
of the EHBs.
Comment: One commenter believes that strong and comprehensive
oversight and enforcement of EHBs and nondiscrimination standards at
the state and federal level will help ensure consistent coverage of
transplant benefits and eliminate discriminatory insurance practices.
Therefore, the commenter asserted, ABPs must cover all EHB categories
without discrimination for people who have or will acquire health
conditions that lead to end stage organ failure. The commenter stated
that a wide range of medical services are required during the
transplant process and fall under the categories of ambulatory
services, hospitalization, chronic disease management, mental health
services, rehabilitative services, and prescription drugs. The
commenter urged that all of these treatments must be covered under
ABPs.
[[Page 42204]]
Response: If transplant services are covered as part of the
coverage option chosen by the state, or the benefits under the selected
base benchmark plan, as supplemented (and subject to permissible
substitution of benefits), then they will be covered as part of the
ABP.
Comment: According to one commenter, the Affordable Care Act
specifies that entities covered under section 340B(a)(4) of the Public
Health Services Act, which includes federally recognized Hemophilia
Treatment Centers, be designated as essential community providers and
that designation requires that qualified health plan networks to
include Hemophilia Treatment Centers. This commenter requests that
state Medicaid programs be encouraged or required to include essential
community providers in their networks.
Response: Coverage through an ABP remains subject to requirements
under the state plan to provide for beneficiary free choice of
provider, and provider payment rates that are consistent with
efficiency, economy, and quality of care and assure sufficient access
to services. States have options to limit free choice of provider in
some circumstances, for example, managed care service delivery
consistent with section 1932 of the Act, or through selective
contracting arrangements authorized under a waiver under either section
1915 of the Act or section 1115(a) of the Act. In any of these cases,
states must assure sufficient beneficiary access to services.
Comment: Several commenters suggested that the review of EHB, in
the private insurance market and Medicaid, consider whether limits in
coverage and changes in medical evidence or scientific advancement
affect whether enrollees have difficulty accessing services. The EHB
should be based on the most recent and reliable clinical evidence
available and a process should be developed to inform and shape EHBs
based on these factors over time. If not available, there should be an
allowance for some physician discretion.
Response: Consistent with the provisions of section 1302(b) of the
Affordable Care Act, CMS has in the regulations at 45 CFR part 156
defined EHBs by reference to coverage plans available in the commercial
market.
Comment: Several commenters also requested that review of EHBs be
disaggregated to include demographic categories. HHS should require
states to report enrollees' race, ethnicity, language, sex, and
disability status data uniformly, as well as data on other demographic
areas such as sexual orientation and gender identity, as described in
section 4302 of the Affordable Care Act.
Response: This information does not appear to be related to the
review of EHBs. We note, however, that we are developing a Transformed
Medicaid Statistical Information System that will include expanded data
elements regarding beneficiaries, claims and providers per Affordable
Care Act.
Comment: One commenter supports inclusion of all ten EHB to reflect
appropriate balance in each category and requested that anesthesia and
pain management services be included in the ten categories of benefits
covered by the ABPs. This commenter also requested that CRNAs and other
non-physician providers who bill for Medicare Part B be included in
Medicaid ABPs.
Response: The coverage of particular services will depend upon the
coverage option selected by the state, and the EHBs that are determined
based on the state-selected base benchmark plan, as supplemented (and
subject to substitution of actuarially equivalent benefits) consistent
with the process described in 45 CFR part 156. This rule will not
affect the ability of states to set provider qualifications for covered
services.
Comment: One commenter requested that dollar limits on a specific
category of benefits and targeted use of utilization management
techniques be prohibited.
Response: Annual dollar limits are prohibited in the public
employee or commercial plans that are the basis for coverage options
and the base benchmark options according to section 2711 of the Public
Health Service Act. Utilization management techniques are common
practice for benefit management and will continue to be allowed in
Medicaid. We expect that these practices will be non-discriminatory and
not impede access to needed, covered services.
Comment: One commenter indicated that HHS should specify in the
final rule that to meet the health care needs of diverse segments of
the population, an ABP must provide a process for participants to
request and receive: clinically appropriate benefits not routinely
covered by the plan, especially when the ABP is less costly than the
covered benefit; coverage for benefits beyond limits set by the plan;
coverage of specialty care not routinely covered by the plan when
medically necessary and appropriate.
Response: We are specifying in the final rule that, if an
individual in the new adult group meets the criteria for exemption from
mandatory enrollment in an ABP that would otherwise be applicable, then
the individual would have a choice of an ABP that includes at least the
EHBs, and is subject to the requirements of section 1937 of the Act, or
benchmark or benchmark-equivalent coverage that is not subject to the
requirements of section 1937 of the Act, and thus, includes all regular
Medicaid state plan benefits. Other individuals do not have that choice
but this rule does not affect their right to appeal denials of coverage
through the state's fair hearing system.
Comment: Commenters requested clarification and further guidance on
the supplementation process established in both the proposed rule for
the EHBs in the commercial market and the proposed rule for EHBs in
Medicaid ABPs. Many commenters requested that CMS clarify what benefits
would constitute coverage in each category and identify a threshold to
trigger supplementation of a benefit category. It appears that a single
service could be determined to be sufficient to define an EHB in
Medicaid and therefore would not achieve MHPAEA compliance. A few
commenters also stated that a single service would not meet non-
discrimination requirements in addition to the balance requirement,
which requires a much stronger minimum set of benefits in each
category. One commenter requested clarification of the Medicaid EHB
supplementation process including the extent to which the scope of
services in one EHB category must be consistent with services offered
other health service categories. Several commenters believe that
additional provisions need to be added to ensure that the level of
benefits in each EHB category are meaningful and adequate to meet the
needs of the population. Several commenters also requested that CMS
clarify what benefits would constitute coverage in each category and
explain how CMS would enforce the non-discrimination and balance
requirements.
Response: Supplementation occurs when a base-benchmark plan does
not include items or services within one or more of the categories of
EHB. Benefits from the base benchmark that are determined to be EHBs
must be included as an EHB, unless substituted by the state. While the
rules at Sec. 156.115(b) indicates that the ``issuer'' may substitute
benefits, in Medicaid, the state functions as the issuer and we thus
provide that the state can exercise the option to substitute benefits.
We indicated that requirements at Sec. 156.110 apply unless we
specifically modified the approach in Medicaid. Section 156.110(e) that
specifies balance requirements also apply to EHBs
[[Page 42205]]
established in Medicaid. All benefits within the section 1937 coverage
option must also be provided. CMS will conduct a review of all ABP SPAs
to determine appropriateness for approval.
There are both requirements and flexibility for states in
constructing EHBs and section 1937 coverage options. Please refer to
the summary at the end of this section for further discussion of these
steps and flexibilities.
Comment: The HHS February 17, 2012 Bulletin allows for substitution
of services within the rehabilitative and habilitative benefit,
allowing the plan to facilitate substitution of services at the
provider level based on patient need not predetermined by the issuer,
according to one commenter. The November 20, 2012 Patient Protection
and Affordable Care Act; Standards related to Essential Health
Benefits, Actuarial Value, and Accreditation proposed rule indicated
that the issuer would create a substituted benefit plan, which would
leave providers with no choice but to provide services in the benefit
package and potentially lead to an individual choosing a plan that does
not cover the services that they need.
Response: States, not issuers, define benefits within section 1937
of the Act. Section 156.115(b) outlines the substitution policy that
will also be applicable to Medicaid except that, in Medicaid, states
have the role of issuers and will indicate the substituted benefits.
Substitution requires that benefits be in the same EHB category and
that they are actuarially equivalent. This means that a state for
example, could substitute a personal care benefit for an in vitro
fertilization benefit in the EHB Ambulatory Services category, as long
as they were actuarially equivalent. Within the rehabilitative and
habilitative services and devices EHB, benefits can be substituted as
long as the resulting benefits still provide for coverage of both
rehabilitative and habilitative services. We expect that the benefit
design will result in clinically appropriate services based on medical
necessity. The resulting ABP, which includes EHBs that have been
supplemented if necessary, individual benefits that have at state
option been substituted, and benefits from the section 1937 coverage
option, must be approved by CMS. Once approved, a description of the
benefits included in the final ABP should be publicly available so that
beneficiaries are knowledgeable of the benefits to which they are
entitled. That said, we appreciate that it may be difficult at this
point to make changes to the ABP that take effect by January 1, 2014.
In light of this challenge, we will partner with states to work as
quickly as possible to come into full compliance with these provisions.
We do not intend to pursue compliance actions on these issues to the
extent that states are working toward but have not completed a
transition to the new ABPs on January 1, 2014.
Comment: Many commenters are concerned that there is no requirement
regarding adequacy of benefits. These commenters specifically requested
that HHS provide a cross-reference to Sec. 440.230(b) and state
explicitly that the requirement that every service offered through the
Medicaid state plan ``be sufficient in amount, duration, and scope to
reasonably achieve its purpose'' also applies to EHBs in the ABPs. A
few commenters recommended that the regulations be revised to require
states to supplement the benefits in a benchmark plan if any service in
the EHB category is not sufficient in amount, duration, or scope to
reasonably achieve its purpose.
Response: Under section 1937of the Act, states are authorized to
offer ABPs that include benefits derived from public employee or
commercial market products, essential health benefits and certain other
required benefits. Sufficiency standards applicable to the traditional
Medicaid benefit package generally do not apply to ABPs. If Secretary-
approved coverage is chosen as the section 1937 coverage option,
however, then we would require that the benefit package must ``provide
appropriate coverage to meet the needs of the population provided that
coverage'' under Sec. 440.330(d). Sufficiency standards at Sec.
440.230 will be applied in our review of proposed Secretary-approved
coverage.
Comment: Many commenters requested that CMS reconsider the proposed
approach and define comprehensive federal EHBs for section 1937
coverage that all states would be required to use to supplement their
chosen benchmark or benchmark-equivalent coverage. They urged that CMS
should go further and require states to cover comprehensive benefits in
each of the EHB categories and work with states to ensure that minimum
coverage is met. One commenter went further to suggest that CMS and HHS
adopt a comprehensive, national EHB in 2016, when the trial period for
the current approach is complete.
Response: EHBs in Medicaid will generally be defined in the same
fashion as they are defined in the individual and small group market,
except for certain EHB categories discussed in the proposed rule and
this final rule. This approach allows the public employee or commercial
market plan selected by the state to define EHBs for Medicaid to set
the floor for EHB coverage (with supplementation as needed and
substituted as desired). States then have the authority to offer other
services (including through Secretary-approved coverage for the new
adult group).
Comment: One commenter requested that HHS clarify that the
requirement for balance among EHB categories ensures robust coverage in
each category and cannot be used to lower other categories if one or
more categories lacks robust coverage.
Response: Consistent with the requirements of 45 CFR 156.110, EHB
categories must be appropriately balanced to ensure that benefits are
not unduly weighted toward any category. Any benefits that are
determined to be EHBs from the base benchmark plan must be provided.
Section 1937 of the Act also has an ``equal to'' standard that
indicates that all benefits from a section 1937 coverage option must be
provided. When Secretary-approved coverage is used, benefits must meet
Medicaid sufficiency standards as well as the requirement that the
benefit package be appropriate to meet the needs of the population.
Comment: Many commenters reiterated concerns regarding the EHB
proposed rule and EHB benchmark plan standards. This concern remains
for ABPs as the Department does not sufficiently define the scope of
coverage in any statutorily required category specifically maternity
care. The base benchmark plans may include coverage of maternity
services, but the plan documents do not specify which services define
maternity coverage or provide details on coverage including limits. The
lack of clear definitions further complicates the substitution and
supplementation methodology. Several commenters want the Department to
establish clear standards for what must be covered as required by
sections 1302(b)(1) and 1302(b)(4)(C) of the Affordable Care Act to
ensure a comprehensive standard. The adoption of coverage should not
result in a discriminatory benchmark.
One commenter expressed concerns related to the ambiguously defined
EHB categories and encouraged HHS to definitively confirm the extent to
which cost effective, clinically effective nutrition care services such
as medical nutrition therapy are included as EHBs within Medicaid
benchmark and benchmark-equivalent plans. This commenter requests
adequate federal oversight and approval of benchmark plan selection by
HHS to reflect the vital and unique role that nutrition plays in
[[Page 42206]]
improving and maintaining health for all Americans, but also recognizes
the need to define EHBs flexibly. This commenter seeks clarification in
the final rule on the metrics and bases upon which HHS will determine
whether a benchmark or benchmark-equivalent plan meets the EHBs
mandated by Affordable Care Act.
Response: Section 1937 of the Act permits states to offer coverage
through an ABP without regard to sufficiency requirements that are
applicable to regular state plan benefits, except that we would apply
sufficiency standards in our review of proposed Secretary-approved
coverage as the section 1937 coverage option. Substitution is allowed
in section 1937 of the Act using requirements found at 45 CFR
156.115(b) except that the state will be exercising the option for
substitution rather than an individual market issuer.
Comment: Commenters requested that CMS provide clear regulatory
guidance to states to ensure that the process for supplementing
coverage to meet the additional requirements of Affordable Care Act is
clear. This is especially important given that EHBs are not universally
covered well by state Medicaid programs such as mental health and
substance use services. Furthermore, for states that choose to use
benchmark-equivalent coverage, this commenter requests that CMS
establish clear limits on states' ability to use benchmark-equivalent
coverage to undermine the EHB protections as it appears that under the
proposed rule that they can reduce the value of EHBs under the
benchmark-equivalent option to anything short of elimination. These
commenters request that CMS ensure the comprehensiveness of the
benefits for all beneficiaries covered by section 1937 of the Act
regardless of the ABP chosen by the state.
Response: Benchmark-equivalent benefit packages must be at least
actuarially equivalent to one of the section 1937 benchmark coverage
options and must include benefits within certain categories of basic
services. In addition, the Affordable Care Act amended section 1937 of
the Act to require the provision of EHBs in benchmark equivalent
coverage, so we do not believe that use of this section 1937 coverage
authority will undermine the EHB protections. The process for
supplementation is found at 45 CFR 156.110(b)(1) through (4) and
substitution requirements are at Sec. 156.110(b). All benchmark-
equivalent coverage packages must adhere to section 1937 requirements,
and must not violate the EHB anti-discrimination principles.
Comment: One commenter recommended that HHS specify in the final
rule that ABPs must include benefits routinely covered by the benchmark
plan, regardless of whether those benefits are listed in the data
collection template used to report base benchmark benefits to HHS.
Furthermore, all benefits within categories of care that list more than
one benefit must be covered. For example, an ABP should be required to
cover as three distinct benefits rehabilitative services, habilitative
services, and rehabilitative and habilitative devices as opposed to
only covering one of them.
Response: We intend to develop a template for states to use to
define the ABP in Medicaid that will result in the submission of a
state plan amendment. This is a different process than the one used for
states to submit the base benchmark benefits for the individual and
small group market. A state can select a different base benchmark plan
for the individual and small group market than it does for Medicaid
purposes. We anticipate issuing further guidance on these operational
issues.
Comment: One commenter strongly encourages CMS to provide further
guidance on alignment issues during the plan comparison and
supplementation process. This commenter encourages CMS to clarify that
during supplementation, states must create the most comprehensive
benefit package possible, drawing from services covered in either the
section 1937 coverage option or the comparison base benchmark plan,
which could include drawing across categories if necessary to create a
robust set of services that will result in adequate coverage of EHBs.
Response: To clarify, the ABP must include as a floor the EHBs
covered by the base benchmark plan selected by the state to define EHBs
for Medicaid, supplemented as necessary and subject to substitution of
actuarially equivalent benefits as permitted under 45 CFR 156.115(b).
Balance requirements of 45 CFR 156.110(e) also apply. In addition, the
ABP must include any benefits from the section 1937 coverage option
that are not in the base benchmark plan, whether they are EHBs or not.
If the section 1937 coverage option that is one of the three public
employee or commercial products provides a service in a greater amount,
duration, or scope than the EHB provided in the base benchmark plan,
the state must utilize that section 1937 standard for that service. If
the section 1937 coverage option is Secretary-approved coverage, then
the state may choose which benefit to use.
Comment: One commenter requests that HHS specify that appropriate
balance of EHB coverage includes coverage of benefits across the care
continuum, prohibits substitution between categories of EHB (for
example, prohibit coverage of rehab therapy but include drug coverage)
and between benefits (cover wheelchairs instead of rehabilitative
hospital care to restore a person's ability to walk), cover all EHBs
within the settings and by specialists which provide the current
standard of care, and protect patients' access to appropriate and
medically necessary care as provided by skilled medical professionals.
Response: Substitution of benefits can be achieved when defining
the EHBs according to 45 CFR 156.115(b). Benefits must be in the same
EHB category and actuarially equivalent. Balance requirements at 45 CFR
156.110(e) apply, as CMS did not indicate that they do not apply in
Medicaid. CMS will be reviewing each state plan submission. As with all
Medicaid services, states will establish medical necessity criteria for
the receipt of ABP services.
Comment: A commenter indicated understanding that benefit
substitution among EHB categories would be prohibited for ABPs as it is
prohibited for Exchange plans. However, this commenter believes that
substitution even within benefit categories could be extremely
problematic for children's and pregnant women's access to needed
services. Commenters urged HHS to prohibit substitutions or at a
minimum give states the flexibility to disallow substitutions. If
benefit substitution within categories is retained, this commenter
recommends that a more restrictive standard than an actuarial
equivalence test on the value of the benefits compared to the EHB
benchmark plan be implemented.
Response: Substitution of benefits within EHB categories will be at
state option, according to parameters described in 45 CFR 156.115(b).
This process will be the same for Exchange plans and ABPs, except that
states will be in the role of the health insurance issuer for purposes
of substitution.
Comment: Commenters note that in some states the EHB benchmark
covers services beyond those included in the Medicaid state plan. They
argue that requiring states to supplement coverage to make it
comparable to the EHB benchmark is not a workable solution for states,
particularly for states that wish to expand in 2014. They further
assert that some of the immediate operational challenges include the
need to enroll new providers, set reimbursement rates, design claims
and
[[Page 42207]]
payment rules, and incorporate those rules into systems, and if managed
care is used, new capitation rates will need to be designed, which will
result in a large administrative burden.
Response: It is true that ABPs under section 1937 of the Act will
contain different benefits than those offered in regular Medicaid,
based on the coverage options and EHBs that a state elects. These
differences are inherent in the statutory design. While EHBs will
establish a minimum level of benefits, that level may result in greater
or lesser benefits than are available under regular Medicaid. ABPs
require that benefits that are based on commercial insurance products
include the benefit, the benefit description and limitations on amount,
duration, and scope as the minimum standard. States have been working
with CMS toward defining EHBs and ABPs and as part of that process
states may need to undertake contracting activities and system changes
to offer and administer the ABP.
Comment: In the proposed rule concerning EHBs, requirements could
be different in different states according to one commenter. Since two
of the four benchmarks are tied to what is available to state employees
in the state and what is available from the largest HMO in the state,
employers may have confusion about the requirements in a particular
state. This commenter requests identification of who oversees an
employer that has employees with a principle place of employment in
multiple states, and wonders whether it would be the Department of
Labor.
Response: The standards discussed in this regulation relate to the
implementation of EHBs for Medicaid. Employers do not offer Medicaid as
part of their offerings to employees and therefore, this question is
outside the scope of this regulation.
Comment: One commenter asked if, given the requirement that states
must supplement the benchmark package if EHBs are not covered, states
would be required to add these benefits to the state plan under the
Secretary-approved coverage option that is based on state plan
coverage. The commenter asserted that it is unclear if the state must
supplement services that are covered in the base-benchmark selection
for the Exchange, and that it is unclear if supplementation is only for
the benchmark plans provided to newly eligible individuals or if states
that are seeking to provide a Secretary-approved benchmark plan to
newly eligible individuals will be required to amend the state plan to
add the new EHB services not otherwise covered. The commenter also
asked whether states would now be required to add services that are not
currently covered and categorized as optional, and also wondered if EHB
supplementation only applies to benefits for newly eligible people or
must the state meet this requirement for all benchmarks offered
regardless of population.
Response: States are required as part of the ABP to cover all EHBs.
While most of the EHBs are also included under regular Medicaid
coverage, there may be exceptions. For example, substance abuse
services and habilitative services may not be part of a State's regular
Medicaid benefit. The EHB requirement applies to any ABP offered by the
state, including those based on Secretary-approved coverage.
Comment: One commenter indicated that the regulatory language fails
to specify that states must supplement missing categories. This
commenter recommends that the Department clarify that states must
follow the process established in 45 CFR part 156 to ensure that any
missing categories are supplemented in the final rule. The Department
should also ensure that benefit design in ABPs does not result in less
comprehensive benefits than the private insurance market, and
therefore, ABPs should be required to include benefits at least as
robust as those in the state's full EHB package.
Response: EHBs establish a floor of benefits for ABPs offered under
section 1937 of the Act and are based on commercial market products,
which means at a minimum EHBs will include benefits at least as robust
as those in the base benchmark chosen by the state. The supplementation
process in section 1937 of the Act will follow 45 CFR 156.110(b).
Comment: Several commenters generally supported the proposed
process to designing the Medicaid ABP. However, HHS must establish
transparent, minimum standards for states using ``Secretary-approved''
coverage. It will be critical to ensure that the state cannot develop
an ABP based on the weakest benefit level available at each step of the
process. The commenters expressed concern that the rule offers very
little guidance about what the ABP must cover to meet the ten
categories of EHBs required by Affordable Care Act and the scope of
required coverage. They indicated that this lack of clarity may lead to
people in the Medicaid expansion group not receiving the full range of
services available to people at higher income levels accessing private
market or Exchange coverage in their state. An additional commenter
expressed that the youngest and most vulnerable citizens, the birth to
three population, need to have access to all necessary high quality,
comprehensive physical, developmental, mental health and medical care
to ensure positive growth and development.
Response: Current and proposed regulation at Sec. 440.335(d)
states that Secretary-approved coverage must be appropriate to meet the
needs of the population being served. CMS will review proposed
Secretary-approved coverage against that standard. And CMS will apply
the sufficiency standards of Sec. 440.230 in evaluating benefits
included in Secretary-approved coverage. In addition, all ABPs,
including Secretary-approved, must include the full range of EPSDT
services for individuals under age 21, which ensures that they will
have access to comprehensive screening and necessary medical care.
Comment: Several commenters expressed concern regarding the process
proposed by CMS to demonstrate compliance with EHB, saying it is too
burdensome and applying the EHB definition that was created for small
group health plans for commercial products in the private market
needlessly complicates section 1937 of the Act. They asserted that
requiring that states begin by using one of the ten commercial
benchmark plans as the EHB base is not useful for states that want to
use the full Medicaid benefit set under Secretary-approved coverage.
They argued that using the full Medicaid benefit set allows all
Medicaid clients to receive the same benefit set and states would not
have to operationalize a post-eligibility review process to screen
people for opting out of the ABP for the traditional state plan. Their
position was that, given the number of changes that states must
implement in 2014, maintaining a single benefit set reduces
administrative burden and confusion for clients and minimizes the
number of required system changes. According to one commenter, it is
essential that the new adult group have the same benefit set as the
full state Medicaid benefit set. Furthermore, the commenter asserted
that the mandatory Medicaid benefit set should be an option to serve as
the basis for demonstrating EHB compliance under the Secretary-approved
option without supplementation. A few commenters recommend that HHS
create a second definition of EHB compliance that would be based on the
Medicaid mandatory benefit set, limit that definition to the ABP in
Medicaid programs, and allow states to use this benefit set as the
basis to build a
[[Page 42208]]
coverage option for Secretary-approved coverage.
Response: Section 2001(c) inserted new paragraph (b)(5) into
section 1937 of the Act. This amendment requires that benchmark and
benchmark-equivalent benefit packages must provide EHBs described in
section 1302(b) of the Affordable Care Act, beginning January 1, 2014.
The same process to define EHBs applies to both commercial plans and
Medicaid, with adjustments only to reflect the unique nature of
Medicaid. Thus, EHBs must be established within section 1937 using one
of the state options for base benchmark plans as set forth in 45 CFR
part 156. States may still elect to offer Medicaid state plan benefits
in their section 1937 coverage option using Secretary-approved
coverage, as long as all requirements of this regulation are met.
Comment: Many commenters indicated that states electing state plan
benefits using the Secretary-approved option should not be required to
supplement with additional EHB services. Although they acknowledged
that section 1937 of the Act requires inclusion of EHBs as defined
under section 1302(b) of the Affordably Care Act, they asserted that
this does not mandate importation of entire segments of coverage from
private plans nor does it require a wholesale matching of these
offerings in Medicaid. They asserted that implementing EHBs in section
1937 of the Act in this way is onerous and could result in the
relatively less vulnerable, higher income expansion group as compared
with Medicaid beneficiaries receiving more generous benefits such as
substance use disorder services. They further asserted that Congress
certainly could not have intended for the new enrollees to end up
receiving more robust coverage than the categorically needy base. They
stated that this also creates administrative complexity for states and
a situation where incoming beneficiaries who may be disabled must
choose between disparate benefit schedules. The commenters believed
that the only way to mitigate disparate benefit schedules is for states
to expand all benefits for existing and new eligible beneficiaries,
something states are not in a fiscal position to do. They further
asserted that the Affordable Care Act did not authorize a departure
from long standing state discretion under Title XIX to develop
appropriately balanced benefits and suggested that, if states must
expand all benefits for existing and newly eligible beneficiaries, then
states must receive 100 percent FFP for these benefits.
Response: We believe that our response to the question above also
responds to this question; the statute requires that all ABPs, even
Secretary-approved coverage, include EHBs. There are both requirements
and flexibilities for states in constructing EHBs and section 1937
coverage options. The process for defining and including EHBs is the
process used under section 1302(b) of the Affordable Care Act, adapted
to the unique circumstances of the Medicaid program.
Comment: One commenter indicated that the intersection of Sec.
440.345(d) and Sec. 440.347(a) is confusing, and recommends that CMS
clarify in regulation that EHBs form a floor for the ABPs and do not
supplant any preexisting requirements under section 1937 of the Act and
42 CFR part 440, subpart C. Regulations would be clearer if Sec.
440.347 were worded as a definition of EHB rather than a restatement of
the mandate to include EHB in an ABP and for clarity should simply
reference relevant provisions in 45 CFR part 156.
Response: Section 440.345(d) is intended to establish the universe
of benefits required within the ABPs. In addition, state must assure
access to RHC and FQHC services and transportation to and from
medically necessary services as set forth at Sec. 440.365 and Sec.
440.390 respectively. Section 440.347 is intended to specify the
categories of EHBs and the process by which those EHBs are established
within the ABP. Both sections should be read in conjunction to the
other.
Summary: We are adopting the following approach for treatment of
individuals in the new adult group who meet the exemption criteria from
mandatory enrollment in benchmark or benchmark-equivalent coverage in
the final rule. If an individual in the new adult population meets the
criteria for exemption, then they have a choice of the ABP based on
benchmark or benchmark-equivalent coverage including at least the EHBs,
or an ABP with coverage defined as the state's approved Medicaid
traditional state plan, which is not subject to any other requirement
of section 1937 of the Act, including EHB requirements. We are not
making any changes as a result of these comments.
i. Essential Health Benefits (Non-Discrimination Policy) (Sec.
440.347)
Section 1302(b)(4) of the Affordable Care Act provides that benefit
design cannot discriminate and CMS codified this section of the
Affordable Care Act at Sec. 440.347(e). Benefit design discrimination
policies do not prevent states from using targeting criteria to group
people together to receive specific benefit packages.
Comment: One commenter expressed support for the inclusion of the
new provision clarifying that individuals cannot be discriminated
against based on their ``age, expected length of life, or an
individual's present or predicted disability, degree of medical
dependency, or quality of life or other health conditions.'' The
commenter seeks age-appropriate care and benefits for children, whether
through family or child-only coverage.
Response: We appreciate the support.
Comment: Several commenters indicated that while they understand
that section 1937 of the Act allows states the flexibility to amend
Medicaid state plans to provide certain populations (as defined by the
state) with benefits packages other than those offered in the standard
Medicaid state plan, HHS must closely monitor this and ensure there is
no discrimination in benefit design for certain populations.
Response: Benefit design should not discriminate against
individuals who receive a benefit package under section 1937 of the Act
based on age, disability, life expectancy or condition but may include
benefits designed to meet the special medical needs of segments of the
covered population. Benefit packages designed in section 1937 of the
Act include the same oversight as the regular Medicaid state plan.
Aside from the EHB anti-discrimination requirements, Sec. 440.230(c)
indicates that state Medicaid agencies cannot arbitrarily deny or
reduce the amount, duration, or scope of a required service to an
otherwise eligible recipient based solely on diagnosis, type of illness
or condition.
Comment: Several commenters expressed support of the requirement
that EHB benefit design cannot discriminate on the basis of an
individual's age, expected length of life, or an individual's present
or predicted disability, degree of medical dependency, or quality of
life or other health conditions. The commenters believe these non-
discrimination provisions will require vigorous monitoring and strong
enforcement.
Response: We thank the commenters for their support. We expect
states to comply with these provisions and implement benefit packages
that do not discriminate. ABPs will be subject to the same monitoring
process as currently used in the Medicaid state plan.
Comment: Many commenters expressed support for the inclusion of a
non-discrimination provision in Sec. 440.347(e). But some commenters
pointed out that, while the proposed
[[Page 42209]]
rule recognized the importance of non-discriminatory plan design Sec.
440.347(e) fails to state the full range of nondiscrimination
protections applicable to the EHB. Many commenters expressed concern
that the preamble only references section 1302(b)(4) of the Act and the
requirements proposed in Sec. 440.347(e) state only the protections
under that statutory provision. Therefore the commenters believe that
the requirements in Sec. 440.347(e) reflect an incomplete and
insufficient standard. The commenters believe that the protections
under section 1557 of the Affordable Care Act also apply, and the final
rule must expressly state a comprehensive and consistent
nondiscrimination standard, explicitly requiring EHB benefit design to
comply with section 1557 of the Affordable Care Act. The commenters
recommend the final rule be revised to include the language used in the
nondiscrimination standard set out in the proposed EHB rule. The
commenters believe that without the additional requirements the
benefits of both section 1557 and the Affordable Care Act as a whole in
ensuring comprehensive coverage for all individuals will be undermined.
Lastly, the commenters also requested the regulation prohibit ABPs from
including all of the following:
Participant cost-sharing designs that are more burdensome
on some benefits than others.
Unreasonable and arbitrary visit and dollar limits on a
specific category of benefits, so as to discourage participation by
individuals with brain injury.
Targeted use of utilization management techniques for some
benefits, and not to others.
Defining the benefits in such a way to exclude coverage
for those services based upon age, disability, expected length of life,
or the willingness or capacity to participate in wellness programs or
behavioral incentive programs.
Response: Some of the protections sought by commenters are already
contained in laws applicable to state Medicaid programs. Section 430.2,
an existing regulation, identifies other regulations applicable to
state Medicaid programs including 45 CFR part 80, which requires that
programs receiving federal assistance, through the Department of Health
and Human Services, include effectuation of Title VI of the Civil
Rights Act of 1964 and 45 CFR part 84, which implements Section 504 of
the Rehabilitation Act of 1973, prohibiting disability discrimination.
In addition, state Medicaid programs are subject to the Age
Discrimination Act of 1975. Therefore, these protections are already
applicable to Medicaid.
We appreciate commenters pointing out deficiencies in Sec.
440.347(e) and have revised it to align with the regulation
implementing EHBs in the Exchanges.
Comment: A few commenters indicated appreciation of CMS's work to
revise current Medicaid rules such that they incorporate statutory non-
discrimination provisions from section 1302(b)(4). The commenters
strongly encourage CMS to also codify all statutory non-discrimination
provisions applicable to issuers of QHPs that meet EHB requirements.
CMS should specify that Sec. 156.200 and Sec. 156.225 also apply to
ABPs. Section 156.200 specifically prohibits discrimination based on
factors including but not limited to race, disability, and age. Section
156.225 codifies section 1311(c)(1)(A) of the Affordable Care Act which
prohibits marketing practices and benefit designs that result in
discrimination against individuals with significant or high cost health
care needs. The commenters believe that all Affordable Care Act non-
discrimination provisions applicable to QHPs issuers and EHB standards
must similarly apply to ABPs in Medicaid to ensure consistency of
standards across all forms of all health care coverage.
Response: The requirements in 45 CFR part 156 apply to QHP issuers
and not Medicaid managed care plans. However, there are similar
protections in place in the regulations governing Medicaid managed care
plans. If ABPs are delivered through a Medicaid managed care plan,
those protections, including marketing, appeals and grievances,
beneficiary information, and non-discrimination based on health status
will apply to the Medicaid managed care plans providing ABP benefits.
There are similar protections on many of these issues for Medicaid fee
for service delivery systems, requiring fair hearing, free choice of
provider, and beneficiary information.
We take this opportunity to clarify that States have the
flexibility to use managed care to deliver ABP benefits without regard
to statewideness and comparability of services. Further, freedom of
choice of provider may also be disregarded to the extent the State can
demonstrate that freedom of choice would be contrary to the effective
and efficient implementation of an ABP.
Comment: Many commenters also recommended Sec. 440.347(e) be
amended as follows: EHBs cannot be based on a benefit design or
implementation of a benefit design that discriminated on the basis of
an individual's race, color, national origin, sex, sexual orientation,
gender identity, age expected length of life, or of an individual's
present or predicted disability, degree of medical dependency, or
quality of life or other health conditions. Other commenters
recommended Sec. 440.347(e) be amended as follows: (e) EHBs cannot be
based on a benefit design or implementation of a benefit design that
discriminates on the basis of an individual's age, expected length of
life, an individual's present or predicted disability, degree of
medical dependency, or quality of life or other health conditions,
race, color, national origin, language, sex, sexual orientation or
gender identity.
Response: The suggested change to Sec. 440.347(e) is unnecessary
because the protections described are already reflected in existing
Medicaid regulations.
Comment: Many commenters expressed concern about the lack of
guidance under the proposed rule for monitoring and enforcement of the
proposed nondiscrimination provisions, and believe that the final rule
must better define how individual states will assess, monitor, and
enforce the law's nondiscrimination provisions. Moreover, the
commenters do not believe it is sufficient to delegate all monitoring
and enforcement to states. The commenters recommend the final rule
define how CMS will take enforcement action when states are not
ensuring compliance with the nondiscrimination standards established
under the Affordable Care Act. The commenters also recommend that CMS
develop a clear standard for what constitutes a discriminatory benefit
design. This standard must address both individual cases of intentional
discrimination and benefit designs that are facially neutral but that
have the effect of systematically disadvantaging members of protected
classes. Ultimately, this standard must make clear that the
determination of whether a coverage limitation or exclusion is
discriminatory should turn on the degree to which the benefit design is
based on sound standards of clinical appropriateness rather than on
arbitrary distinctions between health conditions or personal
characteristics. To assist federal and state regulators in rectifying
discrimination in benefit design, CMS should follow up on the final
rule with sub-regulatory guidance explaining how to evaluate products
for impermissible discrimination and providing examples of
discriminatory benefit designs such as those listed above. In addition,
CMS should require trained evaluators in each state to regularly and
transparently review
[[Page 42210]]
coverage available through ABPs for discriminatory benefit designs and
to ensure identified instances of discrimination are remedied in an
expedient manner. Where CMS determines that a state Medicaid agency is
not fulfilling its responsibilities in this area, CMS should establish
a review procedure to focus on ensuring that all services deemed part
of the EHBs are available to all eligible individuals for whom they are
medically necessary, without arbitrary discrimination on the basis of
any protected personal characteristic.
Response: ABPs are Medicaid state plan amendments and are subject
to the same monitoring and oversight that occurs in the Medicaid state
plan. Under this process, states review applicable requirements and
design their program, including ABPs. The proposed design is submitted
to CMS for approval, and CMS reviews the proposal for compliance with
federal requirements. If approved, CMS may also review state
implementation for compliance with federal requirements. In addition,
issues can be raised by beneficiaries through the fair hearing process
if services are denied. As with any Medicaid service, we recognize the
important role that all stakeholders play in making CMS aware of any
perceived ABP noncompliance. We will consider issuing further guidance
on this topic.
Comment: One commenter is concerned that the proposed rule does not
establish sufficiently robust oversight or enforcement framework to
provide states with essential guidance to implement such a program. The
regulatory text does not expressly require the Exchanges, states or OPM
to monitor plans for compliance with the prohibition on discrimination.
This commenter urges CMS to adopt an express requirement in the
regulatory text of the rule that the Exchanges, states and OPM monitor
for non-discrimination.
Response: Medicaid is a federal and state partnership and as such,
states have the first line of responsibility to design and implement
their program in compliance with federal requirements, including the
non-discrimination requirements. Federal oversight is implemented using
the existing state plan process, as well as ongoing monitoring of
program operations.
Comment: Several commenters expressed concern that applying the EHB
standard to prescription drug coverage in Medicaid would not provide
appropriate protections for people with chronic conditions like cancer,
diabetes, Parkinson's, HIV/AIDS, schizophrenia, epilepsy, obesity and
organ transplant recipients. The commenters believe that focusing on a
number of drugs covered, as opposed to ensuring a breadth of drugs are
covered, could result in a selection of drugs that meets the minimum
requirement but discriminates against potential enrollees.
Response: While we understand the commenters' concerns, the statute
permits states a certain amount of flexibility in determining and
structuring ABPs that meet the needs of enrollees and are consistent
with overall state objectives. We must clarify a statement in the
preamble to the proposed rule, indicating that requirements under
section 1927 of the Act are applicable to ABPs under section 1937 of
the Act. Section 1927 of the Act does not affect the flexibility of
states to define ABP benefit packages consistent with a coverage
benchmark and including EHBs. The amount, duration, and scope of
prescription drug coverage would thus be governed by the requirements
of section 1937 of the Act. To the extent that a prescription drug is
within the scope of the ABP benefit as a covered outpatient drug,
section 1927 of the Act is then applicable. For such covered outpatient
drugs, since payment is available under the state plan, all drug rebate
obligations under the rebate agreement are required for drug
manufacturers under 1927(b) of the Act.
To explain in more detail, the amount, duration, and scope of
coverage for an ABP is determined under section 1937 of the Act, which
authorizes benchmark or benchmark-equivalent coverage ``notwithstanding
any other provision that would be directly contrary.'' But, the drug
rebate obligation applies under section 1927 of the Act when payment is
made under the Medicaid state plan for covered outpatient drugs as part
of the ABP. In addition, to the extent that covered outpatient drugs
are within the scope of ABP coverage, the protections and limitations
for such coverage under section 1927 of the Act apply. So, for example,
to the extent that coverage under an ABP includes a class of covered
outpatient drugs, a state could impose limitations on that coverage
only consistent with the provisions of section 1927(d) of the Act. In
general the requirements for prescription drug coverage under section
1937 of the Act, through the requirement for coverage of EHBs, will
mean that ABPs will meet existing section 1927 requirements for
Medicaid payment of covered outpatient drugs, which we believe will
address the commenters' concerns. We discuss the interaction between
the requirements for prescription drug coverage under section 1937 of
the Act with the requirements for covered outpatient drugs under
section 1927 of the Act in further detail later in this final rule.
Comment: Some of the commenters are concerned that CMS allows
states to place limitations on amount, duration, and scope and adopt
prior authorization and other utilization control measures, as well as
policies that promote the use of generic drugs. The commenters believe
that for people living with chronic conditions, use of utilization
management techniques can have a detrimental impact and inhibit people
from accessing needed treatments. The commenters also believe that
these limitations can violate the non-discrimination requirements in
the law.
In particular, commenters indicated that it is imperative that non-
discrimination protections found in Sec. 440.347 are strictly and
clearly applied to the ABP prescription drug benefit. HIV care and
treatment standards maintained by Federal agencies recommend a
combination of medications for effective management of HIV disease (see
https://www.aidsinfo.nih.gov). Quantitative limits on the number of
drugs covered per month are discriminatory against people with HIV and
others whose quality of life and health depend on access to a specific
regimen of multiple prescription drugs to treat both HIV and co-
occurring conditions as recommended by their medical provider. The
application of the non-discrimination provisions should prohibit states
from applying quantitative limits on monthly drug coverage for the
expansion population, and the commenters urged that this standard also
be applied to the traditional Medicaid population. If monthly drug
limits are considered, there must be provisions to allow for a timely
override process that does not delay immediate and uninterrupted access
to the medications when recommended by a medical provider.
Commenters also requested that CMS adopt a more robust standard for
evaluating limitations on amount, duration, and scope and prior
authorization and utilization control measures that may be
discriminatory by design. These evaluations should be specific to the
population and based on sound medical evidence regarding the
prescription drugs necessary to provide adequate coverage. Restrictions
to prescription drug coverage in Medicaid, such as monthly drug limits,
could leave some Medicaid beneficiaries with less comprehensive
coverage than that offered to individuals covered in the
[[Page 42211]]
Exchange because of limitations that are discriminatory based on health
care need.
A few commenters also expressed concern that the proposed rule does
not discuss the circumstances in which a limitation on drug coverage
could violate the non-discrimination requirement. CMS should provide
additional guidance about its interpretation of the nondiscrimination
rule and its enforcement strategies, particularly for prescription
drugs. The commenters believe that this should include oversight
functions to actively monitor and test for discriminatory plan design
and implementation, and to report such activities to CMS. For instance,
the implications of plan substitutions within a category of EHBs or
prescription drug cost-sharing designs for high risk enrollees should
be considered.
Response: States have considerable flexibility in implementing the
provision of Medicaid services through ABPs. While this flexibility
permits states in some instances to limit prescription drug coverage
based on the coverage offered under other public employee or commercial
plans, it also includes the ability to exceed the amount, duration, and
scope of prescription drugs covered by those plans, as long as the
services provided are consistent with the Medicaid requirements.
The non-discrimination provisions adopted in this final rule at
Sec. 440.347 require that states will need to assess whether their ABP
benefits, including any limitations placed on the amount, duration and
scope of any benefit, discriminate on the basis of the individual's
age, expected length of life or any individual's present or predicted
disability, degree of medical dependency, or quality of life or other
health conditions. We will consider whether additional sub-regulatory
guidance on these matters is needed.
Comment: One commenter stated that private market carriers argue
that exclusions for services or drugs commonly provided for the
treatment of conditions such as HIV/AIDS are not discriminatory because
they apply to all plan enrollees, regardless of their specific negative
effect on people with these conditions.
Response: Under the law, states must assess whether their ABP
benefit designs, including service or drug exclusions that are applied
to all beneficiaries, discriminate based on an individual's age,
expected length of life, or an individual's present or predicted
disability, degree of medical dependency, or quality of life or other
health condition contrary to the non-discrimination provisions being
adopted in this final rule at Sec. 440.347.
Comment: One commenter suggested that in developing an analysis
framework to aid in testing for discriminatory plan benefits, CMS must
ensure that ABPs refrain from using benefit designs that treat patients
in a disparate manner based on age. For example, where FDA approves a
drug or biologic for use in patients within a certain population, such
as pediatrics, the commenter argued that ABPs should not be permitted
to restrict coverage or employ varying utilization techniques for
children of different age ranges within that pediatric population. The
commenter requested CMS' vigilant oversight to protect children from
being subject to age-based discrimination in accessing FDA-approved
products.
Response: The non-discrimination provisions adopted in this final
rule at Sec. 440.347 require that states will need to assess whether
their ABP benefits, including any limitations placed on the amount,
duration and scope of any benefit, discriminate on the basis of the
individual's age, expected length of life or any individual's present
or predicted disability, degree of medical dependency, or quality of
life or other health conditions. A limitation on medically necessary
care provided to pediatric patients would violate the requirement under
section 1937 of the Act that ABPs include the full range of medically
necessary EPSDT screening and treatment services. Thus, the issue would
not be one of benefit design but of compliance in providing a covered
benefit.
Comment: A few commenters stated that CMS should adopt similar
guidance and review processes as required under Medicare Part D program
in the Medicaid EHB final rule. These proven non-discrimination
policies and processes have been critically important in assuring that
all Medicare beneficiaries--from the healthiest beneficiaries to the
most vulnerable beneficiaries with serious and chronic illnesses--can
obtain affordable Part D coverage that meets their individual needs.
Additionally, CMS' experience assessing Medicare Advantage plans' cost-
sharing and benefit designs for discriminatory effects may help point
the way.
Response: We appreciate the comments regarding the use of Part D
non-discrimination standards and will consider those standards as we
evaluate these issues and the need for further guidance.
Comment: Several commenters indicated that meaningful non-
discrimination protections will require a thoughtful and thorough
review of preferred drug lists (PDLs). They stated that the following
approaches could help ensure meaningful access: (1) PDLs should only be
permitted to categorize a drug as non-preferred when there are genuine
therapeutic alternatives classified as preferred; (2) PDLs should allow
for appropriate access to drugs or drug classes needed for adherence to
widely accepted treatment guidelines; (3) The most commonly used
medications (or therapeutically similar medications) for conditions
with high prevalence in the Medicaid population should be categorized
as preferred drugs; and (4) Most importantly, medications used by
particularly vulnerable Medicaid beneficiaries, such as those living
with HIV/AIDS, cancer or serious mental illness, should be largely
available as preferred drugs, given the importance of avoiding medical
complications and interruptions in therapy for individuals with those
conditions.
Response: For covered outpatient drugs, a PDL is permitted under
section 1927 of the Act, as long as it is under a prior authorization
program that meets the requirements of section 1927(d)(5) of the Act.
Furthermore, as we discuss in the cost sharing sections of this final
rule, a PDL may also be established for cost sharing purposes.
Comment: Many commenters expressed concern that the regulation did
not provide examples of what would be considered discriminatory benefit
design. The commenters request CMS identify a clear standard to
determine whether the coverage provided complies with the non-
discrimination provisions of the Affordable Care Act. Additionally, the
commenters believe that CMS should provide examples to States of what
would constitute violations, monitor ABP coverage for compliance with
the non-discrimination requirements, and enforce these provisions of
the law. Many other commenters added that the rule also did not
establish a process to bring discriminatory benefit design or practice
into compliance. CMS should consider developing more detail in the
final regulation defining these protections. This should include a
process for bringing a State's chosen benchmark or benchmark-equivalent
option into compliance with the law.
Response: States will submit Medicaid state plan amendments for
federal approval to implement ABPs and receive FFP. The state will
assure in that submission that they will comply with non-discriminatory
requirements as set forth in Sec. 440.347(e). If issues are
[[Page 42212]]
detected with adherence to these requirements, we will pursue
appropriate action with the state to rectify the issues. As always, we
appreciate the ongoing input of stakeholders to help inform states and
CMS of concerns relating to these matters.
Comment: One commenter indicated that it is unclear how the
requirement that EHBs cannot be based on a benefit design or
implementation of a benefit design that discriminates on the basis of
an individual's age, expected length of life, or of an individual's
present or predicted disability, degree of medical dependency, or
quality of life or other health condition will be evaluated in the
context of benchmark plans for specified population. It is unclear
whether targeting permitted under other sections such as section
1915(i) of the Act would be permitted. The commenter wondered whether
it would preclude the establishment of specialty plans based on
diagnosis.
Response: Section 1937 of the Act does allow for a waiver of
comparability at Sec. 440.230(c); thus permitting states to identify
groups of people, populations, based on certain characteristics such as
presence of a chronic condition. States can then design benefit
packages that are suitable for the population, but this activity does
not permit benefit designs that are inherently discriminatory.
Comment: A few commenters expressed concern that neither earlier
rules on EHB nor this proposed rule specifically define
``discrimination'' in the context of discriminatory benefit design. The
commenters urge HHS to develop and promulgate a definition of
``discrimination'' that will allow states to evaluate health plans
uniformly. The proposed rule delegates entirely to states the task of
evaluating EHB for discriminatory design or intent with no further
guidance at all. The absence of a definition of discrimination will
inevitably lead to a 50-state patchwork of definitions. The commenters
strongly believe that the definition of discriminatory benefit design
should not vary among states.
Response: Medicaid is a federal and state partnership that allows
states to design state-specific programs within broad federal
guidelines and, more generally, that allocates responsibilities to both
states and the federal government. By identifying states as accountable
for determining that benefit design is not discriminatory, we recognize
their important role in assuring compliance with this important
statutory directive. Such accountability does not negate federal
responsibility. As noted, we will consider whether further guidance on
discrimination benefit design would be useful.
Comment: One commenter pointed to the Affordable Care Act's
provision barring discrimination in EHB as prohibiting disability-based
discrimination in making decisions about coverage, reimbursement rates,
establishing incentive programs, and designing benefits, and the
commenters believe those requirements should apply to Medicaid ABPs.
The commenter recommends the Department provide additional guidance
concerning applications of the Affordable Care Act EHB non-
discrimination mandate to ABPs. The commenter believes the Department
should also identify a minimum scope of services that plans must cover
to comply with the Affordable Care Act's parity and nondiscrimination
requirements and the requirement that EHB take into account the ``needs
of diverse segments of the population, including . . . persons with
disabilities.''
Response: The United State Supreme Court decision in Olmstead v.
L.C. rendered on June 22, 1999 held that unjustified segregation of
people with disabilities constitutes discrimination in violation of
Title II of the ADA. Public agencies must provide services to people in
the community when services are appropriate, people do not oppose
services in the community, and the community-based services can be
reasonably accommodated, taking into account the resources available to
the entity and the needs of others who are receiving disability
services from the entity. Medicaid beneficiaries must receive services
in the most integrated setting appropriate. We agree with the commenter
that benefit design, including rate structures, should not create a
pathway to institutionalization or segregation. Setting is not an
appropriate targeting criterion, because it is potentially
discriminatory as different benefits could be designed based on where
individuals live and therefore, it would not be acceptable as a waiver
of comparability.
Comment: Many commenters recommend CMS use the following data to
determine compliance with the non-discrimination requirements:
Medical necessity requirements for Medicaid must be
evaluated and standardized, and HHS should monitor state implementation
of medical necessity to ensure that people living with HIV, chronic
disabilities and other chronic and complex conditions have unimpeded
access to essential care and treatment.
Utilization management techniques, exclusions, and service
limits must be closely monitored to ensure that plans have not put in
place barriers to services or excluded or limited certain items or
services solely to deny access to care for people with chronic and
complex health conditions. The commenters urge HHS to develop a list of
practices that amount to discrimination to help guide monitoring and
enforcement activities. For instance, requiring step therapy for HIV
treatment without a medical override provision is a discriminatory
utilization management technique that should be barred. Similarly, a
monthly limit on prescription drugs (for example, several states have
monthly limits of three or four prescription drugs) is also per-se
discriminatory, as applied to people living with HIV and other chronic
conditions.
Physician network size and composition must be evaluated
to ensure that Medicaid managed care plan networks include providers
that are able to deliver quality care for people living with HIV and
other chronic and complex conditions. A plan network that excludes HIV
providers violates network adequacy standards outlined in qualified
health plan standards and is a discriminatory plan design practice that
forecloses access to EHB services. In addition, patient protections
(for example, standing out-of-network referrals) will be necessary to
ensure a smooth transition to coverage and to support continuity in
care. The commenters strongly urge CMS to require Medicaid managed care
plans to contract with Essential Community Providers, including Ryan
White medical providers.
For chronic and complex conditions, where the standard of
care is rapidly evolving, reference to clinical guidelines is
particularly important to ensure that coverage decisions are based on
established medically accepted guidelines.
Response: Thank you for your suggestions. We agree that Medicaid
managed care provider networks need to be adequate to provide services
to all of their members. It is at state discretion to include (or not)
standards for managed care providers in the contracts that the state
holds with the managed care organizations in the state. Managed care
entities can contract with any provider operating within the scope of
their license to provide services.
Comment: A few commenters recommend ongoing procedures for states
to monitor and share data on how they are meeting their benefit design
and anti-discrimination obligations over time, and make this
information transparent and readily available in at
[[Page 42213]]
least an aggregate fashion to HHS, the public, and to health advocates.
Response: We appreciate the comments. We are currently redesigning
data collection procedures and standards and will consider these
comments.
Comment: One commenter is requesting that any coverage under the
Affordable Care Act, including Medicaid Programs, adequately cover
therapies that cancer patients absolutely must take whether or not
there is an actuarial equivalent at a lower cost. Coverage of drugs and
services related to cancer care should not create cost barriers to
patients through cost-sharing schemes such as burdensome co-pays and
co-insurance. To do so would be unfairly discriminatory, and could
impact a patient's ability to access their care, particularly low-
income patients enrolled in Medicaid. The commenter would like to see
strong protections and oversight established to prevent discrimination.
Response: We agree that a patient's ability to pay cost sharing
imposed for a service can affect a patient's access to care and that
low-income patients are particularly sensitive to such costs. Medicaid
cost sharing rules at Sec. 447.52 generally and Sec. 447.53 for drugs
apply to ABPs. States design cost sharing for therapies and drugs using
those rules, and cost sharing rules may not be implemented in a manner
that would be discriminatory. Annual dollar limits on services will not
be allowed on benefits in the public employee or commercial plans that
are the basis for the base benchmark options used to define EHBs per
section 2711 of the Affordable Care Act.
Comment: A few commenters believe that Sec. 440.347(e) sets out a
strong non-discrimination requirement. However, the commenters also
believe that there will be times when individuals are going to need
access to legal advocacy to seek redress from discrimination and
enforce these due process protections. The commenters recommend that
the states be required to assist individuals to use the due process and
appeals processes, this would include: (1) Information and assistance
in pursuing complaints and appeals; (2) negotiation and mediation; (3)
case advocacy assistance in interpreting relevant law; (4) reporting on
patterns of non-compliance by plans as appropriate; and (5) individual
case advocacy in administrative hearings and court proceedings relating
to program benefits.
Response: We appreciate these suggestions; however, they are
outside the scope of this regulation.
Comment: Many commenters representing the Lesbian Gay Bi-Sexual and
Transgender (LGBT) community stated that the final rules must also
address gaps in enforcement of this prohibition on discriminatory
exclusions by providing clear guidance to state Medicaid agencies on
implementation of these nondiscrimination standards. Enforcement is a
major concern for these commenters in two areas: (i) instances of
discrimination against individual enrollees, and (ii) discriminatory
benefit design. The former is very important for LGBT enrollees, and
they encourage CMS to work with state Medicaid Directors to ensure that
robust and transparent appeals procedures are equally available to all
individuals who need them. With regard to discriminatory benefits
design, they are particularly concerned about enforcement in the
context of potential disagreement as to what kinds of benefit
limitations and exclusions constitute impermissible discrimination in
benefit design.
Response: We appreciate the concerns expressed by these commenters.
We intend to work with states on these matters as well as consider ways
in which discrimination for LGBT enrollees may be rooted in benefit
limitations and exclusions as well as in appeals processes.
Comment: Several commenters stated that the proposed rule requires
that a Medicaid benchmark plan's benefit design cannot be
discriminatory, and the final regulation must ensure adequate
protections against discrimination. The commenters recommend the
regulation require the following non-discrimination standards:
Processes for review of plan benefits design to avoid
discrimination caused by unfair utilization management techniques or
other plan design elements.
Requirements for plans to disclose to all prospective and
current members all utilization management techniques as well as all
limits on services.
Final authority at the federal level to approve any state
non-discrimination review processes to ensure appropriate measures are
in place to guarantee that plans are meeting the requirements of this
section.
Federal monitoring programs to ensure appropriate checks
are in place to guarantee that plans are meeting federal requirements.
In addition, the commenters urge CMS to clarify that Medicaid cost-
sharing limits apply to the managed care organizations participating in
the Medicaid program. For more details on non-discrimination standards,
the commenters refer CMS to its proposed regulatory language for a
comprehensive set of patient protections.
Response: In Medicaid, utilization management processes are at
state discretion. States have flexibility to design and implement the
Medicaid program in the state according to state policies and
procedures. States will assure in the state plan amendment submission
that anti-discrimination practices at Sec. 440.347(e) are met. We
clarify here that Medicaid cost sharing parameters apply to services
provided in a managed care delivery system. Furthermore, we have
oversight responsibility of state programs to insure that federal rules
and requirements are being followed.
Comment: One commenter pointed out that Sec. 440.347 deals
exclusively with patient non-discrimination. The commenter indicated
that there is also provider discrimination within health plans, where
sometimes entire classes of healthcare professionals are excluded from
providing services under the benefit solely based on their licensure or
certification. The commenter believes such discrimination can limit or
deny patient choice and access to a range of beneficial, safe and cost-
efficient healthcare professionals, impairing competition, patient
access to care, and optimal healthcare delivery. The commenter
recommends the rule require ABPs offering EHBs to align payment systems
to adhere to existing state provider non-discrimination laws as
applicable, and to the federal provider non-discrimination provision in
the Patient Protection and Affordable Care Act (Sec. 1201, Subpart 1,
creating a new Public Health Service Act Sec. 2706, ``Non-
Discrimination in Health Care'', 42 U.S.C. 300gg-5) slated to take
effect January 1, 2014.
Response: We require that all providers are operating within the
scope of their licensure or certification when providing services to
Medicaid beneficiaries.
Summary: We appreciate the comments and suggestions and may
consider further guidance. No change in the substance of the regulatory
text is needed. However, CMS made grammatical changes to the regulation
text at Sec. 440.347(e) as a result of comments received in this
section.
3. Modifications in Applying the Provisions of This Final Rule to
Medicaid
We proposed in the implementation of section 1937 of the Act and
the provisions in the Affordable Care Act relating to EHBs, a process
in Medicaid
[[Page 42214]]
for designing ABPs. The Affordable Care Act modified section 1937 of
the Act to implement two standards for minimum coverage provision; not
only must EHBs, as defined by the Secretary, be provided, but all
requirements of section 1937 of the Act continue to apply. Furthermore,
we outlined expectations for specific EHBs as they are implemented in
Medicaid including: habilitative services; pediatric or and vision
services; prescription drugs; preventive services as an EHB; and the
fact that all other Title XIX provisions apply.
a. Essential Health Benefits (Rehabilitative and Habilitative Services
and Devices) (Sec. 440.347)
The proposed rule requested comment on an approach for defining
habilitative services in Medicaid and we reserved regulatory text to do
so. We received varied comments, and are adopting in this final rule
the requirement that services covered by the base benchmark are the
floor of EHB coverage, substituted as desired by the state. Under 45
CFR 156.110(f), if no habilitative services and devices are included in
the base benchmark, states have the option to determine generally the
required EHB services that are in the category of habilitative services
and devices. If the state has done so, the base benchmark, and coverage
under the ABP, must reflect that determination. If the state has not
made a general determination of the habilitative services that are
required for this EHB category, the state must exercise the option set
forth in 45 CFR 156.115(a)(5) to determine EHB for the specific ABP.
Under that option, habilitative services and devices must be included
as EHBs either in an amount, duration, and scope no more restrictive in
terms of treatment and benefit limitations than rehabilitative services
and devices, or otherwise to an extent determined by the state and
reported to HHS. In other words, if the base benchmark does not include
habilitative services and devices, ABP coverage must, at a minimum, be
based on the general state determination of habilitative services and
devices that are included in EHBs, or on a Medicaid-specific
determination for the particular ABP.
While we are not prescribing a specific definition of habilitative
services and devices for purposes of ABP coverage of EHB, we clarify
here that states may choose to adopt service definitions similar to
those issued by the National Association of Insurance Commissioners
(NAIC), as follows: rehabilitative services and devices are defined as
services and devices provided to assist a person to prevent
deterioration and regain or maintain a skill or function acquired and
then lost or impaired due to illness, injury or disabling conditions.
The NAIC also defines habilitative services and devices as services and
devices provided for a person to prevent deterioration or attain or
maintain a skill or function never learned or acquired due to a
disabling condition. CMS will consider the need for future guidance,
once experience is gained in implementing these EHB services and
devices. We also note that while there is a definition of habilitative
services under existing sections 1915(c) and 1915(i) of the Act, this
definition is not necessarily applicable and may in fact not be
appropriate for the population covered under ABPs.
Comment: A number of commenters believed that by requiring coverage
of habilitative services in the ten mandatory EHB categories, Congress
clearly indicated its intent to meet the health needs of individuals
with functional limitations following illness, injury, disability or
due to a chronic condition. The commenters recommended that HHS develop
an objective minimum national standard for habilitative services based
on ``appropriate coverage to meet the needs of the population,'' and
allow states flexibility to add to this minimum for purposes of
innovation.
A few commenters recommended HHS better define this category of
services including providing clarity as to how plan definitions and
scope of coverage will be assessed to ensure compliance with non-
discrimination provisions. A number of commenters requested HHS cover
habilitation at parity with rehabilitation, with some comments
suggesting this standard also require habilitative services under
Medicaid to be at least as generously defined as in the private market.
Many commenters requested that HHS require coverage of habilitative
devices without arbitrary restrictions and caps that limit the
effectiveness of the benefit.
Several commenters recommended HHS include a set of habilitative
services specifying the minimum type of services to be provided and
specify that these services are a floor.
Many commenters recommended that habilitation be covered separate
and distinct from rehabilitation. For example, the plan cannot
substitute rehabilitation for habilitation or apply only a single visit
limit to both benefits. Each benefit must have separate and distinct
limits which are applied based on medical necessity, not an arbitrary
cap.
One commenter requested that HHS recognize that habilitative
services are similar in type and scope to rehabilitative services (for
example, physical therapy, occupational therapy, speech-language
pathology). One commenter believed that habilitation should be covered
in the same setting and include the same type of providers and
specialists as covered in the rehabilitation benefit.
A number of commenters believed that setting clear, comprehensive,
and uniform standards for habilitative services will prevent non-
aligned localized definitions that could create serious problems across
programs and states. A few commenters requested formal guidance on what
the minimal expectation is for habilitative services.
A few commenters believed that when states adopt the habilitative
benefit for ABP, HHS require that they do not impose financial
requirements, quantitative treatment limitations, or financial
limitations that are more restrictive than the predominant requirements
or limitations that apply to all other benefit categories.
Response: We believe the provision of habilitative services is in
addition to rehabilitative services and devices as an EHB. As EHBs are
based on commercial market products, we are interpreting rehabilitative
services as an EHB to more closely align with commercial market
definitions, rather than the broader definition of rehabilitation in
Medicaid. We therefore, are establishing that the commercial market
definition of EHBs is the floor of coverage, subject to substitution
flexibilities. If the commercial market coverage is not adequate,
states, not issuers, define the benefit. At state discretion, as
indicated above, states may offer coverage of habilitative services and
devices that is no more restrictive in terms of amount, duration, and
scope than rehabilitative services and devices. We expect that the
services will be clinically appropriate to meet the needs of
individuals based on medical necessity. We have added this flexibility
for states to define a minimum standard of coverage if the commercial
market benefits are not adequate. We are suggesting, but not requiring,
definitions of rehabilitative and habilitative services and devices, as
indicated above, and will consider needs for future guidance. We are
reiterating that the benefit flexibility under an ABP allows states
considerable latitude to define the benefit package for each population
and there may be services that are covered in some settings but not in
other settings, or that are covered when furnished by some
practitioners but not others. This is
[[Page 42215]]
flexibility that exists currently in the commercial marketplace, and is
extended to state Medicaid programs under section 1937 of the Act.
Comment: One commenter recommended that the coverage and medical
necessity determinations for habilitative services and devices should
be based on clinical judgment of the effectiveness of the therapy,
service, or device to address the deficit. In addition, HHS should make
clear that such benefits are to cover maintenance of function not just
improvements, to assure that individuals in need have access to care
that prevents deterioration of their conditions.
One commenter requested that HHS inform states that habilitative
services need to be medically necessary and plans must be clear on how
they define and determine medical necessity.
Response: States may require that all services covered under
Medicaid be medically necessary. Determining the specific coverage of
habilitative services and devices will be done by the state, based on
services found in the base benchmark plan selected by the state to
define EHBs for Medicaid, and substituted as desired. If a base
benchmark plan does not include habilitative services, consistent with
45 CFR 156.110(f) and 156.115(f), States will determine which services
are included as EHB in the habilitative services and devices category.
We agree with the commenter that habilitative services, generally
speaking, cover acquisition and maintenance of skills, while
rehabilitative services cover restoration of previously acquired
skills, but we are not setting forth a specific definition of these
terms at this time.
Comment: One commenter recommended that HHS look to state Medicaid
programs as a guide for defining what habilitation services should be
covered under the EHB. A number of commenters requested that HHS
require states and plans to adopt the definition of habilitative
services put forth by the NAIC, which was included in the Department's
proposed rule defining medical and insurance terminology. Many
commenters recommend that if the NAIC definition is not used, an
alternate definition to consider is provided in Medicaid law under
section 1915(c)(5)(A) of the Act.
Response: We appreciate these suggestions and find the definitions
of rehabilitative services and devices and habilitative services and
devices extremely useful. Habilitative services and devices as
described in the base benchmark plan is the floor of coverage, subject
to substitution flexibility. If a base benchmark plan does not include
habilitative services, consistent with 45 CFR 156.110(f) and
156.115(f), States will determine which services are included as EHB in
the habilitative services and devices category. States may choose to
offer habilitative services and devices in no more restrictive in terms
of amount, duration, and scope of treatment than is applied for
rehabilitative services and devices.
Comment: One commenter requested the state-defined habilitative
benefit definition, as applied to section 1937 ABP in Medicaid, should
not be extended to QHPs on the Exchange. This commenter indicated that
in many states, Medicaid takes an expansive view of habilitative
services, and there is a risk that if applied to the commercial market,
this could raise costs on QHPs in the Exchange. States should have the
option to either separately define habilitative services for Medicaid
or apply the state-defined habilitative definition for the Exchange to
the Medicaid programs, but not apply a broad Medicaid habilitative
service definition to QHPs in the Exchange.
Response: This regulation is focused on the parameters of the
habilitative services and devices that are EHBs for purposes of section
1937 ABPs under the Medicaid program and, this regulation does not
apply to QHPs.
Comment: Many commenters recommended that states should be allowed
to define habilitative services for their Medicaid program.
Response: We are adopting the position in this final rule that
states will have the ability to define habilitative services and
devices. If the base benchmark plan selected by the state to define
EHBs, does not include habilitative services and devices, states will
define the habilitative services and devices that will be regarded as
this EHB category and must be covered in the ABP. In so doing, states
can choose to offer habilitative services and devices that are at a
minimum no more restrictive in terms of amount, duration, and scope
than rehabilitative services and devices.
Comment: One commenter requested that HHS continue to allow states
and issuers the flexibility to define habilitative services for the
individual and small group markets as proposed in the EHB proposed rule
and not be required to follow Medicaid definitions.
Response: We reiterate that this regulation applies only to the
Medicaid program, and has no bearing on the provision of habilitative
services in the individual and small group markets.
Comment: One commenter requested HHS clarify that states will be
deemed to cover habilitation if they provide ABP enrollees with such
services through a section 1915(c) waiver program.
Response: The new adult eligibility group is not eligible for
enrollment in section 1915(c) waivers. However, states may also add
section 1915(i) services to the ABP using Secretary-approved coverage,
which may include some habilitative services and devices. But we do not
see a reason to ``deem'' compliance with the habilitative services and
devices EHB requirements just because a state may include some
habilitative services and devices in those ways. The state must still
determine habilitative services and devices that are EHBs in accordance
with this regulation.
Comment: A few commenters recommended that if HHS does not use a
national standard for Medicaid habilitative service benefits, then
states should be required to base their definitions on documented and
evidence-based criteria, such as those endorsed by a relevant national
academy of providers or national disease group; and states should not
automatically be allowed to use their Exchange habilitative services
definitions unless it independently meets the criteria stated above.
Response: We expect that states will consider the efficacy of
services, evidence-based criteria, and the needs of the populations
being served as they are designing habilitative services, based on the
services found in the base benchmark selected by the state to define
EHBs for Medicaid, and supplemented and substituted as necessary and
desired.
Comment: Many commenters recommended that the state-defined
habilitative services for Exchanges should not apply to Medicaid.
Instead, some commenters indicated that states should be required to
define habilitative services through a public process that establishes
minimum standards for coverage, while taking into account unique
circumstances of the Medicaid population, including the impact of a
restrictive definition on access to critical services in early
intervention and special education. One commenter believed that states
should have the option to offer parity.
Response: In terms of complying with EHB requirements, the same
basic framework applies to both ABPs and plans in the individual and
small group markets. But that basic framework includes considerable
flexibility that states can exercise in the Medicaid context. While
states will ultimately determine coverage of habilitative services we
encourage states to do so in recognition of the unique needs of the
[[Page 42216]]
Medicaid population. As states work to identify coverable habilitative
services, they are expected to consider input from the public in making
the decisions. ABPs are subject to public notice requirements in Sec.
440.386.
Comment: One commenter requested that the final rule ensure that
the state's Medicaid definition of habilitation is at least as generous
as the definition used for Exchange plans.
Response: While we believe that the procedures we are adopting to
determine habilitative services included in EHB for Medicaid will
generally be at least as generous as the parallel procedures for the
individual and group market, we are not requiring that result. We
believe that the procedures for Medicaid will lead to appropriate
coverage for Medicaid beneficiaries while recognizing the state's role
in designing Medicaid coverage.
Comment: Many commenters recommended against HHS allowing any of
the potential flexibility, authorized in the Exchange, for issuers to
define the habilitative benefit. Commenters were concerned that issuers
would limit the range of services too narrowly.
Response: States will retain flexibility to design services covered
within the rehabilitative and habilitative services and devices EHB
consistent with the procedures set forth in this final regulation.
Comment: A few commenters recommended HHS require states to
establish the same definition of habilitative services for ABP, QHPs,
and Exchange, due to the significant amount of churn associated with
the population being served. One commenter believed that habilitative
services should have a common definition, but that definition should
not necessarily determine what is covered by the Exchange or Medicaid.
Those habilitative services that are to be covered should be separately
established by the Exchange and by Medicaid, since this is a question
of affordability and comprehensiveness.
Response: We recognize the possibility for churn between Medicaid
and the individual and small group markets. We believe the flexibility
reflected in this regulation provides the basis for continuity between
the commercial market and Medicaid. We are also allowing states to use
provider qualifications from the commercial market plans to help
minimize the possibility for provider changes if a person's plan
changes.
Comment: One commenter indicated that currently under Medicaid,
habilitation services are defined in statute and provided as an
alternative to institutional services such as nursing home care. As
noted in the regulation, employers do not cover the service consistent
with Medicaid requirements. As a result, if parity is required without
consideration of the scope of habilitation services offered, the result
could be states exceeding the EHB standard. States should be provided
the flexibility to define and provide coverage of habilitation
services.
Response: Habilitative services and devices are coverable services
under the section 1915(c) waiver program and the waiver program does
provide a suggested definition. Section 1915(i) also allows coverage of
habilitative services and devices where states define the service. We
are giving states flexibility to define habilitative services and
devices within the standards finalized in this regulation. In addition,
states may offer either habilitative or rehabilitative services in
excess of these standards.
Comment: Numerous commenters believed that states should not be
allowed to define habilitative services through parity with
rehabilitative services since the two service sets have totally
distinct purposes and impact different sets of individuals. They
asserted that parity is a poor standard because there is no certainty
that the rehabilitative services level is itself adequate to begin
with.
Response: We appreciate the commenters' concerns. We are
establishing that the state may determine the ABP-covered benefit
beyond the benefits included in the base benchmark plan,. To the extent
that the base benchmark has no habilitative services, the state may
elect to include as the EHB category habilitative services and devices
coverage that is no more restrictive in amount, duration, and scope
than the coverage of rehabilitative services and devices. We
acknowledge that this standard does not guarantee provision of any
particular habilitative or rehabilitative service. This will be in
large part determined by the services offered in the plan selected by
the state to define EHBs for Medicaid.
Comment: One commenter requested HHS, at a minimum, afford
flexibility to issuers allowing them to either provide parity by
covering habilitative services in the same manner as rehabilitative
services or report the services it decides to cover to HHS.
Response: The procedures we have adopted recognize that states have
the role that issuers have in the individual and small group market.
Federal Medicaid works directly with state governments and not issuers.
Therefore, we believe that having states define the habilitative
services benefit instead of issuers, using the procedures finalized
here, is the most appropriate approach.
Comment: One commenter believed that habilitative services
complement rehabilitative services and are integral to ensuring that
the beneficiary receives comprehensive care that restores him/her to
maximum functional levels. This commenter stated that both substitution
among and parity between these services could be problematic if the
beneficiary's medical condition requires significantly more
rehabilitative services than habilitative services and vice versa.
Response: States may implement utilization management processes
that allow for individuals who need additional services beyond the
limits established in the ABP to receive such services based on medical
necessity. States could substitute rehabilitative services for
rehabilitative services and habilitative services for habilitative
services.
Comment: A number of commenters recommended that HHS remove the
requirement that state Medicaid programs cover habilitative services,
as this is not a separate mandated category of EHB services. Instead, a
Section 1937 plan that covers either rehabilitative or habilitative
services should be deemed to cover items and services within the
general EHB category for rehabilitative-habilitative services.
Alternatively, a few commenters recommended that HHS clarify that
ABPs must cover all of the benefits within categories of care that list
more than one benefit, as is the case for rehabilitative and
habilitative services and devices. In particular, a plan should not be
considered to meet the requirement of covering all EHBs unless it
covers, as three distinct benefits, rehabilitative services,
habilitative services, and rehabilitative and habilitative devices, as
opposed to covering only one of the many benefits included in this
category.
Response: Habilitative services are listed as a required benefit
category of EHB at section 1302(b)(1)(G) of the Affordable Care Act. It
is part of a category of EHBs, but is distinct from rehabilitative
services and devices. Both rehabilitative and habilitative services and
devices must be offered in all ABPs.
Comment: A number of commenters supported access to habilitative
services and devices including autism services, durable medical
equipment, orthotics, prosthetics, low vision aides, hearing aids,
augmentative communication devices that aid in speech and hearing, and
other assistive technology and supplies that are often critical to
ensure
[[Page 42217]]
individuals are able to function independently in the community.
Response: We appreciate the comment and agree that these types of
services could assist people with living in the community. We are not
requiring any specific services to be offered within this EHB category.
Comment: A number of commenters requested that HHS require coverage
of services without age restrictions. They indicated that a pediatric-
only habilitative benefit is inadequate, especially as the new
eligibility category is for adults only.
Response: EHBs including rehabilitative and habilitative services
and devices apply to all individuals who receive a benefit package in
ABPs, regardless of age. For the new adult group, only individuals who
are ages 19 and 20 will qualify for EPSDT services.
Comment: A few commenters requested HHS prohibit the exclusion of
specific conditions or diagnoses from accessing the benefit.
Response: ABPs allow for comparability to be waived, which results
in allowing for targeting of individuals to specific benefit packages.
However, all individuals in the new adult group and other individuals
the state either mandates or offers voluntary enrollment into an ABP
must receive all EHBs, including habilitative and rehabilitative
services and devices.
Comment: A few commenters recommended that states should define
habilitation using EPSDT criteria.
Response: Section 1905(a) of the Act does not include a service
category for ``habilitation services'' so it is not useful to look to
EPSDT coverage for guidance and EPSDT criteria do not apply under law
to adults. For children, however, the EPSDT benefit must provide
eligible individuals with any medically necessary service that is
coverable under a section 1905(a) service category. Consistent with the
law, these regulations extend the EPSDT benefit, which also includes
children covered in an ABP. Therefore, children in an ABP should
receive any covered section 1905(a) benefits that they require based on
medical necessity.
Comment: A few commenters requested that HHS cover habilitation
services, which maintain an individual's functional status, as defined
by the HHS Summary of Benefits and Coverage regulations.
Response: The HHS Summary of Benefits and Coverage regulations
apply to private insurance markets, which do not include Medicaid.
Comment: A few commenters cautioned against restricting services in
EHB plans without allowing for an exception process.
Response: States do have the flexibility to allow for exception
processes for utilization management of the benefit; such exceptions
must be based on medical need.
Comment: One commenter recommended that the habilitative benefit
cover the full array of health and ancillary service needs of children
with special health care needs. The commenter believed that this is
especially important for children aging out of foster care, as these
children are at greater risk of having a chronic condition requiring
habilitative services.
A few commenters indicated that it is inappropriate for any one
service to satisfy the requirement for a benchmark plan covering
habilitative services. For example, providing only Applied Behavioral
Analysis to children under the benchmark plan is inadequate to satisfy
the full requirement of coverage of habilitative services. These
commenters requested that the benchmark plan utilized be as
comprehensive in its coverage as feasible. One commenter recommended
defining habilitation and contrasting it with rehabilitation to help
clarify the distinction between the two benefits.
Response: We remind readers that states must not only comply with
the standards finalized in this regulation, but must also include all
habilitative services covered in the public employee or commercial plan
selected by the state to define EHBs for Medicaid, supplemented and
substituted as necessary and permitted.
Comment: One commenter believed there should be no exclusion for
services that may be educationally-relevant, as is the current policy
in Medicaid.
Response: Payment for Medicaid services must be for services that
are medical or remedial in nature as specified by the particular
authority from which the service is derived.
Comment: One commenter requested HHS provide states a description
of maintenance programs and clarify at what point services are no
longer covered.
Response: The level at which services no longer have clinical value
is determined by the state through medical necessity criteria.
Comments: One commenter requested that HHS clarify the clinical
settings in which habilitative services may be covered and ensure that
there is a prohibition against ``school'' exclusions.
Response: Settings in which services are furnished are largely
determined by the providers authorized by the state to deliver
services. Practitioners within schools can become Medicaid providers if
they meet the provider qualifications as established by the state. In
ABPs, states may use provider qualifications for the benefit as defined
for the commercial market, Medicaid provider qualification rules for
the benefit, or a combination of both.
Comment: A few commenters requested information related to the cost
of adding habilitative services.
Response: Habilitative services are not included in the benefit
package typically included in the Medicaid state plan, and our limited
experience does not allow for extrapolation for a nationally required
service. States will initially receive 100 percent FMAP starting
January 1, 2014 to cover the cost of providing services to individuals
who are considered newly eligible in the new adult group, and that
funding will decline to 90 percent FMAP in 2020. For individuals who
are considered not newly eligible in the new adult group and those who
are not in the new adult group, FMAP will be provided at the state's
regular FMAP rate.
Comment: Many commenters recommended that HHS prohibit the use of
cost-sharing requirements or utilization management tools which target
the habilitation benefit and are not applied to other EHB benefits.
Response: We are not accepting this comment because states have the
flexibility to impose cost sharing consistent with the exemptions and
beneficiary protections set forth in sections 1916 and 1916A of the
Act, which we address separately in this final rule. There is no
exemption under those provisions for habilitation services. In
determining how to exercise the flexibility to impose cost sharing,
however, we recognize that states must consider their obligations under
the Americans with Disabilities Act and must not implement a
discriminatory benefit design.
Comment: A few commenters were disappointed that HHS has chosen not
to provide states any guidance regarding the habilitation benefit in
ABP.
Response: In the proposed rule, we solicited public comments on the
EHB requirements for rehabilitative and habilitative services,
including devices. We received considerable numbers of comments, and
considered those comments carefully. We weighed concerns about burden
and cost of expansive coverage against the benefits of wider access for
beneficiaries to needed care. We also considered the treatment of these
benefits in the commercial market. Based on this consideration, we are
issuing in this
[[Page 42218]]
final regulation the policy for coverage of rehabilitative and
habilitative services, including devices. We hope that these policies
provide the guidance requested by commenters.
Comment: Many commenters requested HHS stipulate in the final
regulation an ongoing process for data collection and evaluation
related to ABP and Exchange coverage of habilitative services and
devices. If this data were compared to the model definition of
habilitation, that would give parameters for determining the adequacy
of coverage for the first year of ABP and exchange operation.
Response: CMS collects data from states in a variety of ways. The
data will be available to help states, CMS and others determine what
services are actually being provided, and it will help to inform us for
future coverage decisions.
Comment: One commenter indicated that states should be able to
include as Medicaid state plan services any habilitative services
included in either its Exchange EHB benchmark or ABP.
Response: Habilitative services are only required in the Medicaid
program for individuals in an ABP. Many states cover habilitative
services under their section 1915(c) waivers. States interested
offering habilitative services in other contexts should initiate
conversations with CMS.
Comment: One commenter believed the habilitative benefit proposed
to be defined in the November 20, 2012 EHB proposed regulation is
wholly inadequate and urged HHS to pursue promulgation of a strong,
uniform definition of habilitative services for ABPs, as well as those
offered through the Exchange.
Response: The scope of this regulation is related to the definition
of habilitation services as EHBs for purposes of Medicaid ABPs under
section 1937 of the Act. This regulation does not extend to the
definition of habilitation services as EHBs for purposes of the
individual and small group markets.
Comment: One commenter recommended that HHS have the authority to
amend state defined coverage of habilitative services should evidence
show that they provide insufficient coverage for users.
Response: We anticipate that states will provide appropriate
coverage of this service but section 1937 of the Act gives states a
certain amount of flexibility to define ABPs that include the minimum
coverage defined as EHBs.
Comment: One commenter believed that by requiring section 1937
plans to cover habilitative services, CMS is creating a disconnect
between the scope of services offered under the state plan and section
1937 coverage, in essence making the section 1937 plans more generous
than current Medicaid state plans (which goes against congressional
intent).
Response: The Affordable Care Act established habilitative services
as part of the EHB category ``Rehabilitative and Habilitative Services
and Devices.'' EHBs are required to be offered as part of ABPs and are
not required in other Medicaid state plan benefits for adults. ABP
benefit packages will be different from those defined as the Medicaid
state plan.
Comment: One commenter believed that requiring habilitative
coverage does little to ensure that appropriate services are available
to individuals, as those requiring habilitative services are likely to
be considered ``medically frail'', exempting them from mandatory
enrollment in the benchmark package.
Response: Individuals in the new adult group who meet the criteria
to otherwise be determined to be exempt for medical frailty, will have
a choice between ABP coverage that is defined in accordance with the
requirements of section 1937 of the Act, including the EHB
requirements, or ABP coverage that is defined as the coverage available
under the state's approved Medicaid state plan. People who are not in
the new adult group and are eligible for voluntary enrollment may be
given a choice by the state between the benefit package defined using
the ABP or the state's approved Medicaid state plan. An individual who
has such an election may obtain needed habilitation services if the
state has elected to provide such coverage under the state plan under
section 1915(i) of the Act. If not, such individuals who need
habilitative services may wish to voluntarily enroll in an ABP defined
under section 1937 of the Act, if the EHB benefit package, inclusive of
habilitative services, meets their needs.
