Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond, 15807-15879 [2014-06134]
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Vol. 79
Friday,
No. 55
March 21, 2014
Part II
Department of Health and Human Services
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45 CFR Parts 146, 147, 148, et al.
Patient Protection and Affordable Care Act; Exchange and Insurance
Market Standards for 2015 and Beyond; Proposed Rule
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Federal Register / Vol. 79, No. 55 / Friday, March 21, 2014 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Parts 146, 147, 148, 153, 155,
156, and 158
[CMS–9949–P]
RIN 0938–AS02
Patient Protection and Affordable Care
Act; Exchange and Insurance Market
Standards for 2015 and Beyond
Centers for Medicare &
Medicaid Services (CMS), Department
of Health and Human Services (HHS).
ACTION: Proposed rule.
AGENCY:
This proposed rule addresses
various requirements applicable to
health insurance issuers, Affordable
Insurance Exchanges (‘‘Exchanges’’),
Navigators, non-Navigator assistance
personnel, and other entities under 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).
Specifically, the rule proposes standards
related to product discontinuation and
renewal, quality reporting, nondiscrimination standards, minimum
certification standards and
responsibilities of qualified health plan
(QHP) issuers, the Small Business
Health Options Program, and
enforcement remedies in Federallyfacilitated Exchanges. It also proposes:
A modification of HHS’s allocation of
reinsurance contributions collected if
those contributions do not meet our
projections; certain changes to the
ceiling on allowable administrative
expenses in the risk corridors
calculation; modifications to the way we
calculate certain cost-sharing
parameters so that we round those
parameters down to the nearest $50
increment; certain approaches we are
considering to index the required
contribution used to determine
eligibility for an exemption from the
shared responsibility payment under
section 5000A of the Internal Revenue
Code; grounds for imposing civil money
penalties on persons who provide false
or fraudulent information to the
Exchange and on persons who
improperly use or disclose information;
updated standards for the consumer
assistance programs; standards related
to the opt-out provisions for self-funded,
non-Federal governmental plans and the
individual market provisions under the
Health Insurance Portability and
Accountability Act of 1996; standards
for recognition of certain types of
foreign group health coverage as
minimum essential coverage;
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SUMMARY:
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amendments to Exchange appeals
standards and coverage enrollment and
termination standards; and time-limited
adjustments to the standards relating to
the medical loss ratio program.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below no later
than 5 p.m. on April 21, 2014.
ADDRESSES: In commenting, please refer
to file code CMS–9949–P. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–9949–P, P.O. Box 8016, Baltimore,
MD 21244–8016.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–9949–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. Alternatively,
you may deliver (by hand or courier)
your written comments ONLY to the
following addresses prior to the close of
the comment period:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address, call
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telephone number (410) 786–9994 in
advance to schedule your arrival with
one of our staff members.
Comments erroneously mailed to the
addresses indicated as appropriate for
hand or courier delivery may be delayed
and received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: For
general matters and matters related to
Parts 146 through 148: Jacob Ackerman,
(301) 492–4179.
For matters related to reinsurance,
under Part 153: Adrianne Glasgow,
(410) 786–0686.
For matters related to risk corridors,
under Part 153: Jaya Ghildiyal, (301)
492–5149.
For matters related to noninterference with Federal law and nondiscrimination standards, and
Navigator, non-Navigator assistance
personnel, and certified application
counselor program standards, under
Part 155, subparts B and C: Joan
Matlack, (301) 492–4223.
For matters related to civil money
penalties and consumer authorization
forms, under Part 155, subpart C: Emily
Ames, (301) 492–4246.
For matters related to civil money
penalties for false or fraudulent
information or improper use of
information, under Part 155, subpart C:
Julia Cassidy, (301) 492–4412.
For matters related to enrollment of a
qualified individual, under Part 155,
subpart E: Jack Lavelle, (410) 786–0639.
For matters related to special
enrollment periods and exemptions
under Part 155, subparts D and G, and
matters related to eligibility appeals,
under Part 155, subparts F and H:
Christine Hammer, (301) 492–4431.
For matters related to the Small
Business Health Options Program,
under Part 155, subpart H: Christelle
Jang, (410) 786–8438.
For matters related to the required
contribution percentage for affordability
exemptions, under Part 155, subpart G:
Ariel Novick, (301) 492–4309.
For matters related to cost sharing,
under Part 156, subpart B: Pat Meisol,
(410) 786–1917.
For matters related to quality
standards, under Parts 155 and 156:
Nidhi Singh Shah, (301) 492–5110.
For matters related to minimum
essential coverage, under Part 156,
subpart G: Cam Clemmons, (410) 786–
1565.
For all other matters related to Parts
155 and 156: Leigha Basini, (301) 492–
4380.
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For matters related to the medical loss
ratio program, under Part 158: Julie
McCune, (301) 492–4196.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is
also available from the Federal Register
online database through Federal Digital
System (FDsys), a service of the U.S.
Government Printing Office. This
database can be accessed via the
internet at https://www.gpo.gov/fdsys.
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: https://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
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Table of Contents
I. Executive Summary
II. Background
A. Legislative Overview
B. Stakeholder Consultation and Input
C. Structure of Proposed Rule
III. Provisions of the Proposed Rule
A. Part 146—Requirements for the Group
Health Insurance Market
1. HIPAA Opt-Out Provisions for Plan
Sponsors of Self-Funded, Non-Federal
Governmental Plans (§ 146.180)
B. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
1. Guaranteed Availability and Guaranteed
Renewability of Coverage (§§ 147.104
and 147.106)
a. No Effect on Other Laws
b. Product Withdrawal and Uniform
Modification of Coverage Exceptions to
Guaranteed Renewability Requirements
C. Part 148—Requirements for the
Individual Health Insurance Market
1. Conforming Changes to Individual
Market Regulations (§§ 148.101 Through
148.128)
2. Fixed Indemnity Insurance in the
Individual Health Insurance Market
(§ 148.220)
D. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
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Adjustment Under the Affordable Care
Act
1. Provisions and Parameters for the
Transitional Reinsurance Program
(§ 153.405)
2. Provisions for the Temporary Risk
Corridors Program (§ 153.500)
E. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. Subpart B—General Standards Related to
the Establishment of the Exchange
a. Non-Interference With Federal Law and
Non-Discrimination Standards
(§ 155.120)
2. Subpart C—General Functions of an
Exchange
a. Civil Money Penalties for Violations of
Applicable Exchange Standards by
Consumer Assistance Entities in
Federally-Facilitated Exchanges
(§ 155.206)
b. Navigator, Non-Navigator Assistance
Personnel, and Certified Application
Counselor Program Standards
(§§ 155.210, 155.215, and 155.225)
c. Certified Application Counselors
(§ 155.225)
d. Payment of Premiums (§ 155.240)
e. Privacy and Security of Personally
Identifiable Information (§ 155.260)
f. Bases and Process for Imposing Civil
Money Penalties for Provision of False or
Fraudulent Information to an Exchange
or Improper Use or Disclosure of
Information (§ 155.285)
3. Subpart D—Exchange Functions in the
Individual Market: Eligibility
Determinations for Exchange
Participation and Insurance Affordability
Programs
a. Verification of Eligibility for Minimum
Essential Coverage Other Than Through
an Eligible Employer-Sponsored Plan
(§ 155.320)
b. Eligibility Redetermination During a
Benefit Year (§ 155.330)
4. Subpart E—Exchange Functions in the
Individual Market: Enrollment in
Qualified Health Plans
a. Enrollment of Qualified Individuals in a
QHP (§ 155.400)
b. Initial and Annual Open Enrollment
Periods (§ 155.410)
c. Special Enrollment Periods (§ 155.420)
d. Termination of Coverage (§ 155.430)
5. Subpart F—Appeals of Eligibility
Determinations for Exchange
Participation and Insurance Affordability
Programs
a. General Eligibility Appeals
Requirements (§ 155.505)
b. Dismissals (§ 155.530)
c. Employer Appeals Process (§ 155.555)
6. Subpart G—Exchange Functions in the
Individual Market: Eligibility
Determinations for Exemptions
a. Required Contribution Percentage
b. Options for Conducting Eligibility
Determinations for Exemptions
(§ 155.625)
7. Subpart H—Exchange Functions: Small
Business Health Options Program
a. Functions of a SHOP (§ 155.705)
b. Enrollment Periods Under SHOP
(§ 155.725)
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c. SHOP Employer and Employee
Eligibility Appeals Requirements
(§ 155.740)
8. Subpart O—Quality Standards for
Exchanges
a. Quality Rating System (§ 155.1400)
b. Enrollee Satisfaction Survey System
(§ 155.1405)
F. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
1. Subpart B—Essential Health Benefits
Package
a. Prescription Drug Benefits (§ 156.122)
b. Cost-Sharing Requirements (§ 156.130)
2. Subpart C—General Functions of an
Exchange
a. QHP Issuer Participation Standards
(§ 156.200)
3. Subpart G—Minimum Essential
Coverage
a. Other Coverage That Qualifies as
Minimum Essential Coverage (§ 156.602)
b. Requirements for Recognition as
Minimum Essential Coverage for Types
of Coverage Not Otherwise Designated
Minimum Essential Coverage in the
Statute or This Subpart (§ 156.604)
4. Subpart I—Enforcement Remedies in
Federally-Facilitated Exchanges
a. Available Remedies; Scope (§ 156.800)
b. Bases and Process for Imposing Civil
Money Penalties in Federally-Facilitated
Exchanges (§ 156.805)
c. Bases and Process for Decertification of
a QHP Offered by an Issuer Through a
Federally-Facilitated Exchange
(§ 156.810)
5. Subpart L—Quality Standards
a. Establishment of Standards for HHSApproved Enrollee Satisfaction Survey
Vendors for Use by QHP Issuers in
Exchanges (§ 156.1105)
b. Quality Rating System (§ 156.1120)
c. Enrollee Satisfaction Survey (§ 156.1125)
G. Part 158—Issuer Use of Premium
Revenue: Reporting and Rebate
Requirements
1. Subpart A—Disclosure and Reporting
a. ICD–10 Conversion Expenses (§ 158.150)
2. Subpart B—Calculating and Providing
the Rebate
a. MLR and Rebate Calculations in States
With Merged Individual and Small
Group Markets (§§ 158.211, 158.220,
158.231)
b. Accounting for Special Circumstances
(§ 158.221)
c. Distribution of de Minimis Rebates
(§ 158.243)
IV. Collection of Information Requirements
A. ICRs Regarding Recertification for
Certified Application Counselors
(§ 155.225)
B. ICRs Regarding Consumer Authorization
(§§ 155.210 and 155.215)
C. ICRs Regarding Enrollee Satisfaction &
Marketplace Surveys (§§ 155.1200,
156.1105, and 156.1125)
D. ICR Regarding Quality Rating System
(§ 156.1120)
E. ICRs Regarding Quality Standards for
Exchanges (§§ 155.1400 and 155.1405)
F. ICR Regarding Medical Loss Ratio
Requirements (§§ 158.150, 158.211,
158.220, 158.221, 158.231, and 158.243)
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G. ICRs Regarding Civil Money Penalties
(§§ 155.206 and 155.285)
H. ICRs regarding Fixed Indemnity Plans,
Minimum Essential Coverage,
Certifications of Creditable Coverage and
HIPAA Opt-Out Election Notice, Notice
of Discontinuation, Notice of Renewal
(§§ 146.152, 146.180, 147.106, 148.122,
148.220, and 156.602)
V. Regulatory Impact Analysis
A. Summary
B. Executive Orders 13563 and 12866
1. Need for Regulatory Action
2. Summary of Impacts
3. Anticipated Benefits, Costs and
Transfers
C. Regulatory Alternatives
1. Collecting ESS Data at the Product Level
Instead of Each Product per Metal Tier
2. Using Medicaid CAHPS as Is Instead of
Adding Additional and New Questions
to the ESS
3. Collecting QRS Data for Each Product
per Metal Tier Instead of at the Product
Level
4. Using the Medicare Advantage (MA)
CAHPS Instrument and Star System
D. Regulatory Flexibility Act
E. Unfunded Mandates Reform Act
F. Federalism
G. Congressional Review Act
VI. Regulations Text
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Abbreviations
Affordable Care Act The collective term for
the Patient Protection and Affordable Care
Act (Pub. L. 111–148) and the Health Care
and Education Reconciliation Act of 2010
(Pub. L. 111–152)
AV Actuarial Value
CAC Certified Application Counselor
CAHPS® Consumer Assessment of
Healthcare Providers and Systems
CFR Code of Federal Regulations
CMP Civil Money Penalty
CMS Centers for Medicare & Medicaid
Services
CSR Cost-Sharing Reductions
DSH Disproportionate Share Hospital
EHB Essential Health Benefits
ERISA Employee Retirement Income
Security Act of 1974 (Pub. L. 93–406)
ESS Enrollee Satisfaction Survey
FFE Federally-facilitated Exchange
FF–SHOP Federally-facilitated Small
Business Health Options Program
FQHC Federally Qualified Health Center
HHS United States Department of Health
and Human Services
HIPAA Health Insurance Portability and
Accountability Act of 1996 (Pub. L. 104–
191)
IRS Internal Revenue Service
MLR Medical Loss Ratio
NAIC National Association of Insurance
Commissioners
OMB Office of Management and Budget
OPM United States Office of Personnel
Management
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1995
PSO Patient Safety Organization
QHP Qualified health plan
QRS Quality Rating System
SHOP Small Business Health Options
Program
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The Code Internal Revenue Code of 1986
URL Uniform Resource Locator
I. Executive Summary
Since January 1, 2014, qualified
individuals and small employers have
been able to obtain private health
insurance through Affordable Insurance
Exchanges, or ‘‘Exchanges’’ (also known
as Health Insurance Marketplaces, or
‘‘Marketplaces’’).1 The Exchanges
provide competitive marketplaces
where individuals and small employers
can compare available private health
insurance options on the basis of price,
quality, and other factors. The
Exchanges help enhance competition in
the health insurance market, improve
choice of affordable health insurance,
and give small businesses the same
purchasing power as large businesses.
Individuals who enroll in qualified
health plans (QHPs) through individual
market Exchanges may be eligible to
receive premium tax credits to make
health insurance purchased through an
Exchange more affordable and costsharing reductions that lower out-ofpocket expenses for health care services.
The premium tax credits, combined
with the new insurance reforms, will
significantly increase the number of
individuals with health insurance
coverage. Premium stabilization
programs—risk adjustment, reinsurance,
and risk corridors—protect against
adverse selection in the newly enrolled
population. These programs, in
combination with the medical loss ratio
program and market reforms extending
guaranteed availability (also known as
guaranteed issue) protections,
prohibiting the use of factors such as
health status, medical history, gender,
and industry of employment to set
premium rates, will help to ensure that
every American has access to high
quality, affordable health insurance.
This proposed rule would address
various requirements applicable to
health insurance issuers, Exchanges,
Navigators, non-Navigator assistance
personnel, and other entities under the
Affordable Care Act. Specifically, the
rule proposes standards related to
product discontinuation and renewal,
quality reporting, non-discrimination
standards, minimum certification
standards and responsibilities of
qualified health plan (QHP) issuers, the
Small Business Health Options Program,
1 The word ‘‘Exchanges’’ refers to both State
Exchanges, also called State-based Exchanges, and
Federally-facilitated Exchanges (FFEs). In this
proposed rule, we use the terms ‘‘State Exchange’’
or ‘‘FFE’’ when we are referring to a particular type
of Exchange. When we refer to ‘‘FFEs,’’ we are also
referring to State Partnership Exchanges, which are
a form of FFEs.
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and enforcement remedies in Federallyfacilitated Exchanges. It also proposes:
A modification of HHS’s allocation of
reinsurance contributions collected if
those contributions do not meet our
projections; certain changes to the
ceiling on allowable administrative
expenses in the risk corridors
calculation; modifications to the way we
calculate certain cost-sharing
parameters so that we round those
parameters down to the nearest $50
increment; certain approaches we are
considering to index the required
contribution used to determine
eligibility for an exemption from the
shared responsibility payment under
section 5000A of the Internal Revenue
Code; grounds for imposing civil money
penalties on persons who provide false
or fraudulent information to the
Exchange and on persons who
improperly use or disclose information;
updated standards for the consumer
assistance programs; standards related
to the opt-out provisions for self-funded,
non-Federal governmental plans and the
individual market provisions under the
Health Insurance Portability and
Accountability Act of 1996; standards
for recognition of certain types of
foreign group health coverage as
minimum essential coverage;
amendments to Exchange appeals
standards and coverage enrollment and
termination standards; and time-limited
adjustments to the standards relating to
the medical loss ratio program. Nearly
all of these proposed policies were
described in the preamble to the final
rule titled, HHS Notice of Benefit and
Payment Parameters for 2015, published
on March 11, 2014 (79 FR 13744) (2015
Payment Notice).2
Product Withdrawal and Uniform
Modification of Coverage Exceptions to
Guaranteed Renewability Requirements:
Under sections 2702 and 2703 of the
Public Health Service Act (PHS Act), as
added by the Affordable Care Act,
health insurance issuers in the group
and individual markets must guarantee
the availability and renewability of
coverage unless an exception applies. In
this proposed rule, we propose criteria
for determining when modifications
made by an issuer to the health
insurance coverage for a product would
and would not constitute the
discontinuation of an existing product
and the creation of a new product. We
also propose that issuers use standard
consumer notices in a format designated
by the Secretary when discontinuing or
renewing a product in the group or
2 Patient Protection and Affordable Care Act; HHS
Notice of Benefit and Payment Parameters for 2015,
79 FR 13744 (March 11, 2014).
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individual market. Additionally, we
propose to clarify that the guaranteed
availability and renewability
requirements should not be construed to
supersede other provisions of Federal
law in certain circumstances.
Conforming Changes to Individual
Market Provisions: Sections 2741
through 2744 of the PHS Act were
added by HIPAA to improve the
portability and continuity of coverage in
the individual health insurance market.
These provisions are implemented
through regulations in 45 CFR Part 148.
In this proposed rule, we propose to
amend the individual market provisions
in Part 148 to reflect the amendments
made by the Affordable Care Act. These
amendments are for clarity only.
Fixed Indemnity Insurance in the
Individual Market: Consistent with
previously released guidance, we
propose to amend the criteria for fixed
indemnity insurance to be treated as an
excepted benefit in the individual
health insurance market.3 The proposed
amendments would eliminate the
requirement that individual fixed
indemnity insurance must pay on a perperiod basis (as opposed to a per-service
basis), and instead require, among other
things, that it be sold only as secondary
to other health coverage that is
minimum essential coverage to be
considered an excepted benefit.
HIPAA Opt-Out for Self-Funded, NonFederal Governmental Plans: Prior to
enactment of the Affordable Care Act,
sponsors of self-funded, non-Federal
governmental plans were permitted to
elect to exempt those plans from (‘‘opt
out of’’) certain provisions of title XXVII
of the PHS Act. Consistent with
previously released guidance, we
propose amendments to the non-Federal
governmental plan regulations (45 CFR
146.180) to reflect the amendments
made by the Affordable Care Act to
these provisions.4
Premium Stabilization Programs: The
Affordable Care Act establishes three
premium stabilization programs—risk
adjustment, reinsurance, and risk
corridors—to protect against adverse
selection. The goal of the permanent
risk adjustment program is to mitigate
the impacts of possible adverse
3 FAQs about Affordable Care Act
Implementation (Part XVIII) and Mental Health
Parity Implementation, Q11 (January 9, 2014).
Available at: https://www.cms.gov/CCIIO/Resources/
Fact-Sheets-and-FAQs/aca_implementation_
faqs18.html and https://www.dol.gov/ebsa/faqs/faqaca18.html.
4 Amendments to the HIPAA opt-out provision
(formerly section 2721(b)(2) of the Public Health
Service Act) made by the Affordable Care Act
(September 21, 2010). Available at: https://
www.cms.gov/CCIIO/Resources/Files/Downloads/
opt_out_memo.pdf.
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selection and stabilize the premiums in
the individual and small group markets
as and after insurance market reforms
are implemented. The Affordable Care
Act also directs that a transitional
reinsurance program be established in
each State to help stabilize premiums
for coverage by helping to pay the cost
of treating high-cost enrollees in the
individual market from 2014 through
2016.
Both the reinsurance and risk
adjustment programs are subject to the
fiscal year 2015 sequestration. The risk
adjustment and reinsurance programs
will be sequestered at a rate of 7.3
percent in fiscal year 2015. The Federal
government’s 2015 fiscal year begins on
October 1, 2014. HHS, in coordination
with the OMB, has determined that,
pursuant to section 256(k)(6) of the
Balanced Budget and Emergency Deficit
Control Act of 1985 as amended, and
the underlying authority for these
programs, funds that are sequestered in
fiscal year 2015 from the reinsurance
and risk adjustment programs will
become available for payment to issuers
in fiscal year 2016 without further
Congressional action. HHS is still
working through operational questions
regarding the structure and timing of
these payments, but aims to make
payments of sequestered fiscal year
2015 funding for the reinsurance and
risk adjustment programs, which would
have otherwise been paid in the summer
of 2015, as soon as practicably possible
in fiscal year 2016, which begins on
October 1, 2015. Should Congress fail to
enact deficit reduction that replaces the
Joint Committee reductions, these
programs would be sequestered in
future fiscal years, and any sequestered
funding would become available in the
fiscal year following that in which it
was sequestered.
In this proposed rule, we solicit
feedback on potential revisions to the
allocation of reinsurance contributions
collected and we suggest an approach
such that the contributions collected
under that program are allocated first to
the reinsurance pool and administrative
expenses, and second to the U.S.
Treasury. In addition, we invite
comment on alternative allocation
approaches to maximize the premium
stabilization benefits of the program.
We also propose changing the limit on
allowable administrative costs to 22
percent and the limit on profits to 5
percent in the risk corridors calculation,
in recognition of the ongoing
uncertainty and changes in the market
in 2015; we expect to implement this
change in a budget neutral way.
Exchange Establishment and QHP
Issuer Standards: The rule proposes
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amending oversight standards regarding
QHP decertification and CMPs. It also
proposes that QHP issuers provide
enrollees with an annual notice of
coverage changes. This rule proposes a
process for survey vendors to appeal an
HHS decision not to approve its
application to become an enrollee
satisfaction survey (ESS) vendor, as well
as standards for revoking HHS-approval
of ESS vendors. Finally, it proposes
standards for the ESS and quality rating
system (QRS) related to the display of
such information by Exchanges and the
submission of validated data by QHP
issuers.
We propose to align the start of
annual employer election periods in all
SHOPs for plan years beginning in 2015
with the start of open enrollment in the
corresponding individual market
Exchange for the 2015 benefit year and
to eliminate the 30-day minimum time
frames for the employer and employee
annual election periods. We also
propose to allow State departments of
insurance to recommend that, in 2015,
a SHOP not provide employers with the
option of selecting a level of coverage as
described in section 1302(d)(1) of the
Affordable Care Act, and making all
QHPs at that level of coverage available
to their employees if making that option
available would result in significant
adverse selection in the State’s small
group market resulting in market
disruptions that could not be addressed
by the premium stabilization programs
or single risk pool, or if there would be
insufficient issuers of qualified health
plans or qualified stand-alone dental
plans to allow for meaningful choice
among plans. We propose to allow the
opportunity for a person appealing a
determination of SHOP eligibility to
withdraw an appeal by telephone, if the
appeals entity is capable of accepting
telephonic signatures.
Civil Money Penalties for False
Information or Improper Use of
Information: The proposed rule
specifies the grounds for imposing civil
money penalties on persons who
provide false or fraudulent information
to the Exchange and on persons who use
or disclose information in violation of
section 1411(g) of the Affordable Care
Act. The grounds for imposing a penalty
include: negligent failure to provide
correct information, knowing and
willful provision of false or fraudulent
information, and knowing and willful
use or disclosure of information in
violation of section 1411(g). This section
proposes the factors used to determine
the amount of the CMP to be imposed
against a person. The section also
provides for the requirements for
notices which must be provided to a
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person if HHS proposes to impose a
CMP, and the processes a person may
follow should the person wish to
challenge HHS’ determination that a
CMP should be imposed, including a
process pursuant to which a person may
request a hearing before an
administrative law judge. We also
propose to amend current privacy and
security regulations at 45 CFR 155.260
to reference the new CMP provisions
associated with knowingly and willfully
using or disclosing information in
violation of section 1411(g) of the
Affordable Care Act.
Civil Money Penalties for Consumer
Assistance Entities: The proposed rule
would provide that HHS may impose
CMPs against Navigators, non-Navigator
assistance personnel, certified
application counselor designated
organizations, and certified application
counselors in FFEs, if these entities and/
or individuals violate Federal
requirements applicable to their
activities.
Navigator, Non-Navigator Assistance
Personnel, and Certified Application
Counselor Program Standards: In this
proposed rule, we propose to specify
certain types of State laws applicable to
Navigators, non-Navigator assistance
personnel, and certified application
counselors that HHS considers to
conflict with or prevent the application
of the provisions of title I of the
Affordable Care Act within the meaning
of section 1321(d) of the Affordable Care
Act. We would also make several
changes to update the standards
applicable to these consumer assistance
entities and individuals, such as
prohibiting them from specified
marketing or solicitation activities. We
propose to require Navigators and nonNavigator assistance personnel to obtain
authorization before accessing a
consumer’s personally identifiable
information and to prohibit them from
charging consumers for their services.
We also propose to require that certified
application counselors be recertified on
at least an annual basis, and propose to
prohibit certified application counselors
and certified application counselor
designated organizations from receiving
consideration, directly or indirectly,
from health insurance issuers or stop
loss insurance issuers in connection
with the enrollment of consumers in
QHPs or non-QHPs. We further propose
that, in specific circumstances, certified
application counselor designated
organizations can serve targeted
populations without violating the broad
non-discrimination requirement related
to Exchange functions.