Summary: We solicited public comments related to this provision in
the proposed rule. We clarify in regulation text that the state will
define rehabilitative and habilitative services. Services covered by
the base benchmark are the floor of EHB coverage, substituted as
desired by the state. Under 45 CFR 156.110(f), if no habilitative
services and devices are included in the base benchmark, states have
the option to determine generally the required EHB services that are in
the category of habilitative services and devices. If the state has
done so, the base benchmark, and coverage under the ABP, must reflect
that determination. If the state has not made a general determination
of the habilitative services that are required as this EHB category,
the state must exercise the option set forth in 45 CFR 156.115(a)(5) to
determine EHB for the specific ABP. Under that option, habilitative
services and devices must be included as EHBs either in an amount,
duration, and scope no more restrictive in terms of treatment and
benefit limitations than rehabilitative services and devices, or
otherwise to an extent determined by the state and reported to HHS. In
other words, if the base benchmark does not include habilitative
services and devices, ABP coverage must, at a minimum, be based on the
general state determination of habilitative services and devices that
are included in EHBs, or on a Medicaid-specific determination for the
particular ABP.
b. Pediatric Oral and Vision and EPSDT Services
For Medicaid, medically necessary services, including pediatric
oral and vision services, must be provided to eligible individuals
under the age of 21 according to requirements of the EPSDT benefit. We
clarified in the proposed rule that any limitations relating to
pediatric services that may apply in the individual or small group
market does not apply to Medicaid. In this final rule, we made no
change from the proposed rule.
Comment: Several commenters expressed appreciation for and support
of the clarifying language in the preamble that confirmed that
medically necessary services provided to eligible beneficiaries under
the age of 21 must be provided under the EPSDT program, and that any
limitation relating to pediatric services based on benchmarks would not
apply to Medicaid for children enrolled in ABPs.
One commenter added that the EPSDT benefit ensures that Medicaid
eligible children have access to a complete range of medically
necessary services, concluding that this will prove especially
important for children with chronic conditions.
A separate commenter believed that the pediatric services category
for benchmark plans for all populations must include a comprehensive
pediatric services benefit modeled after EPSDT.
Response: We generally agree with these commenters, that the EPSDT
benefit is important in offering increased access and a comprehensive
range of medically necessary services for children under the age of 21.
For children enrolled in Medicaid, all medically necessary services in
general, including pediatric oral and vision
[[Page 42219]]
services, are covered under the Medicaid EPSDT benefit, which applies
to every section 1937 ABP. As a result, EHB supplementation for
pediatric services is not necessary in Medicaid.
When assuring access to EPSDT services, a state has the option to
offer medically necessary services to eligible children through either
benchmark and benchmark-equivalent plan benefits without limitation or,
alternatively, a state may meet the ESPDT requirement by providing
services in combination with an eligible individual's benchmark or
benchmark-equivalent plan as additional benefits. The state Medicaid
program must assure that eligible individuals enrolled in ABP coverage
receive EPSDT services that can be accessed in the most beneficial and
seamless manner for the population being served.
Comment: One commenter believed that subjecting ABP benefit
categories to EPSDT requirement, such as preliminary screening, would
water down ABP benefit packages and serve as an artificial barrier to
care that children need. The commenter believed that a robust pediatric
vision services benefit, as envisioned by Congress in the Affordable
Care Act, based on coverage typical in the commercial market, should
not be interrupted by imposing a harmful screening requirement.
Response: We disagree. The commenter may have a misunderstanding of
the EPSDT screening requirements. States are required to adopt EPSDT
screenings (that is, preventive visits) for well-child, vision,
hearing, and dental services. States may also adopt a national
periodicity schedule such as Bright Futures (the Guidelines for health
of the American Academy of Pediatrics). Services are provided based on
these periodicity schedules and at other intervals as determined
medically necessary. The inclusion of screening requirements as part of
the EPSDT mandate should not in any way ``water down'' benefits
provided under ABPs to individuals under the age of 21. It should serve
to ensure that children receive the necessary screenings and any
additional services and treatments according to appropriate standards
of care.
Summary: No changes were made. CMS clarified in regulation text
that EPSDT applies to pediatric services including oral and vision care
as a result of comments received in this section.
c. Essential Health Benefits (Prescription Drugs) (Sec. 440.347)
In the proposed rule, we proposed to add a new paragraph (b)(7) to
include benchmark-equivalent health benefits coverage for prescription
drugs. We also indicated in the preamble that section 1927 of the Act
requirements for covered outpatient drugs also apply to such
prescription drug benefits as an EHB. As we previously discussed, we
are clarifying in this final rule that this statement may have been
over-inclusive, since section 1927 requirements do not apply to ABPs to
the extent that they conflict with the flexibility under section 1937
of the Act for states to define the amount, duration, and scope of the
benefit for covered outpatient drugs. We received the following
comments:
Comment: A few commenters expressed support of paragraph (b)(7) of
Sec. 440.335, which implements the statutory requirements for
benchmark equivalent coverage of prescription drugs.
Response: We appreciate the commenters' support for the coverage of
prescription drugs as required under section 1937 of the Act.
Comment: A few commenters indicated that in the current Medicaid
program, states limit the number of drugs and include other utilization
control measures that are harmful to patients and deny them the
therapies that meet their health needs as prescribed by their
physician. Some state Medicaid programs limit patients to two to four
brand name drugs per month. Such limitations clearly do not meet
patients' needs and the commenter urges CMS not to allow states to
adopt them for the expansion population. Patients should be able to
access the medications that they need as prescribed by their
physicians. If they are not able to access appropriate medications,
patients may become ill, impacting healthcare spending in the long run.
The commenters further seek clarification on what is being proposed
in the rule's recommendation regarding prescription drug limits. While
the rule proposes that the ABP has to meet the benefits in the state-
selected EHB for the private market, the rule separately appears to
replace the ABPs EHB drug benefit category with that described in
section 1927 of the Act. In the final rule, the commenters ask for
clarification on this matter and specifically on whether the ABP drug
benefit is trumped by what is outlined in section 1927 of the Act,
including with respect to any limitations. Furthermore, they are
greatly concerned by the seemingly open ended ability of states to
impose limits, and recommend that quantity limitations not apply to the
ABP.
Another commenter states that CMS' final rule must clearly specify
all the drug access protections that apply to Medicaid ABPs. The
commenter believes that these protections are essential in the Medicaid
context because Medicaid beneficiaries represent a vulnerable
population that tends to have lower health status and fewer resources
to obtain needed care.
Response: States have considerable flexibility in designing benefit
packages for ABPs, including in the process of ensuring coverage of
EHBs. While this flexibility permits states in some instances to limit
prescription drug coverage based on the coverage offered under other
public employee or commercial plans, it also includes the ability to
exceed the amount, duration, and scope of prescription drugs covered
under those plans. We also clarify that nothing in the commercial
market implementation of EHBs, including prescription drugs, directly
prohibits the utilization of monthly quantity limits. In developing
ABPs, states must include prescription drug coverage to at least
reflect the EHB-benchmark plan standards, including the requirement to
have procedures in place that allow an enrollee to request and gain
access to clinically appropriate drugs not otherwise covered. We
believe these requirements will result in coverage that is similar to
the coverage otherwise required under regular Medicaid state plan
coverage.
Comment: A few commenters stated that they support the rules
governing coverage of prescription drugs under Medicaid (section 1927
of the Act) applying to the ABP requiring coverage of nearly all of the
drugs produced by manufacturers who participate in the Medicaid drug
rebate program. The breadth of coverage offered by the Medicaid drug
benefit is important to meet the medication needs of people with HIV
who rely on a complex and unique drug regimen to treat HIV infection
and manage serious co-occurring conditions, such as heart disease,
serious mental illnesses and hepatitis B or C. However, they have
serious concerns regarding the flexibility afforded to states to apply
quantitative limits on drug coverage, particularly given that these
limits are not common practice in the private insurance market.
Allowing these types of limits in ABPs threatens access to lifesaving
care and treatment and undermines the letter and spirit of the
Affordable Care Act's EHB requirements for newly eligible Medicaid
beneficiaries. It will also have the effect of undermining the adequacy
of prescription drug coverage for those
[[Page 42220]]
with chronic health needs. The commenters recommend that HHS apply the
section 1927 requirement for the range of covered medications, but
prohibit additional authority for quantitative limits or other limits
except as legally applicable based on the underlying ABP and EHB
benchmarks. The commenters further recommend that Sec. 440.347 be
amended to read: ``(e)Prescription drugs. Prescription drugs will be
offered at a minimum in accordance with the requirements of section
1927 of the Act and implementing regulations.''
Response: While drug rebate obligations under section 1927(b) of
the Act are applicable to payment for covered outpatient drugs covered
through an ABP, the amount, duration and scope of coverage for an ABP
is determined under section 1937 of the Act, which authorizes benchmark
or benchmark-equivalent coverage ``notwithstanding any other provisions
that would be directly contrary.'' This being the case, we do not have
the authority to require states, when establishing its benefits under
its ABP, to meet the coverage requirements of section 1927 of the Act.
Doing so would be directly contrary to flexibility with respect to the
amount, duration, and scope of coverage provided under section 1937 of
the Act. As for the commenters' concerns with the limits provided under
section 1927 of the Act as they apply to the Medicaid population,
especially on disease specific or chronic care populations, we note
that states have considerable discretion in the provision of Medicaid
services including the ability to define the amount, duration, and
scope of prescription drugs covered under ABPs. We also clarify that
nothing in the commercial market implementation of EHBs, including
prescription drugs, prohibits the utilization of monthly quantity
limits.
Comment: One commenter stated that in 2014, the Affordable Care Act
requires that ABPs cover at ``least essential health benefits, as
described in section 1302(b) of Affordable Care Act''. The commenter
continues that while CMS proposes that the EHB requirements described
in its November 2012 EHB proposed rule apply to ABPs, the Medicaid EHB
proposed rule does not spell out the minimum prescription drug coverage
requirements that will govern ABPs.
The commenter requests CMS clarify that Medicaid ABPs must cover at
least the same number of drugs in a particular United States
Pharmacopeia (USP) class that the state-selected benchmark plan
pertinent to the ABP covers, consistent with the ``Standards Related to
Essential Health Benefits, Actuarial Value, and Accreditation''
proposed rule. The commenter also requests that CMS consider
identifying classes of drugs in which broad access to different drugs
within the class is essential to assure that vulnerable patients have
prompt access to the right medicine for a serious illness, and bolster
the drug coverage requirements for those drug classes accordingly.
Response: As indicated above, states have considerable discretion
in the provision of Medicaid services including the ability to define
the amount, duration, and scope of prescription drug coverage under an
ABP. In developing ABPs, states must include prescription drug coverage
consistent with the EHB-benchmark plan standards. These standards are
set forth at 45 CFR 156.122 and include the requirement that health
plans have procedures in place that allow an enrollee to request and
gain access to clinically appropriate drugs not covered by the health
plan. We believe such requirements will result in coverage that is
similar to the coverage otherwise required under regular Medicaid state
plan coverage.
Comment: One commenter is concerned with the adequacy of the EHB
prescription drug benefit, which will apply to Medicaid beneficiaries
enrolled in ABPs effective January 1, 2014. Medicaid beneficiaries in
ABPs including those low-income adults who are newly eligible for
Medicaid under Affordable Care Act are entitled to coverage for EHB.
The proposed rule codifies this requirement and incorporates the
definitions and standards that were specified for EHB coverage in the
individual and small group market in the EHB proposed rule that CMS
published on November 26, 2012, including CMS' proposed formulary
standard for the prescription drug benefit. While the final rule states
that USP will be used at least through ``the years 2014 and 2015 during
the transitional EHB policy'' and thus it applies to the Medicaid ABPs
during that time, the commenter urges CMS reconsider the use of the USP
system as it is currently structured after 2015 given that many
significant concerns remain. The commenter lists the following concerns
regarding the EHB prescription drug benefit:
The inadequacy of the USP to represent the full range of
categories and classes of drugs needed by the populations covered by
the EHB, including Medicaid beneficiaries enrolled in ABPs, because the
USP was created as a classification system to be used by Medicare Part
D plans;
The need to incorporate specific protections for
vulnerable populations to ensure appropriate access to vital
medications;
The need to expand the USP categories and classes and
include more detail to adequately represent the drugs needed by
enrollees in plans subject to EHB;
The inability of USP categories and classes to capture all
medical benefit drugs, including physician-administered drugs, and the
need for CMS to specify that plans must offer robust coverage of drugs
that are included as part of a comprehensive medical benefit, including
a wider range of therapies, and should not rely on the USP categories
and classes when determining coverage for physician-administered
therapies;
A requirement that new therapies be reviewed and added to
plan formularies within 90 to 180 days through a process that mirrors
the review process performed by independent Pharmacy and Therapeutic
Committees in Medicare Part D to support timely access to new and
innovative medications;
A requirement for specific appeals and exceptions
procedures to ensure that patients have access to needed treatments,
and the application of these procedures also apply to drugs that are
covered as part of a comprehensive medical benefit; and,
The need for CMS to provide specific guidance about
Medicaid ABPs regarding acceptable and unacceptable utilization
management techniques, without which there is a real risk that plans
could apply utilization management tools in a way that discriminates
against individuals with more significant health care needs.
Response: We appreciate the comments submitted regarding the
application of the EHB requirements to ABPs, including the commenter's
concerns with the use of the USP classification system. As stated
above, states have considerable discretion in the provision of Medicaid
services including the ability to define the amount, duration, and
scope of coverage under an ABP. We also clarify that nothing in the
commercial market implementation of EHBs, including prescription drugs,
prohibits the use of utilization management tools. In developing ABPs,
states must include prescription drug coverage to reflect the EHB-
benchmark plan standards, including the requirements at section 45 CFR
156.122. We believe these requirements will result in coverage that
[[Page 42221]]
is similar to the coverage otherwise required under regular state plan
coverage.
Comment: A few commenters indicated that the preamble to the
proposed rule says that all drugs of the companies that participate in
the drug rebate program should be included in the ABP; however that
language is not included in the language of the proposed regulation.
The commenters recommended that the regulatory language be amended to
correct that omission. Additionally, commenters agreed with HHS' legal
conclusion, stated at 78 FR 4631, that section 1927 of the Act applies
to ABPs and believe that this is a critical protection requiring
coverage of a range of drugs necessary to meet the needs of the
Medicaid population. The commenter recommends that HHS' explicitly
state this requirement in the regulation.
Response: As noted earlier, we must clarify a statement in the
preamble to the proposed rule, indicating that coverage requirements
under section 1927 of the Act are applicable to ABPs under section 1937
of the Act. While drug rebate obligations under the rebate agreement
are required for drug manufacturers under section 1927(b) of the Act,
the amount, duration and scope of drug coverage under an ABP is
determined under section 1937 of the Act. The drug rebate obligation
applies because payment is made under the Medicaid state plan for
covered outpatient drugs as part of the ABP. The amount, duration, and
scope of coverage for an ABP are determined under section 1937 of the
Act, which authorizes benchmark or benchmark-equivalent coverage
``notwithstanding any other provision that would be directly
contrary.'' That said, to the extent that covered outpatient drugs are
within the scope of coverage, the non-coverage provisions under section
1927(d) of the Act would apply. For example, states will continue to be
permitted to apply certain permissible restrictions such as prior
authorization. However, when establishing such programs, states must
continue to adhere to the requirements that states must respond within
24 hours for pre-authorization requests, except for excluded drugs
listed at section 1927(d)(2) of the Act, and that at least a 72-hour
supply of a covered outpatient prescription drug must be dispensed in
an emergency situation. Further, we are revising Sec. 440.345 to add a
new paragraph (f) that states that when states pay for covered
outpatient drugs under their ABP's prescription drug coverage, they
must comply with the requirements of section 1927 of the Act.
Comment: A few commenters believed that ABPs are required by
statute to include all outpatient drugs in the Medicaid drug rebate
program, as well as meet the requirements for prescription drugs as
proposed in the EHB proposed rule for the commercial market. These
commenters also believe that in the absence of prescription drug
coverage in a particular category or class, the ABP benefit must
include at least one drug. They also recommend that the final rule
clarify that prescription drug coverage within ABPs must provide the
greater of the statutorily required coverage described in section 1927
of the Act, or the required EHB coverage described in the proposed rule
issued November 26, 2012. Another commenter recommended that CMS
require each ABP's coverage of prescription drugs to be consistent with
the state's EHB standard.
Response: As indicated above, states have considerable flexibility
in implementing the provision of Medicaid services through ABPs. In
developing ABPs, states must include prescription drug coverage to
reflect the EHB-benchmark plan standards at section 45 CFR 156.122 for
prescription drug coverage. We believe these requirements will result
in coverage that is similar to the coverage otherwise required under
regular state plan coverage.
Comment: A few commenters indicated that the regulatory text is
correct at part 440, but the preamble is not, in that the rebate
statute section 1927 of the Act does not apply to ABPs. They reasoned
that the benefits under section 1937 of the Act are mandatory benefits,
and they explicitly refer to the prescription drugs of the essential
health benefits and not to the covered outpatient drugs of the
voluntary Medicaid benefit to which section 1927 of the Act applies.
Thus, the EHB's prescription drug coverage, which requires the greater
of one drug in a class or the number of drugs in the class in the
benchmark plan, should apply to ABPs. If it is determined that section
1927 of the Act applies, then all the requirements and protections of
section 1927 of the Act should apply to ABPs.
A commenter stated that the rebate statute applies exclusively to
covered outpatient drugs; it requires manufacturers to pay rebates on
covered outpatient drugs (when they are paid for under a state Medicaid
plan); and it limits the restrictions that states can place on access
to covered outpatient drugs. The statute defines a ``covered outpatient
drug'' in terms of what is included in the definition and what is
excluded. This commenter believes the term ``covered outpatient drug''
is a well understood term of art meaning those drugs to which the
Medicaid rebate statute applies. If Congress had intended the Medicaid
rebate statute to apply to Medicaid ABPs, then Congress would have
stated this explicitly and described the drugs covered under an ABP as
``covered outpatient drugs.'' When Congress decided to apply the rebate
statute to Medicaid managed care organizations, Congress made its
decision clear and took the steps necessary to make its decision
workable. For example, Congress explicitly revised the rebate statute
to provide that covered outpatient drugs for which payment was made
under the state Medicaid plan includes ``such drugs as dispensed to
individuals enrolled with a Medicaid managed care organization if the
organization is responsible for coverage of such drugs,'' among other
changes.
By contrast, the commenters assert that Congress took an entirely
different approach with Medicaid ABPs. Unlike in the Medicaid MCO case,
Congress never mentioned Medicaid rebates in the statutory provision
authorizing ABPs, never mentioned ABPs in the Medicaid rebate statute,
never established any mechanism for ABPs to report drug utilization
data to states and for states to include this data in manufacturers'
rebate invoices, and never provided that state payments to ABPs would
be premised on the understanding that states would collect Medicaid
rebates.
Similarly, the commenters indicate that section 1937 of the Act
makes no mention of covered outpatient drugs. Instead, the drug-related
provisions in section 1937 of the Act provide only that (1) benchmark-
equivalent coverage must include ``prescriptions drugs'' (among other
basic services required in benchmark-equivalent plans) and (2) starting
in 2014, all ABPs must provide ``at least essential health benefits as
described in section 1302(b) of Affordable Care Act, which benefits
include prescription drugs.'' Thus in both of the statutory provisions
referencing ABPs' drug coverage, Congress omitted the term denoting
those drugs that are subject to the Medicaid rebate statute and instead
incorporated different terms with no connection to the rebate statute.
And Congress' decision to omit ``covered outpatient drug'' terminology
is consistent with its decisions: (1) not to require to authorize
reporting of ABP drug utilization data to states and manufacturers; and
(2) not to address any implications of state rebate collection on ABP
payments. Congress'
[[Page 42222]]
decision not to apply the rebate statute also is consistent with the
purpose of section 1937 of the Act, which is to give State Medicaid
programs more flexibility and allow them to operate more like
commercial payers.
Another commenter stated that the prescription drug benefit to be
provided to Medicaid beneficiaries under section 1937 of the Act is not
the same benefit as the ``prescribed drugs'' provided under a State
plan under section 1905(a)(12) of the Act. Indeed, the coverage for
prescription drugs made available to the Medicaid expansion population
is derived from a different statutory authority than the traditional
Medicaid option to provide coverage for ``prescribed drugs.'' The
benefit under section 1905(a)(12) of the Act is optional for a State,
while the prescription drug provided by an ABP is mandatory in accord
with EHB requirements established by Affordable Care Act. Therefore,
the commenter contends, and urges CMS to clarify in the final rule,
that there is no statutory basis to apply section 1927 of the Act to
these ABPs.
In short, the commenters believe the statutory evidence
demonstrates that Congress decided not to apply the Medicaid rebate
statute to ABPs. When a word or phrase has become a term of art with a
specialized meaning, that specialized meaning governs. Likewise, when
Congress uses a term of art in one statutory provision but omits it in
another (like section 1937 of the Act), then Congress intends a
different meaning; ``where Congress includes particular language in one
section of a statute but omits it in another . . ., it is generally
presumed that Congress acts intentionally and purposefully in disparate
inclusion or exclusion.'' Accordingly, applying the rebate statute to
ABPs would be directly contrary to section 1937 of the Act and thus
prohibited.
Response: Drug rebate obligations are required for drug
manufacturers under 1927(b) of the Act when payment occurs for covered
outpatient drugs covered through an ABP. However, the amount, duration,
and scope of drug coverage under an ABP are determined under section
1937 of the Act. That is, the drug rebate obligation applies because
payment is made under the Medicaid state plan for covered outpatient
drugs provided as part of the ABP prescription drug benefit. The
amount, duration, and scope of coverage for an ABP are determined under
section 1937 of the Act, which authorizes benchmark or benchmark-
equivalent coverage ``notwithstanding any other provision that would be
directly contrary.'' That said, to the extent that covered outpatient
drugs are within the scope of coverage, the non-coverage provisions of
section 1927 of the Act would apply.
Comment: A commenter indicated that they anticipate that requiring
ABPs to satisfy the requirements of both section 1927 of the Act and
the EHB formulary standard may present significant practical challenges
for the ABPs. The proposed rule does not explain how these two sets of
requirements will fit together or whether and when the requirements of
section 1927 of the Act will take precedence over the EHB formulary
standard. For example, section 1927 of the Act requires manufacturers
and the Secretary to enter into an agreement under which manufacturers
must pay rebates to state Medicaid agencies for utilization of the
manufacturer's covered outpatient drugs, in return for the state
coverage of such drugs, which may be restricted only within the set
confines of section 1927(d) of the Act. The proposed EHB prescription
drug benefit, by contrast, requires coverage of at least the greater of
(1) one drug in every USP category and class; or (2) the same number of
drugs in each category and class as the EHB benchmark plan.
Response: As we stated earlier, there is no authority to require
states to meet requirements of section 1927 of the Act related to the
amount, duration and scope of covered outpatient drugs under an ABP.
States have some discretion in the provision of Medicaid services
including the ability to define the amount, duration, and scope of
coverage under an ABP. In developing ABPs, states must include
prescription drug coverage to reflect the standards used to define EHBs
for Medicaid. As stated earlier, we believe these requirements at 45
CFR 156.122 will result in coverage that is similar to the coverage
otherwise required under regular Medicaid state plan coverage.
Comment: A few commenters indicated that to the extent that CMS
nonetheless decides to apply section 1927 to ABPs, it is of the utmost
importance that CMS apply and stringently enforce both the coverage and
access requirements of that section. CMS should explicitly indicate
that the section 1927 safeguards on coverage and exclusions apply, in
addition to the prescription drug benefit requirements of the EHB
proposed rule. Any requirements for payment of rebates under section
1927 of the Act without adherence to the coverage and exclusion
limitations violates the intent and spirit of that section.
Another commenter indicated that the Medicaid rebate statute
requires states that provide payment for drugs to cover all ``covered
outpatient drugs'' of manufacturers that sign a Medicaid rebate
agreement, subject to certain limitations on coverage that the statute
describes very specifically. The rebate statute explicitly lists the
limited circumstances in which a State Medicaid program may exclude or
otherwise restrict coverage of a drug manufactured by a company with a
Medicaid rebate agreement.
Response: While drug rebate obligations under the rebate agreement
with drug manufacturers under section 1927(b) of the Act are applicable
to covered outpatient drugs covered through an ABP, the amount,
duration, and scope of drug coverage under an ABP are determined under
section 1937 of the Act alone. The drug rebate obligation applies when
payment is made for covered outpatient drugs in accordance under the
Medicaid state plan, including a state's ABP. The amount, duration, and
scope of coverage for an ABP is determined under section 1937 of the
Act, which authorizes benchmark or benchmark-equivalent coverage
``notwithstanding any other provision that would be directly
contrary.''
Comment: One commenter recommended that the prescription drug
benefit under ABPs should include all over-the-counter and prescription
medications approved by the FDA to treat tobacco cessation. The
commenter continues that tobacco cessation medications are currently on
the list of ``drugs subject to restriction'' in section 1927(d) of the
Act, and therefore, states are allowed to exclude coverage of these
drugs.
Response: Effective January 1, 2014, section 1927(d) of the Act
requires states to provide coverage of non-prescription and
prescription covered outpatient drugs used to treat tobacco cessation
for all Medicaid beneficiaries. Notwithstanding that requirement, we
note that there is no authority to require states to meet requirements
of section 1927 of the Act related to the amount, duration, and scope
of covered outpatient drugs under an ABP. States have considerable
discretion in the provision of Medicaid services including the ability
to define the amount, duration, and scope of coverage under an ABP. In
developing ABPs, states must include prescription drug coverage to
reflect the standards for defining EHBs in Medicaid. As stated earlier,
we believe these requirements at 45 CFR 156.122 will result in coverage
that is similar to the coverage otherwise required under regular
Medicaid state plan coverage.
[[Page 42223]]
Comment: A few commenters indicated that the agency says that the
states have the flexibility to ``adopt prior authorization and other
utilization control measures, as well as policies that promote use of
generic drugs.'' The commenters believe there is potential for conflict
between the prescription drug coverage of an ABP supplemented by the
states' essential health benefit standard, and a drug benefit that is
consistent with the State's Medicaid program. The commenter urged
clarification of the coverage standard accompanied by protections to
ensure that patients can appeal utilization controls that might prevent
them from receiving necessary medications.
One commenter recommended that CMS monitor the implementation of
traditional Medicaid and ABP PDLs and utilization management
techniques, and act to stop burdensome limitations that reduce access
to care and could impact patient health because of limited access to
needed drugs. The commenter also recommends requiring that decisions
regarding PDLs take into account evidence-based clinical practice
guidelines, and not just of drugs; and that CMS require that states
only be permitted to classify a drug as non-preferred when there are
genuine therapeutic alternatives classified as preferred.
Response: Prescription drug coverage under an ABP is still subject
to the provisions related to drug rebates, as well as the non-coverage
provisions under section 1927(d) of the Act. Therefore, states will
continue to be permitted to apply certain permissible restrictions such
as prior authorization. However, when establishing such programs,
states must continue to adhere to the requirements that states must
respond within 24 hours for pre-authorization requests, except for
excluded drugs listed at section 1927(d)(2) of the Act, and that at
least a 72-hour supply of a covered outpatient prescription drug must
be dispensed in an emergency situation.
Furthermore, a state Medicaid agency's Pharmacy and Therapeutics
(P&T) Committee typically makes decisions on inclusion of preferred
drugs in a therapeutic class when establishing a state's PDL.
Specifically, the P&T Committee reviews evidence-based information,
along with review of comparative clinical trials to make such decisions
regarding a state's PDL. A PDL is permitted under section 1927 of the
Act, as long as it is under a prior authorization program that meets
the requirements of section 1927(d)(5) of the Act.
Comment: One commenter recommends that individuals have access to
the full range of available clotting factors without limitation through
restrictive drug formularies, which negatively impacts patient care.
Patients and physicians should make the choice of which therapy is
appropriate. The commenter also noted that hemophilia patients should
have access to a range of specialty pharmacy providers. Several
commenters recommend that CMS require states to implement beneficiary
protections consistent with Medicare Part D, including consideration of
specific drugs, tiering, and utilization management strategies used in
each formulary.
Response: As we stated earlier, there is no authority to require
states to meet requirements of section 1927 of the Act related to the
amount, duration and scope of covered outpatient drugs under an ABP.
States have considerable discretion in the provision of Medicaid
services including the ability to define the amount, duration, and
scope of coverage under an ABP. In developing ABPs, states must include
prescription drug coverage to reflect the standards for defining EHBs
in Medicaid. As we have noted in prior responses, we believe these
requirements will result in coverage that is similar to the coverage
otherwise required under regular Medicaid state plan coverage.
Comment: One commenter stated that section 2001(c) of Affordable
Care Act modified the benefit provisions of section 1937 of the Act.
Among other things, section 2001(c) of the Affordable Care Act added
mental health benefits and prescription drug coverage to the list of
benefits that must be included in benchmark equivalent coverage; and
directed that ABPs that include medical/surgical benefits and mental
health and/or substance use disorder benefits comply with the Mental
Health Parity and Addiction Equity Act of 2008.
This being the case, the commenter encourages CMS to clarify and
strengthen the guidance on drug formularies in the current parity
regulations which make it difficult to determine whether a formulary
satisfies the law's parity standards.
Response: While we appreciate the commenter's concern, the Interim
Final Regulation regarding the Mental Health Parity and Addiction
Equity Act of 2008 is not the subject of this final rule.
Comment: One commenter suggested that CMS provide guidance to
states on medication assisted treatment of substance abuse disorder.
Specifically, states should be required to cover Methadone,
Buprenorphine, Vivitrol, etc., in the EHB and that where needed states
should expand the formulary to include all FDA approved medications for
the treatment of substance use disorders.
Response: CMS is not providing guidance regarding specific services
offered in each of the ten essential health benefits in this final
rule.
Comment: One commenter requests that CMS encourage state Medicaid
programs to utilize the 340B drug purchasing program provided by
hemophilia treatment centers or HTCs so that individuals with
hemophilia can receive their pharmacy services from their HTC. HTCs
with 340B programs integrate clinical and pharmacy services to provide
comprehensive high-quality care to patients and closely monitor drug
utilization, allowing for more immediate changes in treatment and
better management of treatment costs. Patients benefit from lower cost
prescriptions that reduce out-of-pocket spending and accumulation of
costs towards caps on health insurance expenditures and ongoing
education and support to ensure that they appropriately assess their
treatment needs. Medicaid programs will benefit from better management
of overall treatment costs through close monitoring of bleeds and
factor use to reduce complications.
Response: We appreciate the comments regarding the 340B program and
coverage of drugs for hemophilia; however, the State's utilization of
the 340B drug purchasing program is outside the scope of this rule.
Comment: CMS should establish clear requirements to assure that
utilization data for populations eligible to receive Medicaid rebates
is maintained separately from data from other lines of business. That
is, the final regulation must provide clear rules to assure that plans
maintain data on prescription drug claims appropriately and do not mix
data from populations eligible for Medicaid rebates with data for other
enrollees not eligible for Medicaid rebates. Because many plans may
offer products in the exchanges as well as participate in Medicaid
managed care (under either section 1903(m) of the Act, as well as
Medicaid ABPs) the potential for confusion is high and clear rules are
needed to assure that utilization for rebate-eligible patients is
maintained separately from data for other lines of business.
Response: If the state administers its ABP via a Medicaid MCO, the
state will need to ensure the MCO distinguishes these claims from its
other lines of business for the purpose of claiming
[[Page 42224]]
Medicaid rebates consistent with the current requirement for such
claims under section 1927 of the Act. CMS expects to issue
subregulatory guidance on collecting manufacturer rebates for ABPs.
Manufacturers are not required under section 1927 of the Act to pay
rebates absent a Medicaid payment for the drugs, which would not be
present in the case of drugs dispensed to Medicaid beneficiaries that
are enrolled in qualified health plans where the only Medicaid payment
was premium assistance for the beneficiary.
Summary: Based upon the comments requesting clarification as to
whether or not section 1927 of the Act applies to prescription drug
coverage provided under a state's ABP, we will be adding paragraph (f)
to Sec. 440.345 to require that when states pay for covered outpatient
drugs under their ABP's prescription drug coverage, states must comply
with the requirements under section 1927 of the Act.
4. All Other Title XIX Provisions Apply
We clarified in the proposed rule that all other Title XIX of the
Act provisions apply unless, as spelled out in section 1937 of the Act,
a state can satisfactorily demonstrate that implementing such other
provisions would be directly contrary to their ability to implement
ABPs under section 1937 of the Act.
Comment: We received one comment requesting that CMS elaborate on
what is meant by the preamble language that all other provisions under
title XIX of the Act apply, and whether states are required to cover
the current mandatory Medicaid benefits, and ensure non-emergency
transportation, when using an ABP for the new adult expansion group.
Response: The Medicaid benchmark and benchmark-equivalent coverage
was first authorized by the DRA, which included language stating that
``notwithstanding any other provision of title XIX'' states can offer
medical assistance to certain Medicaid beneficiaries through benchmark
or benchmark-equivalent benefit packages. As a result of CHIPRA changes
to the DRA, CMS regulations were revised to implement this change in
law. CHIPRA language provides clearly that a state's benchmark or
benchmark-equivalent programs may vary only from statutory requirements
explicitly waived in section 1937 of the Act (statewideness and
comparability), unless states can demonstrate that other provisions not
identified in section 1937 of the Act would be directly contrary to
their ability to implement ABP. As such, in the proposed rule, we
offered clarifying language in the preamble to reiterate that this
current policy continues to apply. Due to statutory requirements,
states may not disregard any provisions of title XIX and are therefore
required to assure that all populations receiving ABPs, including the
new adult expansion group, have access to transportation necessary to
obtain Medicaid covered services.
Summary: No changes will be made to the proposed regulation as a
result of comments received in this section.
5. Preventive Services as an EHB
The EHB Final rule specified that, to provide EHB, a plan must
provide coverage of preventive services. This requires plans to cover a
broad range of preventive services including ``A'' or ``B'' services
recommended by the United States Preventive Services Task Force;
Advisory Committee for Immunization Practices recommended vaccines;
preventive care and screening of infants, children and adults recommend
by HRSA's Bright Futures program, and additional preventive services
for women recommended by the Institute of Medicine. We proposed that
Title XIX premium and cost sharing provisions apply to preventive
services for adults, but not for children.
Comment: Many commenters commended HHS for including in ABPs the
full range of preventive services required in the EHB, including all of
the services specified in section 2713 of the PHS Act. The commenters
believed this is a critical provision for vulnerable populations and
will help achieve the Affordable Care Act objective of shifting health
care emphasis from expensive interventions to cost-effective
prevention. The commenters requested that HHS explicitly state this
requirement (currently in the preamble at 78 FR 4631) in the regulation
itself.
Response: The language in the preamble to the proposed rule,
originating in section 2713 of the PHS Act, was included as a reference
to the requirement to cover preventive services as part of providing
EHB, which has been implemented by regulation codified at 45 CFR
147.130. We do not believe this requires further clarification in this
final rule.
Comment: A number of commenters asked CMS to clarify its preamble
language, ``Title XIX premium and cost sharing provisions apply to
preventive services.'' Specifically, CMS should clarify whether it
intends this to apply to the ABPs for the new expansion population and/
or to current state Medicaid plan services.
Response: We agree that this issue needs to be clarified,
particularly in light of the issuance of the final rules implementing
EHB requirements for the individual and small group markets. In the
final regulations issued February 25, 2013 at 78 FR 12835, the
provision of EHB was defined at 45 CFR 156.115(a)(4) to ``include
preventive health services described in [45 CFR] Sec. 147.130''. That
cross referenced provision describes the requirement for coverage of
preventive services without cost sharing. As explained in the preamble
to the proposed regulations, at 77 FR 70644, 70651 (Nov. 26, 2012), the
intent was to include in the EHB coverage obligation the prohibition on
cost sharing for preventive health services. Thus, while Medicaid cost
sharing provisions at sections 1916 and 1916A of the Act apply
generally to preventive services provided in ABPs, cost sharing may not
be applied to preventive services that are within the definition of
EHBs (described in 45 CFR 147.130). An ABP may include preventive
services beyond the floor of coverage required as EHBs, and cost
sharing may be applied to such preventive services at state option to
the extent permissible under sections 1916 and 1916A of the Act.
Comment: One commenter requested clarification on whether the full
range of United States Preventive Services Task Force (USPSTF) ``A''
and ``B'' services is specific to benchmark benefits offered to
individuals that are newly eligible.
Response: These services, along with IOM-recommended women's
preventive services, ACIP-recommended vaccines, and HRSA's Bright
Futures recommendations, comprise the preventive services EHB category
that will be provided to all individuals in an ABP, including those in
the new adult group. In addition, coverage of USPSTF ``A'' and ``B''
preventive services under section 4106 of the Affordable Care Act
applies, at state option, to preventive services furnished under the
regular state plan. States implementing the preventive services EHB in
their ABP without cost sharing will be eligible for the additional 1
percentage point of FMAP (for newly eligible individuals, this
increased FMAP will be available once Federal reimbursement of services
drops below 100 percent).
Comment: A few commenters were concerned that other preventive
screenings recommended by the CDC are not included in the proposed
rule. The commenters recommended the inclusion of all CDC hepatitis B
and C screening recommendations as required components of Medicaid's
ABPs.
Response: CMS recognizes the importance of CDC recommendations
related to preventive services. The proposed rule was not meant to be
an
[[Page 42225]]
exhaustive list of all recommendations made by government agencies such
as the USPSTF. States have the option to adopt CDC recommendations as
long as they are in line with EHB preventive service statutory and
regulatory guidance.
Comment: A few commenters requested that HHS clearly define which
tobacco cessation treatments are required to be covered as a preventive
service under EHB. The commenters believed this definition should be
comprehensive, and include--and require--all tobacco cessation
medications approved by the FDA as well as individual, group and phone
counseling. The commenters believed it should be based on and reference
the most recent version of the Public Health Service Guideline Treating
Tobacco Use and Dependence, to ensure that when and if the guideline is
updated the benefit will be revised as appropriate.
Response: We appreciate the commenter's recommendations. Tobacco
cessation programs are important preventive services. However, states
have been given latitude on how to furnish this service within the
bounds of statute, regulation, and sub-regulatory guidance. Tobacco
cessation for pregnant women is defined in section 4107 of Affordable
Care Act and is located at section 1905(a)(4)(D) of the Act. We also
issued a letter to State Medicaid Directors dated June 24, 2011 that
clarified policy related to this provision. The only tobacco cessation
services required to be furnished in the EHB package are those
recommended by the entities designated in section 2713 of the Public
Health Service Act.
Comment: Many commenters requested greater definition of the
preventive services that states are required to cover to meet the EHB
requirement. The commenters found it difficult to determine what
preventive health services are covered and what the scope and limits of
the coverage may be.
Response: The definition of preventive services as an EHB includes
a broad range of preventive services including: ``A'' or ``B'' services
recommended by the United States Preventive Services Task Force;
Advisory Committee for Immunization Practices (ACIP) recommended
vaccines; preventive care and screening for infants, children and
adults recommended by HRSA's Bright Futures program/project; and
additional preventive services for women recommended by Institute of
Medicine (IOM). Further definition was not provided as these standards
were established by experts in the field of prevention.
Comment: A few commenters requested that HHS provide the following
guidance:
Clarify in the language of the final rule that Medicaid
ABP must cover all section 2713 services.
Clarify that section 2713 coverage requirements apply even
where there is overlap with EHB categories.
Create standards to ensure that section 2713 preventive
service coverage offers meaningful incentives to providers.
Encourage states to align traditional Medicaid coverage
with the section 2713 preventive services requirement.
Response: We appreciate the commenters' request to include further
descriptions within the final rule. The rule, as written, requires
states to provide a robust set of preventive services that align with
Sec. 147.130. The Affordable Care Act established Sec. 4106 effective
January 1, 2013 within regular Medicaid coverage, which includes a
subset of the services implemented in Sec. 2713 of the Public Health
Service Act (PHSA). A State Medicaid Director Letter on Sec. 4106 was
released on February 1, 2013 (https://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD-13-002.pdf).
Comment: One commenter requested clarification regarding the
interval after which a preventive service rated with an A or B by the
USPSTF must be included in EHBs for Medicaid plans. The commenter
encouraged HHS to establish an interval of no later than the 1-year
minimum specified in section 2713(b)(1) of the Public Health Service
Act, irrespective of any other timetable HHS choose for updating the
EHBs more broadly over time.
Response: Section 2713(b)(1) and (2) of the Public Health Service
Act set forth the interval between the date on which a recommendation
described in subsection (a)(1) or (a)(2) or a guideline under
subsection (a)(3) is issued and the plan year for which of the
requirements described in subsection (a) is effective for the service
described in such recommendation or guideline. We believe that such an
interval is appropriate for applicable preventive services included in
the ABP.
Comment: One commenter requested specificity around the process by
which USPSTF recommendations will be incorporated into EHBs over time
and the process for determining the frequency and intensity of USPSTF-
recommended behavioral interventions.
Response: A broad range of preventive services including all ``A''
or ``B'' services recommended by the United States Preventive Services
Task Force must be incorporated in the EHB and are required to be
implemented according to the effective date of the submitted SPA. If
states want an effective date of January 1, 2014 for the entire ABP
including these preventive services, then a SPA will need to be
submitted by the end of the first calendar quarter of 2014. States are
expected to keep abreast of changes to the USPSTF-recommended services
to ensure provision of a current array of services.
Comment: One commenter indicated that, to the extent that HHS does
not specify the number of covered visits to registered dietician
specialists for medical nutrition therapy, national practice guidelines
should determine appropriate coverage.
Response: We encourage states to consult and rely on national
practice guidelines, as they design their benefit packages.
Comment: One commenter requested that while HHS may be reluctant to
explicitly require coverage of obesity treatment, HHS should clarify
whether management of obesity and metabolic disorders are chronic
disease management services and are therefore covered services under
the ``Preventive and Wellness Services and Chronic Disease Management''
category of the EHB package. One commenter believed that beneficiaries
affected by severe obesity should have access to bariatric surgery with
comprehensive pre- and post-surgery nutrition evaluation and counseling
to ensure the efficacy and cost effectiveness of the bariatric surgery
benefit over the long term.
Response: ``A'' or ``B'' services recommended by the United States
Preventive Services Task Force must be incorporated in the EHB. Current
USPSTF guidelines provide for the screening and counseling for obesity
in both children and adults. Aside from the services specified at
section 2713 of the Public Health Service Act, we are not mandating the
provision of specific services through the EHB package. We agree that
bariatric surgery, complete with appropriate counseling, can be a
valuable service, and it will covered in the ABP if it is included in
EHB definitions of the public employee or commercial plan selected by
the state to define EHBs for Medicaid, supplemented and substituted as
necessary and permitted. States may also choose to add this service to
their ABP.
Comment: One commenter asked HHS to clarify whether a state that
chooses to use its current state plan as the ABP would need to add
services to the state plan for ABP recipients if not all preventive
services are included. The
[[Page 42226]]
commenter also asked whether states would need to amend the state plan
and provide these services for all Medicaid recipients of the state
plan services.
Response: The regular state plan does not need to be amended to
reflect the breadth and depth of required preventive service coverage
in an ABP. States will have to comply with the definition of preventive
services for the EHB category within the ABP. States using Secretary-
approved coverage to implement a benefit package similar to their
Medicaid state plan would need to ensure provision of all EHB
preventive services through the ABP, even if such services are not
available under the state plan. A state plan amendment will be required
to implement an ABP for the new adult group and for any other
categorically needy eligibility groups that a state may wish to enroll
in an ABP.
Comment: A number of commenters recommended that HHS apply the PHS
Act 2713 cost-sharing prohibition for preventive services under section
2713 of the PHS Act to the same preventive services covered by ABPs.
The commenters believed these protections are essential to provide
meaningful coverage to vulnerable population and avoid the unfair
outcome of greater cost-sharing for poorer individuals. The commenters
believed cost sharing on preventive services should be prohibited based
on the authority of section 2713 of the PHS Act. One commenter believed
that cost-sharing for preventive services is prohibited under the
definition of EHB in regulations at 45 CFR 156.115, which state that
the EHB include ``preventive health services described in [45 CFR]
Sec. 147.30.'' The commenter explained that this section lists the
services included in the definition of preventive health services and
states that insurers ``may not impose any cost-sharing requirements
(such as copayment, coinsurance, or deductible) for those items or
services.'' The commenter believed the definition of preventive
services in the EHB is unique in that it incorporated a prohibition on
cost-sharing in the definition of the benefit. The commenter believed
that by requiring EHB in ABPs, Congress intended to carry that
prohibition on cost-sharing into Medicaid's ABPs. A number of
commenters believed that prohibiting cost sharing for preventive
services is consistent with the provision giving states a percentage
point increase in their FMAP under section 4106 of the Affordable Care
Act.
Response: We appreciate the concerns commenters raised regarding
cost sharing for preventive services and we are adopting their
suggested policies in light of the provisions of the recently issued
EHB regulations for the individual and group markets at 45 CFR
156.115(a)(4). As stated above, states may not impose cost sharing for
preventive services included in ABPs that are within the scope of EHBs,
as defined at 45 CFR 147.130, but may impose cost sharing consistent
with sections 1916 and 1916A of the Act on preventive services that go
beyond that scope. This is because the definition of preventive
services for purposes of the EHBs precludes cost sharing, and Medicaid
ABPs must include EHBs. We clarify that the broader prohibitions on
cost sharing for preventive services at section 2713 of the PHS Act
apply only to group health plans and health insurance issuers providing
group or individual health insurance coverage, and do not apply to
Medicaid. For preventive health services beyond the scope of EHBs, we
note that cost sharing is not allowed for preventive services provided
to children under sections 1916 and 1916A(b)(ii) of the Act. We agree
with commenters that this preclusion of cost sharing for preventive
service EHBs is consistent with the policies set forth in section 4106
of the Affordable Care Act, which added section 1905(b)(5) to the Act,
giving states an increase in the federal medical assistance percentage
for preventive services if the state did not impose cost sharing on
such services.
Comment: A number of commenters believe that cost sharing should
not be applied to the EPSDT population.
Response: While we discuss cost sharing issues at greater length in
discussing the streamlined cost sharing regulations being issued in
this final rule, for EPSDT for individuals enrolled in ABPs, we note
that sections 1916 and 1916A(b)(ii) of the Act preclude cost sharing
for individuals under age 18 who are mandatorily eligible, and preclude
cost sharing for preventive services (such as well baby and well child
care and immunizations) provided to children under 18 years of age
regardless of family income. Section 1916(b)(2)(a) of the Act further
states that cost sharing cannot be imposed under the plan for services
furnished to individuals under 18 years of age (and, at the option of
the State, individuals under 21, 20, or 19 years of age, or any
reasonable category of individuals 18 years of age or over). These
provisions also apply to ABPs.
Summary: No changes will be made to the proposed regulation as a
result of comments received in this section.
6. Other Changes To Simplify, Modernize, and Clarify Medicaid Benchmark
Requirements and Coverage Requirements
We proposed to make certain changes to the regulations to promote
simplification and clarification where needed, and provide some
additional flexibilities to states regarding benefit options. We
received the following comments:
a. Diagnostic, Screening, Preventive, and Rehabilitative Services
(Preventive Services) (Sec. 440.130)
We proposed to conform our regulatory definition of preventive
services at Sec. 440.130(c) with the statute relating to the issue of
who can be providers of preventive services. Our current regulation
states that preventive services must be provided by a physician or
other licensed practitioner. This is not in alignment with the
statutory provision at section 1905(a)(13) of the Act that defines
``services . . . recommended by a physician or other licensed
practitioner of healing arts within the scope of their practice under
state law.'' We proposed to change the rule to make clear that
physicians or other licensed practitioners may recommend these
services. In our proposed rule, we inadvertently used punctuation that
would have had the effect of eliminating the other three prongs of the
preventive services definition, and we are restoring those prongs in
this final rule.
Comment: Many commenters commended HHS for conforming the
regulatory definition relating to who can provide preventive services
at section 1905(a)(13) of the Act that defines ``services . . .
recommended by a physician or other licensed practitioner of healing
arts within the scope of their practice under State law.'' Many
commenters believed this change will improve access to preventive
services, expand access to evidence based practices, and provide
greater partnership between providers and advocates. The commenters
urged CMS to preserve this important provision in the final rule.
Response: We agree that the amended regulatory definition of who
can provide preventive services will result in improved access to
preventive services and facilitate partnership between providers and
advocates. This provision has been codified in the final rule.
Comment: A number of commenters believed that the amended
regulatory definition will be especially important to low-income people
who disproportionately access care through
[[Page 42227]]
community-based and support services and may experience significant
stigma and lower trust levels with other providers.
One commenter believed current Medicaid regulations surrounding
Sec. 440.130(c) have significantly limited the available care and
treatment for Medicaid and CHIP-enrolled children who suffer from
chronic diseases.
Response: The amended definition may result in greater access for
individuals who suffer from chronic disease as the pool of providers
could increase significantly.
Comment: A few commenters commended HHS for making reference to
this regulatory change in a February 1, 2013 letter to State Medicaid
Director. The letter stated that if the proposed regulatory change is
finalized, then preventive services recommended by USPSTF or ACIP, and
provided by practitioners other than physicians or other licensed
practitioners, are eligible for the 1 percentage point FMAP increase
established under the Affordable Care Act.
Response: We attempt to provide as much notice as possible related
to rule making and appreciate the commenter's support.
Comment: One commenter believed the proposed language, ``(c)
Preventive services means services recommended by a physician or other
licensed practitioner of the healing arts acting within the scope of
authorized practice under state law'', was overly broad.
Response: The regulation is consistent with statutory language in
section 1905(a)(13) of the Act. The final rule increases the number of
providers able to furnish services. We are not changing regulation text
at Sec. 440.130(c)(1) through (c)(3).
Comment: One commenter believed that the proposed new definition in
the rule represents a far broader view of the term ``preventive
services'' than Congress contemplated in Affordable Care Act. For
purposes of describing what services are included in EHB, ``preventive
services'' are already extensively described at Sec. 147.130. The
proposed revision in the definition of ``preventive services'' at Sec.
440.130 would not primarily affect the scope of preventive services
required to be offered as EHB in the state benchmark plans. Rather, the
amendment would greatly expand the scope of the preventive services
benefit that may be offered as an optional service under standard state
MA plans.
Response: This change is not based on an interpretation of
``preventive services'' as it is used in the Affordable Care Act for
purposes of EHB, but an interpretation of the coverage of preventive
services under regular Medicaid under section 1905(a)(13) of the Act.
This regulatory change will primarily impact the provision of
preventive services under the regular state Medicaid plan. Section 4106
of the Affordable Care Act, `Improving Access to Preventive Services
for Eligible Adults in Medicaid,' broadens the section 1905(a)(13)
preventive services benefit by providing a 1 percentage point FMAP
increase on clinical preventive services that are assigned a grade of A
or B by the USPSTF.
Comment: A number of commenters believed the new definition could
have a significant fiscal impact on states' Medicaid programs because,
as a part of EPSDT, the expanded scope of services must be offered to
recipients under age of 21.
Response: While we acknowledge that this change will result in
additional providers being authorized to provide preventive services,
it accurately reflects the statutory language for the preventive
services benefit. In addition, broadening the scope of providers who
can provide preventive services in the Medicaid program may reduce,
rather than increase, program expenditures by making available services
in the most efficient and effective settings. Providing broader access
to these types of providers and benefits may assist individuals with
improved health.
Comment: A number of commenters requested clarification on
preventive services. The commenters believed that the definition
provided (Sec. 440.130) is broad and will be difficult for states to
operationalize without more detail. The commenters requested a more
precise definition that includes the current procedural terminology
codes for each preventive service and that HHS work with states to
develop preventive definitions. Without such guidance states and the
federal government could end up inappropriately paying for air
conditioners, ineffective weight loss programs, or similar services
which are simply not appropriate.
Response: States still have the ability to restrict preventive
services to direct patient care that is medically necessary and is for
the purpose of preventing disease, disability and other health
conditions or their progression, prolonging life and promoting physical
and mental health and efficiency. The commenters may have been confused
because we inadvertently proposed to eliminate these other prongs of
the preventive services definition, which we preserve in this final
rule. States also have some options in determining coverage of
preventive services, and can specify the options, and specific billing
codes, for covered preventive services using the state plan amendment
process.
Comment: One commenter urged HHS to retain the current regulatory
definition which established that the allowable providers of preventive
services are physicians or other licensed practitioners. The commenter
disagreed that the provider requirements for preventive services under
the Affordable Care Act should be aligned with Medicaid provider
requirements for the optional benefit category as established under
section 1905(a)(13) of the Act. The commenter stated that the benefits
are distinctly different and have different purposes, particularly for
children up to the age 21.
Response: We disagree with this position. Both section 1905(a)(13)
of the Act and Affordable Care Act provide for a more robust set of
preventive services than the current regulations, in allowing a broader
pool of providers to deliver such services. In making this change in
the final rule, we are aligning our regulation with the statutory
coverage provision. States will continue to have some flexibility to
determine the scope of covered preventive services in their state by
submitting a SPA to do so.
Comment: Many commenters were concerned that this broad language
would allow for unlimited services as recommended by health care
providers and other providers of the healing arts. These commenters
requested that this be clarified to impose reasonable limits on
services.
Response: Under existing rules, states can establish limitations on
amount, duration, and scope, on the optional preventive services
provided the resulting benefit is sufficient to meet the purpose of the
benefit. CMS reviews each state plan amendment submitted by states to
determine the sufficiency of the benefit.
Comment: One commenter recommended closer integration of community
prevention and lifestyle changes into the Medicare and Medicaid
programs, as an important opportunity to both effectively and often
less expensively treat and prevent chronic disease, such as heart
disease and diabetes.
Response: We agree that greater coordination between Medicare and
Medicaid will provide efficiencies and health outcomes for individuals
with chronic disease as well as other conditions. Medicaid continues to
build closer and more integrated community preventive services with
Medicare.
Comment: One commenter believed that Registered Dieticians should
be designated as the recognized providers
[[Page 42228]]
of nutrition services, including medical nutrition therapy and
nutrition counseling because of RD's demonstrated competency and
effectiveness. This commenter stated that nutrition counseling is
medically necessary for chronic disease states in which dietary
adjustment has a therapeutic role, when it is prescribed by a physician
and furnished by qualified provider.
Response: We believe that Registered Dieticians have an important
role in furnishing nutrition services. All preventive services should
be furnished by qualified providers within their scope of practice.
Comment: One commenter urged HHS to clarify that Sec. 440.130 of
the proposed regulation does not dictate who can provide preventive
services; it merely dictates what providers can recommend them,
consistent with the totality of the statute.
Response: The proposed regulation does not dictate who can provide
preventive services; it defines who can recommend such services. States
will have discretion to determine which providers will provide the
service using the state plan amendment process.
Summary: No changes to the proposed regulation will be made as a
result of comments received in this section.
b. Public Notice (Sec. 440.386)
The proposed rule added a new provision to allow states greater
flexibility when required to publish public notice associated with an
ABP state plan amendment (SPA). We proposed modifying the public notice
requirement for ABPs to require that such notice be given prior to
implementing a SPA when the new ABP provides individuals with a benefit
package equal to or enhanced beyond the state's approved state plan, or
adds additional services to an existing ABP. We proposed the
requirement to publish public notice no less than two weeks prior to
submitting a SPA that establishes an ABP that provides coverage that is
less than the coverage by a state's approved state plan or includes
cost sharing of any type. Based on public comment, we are negating what
we proposed, as we do not believe that 2 weeks is a sufficient time
period. We will be reverting back to our existing policy of requiring
the states to provide ``a reasonable opportunity to comment'' on all
ABP SPAs prior to their submission to CMS.
Comment: Many commenters supported requiring states to give public
notice before implementation of a SPA that established an ABP. The
commenters also commended HHS for requiring states to provide public
notice regarding how they must comply with the requirement that
children have access to EPSDT.
Many commenters believed that the proposed public notice
requirements at Sec. 440.386 are problematic and HHS should not use
them as a model for all SPAs. Some commenters believed proposed Sec.
440.386 repeats the language of Sec. 440.305(d) requiring a
``reasonable opportunity'' for public comment, but then limits the
public comment period to just two weeks for certain ABPs which the
state Medicaid agency determines provide less coverage or higher cost
sharing than existing benchmark plans, and other commenters believed
that two weeks is an inadequate amount of time for meaningful
stakeholder consideration and input.
Many commenters believed HHS should require an advance notice and
comment period of no less than 30 days as this aligns with other
comment periods (such as the state comment period for section 1115
waivers) and is particularly important because of the time and effort
required to conduct the benefit-by-benefit comparisons between non-
aligned Medicaid state plans, ABP proposals and EHBs which will be
necessary to provide meaningful input.
Response: We have considered all of the comments concerning the
requirement for public notice and agree with the commenters that two
weeks is not sufficient to allow for a meaningful timeframe in which
public comments can be solicited and considered. We are therefore
revising Sec. 440.386 to revert to our existing ABP public notice
policy currently found at Sec. 440.305(d). We would also like to
clarify that the public notice requirements at Sec. 440.386 are
applicable only to section 1937 ABPs.
Comment: A number of commenters requested HHS require a mandatory
15-day period (sometimes referred to as a ``cool down'' period) for
states to review comments received and incorporate suggestions into the
final ABP submission.
A few commenters believed that Sec. 440.386 creates a two tiered
process whereby the state's own evaluation of an ABP determines whether
it is subject to public notice and comment. The commenters believed
this kind of agency determination defeats the very purpose of
transparency and stakeholder input.
Many commenters believed that there is no compliance provision to
help ensure meaningful participation by the public, unlike the
reporting requirement of Sec. 431.412(viii) for section 1115
demonstrations. The commenters requested that any SPAs, including those
establishing ABPs, should be subject to the same transparency and
public input procedures and reporting requirement modeled upon those
governing section 1115 demonstrations to help ensure meaningful
participation by the public, and that HHS understands the issues raised
at the state level when making the SPA approval decision.
Response: In revising Sec. 440.386 to revert to our existing
policy, we believe that we have provided a minimum floor that allows
sufficient time for stakeholder feedback and state review.
Comment: Numerous commenters requested that at a minimum, SPAs that
materially change a state Medicaid program should be subject to
increased transparency and stakeholder input requirements.
Response: States will be required to follow existing public notice
requirements, which requires that the state must have provided the
public with advance notice of the State plan amendment and reasonable
opportunity to comment prior to the submission of the SPA.
Comment: A few commenters recommended that states should be
required to provide detailed information on the ABP options under
consideration.
Response: The state is required to provide information regarding
the ABP through the public notice process.
Comment: A number of commenters requested that HHS include specific
requirements for adequate public posting of the proposal, including
that it be posted on an internet Web site, as well as a clear
description of the process and timeline for comment submission.
Response: We believe that states should have the flexibility to
determine how best to provide public notice to the populations in their
state.
Comment: One commenter believed that notice and stakeholder
engagement requirements should explicitly include HIV/AIDS programs
within health departments.
Response: We believe that all stakeholder groups, including HIV/
AIDS, will be served by the public notice policy.
Comment: One commenter noted that there were a number of different
sources of information for public notice (including 59 FR 49249
(September 27, 1994); Sec. 447.205; and new transparency requirements
for waiver and waiver renewals (see State Health Official (SHO) Letter
12-001)) and HHS could achieve efficiencies by streamlining
notice requirements.
[[Page 42229]]
Response: While there are various methods for providing public
notice across programs, we believe that each serves its own purpose for
that program. The public notice regulations under Sec. 440.386 provide
the most efficient and effective policy for ABPs.
Comment: One commenter proposed that HHS further define
``substantial'', which triggers the ``notice and comment'' requirement.
The commenter requested that HHS adopt a universal definition of
``substantial'' so that there is no confusion of the word's meaning.
Response: ``Substantial'' is used in the ABP public notice
requirements. It means that eligibility, enrollment, benefits, cost
sharing, payment methodologies, or delivery systems have changed
significantly to affect beneficiaries.
Comment: One commenter believed that requiring public notice for a
SPA when an ABP provides a benefit package equal to or enhanced beyond
a state's approved state plan was puzzling. The commenter believed it
added yet another public notice requirement with questionable return,
particularly when this occurs prior to implementation. The commenter
agreed that prior public notice should be required when providing a
lesser benefit package than the approved State Plan, adding cost
sharing or reducing benefits.
Response: We believe, for the purpose of transparency, ABPs should
be disseminated to the public. We believe it is important that all
beneficiaries are made aware of changes being made to ABPs.
Comment: One commenter requested that when a SPA is submitted
providing less coverage the public should have at least 30 days to
submit comments and the agency should provide a summary of the comments
it receives and how the comments were addressed when it submits the SPA
to CMS for approval.
Response: Based on comments related to this section of the
regulation, we will be continuing with the existing ABP public notice
requirements. Requiring the state to provide a summary of the comments
it receives and how the comments were addressed when it submits the SPA
to CMS for approval could be too onerous to operationalize depending on
the magnitude of comments received. CMS reserves the right to request,
when appropriate, specific information on public comments.
Comment: A few commenters requested that HHS publically release all
ABPs selected and allow an opportunity for public comment to ensure
plan adequacy.
Response: All approved SPAs are public documents. If the commenter
would like to comment on a particular SPA they may contact their
specific state.
Comment: Many commenters recommended HHS amend Sec. 430.12 by
adding new paragraph (d) or deleting Sec. 440.386 (a) and (b) and
replacing them with language that would require a 30 day public comment
period and a 15 day review period for the state and outlined the detail
to be included in the public notice. These commenters also included
requirements for publication of public notice and information to be
included in the SPA.
Response: We appreciate the commenters' thorough language
recommendations. However, we believe that the current public notice
policy sufficiently balances the need for transparency while preventing
the impediment of the approval of SPAs in a timely manner.
Comment: One commenter requested that HHS monitor the public
information on Medicaid programs and State-Based Exchange, provide and
consider issuing guidance on how to communicate benefit packages to
enrollees and plan members in a clear and effective way, incorporating
low literacy-level principles. The commenter suggested that HHS should
consider requiring states to undergo a public stakeholder review
process for these materials.
Response: We thank the commenter for these recommendations and will
take them under further review however they are beyond the scope of
this regulation.
Comment: One commenter requested that HHS require all state plan
amendments be made public and subject to comment.
Response: While we agree it is a good practice for states to place
SPAs online; requiring states to do so is beyond the scope of this
regulation.
Comment: One commenter asked if HHS was going to require additional
public notice requirements on anything that is related to cost-sharing.
Response: Cost sharing of any type requires public notice per Sec.
440.386.
Comment: One commenter believed there was a technical error made in
the Part 440-services. The commenter noted that the general provisions
section Sec. 440.305 to Sec. 440.386 is not mentioned in the
description of the changes to either Sec. 440.305 or Sec. 440.386.
Response: CMS will take this opportunity to delete Sec. 440.305(d)
as a new Sec. 440.386 has been added for public notice.
Summary: CMS will delete Sec. 440.305(d), which was the section
describing public notice requirements, as a new Sec. 440.386 has been
added for public notice. We have reverted to our existing public notice
requirements based on public comment on this section of the rule.
c. Exempt Individuals (Modifying Definition of Medically Frail) (Sec.
440.315)
The proposed rule updated the definition of the ``medically frail''
category of individuals exempted from mandatory enrollment, and
solicited comment about whether to add SUD to the definition. The final
rule adds individuals with chronic SUDs to the definition of
``medically frail'', based on the overwhelming support in public
comments.
Comment: Many commenters strongly supported CMS's definition of
exempt individuals and clarification of medically frail. In supporting
the definition of medically, many commenters also thanked the Secretary
for including in the definition of medically frail, individuals with
serious or disabling mental illness, (including children with serious
emotional disturbances), and individuals with physical, intellectual or
developmental disabilities that significantly impair their ability to
perform one or more activities of daily living; many commenters agreed
that individuals with a disability determination based on Social
Security criteria should be exempted from mandatory enrollment in an
ABP.
One commenter stated that medically frail are an identifiable
population with unique care and cost characteristics and this
definition provides an opportunity for these individuals through
practices that may not be included in the products offered through
state exchanges.
Response: We are pleased with the overwhelming support for the
clarified definition of ``medically frail'' displayed in the majority
of comments.
Comment: Many of the commenters urged CMS to include individuals
with substance use disorders in the definition of medically frail
because individuals with substance use disorders (SUD) have similar
health needs as those with the other complex conditions included in the
definition, and ABP coverage may be less likely to provide needed
services and supports typically provided by Medicaid.
Many commenters also pointed out that individuals with SUD cannot
be considered disabled under Social Security law if SUD is a
contributing
[[Page 42230]]
factor material to the determination that the individual is disabled,
regardless of the severity of the SUD. Particular concern was raised
about benchmark coverage in states that may choose the weakest
available benchmark plan option in an effort to limit perceived
financial risk for the state, or to avoid political risk. Concern was
also raised that beneficiaries living in states offering fewer benefits
``suffer'' from placement in clinically inappropriate levels of care
resulting in poor outcomes and higher federal costs.
One commenter wrote that SUD should be included in the definition
of medically frail because scientific research indicates that addiction
is a chronic brain disorder with intrinsic behavioral and social
components, similar to other forms of mental illness.
In supporting clarification of the definition of medically frail, a
commenter wrote that the definition should include all those with
disabling conditions because the reference plans that may serve as the
model for benefits in ABPs are employer-sponsored insurance plans and
may not be adequate to serve the needs of those who are too medically
frail to work.
Another commenter wrote that it supported clarifying the definition
of medically frail by including all those with disabling conditions.
Medicaid should provide more comprehensive benefits for individuals and
this language will allow it to do so since employer sponsored plans
often inadequately cover substance use disorders, therefore the
commenter supports adding SUD to the definition of medically frail.
Alternatively, a few commenters recommended that CMS not require
that individuals with SUD be considered exempt from mandatory ABP
enrollment. This commenter wrote that because states must design their
ABPs to include a comprehensive array of mental and behavioral health
services, inclusive of substance use treatment at parity with physical
health services, it seems unnecessary and overly prescriptive to
mandate the exemption of individuals with SUDs.
Response: Since publication, in 2010, of the Final Rule: State
Flexibility for Medicaid Benefit Packages, numerous stakeholders have
raised concern that individuals with SUD may not be appropriate for
enrollment in an ABP because ABPs may not provide the same level of
care provided by the standard Medicaid State plan. Individuals with a
substance use disorder may have chronic health conditions and need an
expanded array of behavioral health and possibly long term services and
supports.
Considering the overwhelming support for including SUD in the
definition of medically frail, we have modified Sec. 440.315(f) to
include as medically frail, individuals with chronic SUD. While we
recognize that substance use is among the EHBs, we believe that
individuals with this condition could be medically frail and should
have the choice to elect voluntary enrollment in an ABP or receive full
state plan benefits (for individuals in the new adult group, through an
ABP that consists of full state plan benefits).
Comment: One commenter wrote that while the definition of
``medically frail'' appropriately clarifies that individuals with
serious mental illnesses and children with serious emotional
disturbances are included among ``individuals with disabling mental
disorders'' it inappropriately excludes people with psychiatric
disabilities from another listed group--``individuals with a physical,
intellectual or developmental disability that significantly impairs
their ability to perform one or more activities of daily living.''
People with psychiatric disabilities should continue to be included in
that group. Particularly due to the lack of clarity about what may
count as a ``serious mental illness,'' it is important to ensure that
people with mental illness have the same opportunity as people with
other disabilities to qualify for exemption on the grounds that their
disability significantly impairs their ability to perform one or more
daily living activities.
Response: We acknowledge that individuals with serious mental
illness tend to have significant co-morbid conditions that are going to
require a different array of mental health and medical services, and
long term services and supports that may not be available through an
ABP. However, we do not believe it is necessary to explicitly specify
that individuals with psychiatric disorders also qualify for
``medically frail'' due to deficiencies in activities of daily living.
Individuals only need to meet one criterion within this definition to
qualify for the exemption to mandatory enrollment. Section 440.315(f)
provides states with a minimum standard for identifying individuals who
are medically frail and states have the flexibility to expand this
definition.
Comment: A commenter wrote that the term medically frail should be
replaced with individuals with disabilities.
Response: We are retaining the term medically frail in our
regulations because that term is specified in section 1937 of the Act
and we believe it would be confusing to use a different term for the
exemption.
Comment: One commenter stated that CMS should avoid defining any
new categories of medically frail as the concept of medically frail as
outlined in the proposed rule is incomplete and unworkable, and more
time and thought needs to be put into this before moving forward with
final rules. The commenter believes there are both operational and
implementation challenges to the new concept of medically frail
contained in the proposed rule and since there is no clear definition
of medically frail, or guidance on how a state would go about making
that determination, if the rules were implemented as written, the
likely result would be a significant disruption of the eligibility
process and a large number of appeals.
Response: Section 440.315 provides states with a minimum standard
for exempting specified categories of individuals from mandatory
enrollment in an ABP. We do not expect these exemptions to mandatory
enrollment to be disruptive to the eligibility process as eligibility
determination occurs first as a separate process. States will not need
to determine whether a beneficiary qualifies as medically frail upfront
but will need to have a process for identifying individuals who cannot
be mandatorily enrolled into an ABP.
Comment: We received many comments requesting that CMS provide
further clarification regarding the operationalization and coverage
implications of the proposed revision to the definition of medically
frail, as well as clarifying how the revised definition will impact
implementation.
One commenter indicated that states have limited experience with
ABP coverage under section 1937 of the Act, and it is unclear how
exemption from mandatory enrollment in an ABP for individuals defined
as medically frail (and other categories of exempt individuals) would
be operationalized on a broader scale. Further, it may be operationally
challenging to identify the range of individuals included in the
proposed definition as medically frail, prior to eligibility
determination and plan enrollment, particularly for individuals with
SUDs.
Several commenters requested CMS to provide clear, objective
standards for defining medically frail, such as the criteria used to
determine eligibility for Supplemental Security Income. One comment
also expressed concern that
[[Page 42231]]
any approach to identifying individuals who could be exempt from
mandatory enrollment in an ABP not stigmatize individuals or create
unintended barriers to seeking treatment. Several commenters wrote that
the definition of medically frail is vague and will be difficult for
states to operationalize. Another wrote that the impact of the
medically frail definition will be significantly mitigated if CMS
clarifies that a state's existing Medicaid benefit package will be
deemed to meet the ABP standards under the Secretary-approved coverage
option.
One commenter expressed concern that the definition of medically
frail is so broad that there could be confusion, inconsistency, and
costly implications to having such a broad set of individuals eligible
for exemption and recommended that CMS should clearly and carefully
define the set of individuals who would be exempt and not include
individuals with chemical dependency in the definition.
A number of commenters encouraged HHS to develop a systemic plan
for how the medically frail that are enrolled into an ABP, based on the
streamlined application collecting minimal information about disability
or function, will be identified for exemption and stated HHS must
develop requirements and supports for states to identify exemption
eligibility.
Several commenters expressed concern that the process of ensuring
that all exempt individuals are identified and enrolled in the benefit
plan that best service their health care needs (either an ABP or
traditional Medicaid) will be very burdensome or difficult for states
and asked that CMS provide further guidance on how this can be
accomplished. Several of these commenters stated that ABPs are not well
aligned with traditional Medicaid and urged CMS to provide further
guidance to states on methods and strategies for identifying exempted
individuals through the streamlined application process and enrolling
them in the appropriate coverage.
Another commenter envisioned situations where it may be beneficial
for a medically frail individual to have access to an ABP rather than
traditional Medicaid and urged CMS to design processes that ensure that
individuals have the ability to make an informed choice about their
Medicaid benefit options.
Another commenter voiced concern that the proposed rule does not
require a process to ensure that individuals are appropriately
identified as potentially exempt when they apply for coverage. This
commenter pointed out that individuals with serious mental illnesses
and disabilities may not realize that they may qualify as exempt if
they do not receive clear notification concerning (1) The possibility
that they may be exempt, (2) the process for determining whether they
are exempt, and (3) how to opt out of enrollment in an ABP if they are
exempt. The final rule should require this type of notice and process.
Response: CMS acknowledges that many states will not have prior
experience with implementation of an ABP, or with identifying
individuals who are exempt from mandatory enrollment or who meet the
criteria for exemption. We anticipate that for existing eligible
individuals the state, if it chooses, will be able to screen
beneficiaries it intends to enroll to identify exempt individuals by
eligibility category and through the use of historic medical encounter
data.
For newly enrolled individuals, who are eligible based on income
rather than disability, the state will not initially have information
concerning their current health status or historic encounter data.
Therefore, the enrollment process could be important to identifying if
an individual meets the criteria of the statutory exemptions. One
appropriate screening option includes beneficiaries identifying
themselves as meeting the exemption criteria. We encourage states to
implement a process to screen for exempt individuals using this minimum
standard for identifying individuals who are medically frail. Proposed
regulations that were not finalized as part of this rule at Sec.
435.917(b) and (c) set forth the information that must be provided to
an individual regarding benefits and services and provide that the
information must be sufficient to enable the individual to make an
informed choice. Sample beneficiary notices will be provided to the
states by CMS, incorporating questions posed to beneficiaries to aide
in the self-identification process. While the individual is being
provided with this information through options counseling, the
individual could be initially enrolled in benchmark or benchmark-
equivalent coverage that is subject to section 1937 requirements.
Comment: One commenter wrote that the phrase ``disabling mental
disorders'' relies on non-measurable terms. The commenter believes that
specific disorders, including SUDs, should be added if they meet a
defined disability test. CMS should provide states with the flexibility
to define medically frail or provide states with general guidelines
that an individual would have to meet to qualify and allow states to
set defined criteria.
Response: To ensure appropriate service protection for individuals
with disabilities and special medical needs, we have included a basic
definition of medically frail that we anticipate will ensure that
vulnerable individuals with special medical needs are not mandatorily
enrolled in an ABP that may not provide appropriate medical treatment
for their individual medical condition. Section 440.315(f) provides
states with a minimum standard for defining medically frail
populations.
Comment: Several commenters stated that the underlying goal of the
exemption from mandatory enrollment of vulnerable populations is to
protect access to needed services. There may be instances where amount,
duration and scope limitations are more restrictive under the Medicaid
state plan rather than under the ABP, highlighting the need for
beneficiaries to receive easily understandable information that allows
them to compare coverage options.
Response: CMS thanks the commenters' for acknowledging the
underlying purpose for exempting certain populations from mandatory
enrollment in an ABP and concurs with this comment. Beneficiaries need
to make individualized determinations of the benefit package (either
the ABP or the regular state plan) that best meets their needs.
Comment: Several commenters requested CMS provide further guidance
on the enrollment and selection process for medically frail
beneficiaries as this will be critical for those who qualify to be able
to select the benefit plan that best meets their health care needs. The
commenter wants to assure that, depending on the circumstances,
medically frail individuals will not be forced into a plan that
provides fewer benefits than the traditional Medicaid plan or the ABP.
Response: The purpose of the criteria for the exempt categories is
to assure that individuals with special medical needs will be enrolled
in a coverage plan that best provides necessary services. The design
and implementation of a process to determine medical frailty will
likely be specific to each state. However, states will have to follow
proposed regulations that were not finalized as part of this rule at
Sec. 435.917(b) and (c) in that sufficient information must be
provided to an individual about benefits and services to enable the
individual to make an informed choice.
Comment: One commenter requested that CMS allow states to define
the
[[Page 42232]]
exempt medically frail population using objective measurable criteria.
Response: Section 440.315 provides states with a minimum set of
criteria for exempting specified categories of individuals from
mandatory enrollment in an ABP or for individuals in the new adult
group, a choice between benchmark coverage that is either coverage
defined in the ABP or benchmark coverage that is the state's regular
approved Medicaid state plan.
Comment: One commenter recommended that the definition of
``medically frail'' include individuals that meet the Medicaid Health
Home eligibility requirements in section 2703 of the Affordable Care
Act.
Response: We believe that many enrollees in health homes, as they
are individuals with chronic conditions that are serious and complex,
will be covered by the existing definition of medically frail. But not
all health home enrollees have that level of medical need, and we have
determined that the suggested revision would not serve the limited
purposes of the exemption.
Comment: One commenter requested that the definition of medically
frail include all people with disabilities, because this definition is
one of the most essential provisions among all of the proposed rules,
and because persons with disabilities would be imperiled as a result of
mandatory enrollment in an ABP modeled after a commercial plan.
One commenter stated that inclusion of individuals with SSI appears
to broaden the definition of medically fragile for which there is
currently no standard definition and historically states have been able
to define. As a result, determinations for SSI will likely differ as
other considerations are included in the determination.
Response: In defining medically frail, Sec. 440.315 (f) covers a
wide range of populations that will be determined to be eligible for
voluntary enrollment, or in the case of individuals determined eligible
for the new adult group, eligible to choose to receive benchmark
benefits as defined in the ABP or benchmark benefits that are the
state's approved Medicaid state plan, assuring that these individuals
will receive care that is appropriate to their medical needs. As
proposed, Sec. 440.315(f) specifically includes individuals with
disabling mental disorders (including children with serious emotional
disturbances and adults with serious mental illness), individuals with
serious and complex medical conditions, individuals with a physical,
intellectual or developmental disability that significantly impairs
their ability to perform one or more activities of daily living, and
individuals with a disability determination, based on Social Security
criteria, or in states that apply more restrictive criteria than the
Supplemental Security Income (SSI) program, as the state plan criteria.
Sufficient information must be provided to an individual about benefits
and services to enable the individual to make an informed choice
according to proposed regulations that were not finalized as part of
this rule at Sec. 435.917(b) and (c).
Section 440.315(f) provides states with a minimum standard for
identifying individuals who are medically frail and states have the
flexibility to expand this definition.
Comment: One commenter wrote that, by including in the final rule
such a broad description of medically frail, CMS could substantially
increase the number of individuals who would be exempt from mandatory
enrollment in section 1937 benefit plans. The commenter asserted that
this would allow the states less flexibility in creating plans to best
meet the needs of these individuals. The commenter wrote that this is
particularly true if individuals with SUDs were to be included in the
definition and strongly recommended not including people with SUD in
the medically frail category as mental health and SUD services are
required benefits under the EHB benefits package. The commenter also
questioned the reasoning behind including people with SUD in the
definition of medically frail.
Response: We do not agree that the definition of medically frail is
too expansive and will unduly limit state flexibility. Nor do we think
that inclusion of individuals with SUDs will be problematic. We
recognize that a broader definition of medically frail individuals will
mean that such individuals will only elect to enroll in an ABP if the
benefits are designed to meet their needs at least as well as regular
state plan coverage.
Comment: One commenter wrote that if newly eligible individuals
meet the criteria for exemption and are exempt from section 1937 of the
Act, the Federal government needs to clarify if the enhanced funding
for this group would be available for all services provided to those
individuals.
Response: Yes, enhanced FMAP is available for all services provided
to a newly eligible individual, whether that person chooses the ABP
based on a benchmark or benchmark equivalent package that includes the
EHBs in compliance with section 1937 of the Act, or chooses an ABP
equal to the state's approved regular state plan.
Comment: A number of commenters expressed concern how individuals
who are exempt will be identified and requested further guidance on
enrollment and selection process for medically frail so that those
exempt can select the plan that best meets their needs. Several
commenters recommended adding a requirement that the notice provided to
individuals who have been found eligible for the expansion group
include detailed information regarding how one can qualify for an
exemption and the services and supports that would be available to a
person who is exempt from mandatory enrollment in an ABP, and should
include information regarding how to request and receive an exemption.
A commenter suggested that this requirement should be added to Sec.
435.917. Another stated that those who may be exempt will need clear,
consumer friendly information and decision support to help them
understand their choices.
Another commenter voiced concern that the proposed rule does not
require a process to ensure that individuals are appropriately
identified as potentially exempt when they apply for coverage.
Individuals with serious mental illnesses and disabilities may not
realize that they may qualify as exempt if they do not receive clear
notification concerning (1) The possibility that they may be exempt,
(2) the process for determining whether they are exempt, and (3) how to
opt out of enrollment in an ABP if they are exempt. The final rule
should require this type of notice and process.
A commenter expressed concern that the proposed rule does not issue
requirements outlining the process states should use to identify people
who are exempt and this is particularly pertinent given the ongoing
confusion about whether or not states will be able to claim enhanced
federal match for Medicaid expansions individuals who are exempt from
ABP enrollment. The commenter fears states will incur high
administrative costs managing different federal match rates for
different Medicaid expansion individuals, creating an incentive to
develop processes that implicitly or explicitly discourage exempt
individuals from taking advantage of their right to enroll in
traditional Medicaid.
One commenter voiced concern that including in the definition of
medically frail individuals with disabling mental disorders,
individuals with serious and complex medical conditions, individuals
with physical and intellectual or developmental disabilities that
significantly impair
[[Page 42233]]
their ability to perform one or more activities of daily living, or
individuals with a disability determination based on Social Security
criteria does not appear to be couched entirely within SSA disability
criteria and that some individuals with substance use disorders who are
not otherwise considered ``disabled'' under Medicaid may be viewed as
medically frail and exempt for ABP. Therefore, individuals with SUDs
would be included in a higher-level, comprehensive Medicaid benefit
package, thereby increasing costs to the state without the benefit of
the higher federal match under the Medicaid expansion to newly eligible
adults.
Response: We intend that, as amended, Sec. 440.315 may expand the
number of individuals who will qualify as exempt beyond the scope of
those who are otherwise considered disabled to include other
individuals whose medical needs mean that they are medically frail. We
also agree that exempt individuals will need clear, consumer friendly
information and decision support to help them understand their choices.
For Medicaid beneficiaries who are not in the new adult group, existing
requirements at Sec. 440.320 requires the state to provide each
individual considering voluntary enrollment in an ABP a comparison of
the ABP option versus the State plan option before the individual
chooses to enroll. The comparison must also include information on the
cost-sharing obligations of beneficiaries. CMS has proposed
requirements that were not finalized as part of this rule at Sec.
435.917(b) and (c) that an individual must receive information based on
eligibility regarding benefits and services that are available to them.
Information must be sufficient for the individual to make an informed
choice. Proposed regulations that were not finalized as part of this
rule at Sec. 435.917(b) and (c) will apply to all Medicaid
beneficiaries including adults in the new eligibility group.
Individuals in the new adult group who otherwise meet criteria for
exemption from mandatory enrollment may be enrolled in benchmark or
benchmark-equivalent coverage subject to section 1937 requirements
during the options counseling period to insure coverage during this
time.
Comment: Several commenters stated that CMS should further clarify
which medical conditions are considered ``serious and complex'' and
urged CMS to specify that chronic conditions such as HIV/AIDS and viral
hepatitis, which may have co-morbidities, are serious and complex and
individuals with serious and complex conditions should be exempted from
mandatory enrollment in an ABP. Many commenters strongly recommended
that HHS also include in the definition of medically frail or special
medical needs, individuals with chronic health conditions because
individuals with chronic illness should not be forced into an ABP
package that will not meet their predictable needs, as this may lead to
higher long term costs associated with poorly managed chronic
conditions.