Indexing of Cost-Sharing
Requirements: Under § 156.130(a), the
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annual limitation on cost sharing and
the annual limitation on deductibles in
the small group market for years after
2014 are to be indexed by the premium
adjustment percentage. We established
our methodology for calculating the
premium adjustment percentage in the
2015 Payment Notice. In this rule, we
propose calculating these limitations
based on the premium adjustment
percentage by rounding down to the
nearest $50 increment.
Required Contribution Percentage:
Under section 5000A of the Code, an
applicable individual must maintain
minimum essential coverage for each
month, qualify for an exemption, or
make a shared responsibility payment.
An individual may qualify for an
exemption from the shared
responsibility payment if the amount
that he or she would be required to pay
towards minimum essential coverage
(required contribution) exceeds a
particular percentage (the required
contribution percentage) of his or her
household income. Under section
5000A of the Code, the required
contribution percentage for 2014 is 8
percent, and for each plan year
beginning in a calendar year after 2014,
the percentage, as determined by the
Secretary of Health and Human Services
(the Secretary), that reflects the excess
of the rate of premium growth between
the preceding calendar year and 2013
over the rate of income growth for the
same period. In this preamble to this
proposed rule, we describe issues
related to possible methodologies for
determining the percentage reflecting
the excess of the rate of premium
growth over the rate of income growth
for plan years after 2014.
Eligibility Appeals: This rule proposes
to amend standards related to eligibility
appeals provisions in subparts F and H
of Part 155. To facilitate the efficient
conclusion of an appeal at the request
of the appellant, we propose to amend
the withdrawal procedure to permit
withdrawals made via telephonic
signature.
Minimum Essential Coverage: On
October 31, 2013, we published
guidance indicating that certain types of
foreign group health coverage are
recognized as minimum essential
coverage.5 In this proposed rule, we
propose amendments codifying the
treatment of foreign group coverage as
described in the October 31, 2013
guidance. We also clarify that entities
5 See CCIIO Sub-Regulatory Guidance: Process for
Obtaining Recognition as Minimum Essential
Coverage (October 31, 2013). Available at: https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/mec-guidance-10-312013.pdf.
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other than plan sponsors (for example,
issuers) can apply for their coverage to
be recognized as minimum essential
coverage, pursuant to the process
outlined in 45 CFR 156.604 and
guidance thereunder.
Medical Loss Ratio: The MLR program
created pursuant to the Affordable Care
Act generally requires issuers to rebate
a portion of premiums if their MLR fails
to meet the applicable MLR standard in
a State and market for the applicable
reporting year. An issuer’s MLR is the
ratio of claims plus quality
improvement activities to premium
revenue, with the premium adjusted by
the amounts paid for taxes, licensing
and regulatory fees, and the premium
stabilization programs. On December 1,
2010, we published an interim final rule
entitled ‘‘Health Insurance Issuers
Implementing Medical Loss Ratio (MLR)
Requirements under the Patient
Protection and Affordable Care Act’’ (75
FR 74864), which established standards
for the MLR program. Since then, we
have made several revisions and
technical corrections to those rules. In
this proposed rule, we propose to
modify the timeframe for which issuers
can include their ICD–10 conversion
costs in their MLR calculation. We also
propose to modify the regulation to
clarify how issuers would calculate
MLRs and rebates in States that require
the individual and small group markets
to be merged. We note that the
standards for ICD–10 conversion costs
and merged markets would also apply to
the risk corridors program. Further, we
propose to modify the regulation to
account for the special circumstances of
the issuers affected by the CMS
November 2013 transitional policy and
the issuers impacted by systems
challenges during the implementation of
the Exchanges. We also propose to
amend the requirements for distribution
of de minimis rebates.
II. Background
A. Legislative Overview
The Patient Protection and Affordable
Care Act (Pub. L. 111–148) was enacted
on March 23, 2010. The Health Care and
Education Reconciliation Act of 2010
(Pub. L. 111–152), which amended and
revised several provisions of the Patient
Protection and Affordable Care Act, was
enacted on March 30, 2010. In this
proposed rule, we refer to the two
statutes collectively as the ‘‘Affordable
Care Act.’’
The Affordable Care Act reorganizes,
amends, and adds to the provisions of
title XXVII of the PHS Act relating to
group health plans and health insurance
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issuers in the group and individual
markets.
Section 1201 of the Affordable Care
Act added sections 2702 and 2703 of the
PHS Act. Section 2702 of the PHS Act
generally requires an issuer that offers
health insurance coverage in the
individual or group market in a State to
offer coverage to and accept every
individual or employer in the State that
applies for such coverage. Section 2703
of the PHS Act generally requires an
issuer to renew or continue in force
coverage in the group or individual
market at the option of the plan sponsor
or the individual.
Prior to enactment of the Affordable
Care Act, HIPAA amended the PHS Act
to improve access to individual health
insurance coverage for certain eligible
individuals who previously had group
coverage, and to guarantee the
renewability of all coverage in the
individual market. These reforms were
added as sections 2741 through 2744 of
the PHS Act.
HIPAA also added PHS Act
provisions permitting sponsors of selffunded, non-Federal governmental
plans to elect to exempt those plans
from (‘‘opt out of’’) certain provisions of
title XXVII of the PHS Act. This election
was authorized under section 2721(b)(2)
of the PHS Act, which is now
designated as section 2722(a)(2) of the
PHS Act by the Affordable Care Act.
Section 2718 of the PHS Act, as added
by the Affordable Care Act, generally
requires health insurance issuers to
submit an annual MLR report to HHS
and provide rebates to consumers if they
do not achieve specified MLRs.
Sections 2722 and 2763 of the PHS
Act, as implemented in 45 CFR
146.145(b) and 148.220, provide that the
requirements of parts A and B of title
XXVII of the PHS Act shall not apply to
any individual coverage or any group
health plan (or group health insurance
coverage) in relation to its provision of
excepted benefits. Excepted benefits are
described in section 2791(c) of the PHS
Act. One category of excepted benefits,
called ‘‘noncoordinated excepted
benefits,’’ includes coverage for only a
specified disease or illness, and hospital
indemnity or other fixed indemnity
insurance. Benefits in this category are
excepted only if they meet certain
conditions specified in the statute and
regulations.
Section 1302(c) of the Affordable Care
Act establishes an annual limitation on
cost sharing and an annual limitation on
deductibles in the small group market
for 2014, and provides that those
limitations are to be increased for each
year after 2014 by the percentage by
which the average per capita premium
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for health insurance coverage in the
United States for the preceding year
exceeds the average per capita premium
for 2013. Under section 1302(c), those
limitations are to be rounded to the next
lowest multiple of $50.
Section 1311(b) of the Affordable Care
Act provides that each State has the
opportunity to establish an Exchange
that: (1) Facilitates the purchase of
insurance coverage by qualified
individuals through QHPs; (2) provides
for the establishment of a SHOP
designed to assist qualified employers
in the enrollment of their qualified
employees in QHPs; and (3) meets other
requirements specified in the Affordable
Care Act.
Section 1311(c)(3) of the Affordable
Care Act requires the Secretary to
develop a rating system to rate QHPs
offered through an Exchange on the
basis of quality and price. Section
1311(c)(4) of the Affordable Care Act
directs the Secretary to establish an ESS
system that would evaluate the level of
enrollee satisfaction of members in
QHPs offered through an Exchange, for
each QHP with more than 500 enrollees
in the previous year. Sections 1311(c)(3)
and 1311(c)(4) of the Affordable Care
Act further require an Exchange to
provide information to individuals and
employers from the rating and ESS
systems on the Exchange’s Web site. We
have already promulgated regulations in
45 CFR 155.200(d) that direct Exchanges
to oversee implementation of ESSs and
ratings of health care quality and
outcomes, and 45 CFR 156.200(b)(5) 6
that directs QHP issuers that participate
in Exchanges to report health care
quality and outcomes information and
to implement an ESS consistent with
the Affordable Care Act.
Sections 1311(d)(4)(K) and 1311(i) of
the Affordable Care Act direct all
Exchanges to establish a Navigator
program.
Section 1321(a) of the Affordable Care
Act provides broad authority for the
Secretary to establish standards and
regulations to implement the statutory
requirements related to Exchanges,
QHPs and other components of title I of
the Affordable Care Act. Section
1321(a)(1) directs the Secretary to issue
regulations that set standards for
meeting the requirements of title I of the
Affordable Care Act with respect to,
among other things, the establishment
and operation of Exchanges. Section
1321(a)(2) requires the Secretary to
engage in consultation to ensure
6 Patient
Protection and Affordable Care Act;
Establishment of Exchanges and Qualified Health
Plans; Exchange Standards for Employers; Final
Rule, 77 FR 18310 (Mar. 27, 2012) (to be codified
at 45 CFR parts 155, 156, & 157).
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15813
balanced representation among
interested parties.
Section 1321 of the Affordable Care
Act provides for State flexibility in the
operation and enforcement of Exchanges
and related requirements. Section
1321(d) provides that nothing in title I
of the Affordable Care Act shall be
construed to preempt any State law that
does not prevent the application of title
I of the Affordable Care Act. Section
1311(k) specifies that Exchanges may
not establish rules that conflict with or
prevent the application of regulations
promulgated by the Secretary.
Section 1321(c)(1) requires the
Secretary of HHS (referred to throughout
this rule as the Secretary) to establish
and operate an FFE within States that
either: (1) Did not elect to establish an
Exchange; or (2) as determined by the
Secretary, did not have any required
Exchange operational by January 1,
2014.
Section 1321(c)(2) of the Affordable
Care Act provides that the provisions of
section 2723(b) of the PHS Act 7 shall
apply to the enforcement under section
1321(c)(1) of requirements of section
1321(a)(1), without regard to any
limitation on the application of those
provisions to group health plans.
Section 2723(b) of the PHS Act
authorizes the Secretary to impose
CMPs as a means of enforcing the
individual and group market reforms
contained in Part A of title XXVII of the
PHS Act when, in the Secretary’s
determination, a State fails to
substantially enforce these provisions.
Section 1341 of the Affordable Care
Act requires the establishment of a
transitional reinsurance program in each
State to help pay the cost of treating
high-cost enrollees in the individual
market from 2014 through 2016. Section
1342 of the Affordable Care Act directs
the Secretary to establish a temporary
risk corridors program that provides for
the sharing in gains or losses resulting
from inaccurate rate setting from 2014
through 2016 between the Federal
government and certain participating
health plans.
Section 1411(f)(1) of the Affordable
Care Act provides that the Secretary, in
consultation with the Secretary of the
Treasury, the Secretary of Homeland
Security, and the Commissioner of
Social Security, shall establish
procedures by which the Secretary or
one of such other Federal officers hears
and makes decisions with respect to
7 Section 1321(c) of the Affordable Care Act
erroneously cites to section 2736(b) of the PHS Act
instead of 2723(b) of the PHS Act. This was clearly
a typographical error, and we have interpreted
section 1321(c) of the Affordable Care Act to
incorporate section 2723(b) of the PHS Act.
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appeals of any determination under
subsection (e) and redetermines
eligibility on a periodic basis in
appropriate circumstances. Section
1411(f)(2) of the Affordable Care Act
provides that the Secretary shall
establish a separate appeals process for
employers who are notified under
section 1411(e)(4)(C) of the Affordable
Care Act that the employer may be
liable for a tax imposed by section
4980H of the Internal Revenue Code of
1986 (the Code) with respect to an
employee because of a determination
that the employer does not provide
minimum essential coverage through an
employer-sponsored plan or that the
employer does provide that coverage but
it is not affordable coverage with respect
to an employee.
Section 1411(h) of the Affordable Care
Act sets forth CMPs to which any
person may be subject if that person
provides inaccurate information as part
of an Exchange application or
improperly uses or discloses an
applicant’s information.
Section 1501(b) of the Affordable Care
Act added section 5000A to the Code.
That section, as amended by the
TRICARE Affirmation Act of 2010 (Pub.
L. 111–159, 124 Stat. 1123) and Public
Law 111–173 (124 Stat. 1215), requires
nonexempt individuals to either
maintain minimum essential coverage
or make a shared responsibility payment
for each month beginning in 2014. It
also describes categories of individuals
who may qualify for an exemption from
the individual shared responsibility
payment. Section 1311(d)(4)(H) of the
Affordable Care Act specifies that the
Exchange will, subject to section 1411 of
the Affordable Care Act, grant
certifications of exemption from the
individual shared responsibility
payment specified in section 5000A of
the Code. Standards relating to these
provisions were established in IRS
regulations titled, Shared Responsibility
Payment for Not Maintaining Minimum
Essential Coverage Final Rule published
in the August 30, 2013 Federal Register
(78 FR 53646) (IRS Minimum Essential
Coverage Final Rule) and HHS
regulations titled, Exchange Functions:
Eligibility for Exemptions;
Miscellaneous Minimum Essential
Coverage Provisions Final Rule
published in the July 1, 2013 Federal
Register (78 FR 39494) (HHS Minimum
Essential Coverage Final Rule).
B. Stakeholder Consultation and Input
HHS has consulted with stakeholders
on policies related to the operation of
Exchanges, including the SHOP and the
premium stabilization programs. HHS
has held a number of listening sessions
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with consumers, providers, employers,
health plans, the actuarial community,
and State representatives to gather
public input. HHS consulted with
stakeholders through regular meetings
with the National Association of
Insurance Commissioners (NAIC),
regular contact with States through the
Exchange Establishment grant and
Exchange Blueprint approval processes,
technical health care quality
measurement experts, health care
survey development experts, and
meetings with Tribal leaders and
representatives, health insurance
issuers, trade groups, consumer
advocates, employers, and other
interested parties. In addition, HHS
received public comment on various
notices published in the Federal
Register relating to health care quality
in the Exchanges,8 enrollee experience
measures and domains,9 and the quality
rating system, which provided valuable
feedback on quality reporting and
quality rating requirements.10 We
considered all of the public input as we
developed the policies in this proposed
rule.
C. Structure of Proposed Rule
The regulations outlined in this
proposed rule would be codified in 45
CFR parts 146, 147, 148, 153, 155, 156,
and 158. Part 146 outlines the group
health insurance market requirements of
the PHS Act added by HIPAA and other
laws, including guaranteed renewability
standards and opt-out provisions for
sponsors of self-funded, non-Federal
governmental plans. Part 147 outlines
health insurance reform requirements
for the group and individual markets
added by the Affordable Care Act,
including standards related to
guaranteed availability and guaranteed
renewability of coverage. Part 148
outlines the individual health insurance
market requirements of the PHS Act
added by HIPAA and other laws,
including standards related to
guaranteed availability with respect to
certain eligible individuals and
guaranteed renewability for all
individuals. Part 153 outlines standards
related to reinsurance program and risk
8 Request for Information Regarding Health Care
Quality for Exchanges: https://www.gpo.gov/fdsys/
pkg/FR-2012-11-27/pdf/2012-28473.pdf.
9 Request for Domains, Instruments, and
Measures for Development of a Standardized
Instrument for Use in Public Reporting of Enrollee
Satisfaction With Their Qualified Health Plan and
Exchange: https://www.gpo.gov/fdsys/pkg/FR-201206-21/html/2012-15162.htm.
10 Patient Protection and Affordable Care Act;
Exchanges and Qualified Health Plans, Quality
Rating System (QRS) Framework, Measures and
Methodology; Notice with Comment, 78 FR 69418
(Nov. 19, 2013).
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corridors programs. Part 155 outlines
standards related to the operations and
functions of an Exchange, including
standards related to non-discrimination,
accessibility, and enforcement remedies;
standards applicable to the consumer
assistance functions performed by
Navigators, non-Navigator assistance
personnel, and certified application
counselors; standards related to
eligibility appeals; standards related to
exemptions; standards related to quality
reporting; and standards related to
SHOP. Part 156 outlines health
insurance issuer responsibilities,
including the methodology for
calculating the annual limit on costsharing and deductibles for years after
2014; minimum certification standards;
standards for recognition of certain
types of foreign group health coverage
as minimum essential coverage; quality
standards for QHPs; and other QHP
issuer responsibilities. Part 158 outlines
standards related to the medical loss
ratio program, including standards
related to treatment of ICD–10
conversion costs, standards related to
adjustments for issuers affected by the
November 2013 CMS transitional policy
and issuers that incurred costs due to
the technical problems during the
implementation of the Exchanges,
standards related to MLR reporting and
rebate calculations in States with
merged individual and small group
markets, and standards related to
distribution of de minimis rebates.
III. Provisions of the Proposed Rule
A. Part 146—Requirements for the
Group Health Insurance Market
1. HIPAA Opt-Out Provisions for Plan
Sponsors of Self-Funded, Non-Federal
Governmental Plans (§ 146.180)
Prior to enactment of the Affordable
Care Act, sponsors of self-funded, nonFederal governmental plans were
permitted to elect to exempt those plans
from (‘‘opt out of’’) certain provisions of
title XXVII of the PHS Act. This election
was authorized under section 2721(b)(2)
of the PHS Act. Sponsors of those plans
could elect to opt out of all or any of the
following title XXVII requirement
categories:
1. Limitations on preexisting
condition exclusion periods under
section 2701 of the PHS Act
(redesignated as section 2704 by the
Affordable Care Act).
2. Requirements for special
enrollment periods under section 2701
of the PHS Act (redesignated as section
2704 by the Affordable Care Act).
3. Prohibitions against discriminating
against individual participants and
beneficiaries based on health status (but
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not including provisions added by the
Genetic Information Nondiscrimination
Act of 2008) under 2702 of the PHS Act
(redesignated as section 2705 by the
Affordable Care Act).
4. Standards relating to benefits for
newborns and mothers under section
2704 of the PHS Act (redesignated as
section 2725 by the Affordable Care
Act).
5. Parity in the application of certain
limits to mental health and substance
use disorder benefits (including
requirements of the Mental Health
Parity and Addiction Equity Act of
2008) under section 2705 of the PHS Act
(redesignated as section 2726 by the
Affordable Care Act).
6. Required coverage for
reconstructive surgery following
mastectomies under section 2706 of the
PHS Act (redesignated as section 2727
of the PHS Act).
7. Coverage of dependent students on
a medically necessary leave of absence
under section 2707 of the PHS Act
(redesignated as section 2728 by the
Affordable Care Act).
The Affordable Care Act made a
number of changes, with the result that
sponsors of self-funded, non-Federal
governmental plans can no longer opt
out of as many requirements of title
XXVII. First, PHS Act section 2721 was
redesignated as section 2722. The new
section 2722(a)(2) no longer allows a
sponsor of a self-funded, non-Federal
governmental plan to exempt that plan
from the first 3 requirement categories
listed above, but may continue to
exempt the plan from requirement
categories 4 through 7.
In response to the Affordable Care Act
amendments, HHS issued guidance on
September 21, 2010 indicating that, for
plan years beginning on or after
September 23, 2010, plan sponsors of
non-collectively bargained plans can
only elect to be exempt from provisions
4–7 and that provisions 1–3 are no
longer available for exemption.11 Group
health plans maintained pursuant to a
collective bargaining agreement that was
ratified before March 23, 2010, and that
has been exempted from any of the first
3 requirement categories listed above,
would not have to come into
compliance with those provisions until
the commencement of the first plan year
following the expiration of the last plan
year governed by the collective
bargaining agreement. Because of the
timing of the guidance, HHS elected not
11 Amendments to the HIPAA opt-out provision
(formerly section 2721(b)(2) of the Public Health
Service Act) made by the Affordable Care Act
(September 21, 2010). Available at: https://
www.cms.gov/CCIIO/Resources/Files/Downloads/
opt_out_memo.pdf.
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to take any enforcement actions with
respect to opt-out elections for plan
years beginning prior to April 1, 2011
on the provisions 1–3.
We propose to revise the provisions of
§ 146.180 to reflect the amendments of
the Affordable Care Act and the
September 21, 2010 guidance. While the
proposed rule restates the current rule
in the procedures for filing an opt-out
election with CMS, the following
revisions are being proposed primarily
to reflect the Affordable Care Act
amendments: identification of PHS Act
provisions subject to the opt-out
election as noted above; deletion of
references to the notice of creditable
coverage requirement since that
requirement has been superseded; and
the deletion of examples referencing
provisions that are no longer available
for opt-out elections.
Additionally, we propose to replace
the address for submitting the election
documents with language indicating
that opt-out elections must be submitted
in an electronic format as specified by
the Secretary in guidance. We believe
that electronic submissions will be
easier and more efficient for both the
plan sponsors and for CMS to track the
submissions. We welcome comments on
improving the election process in order
for elections to be submitted
electronically. Until the issuance of
final regulations, elections will be
accepted via U.S. Mail or facsimile. The
current address for the submission, as
noted on the CMS/CCIIO Web site, is
Centers for Medicare & Medicaid
Services (CMS), Center for Consumer
Information and Insurance Oversight
(CCIIO), Attn: HIPAA Opt-Out, 200
Independence Avenue SW., Room
733H–02, Washington, DC 20201.
Elections can also be submitted via
facsimile at 301–492–4462. Questions
regarding the opt-out process can be
submitted to CMS at HIPAAOptOut@
cms.hhs.gov. CMS makes publicly
available on its Web site a list of selffunded, non-Federal governmental
plans that have submitted an opt-out
election and the PHS Act provisions
subject to the election.12
The proposed rule would clarify that
plan sponsors of self-funded, nonFederal governmental plans offering
health coverage subject to a collectively
bargained agreement that was ratified
before March 23, 2010 can continue to
be exempt from any of the 7 original
provisions for which a timely election
was filed with CMS until the expiration
12 See List of HIPAA Opt-Out Elections for SelfFunded Non-Federal Governmental Plans.
Available at: https://www.cms.gov/CCIIO/Resources/
Files/Downloads/hipaa-nfgp-list-7-9-2013.pdf.
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of the last plan year subject to the
agreement.
These proposed amendments would
generally become applicable upon the
effective date of the final rule.
Comments are welcome on the proposed
revisions and on any aspect of the
proposed rule, including the provisions
unchanged from the current regulation.
Finally, we note that some plan
administrators have been submitting
one opt-out election to CMS for multiple
group health plans. While this is
permitted for plans subject to the same
collective bargaining agreement, single
elections have been received for
multiple plans not under a collective
bargaining agreement. The current
regulations expressly require a separate
election for each group health plan not
subject to collective bargaining. We
request comments on whether the
regulation should be modified to allow
a single opt-out submission for multiple
group health plans not subject to
collective bargaining. We are also
considering requiring, as part of the optout election document, that sponsors of
plans subject to a collective bargaining
agreement be required to list all plans
subject to the agreement. We welcome
comments on this proposal.
B. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
1. Guaranteed Availability and
Guaranteed Renewability of Coverage
(§§ 147.104 and 147.106)
a. No Effect on Other Laws
Section 2702 of the PHS Act generally
requires a health insurance issuer that
offers health insurance coverage in the
individual or group market in a State to
offer coverage to and accept every
individual or employer in the State that
applies for coverage. Section 2703 of the
PHS Act generally requires a health
insurance issuer to renew or continue in
force 13 coverage in the group or
individual market at the option of the
plan sponsor or the individual. These
sections are implemented by regulations
at 45 CFR 147.104 and 147.106,
respectively. They apply to health plans
offered both through and outside of an
Exchange.
There are several exceptions to these
requirements. In addition to statutorily
specified exceptions set forth in sections
2702 and 2703 of the PHS Act, other
Federal laws restrict the products that
are available to certain individuals. For
example, section 1882(d) of the Social
13 ‘‘Continue in force’’ means that the issuer
maintains the same policy form that the plan
sponsor or individual purchased.
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Security Act establishes an antiduplication provision that makes it
unlawful for an issuer to knowingly sell
to an individual entitled to benefits
under Medicare part A or enrolled
under Medicare part B an individual
health insurance policy that duplicates
Medicare benefits; sections 1311(d)(2)
and 1312(f) of the Affordable Care Act
limit access of an individual market
QHP offered through an Exchange to
citizens and lawful residents; 14 and
section 1302(e) of the Affordable Care
Act provides that only individuals
under age 30, and individuals who are
certified as exempt from the
requirement to maintain minimum
essential coverage based on lack of
affordable coverage or hardship, are
eligible to enroll in catastrophic plans.
Consistent with the canons of statutory
construction, which provide that
specific statutory language ordinarily
trumps conflicting general language,15
the guaranteed availability and
renewability requirements are
subordinated to these and other Federal
law requirements limiting access to
coverage. As a result, issuers of coverage
subject to specific Federal statutes that
conflict with PHS Act sections 2702 and
2703 could deny enrollment or
reenrollment in coverage where doing
otherwise is contrary to law.
We propose to amend the guaranteed
availability and renewability regulations
to codify this interpretation in
regulation text. We propose to add new
paragraph (h) in § 147.104 providing
that nothing in the guaranteed
availability requirements should be
construed to require an issuer to offer
coverage where other Federal laws
operate to prohibit the issuance of such
coverage. Similarly, we propose to
redesignate paragraphs (g) and (h) as (h)
and (i), and add new paragraph (g) in
§ 147.106 providing that nothing in the
14 Although the Affordable Care Act creates a
limited exception to the guaranteed availability
requirements for qualified individuals purchasing
coverage through an Exchange, if an individual
declines or is ineligible to enroll through an
Exchange and seeks enrollment directly with the
issuer, issuers of coverage subject to the guaranteed
availability requirements of section 2702 of the PHS
Act must accept every individual in the State that
applies for such coverage unless an exception
applies.
15 See Fourco Glass Co. v. Transmirra Products
Corp., 353 U.S. 222, 228 (1957) (citations omitted)
(providing that, ‘‘However inclusive may be the
general language of a statute, it will not be held to
apply to a matter specifically dealt with in another
part of the same enactment.’’ The same principle is
used to resolve conflict between two statutes. See
also, e.g., United States v. Estate of Romani, 523
U.S. 517, 532 (1998) (later, more specific statute
governs). See also Morton v. Mancari, 417 U.S. 535,
550–51 (1974) (a general statute will not be held to
have repealed by implication a more specific one
unless there is ‘‘clear intention otherwise’’).
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guaranteed renewability requirements
should be construed to require an issuer
to renew or continue in force coverage
for which continued eligibility would
otherwise be prohibited under
applicable Federal law. We believe that
these regulatory changes are consistent
with current market practice and will
cause no disruption in the health
insurance market. We solicit comment
on these and other clarifications that
may be helpful. We note that only
Federal laws, not State laws, can create
exceptions to the Federal guaranteed
availability and renewability
requirements.
We also note that, due to a formatting
error in the interim final rule with
comment period titled, Patient
Protection and Affordable Care Act;
Maximizing January 1, 2014 Coverage
Opportunities (78 FR 76212), the
regulation text at § 147.104(b)(1)(i)
contains a duplicate reference to the
SHOP regulation at § 155.725. We
propose to correct the duplicate
reference in this proposed rule, and to
make other minor regulatory revisions
in this paragraph for clarity.
b. Product Withdrawal and Uniform
Modification of Coverage Exceptions to
Guaranteed Renewability Requirements
The PHS Act provisions enacted by
HIPAA and the Affordable Care Act
require health insurance issuers to
guarantee the renewal of coverage
unless at least one of several listed
exceptions applies.16 One exception to
the guaranteed renewability
requirements permits an issuer to cease
offering a particular product in a market
and to discontinuing existing blocks of
business with respect to that product
(product withdrawal). This may be
done, in accordance with State law,
provided certain other requirements are
met. The PHS Act also provides for
issuers, only at the time of coverage
renewal, to modify the health insurance
coverage for a product offered to a group
health plan or an individual in the
individual market, if the modification is
consistent with State law and effective
uniformly for all group health plans or
individuals with that product (uniform
modification of coverage). The law
contemplates that a uniform
modification does not alter a
policyholder’s right to renewability, and
16 See PHS Act sections 2703 (applicable to nongrandfathered health plans in the group and
individual markets), section 2712 as codified prior
to enactment of the Affordable Care Act (applicable
to grandfathered health plans in the group market),
and section 2742 (applicable to both grandfathered
and non-grandfathered health plans in the
individual market), as implemented in 45 CFR
146.152, 147.106, and 148.122.
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that such modifications do not in effect
result in the termination of the existing
policy under the product withdrawal
rules.
In this proposed rule, we propose
standards defining whether certain
modifications to a policy would
constitute ‘‘uniform modifications’’
within the meaning of the PHS Act, or
would constitute the withdrawal of the
existing product and the creation of a
new product. These provisions would
be codified in each of the guaranteed
renewability regulations at 45 CFR
146.152, 147.106, and 148.122, and
would therefore apply to both
grandfathered and non-grandfathered
coverage in the group and individual
markets.17
Definition of Uniform Modification of
Coverage
We propose that a modification made
solely pursuant to applicable Federal or
State law would be considered a
modification of coverage rather than a
product withdrawal. These
modifications could include changes
required to comply with Affordable Care
Act standards (such as elimination of a
prohibited annual limit) and changes
permitted based on updated standards
(such as increasing an annual limitation
on cost sharing based on the annual
increase in the limit permitted as a
result of the application of the premium
adjustment percentage). Additionally,
we propose that if an issuer makes
changes to the health insurance
coverage for a product that are not
pursuant to applicable Federal or State
law, the modifications would constitute
a uniform modification of coverage for
purposes of the guaranteed renewability
requirements under the PHS Act if the
product that has been modified meets
all of the following criteria:
• The product is offered by the same
health insurance issuer (within the
meaning of section 2791(b)(2) of the
PHS Act);
• The product is offered as the same
product type (e.g., preferred provider
organization (PPO) or health
maintenance organization (HMO));
• The product covers a majority of the
same counties in its service area;
17 While the Affordable Care Act amended section
2703 of the PHS Act to generally apply to health
insurance issuers in the group and individual
markets, the uniform modification of coverage
exception in section 2703(d) of the PHS Act
addresses only the large and small group markets.
Section 2742 of the PHS Act and the regulations at
§ 148.122(g) contain parallel provisions allowing for
the uniform modification of coverage in the
individual market. For ease of reference and to
facilitate compliance, we propose to add a
provision in § 147.106(e)(1) reiterating the uniform
modification of coverage exception for nongrandfathered coverage in the individual market.
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• The product has the same costsharing structure, except for variation in
cost sharing solely related to changes in
cost and utilization of medical care, or
to maintain the same level of coverage
described in sections 1302(d) and (e) of
the Affordable Care Act (e.g., bronze,
silver, gold, platinum or catastrophic);
and
• The product provides the same
covered benefits, except for changes in
benefits that cumulatively impact the
rate for the product by no more than 2
percent (not including changes required
by applicable Federal or State law).
Under this proposal, if an issuer
modifies the coverage for a product and
the resulting product is consistent with
the above criteria, the issuer would be
considered under the PHS Act to have
made a uniform modification of
coverage and therefore not to have
withdrawn the product from that
market. Conversely, if an issuer
modifies the coverage for a product in
a manner that results in a product that
differs from the above criteria, the issuer
would be considered to have changed
the coverage to such extent that the
issuer has withdrawn the existing
product and created a new product.18
These criteria, if finalized, would
establish minimum Federal standards
determining whether coverage
modifications constitute the
continuance of an existing product in a
market within a State for products
offered both through and outside of an
Exchange. We believe these proposed
standards will minimize unnecessary
terminations of coverage, ensuring
predictability and continuity for
consumers, while reasonably providing
issuers the flexibility to make necessary
adjustments to coverage.
We recognize that some States may
have different definitions of what
changes to a health insurance product
constitute modifications and what
changes constitute withdrawals and refilings of new products. The definitions
proposed here would preempt any
conflicting State definitions. We
acknowledge that the guaranteed
renewability sections of the PHS Act
provide that a uniform modification of
coverage must, among other things, be
‘‘consistent with State law.’’ We
interpret this statutory language as
governing the extent or type of
modifications that may legally be made
an issuer is considered to offer the
same product for purposes of this proposal is
unrelated to and would not determine whether a
plan maintains status as a grandfathered health plan
under section 1251 of the Affordable Care Act and
its implementing regulations. 26 CFR 54.9815–
1251T, 29 CFR 2590.715–1251, and 45 CFR
147.140.
under State law. As discussed in the
preamble to the final rule published on
February 27, 2013 under section 2703 of
the PHS Act (78 FR 13419), State laws
that prevent issuers from uniformly
modifying coverage to comply with
Federal law requirements would, in
effect, prevent the application of such
requirements and therefore be
preempted.19 Accordingly, under the
approach we are proposing, States
would have the flexibility to apply
additional criteria that broaden the
scope of what would be considered a
uniform modification, but not narrow its
scope.
We request comment on all aspects of
this proposal.
Standard Consumer Notices When
Discontinuing or Renewing a Product in
the Group or Individual Market
To reduce confusion and ensure
consumers receive clear, accurate, and
consistent information about their
coverage options, we are also proposing
standard notice requirements when
issuers discontinue or renew coverage
in the group and individual markets.
First, under the current regulations,
issuers electing to discontinue offering a
particular product in a market must
provide to each plan sponsor or
individual provided that product (and
to all participants and beneficiaries
covered under such coverage) at least 90
calendar days’ notice of the
discontinuation in writing. We propose
that, to satisfy this requirement, the
issuer must provide notice ‘‘in a form
and manner specified by the Secretary.’’
Second, we propose to establish a
new notice requirement when issuers
provide the option to renew coverage,
including a renewal of coverage with
modifications. We propose the issuer in
this situation must provide written
notice of the renewal to each plan
sponsor in the small or large group
market and to each individual
policyholder in the individual market
(as applicable). We propose this notice
must also be provided in a form and
manner specified by the Secretary.
We request comment on these
proposals. Concurrently with the
issuance of this proposed rule, we are
publishing four draft notices in
guidance that would be required to be
used when issuers elect to discontinue
or renew a product, consistent with the
above discussion.20 We solicit
18 Whether
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19 Patient Protection and Affordable Care Act;
Health Insurance Market Rules; Rate Review, 78 FR
13406 (February 27, 2013).
20 Standard Notices When Discontinuing or
Renewing a Particular Product in the Group or
Individual Market (March 14, 2014). Available at:
https://www.cms.gov/CCIIO/Resources/Files/
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comments on the draft notices as
described in the guidance.
Rate Review
Section 2794 of the PHS Act, and
regulations at 45 CFR Part 154, establish
a process whereby CMS or the
applicable State will review rate
increases of health insurance coverage
that meet or exceed specified thresholds
to determine if the rate increases are
unreasonable. It has come to our
attention, however, that some issuers
may attempt to avoid review of rate
increases by withdrawing a product(s)
offered in the individual or small group
market in a State and re-filing the
product(s) as a ‘‘new’’ product(s) the
following year. Under § 154.102, a ‘‘rate
increase’’ is defined as ‘‘any increase of
the rates for a specific product offered
in the individual or small group
market,’’ and a ‘‘product’’ is defined as
‘‘a package of health insurance coverage
benefits with a discrete set of rating and
pricing methodologies that a health
insurance issuer offers in a State.’’
CMS intends to apply the criteria
outlined above regarding product
discontinuation and renewal to
determine whether the rate filing is
subject to review under 45 CFR Part
154. Specifically, if an issuer withdraws
a product in a market in a State and,
within a 12-month period, reintroduces
a product in that market with
modifications of the discontinued
product that do not differ from the
above criteria, we would consider the
issuer to be continuing to offer the same
‘‘product’’ within the meaning of that
term under § 154.102. As such, the rate
filing for the product would be subject
to the annual review of rate increases of
health insurance coverage should it
meet or exceed the specified thresholds
to determine if the rate increase is
unreasonable. CMS will consider
compliance with the proposed criteria
to constitute compliance with PHS Act
section 2794 until this rulemaking is
finalized.
We request comment on whether this
clarification, or a cross-reference to the
proposed definition of a uniform
modification of coverage in § 147.106 of
this proposed rule, should be added to
Part 154.
C. Part 148—Requirements for the
Individual Health Insurance Market
1. Conforming Changes to Individual
Market Regulations (§§ 148.101 through
148.128)
The Health Insurance Portability and
Accountability Act of 1996 (HIPAA),
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Public Law 104–191, was enacted in
1996 to provide for, among other things,
improved portability and continuity of
coverage in both the group and
individual health insurance markets.
Section 111 of HIPAA added sections
2741 through 2744 of the PHS Act to
improve availability and renewability in
the individual market. HIPAA also
added provisions of the Code, the
Employee Retirement Income Security
Act of 1974 (ERISA), and the PHS Act
governing the group health insurance
market and group health plan coverage
provided in connection with
employment. These provisions
permitted limited exclusions of
coverage under certain circumstances
based on preexisting conditions.
The individual health insurance
market provisions of HIPAA are
implemented in 45 CFR Part 148. These
provisions guarantee the availability of
individual health insurance coverage
without preexisting condition
exclusions for certain eligible
individuals who lose group health
insurance coverage; require issuance of
certificates of creditable coverage;
guarantee the renewability of individual
health insurance coverage for all
individuals; and set forth procedures for
States that choose to implement an
alternative mechanism under State law
with respect to guaranteed availability
for eligible individuals.
The Affordable Care Act added a new
section 2704 of the PHS Act, which
renumbered and amended the HIPAA
requirements relating to preexisting
condition exclusions.21 In general, the
new PHS Act section 2704 provides that
a group health plan and a health
insurance issuer offering group or
individual health insurance coverage
may not impose any preexisting
condition exclusions. Section 2704 and
the regulations under that section are
generally effective for plan years (in the
individual market, policy years)
beginning on or after January 1, 2014,
but for enrollees under the age of 19, the
prohibition became effective for plan
years (in the individual market, policy
years) beginning on or after September
23, 2010.22
21 The Affordable Care Act adds section 715(a)(1)
of ERISA and section 9815(a)(1) of the Code to
incorporate the provisions of part A of title XXVII
of the PHS Act, including section 2704 of the PHS
Act, into ERISA and the Code, and to make them
applicable to group health plans and health
insurance issuers providing health insurance
coverage in connection with group health plans.
22 PHS Act section 2704 applies to grandfathered
and non-grandfathered group health plans and
group health insurance coverage, and nongrandfathered individual health insurance coverage.
It does not apply to grandfathered individual health
insurance coverage. For more information on
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This proposed rule would make
conforming amendments to the
individual market provisions contained
in Part 148 by removing provisions
concerning preexisting condition
exclusions that are superseded by new
section 2704 of the PHS Act. These
amendments would generally become
applicable upon the effective date of the
final rule. However, the proposed
amendment to eliminate the
requirement to issue certificates of
creditable coverage is proposed to apply
December 31, 2014, so that individuals
needing to offset a preexisting condition
exclusion under a group health plan
that will become subject to the
prohibition on preexisting condition
exclusions starting with a plan year
beginning on December 31, 2014, would
still have access to the certificate for
proof of coverage until that time. These
proposed amendments are consistent
with rulemaking amending the group
market regulations under HIPAA 23 and
with previously released guidance
addressing the maintenance of State
alternative mechanisms.24
We solicit comment on this proposal.
2. Fixed Indemnity Insurance in the
Individual Health Insurance Market
(§ 148.220)
Pursuant to PHS Act sections
2722(c)(2), 2763(b) and 2791(c)(3)(B),
insurance that pays a fixed amount
under specified conditions without
regard to other insurance (‘‘fixed
indemnity insurance’’) is considered to
be an excepted benefit, exempt from
many of the provisions of title XXVII of
the PHS Act for the group and
individual markets, if it meets all of the
following conditions: (1) The benefits
are be provided under a separate policy,
certificate or contract of insurance; (2)
there is no coordination between the
provision of such benefits and any
exclusion of benefits under any group
health plan maintained by the same
plan sponsor; and (3) such benefits are
paid with respect to an event without
regard to whether benefits are provided
with respect to such event under any
group health plan maintained by the
same plan sponsor.
These statutory requirements are
reflected in regulations at 45 CFR
grandfathered health plans, see section 1251 of the
Affordable Care Act and its implementing
regulations at 26 CFR 54.9815–1251T, 29 CFR
2590.715–1251, and 45 CFR 147.140.
23 See Ninety-Day Waiting Period Limitation and
Technical Amendments to Certain Health Coverage
Requirements Under the Affordable Care Act, 78 FR
10296 (February 24, 2014).
24 See Questions and Answers Related to Health
Insurance Market Rules, Q2. Available at: https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/qa_hmr.html.
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146.145(b)(4) and 148.220(b)(3). In
addition, under § 146.145(b)(4),
incorporated through § 148.220(b)(3),
benefits of fixed indemnity insurance in
the group and individual markets must
be paid on a fixed amount basis without
regard to the cost of the item or service
and can only be paid on a per-period
basis as opposed to on a per-service
basis in order to be treated as an
excepted benefit.
The primary reason fixed indemnity
insurance is considered to be an
excepted benefit if it meets the statutory
and regulatory criteria is that its primary
purpose is not to provide major medical
coverage but to provide a cashreplacement benefit for those
individuals with other health coverage.
Since the issuance of the regulations,
however, various situations have come
to the attention of HHS, the Department
of Labor, and the Department of the
Treasury (the Departments) where a
health insurance policy is advertised as
fixed indemnity coverage but pays a
fixed amount based not on a period of
time, but if a particular service is
received. For example, the fixed
indemnity coverage pays a fixed $50 per
visit for doctors’ visits, or $100 for a day
of hospitalization, different fixed dollar
amounts for other various surgical
procedures, and/or a fixed $15 per
prescription without regard to cost. In
all cases, these fixed amounts are paid
under these policies without regard to
costs, and without regard to other
insurance payments that may cover the
same services. In such circumstances,
the fixed payments for doctors’ visits,
surgery, and prescription drugs are not
made not on a per-period basis, but
instead based on the type of procedure
or item, such as the surgery or doctor
visit actually performed or the drug
prescribed, and the amount of payment
varies widely based on the type of
surgery or the cost of the drug. Because
these payments are not based on a
‘‘fixed dollar amount per day (or per
other period),’’ such a policy is not an
excepted benefit under the current
regulations.
The Departments issued a frequently
asked question (FAQ) on January 24,
2013 affirming that under the current
regulations, for fixed indemnity
insurance to be an excepted benefit,
payment based on an event must be
paid on a per-period basis as opposed to
on a per-service basis.25 While the FAQ
only addressed fixed indemnity
insurance sold in the group health
25 See FAQs about Affordable Care Act
Implementation (Part XI), Q7, available at https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs11.html and https://
www.dol.gov/ebsa/faqs/faq-aca11.html.
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insurance market, the same analysis also
applies to fixed indemnity insurance
sold in the individual health insurance
market, as noted above.
Since the issuance of the January 24,
2013 FAQ, however, stakeholders have
expressed concerns over the distinction
made under the current regulations
between payment on a per-period basis
(which is permitted) and payment on a
per-service basis (which is not
permitted). State insurance regulators
indicated that they have for years been
approving policies as fixed indemnity
insurance that pay on a per-service basis
and treating such coverage as an
excepted benefit. In an August 27, 2013
letter to the Secretaries of the
Departments on behalf of the National
Association of Insurance Commissioners
(NAIC), it was stated that ‘‘state
regulators believe hospital and other
fixed indemnity coverage with variable
fixed amounts based on service types
could provide important options for
consumers as supplemental coverage.
Consumers who purchase major medical
coverage that meets the definition of
‘minimum essential coverage’ may still
want to buy fixed indemnity coverage to
help meet out-of-pocket medical and
other costs.’’ Industry groups
representing health insurance issuers
have also expressed similar concerns.
Based on the feedback from
stakeholders and the fact that, starting
in 2014, most individuals are required
to have minimum essential coverage in
order to satisfy the individual shared
responsibility requirement under
section 5000A of the Code, CMS agrees
that it is appropriate to revise the
current regulatory criteria for individual
market fixed indemnity coverage to be
treated as an excepted benefit by (1)
eliminating the current requirement that
payment be made on a per-period basis
and not on a per-service basis, and (2)
among other things, imposing a new
requirement that fixed indemnity
insurance be sold only as secondary to
other health coverage that meets the
definition of minimum essential
coverage.26
On January 9, 2014, the Departments
published an FAQ stating that, ‘‘HHS
intends to propose amendments to 45
CFR 148.220(b)(3) that would allow
fixed indemnity coverage sold in the
26 Fixed indemnity plans paying fixed amounts
per service that meet these requirements to be
excepted benefits do not qualify as permitted
insurance that can be provided in addition to a
High Deductible Health plan to an eligible
individual under section 223(c)(3) of the Code. The
statutory language for permitted hospitalization
insurance specifically refers to ‘‘insurance paying a
fixed amount per day (or other period) of
hospitalization’’ rather than ‘‘hospital indemnity or
other fixed indemnity insurance.’’
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individual health insurance market to
be considered to be an excepted benefit
if it meets the following conditions: (1)
It is sold only to individuals who have
other health coverage that is minimum
essential coverage within the meaning
of section 5000A(f) of the Code; (2) there
is no coordination between the
provision of benefits and an exclusion
of benefits under any other health
coverage; (3) the benefits are paid in a
fixed dollar amount regardless of the
amount of expenses incurred and
without regard to the amount of benefits
provided with respect to an event or
service under any other health coverage;
and (4) a notice is displayed
prominently in the plan materials
informing policyholders that the
coverage does not meet the definition of
minimum essential coverage and will
not satisfy the individual responsibility
requirements of section 5000A of the
Code.’’ 27 The FAQ further provided
that, ‘‘Until HHS finalizes this
rulemaking related to these proposed
amendments, HHS will treat fixed
indemnity coverage in the individual
market as excepted benefits for
enforcement purposes if it meets the
conditions above in States where HHS
has direct enforcement authority. For
States with primary enforcement
authority, HHS encourages those States
to also treat this coverage as an excepted
benefit and will not consider that a State
is not substantially enforcing the
individual market requirements merely
because it does so.’’
Consistent with the January 9, 2014
FAQ, we are proposing the following
revised criteria for fixed indemnity
insurance to be treated as an excepted
benefit in the individual health
insurance market: (1) The benefits are
provided only to individuals who have
other health coverage that is minimum
essential coverage within the meaning
of section 5000A(f) of the Code; (2) there
is no coordination between the
provision of benefits and an exclusion
of benefits under any other health
coverage; (3) the benefits are paid in a
fixed dollar amount per day of
hospitalization or illness or per service
(for example, $100/day or $50/visit)
regardless of the amount of expenses
incurred and without regard to the
amount of benefits provided with
respect to the event or service under any
other health coverage; and (4) a notice
is displayed prominently in the plan
27 FAQs about Affordable Care Act
Implementation (Part XVIII) and Mental Health
Parity Implementation, Q11 (January 9, 2014).
Available at: https://www.cms.gov/CCIIO/Resources/
Fact-Sheets-and-FAQs/aca_
implementation_faqs18.html and https://
www.dol.gov/ebsa/faqs/faq-aca18.html.
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materials in at least 14 point type that
has the following language: ‘‘THIS IS A
SUPPLEMENT TO HEALTH
INSURANCE AND IS NOT A
SUBSTITUTE FOR MAJOR MEDICAL
COVERAGE. LACK OF MAJOR
MEDICAL COVERAGE (OR OTHER
MINIMUM ESSENTIAL COVERAGE)
MAY RESULT IN AN ADDITIONAL
PAYMENT WITH YOUR TAXES.’’
CMS is aware of at least one State law
that requires fixed indemnity insurance
to be sold as secondary to major medical
insurance in order to be treated as an
excepted benefit. We welcome
comments on this approach including
the language in the required notice. We
also solicit comments on whether the
requirement for individuals to have
other minimum essential coverage in
order to be sold fixed indemnity
insurance is sufficient protection,
especially given the fact that a group
health plan that provides minimum
benefits can be minimum essential
coverage. For example, we solicit
comment on whether to require that
fixed indemnity insurance must only be
sold to individuals with other health
coverage that meets the EHB
requirements. To meet the standard that
fixed indemnity insurance must be sold
on a secondary basis, an issuer of fixed
indemnity insurance would have to be
reasonably assured that an individual
has obtained other health coverage that
is minimum essential coverage. We seek
comments on the extent of verification
issuers should require from applicants
to be reasonably assured that they have
minimum essential coverage, including
whether an attestation included in the
application is sufficient.
The current regulation requires fixed
indemnity insurance to be sold under a
separate policy, certificate or contract of
insurance but does not require that it be
provided by an issuer other than the
issuer providing the major medical
coverage to the enrollees of the fixed
indemnity insurance. The Departments
previously released guidance
establishing a safe harbor under which
supplemental health insurance coverage
will be considered to be an excepted
benefit.28 In the guidance, one of the
criteria for the safe harbor is that the
supplemental coverage has to be issued
by an entity that does not provide the
primary coverage under the plan in
28 See CMS Insurance Standards Bulletin 08–01
(available at https://www.cms.gov/CCIIO/Resources/
Files/Downloads/hipaa_08_01_508.pdf ); the
Department of Labor’s Employee Benefits Security
Administration’s Field Assistance Bulletin No.
2007–04 (available at https://www.dol.gov/ebsa/pdf/
fab2007-4.pdf ); and Internal Revenue Service
Notice 2008–23 (available at https://www.irs.gov/irb/
2008-07_IRB/ar09.html ).
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order for the supplemental coverage to
be an excepted benefit. This prevents an
issuer from carving out certain benefits
from its major medical coverage and
packaging those benefits with the major
medical coverage as a supplemental
excepted benefit. We are considering
adding the same protection for fixed
indemnity insurance sold in the
individual market and welcome
comments on this approach.
This proposal only addresses fixed
indemnity insurance sold in the
individual market. For fixed indemnity
insurance sold in the group health
insurance market, see the FAQ
published by the Departments on
January 9, 2014.
We believe that most fixed indemnity
products in the individual market today
will largely satisfy these criteria and we
welcome comment on how this proposal
would affect existing market
arrangements. If these proposals are
finalized, they would apply for policy
years beginning on or after January 1,
2015. We welcome comments on
whether this would provide a sufficient
transition period. We also solicit
comments on whether the existing
regulatory criteria for fixed indemnity
insurance to be an excepted benefit (as
interpreted in our January 24, 2013
FAQ) should instead remain in place on
a permanent basis or at least on a
temporary basis to ensure a sufficient
transition that avoids market disruption.
D. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment under the Affordable Care
Act
1. Provisions and Parameters for the
Transitional Reinsurance Program
(§ 153.405)
The Affordable Care Act directs that
a transitional reinsurance program be
established in each State to help
stabilize premiums for coverage in the
individual market from 2014 through
2016. In the 2014 Payment Notice and
the 2015 Payment Notice, we expanded
on the standards set forth in subparts C
and E of the Premium Stabilization
Rule, and established the reinsurance
payment parameters and uniform
reinsurance contribution rate for the
2014 and 2015 benefit years. In this
proposed rule, we solicit feedback on a
potential revision to the allocation of
reinsurance contributions collected for
all benefit years such that reinsurance
contributions collected are allocated
first to the reinsurance payment pool
and administrative expenses and second
to payments to the U.S. Treasury.
Section 1341(b)(3)(B)(iii) of the
Affordable Care Act specifies the total
contribution amounts to be collected
from contributing entities for the
reinsurance payment pool as $10 billion
for 2014, $6 billion for 2015, and $4
billion for 2016. Sections
1341(b)(3)(B)(iv) and 1341(b)(4) of the
Affordable Care Act direct the collection
of funds for contribution to the U.S.