One commenter indicated it was assumed that chronic kidney disease
and end stage renal disease were considered to be chronic diseases and
another commenter indicated that individuals with Cystic Fibrosis fall
squarely within the medically frail definition.
Another commenter wrote that it was assumed that long term cancer
survivors managing complex treatment or a complicated set of late and
long-term effects would fit the description of complex medical
conditions and therefore could choose the most appropriate benefit
plan.
Some commenters also stated that being forced into a health plan
that does not meet the needs of a person with chronic illness may lead
to higher long-term costs associated with poorly managed chronic
conditions.
One of the commenters urged CMS to specifically include in the
definition of medically frail individuals with chronic viral hepatitis.
Response: The exemption categories established by statute and the
proposed clarification in Sec. 440.315 are intended to provide states
with a minimum standard for exempting vulnerable populations. We agree
with the commenters that illnesses such as HIV/AIDS, viral hepatitis,
cancer and end stage renal disease are all serious chronic medical
conditions. It would not be possible for CMS to include an exhaustive
list of conditions that should qualify as medically frail, but we
believe that the criteria as currently drafted is broad enough to
include individuals for whom a choice of service package is most
appropriate.
Comment: Several commenters suggested that benchmark exempt
populations are vulnerable and best serviced by traditional Medicaid.
Response: We expect the exemptions process or the process designed
for individuals in the new adult group will provide these individuals
with an informed choice of the benefit package that best meets their
needs.
Comment: A commenter wrote that the current exemption definition
would create the need for a new frailty determination process for all
newly eligible adults for states that implement an ABP that is
different from the standard benefit. This is a concern for one state as
it becomes an administration burden for the consumer and the state
system with considerable fiscal implications and proposes a common
benefit for adult populations in Medicaid that would avoid the frailty
determination and exemption process.
Response: We acknowledge the writer's concerns, and are not
requiring any specific processes for implementing the exemptions
criteria for the new adult group. We provided a minimum standard for
identification of individuals who are medically frail and proposed
regulations that were not finalized as part of this rule at Sec.
435.917(b) and (c) regarding benefits option counseling should be
followed. Individuals may receive benchmark or benchmark-equivalent
coverage subject to 1937 requirements during the options counseling
period to insure coverage during this time.
Comment: Two commenters wrote that some states have Medicaid and
other public health care programs that have developed special
initiatives designed to meet the needs of enrollees who have substance
use disorders. They indicated that these initiatives may include
provision of care management series, discouraging drug-seeking behavior
by requiring care to be provide by a specified doctor and hospital,
etc. The commenters asserted that exempting these individuals from
mandatory ABP enrollment would make it far more difficult for Medicaid
Programs to meet these individuals' health care needs. While the
writers agree with the characterization of a substance use disorder as
``medically frail'', and thereby exempting them from mandatory
enrollment in an ABP, it would make it more difficult for Medicaid
Programs to meet these individuals' care needs.
Response: We appreciate the commenters' concern but do not agree
that exempting individuals with chronic SUD from mandatory ABP
enrollment would make it more difficult for Medicaid programs to meet
the individuals' health care needs. Section 1937 of the Act provides
states with the flexibility to redesign current Medicaid benefit
coverage to provide unique programs for targeted populations and
encourages states to be creative in the design of its coverage
packages. The exemption of individuals with chronic SUD is not an
impediment to providing quality care that meets the specific needs of
this population. Conversely, the flexibility provided by ABPs
[[Page 42234]]
encourages states to design comprehensive benefit packages that would
encourage voluntary enrollment.
Comment: One commenter wrote that states should be able to employ
traditional Medicaid disability assessments in evaluating medically
frail exemption and limit receipt of long term care services and
supports to those undergoing asset testing. To ensure long term
stability and a fiscally sound expansion, the commenter requested
sufficient flexibility to limit receipt of non-EHB services including
long term care services, to the non-expansion population via state plan
amendment or section 1915(c) waiver and recommended revision to the
medically frail exemption to align with the disability assessments
already in use within Medicaid.
Response: We disagree with this commenter. We believe the current
construct of the medically frail exemption category is in keeping with
legislative construct
Comment: A commenter wrote that the proposed revision to the
definition of medically frail seems to run against the Affordable Care
Act's benefit design for the expansion population, that is, coverage
tied to section 1937 of the Act and incorporation of an EHB standard
from the individual and small group markets, which excludes coverage
from long-term care and supports. The commenter asserted that
Affordable Care Act congressional goals to contain the costs of the
Medicaid expansion may be jeopardized if states are faced with
widespread eligibility for long term care services without the
traditional program integrity tools used to filter such services based
on objective need. The commenter further asserted that existing ABP
rules already exempt a broad range of vulnerable individuals as
compared to traditional disability assessment and that within what is
likely to be a large exempted class, these beneficiaries will access
benefits otherwise excluded from the EHB standard, namely institutional
or long term care through the state plan, at sizable cost to states and
the federal government. Of particular concern to the commenter is the
application of personal care services to a large exempt segment of the
new adult group and these long-term care benefits would be accessed in
the streamlined MAGI enrollment where asset evaluation would be
prohibited.
Response: The Affordable Care Act did not change the categories of
individuals exempted from mandatory enrollment, and added the provision
at section 1902(k)(1) of the Act, which contemplates that individuals
who meet the conditions for exemption would receive ABP coverage that
is not subject to the requirements of section 1937 of the Act. There is
nothing in the Affordable Care Act that would preclude us from
clarifying and amplifying the term ``medically frail'' to include
populations that have high medical needs resulting from disabling
mental disorders, substance use disorders, serious and complex medical
conditions, or disabilities. We are clarifying in this final rule that
the exemptions to benchmark or benchmark-equivalent coverage do not
directly apply to the new adult population, but if an individual in the
new adult population meets the criteria for exemption, then that
individual has a choice of an ABP based on benchmark or benchmark-
equivalent coverage including EHBs, or an ABP defined as the state's
approved Medicaid regular state plan, which is not subject to EHB
requirements. Please see more detailed response above for additional
information related to this provision.
Summary: We changed the proposed regulation language at Sec.
440.315(f) by adding ``chronic substance use disorders'' to the
definition of the medically frail exemption category.
d. Benchmark Health Benefits Coverage (Adding Benefits to Secretary-
Approved Coverage) (Sec. 440.330)
In the proposed rule, we amended Sec. 440.330(d) by broadening the
benefits available as Secretary-approved coverage from section 1905(a)
benefits to benefits of the type that are available under 1 or more of
the standard benchmark coverage packages or state plan benefits
described in sections 1905(a), 1915(i), 1915(j), 1915(k) or 1945 of the
Act, or any other Medicaid state plan benefits enacted under Title XIX,
or benefits available under base benchmark plans described in Sec.
156.100.
e. Secretary-Approved Health Benefits Coverage and Sec. 440.330(d) and
State Plan Requirements for Providing Additional Services (Adding
Benefits to Additional Coverage) (Sec. 440.335)
Comment: Many commenters offered general support for the
flexibility allowed in the proposed rule to include a broader range of
selected benefits through a Secretary-approved coverage package.
Some commenters noted that the ability of states to select coverage
corresponding to their full traditional Medicaid benefit as their ABP,
which would be presented under the Secretary-approved coverage option,
offers a clear distinction between the section 1937 benchmark options
and the EHB benchmark options set forth in 45 CFR part 156.
Many commenters believed that the proposed language correctly
offered states the option to use the Secretary-approved option in
section 1937 of the Act to extend comprehensive Medicaid coverage to
the new adult expansion group and that extending full Medicaid benefits
to this population, supplemented as needed to comply with the EHBs,
mental health parity and other protections in the law, is the best
approach for meeting the complex health needs of the low-income adults
who will gain Medicaid eligibility under the expansion.
Response: The proposed provisions for defining Secretary-approved
coverage sought to balance statutory requirements for establishing a
minimum coverage standard through ABP with the flexibility that states
may need when considering the appropriate range of ABP coverage
relative to the medical needs of the population being served. States
may also substitute benefits using the state's approved Medicaid state
plan benefits as long as the benefits are in the same EHB category and
they are actuarially equivalent. We appreciate the commenters' support.
Comment: Some commenters were not clear on which state plan
benefits may be included and, thus, urged HHS to clarify that state
plan benefits enacted under Title XIX are available for inclusion
through the Secretary-approved process irrespective of whether they
have otherwise been implemented in a particular state Medicaid program.
As an example, those commenters noted that a state that may conceivably
want to design a Medicaid benchmark targeting vulnerable populations,
such as individuals with dementia, and include a particularly relevant
home support service that is not an otherwise available service in the
state's Medicaid program.
Response: We wish to clarify for commenters that any benefits
described in sections 1905(a), 1915(i), 1915(j), 1915(j) or 1945 of the
Act, and any benefits included in a selected benchmark coverage option
may be included in an ABP whether or not those benefits are offered
through a particular Medicaid program.
Comment: Many commenters requested that, in addition to the
provisions that Secretary-approved coverage must meet the needs of the
target population, HHS revise language to require that the final
Secretary-approved benefits package be at least actuarially equivalent
to one of the first
[[Page 42235]]
three benchmark options, indicating that this would ensure that states
use the Secretary-approved option to provide a benefit that is
innovative and comprehensive, and not solely to provide a benefit that
is lesser.
Many of the same commenters recommend amending Sec. 440.330(d) to
read as follows: Any other health benefits coverage that the Secretary
determines, upon application by a State, provides appropriate coverage
to meet the needs of the population provided that coverage, and is at
least actuarially equivalent to one of the benchmark options in
paragraphs (a), (b), or (c). Secretarial coverage may include benefits
of the type that are available under 1 or more of the standard
benchmark coverage packages defined in Sec. 440.330(a) through (c) of
this chapter, State plan benefits described in sections 1905(a),
1915(i), 1915(j), 1915(k), and 1945 of the Act (whether actually
covered in the state plan or not), any other Medicaid State plan
benefits enacted under title XIX, or benefits available under base
benchmark plans described in Sec. 156.100.
Response: For commenters requesting that we require an actuarial
equivalence study for Secretary-approved coverage against one of the
three benchmark options at Sec. 440.330(a) through (c), the statute
defines Secretary-approved coverage as one of the minimum standards for
benchmark coverage, and as such, the benchmark options in Sec.
440.330(a) through (d) should serve as a reference for states
considering the benchmark-equivalent coverage option offered in other
regulatory provisions at Sec. 440.335. Section 1937 of the Act does
not expressly mandate an actuarial study of Secretary-approved coverage
Therefore, we are adopting Sec. 440.330(d) as proposed, and we believe
that our clarification here will serve to clarify that a state plan
benefit need not be offered through the regular state Medicaid program
for its inclusion in benchmark coverage, or benchmark-equivalent
coverage.
Comment: Many commenters indicated support of the intent to revise
Sec. 440.335(c)(1) to similarly align policy for benchmark-equivalent
coverage as it does for Secretary-approved coverage and, thus, allow
addition of benefits through the benchmark-equivalent coverage process.
Commenters believed that there are no legal impediments to this
approach and urged HHS to finalize the revision.
Similarly, other commenters commended the Secretary for continuing
to allow states the option for coverage of additional benefits in
excess of the minimum required coverage for benchmark-equivalent plans
and for revising the language to include home and community-based
services available under state plan options among these potential
additional benefits.
Many other commenters applauded HHS's inclusion of various options
for LTSS and care coordination support. Commenters generally offered
strong support and commended the decision to enable states the
flexibility necessary to align ABPs with state-plan options for home
and community-based services, self-directed personal assistance
services and attendant services, and other state Medicaid plan benefits
described in section 1915(i), (j), (k) and section 1945 of the Act.
One commenter indicated that the flexibility to offer such services
may provide states further opportunity to offer home and community-
based services to particular populations since the proposed rule
retains the section 1937 waiver of comparability that allows states to
choose target populations for receipt of specialized benefit packages.
The commenter offered an example of a state that could design benefit
packages that help support community living, including employment for
persons with disabilities.
One commenter was concerned that states may not take advantage of
this flexibility, and suggested that CMS consider issuing additional
guidance to states regarding the ability to cover services critical to
chronic care management for the new adult eligibility group, such as
the new health home benefit.
Similarly, another commenter requested that CMS clarify how
authorities at sections 1915(i) and 1945 will be used given that
individuals that would most likely benefit from these authorities will
be exempt from enrollment:
Response: CMS is providing states with additional options to craft
benefit packages that most appropriately meet the needs of the
population being served. Benefits that can now be included as
Secretary-approved coverage may in fact assist people who do not yet
qualify as medically frail. For instance, if someone needs assistance
with medication administration, they may not yet meet the definition of
medically frail, but they may benefit significantly from the service
and in fact avoid progression toward that exemption group or meeting
the associated criteria. We are in support of melding regular medical/
surgical benefits with home- and community-based services that support
people living the community and potentially avoiding or delaying
hospitalization or institutionalization.
Comment: One commenter indicated recognition that section 1915(i)
of the Act has proven to be a particularly critical tool available to
states to expand home and community based services and supports to
cover a broad array of services that enable individuals with mental
illnesses to succeed in their own homes.
Response: We are in agreement with the commenter that section
1915(i) of the Act can serve as a critical tool available to states to
expand an array of services that enable individuals with chronic
condition to succeed independently. For this reason, we will finalize
regulations to include section 1915(i) of the Act as a viable state
plan option that states may consider for inclusion when selecting an
ABP.
Comment: A few commenters requested clarification from CMS that
states may include section 1915(c) of the Act and other waiver-based
services in their ABPs. Commenters stated concern that states may need
flexibility to include additional services, such as personal care and
other services that enable Medicaid beneficiaries to remain in their
homes to their ABPs because section 1915(c) of the Act was not
referenced in Sec. 440.360.
Similarly, many state Medicaid agencies stated that the regulatory
sections should expressly specify that states may provide ABP enrollees
with access to section 1915(c) programs. The commenters indicated
belief that section 1915(c) services are ``state plan benefits enacted
under Title XIX'' given that section 1915(c) is found in Title XIX and
offers services that a state plan may include as ``medical assistance
under such a plan.'' The commenters also requested that CMS confirm
their reading of Sec. Sec. 440.330, 440.360, allowing states the
option to provide enrollees with section 1915(c) waiver services either
as part of Secretary-approved ABP or as ``additional services''
available to non-expansion enrollees.
Response: Section 1915(c) of the Act is not a state plan benefit,
and therefore, is not consistent with our general principle that
Secretary-approved or additional coverage consists of coverage under
one of the benchmark coverage options or regular state plan benefits.
Because the same services provided under section 1915(c) of the Act may
be provided under section 1915(i) of the Act, which can be offered in
an ABP, we do not see any reason to add section 1915(c) benefits as an
exception to this general principle.
[[Page 42236]]
Summary: No changes to the proposed regulation were made as a
result of these comments.
f. Benchmark-Equivalent Health Benefits Coverage and Sec. 440.360
State Plan Requirements for Providing Additional Services (Adding
Benefits to Additional Coverage) (Sec. 440.335)
In the proposed rule, we amended Sec. 440.335(c) and Sec. 440.360
by broadening the benefits available as additional coverage from
section 1905(a) benefits to benefits of the type that are available
under 1 or more of the standard benchmark coverage packages or state
plan benefits described in sections 1905(a), 1915(i), 1915(j), 1915(k)
or 1945 of the Act, or any other Medicaid state plan benefits enacted
under Title XIX, or benefits available under base benchmark plans
described in Sec. 156.100.
Comment: Many commenters believed that the proposed rule would
prohibit states from providing wrap-around or other additional benefits
to newly-eligible adults, but would allow states to provide additional
benefits for other populations in ABPs.
Many commenters shared the belief that the Affordable Care Act does
not appear to prohibit states from providing additional services to the
newly-eligible populations and that CMS should allow states flexibility
to provide additional services to the newly eligible population without
having to go through the additional process required for Secretary-
approved coverage. Those commenters believed that if CMS determines
that the law prohibits states from providing additional benefits to the
newly-eligible population, it should allow states the ability to simply
add these benefits using a streamlined process under the Secretary-
approved option or through another mechanism.
Several commenters urged CMS to clarify through the final rule that
states may provide additional benefits to ABPs for those eligible
through section 1902(a)(10)(A)(i)(VIII) of the Act through the
Secretary-approved coverage option, so as to not implicate the
restriction on additional coverage for the new adult group contained
through Sec. 440.360. Those commenters believed that the proposed
language is misleading and could be interpreted that the expansion
population is not able to receive additional benefits in any
circumstances, noting that the intent of the proposed rule is that the
expansion group is limited to benchmark ABP coverage.
A number of commenters requested that CMS allow states the
flexibility to provide additional benefits beyond what is minimally
required in the benchmark to any or all populations in ABPs, including
the expansion population.
Similarly, another commenter urged CMS to allow states to be as
expansive as they want to be in offering health care services to all
beneficiaries of ABPs, including the newly eligible Medicaid expansion
population, beyond what is minimally required within each state's ABP.
Other commenters noted that states may identify deficiencies and
gaps in the commercial benchmark plan options that fall outside parity,
non-discrimination, EHB and other requirements. In this situation,
commenters believed that a state should be able to add benefits easily
for its expansion population and CMS should provide states with all
available flexibility to do so.
Response: Section 1902(k)(1) of the Act is very clear that
individuals eligible through the new adult expansion group are limited
to benchmark or benchmark-equivalent coverage. In addition, there is a
payment exclusion under section 1903(i)(26) of the Act for FFP in any
additional coverage. ``Additional services'' authorized under section
1937 fall outside benchmark and benchmark-equivalent coverage. But we
are addressing this concern by allowing states increased flexibility
under this final rule to include broader benefits and services that are
appropriate for the population being covered and that are similar to
the benefit types listed in Sec. 440.360, through Secretary-approved
coverage or benchmark-equivalent coverage.
Comment: Many commenters indicated strong support for HHS' proposed
policy and commended the Department for clarifying the authority for
states to provide a wide range of benefits in developing Secretary-
approved coverage. In continuing, those commenters noted that many
consumer stakeholders have misunderstood the allowance for inclusion of
benefits under Secretary-approved coverage due to the general
prohibition on adding services to Medicaid benchmarks and requested
that the Department clarify that benefits can be added, but only
through the Secretary-approved process.
Other commenters urged CMS to consolidate these sections and
clarify that, despite the prohibition on adding services to Medicaid
benchmarks, states have the flexibility to offer additional and richer
benefits to all those enrolled in ABPs, including the expansion group,
by choosing the Secretary-approved coverage option. Those commenters
also requested clarification that the federal match otherwise available
for these populations is available for the additional benefits when
they are approved by the Secretary.
Similarly, other commenters requested that CMS clarify and confirm
that the interpretation of this provision within the proposed rule is
that if a state wanted to provide wrap-around services for a particular
population that some of the ``newly eligible'' population may fall
under, it does not appear that would be allowed unless the state
creates a Secretary-approved plan that incorporates the benefits into
the underlying plan itself.
One commenter indicated that it would be helpful for CMS to clarify
that adding additional benefits is possible for individuals in the
newly eligible group, and that the prohibition on additional coverage
for the expansion group at Sec. 440.360 only applies to benefits that
have not been included in the benchmark package selected by the state.
The commenter also suggested that both benchmark-equivalent coverage
and Secretary-approved coverage provide the state flexibility to
include benefits that can be covered through a Medicaid state plan or a
base benchmark option available to the state.
Response: We reassert the statutory construct that does not allow
the new adult group to received ``additional'' services. However, the
broadening of Secretary-approved coverage to include the same options
for services accomplishes the goal of allowing individuals in the new
adult group access to that same robust benefit package. We reiterate
that services provided under an ABP do not have to be offered under the
regular state plan.
Comment: Several commenters recognized that the Secretary's
clarification that additional benefits may include those available
under base benchmark plans (described in Sec. 156.100), in additional
to standard benchmark coverage packages or standard state plan
benefits. Those commenters were concerned about flexibility for states
to model ABPs after any base benchmark, noting that not every base
benchmark plan option may provide appropriate benefit levels for the
Medicaid population.
One commenter familiar with the needs of underserved and poor
populations with chronic conditions was appreciative that the EHB rules
builds upon protections already offered through existing rules that
allow states to enroll certain populations in Medicaid benchmark plans,
and grants states significant flexibility through regulations at Sec.
440.360 to develop a more comprehensive benefits package
[[Page 42237]]
that will better meet the needs of people with HIV and others with
chronic conditions.
Response: As mentioned in previous responses, we believe the
statute requires states to balance the appropriateness of the ABP
package when considering the population being covered. Therefore, we
believe our regulations encourage states to consider other options if
their analysis reveals that the base benchmark options elected do not
provide an appropriate level of benefits relative to the population
being covered.
Comment: A few commenters wished to emphasize that section 1937 of
the Act requires states to provide FQHC services to beneficiaries who
receive ABP coverage in the same manner as CMS previously stated and
conveyed in the agency's April 30, 2010 final rule. The commenters
emphasized that for situations where no FQHCs are available to section
1902(a)(10)(A)(i)(VII) of the Act enrollees under their managed care
plan, then the state must provide the beneficiary enrolled in ABP
coverage with FQHC services on a per-visit basis as required by section
1902(bb) of the Act. Alternatively, if a managed care entity is able to
provide FQHC services to any beneficiary receiving ABP coverage,
payments for such services must be made on a cost-related prospective
payment system basis, with state supplemental payments provided where
the PPS payment would exceed the amount provided under the managed care
contract.
Commenters indicated concern that because Sec. 440.360 is silent
on states' obligation to provide FQHC and RHC services as part of
benchmark or benchmark-equivalent coverage, the proposed regulation
fails to distinguish clearly between required and ``additional
benefits'' for the section 1937 package and that the omission of FQHC
services from the list creates the impression that these services are
not a required benefit within section 1937 coverage.
Several commenters recommended that CMS clarify the FQHC services
requirement by: (a) Consolidating Sec. 440.365 into Sec. 440.345; or
(b) independently reference Sec. 440.365 in Sec. 440.360 by having
the first sentence of regulatory provision Sec. 440.360 read, ``In
addition to the requirements of Sec. 440.345 and Sec. 440.365.''
Response: We agree with the commenters that regulations at Sec.
440.365 continue to require that the state must provide that
individuals enrolled in an ABP have access, through that coverage or
otherwise, to rural health clinic services and FQHC services. Such
required services are required as part of Sec. 440.365 and a state
must assure to CMS that they are providing these services, which is
different than adding additional services described at Sec. 440.360.
FQHCs are considered Essential Community Providers in the commercial
market, and we anticipate these entities playing a critical role in
Medicaid ABPs as well. When these providers are part of the ABP
provider network, reimbursement to them must adhere to statutory
requirements.
Summary: Minor grammatical edits to the proposed regulation were
made as a result of these comments.
g. Other Comments Received
We received various other comments that did not relate specifically
to provisions proposed in the proposed rule.
Comment: One commenter stated that to realize the opportunity
presented by the Affordable Care Act, it is essential that individuals
who are admitted to jail and are eligible for Medicaid be enrolled in
Medicaid either during incarceration or immediately upon release to the
community. By law federal Medicaid matching funds are not available for
the costs of needed items and services for individuals who are enrolled
in Medicaid while they are inmates, unless they are admitted to a
medical institution for treatment during the period of incarceration.
Nonetheless, the suspension of benefits does not affect the Medicaid
eligibility of inmates or their ability to enroll in the program if
eligible.
Response: Paragraph (A) following section 1905(a)(29) of the Act
and implementing regulations at Sec. 435.1009, exclude from the
definition of medical assistance care or services for any individual
who is an inmate of a public institution, except as an inpatient in a
medical institution. We read this exclusion to apply generally to
medical assistance, whether provided through the regular coverage plan
or through an ABP. Thus, while we agree with the commenter that
incarcerated individuals may be eligible for Medicaid, they would not
be entitled to benefits inconsistent with the exclusion. We note that
this is consistent with the exclusion of incarcerated individuals from
eligibility to enroll in coverage through the Exchange. It is also
consistent with the responsibility under the Eighth Amendment of the
United States Constitution of governmental entities to provide
necessary medical care to individuals who they are holding as inmates,
which effectively creates a liable third party for such care.
Individuals who are enrolled in Medicaid when entering a public
institution should have their eligibility suspended, rather than
terminated, as they remain eligible. This also ensures ease of
reinstitution of coverage post-release. Additionally, if an individual
is not already enrolled in Medicaid, states are encouraged to enroll
eligible individuals prior to their release so that the individual can
receive Medicaid covered services in a timely manner upon discharge.
Comment: A commenter requested additional guidance as to what type
of information CMS will need to approve an ABP state plan amendment and
how CMS will determine if mental health parity has been met.
Response: We will be issuing a template for states to use to submit
ABPs as a state plan amendment. At this time, mental health parity will
be determined to be met with an assurance by the state. We will be
developing more specific policy related to this topic in the near
future.
Comment: One commenter requested CMS clarify what Medicaid category
the EHBs are applicable. The commenter wondered whether EHBs only apply
to the expansion population and ABPs or does it also apply to
individuals who are currently eligible for Medicaid. The commenter
questioned whether, for example, current Medicaid benefits would need
to be adjusted to include habilitative services.
Response: EHBs apply only to section 1937 of the Act and were not
extended into regular Medicaid. Therefore, regular Medicaid state plan
benefits will not include the EHBs.
Summary: No changes to the proposed regulation were made as a
result of these comments.
7. Summary
ABPs are intended to offer states flexibility in designing benefit
packages for the Medicaid population that are benchmarked to public
employee or commercial plans. To ensure coverage of the kinds of
services that will also be assured for those purchasing coverage in the
individual and small group market, the law also requires that ABPs
cover the ten EHBs specified by law.
Recognizing that states face challenges in administering both their
state plan benefits and ABPs, we have sought to provide as much
flexibility in aligning those packages as possible. That said, we
appreciate that it may be difficult at this point to make changes to
the ABP that take effect by January 1, 2014. In light of this
challenge, we will partner with states to work as quickly as possible
to come into full compliance
[[Page 42238]]
with these provisions. We do not intend to pursue compliance actions on
these issues to the extent that states are working toward but have not
completed a transition to the new ABPs on January 1, 2014. To establish
its base benchmark for EHBs for Medicaid, the state can select the same
or a different plan than the base benchmark used for the Exchanges.
Once having selected the base benchmark plan for EHBs, the state maps
the benefits to EHB categories, and then can engage in supplementation
and/or substitution:
Through supplementation at 45 CFR 156.110, the state must
add EHBs to a base benchmark plan that is missing a required category
of EHBs. States can supply the missing EHBs from other base benchmark
plans.
Through substitution at 45 CFR 156.115(b), the state can
replace one or more of the benefits within each category of EHB, as
long as it maps appropriately to the category and the services are
actuarially equivalent to the services that are being substituted.
State Medicaid programs can use this process to substitute Medicaid
state plan benefits for public employee or commercial plan benefits,
for example, as long as applicable requirements are met. States must
provide notification to CMS that they have engaged in substitution and
have an actuarial certification and analysis available for inspection.
States must assure, as they evaluate their base benchmark for EHBs
and take these steps that they also properly account for special
Medicaid considerations discussed in this rule. When states pay for
covered outpatient drugs under the ABP prescription drug benefit, they
must comply with the requirements under section 1927 of the Act.
Habilitative services and devices are defined by what is in the state
selected base benchmark plan, substituted as desired. If not defined in
the base benchmark, the state will define the benefit. For example,
states may offer coverage of habilitative services and devices that is
no more restrictive in terms of amount, duration, and scope than the
rehabilitative services and devices covered under the applicable
benchmark plan. We expect that the services will be clinically
appropriate to meet the needs of individuals based on medical
necessity. Pediatric oral and vision care must follow requirements of
the EPSDT benefit.
The final base benchmark plan for EHBs for Medicaid, after
completion of these steps, provides the floor for Medicaid coverage to
individuals in the ABP.
States also select a section 1937 coverage option. If the section
1937 coverage option and the plan initially selected as the base
benchmark for EHBs are the same, the state will meet all requirements
by specifying as the final ABP the final base benchmark, as
supplemented and subject to permissible substitution, and further
supplemented to the extent necessary to ensure coverage required under
section 1937 of the Act, including EPSDT services, family planning
services, and FQHC and RHC services.
If the section 1937 coverage option and the selected base benchmark
plan are different (including when the state elects Secretary approved
coverage option or benchmark equivalent coverage), states have to take
the following steps to construct their final ABP:
If any other benefits are available in the section 1937
coverage option, add that benefit.
For any benefits in common from the section 1937 public
employee or commercial market plan options, but with one having more
robust qualities related to amount, duration, or scope, the benefit
with the more robust coverage.
For any benefits in common from the section 1937
Secretary-approved coverage option, but with one having more robust
qualities related to amount, duration, or scope, determine whether to
apply the benefit with the more robust coverage.
Alternatively, a state can first determine their ultimate goal in
creating their benefit package (for example, wanting to create an ABP
that mirrors the state's regular Medicaid state plan benefit package as
much as possible), and develop their ABP starting first with the
selection of their 1937 coverage option. This would entail comparing
the state plan benefit package with the base benchmark benefit package,
supplementing the state plan benefit with EHBs as necessary, and
applying permissible substitution of benefits consistent with 45 CFR
156.115(b) to better align with state plan benefits.
C. Exchanges: Eligibility and Enrollment
Throughout this proposed rule, we proposed technical corrections to
regulation sections in part 155 to replace references to section 36B of
the Code with the corresponding sections to the Department of
Treasury's final rule, Health Insurance Premium Tax Credit (26 CFR
1.36B-0 et seq.), published in the May 23, 2012 Federal Register (77 FR
30377). We are finalizing these technical corrections as proposed.
1. Definitions (Sec. 155.20)
In Sec. 155.20, we proposed technical corrections to the
definitions of ``advance payments of the premium tax credit'' and
``application filer,'' and added a definition of ``catastrophic plan''
by referencing the appropriate statutory provision within the
Affordable Care Act. We did not receive specific comments on these
technical corrections, and are thus finalizing them as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.20 of the
proposed rule with a technical correction to the definition of advance
payments of the premium tax credit, which we clarify refers to the
payment of the tax credit authorized by 26 U.S.C. 36B and its
implementing regulations.
2. Approval of a State Exchange (Sec. 155.105)
In Sec. 155.105, we proposed a technical correction to replace the
reference to section 36B of the Code to the applicable Treasury
regulation. We did not receive specific comments on this section, and
are thus finalizing the provision as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.105 of the
proposed rule without modification.
3. Functions of an Exchange (Sec. 155.200)
In Sec. 155.200, we proposed to clarify that the Exchange must
also perform the minimum functions described in subpart F concerning
appeals. The only comments we received supported this clarification.
Summary of Regulatory Changes
We intend to finalize the clarification to paragraph (a) at a
future date when subpart F is finalized, and so thus maintain the
previous language from the Exchange final rule.
4. Authorized Representatives (Sec. 155.227)
We proposed to add Sec. 155.227, establishing minimum requirements
for the designation of authorized representatives who may act on an
applicant's or enrollee's behalf in the individual and small group
markets. We noted in the preamble that the proposed rule for authorized
representatives for Exchanges closely tracks the proposed rule for
authorized representatives for Medicaid.
In paragraph (a), we proposed that the Exchange must permit
applicants and enrollees in the individual and small
[[Page 42239]]
group markets to designate an individual person or organization to act
on that applicant or enrollee's behalf. We also proposed that an
applicant or enrollee may have such a representative through operation
of state law, subject to applicable privacy and security requirements.
We also proposed that the Exchange must not restrict the option to
designate an authorized representative to only certain groups of
applicants or enrollees. We noted that the Exchange should ensure that
the authorized representative agrees to maintain, or be legally bound
to maintain, the confidentiality of any information regarding the
applicant or enrollee provided by the Exchange, and that authorized
representatives should adhere to applicable authentication and data
security standards. Additionally, we proposed that the Exchange should
ensure that the authorized representative is responsible for fulfilling
all responsibilities encompassed within the scope of the authorized
representation, as described in this section, to the same extent as the
person he or she represents.
In paragraph (b), we proposed the situations when the Exchange must
permit an applicant or enrollee to designate an authorized
representative. We also proposed that the single, streamlined
application described in Sec. 155.405 will provide applicants the
opportunity to designate an authorized representative and will collect
the information necessary for such representative to enter into any
associated agreements with the Exchange as part of the application
process. We noted that applicants and enrollees who do not designate an
authorized representative on their applications will subsequently be
able to do so through electronic, paper formats, and other modalities,
as described in Sec. 155.405(c)(2). We also noted that legal
documentation of authority to act on behalf of an applicant or enrollee
under state law, such as a court order establishing legal guardianship
or a power of attorney, may serve in the place of the applicant or
enrollee's designation.
In paragraph (c), we proposed that the Exchange must permit an
applicant or enrollee to authorize a representative to--(1) Sign the
application on the individual's behalf; (2) submit an update or respond
to a redetermination for the individual; (3) receive copies of the
individual's notices and other communications from the Exchange; and
(4) act on behalf of the individual in all other matters with the
Exchange.
In paragraph (d), we proposed that the Exchange must permit an
applicant or enrollee to change or withdraw an authorization at any
time. We also noted the authorized representative also may withdraw his
or her representation by notifying the Exchange and the applicant or
enrollee.
In paragraph (e), we proposed that an authorized representative
acting as either a staff member or volunteer of an organization and the
organization itself must sign an agreement meeting the requirements
proposed in regards to Exchange certified application counselors. We
noted that while the protections afforded by such an agreement are
important when an authorized representative is a member or volunteer of
an organization, we believe that they are not logical in cases where an
authorized representative is not acting on behalf of an organization.
We sought comments on applying the protections in paragraph (e) to
authorized representatives more broadly.
In paragraph (f), we proposed that the Exchange require authorized
representatives to comply with any applicable state and federal laws
concerning conflicts of interest and confidentiality of information.
In paragraph (g), we proposed that the designation of an authorized
representative must be in writing, including a signature, or through
another legally binding format, and be accepted through all of the
modalities described in Sec. 155.405(c) of this part.
We received the following comments concerning the proposed
authorized representative provisions.
Comment: Several commenters recommended that the Exchange be
required to make clear the powers and duties authorized representatives
may have with respect to the Exchange, as well as all other
requirements of Sec. 155.227, in a manner that is easily
understandable by both the authorized representative and applicant or
enrollee.
Response: In the final rule, we added a provision to paragraph (a)
specifying that the Exchange must provide information regarding the
powers and duties that an authorized representative may have with
respect to Exchange activities to both the applicant or enrollee and
the authorized representative.
Comment: Several commenters suggested that an authorized
representative should have an affirmative duty to notify the Exchange
and the applicant or enrollee on whose behalf he or she is acting of
any revocation or material change in the authorized representative's
legal authority to act on behalf of the applicant or enrollee. These
commenters also suggested that such a material change or revocation
should result in revocation of the authorized representative's
authority to act on behalf of the consumer for Exchange purposes.
Response: We have clarified in Sec. 155.227(d)(2) of the final
rule that an authorized representative must notify the Exchange and the
applicant or enrollee on whose behalf he or she is acting when the
authorized representative no longer has legal authority to act on
behalf of the applicant or enrollee.
Comment: Several commenters asked HHS to clarify which legal
documentation may serve in the place of an affirmative representation
to designate an authorized representative. Other commenters recommended
clarifying that a power of attorney may be used for such a purpose only
if it authorizes the holder to act in the types of activities permitted
under Sec. 155.227(c). One commenter recommended that legal
documentation to act as an authorized representative be required, as
opposed to optional, to protect vulnerable applicants or enrollees.
Another commenter recommended adding language that authorizes the
Exchange to dictate the form or manner of the authorization. A few
commenters also expressed concerns about the proposed requirement that
the designation of an authorized representative be in writing including
a signature or other legally binding format.
Response: In paragraph (a)(2), we outline the form and manner of
how an applicant or enrollee may designate another person as his or her
authorized representative, specifying that this designation should be
in a legally binding format. We also provide examples of legal
documentation that could be used to designate an authorized
representative in lieu of a signed document, including, but not limited
to, a court order establishing legal guardianship or a power of
attorney. While we do not require that legal documentation be provided
before the Exchange may recognize an individual as an authorized
representative, we anticipate that Exchanges will have procedures in
place to ensure that applicants and enrollees have control over whom
they designate as an authorized representative. For example, Exchanges
have flexibility to require that the designation should occur through a
signed agreement or legally binding document. In general, an Exchange
could accept any document that is valid for designating an authorized
[[Page 42240]]
representative in the state, and that permits the holder to perform the
activities specified in Sec. 155.227(c), in place of an affirmative
representation to designate an authorized representative. We emphasize
that to be used in this manner, documentation has to give the authority
needed to be an authorized representative for the activities specified
in Sec. 155.227(c).
Comment: A few commenters inquired about the relationship between
an authorized representative designated through the Exchange and a QHP
issuer, and recommended that an applicant or enrollee be required to
complete a separate authorization form to designate a representative to
act on his or her behalf in interactions with the QHP issuer.
Commenters expressed an understanding that QHP issuers would be
responsible for developing and executing the authorized representative
forms that govern interactions between the enrollee and the issuer.
Response: Subject to applicable law, we believe that the authorized
representative designated by an applicant or enrollee through the
Exchange process should also be able to serve in the same capacity with
the QHP issuer, and that streamlining this process is important to
minimize the burden on applicants or enrollees who need authorized
representation. Therefore, we would urge QHP issuers to allow an
Exchange authorized representative to serve in the same capacity with
the QHP issuer. We note that the companion guide \2\ that will be used
by all Exchanges for sending enrollment data to QHP issuers has fields
that may accommodate this information.
---------------------------------------------------------------------------
\2\ Standard Companion Guide Transaction Information, (March 22,
2013). Available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/companion-guide-for-ffe-enrollment-transaction-v15.pdf.
---------------------------------------------------------------------------
Comment: Some commenters suggested that HHS develop some conflict
of interest standards to ensure that consumers are protected when
interacting with entities that may benefit from becoming an authorized
representative. Other commenters suggested banning all organizations
from becoming authorized representatives, because some entities may
benefit from becoming an authorized representative.
Response: We appreciate the comments and plan to monitor
organizations acting as authorized representatives over time to
determine whether more specificity is needed. Additionally, Sec.
155.227(e) of the final rule clarifies that authorized representatives
must comply with applicable state and federal laws regarding conflicts
of interest.
Comment: Several commenters recommended that an applicant or
enrollee should be able to authorize their representative to engage in
fewer than all of the activities described in the proposed rule.
Response: In the final rule, we maintain language specifying that
an Exchange must allow applicants and enrollees to authorize a
representative to perform the full range of activities listed in the
rule. We also add language to Sec. 155.227(c) clarifying that the
Exchange may (but need not) permit consumers to authorize fewer than
all of the listed activities, so long as the Exchange is able to track
the specific permissions for each authorized representative. We note
that for plan years beginning before January 1, 2015, the FFE will not
have the operational capacity to support the authorization of
representatives to perform less than the full range of activities
listed in the rule.
Comment: Several commenters urged that the provision in proposed
Sec. 155.227(d) that the applicant or enrollee notify both the
Exchange and the representative that the representative is no longer
authorized to act on his or her behalf be removed. Other commenters
suggested that the applicant or enrollee should notify only the
Exchange.
Response: In the final rule, we clarify that the responsibility for
notifying a representative whose authorization has been discontinued by
an applicant or enrollee falls only on the Exchange.
Comment: One commenter expressed support for a policy that would
permit the Exchange to terminate a designation after a given period of
time to be determined by the Exchange. This commenter noted that this
aligns with the 5-year limit on authorizations from enrollees to allow
Exchanges to request tax information for conducting annual
redeterminations in accordance with Sec. 155.335(k).
Response: In the final rule, we have added a provision specifying
that authorized representatives will notify the Exchange if they are no
longer authorized to act in that capacity. As long as a person has the
authority to act as an authorized representative, there is no need to
terminate or reauthorize that relationship after a set amount of time.
An applicant or enrollee may also modify the authorization at any time.
Comment: A commenter suggested that compliance agreements for
authorized representatives should be available directly from HHS,
instead of Exchanges, for entities such as multi-employer plans that
are subject to federal regulation under ERISA, the Code, and the Taft-
Hartley Act, but not to state insurance regulation. The commenter noted
that the relationships between plans and plan participants and
beneficiaries established under the Taft-Hartley Act should continue to
be recognized in regulations implementing the Affordable Care Act.
Response: We expect that authorized representatives will be used
primarily by applicants and enrollees who are unable to represent
themselves or who are seriously challenged in representing themselves
in their relationship with the Exchange. Accordingly, authorized
representatives' agreements are between an applicant or enrollee and
his or her authorized representative regarding representation before
the Exchange.
Comment: One commenter sought clarification on whether staff or
volunteers of organizations must be trained and certified as Exchange
certified application counselors under proposed Sec. 155.225(b) to
serve as authorized representatives.
Response: The rule does not require authorized representatives to
be trained and certified as certified application counselors. The role
of an authorized representative is distinct from the role of a
certified application counselor. Specifically, certified application
counselors, for which standards will be finalized in a future
regulation, provide guidance and assistance to applicants and enrollees
who will interact with the Exchange on their own behalf, while
authorized representatives are commonly used by applicants or enrollees
who are unable to represent themselves, and have the legal authority to
actually sign for an applicant or enrollee and make other decisions on
his or her behalf.
Comment: Several commenters suggested that requiring organizations
to enter into agreements and follow a set of standards as proposed in
Sec. 155.227(e) will lead to disruptions in the availability of
assistance and lead to real harm to persons who need assistance. Other
commenters expressed concerns that every authorized representative
would have to be certified.
Response: In light of the commenters' concerns, and the protections
for consumers that already apply to all Exchange authorized
representatives, we have not finalized the proposed requirement that
organizations and staff and volunteers of organizations sign a separate
agreement. We recognize that authorized representatives are given
significant authority, and accordingly, we need to ensure that the
privacy and security of applicants' and enrollees' personal data are
protected. We note
[[Page 42241]]
that all authorized representatives, not just organizations and those
working for organizations, will be subject to the privacy and security
standards established and implemented by the Exchange consistent with
45 CFR 155.260 through agreements, as is required by 45 CFR
155.260(b)(2). This will be further clarified in subregulatory
guidance. Since all authorized representatives will be subject to
privacy and security standards, in this final rule, we removed the
requirement for organizations and staff and volunteers of organizations
to sign a separate agreement.
We have also not finalized the provision in the proposed rule that
would have subjected authorized representatives who are staff and
volunteers of organizations, and their organizations, to the proposed
standards for Exchange certified application counselors. This proposal
was motivated in large part by a concern that staff and volunteers of
such organizations might be likely to have conflicts of interest. This
concern, however, is addressed by Sec. 155.227(e), which clarifies
that authorized representatives must comply with applicable state and
federal laws regarding conflicts of interest.
Comment: One commenter suggested requiring legal documentation when
an applicant or enrollee changes or withdraws his or her authorization.
Response: Applicants and enrollees will not always have legal
documents to substantiate discontinuing an authorization. When an
applicant or enrollee appoints a new authorized representative,
including to replace an existing authorized representative, he or she
should follow the same process as an applicant or enrollee who appoints
an authorized representative for the first time.
Comment: Another commenter recommended that an enrollee should not
be able to designate an authorized representative if he or she failed
to do so during the application process.
Response: We see no need to limit an applicant or enrollee's
ability to designate an authorized representative solely to the
application process, particularly as some enrollees may develop a need
for an authorized representative after submitting an application,
choosing a plan, and maintaining coverage for many years.
Comment: Several commenters sought clarification about whether an
applicant or enrollee who applies through the Exchange with the
assistance of an authorized representative and is subsequently
transferred to the state Medicaid agency would need to redesignate his
or her authorized representative.
Response: If the application is transferred to the state Medicaid
agency, the authorized representative designation would be transferred
as well.
Comment: One commenter inquired about whether the Exchange will be
deemed liable for any breaches of confidentiality that are beyond the
control of the Exchange. A commenter also requested that HHS modify
language to make it clear that it is the legal duty of the authorized
representative to maintain confidentiality in daily practice.
Response: We appreciate this comment and recognize that this issue
applies more broadly. There are potentially some instances in which a
person that provides application assistance, including an authorized
representative, could negligently disclose an applicant's or enrollee's
information under circumstances that the Exchange could not have
prevented. We note that authorized representatives will need to comply
with the same privacy and security standards that the Exchange adopts
consistent with Sec. 155.260, or with more stringent standards,
pursuant to Sec. 155.260(b). Additionally, paragraph (e) of the final
rule requires authorized representatives to comply with applicable
state and federal laws concerning conflicts of interest and
confidentiality of information.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.227 of the
proposed rule, with a few modifications. For clarity and consistency
with the terminology defined in Sec. 155.20, and to make it clear that
we intend authorized representatives to provide assistance both in the
SHOP Exchanges and in the individual market Exchanges, we replaced the
terms ``individual'' and/or ``employee'' with the terms ``applicant''
and/or ``enrollee'' to describe the people helped by authorized
representatives. To further indicate that we intend authorized
representatives to provide assistance both in the SHOP and in the
individual market Exchanges, we clarify in Sec. 155.227(a) that an
applicant or enrollee can designate an authorized representative in the
individual or small group market Exchange and have added ``subpart H''
to the regulation text to account for the functions that an authorized
representative may perform in a SHOP. To avoid confusion with the
defined term ``qualified individual,'' we use the term ``person''
instead of ``individual'' in the final rule when describing individual
persons acting as an authorized representative.
We added paragraph (a)(5) to specify that the Exchange must provide
information about the powers and duties of an authorized representative
both to the applicant or enrollee and to the authorized representative.
We redesignated proposed paragraphs (c)(1) through (c)(4) as (c)(1)(i)
through (c)(1)(iv), and added a new paragraph (c)(2), which allows an
Exchange to permit an applicant or enrollee to authorize a
representative to perform fewer than all of the activities described in
paragraph (c)(1) of this section, provided that the Exchange tracks the
specific permissions of each authorized representative. Additionally,
we removed paragraph (d)(1), and redesignated proposed paragraphs
(d)(2) and (d)(3) as paragraphs (d)(1) and (d)(2). We modified the
language in redesignated paragraph (d)(1) to explain that the Exchange,
not the applicant or enrollee, will notify the authorized
representative when an applicant or enrollee notifies the Exchange that
he or she is no longer represented by his or her previously authorized
representative. We further modified redesignated paragraph (d)(2) to
clarify that an authorized representative will notify the Exchange and
the applicant or enrollee on whose behalf he or she is acting when the
authorized representative no longer has legal authority to act on
behalf of the applicant or enrollee. We also deleted paragraph (e) and
redesignated paragraphs (f) and (g) as (e) and (f), respectively. We
also made the following technical corrections. We made a technical
correction in paragraph (a)(1) to specify that authorized
representatives are permitted to assist individuals apply for
eligibility determinations or redeterminations for exemptions from the
shared responsibility payment under subpart G of this part. We made
technical corrections in paragraphs (a)(2) and (g) to clarify that the
designation of an authorized representative must be in a written
document signed by the applicant or enrollee instead of saying it must
be in writing, including a signature. We also added the word ``must''
to paragraphs (a)(3), (a)(4), and (f) to clarify that the activities
described in those paragraphs are required Exchange functions. We made
a technical correction in paragraph (d) to move the words ``the
applicant or enrollee notifies'' to the paragraph they modify. Finally,
we made a technical correction in paragraph (f), to clarify what is
meant by legally binding format
[[Page 42242]]
by adding ``as described in Sec. 155.227(a)(2).''
5. General Standards for Exchange Notices (Sec. 155.230)
In Sec. 155.230, we proposed to make a technical correction in
paragraph (a) to clarify that the general standards for notices apply
to all notices sent by the Exchange to individuals or employers.
We also proposed to revise paragraph (a) by redesignating paragraph
(a)(1) as paragraph (a)(4) and redesignating paragraph (a)(2) as
paragraph (a)(5). We proposed to revise redesignated (a)(2) to change
``; and'' to ``.'' We proposed to add new paragraph (a)(1) to indicate
that any notice required to be sent by the Exchange to individuals or
employers must be written and include an explanation of the action that
is reflected in the notice, including the effective date of the action,
and we proposed to add new paragraph (a)(2) to require the notice to
include any factual findings relevant to the action. We proposed to
revise paragraph (a)(3) to clarify that the notice must include the
citation to, or identification of, the relevant regulations that
support the action. We note that the contents of notices are subject to
privacy and security provisions in Sec. 155.260, including the
limitations on disclosure of information.
Furthermore, we proposed to add paragraph (d) to allow the Exchange
to provide notices either through standard mail, or if an individual or
employer elects, electronically, provided that standards for use of
electronic notices are met as set forth in Sec. 435.918, which
contains a parallel provision. We did not propose that the standards
specifically described under proposed paragraph (d) would apply to the
SHOP, and sought comment regarding this issue. We received the
following comments concerning the proposed provisions for standards for
Exchange notices:
Comment: Several commenters supported our proposal to clarify that
the general standards for notices under Sec. 155.230 apply to notices
sent by the Exchange to both individuals and employers, and they
supported the changes and additions proposed under paragraph (a). Many
commenters indicated that the Exchange should be required to include
contact information for both customer service and consumer assistance
resources in notices, and commenters indicated that HHS should make
copies of the applicable statute or regulation available upon request
by consumers. One commenter stated the notice needs to include a clear
explanation of any next steps and the timeframe by which action needs
to be taken, while another commenter emphasized that notices should
contain information about where individualized and unbiased counseling
is available for the individual. Lastly, a few commenters suggested
that we add ``laws or regulations'' to Sec. 155.230(a)(3).
Response: In response to comments received, we clarify that while
the standards under Sec. 155.230 generally do apply to notices sent by
the individual market Exchange to both individuals and employers, HHS
does not expect that the Exchange will have the information necessary
to provide an employer with a choice to receive the notice specified in
Sec. 155.310(h) regarding eligibility for advance payments of the
premium tax credit electronically, as we do not expect that individuals
will provide email information for employers on the application.
Accordingly, we expect that notices sent from the Exchange to employers
will likely be provided by standard mail, at least in the early years
of program implementation. We will continue to work with employers
regarding how best to implement notices from the Exchange to employers
in an efficient manner.
We intend to consider the suggestions regarding notice content in
the development of model notices, and encourage Exchanges to do the
same in developing notices they will use. We expect that notices will
include clear information about next steps and timeframe by which
action needs to be taken. We acknowledge the value of including contact
information for both customer service and consumer assistance resources
in notices. We recognize that including a list of all available
consumer assistance resources will make the notice longer, and so note
that this is an area in which Exchanges have flexibility. We also note
that applicable federal regulations are and will remain available
through public Web sites.
Comment: Several commenters reinforced their support for the use of
plain language to help notify enrollees of their rights and to properly
explain health coverage options that may be available to consumers. One
commenter recommended the notice include clear information about how to
get help if the individual does not understand the notice, as well as
clear information that an individual does not have to take the premium
tax credit in advance.
Response: All notices specified under 45 CFR parts 155 and 156 are
required to meet the accessibility standards described under Sec.
155.205(c), which specify that information must be provided in plain
language and in a manner accessible to limited English proficient
individuals. We expect Exchanges to make consumers aware of the
reconciliation process applicable to advance payments of the premium
tax credit as a part of the initial Exchange educational materials, as
well as at the time that an individual selects a QHP. HHS is working
with states to identify all key messages that should be communicated to
individuals through notices and other Exchange processes, and will take
these comments into consideration for implementation.
Comment: Commenters generally expressed support for the electronic
notice standards proposed under Sec. 155.230(d), while some expressed
concerns or suggestions related to the proposed standards. Commenters
raised a variety of concerns about how consumers who elect to receive
electronic notices may not actually receive them, including as a result
of not checking email regularly. One commenter urged that Exchanges
should be required to change the enrollee's delivery method for notices
if the Exchange finds that electronic notices are not being opened. One
commenter suggested that written notifications should cease only after
clear and unambiguous expression from an enrollee that they no longer
wish to receive paper notifications, and that the Exchange should be
required to track whether electronic notices are delivered and opened
by an enrollee. Another commenter recommended that individuals be
allowed to decide which notices they receive electronically or by mail.
One commenter suggested that electronic notices should be in addition
to, rather than replace, mailed paper notices. Lastly, one commenter
recommended modifying the notice provision so that if an individual
elects to receive electronic notices, the Exchange also always would
send a mailed notice in addition to the electronic notice when the
Exchange is taking an adverse action or when the consumer is required
to take an additional action to maintain his or her eligibility for
enrollment in a QHP, advance payments of the premium tax credit, or
cost-sharing reductions.
Response: We do not expect that the Exchange will track and monitor
when an individual opens emails and electronic notices. As described in
the electronic notice standards under Sec. 435.918, which are
incorporated by reference under Sec. 155.230(d), applicants will
receive paper notices by mail until they affirmatively elect to receive
electronic notices. We expect Exchanges to remain consistent in their
overall
[[Page 42243]]
approach to distributing notices, as required under Sec. 155.230(d).
Individuals will be able to control how they receive notices.
Additionally, under Sec. 435.918(b)(6), an individual will be able to
request any notice posted in the individual's electronic account to be
sent through regular mail. Furthermore, nothing precludes the Exchange
from providing an individual with the choice to receive some types of
notices electronically and others through regular mail (for example,
notices concerning adverse actions). Accordingly, we are finalizing
this provision as proposed, with one modification to allow the
individual market Exchange to choose to delay the implementation of the
process described in 42 CFR 435.918(b)(1) regarding sending a mailed
confirmation of the choice to receive electronic notices, given the
time available for implementation.
Comment: Some commenters supported the exclusion of the SHOP
Exchange from the electronic notice standards under Sec. 155.230(d),
while others expressed support for the SHOP being able to send all
notices electronically. Many commenters urged that employers in the
SHOP should have a choice regarding to how they receive notices, and
some expressed concern about employers not having a choice. One
commenter recommended that the SHOP be allowed to choose between
offering both written and electronic notices, to allow qualified
employers and employees to select which method they prefer; or to only
offer paper notices. The commenter noted that allowing states to adopt
an electronic-only approach for notice delivery might be problematic
for some employers. Another commenter indicated that the proposed rule
is not clear about what the default format would be for notices sent by
the SHOP.
Response: Based on the comments received and because we believe it
is important for employers to be able to choose how they receive
notices, we are modifying the proposed rule to allow an employer or
employee in any SHOP to elect to receive electronic notices, provided
that the standards for electronic notices in Sec. 435.918(b)(2),
(b)(3), (b)(4), and (b)(5) are met for the employer or employee.
Accordingly, the SHOP must: (1) Permit the employer or employee to
change such election, at any time, and inform the employer or employee
of this right; (2) Post notices to the employer or employee's
electronic account within one business day of notice generation; (3)
Send an email or other electronic communication alerting the employer
or employee when a notice has been posted; and (4) If an electronic
communication is undeliverable, send the notice by regular mail within
three business days of the date of the failed electronic communication.
Comment: Several commenters asked for clarification regarding how
electronic notice standards apply to QHP issuers, and they suggested
that QHP issuers also be allowed to offer enrollees the option of
receiving electronic notices. Some commenters recommended that the
Exchange adopt electronic notice standards for QHP issuers similar to
those applicable to the individual market Exchange. One commenter
recommended that the single, streamlined application include an option
for applicants to elect to receive notices from the QHP issuer
electronically, in addition to the election to receive notices from the
Exchange electronically. One commenter requested that a provision be
added permitting managed care organizations to provide electronic
notices.
Response: The provisions related to electronic notice standards
under part 155 of the proposed rule apply to the individual market and
SHOP Exchange. We acknowledge the importance of QHP issuers being able
to send, and enrollees being able to choose to receive, electronic
notices, and we clarify that nothing in this regulation precludes QHP
issuers from offering their enrollees the option to receive notices
electronically. We understand that most QHP issuers already make
electronic notices available as an option to their current enrollees,
and we are supportive of QHP issuers continuing to make this option
available to enrollees when they are participating in the Exchange.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.230 of the
proposed rule with a few modifications. We renumber proposed paragraph
(d) as paragraph (d)(1) and modify it to specify the electronic notice
standards for an individual market Exchange, while also adding
paragraph (d)(2) to establish the electronic notice standards for a
SHOP. We also add language to allow the individual market Exchange to
choose to delay the implementation of the process described in 42 CFR
435.918(b)(1) regarding sending a mailed confirmation of the choice to
receive electronic notices. We provide in paragraph (d)(2) that an
employer or employee in any SHOP may elect to receive electronic
notices, provided that the requirements for electronic notices in Sec.
435.918(b)(2), (b)(3), (b)(4), and (b)(5) are met for the employer or
employee.
6. Definitions and General Standards for Eligibility Determinations
(Sec. 155.300)
In Sec. 155.300, we proposed technical corrections in paragraph
(a) to the definitions of ``minimum value,'' ``modified adjusted gross
income,'' and ``qualifying coverage in an eligible employer-sponsored
plan,'' and also removed the definition of ``adoption taxpayer
identification number.'' We are finalizing the technical corrections as
proposed, with an additional technical correction to specify the
appropriate definition of minimum value.
Comment: Several commenters recommended that HHS should not cross-
reference in Sec. 155.300 to the affordability standard for eligible
employer-sponsored coverage in the Department of the Treasury's premium
tax credit regulation, 26 CFR 1.36B-0 et seq., as the Department of the
Treasury regulation is based on individual rather than family coverage.
Response: The Department of the Treasury maintains the legal
authority to interpret and implement the eligibility standards for the
premium tax credit, including those related to affordability and
minimum value of coverage in an eligible employer-sponsored plan,
because those are based on provisions of the Code. The proposed
technical corrections do not revise the policy regarding the Exchange's
determination of the affordability of eligible employer-sponsored
coverage, but simply update the cross-reference to align with the
Department of the Treasury's implementing regulation. As such, we are
finalizing the technical corrections as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.300 of the
proposed rule with a technical correction to specify the appropriate
definition of minimum value.
7. Options for Conducting Eligibility Determinations (Sec. 155.302(a)
and (b), and (d))
In Sec. 155.302, we promulgated provisions as interim final with
request for comments in the Exchange final rule (77 FR 18310, at 18451-
52). We proposed to modify some of the provisions in Sec. 155.302 in
the proposed rule (78 FR 4594, 4635).
In paragraph (a) of the interim final rule, we provided that the
Exchange may fulfill its minimum functions under this subpart by either
executing all eligibility functions, directly or through contracting
arrangements described in
[[Page 42244]]
Sec. 155.110(a), or through a combination of this approach and one or
both of the approaches identified in paragraphs (b) and (c), which
apply when other entities make eligibility determinations for insurance
affordability programs. We proposed a revision to the interim final
rule in paragraph (a)(1) to specify that Medicaid and CHIP eligibility
determinations made by the Exchange may only be made by a government
agency that maintains personnel standards on a merit basis.
In paragraph (b) of the interim final rule, we provided that the
Exchange may conduct an assessment of eligibility for Medicaid and CHIP
rather than an eligibility determination for Medicaid and CHIP,
provided that the Exchange make such an assessment based on the
applicable Medicaid and CHIP MAGI-based income standards and
citizenship and immigration status, using verification rules and
procedures consistent with Medicaid and CHIP regulations, without
regard to how such standards are implemented by the state Medicaid and
CHIP agencies.
In paragraph (b)(2) of the interim final rule, we provided that
notices and other activities that must be conducted in connection with
an eligibility determination for Medicaid or CHIP would be conducted by
the Exchange consistent with the standards identified in this subpart
or by the applicable state Medicaid or state CHIP agency consistent
with applicable law.
In paragraph (b)(3) of the interim final rule, we provided that if
the Exchange assesses an applicant potentially eligible for Medicaid or
CHIP, the Exchange would transmit such the applicant's information to
the State Medicaid or CHIP agency for a formal determination of
eligibility for such insurance affordability program. We explained in
the preamble to the interim final rule that the Exchange would consider
the applicant ineligible for Medicaid or CHIP for purposes of
eligibility for advance payments of the premium tax credit and cost-
sharing reductions until the state Medicaid or CHIP agency notified the
Exchange that the applicant was eligible for Medicaid or CHIP.
In paragraph (b)(4) of the interim final rule, we proposed that if
the Exchange assesses an applicant not potentially eligible for
Medicaid or CHIP based on the applicable Medicaid and CHIP MAGI-based
income standards, the Exchange must consider such an applicant as
ineligible for Medicaid or CHIP for purposes of determining eligibility
for advance payments of the premium tax credit and cost-sharing
reductions, and notify the applicant and provide him or her with the
opportunity to withdraw his or her application for Medicaid and CHIP or
request a full determination of eligibility for Medicaid and CHIP from
the applicable state agencies. To the extent that an applicant
withdraws his or her application for Medicaid and CHIP, the applicant
would not receive a formal approval or denial for Medicaid and CHIP.
We proposed a revision to the interim final rule in paragraph
(b)(4)(i)(A) to specify that, if an applicant who is not assessed as
potentially eligible for Medicaid or CHIP by the Exchange withdraws his
or her application for Medicaid or CHIP, and then appeals his or her
eligibility determination for advance payments of the premium tax
credit or cost-sharing reductions and is found potentially eligible for
Medicaid or CHIP, the Medicaid or CHIP application is not considered
withdrawn. The purpose of this revision is to reinstate the Medicaid
and CHIP application date, which is used in determining the effective
date of coverage under Medicaid and CHIP.
We provided in paragraph (b)(4)(i)(B) that the Exchange must notify
and provide an applicant who is assessed as not potentially eligible
for Medicaid and CHIP with the opportunity to request a full
determination of eligibility for Medicaid and CHIP by the applicable
state Medicaid and CHIP agencies. For an applicant who requests a full
Medicaid and CHIP determination, we provided that the Exchange must
transmit all information provided as part of the application, update,
or renewal that initiated the assessment, and any information obtained
or verified by the Exchange to the state Medicaid and CHIP agency. We
provided that the Exchange must consider such an applicant as
ineligible for Medicaid or CHIP for purposes of determining eligibility
for advance payments of the premium tax credit and cost-sharing
reductions until the state Medicaid or CHIP agency notifies the
Exchange that the applicant has been determined eligible for Medicaid
or CHIP.
We provided in paragraph (b)(5) that, under an assessment model
discussed above, the Exchange must adhere to the eligibility
determination for Medicaid or CHIP made by the Medicaid or CHIP agency.
We provided in paragraph (b)(6) that the Exchange and the applicable
state Medicaid and CHIP agencies must enter into an agreement
specifying their respective responsibilities in connection with
eligibility determinations for Medicaid and CHIP, which requirement
complements the standards in Sec. 435.1200(d). In accordance with
these standards, when the Exchange performs an assessment and
transmitted it to the state Medicaid or CHIP agency, and the Exchange
is providing advance payments of premium tax credits pending an
eligibility determination for Medicaid and CHIP, the Exchange will
receive a notification of the final determination of eligibility for
Medicaid and CHIP made by the receiving agency. This approach helps
avoid duplicative requests for information from applicants and
verification of information.
We proposed a revision to the interim final rule in paragraph
(b)(5) to specify that the Exchange also will adhere to the appeals
decision for Medicaid or CHIP eligibility determinations made by the
state Medicaid or CHIP agency or appeals entity for such agency.
In paragraph (d) of the interim final rule, we provided the
standards to which the Exchange must adhere when assessments of
eligibility for Medicaid and CHIP based on MAGI and eligibility
determinations for advance payments of the premium tax credit and cost-
sharing reductions are made in accordance with paragraphs (b) and (c);
such standards include that all eligibility processes are streamlined
and coordinated across applicable agencies, that such arrangement does
not increase administrative costs and burden on applicants, enrollees,
beneficiaries, or application filers, or increase delay, and that
applicable requirements under part 155 and section 6103 of the Code are
met.
Comment: Several commenters raised concerns regarding Sec.
155.302(a) as promulgated in the interim final rule, as they believed
it could permit non-public agencies to conduct eligibility
determinations for Medicaid and CHIP, which they worried would have a
negative impact on consumer assistance, timeliness, accuracy, and the
potential for conflicts of interest. Some commenters wanted to ensure
that agreements between state Medicaid agencies and private entities
related to the eligibility determination process would be relayed to
HHS for appropriate review. Several commenters recommended clear
language to specify that a private Exchange is not permitted to make
final determinations regarding an applicant's eligibility for Medicaid
and CHIP. One commenter wanted HHS to strengthen the conflict of
interest language and specify that the Exchange may not contract out
eligibility determinations for advance payments of the premium tax
credit and cost-sharing reductions due to such determinations being
inherently governmental.
Response: We appreciate these comments regarding the interim final
rule, as well as comments received
[[Page 42245]]
regarding the proposed revisions to paragraph (a)(1) of the interim
final rule that would specify that any contracting arrangement for
eligibility determinations for Medicaid and CHIP is subject to the
standards in 42 CFR 431.10(c)(2). In response to these comments, we are
finalizing Sec. 155.302(a) with the proposed revision to paragraph
(a)(1), with a minor clarification to specify that the reference to 42
CFR 431.10(c)(2) is specific to contracting arrangements for
eligibility determinations for Medicaid and CHIP. Specifically, this
means that an Exchange contractor may make eligibility determinations
for Medicaid and CHIP if it is a government agency or public authority
that maintains personnel standards on a merit basis. We note that 42
CFR 431.10(d) specifies that agreements regarding the delegation of
eligibility determinations by state Medicaid agencies must be available
to the Secretary, upon request. Exchanges are permitted to contract
eligibility determinations for advance payments of the premium tax
credit and cost-sharing reductions in accordance with Sec. 155.110(a).
Comment: Many commenters expressed concerns about the potential
bifurcation of the eligibility process under Sec. 155.302(b) for
Medicaid, CHIP, and advance payments of the premium tax credit and
cost-sharing reductions in terms of its impact on various stakeholders.
Commenters urged that HHS maintain the ``no wrong door'' approach
envisioned by the Affordable Care Act to ensure that an individual is
appropriately screened for all relevant insurance affordability
programs. As such, some commenters requested that by 2016, HHS revisit
the decision to allow states to implement eligibility systems in the
manner as described in the interim final rule, while also evaluating
whether more Exchanges move from making assessments to determinations
during the intervening time period. Commenters recommended that, if HHS
retains this provision, HHS should specify that states must demonstrate
they have the capacity to manage electronic accounts and applicant
information in so as not to increase the burden on individuals and
families by requesting duplicate information or increase the
administrative costs for state Medicaid and CHIP agencies related to
file transfers or unnecessarily duplicative verification processes.
Some commenters wanted HHS to require the Exchange to notify the
transferring program that it had received the electronic account and
report its final eligibility determination, to protect applicants.
Furthermore, commenters urged HHS to establish a process for monitoring
and enforcing the standards, as well as educating the public, regarding
the division of eligibility responsibilities between the Exchange and
relevant Medicaid and CHIP agencies. Commenters stated that if such
monitoring uncovers noncompliance with performance standards or other
requirements, HHS should require the Exchanges and state Medicaid and
CHIP agencies to submit corrective action plans.
Response: We appreciate the suggestions from commenters, and note
that many of these recommendations are already included in the interim
final rule. We intend to monitor the efficiency of how states implement
assessment or determination models to determine whether to propose
revisions in future years. We believe that the existing language in
Sec. 155.302(b) is augmented by Sec. 155.345(g) and 42 CFR 435.1200,
which specify that the Exchange and the state Medicaid and CHIP
agencies must have the capacity to manage electronic accounts, and also
that the Exchange will notify the transferring Medicaid or CHIP agency
regarding the receipt of an electronic account as well as of its final
eligibility determination. Accordingly, we do not modify this provision
further to address these comments. Although we do not establish a
formal process for monitoring and taking enforcement action for
noncompliance with these standards in the regulation text, HHS will
continue to evaluate the need for such processes during the
implementation of these regulations.
Comment: Several commenters suggested that states should adopt
procedures that would allow Exchanges to assess eligibility for
Medicaid based on factors other than MAGI, and potentially also
allowing the Exchange to assess eligibility for other programs,
including the Supplemental Nutritional Assistance Program. Some
commenters urged HHS to require Exchanges to develop appropriate
screening standards to identify vulnerable populations that might be
eligible for certain programs on a basis other than MAGI.
Response: This comment is outside the scope of Sec. 155.302(b) of
the interim final rule, as this provision only concerns the use of MAGI
determinations, while Sec. 155.345(b) concerns the duties of the
Exchange for Medicaid eligibility based on factors other than MAGI. We
note that Exchanges are not precluded from entering into agreements
with Medicaid and CHIP agencies to make eligibility determinations for
Medicaid based on factors other than MAGI.
Comment: Some commenters requested that HHS provide greater
specificity throughout Sec. 155.302(b) to indicate that contracting
agreements, verifications rules and standards, notices, and other
activities discussed must adhere to the specific standards of
Sec. Sec. 155.302(d) and 155.345(g), and 42 CFR part 431, subpart E.
Response: As noted earlier, Sec. 155.302(b) only applies in place
of the standards elsewhere in subpart D that specify that the Exchange
will make eligibility determinations for Medicaid and CHIP based on
MAGI, rather than assessments; it does not conflict with standards
provided elsewhere in subpart D that address other components of the
eligibility process that are unaffected by whether the Exchange is
making assessments or determinations of eligibility for Medicaid and
CHIP. As such, Exchanges are still guided by other provisions in
subpart D, such as Sec. 155.345(g). Provisions in 42 CFR part 431
concern standards for Medicaid agencies, which continue to apply to
Medicaid agencies in accordance with that part notwithstanding the role
of the Exchange for Medicaid eligibility. Finally, Sec. 155.302(a)(2)
already specifically states that use of the option in Sec. 155.302(b)
is subject to Sec. 155.302(d), so we do not believe that it is
necessary to add further references to Sec. 155.302(d).
Comment: Some commenters supported the increased level of
flexibility for the Exchange to make assessments of eligibility for
Medicaid and CHIP based on MAGI, rather than determinations. However,
these commenters expressed concerns about relying on applicants who are
not assessed as potentially eligible for Medicaid or CHIP based on MAGI
to self-identify as potentially eligible based on non-MAGI standards or
proactively request a full determination from the state Medicaid and
CHIP agencies, as opposed to placing greater burden on the Exchange to
take additional steps to proactively identify applicants who might be
Medicaid eligible based on non-MAGI standards. One commenter also asked
HHS to clarify that in cases where an Exchange conducts an assessment
of Medicaid eligibility; the assessment must include an assessment of
Medicaid eligibility on bases other than MAGI. These commenters
suggested that HHS encourage states to utilize a process whereby
individuals who enroll in a QHP, but are subsequently determined
eligible for Medicaid, are able to transition into the same carrier's
Medicaid product if the
[[Page 42246]]
QHP also operates a Medicaid health plan.
Response: We appreciate the concerns regarding how to create a
streamlined process that is minimally burdensome on individuals and
families, and results in accurate eligibility determinations. Under
Sec. 155.345(b) and (c), the Exchange will evaluate applications for
applicants who are not eligible for Medicaid based on MAGI for possible
Medicaid eligibility based on factors other than MAGI, and must provide
an opportunity for applicants and enrollees to request a full
determination of Medicaid eligibility based on factors other than MAGI.
If the Exchange evaluates an applicant as potentially eligible for
Medicaid based on factors other than MAGI, or the applicant or enrollee
requests a full determination of Medicaid eligibility, Sec. 155.345(d)
specifies that the Exchange will transmit the applicant's information
to the state Medicaid agency for a full determination. The Exchange has
the same responsibilities regarding eligibility for Medicaid based on
factors other than MAGI under the assessment and the determination
models, which we believe is appropriate because the single, streamlined
application that will be used by the Exchange does not request all the
information necessary to conduct a full determination of Medicaid
eligibility based on factors other than MAGI. Rather, it includes an
opportunity for an application filer to indicate that an applicant has
limitations in daily activities or lives in a medical facility or
nursing home, which are factors that are considered in determining
eligibility for Medicaid based on factors other than MAGI. If answered
affirmatively, the Exchange will trigger a referral to the applicable
state Medicaid agency such that the state Medicaid agency can determine
the applicant's eligibility for Medicaid, including based on factors
other than MAGI. Further, we note that the assessment of eligibility
for Medicaid based on MAGI is designed to be a robust evaluation, and
we expect that the number of applicants who will receive an assessment
that is inconsistent with the final determination will be limited. We
note that while comments related to HHS encouraging a process to help
individuals transition between QHPs and Medicaid products of the same
carrier is outside the scope of this regulation, Exchanges maintain the
flexibility to pursue such an option.
Comment: Some commenters noted the need for high levels of
coordination between the Exchange and state Medicaid and CHIP agencies.
A few commenters also wanted HHS to provide guidance with a view toward
minimizing the situations in which an individual will enroll in a QHP
through the Exchange pending the outcome of a Medicaid or CHIP
eligibility determination and then be subsequently determined eligible
for Medicaid or CHIP.
Response: We agree that a high degree of coordination is needed to
manage an assessment model, and believe that the language in Sec.
155.302(b) and (d), as well as Sec. 155.345, prescribes an appropriate
set of standards. We recognize the challenges that may occur related to
individuals who enroll in a QHP pending the outcome of a Medicaid or
CHIP eligibility determination, but we believe that these are
outweighed by the benefits associated with providing eligible
individuals with health coverage pending the completion of an
eligibility determination for Medicaid or CHIP, and we note that
enrolling in a QHP through the Exchange during such a period is the
individual's choice. With that, we expect that as states implement
their Exchanges and as eligibility systems for the Exchange, Medicaid,
and CHIP mature, the need for multiple entities to take part in
processing an application will lessen, and the time needed to complete
the entire eligibility process will also decrease, which will reduce
the need for interim coverage.
Comment: One commenter worried that the remainder of subpart D
concerning the eligibility process was not updated to reflect Sec.
155.302(b).
Response: We note that Sec. 155.302(b) provides that the Exchange
may conduct an assessment of MAGI-based eligibility for Medicaid and
CHIP, rather than a determination of eligibility for Medicaid and CHIP,
in accordance with the specified standards, ``[n]otwithstanding the
requirements of this subpart[.]'' In view of this language, we did not
update other provisions in subpart D to reflect Sec. 155.302(b). We
note that Sec. 155.302(b) does not supersede other provisions, such as
those in Sec. 155.345, that set additional standards for Exchanges in
coordinating with Medicaid and CHIP agencies.
Comment: Some commenters worried that the Exchange assessment
provision would allow the Exchange the assess eligibility without
applying Medicaid rules and procedures. Commenters recommended that,
under an assessment model, the Exchange should provide presumptive
eligibility for Medicaid, which they believed was particularly
important for children and pregnant women, while the application is
transferred to the Medicaid and CHIP agencies and a determination is
made. One commenter suggested HHS develop a universal model for
tracking children as they move from one coverage type to another, which
Exchanges should be required to implement.
Response: Section 155.302(b)(1) specifies that an assessment will
be made based on, ``the applicable Medicaid and CHIP MAGI-based income
standards and citizenship and immigration status, using verification
rules consistent with 42 CFR parts 435 and 457, without regard to how
such standards are implemented by the State Medicaid and CHIP
agencies.'' We maintain this language in this final rule, which ensures
that the Exchange will use standard Medicaid rules and procedures in
making an eligibility assessment. We appreciate the commenter's
recommendations related to presumptive eligibility, but note that HHS'
approach in establishing an assessment model was premised on having the
Medicaid or CHIP agency make all eligibility determinations that result
in the provision of benefits under Medicaid or CHIP. Accordingly, we do
not specify that the Exchange will make presumptive determinations
under an assessment model. HHS will continue to work with Exchanges and
Medicaid and CHIP agencies to ensure that vulnerable populations, such
as children and pregnant women, receive the correct eligibility
determinations for insurance affordability programs in a timely
fashion.
Comment: Some commenters recommended that the interim final rule be
amended to eliminate or strictly limit differences between the
procedures used by Exchanges in assessing eligibility for Medicaid and
CHIP, and those used by state Medicaid and CHIP agencies in determining
eligibility, with HHS permitting Federally-facilitated Exchanges and
State Partnership Exchanges to have slightly more flexibility for
differences than State-based Exchanges.
Response: We agree that the differences between the procedures used
by Exchanges and their partner Medicaid and CHIP agencies in conducting
eligibility determinations should be limited, and believe that Sec.
155.302(b)(1) already accomplishes this to a significant extent. We
reiterate that an assessment under Sec. 155.302(b) will be robust and
will involve the execution of detailed MAGI-based eligibility rules and
verification procedures. Further, we believe that there is little
reason for the use of an assessment model in a state that operates a
state-based Exchange, given the availability of shared information
technology services and the status of the
[[Page 42247]]
state-based Exchange as a state, rather than a federal, entity. We
intend to continue to work closely with states to ensure that systems
and processes are appropriately integrated, with the goal of reducing
administrative costs, burden on consumers, and the time needed to
complete the eligibility process.
Comment: Several commenters recommended that HHS set a specific
timeliness standard regarding the electronic transmission of the
application along with all relevant information collected from either
the application or available electronic data sources from the Exchange
to the state Medicaid or CHIP agency to ensure that eligibility
determinations are provided without undue delay. Some commenters
requested that HHS specify that an Exchange must complete an
eligibility determination in no more than 30 days (with up to 60 days
for evaluations based on factors other than MAGI under Sec.
155.345(b)) and complete the transfer of an individual's electronic
file, where required, within one business day; some commenters also
urged greater alignment between Exchange and Medicaid timeliness and
other performance standards.
Response: In Sec. 155.302(b)(3) and (b)(4)(ii)(A), we specify that
information will be transferred promptly, and without undue delay.
Further, in Sec. 155.310(e)(1), we specify that the Exchange will make
an eligibility determination promptly, and without undue delay. We
believe that this is an appropriate approach to initial timeliness
standards, given the fact that this is an entirely new program, and we
intend to work closely with states to monitor and improve the
timeliness of all aspects of the eligibility and enrollment process.
Further, we note that we agree with the commenter's suggestion
regarding the alignment of performance standards, and intend to issue
future guidance on this topic.
Comment: Several commenters suggested that HHS modify Sec.
155.302(b)(6) related to the standards for agreements entered into
between the Exchange and state Medicaid and CHIP agencies to provide
greater specificity regarding eligibility determinations, transfer
procedures, notice and appeals processes, and consumer assistance.
Additionally, these commenters asked that the agreements be made
readily available to the public in addition to HHS, while also
providing a period for public review and comments on the agreements
prior to their approval by HHS.
Response: We finalize Sec. 155.302(b)(6) from the interim final
rule with a clarification that, like the agreements specified in Sec.
155.345(a), the agreement under Sec. 155.302(b)(6) will be made
available to HHS upon request. To the extent that the Secretary
requests and obtains a copy of an agreement under Sec. 155.302(b)(6),
the public can request the agreement through the Freedom of Information
Act, 5 U.S.C. 552. The public may also obtain copies of these
agreements under applicable state freedom of information laws. We
believe that there are ample opportunities for public input for
Exchange operations, particularly given that the standards that will
govern the content of these agreements are specified in this
regulation. We also note again that Sec. 155.302(b) does not supersede
other provisions, such as those in Sec. 155.345, that set additional
standards for Exchanges in coordinating with Medicaid and CHIP
agencies.
Comment: One commenter wanted to ensure that HHS would review and
approve all state Medicaid verification plans.
Response: This comment is outside of the scope of this regulation.
We note, however, that as described in 42 CFR 435.945(j), state
Medicaid verification plans must be available to the Secretary of HHS
upon request, thereby enabling appropriate oversight of verification
standards.
Comment: One commenter sought clarification as to whether an
Exchange could choose to perform neither an assessment nor a
determination for Medicaid and CHIP.
Response: We clarify that the Exchange must make either
determinations or assessments for Medicaid and CHIP based on MAGI for
applications that include a request for an eligibility determination
for insurance affordability programs. However, we note that the
Exchange is permitted to contract with an eligible contracting entity,
including the state Medicaid agency, to conduct eligibility
determinations for Medicaid and CHIP, consistent with Sec. 155.302(a).
Comment: Several commenters recommended that an applicant who
appears to be eligible for Medicaid based on factors other than MAGI be
flagged by the Exchange early in the process, and if the Exchange does
not assess such an applicant as potentially eligible for Medicaid or
CHIP based on MAGI, the applicant should not have to request a full
eligibility determination from the state agency under Sec.
155.302(b)(4)(i)(B) to receive an eligibility determination for
Medicaid based on factors other than MAGI.
Response: As noted above, Sec. 155.302(b) does not supersede Sec.
155.345(b), which specifies that the Exchange will assess information
provided on an application by an applicant who is not eligible for
Medicaid based on MAGI to determine whether he or she is potentially
eligible for Medicaid based on factors other than MAGI. We clarify that
this provision applies in an Exchange that is implementing the option
under Sec. 155.302(b), such that if the Exchange does not assess an
applicant as potentially eligible for Medicaid based on MAGI, it will
then examine the application to determine whether to transfer the
applicant to the state Medicaid agency for consideration of Medicaid
eligibility based on other factors.
Comment: Commenters recommended that the provision at Sec.
155.302(b)(4)(i)(A), allowing an individual the opportunity to withdraw
his or her Medicaid and CHIP application, be eliminated or modified to
allow only individuals above a certain income threshold to withdraw
their Medicaid and CHIP applications. Others commenters were concerned
that language notifying an individual of his or her opportunity to
withdraw would be confusing and lead to individuals being dissuaded
from pursuing a Medicaid or CHIP eligibility determination.
Response: When an applicant requests an eligibility determination
for insurance affordability programs, the single, streamlined
application is an application for Medicaid and CHIP (as well as for
eligibility for enrollment in a QHP through the Exchange, and related
insurance affordability programs), so it needs to end in either a final
determination of eligibility for Medicaid or CHIP (approval or denial),
or a withdrawal of the application as it relates to Medicaid and CHIP.
When a state Medicaid or CHIP agency elects to have the Exchange make
assessments of Medicaid or CHIP eligibility, rather than
determinations, the Exchange is unable to provide a final determination
of Medicaid or CHIP eligibility, including a denial of Medicaid or CHIP
eligibility. Accordingly, withdrawal allows the assessment model to
function such that an applicant does not require a formal, final denial
of Medicaid and CHIP from the state Medicaid or CHIP agency to gain
eligibility for advance payments of the premium tax credit and cost-
sharing reductions, if otherwise eligible. This approach provides
significant efficiencies for consumers by not requiring multiple
eligibility determinations, as well as for Exchanges and Medicaid and
CHIP agencies. Given that the proposed approach preserves the
application date for purposes of
[[Page 42248]]
Medicaid and CHIP in the event of an appeal, we note that the only
implication of withdrawing an application in this context is that the
applicant can no longer request a determination from the state Medicaid
or CHIP agency based on the withdrawn application, and would instead
need to submit another application to be considered for those programs
(other than on appeal).