Treasury in the amounts of $2 billion for
2014, $2 billion for 2015, and $1 billion
for 2016. Section 1341(b)(3)(B)(ii) of the
Affordable Care Act allows for the
collection of additional amounts for
administrative expenses. Taken
together, these three components make
up the total dollar amount to be
collected from contributing entities for
each of the three years of the
reinsurance program under a national
per capita contribution rate. For 2014, to
collect $12.02 billion, HHS set a per
capita contribution rate of $63; for 2015,
to collect $8.025 billion, HHS set a per
capita contribution rate of $44.
In the 2014 and 2015 Payment
Notices, we provided that if total
contributions collected for 2014 and
2015 exceed $12.02 billion and $8.025
billion, respectively, we would allocate
$2 billion to the U.S. Treasury, $20.3 or
$25.4 million, as applicable, to
administrative expenses, and would
allocate all remaining contributions for
reinsurance payments, thus prioritizing
excess contributions towards
reinsurance contributions. Due to the
uncertainty in our estimates of
reinsurance contributions to be
collected, and to help assure that the
reinsurance payment pool is sufficient
to provide the premium stabilization
benefits intended by the statute, we
propose to revise our allocation of
reinsurance contributions collected and
adopt a similar prioritization in the
event that reinsurance collections fall
short of our estimates. Specifically, if
collections fall short of our estimates for
a particular benefit year, we propose to
alter the allocation so that the
reinsurance contributions that are
collected are allocated first to the
reinsurance pool and administrative
expenses, and are allocated to the U.S.
Treasury once the targets for
reinsurance payments and
administrative expenses are met. For
example, as Table 1 provides, in 2014,
reinsurance contributions would go first
to the reinsurance payment pool and
administrative expenses, up to $10.02
billion, and any additional
contributions collected would be
allocated to the U.S. Treasury, up to the
total $12.02 billion.
TABLE 1—PROPORTION OF REINSURANCE CONTRIBUTIONS COLLECTED UNDER THE UNIFORM REINSURANCE CONTRIBUTION RATE FOR THE 2014 BENEFIT YEAR FOR REINSURANCE PAYMENTS, PAYMENTS TO THE U.S. TREASURY, AND
ADMINISTRATIVE EXPENSES
If total contribution collections under
the 2014 uniform reinsurance contribution rate are less than or equal to
$10.02 billion
If total contribution collections under
the 2014 uniform reinsurance contribution rate are more than $10.02 billion,
but less than or equal to $12.02 billion
If total contribution collections under
the 2014 uniform reinsurance contribution rate are more than $12.02 billion
Reinsurance payments.
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Proportion or
amount for:
99.9 percent ($10 billion/$10.02 billion)
$10 billion .............................................
Payments to the
U.S. Treasury.
Administrative expenses.
0 percent ..............................................
Total collections less $10.02 billion .....
Total collections less $2.02 billion
(U.S. Treasury and administrative
expenses).
$2 billion.
0.1 percent ($20.3 million/$10.02 billion).
$20.3 million .........................................
$20.3 million.
Therefore, if we collect $11 billion
instead of $12.02 billion for 2014, we
propose to fully fund the reinsurance
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payment pool and administrative
expenses, and to pay to the U.S.
Treasury $0.98 billion.
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Similarly, for 2015, reinsurance
contributions would go first to the
reinsurance payment pool and
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administrative expenses, up to $6.025
billion, and any additional
contributions collected would be
15821
allocated to the U.S. Treasury, up to the
total $8.025 billion.
TABLE 2—PROPORTION OF REINSURANCE CONTRIBUTIONS COLLECTED UNDER THE UNIFORM REINSURANCE CONTRIBUTION RATE FOR THE 2015 BENEFIT YEAR FOR REINSURANCE PAYMENTS, PAYMENTS TO THE U.S. TREASURY, AND
ADMINISTRATIVE EXPENSES
If total contribution collections under
the 2015 uniform reinsurance contribution rate are less than or equal to
$6.025 billion
If total contribution collections under
the 2015 uniform reinsurance contribution rate are more than $6.025 billion,
but less than or equal to $8.025 billion
If total contribution collections under
the 2015 uniform reinsurance contribution rate are more than $8.025 billion
Reinsurance payments.
99.9 percent ($6 billion/$6.025 billion)
$6 billion ...............................................
Payments to the
U.S. Treasury.
Administrative expenses.
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Proportion or
amount for:
0 percent ..............................................
Total collections less $6.025 billion .....
Total collections less $2.025 billion
(U.S. Treasury and administrative
expenses).
$2 billion.
0.1 percent ($25.4 million/$6.025 billion).
$25.4 million .........................................
$25.4 million.
Therefore, if we collect $7 billion
instead of $8.025 billion in 2015, we
propose to fully fund the reinsurance
payment pool and administrative
expenses, and to pay to the U.S.
Treasury $0.975 billion.
We note that in the 2015 Payment
Notice, we amended 45 CFR 153.405(c)
to provide a bifurcated contribution
collection schedule, under which
contributing entities would submit
reinsurance contributions via two
payments. The first payment would
cover the contribution amount allocated
to reinsurance payments and
administrative expenses; the second
payment would cover the contribution
amount allocated to payments to the
U.S. Treasury for the applicable benefit
year. In light of our proposed allocation
policy, we note that contributions
collected in the second collection would
be allocated for reinsurance payments
and administrative expenses if the first
collection does not fully provide for the
target reinsurance pool and
administrative expenses. Therefore, for
2014, if the first collection resulted in a
total collection of $9 billion, any
contribution collected via the second
collection up to $1.02 billion would be
allocated for reinsurance payments and
administrative expenses.
We seek comment on this allocation
proposal, including on the legal
authority to implement a prioritization
of reinsurance contributions to
reinsurance payments over payments to
the U.S. Treasury. We also seek
comment on the appropriate and
permissible prioritization of reinsurance
administrative expenses, and whether
those expenses should have the same or
different priority as reinsurance
payments or payments to the U.S.
Treasury. In addition, we seek comment
on alternative allocation approaches to
provide the premium stabilization
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benefits of the reinsurance program, as
intended by the statute.
2. Provisions for the Temporary Risk
Corridors Program (§ 153.500)
In the 2015 Payment Notice, we
indicated that we would consider
additional adjustments to the risk
corridors program for benefit year 2015.
We did so recognizing that issuers of
QHPs may face additional
administrative costs, risk pool effects,
and uncertainty for that benefit year
related to State extensions of renewals
of plans that do not comply with 2014
market reforms, including the rating
rules, the additional time it will take to
fully assess the risk profile of 2014
enrollees given the six-month initial
open enrollment period, protracted
phase-outs of high-risk pools, and the
scheduled decline in the reinsurance
program payments. We also recognize
that issuers of QHPs may face additional
costs from other transitions to the 2014
market rules, including the
infrastructure requirements around
Exchanges, and the distributed data
collection methodology for risk
adjustment and reinsurance. We note
that these uncertainties will continue
through the summer of 2014, while
issuers are in the process of setting their
rates for the 2015 benefit year.
Therefore, for the 2015 benefit year, we
are considering further adjustments to
the risk corridors formula that would
help to mitigate these additional
administrative costs and uncertainties
around operations and the risk pool,
and to stabilize the market as it
continues to transition to full
compliance with Affordable Care Act
provisions.
We propose to implement an
adjustment to the risk corridors formula
set forth in subpart F of part 153 for
each of the individual and small group
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markets by increasing the ceiling on
allowable administrative costs
(currently set at 20 percent, plus the
adjustment percentage, of after-tax
premiums). Such an adjustment could
increase a QHP issuer’s risk corridors
ratio if administrative expenses are
unexpectedly high or claims costs are
unexpectedly low, thereby increasing
risk corridors payments or decreasing
risk corridors charges. We propose to
raise the administrative cost ceiling by
2 percentage points, from 20 percent to
22 percent. We also propose to increase
the profit margin floor in the risk
corridors formula (currently set at 3
percent, plus the adjustment percentage,
of after-tax premiums). Such an
adjustment could increase a QHP
issuer’s risk corridors ratio if claims
costs are unexpectedly high, thereby
increasing risk corridors payments or
decreasing risk corridors charges. We
propose to raise the profit margin floor
by 2 percentage points, from 3 percent
to 5 percent.
We are proposing to implement this
proposed increase to the administrative
cost ceiling and profit floor in a manner
similar to the risk corridors adjustment
percentage set forth in the 2015
Payment Notice. In the 2015 Payment
Notice, we provided for an adjustment
that would increase the administrative
cost ceiling and profit floor in the risk
corridors formula for QHP issuers in
transitional States, in order to account
for the effects of the transitional policy.
In this proposed rule, we are proposing
to increase the administrative cost and
profit floor for 2015 for QHP issuers in
every State for the reasons described
below.
We note that, because the risk
corridors program applies only to
certain plans defined to be qualified
health plans at 45 CFR 153.500, the
extent to which an issuer may receive
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the full effect of this adjustment would
depend upon the portion of an issuer’s
individual and small group enrollees in
plans subject to risk corridors. We
intend to implement this program in a
budget neutral manner, and may make
future adjustments to program
parameters, upwards or downwards, as
necessary to achieve this goal.
We are proposing that these
adjustments apply on a national basis
for the 2015 benefit year because we
believe that these additional transitional
costs and uncertainties will be faced by
issuers in all States, not just States
adopting the transitional policy.
Because many of these costs and
uncertainties are difficult to measure,
we believe it would be difficult to
estimate them on an issuer-by-issuer or
State-by-State basis. Additionally, we
believe that a national adjustment
would be administratively simple for
issuers.
For example, issuers will continue to
face administrative expenses in seeking
to measure the extent to which issuers
will extend renewals of plans through
the 2015 rate-setting period. They will
continue to accrue additional expenses
monitoring the risk profile of 2014
enrollees during this period,
particularly with the protracted phaseouts of high-risk pools. And they will
continue to face uncertainty and
administrative costs in measuring likely
payouts from the reinsurance program.
These costs were not anticipated when
we established the 20 percent ceiling on
administrative expenses; and we believe
that these uncertainties will be difficult
to accommodate as part of 2015 rate
setting.
Although the adjustments that we are
considering would affect each issuer
differently, depending on its particular
experience and administrative cost rate,
we believe that, on average, the
adjustment could suitably offset some of
these increased costs.
We also propose that the medical loss
ratio formula not take into account any
additional risk corridors payments
resulting from this adjustment, under
our authority under section 2718(c) of
the PHS Act to ‘‘take into account the
special circumstances of smaller plans,
different types of plans, and newer
plans.’’ This proposed approach is
similar to the policy established forth in
the 2015 Payment Notice, which
removes the effect of the risk corridors
adjustment percentage from an issuer’s
MLR calculation.
We request comment on all aspects of
this proposal. In particular, we request
comment on the specific administrative
costs associated with each of these
policies, and other types of additional
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administrative or other expenses that
will be incurred by issuers of QHP in
2015. We seek comment on the
magnitude of these expenses, and
whether these expenses could have been
fairly estimated and included in
premium rating. We seek comment on
whether the administrative ceiling or
the profit floor should be raised (or
both), and in each case, by how much,
to account for these costs and
uncertainties. We also seek comment on
alternate ways of implementing
adjustments to the risk corridors
program, including whether raising the
administrative cost ceiling or raising the
profit floor would alone be sufficient to
help offset issuer’s unexpected
administrative expenses. Finally, we
seek comment on whether certain
limitations or conditions should be
placed on the adjustment, and whether
the adjustment should be limited to
certain types of plans or should apply
only in certain States.
E. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. Subpart B—General Standards
Related to the Establishment of the
Exchange
a. Non-Interference with Federal Law
and Non-Discrimination Standards
(§ 155.120)
In section 45 CFR 155.120(c), we
established the requirement that the
State and the Exchange, when carrying
out the requirements of Part 155, must
comply with any applicable nondiscrimination statutes, and must not
discriminate on the basis of race, color,
national origin, disability, age, sex,
gender identity or sexual orientation.
We stated that the non-discrimination
provisions of § 155.120(c) apply not just
to the Exchanges themselves, but to
Exchange contractors and all Exchange
activities (including but not limited to
marketing, outreach and enrollment),
Navigators, non-Navigator assistance
personnel, certified application
counselors, and organizations
designated to certify their staff and
volunteers as certified application
counselors (78 FR 42829). We also
established in 45 CFR 155.105(f) that
this non-discrimination requirement
applies to the Federally-facilitated
Exchanges.
We now propose to re-designate the
introductory language in existing
§ 155.120(c) as a new section
§ 155.120(c)(1), re-designate existing
§ 155.120(c)(1) as a new
§ 155.120(c)(1)(i), and re-designate
existing § 155.120(c)(2) as a new
§ 155.120(c)(1)(ii). We are proposing to
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make these technical changes to existing
§ 155.120(c) so that we can add a new
paragraph (c)(2) to § 155.120 that creates
a limited exception to the nondiscrimination provisions in existing
§ 155.120(c)(1) and (c)(2). Under this
proposed exception, an organization
receiving Federal funds to provide
services to a defined population under
the terms of Federal legal authorities
(for example, a Ryan White HIV/AIDS
Program or an Indian health provider)
that participates in the certified
application counselor program under 45
CFR 155.225 may limit its provision of
certified application counselor services
to the same defined population without
violating the non-discrimination
provisions in existing § 155.120(c). We
are proposing to adopt this exception to
the non-discrimination provisions in
order to allow such organizations to
provide certified application counselor
services and assist their defined
populations in enrolling in health
coverage offered through the Exchanges
consistent with the Federal legal
authorities under which such
organizations operate.
To the extent that one of these
organizations decides to take advantage
of this exception, but is approached for
certified application counselor services
by an individual who is not included in
the defined population that the
organization serves, we propose that the
organization must refer the individual to
other Exchange-approved resources,
such as the toll-free Exchange call
center, a Navigator, non-Navigator
assistance personnel, or another
designated certified application
counselor organization, that are able to
provide assistance to the individual.
However, to the extent that one of
these organizations decides that it will
not take advantage of this proposed
exception, we propose that the nondiscrimination provisions in existing
§ 155.120(c) would continue to apply.
That is, if an organization decides that
it will provide certified application
counselor services to individuals that
are not included in the defined
population that it serves, it must
provide those services to all individuals
consistent with the non-discrimination
provisions in existing § 155.120(c).
2. Subpart C—General Functions of an
Exchange
a. Civil Money Penalties for Violations
of Applicable Exchange Standards by
Consumer Assistance Entities in
Federally-Facilitated Exchanges
(§ 155.206)
In a new § 155.206, as part of HHS’s
enforcement authority under section
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1321(c)(2) of the Affordable Care Act,
we propose to provide for the
imposition of civil money penalties
(CMPs) on Navigators, non-Navigator
assistance personnel, and certified
application counselors and certified
application counselor designated
organizations in FFEs and State
Partnership Exchanges that do not
comply with applicable Federal
requirements. This proposal is designed
to deter these entities and individuals
from failing to comply with the Federal
requirements that apply to them, and to
ensure that consumers interacting with
the Exchange receive high-quality
assistance and robust consumer
protection. As a general principle, while
HHS proposes to establish authority to
assess CMPs when appropriate,
consistent with this proposed rule, we
note that we also intend to continue to
work collaboratively with consumer
assistance entities and personnel to
prevent noncompliance issues and
address any that may arise before they
might rise to the level where CMP
would be assessed.
The Secretary, under the authority of
sections 1311(i) and 1321(a)(1) of the
Affordable Care Act, has previously
established a range of consumer
assistance programs to help consumers
apply for and enroll in QHPs and
insurance affordability programs
through the Exchange. These consumer
assistance programs include the
Navigator program described at section
1311(i) of the Affordable Care Act and
45 CFR 155.210; the consumer
assistance, outreach, and education
functions authorized by section
1321(a)(1) of the Affordable Care Act
and established at 45 CFR 155.205(d)
and (e), which can include a nonNavigator assistance personnel program;
and the certified application counselor
program authorized by section
1321(a)(1) of the Affordable Care Act
and set forth at 45 CFR 155.225. Under
these authorities and the authority
granted to the Secretary by section
1321(c)(1) of the Affordable Care Act,
the FFE has implemented a Navigator
and certified application counselor
program in all States that did not elect
to establish an Exchange, and has
implemented a non-Navigator assistance
program in some of those States,
through an enrollment assistance
contract.
Under section 1321(c)(2) of the
Affordable Care Act, the provisions of
section 2723(b) of the PHS Act 29 apply
29 Section 1321(c)(2) of the Affordable Care Act
erroneously cites to section 2736(b) of the PHS Act
instead of 2723(b) of the PHS Act. This was clearly
a typographical error, and we have therefore
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to the Secretary’s enforcement, under
section 1321(c)(1) of the Affordable Care
Act, of the standards established by the
Secretary under section 1321(a)(1) of the
Affordable Care Act for meeting the
requirements under title I of the
Affordable Care Act, including the
establishment and operation of
Exchanges, without regard to any
limitation on the application of the
provisions of section 2723(b) of the PHS
Act to group health plans. Section
2723(b) of the PHS Act provides the
Secretary with authority to assess CMPs
against health insurance issuers that fail
to meet certain Federal requirements set
forth in the PHS Act that apply to group
health plans, in circumstances where, in
the Secretary’s determination, the State
that regulates the issuer has failed to
‘‘substantially enforce’’ those
requirements. We interpret the crossreference to section 2723(b) of the PHS
Act in section 1321(c)(2) of the
Affordable Care Act as providing the
Secretary with authority to assess CMPs
to enforce requirements established
under section 1321(a)(1) of the
Affordable Care Act against any entity
subject to those requirements, under
circumstances where the Secretary is
exercising her authority under
1321(c)(1) of the Affordable Care Act.
For purposes of this proposal, we would
consider that any State that has not
elected to establish an Exchange, and in
which the Secretary has therefore had to
establish and operate an Exchange
under section 1321(c)(1), is not
‘‘substantially enforcing’’ the
requirements related to Exchanges that
the Secretary has established under
section 1321(a)(1).
Accordingly, HHS has the authority
under section 1321(c)(2) of the
Affordable Care Act to assess CMPs
against Navigators, non-Navigator
assistance personnel, and certified
application counselors and certified
application counselor designated
organizations in FFEs, including State
Partnership Exchanges, for violations of
the requirements of the Navigator, nonNavigator, and certified application
counselor programs that the Secretary
established under section 1321(a)(1) of
the Affordable Care Act. This proposal
sets forth the circumstances under
which the Secretary would exercise this
authority. It is based on the enforcement
scheme laid out in section 2723(b) of the
PHS Act, and the implementing
regulations at 45 CFR 150.301 et seq.,
but it does not follow that enforcement
scheme exactly, in light of the
differences between the circumstances
interpreted section 1321(c)(2) of the Affordable Care
Act to incorporate section 2723(b) of the PHS Act.
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15823
in which the Secretary would exercise
her authority under PHS Act 2723(b)
versus those under which she would
exercise her authority under section
1321(c)(2) of the Affordable Care Act.
Proposed § 155.206(a) would establish
the scope and purpose of the proposed
CMP provisions and explains when and
against whom HHS would assess a CMP
under this proposal. At § 155.206(a)(2),
we propose that HHS could permit an
entity or individual to whom it has
issued a notice of assessment of CMP to
enter into a corrective action plan
instead of paying the CMP. We specify
that permitting an entity to enter into a
corrective action plan would not limit
HHS’s authority to require payment of
the assessed CMP if the corrective
action plan is not followed. Under this
proposal, the determination of whether
HHS would enter into a corrective
action plan in place of imposing a CMP
would depend upon the factors
proposed in § 155.206(h). We believe
this approach would allow us not only
to penalize violations if necessary, but
also to prioritize working
collaboratively with consumer
assistance entities to ensure that
improvements are made and future
violations are prevented. We also
believe this approach is consistent with
the limitation on imposing CMPs that is
set forth at PHS Act section
2723(b)(2)(C)(iii)(II), under which no
CMP may be assessed for violations due
to reasonable cause and not due to
willful neglect, if the violation is
corrected during the 30-day period
beginning on the first day any of the
entities against whom the penalty
would be assessed knew, or exercising
reasonable diligence would have
known, that such failure existed.
We are considering whether to
provide for an expedited process
through which HHS may assess and
impose CMPs, if extenuating
circumstances exist or if necessary to
protect the public. We believe HHS’s
ability to take swift action might be
particularly useful in cases where HHS
permits an entity to enter into a
corrective action plan in lieu of a CMP,
so that the entity would promptly begin
remedial efforts under the corrective
action plan without undue delay. We
are considering an expedited process
through which HHS would provide the
consumer assistance entity less than the
30-day period provided for under
proposed paragraph (e) to respond to the
notice of investigation under proposed
paragraph (e)(1), or possibly omit that
period altogether. In all cases where an
expedited process would apply, we
anticipate that the entity against which
a CMP is assessed would have an
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opportunity to appeal the imposition of
the penalty after it has been assessed.
We seek comment on whether HHS
should provide for such an expedited
process and on all aspects of how it
should be structured, including
comments on how such an expedited
process could provide sufficient
protection to the public, comments on
how such an expedited process could be
sufficiently protective of the rights of
entities and individuals that might be
assessed a CMP, and comments on other
ways through which the process for
imposing CMPs under this proposal
could be expedited if necessary to
protect the public.
We are also considering implementing
an approach that would give the HHS
Office of Inspector General (OIG)
concurrent authority with CMS to
enforce violations under this section.
Given OIG’s expertise in investigating
waste, fraud, and abuse in the Medicare
and Medicaid programs, we are
considering whether certain violations
of an Exchange consumer assistance
entity’s program requirements might be
most effectively investigated by OIG, or
whether a more streamlined approach
with a single enforcement authority
would be preferable. In considering
whether OIG should have concurrent
enforcement authority under this
proposed section, we are considering
whether both CMS and OIG should use
the procedures laid out in proposed
§ 155.206 for investigating potential
violations and conducting
administrative appeals, or whether and
to what extent OIG should rely on its
own enforcement procedures under 42
CFR, chapter V, subchapter B for either
the investigative process or the
administrative appeals process, or both,
and whether some of the procedures
outlined in OIG’s enforcement
procedures under those regulations
should be incorporated into this section.
We note that because our enforcement
authority under section 1321(c)(2) of the
Affordable Care Act requires
compliance with the provisions of
section 2723(b) of the PHS Act, any
process used by OIG would have to
comply with the requirements in those
statutory provisions. We seek comment
on whether OIG should have concurrent
authority to enforce these proposed
CMP provisions. In addition, we seek
comment on what procedures we
should use to determine which cases
should fall under CMS or OIG
enforcement authority, in the event OIG
has concurrent authority. For example,
we are considering providing that OIG
would enforce only consumer assistance
personnel or entity noncompliance
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involving systemic fraud or gross
misconduct, rather than isolated
incidents. We invite comment on this
issue, and how those determinations
would be made, as well as comments on
any other aspects of a concurrent
authority scheme that we should
consider.
In proposed § 155.206(b), we specify
the individuals and entities that could
be subject to HHS’ enforcement
authority under this proposal. These
individuals and entities would include
Navigators, non-Navigator assistance
personnel (also referred to as in-person
assistance personnel) authorized under
§ 155.205(d) and (e), and certified
application counselors and
organizations designated as certified
application counselor organizations in
FFEs, including in State Partnership
Exchanges. We refer to these individuals
and entities in the proposed rule as
‘‘consumer assistance entities,’’ but
these proposed CMPs could be assessed
against both entities and individuals.
We seek comment on whether all of the
individuals and entities listed in
proposed § 155.205(b) should be subject
to CMPs, and on whether other entities
and individuals should be added to that
list.
In § 155.206(c), we propose the
grounds on which HHS could impose
CMPs on the entities and individuals
specified in § 155.206(b). Section
1321(c)(2) of the Affordable Care Act
authorizes the Secretary to enforce the
requirements of section 1321(a)(1) of the
Affordable Care Act, which include the
requirements established by the
Secretary regarding Exchange consumer
assistance functions. Under our
proposal, this statutory provision would
authorize HHS to assess a CMP or, in
lieu of a CMP, a corrective action plan
against Navigators, non-Navigator
assistance personnel, certified
application counselors, and certified
application counselor organizations in
FFEs if HHS determines that these
individuals or entities are not in
compliance with the Exchange
standards applicable to them. These
Exchange standards would include any
applicable regulations implemented
under title I of the Affordable Care Act,
as interpreted through applicable HHS
guidance, such as the regulations
governing consumer assistance tools
and programs of an Exchange at
§ 155.205; those governing Navigators at
§ 155.210 and Navigators in FFEs at
§ 155.215; those governing certified
application counselors at § 155.225; and
those under § 155.215 governing nonNavigator assistance personnel in FFEs.
These standards would also include any
applicable HHS guidance interpreting
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an existing regulatory or statutory
provision.
For example, § 155.215(b)(1)(i)
requires FFE Navigators to obtain
certification by the Exchange prior to
carrying out any consumer assistance
functions under § 155.210. Under this
proposal, a Navigator who facilitates the
selection of a QHP (a Navigator duty
under § 155.210(e)(3)) prior to obtaining
his or her Exchange certification might,
depending on the circumstances, be
subject to CMPs under § 155.206.
As another example, § 155.210(e)(2)
requires Navigators to provide
information and services in a fair,
accurate, and impartial manner, and
§ 155.215(a)(2)(i) extends this duty to
non-Navigator assistance personnel in
FFEs. Any FFE Navigator or FFE nonNavigator assistance personnel who,
while carrying out Exchange-related
activities, furnishes information that he
or she knew or should have known is
false or fraudulent to consumers, the
Exchange, or to HHS, would have
violated these provisions and might,
depending upon the circumstances, be
subject to CMPs under proposed
§ 155.206. If a Navigator or any nonNavigator assistance personnel in a FFE
encourages an applicant or enrollee to
submit false information on an
application for coverage though the
Exchange, we would also consider that
to be a violation of his or her duty to
provide information in a fair, accurate,
and impartial manner; and this violation
might, depending on the circumstances,
also subject the individual or entity to
the proposed CMPs. Such a Navigator or
non-Navigator assistance personnel
would not be providing fair or accurate
information to consumers, because in
light of the penalties at section 1411(h)
of the Affordable Care Act for providing
false information on an Exchange
application, it is not fair or accurate to
state or imply that a consumer would be
permitted to falsify application
information.
As a final example, a certified
application counselor in an FFE who
steers consumers toward one particular
QHP would not be acting in the best
interest of consumers, as required by
§ 155.225(d)(4), and would not be giving
consumers information about the full
range of QHP options and insurance
affordability programs for which they
are eligible, as required by
§ 155.225(c)(1). Such a certified
application counselor might, depending
on the circumstances, be subject to
CMPs under our proposed § 155.206.
We note that § 155.285 of this
proposed rule would extend CMPs to
consumer assistance entities who
misuse or impermissibly disclose
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personally identifiable information in
violation of section 1411 of the
Affordable Care Act. Therefore, we have
not addressed penalties for those actions
here. Some conduct by consumer
assistance entities may warrant CMPs
under either § 155.285 or § 155.206, and
in such cases we believe HHS has
discretion to determine whether to
impose a CMP under this regulation or
under § 155.285 of this subpart.
However, we specify in proposed
§ 155.206(c) that HHS would not assess
a CMP under this section if a CMP has
already been assessed for the same
conduct under § 155.285. Additionally,
CMPs are not the only enforcement
remedy that would apply to the entities
and individuals who would be subject
to proposed § 155.206. For instance,
HHS could take other enforcement
actions against FFE Navigators, which
are Federal grantees, under the
regulations governing HHS grants.
Furthermore, some of the actions
described above may subject consumer
assistance entities to criminal liability
under Federal or State law.
In § 155.206(d), we propose the basis
for initiating an investigation of a
potential violation. We propose that
HHS could initiate an investigation
based on any information it receives
indicating that a consumer assistance
entity might be in noncompliance with
applicable Exchange standards. Such
information could include consumer
complaints, reports from State insurance
departments and other Federal and State
agencies, and any other information
indicating such a violation. We also
propose that any entity or individual
could file such a complaint with HHS.
In § 155.206(e), (f) and (g), we propose
to outline the process that HHS would
follow to investigate potential violations
in order to determine whether the
consumer assistance entity has engaged
in noncompliance of applicable
Exchange standards. Under proposed
§ 155.206(e), if HHS learns of a potential
violation through the means described
in paragraph (d) in this section and
determines that further investigation is
warranted, HHS would provide written
notice of its investigation to the
consumer assistance entity. Such notice
would describe the potential violation,
provide 30 days from the date of the
notice for the consumer assistance
entity to respond and provide HHS with
information and documents, including
information and documents to refute an
alleged violation, and would state that
a CMP might be assessed if the
consumer assistance entity fails to refute
the allegations in HHS’ determination.
In § 155.206(f), we propose a process
for a consumer assistance entity to
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request an extension from HHS when
the entity cannot prepare a response to
HHS’s notice of investigation within the
30 days provided in the notice. Under
our proposal, if HHS grants the
extension, the responsible entity would
be required to respond to the notice of
investigation within the time frame
specified in HHS’s letter granting the
extension of time, and failure to respond
within 30 days, or within the extended
time frame, could result in HHS’s
imposition of the CMP that would apply
based upon HHS’s initial determination
of a potential violation as set forth in the
notice of investigation under
§ 155.206(e).
In § 155.206(g), we propose that HHS
could review and consider documents
or information received or collected in
accordance with paragraph (d)(1) of this
section or provided by the consumer
assistance entity in response to
receiving a notice in accordance with
paragraph (e)(2) of this section. We also
propose that HHS may conduct an
independent investigation into the
alleged violation, which may include
site visits and interviews, if applicable,
and may consider the results of this
investigation in its determination. The
purpose of these proposed provisions is
to ensure that HHS would follow
reasonable procedures when
investigating a potential violation, and
to allow a consumer assistance entity a
reasonable timeframe to provide
evidence refuting the allegation or other
information regarding the alleged
violation, including its severity or
mitigating circumstances.
In § 155.206(h), we propose the
factors that HHS would use to
determine the appropriate CMP amount,
and to determine whether it would be
appropriate to offer the entity or
individual an opportunity to enter into
a corrective action plan in place of the
CMP. We intend that the CMP amount,
and opportunity to enter into a
corrective action plan, would vary based
on our assessment of the consumer
assistance entity’s previous or ongoing
record of compliance; the gravity of the
violation, as determined in part by the
frequency of the violation and the
financial harm incurred by a consumer;
and the culpability of the consumer
assistance entity, as determined, in part,
by whether the entity received payment
for committing the violation. We believe
these factors would allow us to tailor
enforcement actions to specific
violations, while maintaining robust
enforcement authority in the interest of
protecting consumers.
Section 2723(b)(2)(C) of the PHS Act
limits the amount of CMPs authorized
under section 1321(c)(2) of the
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15825
Affordable Care Act to $100 for each day
for each individual directly affected.
Therefore in § 155.206(i), we propose
that the maximum daily amount of
penalty assessed for each violation
would be $100 for each day, for each
consumer assistance entity, for each
individual directly affected by the
entity’s non-compliance. Similar to our
rules on the maximum penalty for
noncompliant QHP issuers in 45 CFR
156.805(c), we anticipate that there
might be situations where HHS cannot
determine the number of individuals
directly affected. Therefore, we propose,
consistent with the approach under
existing rules at 45 CFR 156.805(c), that
in such situations HHS may reasonably
estimate this number, based on available
information, such as data from a Federal
Navigator grantee’s quarterly or weekly
report concerning the number of
consumers assisted. We also clarify that
imposing $100 for each day an
individual is directly affected would
mean that we would look at the entirety
of time the consumer was affected by
the noncompliance of the assistance
entity. For example, if a certified
application counselor in an FFE is
found to be steering consumers into a
specific plan without regard to the
consumers’ best interests in violation of
§ 155.225(d)(4), we might assess CMPs
based on our reasonable estimate of the
number of consumers affected by the
conduct, as well as the entire time the
conduct took place, including the time
during which each consumer is enrolled
in the plan to which he or she was
improperly steered. Although we have
proposed a maximum per day penalty,
we have not proposed a cap on the total
penalty that could be assessed by HHS,
and we seek comment on whether we
should propose such a cap.
In proposed § 155.206(j), we propose
to clarify that nothing in this section
limits HHS’s authority to settle any
issue or case described in the notice
furnished in accordance with paragraph
(e), or to compromise on any CMP
provided for in this section. This
provision is based on a similar
provision in the HIPAA enforcement
scheme at 45 CFR 150.325.
Section 2723(b)(2)(C) of the PHS Act
places certain limitations on CMPs
authorized under section 1321(c)(2) of
the Affordable Care Act, including the
limitation that HHS will not assess a
CMP where the entity did not know, or
exercising reasonable diligence would
not have known, of the violation. We
propose to implement these limitations
in § 155.206(k). We believe these
limitations would help balance the
interests of HHS, the Exchange, and
consumers to have consumer assistance
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entities exercise reasonable diligence in
understanding and executing their
obligations, while not unnecessarily
penalizing consumer assistance entities
who are acting in good faith. We also
propose, based on the HIPAA
enforcement structure at 45 CFR
150.341, that the burden is on the
consumer assistance entity to establish
that the circumstances triggering these
limitations existed.
In § 155.206(l), we propose standards
for notifying consumer assistance
entities of the intent to assess a CMP,
which notice would include an
explanation of the entity’s right to an
appeal pursuant to the process set forth
at 45 CFR Part 150, Subpart D, as
provided in proposed § 155.206(m). We
seek comment on whether all aspects of
that process should be applicable to
appeals of these CMPs. Finally, in
§ 155.205(n), we propose that HHS may
require payment of the proposed CMP if
the consumer assistance entity does not
timely request a hearing.
We seek comment on all aspects of
these proposals, including but not
limited to whether other provisions of
45 CFR Part 150 should be adopted and
made applicable to this proposed
enforcement scheme, whether a specific
limitations period should apply, and if
so, what limitations period would be
appropriate for violations of applicable
Exchange standards by consumer
assistance entities in FFEs.
b. Navigator, Non-Navigator Assistance
Personnel, and Certified Application
Counselor Program Standards
(§§ 155.210, 155.215, and 155.225)
Sections 1311(d)(4)(K) and 1311(i) of
the Affordable Care Act direct all
Exchanges to establish a Navigator
program. Section 1321(a)(1) of the
Affordable Care Act directs the
Secretary to issue regulations that set
standards for meeting the requirements
of title I of the Affordable Care Act, with
respect to, among other things, the
establishment and operation of
Exchanges. Pursuant to the authority
established in section 1321(a)(1), the
Secretary issued 45 CFR 155.205(d) and
(e), which authorize Exchanges to
perform certain consumer service
functions in addition to the Navigator
program. 45 CFR 155.205(d) provides
that each Exchange must conduct
consumer assistance activities, and
§ 155.205(e) provides that each
Exchange must conduct outreach and
education activities to inform
consumers about the Exchange and
insurance affordability programs, to
encourage participation.
The consumer assistance function
authorized by § 155.205(d) includes the
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Navigator grant program established
under section 1311(i) of the Affordable
Care Act. Section 155.205(d) and (e) also
allow for the establishment of a nonNavigator consumer assistance program.
45 CFR 155.215 establishes standards
for non-Navigator assistance personnel
in FFEs, including State Partnership
Exchanges, and for non-Navigator
assistance personnel in State Exchanges
if they are funded with section 1311(a)
Exchange Establishment grant funds.
Also pursuant to the authority
established in section 1321(a)(1), the
Secretary issued 45 CFR 155.225, which
establishes the certified application
counselor program as a consumer
assistance function of the Exchange,
separate from and in addition to the
functions described in §§ 155.205(d)
and (e), 155.210, and 155.215.
Navigator duties and requirements for
all Exchanges are set forth in section
1311(i) of the Affordable Care Act and
45 CFR 155.210. Additional duties and
requirements for Navigators in
Federally-facilitated and State
Partnership Exchanges are set forth at 45
CFR 155.215. Section 155.215 also sets
forth duties and requirements for nonNavigator assistance personnel in
Federally-facilitated and State
Partnership Exchanges, and for nonNavigator assistance personnel in State
Exchanges if those personnel are funded
with section 1311(a) Exchange
Establishment grant funds. Certified
application counselor duties and
requirements for all Exchanges are set
forth in 45 CFR 155.225.
In accordance with sections 1311(i)(4)
and 1321(d) of the Affordable Care Act,
we previously established in 45 CFR
155.210(c)(1)(iii) that Navigators ‘‘must
meet any licensing, certification or other
standards prescribed by the State or
Exchange, if applicable, so long as such
standards do not prevent the application
of the provisions of title I of the
Affordable Care Act.’’ We have not
established a similar requirement for the
non-Navigator assistance personnel that
are subject to 45 CFR 155.215. Nor did
we finalize a proposed requirement that
would have required certified
application counselors to comply with
State law as a condition of certification.
However, we noted in the preamble to
the rulemaking establishing the certified
application counselor program that
section 1321(d) of the Affordable Care
Act provides that State laws that do not
prevent the application of the
provisions of title I of the Affordable
Care Act are not preempted.30 These
30 Patient Protection and Affordable Care Act;
Exchange Functions: Standards for Navigators and
Non-Navigator Assistance Personnel; Consumer
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preemption principles apply to all of the
Federal standards and duties that apply
to Navigators, non-Navigator assistance
personnel and certified application
counselors, since these have been
authorized and established under title I
of the Affordable Care Act.
We now propose to specify certain
non-Federal requirements that would
prevent the application of provisions of
title I of the Affordable Care Act with
respect to the Navigator, non-Navigator
assistance personnel, and certified
application counselor programs, within
the meaning of section 1321(d) of the
Affordable Care Act. This proposal does
not purport to capture the complete
universe of State requirements that
might be preempted in this context, and
we therefore recognize that a Federal
court may also find other non-Federal
requirements that we do not expressly
mention in this proposed rule to be
preempted.31
We propose amending
§ 155.210(c)(1)(iii) by adding new
paragraphs (A) through (F) to specify
certain non-Federal requirements that
would prevent the application of the
provisions of title I of the Affordable
Care Act, within the meaning of section
1321(d) of the Affordable Care Act, with
respect to the Navigator program. We
also propose to amend § 155.215(f) to
make clear that we would consider the
same types of non-Federal requirements
listed in § 155.210(c)(1)(iii)(A) through
(F) (except for 155.210(c)(1)(iii)(D)) to
prevent the application of the
provisions of title I of the Affordable
Care Act within the meaning of section
1321(d) of the Affordable Care Act,
when applied to non-Navigator
assistance personnel subject to
§ 155.215. Similarly, with respect to the
certified application counselor program,
we propose amending § 155.225(d) by
adding a new paragraph (d)(8) to specify
that certified application counselors
must meet any licensing, certification or
Assistance Tools and Programs of an Exchange and
Certified Application Counselors, 78 FR 42845
(finalized July 17, 2013).
31 The U.S. District Court for the Western District
of Missouri recently granted the plaintiff’s motion
for a preliminary injunction in litigation
challenging a Missouri law regulating Navigators
and other Exchange consumer assistance personnel
on the grounds, inter alia, that certain provisions
of the Missouri law are preempted by Federal law.
The court concluded that ‘‘state laws that make
operation of the [Federally-facilitated Exchange]
more difficult or onerous run afoul of the
Affordable Care Act’s purpose and are subject to
preemption.’’ St. Louis Effort for AIDS, et al. v.
Huff, No. 13–4246–CV–C–ODS, 2014 WL 273201, at
*5 (W.D. Mo. Jan. 23, 2014) (order granting
preliminary injunction). This decision is currently
under appeal before the United States Court of
Appeals for the Eighth Circuit, St. Louis Effort for
AIDS v. Huff, No. 14–1520 (8th Cir. appeal docketed
Mar. 6, 2014).
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other standards prescribed by the State
or Exchange, if applicable, so long as
such standards do not prevent the
application of the provisions of title I of
the Affordable Care Act within the
meaning of section 1321(d) of the
Affordable Care Act. New
§ 155.225(d)(8) would also make clear
that we would consider non-Federal
requirements similar to those listed in
§ 155.210(c)(1)(iii)(A) through (F)
(except for 155.210(c)(1)(iii)(D)) to
prevent the application of the
provisions of title I of the Affordable
Care Act within the meaning of section
1321(d) of the Affordable Care Act,
when applied to certified application
counselors.
As we discuss in greater detail below,
these proposed amendments are
directed at non-Federal requirements
that conflict with Federal statutory or
regulatory standards and that either, on
their face, prevent assisters from
performing their Federally required
duties, or that would conflict with
Federal standards in specific factual
circumstances.
The purpose of these proposed
provisions is to specify a nonexhaustive list of circumstances under
which HHS would consider a nonFederal requirement applicable to
Navigators, non-Navigator assistance
personnel, or certified application
counselors to prevent the application of
provisions of title I of the Affordable
Care Act, within the meaning of section
1321(d) of the Affordable Care Act. As
a general principle, if a non-Federal
requirement would, on its face, prevent
Navigators, non-Navigator assistance
personnel subject to § 155.215, or
certified application counselors from
carrying out Federally mandated duties
or from otherwise meeting Federal
standards that apply to them, or if a
non-Federal requirement would make it
impossible for an Exchange to
implement those consumer assistance
programs consistent with the Federal
statutes and regulations governing those
programs, then, in HHS’s view, such a
requirement would prevent the
application of the provisions of title I of
the Affordable Care Act.
These proposed preemption standards
would not preclude a State from
establishing or implementing additional
State law protections for its consumers,
so long as such laws do not prevent the
application of Federal requirements for
these consumer assistance programs.
For example, a State may require these
types of Exchange-approved assisters to
undergo fingerprinting or background
checks before they can operate in a
State, so long as a State’s
implementation of these additional
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requirements does not prevent the
Exchange from implementing these
consumer assistance programs in the
State consistent with Federal standards
or make it impossible for the assisters to
perform their Federally required duties.
We propose to make some, but not all,
of the proposed provisions applicable to
Navigators, non-Navigator assistance
personnel subject to 45 CFR 155.215,
and certified application counselors (or
certified application counselor
designated organizations) that are
operating in State Exchanges. NonFederal requirements that would
prevent these individuals or entities
from carrying out their Federally
mandated duties or from otherwise
meeting applicable Federal statutory
and regulatory standards and
requirements would prevent the
application of title I of the Affordable
Care Act. Generally, for the reasons
addressed below, proposed
§ 155.210(c)(1)(iii)(A) through (D) would
apply to Navigators in State Exchanges;
through the cross reference to
§ 155.210(c)(1)(iii), proposed
§ 155.215(f) would apply provisions
§ 155.210(c)(1)(iii)(A) through (C) to
non-Navigator assistance entities or
individuals in State Exchanges that are
funded through an Exchange
Establishment Grant under section
1311(a) of the Affordable Care Act; and
proposed § 155.225(d)(8)(i) through (iii)
would apply to certified application
counselors and/or designated certified
application counselor organizations in
State Exchanges. In general, we believe
that the provisions listed above should
apply in a State Exchange because these
provisions address requirements that, in
HHS’ view, would facially conflict with
Federal requirements or standards
established under Federal law, while
the provisions that we propose would
not apply in State Exchanges relate to
how the State interacts with an FFE or
implements State requirements for the
relevant consumer assistance personnel.
Based on our observations, a State
Exchange has an enhanced ability to
work with the State to establish its own
standards and coordinate the
implementation of State law applicable
to assisters in a manner that does not
conflict with Federal standards or
prevent the State Exchange from
implementing consumer assistance
programs consistent with Federal
requirements. We solicit comments on
whether all the proposed provisions
should apply in State Exchanges. We
also seek comments on whether there
are other types of non-Federal
requirements for these types of assisters
in a State Exchange that might prevent
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the application of Federal law within
the meaning of section 1321(d) of the
Affordable Care Act.
In our proposal, we first propose that
non-Federal laws or regulations which
require Navigators, non-Navigator
assistance personnel subject to
§ 155.215, and certified application
counselors to refer consumers to agents
or brokers, or to any other sources not
required to provide them with impartial
advice, would prevent the application of
the provisions of title I of the Affordable
Care Act. Non-Federal laws or
regulations that require referrals to
sources that are not required to provide
impartial advice would, on their face,
make it impossible for these assisters to
comply with existing Federal statutory
and regulatory duties and standards.
Navigators are required to ‘‘distribute
fair and impartial information
concerning enrollment in qualified
health plans, and the availability of
premium tax credits . . . and costsharing reductions . . .,’’ under section
1311(i)(3)(B) of the Affordable Care Act.
Additionally, section 1311(i)(5) of the
Affordable Care Act requires the
Secretary, in collaboration with States,
to ‘‘develop standards to ensure that
information made available by
[N]avigators is fair, accurate, and
impartial.’’ Accordingly, HHS
regulations at § 155.210(e)(2) require
Navigators in all Exchanges to provide
‘‘information and services in a fair,
accurate and impartial manner’’ and
HHS regulations at § 155.215(a)(1)(iii)
require Navigators in Federallyfacilitated and State Partnership
Exchanges to ‘‘provide information to
consumers about the full range of QHP
options and insurance affordability
programs for which they are eligible.’’
HHS regulations at § 155.215(a)(2)(i) and
(iv) impose the same requirements upon
non-Navigator assistance personnel in
Federally-facilitated and State
Partnership Exchanges. Similarly,
§ 155.225(c)(1) requires certified
application counselors to provide
‘‘information to individuals and
employees about the full range of QHP
options and insurance affordability
programs for which they are eligible’’
and § 155.225(d)(4) requires certified
application counselors to act in the best
interest of the applicants assisted. If a
non-Federal law or regulation requires
Navigators or non-Navigator assistance
personnel subject to § 155.215 to refer
consumers to third parties that do not
have a duty to provide consumers with
information that is fair, accurate, and
impartial or requires a certified
application counselor to refer
consumers to third parties that do not
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have a duty to act in the consumer’s best
interest, that non-Federal law would
prevent Navigators, non-Navigator
assistance personnel, or certified
application counselors from meeting the
above-mentioned Federal requirements.
This proposal would apply in all
Exchanges, with the following limited
exception for certain Navigators. Where
a State has elected to establish and
operate only a SHOP Exchange pursuant
to 45 CFR 155.100(a)(2), and has opted
under 45 CFR 155.705(d) to permit
Navigator duties at § 155.210(e)(3) and
(4) in the SHOP-only State Exchange to
be fulfilled through referrals to agents
and brokers, we would not consider
State laws or regulations that permit the
State to take the option at § 155.705(d)
to prevent the application of the
provisions of title I of the Affordable
Care Act, since that option is authorized
under Federal law.
We solicit comment on whether nonFederal requirements that obligate
Navigators, non-Navigator assistance
personnel subject to § 155.215, and
certified application counselors to refer
employers and employees in the small
group market to agents and brokers
should not be considered to prevent the
application of the provisions of title I of
the Affordable Care Act within the
meaning of section 1321(d) of the
Affordable Care Act.
Second, we propose that non-Federal
laws or regulations that prevent
Navigators, non-Navigator assistance
personnel subject to § 155.215, and
certified application counselors from
providing services to all persons to
whom they are required to provide
assistance would also, on their face,
prevent the application of the
provisions of title I of the Affordable
Care Act within the meaning of section
1321(d) of the Affordable Care Act. For
example, if a non-Federal requirement
prohibited Navigators and nonNavigator assistance personnel subject
to § 155.215 from assisting an employer
or employee regarding SHOP coverage
or from acting as an intermediary
between that employer and an issuer
without being a licensed insurance
agent or broker, then such a prohibition
would prevent Navigators from
performing their Federally required
duties and would therefore prevent the
application of the provisions of title I of
the Affordable Care Act within the
meaning of section 1321(d) of the
Affordable Care Act. Specifically, such
non-Federal requirements would
prevent Navigators from providing
‘‘information and services in a fair,
accurate and impartial manner’’ as
required by 45 CFR 155.210(e)(2). They
would also prevent non-Navigator
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assistance personnel subject to 155.215
from complying with the same
requirement, as is required by
§ 155.215(a)(2)(i). We interpret the
requirement that Navigators and nonNavigator assistance personnel subject
to § 155.215 provide information and
services fairly and impartially as a
requirement that these assisters provide
their services to all consumers seeking
assistance. As we have mentioned in
prior rulemaking, Navigators and nonNavigator assistance personnel should
have the ability to help any individual
who presents him or herself for
assistance (see 78 FR 42830). Further,
these requirements would prevent
Navigators and non-Navigator assistance
personnel subject to § 155.215 from
being prepared to serve both the
individual Exchange and SHOP, as
required by § 155.215(b)(1)(v). Similarly,
with respect to certified application
counselors and certified application
counselor organizations, if a nonFederal requirement barred these
individuals or entities from assisting an
employee with SHOP coverage, then
such a requirement would prevent them
from performing their Federally
required duty to provide information to
employees about the full range of QHP
options for which they are eligible and
assist employees to apply for coverage
in a QHP through the Exchange and for
insurance affordability programs, as set
forth under § 155.225(c)(1) and (2).
As another example, with respect to
Navigators, non-Navigator assistance
personnel subject to § 155.215, and
certified application counselors and
organizations, if a non-Federal law
required these individuals or entities to
either cease assisting a consumer or to
discourage the consumer from seeking
assistance from the assister whenever a
consumer disclosed that he or she was
currently insured or had previously
purchased health insurance with the aid
of an agent or broker (even if that
consumer expresses to the assister that
he or she does not want to be assisted
by an agent or broker), then such a nonFederal requirement would prevent the
application of the provisions of title I of
the Affordable Care Act within the
meaning of section 1321(d) of the
Affordable Care Act. Specifically, these
types of requirements would prevent
Navigators from providing ‘‘information
and services in a fair, accurate and
impartial manner’’ as required by 45
CFR 155.210(e)(2). They would also
prevent non-Navigator assistance
personnel subject to 155.215 from
complying with the same requirement,
as is required by § 155.215(a)(2)(i). We
interpret the requirement that
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Navigators and non-Navigator assistance
personnel subject to § 155.215 provide
information and services fairly and
impartially as a requirement that these
assisters serve any consumer who
presents him or herself for assistance,
without regard to whether the consumer
has existing health insurance coverage
or previously had such coverage. Such
a non-Federal requirement would also
keep these assisters from performing
their Federally required duty to be
prepared to serve both the individual
Exchange and SHOP, as required by
§ 155.215(b)(1)(v). With respect to
certified application counselors, these
types of requirements would prevent
them from carrying out required duties
under § 155.225(c)(1) and (2), which
require that certified application
counselors provide information to
employees about the full range of QHP
options for which they are eligible and
assist employees to apply for coverage
in a QHP through the Exchange.
Requirements of this type would also
potentially prevent certified application
counselors from acting in the best
interests of the applicants assisted, as
required by § 155.225(d)(4), especially
in circumstances where a consumer
expresses a desire to not consult an
agent or broker.
Where a State has elected to establish
and operate only a SHOP Exchange
pursuant to 45 CFR 155.100(a)(2), and
has opted under 45 CFR 155.705(d) to
permit Navigator duties at
§ 155.210(e)(3) and (4) in the SHOP-only
State Exchange to be fulfilled through
referrals to agents and brokers, we
would not consider State laws or
regulations that permit the State to take
the option at § 155.705(d) to prevent the
application of the provisions of title I of
the Affordable Care Act, since that
option is authorized under Federal law.