We acknowledge commenters' concerns regarding the potential for
confusion when an applicant is given the opportunity to withdraw his or
her Medicaid and CHIP application. To reduce the potential for consumer
confusion and administrative burden on the consumer and the Exchange
associated with this requirement, we offer the following option in
implementing this provision. Upon notifying an applicant that the
Exchange has assessed him or her as not potentially eligible for
Medicaid or CHIP, the Exchange will provide an opportunity for the
applicant to request a determination of Medicaid or CHIP eligibility
from the state Medicaid or CHIP agency. Rather than expressly asking
the applicant if he or she wants to withdraw the application for
purposes of Medicaid or CHIP eligibility (instead of requesting a
determination from the state agencies), the Exchange may consider the
application withdrawn for purposes of Medicaid and CHIP eligibility if
the applicant does not affirmatively request a determination from the
state Medicaid or CHIP agency within a time period specified in the
notice to the applicant, provided that the notice that communicates the
opportunity to request a determination from the state Medicaid or CHIP
agency and the time limit for doing so also specifies that the Exchange
will take this approach to withdrawal. This will allow an appropriate
disposition for each application, as it relates to Medicaid and CHIP,
and will help alleviate any confusion associated with the opportunity
to expressly withdraw an application, without creating any adverse
impacts for consumers.
Comment: A few commenters requested language that explicitly
preserves the date of application when an applicant withdraws his or
her Medicaid or CHIP application.
Response: Provisions related to preserving the date of the Medicaid
or CHIP application are contained in this final rule at 42 CFR
435.907(h).
Comment: Commenters supported the inclusion of language that
requires the application to not be considered withdrawn if, upon
appeal, the applicant is found potentially eligible for Medicaid or
CHIP. A few commenters requested that any subsequent review finding
potential eligibility for Medicaid or CHIP be sufficient to nullify the
withdrawal.
Response: We are finalizing proposed language requiring the
application to not be considered withdrawn if, upon appeal, the
applicant is found potentially eligible for Medicaid or CHIP. The
additional suggestions to amend this provision would expand the scope
of the provision beyond its intended scope. Further, it would be
impossible to administer the commenters' suggestion to nullify a
withdrawal when any future review finds potential eligibility for
Medicaid or CHIP eligibility, beyond the parameters established in this
rule, since subsequent eligibility determinations and redeterminations
will not necessarily be connected to the withdrawn application.
Comment: Commenters supported the additional proposed language in
Sec. 155.302(b)(5) requiring the Exchange to adhere to State Medicaid
or CHIP agency appeals decisions.
Response: We are finalizing the proposed language with a
modification such that the Exchange appeals entity, in addition to the
Exchange, will adhere to the eligibility determination or appeals
decision for Medicaid or CHIP made by the Medicaid or CHIP agency, or
the appeals entity for such agency.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.302(a) with
one clarification that any contracting arrangement for eligibility
determinations for Medicaid and CHIP is subject to the standards in
Sec. 431.10(c)(2). We are finalizing the provision proposed in Sec.
155.302(b)(5) with a slight technical modification to add ``Exchange
appeals entity.'' We are finalizing Sec. 155.302(b)(6) of the interim
final rule issued at 77 FR 18310, 18451-52 with a modification to
specify that the agreement under Sec. 155.302(b)(6) must be made
available to HHS upon request. We are finalizing the provisions
proposed in paragraph (d) of the proposed rule without modification. We
are otherwise finalizing the other provisions of the interim final rule
with the exception of Sec. 155.302(c), which we are not finalizing at
this time. We are leaving the text of Sec. 155.302(c) as an interim
final rule as published at 77 FR 18310, 18451-52.
8. Eligibility Standards (Sec. 155.305)
In Sec. 155.305, we proposed to add paragraph (a)(3)(v) regarding
residency standards for eligibility for enrollment in a QHP when an
individual attests to being temporarily absent from the service area of
the Exchange but intends to return to the service area of the Exchange
and otherwise meets the residency standards, unless another Exchange
verifies that the individual meets the residency standard in that
Exchange. We also proposed technical corrections within paragraph (f)
to replace the references to section 36B of the Code to the application
Treasury regulations.
We proposed to amend paragraph (f)(3) to clarify the availability
of advance payments of the premium tax credit and cost-sharing
reductions to applicants enrolled in a QHP, that is not a catastrophic
plan, through the Exchange. We did not receive specific comments on
this amendment, and we are thus finalizing the provision as proposed.
We also proposed to add paragraph (h) to codify the eligibility
standards for enrollment through the Exchange in a QHP that is a
catastrophic plan, which are based on age or having in effect a
certificate of exemption from the shared responsibility payment under
section 5000A of the Code in specific categories. We proposed that all
Exchanges must conduct eligibility determinations for a QHP that is a
catastrophic plan within the Exchange.
Comment: Commenters generally offered support for the provision at
Sec. 155.305(a)(3)(v) specifying that the Exchange not deny or
terminate an individual's eligibility for enrollment in a QHP through
the Exchange if he or she meets the residency standards described in
paragraph (a)(3) but for a temporary absence from the service area of
the Exchange. A few commenters recommended deleting the phrase that
allowed the Exchange to deny or terminate eligibility if another
Exchange verifies that the individual meets the residency standard of
such Exchange; others suggested rephrasing the provision to allow an
individual to maintain residency in the Exchange service area unless he
or she is enrolled in another Exchange. Commenters recommending
revisions disagreed with how this language would limit an applicant's
ability to establish residency, under the rules described in Sec.
155.305(a)(3), in more than one Exchange.
Response: We are finalizing the provision without the proposed
clause ``unless another Exchange verifies that the individual meets the
residency standard of such Exchange.'' As commenters pointed out, under
some circumstances, certain individuals may
[[Page 42249]]
establish residency for purposes of Exchange enrollment in multiple
Exchange service areas simultaneously (for example, under Sec.
155.305(a)(3)(iv)(B), if a parent expects to claim a child who lives in
another state on the parent's tax return, the child may enroll in a QHP
through the Exchange either in the child's state of residence, or the
parent's state of residence). Accordingly, while generally, applicants
will establish residency in the Exchange service area in which they
intend to reside, since there are exceptions to this general principle,
this clause limiting residency to one Exchange service area is
unnecessary.
Comment: In response to the provision proposed at Sec.
155.305(a)(3)(v), some commenters expressed concern about operational
challenges specific to providing and coordinating coverage while
individuals are temporarily residing outside the Exchange service area.
A few commenters asked that we further define the term ``temporary'' to
ensure that the term is used consistently across Exchanges, and to help
reduce consumer confusion and administrative inefficiencies.
Response: We acknowledge that coordinating care for applicants
while they are temporarily absent from the service area of the Exchange
through which they enroll in a QHP may present challenges for QHP
issuers. However, we believe this challenge is outweighed by the
importance of maintaining continuity of coverage while an individual is
temporarily absent from a particular Exchange service area.
Additionally, in paragraph (a)(3)(v), we specify that ``temporarily
absent'' means the applicant must intend to return to the Exchange
service area when the purpose of the absence has been accomplished, so
we do not believe that further definition is required in regulation. To
ensure that applicants understand the implications of applying for
coverage through a particular Exchange, we encourage Exchanges to
notify applicants that they may want to apply for coverage through the
Exchange where they meet the residency requirements and wish to most
frequently access benefits.
Furthermore, this provision should not be construed to impose any
additional requirements on QHP issuers related to maintaining networks
outside the Exchange service area or coordinating care for applicants
temporarily absent from the Exchange service area.
Comment: Commenters were divided regarding the Exchange's role in
determining eligibility for catastrophic plans inside and outside the
Exchange, as some expressed support for what they interpreted as HHS
limiting enrollment for catastrophic coverage to enrollment through the
Exchange in QHPs that are catastrophic plans and urged flexibility for
an Exchange to decide not to conduct eligibility determinations for
catastrophic plans, while other commenters requested that the Exchange
conduct eligibility determinations for QHPs that are catastrophic plans
for enrollment both through and not through the Exchange. Commenters
also urged HHS to clarify that an applicant still must be determined
eligible for a QHP to enroll in a catastrophic plan through the
Exchange. Commenters wanted to ensure that the Exchange would provide
clear information to applicants considering purchasing different QHPs,
including by describing the significance of enrolling in a catastrophic
plan for applicants who are also determined eligible for advance
payments of the premium tax credit.
Response: We note that paragraph (h) only concerns eligibility for
enrollment through the Exchange in a QHP that is a catastrophic plan.
The Exchange will not be conducting eligibility determinations for
enrollment outside the Exchange, including in a catastrophic plan. In
finalizing this provision, we are modifying the provision from its
proposed form to clarify that an individual must be determined eligible
for enrollment in a QHP through the Exchange in accordance with Sec.
155.305(a) in addition to meeting the specific eligibility standards
for enrollment in a catastrophic QHP through the Exchange. We believe
that maintaining the provision specifying that the Exchange will
determine eligibility for a QHP that is a catastrophic plan through the
Exchange preserves flexibility for young adults and people for whom
coverage would otherwise be unaffordable to have access to health
coverage, and thus confirm that Exchanges will conduct determinations
of eligibility for enrollment in a QHP that is a catastrophic plan
through the Exchange. We expect that Exchanges will fully inform
qualified individuals regarding the implications of enrolling in a QHP
that is a catastrophic plan through the Exchange as they consider
various health coverage options, particularly as it affects their
eligibility for insurance affordability programs.
Comment: Some commenters wanted us to clarify that Exchanges would
grant certificates of exemption to all applicants eligible for
enrollment in a catastrophic plan, which applicants could use to enroll
in catastrophic plans outside the Exchange (at least temporarily), and
suggested that issuers of catastrophic plans outside the Exchange
should be permitted to rely solely on an attestation by the applicant
that he or she is eligible to enroll in a catastrophic plan.
Response: This provision does not concern catastrophic plans
offered outside of the Exchange. As discussed in the Market Reforms
final rule at 78 FR 13423, the statutory provisions related to
eligibility for catastrophic plans apply to such coverage offered both
inside and outside an Exchange. We maintain that approach and clarify
that nothing in this proposal modifies the Market Reforms final rule
related to the eligibility standards for a catastrophic plan.
Similarly, the eligibility standards for catastrophic plans generally
are specified at Sec. 156.155(a)(5), which provides that a
catastrophic plan can only cover an individual who has either not
attained the age of 30 prior to the first day of the plan or policy
year, or has received a certificate of exemption in specified
categories. While we specify that the Exchange will only conduct
determinations of eligibility for enrollment through the Exchange in a
QHP that is a catastrophic plan, in HHS' Exemptions and Miscellaneous
Minimum Essential Coverage proposed rule, at 78 FR 7368, we propose
that the Exchange will determine eligibility for exemptions from the
shared responsibility payment, and will provide a notice and an
exemption certificate number to any individual determined eligible for
such an exemption. If that provision is finalized as proposed, an
issuer of a catastrophic plan offered outside the Exchange could
request a copy of this notice from an applicant to validate his or her
eligibility for enrollment in the catastrophic plan.
Comment: Some commenters requested that the Exchange's eligibility
standards for enrollment through the Exchange in a QHP that is a
catastrophic plan align with preamble language in the Market Reforms
proposed rule at 77 FR 70601 such that an enrollee who turns 30 in the
middle of a coverage year would remain enrolled in the catastrophic
plan for the duration of the plan year. One commenter also sought
clarification that for coverage obtained through the Exchange, the
first day of the plan year will always be the first of the year.
Response: The eligibility standards related to age described in
this provision follow the approach discussed within the Market Reforms
proposed
[[Page 42250]]
rule at 77 FR 70601. As such, we clarify that an enrollee turning 30 in
the middle of a coverage year could remain enrolled in a QHP that is a
catastrophic plan through the Exchange for that particular coverage
year as long as he or she was not 30 prior to beginning of the plan
year. We note that Sec. 147.104(b)(1)(ii) clarifies that in the
individual market, the coverage effective dates must align with Sec.
155.410 regarding initial open enrollment, and as such, for coverage
obtained in the individual market through the Exchange, the first day
of the plan year will always be the first day of the calendar year.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.305 of the
proposed rule with two slight modifications: to remove the clause
``unless another Exchange verifies that the individual meets the
residency standard of such Exchange'' in paragraph (a)(3)(v), and to
revise paragraph (h)(1) to clarify an applicant must be eligible for
enrollment in a QHP through the Exchange to be determined eligible for
enrollment through the Exchange in a QHP that is a catastrophic plan.
9. Eligibility Process (Sec. 155.310)
In Sec. 155.310, we proposed to add paragraph (i) regarding a
certification program under the Secretary's program for determining
eligibility for advance payments of the premium tax credit and cost-
sharing reductions in accordance with section 1411(a) of the Affordable
Care Act. We noted that this certification program would be distinct
from the notice to employers required by section 1411(e)(4)(B)(iii) of
the Affordable Care Act and paragraph (h) of Sec. 155.310. We proposed
that the certification to the employer would consist of methods adopted
by the Secretary of Treasury as part of the determination of potential
employer liability under section 4980H of the Code. We clarified that
the certification program would address not only individuals on whose
behalf advance payments of the premium tax credit and cost-sharing
reductions are provided, but also individuals claiming the premium tax
credit only on their tax returns. We solicited comments on this
proposal.
We proposed to amend previous language from paragraphs (i) and
(i)(1), and combine those paragraphs in new paragraph (j), to align
with proposed revisions in Sec. 155.335, which specified that the
Exchange will redetermine eligibility on an annual basis for all
qualified individuals, not only enrollees. We proposed to remove the
previous paragraph (i)(2), which addressed situations in which a
qualified individual did not select a plan before the date on which his
or her eligibility would have been redetermined as a part of the annual
redetermination process. Due to the proposed change to Sec.
155.335(a), this paragraph would no longer be necessary. We received
the following comments concerning the proposed provisions:
Comment: One commenter expressed support for the proposal to
implement a certification process consisting of methods adopted by the
Secretary of Treasury as part of the determination of potential
employer liability under section 4980H of the Code, as described in
proposed Sec. 155.310(i). In addition, several commenters expressed
concern over the disclosure of applicant information to the employer
for use in the certification process. Commenters were concerned that
disclosing names in this context could have a chilling effect on
employees who wish to seek Exchange coverage, making it less likely
that individuals would enroll.
Response: For purposes of the certification program proposed and
finalized in Sec. 155.310(i), we believe that only the minimum
personally identifiable information necessary should be released to an
employer. Additional information regarding the certification program is
found in the regulations associated with Sec. 4980H of the Code.
Comment: Commenters recommended removing the provision specifying
that the Exchange will have an applicant attest to the accuracy of the
information on file for him or her when he or she was previously
determined eligible for enrollment in a QHP through the Exchange, did
not select a QHP during his or her enrollment period, or was ineligible
for an enrollment period, and then seeks a new enrollment period prior
to his or her annual redetermination. Commenters characterized this as
an undue burden on qualified individuals, since enrollees are not
required to make the same attestation about their eligibility criteria
remaining constant.
Response: This provision was largely carried over from the Exchange
final rule, with modifications to address changes proposed in Sec.
155.335. It is important for the Exchanges to ensure all eligibility
criteria are satisfied with accurate information, before determining
eligibility for benefits, some of which the enrollee could be liable to
repay if eligibility information is not accurate at the time of
enrollment. Moreover, enrollees are required to report changes that may
affect their eligibility based on the standards in Sec. 155.305
throughout the year, and thus no additional burden is being placed on
qualified individuals. Lastly, one alternative to this proposal would
be to require qualified individuals who do not enroll in coverage when
initially determined eligible to file a new application, which would be
more burdensome than the approach in Sec. 155.310(j). Accordingly, we
are finalizing Sec. 155.310(j) as proposed, with a slight technical
correction for clarity to note that this paragraph only refers to an
applicant who is determined eligible for enrollment in a QHP through
the Exchange.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.310 of the
proposed rule with a technical correction to specify that paragraph (j)
only refers to an applicant who is determined eligible for enrollment
in a QHP through the Exchange .
10. Verification Process Related to Eligibility for Enrollment in a QHP
Through the Exchange (Sec. 155.315)
In Sec. 155.315, we proposed a technical correction in paragraph
(b)(2) to clarify the procedures for an Exchange when the Social
Security Administration indicates an individual is deceased.
We proposed to clarify the circumstances that trigger the
inconsistency process described in paragraph (f)(1) and (2), such as
when required electronic data is not contained within the electronic
data source, and when sources of required data are not reasonably
expected to be available within two days of the initial attempt to
reach the data source. We also proposed to amend paragraph (f)(4) to
clarify that during the clerical error resolution period provided in
paragraph (f)(1), as well as during the period provided in paragraph
(f)(2)(ii), the Exchange proceeds with the eligibility determination
and provides eligibility for enrollment in a QHP and advance payments
of the premium tax credit and cost-sharing reductions, as applicable,
during such period, to the extent the applicant is otherwise qualified
and meets the standards specified in paragraph (f)(4).
We proposed to add paragraph (j) concerning the verification
process related to eligibility for enrollment through the Exchange in a
QHP that is a catastrophic plan. We proposed that the Exchange may
either accept the applicant's attestation of age without further
verification or examine available
[[Page 42251]]
electronic data sources that have been approved by HHS for this
purpose. To verify an applicant's exemption from the shared
responsibility payment, we proposed that this would be accomplished
either through use of the Exchange's records, or through verification
of paper documentation if the certificate was issued by a different
Exchange. In terms of the inconsistency process described in paragraph
(f) of this section, we noted that applicant would not be determined
eligible for enrollment through the Exchange in a QHP that is a
catastrophic plan until verification of necessary information can be
completed. We received comments that addressed both the eligibility
standards and verification process related to QHPs that are
catastrophic plans offered through the Exchange, and have addressed
those comments above the preamble to Sec. 155.305(h). As such, we are
finalizing this paragraph as proposed.
Comment: Several commenters supported our proposed technical
correction in paragraph (b)(2) regarding situations in which the Social
Security Administration indicates that an individual is deceased.
Others recommended allowing additional time, and many commenters
suggested providing an additional 90 days when an applicant has
demonstrated a good faith effort to resolve the issue. Some commenters
sought clarification on the availability of appeal rights regarding
inconsistencies with Social Security Administration data, specifically,
whether individuals had the right to appeal during the 90-day period or
whether they must wait until after a final determination has been made.
Response: As noted in Sec. 155.315(f)(3), the Exchange has the
authority to extend the inconsistency period within Sec.
155.315(f)(2)(ii) based on a good faith effort on the part of the
applicant. We note that an applicant will not be able to appeal an
eligibility decision until he or she receives a notice containing an
approval or denial of eligibility. Further details regarding appeals
will be provided in subsequent rulemaking. We continue to work with the
Social Security Administration and other federal agencies to determine
the role of other federal agencies in the appeals process. Accordingly,
we are finalizing the provision as proposed.
Comment: Some commenters disagreed with the proposal at Sec.
155.315(f) that specifies that the Exchange must trigger the
inconsistency period when electronic data is required but it is not
reasonably expected that data sources will be available within 2 days
of the initial request to the data source. Commenters recommended that
if verification cannot occur promptly, or in ``real time,'' the
inconsistency period should be triggered immediately, along with the
provision of eligibility based on an applicant's attestation. Some
commenters mentioned specifically that an inability to verify
citizenship and immigration status through electronic data should lead
to the immediate trigger of the inconsistency period, to align with
Medicaid regulations.
Commenters supported timelines according to which the Exchange
should be required to contact the application filer for documentation
or additional information when data sources are unavailable. Some
commenters supported the requirement of a 2-day period prior to
requesting information from the application filer, and some recommended
extending it to 5 days. Commenters also recommended that the Exchange
continue to attempt data matches after notifying the application filer
so the entire burden is not immediately shifted to the application
filer.
Response: Since the publication of the proposed rule, we have
confirmed that data from IRS, SSA, and DHS should be available every
day. Accordingly, we are modifying the proposed provision to finalize
the rule to reduce the waiting period reduced from 2 days to 1 day.
Further, we also add new paragraph (f)(6) to clarify the applicability
of Sec. 155.315(f).
First, in paragraph (f)(6), we specify that that the Exchange will
not apply such a waiting period when electronic data to support the
verifications specified in Sec. 155.315(d) (residency), or Sec.
155.320(b) (minimum essential coverage, other than minimum essential
coverage in an eligible employer-sponsored plan) is required but it is
not reasonably expected that electronic data sources will be available
within 1 day of the initial request to the data source; instead, the
Exchange will accept the applicant's attestation regarding the factor
of eligibility for which the unavailable data source is relevant. While
the data matching described in this subpart for these factors of
eligibility is important, we do not believe that it should hold up an
eligibility determination or cause the eligibility process to default
to paper documentation when electronic data sources are unavailable. We
also note that the use of electronic data as a primary method of
verification of residency is an option for Exchanges. In addition, we
clarify that Sec. 155.320(d)(3)(iii) specifies that when the Exchange
does not have information from data sources for the verifications
related to enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan, the Exchange will move forward with a sampling process.
Second, we clarify that Sec. 155.320(c)(3) (family size and income
for purposes of eligibility for advance payments of the premium tax
credit and cost-sharing reductions) already specifies procedures to
address situations in which electronic data sources with information
about current, MAGI-based income are unavailable. We believe that these
procedures should continue to govern these situations.
We acknowledge commenters' concerns about providing eligibility
determinations in a timely fashion when electronic data sources are
delayed in responding or do not respond. The proposed language at Sec.
155.315(f) minimizes the administrative and consumer burden associated
with requesting documentation and providing coverage for a short period
of time (when electronic data sources may quickly become available and
indicate eligibility for a different insurance affordability program),
with the need to provide prompt eligibility determinations.
Accordingly, when electronic data from IRS, SSA, or DHS is necessary
but unavailable, and it is reasonably expected that the necessary
electronic data source will be available within 1 day, the Exchange
will wait 1 day before making an eligibility determination, so as to
not generate an eligibility determination that may be shown to be
invalid less than 24 hours later. This approach also avoids the need to
request documentation when an electronic data match will make the
documentation request unnecessary less than 24 hours later. If it is
not reasonably expected that the necessary electronic data source will
be available within 1 day, or it is reasonably expected that the
necessary electronic data source will be available within 1 day, but
this expectation proves incorrect, then the Exchange will determine the
applicant's eligibility using his or her attestation regarding the
factor of eligibility for which the electronic data source is
unavailable, and will follow the remaining procedures in Sec.
155.315(f) to attempt to complete the verification. We believe this
approach is responsive to commenters' concerns and satisfies the need
to reduce administrative burden and the burden on application filers
while still ensuring accurate eligibility determinations. We also note
that the Exchange has the flexibility to continue checking whether such
data sources
[[Page 42252]]
have become available leading up to the triggering of the inconsistency
period and during such inconsistency period.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.315 of the
proposed rule, with a few modifications. We are modifying paragraph (f)
to provide that if key electronic data sources are unavailable and not
reasonably expected to be available within 1 day, the Exchange will
make an eligibility determination based on an applicant's attestation
and trigger the inconsistency period in paragraph (f). The proposed
language specified a 2-day period. We also added a new paragraph (f)(6)
to clarify that the Exchange will accept an applicant's attestation
regarding three specific factors of eligibility when electronic data is
required but it is not reasonably expected that data sources will be
available within 1 day of the initial request to the data source. We
are also modifying paragraph(f)(5) of this section by deleting
paragraph (f)(5)(ii) and combining paragraph (f)(5)(i) with paragraph
(f)(5), because the language that previously appeared in paragraph
(f)(5)(ii) regarding effective dates conflicted with the requirements
under Sec. 155.330(f). Lastly, we modify the language in paragraph (j)
related to the verification of eligibility for enrollment through the
Exchange in a QHP that is a catastrophic plan for purposes of clarity.
11. Verifications Related to Eligibility for Insurance Affordability
Programs (Sec. 155.320)
In Sec. 155.320, we proposed to amend and make technical
corrections in paragraph (c)(1), in accordance with the legislative
change made by Public Law 112-56 concerning the treatment of Social
Security benefits related to MAGI, to incorporate Social Security
benefits when verifying projected annual household income. We also
proposed to remove language concerning an adoption taxpayer
identification number, and to replace references to section 36B of the
Code with the applicable Treasury regulation. We received comments
supporting these revisions without further suggestions, and are thus
finalizing the amendments and technical corrections as proposed.
We proposed to amend and make technical corrections in paragraph
(c)(3) to specify that the Exchange verify that neither advance
payments of the premium tax credit nor cost-sharing reductions are
already provided on behalf of an individual, and align with the revised
policy that the Exchange incorporate Social Security benefits when
verifying projected annual household income. We did not receive
specific comments regarding the proposed changes to paragraph (c)(3),
and are thus finalizing the changes as proposed.
We proposed to clarify when additional verification is necessary as
part of the process to verify an expected increase in projected annual
household income when compared to annual income data. We proposed to
add language regarding the circumstances under which annualized current
income data will be sufficient to support an expected decrease in
projected annual household income. We also proposed to replace
references to section 36B of the Code with references to the applicable
Treasury regulation.
We proposed to consolidate paragraphs (d) and (e), currently
entitled ``Verification related to enrollment in an eligible employer-
sponsored plan'' and ``Verification related to eligibility for
qualifying coverage in an eligible employer-sponsored plan,''
respectively, into new paragraph (d). The standards proposed in
paragraph (d) set forth the rules for verifying enrollment in an
eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible employer-sponsored plan. We proposed that the
Exchange must verify whether an applicant reasonably expects to be
enrolled in an eligible employer-sponsored plan or is eligible for
qualifying coverage in an eligible employer-sponsored plan for the
benefit year for which coverage is requested. As a result of the
proposed consolidation of paragraphs (d) and (e), we proposed to
redesignate paragraph (f) as paragraph (e).
In paragraph (d)(2), we proposed the data sources the Exchange will
use to verify access to employer-sponsored coverage, which include (1)
Data about enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan from any electronic data sources that are available to the
Exchange and which have been approved by HHS for this purpose based on
evidence showing that such data sources are sufficiently current,
accurate, and minimize administrative burden; (2) data regarding
enrollment in an eligible employer-sponsored plan or eligibility for
qualifying coverage in an eligible employer-sponsored plan based on
federal employment obtained by transmitting identifying information
specified by HHS to HHS; (3) data from the SHOP that operates in the
state in which the Exchange is operating; and (4) any available data
regarding the employment of an applicant and the members of his or her
household, as defined in 26 CFR 1.36B-1(d), from any electronic data
sources that are available to the Exchange and have been approved by
HHS for this purpose, based on evidence showing that such data sources
are sufficiently current, accurate, and minimize administrative burden.
We proposed that data regarding employment would not be used to
identify inconsistencies that need to be resolved to maintain
eligibility, and would instead only be used to determine whether an
individual should be part of the pool of individuals from which a
sample is taken for review. We solicited comment on whether data
regarding employment should only be used as a point of information for
applicants to help prompt accurate attestations, and not as a point of
comparison for the purposes of identifying inconsistencies as part of
the verification described in this paragraph, since these data sources
do not directly address enrollment in an eligible employer-sponsored
plan or eligibility for qualifying coverage in an eligible employer-
sponsored plan. We also solicited comment on the feasibility of making
the necessary systems connections by October 1, 2013, and whether
alternative approaches should be considered for the first year of
operations.
To verify enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan, we proposed that the Exchange follow the inconsistency process
specified in Sec. 155.315(f) if an applicant's attestation is not
reasonably compatible with information from a data source authorized by
HHS, data regarding federal employment, data from SHOP, or other
information provided by the application filer or in the records of the
Exchange. Further, if the Exchange does not have any of the information
from a data source authorized by HHS, from data regarding federal
employment, or from data from the SHOP for an applicant, and either
does not have any available electronic data regarding the employment of
an applicant and the members of his or her household or an applicant's
attestation is not reasonably compatible with any available data
regarding the employment of an applicant and the members of his or her
household, we proposed that the Exchange would place the applicant into
a pool of applicants from which it would select a statistically-
significant sample of applicants, from whose employers the Exchange
would request information regarding enrollment in an
[[Page 42253]]
eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible employer-sponsored plan.
We solicited comments on whether handling inconsistencies with any
available data regarding the employment of an applicant and the members
of his or her household through the sampling process, rather than
through the procedures specified in Sec. 155.315(f), is a suitable
approach.
We requested comments on a methodology by which an Exchange could
generate a statistically significant sample of applicants and whether
there are ways to focus the sample on individuals who are most likely
to have access to affordable, minimum value coverage.
In clause (d)(3)(iii)(A), we proposed that the Exchange would
provide notice to an applicant who is selected as part of the sample
indicating that the Exchange would be contacting any employer
identified on the application for the applicant and the members of his
or her household, as defined in 26 CFR 1.36B-1(d), to verify whether
the applicant is enrolled in an eligible employer-sponsored plan or is
eligible for qualifying coverage in an eligible employer-sponsored plan
for the benefit year for which coverage is requested. We sought comment
on ways the Exchange may communicate this sampling process to consumers
with the intention of minimizing confusion.
We proposed that the Exchange would proceed with all other elements
of the eligibility determination using the applicant's attestation
while the sample-based review is occurring, and provide eligibility for
enrollment in a QHP through the Exchange to the extent that an
applicant is otherwise qualified. Consistent with Sec. 155.315(f), we
proposed that during the sample-based review, the Exchange would ensure
that advance payments of the premium tax credit and cost-sharing
reductions are provided on behalf of an applicant who is otherwise
qualified for such payments and reductions, as described in under Sec.
155.305 of this subpart, if the tax filer attests to the Exchange that
he or she understands that any advance payments of the premium tax
credit paid on his or her behalf are subject to reconciliation.
When an applicant is selected for the sample-based review, we
proposed in clause (d)(3)(iii)(D) that the Exchange make reasonable
attempts to contact any employer identified on the application for the
applicant and the members of his or her household, as defined in 26 CFR
1.36B-1(d), to verify whether the applicant is enrolled in an eligible
employer-sponsored plan or is eligible for qualifying coverage in an
eligible employer-sponsored plan for the benefit year for which
coverage is requested.
We discussed one alternative approach, under which the Exchange
would request documentation from consumers who were selected as part of
the sample, instead of attempting to contact their employers. We chose
not to propose this approach since the application will already solicit
all necessary information from consumers, so it is unclear what would
be gained through a second information request to consumers. We
solicited comment on this alternative and other alternatives to
implement this process while minimizing burden on consumers, employers,
and Exchanges. We also sought comment on ways the Exchange can most
efficiently interact with employers, including other entities that
employers may rely upon to support this process, such as third-party
administrators.
In clause (d)(3)(iii)(E), we proposed that if the Exchange receives
any information from an employer relevant to the applicant's enrollment
in an eligible employer-sponsored plan or eligibility for qualifying
coverage in an eligible employer-sponsored plan as a result of the
sample-based review, the Exchange would determine the applicant's
eligibility based on such information and in accordance with the
effective dates specified in Sec. 155.330(f) of this subpart and, if
such information changes the applicant's eligibility determination,
notify the applicant and his or her employer or employers of such
determination in accordance with the notice requirements specified in
Sec. 155.310(g) and (h) of this part.
We also proposed that if, after a period of 90 days from the date
on which the notice specified in clause (d)(3)(iii)(A) is sent to the
applicant, the Exchange is unable to obtain the necessary information
from an employer, the Exchange will determine the applicant's
eligibility based on his or her attestation regarding that employer. We
solicited comment on this proposal to not provide an additional notice
to the applicant and his or her employer when the applicant's
eligibility does not change as a result of the sample-based review and
whether it is preferable to include an additional notice to the
applicant and employer at the end of the 90-day period.
In clause (d)(3)(iii)(G), we proposed that to carry out the
sampling process described above, the Exchange must only disclose an
individual's information to an employer to the extent necessary for the
employer to identify the employee. We solicited comments on this
proposed approach and whether there are ways these procedures can
further minimize burden on the Exchange, employers, and consumers.
We also highlighted steps we are taking to help consumers with
providing information related to access to employer-sponsored coverage
on the application. We suggested the use of a voluntary pre-enrollment
template to assist applicants in gathering the information about access
to coverage through an eligible employer-sponsored plan as required by
the Exchange to determine eligibility for advance payments of the
premium tax credit and cost-sharing reductions. We sought comments on
the use of this pre-enrollment template and ways it could be used to
assist consumers with providing the necessary information to complete
the verification described in paragraph (d) while minimizing burden on
employers.
Lastly, in paragraph (d)(4), we also proposed that the Exchange may
rely on HHS to conduct this verification. We proposed that under this
option, the Exchange would send applicant information to HHS; HHS would
take on all verification activities specified in regulation, including
data matching with the Office of Personnel Management (OPM), SHOP,
available employment data, and the sample-based review; and the
Exchange would integrate the result into its eligibility process and
send the individual and employer notices described in Sec. 155.310(g)
and (h) of this part. Further, we proposed that under such an
arrangement, the Exchange and HHS would enter into an agreement
specifying their respective responsibilities in connection with the
verifications described in paragraph (d); other activities required in
connection with the verifications described are performed by the
Exchange in accordance with the standards identified in this subpart or
by HHS in accordance with the agreement; and the Exchange provides all
relevant application information to HHS through a secure, electronic
interface, promptly and without undue delay. We solicited comments on
this proposed option.
Comment: In reference to the proposed language at Sec.
155.320(c)(3)(vi)(C), which specifies that the Exchange will request
additional information regarding projected annual household income when
an application filer's attestation is in excess of annual income data,
but below annualized current income data by a ``significant amount,''
commenters recommended that the phrase ``significant amount'' be
replaced with a percent threshold. Some commenters
[[Page 42254]]
recommended a threshold of 20 percent, specifically.
Response: To preserve the Exchange's flexibility to determine what
may constitute a significant amount, we are finalizing this provision
as proposed.
Comment: Commenters recommended replacing the standard ``not
reasonably compatible'' with the term ``significantly and materially
incompatible,'' defined further by commenters as ``making an important
change to the outcome.'' Such commenters suggested only using the
process described in Sec. 155.315(f) if an attestation is
significantly and materially incompatible with other information.
Further, commenters suggested easing verification rules for individuals
who comply with information requests, including attestations, and for
whom required data is not available.
Response: In Sec. 155.300(d) of the Exchange final rule, we
include in the definition of ``reasonably compatible'' that the
``difference or discrepancy does not impact the eligibility of the
applicant, including the amount of advance payments of the premium tax
credits or category of cost-sharing.'' This definition allows for
Exchange flexibility in verifying application information, and where
appropriate, the final rule provides for a more prescriptive reasonable
compatibility standard, in reference to specific verifications. We
believe it is an ideal approach to provide flexibility in the case of
many verifications, but for areas in which the outcome of the
eligibility determination is sensitive to small changes, provide a more
specific approach. Therefore, we finalize the reasonable compatibility
standards used in Sec. 155.320(c), with some changes described herein,
and without changing the overall definition of ``reasonable
compatibility,'' defined in Sec. 155.300(d), which is used throughout
Exchange and Medicaid regulations.
For income verification, for the first year of operations, we are
providing Exchanges with temporarily expanded discretion to accept an
attestation of projected annual household income without further
verification, as described below. Under current regulations, when data
described in paragraph (c)(1)(i) of this section is available for the
tax household but the attested annual household income is more than 10
percent below the annual income computed in accordance with clause
(c)(3)(ii)(A) of this section, the Exchange must use annualized data
from the MAGI-based income sources, specified in paragraph (c)(1)(ii),
to the extent it is available, to verify the attestation of annual
household income. If such data is not available or does not support the
attestation, clause (c)(3)(vi)(C) specifies that the Exchange must
follow the procedures specified in Sec. 155.315(f)(1) through (4),
which includes requesting documentation to verify the attestation of
project annual household income. The attestation is not supported by
the data when the attestation is more than 10 percent below the annual
income as computed using data sources. For the first year of
operations, we will exercise enforcement discretion under this
provision such that each Exchange will have the option, only when the
attestation under (c)(3)(ii)(B) is greater than ten percent below the
annual household income computed in accordance with clause
(c)(3)(ii)(A) and MAGI-based income data from the sources specified in
paragraph (c)(1)(ii) is unavailable to request a reasonable explanation
for the discrepancy from the applicant, and if such explanation is
insufficient, follow the procedures specified in Sec. 155.315(f)(1)
through (4) for a statistically significant sample of the population
that would otherwise be subject to such procedures under clause
(c)(3)(vi)(D). For those individuals who are not part of this sample,
the Exchange may accept the attestation of projected annual household
income without further verification for purposes of the Exchange's
eligibility determination. We expect that any Exchange that exercises
this option will monitor the process closely and adjust the targeting
and size of the sampled population as needed to ensure an effective
verification process. We note that we believe this exercise of
enforcement discretion concerning the Exchange's obligations to verify
income information in these specific circumstances is made in the
context of all information--including the actual household income
amounts for 2014--being available at the end of the year for the
reconciliation performed under section 36B(f) of the Code.
Comment: We received comments that asked if, following the 90-day
inconsistency period under Sec. 155.315(f), when invoked under clause
(c)(3)(vi)(C) of this section, the applicant has not responded and data
sources indicate that the applicant is eligible for Medicaid or CHIP,
the Exchange should notify the applicant and offer to enroll him or her
in Medicaid or CHIP, in states where the Exchange can make that
determination, or transmit the file to the Medicaid or CHIP agency if
the Exchange cannot make that determination.
Response: This recommendation is not specific to Sec.
155.320(c)(3). However, we note that, under Sec. 155.320(c)(3)(iii),
an attestation that reflects an increase compared to the tax data would
generally be accepted without further verification (for purposes of
eligibility for advance payments of the premium tax credit and cost-
sharing reductions); therefore, if an applicant attests to a projected
annual household income that would qualify him or her for advance
payments of the premium tax credit or cost-sharing reductions but MAGI-
based income sources indicate that income is lower than the applicant's
attestation, even if such data indicates Medicaid or CHIP eligibility,
the attestation would be accepted without further verification. We note
that this scenario assumes that the applicant has not attested to
projected annual household income that would be consistent with
eligibility for Medicaid or CHIP under the applicable MAGI standard.
Comment: One commenter expressed support for continuing to examine
ways in which employer reporting under the Affordable Care Act can be
streamlined both in timeframe and in the number of elements to prevent
inefficient or duplicative reporting.
Response: We agree with the commenter. As stated in the proposed
rule, the Administration will continue to consider ways to streamline
reporting under the Affordable Care Act.
Comment: One commenter recommended that applicants should first
attest to whether or not they have any offer of coverage. The commenter
suggested it is unnecessary to verify enrollment in or eligibility for
qualifying coverage in an eligible employer-sponsored plan for everyone
who applies for insurance affordability programs. Another commenter
recommended that the Exchange only ask for general information about
employee contributions to the employer-sponsored plan, eligibility for
the plan, and whether the plan provides minimum value rather than
specifically identifying to the employer the particular employee who
has requested premium tax credits.
Response: We appreciate the commenter's suggestion regarding ways
to expedite the application process, and are working to consider
similar suggestions received based on the public comment period for the
single, streamlined application. To this end, we have designed the
employer-sponsored coverage section of the single, streamlined
application to ask a threshold question of whether the individual has
an offer of coverage through a job, including an offer through a spouse
or parent's job and then if the answer is ``no,'' allow the
[[Page 42255]]
individual to skip the remaining employer-sponsored coverage questions
on the application. We will also collect employer contact information
as necessary to send the employer notice described in Sec. 155.310(h).
The paper application for enrollment in a QHP through the Exchange and
insurance affordability programs can be found at: https://www.cciio.cms.gov/resources/other/Files/AttachmentC_042913.pdf.
Comment: We received several comments regarding available data
sources proposed in Sec. 155.320(d)(2). Some commenters suggested that
HHS work on developing an employer-sponsored coverage data source that
would be available to states at a significantly reduced cost.
One commenter specifically recommended that data sources that
reflect information regarding employment be used as a point of
information for applicants only, and not as a basis for identifying an
inconsistency that must be resolved to maintain eligibility. The
commenter suggested that relying on employment data to support the
verification of enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan may create a barrier to coverage and unduly delay enrollment of
eligible applicants.
One commenter requested that data regarding federal employment as
specified in Sec. 155.320(d)(2)(ii) be made available through the
federal data services hub and requested that HHS release a technical
description of the service as soon as possible.
Response: As one commenter noted, HHS conducted an extensive search
of available data sources and found that no comprehensive data source
will be available by October 1, 2013. Current legislative and
operational barriers prohibit HHS from requiring employers to report
information directly to Exchanges or requiring Exchanges to obtain
employer data from the Internal Revenue Service. The proposed rule
included an interim solution to support this verification until a more
robust verification process can be developed. We remain committed to
working with any interested parties on solutions that make employer
reporting more efficient.
We agree with the comment above suggesting that employment data not
be used as the basis for generating inconsistencies or identifying
individuals for inclusion in the sample-based review, since it is not
specific to employer-sponsored coverage. Accordingly, we do not believe
that it is necessary to specify the use of employment data, and so are
removing paragraph (d)(2)(iv) and modifying paragraph (d)(3)(iii) to
remove the provision specifying that the Exchange will obtain
employment data. We clarify that notwithstanding this deletion,
Exchanges may use employment data as a tool to assist consumers in
providing accurate attestations to the Exchange regarding employer-
sponsored coverage.
Lastly, we are currently working with our federal partners at the
Office of Personnel Management to develop a service through the hub to
verify data regarding federal employment as is necessary to implement
proposed 155.320(d)(2)(ii). We expect to release a detailed technical
description of this service in the near future.
Comment: We received several comments on the pre-enrollment
template developed to assist consumers with collecting information
related to eligibility for qualifying coverage in an eligible employer-
sponsored plan. Many commenters expressed support for the voluntary
template and efforts to facilitate employers reporting such information
to Exchanges. One commenter suggested that employers pre-populate the
form and distribute it online to employees without being specifically
requested to do so by individual employees. Another commenter expressed
concern over asking employees to gather information from employers,
suggesting that it could pose problems and force employees not to seek
Exchange coverage.
A few commenters suggested ways to implement the template including
providing the template on the date of hire or in conjunction with other
information about employer-sponsored coverage provided by the employer
to employees. One commenter suggested large employers have an incentive
to report this information to employees to avoid having employees
request information from them on an individual basis. Another commenter
suggested that the template would need to allow employers to report
multiple premium contributions and/or plan actuarial values.
Response: We developed the pre-enrollment template, which is a tool
to help an individual complete the questions related to employer-
sponsored coverage on the single, streamlined application, based on
extensive input from employers and other stakeholders. While the use of
the template is voluntary, we believe it will facilitate the collection
of related employer-sponsored coverage information from employers, and
in doing so, streamline the application process, and increase the
accuracy of eligibility determinations. To this end, we also note that
employers have the option of combining the employer coverage tool with
the notice specified under section 18B of the Fair Labor Standards Act,
as added by section 1512 of the Affordable Care Act found at this link,
https://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf. As noted in the proposed
rule, we also anticipate that employers will find additional ways to
provide this information to their employees, including posting this
pre-populated tool on a company Web site, or making this information
available during benefit fairs, and we are supportive of additional
efforts by employers to disseminate this information efficiently. The
employer coverage tool can be found at: https://cciio.cms.gov/resources/other/Files/AttachmentC_042913.pdf.
Comment: Several commenters generally supported the sampling
approach proposed in Sec. 155.320(d)(3)(iii) and noted that contacting
the employer directly is the most accurate and efficient way to verify
information regarding access to qualifying employer-sponsored coverage.
One commenter specifically supported the proposed approach to rely on
the Exchange to reach out to employers for information about employer-
sponsored coverage rather than relying on individuals to get the
information from their employer.
Some commenters expressed concern over the sampling approach,
suggesting the process was burdensome for employers and Exchanges.
Commenters urged HHS to develop sampling procedures that are as
unobtrusive as possible and do not create confusion for an individual
or an individual's employer. One commenter urged the Administration to
encourage States to use uniform processes in conjunction with HHS. One
commenter recommended that final regulations specify timelines and
specific information required for employer responses under Sec.
155.320(d)(3)(iii). Another commenter also recommended that final
regulations permit employers to designate third-party administrators to
respond and act on their behalf for the sample-based review.
Some noted that contacts to employers create risks for employees
who may have a very weak position or status with employers. Some
commenters suggested that employees should be able to opt out of having
the Exchange contact their employer. One commenter suggested that any
verification process adopted by HHS should not invite retaliation
against employees in any way. Another commenter suggested that the
notice to
[[Page 42256]]
employers in Sec. 155.310(h) communicate that employers are explicitly
prohibited from retaliating against employees and provide accessible
information about how employees may pursue a complaint or seek redress,
including the time limit for filing a complaint.
Response: We believe the sampling approach proposed in Sec.
155.320(d)(3)(iii) is the best interim approach for effectively
completing this verification while minimizing burden on Exchanges and
employers. As noted in the proposed rule, we believe that employers are
in the best position to provide information regarding the employer-
sponsored coverage that they offer to their employees. We maintain the
approach of relying on Exchanges to reach out to a select number of
employers to verify applicant information with some minor
clarifications.
We also appreciate the concerns raised related to burden on
Exchanges and employers. We intend for Exchanges to contact employers
in a standardized manner and only ask for information that is necessary
for verifying access to qualifying employer-sponsored coverage. We do
not include a timing standard for employers to respond to Exchange
inquiries; however we expect that employers will respond to Exchange
inquiries in a timely manner. With that stated, as proposed and
finalized in Sec. 155.320(d)(3)(iii)(F), after a period of 90 days,
the Exchange will conclude the sample-based review.
Regarding the recommendation that final regulations permit
employers to designate third-party administrators to respond and act on
their behalf for this verification, we note that this rule finalizes
standards related to Exchanges and therefore standards regarding
activities of employers are outside the scope of this regulation.
However, we believe that this would be a feasible approach, as long as
it is consistent with any other authorities that may govern the
delegation of employer responsibilities to other entities.
We also acknowledge the comment expressing the concern that
contacting employers might create risks for employees who may have a
very weak position or status with employers. Section 18C of the Fair
Labor Standards Act, as added by section 1558 of the Affordable Care
Act, provides protections for employees that prohibit discrimination
because the employee has received advance payments of the premium tax
credit or cost-sharing reductions, and for other specified reasons.
Allowing an individual to opt out of the sampling process under
Sec. 155.320(d)(3)(iii) would prevent the Exchange from receiving
accurate information for some individuals and increase the potential
for a tax liability for the tax filer at tax filing. The opt-out
process would also compromise the randomness, and potentially the
statistical validity of the sample. Accordingly, we do not adopt this
suggestion.
Comment: We received several comments strongly supporting the
approach in Sec. 155.320(d)(3)(iii)(C), reflecting the statutory
requirement in section 1411(e)(4) of the Affordable Care Act, allowing
an individual to receive advance payments of the premium tax credits
and cost-sharing reductions during the 90-day sampling period if the
individual is otherwise qualified. One commenter supported the
recognition that applicants should be made aware that any advance
payments of the premium tax credit could be subject to reconciliation.
We also received comments in support of the provision in Sec.
155.320(d)(3)(iii)(F) allowing the Exchange to use an applicant's
attestation if no information is received from the employer. Another
commenter noted that the burden of resolving inconsistencies should
fall first on the Exchanges and only reach individuals when the
Exchanges have exhausted all available means to resolve the
inconsistency.
Response: We believe it is important for the eligibility
determination process to be consistent in how and when the Exchange
requests supporting documentation throughout the eligibility
determination process and to avoid unnecessary delay in eligibility
determinations. We agree with commenters regarding the importance of
collecting an attestation from a tax filer regarding his or her
understanding of reconciliation prior to making advance payments of the
premium tax credit, and therefore maintain this in the final rule.
Additionally, we are finalizing our proposal to rely on an applicant's
attestation if the Exchange is unable to obtain the necessary
information from an employer.
Comment: One commenter was concerned that the timeframe for
employers to provide information (within 90 days of notice regarding
the Exchange's intent to verify the applicant's enrollment in an
eligible employer-sponsored plan or eligibility for qualifying coverage
through an eligible employer-sponsored plan) is too long and
recommended shortening this period to 30 days.
Response: In proposed section Sec. 155.320(d)(3)(iii), which we
maintain in the final rule, we provide that an Exchange will proceed
with an applicant's eligibility determination during the sampling
process and ensure that advance payments of the premium tax credit and
cost-sharing reductions are provided on behalf of an applicant who is
otherwise qualified for such payments and reductions. This process is
intended to ensure that eligibility determinations are not delayed due
to the Exchange not being able to contact an employer. Under our
authority under section 1411(a) and (d) of the Affordable Care Act and
after consideration of a shorter timeframe, we came to the conclusion
that 90 days is consistent with other similar processes, such as the
inconsistency period specified in Sec. 155.315(f), and will also allow
an appropriate opportunity for receiving a response from employers.
Comment: Commenters supported the option to allow an Exchange to
fulfill the requirements of this verification by relying on HHS to
perform it. One commenter noted that this option is particularly
helpful as no acceptable data sources will be available in their state
by October 1, 2013. One commenter was pleased with this provision,
noting that it welcomed efforts to reduce administrative and cost
burdens involved with Exchange eligibility determination processes. One
commenter expressed the need for more information from HHS specifying
the steps it will take to complete this verification, and detail on the
particular information HHS anticipates it will need. One commenter
suggested a provision be included in the agreement between HHS and the
Exchange to hold applicants harmless if a glitch in communication
occurs. The commenter also suggested that consumers should not be
required to submit duplicative information. One commenter asked that
HHS consider expanding its employer-sponsored plan enrollment and
eligibility verification process to include the sending of notices to
individuals and employers described in Sec. 155.310(g) and (h), which
occurs after an eligibility determination is made.
Response: After reviewing and considering the appropriate public
comments and completing a technical analysis, we have concluded that
the service described in the proposed rule is not feasible for
implementation for the first year of operations. This service would
involve a large amount of systems development on both the state and
federal side, which cannot occur in time for October 1, 2013. As such,
in the final rule, we maintain the proposed language, with a
clarification that the option to rely on HHS to perform this
verification is effective for eligibility
[[Page 42257]]
determinations that are effective on or after January 1, 2015--meaning
that the Exchange will be able to rely on HHS to perform this function
as part of the eligibility determination system under section 1411 of
the Affordable Care Act beginning with open enrollment for the 2015
plan year.
To provide relief to state-based Exchanges that were planning to
rely on this service, we note that we are also delaying the date by
which an Exchange must implement the sample-based review. For
eligibility determinations for insurance affordability programs that
are effective before January 1, 2015, we added paragraph (d)(3)(iv) to
specify that if the Exchange does not have any of the information
specified in Sec. 155.320(d)(2)(i) through (d)(2)(iii) for an
applicant, the Exchange may accept the applicant's attestation
regarding enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan for the benefit year for which coverage is requested without
further verification, instead of following the procedure in Sec.
155.320(d)(3)(iii).
While we believe it is important for Exchanges to implement the
procedure in Sec. 155.320(d)(3)(iii) to support program integrity and
minimize financial risks on behalf of the tax filer at reconciliation,
we acknowledge that some Exchanges may not have the resources and
operational capability to conduct the sampling process in the first
year. We note that the FFE will implement the verification process as
specified in Sec. 155.320(d).
For October 1, 2013, we expect that Exchanges will use OPM data
provided by HHS and available through the hub and SHOP data available
through the SHOP that corresponds to the individual market Exchange to
identify inconsistencies with attested information, and follow the
process established in Sec. 155.315(f) to resolve any such
inconsistencies. We plan to continue working closely with Exchanges,
and may propose regulatory amendments as necessary, to implement an
increasingly effective verification process over time.
We also note that we considered whether the distribution of notices
could be part of a future service performed by HHS. The eligibility
notices cited by the commenter involve information beyond what is
involved with this verification service, including individual
eligibility results, and the commenter's proposal therefore would add
significant complexity to an already-complex service. Accordingly, we
are finalizing this provision as proposed.
Comment: We solicited comment regarding the feasibility of making
the necessary systems connections to support the verification of
enrollment in an eligible employer-sponsored plan and eligibility for
qualifying coverage in an eligible employer-sponsored plan by October
1, 2013, and whether alternative approaches should be considered for
the first year of operations. Several commenters expressed general
support of the approach to verifying access to qualifying employer-
sponsored coverage. However, one commenter expressed concern over the
complexity of the verification procedures and questioned whether
Exchanges will be able to implement these processes consistently by
October 1, 2013. A small number of commenters recommended that HHS
consider limiting verification to those situations in which it is
essential to comply with the Affordable Care Act. One commenter agreed
with the recommendation that the proposed strategy for verification
should be temporary and that it should be revisited in 2016 when more
data become available.
Response: We appreciate feedback from commenters on the proposed
approach. We acknowledge the timing concerns with implementing the
policies in the proposed rule for October 1, 2013 and will continue to
work with Exchanges to develop interim solutions within the general
construct of these regulations and related guidance. We believe that
the proposed approach is minimally burdensome, particularly based on
the approval of use of a sample-based review provided in Sec.
155.320(d)(3)(iii) instead of an inconsistency process, and another
approach would necessitate manual review for a larger number of
individuals. Accordingly, in the final rule, we maintain the provisions
proposed in Sec. 155.320(d) with continued anticipation that the
strategy will evolve as additional data and data sources become
available and as more information is gained when the sample-based
review is implemented.
Comment: One commenter recommended that HHS allow Exchanges the
flexibility to define the factors that would trigger the sample-based
review and how to conduct the necessary investigations. Another
commenter proposed that Exchanges should have flexibility to use
whatever information they have at their disposal to identify
individuals who are likely to have employer-sponsored coverage and to
conduct a minimum number of follow up reviews.
Response: We recognize that some Exchanges may have access to
additional data sources that could be useful for these purposes. We
note that proposed Sec. 155.320(d)(2)(i), which we are finalizing as
proposed, allows the use of electronic data sources that are approved
by HHS, which could include state-based or state-developed data
sources. We encourage states to work with HHS to incorporate these data
sources and other existing processes into the Exchange verification
process.
Comment: We received several comments on standards related to
notices proposed throughout Sec. 155.320. Commenters suggested that
any notices be clearly written in plain language at an appropriate
reading level for employees with limited education and LEP individuals.
One commenter recommended that notice of applicants' appeal rights be
provided to applicants if information from an employer results in a
change to their eligibility status.
Specifically regarding the notice described in Sec.
155.320(d)(3)(iii), one commenter suggested the notice clearly specify
that the employee was selected as part of a purely random sample,
rather than due to any indication of misinformation or inappropriate
action on the part of the employee. Additionally, one commenter
supported HHS developing notices and otherwise educating employers to
help employers understand their potential tax liabilities. Finally, one
commenter urged Exchange personnel, Navigators, certified application
counselors and all consumer assistance personnel to be trained on these
verification procedures.
Response: All notices described in this part are subject to the
general notices standards under Sec. 155.230, which include standards
related content provided in the notice, including notice of appeal
rights, and that the notices must conform to accessibility and
readability standards. We agree that information regarding this
verification will be important for Navigators and other entities
helping consumers apply for coverage and intend to include information
about this verification process related in training materials and other
guidance documents produced by HHS.
Comment: One commenter raised concerns over the potential for
confusion that could result from unnecessary notifications to employers
by Exchanges, for example, when employers receive the notice specified
in Sec. 155.310(h) regarding potential tax liability under Sec. 4980H
of the Code even
[[Page 42258]]
though the employer may not in fact have any tax liability.
Response: The proposed rule did not modify the requirements related
to the employer notice as described in Sec. 155.310(h) and therefore
the comment is outside of the scope of this rule.
Comment: One commenter recommended that the verification process
and information supplied should be considered confidential, and
recommended that the final rule include language clarifying this and
prohibiting the sharing of this information with anyone not directly
required to verify the information. The commenter specified that the
employer representative verifying the information at request of the
Exchange should be prohibited from sharing the Exchange's request for
the information with any person not directly responsible for providing
the information.
Response: We agree with the suggestion that information supplied
during the verification process described in Sec. 155.320(d)(3)(iii)
should be protected and not disclosed to unauthorized parties. When an
Exchange reaches out to an employer to confirm whether an applicant is
enrolled in an eligible employer-sponsored plan or eligible for
qualifying coverage in an eligible employer-sponsored plan, we do not
intend for the Exchange staff to disclose the employee's household
income or any other taxpayer information, except the employee's name or
other identifying information. The employer would need to identify the
employee to provide the Exchange with information about the plan
options available to the employee. The Exchange would rely on
information provided by the employee or employer when communicating
with the employer, so that only the appropriate employer
representatives are consulted during the sample-based review. We also
note that like all information created, collected, used, or disclosed
by the Exchange, information regarding employer-sponsored coverage is
subject to the privacy and security protections established in Sec.
155.260.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.320(c)
without modification. We are finalizing the provisions proposed in
Sec. 155.320(d), with a few modifications. In paragraph (d)(2)(iii),
we clarify that the Exchange must obtain any available data from the
SHOP that corresponds to the state in which the Exchange is operating.
In paragraph (d)(3)(iii), we modify language to specify that the
Exchange must select a statistically significant random sample of
applicants for whom the Exchange does not have any of the information
specified in paragraphs (d)(2)(i) through (d)(2)(iii). Based on
comments suggesting that employment data only be used to prompt
applicants to encourage accurate attestations, we removed paragraph
(d)(2)(iv). Additionally, we clarified paragraph (d)(4) to specify that
the ability for the Exchange to satisfy the provisions of paragraph (d)
by relying on HHS is effective for eligibility determinations for
advance payments of the premium tax credit and cost-sharing reductions
that are effective on or after January 1, 2015, and to clarify that the
division of responsibilities under this option is subject to guidance
issued by the Secretary. To accommodate this change, we added paragraph
(d)(3)(iv) to clarify that for eligibility determinations for advance
payments of the premium tax credit and cost-sharing reductions that are
effective before January 1, 2015, if the Exchange does not have any of
the information specified in paragraphs (d)(2)(i) through (d)(2)(iii)
for an applicant, the Exchange may accept an applicant's attestation
regarding enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan for the benefit year for which coverage is requested, without
further verification under paragraph (d)(3)(iii) of this section.
Additionally, we deleted paragraph (d)(4)(iv) to remove the agreement
associated with having HHS conduct this verification. Finally, we
removed paragraph (e) and redesignated paragraph (f) as paragraph (e).
As a result of the consolidation of former paragraphs (d) and (e) in
paragraph (d) of this final rule, we also make a technical correction
to Sec. 155.615(f)(2)(i) to modify the cross-reference in that
provision to reference Sec. 155.320(d).
12. Eligibility Redetermination During a Benefit Year (Sec. 155.330)
In Sec. 155.330, we proposed to amend paragraph (d)(1) to clarify
that the Exchange would only conduct periodic examination of data
sources to identify eligibility determinations for Medicare, Medicaid,
CHIP, or the BHP, for enrollees on whose behalf advance payments of the
premium tax credit or cost-sharing reductions are being provided. We
also proposed revising paragraph (e) to specify how the Exchange would
proceed when data matching indicates that an individual is deceased,
such that the Exchange would modify eligibility status to account for
the data after 30 days without a response to the notice sent. In
situations where the Exchange identifies updated information regarding
income, family size, or family composition, except information
regarding death, we clarified that the enrollee-reported information
would be subject to verification.
We also solicited comments about adding a provision to specify that
Exchanges would include language in the eligibility determination
notice after a redetermination resulting in a change in an enrollee's
level of cost-sharing reductions to also describe the specific changes
to an enrollee's deductible, co-pays, coinsurance, and other forms of
cost-sharing reductions if they remained enrolled in the same QHP.
We proposed to amend paragraph (f) to incorporate changes as a
result of eligibility appeals decisions, as well as changes that affect
only enrollment or premiums, but do not affect eligibility. The
proposed changes to paragraph (f) were designed to align eligibility
effective dates and enrollment effective dates with one another, and to
accommodate the limited situations in which retroactive eligibility may
be necessary.
In paragraph (f)(1), we proposed that changes resulting from a
redetermination, from an appeal decision, or affecting enrollment or
premiums only, be implemented on the first day of the month following
notice of the change. In paragraph (f)(2), we proposed that the
Exchange may determine a reasonable point in a month, no earlier than
the 15th, after which a change will not be effective until the first
day of the month after the month specified in paragraph (f)(1).
In paragraph (f)(3), we proposed that the Exchange must implement
changes resulting in a decreased amount of advance payments of the
premium tax credit or cost-sharing reductions that occur after the 15th
of the month, on the first day of the month after the month specified
in paragraph (f)(1). In paragraph (f)(4), we proposed that the Exchange
must implement changes that result in an increased level of cost-
sharing reductions that occur after the 15th of the month, on the first
day of the month after the month specified in paragraph (f)(1). Changes
that result in an increased amount of advance payments of the premium
tax credit would be implemented under paragraphs (f)(1) and (f)(2).
In paragraph (f)(5), we proposed that the Exchange implement a
change associated with birth, adoption, placement for adoption,
marriage, or loss of minimum essential coverage, on the coverage
effective dates described in Sec. 155.420(b)(2)(i) and (ii). In
paragraph
[[Page 42259]]
(f)(6), we proposed that the Exchange may implement a change associated
with the events described in Sec. 155.420(d)(4), (d)(5), and (d)(9) on
an effective date that is based on the specific circumstances of each
situation. In redesignated paragraph (f)(7), we proposed to maintain
the existing language of what was originally paragraph (f)(3).
Comment: Commenters expressed general support for HHS' proposal
regarding when the Exchange determines through periodic data matching
that an individual is deceased. One commenter sought clarification
about whether the Exchange could terminate coverage retroactively to
the date of death to align with non-group market standards.
Response: In response to comments, we clarify in finalizing Sec.
155.430(d) that the Exchange will terminate coverage retroactively to
the date of death. This revision is discussed in more detail in the
response to comments regarding that provision below.
Comment: Multiple commenters expressed strong support for including
a provision in the final rule such that Exchange would include language
regarding a change in an enrollee's level of cost-sharing reductions as
a result of a redetermination in the eligibility determination notice
sent to the enrollee. Several commenters requested that the notice also
include information about the enrollee's eligibility for a special
enrollment period as well as the deadline to make a decision to select
a new plan if they so desired. Commenters also recommended that the
notice include the potentially negative financial impact of changing
QHPs. One commenter requested additional guidance regarding the
implementation of cost-sharing reductions generally, and another stated
that it could not comply with such a proposed change in Exchange design
at this stage.
Response: We clarify that Sec. 155.230(a)(1) specifies that the
Exchange will provide language in the eligibility determination notice
to the enrollee explaining the action reflected in the notice, which in
this case includes the fact that an enrollee has been determined
eligible for a new cost-sharing reduction level, his or her eligibility
for a special enrollment period, the requisite deadlines, and the
possible ramifications if an enrollee decides to change QHPs (for
example, deductible resetting, whereby an individual who had accrued
expenses towards the deductible cap for his or her previous QHP would
have to start again from $0 in making cost-sharing payments towards the
deductible and out-of-pocket limit). Since regulations do not specify
that the Exchange will provide detailed, plan-specific information on
cost-sharing reductions after initial plan selection, we will not
require that it be provided by the Exchange when a change occurs.
Rather, we expect that QHPs will make this information available. We
will also not specify that the Exchange will describe the specific
changes that could occur in different plans, which could require as
many variations as there are plans. Exchanges maintain the flexibility
to provide more detail. HHS provided general guidance regarding the
implementation of cost-sharing reductions in subpart E of the final
Payment Notice at 78 FR 15410, 15474 et. seq.
Comment: Commenters generally supported the effective dates we
proposed in Sec. 155.330(f). Several commenters urged HHS to
prioritize continuity of coverage in defining effective dates. Other
commenters cautioned against requiring eligibility effective dates that
would necessitate the return or repayment of claims, premiums, advance
payments of the premium tax credit, or cost-sharing reduction payments.
Response: We appreciate the importance of continuity of coverage,
as well as the importance of clarity for consumers. As such, we are
finalizing the provisions proposed in Sec. 155.330(f), with two
modifications for clarity. First, we consolidate the provisions
formerly proposed in Sec. 155.330(f)(3) and Sec. 155.330(f)(4) into a
single provision covering decreases in advance payments of the premium
tax credit and changes in cost-sharing reductions. Second, we remove
the requirement formerly proposed in Sec. 155.330(f)(7), because the
termination of coverage requirement in Sec. 155.430(d)(3) renders
Sec. 155.330(f)(7) duplicative.
Comment: Commenters requested that HHS require transparency and
plain language in communicating effective dates to consumers, given the
complexity of changing benefits, programs, and coverage.
Response: We agree that transparency and plain language are of the
upmost importance, and urge states and QHP issuers to share successful
communication strategies among one another. We note that Sec.
155.230(b) specifies that all notices will be in plain language. HHS
will also share model notice language for Exchanges to adapt to their
specific needs.
Comment: Some commenters questioned why advance payments of the
premium tax credit and cost-sharing reductions could not always be
implemented as of the first of the following month.
Response: The 15th-of-the-month cutoff specified in Sec.
155.330(f)(3) concerning changes that result in a decreased amount of
advance payments of the premium tax credit and changes in levels of
eligibility for cost-sharing reductions aims to prevent consumers from
incurring financial liabilities that may result from such changes in
eligibility, which could also be very problematic for QHP issuers to
implement. However, as noted above, Exchanges have flexibility to set a
reasonable cut-off date for implementing changes that result in an
increased level of advance payments of the premium tax credit, such
that they could always be implemented on the first day of the following
month, Accordingly, we are finalizing this provision as proposed.
Comment: Some commenters sought reassurance that Exchanges would
remain the system of record--the final authority on applicants' and
enrollees' eligibility for enrollment through the Exchange and receipt
of advance payments of the premium tax credit and cost-sharing
reductions--and that all changes would be communicated to QHP issuers.
Some commenters also requested flexibility for issuers to communicate
changes to enrollees, consistent with current practices.
Response: Exchanges are intended to be the final authority on
applicants' and enrollees' eligibility for enrollment in a QHP through
the Exchange, advance payments of the premium tax credit, and cost-
sharing reductions (subject to applicable appeals). As specified in
Sec. 155.310(g) and Sec. 155.400(b)(1), Exchanges will communicate
information about all eligibility and enrollment changes to both
enrollees and their health insurance issuers in a timely fashion. We
also encourage QHP issuers to communicate transparently with enrollees
regarding changes to their coverage, including how changes in an
enrollee's eligibility for cost-sharing reductions may affect the
enrollee's out-of-pocked costs related to coverage, provided that such
communications are not confusing for consumers.
Comment: Commenters supported our proposal in paragraph (f)(4) of
this section to align enrollment effective dates with eligibility
effective dates, but sought clarification on eligibility effective
dates for individuals who opt not to select a new plan upon
experiencing one of the special enrollment period triggering events
described in Sec. 155.420(b)(2).
Response: We clarify that the eligibility effective dates in
[[Page 42260]]
Sec. 155.330(f)(4) apply only in situations in which an individual
uses the special enrollment period to select a plan upon experiencing
one of the triggering events described in Sec. 155.420(b)(2).
Eligibility for individuals who experience a change related to
marriage, birth, adoption, placement in foster care, or loss of minimum
essential coverage, and who opt to maintain their existing QHP, follows
the effective dates otherwise specified within Sec. 155.330(f).
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.330, with
some modifications. First, we clarified that the effective dates in
paragraph (f)(1)(ii) are based on the date specified in the appeal
decision, and removed cross-references to appeals provisions in
paragraph (f)(1)(ii), as we are not finalizing provisions related to
eligibility appeals at this time. However, we maintain the substance of
the provision, and intend to replace the cross-references when we
finalize subpart F. Second, we consolidated the provisions formerly
proposed in Sec. 155.330(f)(3) and Sec. 155.330(f)(4) into a single
requirement in paragraph (f)(3) for decreases in advance payments of
the premium tax credit and changes in cost-sharing reductions. Third,
we modified newly designated (f)(4) to clarify that the Exchange will
implement a change associated with the events described in Sec.
155.420(b)(2)(i) and (ii) of this part on the effective dates described
in Sec. 155.420(b)(2)(i) and (ii) of this part respectively, instead
of on the first day of the following month. Fourth, we removed the
requirement formerly proposed in Sec. 155.330(f)(7), because the
termination of coverage requirement in Sec. 155.430(d)(3) renders
Sec. 155.330(f)(7) duplicative.
13. Annual Eligibility Redetermination (Sec. 155.335)
In Sec. 155.335, we proposed to amend paragraphs (a), (b), (c),
(e), (f), (g), (h), (k), and (l) of this section to specify that
subject to the limitations specified in paragraph (l) and new paragraph
(m), the Exchange will conduct an annual eligibility redetermination
for all qualified individuals, not only those who are enrolled in a
QHP. Our proposal was to replace the word ``enrollee'' with the term
``qualified individual'' in these paragraphs.
We proposed to amend paragraph (b) to include data regarding Social
Security benefits as defined under 26 CFR 1.36B-1(e)(2)(ii). This
reflects the revision we proposed to make in Sec. 155.320(c)(1)(i)(A).
We proposed to make technical corrections to paragraph (l) to
specify that, if the Exchange does not have authorization to use a
qualified individual's tax information, the Exchange will redetermine
the qualified individual's eligibility only for enrollment in a QHP
through the Exchange.
We proposed to add new paragraph (m), which would provide that, if
a qualified individual does not select a QHP before the redetermination
described in this section, and is not enrolled in a QHP through the
Exchange at any time during the benefit year for which such
redetermination is made, the Exchange must not automatically conduct a
subsequent redetermination of his or her eligibility for a future
benefit year.
Comment: Commenters supported HHS' proposal to allow all qualified
individuals to be redetermined for eligibility for enrollment in a QHP
through the Exchange, regardless of whether they have enrolled in a QHP
through the Exchange during the coverage year. Several commenters
recommended omitting Sec. 155.335(m), the special rule, to allow
states to continue redeterminations for non-enrolled qualified
individuals, for at least 3 more years.
Response: We continue to believe that one redetermination for a
qualified individual who does not select a QHP represents an
appropriate balance between providing consumers with a streamlined
ability to obtain coverage and the burden on the Exchange associated
with redeterminations and on consumers who are not interested in
enrolling. We intend to monitor take-up rates within the FFE and
encourage state-based Exchanges to do the same, as this data will
inform whether changes to this policy might be appropriate in the
future. Accordingly, we are finalizing this provision as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.335 of the
proposed rule without modification, except we reserve paragraphs (c)(1)
and (c)(2) as we continue to evaluate the appropriate information that
will be included in the annual redetermination notice, and modify
paragraph (c)(3) such that the previous reference to paragraph (c)(1),
which is now reserved, instead refers to paragraph (b), which
accurately refers to the updated information being retrieved by the
Exchange.
14. Administration of Advance Payments of the Premium Tax Credit and
Cost-Sharing Reductions (Sec. 155.340)
In Sec. 155.340, we proposed technical corrections in paragraphs
(b) and (c) to replace the reference to section 36B of the Code to the
applicable Treasury regulation. We did not receive specific comments on
this section, and are thus finalizing the provision as proposed.
Summary of Regulatory Changes
We are finalizing the technical corrections proposed in Sec.
155.340 of the proposed rule to specify the appropriate definition of
minimum value.
15. Coordination With Medicaid, CHIP, the Basic Health Program, and the
Pre-existing Condition Insurance Plan (Sec. 155.345)
In Sec. 155.345, we proposed to make a technical correction to
paragraph (a) to clarify that the agreements that the Exchange enters
into with the agencies administering Medicaid, CHIP, and the BHP, if
applicable, must include a clear delineation of the responsibilities of
each ``agency'' as opposed to each ``program.'' We proposed to amend
paragraph (a)(2) to specify that the agreement the Exchange enters into
with other agencies administering insurance affordability programs
addresses the responsibilities of each agency to ensure prompt
determinations of eligibility and enrollment in the appropriate program
without undue delay, based on the date the application is submitted to,
or redetermination is initiated by, the Exchange or another agency
administering an insurance affordability program. We proposed to change
the ordering of agencies listed for purposes of clarity. We also
proposed to redesignate paragraph (a)(3) as paragraph (a)(4), and add a
new paragraph (a)(3) to ensure that, as of January 1, 2015, the
agreement delineates responsibilities for the provision of a combined
eligibility notice, as defined in Sec. 435.4, to individuals and
members of the same household, to the extent feasible, for enrollment
in a QHP through the Exchange and for all insurance affordability
programs. Section 155.345(a)(3)(i) proposed that prior to January 1,
2015, the notice include coordinated content, as defined in Sec.
435.4, while Sec. 155.345(a)(3)(ii) and (g)(7) addressed the
implementation of a combined eligibility notice requirement as of
January 1, 2015.
We proposed a phased-in approach for the provision of a combined
eligibility notice in cases where the Exchange is performing
assessments of
[[Page 42261]]
eligibility for Medicaid and CHIP based on MAGI.
We noted that, based on the operational readiness of the Exchange
and other agencies administering insurance affordability programs,
combined eligibility notices may be implemented earlier that January 1,
2015, but that in states where the FFE is conducting assessments rather
than final determinations of eligibility, the FFE will only be able to
provide an eligibility notice that includes coordinated content prior
to January 1, 2015 (and not combined eligibility notices) for
eligibility determinations made by the FFE.
We proposed to make a technical correction in paragraph (f) to cite
to the applicable Treasury regulation instead of Section 36B of the
Code.
We proposed a series of technical corrections throughout paragraphs
(f) and (g) to clarify various provisions and to redesignate paragraphs
as necessary to accommodate the changes described in the proposed rule.
We proposed to add paragraph (g)(7) to require combined eligibility
notices effective January 1, 2015.
Comment: We received comments recommending that notices be
consolidated and coordinated for all family members applying together
even when individuals are eligible for different programs, at the very
least for the initial eligibility determination notice. Commenters
suggested that all notices need to clearly state by name all
individuals to whom the notice applies, especially when notices are
regarding termination. Some commenters indicated that the notice with
coordinated content should clearly inform an individual what he or she
is or may be eligible for, and should never begin with the
ineligibility information. Commenters suggested that all agreements
between the Exchange and the agencies administering Medicaid and CHIP
be approved by HHS and be made publicly available, including on a
public Web site. Some commenters stated that the public should be given
an opportunity to provide input on the agreements and any changes that
are made to the agreements.
Response: We are finalizing this section as proposed, with minor
modifications to reserve two provisions for finalization at a future
date. We anticipate that initial eligibility determination notices will
be consolidated for family members who apply together. Additionally, we
expect that information about the program for which an individual is
eligible, if any, will be displayed in notices before information about
programs for which the individual is not eligible. We are reserving
paragraphs (a)(3) and (g)(7), regarding coordinated content and
combined notices, respectively, which we intend to finalize at a later
date with the parallel Medicaid provisions. The Federally-facilitated
Exchange will provide coordinated content in notices for October 1,
2013. We will take these recommendations into consideration as we
develop model eligibility determination notices. We are not specifying
that agreements between Medicaid and CHIP agencies and Exchanges be
approved by HHS, as we think that the standards included in regulation
represent an appropriate level of federal oversight at this time.
However, we will work with Exchanges to monitor operations over time,
and reevaluate this decision as needed.
Comment: Many commenters expressed support for combined eligibility
notices. Some commenters expressed general support of the phased in
approach for combined eligibility notices, but strongly recommended
minimizing the delay in the implementation of combined notices so that
it only affects the initial annual open enrollment period. Commenters
suggested that the requirement for a combined eligibility notice should
be effective for redetermination notices and eligibility notices for
the open enrollment period beginning on October 15, 2014. Some
commenters were supportive of the January 1, 2015 implementation date
of combined eligibility notices, while others recommended a January 1,
2016 implementation date. One commenter recommended that the effective
date be set as January 1, 2014, and that HHS allow those states that
cannot update their technology in time for January 2014 to seek
approval from HHS for delaying implementation, rather than a nationwide
delay in implementation. Many commenters asked HHS to reiterate that
the phased-in approach does not diminish the principles of the
Affordable Care Act to promote coordination between the Exchange,
Medicaid, and CHIP, beginning in October 2013.
Response: We appreciate commenters' suggestions. We intend to
finalize this provision at a future date with the parallel Medicaid
provision, and so have reserved paragraph (g)(7) for the purposes of
this rule. The Federally-facilitated Exchange will provide coordinated
content in notices for October 1, 2013.
Comment: Several commenters noted that state flexibility is
important in determining when to issue combined or separate,
coordinated eligibility notices. One commenter opposed the requirement
for agencies administering insurance affordability programs to provide
coordinated content in notices before January 1, 2014, and specifically
recommended that at initial annual open enrollment each agency should
be responsible for issuing its own eligibility determination notice
based on the eligibility determination completed for the program or
programs that agency administers, without regard for the other
insurance affordability programs. Many other commenters, however,
expressed support for a coordinated eligibility notice prior to the
implementation of a combined eligibility notice. Another commenter
believed that the state is best suited to determine which agency should
provide the notice of eligibility determination, and opposed to the
requirement under Sec. 155.345(a)(3)(ii) that the combined eligibility
notice be provided by the agency that makes the last determination of
eligibility. One commenter noted that HHS should consider additional
situations where a combined eligibility notice is feasible, but not
beneficial to the applicant(s). Another commenter suggested that HHS
consider additional flexibility for notices to be sent immediately for
consumers who receive a final eligibility determination, and include an
explanation in the notice about the status of any other determinations
that are in progress for other applicants in the household.
Many commenters stated that HHS should ensure that the combined
eligibility notice includes complete information about Medicaid appeal
rights. Other commenters stated that the combined eligibility notice
should include a statement that the individual might be eligible for
additional benefits and more affordable coverage through Medicaid, and
specify how the individual can be screened for Medicaid eligibility.
Response: In the proposed rule, HHS noted two situations in which
the combined eligibility notice would not be advantageous for
consumers, and HHS sought comment on additional situations in which the
combined eligibility notice would not be advantageous. As one commenter
suggested, HHS explained one situation in which a combined eligibility
notice is not appropriate is where multiple family members apply
together, and some members receive a final eligibility determination
while other members need to be transferred to a different agency for a
final determination to be made for other insurance affordability
programs. We will work closely with states to determine when the
issuance of
[[Page 42262]]
a combined eligibility notice is not appropriate, including situations
in which it is not advantageous for the last agency that makes a
determination of eligibility based on MAGI to issue a combined
eligibility notice. Furthermore, we clarify that while the Exchange
will make determinations or assessments of MAGI-based eligibility for
Medicaid and CHIP in accordance with Sec. 155.305(c) and (d), and
Sec. 155.302(b), the Exchange is not required to complete the Medicaid
and CHIP enrollment process for eligible individuals.
We expect that combined eligibility notices will include a
description of appeal rights in accordance with Sec. 155.230(a)(5),
including Medicaid appeal rights, as well as information about how an
individual can request a full eligibility determination from the state
Medicaid or CHIP agency. And, as noted above, we intend to finalize
paragraphs (a)(3) and (g)(7) at a future date alongside parallel
Medicaid provisions, and we are reserving these paragraphs for the
purposes of this final rule.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.345 of the
proposed rule with a few minor modifications. We reserve Sec. Sec.
155.345(a)(3) and (g)(7) for finalization at a later date. Pursuant to
the discussion in the preamble associated with 42 CFR 431.10(c) and
(d), we add new paragraph (h) to clarify that the Exchange and the
Exchange appeals entity must adhere to the eligibility determination or
appeals decision for Medicaid or CHIP made by the State Medicaid or
CHIP agency, or the appeals entity for such agency, which is consistent
regardless of whether the Exchange is making eligibility determinations
or assessments for Medicaid and CHIP. Accordingly, we redesignate
previous paragraphs (h) and (i) as paragraphs (i) and (j).
16. Special Eligibility Standards and Process for Indians (Sec.
155.350)
In Sec. 155.350, we proposed to make a technical correction in
paragraph (a)(1) to replace the reference to section 36B of the Code
with a reference to the applicable Treasury regulation. We did not
receive specific comments on this section, and are thus finalizing the
provision as proposed.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.350 of the
proposed rule without modification.
17. Enrollment of Qualified Individuals Into QHP's (Sec. 155.400)
In Sec. 155.400, we proposed to add paragraph (b)(3) to clarify
the requirement that the Exchange send updated eligibility and
enrollment information for all enrollment-related transactions to HHS
promptly and without undue delay. This added further specificity to the
existing requirement that the Exchange send eligibility and enrollment
information to HHS under paragraph (b)(1) of this section. After
considering several comments in response to this proposal, we are
finalizing the provision as proposed.
Comment: Commenters were supportive of the proposal that the
Exchange would send updated information for all enrollment-related
transactions to HHS promptly and without undue delay. One commenter
sought clarification about cancellations, and wanted to ensure that QHP
issuers did not violate the Affordable Care Act's ban on discrimination
in coverage of benefits related to preexisting conditions. Another
commenter inquired about whether the specific issuer reporting
requirements associated with this provision may vary according to the
different Exchange models.
Response: We note that the cancellations by QHP issuers referred to
in the preamble to this provision in the proposed rule could occur for
various reasons, such as when an individual voluntarily cancels his or
her health insurance selection before the coverage effective date. In
terms of issuer reporting requirements, each Exchange maintains
flexibility to determine its own issuer reporting requirements relative
to enrollment transactions, consistent with the law and applicable
regulations. This provision specifically addresses only the requirement
that the Exchanges report updated eligibility and enrollment
information to HHS.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.400 of the
proposed rule without modification.
18. Special Enrollment Periods (Sec. 155.420)
In Sec. 155.420, we proposed to clarify the scope of the special
enrollment periods throughout this section and add paragraph (a)(2)
clarifying that our usage of ``dependent'' refers to any individual who
is or who may become eligible for coverage under the terms of a QHP
because of a relationship to a qualified individual enrollee.
We proposed to amend paragraph (b) to specify that the effective
dates described therein apply both to qualified individuals first
enrolling in a QHP through the Exchange through a special enrollment
period, as well as to current enrollees. As the effective dates
regarding advance payments of the premium tax credit and cost-sharing
reductions are now addressed in Sec. 155.330(f), we proposed removing
such language in paragraph (b)(2)(i). We also solicited comments as to
whether we should expand the special effective dates in paragraph
(b)(2)(i) concerning birth, adoption, or placement of adoption to cover
children placed in foster care as well, which would also necessitate a
corresponding change to the triggering events described within
paragraph (d)(2) that specifically address that special enrollment
period.
We proposed to add paragraph (b)(2)(iii) regarding the effective
dates for a special enrollment period under paragraphs (d)(4), (d)(5),
and (d)(9) to align with a similar provision proposed in Sec.
155.330(f). This would ensure that the Exchange could tailor an
effective date based on the circumstances surrounding an error by the
Exchange, a contract violation by the QHP issuer, or other
``exceptional circumstances''.
To align the effective dates under this section with the effective
dates for eligibility as proposed in Sec. 155.330(f), we proposed to
add paragraph (b)(4) to ensure that the Exchange adhere the modified
effective dates related to advance payments of the premium tax credit
and cost-sharing reductions proposed in Sec. 155.330(f). As such, we
proposed to remove language in paragraphs (b)(2) and (b)(3) that
previously addressed this issue.
We also proposed to amend paragraph (d) to specify which triggering
events will allow a qualified individual or enrollee, or his or her
dependent to qualify for a special enrollment period. This was designed
to permit all members of a household, in certain situations, to enroll
in or change QHP's together in response to an event experienced by one
member of the household, and we proposed technical corrections
throughout paragraph (d) to ensure that the revised language allows for
the dependent to qualify for a special enrollment period as well,
subject to whether the QHP covers the dependent. While we did not
modify the scope of each triggering event described within paragraph
(d), we solicited comments regarding whether we should permit such
movement of related individuals for other special enrollment periods.
We proposed to add language specifying that the triggering event in
the case of a QHP decertification is the date of the notice of
decertification,
[[Page 42263]]
whereas the triggering event in all other cases associated with a
qualified individual or his or her dependent losing minimum essential
coverage is the date the individual or dependent loses eligibility for
minimum essential coverage.
We also proposed to amend paragraphs (d)(6)(i) and (ii) to specify
that the Exchange will provide a special enrollment period for an
enrollee or his or her dependent enrolled in the same QHP who is
determined newly eligible or newly ineligible for advance payments of
the premium tax credit or who experiences a change in eligibility for
cost-sharing reductions. We also modified the language within paragraph
(d)(6)(iii) to allow a qualified individual or his or her dependent who
is enrolled in qualifying coverage in an eligible employer-sponsored
plan and who are determined newly eligible for advance payments of the
premium tax credit to qualify for this special enrollment period prior
to when he or she will cease to be eligible for qualifying coverage in
an eligible employer-sponsored plan, provided that eligibility for
advance payments of the premium tax credit and cost-sharing reductions
are not available for an individual who is enrolled in an eligible
employer-sponsored plan. Allowing these qualified individuals or
dependents to be determined eligible for this special enrollment period
up to 60 days prior to the end of his or her employer-sponsored
coverage protects them from potential gaps in coverage.
Finally, we proposed to add a new paragraph (d)(10) to provide a
special enrollment period for a qualified individual or his or her
dependent that is enrolled in an eligible employer-sponsored plan that
does not provide qualifying coverage, and is allowed to terminate his
or her existing coverage. The Exchange would allow such an individual
to access this special enrollment period up to 60 days prior to the end
of his or her coverage in an eligible employer-sponsored plan, to
protect them from potential gaps in coverage.
Comment: Several commenters supported our clarification in
paragraph (a) aligning the definition of ``dependent'' to refer to
those family members that would be eligible to enroll in coverage under
a QHP, and commended HHS for allowing dependents to change QHPs or
enroll in a new QHP together with their family members for certain
special enrollment periods when eligible. Some commenters wanted to
ensure that family members would be adequately informed about the
benefits of enrolling in plans together as well as the potential
drawbacks of failing to do so. However, several comments also raised
concerns that this proposed definition was too plan-specific and would
ultimately lead to greater confusion among families in terms of
eligibility for special enrollment periods. Other commenters sought
flexibility for the definition of ``dependent'' to correspond with
state law, as opposed to a potentially narrower definition set by a QHP
issuer.
Response: We believe that clarifying that the meaning of
``dependent'' aligns with 26 CFR 54.9801-2, the regulation implementing
section 9801(f) of the Code, throughout this section, including for the
special enrollment periods not specified in section 9801(f) of the
Code, helps to promote efficient operations and uniform standards to
guide QHP issuers and Exchanges. Furthermore, this will ensure that
state laws regarding the definition of ``dependent'' will be maintained
within the Exchange, as this does not contradict state laws, but rather
corresponds with state laws that already require issuers cover certain
dependents. We intend to provide the appropriate information through
the eligibility determination notice to an individual and their family
members to adequately inform them of all of their options when
determined eligible for a special enrollment period.
Comment: Some commenters supported our proposal to expand certain
special enrollment periods to dependents to allow family members to
enroll in a new QHP together in response to an event experience by one
member of the tax household, while others sought clarification or an
expansion of this approach to other triggering events. Commenters
requested clarification as to whether the proposed rules sought to
limit the applicability of special enrollment periods to dependents
enrolled in the same QHP with an enrollee, or to members of the tax
household who may be receiving a portion of the advance payments of the
premium tax credit, as well as if paragraph (d)(2) limited the special
enrollment period to only the qualified individual and the ``new''
dependent. Other commenters recommended that the special enrollment
period in paragraph (d)(3) related to citizenship or immigration status
should apply both to the individual who is newly qualified along with
eligible dependents.
Response: As noted above regarding the definition of ``dependent'',
family members eligible to enroll in a QHP are determined eligible for
a special enrollment period when specified in paragraph (d) of this
section. This is not limited to only those members of a tax household
on whose behalf advance payments of the premium tax credit are provided
or who are enrolled in the same QHP. When a family member who
experiences any of the triggering events in paragraph (d) of this
section, that includes dependents in addition to qualified individuals
or enrollees, selects a QHP as part of a special enrollment period, the
Exchange will permit all members of the tax household to enroll
together assuming they are all eligible to enroll in the particular
QHP. If a specific family member experiences a triggering event, but
fails to select a QHP within the relevant special enrollment period,
his or her dependent does not have the ability to choose a different
QHP during this period separately. Furthermore, in response to
comments, we clarify that the special enrollment period in paragraph
(d)(3) of this section, related to citizenship or immigration status,
will apply to both the individual who is newly qualified as well as his
or her dependents, if eligible for coverage under a QHP. We note that
the special enrollment period described in paragraph (d)(3) only
applies to an individual who was not previously a citizen, national, or
lawfully present, as opposed to an individual switching between one of
these statuses.
Comment: In response to HHS' solicitation for comments regarding
modifying the special effective dates in paragraph (b)(2), which
correspond directly to the triggering events described within paragraph
(d)(2), many commenters urged HHS to include the placement of a foster
child as a triggering event within the special enrollment period.
Several commenters also raised concerns about our proposed
modifications to the triggering event for the special enrollment period
described in paragraph (d)(6), related to being newly eligible or
ineligible for advance payments of the premium tax credit, or a change
in eligibility for cost-sharing reductions. Some commenters opposed our
proposal that only enrollees would be eligible for this special
enrollment period if newly eligible or ineligible for advance payments
of the premium tax credit instead of qualified individuals at any point
during the coverage year, and recommended that we not finalize this
proposal in favor of retaining the language adopted in the Exchange
final rule.
Response: We appreciate the comments regarding placement in foster
care as it related to special effective dates, and will add language in
paragraph (b)(2) to include the placement of a foster child as one of
the triggering events listed therein, as well as make the corresponding
change
[[Page 42264]]
regarding the special enrollment period in paragraph (d)(2). We note,
however, that due to the availability of Medicaid to foster children,
it is unclear how frequently this special enrollment period will be
used. Due to ongoing considerations regarding the risk pool, we are
finalizing our proposed modifications to paragraph (d)(6) to specify
that this special enrollment period only applies to those individuals
who are already enrolled in a QHP through the Exchange.
Comment: Multiple commenters expressed general support for the
modifications we proposed to special enrollment periods throughout
paragraph (d), including our proposal to allow a prospective special
enrollment period for qualified individuals enrolled in eligible
employer-sponsored coverage to prevent gaps in coverage. In regards to
the proposed revision to paragraph (d)(6)(iii) related to employer-
sponsored coverage, some commenters suggested that the triggering event
should not be limited to when an individual is enrolled in employer-
sponsored coverage, but should also cover non-enrolled individuals
whose offer of employer-sponsored coverage does not meet the
affordability or minimum value standards. Other commenters wanted HHS
to allow a qualified individual to be determined eligible for advance
payments of the premium tax credit within the window of their special
enrollment period, but prior to when their employer-sponsored coverage
ended.
Response: We believe that individuals with an affordable offer of
employer-sponsored coverage that meets minimum value should be
encouraged to enroll in a plan with their employer. If after enrolling,
their lowest-cost self-only plan option changes during the coverage
year such that it no longer meets the affordability and minimum value
standards, and an individual reports this to the Exchange, the Exchange
will accordingly determine them eligible for a special enrollment
period under paragraph (d)(6). As such, this provision creates
incentives for individuals to enroll in affordable employer-sponsored
coverage, while also minimizing potential gaps in coverage if a change
in coverage occurs during the year such that an applicant would be
newly eligible for advance payments of the premium tax credit if their
employer terminates coverage or changes their plan options. In
addition, we are consolidating proposed paragraph (d)(10), which
provided a special enrollment period to an individual who was enrolled
in non-qualifying coverage in an eligible employer-sponsored plan, into
paragraph (d)(6) and modifying it to clarify that consistent with the
eligibility standards for advance payments of the premium tax credit,
the special enrollment period is available for an individual who is
enrolled in any eligible employer-sponsored plan, and is not eligible
for qualifying coverage in an eligible employer-sponsored plan. For
example, this modification ensures that an individual who is enrolled
in family coverage but for whom the lowest-cost self-only plan is
unaffordable in accordance with the Code can access this special
enrollment period, as intended in the proposed regulation. We will
maintain the prospective ability for an enrollee to select a QHP up to
60 days before their eligible employer-sponsored coverage ends or their
employer allows him or her to drop coverage if the lowest-cost self-
only plan offer is non-qualifying. We note that the Exchange cannot
provide an individual with advance payments of the premium tax credit
while he or she is enrolled in eligible employer-sponsored coverage, as
specified in 26 CFR 1.36B-2(a)(2).
Comment: A few commenters raised concerns regarding the notice that
individuals would receive if determined eligible for a special
enrollment period, and wanted to ensure that the notice would prevent
confusion by providing clear guidance to individuals by helping them
understand the premiums they would be responsible for, and to help them
enroll in a QHP in a timely fashion.
Response: The Exchange will not have information regarding actual
premiums at the time of an initial eligibility determination notice,
since an individual will not have selected a plan at that point. HHS
also developed model notices, released alongside this final rule, that
reflect how an Exchange should clearly communicate an individual's
eligibility for an SEP and the instructions for how he or she can
enroll in a QHP.
Comment: Several commenters also urged HHS to specify additional
triggering events for special enrollment periods. Some commenters
recommended additional triggering events described in Medicare Part D,
unaffordable rate increases, and misinformation provided to an
individual regarding minimum essential coverage or advance payments of
the premium tax credit or cost-sharing reductions. One commenter wanted
HHS to include any change in family size as a triggering event, raising
particular concerns about pregnancy to allow a woman enrolled in a
catastrophic plan to change QHPs prior to the birth of a newborn.
Several commenters requested that HHS clarify that certain triggering
events would qualify as a special enrollment period under ``exceptional
circumstances'' described in paragraph (d)(9) of this section, such as
provider religious objections to covering certain health services to
women.
Response: We believe that the current special enrollment periods
previously proposed appropriately account for changes in circumstances
that necessitate when individuals would need to select a new or
different QHP and balance these needs with considerations regarding the
risk pool. In addition, we note that Sec. 147.104(b)(2) specifies that
in 2014, an Exchange must provide a special enrollment period for
individuals enrolled in non-calendar year individual health insurance
policies beginning on the date that is 30 days prior to the date the
policy year ends in 2014.
Furthermore, a state may establish additional special enrollment
periods to supplement those described in this section as long as they
are more consumer protective than those contained in this section and
otherwise comply with applicable laws and regulations.
HHS intends to issue further guidance related to how Exchanges will
determine the triggering events that constitute ``exceptional
circumstances'' under paragraph (d)(9) of this section. For the issue
raised regarding provider religious objections, we believe that there
are other remedies available to consumers who encounter such
situations.
Comment: One commenter sought clarification that the special
enrollment periods only apply to the individual market as opposed to
the small group market.
Response: We confirm that the language in Sec. 155.420 regarding
special enrollment periods only applies in its entirety to the
individual market. Separate provisions pertain to the small group
market as discussed at Sec. 155.725(a)(3), which excludes Sec.
155.420(d)(3) and (d)(6).
Comment: Some commenters raised concerns regarding our proposals
within this section that pertain to effective dates. Commenters
requested clarification on whether the effective dates related to
errors by the Exchange or contract violations by QHP issuers would
involve setting retroactive enrollment dates. Some commenters suggested
that the Exchange provide flexibility to individuals related to
retroactivity for errors as some
[[Page 42265]]
individuals may not want the Exchange to implement an earlier effective
date. If allowing for retroactivity, commenters urged that the
Exchange's flexibility related to errors or contract violations should
only be provided to correct the unfair outcome. Commenters asked that
the effective date be set for the individual on what it would have been
without the error, and requested that the Exchange only set the
effective date according to paragraph (b)(1) of this section if the
date on which the determination would have been effective without the
error cannot be ascertained. Several commenters also raised concerns
about HHS' proposal to remove the language about effective dates for
advance payments of the premium tax credit and cost-sharing reductions
within this section. Some commenters worried about an Exchange
instituting earlier effective dates under paragraph (b)(3) of this
section, particularly the FFE in 2014.
Response: Outside of a technical correction within paragraph (b)(3)
of this section, we did not propose any changes to the provision
related to the Exchange instituting earlier effective dates if all
participating QHP issuers agree to effectuate coverage in a shorter
timeframe. We believe that there are sufficient regulatory safeguards
for QHP issuers in 2014 if they inform the Exchange that they are not
prepared to institute earlier effective dates. In terms of the
Exchange's flexibility related to retroactive eligibility and
enrollment in cases of errors or contract violations, we note that the
outcome is still contingent on an individual selecting a QHP when
determined eligible for a special enrollment period. This preserves the
ability for an individual to choose to enroll on a particular date, or
to choose not to enroll.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.420 of the
proposed rule with the following modifications. First, in paragraphs
(b)(2)(i) and (d)(2), we expand the special enrollment period and
special effective dates for birth, adoption, and placement for adoption
to also include placement in foster care. Second, in paragraph (d)(3),
we clarify that the special enrollment period for an individual who was
not a citizen, national, or lawfully present non-citizen and gains such
status also applies to his or her dependents, if eligible under the
Exchange eligibility rules. Third, we modify paragraph (d)(6) to
incorporate the special enrollment period proposed in paragraph
(d)(10), with modifications to reflect that it accommodates individuals
who are enrolled in an eligible employer-sponsored plan, but are not
eligible for qualifying coverage in an eligible employer-sponsored
plan. Accordingly, we delete paragraph (d)(10).
19. Termination of Coverage (Sec. 155.430)
In Sec. 155.430, we proposed to amend paragraph (b)(1) to clarify
that it specifically refers to enrollee-initiated terminations. We
proposed to add paragraph (b)(1)(i) to account for circumstances in
which, through periodic data matching, an Exchange finds an enrollee
eligible for other minimum essential coverage, thus resulting in the
enrollee's ineligibility for advance payments of the premium tax
credit. We also proposed in paragraph (b)(1)(ii), that at the time of
plan selection, the Exchange would provide a qualified individual with
the opportunity to choose to remain enrolled in a QHP if the Exchange
identifies that he or she has become eligible for other minimum
essential coverage, and the enrollee does not request a termination in
accordance with paragraph (b)(1)(i).
We proposed to amend paragraph (d)(1) to specify that changes in
advance payments of the premium tax credit and cost-sharing reductions,
including terminations, adhere to the effective dates specified in
Sec. 155.330(f).
Comment: Several commenters cautioned against requiring retroactive
termination effective dates that would necessitate the return or
repayment of claims, premiums, advance payments of the premium tax
credit, or cost-sharing reduction payments. However, other commenters
urged HHS to modify termination effective dates in Sec. 155.430(d)
such that for qualified individuals who gained, or were going to gain
other coverage, the termination effective dates would be the day before
the other coverage begins, regardless of when the enrollee notifies the
Exchange of his or her other coverage.
Response: We appreciate the comments concerning this provision, and
have modified the termination effective date at Sec.
155.430(d)(2)(iii) for enrollee-requested terminations such that QHP
issuers and Exchanges may only terminate coverage effective on or after
the date on which the enrollee requests termination, and not
retroactively. We have also clarified in Sec. 155.430(d)(2)(iv) that
the last day of coverage in a QHP for an enrollee who is determined
eligible for Medicaid, CHIP or the BHP is the day before the individual
is determined eligible for such coverage, rather than retroactive to
the Medicaid or CHIP eligibility effective date.
Comment: One commenter recommended amending Sec. 155.430(d) to
specify that changes in eligibility, including terminations, must
adhere to the effective dates specified in Sec. 155.330(f), to ensure
alignment of processes.
Response: We agree with the commenter, and have modified the
termination effective dates in Sec. 155.430(d)(3) to cross-reference
Sec. 155.330(f).
Comment: Commenters sought clarification of why an enrollee who is
eligible for other minimum essential coverage would elect to remain
enrolled in a QHP without advance payments of the premium tax credit.
Response: While 26 CFR 1.36B-2 specifies that premium tax credits
are not available to support enrollment in a QHP through the Exchange
for an individual who is eligible for other minimum essential coverage,
such an individual is free to remain enrolled in a QHP through the
Exchange, without advance payments of the premium tax credit and cost-
sharing reductions, if he or she remains eligible for enrollment in a
QHP through the Exchange. It is possible that an individual would want
to maintain enrollment without advance payments of the premium tax
credit and cost-sharing reductions for continuity of coverage reasons.
As we proposed in 155.430(b)(2)(ii), the Exchange must provide an
opportunity at the time of QHP selection for an individual to choose to
remain enrolled in a QHP if he or she has become eligible for other
minimum essential coverage. If the individual does not choose to remain
enrolled in a QHP upon such a change, the Exchange would initiate
termination upon completion of the redetermination process specified in
Sec. 155.330.
Comment: Commenters recommended that in addition to the opportunity
at plan selection, enrollees should be given a second opportunity to
elect to remain enrolled in a QHP without advance payments of the
premium tax credit and cost-sharing reductions when the Exchange finds
the enrollee is eligible for other minimum essential coverage through a
periodic data match.
Response: Exchanges are free to provide additional opportunities
for individuals to request termination, or to request to remain
enrolled in a QHP without advance payments of the premium tax credit or
cost-sharing reductions, upon losing eligibility for such benefits. In
paragraph (b)(1)(ii), we have clarified that the opportunity provided
at the time of plan selection is effective both in cases of periodic
data matching as well as when an enrollee reports gaining eligibility
for other
[[Page 42266]]
minimum essential coverage that would make him or her ineligible for
advance payments of the premium tax credit and cost-sharing reductions.
Comment: A commenter raised a concern that the proposed revision to
the termination provision in Sec. 155.430(b)(2) broadly permits an
individual whose coverage was already effectuated during the initial
open enrollment period to notify the Exchange or QHP issuer of his or
her termination of coverage, and switch QHPs.
Response: Individuals are free to terminate enrollment in a QHP
through the Exchange at any time. Individuals who wish to begin other
coverage in a QHP through the Exchange must be within an open or
special enrollment period to do so. Each Exchange has the flexibility
to decide whether to allow enrollees for whom coverage has been
effectuated to change QHPs during any remaining time in an open or
special enrollment period. For October 1, 2013, the FFE will not permit
an enrollee to change QHPs in such a situation. As noted above, such an
individual may qualify for a new special enrollment period as specified
in 45 CFR 155.420.
Comment: One commenter noticed that the proposed provisions did not
clarify whether the Exchange would be permitted to terminate coverage
retroactively to the date of death. The commenter recommended that the
Exchanges have the flexibility to align with non-group market
standards, and allow for retroactive terminations when the Exchange
obtains updated information regarding a death.
Response: We agree with the commenter, and have added paragraph
Sec. 155.430(d)(7) to clarify that in the case of termination due to
death, the last day of coverage is the date of death, which means that
coverage could be terminated retroactively.
Comment: A commenter noticed that there were conflicting provisions
regarding terminations at Sec. 155.430 and Sec. 156.270(b). Section
156.270(b) specifies that QHP issuers must notify both the Exchange and
enrollees of the effective date and reason for termination at least 30
days prior to the last day of coverage, and Sec. 155.430(d) specifies
that in some cases, QHP issuers may effectuate termination in fewer
than 30 days.
Response: We have modified Sec. 156.270(b) in this final rule to
align the coverage termination standards for Exchanges and QHP issuers.
We have also clarified that QHP issuers will promptly notify both
enrollees and the Exchange of the termination reason and termination
effective date when the QHP initiates a termination.
Summary of Regulatory Changes
We are finalizing the provisions proposed in Sec. 155.430 of the
proposed rule, with the following modifications: We modified paragraph
(b)(1)(ii) to specify that the opportunity provided by the Exchange at
the time of plan selection for an individual to choose to remain
enrolled in a QHP if he or she becomes eligible for other minimum
essential coverage applies both to situations in which eligibility for
other minimum essential coverage is identified via a periodic data
match, as well as situations in which the individual reports the change
to the Exchange. We modified the termination effective date provision
at paragraph (d)(2)(iii), for enrollee-requested terminations, such
that QHP issuers and Exchanges may only terminate prospectively, not
retroactively. We modified paragraph (d)(2)(iv), which concerns
terminations for enrollees who are determined eligible for Medicaid,
CHIP or the BHP, such that the last day of coverage is the day before
the individual is determined eligible for such coverage, rather than
retroactive to the Medicaid or CHIP eligibility effective date. We also
modified the termination effective dates in paragraph (d)(3) to cross-
reference Sec. 155.330(f). We added paragraph (d)(7) to clarify that
in the case of termination due to death, the last day of coverage is
the date of death. In addition, we are finalizing an amendment to Sec.
156.270(b) to align the coverage termination requirements for Exchanges
and QHP issuers.
D. Medicaid Premiums and Cost Sharing
1. Responses to General Comments (Sec. 447.51 through Sec. 447.57)
Comment: Many commenters supported the streamlined and consolidated
approach to the revised cost sharing rules. One commenter believed that
removing the distinction between the requirements of sections1916 and
1916A of the Act was confusing and lost some of the differences in the
statutory provisions. The commenter was also concerned that under the
revised rules, states will no longer have to explicitly invoke the use
of alternative (section 1916A of the Act) cost sharing through the
state plan amendment process. One commenter stated that CMS should not
provide more specific requirements in the regulations to give states
more flexibility.
Response: We maintain the streamlined and consolidated structure in
the final regulation, which we believe is consistent with the
flexibilities and limitations provided in both sections 1916 and 1916A
of the Act. We believe that consolidation will simplify the rules for
beneficiaries, providers, and states, and will also simplify the state
plan amendment (SPA) process. States will continue to be required to
submit a SPA to impose new or revised cost sharing or premiums, and CMS
will review such SPAs to ensure compliance with the regulations and
statute.
Comment: Two commenters recommended that rather than remove current
Sec. 447.58 and reserve it, this provision should be used to implement
the long-standing statutory provision that the cost sharing provisions
of sections 1916 and 1916A of the Act cannot be waived unless a state
meets the criteria required under section 1916(f) of the Act.
Response: The terms of section 1916(f) of the Act, relating to the
requirements states must meet for the Secretary to approve a waiver of
the cost sharing provisions of sections 1916 and 1916A of the Act are
clear. We do not believe it is necessary at this time to issue
regulations setting forth the Secretary's substantive authority under
section 1115 of the Act, and such an action would be outside of the
scope of this rulemaking. We note that we issued procedural regulations
at 77 FR 11678 (Feb. 27, 2012) governing demonstration applications in
accordance with section 1115(d) of the Act (as added by section
10201(i) of the Affordable Care Act).
Comment: One commenter stated that given the statutory constraints
implemented in the regulations, states should be given additional
flexibility through the use of a standard waiver template applicable to
newly eligible adults. One commenter stated that for MAGI-based
eligibility groups, states should be able to impose premiums and cost
sharing on individuals with income over 100 percent of the FPL that is
equivalent to what those individuals would be subject to if they were
enrolled in the Exchange.
Response: Section 1916A of the Act and these regulations provide
considerable flexibility for states to impose cost sharing on
individuals with income over 100 percent of the FPL, including the
ability to target cost sharing, charge higher amounts, and make the
cost sharing enforceable. But the statute provides for cost sharing
protections for the Medicaid population that are not the same as the
protections for individuals enrolled in coverage through the Exchange.
To waive the
[[Page 42267]]
Medicaid cost sharing requirements and go beyond the flexibilities
provided in section 1916A of the Act for individuals covered under the
state plan, the Secretary must find that the requirements of section
1916(f) of the Act have been met. We do not believe that a template for
waiving the cost sharing requirements in accordance with section
1916(f) of the Act is needed at this time. Except for certain specified
eligibility groups, sections 1916 and 1916A of the Act limit premiums
imposed under the state plan on those with income over 150 percent of
the FPL.
Comment: One commenter noted that it appears we left in place
Sec. Sec. 447.66 through 447.82 of the current regulations and
suggested that CMS remove these sections.
Response: This was a drafting error and we have removed those
sections in the final rule. Those sections reflected alternative
premiums and cost sharing requirements under section 1916A of the Act
that have been integrated into new streamlined cost sharing regulations
that reflect both sections 1916 and 1916A of the Act.
2. Definitions (Sec. 447.51)
We proposed to add a definition for premiums, which includes
enrollment fees and other similar charges. We also proposed to add a
definition for cost sharing to encompass deductibles, copayments,
coinsurance, and other similar charges. Because each of these charges
would be included within cost sharing, we proposed to remove separate
requirements related to deductibles, copayments, and coinsurance;
instead all cost sharing would be subject to a single set of rules. We
also proposed new definitions for purposes of the premium and cost
sharing regulations for preferred drugs, emergency and non-emergency
services, and alternative non-emergency service providers, since the
cost sharing rules vary for these items and services. We received the
following comments concerning the proposed definitions:
Comment: Several commenters recommended that we revise the
definition of alternative non-emergency service provider at Sec.
447.54 to mean ``a Medicaid-participating provider, such as a
physician's office, health care clinic, community health center,
hospital outpatient department, or similar provider that is actually
available and accessible and can provide clinically appropriate
services for the diagnosis or treatment of a non-emergency condition in
a timely manner.''
Response: We are finalizing the definition as proposed in Sec.
447.51. The revisions suggested by the commenters regarding the
alternative non-emergency provider being available and accessible and
being able to provide for the diagnosis or treatment of a non-emergency
condition are implicit in the requirements that must be met at Sec.
447.54(d) before the imposition of cost sharing for non-emergency use
of the ED. However, we have revised the definition of non-emergency
services for clarity; this revision is not a substantive change.
Comment: Several commenters recommended that we remove the term
``coinsurance'' from the definition of cost sharing at Sec. 447.51,
since few states charge coinsurance and the statute does not use the
term. They discussed that eliminating the term ``coinsurance'' would
further the goal of simplification.
Response: We agree that very few states elect the option to charge
coinsurance, but it is still an option available to states under the
statute, which allows for other ``similar charges.'' Therefore we are
maintaining the term ``coinsurance'' in the definition of cost sharing
in the final rule. With the streamlining of the regulations in this
final rule, states that do elect to charge coinsurance must ensure it
does not exceed the limits defined in Sec. 447.52-54.
Comment: We solicited comments on whether we should add definitions
of ``inpatient stay'' and ``outpatient services'' to take into account
situations in which an individual is discharged and soon thereafter
returns to an inpatient facility for continued treatment of the same
condition. One commenter supported the inclusion of a definition of
``inpatient stay'' and recommended that we adopt the approach taken in
Medicare to define a ``benefit period'' and prohibit a second copay for
any inpatient stay within the same benefit period. Some commenters also
supported the addition of a definition of ``outpatient services''
giving states broad flexibility to determine which services may be
subject to cost sharing. No commenters opposed adding definitions of
these terms.
Response: We are adding a definition of ``inpatient stay'' in the
final rule at Sec. 447.51 to mean the services received during a
continuous period of inpatient days in either a single medical
institution or multiple medical institutions, and also to include a
return to an inpatient institution after a brief period when the return
is for treatment of a condition that was present in the initial period.
We also add that the definition of ``inpatient'' has the same meaning
as in Sec. 440.2. We believe this is in the best interest of
beneficiaries with chronic conditions who may have frequent visits to
the hospital or other institution for treatment of the same condition,
and is consistent with the limitations on cost sharing established in
the statute. We also add a definition of ``outpatient services'' for
purposes of cost sharing to mean any service or supply not meeting the
definition of an inpatient stay. This definition will include cost
sharing for any services outside an institutional setting, not
otherwise exempt by statute or regulations, excluding drugs and non-
emergency use of the hospital emergency department which are defined
separately. We note that these definitions are applicable only to cost
sharing and do not constitute any change in definition specific to the
provision of benefits or services.
Comment: One commenter requested CMS provide additional information
to states regarding how the proposed definition of cost sharing will
affect the offset to expenses that states can report for Medicaid FFP
(Sec. 447.51).
Response: Nothing in the definition of ``cost sharing'' at Sec.
447.51 changes the rule related to FFP. Per Sec. 447.56(e), which is
unchanged from current rules, no FFP is available for any premiums or
cost sharing that should have been paid by the beneficiary, except for
amounts that the agency pays as bad debts of providers who are paid in
accordance with Medicare reasonable cost principles.
Comment: One commenter recommended revising the definition of a
premium at Sec. 447.51 to exclude enrollment fees because premiums are
generally applied on an annual or periodic basis whereas enrollment
fees are generally a onetime payment. The commenter recommends that
states should have the flexibility to require an enrollment fee in
addition to premiums.
Response: The statute defines a premium to include any enrollment
fee or similar charge, and therefore the limitations on total premium
charges include both premiums and enrollment fees. As the Secretary
does not have the authority to change this requirement, we are
finalizing the definition of premiums as proposed. States do have the
flexibility to impose both a monthly premium and an initial enrollment
fee within the limitations for premiums described in this rule.
3. Update to Maximum Nominal Cost Sharing (Sec. 447.52)
We proposed to implement sections 1916(a)(3) and (b)(3) of the Act
relating
[[Page 42268]]
to nominal cost sharing, and to revise the maximum amount of nominal
cost sharing for outpatient services. For beneficiaries with incomes at
or below 100 percent of the FPL, cost sharing for outpatient services
may not exceed nominal. For those with income above 100 percent of the
FPL, cost sharing can either be limited to nominal or may extend up to
10 or 20 percent of the cost of the service, depending on the income of
the beneficiary. Currently, maximum allowable nominal cost sharing is
tied to what the agency pays for the service, not to exceed $3.90 for
services for which the state pays more than $50. Because this can be
confusing and burdensome for states, providers, and beneficiaries, we
proposed to allow instead a flat $4 maximum allowable charge for
outpatient services. This is a modest $0.10 increase from the current
maximum, and as we noted as a basis for the proposed rule, the majority
of state services are reimbursed at more than $50. The proposed changes
are discussed in more detail in the January 22, 2013 Medicaid
Eligibility Expansion proposed rule (78 FR 4658 and 4659). We received
the following comments concerning the proposed update to the maximum
nominal cost sharing provisions:
Comment: Many commenters wanted CMS to eliminate cost sharing for
Medicaid beneficiaries altogether because of the extensive research
showing that cost sharing on low-income populations creates barriers to
accessing needed care, with particular consequence for those with
special health care needs. One commenter recommended that CMS revise
the cost sharing regulations to align with the lowest eligibility
threshold for Medicaid based on modified adjusted gross income created
by the Affordable Care Act (for example, 133 percent of the FPL) and
create two tiers of cost sharing--one for those with income at or below
133 percent of the FPL and one for those with income above 133 percent
of the FPL. One other commenter recommended that individuals with
income below 133 percent of the FPL should be exempt from cost sharing.
Response: We recognize the studies indicating that cost sharing may
impact beneficiaries' access to needed and prescribed services, given
the low incomes of most of those who are enrolled in Medicaid. However,
the statute authorizes states to impose cost sharing, subject to
certain limitations. Additionally, the Affordable Care Act did not
modify the cost sharing provisions of sections 1916 and 1916A of the
Act. Section 1916A of the Act distinguishes between individuals with
income at or below 100 percent of the FPL, those with income above 100
and at or below 150 percent of the FPL, and those with income above 150
percent of the FPL. We do not have the authority to revise the income
thresholds set out in statute or to preclude states from imposing cost
sharing on individuals with income under 133 percent of the FPL
consistent with the limitations in sections 1916 and 1916A of the Act,
as implemented in these regulations. States do not, of course, have to
implement cost sharing to the extent authorized by the statute, and
most do not do so. We note that in Sec. 447.51 of the final rule we
add a definition of Federal poverty level (FPL) to use the acronym
throughout the regulation. No substantive change is intended.
Comment: Several commenters stated that cost sharing is unnecessary
in the context of managed care because the point of managed care is to
manage utilization and ensure care is provided in the most appropriate
settings. The commenters argue that managed care already achieves the
goals that states are attempting to achieve through cost sharing and
that cost sharing interferes with the medical management effectuated
through managed care programs. Another commenter believed the rules did
not provide enough flexibility in the managed care context. One
commenter requested that CMS clarify that Medicaid agencies can permit
managed care organizations to not impose cost sharing on enrollees.
Response: While managed care can play a role in ensuring more
appropriate utilization of health care services, the statute does not
limit the imposition of cost sharing to fee-for-service delivery
systems. In general, states may not establish different cost sharing
requirements for beneficiaries served by a fee-for-service versus a
managed care delivery system unless all beneficiaries have the same
opportunity to participate in fee-for-service versus managed care and
to enjoy the benefits of lower cost sharing imposed under one service
delivery mechanism versus the other. Section 4708(b) of the Balanced
Budget Act of 1997 specifically removed the statutory cost sharing
exemption for enrollees in managed care organizations. Managed care
organizations may choose not to impose state plan cost sharing on their
members, but the state must still consider the amount of cost sharing
under the state plan in determining the actuarial soundness of the
capitated payment to the managed care organization. Section 1916A of
the Act allows states to target cost sharing to specified eligibility
groups, as described at Sec. 447.52(d) of this final rule, and states
may target cost sharing specifically to those eligibility groups who
may be enrolled in managed care, but the targeting must be based on the
eligibility group and not solely on the basis of enrollment in managed
care. However, states may charge different co-pays to incentivize the
use of certain care models--for example lower co-pays to encourage use
of primary care medical homes or other patient-centered coordinated
care models--to the extent that those models provide a different
service from those offered at a more traditional medical provider, and
the particular model of care is broadly available to beneficiaries.
This is permissible because the state is differentiating co-payments
based on the service provided, and because all individuals have the
choice to receive such services, comparability is met.
Comment: Some commenters recommended that CMS should restore the
use of the term ``nominal,'' as that term is used in the existing
regulations. They argue that the Act specifically limits cost sharing
to ``nominal'' amounts and directs the Secretary to determine what
constitutes a ``nominal'' amount each year to ensure that cost sharing
amounts are not onerous for beneficiaries.
Response: The streamlining proposed does not negate the
requirements at section 1916 of the Act that cost sharing for certain
populations be nominal in amount. Section 1916 of the Act gives the
Secretary authority to define nominal cost sharing, which we do at
proposed Sec. Sec. 447.52, 447.53 and 447.54. The amounts described in
these sections are the maximum that can be imposed on individuals with
income at or below 100 percent of the FPL, since these individuals may
not be subject to the higher cost sharing allowable under section 1916A
of the Act. The proposed amounts will be updated annually based on the
CPI-U, starting October 1, 2015. As mentioned, in streamlining the
regulations implementing sections 1916 and 1916A of the Act, we did not
use the term ``nominal'' in the regulatory text, but the amounts
permitted were set based on the determination that they were nominal
amounts.
Comment: Many commenters agreed with severing the tie between
maximum cost sharing amounts and what the agency pays for the service
but believed that a flat $4 maximum amount proposed at Sec. 447.52 was
too burdensome for Medicaid beneficiaries with income at or below 100
percent of the FPL. Many commenters recommended that CMS should set
maximum cost sharing amounts based on the income and health status of
the
[[Page 42269]]
beneficiaries and recommended using Medicare as a model, which
establishes two tiers for Part D copayments for individuals with income
at or below 100 percent of the FPL and individuals with incomes over
100 percent of the FPL, and recommend the Medicaid cost sharing maximum
should be limited to $2.10 for those at or below 100 percent of the FPL
which is the approximate average of the FY 2013 maximum copayment
amounts.
Response: Sections 1916 and 1916A of the Act allow for different
levels of cost sharing for individuals with income at or below 100
percent of the FPL versus those with income over 100 percent of the
FPL, similar to the two-tiered structure established for Medicare Part
D which the commenters recommend. Section 1916A of the Act further
differentiates maximum cost sharing levels for those with income above
100 or at or below 150 percent of the FPL and those with income over
150 percent of the FPL. Current regulations already allow states to
charge all non-exempt beneficiaries up to $3.90 for many services, and
as described previously, we believe the $4 maximum charge is
comparable, particularly given that the next update to this nominal
amount has been postponed under this rule until October 1, 2015. We
also note that while this is the maximum level at which states may set
their cost sharing obligations, they may establish lower levels of cost
sharing.
We note that under current regulations at Sec. 447.56, states have
the option to establish different cost sharing charges for individuals
at different income levels. We inadvertently omitted this section from
the proposed rule and are restoring this option in the final rule at
Sec. 447.52(g). We specify in the final rule that if the state imposes
cost sharing charges that vary by income, it must ensure that lower
income individuals have lesser cost sharing than higher income
individuals.
Comment: One commenter expressed concern that the simplified $4
maximum for individuals with income at or below 100 percent of the FPL
would create a disparity with the percentage-based maximum cost sharing
for individuals with income above 100 percent of the FPL.
Response: It was not our intent to establish a cost sharing system
under which lower income beneficiaries could be subjected to higher
cost sharing than their higher income counterparts. Our intent was to
define maximum nominal cost sharing, as described under sections
1916(a)(3) and (b)(3) of the Act, as $4 for outpatient services. If a
state seeks to use the authority provided under section 1916 of the Act
to impose nominal cost sharing on individuals with income at or below
100 percent of the FPL, such cost sharing must also be applied to
individuals with income above 100 percent of the FPL. Section 1916 of
the Act does not allow for targeted cost sharing on different groups of
individuals, so any cost sharing established under this authority is
applicable to all non-exempt individuals. The 10 and 20 percent
maximums established for individuals with income over 100 percent of
the FPL are specific to cost sharing established under the authority of
section 1916A of the Act. This authority specifically allows for cost
sharing of up to 10 percent of the cost of the service for individuals
above 100 and at or below 150 percent of the FPL and 20 percent for
individuals with income above 150 percent of the FPL, with slightly
different maximums for drugs and non-emergency use of the emergency
department. For a specific outpatient service, a state may establish
nominal cost sharing under the authority of section 1916 of the Act for
all non-exempt individuals covered under the state plan in an amount
not to exceed $4 (as adjusted for inflation), and the state may also
establish targeted cost sharing for specified individuals under section
1916A of the Act for that same outpatient service, in an amount not to
exceed 10 percent of the cost of the service. In such a case, the cost
sharing imposed under the section 1916 authority may not exceed 10
percent of the cost of the service if that amount is less than the
maximum nominal amount allowed for individuals with income under 100
percent of the FPL, because the state must ensure that lower income
individuals are charged less than individuals with higher income, as
described at Sec. 447.52(g).
Comment: We solicited comments on the best approach to cost sharing
for an inpatient stay for individuals with income at or below 100
percent of the FPL. We indicated we were considering a maximum cost
sharing amount less than what is allowed in current regulation. Most
commenters believed that the current regulations allowing cost sharing
of up to 50 percent of what the agency pays for the first day of
inpatient care was too great a burden for individuals at this income
level. A few commenters recommended a maximum copayment of $10, one
commenter recommended $100, and many recommended that the cost sharing
for inpatient care should be the same as for outpatient services and be
limited to $4.
Response: We are revising the regulations to limit maximum cost
sharing charges for an inpatient stay, for individuals with income at
or below 100 percent the FPL, to $75. This $75 limit will encompass
most hospital cost sharing established by state Medicaid programs today
and will align with the ratio of cost sharing for inpatient versus
outpatient services with similar charges provided under private
insurance plans. To provide a transition period for the small number of
states with existing inpatient cost sharing exceeding $75, we are
adding a new paragraph at Sec. 447.52(b)(2). Under paragraph (b)(2),
states with inpatient cost sharing that exceeds $75, as of July 15,
2013, must submit a plan to CMS that provides for reducing inpatient
cost sharing to $75 by July 1, 2017. We redesignate the succeeding
paragraphs, accordingly.
Comment: We solicited comments on whether we should define nominal
cost sharing differently for community-based long term services and
supports (LTSS) due to the frequency with which these services are
provided and utilized by beneficiaries. Many commenters supported a
separate approach to LTSS because they are concerned about the
financial burden that an individual needing these services could face
if a state were allowed to charge up to $4 for each service and most
recommended that such services be exempted from cost sharing.
Commenters were also concerned that allowing cost sharing for LTSS
would discourage individuals from utilizing LTSS and leave many to opt
for institutional care, which is more costly for states in the long
run. Some commenters recommended that consideration be given to
limiting the number of copayments permitted per week, month, or other
specified timeframe for those with significant service needs, including
adults with serious mental illness. One commenter opposed establishing
different limits for community-based long term services and supports as
it would be administratively burdensome for states. This commenter also
pointed out that no specific mention is made in the regulations to
long-term care community-based services provided under sections
1915(c), 1915(d), 1915(i), or 1915(k) of the Act. The commenter
suggested that perhaps these defined packages are the more appropriate
starting place if separate cost-sharing rules for these services are
considered, but we need to take into account the fact that some
individuals already contribute to the cost of these services in
accordance with the post-eligibility treatment of income rules under
part 435 subpart H.
Response: We agree with commenters that additional protections for
non-
[[Page 42270]]
exempt individuals receiving community-based LTSS are appropriate to
ensure that receiving care in the community, rather than in an
institution, remains a financially viable option for such individuals,
but the statute does not authorize the Secretary to require an
exemption. We note that few states now impose cost sharing on LTSS. We
encourage all states to consider the significant consequences of
imposing cost sharing on such services, and remind states that they are
required to comply with the Americans with Disabilities Act and Section
504 of the Rehabilitation Act as interpreted in the Olmstead v. L.C.
and E.W (``Olmstead'') to ensure they are not placing individuals at
risk of institutionalization. While we are not directing an exemption
for LTSS, we agree with commenters that additional protections are
necessary for individuals with high service needs, and we are revising
the proposed aggregate limit for premiums and cost sharing to protect
all beneficiaries with high medical needs. As discussed further under
Sec. 447.56, the 5 percent aggregate limit applies to all individuals
regardless of income. In addition, if premiums and cost sharing could
exceed 5 percent of family income, states are required to have a
mechanism to track such premiums and cost sharing in a manner that does
not rely on beneficiaries. To provide protections to individuals with
high service needs and ensure their cost sharing does not exceed the
aggregate limit, we encourage states to consider prospectively ending a
beneficiary's cost sharing obligation at a specified time of the
applicable month or quarter given the frequency of utilization and the
predictability of services provided under an approved plan of care, for
example. We note that such an approach must take into account the cost
sharing for items or services that may be received outside the plan of
care, such as drugs for example, which would also contribute to the 5
percent aggregate limit.
We considered different options for a separate definition of
nominal cost sharing specific to LTSS but have determined the most
effective way to ensure ongoing affordability of care for beneficiaries
who are frequent and regular consumers of care, including but not
limited to those who need LTSS, is to ensure that there is an effective
aggregate cap on cost sharing. Aggregate out of pocket limits are a
common practice in the commercial market and we believe the extension
of the aggregate limit is consistent with industry practice and will
provide the greatest protections for beneficiaries, consistent with
statutory provisions, while still maintaining states' flexibility to
establish appropriate cost sharing mechanisms for their programs.
Comment: One commenter believed that proposed Sec. 447.52(b)(2),
which relates to maximum allowable cost sharing when the state does not
have fee-for-service payment rates, is confusing and could be read to
only apply to those with income at or below 100 percent of the FPL.
Response: We agree and have revised the paragraph, redesignated in
this final rule as Sec. 447.52(b)(3), to be clear that, ``in states
that do not have fee-for-service payment rates, any cost sharing
imposed on individuals at any income level may not exceed the maximum
amount established for individuals with income at or below 100 percent
of the FPL.'' The same clarification to the regulation text is made at
Sec. 447.53(c).
Comment: Some commenters recommended that the Secretary provide
states the flexibility to determine the cost sharing methodology that
best aligns with their delivery system and provider categories, for
example allowing flat co-payments and premiums, co-payments based on a
percentage of what the agency pays for the service, or premiums
calculated as a percentage of family income.
Response: The regulations at proposed Sec. Sec. 447.52, 447.53 and
447.54 establish maximum limits on the cost sharing that states can
impose. While we are no longer requiring that the maximum cost sharing
amounts be based on what the agency pays for the service, nothing in
the regulations preclude states from setting their cost sharing amounts
on such basis provided that the amounts charged do not exceed maximum
permissible levels. Similarly, provided that the specific limits set
out in the statute and codified in the regulations--including the
aggregate limit not to exceed 5 percent of family income--are
respected, states have the flexibility under Sec. 447.55 to structure
premiums in the manner suggested, although, as noted, statutory
authority to impose premiums is limited.
Comment: We received several comments suggesting we clarify that
states can apply different levels of cost sharing for their current
Medicaid populations as compared to adults who will become eligible
under the adult group.
Response: In general, any cost sharing established under the state
plan must apply to all beneficiaries who are not specifically exempted
per the requirements at Sec. 447.56(a) to ensure comparability. There
are two exceptions to this requirement, as follows. First, states may
vary the cost sharing obligation by income level, reflected at Sec.
447.52(g) of the final rule, such that individuals with family income
below a certain threshold could be subject to lower cost sharing than
those at higher income levels. A state could, for example, decide not
to impose cost sharing on individuals with incomes below 50 percent of
the FPL, and to impose a $1 copayment on individuals with income above
50 percent of the FPL. We note that states should have adequate
processes in place to ensure providers and beneficiaries are aware of
who can be charged what cost sharing so it is appropriately applied.
Second, reflected at Sec. 447.52(d), as redesignated in the final
rule, states may establish different levels of cost sharing for
targeted groups of individuals with income above 100 percent of the
FPL. In this final rule, we clarify that for cost sharing imposed for
non-preferred drugs and non-emergency services furnished in an ED,
states may target to specified individuals with income below 100
percent of the FPL as well as those above, as discussed below. Thus,
states could impose different cost sharing on individuals eligible in
the new Adult group, or any other eligibility group, with income
greater than 100 percent of the FPL than that imposed on other
beneficiaries.
Comment: One commenter stated that proposed Sec. 447.52(f), which
lists the information that must be included in the state plan for each
cost sharing charge imposed, is revised from the current regulations
atSec. 447.53(d) but that we did not provide a rationale for the
revisions.
Response: We consolidated the state plan requirements currently
contained in Sec. Sec. 447.53(d) and 447.68 into one new section,
redesignated as Sec. 447.52(i) in the final regulation. The state plan
requirements for tracking beneficiary cost sharing related to the
aggregate limit are contained in Sec. 447.56(f)(2) of this final rule.
In consolidating the state plan requirements for cost sharing under the
authority of both sections 1916 and 1916A of the Act, we sought
generally to maintain the current requirements, while removing any
unnecessary regulatory provisions. For example, we removed the
requirement that states describe the basis for determining the charge,
because these regulations no longer require states to base their cost
sharing charges on what the agency pays for the service and this
provision was no longer necessary. We note that we are making minor
technical changes to paragraph Sec. 447.52(i)(4) to improve the
structure of the paragraph
[[Page 42271]]
and delete extraneous language. No substantive changes are intended.
Comment: One commenter recommended that CMS require that state
plans identify whether a cost sharing charge is being imposed under the
authority of section 1916 or section 1916A of the Act.
Response: With the streamlining of the regulations we do not
believe it is necessary for states to specify what authority they are
relying on to impose cost sharing. In their state plan, the states
seeking to impose or continue cost sharing will need to detail who will
be subject to cost sharing, for what service, how much, and whether
providers may deny services for lack of payment. We will review state
plan amendments to ensure compliance with sections 1916 and 1916A of
the Act and these regulations.
Comment: One commenter requested that we clarify that the
regulation authorizes states to allow providers to deny services for
nonpayment of cost sharing, but does not confer authority on states to
require providers to do so. One commenter recommended that we include a
provision that providers are not prevented from reducing or waiving the
application of a cost sharing requirement on a case-by-case basis.
Response: The requirements at Sec. Sec. 447.52(e)(1) and (e)(2),
as redesignated in this final rule, are clear that, while states may
allow providers to deny services to individuals with income above 100
percent of the FPL who have failed to pay cost sharing charges, states
are not required to permit providers to do so (and providers may only
deny services if the state opts to permit them to do so). Further,
Sec. 447.52(e)(3) is clear that even if the state exercises this
option, providers are not prohibited from nonetheless electing to
provide the service to individuals who do not pay their cost sharing
obligations. This is not at state option--it is a provider option--and
we do not believe it is necessary to be included in the state plan.
Comment: A few commenters suggested that the regulations authorize
states to allow providers to deny services for non-payment of cost
sharing charges in more situations, including for those with income at
or below 100 percent of the FPL. The commenters believe that such
provider enforcement, particularly in the context of nonemergency use
of the emergency room, would be appropriate.
Response: We are unable to extend the scope of the regulations
beyond the statutory authority provided in sections 1916 and 1916A of
the Act, both of which only allow states to impose provider-enforceable
cost sharing to non-exempt individuals with income over 100 percent of
the FPL and thereby assure the provision of services to lower income
individuals who may not be able to afford the charge. These provisions
of sections 1916 and 1916A of the Act cannot be waived unless the state
meets the requirements of section 1916(f) of the Act.
Comment: One commenter recommended that the table at Sec.
447.52(b) be clarified to clearly specify that the amounts are maximum
amounts to correspond with the language in Sec. 447.52(b).
Response: We agree with the commenter and have made the revision to
Sec. Sec. 447.52(b), 447.53(b) and 447.54(b).
Comment: One commenter asked if cost sharing must be imposed or if
it is an allowable activity.
Response: States are not required to impose cost sharing, it is an
option. Some states do not impose cost sharing. Furthermore, if a state
does impose cost sharing, it has the option to charge less than the
maximum amounts. Many states do so today.
Comment: One commenter requested clarification as to whether Sec.
447.52(e) (relating to the prohibition against multiple charges)
includes premiums.
Response: Sec. 447.52(e) has been redesignated as Sec. 447.52(f)
in this final rule and pertains to cost sharing only, which is defined
in Sec. 447.51 to include any copayment, coinsurance, deductible or
similar charge. Premiums are not encompassed in this definition, and
states may impose both a premium and cost sharing on a given individual
subject to the applicable conditions on such charges.
Comment: One commenter recommended revising the rule to allow
states to waive or reduce cost-sharing for outpatient services
delivered by designated high-value providers or in high-value care
settings, even if those services may otherwise be subject to cost-
sharing. One commenter requested clarification that the cost sharing
rules may not be applied to different types of practitioners based on
their licensure and that cost sharing within a category of services is
not used to discriminate against health care practitioners acting
within their state-defined licensure.
Response: Nothing in the regulations prevents a state from
determining which services are subject to cost sharing and the amount
charged, or by what type of provider the service is delivered. As
suggested by the commenter, states could differentiate cost sharing for
services provided by a designated high value provider as long as the
state ensures that all beneficiaries have access to such providers.
Comment: One commenter recommended that we include in the final
rule, language currently at Sec. 447.60 that was omitted from the
proposed rule, which requires that any cost sharing charges imposed by
managed care organization on Medicaid enrollees be in accordance with
the requirements set forth in the regulations.
Response: We agree with the commenter. The omission of this
provision was not intentional and we have included this requirement in
the final rule at Sec. 447.52(h).
Comment: One commenter believed that if deductibles are an option
for a state, they should be administered at an individual level on an
annual basis because the commenter believes monthly and/or family-level
deductibles are complex, confusing, and not the standard generally used
by health plans especially when combined with other cost sharing.
Response: Deductibles are permitted at an individual level under
the statute and these regulations. Any deductible imposed by a state
must be within the maximum amounts established in Sec. Sec. 447.52-54,
and subject to the aggregate limit described in Sec. 447.56(f) of this
final rule.
4. Higher Cost Sharing Permitted for Individuals With Incomes Above 100
Percent of the FPL (Sec. 447.52)
We proposed to consolidate the current multiple cost sharing rules
implementing sections 1916 and 1916A of the Act, respectively, into one
set of streamlined cost sharing regulations for both statutory
authorities at proposed Sec. 447.52. Under section 1916 of the Act,
states may impose nominal cost sharing on individuals not exempted by
the statute. Under section 1916A of the Act, statute states may impose
cost sharing at higher than nominal levels for nonexempt individuals
with incomes above 100 percent of the FPL. For individuals with income
above 100 and at or below 150 percent of the FPL, section 1916A of the
Act permits cost sharing for nonexempt services up to 10 percent of the
cost paid by the state for such services. (Different rules, discussed
below, pertain to cost sharing for drugs and emergency department
services). For individuals with income above 150 percent of the FPL,
such cost sharing may not exceed 20 percent of the cost paid by the
state. We received the following comments concerning the proposed
provision for higher cost sharing permitted for individuals with
incomes above 100 percent of the FPL:
[[Page 42272]]
Comment: A few commenters were concerned that we proposed to permit
cost sharing for children.
Response: We did not propose new policy in the proposed rule
related to cost sharing for children. Section 1916A of the Act permits
states to impose cost sharing on certain children by exempting children
covered under mandatory eligibility categories. This statutory option,
implemented at Sec. 447.70 of the current regulations, is retained in
this rulemaking at Sec. 447.56(a)(1)(i) through (VI). We revised the
description of children who are exempt from premiums and cost sharing
at Sec. 447.56(a)(1)(i)(iii) to reflect the consolidation of different
statutory eligibility groups for children under a single regulatory
section at Sec. 435.118 of the March 2012 final rule. We also made a
technical change to the description of children exempt from premiums
and cost sharing under Sec. 447.56(a)(1)(i)(iv) to reflect the changes
in the types of assistance available under Title IV-E of the Act. These
are not substantive changes and are intended solely to assist states in
appropriately identifying those children who may be charged premiums
and cost sharing and exempting those who may not, as described in the
statute.
Comment: One commenter recommended that CMS specify health centers'
statutory responsibility related to the grants provided under section
330 of the Public Health Services Act (PHSA) to provide services
regardless of ability to pay and clarify that states may not impose on
health centers any obligations that conflict with these requirements.
The same commenter also recommended that CMS add an exception at Sec.
447.56(c)(3), entitling FQHCs to full Medicaid payment in situations in
which they are required to collect cost sharing that would directly
conflict with the section 330 requirements to waive a portion of the
Medicaid cost sharing, and at Sec. 447.56(e)(1) to authorize FFP for
cost sharing amounts waived by an FQHC. At a minimum, the commenter
recommends that CMS and HRSA issue joint guidance to minimize the
tension between the Medicaid and section 330 of the PHSA regulations
concerning patient payment obligations for services provided by FQHCs.
Response: The obligations of FQHCs related to their section 330
grants, as well as reimbursement to FQHCs, are beyond the scope of this
regulation. This regulation does not require that FQHCs bill patients
for cost sharing, but it does require that the payment to the provider
take into account the cost sharing obligation. This requirement that
states deduct a beneficiary's cost sharing obligation from the payment
to providers is not new policy. It is contained in current regulations
at Sec. Sec. 447.57 and 447.82, redesignated at Sec. 447.56(c) in
this final rule. FQHC services are not specified as exempt from cost
sharing under sections 1916 or 1916A of the Act and we do not believe
that the Secretary has authority to mandate that states nonetheless
exempt such services from cost sharing based on FQHCs' section 330
obligations. States, however, do have the flexibility to exempt
particular services (including FQHC services) from cost sharing and/or
to adjust the amount of cost sharing imposed, consistent with the
regulations.
Comment: Some commenters recommended permitting flat-dollar
copayments for all income groups, which they think would be easiest for
enrollees and providers to understand and for Medicaid plans to
administer. One commenter requested that we clarify how a limit based
on 10 percent of the cost the agency pays for the service for
individuals with family income above 100 percent but at or below 150
percent of the FPL and 20 percent of the cost the agency pays for the
service for individuals with income over 150 percent of the FPL, would
apply to FQHC services reimbursed under the prospective payment system
(PPS). The commenter is concerned that because the amount of
reimbursement under the PPS varies by health center, the maximum
allowable cost sharing obligation for a particular service or visit
would differ from health center to health center, and that this would
be administratively burdensome for states, managed care plans, and
providers; inequitable for beneficiaries; and could impede access to
FQHC services. The commenter recommends that we revise the rule to
provide that the maximum cost sharing for all individuals for FQHC
services reimbursed under the PPS rate be the same as the maximum rate
for individuals with income at or below 100 percent of the FPL.
Response: Section 1916A of the Act sets the maximum allowable cost
sharing for individuals with income over 100 percent and at or below
150 percent of the FPL at 10 percent of what the agency pays for the
service and for individuals with income over 150 percent of the FPL, at
20 percent of what the agency pays. We do not have the authority to
change the maximum amount to a flat fee. We note that these percentages
represent the maximum allowable charges. States have the flexibility to
establish lesser cost sharing amounts for any service, and they may use
a flat fee as long as it does not exceed the maximum level permitted.
In determining the cost sharing for a particular service, states also
can use the average payment made for the service across providers or
units of the service to develop a consistent cost sharing amount within
the maximum amount allowed by statute and regulation.
Comment: One commenter asked for clarification regarding the
definitions of income that states should use in setting cost sharing
charges, other than to say that the definitions of household income in
Sec. 435.603 should be used in determining the aggregate limit on
cost-sharing. The commenter sought further clarification on the meaning
of ``family income'' and suggested that states be required to describe
their methodology in their state plan for approval by the Secretary as
reasonable.
Response: In the interest of streamlining the requirements and
reducing administrative burden, we are not requiring states to include,
in their state plans, the methodology for determining income specific
to premiums and cost sharing. For individuals whose financial
eligibility is determined based on modified adjusted gross income
(MAGI), ``family income'' for the purposes of imposing premiums or cost
sharing or for defining the aggregate limit means ``household income''
using MAGI-based methods, as set forth in Sec. 435.603. For
individuals who are exempt from MAGI under section 1902(e)(14)(D) of
the Act, implemented at Sec. 435.603(j) of the regulations, we are
still examining options related to income determinations.
Comment: One commenter stated that we do not have the authority to
allow targeted cost sharing because it would violate comparability and
recommended that we delete proposed Sec. 447.52(c), relating to
``targeted cost sharing.'' Another commenter stated that additional
targeting and variation of cost sharing within groups would add
unnecessary complexity and should not be used.
Response: We are retaining the option for states to target cost
sharing to specified groups of individuals. Comparability is required
for cost sharing imposed under section 1916 of the Act. However,
section 1916A(a)(1) of the Act provides that, ``a State, at its option
and through a state plan amendment, may impose premiums and cost
sharing for any group of individuals (as specified by the State) and
for any type of services . . . and may vary such premiums and cost
sharing among such groups or types, consistent with the limitations
established under this
[[Page 42273]]
section.'' This provision is codified in current regulations at Sec.
447.62(a). Therefore, at redesignated Sec. 447.52(d) of the final rule
states may apply targeted cost sharing on specified groups of
individuals; such cost sharing is limited to individuals with income
over 100 percent of the FPL, per the requirements of section 1916A of
the Act. We have revised Sec. 447.52(d), adding paragraphs (1) and (2)
to clarify that for cost sharing imposed for non-preferred drugs and
non-emergency services furnished in an ED, the state may target to
individuals below 100 percent of the FPL as well as those above, as
allowed by section 1916A of the Act.
Comment: We solicited comments on whether the regulations should
specify ways in which states may target different defined groups of
individuals (with income over 100 percent of the FPL) for differential
cost sharing under proposed Sec. 447.52(c). One commenter suggested
that the regulation should make it clear that targeting must be
reasonable, that individuals with lower incomes may not be charged more
than those with higher incomes, and that targeting may not discriminate
based on gender, physical or mental disability, age, race, ethnicity,
or any other protected classification. Another commenter requested that
the Secretary include criteria that must be considered by states in
targeting cost sharing to particular types of beneficiaries.
Response: Section 1916A of the Act gives states authority to target
premiums and cost sharing to any group of individuals with income above
100 percent of the FPL (for cost sharing imposed for non-preferred
drugs or non-emergency use of the emergency department, states can
target to individuals at all income levels as discussed above), and to
vary such premiums and cost sharing among the groups. In examining all
the possible ways in which targeting could be applied, we believe
targeting based on eligibility group or income level are the only
targeting methods consistent with section 1916A of the Act, which will
not lead to discriminatory practices. Thus, states can choose to impose
premiums or cost sharing on individuals with income above 100 percent
of the FPL in particular eligibility groups and to vary them by income
level within the group. States may not target solely on the basis of
delivery system--managed care, fee-for-service, and primary care case
management--but may target eligibility groups covered through a
specific service delivery system like managed care. States may not
target based on disease-type or chronic condition. We note that states
can impose cost sharing on whichever non-exempt service they choose for
individuals at any income level subject to limitations in the
regulations, and are not required to impose cost sharing on all non-
exempt services in the state plan. For the recommendation regarding
lower income versus higher income individuals, as noted above, we added
Sec. 447.52(g) to specify that if a state imposes income-related
charges, it may not impose a higher charge for lower-income individuals
than is charged for higher-income individuals.
5. Cost Sharing for Drugs (Sec. 447.53)
We proposed to establish a single provision governing cost sharing
for drugs which would apply to nonexempt individuals at all income
levels. To provide additional flexibility to states, and to further
encourage the use of preferred drugs, we proposed to define ``nominal
cost sharing'' as no more than $8 for non-preferred drugs and $4 for
preferred drugs for individuals with income at or below 150 percent of
the FPL. For individuals with family income above 150 percent of the
FPL, per section 1916A(c) of the Act, a higher cost sharing charge may
be established for non-preferred drugs, not to exceed 20 percent of the
cost the agency pays for the drug. While states may not impose cost
sharing on exempt individuals for preferred drugs, states may elect to
impose cost sharing for non-preferred drugs on individuals who are
otherwise exempt up to the nominal cost sharing amount. Cost sharing
for a non-preferred drug must be limited to the amount imposed for a
preferred drug if the individual's prescribing provider determines that
the preferred drug for treatment of the same condition either will be
less effective for the individual or will have adverse effects for the
individual or both. Under the proposed rule, states would have the
flexibility to apply differential cost sharing for preferred versus
non-preferred drugs. For example, a state may charge $1 for preferred
and $5 for non-preferred drugs or $0 for preferred and $8 for non-
preferred drugs. We received the following comments concerning the
proposed cost sharing for drugs provisions:
Comment: A few commenters suggested we take an approach that
distinguishes between formulary generic and formulary brand drugs
(instead of preferred and non-preferred). One commenter noted that this
approach may be more helpful in the managed care context. One commenter
requested clarification as to whether the requirement that all drugs be
considered preferred for cost sharing purposes if the agency does not
differentiate between preferred and non-preferred, is a de facto
preferred status. The commenter was concerned that this could result in
lower cost sharing for more expensive brand name drugs that are not
identified by the state as non-preferred. One commenter was opposed to
the definition of preferred drugs at proposed Sec. 447.51 to include
all drugs if the agency does not differentiate between preferred and
non-preferred drugs.
Response: Section 1916A of the Act allows states to have different
cost sharing levels for preferred and non-preferred drugs, but does not
speak to generic versus brand name drugs. States may use a variety of
methods to determine preferred and non-preferred drugs including
whether the drug is a brand or generic. States also maintain other cost
control measures, such as mandatory generic substitution policies. The
definition of preferred drugs, which includes all drugs if the agency
does not differentiate between preferred and non-preferred drugs, is
consistent with section 1916A(c) of the Act and current regulations at
Sec. 447.70(a).
Comment: Several commenters disagreed with the proposed policy to
allow cost sharing for up to $4 for preferred drugs and $8 for non-
preferred drugs. They described research showing that even low
prescription drug copayments may cause very low income people to defer
filling prescriptions. The commenters argue that Medicaid beneficiaries
cannot be incentivized to select a preferred drug, as is accomplished
with some success among middle class consumers; instead, with such high
cost sharing differentials, Medicaid enrollees will go without the
``non-preferred'' drug even if it is medically necessary and would work
far more effectively than a preferred drug. These commenters recommend
that CMS define nominal drug cost sharing in relation to the income and
health status of the Medicaid population and amend the table at Sec.
447.53(b) to establish maximum cost sharing as follows: individuals
with family income at or below 150 percent of the FPL--Preferred drugs:
$1.10, Non-preferred drugs: $3.30; individuals with family income
exceeding 150 percent of the FPL--Preferred drugs: $1.10; Non-preferred
drugs: $4.20. Two other commenters expressed concern with the $8 copay
for non-preferred drugs if states have latitude to classify most or all
of the brand-name drugs in a therapeutic class as non-preferred. One
commenter stated the proposed increase in cost sharing is unnecessary
because states already have many tools to
[[Page 42274]]
control prescription drug costs and have high utilization of generic
drugs. Other commenters appreciated the flexibility proposed for cost
sharing. One commenter welcomed the increased maximum cost sharing, and
one commenter stated that allowing states to charge higher cost sharing
for non-preferred drugs, when effective, lower-cost alternatives are
available, is a reasonable policy.
Response: We agree that cost sharing is just one of many tools that
states may use to manage drug utilization, and states may determine
that higher cost sharing does not enhance their efforts to promote the
use of preferred drugs. However, we also agree that it is a tool
permitted under the statute. In the final rule we are maintaining the
option for states to impose cost sharing of up to $4 for preferred
drugs and $8 for non-preferred drugs for all individuals, including
those with income at or below 150 percent of the FPL, and for those
with income above 150 percent of the FPL, to continue to establish
higher non-preferred drug cost sharing of up to 20 percent of the cost
of the drug. As described at Sec. 447.53(e), as revised in the final
rule, if a prescriber finds that the non-preferred drug is medically
necessary, the state must have a process in place to limit cost sharing
for that drug to the amount for preferred drugs.
Comment: One commenter suggested that the final rule require a cap
on cost sharing for non-preferred drugs as a necessary protection for
this vulnerable population.
Response: The 5 percent aggregate limit on cost sharing in the
current regulation and included in this final regulation at Sec.
447.56(f) applies to all cost sharing, including that for non-preferred
drugs. States have the option to establish additional cost sharing
limits for particular services, such as drugs at Sec. 447.56(f)(5) of
the final rule, but we do not have the authority to mandate a cost
sharing cap specific to non-preferred drugs.
Comment: A few commenters stated that CMS was circumventing the
statutory requirements of section 1916A of the Act by setting two
different maximum ``nominal'' amounts for preferred and non-preferred
drugs because the Act requires that cost sharing for all drugs imposed
on individuals with income under 150 percent of the FPL must not exceed
the ``nominal'' cost sharing as otherwise determined under section 1916
of the Act. Additionally, the commenter notes that section 1916A of the
Act explicitly allows states to charge up to twice the nominal amount
for non-emergency care furnished in an emergency department, so if
Congress intended to allow the same for non-preferred drugs, Congress
would have provided such an option in the statute.
Response: Section 1916 of the Act gives the Secretary the authority
to define nominal cost sharing. There is nothing in the statute which
requires a single definition of what is considered to be nominal.
Moreover, the general cost differential between preferred and non-
preferred drugs merits a different nominal maximum for each type,
therefore we believe it is appropriate to establish a $4 nominal
maximum for preferred drugs and an $8 nominal maximum for non-preferred
drugs.
Comment: One commenter expressed concern for vulnerable populations
that require certain classes of drugs, such as HIV antiretroviral
drugs, and recommended they be available at the ``preferred'' drug
cost-sharing level.
Response: States have the discretion to designate which covered
drugs within each class of drugs will be considered preferred or non-
preferred. Beneficiaries must always have access to necessary drugs at
the preferred drug rate because a given drug cannot be considered non-
preferred unless the state has an equivalent drug available at the
preferred rate. In addition, Sec. 447.53(e), as revised in this final
rule, requires states to provide a non-preferred drug at the preferred
drug cost sharing level, if the prescribing provider determines that
the preferred drug would be less effective or have adverse effects on
the individual.
Comment: A few commenters recommended that we convert the non-
preferred prescription drug copayment to a flat dollar amount for
individuals with incomes over 150 percent of the FPL instead of basing
cost sharing on what the agency pays for the drug.
Response: As discussed above, section 1916A of the Act sets the
maximum allowable non-preferred drug cost sharing level for individuals
with income over 150 percent of the FPL at 20 percent of what the
agency pays for the drug. CMS does not have the authority to change the
maximum amount allowed to a flat fee, but states may construct their
charges as flat fees as long as such fees are within the maximums
established by law.
Comment: One commenter supported the proposed increase of allowable
cost sharing for non-preferred drugs when Medicaid recipients and not
Medicaid pharmacy providers bear responsibility for the higher cost
sharing. The commenter requested that, when enhanced cost sharing for
prescription drugs is implemented, we mandate states to condition
services on the payment of such cost sharing. Alternatively, the
commenter requested that CMS mandate states to develop a mechanism
whereby participating pharmacies can submit unpaid cost sharing amount
to the state for payment. One commenter recommended that HHS require
states to implement cost sharing provisions for prescription drugs and
to permit providers to withhold medication (whether preferred or non-
preferred) from beneficiaries for failure to pay cost sharing.
Response: The imposition of premiums or cost sharing is an option
permitted states under sections 1916 and 1919A of the Act and cannot be
mandated by the Secretary. The statute stipulates that providers,
including pharmacies, may not deny services to individuals with income
at or below 100 percent of the FPL due to inability to pay their cost
sharing obligation. States have the option to allow providers to deny
services to individuals with income over 100 percent of the FPL if they
do not pay required cost sharing. If a state opts to allow providers to
deny services if the individual does not pay the cost sharing, this
must be indicated in their state plan. Regardless of whether an
individual pays the cost sharing, states must deduct the payment made
to the provider by the amount of the individual's cost sharing
obligation in accordance with Sec. 447.56(c) of this final rule. We do
not have the statutory authority to alter these requirements in the
manner being suggested by the commenters.
Comment: One commenter requested clarification as to whether states
have the option to impose cost sharing for non-preferred drugs on
individuals otherwise exempt from cost sharing. One commenter
recommended that states should have the option to impose cost sharing
on exempt individuals for certain classes of prescription drugs that
the state identifies as elective or controversial, such as narcotics.
Response: Section 1916A of the Act allows states to impose cost
sharing for non-preferred drugs on otherwise exempt individuals,
provided that such cost sharing does not exceed a nominal amount. At
Sec. 447.53(b) of the final rule, we have defined nominal cost sharing
for preferred drugs as no more than $4 and for non-preferred drugs at
no more than $8. We are revising Sec. 447.53(d) in the final rule to
clarify that cost sharing for non-preferred drugs imposed on otherwise
exempt populations cannot exceed the nominal amount defined in Sec.
447.53(b) in accordance with section 1916A(c) of the Act. While states
may impose cost sharing on some drugs and not other drugs, all cost
sharing must be
[[Page 42275]]
consistent with the requirements of Sec. 447.53(b) and, if there are
no drugs identified as non-preferred drugs in a class, cost sharing for
drugs in that class cannot exceed the nominal amounts for preferred
drugs. Identification of ``elective'' or ``controversial'' drugs is
beyond the scope of this regulation.
Comment: A few commenters stated that the proposed cost-
effectiveness standard for determining which drugs are non-preferred is
inappropriate and does not include the anti-discrimination protections
contained in the Affordable Care Act. The commenter believed that this
standard would threaten access to needed treatment and would result in
broad, one-size-fits-all policies that do not reflect important
differences in individual beneficiary needs and circumstances. One
commenter recommended that the definition of preferred drugs not be
restricted to low-cost or exclusively generic agents, and should
encourage the inclusion of high-value brand agents, especially when a
generic equivalent is not available. The commenter believed that
preferred and non-preferred drugs should be chosen based on clinical
value, not solely on the basis of acquisition price. One commenter
recommended that the definition of preferred and non-preferred drugs be
determined based on clinical assessment of the individual. One
commenter recommended that the definition of preferred drugs be
expanded to include the generic equivalent of brand named drugs.
Response: The definition of preferred drugs for cost sharing
purposes at Sec. 447.51 does not prescribe the type of drugs that the
state designates as preferred or non-preferred, and requiring the
inclusion of certain drugs on a state's preferred drug list is beyond
the scope of this regulation. However we do not believe that preferred
drug programs limit individuals' access to necessary drugs. These
regulations require that states establish a process through which a
beneficiary can access a non-preferred drug, which his or her provider
has determined to be medically necessary for the beneficiary, with cost
sharing limited to the amount applicable to preferred drugs. We believe
that this policy would not violate any non-discrimination standards
since all beneficiaries are subject to the Medicaid requirements of the
preferred drug list, which direct that it be developed in a manner that
does not discriminate against any particular class of individual, or
type of disability or disease. In addition, as previously noted in
guidance (SMDL 04-006, September 9, 2004), states need to
assure that patients continue to have access to needed medications so
in addition to cost considerations, a preferred drug list should be
based on clinical criteria that considers the efficacy of the drug to
others in that class.
Comment: Several commenters were concerned that allowing states to
impose cost sharing of up to 20 percent of what the agency pays for a
non-preferred drug, for individuals with income over 150 percent of the
FPL, would be overly burdensome for individuals with chronic
conditions.
Response: Section 1916A(2)(B) of the Act provides for the
flexibility to impose cost sharing at these levels for individuals with
incomes above 150 percent of the FPL. We did not propose to change this
flexibility, which is codified at Sec. 447.74 of the current
regulations, and is moved to Sec. 447.53 in this final rule. The
Secretary does not have the authority to change or reduce the
percentage of the cost of the item or service that is the maximum
allowable cost sharing because the statute is clear. We note that such
cost sharing is subject to the aggregate limit codified at Sec.
447.56(f) of this final rule.
Comment: Several commenters suggested that we revise Sec.
447.53(e) to provide more detailed requirements for the process states
must have in place to allow for cost sharing at the preferred drug
level, in the case of a non-preferred drug that the prescribing
provider has determined would be less effective or may adversely affect
the individual. The commenters stated that any process should take into
account the electronic claims processing used by pharmacies and
pharmacists and should be easy for the prescriber to invoke. Several
commenters also recommended that states be required to describe their
process in the state plan and provider manuals. One commenter believed
that this requirement undermined the intent of the regulations to
encourage the use of less expensive preferred drugs because for a state
to actually cover a non-preferred drug, the prescriber already has to
receive prior-authorization, meaning most, if not all non-preferred
drugs would have to be provided at the lower cost sharing amount.
Response: States must have a process in place for providing prior
authorization of medically necessary drugs that meets the existing
requirements at section 1927(d)(5) of the Act, therefore we are not
prescribing additional requirements in this regulation or requiring
states to describe the process in their state plan. However, we are
revising the final rule to add the word ``timely'' to the process
states must use to allow for cost sharing at the preferred drug level
in accordance with the section 1927 of the Act. We will monitor state
implementation and determine whether additional guidance is necessary.
6. Cost Sharing for Emergency Department (ED) Services (Sec. 447.54)
Sections 1916(a)(3) and 1916(b)(3) of the Act, allow states to
obtain a waiver to impose cost sharing for non-emergency use of the ED
that does not exceed twice the nominal amount for other outpatient
services. Section 1916A(e)(2)(A) of the Act also allows cost sharing
for individuals with income above 100 percent of the FPL and at or
below 150 percent the FPL in an amount not to exceed twice the nominal
amount as determined by the Secretary. We proposed to consolidate
current regulations at Sec. 447.54(b) and Sec. 447.72 related to non-
emergency use of the ED into proposed Sec. 447.54. To facilitate
states' ability to utilize flexibility provided in existing
regulations, for all individuals with income at or below 150 percent of
the FPL, we proposed to allow cost sharing of no more than $8, which
represents twice nominal, for non-emergency use of the ED without
requiring a waiver. The proposed changes are discussed in more detail
in the January 22, 2013 Medicaid Eligibility Expansion proposed rule
(78 FR 4659 and 4660). We received the following comments concerning
the proposed provision for cost sharing specific to non-emergency use
of the ED:
Comment: Many commenters opposed the policy to allow up to $8 for
non-emergency use of the ED because it might cause individuals with
incomes at or below 150 percent of the FPL to forego necessary
services, including potentially lifesaving services, and because many
Medicaid beneficiaries go to the ED because they lack access to regular
sources of primary care. Foregoing necessary services may result in
adverse health outcomes requiring more expensive care later. Many
commenters recommended that the maximum allowable cost sharing should
be set at $3.30 for individuals with family income at or below 100
percent of the FPL, $6.30 for individuals with family income from 101-
150 percent of the FPL and $12.00 for individuals with family income
above 150 percent of the FPL. Several other commenters recommended that
the maximum allowable cost sharing amount for non-emergency use of the
ED be limited to $4 to align with what is proposed for other services.
Several commenters recommended that CMS allow states the flexibility to
impose cost sharing for
[[Page 42276]]
non-emergency use of the ED that exceeds $8, to decrease inappropriate
use of the ED. One commenter recommended that up to three times the
outpatient services copayment (rather than two) should be allowed in
states that are working to expand access to alternative options for
care. Many commenters recommended that for individuals with family
income at or below 100 percent of the FPL, we revise the regulations to
allow cost sharing for non-emergency use of the ED, only when no cost
sharing (rather than lesser cost sharing) is imposed to receive such
care through an outpatient department or other alternative health care
provider in the geographic area of the hospital ED involved.
Response: We believe it is important for states to have options to
incentivize care in the most appropriate settings and to encourage
individuals to develop a regular source of care, to the extent that
beneficiaries are assured timely access to needed care. One option to
achieve this is through cost sharing initiatives, therefore, we are
finalizing Sec. 447.54(b) as proposed, however we note that we have
made some minor technical changes in the final rule to spell out the
term emergency department instead of using the acronym ED and to refer
to non-emergency services instead of treatment. The technical changes
are for clarification only and are not intended to be substantive. The
$8 maximum for non-emergency use of the ED is twice the nominal amount
for outpatient services, which is the maximum allowable cost sharing
permitted under sections 1916 and 1916A of the Act for individuals with
income at or below 150 percent of the FPL. The statute does not limit
the amount states can impose for non-emergency use of the ED on
individuals with income over 150 percent of the FPL (other than through
the aggregate cap of 5 percent of family income), and we do not have
the authority to limit such cost sharing through regulation. Section
1916 of the Act requires that there be an accessible alternative
provider to provide the services, but does not require that there be no
cost sharing for such services and section 1916A of the Act requires
there be lesser cost sharing for services provided by the alternative
provider, or no cost sharing if the cost sharing is being applied to an
otherwise exempt individual. To streamline the requirements to make it
administratively feasible for states to meet this requirement, we are
maintaining the proposed policy in the final rule that services
provided by an alternative provider must be available with lesser cost
sharing or no cost sharing only if the individual is otherwise exempt
from cost sharing. We note that for individuals with income at or below
100 percent of the FPL the state may not allow a provider--including a
hospital ED--to deny services in the event that an individual is unable
to pay the cost sharing.
We note that in the final rule we are deleting Sec. 431.57 of this
subchapter relating to the waiver of cost sharing requirements for
states to impose cost sharing for non-emergency services furnished in
an ED. This language is redundant with Sec. 447.54(b) of the final
rule, which allows states may impose cost sharing up to twice the
nominal amount for such services through the state plan. In addition to
this technical change, we updated the citations to the cost sharing
regulations at Sec. Sec. 435.121, 435.831, 436.831, 438.108, 440.250,
447.15, 447.20, and 457.540.
Comment: One commenter recommended that CMS make public the amount
of documented Medicaid savings in states that have imposed cost sharing
for non-emergency use of the ED.
Response: We are not revising the rule to require states to
document savings. However, we will examine available options for
sharing best practices and other data available from states with
successful ED diversion programs.
Comment: Several commenters noted a drafting error at Sec.
447.54(c), which they believe should be revised to read: ``. . . not to
exceed the maximum amount established in paragraph (b) of this section.
. .'' The commenters also believed we made an error in Sec. 447.54(d),
which they think should read ``. . . to impose cost sharing under
paragraph (a), (b) or (c) of this section of non-emergency. . . .''
Response: We agree that there was a drafting error in paragraph (c)
and have corrected the provision in this final rule. However, paragraph
(d) was written as intended, and is finalized as proposed. Paragraphs
(a) and (c) provide the authority to impose cost sharing, while
paragraph (b) describes the maximum allowable amounts.
Comment: One commenter recommended that cost sharing for non-
emergency use of the ED should be permitted for any visit to the ED
that does not result an inpatient stay.
Response: Sections 1916 and 1916A of the Act prohibit cost sharing
for emergency services. As there are many emergency conditions and
services that do not result in an inpatient stay, the commenters'
suggested policy would violate the statute.
Comment: Many commenters recommended that states that impose cost
sharing for non-emergency services provided in an ED be required to
permit newly-enrolled individuals to make at least one non-emergency ED
visit before requiring them to pay this cost-sharing obligation.
Response: States have the option to establish such a policy under
current regulations and the new rule as finalized, but we do not think
it appropriate to require it.
Comment: Some commenters suggested that we designate underserved
areas and/or certain periods of time in which insufficient access
warrants exemption from cost sharing for non-emergency use of the ED.
Response: Per Sec. 447.54(d), before imposing cost sharing for
non-emergency use of the ED, the hospital must provide the individual
with a name of and location of an available and accessible provider and
provide a referral to coordinate scheduling. If geographical or other
circumstances prevent the hospital from meeting this requirement, the
cost sharing may not be imposed.