Third, we propose that non-Federal
laws that prevent Navigators, nonNavigator assistance personnel subject
to § 155.215, and certified application
counselors from discussing the terms of
coverage of any particular policy or
plan, or from providing advice regarding
substantive benefits or comparative
benefits of different health plans, would
also, on their face, prevent the
application of the provisions of title I of
the Affordable Care Act within the
meaning of section 1321(d) of the
Affordable Care Act. Such non-Federal
requirements would prevent Navigators
from fulfilling their statutory and
regulatory duties under section
1311(i)(3) of the Affordable Care Act
and 45 CFR 155.210(e)(2) and (3) to
distribute fair and impartial information
concerning enrollment in qualified
health plans and to facilitate enrollment
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in qualified health plans. Such nonFederal requirements would also
prevent non-Navigator assistance
personnel subject to § 155.215 from
carrying out their required duties under
§ 155.215(a)(2)(i), which requires that
they comply with § 155.210(e)(2).
Finally, such non-Federal requirements
would also prevent certified application
counselors and organizations from
fulfilling regulatory duties established
under § 155.225(c) to provide
information to individuals and
employees about the full range of QHP
options and insurance affordability
programs for which they are eligible,
assist individuals and employees to
apply for coverage in a QHP through the
Exchange and for insurance affordability
programs, and help to facilitate
enrollment of eligible individuals in
QHPs and insurance affordability
programs. CMS interprets these
statutory and regulatory provisions to
require Navigators, non-Navigator
assistance personnel subject to
§ 155.215, and certified application
counselors to be prepared to discuss the
terms and features of any coverage for
which a consumer is or might be
eligible, consistent with each
consumer’s expressed interests and
needs, including, for example, plan
features such as deductibles,
coinsurance and copayments, coverage
limitations or exclusions, and/or
whether a particular provider or
hospital is included within a plan’s
network. CMS has always interpreted
the statute and regulations to prohibit
Navigators, non-Navigators, and
certified application counselors from
steering a consumer toward a particular
plan or plans. However, under 45 CFR
155.210(e)(3) and 155.215(a)(2)(i),
Navigators and non-Navigator assistance
personnel subject to § 155.215 have a
duty to ‘‘facilitate selection of a QHP,’’
and that duty includes providing
information to consumers about the
substantive benefits or particular
features of a health plan. Similarly,
certified application counselors are
required to provide this same type of
information to consumers, since they
have a duty under 45 CFR 155.225(c)(3)
to help to facilitate enrollment of
eligible individuals in QHPs and
insurance affordability programs. We
therefore propose that non-Federal
requirements that prevent assisters from
describing or providing information
about the substantive benefits or
particular features of a health plan,
including comparative information to
facilitate a consumer’s selection of a
plan, would prevent the application of
the provisions of title I of the Affordable
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Care Act within the meaning of section
1321(d) of the Affordable Care Act.
Fourth, we propose to put into
regulatory text a position we previously
expressed in preamble, that a State or an
Exchange must not require that all
Navigators be agents or brokers or carry
errors and omissions coverage. Section
1311(i)(2)(B) of the Affordable Care Act
provides that various types of entities
may serve as Navigators, and through
§ 155.210(c)(2), we established the
requirement that in all Exchanges, at
least two types of entities, including one
community and consumer-focused
nonprofit group, must serve as
Navigators. Requiring that each
Navigator be a licensed agent or broker
or carry errors and omissions coverage
(which is typically held only by
licensed professionals such as agents
and brokers) would mean that all
Navigators would fall under only one
type of entity listed in 155.210(c)(2),
specifically, agents and brokers, and
would therefore prevent the application
of § 155.210(c)(2)(i). In other words,
these types of non-Federal requirements
would make it impossible for the
Exchange in such States to fulfill the
Federal requirement that at least two
types of entities listed at 155.210(c)(2),
including one community and
consumer-focused nonprofit group,
serve as Navigators. HHS has previously
advised (see 77 FR 18310, 18331–32)
that such requirements would prevent
the application of § 155.210(c)(2) within
the meaning of section 1321(d) of the
Affordable Care Act; this proposal
makes this policy explicit in regulation
text.
Fifth, we propose to specify that, in
States with an FFE, non-Federal
requirements may not, in effect, render
ineligible any individuals or entities
that the FFE would deem eligible under
applicable Federal standards. Such nonFederal requirements would prevent the
FFE from implementing the consumer
assistance programs that they are
required (or authorized) to implement
under section 1311(i) of the Affordable
Care Act, and 45 CFR 155.205, 155.210,
155.215, and 155.225, consistent with
Federal requirements established for
those programs.
For example, non-Federal
requirements that prohibit Navigators,
non-Navigator assistance personnel, or
certified application counselors or
organizations in an FFE from receiving
any consideration, directly or indirectly,
from a health insurance issuer offering
health insurance coverage in or outside
of an Exchange, even if not in
connection with the enrollment of
individuals into a QHP, go beyond
Federal conflict of interest standards set
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15829
forth in section 1311(i)(4)(A)(i) and (ii)
of the Affordable Care Act and
§§ 155.210(d)(4), 155.215(a) and
155.225(d)(2) and (4), as interpreted in
Federal guidance, and would also go
beyond the parallel conflict of interest
standards proposed for certified
application counselors in our proposed
§ 155.225(g)(2). For Navigators, section
1311(i)(4)(A)(i) and (ii) of the Affordable
Care Act and 45 CFR 155.210(d)(4)
together provide that a Navigator shall
not be a health insurance or stop loss
insurance issuer or receive any
consideration directly or indirectly from
a health insurance issuer or issuer of
stop loss insurance in connection with
the enrollment of any qualified
individuals or employees of a qualified
employer in a qualified health plan or
a non-qualified health plan. Under 45
CFR 155.215(a)(2), a set of parallel
conflict of interest standards apply in
FFEs (including State Partnership
Exchanges) to non-Navigator assistance
personnel carrying out consumer
assistance functions under 155.205(d)
and (e), and to non-Navigator assistance
personnel in a State Exchange funded
through Federal Exchange
Establishment grants.32 For certified
application counselors, conflict of
interest standards in § 155.225(d)(2)
require that each staff member or
volunteer seeking certification disclose
to the organization, or to the Exchange
if directly certified by an Exchange, and
to potential applicants, any
relationships the certified application
counselor or sponsoring agency has
with QHPs or insurance affordability
programs, or other potential conflicts of
interest.33
A non-Federal requirement that
prohibits consumer assistance entities
and individuals from receiving any
32 For Navigators and non-Navigator assistance
personnel subject to 155.215, we have clarified in
Federal guidance the scope of these conflict of
interest standards. Specifically, conflict of interest
standards do not apply to consideration received by
a provider to support specific activities, such as the
provision of medical services, if the consideration
is not connected to the enrollment of individuals
or employees in QHPs (78 FR 42831). In addition,
Federal regulations do not inherently prohibit
Navigators from receiving grants and other
consideration from health insurance issuers for
activities unrelated to enrollment into health plans
(77 FR 18332); For example, entities such as
chambers of commerce, that include as a
constituent member an association that has
members of or lobbies on behalf of the insurance
industry, are not prohibited from serving as
Navigator grantees (78 FR 42835).
33 We have clarified in guidance that no conflict
of interest should bar an otherwise eligible
individual from serving as a certified application
counselor, provided that they disclose any conflicts
of interest, including but not limited to, any
relationships with QHPs or insurance affordability
programs, such as Medicaid plans and Medicaid
managed care organizations (78 FR 42842).
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consideration, directly or indirectly,
from a health insurance issuer offering
health insurance coverage in or outside
of an Exchange, even if not in
connection with the enrollment of
individuals into a QHP, would prevent
an FFE from approving as Navigators,
non-Navigator assistance personnel, or
certified application counselors and
organizations certain entities, including
hospitals and community health care
clinics, that would otherwise be eligible
to serve in those capacities. Further,
with respect to the Navigator program,
we further note that such a requirement
could bar the FFE from awarding a grant
to the most qualified applicants as
required and therefore might prevent
HHS from allocating Federal money in
the most appropriate manner.
As another example, if a State with an
FFE effectively prohibits an individual
or organization from serving as a
Navigator, non-Navigator assistance
personnel or certified application
counselor in the FFE merely because the
individual or entity does not maintain
its principal place of business in that
State, that State could render ineligible
individuals or entities that the FFE
would deem eligible under applicable
Federal standards. Such a standard
would therefore prevent the FFE from
implementing the consumer assistance
programs that it is required (or
authorized) to implement, within the
meaning of section 1321(d) of the
Affordable Care Act. We mean to
address here only non-Federal
requirements that would interpret
‘‘principal place of business’’ as
meaning that a business could have only
one principal place of business
nationwide, in a single State (similar to
the legal concept that may be used in
determining corporate citizenship for
purposes of establishing diversity
jurisdiction in Federal court, as required
under 28 U.S.C. 1332(c)). States may
however, require organizations to
register with or be incorporated in the
State, which will allow States and
Exchanges to work with these
organizations to ensure that they are
meeting the needs of their consumers.
Sixth and last, we propose to specify
that in the FFEs, States may not impose
requirements that, as applied or as
implemented in the State, prevent the
application of Federal standards
applicable to Exchanges, Navigators,
non-Navigator assistance personnel
subject to § 155.215, and certified
application counselors and designated
organizations. For example, with respect
to the Navigator program, if a State with
an FFE implemented a requirement that
prevented the only Navigator entity
operating in the State from continuing
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to perform its Federally required duties,
then such a provision, as applied,
would prevent the Exchange from
operating a Navigator program in that
State as section 1311(i)(1) of the
Affordable Care Act and § 155.210(a)
require. As another example, a State
might impose requirements as
mandatory conditions for continuing to
perform any applicable Federally
required duties, such as additional
training or fingerprinting or background
checks, which, on their face, we
consider as generally permissible, but
might also set a deadline for compliance
that made it impossible for any of
individual or entity approved by the
FFE to comply on a timely basis, despite
good faith efforts to comply. Under such
circumstances these entities and
individuals could not fulfill any of their
Federally required duties, and the FFE
could not operate the consumer
assistance programs that it is required
(or authorized) to implement under
section 1311(i) of the Affordable Care
Act, and 45 CFR 155.205, 155.210,
155.215, and 155.225.
We believe these proposals will
provide additional clarity regarding
HHS’s position with respect to whether
a non-exhaustive list of specific nonFederal requirements would prevent the
application of Federal requirements
applicable to Navigators, non-Navigator
assistance personnel, and certified
application counselors and Exchanges’
operation of such programs, within the
meaning of section 1321(d) of the
Affordable Care Act. In advancing these
proposals, HHS’s intent is to accord all
States the comity that they are due
under section 1321(d) of the Affordable
Care Act, while preserving the ability of
Exchanges, and the individuals and
entities approved by Exchanges, to carry
out such programs. HHS proposes these
provisions to ensure that it can establish
and operate the consumer assistance
functions of an FFE consistent with the
Federal requirements set forth in section
1311(i) of the Affordable Care Act and
45 CFR 155.205, 155.210, 155.215, and
155.225. We solicit comments on all
aspects of these proposals.
This proposed rule would also amend
some of the current regulatory
prohibitions on Navigator conduct. If
these proposals are finalized, we expect
that they would be effective on the date
the final regulations are effective.
Section 155.210(d), among other
things, currently prohibits Navigators
from being health insurance issuers or
stop-loss issuers. We propose to amend
section 155.210(d) by adding a
provision that would provide that
Navigators may not charge consumers
for performing any Navigator duties.
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Our proposal would prohibit Navigators
from requesting any form of
remuneration from consumers for
Navigator duties, such as charging fees,
asking for favors in exchange for
services provided, or requesting
compensation from consumers for
Navigator duties. As we previously
explained in preamble when existing
rules establishing a prohibition on
charging fees by certified application
counselors were finalized, HHS does not
believe that it would be consistent with
the purpose of the Navigator program or
the consumer assistance, education, and
outreach functions under § 155.205(d)
and (e), for Navigators to charge
consumers for their services. (78 FR
42829) The goal of the Navigator
program is to provide consumers with
information about and assistance with
enrollment in coverage through the
Exchange, without cost to the consumer.
That is why the Affordable Care Act, at
section 1311(i)(1), makes clear that
Navigator duties must be funded by the
Exchange through grants. We believe
that having free assistance available to
consumers helps further both the goals
of the Navigator program and the
Exchanges generally by supporting
access for low-income individuals who
might previously have been priced out
of the health insurance market. We now
propose to make this an express
prohibition in our regulations, through
the addition of a new provision at
§ 155.210(d)(5). If finalized, this
prohibition would also apply to nonNavigator assistance personnel carrying
out consumer assistance functions
under §§ 155.205(d) and (e) in an FFE
and to non-Navigator assistance
personnel funded through an Exchange
Establishment Grant, since existing
rules at § 155.215(a)(2)(i) require that
these entities must comply with the
prohibitions on Navigator conduct set
forth at § 155.210(d). We think the same
rationale for the prohibition generally
applies in the case of non-Navigator
personnel. This proposal would also
align the Navigator and non-Navigator
assistance personnel provisions with the
similar provision applicable to certified
application counselors in existing
§ 155.225(g).
Our proposal would not prevent
Navigators from charging for other, nonNavigator-related services the
organization may offer, given that
section 1311(i)(2) of the Affordable Care
Act and implementing regulations at
§ 155.210(c)(2) allow for various
commercial entities or associations to
become Navigators.34 We do not intend
34 Specifically, section 1311(i)(2)(B) and
§ 155.210(c)(2) provide that Navigator entities may
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to prevent a Navigator entity or
individual Navigators from pursuing the
normal course of their non-Navigatorrelated business or established nonNavigator-related programs. However,
Navigators would not be permitted to
solicit customers for their other, nonNavigator-related services in connection
with their Navigator duties. For
example, a hospital conducting outreach
and education events as a Navigator
would not be permitted to use these
events as opportunities to solicit new
patients.
We also propose to amend
§ 155.210(d) to provide that Navigator
organizations would be prohibited from
compensating individual Navigators on
a per-application, per-person assisted,
or per-enrollment basis. We believe that
such practices create adverse incentives
that may result in enrollment errors or
even improper conduct on the part of
the Navigator, such as favoring
consumers who take less time to assist
than other consumers, or pressuring
consumers to make quick decisions
about their health coverage, rather than
ensuring that they are fully informed
about the full range of their options.
Additionally, such a compensation
methodology is inconsistent with the
statutory and regulatory scheme for
Navigators. We request comment on
whether this proposal would negatively
affect existing Navigator programs,
including whether it would present
implementation challenges for these
programs if it becomes effective before
November 15, 2014.
The duties of a Navigator under
section 1311(i)(3) of the Affordable Care
Act and § 155.210(e) are not limited to
facilitating selection of a QHP.
Navigators’ duties also include
conducting public education activities;
distributing fair and impartial
information about qualified health plans
and advance payments of the premium
tax credit and cost-sharing reductions;
providing appropriate referrals for
consumers with complaints, questions,
or grievances about their health plan,
coverage, or a determination under such
plan or coverage; and providing
information in a manner that is
culturally and linguistically appropriate
and accessible to people with
disabilities. We believe that
compensating Navigators based on the
number of successful applications or
enrollments may create disincentives to
include, among others, trade, industry, and
professional associations; commercial fishing
industry organizations; ranching and farming
organizations; community and consumer-focused
nonprofit groups; chambers of commerce; unions,
resource partners of the Small Business
Administration; and licensed agents and brokers.
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perform the full spectrum of required
duties. To discourage improper conduct
and ensure that Navigators fully perform
each of their required duties, we
propose to prohibit such compensation
arrangements. Under the proposal,
Navigators would be permitted to pay
employees on a salaried basis, on a perhour basis, or any other way that is not
tied to the numbers of consumers who
apply or enroll successfully with the
Navigator’s assistance. Because
§ 155.210 applies to all Navigators,
including those in States with State
Exchanges, this prohibition would
apply to Navigators in all States. We
seek comment on this proposal and
alternatives that build in rewards for
performance without the unintended
consequences previously described.
As with Navigators, we believe it is
important that non-Navigator assistance
personnel authorized under § 155.205(d)
and (e) in FFEs and in State Exchanges
if funded through section 1311(a)
Exchange Establishment grants focus on
providing full and accurate information
rather than on meeting quotas. Because
§ 155.215(a)(2) applies the prohibitions
on certain conduct established for
Navigators in § 155.210(d) to nonNavigator assistance personnel in FFEs,
State Partnership Exchanges, and in
State Exchanges if funded with section
1311(a) Exchange Establishment grants,
these prohibitions on Navigator conduct
would also apply to these non-Navigator
assistance personnel, and would help
decrease the risk of creating adverse
incentives that could potentially lead to
improper conduct.
In § 155.210(d)(7), we propose that
Navigators be prohibited from providing
gifts to applicants or potential enrollees
as an inducement for application
assistance or enrollment, including gift
cards or cash, unless they are of
nominal value. We propose to define
nominal value as a cash value of $15 of
less, or an item worth $15 or less, based
on the retail purchase price of the item
regardless of the actual cost. This
definition would be consistent with the
definition used for nominal value in
connection with prohibitions applicable
to the marketing of Medicare Advantage
and Medicare Part D plans. (See 73 FR
54236) CMS proposes that it would
update the definition of nominal value
in guidance as necessary to account for
inflation and other relevant factors. We
seek comment on how nominal value
should be defined in this context.
We also propose in § 155.210(d)(7) to
prohibit Navigators from providing any
applicant or potential enrollee with
promotional items, that is, items that
market or promote the products or
services of a third party. There are
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several reasons we are proposing these
prohibitions. First, providing cash or
gifts, other than those of nominal value,
would not be an appropriate use of
Navigator grant funds, which are
intended to be used to support a
Navigator’s outreach, education, and
application assistance activities. In
addition, section 1311(d)(5)(B) of the
Affordable Care Act prohibits an
Exchange from utilizing any funds
intended for the administrative and
operational expenses of the Exchange,
which would include the funds used to
pay for the Exchange’s grants to
Navigators, to pay for promotional
giveaways. Second, the provision of
cash or gifts to potential applicants or
enrollees may shift the focus of a
Navigator’s interaction with a potential
applicant or enrollee away from its
duties to provide information and
services in a fair, accurate, and impartial
manner and to facilitate selection of a
QHP, in appropriate circumstances.
Offering cash or gifts to potential
applicants or enrollees could also cause
some consumers to approach Navigators
for reasons other than the receipt of
information and Exchange application
assistance. Third, providing to
applicants or potential enrollees any
promotional items that market or
promote the products or services of a
third party would be in conflict with the
Navigator’s duty to be fair and impartial
in its dealings with consumers, since it
introduces a third party’s interests and
marketing goals into the relationship
between a Navigator and the consumers
they serve. We believe that the duty of
a Navigator to provide information and
services in a fair, accurate and impartial
manner make it inappropriate for a
Navigator to engage in activities that
give the appearance of promoting or
marketing the products or services of
third party business interests when it is
performing Navigator activities and
services.
We are also proposing in
§ 155.210(d)(8) and (9) new standards
for Navigators with respect to their
contacts and interaction with
consumers, and the outreach and
marketing practices they use when
offering their services. In
§ 155.210(d)(8), we propose to prohibit
Navigators from going door-to-door or
using other unsolicited means of direct
contact to help consumers fill out
applications or enroll in health
coverage, although these proposed rules
would not prohibit a Navigator from
going door-to-door to provide
consumers with educational or outreach
materials. This would include making
cold calls to a consumer to provide
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application or enrollment assistance,
without the consumer initiating the
contact. In § 155.210(d)(9), we propose
to prohibit Navigators from making
robocalls, or calls that use an automatic
telephone dialing system or an artificial
or prerecorded voice, when initiating
contact with consumers. We believe that
these standards will ensure that
Navigator practices are protective of the
privacy and security interests of the
consumers they serve, and will also
provide important guidance and peace
of mind to consumers, when they are
faced with questions or concerns about
what to expect in their interactions with
individuals offering Exchange
assistance. We seek comment about
whether any of the activities and
strategies that we propose to prohibit for
Navigators are appropriate and
consistent with section 1311(i) of the
Affordable Care Act.
For the same reasons, the proposed
standards established in § 155.210(d)(7),
(8) and (9) would also apply to nonNavigator assistance personnel in FFEs,
State Partnership Exchanges, and in
State Exchanges if funded with section
1311(a) Exchange Establishment grants,
through the reference in § 155.215(a)(2),
which applies the prohibitions on
conduct established for Navigators in
§ 155.210(d) to these types of nonNavigator assistance personnel.
In addition, we propose to amend
paragraph (e), which describes the
duties of a Navigator, by adding a new
paragraph (e)(6) that would require
Navigators to provide applicants and
enrollees seeking their assistance with
notice of the functions and
responsibilities of Navigators, to obtain
written authorization from those they
are assisting, in a form determined by
the Secretary, and to retain these
authorization forms. We propose that
Exchanges must establish a reasonable
retention period for maintaining this
authorization, and that in FFEs the
retention period would be three years,
unless a different retention period has
already been provided in the
administrative requirements for CMS
grant and cooperative agreement
recipients at 45 CFR 92.42 and 45 CFR
74.53 or in other applicable Federal law.
We have considered specifying a
retention period for all Exchanges,
including specifying either a minimum
retention period or a specified retention
period ranging from three to five years,
and solicit comments on the best
approach. We also propose that
consumers would be able to revoke this
authorization at any time. These
provisions would ensure that all
consumers receive adequate notice of
the role and duties of a Navigator and
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that all consumers give their informed
consent before sharing any personally
identifiable information with the
Navigator.
For the same reasons, we also propose
to add a new § 155.215(g) applying these
authorization provisions to nonNavigator assistance personnel
authorized under § 155.205(d) and (e) in
FFEs, State Partnership Exchanges, and
in State Exchanges if funded through
section 1311(a) Exchange Establishment
grants.
Finally, we propose to add a new
§ 155.210(e)(7), requiring Navigators to
maintain a physical presence in their
Exchange service area, so that face-toface assistance can be provided to
applicants and enrollees. Under this
proposal, a Navigator would not be
required to have its principal place of
business in the State in which Navigator
services are being provided. For the
same reasons, we also propose to add a
new § 155.215(g), to make the same
provisions proposed for Navigators
under § 155.205(e)(7), as outlined above,
also applicable to non-Navigator
assistance personnel subject to
§ 155.215.
We solicit comments on all aspects of
these proposals.
c. Certified Application Counselors
(§ 155.225)
Section 1321(a)(1) of the Affordable
Care Act directs and authorizes the
Secretary to issue regulations setting
standards for meeting the requirements
under title I of the Affordable Care Act,
with respect to, among other things, the
establishment and operation of
Exchanges. Pursuant to this authority,
the Secretary issued § 155.225, which
establishes the certified application
counselor program as a consumer
assistance function of the Exchange
separate from and in addition to the
functions described in §§ 155.205(d)
and (e), 155.210, and 155.215.
Section 155.225(b) establishes
standards for the designation of a
certified application counselor
organization by an Exchange. We
propose to add to these designation
standards a new § 155.225(b)(iii) which
would establish the requirement that
certified application counselor
organizations maintain a physical
presence in the Exchange service area,
so that face-to-face assistance would be
provided to applicants and enrollees.
This proposed requirement would also
facilitate consumer protection efforts by
a State. We note that, under this
proposal, an entity designated as a
certified application counselor
organization would not be required to
have its principal place of business in
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the State in which certified application
counselor services are being provided
by the organization.
Section 155.225(d) currently sets forth
CAC certification standards, including
the successful completion of Exchangeapproved training. We propose to
amend 45 CFR 155.225(d) to propose, in
a new paragraph (d)(7), that individual
certified application counselors would
also be required to successfully
complete Exchange-approved
recertification training and be recertified
on at least an annual basis. This
proposal would ensure that certified
application counselors keep up to date
with current Exchange requirements
and that they remain appropriately
trained in order to best serve consumers.
Under this proposal, each Exchange
would establish its own recertification
standards consistent with these
requirements.
Existing § 155.225(f)(2) provides that
certified application counselor
organizations, or, if applicable, an
Exchange that certifies staff members or
volunteers of organizations directly,
must establish procedures to ensure that
consumers provide authorization before
a certified application counselor has
access to the consumer’s personally
identifiable information, and that the
organization or application counselor
must maintain a record of the
authorization. We propose to revise this
paragraph to clarify the retention period
of the authorization form. We propose
that Exchanges would be required to
establish a reasonable retention period
for maintaining this authorization, and
specify that in FFEs, the retention
period would be three years. We based
this period on the retention period in
the current administrative requirements
for CMS grant and cooperative
agreement recipients at 45 CFR 92.42
and 45 CFR 74.53. Because certified
application counselors perform similar
duties to Navigators and are subject to
similar privacy and security
requirements, we believe a similar
retention period should apply, even
though certified application counselors
would not necessarily be HHS grantees.
We have considered specifying a
retention period for all Exchanges,
including specifying either a minimum
retention period or a specified retention
period ranging from three to five years,
and solicit comments on the best
approach.
Under existing regulations at 45 CFR
155.225(g), certified application
counselors ‘‘may not impose any charge
on applicants for application or other
assistance related to the Exchange.’’
This was intended as a strict prohibition
on the imposition of charges or fees by
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certified application counselors. We
now propose to amend § 155.225(g) to
substitute ‘‘must not’’ for ‘‘may not,’’ so
that there can be no doubt about the
intent of this requirement.
We also propose to amend 45 CFR
155.225(g) to reorganize and renumber
this section and to propose several
additional standards for certified
application counselors. We propose that
what is now § 155.225(g) should be
renamed as a section establishing
standards related to ‘‘fees,
consideration, solicitation and
marketing.’’ We propose to redesignate
amended § 155.225(g) as § 155.225(g)(1)
and add the new prohibitions in this
amended section to new
§§ 155.225(g)(2) through (6).