Comment: Several commenters asked that we refrain from adding more
specificity or requirements in the regulation itself, for example
imposing further requirements or pre-conditions on a state's authority
to impose cost sharing for non-emergency services provided in an ED,
which they believed would limit the ability of states to account for
variation across states. A few commenters were concerned that we had
added a new requirement in stipulating that hospitals ensure that an
alternative provider is available to provide needed services with
lesser or no cost sharing. They were concerned the use of the term
``ensure'' in proposed Sec. 447.54(d)(2)(ii) would require hospitals
to ``ensure'' something beyond their control, presenting unnecessary
administrative burden for state administrators and hospitals. Many
commenters stated that CMS should remove the requirements at proposed
Sec. 447.54(d)(2)(iii) that ED staff provide a referral and coordinate
scheduling with an available and accessible alternative non-emergency
services provider, because it is administratively burdensome and takes
time and resources away from patient care. In addition, they argue that
compliance is infeasible given hospitals' limited access to current,
accurate information on the availability of appointments with other
providers. The commenters believed that these requirements will make it
difficult for states to take up the
[[Page 42277]]
option afforded under the statute and that it would be less costly for
an ED to provide treatment for the non-emergency conditions than to
coordinate a referral. One commenter stated that the requirement to
provide a referral is unnecessary because in many state managed care
programs, every enrollee has a primary care provider and 24-hour call-
in lines are available, enabling hospitals providing the care to
contact either the enrollee's primary care provider or the 24-hour
call-in line as an alternative to following the steps listed in Sec.
447.54(d). Another commenter stated that the language in proposed Sec.
447.54(d)(2)(iii) differs from the requirement at current Sec.
447.80(b)(2)(iii), and that the revised language would impose
additional burdens on states' ability to effectively implement cost
sharing. The commenter noted that current Sec. 447.80(b)(2)(iii)
requires hospitals to provide ``a referral to coordinate scheduling of
treatment by an available and accessible alternative non-emergency
services provider,'' while proposed Sec. 447.54(d)(2)(iii) requires
hospitals to ``coordinate scheduling and provide a referral for
treatment by this provider.''
Response: We did not intend to add additional requirements for
hospitals related to cost sharing for non-emergency use of the ED.
Rather, our intent was to clarify the existing language. To eliminate
any confusion, we are replacing the word ``ensure'' with ``determine''
in Sec. 447.54(d)(2)(iii), as redesignated in the final regulation.
This is consistent with the statutory requirement that before
collecting cost sharing for non-emergency use of the ED, hospitals must
provide individuals with the name and location of an available and
accessible provider that can provide the service with lesser or no cost
sharing. States share in this responsibility, of course, and will need
to work with hospitals to ensure that hospitals are able to determine
whether such care is available and accessible. The goal underlying the
policy is to ensure that the right care is provided at the right time
in an appropriate setting.
The language in proposed Sec. 447.54(d)(2)(iii), redesignated at
Sec. 447.54(d)(2)(iv) of this final rule, was intended to clarify the
referral requirement, which is in current regulation at Sec.
447.80(b)(2), and which reflects statutory language. We did not intend
to change the substance of the rule. However, to avoid any confusion we
are revising Sec. 447.54(d)(2)(iv) to reinstate the language from the
current rule that hospitals must provide a referral to coordinate
scheduling for treatment by an alternative provider. To confirm that
the alternative non-emergency services provider is ``actually available
and accessible'' as required by statute, it is important that
scheduling be done onsite, with the beneficiary present, to the maximum
extent possible. We recognize that this may not be possible during
certain hours of the night, in which case follow-up scheduling may be
necessary. Hospitals can and should take advantage of the existence of
a call line and assigned primary care providers in satisfying the
coordination requirements in the statute and regulations, and states
should assure, before imposing such cost sharing, that procedures are
in place that can facilitate hospitals' ability to carry out these
responsibilities, including outside of regular business hours.
Comment: One commenter requested clarification of the referral
requirement, including whether a patient should have a scheduled
appointment, or just the information necessary to make an appointment,
with an alternative provider when he or she leaves the hospital;
whether community clinics or FQHCs may serve as alternative, non-
emergency providers for referral from the ED; and the appropriate
process for completing a referral when physician offices are closed.
One commenter requested that we define ``timely manner'' in proposed
Sec. 447.54(d)(2)(ii).
Response: The regulations are not prescriptive on the exact process
to be used by hospitals. States have flexibility to establish processes
to meet the coordination goals in the statute and regulations in a
manner that best accommodates their systems and provider networks. The
extent to which a state relies on managed care or establishes patient
centered medical homes, for example, may impact how a state would meet
the requirements in the regulation. As noted above, whenever possible,
hospitals should attempt to schedule the appointment while the patient
is present, but if that is not feasible, the hospital would need to
follow up to ensure that an alternative provider is ``actually
available and accessible'' in a timely manner, as required by statute.
Section 1916A (e)(4)(B) of the Act describes an alternative non-
emergency services provider as one ``that can provide clinically
appropriate services for the diagnosis or treatment of a condition
contemporaneously with the provision of the non-emergency services that
would be provided in an emergency department.'' Any Medicaid
participating providers, including clinics that can do so, are
acceptable. Because we do not think that there is a uniform definition
of timeliness that is appropriate for all situations, we are not
defining ``timely manner'' in the regulation. In meeting a general
timeliness standard, however, states should direct hospitals to
consider the medical needs of the individual to assess (1) whether care
is needed right away or if a short delay in treatment would be
sufficient, and (2) any particular challenges the person may face in
accessing follow-up care, such as leave from employment, child care, or
ability to receive language assistance services or accessible care for
people with disabilities. States will need to work with the hospitals,
non-emergency providers, and managed care organizations participating
in their Medicaid programs to design a referral network and system that
fulfills the statutory requirements prior to imposing cost sharing
amounts for non-emergency services provided by a hospital ED. The
intent of this provision is to provide an additional tool to ensure
that care is provided in a timely and appropriate manner to drive
better quality at lower costs. It is not to be implemented in a way
that results in people not getting the care they need.
Comment: One commenter believed that we omitted from proposed Sec.
447.54(d) some of the statutory requirements that hospitals must meet
before collecting cost sharing for non-emergency use of the ED,
including the obligation to inform the recipient that he or she does
not have an emergency medical condition and the requirement to notify
the recipient of the applicable cost sharing for treatment of a non-
emergency condition in the ED.
Response: We did not omit any of the statutory requirements in the
proposed rule. The requirement that the hospital inform individuals
whether or not they need emergency services, and of the cost sharing
obligation to receive services in the ED is implicit in the
requirements that the assessment be performed and that the hospital
provide the individual with the name and location of an available and
accessible alternative provider that can provide services with lesser
or no cost sharing. We do not see a need to state as much explicitly in
the text of the regulation. However, for clarity, we have added a new
paragraph (i) at Sec. 447.54(d)(2) requiring hospitals to ``inform the
individual of the amount of his or her cost sharing obligation for non-
emergency services provided in the emergency department.'' Proposed
Sec. Sec. 447.54(d)(2)(i) through (iii) are redesignated in this final
rule as Sec. Sec. 447.54(d)(2)(ii) through (iv), respectively.
[[Page 42278]]
Comment: A few commenters recommended that the Secretary ensure
that the safeguards at Sec. 447.54(d) are observed by states that
impose cost sharing for non-emergency use of the ED.
Response: We will ensure through the state plan amendment process
that the requirements of Sec. 447.54(d) are met, and expect to oversee
implementation to the extent feasible.
Comment: One commenter recommended that the final rule include
requirements for oversight and reporting to ensure that higher cost-
sharing is not imposed without verification of the availability of
alternative providers able to furnish non-emergency care. In addition,
the commenter recommended enhanced requirements for verification in
rural and other areas with a shortage of primary care physicians and
specialists that will see Medicaid patients that there is available and
accessible care by an alternative provider. A few commenters
recommended that, at a minimum, the ED should be required to specify
what the particular patient's cost-sharing obligation will be,
including in the case of a patient with income above 150 percent of the
FPL, that the patient may be responsible for 100 percent of the
charges. The commenter also believed that, prior to an emergency room
providing non-emergency care to a Medicaid beneficiary the hospital
should be required to obtain written consent from the individual to
receive the non-emergency care in the ED and to take responsibility for
any cost-sharing obligation for such care.
Response: The statute, codified at Sec. 447.54(d) in this
rulemaking, sets forth clear requirements that states must effectuate
to establish cost sharing for non-emergency use of the ED, including a
requirement that hospitals provide information on available and
accessible providers who can provide the needed non-emergency services
with lesser or no cost sharing. States must ensure that hospitals are
able to meet these requirements, whether in a rural, suburban, or urban
setting. We ensure that states are in compliance with the statute and
regulations through the state plan amendment process and will consider
whether further reporting is necessary for oversight purposes. For cost
sharing for individuals with income above 150 percent of the FPL, we
note that the statute does not require states to make such patients
responsible for 100 percent of the charges for non-emergency use of the
ED, but also does not limit the cost sharing that states can impose on
individuals in this income bracket for non-emergency use of the ED. At
proposed Sec. 447.52(b)(3), finalized in this rulemaking at Sec.
447.52(c), any cost sharing imposed for any service may not equal or
exceed the amount the agency pays for the service; such cost sharing is
also limited by the 5 percent aggregate limit described at Sec.
447.56(f).
Comment: Several commenters stated that the rule does not provide a
clear methodology for determining ``non-emergency'' status. One
commenter highlighted the preamble discussion in the proposed
regulation about the difficulty in determining whether a service is
needed to address an emergency situation based on Current Procedural
Terminology (CPT) codes alone, and the lack of guidance on other
standards that could be used, and requested that CMS more clearly
define ``non-emergency'' or provide states latitude to define as
needed. Another commenter shared our concerns about CPT codes and noted
that, while the imposition of non-emergency ED cost sharing is not
administratively feasible without some type list, any protocols must
also avoid violation of the emergency screening requirements under the
Emergency Medical Treatment and Active Labor Act (EMTALA). One
commenter stated that the EMTALA requirements are sufficient to
determine which individuals should be subject to cost sharing for non-
emergency use of the ED, and that states should not have to describe
the processes in the state plan. Another commenter expressed concern
about beneficiaries' general ability to distinguish between
``emergency'' and ``non-emergency'' symptoms. The commenter was
concerned that adequate protections be in place to ensure that
beneficiaries are not punished for seeking emergency care when doing so
is appropriate under a prudent layperson standard. Another commenter
agreed that in distinguishing between ``emergency'' and ``non-
emergency'' conditions, hospitals must use the prudent layperson
definition, not a discharge diagnosis. One commenter stated clinical
reviews of ER claims to look at presenting conditions such as chest
pain seem would be administratively burdensome, and could delay
treatment, referral, or payment to providers. Other commenters
requested that we either clearly define ``non-emergency'' services or
provide states with the latitude to define them as needed, and several
commenters asked us to maintain the maximum level of flexibility in the
rule to facilitate appropriate and feasible implementation of non-
emergency ED cost sharing.
Response: ``Non-emergency'' services are defined at Sec. 447.51,
which cross references to the current definition of emergency services
at Sec. 438.114. This definition relies on a prudent layperson
standard, in that a medical condition manifests itself by acute
symptoms of sufficient severity that a prudent layperson that possesses
an average knowledge of health and medicine could deduce that they need
emergency medical attention. We agree that it is difficult to implement
a system to differentiate non-emergency from emergency services for
cost sharing purposes in a way that ensures beneficiary protections
consistent with the prudent layperson standard. We continue to believe
that the use of diagnosis and procedure codes alone is not an
appropriate process for determining non-emergency services, as doing so
would not adequately protect beneficiaries legitimately seeking ED
services based on the prudent layperson standard, for whom a CPT code
assigned after care is provided may indicate a non-emergency condition.
We sought comments on feasible methodologies for states and hospitals
to use to make this distinction, but did not receive any
recommendations. Therefore, we are not making any revisions in the
final rule to prescribe how states can and should distinguish between
``emergency'' and ``non-emergency'' conditions for cost sharing
purposes. We remain open to states' proposals for distinguishing
between ``emergency'' and ``non-emergency'' conditions and will review
such proposals through the state plan amendment process. As successful
models emerge we will develop further guidance.
Comment: One commenter asked if would be reasonable to have the
Medicaid agency reimburse hospitals for the medical screening that they
must conduct. Another commenter asked if a hospital could be reimbursed
for providing a referral and giving advice on other appropriate
providers.
Response: To the extent the provider properly bills the Medicaid
agency for an assessment or evaluation conducted on a Medicaid
beneficiary, the provider would be entitled to payment for the service
as provided for in the state's Medicaid State plan. States may also
establish payment specifically for the medical screening exam required
by EMTALA and/or for coordination of referrals to alternative non-
emergency services providers.
Comment: One commenter suggested that CMS allow hospitals to charge
the maximum allowable cost-sharing amount for non-emergent care, and
then refund the beneficiary if needed. The
[[Page 42279]]
commenter expressed concern that hospitals will not be able to impose
cost sharing on beneficiaries after they have left the ED.
Response: The statute requires that before providing and imposing
cost sharing for non-emergency services in an ED, the hospital must
inform the beneficiary of the cost sharing obligation tied to those
services and provide the name and location of an available, accessible,
alternative provider that can provide the services with no or lesser
cost sharing. This allows the beneficiary to forgo treatment in the ED
if they do not have the ability to pay the cost sharing. If the
individual decides to stay and receive the services at the ED, the
hospital can impose the cost sharing while the person is still present.
Comment: One commenter stated that for hospitals, the collection of
Medicaid cost-sharing amounts for non-emergency care in ED settings can
prove difficult, leading to lack of payment and increases in bad debt.
Response: The statute allows states to impose cost sharing for non-
emergency care in an ED and sets out the requirements that hospitals
must meet to collect such cost sharing. We do not have the authority to
take away this option or ignore the statutory requirements and will
work with states and the hospital community to share best practices and
potentially issue further guidance.
Comment: One commenter requested clarification as to whether urgent
care centers are subject to the guidelines for cost sharing for non-
emergency use of the ED.
Response: No, this rule only pertains to non-emergency services
furnished in an ED.
Comment: A few commenters supported what they believed was a new
option regarding cost sharing for non-emergency services provided in
the ED to beneficiaries who are otherwise exempt from cost sharing.
Response: This is not a new option. This is a statutory option
described at section 1916A(e)(2)(B) of the Act and codified in current
regulations at Sec. 447.70(b).
Comment: One commenter stated that instead of focusing on cost
sharing, which could result in harm to patients, we should focus on
best practices for medically sound ways of reducing unnecessary
emergency department visits, such as electronic exchange of patient
information, care coordination, patient education on appropriate use of
the ED, and guidelines for prescribing narcotics. One commenter was
concerned that focusing on cost sharing does not address why patients
seek care in an ED, and that hospitals trying to decrease non-emergency
ED use will inadvertently run afoul of either EMTALA or their state's
emergency access rules. The commenter recommended that some form of
safe harbor be established for hospitals trying, in good faith, to
encourage the most appropriate use of resources for non-emergency care.
Response: We agree that there are many strategies which states can
and have implemented to address the problem of non-emergency use of
hospital EDs. However, whether or not cost sharing is the most
effective way to address non-emergency use of the ED, it is an option
provided to states in the statute. We are available to work with all
states in exploring the full range of options to reduce non-emergency
use of the ED, and to share best practices which emerge.
7. Premiums (Sec. 447.55)
We proposed one simplified, consolidated section of the regulations
to implement the options authorized under sections 1916 and 1916A of
the Act relating to the imposition of premiums on individuals with
family income above 150 percent of the FPL, and describe the options to
impose premiums for specific populations. The proposed changes are
discussed in more detail in the January 22, 2013 Medicaid Eligibility
Expansion proposed rule (78 FR 4660). We received the following
comments concerning the proposed premiums provisions:
Comment: Several commenters recommended that we revise proposed
Sec. 447.55(a)(2) to clarify that states are allowed to impose
premiums on qualified disabled and working individuals if the
individual's income exceeds 150 percent of FPL. The commenters also
noted that proposed Sec. 447.55(c) does not reflect statutory
requirements in section 1916 of the Act that limit aggregate premium
expenses for individuals provided medical assistance under section
1902(a)(10)(A)(ii)(XV) or 1902(a)(10)(A)(ii)(XVI) of the Act and the
Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA), to
no more than 7.5 percent of the individual's family income for those
whose annual income does not exceed 450 percent of the FPL.
Response: We agree with the commenters. Due to a drafting error,
the allowable premiums and limitations described at proposed Sec.
447.55 were not clear. We have revised paragraph (a) and paragraph (c)
(redesignated as paragraph (b) for clarity), of Sec. 447.55 to address
this error. Paragraph (b)(1) describes the limitations on prepayment;
paragraph (b)(2) describes the options for terminating an individual
for failure to pay, paragraph (b)(3) describes the statutory
requirements noted by the commenter for individuals receiving medical
assistance under TWWIIA, and paragraph (b)(4) describes the state's
option to waive premiums for any individual or family. In addition to
these clarifications, we revised the description of pregnant women who
may be charged premiums at Sec. 447.55(a)(1) to reflect the
consolidation of different statutory eligibility groups for pregnant
women under a single regulatory section at Sec. 435.116 of the March
2012 final rule. This is not a substantive change and is intended
solely to assist states in appropriately identifying those
beneficiaries who may be charged premiums, as described in the statute.
As noted above, we made a similar revision to the description of
children who are exempt from premiums and cost sharing at Sec.
447.56(a)(1)(i) through (iii) of this final rule.
Comment: Several commenters recommended that Sec. 447.55 be
revised to clarify that premiums can only be imposed on medically needy
individuals after their spend-down amount is met and they are receiving
Medicaid; they cannot be included as part of the spend down.
Response: An individual cannot be subject to a premium unless he or
she is eligible for Medicaid. States may not impose a premium until the
month in which the individual has met his or her spend-down and becomes
eligible.
Comment: Several commenters recommended that the regulations
require a process for waiving premiums in cases of undue hardship; and
that the process adopted by a state should be set forth in the state
plan and reflected in state law and other public documents. One
commenter asked for CMS to provide examples of ``hardship.''
Response: The decision to waive premiums due to hardship is a
matter of state policy. Such policies do not require prior
authorization from the Secretary. Therefore we are not revising the
regulations as suggested.
Comment: One commenter stated that ``sliding scale'' premiums
imposed on the medically needy under Sec. 457.55 must actually
``slide'' so that there is a lowest-income group of individuals for
whom there is no premium and that premiums for higher income
individuals increase linearly or quasi-linearly up to $20 for those at
or near 150 percent of the FPL. One commenter stated the $20 allowable
premium should be removed from the regulation.
[[Page 42280]]
Response: Section 1916 of the Act expressly permits states to
impose premiums on medically needy individuals on a sliding scale, but
does not require that the lowest income medically needy individuals are
charged $0 premiums. Current regulations at Sec. 447.52 allow for
premiums on a sliding-scale basis up to $19, and we are finalizing the
proposal to increase that amount to $20. We have revised the
regulations at Sec. 447.55(a)(5) to clarify that, if premiums are
imposed on medically needy individuals on a sliding scale, the agency
must impose an appropriately higher premium for individuals at higher
levels of income, with $20 being the maximum allowable premium at the
highest income level. States may choose to set their highest premium at
a level below $20.
Comment: One commenter asked for clarification of the consequences
for ``non-payment'' that are described at proposed Sec.
447.55(c)(1)(ii) and (2)(ii). The commenter recommends that termination
be allowed for failure to make full payment, and that partial payment
is not adequate to prevent termination from the program.
Response: As noted previously, due to a drafting error, we have
revised Sec. 447.55(c) (redesignated as paragraph (b) of the final
rule) to clarify the consequences for non-payment for all individuals
subject to premiums. As described in paragraph (2), except for
medically needy individuals, states have the option to terminate any
individual who has failed to pay all or part of his or her premium
obligation. The state may not terminate an individual prior to 60 days
after the failure to pay the premium. The state may not terminate an
individual who, during that time period, has paid the premium due in
full. To reiterate current policy, we also added a new paragraph (5) to
Sec. 447.56(b) to indicate that no further consequences can be applied
for non-payment of Medicaid premiums, including ``lock-out'' periods.
We note that we redesignated paragraph (c) as paragraph (b) in the
final rule to move the state plan requirements after the section
related to consequences for non-payment. This change is to improve the
flow of the regulation and is not intended to be substantive.
Comment: One commenter was concerned that proposed Sec. 447.55(c)
would permit states to terminate Medicaid coverage for failure to pay
premiums for as little as 60 days. While the commenter calls this an
improvement over the current regulation, which they believe does not
establish any minimum grace period, the commenter believed that states
should be encouraged to work with beneficiaries on a payment schedule
to avoid a termination.
Response: Proposed Sec. 447.55(c), redesignated as Sec. 447.55(b)
in the final rule, does not represent new policy. This option,
established under both sections 1916 and 1916A of the Act, is currently
codified at Sec. 447.80 for individuals with income over 150 percent
of the FPL who are subject to premiums under section 1916A of the Act.
In this final rule, we are simply codifying the requirements as they
relate to premiums imposed under the authority of section 1916(c) of
the Act.
8. Limitations on Premiums and Cost Sharing (Sec. 447.56)
We proposed a single streamlined approach to implement the
limitations on premium and cost sharing established under sections 1916
and 1916A of the Act wherever the policies align. Sections 1916(a),
(b), and (j), and 1916A(b)(3) of the Act specify certain groups of
individuals as exempt from premiums and/or cost sharing, including
certain children, pregnant women, certain American Indians and Alaska
Natives (AI/ANs), certain individuals residing in an institution,
individuals receiving hospice care and individuals eligible under the
optional eligibility group for individuals with breast and cervical
cancer under Sec. 435.213 of this part. The proposed changes are
discussed in more detail in the January 22, 2013 Medicaid Eligibility
Expansion proposed rule (78 FR 4660 and 4661). We received the
following comments concerning the proposed limitations on premiums and
cost sharing provisions:
Comment: Two commenters recommended that proposed Sec. 447.54(c),
which permits states to impose cost sharing for non-emergency use of
the ED on individuals otherwise exempt from cost sharing, should not
apply to AI/AN beneficiaries who are exempt from cost sharing.
Response: We are finalizing the regulation as proposed. Sections
1916A(c)(2)(B) and 1916A(e)(2)(B) of the Act permit states to charge
nominal cost sharing to individuals otherwise exempt from cost sharing
under section 1916A(b)(3)(B) of the Act for non-preferred drugs and
non-emergency use of an ED. There is no differential treatment under
the statute for AI/ANs as compared to other individuals who are
otherwise exempt from cost sharing. However, such cost sharing must be
limited to the nominal and neither a pharmacy nor a hospital ED may
deny services if the individual does not pay the cost sharing.
Comment: We solicited comments about requiring states to
periodically renew an AI/AN's cost sharing exemption based on current
or previous use of a service from an Indian health care provider or
through referral under contract health services. A number of commenters
supported proposed Sec. 447.56(a)(1)(vii) to exempt AI/ANs who are
currently receiving, or have ever received a service from an Indian
health care provider or through referral under contract health services
from any cost sharing. Several commenters were concerned that requiring
renewal of status for the exemption would be administratively
burdensome for both AI/AN individuals and state Medicaid agencies and
could lead to exempt individuals being subject to impermissible cost
sharing. A few commenters recommended that if renewal of the AI/AN
exemption status is required, that such renewal be limited to no more
than once every three years, which is the period of time used by IHS
for determining ``active users'' in an IHS or tribal service unit. No
commenters supported a renewal policy for AI/AN exemption.
Response: We are adopting the AI/AN exemption as proposed because
we do not see any particular utility in requiring renewal of status,
since the underlying eligibility for IHS or tribal health services is
unlikely to change, and we agree that renewal of status can be
burdensome for both the beneficiary and the provider. Once the
exemption for an individual at Sec. 447.56(a)(1)(x), as redesignated
in this final rule, is established, a renewal of such exemption will
not be necessary. We note that we added a definition of contract health
service at Sec. 447.51 for clarity and made a technical correction
under the definition of Indian to reflect revised citations to 25 U.S.C
due to changes made by the Affordable Care Act. We do not intend these
to be substantive changes to the regulations.
Comment: One commenter recommended we permit states to implement
specific processes to track separate cost sharing for AI/ANs related to
the 5 percent aggregate limit as permitted by current regulation.
Response: We do not see a need for states to separately track cost
sharing for AI/AN beneficiaries, the majority of whom are exempt from
cost sharing under the regulations. For any individuals permissibly
subject to cost sharing, the same 5 percent aggregate limit applied to
other beneficiaries, and the same requirement to track cost sharing
charges, would apply.
[[Page 42281]]
Comment: A few commenters suggested states should have broad
latitude in applying verification procedures to exempt AI/ANs who are
eligible for or currently or have ever received a service from an
Indian provider or through referral under contract health services
(CHS) from premiums and cost sharing respectively, and that procedures
that create the least burden on individuals, including electronic
processes, be employed by states. They recommended that self-
attestation of status for the AI/AN cost sharing exemption be
permitted, that if verification is required that electronic data
matching should be used to the maximum extent possible, and that we
provide a list of possible documents which states could use when
electronic verification is not available.
Response: There are no specific federal requirements regarding the
process for verifying premiums and cost sharing exemptions for AI/ANs.
States have flexibility to establish their own processes for verifying
who is eligible to receive or has ever received a service from an
Indian provider or through referral under CHS, including the use of
self-attestation, electronic data matches or reasonable paper
documentation, as long as the process is not unduly burdensome on AI/
ANs.
Comment: One commenter requested that CMS clarify that family
planning supplies are exempt from differential cost-sharing for non-
preferred drugs. Another commenter recommended that CMS clarify that
the limitations on premiums and cost sharing also apply to family
planning-related services, including office visits. Commenters believed
that this clarification is particularly important for coverage of
family planning under the state plan, permitted under section
1902(a)(10)(A)(ii)(XXI) of the Act, as added by section 2303 of the
Affordable Care Act, which defines ``medical assistance'' covered under
this option to include both family planning and family planning-related
services.
Response: Under sections 1916 and 1916A of the Act and Sec. 447.53
and Sec. 447.70 of the current regulation, family planning services
and supplies, including contraceptives and pharmaceuticals for which
the state properly claims or could claim at an enhanced federal match,
are exempt from cost sharing. We did not propose any changes to this
exemption, which is codified at Sec. 447.56(a)(2)(ii) of this final
rule. We do not have the statutory authority to require states to
exempt ``family planning-related services,'' which are a separate
category of services, but states have the option to do so.
Comment: One commenter requested that we clarify that pregnant
women receiving services during a period of presumptive eligibility are
also exempt from premiums and cost sharing.
Response: Individuals who are receiving benefits during a
presumptive eligibility period, but who have not yet been determined
Medicaid eligible by the agency, based on a regular application,
including pregnant women, may not be subjected to the premiums. In
addition, all pregnancy-related services are exempt from cost sharing,
including during a period of presumptive eligibility. As described in
the March 2012 final eligibility rule, ``Pregnancy related services''
is presumed to include all services otherwise covered under the state
plan unless the state has justified classification of a service as not
pregnancy-related in its state plan.
Comment: Many commenters supported the provision in proposed Sec.
447.56(a)(1)(v) to give states the option to exempt individuals from
cost sharing if they are receiving long term services and supports in a
home or community-based setting and are required to contribute to the
cost of care in a manner similar to the post-eligibility treatment of
income for institutionalized individuals under part 435 subpart H of
the regulations. Many commenters recommended that we require states to
exempt such individuals because imposing cost sharing could push
individuals into more restrictive settings in violation of the
requirements of the Americans with Disabilities Act (ADA), as applied
by the Supreme Court in the Olmstead decision. A few commenters
recommended that we require states to exempt all individuals receiving
services in a home and community-based setting regardless of whether
they are required to contribute to the cost of their care. Finally, one
commenter asked that we clarify that we are not proposing to extend the
same post-eligibility treatment of income rules used for institutional
services to individuals receiving services in a home and community-
based setting who, in addition to any contribution for the cost of
their care, also generally have to cover other basic living expenses,
such as for housing and food, and would not be able to cover such
expenses if they were required to contribute all but a nominal amount
of their income to cover the cost of the services received, as is the
case for institutionalized individuals.
Response: As noted above, we do not see a statutory basis to
require this exemption, therefore in the final rule, at Sec.
447.56(a)(1)(viii), as redesignated, we maintain the option for states
to exempt individuals receiving services in a home and community-based
setting, whose medical assistance is reduced by amounts reflecting
available income other than required for personal needs. This option is
consistent with state authority under section 1916A of the Act to
target cost sharing to specified groups. In addition, states may target
cost sharing at particular types of services, and could determine not
to impose cost sharing on home and community-based services. We also
note that if an individual has his or her medical assistance reduced to
account for available income, the individual would be able to deduct
any premiums or cost sharing from the calculation of available income
used to determine the level of medical assistance provided. There would
be no modification of current regulations relating to post-eligibility
treatment of income or share-of-cost. Again, we remind states of their
obligations under Olmstead.
Comment: One commenter recommended that former foster care children
covered under Sec. 435.150 should be exempt from premiums and cost
sharing. Several commenters recommended that states be given the
express option to exclude medically frail individuals from cost
sharing.
Response: While we understand that these are populations upon which
states may not wish to impose cost sharing, we do not see a clear basis
to support a federally-mandated exemption. States are free to use
targeted cost sharing, in accordance with Sec. 447.52(d), to limit the
impact of cost sharing as needed to address issues of non-exempt
populations that the state determines are particularly vulnerable.
Comment: One commenter requested clarification on the provision at
Sec. 447.56(c)(3), which is specific to providers that the agency
reimburses under Medicare reasonable cost reimbursement principles. The
commenter asked whether the policy that an agency may increase its
payment to offset uncollected deductible, coinsurance, copayment, or
similar charges that are bad debts of such providers was a change or
consistent with current law.
Response: This policy is contained in the current regulations at
Sec. 447.57(b). However, consistent with the new definition of cost
sharing included at Sec. 447.51 of this final rule, we are replacing
the reference to ``deductible, coinsurance, copayment, or similar''
with ``cost sharing'' in the final rule.
[[Page 42282]]
Comment: Many commenters recommended that we amend sections 1916
and 1916A of the Act to clarify that the preventive services included
in the EHBs are exempt from cost sharing, because low income
individuals enrolled in Medicaid ABPs may be responsible for cost
sharing for some of the preventive services that are available to
higher income individuals in the private market with no cost sharing.
Response: Section 1916A of the Act and the final rule at Sec.
447.56(a)(2)(iii) do require exemption of preventive services for
children under age 18. At a minimum such services must include those
specified at Sec. 457.520, which reflect the well-baby and well child
care and immunizations in the Bright Futures guidelines issued by the
American Academy of Pediatrics. We do not see a basis to broaden this
statutory exemption under the Medicaid program to extend to preventive
services for older individuals. States have the flexibility to exempt
additional services from cost sharing and could determine to exempt
preventive services for all beneficiaries.
Comment: Many commenters recommended that we exempt services
associated with ``never events'' from cost sharing.
Response: We agree with commenters that services associated with
``never events'' should not be subject to cost sharing. In accordance
with Sec. 447.26(c)(1), ``no medical assistance will be paid for
``provider preventable conditions'' as defined in this section. We
interpret medical assistance in this context to include any state plan
imposed cost sharing, and providers, who are not permitted to claim
reimbursement from the agency for these services, also are not entitled
to charge the beneficiary any cost sharing amount. To clarify this
requirement, we have included provider-preventable services, also known
as ``never events,'' among the list of exempted services at Sec.
447.56(a)(2)(v).
Comment: One commenter recommended that we revise Sec.
447.56(a)(2)(iv) to require that all services provided to pregnant
women be considered as pregnancy-related, except those services
specifically identified in the state plan as not being related to the
pregnancy, only if the state is able to justify and the Secretary
concurs, that the service is not pregnancy-related.
Response: States have the discretion to determine pregnancy-related
services within the parameters of Sec. 440.210(a)(2). We are seeking
to align the standard related to cost sharing with what is required for
the provision of pregnancy-related services, and maintain in the final
rule that all services provided to pregnant women will be considered
pregnancy related unless the state has justified classification of a
service as not pregnancy-related in its state plan.
Comment: One commenter asked that we clarify what is meant by
``nonexempt'' and ``otherwise exempt populations,'' per the reference
to allowing states to impose cost-sharing at higher than nominal levels
for nonexempt individuals and applying cost sharing to otherwise exempt
populations at Sec. 447.56.
Response: Exempt populations are defined at sections 1916(a), (b)
and (j) and 1916A(b) of the Act and at Sec. 447.53 and Sec. 447.70 of
the current regulations. These populations are exempt from cost sharing
under section 1916 and 1916A(a) of the Act, respectively, but are not
exempt from cost sharing under section 1916A(c) or (e) of the Act,
which pertain to alternative cost sharing for non-preferred drugs and
non-emergency use of the ED. These exemptions were consolidated at
Sec. 447.56(a) of the proposed rule and maintained in the final rule.
When using the term ``nonexempt'' we are referring to beneficiaries who
do not fall into one of the groups exempted under Sec. 447.56(a) of
the final rule and therefore may be subject to cost sharing.
``Otherwise exempt populations'' refers to those populations that are
generally required to be exempted from cost sharing but are not exempt
from cost sharing under section 1916A(c) or (e) of the Act. Section
1916A of the Act allows states to impose cost sharing for drugs and
non-emergency use of the ED on ``otherwise exempt populations,''
meaning that such cost sharing may be imposed on beneficiaries who are
exempted from all other cost sharing per Sec. 447.56(a).
Comment: Many commenters were concerned that the aggregate limit
described in proposed Sec. 447.56(f) does not apply to individuals
with income at or below 100 percent of the FPL. Another commenter was
concerned that these rules created a new requirement for states to
apply the aggregate limit to cost sharing imposed under section 1916 of
the Act. A few commenters urged the Secretary to lower the aggregate
limit to something less than 5 percent.
Response: Under sections 1916 and 1916A of the Act, aggregate
premiums and cost sharing imposed may not exceed 5 percent of an
individual's income. This is a statutory limit and we do not have the
authority to require states to apply a lower cap. However, we are
revising the final regulation at Sec. 447.56(f)(1), and redesignating
the succeeding paragraphs accordingly, to provide that the aggregate
limit applies to all premiums and cost sharing incurred by all
individuals in the Medicaid household, at all income levels. At Sec.
447.56(f)(2) of the final rule, we maintain the requirement in current
regulation that states must track all incurred Medicaid premiums and
cost sharing for all members of the Medicaid household, if such
premiums and cost sharing could place any family member at risk of
reaching the aggregate limit.
Comment: Many commenters recommended we revise proposed Sec.
447.56(f)(3) to require states to inform beneficiaries, at risk of
reaching the aggregate limit, of the automated process used to track
premiums and cost sharing, and how they can obtain ongoing information
about how far they are from reaching the limit.
Response: Section 447.56(f)(2), as redesignated in this final rule,
requires that if a state imposes cost sharing that could result in
individuals reaching the aggregate limit, the state must describe their
process for tracking the premiums and cost sharing in their state plan.
Current regulations at Sec. 447.64(d)(2), redesignated atSec.
447.56(f)(3) in this final rule, do require the state to notify
beneficiaries and providers when the beneficiary reaches the cap. We
are revising this paragraph to restore language currently in Sec.
447.68(d) that was inadvertently removed in the proposed rule
indicating that the state must inform beneficiaries and providers of
the beneficiaries' aggregate limit. States must also have a process in
place for beneficiaries to request a reassessment of their aggregate
limit. We believe these rules provide the best balance between
minimizing administrative burden on states and modernizing the Medicaid
program to ensure beneficiaries are not charged amounts in excess of
the aggregate. We do not believe these rules prevent states from
establishing processes by which beneficiaries can regularly check their
status regarding the aggregate limit. To allow states flexibility, we
are not specifying the mechanisms by which such notifications must
occur.
Comment: One commenter recommended that the regulation should use a
single, annual (not monthly) cost sharing maximum, such as that used
for the Part D low-income subsidy, since renewals are completed on an
annual basis, and therefore cost-sharing maximums are most effectively
implemented on a well-established calendar-year basis.
Response: Section 1916A of the Act requires that the aggregate
limit be applied on a monthly or quarterly basis
[[Page 42283]]
as determined by the state; an annual limit is not permitted under the
statute.
Comment: One commenter requested that we clarify what is meant by
``premiums or cost sharing rules that could place beneficiaries at risk
of reaching the aggregate family limit'' in proposed Sec.
447.56(f)(3).
Response: If a state imposes premiums and/or cost sharing at a
level that could result in cumulative premiums and cost sharing
exceeding 5 percent of a beneficiary's family income (for all family
members on Medicaid, over the course of a month or quarter as
determined by the state), the state must implement an effective
tracking mechanism to ensure the cap is not exceeded. For example, a
state may establish a prescription drug copayment targeted to
individuals with family income above 150 percent of the FPL, and set
the copay at $1 for preferred drugs and $2 for non-preferred drugs. If
this is the only cost sharing to which these individuals are subject,
and they do not pay a premium, then it is unlikely that any beneficiary
would accumulate cost sharing charges in excess of 5 percent of his or
her family income, and the state would not have to establish a tracking
mechanism. However, if these same beneficiaries were also assessed a
premium of 4 percent of family income, beneficiaries may be at risk of
reaching the aggregate limit and the state would need to establish a
tracking mechanism. Anyone with income under 100 percent of the FPL,
who is subject to any cost sharing would likely be at risk of reaching
the aggregate limit and a tracking mechanism would likely be required.
We will work with states to determine their need for a tracking
mechanism through the state plan amendment process.
We note that if more than one Medicaid beneficiary resides in a
household, then the premiums or copayments of each beneficiary in the
household would count toward the aggregate limit. We do not
specifically define when cost sharing may place beneficiaries at risk
of reaching the aggregate limit, because of the many different
combinations of cost sharing and premium charges which it would be
possible for states to impose. We will monitor state compliance through
the state plan amendment process.
Comment: One commenter requested further guidance on ways to track
cost sharing for beneficiaries who change plans during the year.
Response: For individuals who change plan mid-year, the state must
establish a mechanism to continue tracking through the transition to
ensure that they do not exceed the cap. Alternatively, a state could
suspend any additional cost sharing until the next monthly or quarterly
period begins. We have in the past encouraged, and continue to
encourage, states to track cost sharing through their Medicaid
Management Information System (MMIS). As we review state plan
amendments and conduct audits, we will share best practices that emerge
among states to promote effective and efficient tracking systems.
Comment: Many commenters recommended that we remove the requirement
at proposed Sec. 447.56(f)(3) that states have an automated mechanism
for tracking each family's incurred premiums and cost sharing because
it is costly and presents a substantial administrative and operational
burden on state Medicaid agencies, their contractors, and providers.
Instead, the commenters recommended that the state should have an
opportunity to develop its own mechanism for tracking a Medicaid
enrollee's premium and cost sharing spending. A few commenters also
recommended that states should have the option of having the enrollees
track their own information. One commenter asked that we clarify that a
state that delegates responsibility for the administration of cost
sharing to managed care organizations must ensure the availability of
complete and timely information necessary for performing this role.
Response: We have revised Sec. 447.56(f)(2) in this final rule to
remove the word ``automated'' and replace it with ``effective.'' CMS
will review state proposals through the state plan amendment process to
ensure that tracking mechanisms employed by states are effective in
ensuring that incurred premiums and cost sharing do not exceed the
aggregate limit and that the tracking mechanism does not rely on
beneficiaries. We note that under current regulations states must
account for cost sharing amounts in their MMIS to ensure appropriate
provider payment and must calculate each family's aggregate limit--from
data in the state's eligibility system--and provide that information to
the beneficiary. States may claim federal matching funds to update
their MMIS and eligibility systems as necessary to implement a tracking
system that uses the data already available in their systems to
implement the aggregate limit. States have the flexibility to develop
any effective process that does not rely on beneficiaries, and contains
timely and accurate information so that beneficiaries do not exceed
their aggregate limits. In addition, a state may delegate this
responsibility, as appropriate, to their managed care organizations
although we are not requiring that they do so. Tracking of premiums and
cost sharing is standard industry practice among health plans,
including those that participate in the Medicaid program, and is
consistent with implementing the requirements of the Affordable Care
Act out-of-pocket limits for all Americans, which will require tracking
by all private health insurance plans.
Comment: One commenter stated that the flexibilities provided in
the proposed rule, including the higher cost sharing limits, are
negated by the continued application of the aggregate limit. The
commenter argues that the high cost sharing limits effectively will
serve as a provider rate cut, which will trigger further decrease in
access to health care for Medicaid beneficiaries. The commenter
recommends that we allow exceptions to the 5 percent aggregate limit
and the automated tracking requirements, allowing states to propose in
their state plan reasonable assumptions and methodologies to limit
maximum out-of-pocket costs at an individual or family level. The
commenter believed such an approach, coupled with provisions for
exceptions and an appeals process involving clear timelines to preserve
access to care, would be consistent with the spirit of the statute.
Response: We do not understand the connection that the commenter is
making between the aggregate limit and effective provider reimbursement
rates. Once the limit is reached, the beneficiary may not be charged
any cost sharing amounts, and providers will be paid the full
reimbursement rate by the state. Regardless, the application of an
aggregate limit, which is common practice in commercial insurance as
well, is required by section 1916A of the Act, as added by the Deficit
Reduction Act of 2005; we do not have authority to eliminate this
requirement through regulation.
9. Beneficiary and Public Notice Requirements (Sec. 447.57)
We proposed to codify existing policy to ensure that beneficiaries,
providers, and the general public all have access to effective notice
of Medicaid premium and cost sharing charges. Appropriate vehicles for
providing notice might include the agency Web site, newspapers with
wide circulation, web, and print media reaching racial, ethnic, and
linguistic minorities, stakeholder meetings, and formal notice and
comment in accordance with the state's
[[Page 42284]]
administrative procedures. We received the following comments
concerning the proposed provisions for beneficiary and public notice
requirements:
Comment: One commenter asked for clarification on what constitutes
a method to which applicants, beneficiaries, and providers are ``likely
to have access,'' and whether publication on a state Web site would be
an acceptable method. One commenter strongly disagreed that state
legislative hearings do not provide sufficient public, beneficiary and
provider notice and recommended that such hearings be included as one
of the options for providing sufficient notice.
Response: To allow flexibility for different state processes while
ensuring provision of meaningful notice, we are not prescribing the
particular method or format that states must use to provide the
required notice, but instead proposed parameters at Sec. 447.57,
finalized with one revision (discussed below) in this rulemaking,
regarding what constitutes sufficient notice. We provided examples of
acceptable methods in the preamble to the proposed rule, including
notice on the state agency's Web site. As stated in the preamble to the
proposed rule, we do not believe that legislation discussed at a
hearing or posted on a Web site is adequate, since state legislation
and legislative hearings often are not accessible or understandable to
many beneficiaries, providers or other interested members of the
public.
Comment: Many commenters supported the proposal to require that
states provide additional public notice if proposed cost sharing is
substantially modified during the state plan amendment (SPA) approval
process. Many of these same commenters also recommended that we require
states to provide at least a 30-day comment period on any revisions to
a SPA involving premiums or cost sharing charges. A few commenters were
concerned that the proposed rule would be too burdensome on states and
recommended that no additional public notice requirements be imposed on
states.
Response: We have revised the regulations at Sec. 447.57(c) to
require states to provide additional public notice if proposed cost
sharing is substantially modified during the SPA approval process. We
are also applying this rule to premiums that are substantially modified
during the SPA process. We are not, however, accepting the
recommendation that states should have to provide a second 30 day
comment period for any revisions made to the state's cost sharing
policy during the SPA approval process, as we believe this would be
overly burdensome on states and significantly delay the SPA process.
III. Provisions of the Final Regulations
For the most part, this final rule incorporates the provisions of
the proposed rule. We received many comments about the complexity of
the proposed rules and the significance of the changes that need to be
made to fully implement the provisions of the Affordable Care Act. Many
commenters were concerned about the short timeframes for implementation
and about states' ability to make needed changes to policy, operations,
and information technology systems. We recognize that the timing of
this rule may result in implementation challenges, especially from a
systems perspective. Therefore, we have evaluated the provisions of the
January proposed rule that are necessary to meet the deadlines and are
finalizing in this rule only those provisions that we believe states
will be reasonably able to (or have already been planning to) implement
by January 1, 2014. Remaining provisions will be finalized in future
rulemaking. Those provisions, included in this final rule, that differ
from the proposed rule are as follows:
Change to Sec. 431.10
Clarified responsibilities of single state agency related
to delegation of fair hearings.
Change to Sec. 431.201
Added the definition of ``send.''
Change to Sec. 431.205
Clarified language in Sec. 431.205(b).
Change to Sec. 431.206
Clarified in Sec. 431.206(d) that an individual has a
right to a hearing before the Medicaid agency instead of the Exchange
or Exchange appeals entity.
Change to Sec. 435.603
Specified in Sec. 435.603(d)(4) that the 5 percent
disregard should be applied to the highest income standard in the
applicable Title of the Act under which the individual may be
determined eligible using MAGI-based methodologies.
Change to Sec. 435.908
Deleted paragraph Sec. 435.908(c)(3)(i).
Change to Sec. 435.918
Allowed for delayed implementation of electronic notices
and required that the Agency ensure that an individual's election to
receive notices electronically is confirmed by regular mail and that
the individual is informed of his or her right to change such election.
Change to Sec. 435.923
Clarified in Sec. 435.923(a) that any authorization
granted under operation of state law may serve in place of written
authorization by the applicant or beneficiary.
Change to Sec. 435.1015
Clarified that states are required to consider the cost
sharing requirements of the private health plan when determining
whether premium assistance is a cost-effective option.
Changes to Sec. 435.1110
Revised Sec. 435.1110(c)(1) to make clear that states
electing to limit the presumptive eligibility determinations which
hospitals can make must permit the hospitals to make presumptive
eligibility determinations based on income for all of the populations
included in Sec. 435.1102 and Sec. 435.1103.
Adding paragraph (d)(3) to provide that the agency may
disqualify a hospital as a qualified hospital only after it has first
provided the hospital with additional training or taken other
reasonable corrective action measures.
Change to Sec. 435.1200
Codified Sec. 435.1200(d)(5) of proposed rule at Sec.
435.1200(d)(6).
Changes to Sec. 447.51
Added definition of ``inpatient stay'' and ``outpatient
services.''
Added definition of Federal poverty level (FPL) to use the
acronym throughout the regulation. No substantive change is intended.
Added a definition of contract health service, for clarity
(not a substantive change to the regulations).
Changes to Sec. 447.52
Revised the maximum cost sharing allowed for an inpatient
stay to $75 and added a new paragraph at (b)(2), to require states with
inpatient cost sharing that exceeds the amount in the final rule, as of
July 15, 2013, to submit a plan to CMS that provides for reducing
inpatient cost sharing to $75 on or before July 1, 2017.
Revised paragraph (b)(3) to be clear that, ``in states
that do not have fee-for-service payment rates, any cost sharing
imposed on individuals at any income level may not exceed the maximum
amount established for individuals with income at or below 100 percent
of the FPL.
[[Page 42285]]
Revised Sec. 447.52(d), adding paragraphs (1) and (2) to
clarify that for cost sharing imposed for non-preferred drugs and for
non-emergency services provided in a hospital emergency department
under, the agency may target to a specified group of individuals
regardless of income.
Added and amended paragraph (g) to restore the option to
establish different cost sharing charges for individuals at different
income levels.
Added paragraph (h) to restore requirement that any cost
sharing charges imposed by managed care organization on Medicaid
enrollees be in accordance with the requirements set forth in the
regulations.
Added paragraph (i) to consolidate the state plan
requirements currently contained in Sec. 447.53(d) and Sec. 447.68.
Changes to Sec. 447.53
Revised paragraph (d) to clarify that cost sharing for
non-preferred drugs imposed on otherwise exempt populations cannot
exceed the nominal amount defined in Sec. 447.53(b) in accordance with
section 1916A(c) of the Act.
Revised paragraph (e) to require that states must have a
timely process to allow for cost sharing at the preferred drug level if
the prescribing provider determines that the preferred drug would be
less effective or have adverse effects on the individual to ensure that
access to necessary drugs is not delayed.
Changes to Sec. 447.54
Amended paragraph (d)(2)(iii) to replace the word
``ensure'' with ``determine.''
Added new paragraph (i) at Sec. 447.54(d)(2) requiring
hospitals to inform the individual of the amount of his or her cost
sharing obligation for non-emergency services provided in the ED.
Changes to Sec. 447.55
Due to a drafting error we revised this section to
accurate reflect who can be charged premiums and what consequences for
non-payment exist for specified groups.
Revised at paragraph (a)(1) the description of pregnant
women who can be charged premiums to reflect the consolidation of
different statutory eligibility groups for pregnant women under a
single regulatory section at Sec. 435.116 of the March 2012 final
rule. This is not a substantive change and is intended solely to assist
states in appropriately identifying those pregnant women who may be
charged as described in the statute.
Revised paragraph (a)(5) to clarify that, if premiums are
imposed on a sliding scale, the agency must impose an appropriately
higher premium for individuals at higher levels of income, with $20
being the maximum allowable premium at the highest income level.
Added a new paragraph (5) to Sec. 447.55(b) to indicate
that no further consequences can be applied for non-payment of Medicaid
premiums, including ``lock-out'' periods.
Changes to Sec. 447.56
Revised at paragraph (a)(1)(i) the description of children
who are exempt from premiums and cost sharing at Sec. 447.56(a)(1)(i)
through (iii) and (iv) to reflect the consolidation of different
statutory eligibility groups for children under a single regulatory
section at Sec. 435.118 of the March 2012 final rule, and to reflect
the changes in the types of assistance available under Title IV-E of
the Act. These are not substantive changes and are intended solely to
assist states in appropriately identifying those children who may be
charged premiums and cost sharing and exempting those who may not, as
described in the statute.
Amended paragraph (a)(2)(v) to include provider-
preventable services, also known as ``never events,'' among the list of
exempted services.
Revised paragraph (f)(2) to restore language currently in
Sec. 447.68(d) that was inadvertently removed in the proposed rule
indicating that the state must inform beneficiaries and providers of
the beneficiaries' aggregate limit.
Changes to Sec. 447.57
Revised language at paragraph (c) to require states to
provide additional public notice if proposed cost sharing is
substantially modified during the SPA approval process.
Change to Sec. 457.110
Required that states provide individuals with a choice to
receive notices and information required under this subpart and subpart
K of this part, in electronic format or by regular mail.
Change to Sec. 457.570
Adding paragraph (c)(2).
Change to Sec. 457.810
Added language requiring protections against substitution
of coverage in states that operate premium assistance programs.
Changes to Sec. 155.20
Clarifies the definition of advance payments of the
premium tax credit.
Changes to Sec. 155.200
Removes the reference to subpart F, as it will be
finalized in a future rule.
Changes to Sec. 155.227
Clarifies that for the purpose of Sec. 155.227, the terms
``applicant'' and ``enrollee'' describe people on whose behalf
authorized representatives are acting, and that the term ``person''
describes an individual acting as an authorized representative.
Clarifies that authorized representatives are permitted to
provide assistance in the individual and SHOP Exchanges, as well as for
individuals seeking an exemption from the shared responsibility
payment.
Adds language ensuring that the Exchange provides
information to both the applicant or enrollee and the authorized
representative regarding the powers and duties of an authorized
representative.
Adds language allowing an Exchange to permit an applicant
or enrollee to authorize their representative to perform fewer than all
of the activities described in this section, provided that the Exchange
tracks the specific permissions of each authorized representative.
Clarifies that an authorized representative will notify
the Exchange and the applicant or enrollee on whose behalf he or she is
acting when the authorized representative no longer has legal authority
to act on behalf of the applicant or enrollee.
Clarifies that the Exchange, not the applicant or
enrollee, will notify the authorized representative when an applicant
or enrollee notifies the Exchange that an authorized representative is
no longer acting on his or her behalf.
Removes the provision that organizations as well as staff
and volunteers of organizations must enter an agreement with the
Exchange.
Changes to Sec. 155.230
Clarifies electronic notice standards for an individual
market Exchange, and specifies that the individual market Exchange may
choose to delay the implementation of the process described in Sec.
435.918(b)(1) regarding sending a mailed confirmation of the choice to
receive electronic notices.
Adds standards to distinguish notice standards for a SHOP
and adds language to allow an employer or employee in any SHOP to elect
to receive electronic notices.
[[Page 42286]]
Changes to Sec. 155.300
Clarifies the appropriate cross-reference for the
definition of minimum value.
Changes to Sec. 155.302
Clarifies that any contracting arrangement for eligibility
determinations for Medicaid and CHIP is subject to the standards in
Sec. 431.10(c)(2).
Clarifies that the Exchange appeals entity, in addition to
the Exchange, must adhere to the eligibility determination or appeals
decision for Medicaid or CHIP made by the Medicaid or CHIP agency, or
the appeals entity for such agency.
Specifies that the agreement under Sec. 155.302(b)(6)
will be made available to HHS upon request.
Changes to Sec. 155.305
Removes the clause ``unless another Exchange verifies that
the individual meets the residency standard of such Exchange'' related
to temporary residence.
Clarifies that an applicant must be eligible for
enrollment in a QHP through the Exchange to be determined eligible for
enrollment through the Exchange in a QHP that is a catastrophic plan.
Changes to Sec. 155.310
Clarifies that the provision regarding duration of
eligibility determinations without enrollment only refers to an
applicant who is determined eligible for enrollment in a QHP through
the Exchange.
Changes to Sec. 155.315
Modifies procedures for situations in which key data
sources are unavailable and not reasonably expected to be available
within 1 day, such that the Exchange will make an eligibility
determination based on an applicant's attestation and trigger the
inconsistency period in paragraph (f).
Clarifies that the Exchange will accept an applicant's
attestation regarding three specific factors of eligibility when
electronic data is required but it is not reasonably expected that data
sources will be available within 1 day of the initial request to the
data source, and that for purposes of eligibility for advance payments
of the premium tax credit and cost-sharing reductions, other sections
in this subpart already address situations in which data regarding
MAGI-based income is unavailable.
Clarifies that paragraph (f)(5)(i) of this section will
follow the effective dates specified in Sec. 155.330(f).
Modifies the language concerning the verification related
to eligibility for enrollment through the Exchange in a QHP that is a
catastrophic plan for the purpose of clarity.
Changes to Sec. 155.320
Clarifies that the Exchange must obtain any available data
from the SHOP that corresponds to the State in which the Exchange is
operating.
Modifies language to specify that the Exchange must select
a statistically significant random sample of applicants for whom the
Exchange does not have any of the information specified in paragraphs
(d)(2)(i) through (d)(2)(iii).
Removes language specifying that the Exchange must use any
available data regarding employment of an applicant and members of his
or her household.
Specifies that for eligibility for enrollment in a QHP
through the Exchange that is effective before January 1, 2015, if the
Exchange does not have any of the information specified in paragraphs
(d)(2)(i) through (d)(2)(iii) for an applicant, the Exchange may accept
an applicant's attestation regarding enrollment in an eligible
employer-sponsored plan and eligibility for qualifying coverage in an
eligible employer-sponsored plan for the benefit year for which
coverage is requested without further verification, instead of
following sampling procedures.
Clarifies that the ability for the Exchange to satisfy the
provisions of paragraph (d) of this section by relying on HHS is
effective for eligibility for enrollment in a QHP through the Exchange
that is effective on or after January 1, 2015, and clarifies that the
division of responsibilities under this option is subject to guidance
issued by the Secretary.
Removes language concerning the agreement associated with
having HHS conduct this verification.
Changes to Sec. 155.330
Removes cross-references to appeals provisions, and
clarifies that an Exchange must implement changes resulting from an
appeal decision on the date specified in the appeal decision.
Consolidates standards for decreases in advance payments
of the premium tax credit and changes in cost-sharing reductions.
Specifies that a change associated with birth, adoption,
placement for adoption and placement in foster care must be implemented
on the coverage effective date described in Sec. 155.420(b)(2)(i) and
(ii).
Removes duplicative cross-references regarding termination
of coverage.
Changes to Sec. 155.340
Clarifies the appropriate cross-reference for the minimum
value standard.
Changes to Sec. 155.345
Reserves paragraphs (a)(3) and (g)(7) for future
finalization.
Clarifies that the Exchange and Exchange appeals entity
will adhere to the eligibility determination or appeals decision
relating to an individual's eligibility for Medicaid or CHIP made by
the state's Medicaid or CHIP agency or the appeals entity for such
agency.
Changes to Sec. 155.420
Clarifies that the special effective dates for birth,
adoption, and placement for adoption also apply to placement in foster
care.
Expands special enrollment period for birth, adoption, and
placement for adoption to also include placement in foster care.
Clarifies that the special enrollment period for an
individual who was not a citizen, national, or lawfully present non-
citizen and gains such status also applies to his or her dependents, if
eligible for coverage through the Exchange.
Modifies the special enrollment period for enrollees newly
eligible or ineligible for advance payments of the premium tax credit
or who experience a change in eligibility for cost-sharing reductions
to reflect that the special enrollment period accommodates individuals
enrolled in an eligible employer-sponsored plan, but not eligible for
qualifying coverage in an eligible employer-sponsored plan.
Changes to Sec. 155.430
Modifies language to allow applicants and enrollees to
request termination from their QHP, in the event they report access to
other minimum essential coverage and become ineligible for advance
payments of the premium tax credit and cost-sharing reductions.
Modifies standards for enrollee-requested termination
effective dates, such that QHP issuers and Exchanges may only terminate
prospectively, and not retroactively.
Clarifies that terminations for enrollees who are
determined eligible for Medicaid, CHIP or the BHP, such that the last
day of coverage is the day before the individual is determined eligible
for such coverage, rather than
[[Page 42287]]
retroactive to the Medicaid or CHIP eligibility effective date.
Aligns termination effective dates to appropriately cross-
reference with eligibility effective dates.
Adds language to clarify that in the case of termination
due to death, the last day of coverage is the date of death.
Changes to Sec. 156.270
Modifies coverage termination requirements such that
standards for QHP issuers align with those for Exchanges.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. To
fairly evaluate whether an information collection should be approved by
OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In the January 22, 2013 (78 FR 4593) proposed rule, we requested
public comment on each of the rule's information collection
requirements (ICRs). The comments and our response are discussed below.
Background
This final rule continues to implement key provisions of the
Affordable Care Act including the completion of the streamlining of
eligibility for children, pregnant women, and adults that were
initiated in the Medicaid eligibility final rule published on March 23,
2012 (77 FR 17144). This rule also modifies CHIP rules relating to
substitution of coverage and premium lock-out periods, which are
important to a coordinated system of coverage across programs. Finally,
this rule includes provisions related to authorized representatives,
the procedures for verifying access to qualifying employer-sponsored
coverage, catastrophic coverage and other provisions related to
eligibility and enrollment.
The policies in this rule will result in a reduction in burden for
individuals applying for and renewing coverage, as well as for states.
The Medicaid program and CHIP will be made easier for states to
administer and for individuals to navigate by streamlining Medicaid
eligibility and simplifying Medicaid and CHIP eligibility rules for
most individuals. Even though there are short-term burdens associated
with the implementation of the final rule, the Medicaid program and
CHIP will be easier for states to administer over time due to the
streamlined eligibility and coordinated efforts for Medicaid, CHIP, and
the new affordable insurance exchanges.
The final rule also continues to implement provisions related to
the establishment of Exchanges. This final rule: (1) Specifies
standards related to authorized representatives, (2) outlines criteria
related to the verification of enrollment in and eligibility for
minimum essential coverage through an eligible employer-sponsored plan,
and (3) further specifies or amend standards related to other
eligibility and enrollment provisions. The description of the burden
estimates associated with these provisions is included in the
information collection requirements outlined in section D.
Section A outlines the information collection requirements that
involve Medicaid and CHIP eligibility and enrollment. Section B
outlines the information collection requirements that involve Exchange
eligibility and enrollment.
We used data from the Bureau of Labor Statistics to derive average
costs for all estimates of salary in establishing the information
collection requirements. Salary estimates include the cost of fringe
benefits, calculated at 35 percent of salary, which is based on the
June 2012 Employer Costs for Employee Compensation report by the U.S.
Bureau of Labor Statistics.
A. Medicaid and CHIP Information Collection Requirements (ICRs) To Be
Addressed Through Separate Notices and Comment Process Under the
Paperwork Reduction Act
1. ICRs Regarding State Plan Amendments
1a. Sections 431.10, 431.11, 431.206, 431.211, 431.213, 431.230,
431.231, 431.240, 435.110, 435.116, 435.603, 435.907, 435.908, 435.918,
435.1101, 435.1102, 435.1103, 435.1110, 435.1200, 435.1205, 440.130,
440.210, 440.220, 440.305, 440.315, 440.330, 440.335, 440.345, 447.52-
54, 457.110, 457.340, 457.350, 457.351, 457.355, 457.570, and 457.805
These amendments to the Medicaid and CHIP state plans are necessary
to reflect changes in statute and federal policy. While we are aware of
the need to estimate the PRA burden associated with the submission of
state plan amendments related to the provisions identified above, those
amendments will be addressed as part of the electronic state plan
filing process being developed by CMS (the MACPro system) and submitted
to OMB for approval under OCN 0938-1188 (CMS-10434).
1b. Sections 435.113, 435.114, 435.223, and 435.510
Since we are eliminating the provisions in Sec. Sec. 435.113,
435.114, 435.223, and 435.510, states will no longer be required to
submit state plan amendments related to those provisions. The
provisions have been approved by OMB under OCN 0938-1147).
B. Medicaid Eligibility and Enrollment
1. ICRs Regarding Delegation of Eligibility Determinations and Appeals
(Sec. Sec. 431.10(c), 431.11. and 457.1120)
In Sec. 431.10(c), a state may delegate authority to make
eligibility determinations and to conduct fair hearings. States
generally have written agreements with various entities for similar
purposes. Under this final rule, agreements may need to be modified or
new agreements established. However, states that use the same agency to
administer more than one program (for example, Medicaid and the
Exchange) will not need an agreement for the determination of
eligibility by that agency.
Delegation of eligibility determinations was approved under OMB
control number 0938-1147. This rule sets out changes in the existing
requirement related to the type of agencies that can make Medicaid and
CHIP eligibility determinations. These amendments do not change the
burden associated with the requirement. Medicaid and CHIP agencies will
need to establish new agreements to delegate authority to conduct
eligibility appeals. The burden associated with the delegation of
appeals is the time and effort necessary for the Medicaid and CHIP
agencies to create and execute the agreements with the organization to
which they are delegating authority.
There are 53 Medicaid agencies (the 50 states, the District of
Columbia, Northern Mariana Islands, and American Samoa) and 43 CHIP
agencies, for a total of 96 agencies. For the
[[Page 42288]]
purpose of developing the cost, we estimate that half of these agencies
will establish an agreement with an organization to conduct fair
hearings. We estimate a one-time burden of 50 hours to develop an
agreement that can be used with the organization. It will take an
additional 10 hours for Medicaid and 10 hours for a separate CHIP
agency to negotiate and execute the agreement with the organization for
a total time burden of 2,880 hours [(53 + 43)/2 x (50 + 10)] across all
agreements. For the purpose of the cost, we estimate it will take a
health policy analyst 40 hours at $49.35 an hour and a senior manager
10 hours at $79.08 an hour to complete the model agreement (for a total
of $2,764.80) plus 10 additional hours ($49.35) for a health policy
analyst to execute a completed agreement with each organization. The
estimated cost for each agreement is $3,258.30 for a total cost of
$156,398.40.
2. ICRs Regarding Fair Hearing Processes (Sec. Sec. 431.205(e), and
431.206(d) and (e))
In Sec. Sec. 431.205(e) and 431.206(e), the hearing system and
information must be accessible to persons who are limited English
proficient and to persons with disabilities. While states are required
to make the hearing system accessible, we believe the associated burden
is exempt from the PRA (see 5 CFR 1320.3(b)(2)) since we believe that
the time, effort, and financial resources necessary to comply with this
requirement will be incurred by persons during the normal course of
their activities and should, therefore, be considered as a usual and
customary business practice.
In Sec. 431.206(d), states are required to inform individuals that
they may have their hearing before the agency (instead of the Exchange
or the Exchange appeals entity) and the method by which the individual
may make such election. There are 53 Medicaid agencies (the 50 states,
the District of Columbia, Northern Mariana Islands, and American Samoa)
and 43 CHIP agencies for a total of 96 agencies that will be subject to
this requirement. The burden associated with providing this choice is
developing the process and workflow to enable the choice and sending
the request for the fair hearing to the appropriate agency. We estimate
it will take each agency an average of 70 hours to create the process
and workflow required in providing the choice. For the purpose of the
cost, we estimate it will take a health policy analyst 40 hours at
$49.35 an hour, a senior manager 10 hours at $79.08 an hour, and a
computer programmer 20 hours at $52.50 to complete the process and
workflow. The estimated cost for each agency is $3814.80. The total
estimated cost is $366,220.80.
3. ICRs Regarding Application Counselors (Sec. 435.908(c))
In Sec. 435.908(c), states have the option to authorize certain
staff and volunteers of organizations to act as certified application
counselors. The burden associated with the requirements to assist
individuals with the application process is the time and effort
necessary for the state to create agreements with these organizations,
to create a registration process for assistors, and to train staff on
the eligibility and confidentiality rules and requirements and how to
assist applicants with the completing the application.
We estimate the 50 states, the District of Columbia, Northern
Mariana Islands, and American Samoa will establish agreements with on
average 20 organizations in their state or territory for a total of
1,060 agreements related to application assistance. As part of this
estimate, we assumed that state Medicaid and CHIP agencies will be
party to the same agreements and, therefore, will not establish
separate agreements.
The first burden associated with this provision is the time and
effort necessary for the state Medicaid and CHIP agencies to establish
an agreement. To develop an agreement, we estimate that it will take
each of the 53 states and territories 50 hours to develop a model
agreement. For the purpose of the cost, we estimate it will take a
health policy analyst 40 hours at $49.35 an hour and a senior manager
10 hours at $79.08 to develop an agreement. The estimated cost is
$2,764.80 (per state) or $146,534.40 (total) while the total annual
hour burden is 2,650 hours.
To negotiate and complete the agreement, we estimate that each of
the 53 states/territories will execute 20 agreements. For the purpose
of the cost, we estimate it will take a health policy analyst 10 hours
at $49.35 an hour to execute each agreement. The estimated cost is
$9,870 (per state) or $523,110 (total) while the total annual hour
burden is 10,600 hours.
To develop and execute the model agreements, the total cost is
$669,644.40 for 13,250 hours of labor.
The next burden associated with this provision is the time and
effort necessary for the 53 states and territories to establish the
registration process and workflow for the application counselors. We
estimate it will take each state or territory an average of 70 hours
(3,710 total hours) to create the registration process and workflow for
the application counselors. For the purpose of the cost, we estimate it
will take a health policy analyst 40 hours, at $49.35 an hour, a senior
manager 10 hours, at $79.08 an hour, and a computer programmer 20 hours
at $52.50 to complete the registration process and workflow. The
estimated cost for each state or territory is $3,814.80. The total
estimated cost is $202,184.40.
The next burden associated with this provision is the time and
effort necessary for the 53 state Medicaid and CHIP agencies to provide
training to the application counselors. For the purpose of the cost, we
estimate it will take a training specialist 40 hours at $26.64 an hour
and a training and development manager 10 hours at $64.43 an hour to
develop training materials for the application counselors, for a total
time burden of 2,650 hours. The estimated cost for each state or
territory is $1,709.90. The total estimated cost is $90,624.70.
Lastly, we estimate that each state or territory will offer 50
hours of training sessions to train individuals to assist applicants
with Medicaid and CHIP applications for a total time burden of 2650
hours. For the purpose of the cost, we estimate it will take a training
specialist 50 hours at $26.64 an hour to train the application
counselors. The estimated cost for each agency is $1,332. The total
estimated cost is $70,596.
4. ICRs Regarding Eligibility Determination Notices (Sec. 435.918,
Sec. 457.110)
In Sec. 435.918 and Sec. 457.110, states must electronically
provide notices to individuals when elected.
The burden associated with the requirements to deliver notices is
the time necessary for the state staff to: (1) Familiarize themselves
with the requirements related to notices; (2) develop the language for
approval, denial, termination, suspension, and change of benefits
notices; and (3) program the language in the Medicaid and CHIP notice
systems so that the notice can be populated and generated based on the
outcome of the eligibility determination and be delivered in an
electronic format.
We estimate 53 state Medicaid agencies (the 50 states, the District
of Columbia, Northern Mariana Islands, and American Samoa) and 43 CHIP
agencies (in states that have a separate or combination CHIP), totaling
96 agencies, will be subject to this requirement. We estimate that it
will take each Medicaid and CHIP agency 194 hours annually to develop,
[[Page 42289]]
automate, and distribute the notice of eligibility determination. For
the purpose of the cost burden, we estimate it will take a health
policy analyst 138 hours at $49.35 an hour, a senior manager 4 hours at
$79.08, an attorney 20 hours at $90.14, and a computer programmer 32
hours at $52.50 to complete the notices. The estimated cost burden for
each agency is $10,609.42. The total estimated cost burden is
$1,018,504.30, and the total annual hour burden is 18,624 hours.
5. ICRs Regarding Authorized Representatives (Sec. 435.923(a))
Section 435.923(a) sets out minimum requirements for the
designation of authorized representatives. We are also applying these
provisions to state CHIP agencies through the addition of a cross
reference in Sec. 457.340.
We are aware of the need to estimate the PRA burden associated with
the collection of information related to authorizing an individual to
act as a representative of an applicant, to permit self-attestation for
individuals who do not have access to documentation, and the
citizenship and immigration verification requirements. These
requirements were addressed as part of the single, streamlined
application under OCN 0938-1191 (CMS-10440).
6. ICRs Regarding Presumptive Eligibility Determined by Hospitals
(Sec. 435.1110)
Under Sec. 435.1110(d)(1), states may establish state-specific
standards for qualified hospitals that conduct presumptive eligibility
determinations related to the success of assisting individuals
determined presumptively eligible who submit a regular application and/
or are approved for eligibility by the agency. States also have a great
deal of flexibility in determining and implementing the standards
appropriate for their programs as well as appropriate corrective action
measures for hospitals which do not meet the state standards.
This change is necessary to reflect changes in federal policy. A
state's election of state-specific standards will affect their Medicaid
state plan. While we are aware of the need to estimate the burden
associated with the submission of the state plan amendment, that
amendment will be addressed under the electronic state plan filing
process being developed by CMS (the MACPro system) and submitted to OMB
for approval under OCN 0938-1188 (CMS-10434). The amendment and its
estimated burden will also be made available for public comment through
the PRA process.
In Sec. Sec. 435.1101(b) and 457.355 (by reference to Sec.
435.1101), states are required to provide qualified entities with
training in all applicable policies and procedures related to
presumptive eligibility. The burden associated with this provision is
the time and effort necessary for the states and territories to provide
training to the hospitals. We estimate 50 states, the District of
Columbia, Northern Mariana Islands, and American Samoa will be subject
to this requirement. As part of this estimate, we assumed that state
Medicaid agencies and CHIP agencies, where there are separate agencies,
will develop and use the same training.
For the purpose of the cost, we estimate it will take a training
specialist 40 hours at $26.64 an hour and a training and development
manager 10 hours at $64.43 an hour to develop training materials for
the qualified entities, for a total time burden of 2,650 hours. The
estimated cost for each state or territory is $1,709.90. The total
estimated cost is $90,624.70.
We also estimate that each state or territory will offer 50 hours
of training sessions to qualified entities, for a total time burden of
2,650 hours. For the purpose of the cost, we estimate it will take a
training specialist 50 hours at $26.64 an hour to train the qualified
entities. The estimated cost for each agency is $1,332. The total
estimated cost is $70,596.
7. ICRs Regarding ABP SPA-Related Requirements (Sec. Sec. 440.305,
440.315, 440.330, 440.335, 440.345, 440.347, 440.360, and 440.386)
In the proposed rule, CMS requested comment on habilitative
services (Sec. 440.347(d)) and on the ``medically frail'' definition
(Sec. 440.315(f)). Comments and CMS' response can be found in section
B.3.a of this preamble. We also requested comment on essential health
benefits (rehabilitative and habilitative services and devices) (Sec.
440.347). See section II.B. of this preamble for the comments and our
response. Additional comments were solicited for exempt individuals
(modifying definition of ``medically frail'') (Sec. 440.315). Comments
and CMS' response can be found in the ABP portion of this preamble.
CMS also received many comments on the proposed changes to: (1) The
public notice requirement in Sec. 440.386 (see section II.B.7.b. of
this preamble for the comment and our response); (2) public notice in
Sec. 440.386 and prescription drug coverage in Sec. 440.345(f) (see
section II.B.3.i. of this preamble for the comment and our response);
(3) essential health benefits (non-discrimination policy) under Sec.
440.347 (see section II.B.2.d of this preamble); and (4) EPSDT and
other required benefits (family planning services and supplies) under
Sec. 440.345 (see the comments and responses section of the ABP
portion of this preamble). As a result of comments received, CMS is
finalizing the public notice requirements in this final rule without
change.
We also received a number of comments requesting clarification to
our statement in the preamble that the section 1927 requirements apply
to the ABP prescription drug benefit. Specifically, commenters
requested clarification, as part of this final rule, as to how section
1927 of the Act applies to prescription drug coverage under the ABP
since ABP requirements for prescription drug coverage must meet the
minimum EHB prescription drug requirements at section 1937 of the Act.
Based upon those comments, we have clarified in the regulation that
when states pay for covered outpatient drugs under a state's ABP, the
section 1927 requirements apply. There is no additional information
collection burden associated with this clarification.
While this rule has finalized policy related to these provisions,
these policies do not result in any additional information collection
requirements. Rather, the policy clarifications are interpretations of
information that is already being collected.
The information collection requirements and burden estimates
associated with Sec. Sec. 440.305, 440.315, 440.330, 440.335, 440.345,
440.347, 440.360, and 440.386 have been approved by OMB through March
31, 2016, under OCN 0938-1188 (CMS-10434). This rule will not impose
any new or revised SPA-related reporting, recordkeeping, or third party
disclosure requirements and, therefore, does not require additional OMB
review under the authority of the Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.).
8. ICRs Regarding Cost Sharing and Premiums (Sec. Sec. 447.52, 447.53,
447.54, 447.55 and 447.56)
The Deficit Reduction Act of 2005 (DRA) established a new section
1916A of the Act, which gives states additional flexibility, allowing
for alternative premiums and cost sharing, beyond what is allowed under
section 1916 of the Act, for somewhat higher income beneficiaries. Such
alternative cost sharing may be targeted to specific groups of
beneficiaries and payment may be required as a condition of
[[Page 42290]]
providing services. Thus, in accordance with the DRA we reviewed and
made changes to the current cost sharing and premiums regulations under
Sec. Sec. 447.52 through 447.56.
In a review of these sections we found that 45 states including the
District of Columbia impose cost-sharing and 40 states impose premiums
on beneficiaries. While these provisions are subject to the PRA, we
believe that any changes a state makes to its current state plan under
any of these sections is a usual and customary practice under 5 CFR
1320.3(b)(2) and, as such, the burden associated with it is exempt from
the PRA.
For those states electing to impose cost-sharing or premiums for
the first time will only need to submit a state plan amendment one time
for review. We estimate it will take each agency in this circumstance
an average of 2 hours to fill out the state plan pre-print for either
cost-sharing or premiums and submit it for approval. Thus we anticipate
six states may impose cost-sharing and 11 states and the District of
Columbia may impose premiums on beneficiaries. For the purpose of the
cost burden, we estimate it will take a health policy analyst 1 hour at
$49.35 an hour and a senior manager 1 hour at $79.08 an hour to
complete the process and submission of each new state plan amendment.
The estimated cost burden for each agency is $128.43. The total
estimated cost burden is $2,183.31.
9. ICRs Regarding Beneficiary and Public Notice Requirements (Sec.
447.57)
In Sec. 447.57(a), 53 Medicaid agencies will be required to make
available a public schedule describing current premiums and cost
sharing requirements containing the information in paragraphs (a)(1)
through (6). In Sec. 447.57(b), agencies are required to make the
public schedule available to those identified in paragraphs (b)(1)
through (4).
Prior to submitting a SPA for Secretary approval to establish or
modify existing premiums or cost sharing or change the consequences for
non-payment, Sec. 447.57(c) requires that the state: (1) Provide the
public with advance notice of the SPA (specifying the amount of
premiums or cost sharing and who is subject to the charges); (2)
provide a reasonable opportunity to comment on SPAs that propose to
substantially modify premiums and cost sharing; (3) submit
documentation to demonstrate that these requirements were met; and (4)
provide additional public notice if cost sharing is modified during the
SPA approval process.
In Sec. 447.57(d), the information must be provided in a manner
that ensures that affected beneficiaries and providers are likely to
have access to the notice and are able to provide comments on proposed
state plan amendments.
We estimate it will take each Medicaid agency an average of 6 hours
to create the process and workflow required in providing the schedule
and notice. For the purpose of the cost burden, we estimate it will
take a health policy analyst 4 hours at $49.35 an hour and a senior
manager 2 hours at $79.08 an hour to complete the process and workflow.
The estimated cost burden for each agency is $355.56. The total
estimated cost burden is $18,844.68.
C. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
For purposes of presenting an estimate of paperwork burden, we
reflect the participation of 18 State-Based Exchanges. It is important
to note that the Exchange provisions found in part 155, subparts D and
E discussed below involve several information collections that will
occur through the single, streamlined application for enrollment in a
QHP and for insurance affordability programs described in Sec.
155.405. We have accounted for the burden associated with these
collections in the Supporting Statement for Data Collection to Support
Eligibility Determinations for Insurance Affordability Programs and
Enrollment through Health Benefits Exchanges, Medicaid, and Children's
Health Insurance Program Agencies (CMS-10440; OCN 0938-1191).
We also highlight that the Supporting Statement includes several
information collections from regulatory provisions finalized in the
Exchange final rule (77 FR 18310). We have included these information
collections in this PRA package to address PRA requirements related to
those provisions as they were not included in the information
collection section of the Exchange final rule.
Lastly, we have not included information regarding information
collections associated with certified application counselors,
eligibility appeals, and SHOP coordination with individual market
Exchanges, which we will finalize at a future date with the
corresponding regulatory provisions.
1. ICRs Regarding Authorized Representatives (Sec. 155.227)
Section 155.227(a) provides that an applicant or enrollee, subject
to applicable privacy and security requirements, may designate an
individual person or organization as his or her authorized
representative. One method for designating an authorized representative
is by submitting legal documentation of the representative's authority.
Exchanges have the option to make available an ``Appointment of
Authorized Representative Form'' at the time of application or anytime
thereafter for an individual to designate an authorized representative.
Such a form would collect identifying and contact information about the
applicant, enrollee, and requested authorized representative. Requested
data elements would include the following for both the applicant or
enrollee and the requested representative: name, address, phone number,
email address, date of birth, and relationship. The applicant,
enrollee, or authorized representative could obtain the form from the
Exchange Web site or from an assister (such as a Navigator, non-
Navigator in-person assister, etc.), and could submit it to the
Exchange by mail or online at any time. We expect that the Exchange
would use this information to authorize the authorized representative
to act on behalf of the applicant or enrollee. An authorized
representative could also submit this form if the applicant or enrollee
is unable to do so.
HHS is currently developing a model Appointment of Authorized
Representative Form to be used by the Federally-facilitated Exchanges
and will make that form available to State-based Exchanges, which would
also decrease the burden on State-based Exchanges to develop such a
form. If a state opts not to use the form provided by HHS, we estimate
the burden associated for the time and effort necessary for a State-
based Exchange to develop the Appointment of Authorized Representative
Form to be 30 hours. This includes a 10 hours from a mid-level health
policy analyst at an hourly cost of $49.35 and 10 hours from an
operations analyst at an hourly cost of $54.45 for drafting the form
with 4 hours of managerial oversight at an hourly cost of $79.08 and 6
hours of legal review at an hourly cost of $90.14. The estimated cost
per State-based Exchange is $1,895, for a total cost of $34, 113 for 18
State-based Exchanges.
For an applicant, enrollee, or prospective authorized
representative, we estimate that it will take up to 5 minutes to review
instructions and complete an Appointment of Authorized Representative
Form. While we expect most applicants, enrollees, or prospective
authorized representatives to complete the Authorized Representative
Form, an applicant, enrollee, or prospective authorized
[[Page 42291]]
representative may also comply with this provision by providing the
necessary information online, by phone, by mail, or in-person. We
expect a similar burden on the applicant, enrollee, or authorized
representative to comply with this provision through such means. If the
applicant, enrollee, or authorized representative chooses to submit an
``Appointment of Authorized Representative Form,'' the burden for a
State-based Exchange to process the submitted information will be
approximately 10 minutes at a cost of $3.39 per submission. We
anticipate that an eligibility support staff person will scan,
digitize, and link the form to an applicant's or enrollee's account,
review the submitted information, and update the authorized
representative's and applicant's or enrollee's account, if applicable.
2. ICRs Regarding Notices (Sec. Sec. 155.302, 155.310, 155.315,
155.320, 155.330, 155.335, 155.345, 155.355, 155.410, 155.715, 155.720,
155.725, and 155.1080)
Several provisions in subparts D and E outline specific scenarios
in which the Exchange will send a notice to individuals and employers
throughout the eligibility and enrollment process. HHS is currently
developing model eligibility determination notices and several other
models for notices described in 45 CFR parts 155, 156, and 157 which
will decrease the burden on Exchanges to establish such notices. For
some notices, the Exchange will include specific notice text in another
notice, such as the eligibility determination notice, rather than send
an entirely separate notice (effectively, two notices are combined into
one). The purpose of these notices is to alert the individuals and
employers who receive the notice of actions taken by the Exchange. When
possible, we anticipate that the Exchange will consolidate notices when
multiple members of a household are applying together and receive an
eligibility determination at the same time. The notice may be in paper
or electronic format but must be in writing and sent after an
eligibility determination has been made by the Exchange. We anticipate
that a large volume of enrollees will request electronic notification
while others will opt to receive the notice by mail. As a result of
certain enrollees opting to receiving the notice by mail in some
instances, we estimated the associated mailing costs for the time and
effort needed to mail notices in bulk to enrollees as appropriate.
We expect that the electronic eligibility determination notice will
be dynamic and include information tailored to all possible outcomes of
an application throughout the eligibility determination process. To
develop the paper and electronic notices, Exchange staff will need to
learn eligibility rules and draft notice text for various decision
points, follow up, referrals, and appeals procedures. A health policy
analyst, senior manager, and legal counsel will review the notice. The
Exchange will then engage in review and editing to incorporate changes
from the consultation and user testing including review to ensure
compliance with plain writing, translation, and readability standards.
We intend that Exchanges will work closely with the state Medicaid or
CHIP agency to develop coordinated notices. Finally, a developer will
program the template notice into the eligibility system so that the
notice may be populated and generated in the correct format according
to an individual's preference to receive notices, via paper or
electronically, as the applicant moves through the eligibility process.
If a state opts not to use the model notices provided by HHS, we
estimate that the Exchange effort related to the development and
implementation of the eligibility notice will necessitate 44 hours from
a health policy analyst at an hourly cost of $49.35 to learn
eligibility rules and draft notice text; 20 hours from an attorney at
an hourly cost of $90.14 and 4 hours from a senior manager at an hourly
cost of $79.08 to review the notice; and 32 hours from a computer
programmer at an hourly cost of $52.50 to conduct the necessary
development. In total, we estimate that this will take a total of 100
hours for each Exchange, at a cost of approximately $5,971 per Exchange
and a total cost of $107,478 for 18 State-Based Exchanges. We expect
that the burden on the Exchange to maintain this notice will be
significantly lower than to develop it.
Section 155.310(h) specifies that the Exchange will notify an
employer that an individual in an employee's tax household has been
determined eligible for advance payments of the premium tax credit and/
or cost-sharing reductions based in part on the employer not offering
minimum essential coverage or not offering qualifying coverage in an
eligible employer-sponsored plan. Upon making such an eligibility
determination, the Exchange will send a notice to the employer with
information identifying the employee, along with a notification that
the employer may be liable for the payment under section 4980H of the
Code, and that the employer has a right to appeal this determination.
Because this notice will be sent to an employer at the address as
provided by an application filer on the application, we anticipate all
of these notices will be sent by mail. As a result, we estimated the
associated mailing costs for the time and effort needed to mail notices
in bulk to employers. Like the eligibility notice, the employer notice
above will be developed and programmed into the eligibility system.
However, unlike the eligibility notice, we expect the information on
the employer notice to be minimal in comparison to the eligibility
notice and therefore the burden on the Exchange to develop the notice
to be substantially less. Further, as with the individual eligibility
notice, HHS will provide model notice text for Exchanges to use in
developing this notice.
3. ICRs Regarding Verification of Enrollment in an Eligible Employer-
Sponsored Plan and Eligibility for Qualifying Coverage in an Eligible
Employer-Sponsored Plan (Sec. 155.320)
Section 155.320(d) proposes the process for the verification of
enrollment in an eligible employer-sponsored plan and eligibility for
qualifying coverage in an eligible employer-sponsored plan. Paragraph
(d)(2) specifies that the Exchange will obtain relevant data from any
electronic data source available to the Exchange which has been
approved by HHS, as well as data from certain specified electronic data
sources. This will involve the development and execution of data
sharing agreements; however, this burden is already captured in the
data sharing agreements described in Sec. 155.315. As these
verification activities will all be electronic, we do not expect for
there to be any additional burden than that which is required to design
the overall eligibility and enrollment system.
Paragraph (d)(3)(iii)(A) proposes that the Exchange provide notice
to certain applicants indicating that the Exchange will be contacting
any employer identified on the application to verify whether the
applicant is enrolled in an eligible employer-sponsored plan or is
eligible for qualifying coverage in an eligible employer-sponsored plan
for the benefit year for which coverage is requested. The burden
associated with this notice to certain applicants is addressed in
155.310(g) as this will not be a separate notice, but incorporated into
the eligibility determination notice described in the above paragraph.
In paragraph (d)(3)(iii)(D), we propose that the Exchange make
reasonable attempts to contact any employer to which the applicant
attested
[[Page 42292]]
employment to verify whether the applicant is enrolled in an eligible
employer-sponsored plan or is eligible for qualifying coverage in an
eligible employer-sponsored plan for the benefit year for which
coverage is requested. We note that the flexibility we provide to
State-Based Exchanges for the first year of operations will
significantly reduce the burden of this information collection in the
first year.
It is difficult to estimate the burden associated with this
information collection as the calculation involves identifying the
number of individuals for whom employer-sponsored coverage information
will be unavailable. As such, below, we estimate the time and cost
associated with the Exchange making a reasonable attempt to contact one
employer. We estimate the time associated with this information
collection to be a total of 2.2 hours per employer at a total cost of
$34.
4. ICRs Regarding Electronic Transmissions (Sec. Sec. 155.310,
155.315, 155.320, and 155.340)
Sections 155.310, 155.315, 155.320, 155.330, and 155.340 involve
the electronic transmission of data to determine eligibility for
enrollment in a QHP and for insurance affordability programs. Section
155.310(d)(3) specifies that the Exchange must notify the state
Medicaid or CHIP agency and transmit all information from the records
of the Exchange for an applicant determined eligible for Medicaid or
CHIP to the Medicaid or CHIP agency to ensure that the Medicaid or CHIP
agency can provide the applicant with coverage promptly and without
undue delay. This applicant information will be transmitted
electronically from the Exchange to the agency administering Medicaid
or CHIP once a determination has been made that the applicant is
eligible for such program. The purpose of this data transmission is to
notify the agency administering Medicaid or CHIP that an individual is
newly eligible and thus the agency should facilitate enrollment in a
plan or delivery system. Data will be transmitted through a secure
electronic interface.
Sections 155.315 and 155.320 include transactions necessary to
verify applicant information. We expect there to be no transactional
burden associated with the electronic transactions needed to implement
Sec. Sec. 155.315 and 155.320. As these transmission functions will
all be electronic, we do not expect for there to be any additional
burden than that which is required to design the overall eligibility
and enrollment system.
In Sec. 155.340, the Exchange must provide the relevant
information, such as the dollar amount of the advance payment and the
cost-sharing reductions eligibility category, to enable advance
payments of the premium tax credit and cost-sharing reductions,
reconciliation of the advance payments of the premium tax credit, and
administration of the employer responsibility requirements. As we
anticipate that these transmissions of information will all be
electronic, we do not expect for there to be any additional burden than
that which is required to design the overall eligibility and enrollment
system.
5. ICRs Regarding Reporting Changes (Sec. Sec. 155.315, 155.330, and
155.335)
Section 155.315(f) outlines the process for resolving
inconsistencies identified through the verification process. In Sec.
155.330(c)(1), we state that the Exchange will verify any information
reported by an enrollee in accordance with the processes specified in
Sec. Sec. 155.315 and 155.320 prior to using such information in an
eligibility redetermination. Section 155.335(e) provides that the
Exchange will require a qualified individual to report any changes for
the information listed in the notice described in Sec. 155.335(c) of
this section within 30 days from the date of the notice. It is not
possible at this time to provide estimates for the number of applicants
for whom a reported change will necessitate the adjudication of
documentation, but we anticipate that this number will decrease as
applicants become more familiar with the eligibility process and as
more data become available. As such, for now, we note that the burden
associated with this provision is one hour for an individual to collect
and submit documentation, and 12 minutes (or 0.2 hours) for eligibility
support staff at an hourly cost of $28.66 to review the documentation.
6. ICRs Regarding Enrollment and Termination (Sec. Sec. 155.400,
155.405, and 155.430)
In part 155, subpart E, we describe the requirements for Exchanges
in connection with enrollment and disenrollment of qualified
individuals through the Exchange. These information collections are
associated with sending eligibility and enrollment information to QHP
issuers and to HHS, maintaining records of all enrollments in QHPs
through the Exchange, reconciling enrollment information with QHP
issuers and HHS, and retaining and tracking coverage termination
information. The burden estimates associated with these provisions
include the time and cost to meet these record requirements. We
estimate that it will take 142 hours annually for an Exchange to meet
these recordkeeping requirements for a total of 2,556 hours for 18
State-Based Exchanges.
In the case of the requirement related to termination standards,
the burden includes estimates related to the maintenance and
transmission of coverage termination information, as well as the time
and effort needed to develop the system to collect and store the
information. We estimate that it will take 30 hours of a health policy
analyst at an hourly rate of $58.05, 20 hours for a computer programmer
at an hourly rate of $52.50, and 20 hours for an operations analyst at
an hourly rate of $54.45 for a total of 70 hours annually per Exchange
and a total of 1,260 hours for 18 Exchanges, for the time and effort to
meet this standard. We estimate a cost of $3,881 for one Exchange and a
total cost of 69,858 for 18 State-Based Exchanges.
7. ICRs Regarding Agreements (Sec. Sec. 155.302 and 155.345)
Section 155.345(a) specifies that an Exchange and the corresponding
state Medicaid and CHIP agencies will enter in to an agreement
regarding the coordination of eligibility determinations, and Sec.
155.302(b)(6) specifies that to the extent that an Exchange is making
assessments of eligibility for Medicaid and CHIP, rather than
determinations, the Exchange will enter into an agreement with the
state Medicaid and CHIP agencies regarding this arrangement. These
agreements are necessary to minimize burden on individuals, ensure
prompt determinations of eligibility and enrollment in the appropriate
program without undue delay and to provide standards for transferring
an application between the Exchange and other entities administering
insurance affordability programs. The specific number of agreements
needed may vary depending on how states choose to divide
responsibilities regarding eligibility determinations; where the
Exchange is making assessments, we expect that the agreement described
in Sec. 155.302(b)(6) will be combined with the agreement in Sec.
155.345(a).
The burden associated with this provision is the time and effort
necessary for the Exchange to establish or modify an agreement for
eligibility determinations and coordination of eligibility and
enrollment functions. If an Exchange chooses to draft separate
agreements for each insurance affordability program, then the estimate
will likely increase.
[[Page 42293]]
In either case, we estimate it will take each Exchange an average
of 105 hours to create a new agreement, although we assume that such
agreements will be largely standardized across states, and that HHS
will provide model agreements for state Medicaid and CHIP agencies and
the Exchange to use. This includes a mid-level health policy analyst
and an operations analyst reviewing the agreement with managerial
oversight and comprehensive review of the agreement by operations
analyst. We estimate a cost of $6,733 per Exchange.
8. ICRs Regarding Notices From QHP Issuers (Sec. Sec. 156.260,
156.265, 156.270, and 156.290)
First, Sec. 156.260(b) provides that QHP issuers will notify a
qualified individual of his or her effective date of coverage, in
accordance with the effective dates of coverage established by the
Exchange in accordance with Sec. 155.410(c) and (f). Second, under
Sec. 156.270(b), QHP issuers will send a notice of termination of
coverage to an enrollee if the enrollee's coverage in the QHP is being
terminated in accordance with Sec. 155.430(b)(1)(i), (b)(2)(ii) or
(b)(2)(iii). Third, Sec. 156.270(f) provides that QHP issuers will
provide enrollees with a notice about the grace period for non-payment
of premiums. QHP issuers will send this notice to enrollees who are
delinquent on premium payments. Fourth, Sec. 156.265(e) provides that
QHP issuers will provide new enrollees with an enrollment information
package, which we anticipate that issuers may combine with the
notification of coverage effective date described in Sec. 156.260(b).
Lastly, under Sec. 156.290(b), QHP issuers will provide a notice to
enrollees if the issuer elects not to seek recertification of a QHP.
We anticipate that some of the above QHP issuer required notices
are similar in nature to the notices that issuers currently send to
enrollees. For example, it is standard practice for issuers to provide
new enrollees with information about their enrollment in a plan, their
effective date of coverage, and if and when their coverage is
terminating. Accordingly, we anticipate that QHP issuers will review,
update, and revise notice templates that they utilize currently as they
work to address the notice requirements described below and to ensure
that the notices include the appropriate information. Similar to
notices that will be issued by the Exchange, we expect that for QHP-
issued notices, an analyst will develop text, and a peer analyst,
manager, and legal counsel for the issuer will review the notices,
including a review to ensure compliance with plain writing, language
access, and readability standards as required under Sec. 156.250(c).
Finally, a developer will need to incorporate programming changes into
the issuer's noticing system to account for the changes and updates
that will be necessary to ensure that the QHP issuer is in compliance
with the notice standards set forth in this rule and to ensure the
notice can be populated and generated according to an individual's
preference to receive notices. We estimate that the burden related to
the development and implementation of this notice will necessitate 44
hours from a health policy analyst at an hourly cost of $49.35 to learn
appeals rules and draft notice text; 20 hours from an attorney at an
hourly cost of $90.14 and four hours from a senior manager at an hourly
cost of $79.08 to review the notice; and 32 hours from a computer
programmer at an hourly cost of $52.50 to conduct the necessary
development. In total, we estimate that this will take a total of 100
hours for each QHP issuer, at a cost of approximately $5,971 per
issuer. We expect that the burden on QHP issuers to maintain this
notice will be significantly lower than to develop it.
However, we believe that the burden estimate described under Sec.
155.310(g) likely represents an upper bound estimate of the burden on
issuers to develop each of these notices as in some cases the notice
described under Sec. 155.310(g) will be somewhat more dynamic to
address the additional information we expect to be included in that
notice.
Since the above estimate applies to one notice, and we described 5
notices under part 156, the total burden estimate is $40,710. Due to
uncertainty regarding the number of individuals who will choose to
receive paper notices, as well as some uncertainty regarding the
frequency of circumstances that will trigger notices in accordance with
this part, we have only included an estimate of the printing and
mailing costs for a QHP issuer to send one notice to a qualified
individual or enrollee.
9. ICRs Regarding Notices and Third-Party Disclosures in the SHOP
(Sec. Sec. 157.205(e) and (f))
45 CFR part 157 includes several instances in which qualified
employers participating in the SHOP Exchange will need to provide
information to employees or to the SHOP Exchange. We include the data
elements for these notifications in appendix A of this PRA package. For
the individual market Exchange, we anticipate that a large share of
enrollees will elect to receive electronic notices while the rest will
receive notices by mail. We do not make this assumption for notices
described here as we expect that qualified employers would provide
notices to employees in whatever format the qualified employer usually
provides notices to employees; in paper, electronically, or in a
combination of both formats. We estimate that the associated printing
costs for paper notices will be approximately $0.10 per notice. We do
not take mailing costs into consideration for notices provided by
qualified employers, as we expect that if qualified employers provide
notices in paper format, the employer may provide the employee with the
notice in person, instead of mailing the notice. We do not have a
reasonable way to estimate total printing costs for notices provided by
qualified employers in the SHOP Exchange due to uncertainty regarding
the number of employees who will choose to receive paper notices, as
well as some uncertainty regarding the frequency of circumstances that
will trigger notices in accordance with this part.
First, Sec. 157.205(e) specifies that a qualified employer provide
an employee with information about the enrollment process. A qualified
employer will inform each employee that he or she has an offer of
coverage through the SHOP Exchange, and instructions for how the
employee can apply for and enroll in coverage. We anticipate that the
qualified employer will also provide information about the acceptable
formats in which an employee may submit an application; online, on
paper, or by phone, as described under Sec. 157.205(c). If the
employee being offered coverage was hired outside an initial or annual
enrollment period, the notice will also inform the employee if he or
she is qualified for a special enrollment period. Second, in Sec.
157.205(f) we provide that a qualified employer will notify the SHOP
Exchange regarding an employee's change in eligibility for enrollment
in a QHP through the SHOP Exchange, including when a dependent or
employee is newly eligible, or is no longer eligible.
We expect that the information that qualified employers will
provide to employees and the SHOP Exchange, as described above, will be
somewhat standardized. Additionally, we anticipate that qualified
employers will generate notices using a manual process. We expect that
for a qualified employer to establish a notice, the qualified employer
will need 20 hours from a human resources specialist at an hourly cost
of $40.68 to develop the text; and
[[Page 42294]]
four hours from a human resources manager at an hourly cost of $75.01
and ten hours from an attorney at an hourly cost of $90.14 to review
the notices. We do not anticipate that a developer will be needed to
develop the notices described in this part since we expect that in most
cases, these notices will be manually generated on demand. Accordingly,
we expect that the burden hours for developing each of the notices will
be approximately 34 hours, for a total of 68 hours per qualified
employer, at a total cost of $4,030. We expect that the burden on the
qualified employer to maintain the notices will be significantly lower
than to develop the notices.
D. Summary of Annual Burden Estimates
Table 1--Proposed Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Burden per
Regulation section(s) OMB & CMS ID Respondents Responses response Total annual Labor cost of Total cost ($)
s (total) (hours) burden (hours) reporting ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
42 CFR 431.10, 431.11, and OCN 0938-New; CMS- 48 48 60 2,880 3,258 (per 156,398
457.1120. 10456. respondent).
Sec. Sec. 435.917, 435.918, OCN 0938-New; CMS- 96 96 194 18,624 10,609 (per 1,018,504
457.110, and 457.340. 10456. respondent).
Sec. Sec. 435.923 and OCN 0938-New; CMS- 53 1060 12.5 13,250 12,635 (per 669,644
457.340 (develop and execute 10456. respondent).
agreements).
Sec. Sec. 435.923 and OCN 0938-New; CMS- 53 53 70 3,710 3,815 (per 202,184
457.340 (create registration 10456. respondent).
process and work flow).
Sec. Sec. 435.923 and OCN 0938-New; CMS- 53 53 50 2,650 1,710 (per 90,625
457.340 (develop training 10456. respondent).
materials).
Sec. Sec. 435.923 and OCN 0938-New; CMS- 53 53 50 2,650 1,332 (per 70,596
457.340 (train application 10456. respondent).
assistors).
Sec. Sec. 435.1101(b) and OCN 0938-New; CMS- 53 53 50 2,650 1,710 (per 90,625
457.355. 10456. respondent).
Sec. 447.57................. 0938-New; CMS- 53 53 6 318 210 (per respondent). 11,130
10456.
Sec. 155.227 (ICRs Regarding OCN 0938-New; CMS- 18 18 30 540 1,895 (per 34,113
Authorized Representatives). 10400. respondent).
Sec. Sec. 155.302, 155.310, OCN 0938-New; CMS- 18 18 100 1,800 5,971 (per 107,478
155.315, 155.320, 155.330, 10400. respondent).
155.335, 155.345, 155.410,
155.715, 155.720, 155.725,
and 155.1080 (ICRs Regarding
Notices).
Sec. 155.320 (ICRs Regarding OCN 0938-New; CMS- 1 .............. 2.2 .............. 34 (for one ..............
Verification of Enrollment in 10400. respondent).
an Eligible Employer-
Sponsored Plan and
Eligibility for Qualifying
Coverage in an Eligible
Employer-Sponsored Plan).
[[Page 42295]]
Sec. Sec. 155.315, 155. OCN 0938-New; CMS- 18 18 .2 .............. 29 (for one 5.73
330, 155.335 (ICRs Regarding 10400. respondent).
Reporting Changes).
Sec. Sec. 155.400 and 405 OCN 0938-New; CMS- 18 18 142 2,556 7,254 (per 136,314
(ICRs Regarding Enrollment). 10400. respondent).
Sec. 155.430 (ICRs Regarding OCN 0938-New; CMS- 18 18 70 1,260 3,881 (per 69,858
Termination). 10400. respondent).
Sec. Sec. 155.302, 155.345 OCN 0938-New; CMS- 18 18 105 1,890 6,733 (per 121,194
(ICRs Regarding Agreements). 10400. respondent).
Sec. Sec. 156.260, 156.265, OCN 0938-New; CMS- 18 18 100 1,800 5,971 (per 107,478
156.270, and 156.290 (ICRs 10400. respondent).
Regarding Notices from QHP
Issuers).
Sec. 157.205(e) and (f) OCN 0938-New; CMS- .............. .............. 68 .............. 4,030 (per ..............
(ICRs Regarding Notices and 10400. respondent).
Third Party Disclosures in
the SHOP).
-------------------------------------------------------------------------------------------------------------------------
Total..................... ................. .............. .............. .............. 55,578 ..................... 2,886,146.73
--------------------------------------------------------------------------------------------------------------------------------------------------------
E. Submission of PRA-Related Comments
We have submitted a copy of this final rule to OMB for its review
of the rule's information collection and recordkeeping requirements.
These requirements are not effective until they have been approved by
the OMB.
To obtain copies of the supporting statement and any related forms
for the proposed paperwork collections referenced above, access the CMS
Web site at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html, or call the Reports
Clearance Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you comment on these information collection and
recordkeeping requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this final rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
(CMS-2334-P) Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov. PRA-specific comments must be received by
August 5, 2013.
V. Regulatory Impact Analysis
A. Overall Impact
We have examined the impact of this 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 rules with
economically significant effects ($100 million or more in any 1 year).
The Office of Management and Budget has determined that this rulemaking
is ``economically significant'' within the meaning of section 3(f)(1)
of Executive Order 12866, because it is likely to have an annual effect
of $100 million in any one year. Accordingly, we have prepared a
Regulatory Impact Analysis that presents the costs and benefits of this
rulemaking. The RIA published with the March 2012 Medicaid eligibility
final rule detailed the impact of the Medicaid eligibility changes
related to implementation of the Affordable Care Act. The majority of
Medicaid eligibility provisions included in this final rule were
described in that detailed RIA and do not need to be repeated here. In
the April 30, 2010 final rule on State Flexibility for Medicaid Benefit
Packages, the assumptions utilized in modeling the estimated economic
impact of the associated provisions took into perspective the costs of
the benefit package for the new adult group. Coverage of these benefits
was already accounted for in the April 30, 2010 final rule, and
therefore, does not need to be repeated here.
For coverage beginning on or after January 1, 2014, individuals and
small businesses will be able to purchase private health insurance--
known as qualified health plans--through competitive marketplaces
called Affordable Insurance Exchanges, or ``Exchanges.'' This final
rule: (1) outlines criteria related to the verification of enrollment
in an eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible
[[Page 42296]]
employer-sponsored plan in connection with advance payments of the
premium tax credit and cost-sharing reductions; and (2) further
specifies or amends other eligibility and enrollment provisions to
provide detail necessary for state implementation. This rule continues
to afford states substantial discretion in the design and operation of
the Exchange established by a state, with greater standardization
provided where directed by the statute or where there are compelling
practical, efficiency or consumer protection reasons.
B. Estimated Impact of the Medicaid Premium and Cost Sharing Provisions
The provisions in this final rule related to Medicaid premiums and
cost sharing clarify and update existing flexibilities and provide new
flexibility for states for cost sharing for outpatient services, drugs,
and non-emergency use of the emergency department. As states
contemplate the changes required under the Affordable Care Act, more
states may consider utilizing these flexibilities to either establish
or expand cost sharing. We believe these proposed policies will
encourage less costly care and decreased use of unnecessary services,
which will reduce state and federal costs for the specified services.
The following chart summarizes our estimate of the anticipated effects
of this final rule.
Table 2--Estimated Total Impact of Changes in Maximum Medicaid Cost Sharing, FY 2014-2018
[In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2014 2015 2016 2017 2018 2014-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal..................................... -25 -45 -70 -70 -70 -280
State....................................... -15 -30 -45 -45 -50 -185
-----------------------------------------------------------------------------------------------------------
Total................................... -40 -75 -115 -115 -120 -465
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CMS' Office of the Actuary
We estimate that this final rule will result in total savings of
$465 million over 5 years, including $280 million in cost savings to
the federal government and $185 million in savings to states. These
savings may be attributed primarily to the increased maximum allowable
cost sharing for outpatient services, drugs, and non-emergency use of
the emergency department. Such savings are offset only nominally by the
decreased maximum allowable cost sharing for an inpatient stay. In
addition to direct savings from increased cost sharing, we assume some
declines in utilization as enrollees subject to new cost sharing
requirements choose to decrease their use of services.
C. Estimated Impact of Exchange Provisions
The provisions in this final rule amend select provisions of the
Exchange Establishment final rule (77 FR 18319, March 27, 2012). Our
approach in this regulatory impact analysis was to build off of the
analysis presented in the Exchange Establishment final rule, available
at https://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf. We do not believe the provisions in this final rule
significantly alter our prior estimates of the impact of Exchanges on
the budget or on enrollment in health insurance, and therefore, this
final rule does not significantly alter the regulatory impact analysis
drafted as part of such rulemaking. This section summarizes benefits
and costs of the Exchange provisions presented in this final rule.
1. Methods of Analysis
The estimates in this analysis reflect estimates from the FY 2014
President's Budget for State Planning and Establishment Grants, which
incorporate the costs associated with state implementation of the
provisions proposed in this rule.
2. Benefits of the Proposed Regulation
The provisions included in this final rule amend provisions of the
Exchange Establishment final rule. We do not believe the modifications
made significantly alter the benefits associated with these provisions.
Therefore, we refer to the benefits discussion included in the
regulatory impact analysis associated with the Exchange Establishment
final rule for a full analysis. The Exchange Establishment final rule
regulatory impact analysis can be found at https://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
3. Costs of the Proposed Regulation
The Affordable Care Act and the implementing regulations found in
subpart D of this final rule and the Exchange Establishment final rule
provide for a streamlined system based on simplified eligibility rules,
and an expedited process that will facilitate enrollment of eligible
individuals and minimize costs to states, Exchanges and to the federal
government. To support this new eligibility structure, states seeking
to operate Exchanges are expected to build new or modify existing
information technology (IT) systems. We believe that how each state
builds and assembles the components necessary to support its Exchange
and Medicaid infrastructure will vary and depend on the level of
maturity of current systems, current governance and business models,
size, and other factors. It is important to note that, although states
have the option to establish and operate an Exchange, there is no
federal requirement that each state establish an Exchange. We believe
the proposed provisions provide options and flexibility to states that
minimize costs and burden on Exchanges, consumers, employers and other
entities. We also believe that overall administrative costs may
increase in the short term as states build IT systems; however, in the
long term, states may see savings through the use of more efficient
systems.
Any administrative costs incurred in the development of IT
infrastructure to support the Exchange may be funded through Exchange
Planning and Establishment Grants to states. The federal government
expects that these grants will fund the development of IT systems that
can be used by many states who either develop their own Exchanges or
who partner with the federal government to provide a subset of Exchange
services.\3\ Costs for IT infrastructure that will also support
Medicaid must be allocated to Medicaid, but are eligible for a 90
percent federal matching rate to assist in development.\4\
---------------------------------------------------------------------------
\3\ For example, CMS has awarded a number of Early Innovator
grants to develop efficient and replicable IT systems that can
provide the foundation for other states' work in this area. These
amounts vary from $6 million to $48 million per state.
\4\ Medicaid Program; Federal Funding for Medicaid Eligibility
Determination and Enrollment Activities, Final rule, 75 FR 21950
(April 19, 2011).
---------------------------------------------------------------------------
[[Page 42297]]
In general, as noted in our discussion of benefits, we anticipate
that the final rule will increase take-up of health insurance;
therefore, one type of rule-induced cost will be associated with
providing additional medical services to newly-enrolled individuals. A
recent study found that insured individuals received more hospital care
and more outpatient care than their uninsured counterparts.\5\
---------------------------------------------------------------------------
\5\ Finkelstein, A. et al., (2011). The Oregon Health Insurance
Experiment: Evidence from the First Year,'' National Bureau of
Economic Research Working Paper Series, 17190.
---------------------------------------------------------------------------
Below we include estimated federal government payments related to
grants for Exchange startup. States' initial costs due to the creation
of Exchanges will be funded by these grants. Performing eligibility
determinations is a minimum function of the Exchange; therefore the
Exchange costs to develop the infrastructure for the provisions
included in this final rule are covered by these grant outlays.
Table 3--Estimated Federal Government Outlays for the Affordable Insurance Exchanges FY 2013-FY2017
[In billions of dollars]
----------------------------------------------------------------------------------------------------------------
Year 2013 2014 2015 2016 2017 2013-2017
----------------------------------------------------------------------------------------------------------------
Grant Authority for Exchange 1.5 2.1 1.7 0.8 0.2 6.2
Start up \a\...............
----------------------------------------------------------------------------------------------------------------
\a\ FY 2014 President's Budget.
D. Alternatives Considered
We considered two alternatives to the Exchange provisions.
Alternative #1: Require paper documentation to verify
access to employer-sponsored coverage.
Section 155.320(d) of the final rule provides a process for
verification related to enrollment in an eligible employer-sponsored
plan and eligibility for qualifying coverage in an eligible employer-
sponsored plan. The proposed process relies on available electronic
data sources, with the use of paper documentation in situations in
which information submitted by an applicant is not reasonably
compatible with information in electronic data sources, along with a
sample-based review for situations in which no data is available.
The alternative model we considered would require the Exchange to
require individuals to submit paper documentation to verify this
information in all circumstances. This may increase the burden on
individuals to submit this documentation to the Exchange, which may not
be readily available to the applicant, but on employers, who will have
to produce this information at the request of applicants, and will also
require additional time and resources for Exchanges to accept and
process the paper documentation needed for an eligibility
determination. In addition, it could ultimately increase the amount of
time it will take for an individual to receive health coverage through
the Exchange or an insurance affordability program, could reduce the
number of states likely to operate an Exchange due to increased
administrative costs, and could dissuade individuals from seeking
coverage through the Exchange.
Alternative #2: Require Paper Notices from the Exchange
In Sec. 155.230(d), we provide that the Exchange will provide the
option to an individual or employer to receive notices electronically.
We anticipate that this will be accommodated by the Exchange generating
electronic notices, storing them on a secure Web site, and notifying
individuals and employers through a generic email or text message
communication that a notice is available for review.
The alternative model would require the Exchange to send all
notices in paper form via US mail. This would significantly increase
administrative costs for printing and mailing, and also generate
significant volumes of undeliverable mail which would be returned to
the Exchange.
Summary of Costs for Each Alternative
The paper-driven process outlined under alternatives 1 and 2 would
ultimately increase the amount of time it would take for an individual
to receive health coverage through the Exchange or an insurance
affordability program, would increase administrative costs, and would
dissuade individuals from seeking coverage through the Exchange.
E. Limitations of the Analysis
A number of challenges face estimators in projecting the Exchange,
Medicaid, and CHIP benefits and costs under the Affordable Care Act and
its implementing regulations, including this final rule. Health care
cost growth is difficult to project, especially for people who are
currently not in the health care system--the population targeted for
the Medicaid eligibility changes and new insurance affordability
programs. Such individuals could have pent-up demand and thus have
costs that may be initially higher than other enrollees in health
coverage, while they might also have better health status than those
who have found a way (for example, ``spent down'') to enroll in
Medicaid.
For the Exchange provisions, we use the President's Fiscal Year
2014 Budget as an estimate of the costs associated with the Exchange
provisions. It is difficult to isolate the effects associated with
these particular provisions of the Affordable Care Act, and therefore,
in this analysis, we discuss the evidence relating to the provisions of
this final rule in combination with related provisions of the
Affordable Care Act. Further, with limited previous data and
experiences, there is even greater uncertainty than in estimating the
implications of modifying a previously existing program. Accordingly,
we supplement the regulatory impact analysis with a qualitative
discussion on the specific provisions of this rule.
F. Accounting Statement
As required by OMB Circular A-4 (available at https://www.whitehouse.gov/omb/circulars_a004_a-4/), in Table X we have
prepared an accounting statement table showing the classification of
the impacts associated with implementation of this final rule.
[[Page 42298]]
Table 4--Accounting Statement: Classification of Estimated Net Costs and Transfers
[In millions]
----------------------------------------------------------------------------------------------------------------
Units
Category Estimates -----------------------------------------------------
Year dollar Discount rate Period covered
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($million/ Not Estimated........ 2012 7% 2013-2017
year).
Not Estimated........ 2012 3% 2013-2017
----------------------------------------------------------------------------------------------------------------
Qualitative........................ The Exchanges, combined with other actions being taken to implement the
Affordable Care Act, will improve access to health insurance, with
numerous positive effects, including reduced morbidity and fewer medical
bankruptcies. The Exchange will also serve as a distribution channel for
insurance reducing administrative costs as a part of premiums and
providing comparable information on health plans to allow for a more
efficient shopping experience.
----------------------------------------------------------------------------------------------------------------
Costs*
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($million/ 1,311................ 2012 7% 2013-2017
year).
1,283................ 2012 3% 2013-2017
----------------------------------------------------------------------------------------------------------------
Qualitative........................ Unquantified costs include State implementation costs above the amount
covered by Federal grants; and increased medical costs associated with
more widespread enrollment in health insurance.
----------------------------------------------------------------------------------------------------------------
Transfers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($million/ 54.4................. 2013 7% 2014-2018
year).
55.3................. 2013 3% 2014-2018
----------------------------------------------------------------------------------------------------------------
From Whom to Whom.................. Beneficiaries to Federal Government
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($million/ 35.8................. 2013 7% 2014-2018
year).
36.5................. 2013 3% 2014-2018
----------------------------------------------------------------------------------------------------------------
From Whom to Whom.................. Beneficiaries to State Governments
----------------------------------------------------------------------------------------------------------------
* These costs include grant outlays to States to establish Exchanges; most of these Exchange-establishment costs
been included in the accounting statement for the Exchange final rule.
G. Regulatory Flexibility Analysis
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 final rule on small entities, unless the
head of the agency can certify that the rule will not have a
significant economic impact on a substantial number of small entities.
The Act 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 to 5 percent.
As discussed above, this final rule is necessary to implement
certain standards related to the establishment and operation of
Exchanges as authorized by the Affordable Care Act. Specifically, this
final rule: (1) provides criteria related to the verification of
enrollment in an eligible employer-sponsored plan and eligibility for
qualifying coverage in an eligible employer-sponsored plan; and (2)
further specifies or amends standards related to other eligibility and
enrollment provisions to provide detail necessary for state
implementation.
The intent of this rule is to continue to afford states substantial
discretion in the design and operation of an Exchange, with greater
standardization provided where directed by the statute or where there
are compelling practical, efficiency or consumer protection reasons.
For the purposes of the regulatory flexibility analysis, we expect
the following types of entities to be affected by this final rule--(1)
QHP issuers; and (2) employers. We believe that health insurers will be
classified under the North American Industry Classification System
(NAICS) Code 524114 (Direct Health and CMS-9989-P 166 Medical Insurance
Carriers). According to SBA size standards, entities with average
annual receipts of $7 million or less will be considered small entities
this NAICS code. Health issuers could also possibly be classified in
621491 (HMO Medical Centers) and, if this is the case, the SBA size
standard will be $30 million or less.
1. QHP Issuers
This rule proposes standards for Exchanges that affect eligibility
determinations for enrollment in a QHP through the Exchange, advance
payments of the premium tax credit, cost-sharing reductions, Medicaid,
and CHIP. Although these standards are for Exchanges, they also affect
health plan issuers that choose to participate in an Exchange. QHP
issuers receive information from an Exchange about an enrollee to
enable the QHP issuer to process the correct level of advance payments
of the premium tax credit and cost-sharing reductions. The issuer of
the QHP will adjust an enrollee's net premium to reflect the advance
payments of the premium tax credit, as well as make any changes
required to ensure that cost-sharing reflects the appropriate level of
reductions. QHP issuers benefit significantly from advance payments of
the premium tax credit and cost-sharing reductions, but
[[Page 42299]]
may face some administrative costs relating to receiving enrollee
information from an Exchange.
As discussed in the Web Portal interim final rule (75 FR 24470,
24481 (May 5, 2010), HHS examined the health insurance industry in
depth in the Regulatory Impact Analysis we prepared for the final rule
on establishment of the Medicare Advantage program published on August
3, 2004 (69 FR 46866). In that analysis we determined that there were
few, if any, insurance firms underwriting comprehensive health
insurance policies (in contrast, for example, to travel insurance
policies or dental discount policies) that fell below the size
thresholds for ``small'' business established by the SBA (currently $7
million in annual receipts for health insurers, based on North American
Industry Classification System Code 524114).\6\
---------------------------------------------------------------------------
\6\ Table of Size Standards Matched To North American Industry
Classification System Codes,'' effective November 5, 2010, U.S.
Small Business Administration, available at https://www.sba.gov.
---------------------------------------------------------------------------
Additionally, as discussed in the Medical Loss Ratio interim final
rule (75 FR 74918), the Department 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, the Department used total Accident and Health (A&H) earned
premiums as a proxy for annual receipts. The Department estimated that
there were 28 small entities with less than $7 million in accident and
health earned premiums offering individual or group comprehensive major
medical coverage; however, this estimate may overstate the actual
number of small health insurance issuers offering such coverage,
because it does not include receipts from these companies' other lines
of business.
2. Employers
The establishment of SHOP in conjunction with tax incentives for
eligible employers will provide new opportunities for employers to
offer affordable health insurance to their employees. A detailed
discussion of the impact on employers related to the establishment of
the SHOP is found in the RIA for the Exchange final rule, 77 FR 18010
(March 23, 2012) and available at https://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.
Except in the Exchange provisions, few of the entities that meet
the definition of a small entity as that term is used in the RFA (for
example, small businesses, nonprofit organization, and small
governmental jurisdictions with a population of less than 50,000) will
be impacted directly by this final rule. Individuals and states are not
included in the definition of a small entity. In addition, the impact
of the majority of this rule was addressed in the RIA accompanying the
March 2012 Medicaid eligibility rule (77 FR 17144, March 23, 2012).
Therefore, the Secretary has determined that this final rule will not
have a significant economic impact on a substantial number of small
entities, and we have not prepared a regulatory flexibility analysis.
Additionally, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a final rule may have a significant
economic impact on the operations of a substantial number of small
rural hospitals. This analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital that is located outside of
a metropolitan statistical area and has fewer than 100 beds. We are not
preparing an analysis for section 1102(b) of the Act because the
Secretary has determined that this final rule will not have a direct
economic impact on the operations of a substantial number of small
rural hospitals.
H. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation, by state,
local, or tribal governments, in the aggregate, or by the private
sector. In 2013, that threshold is approximately $141 million. This
final rule does not mandate expenditures by state governments, local
governments, tribal governments, in the aggregate, or the private
sector, of $140 million. The majority of state, local, and private
sector costs related to implementation of the Affordable Care Act were
described in the RIA accompanying the March 2012 Medicaid eligibility
rule (77 FR 17144, March 23, 2012). Furthermore, the final rule does
not set any mandate on states to set up an Exchange.
I. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct effects on states, preempts state law, or otherwise
has federalism implications. We wish to note again that the impact of
changes related to implementation of the Affordable Care Act were
described in the RIA of the March 2012 Medicaid eligibility rule (77 FR
17144, March 23, 2012). As discussed in the March 2012 RIA, we have
consulted with states to receive input on how the various Affordable
Care Act provisions codified in this final rule will affect states. We
continue to engage in ongoing consultations with Medicaid and CHIP
Technical Advisory Groups (TAGs), which have been in place for many
years and serve as a staff level policy and technical exchange of
information between CMS and the states. Through consultations with
these TAGs, we have been able to get input from states specific to
issues surrounding the changes in eligibility groups and rules that
will become effective in 2014.
Because states have flexibility in deciding whether to implement an
Exchange and, if a State opts to, in the design of its Exchange, state
decisions will ultimately influence both administrative expenses and
overall premiums. However, because states are not required to create an
Exchange, these costs are not mandatory. For states electing to create
an Exchange, the initial costs of the creation of the Exchange will be
funded by Exchange Planning and Establishment Grants. After this time,
Exchanges will be financially self-sustaining with revenue sources left
to the discretion of the state. In the Department's view, while this
final rule does not impose substantial direct effects on state and
local governments, it has federalism implications due to direct effects
on the distribution of power and responsibilities among the state and
federal governments relating to determining standards relating to
health insurance coverage (that is, for QHPs) that is offered in the
individual and small group markets. Each state electing to establish a
State-Based Exchange must adopt federal standards contained in the
Affordable Care Act and in this final rule, or have in effect a state
law or regulation that implements these federal standards. However, the
Department anticipates that the federalism implications (if any) are
substantially mitigated because states have choices regarding the
structure and governance of their Exchanges. Additionally, the
Affordable Care Act does not require states to establish an Exchange;
but if a state elects not to establish an Exchange or the state's
Exchange is not approved, HHS will
[[Page 42300]]
establish and operate an Exchange in that state. Additionally, states
will have the opportunity to participate in state Partnership Exchanges
that will allow states to leverage work done by other states and the
federal government.
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, the
Department has engaged in efforts to consult with and work
cooperatively with affected states, including participating in
conference calls with and attending conferences of the National
Association of Insurance Commissioners and consulting with state
officials on an individual basis.
In accordance to the requirements set forth in section 8(a) of
Executive Order 13132, and by the signatures affixed to this
regulation, the Department certifies that CMS has complied with the
requirements of Executive Order 13132 for the attached proposed
regulation in a meaningful and timely manner.
J. Congressional Review Act
This final rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.), which specifies that before a rule can
take effect, the federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
this final rule, and has been transmitted to Congress and the
Comptroller General for review.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 431
Grant programs--health, Health facilities, Medicaid, Privacy,
Reporting and recordkeeping requirements.
42 CFR Part 435
Aid to Families with Dependent Children, Grant programs-health,
Medicaid, Reporting and recordkeeping requirements, Supplemental
Security Income (SSI), Wages.
42 CFR Part 436
Aid to Families with Dependent Children, Grant programs--health,
Guam, Medicaid, Puerto Rico, Supplemental Security Income (SSI), and
Virgin Islands.
42 CFR Part 438
Grant programs--health, Medicaid, and Reporting and recordkeeping
requirements.
42 CFR Part 440
Grant programs--health, Medicaid.
42 CFR Part 447
Accounting, Administrative practice and procedure, Drugs, Grant
programs--health, Health facilities, Health professions, Medicaid,
Reporting and recordkeeping requirements, Rural areas.
42 CFR Part 457
Administrative practice and procedure, Grant programs--health,
Health insurance, Reporting and recordkeeping requirements.
45 CFR Part 155
Administrative practice and procedure, Advertising, 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, 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 Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION
0
1. The authority citation for part 431 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act, (42 U.S.C.
1302).
0
2. Section 431.10 is amended by revising paragraph (a), adding
paragraph (b)(3), and revising paragraphs (c), (d), and (e) to read as
follows:
Sec. 431.10 Single State agency.
(a) Basis, purpose, and definitions. (1) This section implements
section 1902(a)(4) and (5) of the Act.
(2) For purposes of this part--
Appeals decision means a decision made by a hearing officer
adjudicating a fair hearing under subpart E of this part.
Exchange has the meaning given to the term in 45 CFR 155.20.
Exchange appeals entity has the meaning given to the term ``appeals
entity,'' as defined in 45 CFR 155.500.
Medicaid agency is the single State agency for the Medicaid
program.
(b) * * *
(3) The single State agency is responsible for determining
eligibility for all individuals applying for or receiving benefits in
accordance with regulations in part 435 of this chapter and for fair
hearings filed in accordance with subpart E of this part.
(c) Delegations. (1) Subject to the requirement in paragraph (c)(2)
of this section, the Medicaid agency--
(i)(A) May, in the approved state plan, delegate authority to
determine eligibility for all or a defined subset of individuals to--
(1) The single State agency for the financial assistance program
under title IV-A (in the 50 States or the District of Columbia), or
under title I or XVI (AABD), in Guam, Puerto Rico, or the Virgin
Islands;
(2) The Federal agency administering the supplemental security
income program under title XVI of the Act; or
(3) The Exchange.
(B) Must in the approved state plan specify to which agency, and
the individuals for which, authority to determine eligibility is
delegated.
(ii) Delegate authority to conduct fair hearings under subpart E of
this part for denials of eligibility for individuals whose income
eligibility is determined based on the applicable modified adjusted
gross income standard described in Sec. 435.911(c) of this chapter, to
an Exchange or Exchange appeals entity, provided that individuals who
have requested a fair hearing of such a denial are given a choice to
have their fair hearing instead conducted by the Medicaid agency.
(2) The Medicaid agency may delegate authority to make eligibility
determinations or to conduct fair hearings under this section only to a
government agency which maintains personnel standards on a merit basis.
[[Page 42301]]
(3) The Medicaid agency--
(i) Must ensure that any agency to which eligibility determinations
or appeals decisions are delegated--
(A) Complies with all relevant Federal and State law, regulations
and policies, including, but not limited to, those related to the
eligibility criteria applied by the agency under part 435 of this
chapter; prohibitions against conflicts of interest and improper
incentives; and safeguarding confidentiality, including regulations set
forth at subpart F of this part.
(B) Informs applicants and beneficiaries how they can directly
contact and obtain information from the agency; and
(ii) Must exercise appropriate oversight over the eligibility
determinations and appeals decisions made by such agencies to ensure
compliance with paragraphs (c)(2) and (c)(3)(i) of this section and
institute corrective action as needed, including, but not limited to,
rescission of the authority delegated under this section.
(iii) If authority to conduct fair hearings is delegated to the
Exchange or Exchange appeals entity under paragraph (c)(1)(ii) of this
section, the agency may establish a review process whereby the agency
may review fair hearing decisions made under that delegation, but that
review will be limited to the proper application of federal and state
Medicaid law and regulations, including sub-regulatory guidance and
written interpretive policies, and must be conducted by an impartial
official not directly involved in the initial determination.
(d) Agreement with Federal, State or local entities making
eligibility determinations or appeals decisions. The plan must provide
for written agreements between the Medicaid agency and the Exchange or
any other State or local agency that has been delegated authority under
paragraph (c)(1)(i) of this section to determine Medicaid eligibility
and for written agreements between the agency and the Exchange or
Exchange appeals entity that has been delegated authority to conduct
Medicaid fair hearings under paragraph (c)(1)(ii) of this section. Such
agreements must be available to the Secretary upon request and must
include provisions for:
(1) The relationships and respective responsibilities of the
parties, including but not limited to the respective responsibilities
to effectuate the fair hearing rules in subpart E of this part;
(2) Quality control and oversight by the Medicaid agency, including
any reporting requirements needed to facilitate such control and
oversight;
(3) Assurances that the entity to which authority to determine
eligibility or conduct fair hearings will comply with the provisions
set forth in paragraph (c)(3) of this section.
(4) For appeals, procedures to ensure that individuals have notice
and a full opportunity to have their fair hearing conducted by either
the Exchange or Exchange appeals entity or the Medicaid agency.
(e) Authority of the single State agency. The Medicaid agency may
not delegate, to other than its own officials, the authority to
supervise the plan or to develop or issue policies, rules, and
regulations on program matters.
0
3. Section 431.11 is amended by--
0
A. Removing paragraph (b).
0
B. Redesignating paragraphs (c) and (d), as paragraphs (b) and (c),
respectively.
0
C. Revising newly redesignated paragraphs (b) and (c).
The revisions read as follows:
Sec. 431.11 Organization for administration.
* * * * *
(b) Description of organization. (1) The plan must include a
description of the organization and functions of the Medicaid agency.
(2) When submitting a state plan amendment related to the
designation, authority, organization or functions of the Medicaid
agency, the Medicaid agency must provide an organizational chart
reflecting the key components of the Medicaid agency and the functions
each performs.
(c) Eligibility determined or fair hearings decided by other
entities. If eligibility is determined or fair hearings decided by
Federal or State entities other than the Medicaid agency or by local
agencies under the supervision of other State agencies, the plan must
include a description of the staff designated by those other entities
and the functions they perform in carrying out their responsibilities.
Sec. 431.57 [Removed]
0
4. Section 431.57 is removed.
0
5. Section 431.201 is amended by adding the definition of ``send'' in
alphabetical order to read as follows:
Sec. 431.201 Definitions.
* * * * *
Send means deliver by mail or in electronic format consistent with
Sec. 435.918 of this chapter.
* * * * *
0
6. Section 431.205 is amended by revising paragraphs (b)(1) and (2) to
read as follows:
Sec. 431.205 Provision of hearing system.
* * * * *
(b) * * *
(1) A hearing before--
(i) The Medicaid agency; or
(ii) For the denial of eligibility for individuals whose income
eligibility is determined based on the applicable modified adjusted
gross income standard described inSec. 435.911(c) of this chapter, the
Exchange or Exchange appeals entity to which authority to conduct fair
hearings has been delegated under Sec. 431.10(c)(1)(ii), provided that
individuals who have requested a fair hearing are given the choice to
have their fair hearing conducted instead by the Medicaid agency; at
state option the Exchange or Exchange appeals entity decision may be
subject to review by the Medicaid agency in accordance with Sec.
431.10(c)(3)(iii); or
(2) An evidentiary hearing at the local level, with a right of
appeal to the Medicaid agency.
* * * * *
0
7. Section 431.206 is amended by adding paragraphs (d) and (e) to read
as follows:
Sec. 431.206 Informing applicants and beneficiaries.
* * * * *
(d) If, in accordance with Sec. 431.10(c)(1)(ii), the agency has
delegated authority to the Exchange or Exchange appeals entity to
conduct the fair hearing, the agency must inform the individual in
writing that--
(1) He or she has the right to have his or her hearing before the
agency, instead of the Exchange or the Exchange appeals entity; and
(2) The method by which the individual may make such election;
(e) The information required under this section may be provided in
electronic format in accordance with Sec. 435.918 of this chapter.
0
8. Section 431.211 is revised to read as follows:
Sec. 431.211 Advance notice.
The State or local agency must send a notice at least 10 days
before the date of action, except as permitted under Sec. Sec. 431.213
and 431.214.
0
9. Section 431.213 is amended by revising the introductory text to read
as follows:
Sec. 431.213 Exceptions from advance notice.
The agency may send a notice not later than the date of action if--
* * * * *
[[Page 42302]]
Sec. 431.230 [Amended]
0
10. In Sec. 431.230, amend paragraph (a) introductory text by removing
the term ``mails'' and adding in its place the term ``sends''.
0
11. Section 431.231 is amended by revising the section heading and
paragraph (c)(2) to read as follows:
Sec. 431.231 Reinstating services.
* * * * *
(c) * * *
(2) The beneficiary requests a hearing within 10 days from the date
that the individual receives the notice of action. The date on which
the notice is received is considered to be 5 days after the date on the
notice, unless the beneficiary shows that he or she did not receive the
notice within the 5-day period; and
* * * * *
0
12. Section 431.240 is amended by adding paragraph (c) to read as
follows.
Sec. 431.240 Conducting the hearing.
* * * * *
(c) A hearing officer must have access to agency information
necessary to issue a proper hearing decision, including information
concerning State policies and regulations.
PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA
0
13. The authority citation for part 435 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
0
14. Section 435.110 is amended by eepublishing paragraph (c)
introductory text and revising paragraph (c)(1) to read as follows:
Sec. 435.110 Parents and other caretaker relatives.
* * * * *
(c) Income standard. The agency must establish in its State plan
the income standard as follows:
(1) The minimum income standard is a State's AFDC income standard
in effect as of May 1, 1988 for the applicable family size converted to
a MAGI-equivalent standard in accordance with guidance issued by the
Secretary under section 1902(e)(14)(A) and (E) of the Act.
* * * * *
0
15. Section 435.116 is amended by republishing paragraph (d)(4)
introductory text and revising paragraph (d)(4)(i) to read as follows:
Sec. 435.116 Pregnant women.
* * * * *
(d) * * *
(4) Applicable income limit for full Medicaid coverage of pregnant
women. For purposes of paragraph (d)(1) of this section--
(i) The minimum applicable income limit is the State's AFDC income
standard in effect as of May 1, 1988 for the applicable family size
converted to a MAGI-equivalent standard in accordance with guidance
issued by the Secretary under section 1902(e)(14)(A) and (E) of the
Act.
* * * * *
0
16. Section 435.119 is amended by revising the introductory text in
paragraph (b) to read as follows:
Sec. 435.119 Coverage for individuals age 19 or older and under age
65 at or below 133 percent FPL.
* * * * *
(b) Eligibility. Effective January 1, 2014, the agency must provide
Medicaid to individuals who:
* * * * *
Sec. 435.121 [Amended]
0
17. In Sec. 435.121, amend paragraph (f)(1)(iii) by removing the
reference ``Sec. 447.52 or Sec. 447.53'' and by adding in its place
the reference ``Sec. 447.52, Sec. 447.53, or Sec. 447.54''.
0
18. Section 435.603 is amended by--
0
A. In paragraph (b), adding the definitions of ``Child,'' ``Parent,''
and ``Sibling'' in alphabetical order.
0
B. Revising paragraphs (c) and (d)(1).
0
C. Adding paragraph (d)(4).
The revisions and additions read as follows:
Sec. 435.603 Application of modified adjusted gross income (MAGI).
* * * * *
(b) * * *
Child means a natural or biological, adopted or step child.
* * * * *
Parent means a natural or biological, adopted or step parent.
Sibling means natural or biological, adopted, half, or step
sibling.
* * * * *
(c) Basic rule. Except as specified in paragraph (i), (j), and (k)
of this section, the agency must determine financial eligibility for
Medicaid based on ``household income'' as defined in paragraph (d) of
this section.
(d) * * *
(1) General rule. Except as provided in paragraphs (d)(2) through
(d)(4) of this section, household income is the sum of the MAGI-based
income, as defined in paragraph (e) of this section, of every
individual included in the individual's household.
* * * * *
(4) Effective January 1, 2014, in determining the eligibility of an
individual using MAGI-based income, a state must subtract an amount
equivalent to 5 percentage points of the Federal poverty level for the
applicable family size only to determine the eligibility of an
individual for medical assistance under the eligibility group with the
highest income standard using MAGI-based methodologies in the
applicable Title of the Act, but not to determine eligibility for a
particular eligibility group.
* * * * *
0
19. Section 435.907 is amended by adding paragraph (h) to read as
follows.
Sec. 435.907 Application.
* * * * *
(h) Reinstatement of withdrawn applications. (1) In the case of
individuals described in paragraph (h)(2) of this section, the agency
must reinstate the application submitted by the individual, effective
as of the date the application was first received by the Exchange.
(2) Individuals described in this paragraph are individuals who--
(i) Submitted an application described in paragraph (b) of this
section to the Exchange;
(ii) Withdrew their application for Medicaid in accordance with 45
CFR 155.302(b)(4)(A);
(iii) Are assessed as potentially eligible for Medicaid by the
Exchange appeals entity.
0
20. Section 435.908 is amended by adding paragraph (c) to read as
follows:
Sec. 435.908 Assistance with application and renewal.
* * * * *
(c) Certified Application Counselors. (1) At State option, the
agency may certify staff and volunteers of State-designated
organizations to act as application assisters, authorized to provide
assistance to applicants and beneficiaries with the application process
and during renewal of eligibility. To be certified, application
assisters must be--
(i) Authorized and registered by the agency to provide assistance
at application and renewal;
(ii) Effectively trained in the eligibility and benefits rules and
regulations governing enrollment in a QHP through the Exchange and all
insurance affordability programs operated in the State, as implemented
in the State; and
(iii) Trained in and adhere to all rules regulations relating to
the safeguarding and confidentiality of information and prohibiting
conflict of interest,
[[Page 42303]]
including regulations set forth at part 431, subpart F of this chapter,
and at 45 CFR 155.260(f), regulations relating to the prohibition
against reassignment of provider claims specified in Sec. 447.10 of
this chapter, and all other State and Federal laws concerning conflicts
of interest and confidentiality of information.
(2) For purposes of this section, assistance includes providing
information on insurance affordability programs and coverage options,
helping individuals complete an application or renewal, working with
the individual to provide required documentation, submitting
applications and renewals to the agency, interacting with the agency on
the status of such applications and renewals, assisting individuals
with responding to any requests from the agency, and managing their
case between the eligibility determination and regularly scheduled
renewals. Application assisters may be certified by the agency to act
on behalf of applicants and beneficiaries for one, some or all of the
permitted assistance activities.
(3) If the agency elects to certify application assisters, it must
establish procedures to ensure that--
(i) Applicants and beneficiaries are informed of the functions and
responsibilities of certified application assisters;
(ii) Individuals are able to authorize application assisters to
receive confidential information about the individual related to the
individual's application for or renewal of Medicaid; and
(iii) The agency does not disclose confidential applicant or
beneficiary information to an application assister unless the applicant
or beneficiary has authorized the application assister to receive such
information.
(4) Application assisters may not impose, accept or receive payment
or compensation in any form from applicants or beneficiaries for
application assistance.
0
21. Section 435.918 is added to read as follows:
Sec. 435.918 Use of electronic notices.
(a) Effective no earlier than October 1, 2013 and no later than
January 1, 2015, the agency must provide individuals with a choice to
receive notices and information required under this part or subpart E
of part 431 of this chapter in electronic format or by regular mail and
must be permitted to change such election.
(b) If the individual elects to receive communications from the
agency electronically, the agency must--
(1) Ensure that the individual's election to receive notices
electronically is confirmed by regular mail.
(2) Ensure that the individual is informed of his or her right to
change such election to receive notices through regular mail.
(3) Post notices to the individual's electronic account within 1
business day of notice generation.
(4) Send an email or other electronic communication alerting the
individual that a notice has been posted to his or her account. The
agency may not include confidential information in the email or
electronic alert.
(5) Send a notice by regular mail within three business days of the
date of a failed electronic communication if an electronic
communication is undeliverable.
(6) At the individual's request, provide through regular mail any
notice posted to the individual's electronic account.
0
22. Section 435.923 is added to read as follows:
Sec. 435.923 Authorized Representatives.
(a)(1) The agency must permit applicants and beneficiaries to
designate an individual or organization to act responsibly on their
behalf in assisting with the individual's application and renewal of
eligibility and other ongoing communications with the agency. Such a
designation must be in accordance with paragraph (f) of this section,
including the applicant's signature, and must be permitted at the time
of application and at other times.
(2) Authority for an individual or entity to act on behalf of an
applicant or beneficiary accorded under state law, including but not
limited to, a court order establishing legal guardianship or a power of
attorney, must be treated as a written designation by the applicant or
beneficiary of authorized representation.
(b) Applicants and beneficiaries may authorize their
representatives to--
(1) Sign an application on the applicant's behalf;
(2) Complete and submit a renewal form;
(3) Receive copies of the applicant or beneficiary's notices and
other communications from the agency;
(4) Act on behalf of the applicant or beneficiary in all other
matters with the agency.
(c) The power to act as an authorized representative is valid until
the applicant or beneficiary modifies the authorization or notifies the
agency that the representative is no longer authorized to act on his or
her behalf, or the authorized representative informs the agency that he
or she no longer is acting in such capacity, or there is a change in
the legal authority upon which the individual or organization's
authority was based. Such notice must be in accordance with paragraph
(f) of this section and should include the applicant or authorized
representative's signature as appropriate.
(d) The authorized representative--
(1) Is responsible for fulfilling all responsibilities encompassed
within the scope of the authorized representation, as described in
paragraph (b)(2) of this section, to the same extent as the individual
he or she represents;
(2) Must agree to maintain, or be legally bound to maintain, the
confidentiality of any information regarding the applicant or
beneficiary provided by the agency.
(e) The agency must require that, as a condition of serving as an
authorized representative, a provider or staff member or volunteer of
an organization must affirm that he or she will adhere to the
regulations in part 431, subpart F of this chapter and at 45 CFR
155.260(f) (relating to confidentiality of information), Sec. 447.10
of this chapter (relating to the prohibition against reassignment of
provider claims as appropriate for a facility or an organization acting
on the facility's behalf), as well as other relevant State and Federal
laws concerning conflicts of interest and confidentiality of
information.
(f) For purposes of this section, the agency must accept
electronic, including telephonically recorded, signatures and
handwritten signatures transmitted by facsimile or other electronic
transmission. Designations of authorized representatives must be
accepted through all of the modalities described in Sec. 435.907(a).
0
23. Add an undesignated center heading and 435.1015 to read as follows:
FFP for Premium Assistance
Sec. 435.1015 FFP for premium assistance for plans in the individual
market.
(a) FFP is available for payment of the costs of insurance premiums
on behalf of an eligible individual for a health plan offered in the
individual market that provides the individual with benefits for which
the individual is covered under the State plan, subject to the
following conditions:
(1) The insurer is obligated to pay primary to Medicaid for all
health care items and services for which the insurer is legally and
contractually responsible under the individual health plan, as required
under part 433 subpart D of this chapter;
[[Page 42304]]
(2) The agency furnishes all benefits for which the individual is
covered under the State plan that are not available through the
individual health plan;
(3) The individual does not incur any cost sharing charges in
excess of any amounts imposed by the agency under subpart A of part
447; and
(4) The total cost of purchasing such coverage, including
administrative expenditures, the costs of paying all cost sharing
charges in excess of the amounts imposed by the agency under subpart A
of part 447, and the costs of providing benefits as required by (a)(2)
of this section, must be comparable to the cost of providing direct
coverage under the State plan.
(b) A State may not require an individual to receive benefits
through premium assistance under this section, and a State must inform
an individual that it is the individual's choice to receive either
direct coverage under the Medicaid State plan or coverage through
premium assistance for an individual health plan. A State must require
that an individual who elects premium assistance obtain through the
insurance coverage all benefits for which the insurer is responsible
and must provide the individual with information on how to access any
additional benefits and cost sharing assistance not provided by the
insurer.
Subpart L--Options for Coverage of Special Groups under Presumptive
Eligibility
0
24. The heading for subpart L is revised as set forth above.
0
25. Section 435.1102 is amended by--
0
A. Revising the section heading.
0
B. Revising paragraph (a).
0
C. Removing ``and'' at the end of paragraph (b)(2)(iv)(B) and adding
``and'' at the end of paragraph (b)(2)(v)(B);
0
D. Adding paragraph (b)(2)(vi).
0
E. Revising paragraph (b)(3).
0
F. Removing paragraph (b)(4).
0
G. Adding paragraphs (d) and (e).
0
The revisions and additions read as follows:
Sec. 435.1102 Children covered under presumptive eligibility.
(a) The agency may elect to provide Medicaid services for children
under age 19 or a younger age specified by the State during a
presumptive eligibility period following a determination by a qualified
entity, on the basis of preliminary information, that the individual
has gross income (or, at state option, a reasonable estimate of
household income, as defined in Sec. 435.603 of this part, determined
using simplified methods prescribed by the agency) at or below the
income standard established by the State for the age of the child under
Sec. 435.118(c) or under Sec. 435.229 if applicable and higher.
(b) * * *
(2) * * *
(vi) Do not delegate the authority to determine presumptive
eligibility to another entity.
(3) Establish oversight mechanisms to ensure that presumptive
eligibility determinations are being made consistent with the statute
and regulations.
* * * * *
(d) The agency--
(1) May require, for purposes of making a presumptive eligibility
determination under this section, that the individual has attested to
being, or another person who attests to having reasonable knowledge of
the individual's status has attested to the individual being, a--
(i) Citizen or national of the United States or in satisfactory
immigration status; or
(ii) Resident of the State; and
(2) May not--
(i) Impose other conditions for presumptive eligibility not
specified in this section; or
(ii) Require verification of the conditions for presumptive
eligibility.
(e) Notice and fair hearing regulations in subpart E of part 431 of
this chapter do not apply to determinations of presumptive eligibility
under this section.
0
26 Section 435.1103 is added to Subpart L read as follows:
Sec. 435.1103 Presumptive eligibility for other individuals.
(a) The terms of Sec. 435.1101 and Sec. 435.1102 apply to
pregnant women such that the agency may provide Medicaid to pregnant
women during a presumptive eligibility period following a determination
by a qualified entity that the pregnant woman has income at or below
the income standard established by the State under Sec. 435.116(c),
except that coverage of services provided to such women is limited to
ambulatory prenatal care and the number of presumptive eligibility
periods that may be authorized for pregnant women is one per pregnancy.
(b) If the agency provides Medicaid during a presumptive
eligibility period to children under Sec. 435.1102 or to pregnant
women under paragraph (a) of this section, the agency may also apply
the terms of Sec. Sec. 435.1101 and 435.1102 to the individuals
described in one or more of the following sections of this part, based
on the income standard established by the state for such individuals
and providing the benefits covered under that section: Sec. Sec.
435.110 (parents and caretaker relatives), 435.119 (individuals aged 19
or older and under age 65), 435.150 (former foster care children), and
435.218 (individuals under age 65 with income above 133 percent FPL).
(c)(1) The terms of Sec. Sec. 435.1101 and 435.1102 apply to
individuals who may be eligible under Sec. 435.213 of this part
(relating to individuals with breast or cervical cancer) or Sec.
435.214 of this part (relating to eligibility for limited family
planning benefits) such that the agency may provide Medicaid during a
presumptive eligibility period following a determination by a qualified
entity described in paragraph (c)(2) of this section that--
(i) The individual meets the eligibility requirements of Sec.
435.213; or
(ii) The individual meets the eligibility requirements of Sec.
435.214, except that coverage provided during a presumptive eligibility
period to such individuals is limited to the services described in
Sec. 435.214(d).
(2) Qualified entities described in this paragraph include
qualified entities which participate as providers under the State plan
and which the agency determines are capable of making presumptive
eligibility determinations.
0
27. Section 435.1110 is added to Subpart L to read as follows:
Sec. 435.1110 Presumptive eligibility determined by hospitals.
(a) Basic rule. The agency must provide Medicaid during a
presumptive eligibility period to individuals who are determined by a
qualified hospital, on the basis of preliminary information, to be
presumptively eligible subject to the same requirements as apply to the
State options under Sec. Sec. 435.1102 and 435.1103, but regardless of
whether the agency provides Medicaid during a presumptive eligibility
period under such sections.
(b) Qualified hospitals. A qualified hospital is a hospital that--
(1) Participates as a provider under the State plan or a
demonstration under section 1115 of the Act, notifies the agency of its
election to make presumptive eligibility determinations under this
section, and agrees to make presumptive eligibility determinations
consistent with State policies and procedures;
(2) At State option, assists individuals in completing and
submitting the full application and understanding any documentation
requirements; and
[[Page 42305]]
(3) Has not been disqualified by the agency in accordance with
paragraph (d) of this section.
(c) State options for bases of presumptive eligibility. The agency
may--
(1) Limit the determinations of presumptive eligibility which
hospitals may elect to make under this section to determinations based
on income for all of the populations described in Sec. 435.1102 and
Sec. 435.1103; or
(2) Permit hospitals to elect to make presumptive eligibility
determinations on additional bases approved under the State plan or an
1115 demonstration.
(d) Disqualification of hospitals. (1) The agency may establish
standards for qualified hospitals related to the proportion of
individuals determined presumptively eligible for Medicaid by the
hospital who:
(i) Submit a regular application, as described in Sec. 435.907,
before the end of the presumptive eligibility period; or
(ii) Are determined eligible for Medicaid by the agency based on
such application.
(2) The agency must take action, including, but not limited to,
disqualification of a hospital as a qualified hospital under this
section, if the agency determines that the hospital is not--
(i) Making, or is not capable of making, presumptive eligibility
determinations in accordance with applicable state policies and
procedures; or
(ii) Meeting the standard or standards established by the agency
under paragraph (d)(1) of this section.
(3) The agency may disqualify a hospital as a qualified hospital
under this paragraph only after it has provided the hospital with
additional training or taken other reasonable corrective action
measures to address the issue.
0
28. Section 435.1200 is amended by revising paragraph (d)(6) to read as
follows:
Sec. 435.1200 Medicaid Agency responsibilities for a coordinated
eligibility and enrollment process with other insurance affordability
programs
* * * * *
(d) * * *
(6) Notify such program of the final determination of the
individual's eligibility or ineligibility for Medicaid.
* * * * *
0
29. Section 435.1205 is added to read as follows:
Sec. 435.1205 Alignment with exchange initial open enrollment period.
(a) Definitions. For purposes of this section--
Eligibility based on MAGI means Medicaid eligibility based on the
eligibility requirements which will be effective under the State plan,
or waiver of such plan, as of January 1, 2014, consistent with
Sec. Sec. 435.110 through 435.119, 435.218 and 435.603.
(b) Medicaid agency responsibilities to achieve coordinated open
enrollment. For the period beginning October 1, 2013 through December
31, 2013, the agency must
(1) Accept all of the following:
(i) The single streamlined application described in Sec. 435.907.
(ii) Via secure electronic interface, an electronic account
transferred from another insurance affordability program.
(2) For eligibility based on MAGI, comply with the terms of Sec.
435.1200 of this part, such that--
(i) For each electronic account transferred to the agency under
paragraph (c)(1)(ii) of this section, the agency consistent with either
of the following:
(A) Section 435.1200(c), accepts a determination of Medicaid
eligibility based on MAGI, made by another insurance affordability
program.
(B) Section 435.1200(d), determines eligibility for Medicaid based
on MAGI.
(ii) Consistent with Sec. 435.1200(e), for each single streamlined
application submitted directly to the agency under paragraph (b)(1)(i)
of this section--
(A) Determine eligibility based on MAGI; and
(B) For each individual determined not Medicaid eligible based on
MAGI, determine potential eligibility for other insurance affordability
programs, based on the requirements which will be effective for each
program, and transfer the individual's electronic account to such
program via secure electronic interface.
(iii) Provide notice and fair hearing rights, in accordance with
Sec. 435.917 of this part, part 431 subpart E of this chapter, and
Sec. 435.1200 for those determined ineligible for Medicaid.
(3) For each individual determined eligible based on MAGI in
accordance with paragraph (c)(2) of this section--
(i) Provide notice, including the effective date of eligibility, to
such individual, consistent with Sec. 435.917 of this part, and
furnish Medicaid.
(ii) Apply the terms of Sec. 435.916 (relating to beneficiary
responsibility to inform the agency of any changes in circumstances
that may affect eligibility) and Sec. 435.952 (regarding use of
information received by the agency). The first renewal under Sec.
435.916 of this part may, at State option, be scheduled to occur
anytime between 12 months from the date of application and 12 months
from January 1, 2014.
(4) For eligibility effective in 2013, for all applicants--
(i) Consistent with the requirements of subpart J of this part, and
applying the eligibility requirements in effect under the State plan,
or waiver of such plan, as of the date the individual submits an
application to any insurance affordability program--
(A) Determine the individual's eligibility based on the information
provided on the application or in the electronic account; or
(B) Request additional information from the individual needed by
the agency to determine eligibility based on the eligibility
requirements in effect on such date, including on a basis excepted from
application of MAGI-based methods, as described in Sec. 435.603, and
determine such eligibility if such information is provided; and
(C) Furnish Medicaid to individuals determined eligible under this
clause or provide notice and fair hearing rights in accordance with
part 431 subpart E of this part if eligibility effective in 2013 is
denied; or
(ii) Notify the individual of the opportunity to submit a separate
application for coverage effective in 2013 and information on how to
obtain and submit such application.
PART 436--ELIGIBILITY IN GUAM, PUERTO RICO, AND THE VIRGIN ISLANDS
0
30. The authority citation for part 436 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Sec. 436.831 [Amended]
0
31. In Sec. 436.831, amend paragraph (e)(1) by removing the reference
``Sec. 447.51 or Sec. 447.53'' and by adding in its place the
reference ``Sec. 447.52,, Sec. 447.53, or Sec. 447.54''.
PART 438--MANAGED CARE
0
32. The authority citation for part 483 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Sec. 438.108 [Amended]
0
33. Section 438.108 is amended by removing the reference ``Sec. Sec.
447.50 through 447.60'' and by adding in its place the reference
``Sec. Sec. 447.50 through 447.57''.
[[Page 42306]]
PART 440--SERVICES: GENERAL PROVISIONS
0
34. The authority citation for part 440 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
0
35. Section 440.130 is amended by revising paragraph (c) to read as
follows:
Sec. 440.130 Diagnostic, screening, preventive, and rehabilitative
services.
* * * * *
(c) Preventive services means services recommended by a physician
or other licensed practitioner of the healing arts acting within the
scope of authorized practice under State law to--
(1) Prevent disease, disability, and other health conditions or
their progression;
(2) Prolong life; and
(3) Promote physical and mental health and efficiency.
* * * * *
0
36. Section 440.305 is amended by revising paragraphs (a) and (b) and
removing paragraph (d).
The revisions read as follows:
Sec. 440.305 Scope.
(a) General. This subpart sets out requirements for States that
elect to provide medical assistance to certain Medicaid eligible
individuals within one or more groups of individuals specified by the
State, through enrollment of the individuals in coverage, identified as
``benchmark'' or ``benchmark-equivalent.'' Groups must be identified by
characteristics of individuals rather than the amount or level of FMAP.
(b) Limitations. A State may only apply the option in paragraph (a)
of this section for an individual whose eligibility is based on an
eligibility category under section 1905(a) of the Act that could have
been covered under the State's plan on or before February 8, 2006,
except that individuals who are eligible under section
1902(a)(10)(A)(i)(VIII) of the Act must enroll in an Alternative
Benefit Plan to receive medical assistance.
* * * * *
0
37. Section 440.315 is amended by revising the introductory text and
paragraphs (f) and (h) to read as follows:
Sec. 440.315 Exempt individuals.
Individuals within one (or more) of the following categories are
exempt from mandatory enrollment in an Alternative Benefit Plan, unless
the individuals are eligible under section 1902(a)(10)(A)(i)(VIII) of
the Act. Individuals in that eligibility group who meet the conditions
for exemption must be given the option of an Alternative Benefit Plan
that includes all benefits available under the approved State plan.
* * * * *
(f) The individual is medically frail or otherwise an individual
with special medical needs. For these purposes, the State's definition
of individuals who are medically frail or otherwise have special
medical needs must at least include those individuals described in
Sec. 438.50(d)(3) of this chapter, individuals with disabling mental
disorders (including children with serious emotional disturbances and
adults with serious mental illness), individuals with chronic substance
use disorders, individuals with serious and complex medical conditions,
individuals with a physical, intellectual or developmental disability
that significantly impairs their ability to perform 1 or more
activities of daily living, or individuals with a disability
determination based on Social Security criteria or in States that apply
more restrictive criteria than the Supplemental Security Income
program, the State plan criteria.
* * * * *
(h) The individual is eligible and enrolled for Medicaid under
Sec. 435.145 of this chapter based on current eligibility for
assistance under title IV-E of the Act or under Sec. 435.150 of this
chapter based on current status as a former foster care child.
* * * * *
0
38. Section 440.330 is amended by revising paragraph (d) to read as
follows:
Sec. 440.330 Benchmark health benefits coverage.
* * * * *
(d) Secretary-approved coverage. Any other health benefits coverage
that the Secretary determines, upon application by a State, provides
appropriate coverage to meet the needs of the population provided that
coverage. Secretarial coverage may include benefits of the type that
are available under 1 or more of the standard benchmark coverage
packages defined in paragraphs (a) through (c) of this section, State
plan benefits described in section 1905(a), 1915(i), 1915(j), 1915(k)
or section 1945 of the Act, any other Medicaid State plan benefits
enacted under title XIX, or benefits available under base benchmark
plans described in 45 CFR 156.100.
(1) States wishing to elect Secretary-approved coverage should
submit a full description of the proposed coverage (including a
benefit-by-benefit comparison of the proposed plan to one or more of
the three other benchmark plans specified above or to the State's
standard full Medicaid coverage package), and of the population to
which coverage will be offered. In addition, the State should submit
any other information that will be relevant to a determination that the
proposed health benefits coverage will be appropriate for the proposed
population.
(2) [Reserved]
0
39. Section 440.335 is amended by--
0
A. Adding paragraphs (b)(7)and (8).
0
B. Revising paragraph (c)(1).
0
C. Removing paragraph (c)(3).
The revisions and additions read as follows:
Sec. 440.335 Benchmark-equivalent health benefits coverage.
* * * * *
(b) * * *
(7) Prescription drugs.
(8) Mental health benefits.
(c) * * *
(1) In addition to the types of benefits of this section,
benchmark-equivalent coverage may include coverage for any additional
benefits of the type which are covered in 1 or more of the standard
benchmark coverage packages described in Sec. 440.330(a) through (c)
or State plan benefits, described in section 1905(a), 1915(i), 1915(j),
1915(k) and 1945 of the Act, any other Medicaid State plan benefits
enacted under title XIX, or benefits available under base-benchmark
plans described in 45 CFR 156.100.
* * * * *
0
40. Section 440.345 is amended by revising the section heading and
adding paragraphs (b) through (f) to read as follows:
Sec. 440.345 EPSDT and other required benefits.
* * * * *
(b) Family planning. Alternative Benefit Plans must include
coverage for family planning services and supplies.
(c) Mental health parity. Alternative Benefit Plans that provide
both medical and surgical benefits, and mental health or substance use
disorder benefits, must comply with the Mental Health Parity and
Addiction Equity Act.
(d) Essential health benefits. Alternative Benefit Plans must
include at least the essential health benefits described in Sec.
440.347, and include all updates or modifications made thereafter by
the Secretary to the definition of essential health benefits.
(e) Updating of benefits. States are not required to update
Alternative Benefit Plans that have been determined to
[[Page 42307]]
include essential health benefits as of January 1, 2014, until December
31, 2015. States will adhere to future guidance for updating benefits
beyond that date, as described by the Secretary.
(f) Covered outpatient drugs. To the extent states pay for covered
outpatient drugs under their Alternative Benefit Plan's prescription
drug coverage, states must comply with the requirements under section
1927 of the Act.
0
41. Section 440.347 is added to read as follows:
Sec. 440.347 Essential health benefits.
(a) Alternative Benefit Plans must contain essential health
benefits coverage, including benefits in each of the following ten
categories, consistent with the applicable requirements set forth in 45
CFR part 156:
(1) Ambulatory patient services;
(2) Emergency services;
(3) Hospitalization;
(4) Maternity and newborn care;
(5) Mental health and substance use disorders, including behavioral
health treatment;
(6) Prescription drugs;
(7) Rehabilitative and habilitative services and devices, except
that such coverage shall be in accordance with Sec. 440.347(d);
(8) Laboratory services;
(9) Preventive and wellness services and chronic disease
management; and
(10) Pediatric services, including oral and vision care, in
accordance with section 1905(r) of the Act.
(b) Alternative Benefit Plans must include essential health
benefits in one of the state options for establishing essential health
benefits described in 45 CFR 156.100, subject to supplementation under
45 CFR 156.110(b) and substitution as permitted under 45 CFR
156.115(b).
(c) States may select more than one base benchmark option for
establishing essential health benefits in keeping with the flexibility
for States to implement more than one Alternative Benefit Plan for
targeted populations.
(d) To comply with paragraph (a) of this section, Alternative
Benefit Plan coverage of habilitative services and devices will be
based on the habilitative services and devices that are in the
applicable base benchmark plan. If habilitative services and devices
are not in the applicable base benchmark plan, the state will define
habilitative services and devices required as essential health benefits
using the methodology set forth in 45 CFR 156.115(a)(5).
(e) Essential health benefits cannot be based on a benefit design
or implementation of a benefit design that discriminates based on an
individual's age, expected length of life, present or predicted
disability, degree of medical dependency, quality of life or other
health conditions.
42. Section 440.360 is revised to read as follows:
Sec. 440.360 State plan requirements for providing additional
services.
In addition to the requirements of Sec. 440.345, the State may
elect to provide additional coverage to individuals enrolled in
Alternative Benefit Plans, except that the coverage for individuals
eligible only through section 1902(a)(10)(A)(i)(VIII) of the Act is
limited to benchmark or benchmark-equivalent coverage. The State must
describe the populations covered and the payment methodology for these
benefits. Additional benefits must be benefits of the type, which are
covered in 1 or more of the standard benchmark coverage packages
described in Sec. 440.330(a) through (c) or State plan benefits
including those described in sections 1905(a), 1915(i), 1915(j),
1915(k) and 1945 of the Act and any other Medicaid State plan benefits
enacted under title XIX, or benefits available under base benchmark
plans described in 45 CFR 156.100.
0
43. Section 440.386 is added to read as follows:
Sec. 440.386 Public notice.
Prior to submitting to the Centers for Medicare and Medicaid
Services for approval of a State plan amendment to establish an
Alternative Benefit Plan or an amendment to substantially modify an
existing Alternative Benefit Plan, a state must have provided the
public with advance notice of the amendment and reasonable opportunity
to comment for such amendment, and have included in the notice a
description of the method for assuring compliance with Sec. 440.345
related to full access to EPSDT services, and the method for complying
with the provisions of section 5006(e) of the American Recovery and
Reinvestment Act of 2009.
PART 447--PAYMENTS FOR SERVICES
0
44. The authority citation for part 447 continues to read as follows:
Authority: Section 1102 of the Social Security Act (42 U.S.C.
1302).
0
45. Section 447.15 is revised to read as follows:
Sec. 447.15 Acceptance of State payment as payment in full.
A State plan must provide that the Medicaid agency must limit
participation in the Medicaid program to providers who accept, as
payment in full, the amounts paid by the agency plus any deductible,
coinsurance or copayment required by the plan to be paid by the
individual. The provider may only deny services to any eligible
individual on account of the individual's inability to pay the cost
sharing amount imposed by the plan in accordance with Sec. 447.52(e).
The previous sentence does not apply to an individual who is able to
pay. An individual's inability to pay does not eliminate his or her
liability for the cost sharing charge.
Sec. 447.20 [Amended]
0
46. In Sec. 447.20, amend paragraphs (a)(1) and (2) by removing the
reference ``Sec. Sec. 447.53 through 447.56'' wherever it occurs and
adding in its place the reference ``Sec. Sec. 447.52 through 447.54''.
0
47a. Remove the undesignated center headings which appear above
Sec. Sec. 447.50, 447.51, 447.53, 447.59, and 447.62.
0
47b. Add a new undesignated center above revised Sec. Sec. 447.50
through 447.57 to read as follows:
Medicaid Premiums and Cost Sharing
Sec.
447.50 Premiums and cost sharing: Basis and purpose.
447.51 Definitions.
447.52 Cost sharing.
447.53 Cost sharing for drugs.
447.54 Cost sharing for services furnished in a hospital emergency
department.
447.55 Premiums.
447.56 Limitations on premiums and cost sharing.
447.57 Beneficiary and public notice requirements.
Medicaid Premiums and Cost Sharing
Sec. 447.50 Premiums and cost sharing: Basis and purpose.
Sections 1902(a)(14), 1916 and 1916A of the Act permit states to
require certain beneficiaries to share in the costs of providing
medical assistance through premiums and cost sharing. Sections 447.52
through 447.56 specify the standards and conditions under which states
may impose such premiums and or cost sharing.
Sec. 447.51 Definitions
As used in this part--
Alternative non-emergency services provider means a Medicaid
provider, such as a physician's office, health care clinic, community
health center, hospital outpatient department, or similar provider that
can provide clinically appropriate services in a timely manner.
Contract health service means any health service that is:
[[Page 42308]]
(1) Delivered based on a referral by, or at the expense of, an
Indian health program; and
(2) Provided by a public or private medical provider or hospital
that is not a provider or hospital of the IHS or any other Indian
health program
Cost sharing means any copayment, coinsurance, deductible, or other
similar charge.
Emergency services has the same meaning as in Sec. 438.114 of this
chapter.
Federal poverty level (FPL) means the Federal poverty level updated
periodically in the Federal Register by the Secretary of Health and
Human Services under the authority of 42 U.S.C. 9902(2).
Indian means any individual defined at 25 U.S.C. 1603(13),
1603(28), or 1679(a), or who has been determined eligible as an Indian,
under 42 CFR 136.12. This means the individual:
(1) Is a member of a Federally-recognized Indian tribe;
(2) Resides in an urban center and meets one or more of the
following four criteria:
(i) Is a member of a tribe, band, or other organized group of
Indians, including those tribes, bands, or groups terminated since 1940
and those recognized now or in the future by the State in which they
reside, or who is a descendant, in the first or second degree, of any
such member;
(ii) Is an Eskimo or Aleut or other Alaska Native;
(iii) Is considered by the Secretary of the Interior to be an
Indian for any purpose; or
(iv) Is determined to be an Indian under regulations promulgated by
the Secretary;
(3) Is considered by the Secretary of the Interior to be an Indian
for any purpose; or
(4) Is considered by the Secretary of Health and Human Services to
be an Indian for purposes of eligibility for Indian health care
services, including as a California Indian, Eskimo, Aleut, or other
Alaska Native.