In § 155.225(g)(2), we propose to
expressly prohibit certified application
counselors from receiving
consideration, directly or indirectly,
from health insurance issuers or stop
loss issuers in connection with the
enrollment of consumers in qualified
health plans (QHPs) or non-QHPs. This
proposed new requirement would align
with the same standards of conduct
applicable to Navigators and certain
non-Navigator assistance personnel
under 45 CFR 155.210(d)(4) and
155.215(a)(2)(ii), and would apply to
individual certified application
counselors as well as to the
organizations that have been designated
as certified application counselor
organizations. The reason for this
proposal is that, in our view, receiving
commissions or other consideration for
enrollment in QHPs or non-QHPs is not
consistent with the purpose and scope
of certified application counselor
program activities. Under § 155.225(c),
certified application counselors must
act in the best interest of consumers
they assist, inform consumers about the
full range of health coverage options
and affordability programs for which
they are eligible, and help to facilitate
enrollment of eligible individuals in
QHPs and insurance affordability
programs. As such, neither an
individual certified application
counselor nor his or her designated
organization should have any personal
financial incentive to recommend a
particular health coverage option.
Under this proposed amendment,
while an Exchange could certify
individuals as certified application
counselors who are agents or brokers,
and a designated certified application
counselor organization similarly could
certify staff or volunteers as certified
application counselors who are agents
or brokers, those individuals and the
certified application counselor
organization itself would not be
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permitted to receive compensation from
health insurance or stop loss insurance
issuers for enrolling individuals in
QHPs or non-QHPs. Under this
proposed amendment, in other words,
certified application counselors and the
certified application counselor
designated organizations with which
they are affiliated would not be strictly
prohibited from being agents and
brokers, as long as they do not receive
any consideration in connection with
enrollment of a consumer in a QHP or
non-QHP. Therefore, agents and brokers
who sell lines of insurance other than
health insurance or stop loss insurance
(for example, auto, life, and
homeowners’ policies) would not be
prohibited from receiving consideration
from the sale of those other lines of
insurance while serving as a certified
application counselor, provided they
disclose the relationship to the
consumer receiving assistance. We note
that § 155.225(d)(2) requires a certified
application counselor to disclose any
relationship he or she or the sponsoring
certified application counselor agency
has with QHPs or insurance
affordability programs, ‘‘or other
potential conflicts of interest,’’ to the
appropriate parties outlined in that
provision. Consistent with the
interpretation we advanced with respect
to the Navigator program, we interpret
‘‘other potential conflicts of interest’’ in
this context to include any private or
personal interest sufficient to influence,
or appear to influence, the objective
exercise of a certified application
counselor’s or certified application
counselor organization’s official duties
(see 77 FR 18330–31). In an FFE, we
interpret ‘‘other potential conflicts of
interest’’ to encompass any relationship
with a certified application counselor
which may have an influence on the
information or scope of assistance being
provided to the consumer during the
course of the certified application
counselor’s assistance or any
relationship that would confer benefits
or indirect financial gain that could
potentially compromise a certified
application counselor’s ability to act in
the best interests of the consumer.
We also propose to add a new
§ 155.225(g)(3), which would prohibit
individual certified application
counselors from being compensated on
a per-application, per-individualassisted, or per-enrollment basis. As
with Navigators and non-Navigator
assistance personnel, we believe that in
order for application and enrollment
assistance to be effective and
appropriate for each consumer, perenrollment or per-application incentives
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15833
that might encourage certified
application counselors to rush through
sessions with consumers, or not to
provide them with complete
information or enough time to make
complex and important health coverage
decisions, should not be permitted.
Such incentives would impede a
certified application counselor’s ability
to act in the best in the best interests of
consumers, as they are required to do
under § 155.225(d)(4). This proposal
would also help streamline
requirements for these three types of
assistance personnel. We seek comment
on this proposal and alternatives that
build in rewards for performance
without the unintended consequences
previously described.
We also propose to add a new
paragraph (g)(4) to prohibit certified
application counselors from providing
applicants or potential enrollees any
gifts, including gift cards or cash, unless
they are of nominal value. As we also
proposed in our earlier discussion with
respect to Navigators, we propose to
define nominal value consistent with
the definition used for nominal value in
connection with prohibitions applicable
to the marketing of Medicare Advantage
and Medicare Part D plans. (See 73 FR
54236) Specifically, nominal value
would be defined as a cash value of $15
of less, or an item worth $15 or less,
based on the retail purchase price of the
item regardless of the actual cost. CMS
proposes that it would update the
definition of nominal value in guidance
as necessary to account for inflation and
other relevant factors. We seek comment
on how nominal value should be
defined in this context. We also propose
in this section to prohibit certified
application counselors from providing
applicants and potential enrollees with
promotional items that market or
promote the products or services of a
third party, in connection with, or as an
inducement for application assistance or
enrollment. We are proposing this
prohibition for certified application
counselors for similar reasons to those
expressed above in connection with the
prohibition in the Navigator and nonNavigator assistance programs. We are
concerned that the provision of cash or
gifts to potential applicants or enrollees
might interfere with the duties of the
individual providing assistance to that
applicant or potential enrollee; and in
the case of a certified application
counselor, might shift the focus of a
certified application counselor’s
interaction with a potential applicant or
enrollee away from the certified
application counselor’s duties to act in
the consumer’s best interest and to
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facilitate selection of a QHP. In
addition, if a certified application
counselor provides promotional items
that market or promote the products or
services of a third party, this too would
conflict with the duty of a certified
application counselor to act in the best
interest of the consumer, since it
introduces a third party’s interests and
marketing goals into the relationship
between the certified application
counselor and the consumer they are
assisting and may also cause consumers
to approach certified application
counselors for reasons unrelated to the
receipt of information and Exchange
application assistance.
In proposed section § 155.225(g)(5),
we would establish a standard for
certified application counselors that
would prohibit them from soliciting
consumers for application or enrollment
assistance by going door-to-door to
provide this assistance, or to use other
unsolicited means of direct contact,
including calling a consumer, to provide
application or enrollment assistance
without the consumer initiating the
contact. We also propose in a new
§ 155.225(g)(6) to prohibit certified
application counselors from making
robocalls to consumers, such as those
that are initiated to a consumer using an
automatic telephone dialing system or
an artificial or prerecorded voice. As we
explained earlier in this preamble in
relation to the parallel proposed
standard for Navigators and nonNavigator assistance personnel, we
believe restrictions on door-to-door
solicitation and cold-calling would
ensure that certified application
counselors use practices that are
protective of the privacy and security
interests of the consumers they serve,
and give those consumers the greatest
peace of mind. We also believe that
these standards would provide
important guidance to consumers about
what to expect in their interactions with
certified application counselors. As
with the parallel proposal for Navigators
and non-Navigator assistance personnel,
we clarify that this proposal would not
prohibit a certified application
counselor from going door-to-door to
provide consumers with information
about the availability of application
assistance services, or other educational
or outreach materials,35 We seek
comment about whether any of the
activities and strategies that we propose
to prohibit are appropriate and
consistent with Federal requirements.
35 We note that certified application counselors
are not required to perform outreach activities. (see
78 FR 42826).
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We solicit public comments on all
aspects of these proposals.
d. Payment of Premiums (§ 155.240)
There are a limited number of
circumstances in which an individual
will be enrolled in a qualified health
plan through the Exchange for less than
a full month. In particular, these include
situations in which a child is born,
adopted, placed for adoption, or placed
for foster care, or when an individual
voluntarily terminates enrollment.
Currently, there are no Federal
standards for how premiums are
prorated in these limited situations. In
order to provide flexibility for
Exchanges to establish a standardized
methodology for partial month
premiums or rely on issuers to prorate
premiums in accordance with State law
and issuer policies, we propose in
§ 155.240(e) that the Exchange may
establish one or more standard
processes for premium calculation.
Further, consistent with the
methodology finalized for the FF–SHOP
at § 155.705(b)(4)(ii)(B) in the 2015
Payment Notice, in paragraph (e)(1), we
propose that for the Federally-facilitated
Exchange, the premium for coverage
lasting less than one month must equal
the product of the premium for one
month of coverage divided by the
number of days in the month and the
number of days for which coverage is
being provided in the month described
in paragraph (e)(1)(i) of this section.
Adopting this policy for the Federallyfacilitated Exchange will address
situations in which enrollees have midmonth changes in enrollment. For
example, the proposed policy will also
address mid-month births or adoptions
and prevent these enrollees from paying
for coverage on days they were not
enrolled in coverage. In addition, the
proposed policy will eliminate issues
where consumers who transition to
Medicaid are charged premiums for
days on which they are enrolled in
Medicaid. Although it is not a new
occurrence for consumers to transition
from private health insurance to
Medicaid without the benefit of
premiums that are prorated precisely to
the last day of private health insurance
and the first day of Medicaid coverage,
we anticipate that the expansion of
private health insurance through the
Exchange will increase the number of
individuals who will be able to move
between coverage types. We believe that
the proposed policy will benefit this
broadening group. This policy will also
be consistent with proposed 26 CFR
1.36B–3(d)(2), which specifies that
when coverage is terminated before the
last day of the month, and the issuer
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reduces or refunds a portion of the
monthly premium, the premium tax
credit is adjusted using the same
methodology described in this
regulation for the FF–SHOP. Aligning
with the premium tax credit calculation
will provide a cohesive policy across
the Federally-facilitated Exchange for
handling mid-month changes in
enrollment, and will simplify the
calculation of net premiums. Finally,
the proposed Federally-facilitated
Exchange policy will protect consumers
and prevent them from paying
premiums for days in which they are
not enrolled in coverage. We intend to
work closely with QHP issuers to
implement this provision in the
Federally-facilitated Exchange as soon
as is reasonably possible.
We seek comment on this proposed
amendment.
e. Privacy and Security of Personally
Identifiable Information (§ 155.260)
We propose amending § 155.260(g) to
add a reference to § 155.285, which is
being proposed as part of this proposed
rule. Section 155.285 proposes to
specify the grounds for imposing civil
money penalties, the notice required to
be given to a person when a civil money
penalty is assessed, and factors to be
used to determine the amount of civil
money penalties assessed, as well as
some aspects of the process for
imposing civil money penalties. We
propose this addition to § 155.260(g) to
clearly link these two regulatory
provisions and to ensure that readers
fully understand how civil money
penalties will be assessed for any
improper use or disclosure of
information.
f. Bases and Process for Imposing Civil
Money Penalties for Provision of False
or Fraudulent Information to an
Exchange or Improper Use or Disclosure
of Information (§ 155.285)
Section 1411 of the Affordable Care
Act sets forth the procedures for
determining eligibility for Exchange
participation, premium tax credits and
reduced cost-sharing, and the individual
responsibility exemptions. Section
1411(b) specifies minimum information
required to be provided by an applicant,
including name, address, date of birth,
social security number (if applicable,
based on the applicant’s citizenship or
immigration status), and immigration
status. For applicants seeking eligibility
for advance payment of the premium tax
credit or cost sharing reductions, section
1411(b) also specifies that the applicant
must provide information regarding
income and family size, and information
regarding employer sponsored coverage.
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For applicants for an exemption from
the shared responsibility payment for
failure to maintain minimum essential
coverage, section 1411(b) also requires
submission of information relevant to
the specific exemption sought by the
applicant. In addition, section 1411(g) of
the Affordable Care Act also requires
that any person who receives
information provided by an applicant
under section 1411(b), whether directly
from the applicant, by another person at
the request of the applicant, or from a
Federal agency may use the information
only for the purposes of, and to the
extent necessary in, ensuring the
efficient operation of the Exchange.
Finally, section 1411(h) specifies the
civil money penalties which can be
imposed for the provision of false or
fraudulent information as well as for the
improper use and disclosure of
information. In § 155.285, we propose to
regulate on this statutory authority to
impose civil money penalties for the
provision of false and fraudulent
information in violation of section
1411(h)(1) of the Affordable Care Act
and the improper use and disclosure of
information in violation of section
1411(g) of the Affordable Care Act.
In § 155.285(a), in accordance with
the grounds on which penalties may be
imposed as specified in section 1411(h)
of the Affordable Care Act, we propose
the circumstances in which HHS may
impose civil money penalties (CMPs) on
a person if HHS determines that the
person has provided false or fraudulent
information as prohibited by section
1411(h)(1) or improperly used or
disclosed information in violation of
section 1411(g). We want to ensure that
any person who does not comply with
relevant statutory and regulatory
provisions, which limit the ways in
which information provided by an
applicant or from a Federal agency can
be used, may be appropriately
penalized. HHS may impose CMPs for
three specific types of actions related to
the provision of false or fraudulent
information and the improper use of
information. HHS intends to work in
collaboration with States to oversee,
monitor, and enforce compliance with
§ 155.285 in order to protect consumers,
avoid duplication of efforts, and provide
consistent enforcement practices.
Section 1411(b) specifies the
information that is required to be
provided by an applicant for enrollment
in a QHP offered through an Exchange
in the individual market, for premium
tax credits or cost sharing reductions, or
for an exemption from the individual
shared responsibility payment based on
the individual’s status as a member of
an exempt religious sect or division, as
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an Indian, or as an individual eligible
for a hardship exemption, or based on
the individual’s lack of affordable
coverage or the individual’s status as a
taxpayer with household income less
than 100 percent of the poverty line. In
§ 155.285(a)(1)(i), we propose that if any
person (as defined at proposed
§ 155.285(a)(2)) fails to provide correct
information under section 1411(b) of the
Affordable Care Act and such failure is
attributable to negligence or disregard of
any regulations of the Secretary, the
person may be subject to a CMP. For
purposes of this subsection, the terms
‘‘negligence’’ and ‘‘disregard’’ have the
same meaning as those in section 6662
of the Code. Thus, we propose that
‘‘negligence’’ includes any failure to
make a reasonable attempt to provide
accurate, complete, and comprehensive
information, and the term ‘‘disregard’’
includes any careless, reckless, or
intentional disregard for any rules or
regulations of the Secretary. Under
proposed § 155.285(a)(1)(i), if a person
fails to make a reasonable attempt to
provide accurate, complete and
comprehensive information and as a
result provides incorrect information,
the person may be subject to a CMP.
Second, in § 155.285(a)(1)(ii), we
propose that if a person knowingly and
willfully provides false or fraudulent
information under section 1411(b) of the
Affordable Care Act, the person may be
subject to a CMP. Here, HHS must find
that a person provided false or
fraudulent information ‘‘knowingly and
willfully.’’ This provision aims to
ensure that any person who
intentionally provides information
required under section 1411(b) of the
Affordable Care Act that the person
knew to be false could be subject to a
CMP. In addition, if consumer
assistance personnel such as an agent,
broker, Navigator, certified application
counselor, or non-Navigator assistance
personnel, were to in some manner
directly provide false or incorrect
information required under section
1411(b), they may also be subject to a
CMP. If consumer assistance personnel
subject to § 155.206 of this subpart were
to engage in this type of behavior, we
propose that it should be left to HHS’
discretion to determine whether it was
appropriate to impose a CMP under this
regulation, or under § 155.206 of this
subpart, if applicable. We note that
§ 155.206 would only apply to
Navigators, certified application
counselors, and non-Navigator
assistance personnel in a Federallyfacilitated Exchange and that violations
of § 155.285 may not necessarily also
constitute violations of § 155.206. In
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15835
such instances where consumer
assistance personnel may be subject to
a CMP under both §§ 155.206 and
155.285, we have considered specifying
that HHS may only impose a CMP under
§ 155.285. However, we propose that it
should be left to HHS’ discretion to
determine whether it would be
appropriate to impose a CMP under
§ 155.206 or § 155.285. We seek
comment on this proposal and whether
any alternative approaches should be
used.
Third, in § 155.285(a)(1)(iii), we
propose that if a person knowingly and
willfully uses or discloses information
in violation of Affordable Care Act
section 1411(g), the person may be
subject to a CMP. Section 1411(g) of the
Affordable Care Act specifies that any
person who receives information
required to be provided by an applicant,
whether the person receives the
information directly or by another
person at the request of the applicant, or
receives information from a Federal
agency that has been verified as being
consistent or inconsistent with the
records of that Federal agency, may use
the information only for the purposes of,
and to the extent necessary in, ensuring
the efficient operation of the Exchange.
We will refer to the personally
identifiable information (PII) described
in the previous sentence as ‘‘Exchange
PII’’ for the purposes of this section.
Section 1411(g) of the Affordable Care
Act also specifies that any person who
receives Exchange PII may not disclose
the information to any other person
except as provided in section 1411 of
the Affordable Care Act. Section
155.260(a)(1) and (2) implement section
1411(g) of the Affordable Care Act by
specifying that an Exchange may only
use or disclose Exchange PII to carry out
the functions described at § 155.200 or
to carry out additional functions which
the Secretary has determined ensure the
efficient operation of the Exchange and
for which the individual has provided
consent for his or her information to be
so used or disclosed.
In § 155.285(a)(1)(iii)(A) through (C),
we propose types of activities that
would be in violation of section 1411(g)
of the Affordable Care Act. Because
§ 155.260 further describes the
limitations on the use and disclosure of
Exchange PII, we propose that any use
or disclosure of Exchange PII that
violates relevant privacy and security
standards established by the Exchange
pursuant to § 155.260 of this subpart
may constitute a violation of section
1411(g) of the Affordable Care Act. We
also propose that any other use or
disclosure that has not been determined
by the Secretary to ensure the efficient
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operation of the Exchange be compliant
with section 1411(g)(2)(A) of the
Affordable Care Act pursuant to
§ 155.260(a), and which is not necessary
to carry out a function described in a
contract with a non-Exchange entity
executed pursuant to § 155.260(b)(2) of
this subpart, may constitute a violation
of section 1411(g) Affordable Care Act.
More specific examples of activities that
would violate section 1411(g)
Affordable Care Act include a person
selling lists of Exchange PII belonging to
individuals who apply for enrollment or
enroll in an Exchange qualified health
plan, or a non-Exchange entity using the
PII of individuals who sought
enrollment in an Exchange qualified
health plan to market products or
services to those individuals. We note
that without the express, specific
consent of the consumer for their PII to
be used for marketing purposes, use of
Exchange PII for marketing purposes is
prohibited by section 1411(g). In
addition, we note that any person who
obtains specific consent from an
applicant or enrollee to use PII for
marketing purposes must clearly inform
the applicant or enrollee that the
marketing activities have no
relationship to or bearing on an
eligibility determination for or
enrollment in the Exchange. To the
extent any person plans to obtain such
consent to market products to Exchange
applicants and enrollees, the person
should be prepared to provide proof of
consent upon request by the agency
during the course of the agency’s normal
oversight activities.
In § 155.285(a)(2), we propose a
definition of the term ‘‘person.’’ We
propose that for purposes of this
regulation, the term ‘‘person’’ should be
defined to include, but should not be
limited to, all individuals; corporations;
Exchanges; Medicaid and CHIP
agencies; other entities gaining access to
PII submitted to an Exchange to carry
out additional functions which the
Secretary has determined ensure the
efficient operation of the Exchange
pursuant to 155.260(a)(1); and nonExchange entities as defined in
§ 155.260(b) of this subsection, which
includes agents, brokers, Web-brokers,
QHP issuers, Navigators, certified
application counselors, in-person
assistors, and other third party
contractors. The term ‘‘person’’ would
also include the employees of the
aforementioned entities. We propose to
define the term very broadly because
there are several different types of
individuals and entities that could
engage in the actions enumerated in
§ 155.285(a)(1), and we hope to ensure
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that all such individuals and entities are
aware of the penalties they could incur.
We seek comment on these proposals.
In § 155.285(b), we propose the factors
that HHS may take into consideration
when determining the amount of CMPs
to impose. We propose in
§ 155.285(b)(1) that HHS may take into
account factors that include, but are not
limited to, the following factors: the
nature and circumstances of the conduct
including the number of individual
violations; the severity of the violations;
the person’s history with the Exchange,
including any prior violations that
would indicate whether the violation is
an isolated occurrence or represents a
pattern of behavior; the length of time
during which the violation(s) occurred;
the number of individuals affected or
potentially affected; and the extent to
which the person received
compensation or other consideration
associated with the violation. We also
propose in § 155.285(b)(2) that HHS take
into account the nature and extent of the
harm resulting from the action,
including the number of individuals
affected; whether the violation resulted
in financial harm; whether there was
harm to an individual’s reputation;
whether the violation hindered or could
have hindered an individual’s ability to
obtain health care coverage; the actual
or potential impact of the provision of
false or fraudulent information or of the
improper use or disclosure of
information; and whether any person
received a more favorable eligibility
determination for enrollment in a QHP
or insurance affordability program, such
as greater advance payment of the
premium tax credits or cost-sharing
reduction than he or she would be
eligible for if the correct information
had been provided.
In § 155.285(b)(3), we implement the
reasonable cause exception of section
1411(h)(1)(A)(ii) of the Affordable Care
Act pursuant to which no penalty will
be imposed under § 155.285(a)(1)(i) if
HHS determines that there was a
reasonable cause for the failure to
provide correct information required on
an Exchange application and that the
person acted in good faith. We feel that
this reasonable cause exception is very
important to ensure that no CMP may be
imposed for a situation in which a
person was acting in good faith.
In § 155.285(c), we propose maximum
penalties for each different type of
violation, in accordance with the
statutory limitations set forth in section
1411(h) of the Affordable Care Act.
Section 155.285(c)(1) addresses
maximum penalties for provision of
incorrect information, where such
failure is attributable to negligence or
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disregard of any rules or regulations of
the Secretary, and for knowing and
willful provision of false or fraudulent
information in violation of section
1411(h) of the Affordable Care Act. We
propose that the maximum penalty may
be imposed on a per application basis,
as defined at proposed
§ 155.285(c)(1)(iii), during a single ‘‘plan
year.’’ We propose to use the definition
for ‘‘plan year’’ at § 155.20, where a
‘‘plan year’’ means a consecutive 12
month period during which a health
plan provides coverage for health
benefits and which may be a calendar
year or otherwise. In § 155.285(c)(1)(i),
we propose that any person who fails to
provide correct information as specified
in § 155.285(a)(1)(i) may be subject to a
maximum CMP, as specified in section
1411(h)(1)(A)(i) of the Affordable Care
Act, for each ‘‘application’’ on which
the person fails to provide correct
information. In § 155.285(c)(1)(ii), we
propose that any person who knowingly
and willfully provides false information
as specified in § 155.285(a)(1)(ii) may be
subject to a maximum CMP, as specified
in section 1411(h)(1)(A)(i) of the
Affordable Care Act, for each
application on which the person
knowingly and willfully provides false
information. Since we are proposing
that we would impose a penalty on a
plan year basis, if a person were to elect
to use the same information which he or
she entered on an initial application for
the subsequent plan year, and the
person had knowingly and willfully
entered false information on an
application as described in
§ 155.285(c)(1)(ii), the person may be
subject to two CMPs, each up to the
maximum CMP specified in section
1411(h)(1)(A)(i) of the Affordable Care
Act, based on the provision of false
information for two plan years.
In § 155.285(c)(1)(iii), we propose that
for the purposes of this subsection, an
‘‘application’’ is defined as a submission
of information whether submitted
through an online portal, over the
telephone through a call center, or
through a paper submission process.
This submission of information is
provided in relation to any of the
following: An eligibility determination;
an eligibility redetermination based on
a change in an individual’s
circumstances; or an annual eligibility
redetermination for either enrollment in
a qualified health plan, for premium tax
credits or cost sharing reductions, or for
an exemption from the individual
shared responsibility payment. By
proposing this definition of application,
we intend for each submission of
information, regardless of the means of
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submission, to be considered a distinct
application. For example, where a
person submits an initial application for
enrollment in a QHP, and later updates
his or her information to reflect a
change in circumstance, we propose
that this person would have submitted
two applications. We anticipate that
there may be situations where a person
submits a false piece of information on
an initial application for coverage, and
this false information could be seen as
re-submitted on a second application in
the same plan year. We propose to
provide HHS flexibility in such
situations as that described above so
that HHS may, in its discretion, and
depending on the particular facts of the
case, determine the number of incorrect
pieces of information submitted, and
therefore determine the appropriate
penalty for this situation. We solicit
comment on this proposal as well as on
alternate methods through which HHS
could determine the appropriate amount
of penalties to impose.
In § 155.285(c)(2), we propose that
any person who knowingly or willfully
uses or discloses information as
specified in § 155.285(a)(1)(iii) may be
subject to a CMP. We propose in
§ 155.285(c)(2)(i) that a person may be
subject to a maximum CMP, as specified
in section 1411(h)(2) of the Affordable
Care Act, for each use or disclosure
described in paragraph (a)(1)(iii) of this
section, per use or disclosure. We also
propose to define, in § 155.285(d)(2)(ii)
that a use or disclosure includes one
separate use or disclosure of a single
individual’s PII that the person against
whom a civil money penalty may be
imposed has made. For example, if an
agent were to sell a list of 100
consumers’ names and other identifiable
information to another entity, the
proposed definition of a use or
disclosure would mean that HHS could
impose a total of 100 CMPs, each with
a maximum penalty of the amount
specified in section1411(h)(2) of the
Affordable Care Act because the agent
had disclosed the PII of 100 individuals.
In § 155.285(c)(3), we also propose that
these penalties may be imposed in
addition to any other penalties that may
be prescribed by law.
In § 155.285(d), we propose standards
for a notice of intent to issue a CMP that
HHS must send to the person against
whom the CMP is being imposed. We
propose that the written notice will be
either hand delivered, sent by certified
mail, return receipt requested, or sent by
overnight delivery service with
signature upon delivery required. In
§ 155.285(d)(1)(i)–(viii), we propose
eight elements that must be included in
the notice. The elements which must be
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included are as follows: (1) A
description of the findings of fact
regarding the violations with respect to
which the CMP is proposed; (2) the
basis and reasons why the findings of
fact subject the person to a penalty; (3)
any circumstances described in
§ 155.285(c) that were considered in
determining the amount of the proposed
penalty; (4) the amount of the proposed
penalty; (5) an explanation of the
person’s right to a hearing under any
applicable administrative hearing
process; (6) a statement that the failure
to request a hearing within 60 calendar
days after the date of the notice permits
the assessment of the proposed penalty;
and (7) information explaining how to
file a request for a hearing and the
address to which the hearing request
must be sent. We propose that the
person may request a hearing before an
ALJ on the proposed penalty by filing a
request pursuant to the procedure that
will be outlined in the notice of intent
to issue a penalty that the person
receives.