Indian health care provider means a health care program operated by
the Indian Health Service (IHS) or by an Indian Tribe, Tribal
Organization, or Urban Indian Organization (otherwise known as an I/T/
U) as those terms are defined in section 4 of the Indian Health Care
Improvement Act (25 U.S.C. 1603).
Inpatient stay means the services received during a continuous
period of inpatient days in either a single medical institution or
multiple medical institutions, and also includes a return to an
inpatient medical institution after a brief period when the return is
for treatment of a condition that was present in the initial period.
Inpatient has the same meaning as in Sec. 440.2 of this chapter.
Non-emergency services means any care or services that are not
considered emergency services as defined in this section. This does not
include any services furnished in a hospital emergency department that
are required to be provided as an appropriate medical screening
examination or stabilizing examination and treatment under section 1867
of the Act.
Outpatient services for purposes of imposing cost sharing means any
service or supply not meeting the definition of an inpatient stay.
Preferred drugs means drugs that the state has identified on a
publicly available schedule as being determined by a pharmacy and
therapeutics committee for clinical efficacy as the most cost effective
drugs within each therapeutically equivalent or therapeutically similar
class of drugs, or all drugs within such a class if the agency does not
differentiate between preferred and non-preferred drugs.
Premium means any enrollment fee, premium, or other similar charge.
Sec. 447.52 Cost sharing.
(a) Applicability. Except as provided in Sec. 447.56(a)
(exemptions), the agency may impose cost sharing for any service under
the state plan.
(b) Maximum Allowable Cost Sharing. (1) At State option, cost
sharing imposed for any service (other than for drugs and non-emergency
services furnished in an emergency department, as described in
Sec. Sec. 447.53 and 447.54 respectively) may be established at or
below the amounts shown in the following table (except that the maximum
allowable cost sharing for individuals with family income at or below
100 percent of the FPL shall be increased each year, beginning October
1, 2015, by the percentage increase in the medical care component of
the CPI-U for the period of September to September of the preceding
calendar year, rounded to the next higher 5-cent increment):
----------------------------------------------------------------------------------------------------------------
Maximum allowable cost sharing
------------------------------------------------------------------------
Services Individuals with Individuals with family
family income income 101-150% of the Individuals with family
<=100% of the FPL FPL income >150% of the FPL
----------------------------------------------------------------------------------------------------------------
Outpatient Services (physician visit, $4 10% of cost the agency 20% of cost the agency
physical therapy, etc.). pays. pays.
Inpatient Stay......................... 75 10% of total cost the 20% of total cost the
agency pays for the agency pays for the
entire stay. entire stay.
----------------------------------------------------------------------------------------------------------------
(2) States with cost sharing for an inpatient stay that exceeds
$75, as of July 15, 2013, must submit a plan to CMS that provides for
reducing inpatient cost sharing to $75 on or before July 1, 2017.
(3) In states that do not have fee-for-service payment rates, any
cost sharing imposed on individuals at any income level may not exceed
the maximum amount established, for individuals with income at or below
100 percent of the FPL described in paragraph (b)(1) of this section.
(c) Maximum cost sharing. In no case shall the maximum cost sharing
established by the agency be equal to or exceed the amount the agency
pays for the service.
(d) Targeted cost sharing. (1) Except as provided in paragraph
(d)(2) of this section, the agency may target cost sharing to specified
groups of individuals with family income above 100 percent of the FPL.
(2) For cost sharing imposed for non-preferred drugs under Sec.
447.53 and for non-emergency services provided in a hospital emergency
department under Sec. 447.54, the agency may target cost sharing to
specified groups of individuals regardless of income.
(e) Denial of service for nonpayment. (1) The agency may permit a
provider, including a pharmacy or hospital, to require an individual to
pay cost sharing as a condition for receiving the item or service if--
(i) The individual has family income above 100 percent of the FPL,
(ii) The individual is not part of an exempted group under Sec.
447.56(a), and
[[Page 42309]]
(iii) For cost sharing imposed for non-emergency services furnished
in an emergency department, the conditions under Sec. 447.54(d) of
this part have been satisfied.
(2) Except as provided under paragraph (e)(1) of this section, the
state plan must specify that no provider may deny services to an
eligible individual on account of the individual's inability to pay the
cost sharing.
(3) Nothing in this section shall be construed as prohibiting a
provider from choosing to reduce or waive such cost sharing on a case-
by-case basis.
(f) Prohibition against multiple charges. For any service, the
agency may not impose more than one type of cost sharing.
(g) Income-related charges. Subject to the maximum allowable
charges specified in Sec. Sec. 447.52(b), 447.53(b) and 447.54(b), the
plan may establish different cost sharing charges for individuals at
different income levels. If the agency imposes such income-related
charges, it must ensure that lower income individuals are charged less
than individuals with higher income.
(h) Services furnished by a managed care organization (MCO).
Contracts with MCOs must provide that any cost-sharing charges the MCO
imposes on Medicaid enrollees are in accordance with the cost sharing
specified in the state plan and the requirements set forth in
Sec. Sec. 447.50 through 447.57.
(i) State Plan Specifications. For each cost sharing charge imposed
under this part, the state plan must specify--
(1) The service for which the charge is made;
(2) The group or groups of individuals that may be subject to the
charge;
(3)The amount of the charge;
(4) The process used by the state to--
(i) Ensure individuals exempt from cost sharing are not charged,
(ii) Identify for providers whether cost sharing for a specific
item or service may be imposed on an individual and whether the
provider may require the individual, as a condition for receiving the
item or service, to pay the cost sharing charge; and
(5) If the agency imposes cost sharing under Sec. 447.54, the
process by which hospital emergency room services are identified as
non-emergency service.
Sec. 447.53 Cost sharing for drugs.
(a) The agency may establish differential cost sharing for
preferred and non-preferred drugs. The provisions in Sec. 447.56(a)
shall apply except as the agency exercises the option under paragraph
(d) of this section. All drugs will be considered preferred drugs if so
identified or if the agency does not differentiate between preferred
and non-preferred drugs.
(b) At state option, cost sharing for drugs may be established at
or below the amounts shown in the following table (except that the
maximum allowable cost sharing shall be increased each year, beginning
October 1, 2015, by the percentage increase in the medical care
component of the CPI-U for the period of September to September of the
preceding calendar year, rounded to the next higher 5-cent increment.
Such increase shall not be applied to any cost sharing that is based on
the amount the agency pays for the service):
----------------------------------------------------------------------------------------------------------------
Maximum allowable cost sharing
----------------------------------------------------------------------------
Services Individuals with
family income Individuals with family income >150% of the FPL
<=150% of the FPL
----------------------------------------------------------------------------------------------------------------
Preferred Drugs.................... $4 $4.
Non-Preferred Drugs................ 8 20% of the cost the agency pays.
----------------------------------------------------------------------------------------------------------------
(c) In states that do not have fee-for-service payment rates, cost
sharing for prescription drugs imposed on individuals at any income
level may not exceed the maximum amount established for individuals
with income at or below 150 percent of the FPL in paragraph (b) of this
section.
(d) For individuals otherwise exempt from cost sharing under Sec.
447.56(a), the agency may impose cost sharing for non-preferred drugs,
not to exceed the maximum amount established in paragraph (b) of this
section.
(e) In the case of a drug that is identified by the agency as a
non-preferred drug within a therapeutically equivalent or
therapeutically similar class of drugs, the agency must have a timely
process in place so that cost sharing is limited to the amount imposed
for a preferred drug if the individual's prescribing provider
determines that a preferred drug for treatment of the same condition
either will be less effective for the individual, will have adverse
effects for the individual, or both. In such cases the agency must
ensure that reimbursement to the pharmacy is based on the appropriate
cost sharing amount.
Sec. 447.54 Cost sharing for services furnished in a hospital
emergency department.
(a) The agency may impose cost sharing for non-emergency services
provided in a hospital emergency department. The provisions in Sec.
447.56(a) shall apply except as the agency exercises the option under
paragraph (c) of this section.
(b) At state option, cost sharing for non-emergency services
provided in an emergency department may be established at or below the
amounts shown in the following table (except that the maximum allowable
cost sharing identified for individuals with family income at or below
150 percent of the FPL shall be increased each year, beginning October
1, 2015, by the percentage increase in the medical care component of
the CPI-U for the period of September to September of the preceding
calendar year, rounded to the next higher 5-cent increment):
------------------------------------------------------------------------
Maximum allowable cost sharing
-------------------------------------------
Services Individuals with Individuals with
family income <=150% family income >150%
of the FPL of the FPL
------------------------------------------------------------------------
Non-emergency Use of the $8.................. No Limit.
Emergency Department.
------------------------------------------------------------------------
[[Page 42310]]
(c) For individuals otherwise exempt from cost sharing under Sec.
447.56(a), the agency may impose cost sharing for non-emergency use of
the emergency department, not to exceed the maximum amount established
in paragraph (b) of this section for individuals with income at or
below 150 percent of the FPL.
(d) For the agency to impose cost sharing under paragraph (a) or
(c) of this section for non-emergency use of the emergency department,
the hospital providing the care must--
(1) Conduct an appropriate medical screening under Sec. 489.24
subpart G to determine that the individual does not need emergency
services.
(2) Before providing non-emergency services and imposing cost
sharing for such services:
(i) Inform the individual of the amount of his or her cost sharing
obligation for non-emergency services provided in the emergency
department;
(ii) Provide the individual with the name and location of an
available and accessible alternative non-emergency services provider;
(iii) Determine that the alternative provider can provide services
to the individual in a timely manner with the imposition of a lesser
cost sharing amount or no cost sharing if the individual is otherwise
exempt from cost sharing; and
(iv) Provide a referral to coordinate scheduling for treatment by
the alternative provider.
(e) Nothing in this section shall be construed to:
(1) Limit a hospital's obligations for screening and stabilizing
treatment of an emergency medical condition under section 1867 of the
Act; or
(2) Modify any obligations under either state or federal standards
relating to the application of a prudent-layperson standard for payment
or coverage of emergency medical services by any managed care
organization.
Sec. 447.55 Premiums.
(a) The agency may impose premiums upon individuals whose income
exceeds 150 percent of the FPL, subject to the exemptions set forth in
Sec. 447.56(a) and the aggregate limitations set forth in Sec.
447.56(f) of this part, except that:
(1) Pregnant women described in described in paragraph (a)(1)(ii)
of this section may be charged premiums that do not exceed 10 percent
of the amount by which their family income exceeds 150 percent of the
FPL after deducting expenses for care of a dependent child.
(i) The agency may use state or local funds available under other
programs for payment of a premium for such pregnant women. Such funds
shall not be counted as income to the individual for whom such payment
is made.
(ii) Pregnant women described in this clause include pregnant women
eligible for Medicaid under Sec. 435.116 of this chapter whose income
exceeds the higher of -
(A) 150 percent FPL; and
(B) If applicable, the percent FPL described in section
1902(l)(2)(A)(iv) of the Act up to 185 percent FPL.
(2) Individuals provided medical assistance only under sections
1902(a)(10)(A)(ii)(XV) or 1902(a)(10)(A)(ii)(XVI) of the Act and the
Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA),
may be charged premiums on a sliding scale based on income.
(3) Disabled children provided medical assistance under section
1902(a)(10)(A)(ii)(XIX) of the Act in accordance with the Family
Opportunity Act, may be charged premiums on a sliding scale based on
income. The aggregate amount of the child's premium imposed under this
paragraph and any premium that the parent is required to pay for family
coverage under section 1902(cc)(2)(A)(i) of the Act, and other cost
sharing charges may not exceed:
(i) 5 percent of the family's income if the family's income is no
more than 200 percent of the FPL.
(ii) 7.5 percent of the family's income if the family's income
exceeds 200 percent of the FPL but does not exceed 300 percent of the
FPL.
(4) Qualified disabled and working individuals described in section
1905(s) of the Act, whose income exceeds 150 percent of the FPL, may be
charged premiums on a sliding scale based on income, expressed as a
percentage of Medicare cost sharing described at section
1905(p)(3)(A)(i) of the Act.
(5) Medically needy individuals, as defined in Sec. Sec. 435.4 and
436.3 of this chapter, may be charged on a sliding scale. The agency
must impose an appropriately higher charge for each higher level of
family income, not to exceed $20 per month for the highest level of
family income.
(b) Consequences for non-payment. (1) For premiums imposed under
paragraphs (a)(1), (a)(2), (a)(3) and (a)(4) of this section, the
agency may not require a group or groups of individuals to prepay.
(2) Except for premiums imposed under paragraph (a)(5) of this
section, the agency may terminate an individual from medical assistance
on the basis of failure to pay for 60 days or more.
(3) For premiums imposed under paragraph (a)(2) of this section--
(i) For individuals with annual income exceeding 250 percent of the
FPL, the agency may require payment of 100 percent of the premiums
imposed under this paragraph for a year, such that payment is only
required up to 7.5 percent of annual income for individuals whose
annual income does not exceed 450 percent of the FPL.
(ii) For individuals whose annual adjusted gross income (as defined
in section 62 of the Internal Revenue Code of 1986) exceeds $75,000,
increased by inflation each calendar year after 2000, the agency must
require payment of 100 percent of the premiums for a year, except that
the agency may choose to subsidize the premiums using state funds which
may not be federally matched by Medicaid.
(4) For any premiums imposed under this section, the agency may
waive payment of a premium in any case where the agency determines that
requiring the payment will create an undue hardship for the individual
or family.
(5) The agency may not apply further consequences or penalties for
non-payment other than those listed in this section.
(c) State plan specifications. For each premium, enrollment fee, or
similar charge imposed under paragraph (a) of this section, subject to
the requirements of paragraph (b) of this section, the plan must
specify--
(1) The group or groups of individuals that may be subject to the
charge;
(2) The amount and frequency of the charge;
(3) The process used by the state to identify which beneficiaries
are subject to premiums and to ensure individuals exempt from premiums
are not charged; and
(4) The consequences for an individual or family who does not pay.
Sec. 447.56 Limitations on premiums and cost sharing.
(a) Exemptions. (1) The agency may not impose premiums or cost
sharing upon the following groups of individuals:
(i) Individuals ages 1 and older and under age 18 eligible under
Sec. 435.118 of this chapter.
(ii) Infants under age 1 eligible under Sec. 435.118 of this
chapter whose income does not exceed the higher of--
(A) 150 percent FPL (for premiums) or 133 percent FPL (for cost
sharing); and
(B) If applicable, the percent FPL described in section
1902(l)(2)(A)(iv) of the Act up to 185 percent FPL.
(iii) Individuals under age 18 eligible under Sec. 435.120-Sec.
435.122 or Sec. 435.130 of this chapter.
[[Page 42311]]
(iv) Children for whom child welfare services are made available
under Part B of title IV of the Act on the basis of being a child in
foster care and individuals receiving benefits under Part E of that
title, without regard to age.
(v) At state option, individuals under age 19, 20 or age 21,
eligible under Sec. 435.222 of this chapter.
(vi) Disabled children, except as provided at Sec. 447.55(a)(4)
(premiums), who are receiving medical assistance by virtue of the
application of the Family Opportunity Act in accordance with sections
1902(a)(10)(A)(ii)(XIX) and 1902(cc) of the Act.
(vii) Pregnant women, except for premiums allowed under Sec.
447.55(a)(1) and cost sharing for services specified in the state plan
as not pregnancy-related, during the pregnancy and through the
postpartum period which begins on the last day of pregnancy and extends
through the end of the month in which the 60-day period following
termination of pregnancy ends.
(viii) Any individual whose medical assistance for services
furnished in an institution, or at state option in a home and
community-based setting, is reduced by amounts reflecting available
income other than required for personal needs.
(ix) An individual receiving hospice care, as defined in section
1905(o) of the Act.
(x) An Indian who is eligible to receive or has received an item or
service furnished by an Indian health care provider or through referral
under contract health services is exempt from premiums. Indians who are
currently receiving or have ever received an item or service furnished
by an Indian health care provider or through referral under contract
health services are exempt from all cost sharing.
(xi) Individuals who are receiving Medicaid because of the state's
election to extend coverage as authorized by Sec. 435.213 of this
chapter (Breast and Cervical Cancer).
(2) The agency may not impose cost sharing for the following
services:
(i) Emergency services as defined at section 1932(b)(2) of the Act
and Sec. 438.114(a) of this chapter;
(ii) Family planning services and supplies described in section
1905(a)(4)(C) of the Act, including contraceptives and pharmaceuticals
for which the State claims or could claim Federal match at the enhanced
rate under section 1903(a)(5) of the Act for family planning services
and supplies;
(iii) Preventive services, at a minimum the services specified at
Sec. 457.520 of chapter D, provided to children under 18 years of age
regardless of family income, which reflect the well-baby and well child
care and immunizations in the Bright Futures guidelines issued by the
American Academy of Pediatrics; and
(iv) Pregnancy-related services, including those defined at
Sec. Sec. 440.210(a)(2) and 440.250(p) of this chapter, and counseling
and drugs for cessation of tobacco use All services provided to
pregnant women will be considered as pregnancy-related, except those
services specifically identified in the state plan as not being related
to the pregnancy.
(v) Provider-preventable services as defined in Sec. 447.26(b).
(b) Applicability. Except as permitted under Sec. 447.52(d)
(targeted cost sharing), the agency may not exempt additional
individuals from cost sharing obligations that apply generally to the
population at issue.
(c) Payments to providers. (1) Except as provided under paragraphs
(c)(2) and (c)(3) of this section, the agency must reduce the payment
it makes to a provider by the amount of a beneficiary's cost sharing
obligation, regardless of whether the provider has collected the
payment or waived the cost sharing.
(2) For items and services provided to Indians who are exempt from
cost sharing under paragraph (a)(1)(x) of this section, the agency may
not reduce the payment it makes to a provider, including an Indian
health care provider, by the amount of cost sharing that will otherwise
be due from the Indian.
(3) For those providers that the agency reimburses under Medicare
reasonable cost reimbursement principles, in accordance with subpart B
of this part, an agency may increase its payment to offset uncollected
cost sharing charges that are bad debts of providers.
(d) Payments to managed care organizations. If the agency contracts
with a managed care organization, the agency must calculate its
payments to the organization to include cost sharing established under
the state plan, for beneficiaries not exempt from cost sharing under
paragraph (a) of this section, regardless of whether the organization
imposes the cost sharing on its recipient members or the cost sharing
is collected.
(e) Payments to states. No FFP in the state's expenditures for
services is available for--
(1) Any premiums or cost sharing amounts that recipients should
have paid under Sec. Sec. 447.52 through 447.55 (except for amounts
that the agency pays as bad debts of providers under paragraph (c)(3)
of this section; and
(2) Any amounts paid by the agency on behalf of ineligible
individuals, whether or not the individual had paid any required
premium, except for amounts for premium assistance to obtain coverage
for eligible individuals through family coverage that may include
ineligible individuals when authorized in the approved state plan.
(f) Aggregate limits. (1) Medicaid premiums and cost sharing
incurred by all individuals in the Medicaid household may not exceed an
aggregate limit of 5 percent of the family's income applied on either a
quarterly or monthly basis, as specified by the agency.
(2) If the state adopts premiums or cost sharing rules that could
place beneficiaries at risk of reaching the aggregate family limit, the
state plan must indicate a process to track each family's incurred
premiums and cost sharing through an effective mechanism that does not
rely on beneficiary documentation.
(3) The agency must inform beneficiaries and providers of the
beneficiaries aggregate limit and notify beneficiaries and providers
when a beneficiary has incurred out-of-pocket expenses up to the
aggregate family limit and individual family members are no longer
subject to cost sharing for the remainder of the family's current
monthly or quarterly cap period.
(4) The agency must have a process in place for beneficiaries to
request a reassessment of their family aggregate limit if they have a
change in circumstances or if they are being terminated for failure to
pay a premium.
(5) Nothing in paragraph (f) shall preclude the agency from
establishing additional aggregate limits, including but not limited to
a monthly limit on cost sharing charges for a particular service.
Sec. 447.57 Beneficiary and public notice requirements.
(a) The agency must make available a public schedule describing
current premiums and cost sharing requirements containing the following
information:
(1) The group or groups of individuals who are subject to premiums
and/or cost sharing and the current amounts;
(2) Mechanisms for making payments for required premiums and cost
sharing charges;
(3) The consequences for an applicant or recipient who does not pay
a premium or cost sharing charge;
(4) A list of hospitals charging cost sharing for non-emergency use
of the emergency department; and
[[Page 42312]]
(5) A list of preferred drugs or a mechanism to access such a list,
including the agency Web site.
(b) The agency must make the public schedule available to the
following in a manner that ensures that affected applicants,
beneficiaries, and providers are likely to have access to the notice:
(1) Beneficiaries, at the time of their enrollment and reenrollment
after a redetermination of eligibility, and when premiums, cost sharing
charges, or aggregate limits are revised, notice to beneficiaries must
be in accordance with Sec. 435.905(b) of this chapter;
(2) Applicants, at the time of application;
(3) All participating providers; and
(4) The general public.
(c) Prior to submitting to the Centers for Medicare & Medicaid
Services for approval a state plan amendment (SPA) to establish or
substantially modify existing premiums or cost sharing, or change the
consequences for non-payment, the agency must provide the public with
advance notice of the SPA, specifying the amount of premiums or cost
sharing and who is subject to the charges. The agency must provide a
reasonable opportunity to comment on such SPAs. The agency must submit
documentation with the SPA to demonstrate that these requirements were
met. If premiums or cost sharing is substantially modified during the
SPA approval process, the agency must provide additional public notice.
Sec. Sec. 445.58 through 447.82 [Removed]
0
47c. Remove Sec. Sec. 445.58 through 447.82.
PART 457--ALLOTMENTS AND GRANTS TO STATES
0
48. The authority citation for part 457 continues to read as follows:
Authority: Section 1102 of the Social Security Act (42 U.S.C.
1302).
0
49. Section 457.10 is amended by adding the definitions of ``Exchange
appeals entity,'' and ``Premium Lock Out'' to read as follows:
Sec. 457.10 Definitions and use of terms.
* * * * *
Exchange appeals entity has the meaning given to the term ``appeals
entity,'' as defined in 45 CFR 155.500.
* * * * *
Premium Lock-Out is defined as a State-specified period of time not
to exceed 90 days that a CHIP eligible child who has an unpaid premium
or enrollment fee (as applicable) will not be permitted to reenroll for
coverage in CHIP. Premium lock-out periods are not applicable to
children who have paid outstanding premiums or enrollment fees.
* * * * *
0
50. Section 457.110 is amended by adding paragraph (a)(1) and a
reserved paragraph (a)(2) to read as follows:
Sec. 457.110 Enrollment assistance and information requirements.
(a) * * *
(1) The State may provide individuals with a choice to receive
notices and information required under this subpart and Subpart K of
this part, in electronic format or by regular mail, provided that the
State establish safeguards in accordance with Sec. 435.918 of this
chapter.
(2) [Reserved]
* * * * *
0
51. Section Sec. 457.340 is amended by revising paragraph (a) and
adding paragraph (d)(3) to read as follows:
Sec. 457.340 Application for and enrollment in CHIP.
(a) Application and renewal assistance, availability of program
information, and Internet Web site. The terms of Sec. 435.905, Sec.
435.906, Sec. 435.907(h), Sec. 435.908, and Sec. 435.1200(f) of this
chapter apply equally to the State in administering a separate CHIP.
* * * * *
(d) * * *
(3) In the case of individuals subject to a period of uninsurance
under this part, the state must identify and implement processes to
facilitate enrollment of CHIP-eligible children who have satisfied a
period of uninsurance (as described under Sec. 457.805). To minimize
burden on individuals, a state may not require a new application or
information already provided by a family immediately preceding the
beginning of a waiting period. States must also ensure that the proper
safeguards are in place to prevent a disruption in coverage for
children transitioning from coverage under another insurance
affordability program after the completion of a period of uninsurance.
* * * * *
0
52. Section 457.348 is amended by adding paragraph (c)(6) to read as
follows:
Sec. 457.348 Determinations of Children's Health Insurance Program
eligibility by other insurance affordability programs.
* * * * *
(c) * * *
(6) Notify such program of the final determination of the
individual's eligibility or ineligibility for CHIP.
* * * * *
0
53. Section 457.350 is amended by revising paragraphs paragraph (i) to
read as follows:
Sec. 457.350 Eligibility screening and enrollment in other insurance
affordability programs.
* * * * *
(i) Applicants found potentially eligible for other insurance
affordability programs. For individuals identified in paragraph (b)(3)
of this section, including during a period of uninsurance imposed by
the state under Sec. 457.805, the state must--
(1) Promptly and without undue delay, consistent with the
timeliness standards established under Sec. 457.340(d), transfer the
electronic account to the applicable program via a secure electronic
interfaces.
(2) [Reserved.]
(3) In the case of individuals subject to a period of uninsurance
under this part, the state must notify such program of the date on
which such period ends and the individual is eligible to enroll in
CHIP.
* * * * *
0
54. Section 457.370 is added to read as follows:
Sec. 457.370 Alignment with Exchange initial open enrollment period.
The terms of Sec. 435.1205 apply equally to the State in
administering a separate CHIP, except that the State shall make
available and accept the application described in Sec. 457.330, shall
accept electronic accounts as described in Sec. 457.348, and furnish
coverage in accordance with Sec. 457.340.
Sec. 457.540 [Amended]
0
55. In Sec. 457.540, amend paragraph (a) by removing the reference
``Sec. 447.52'' and by adding in its place the reference ``Sec.
447.52, Sec. 447.53, or Sec. 447.54''.
0
56. Section 457.570 is amended by revising paragraph (c) and adding
paragraph (d) to read as follows:
Sec. 457.570 Disenrollment protections.
* * * * *
(c) The State must ensure that disenrollment policies, such as
policies related to non-payment of premiums, do not present barriers to
the timely determination of eligibility and enrollment in coverage of
an eligible child in the appropriate insurance affordability program. A
State may not--
(1) Establish a premium lock-out period that exceeds 90-days in
accordance with Sec. 457.10 of this part.
[[Page 42313]]
(2) Continue to impose a premium lock-out period after a child's
past due premiums have been paid.
(3) Require the collection of past due premiums or enrollment fees
as a condition of eligibility for reenrollment once the State-defined
lock out period has expired, regardless of the length of the lock-out
period.
(d) The State must provide the enrollee with an opportunity for an
impartial review to address disenrollment from the program in
accordance with Sec. 457.1130(a)(3).
0
57. Section 457.805 is revised to read as follows:
Sec. 457.805 State plan requirement: Procedures to address
substitution under group health plans.
(a) State plan requirements. The state plan must include a
description of reasonable procedures to ensure that health benefits
coverage provided under the State plan does not substitute for coverage
provided under group health plans as defined at Sec. 457.10.
(b) Limitations. (1) A state may not, under this section, impose a
period of uninsurance which exceeds 90 days from the date a child
otherwise eligible for CHIP is disenrolled from coverage under a group
health plan.
(2) A waiting period may not be applied to a child following the
loss of eligibility for and enrollment in Medicaid or another insurance
affordability program.
(3) If a state elects to impose a period of uninsurance following
the loss of coverage under a group health plan under this section, such
period may not be imposed in the case of any child if:
(i) The premium paid by the family for coverage of the child under
the group health plan exceeded 5 percent of household income;
(ii) The child's parent is determined eligible for advance payment
of the premium tax credit for enrollment in a QHP through the Exchange
because the ESI in which the family was enrolled is determined
unaffordable in accordance with 26 CFR 1.36B-2(c)(3)(v).
(iii) The cost of family coverage that includes the child exceeds
9.5 percent of the household income.
(iv) The employer stopped offering coverage of dependents (or any
coverage) under an employer-sponsored health insurance plan;
(v) A change in employment, including involuntary separation,
resulted in the child's loss of employer-sponsored insurance (other
than through full payment of the premium by the parent under COBRA);
(vi) The child has special health care needs; and
(vii) The child lost coverage due to the death or divorce of a
parent.
0
58. Section 457.810 is amended by revising paragraph (a) to read as
follows:
Sec. 457.810 Premium assistance programs: Required protections
against substitution.
* * * * *
(a) Period without coverage under a group health plan. For health
benefits coverage provided through premium assistance for group health
plans, the following rules apply:
(1) Any waiting period imposed under the state child health plan
prior to the provision of child health assistance to a targeted low-
income child under the state plan shall apply to the same extent to the
provision of a premium assistance subsidy for the child and shall not
exceed 90 days.
(2) States must permit the same exemptions to the required waiting
period for premium assistance as specified under the state plan at
Sec. 457.805(a)(2), and Sec. 457.805(a)(3) for the provision of child
health assistance to a targeted low-income child.
* * * * *
Title 45
For the reasons set forth in the preamble, the Department of Health
and Human Services amends 45 CFR subtitle A, subchapter B, as set forth
below:
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
59. The authority citation for part 155 is revised to read as follows:
Authority: Sections 1301, 1302, 1303, 1304, 1311, 1312, 1313,
1321, 1322, 1331, 1332, 1334, 1402, 1413, 1321, 1322, 1331, 1332,
1334, 1402, 1411, 1412, 1413 of the Affordable Care Act, Pub. L 111-
148, 124 Stat 199.
0
60. Section 155.20 is amended by revising the definitions of ``Advance
payments of the premium tax credit,'' and adding a definition of
``Catastrophic plan'' to read as follows:
Sec. 155.20 Definitions.
* * * * *
Advance payments of the premium tax credit means payment of the tax
credit authorized by 26 U.S.C. 36B and its implementing regulations,
which are provided on an advance basis to an eligible individual
enrolled in a QHP through an Exchange in accordance with section 1412
of the Affordable Care Act.
* * * * *
Catastrophic plan means a health plan described in section 1302(e)
of the Affordable Care Act.
* * * * *
0
61. Section 155.105 is amended by revising paragraph (b)(2) to read as
follows:
Sec. 155.105 Approval of a State Exchange.
* * * * *
(b) * * *
(2) The Exchange is capable of carrying out the information
reporting requirements of 26 CFR 1.36B-5;
* * * * *
0
62. Section 155.227 is added to read as follows:
Sec. 155.227 Authorized representatives.
(a) General rule. (1) The Exchange must permit an applicant or
enrollee in the individual or small group market, subject to applicable
privacy and security requirements, to designate an individual person or
organization to act on his or her behalf in applying for an eligibility
determination or redetermination, under subpart D, G, or H of this
part, and in carrying out other ongoing communications with the
Exchange.
(2) Designation of an authorized representative must be in a
written document signed by the applicant or enrollee, or through
another legally binding format subject to applicable authentication and
data security standards. If submitted, legal documentation of authority
to act on behalf of an applicant or enrollee under State law, such as a
court order establishing legal guardianship or a power of attorney,
shall serve in the place of the applicant's or enrollee's signature.
(3) The Exchange must ensure that the authorized representative
agrees to maintain, or be legally bound to maintain, the
confidentiality of any information regarding the applicant or enrollee
provided by the Exchange.
(4) The Exchange must ensure that the authorized representative is
responsible for fulfilling all responsibilities encompassed within the
scope of the authorized representation, as described in this section,
to the same extent as the applicant or enrollee he or she represents.
(5) The Exchange must provide information both to the applicant or
enrollee, and to the authorized representative, regarding the powers
and duties of authorized representatives.
(b) Timing of designation. The Exchange must permit an applicant or
enrollee to designate an authorized representative:
[[Page 42314]]
(1) At the time of application; and
(2) At other times and through methods as described in Sec.
155.405(c)(2).
(c) Duties. (1) The Exchange must permit an applicant or enrollee
to authorize his or her representative to:
(i) Sign an application on the applicant or enrollee's behalf;
(ii) Submit an update or respond to a redetermination for the
applicant or enrollee in accordance with Sec. 155.330 or Sec.
155.335;
(iii) Receive copies of the applicant's or enrollee's notices and
other communications from the Exchange; and
(iv) Act on behalf of the applicant or enrollee in all other
matters with the Exchange.
(2) The Exchange may permit an applicant or enrollee to authorize a
representative to perform fewer than all of the activities described in
paragraph (c)(1) of this section, provided that the Exchange tracks the
specific permissions for each authorized representative.
(d) Duration. The Exchange must consider the designation of an
authorized representative valid until:
(1) The applicant or enrollee notifies the Exchange that the
representative is no longer authorized to act on his or her behalf
using one of the methods available for the submission of an
application, as described in Sec. 155.405(c). The Exchange must notify
the authorized representative of such change; or
(2) The authorized representative informs the Exchange and the
applicant or enrollee that he or she no longer is acting in such
capacity. An authorized representative must notify the Exchange and the
applicant or enrollee on whose behalf he or she is acting when the
authorized representative no longer has legal authority to act on
behalf of the applicant or enrollee.
(e) Compliance with State and Federal law. The Exchange must
require an authorized representative to comply with applicable state
and federal laws concerning conflicts of interest and confidentiality
of information.
(f) Signature. For purposes of this section, designation of an
authorized representative must be through a written document signed by
the applicant or enrollee, or through another legally binding format,
as described in Sec. 155.227(a)(2), and must be accepted through all
of the modalities described in Sec. 155.405(c).
0
63. Section 155.230 is amended by revising paragraph (a) and adding
paragraph (d) to read as follows:
Sec. 155.230 General standards for Exchange notices.
(a) General requirement. Any notice required to be sent by the
Exchange to individuals or employers must be written and include:
(1) An explanation of the action reflected in the notice, including
the effective date of the action.
(2) Any factual findings relevant to the action.
(3) Citations to, or identification of, the relevant regulations
supporting the action.
(4) Contact information for available customer service resources.
(5) An explanation of appeal rights, if applicable.
* * * * *
(d) Electronic notices. (1) The individual market Exchange must
provide required notices either through standard mail, or if an
individual or employer elects, electronically, provided that the
requirements for electronic notices in 42 CFR 435.918 are met, except
that the individual market Exchange is not required to implement the
process specified in 42 CFR 435.918(b)(1) for eligibility
determinations for enrollment in a QHP through the Exchange and
insurance affordability programs that are effective before January 1,
2015.
(2) The SHOP must provide required notices either through standard
mail, or if an employer or employee elects, electronically, provided
that the requirements for electronic notices in 42 CFR 435.918(b)(2)
through (5) are met for the employer or employee.
0
64. Section 155.300(a) is amended by removing the definition of
``Adoption taxpayer identification number'' and revising the
definitions of ``Minimum value,'' ``Modified Adjusted Gross Income
(MAGI),'' and ``Qualifying coverage in an eligible employer-sponsored
plan'' to read as follows:
Sec. 155.300 Definitions and general standards for eligibility
determinations.
(a) * * *
Minimum value when used to describe coverage in an eligible
employer-sponsored plan, means that the employer-sponsored plan meets
the standards for coverage of the total allowed costs of benefits set
forth in Sec. 156.145.
Modified Adjusted Gross Income (MAGI) has the same meaning as it
does in 26 CFR 1.36B-1(e)(2).
* * * * *
Qualifying coverage in an eligible employer-sponsored plan means
coverage in an eligible employer-sponsored plan that meets the
affordability and minimum value standards specified in 26 CFR 1.36B-
2(c)(3).
* * * * *
0
65. Section 155.302 is amended by revising paragraphs (a), (b), and (d)
to read as follows:
Sec. 155.302 Options for conducting eligibility determinations.
(a) Options for conducting eligibility determinations. The Exchange
may satisfy the requirements of this subpart--
(1) Directly or through contracting arrangements in accordance with
Sec. 155.110(a), provided that any contracting arrangement for
eligibility determinations for Medicaid and CHIP is subject to the
standards in 42 CFR 431.10(c)(2); or
(2) Through a combination of the approach described in paragraph
(a)(1) of this section and one or both of the options described in
paragraph (b) or (c) of this section, subject to the standards in
paragraph (d) of this section.
(b) Medicaid and CHIP. Notwithstanding the requirements of this
subpart, the Exchange may conduct an assessment of eligibility for
Medicaid and CHIP, rather than an eligibility determination for
Medicaid and CHIP, provided that--
(1) The Exchange makes such an assessment based on the applicable
Medicaid and CHIP MAGI-based income standards and citizenship and
immigration status, using verification rules and procedures consistent
with 42 CFR parts 435 and 457, without regard to how such standards are
implemented by the State Medicaid and CHIP agencies.
(2) Notices and other activities required in connection with an
eligibility determination for Medicaid or CHIP are performed by the
Exchange consistent with the standards identified in this subpart or
the State Medicaid or CHIP agency consistent with applicable law.
(3) Applicants found potentially eligible for Medicaid or CHIP.
When the Exchange assesses an applicant as potentially eligible for
Medicaid or CHIP consistent with the standards in paragraph (b)(1) of
this section, the Exchange transmits all information provided as a part
of the application, update, or renewal that initiated the assessment,
and any information obtained or verified by the Exchange to the State
Medicaid agency or CHIP agency via secure electronic interface,
promptly and without undue delay.
(4) Applicants not found potentially eligible for Medicaid and
CHIP. (i) If the Exchange conducts an assessment in
[[Page 42315]]
accordance with paragraph (b) of this section and finds that an
applicant is not potentially eligible for Medicaid or CHIP based on the
applicable Medicaid and CHIP MAGI-based income standards, the Exchange
must consider the applicant as ineligible for Medicaid and CHIP for
purposes of determining eligibility for advance payments of the premium
tax credit and cost-sharing reductions and must notify such applicant,
and provide him or her with the opportunity to--
(A) Withdraw his or her application for Medicaid and CHIP, unless
the Exchange has assessed the applicant as potentially eligible for
Medicaid based on factors not otherwise considered in this subpart, in
accordance with Sec. 155.345(b), and provided that the application
will not be considered withdrawn if he or she appeals his or her
eligibility determination for advance payments of the premium tax
credit or cost-sharing reductions and the appeals entity described in
Sec. 155.500(a) finds that the individual is potentially eligible for
Medicaid or CHIP; or
(B) Request a full determination of eligibility for Medicaid and
CHIP by the applicable State Medicaid and CHIP agencies.
(ii) To the extent that an applicant described in paragraph
(b)(4)(i) of this section requests a full determination of eligibility
for Medicaid and CHIP, the Exchange must--
(A) Transmit all information provided as a part of the application,
update, or renewal that initiated the assessment, and any information
obtained or verified by the Exchange to the State Medicaid agency and
CHIP agency via secure electronic interface, promptly and without undue
delay; and
(B) Consider such an applicant as ineligible for Medicaid and CHIP
for purposes of determining eligibility for advance payments of the
premium tax credit and cost-sharing reductions until the State Medicaid
or CHIP agency notifies the Exchange that the applicant is eligible for
Medicaid or CHIP.
(5) The Exchange and the Exchange appeals entity adheres to the
eligibility determination or appeals decision for Medicaid or CHIP made
by the State Medicaid or CHIP agency, or the appeals entity for such
agency.
(6) The Exchange and the State Medicaid and CHIP agencies enter
into an agreement specifying their respective responsibilities in
connection with eligibility determinations for Medicaid and CHIP, and
provide a copy of such agreement to HHS upon request.
* * * * *
(d) Standards. To the extent that assessments of eligibility for
Medicaid and CHIP based on MAGI or eligibility determinations for
advance payments of the premium tax credit and cost-sharing reductions
are made in accordance with paragraphs (b) or (c) of this section, the
Exchange must ensure that--
(1) Eligibility processes for all insurance affordability programs
are streamlined and coordinated across HHS, the Exchange, the State
Medicaid agency, and the State CHIP agency, as applicable;
(2) Such arrangement does not increase administrative costs and
burdens on applicants, enrollees, beneficiaries, or application filers,
or increase delay; and
(3) Applicable requirements under 45 CFR 155.260, 155.270, and
155.315(i), and section 6103 of the Code for the confidentiality,
disclosure, maintenance, and use of information are met.
0
66. Section 155.305 is amended by--
0
A. Revising paragraphs (f)(1)(i), (f)(1)(ii)(B), (f)(2)(ii),
(f)(2)(iii), (f)(3), and (f)(5).
0
B. Adding paragraphs (a)(3)(v), and (h).
The revisions and additions read as follows:
Sec. 155.305 Eligibility standards.
(a) * * *
(3) * * *
(v) Temporary absence. The Exchange may not deny or terminate an
individual's eligibility for enrollment in a QHP through the Exchange
if the individual meets the standards in paragraph (a)(3) of this
section but for a temporary absence from the service area of the
Exchange and intends to return when the purpose of the absence has been
accomplished.
* * * * *
(f) * * *
(1) * * *
(i) He or she is expected to have a household income, as defined in
26 CFR 1.36B-1(e), of greater than or equal to 100 percent but not more
than 400 percent of the FPL for the benefit year for which coverage is
requested; and
(ii) * * *
(B) Is not eligible for minimum essential coverage, with the
exception of coverage in the individual market, in accordance with
section 26 CFR 1.36B-2(a)(2) and (c).
(2) * * *
(ii) He or she is expected to have a household income, as defined
in 26 CFR 1.36B-1(e) of less than 100 percent of the FPL for the
benefit year for which coverage is requested; and
(iii) One or more applicants for whom the tax filer expects to
claim a personal exemption deduction on his or her tax return for the
benefit year, including the tax filer and his or her spouse, is a non-
citizen who is lawfully present and ineligible for Medicaid by reason
of immigration status, in accordance with 26 CFR 1.36B-2(b)(5).
(3) Enrollment required. The Exchange may provide advance payments
of the premium tax credit on behalf of a tax filer only if one or more
applicants for whom the tax filer attests that he or she expects to
claim a personal exemption deduction for the benefit year, including
the tax filer and his or her spouse, is enrolled in a QHP that is not a
catastrophic plan, through the Exchange.
* * * * *
(5) Calculation of advance payments of the premium tax credit. The
Exchange must calculate advance payments of the premium tax credit in
accordance with 26 CFR 1.36B-3.
* * * * *
(h) Eligibility for enrollment through the Exchange in a QHP that
is a catastrophic plan. The Exchange must determine an applicant
eligible for enrollment in a QHP through the Exchange in a QHP that is
a catastrophic plan as defined by section 1302(e) of the Affordable
Care Act, if he or she has met the requirements for eligibility for
enrollment in a QHP through the Exchange, in accordance with Sec.
155.305(a), and either--
(1) Has not attained the age of 30 before the beginning of the plan
year; or
(2) Has a certification in effect for any plan year that he or she
is exempt from the requirement to maintain minimum essential coverage
under section 5000A of the Code by reason of--
(i) Section 5000A(e)(1) of the Code (relating to individuals
without affordable coverage); or
(ii) Section 5000A(e)(5) of the Code (relating to individuals with
hardships).
0
67. Section 155.310 is amended by--
0
A. Redesignating paragraph (i) as paragraph (j).
0
B. Adding new paragraph (i).
0
C. Revising newly redesignated paragraph (j).
The addition and revision read as follows:
Sec. 155.310 Eligibility process.
* * * * *
(i) Certification program for employers. As part of its
determination of whether an employer has a liability under section
4980H of the Code, the Internal Revenue Service will adopt methods to
certify to an employer that one or more employees has enrolled for one
or more months during a year in a
[[Page 42316]]
QHP for which a premium tax credit or cost-sharing reduction is allowed
or paid.
(j) Duration of eligibility determinations without enrollment. To
the extent that an applicant who is determined eligible for enrollment
in a QHP through the Exchange does not select a QHP within his or her
enrollment period, or is not eligible for an enrollment period, in
accordance with subpart E, and seeks a new enrollment period prior to
the date on which his or her eligibility is redetermined in accordance
with Sec. 155.335, the Exchange must require the applicant to attest
as to whether information affecting his or her eligibility has changed
since his or her most recent eligibility determination before
determining his or her eligibility for a special enrollment period, and
must process any changes reported in accordance with the procedures
specified in Sec. 155.330.
0
68. Section 155.315 is amended by revising paragraphs (b)(2), (f)
introductory text, (f)(4) introductory text, and (f)(5) and by adding
paragraphs (f)(6) and (j) to read as follows:
Sec. 155.315 Verification process related to eligibility for
enrollment in a QHP through the Exchange.
* * * * *
(b) * * *
(2) To the extent that the Exchange is unable to validate an
individual's Social Security number through the Social Security
Administration, or the Social Security Administration indicates that
the individual is deceased, the Exchange must follow the procedures
specified in paragraph (f) of this section, except that the Exchange
must provide the individual with a period of 90 days from the date on
which the notice described in paragraph (f)(2)(i) of this section is
received for the applicant to provide satisfactory documentary evidence
or resolve the inconsistency with the Social Security Administration.
The date on which the notice is received means 5 days after the date on
the notice, unless the individual demonstrates that he or she did not
receive the notice within the 5 day period.
* * * * *
(f) Inconsistencies. Except as otherwise specified in this subpart,
for an applicant for whom the Exchange cannot verify information
required to determine eligibility for enrollment in a QHP through the
Exchange, advance payments of the premium tax credit, and cost-sharing
reductions, including when electronic data is required in accordance
with this subpart but data for individuals relevant to the eligibility
determination are not included in such data sources or when electronic
data from IRS, DHS, or SSA is required but it is not reasonably
expected that data sources will be available within 1 day of the
initial request to the data source, the Exchange:
* * * * *
(4) During the periods described in paragraphs (f)(1) and
(f)(2)(ii) of this section, must:
* * * * *
(5) If, after the period described in paragraph (f)(2)(ii) of this
section, the Exchange remains unable to verify the attestation, the
Exchange must determine the applicant's eligibility based on the
information available from the data sources specified in this subpart,
unless such applicant qualifies for the exception provided under
paragraph (g) of this section, and notify the applicant of such
determination in accordance with the notice requirements specified in
Sec. 155.310(g), including notice that the Exchange is unable to
verify the attestation.
(6) When electronic data to support the verifications specified in
Sec. 155.315(d) or Sec. 155.320(b) is required but it is not
reasonably expected that data sources will be available within 1 day of
the initial request to the data source, the Exchange must accept the
applicant's attestation regarding the factor of eligibility for which
the unavailable data source is relevant.
* * * * *
(j) Verification related to eligibility for enrollment through the
Exchange in a QHP that is a catastrophic plan. The Exchange must verify
an applicant's attestation that he or she meets the requirements of
Sec. 155.305(h) by--
(1) Verifying the applicant's attestation of age as follows--
(i) Except as provided in paragraph (j)(1)(iii) of this section,
accepting his or her attestation without further verification; or
(ii) Examining electronic data sources that are available to the
Exchange and which have been approved by HHS for this purpose, based on
evidence showing that such data sources are sufficiently current and
accurate, and minimize administrative costs and burdens.
(iii) If information regarding age is not reasonably compatible
with other information provided by the individual or in the records of
the Exchange, the Exchange must examine information in data sources
that are available to the Exchange and which have been approved by HHS
for this purpose based on evidence showing that such data sources are
sufficiently current and accurate.
(2) Verifying that an applicant has a certification of exemption in
effect as described in Sec. 155.305(h)(2).
(3) To the extent that the Exchange is unable to verify the
information required to determine eligibility for enrollment through
the Exchange in a QHP that is a catastrophic plan as described in
paragraphs (j)(1) and (2) of this section, the Exchange must follow the
procedures specified in Sec. 155.315(f), except for Sec.
155.315(f)(4).
0
69. Section 155.320 is amended by--
0
A. Revising paragraphs (c)(1)(i) heading, (c)(1)(i)(A), (c)(1)(ii),
(c)(3)(i)(D), (c)(3)(ii)(A), (c)(3)(iii)(A) and (B), (c)(3)(vi),
(c)(3)(vii), (c)(3)(viii), and (d).
0
B. Adding paragraphs (c)(3)(i)(E) and (c)(3)(iii)(C).
0
C. Removing paragraph (e).
0
D. Redesignating paragraph (f) as paragraph (e).
The revisions and additions read as follows:
Sec. 155.320 Verification process related to eligibility for
insurance affordability programs.
* * * * *
(c) * * *
(1) * * *
(i) Data regarding annual household income. (A) For all individuals
whose income is counted in calculating a tax filer's household income,
as defined in 26 CFR 1.36B-1(e), or an applicant's household income,
calculated in accordance with 42 CFR 435.603(d), and for whom the
Exchange has a Social Security number, the Exchange must request tax
return data regarding MAGI and family size from the Secretary of the
Treasury and data regarding Social security benefits described in 26
CFR 1.36B-1(e)(2)(iii) from the Commissioner of Social Security by
transmitting identifying information specified by HHS to HHS.
* * * * *
(ii) Data regarding MAGI-based income. For all individuals whose
income is counted in calculating a tax filer's household income, as
defined in 26 CFR 1.36B-1(e), or an applicant's household income,
calculated in accordance with 42 CFR 435.603(d), the Exchange must
request data regarding MAGI-based income in accordance with 42 CFR
435.948(a).
* * * * *
(3) * * *
(i) * * *
(D) If the Exchange finds that an applicant's attestation of a tax
filer's family size is not reasonably compatible
[[Page 42317]]
with other information provided by the application filer for the family
or in the records of the Exchange, with the exception of the data
described in paragraph (c)(1)(i) of this section, the Exchange must
utilize data obtained through other electronic data sources to verify
the attestation. If such data sources are unavailable or information in
such data sources is not reasonably compatible with the applicant's
attestation, the Exchange must request additional documentation to
support the attestation within the procedures specified in Sec.
155.315(f).
(E) The Exchange must verify that neither advance payments of the
premium tax credit nor cost-sharing reductions are being provided on
behalf of an individual using information obtained by transmitting
identifying information specified by HHS to HHS.
* * * * *
(ii) * * *
(A) The Exchange must compute annual household income for the
family described in paragraph (c)(3)(i)(A) of this section based on the
data described in paragraph (c)(1)(i) of this section;
* * * * *
(iii) * * *
(A) Except as specified in paragraph (c)(3)(iii)(B) and (C) of this
section, if an applicant's attestation, in accordance with paragraph
(c)(3)(ii)(B) of this section, indicates that a tax filer's annual
household income has increased or is reasonably expected to increase
from the data described in paragraph (c)(3)(ii)(A) of this section for
the benefit year for which the applicant(s) in the tax filer's family
are requesting coverage and the Exchange has not verified the
applicant's MAGI-based income through the process specified in
paragraph (c)(2)(ii) of this section to be within the applicable
Medicaid or CHIP MAGI-based income standard, the Exchange must accept
the applicant's attestation regarding a tax filer's annual household
income without further verification.
(B) If data available to the Exchange in accordance with paragraph
(c)(1)(ii) of this section indicate that a tax filer's projected annual
household income is in excess of his or her attestation by a
significant amount, the Exchange must proceed in accordance with Sec.
155.315(f)(1) through (4).
(C) If other information provided by the application filer
indicates that a tax filer's projected annual household income is in
excess of his or her attestation by a significant amount, the Exchange
must utilize data available to the Exchange in accordance with
paragraph (c)(1)(ii) of this section to verify the attestation. If such
data is unavailable or are not reasonably compatible with the
applicant's attestation, the Exchange must proceed in accordance with
Sec. 155.315(f)(1) through (4).
* * * * *
(vi) Alternate verification process for decreases in annual
household income and situations in which tax return data is
unavailable. If a tax filer qualifies for an alternate verification
process based on the requirements specified in paragraph (c)(3)(iv) of
this section and the applicant's attestation to projected annual
household income, as described in paragraph (c)(3)(ii)(B) of this
section, is greater than ten percent below the annual household income
computed in accordance with paragraph (c)(3)(ii)(A) of this section, or
if data described in paragraph (c)(1)(i) of this section is
unavailable, the Exchange must attempt to verify the applicant's
attestation of the tax filer's projected annual household income by
following the procedures specified in paragraph (c)(3)(vi)(A) through
(G) of this section.
(A) Data. The Exchange must annualize data from the MAGI-based
income sources specified in paragraph (c)(1)(ii) of this section, and
obtain any data available from other electronic data sources that have
been approved by HHS, based on evidence showing that such data sources
are sufficiently accurate and offer less administrative complexity than
paper verification.
(B) Eligibility. To the extent that the applicant's attestation
indicates that the information described in paragraph (c)(3)(vi)(A) of
this section represents an accurate projection of the tax filer's
household income for the benefit year for which coverage is requested,
the Exchange must determine the tax filer's eligibility for advance
payments of the premium tax credit and cost-sharing reductions based on
the household income data in paragraph (c)(3)(vi)(A) of this section.
(C) Increases in annual household income. If an applicant's
attestation, in accordance with paragraph (c)(3)(ii)(B) of this
section, indicates that a tax filer's annual household income has
increased or is reasonably expected to increase from the data described
in paragraph (c)(3)(vi)(A) of this section to the benefit year for
which the applicant(s) in the tax filer's family are requesting
coverage and the Exchange has not verified the applicant's MAGI-based
income through the process specified in paragraph (c)(2)(ii) of this
section to be within the applicable Medicaid or CHIP MAGI-based income
standard, the Exchange must accept the applicant's attestation for the
tax filer's family without further verification, unless the Exchange
finds that an applicant's attestation of a tax filer's annual household
income is not reasonably compatible with other information provided by
the application filer or available to the Exchange in accordance with
paragraph (c)(1)(ii) of this section, in which case the Exchange must
request additional documentation using the procedures specified in
Sec. 155.315(f).
(D) Decreases in annual household income and situations in which
electronic data is unavailable. If electronic data are unavailable or
an applicant's attestation to projected annual household income, as
described in paragraph (c)(3)(ii)(B) of this section, is more than ten
percent below the annual household income as computed using data
sources described in paragraphs (c)(3)(vi)(A) of this section, the
Exchange must follow the procedures specified in Sec. 155.315(f)(1)
through (4).
(E) If, following the 90-day period described in paragraph
(c)(3)(vi)(D) of this section, an applicant has not responded to a
request for additional information from the Exchange and the data
sources specified in paragraph (c)(1) of this section indicate that an
applicant in the tax filer's family is eligible for Medicaid or CHIP,
the Exchange must not provide the applicant with eligibility for
advance payments of the premium tax credit, cost-sharing reductions,
Medicaid, CHIP or the BHP, if a BHP is operating in the service area of
the Exchange.
(F) If, at the conclusion of the period specified in paragraph
(c)(3)(vi)(D) of this section, the Exchange remains unable to verify
the applicant's attestation, the Exchange must determine the
applicant's eligibility based on the information described in paragraph
(c)(3)(ii)(A) of this section, notify the applicant of such
determination in accordance with the notice requirements specified in
Sec. 155.310(g), and implement such determination in accordance with
the effective dates specified in Sec. 155.330(f).
(G) If, at the conclusion of the period specified in paragraph
(c)(3)(vi)(D) of this section, the Exchange remains unable to verify
the applicant's attestation for the tax filer and the information
described in paragraph (c)(3)(ii)(A) of this section is unavailable,
the Exchange must determine the tax filer ineligible for advance
payments of the premium tax credit and cost-sharing reductions, notify
the applicant of such determination in accordance with the notice
requirement specified in Sec. 155.310(g), and discontinue any
[[Page 42318]]
advance payments of the premium tax credit and cost-sharing reductions
in accordance with the effective dates specified in Sec. 155.330(f).
(vii) For the purposes of paragraph (c)(3) of this section,
``household income'' means household income as specified in 26 CFR
1.36B-1(e).
(viii) For the purposes of paragraph (c)(3) of this section,
``family size'' means family size as specified in 26 CFR 1.36B-1(d).
* * * * *
(d) Verification related to enrollment in an eligible employer-
sponsored plan and eligibility for qualifying coverage in an eligible
employer-sponsored plan. (1) General requirement. The Exchange must
verify whether an applicant reasonably expects to be enrolled in an
eligible employer-sponsored plan or is eligible for qualifying coverage
in an eligible employer-sponsored plan for the benefit year for which
coverage is requested.
(2) Data. The Exchange must--
(i) Obtain data about enrollment in and eligibility for an eligible
employer-sponsored plan from any electronic data sources that are
available to the Exchange and which have been approved by HHS, based on
evidence showing that such data sources are sufficiently current,
accurate, and minimize administrative burden.
(ii) Obtain any available data regarding enrollment in employer-
sponsored coverage or eligibility for qualifying coverage in an
eligible employer-sponsored plan based on federal employment by
transmitting identifying information specified by HHS to HHS for HHS to
provide the necessary verification using data obtained by HHS.
(iii) Obtain any available data from the SHOP that corresponds to
the State in which the Exchange is operating.
(3) Verification procedures. (i) Except as specified in paragraphs
(d)(3)(ii) or (iii) of this section, the Exchange must accept an
applicant's attestation regarding the verification specified in
paragraph (d) of this section without further verification.
(ii) If an applicant's attestation is not reasonably compatible
with the information obtained by the Exchange as specified in
paragraphs (d)(2)(i) through (iii) of this section, other information
provided by the application filer, or other information in the records
of the Exchange, the Exchange must follow the procedures specified in
Sec. 155.315(f).
(iii) Except as specified in paragraph (d)(3)(iv) of this section,
if the Exchange does not have any of the information specified in
paragraphs (d)(2)(i) through (iii) of this section for an applicant,
the Exchange must select a statistically significant random sample of
such applicants and--
(A) Provide notice to the applicant indicating that the Exchange
will be contacting any employer identified on the application for the
applicant and the members of his or her household, as defined in 26 CFR
1.36B-1(d), to verify whether the applicant is enrolled in an eligible
employer-sponsored plan or is eligible for qualifying coverage in an
eligible employer-sponsored plan for the benefit year for which
coverage is requested;
(B) Proceed with all other elements of the eligibility
determination using the applicant's attestation, and provide
eligibility for enrollment in a QHP to the extent that an applicant is
otherwise qualified;
(C) Ensure that advance payments of the premium tax credit and
cost-sharing reductions are provided on behalf of an applicant who is
otherwise qualified for such payments and reductions, as described in
Sec. 155.305, if the tax filer attests to the Exchange that he or she
understands that any advance payments of the premium tax credit paid on
his or her behalf are subject to reconciliation;
(D) Make reasonable attempts to contact any employer identified on
the application for the applicant and the members of his or her
household, as defined in 26 CFR 1.36B-1(d), to verify whether the
applicant is enrolled in an eligible employer-sponsored plan or is
eligible for qualifying coverage in an eligible employer-sponsored plan
for the benefit year for which coverage is requested;
(E) If the Exchange receives any information from an employer
relevant to the applicant's enrollment in an eligible employer-
sponsored plan or eligibility for qualifying coverage in an eligible
employer-sponsored plan, the Exchange must determine the applicant's
eligibility based on such information and in accordance with the
effective dates specified in Sec. 155.330(f), and if such information
changes his or her eligibility determination, notify the applicant and
his or her employer or employers of such determination in accordance
with the notice requirements specified in Sec. 155.310(g) and (h);
(F) If, after a period of 90 days from the date on which the notice
described in paragraph (d)(3)(iii)(A) of this section is sent to the
applicant, the Exchange is unable to obtain the necessary information
from an employer, the Exchange must determine the applicant's
eligibility based on his or her attestation(s) regarding coverage
provided by that employer.
(G) To carry out the process described in paragraph (d)(3)(iii) of
this section, the Exchange must only disclose an individual's
information to an employer to the extent necessary for the employer to
identify the employee.
(iv) For eligibility determinations for advance payments of the
premium tax credit and cost-sharing reductions that are effective
before January 1, 2015, if the Exchange does not have any of the
information specified in paragraphs (d)(2)(i) through (iii) of this
section for an applicant, the Exchange may accept an applicant's
attestation regarding enrollment in an eligible employer-sponsored plan
and eligibility for qualifying coverage in an eligible employer-
sponsored plan for the benefit year for which coverage is requested
without further verification, instead of following the procedure in
paragraph (d)(3)(iii) of this section.
(4) Option to rely on verification performed by HHS. For
eligibility determinations for advance payments of the premium tax
credit and cost-sharing reductions that are effective on or after
January 1, 2015, the Exchange may satisfy the provisions of paragraph
(d) of this section by relying on a verification process performed by
HHS, provided that--
(i) The Exchange sends the notices described in Sec. 155.310(g)
and (h);
(ii) Other activities required in connection with the verifications
described in this paragraph are performed by the Exchange in accordance
with the standards identified in this subpart or in accordance with
guidance issued by the Secretary; and
(iii) The Exchange provides all relevant application information to
HHS through a secure, electronic interface, promptly and without undue
delay.
* * * * *
0
70. Section 155.330 is amended by revising paragraphs (d)(1)(ii),
(e)(2), and (f), and by removing paragraph (e)(3).
The revisions read as follows:
Sec. 155.330 Eligibility redetermination during a benefit year.
* * * * *
(d) * * *
(1) * * *
(ii) For an enrollee on whose behalf advance payments of the
premium tax credit or cost-sharing reductions are being provided,
eligibility determinations for Medicare, Medicaid, CHIP, or the BHP, if
a BHP is operating in the service area of the Exchange.
* * * * *
[[Page 42319]]
(e) * * *
(2) Data matching. (i) If the Exchange identifies updated
information regarding death, in accordance with paragraph (d)(1)(i) of
this section, or regarding any factor of eligibility not regarding
income, family size, or family composition, the Exchange must--
(A) Notify the enrollee regarding the updated information, as well
as the enrollee's projected eligibility determination after considering
such information.
(B) Allow an enrollee 30 days from the date of the notice to notify
the Exchange that such information is inaccurate.
(C) If the enrollee responds contesting the updated information,
proceed in accordance with Sec. 155.315(f) of this part.
(D) If the enrollee does not respond within the 30-day period
specified in paragraph (e)(2)(i)(B), proceed in accordance with
paragraphs (e)(1)(i) and (ii) of this section.
(ii) If the Exchange identifies updated information regarding
income, family size, or family composition, with the exception of
information regarding death, the Exchange must--
(A) Follow procedures described in paragraph (e)(2)(i)(A) and (B)
of this section; and
(B) If the enrollee responds confirming the updated information,
proceed in accordance with paragraphs (e)(1)(i) and (ii) of this
section.
(C) If the enrollee does not respond within the 30-day period
specified in paragraph (e)(2)(i)(B) of this section, maintain the
enrollee's existing eligibility determination without considering the
updated information.
(D) If the enrollee provides more up-to-date information, proceed
in accordance with paragraph (c)(1) of this section.
* * * * *
(f) Effective dates. (1) Except as specified in paragraphs (f)(2)
through (f)(5) of this section, the Exchange must implement changes--
(i) Resulting from a redetermination under this section on the
first day of the month following the date of the notice described in
paragraph (e)(1)(ii) of this section; or
(ii) Resulting from an appeal decision, on the date specified in
the appeal decision; or
(iii) Affecting enrollment or premiums only, on the first day of
the month following the date on which the Exchange is notified of the
change;
(2) Except as specified in paragraphs (f)(3) through (5) of this
section, the Exchange may determine a reasonable point in a month after
which a change described in paragraph (f)(1) of this section will not
be effective until the first day of the month after the month specified
in paragraph (f)(1) of this section. Such reasonable point in a month
must be no earlier than the 15th of the month.
(3) Except as specified in paragraphs (f)(4) and (5) of this
section, the Exchange must implement a change described in paragraph
(f)(1) of this section that results in a decreased amount of advance
payments of the premium tax credit, or a change in the level of cost-
sharing reductions, and for which the date of the notices described in
paragraphs (f)(1)(i) and (ii) of this section, or the date on which the
Exchange is notified in accordance with paragraph (f)(1)(iii) of this
section is after the 15th of the month, on the first day of the month
after the month specified in paragraph (f)(1) of this section.
(4) The Exchange must implement a change associated with the events
described in Sec. 155.420(b)(2)(i) and (ii) on the coverage effective
dates described in Sec. 155.420(b)(2)(i) and (ii), respectively.
(5) Notwithstanding paragraphs (f)(1) through (f)(4) of this
section, the Exchange may provide the effective date of a change
associated with the events described in Sec. 155.420(d)(4), (d)(5),
and (d)(9) based on the specific circumstances of each situation.
0
71. Section 155.335 is amended by revising paragraphs (a), (b), (c),
(e), (f), (g), (h), (k)(1), and (l), and adding paragraph (m) to read
as follows:
Sec. 155.335 Annual eligibility redetermination.
(a) General requirement. Except as specified in paragraphs (l) and
(m) of this section, the Exchange must redetermine the eligibility of a
qualified individual on an annual basis.
(b) Updated income and family size information. In the case of a
qualified individual who requested an eligibility determination for
insurance affordability programs in accordance with Sec. 155.310(b) of
this part, the Exchange must request updated tax return information, if
the qualified individual has authorized the request of such tax return
information, data regarding Social Security benefits, and data
regarding MAGI-based income as described in Sec. 155.320(c)(1) of this
part for use in the qualified individual's eligibility redetermination.
(c) Notice to qualified individual. The Exchange must provide a
qualified individual with an annual redetermination notice including
the following:
(1) [Reserved]
(2) [Reserved]
(3) The qualified individual's projected eligibility determination
for the following year, after considering any updated information
described in paragraph (b) of this section, including, if applicable,
the amount of any advance payments of the premium tax credit and the
level of any cost-sharing reductions or eligibility for Medicaid, CHIP
or BHP.
* * * * *
(e) Changes reported by qualified individuals. (1) The Exchange
must require a qualified individual to report any changes for the
information listed in the notice described in paragraph (c) of this
section within 30 days from the date of the notice.
(2) The Exchange must allow a qualified individual, or an
application filer, on behalf of the qualified individual, to report
changes via the channels available for the submission of an
application, as described in Sec. 155.405(c)(2).
(f) Verification of reported changes. The Exchange must verify any
information reported by a qualified individual under paragraph (e) of
this section using the processes specified in Sec. 155.315 and Sec.
155.320, including the relevant provisions in those sections regarding
inconsistencies, prior to using such information to determine
eligibility.
(g) Response to redetermination notice. (1) The Exchange must
require a qualified individual, or an application filer, on behalf of
the qualified individual, to sign and return the notice described in
paragraph (c) of this section.
(2) To the extent that a qualified individual does not sign and
return the notice described in paragraph (c) of this section within the
30-day period specified in paragraph (e) of this section, the Exchange
must proceed in accordance with the procedures specified in paragraph
(h)(1) of this section.
(h) Redetermination and notification of eligibility. (1) After the
30-day period specified in paragraph (e) of this section has elapsed,
the Exchange must--
(i) Redetermine the qualified individual's eligibility in
accordance with the standards specified in Sec. 155.305 using the
information provided to the qualified individual in the notice
specified in paragraph (c) of this section, as supplemented with any
information reported by the qualified individual and verified by the
Exchange in accordance with paragraphs (e) and (f) of this section.
[[Page 42320]]
(ii) Notify the qualified individual in accordance with the
requirements specified in Sec. 155.310(g).
(iii) If applicable, notify the qualified individual employer, in
accordance with the requirements specified in Sec. 155.310(h).
(2) If a qualified individual reports a change for the information
provided in the notice specified in paragraph (c) of this section that
the Exchange has not verified as of the end of the 30-day period
specified in paragraph (e) of this section, the Exchange must
redetermine the qualified individual's eligibility after completing
verification, as specified in paragraph (f) of this section.
* * * * *
(k) * * *
(1) The Exchange must have authorization from a qualified
individual to obtain updated tax return information described in
paragraph (b) of this section for purposes of conducting an annual
redetermination.
* * * * *
(l) Limitation on redetermination. To the extent that a qualified
individual has requested an eligibility determination for insurance
affordability programs in accordance with Sec. 155.310(b) and the
Exchange does not have an active authorization to obtain tax data as a
part of the annual redetermination process, the Exchange must
redetermine the qualified individual's eligibility only for enrollment
in a QHP and notify the enrollee in accordance with the timing
described in paragraph (d) of this section. The Exchange may not
proceed with a redetermination for insurance affordability programs
until such authorization has been obtained or the qualified individual
continues his or her request for an eligibility determination for
insurance affordability programs in accordance with Sec. 155.310(b).
(m) Special rule. The Exchange must not redetermine a qualified
individual's eligibility in accordance with this section if the
qualified individual's eligibility was redetermined under this section
during the prior year, and the qualified individual was not enrolled in
a QHP through the Exchange at the time of such redetermination, and has
not enrolled in a QHP through the Exchange since such redetermination.
0
72. Section 155.340 is amended by revising paragraphs (b) heading,
(b)(1), and (c) to read as follows:
Sec. 155.340 Administration of advance payments of the premium tax
credit and cost-sharing reductions.
* * * * *
(b) Requirement to provide information related to employer
responsibility. (1) In the event that the Exchange determines that an
individual is eligible for advance payments of the premium tax credit
or cost-sharing reductions based in part on a finding that an
individual's employer does not provide minimum essential coverage, or
provides minimum essential coverage that is unaffordable, within the
standard of 26 CFR 1.36B-2(c)(3)(v), or provide minimum essential
coverage that does not meet the minimum value standard of Sec.
156.145, the Exchange must transmit the individual's name and taxpayer
identification number to HHS.
* * * * *
(c) Requirement to provide information related to reconciliation of
advance payments of the premium tax credit. The Exchange must comply
with the requirements of 26 CFR 1.36B-5 regarding reporting to the IRS
and to taxpayers.
* * * * *
0
73. Section 155.345 is amended by--
0
A. Revising paragraphs (a) introductory text and (a)(2).
0
B. Redesignating paragraph (a)(3) as paragraph (a)(4).
0
C. Adding reserved paragraph (a)(3).
0
D. Revising paragraphs (f) introductory text, (g) introductory text,
and (g)(2) through (5).
0
E. Adding paragraph (g)(6).
0
F. Redesignating paragraphs (h) and (i) as paragraphs (i) and (j).
0
G. Adding new paragraph (h).
The revisions and addition read as follows:
Sec. 155.345 Coordination with Medicaid, CHIP, the Basic Health
Program, and the Pre-existing Condition Insurance Plan.
(a) Agreements. The Exchange must enter into agreements with
agencies administering Medicaid, CHIP, and the BHP, if a BHP is
operating in the service area of the Exchange, as are necessary to
fulfill the requirements of this subpart and provide copies of any such
agreements to HHS upon request. Such agreements must include a clear
delineation of the responsibilities of each agency to--
* * * * *
(2) Ensure prompt determinations of eligibility and enrollment in
the appropriate program without undue delay, based on the date the
application is submitted to or redetermination is initiated by the
Exchange or the agency administering Medicaid, CHIP, or the BHP;
(3) [Reserved]
(4) Ensure compliance with paragraphs (c), (d), (e), and (g) of
this section.
* * * * *
(f) Special rule. If the Exchange verifies that a tax filer's
household income, as defined in 26 CFR 1.36B-1(e), is less than 100
percent of the FPL for the benefit year for which coverage is
requested, determines that the tax filer is not eligible for advance
payments of the premium tax credit based on Sec. 155.305(f)(2), and
one or more applicants in the tax filer's household has been determined
ineligible for Medicaid and CHIP based on income, the Exchange must--
* * * * *
(g) Determination of eligibility for individuals submitting
applications directly to an agency administering Medicaid, CHIP, or the
BHP. The Exchange, in consultation with the agency or agencies
administering Medicaid, CHIP, and the BHP if a BHP is operating in the
service area of the Exchange, must establish procedures to ensure that
an eligibility determination for enrollment in a QHP, advance payments
of the premium tax credit, and cost-sharing reductions is performed
when an application is submitted directly to an agency administering
Medicaid, CHIP, or the BHP if a BHP is operating in the service area of
the Exchange. Under such procedures, the Exchange must--
* * * * *
(2) Notify such agency of the receipt of the information described
in paragraph (g)(1) of this section and final eligibility determination
for enrollment in a QHP, advance payments of the premium tax credit,
and cost-sharing reductions.
(3) Not duplicate any eligibility and verification findings already
made by the transmitting agency, to the extent such findings are made
in accordance with this part.
(4) Not request information or documentation from the individual
already provided to another agency administering an insurance
affordability program and included in the transmission of information
provided on the application or other information transmitted from the
other agency.
(5) Determine the individual's eligibility for enrollment in a QHP,
advance payments of the premium tax credit, and cost-sharing
reductions, promptly and without undue delay, and in accordance with
this subpart.
(6) Follow a streamlined process for eligibility determinations
regardless of the agency that initially received an application.
(h) Adherence to state decision regarding Medicaid and CHIP. The
Exchange and the Exchange appeals entity must adhere to the eligibility
[[Page 42321]]
determination or appeals decision for Medicaid or CHIP made by the
State Medicaid or CHIP agency, or the appeals entity for such agency.
* * * * *
0
74. Section 155.350 is amended by revising paragraph (a)(1)(ii) to read
as follows:
Sec. 155.350 Special eligibility standards and process for Indians.
(a) * * *
(1) * * *
(ii) Is expected to have a household income, as defined in 26 CFR
1.36B-1(e) that does not exceed 300 percent of the FPL for the benefit
year for which coverage is requested.
* * * * *
0
75. Section 155.400 is amended by adding paragraph (b)(3) to read as
follows:
Sec. 155.400 Enrollment of qualified individuals into QHPs.
* * * * *
(b) * * *
(3) Send updated eligibility and enrollment information to HHS
promptly and without undue delay, in a manner and timeframe as
specified by HHS.
* * * * *
0
76. Section 155.420 is amended by revising paragraphs (a), (b)(2),
(b)(3), adding paragraph (b)(4), and revising paragraph (d) to read as
follows:
Sec. 155.420 Special enrollment periods.
(a) General requirements. (1) The Exchange must provide special
enrollment periods consistent with this section, during which qualified
individuals may enroll in QHPs and enrollees may change QHPs.
(2) For the purpose of this section, ``dependent'', has the same
meaning as it does in 26 CFR 54.9801-2, referring to any individual who
is or who may become eligible for coverage under the terms of a QHP
because of a relationship to a qualified individual or enrollee.
(b) * * *
(2) Special effective dates. (i) In the case of birth, adoption,
placement for adoption, or placement in foster care, the Exchange must
ensure that coverage is effective for a qualified individual or
enrollee on the date of birth, adoption, placement for adoption, or
placement in foster care.
(ii) In the case of marriage, or in the case where a qualified
individual loses minimum essential coverage, as described in paragraph
(d)(1) of this section, the Exchange must ensure that coverage is
effective for a qualified individual or enrollee on the first day of
the following month.
(iii) In the case of a qualified individual or enrollee eligible
for a special enrollment period as described in paragraphs (d)(4),
(d)(5), or (d)(9) of this section, the Exchange must ensure that
coverage is effective on an appropriate date based on the circumstances
of the special enrollment period, in accordance with guidelines issued
by HHS. Such date much be either--
(A) The date of the event that triggered the special enrollment
period under (d)(4), (d)(5), or (d)(9) of this section; or
(B) In accordance with the regular effective dates specified in
paragraph (b)(1) of this section.
(3) Option for earlier effective dates. Subject to the Exchange
demonstrating to HHS that all of its participating QHP issuers agree to
effectuate coverage in a timeframe shorter than discussed in paragraph
(b)(1) or (b)(2)(ii) of this section, the Exchange may do one or both
of the following for all applicable individuals:
(i) For a QHP selection received by the Exchange from a qualified
individual in accordance with the dates specified in paragraph (b)(1)
or (b)(2)(ii) of this section, the Exchange may provide a coverage
effective date for a qualified individual earlier than specified in
such paragraphs.
(ii) For a QHP selection received by the Exchange from a qualified
individual on a date set by the Exchange after the fifteenth of the
month, the Exchange may provide a coverage effective date of the first
of the following month.
(4) Advance payments of the premium tax credit and cost-sharing
reductions. Notwithstanding the standards of this section, the Exchange
must ensure that advance payments of the premium tax credit and cost-
sharing reductions adhere to the effective dates specified in Sec.
155.330(f).
* * * * *
(d) The Exchange must allow a qualified individual or enrollee,
and, when specified below, his or her dependent, to enroll in or change
from one QHP to another if one of the following triggering events
occur:
(1) The qualified individual or his or her dependent loses minimum
essential coverage:
(i) In the case of a QHP decertification, the triggering event is
the date of the notice of decertification as described in Sec.
155.1080(e)(2); or
(ii) In all other cases, the triggering event is the date the
individual or dependent loses eligibility for minimum essential
coverage;
(2) The qualified individual gains a dependent or becomes a
dependent through marriage, birth, adoption, placement for adoption, or
placement in foster care.
(3) The qualified individual, or his or her dependent, which was
not previously a citizen, national, or lawfully present individual
gains such status;
(4) The qualified individual's or his or her dependent's,
enrollment or non-enrollment in a QHP is unintentional, inadvertent, or
erroneous and is the result of the error, misrepresentation, or
inaction of an officer, employee, or agent of the Exchange or HHS, or
its instrumentalities as evaluated and determined by the Exchange. In
such cases, the Exchange may take such action as may be necessary to
correct or eliminate the effects of such error, misrepresentation, or
inaction;
(5) The enrollee or, his or her dependent adequately demonstrates
to the Exchange that the QHP in which he or she is enrolled
substantially violated a material provision of its contract in relation
to the enrollee;
(6) Newly eligible or ineligible for advance payments of the
premium tax credit, or change in eligibility for cost-sharing
reductions. (i) The enrollee is determined newly eligible or newly
ineligible for advance payments of the premium tax credit or has a
change in eligibility for cost-sharing reductions;
(ii) The enrollee's dependent enrolled in the same QHP is
determined newly eligible or newly ineligible for advance payments of
the premium tax credit or has a change in eligibility for cost-sharing
reductions; or
(iii) A qualified individual or his or her dependent who is
enrolled in an eligible employer-sponsored plan is determined newly
eligible for advance payments of the premium tax credit based in part
on a finding that such individual is ineligible for qualifying coverage
in an eligible-employer sponsored plan in accordance with 26 CFR 1.36B-
2(c)(3), including as a result of his or her employer discontinuing or
changing available coverage within the next 60 days, provided that such
individual is allowed to terminate existing coverage. The Exchange must
permit an individual who is enrolled in an eligible employer-sponsored
plan and will lose eligibility for qualifying coverage in an eligible
employer-sponsored plan within the next 60 days to access this special
enrollment period prior to the end of his or her existing coverage,
although he or she is not eligible for advance payments of the premium
tax credit until the end of his
[[Page 42322]]
or her coverage in an eligible employer-sponsored plan;
(7) The qualified individual or enrollee, or his or her dependent,
gains access to new QHPs as a result of a permanent move;
(8) The qualified individual who is an Indian, as defined by
section 4 of the Indian Health Care Improvement Act, may enroll in a
QHP or change from one QHP to another one time per month;
(9) The qualified individual or enrollee, or his or her dependent,
demonstrates to the Exchange, in accordance with guidelines issued by
HHS, that the individual meets other exceptional circumstances as the
Exchange may provide;
* * * * *
0
77. Section 155.430 is amended by revising paragraphs (b)(1), (d)(1),
(d)(2)(iii), (d)(2)(iv), (d)(3), and by adding paragraph (d)(7) to read
as follows:
Sec. 155.430 Termination of coverage.
* * * * *
(b) * * *
(1) Enrollee-initiated terminations. (i) The Exchange must permit
an enrollee to terminate his or her coverage in a QHP, including as a
result of the enrollee obtaining other minimum essential coverage, with
appropriate notice to the Exchange or the QHP.
(ii) The Exchange must provide an opportunity at the time of plan
selection for an enrollee to choose to remain enrolled in a QHP if he
or she becomes eligible for other minimum essential coverage and the
enrollee does not request termination in accordance with paragraph
(b)(1)(i) of this section. If an enrollee does not choose to remain
enrolled in a QHP in such a situation, the Exchange must initiate
termination of his or her coverage upon completion of the
redetermination process specified in Sec. 155.330.
* * * * *
(d) * * *
(1) For purposes of this section--
(i) Reasonable notice is defined as at least fourteen days before
the requested effective date of termination; and
(ii) Changes in eligibility for advance payments of the premium tax
credit and cost sharing reductions, including terminations, must adhere
to the effective dates specified in Sec. 155.330(f).
(2) * * *
(iii) On a date on or after the date on which the termination is
requested by the enrollee, subject to the determination of the
enrollee's QHP issuer, if the enrollee's QHP issuer agrees to
effectuate termination in fewer than fourteen days, and the enrollee
requests an earlier termination effective date.
(iv) If the enrollee is newly eligible for Medicaid, CHIP, or the
BHP, if a BHP is operating in the service area of the Exchange, the
last day of QHP coverage is the day before the individual is determined
eligible for Medicaid, CHIP, or the BHP.
(3) In the case of a termination in accordance with paragraph
(b)(2)(i) of this section, the last day of QHP coverage is the last day
of eligibility, as described in Sec. 155.330(f), unless the individual
requests an earlier termination effective date per paragraph (b)(1) of
this section.
* * * * *
(7) In the case of a termination due to death, the last day of
coverage is the date of death.
* * * * *
0
78. Section 155.615 is amended by revising paragraph (f)(2)(i) to read
as follows:
Sec. 155.615 Verification process related to eligibility for
exemptions.
* * * * *
(f) * * *
(2) * * *
(i) For any applicant who requests an exemption based on the
hardship described in Sec. 155.605(g)(2), the Exchange must verify the
unavailability of affordable coverage through the procedures used to
determine eligibility for advance payments of the premium tax credit,
as specified in subpart D of this part, including the procedures
described in Sec. 155.315(c)(1), and the procedures used to verify
eligibility for qualifying coverage in an eligible employer-sponsored
plan, as specified in Sec. 155.320(d), except as specified in Sec.
155.615(f)(2)(ii).
* * * * *
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
79. The authority citation for part 156 continues to read as follows:
Authority: Sections 1301, 1302, 1303, 1304, 1311, 1312, 1313,
1321, 1322, 1324, 1334, 1341, 1342, 1343, 1402, 1413, 1321, 1322,
1331, 1332, 1334, 1341, 1342, 1343, 1401, and 1402 of the Affordable
Care Act, Pub. L 111-148, 124 Stat 199.
0
80. Section 156.270 is amended by revising paragraph (b) to read as
follows:
Sec. 156.270 Termination of coverage for qualified individuals.
* * * * *
(b) Termination of coverage notice requirement. If a QHP issuer
terminates an enrollee's coverage in accordance with Sec.
155.430(b)(1)(i), (ii), or (iii), the QHP issuer must, promptly and
without undue delay:
(1) Provide the enrollee with a notice of termination of coverage
that includes the termination effective date and reason for
termination.
(2) [Reserved]
* * * * *
Dated: May 28, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: May 31, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-16271 Filed 7-5-13; 11:15 am]
BILLING CODE 4120-01-P