In § 155.285(e), we propose the
consequences for a person who fails to
request a hearing in a timely manner.
We propose that HHS may assess the
proposed CMP 60 calendar days after
the date of issuance printed on the
notice of intent to issue a CMP. In
§ 155.285(e)(1), we propose that HHS
will notify the person in writing of any
penalty that has been imposed, the
means by which the person can satisfy
the penalty, and the date on which the
penalty is due. We propose in
§ 155.285(e)(2) that a person has no right
to appeal a penalty with respect to
which the person has not timely
requested a hearing. We believe 60 days
is a sufficient period for a person to
request a hearing. We seek comment on
these proposals.
In § 155.285(f), we propose to use the
existing appeals framework in
regulation at 45 CFR Part 150, Subpart
D. We propose to exclude §§ 150.461,
150.463, and 150.465 based on their
lack of applicability to § 155.285. In
§ 155.285(g), we propose that CMS and
OIG will share enforcement authority to
impose the CMPs in § 155.285. In
§ 155.285(g)(1), we propose that CMS
may impose CMPs for any of the
violations at § 155.285(a). In
§ 155.285(g)(2), we propose that OIG
may impose CMPs for violations
specified at § 155.285(a)(1)(ii) and (iii)
in place of imposition of penalties by
CMS. We believe OIG has the
investigative capabilities which would
be necessary to determine whether a
person performed an action knowingly
and willfully, a finding which would be
required before imposing a CMP for the
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violations specified at § 155.285(a)(1)(ii)
and (iii). In light of our proposal to
allow OIG to impose CMPs for
violations specified at § 155.285(a)(1)(ii)
and (iii), we anticipate that OIG would
amend its regulations at part 1003 of
Chapter V of title 42 to encompass the
standards set forth in this section. We
seek comment on the proposed use of
the regulatory framework for appeals at
45 CFR Part 150, Subpart D and on the
question of whether any other
regulatory framework used by HHS for
appeals presents a more appropriate
framework.
In § 155.285(h), we propose a
settlement authority provision to ensure
CMS is able to settle any issue or case
described in § 155.285(a) if necessary.
Finally, in § 155.285(i), we propose a six
year statute of limitations, beginning
from the date on which the violation
occurred, within which HHS may
impose a CMP against a person. We seek
comment on the proposed 6 year statute
of limitations.
3. Subpart D—Exchange Functions in
the Individual Market: Eligibility
Determinations for Exchange
Participation and Insurance
Affordability Programs
a. Verification of Eligibility for
Minimum Essential Coverage Other
Than Through an Eligible EmployerSponsored Plan (§ 155.320)
In § 155.320(d)(4), we established an
option under which a State Exchange
could rely on HHS to conduct
verifications of enrollment in an eligible
employer-sponsored plan and eligibility
for qualifying coverage in an eligible
employer-sponsored plan for purposes
of eligibility for advance payments of
the premium tax credit. This option was
made available for eligibility
determinations that are effective on or
after January 1, 2015. Under this option,
a State Exchange would need to develop
an interface through which to transfer
information to HHS, HHS would need to
develop a way to receive and process
the information, check data sources,
potentially communicate with
consumers, and then return information
to the State Exchange, and the State
Exchange would need to modify
systems to integrate this response into
what should otherwise be a near-realtime eligibility process. Responsibilities
for customer service would likely be
split across the State Exchange and
HHS, which would be difficult to
coordinate and increase administrative
costs.
Accordingly, we have determined that
the benefit gained by having HHS
provide this function is far outweighed
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by the information technology
development and administrative and
consumer complexity that would be
introduced for a State through this
approach. As such, we propose to strike
paragraph (d)(4). We remain committed
to working with State Exchanges to
develop effective solutions for verifying
enrollment in an eligible employersponsored plan and eligibility for
qualifying coverage in an eligible
employer-sponsored plan, and will
work to make any additional electronic
data sources that are accessible to HHS
equally available to State Exchanges. We
note that this proposed modification
does not change the substantive rules
regarding the verification of enrollment
in an eligible employer-sponsored plan
and eligibility for qualifying coverage in
an eligible employer-sponsored plan.
Therefore, the change does not affect
program integrity.
b. Eligibility Redetermination During a
Benefit Year (§ 155.330)
We propose a technical correction in
paragraph (d)(2)(ii) to remove the
reference to paragraph (e)(3) of this
section. In the final rule titled,
‘‘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’’, 78 FR 32319, we
previously removed paragraph (e)(3)
from this section. As such, we now
clarify that paragraph (d)(2)(ii) should
only refer to the standards specified in
paragraph (e)(2) of this section.
4. Subpart E—Exchange Functions in
the Individual Market: Enrollment in
Qualified Health Plans
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a. Enrollment of Qualified Individuals
in a QHP (§ 155.400)
In § 155.400, we propose to add
paragraph (e). In this paragraph, we
propose to establish that the Exchange
would provide instructions to issuers
regarding payment of the first month’s
premium for enrollments. Additionally,
in § 156.265 we propose to establish a
requirement for issuers in the Federallyfacilitated Exchanges regarding payment
due dates to collect premiums no later
than the day before the coverage
effective date. Our intention is to give
the Exchange the flexibility to establish
policy and process rules regarding
premium payment.
We also propose to add paragraph (f),
which would authorize Exchanges to
provide requirements to QHP issuers
regarding the instructions for processing
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electronic enrollment-related
transactions.
b. Initial and Annual Open Enrollment
Periods (§ 155.410)
In 45 CFR 155.410(d), we specify that
starting in 2014, the Exchange must
provide a written annual open
enrollment notification to each enrollee
no earlier than September 1, and no
later than September 30. In 45 CFR
155.335(d), we specify that notice of
annual redetermination for coverage
effective January 1, 2015 be provided as
a single, consolidated notice with the
notice specified in 45 CFR 155.410(d).
In the 2015 Payment Notice, we
amended 45 CFR 155.410(e) to specify
that for the benefit year beginning on
January 1, 2015, the annual open
enrollment period begins on November
15, 2014. Accordingly, we believe that
it is appropriate to modify the timing of
the notice of annual open enrollment
and annual redetermination. Two
options we could consider for this
notice include, but are not limited to: (1)
Shifting the period during which the
notice would be sent by a month, so that
the notice would be sent no earlier than
October 1, and no later than October 31;
and (2) shifting the period during which
the notice would be sent by a month
and lengthening this period so that the
notice would be sent no earlier than
October 1, and no later than November
15, provided that electronic notices are
available for any consumer who
contacts the Exchange on November 15.
We solicit comment on which of these
options we should implement, or if we
should implement another option.
c. Special Enrollment Periods
(§ 155.420)
In 45 CFR 155.420, we set forth
provisions for special enrollment
periods. We now propose amending
§ 155.420(b)(2)(ii), (d)(1), (d)(6)(iii) and
(e), which pertain to the special
enrollment period for loss of coverage;
§ 155.420(b)(2)(i) and (iii), which
pertain to effective dates for certain
special enrollment periods; and
§ 155.420(c), to address the length of the
special enrollment periods.
In paragraph (b)(2)(i), we propose to
provide flexibility for coverage effective
dates in the case of birth, adoption,
placement for adoption, or placement in
foster care. We continue to require the
Exchange to 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, but we allow Exchanges to
permit the qualified individual or
enrollee to elect a later coverage
effective date. If the Exchange permits
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the qualified individual or enrollee to
elect a later coverage effective date, the
Exchange must ensure coverage is
effective on the date elected by the
qualified individual or enrollee. We are
considering establishing parameters for
the dates that may be chosen by the
qualified individual or enrollee.
In § 147.104(b)(2), we specified that,
‘‘a health insurance issuer in the
individual market must provide, with
respect to individuals enrolled in noncalendar year individual health
insurance policies, a limited open
enrollment period . . .’’ Accordingly, in
order to align Exchange regulations with
those of the broader insurance market,
in paragraph (d)(1), we propose that the
Exchange permit qualified individuals
and their dependents to enroll in or
change from one QHP to another if they
are enrolled in a non-calendar year
individual health insurance policy in
2014 described in § 147.104(b)(2), even
if such non-calendar year policies are
renewing. Thus, consumers whose
individual health insurance policies
that renew outside the Exchange open
enrollment period have an opportunity
to enroll in an Exchange, just as they
would if their policies renewed during
the Exchange open enrollment period.
Without this addition, consumers with
individual health insurance policies
renewing outside the Exchange open
enrollment period would be required to
renew such policies, and wait to
terminate the policies during the
Exchange open enrollment period,
should they wish to enroll in the
Exchange, thus disadvantaging these
consumers as compared to consumers
enrolled in calendar year individual
market policies.
In 26 CFR 1.5000A–2(b)(1)(ii)(C), the
Secretary of the Treasury specified that
coverage of pregnancy-related services
under section 1902(a)(10)(A)(i)(IV) and
(a)(10)(A)(ii)(IX) of the Social Security
Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV),
(a)(10)(A)(ii)(IX)) was not minimum
essential coverage. In order to ensure
that women losing eligibility for
coverage of pregnancy-related services
as described above are not left without
an option to enroll in a QHP after the
conclusion of Medicaid eligibility, in
paragraph (d)(1), we propose that the
Exchange permit qualified individuals
and their dependents to enroll in a new
QHP if they lose eligibility for such
pregnancy-related services. We note that
HHS may designate certain specific
pregnancy-related programs to be
minimum essential coverage under
section 5000A(f)(1)(E) of the Affordable
Care Act, though we propose to require
this special enrollment period,
regardless. We solicit comments
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regarding whether there are other
situations in which an individual loses
coverage that is not defined as
minimum essential coverage, such as
AmeriCorps coverage, and should be
provided with a special enrollment
period.
We propose to add to paragraph (c) to
specify that the Exchange must permit
qualified individuals and their
dependents to access the special
enrollment periods described in
paragraph (d)(1) for up to 60 days prior
to the end of the qualified individual’s
or his or her dependent’s existing
coverage. This is consistent with
existing regulations in paragraph
(d)(6)(iii) that are specific to an
individual who is enrolled in an eligible
employer-sponsored plan who 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 employersponsored plan. To improve the clarity
and structure of this rule, we propose to
move the language in paragraph
(d)(6)(iii) regarding the 60 days prior
access to the SEP to paragraph (c). The
proposed change, to paragraph (d)(1)
that would expand the ability to report
a change in advance to all individuals
who are described in paragraph (d)(1) is
designed to allow an individual who is
losing eligibility for coverage outside
the Exchange to transition to coverage
offered through an Exchange without a
gap in coverage, but with protections to
ensure that advance payments of the
premium tax credit are not provided in
advance of the loss of eligibility for
minimum essential coverage outside the
Exchange. Accordingly, we note that
individuals are not eligible for advance
payments of the premium tax credit
until they are no longer enrolled in
minimum essential coverage outside the
Exchange. Lastly, we propose to make
conforming changes to paragraphs
(b)(2)(ii) and (e) to align with the
changes in terminology proposed in
paragraph (d)(1).
In paragraphs (d)(4), (d)(5), (d)(9) and
(d)(10), we provide special enrollment
periods for errors, contract violations,
exceptional circumstances and
misconduct. Existing paragraph
(b)(2)(iii) specifies that for a plan
selection made during one of the special
enrollment periods under paragraphs
(d)(4), (d)(5), and (d)(9), coverage must
be effective on an appropriate date
based on the circumstances of the
special enrollment period, in
accordance with guidelines issued by
HHS, and provides two options for that
effective date. We propose to add
special enrollment periods triggered
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under paragraph (d)(10) to those special
enrollment periods for which these
special coverage effective dates are
available. In order to ensure that the
Exchange has sufficient flexibility with
which to address the types of scenarios
that may trigger these special
enrollment periods, we propose to
amend paragraph (b)(2)(iii) to remove
the restriction to these two options. The
resulting regulatory text would allow
the Exchange to set an effective date
based on what is appropriate to the
circumstances, in accordance with any
guidelines issued by HHS. Similarly, in
order to ensure that the Exchange sets
the length of these same special
enrollment periods to be appropriate to
the circumstances of the specific
enrollment period, we propose to
modify paragraph (c) to specify that the
Exchange may define the length of these
special enrollment periods as
appropriate based on the circumstances
of the special enrollment period, in
accordance with any guidelines issued
by HHS. We believe that this flexibility
is important to ensure that the special
enrollment periods can be implemented
as intended.
Section 155.420(e) clarifies what
qualifies as loss of coverage for purposes
of the special enrollment period
described in paragraph (d)(1). We
propose to modify this paragraph to
clarify that voluntary termination does
not qualify as loss of coverage for
purposes of a special enrollment period,
since the intent of this special
enrollment period is to ensure that an
individual who is losing coverage can
transition to the Exchange without
interruption, and not to allow an
individual to switch from another form
of coverage to the Exchange during the
year when the other form of coverage
remains available and he or she does not
qualify for another special enrollment
period described in this section. We
solicit comments regarding this
clarification.
d. Termination of Coverage (§ 155.430)
We propose to add paragraph (e) to
§ 155.430 to establish the difference
between a termination and a
cancellation and establish the
significance of a reinstatement action in
the context of QHP coverage offered
through an Exchange. Specifically, we
propose to specify that a cancellation is
a specific type of termination action
taken either prior to or after the effective
date of coverage that ends a qualified
individual’s coverage on or before the
effective date, thus rendering coverage
as never effective. In contrast, a
termination is an action taken after the
effective date of coverage that ends an
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enrollee’s coverage effective on a date
after the coverage effective date. In a
cancellation, the effect of the QHP’s
action would be that a qualified
individual never receives coverage from
the QHP, whereas in a termination the
QHP covers the enrollee for some period
of time and would be liable for covered
services that the enrollee received
during the time period between the
coverage effective date and the
termination date, under the terms of the
coverage. A reinstatement action is a
correction of an erroneous termination
or cancellation action resulting in
restoration of an enrollment with no
break in coverage.
In addition to establishing the
difference between cancellations and
terminations, we also propose that an
Exchange may establish operational
standards for QHP issuers for
implementing terminations,
cancellations, and reinstatements.
Enrollment systems for both SBEs and
the FFE continue to evolve, and we
believe that the Exchange’s ability to
issue operational instructions will
enable both the Exchange and the issuer
community to respond more effectively
to changing systems and changing
processes. We believe the effectiveness
of this approach has been demonstrated
in other programs administered by CMS,
specifically the Medicare Advantage
and Medicare Part D programs.
Further, we are proposing to clarify in
paragraph (d)(6) that the termination
effective date being the day before the
effective date of coverage in the new
QHP would also apply in cases of
retroactive enrollments. This could
occur when a consumer is granted a
special enrollment period to change
QHPs with a retroactive coverage
effective date under 155.420(b)(2)(iii).
For coverage that is terminated
retroactively, CMS will adjust any
applicable payments to the original QHP
issuer based on the retroactive
termination date, in order to recoup any
advance payments of the premium tax
credit and cost-sharing reductions made
to the former issuer for the enrollee. The
Exchange would be required to ensure
that the former issuer refunds or credits
any premium paid to the issuer by the
enrollee, reversing claim payments, and
ensuring the provision of refunds for
out-of-pocket payments made by or for
the enrollee for covered benefits and
services incurred, during the retroactive
coverage period. We seek comment on
whether to add a specific requirement to
this effect on issuers in Part 156.
Conversely, in the case of a retroactive
coverage date, CMS will provide the
gaining issuer any applicable advance
payments of the premium tax credit and
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cost-sharing reductions based on the
retroactive coverage effective date. Costsharing reduction reconciliation will
occur for all cost-sharing reductions
provided beginning with the retroactive
coverage date. The gaining issuer would
collect the enrollee’s portion of the
premium for all months of coverage and
will be required to adjudicate the
enrollee’s claims incurred during the
retroactive period, and provide any
applicable cost-sharing reductions.
5. Subpart F—Appeals of Eligibility
Determinations for Exchange
Participation and Insurance
Affordability Programs
a. General Eligibility Appeals
Requirements (§ 155.505)
In § 155.505, we propose a technical
correction to paragraph (b)(4) by
removing ‘‘; and’’ at the end of the
paragraph and adding a period in its
place.
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b. Dismissals (§ 155.530)
In § 155.530, we propose to amend
paragraph (a)(1) to provide an additional
method for appellants to withdraw
appeal requests. The existing provision
requires an appellant who wishes to
withdraw his or her appeal request to do
so in writing (hard copy or electronic).
We are proposing to include the
alternative for an appellant to withdraw
his or her appeal by telephone, if the
appeals entity is capable of accepting
telephonic withdrawals. In paragraphs
(a)(1)(i)(A) and (B), we propose the
requirements for providing a telephonic
withdrawal process. Specifically, we
propose that the appeals entity must
record in full the appellant’s statement
and telephonic signature made under
penalty of perjury, and provide a
written (in hard copy or electronically)
confirmation to the appellant
documenting the telephonic interaction.
This written confirmation can be
captured in the dismissal notice
required in the case of a withdrawal
under § 155.530(b). We note that a
telephonic signature is a verbal
acknowledgement in place of a written
signature.
The intent of this proposed
amendment is to provide a more
efficient and convenient method for
appellants and appeals entities to
conclude an appeal at the request of the
appellant. For example, under the
current rules, an appeals entity must
keep an appeal open and proceed to
hearing following an informal resolution
in every case where the appellant has
not communicated his or her wish to
withdraw the appeal in writing, even if
the appellant is satisfied with the
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informal resolution decision. Because
we anticipate that many appellants will
not take the step of withdrawing their
appeal requests in writing in this
scenario, we believe the proposed
amendment will provide appellants an
easier process through which they can
indicate their wish to end the appeals
process. In addition, we believe the
proposed amendment will also benefit
appeals entities by reducing
administrative burden, such as the
requirement to convene unnecessary
hearings described in the example
above. The telephonic signature process
provides a verifiable record of the
appellant’s intention to withdraw the
appeal and end the appeals process,
including where the appellant is
satisfied with a result he or she has
obtained without fully exhausting the
appeals process.
We request comments on this
proposed amendment, including the
proposed requirements for accepting
telephonic withdrawals. We also note
that, although the proposed
amendments to this provision will put
the Exchange rules for withdrawal of an
appeal request out of alignment with the
Medicaid fair hearing rules, and we seek
comment specifically on the impacts of
this proposed change. Finally, we note
that this proposed amendment also
impacts withdrawal procedures for an
employer appeal through the crossreference in § 155.555(f)(1), which
currently requires withdrawals in
writing.
c. Employer Appeals Process (§ 155.555)
We propose to amend § 155.555 by
redesignating paragraphs (d)(1) through
(d)(4) to more clearly delineate between
the requirements associated with valid
appeal requests versus invalid appeal
requests. We note that under this
proposed redesignation, paragraph
(d)(4) would become new paragraph
(d)(2), stating that upon receipt of an
invalid appeal request, the appeals
entity must promptly and without
undue delay send written notice to the
employer that the appeal request is not
valid because it fails to meet the
requirements of this section. New
paragraph (d)(2) would also provide
introductory language for the
requirements provided in paragraphs
(d)(2)(i) through (iv). The result of this
proposed revisions would be to separate
the requirements for valid appeal
requests in redesignated paragraph
(d)(1) and the requirements for invalid
appeal requests in new paragraph (d)(2).
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6. Subpart G—Exchange Functions in
the Individual Market: Eligibility
Determinations for Exemptions
a. Required Contribution Percentage
Under section 5000A of the Code, an
individual must maintain minimum
essential coverage for each month,
qualify for an exemption, or make a
shared responsibility payment. Sections
5000A(d) and (e) provide for nine
categories of exemptions, and authorize
the Secretary to determine individuals’
eligibility for some of the exemptions,
including the hardship exemption.
Sections 1.5000A–3(a) through (h) of 26
CFR enumerate the circumstances in
which an individual may be exempt
from the shared responsibility payment.
These grounds for exemption include:
(1) Under 26 CFR 1.5000A–3(e), the
individual lacks affordable coverage
because the individual’s annualized
required contribution for minimum
essential coverage for the month
exceeds the required contribution
percentage of the individual’s
household income; (2) the individual
has in effect a hardship exemption
certification described in 26 CFR
1.5000A–3(h) and issued by an
Exchange, as described in 26 CFR
1.5000A–3(h) and, based on the
individual’s projected household
income, will have no affordable
coverage; and (3) the individual and one
or more employed members of his or her
family has been determined eligible for
affordable self-only employer-sponsored
coverage through their respective
employers, but the aggregate cost of
employer-sponsored coverage for all the
employed members of the family
exceeds 8 percent of household income
for that calendar year, as described in 45
CFR 155.605(g)(5). Determining
eligibility for these exemptions requires
comparison between the individual’s
share of the costs for obtaining
minimum essential coverage and a
certain percentage of the individual’s
household income, actual or projected,
for the taxable year. Under section
5000A(e)(1)(A) of the Code, the
percentage of the individual’s
household income is 8 percent. Section
5000A(e)(1)(D) of the Code and 26 CFR
1.5000A–3(e)(2)(ii) further provide that,
for plan years beginning in any calendar
year after 2014, the percentage is
determined by the Secretary to reflect
the excess of the rate of premium
growth between the preceding calendar
year and 2013 over the rate of income
growth for the period.
Below, we outline and request
comments on issues related to various
methodologies we are considering for
determining the excess of the rate of
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premium growth over the rate of income
growth. We are considering publishing
the excess of the rate of premium
growth over the rate of income growth
for calendar years after 2015 in the
annual HHS notice of benefit and
payment parameters. We are also
considering modifying § 155.605(g)(5),
which currently sets the required
contribution percentage at 8 percent, so
that the required contribution
percentage for this exemption in future
years reflects the required contribution
percentage for the applicable calendar
year.
Methodology for Determining the Excess
of Rate of Premium Growth Over Rate of
Income Growth
As one possibility, we are considering
establishing the rate of premium growth
over the rate of income growth for a
particular calendar year as the quotient
of (x) one plus the rate of premium
growth between the preceding calendar
year and 2013, carried out to ten
significant digits, over (y) one plus the
rate of income growth between the
preceding calendar year and 2013,
carried out to ten significant digits. (To
avoid magnifying rounding errors, any
ratio of this sort would also be carried
out to ten significant digits.) This would
be multiplied by the required
contribution percentage for 2014, for
ease of application, and the result
would be rounded to the nearest
hundredth of a percent to yield the
required contribution percentage for the
calendar year. We note that this
methodology would lead to a reduction
in the required contribution percentage
if the ratio of premium growth to
income growth is less than one.
Allowing for such a possibility would
help ensure that changes in the required
contribution standard are proportional
to changes in the ratio of premiums over
income observed in the private market
as a whole. In contrast, we are also
considering constraining this ratio, the
excess of premium growth over income
growth, to be greater than or equal to
one. In addition, as discussed in further
detail below, we are considering
constraining the rate of premium growth
and/or the rate of income growth to be
equal to or greater than zero in any
given year, and seek comment of the
impact of these constraints on the
excess of the rate of premium growth
over the rate of income growth. We
welcome comment on approaches for
determining the excess of the rate of
premium growth over the rate of income
growth. In particular, we seek comment
on whether the excess of the rate of
premium growth over income growth
should be calculated based on the
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difference between the growth rates, the
ratio of the growth rates, or through
other methods, and whether the result
should be subject to other adjustments.
Premium Growth: We are considering
setting the rate of premium growth for
a calendar year to be the premium
adjustment percentage for the year. We
provided in the 2015 Payment Notice
that the premium adjustment
percentage, described at 45 CFR
156.130(e), will be published each year
in the HHS notice of benefit and
payment parameters, and will be used to
adjust certain cost-sharing parameters
established by the Affordable Care Act.
As discussed in the 2015 Payment
Notice, the premium adjustment
percentage is calculated based on
projections of average per enrollee
employer-sponsored insurance
premiums from the National Health
Expenditure Accounts (NHEA), which
are calculated by the CMS Office of the
Actuary. After the initial years of
implementation of market reforms, once
the premium trend is more stable, we
may propose to change the methodology
for calculating the premium adjustment
percentage. For 2015, the premium
adjustment percentage is 4.213431463
percent. We note that incorporating the
premium adjustment percentage into the
methodology for determining the
required contribution percentage will
ensure that adjustments for premium
growth are made in a consistent manner
across programs established by the
Affordable Care Act. We welcome
comment on whether we should use the
premium adjustment percentage as a
measure of premium growth for the
purpose of calculating the contribution
percentage index. We also seek
comment on whether adjustments, such
as ceilings or floors, should be made to
that index. For example, we are also
considering constraining the rate of
premium growth to be equal to or
greater than zero in any given year. We
note the language of section
5000A(e)(1)(D) of the Code could be
read to support such an interpretation.
That section uses the term ‘‘premium
growth,’’ which could be read to mean
that the statute envisions an adjustment
of the required contribution percentage
to only incorporate an increase in
premiums. However, for purposes of
this calculation, we seek comment on
whether growth should be interpreted to
refer to both positive and negative
growth. We also seek comment on
whether other data sources or methods
should be used, such as alternative
NHEA data sources, premium data from
the Federal Employee Health Benefits
Program, or any of the data sources
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15841
discussed in connection with our
proposal for the premium adjustment
percentage index in the proposed 2015
Payment Notice.
Income Growth: We are contemplating
calculating the rate of income growth for
a calendar year as the percentage by
which the per capita GDP for the
preceding calendar year exceeds the per
capita GDP for 2013, carried out to ten
significant digits. In alignment with the
premium adjustment percentage, we are
considering using the projections of per
capita GDP used for the NHEA.36 If we
were to use the projection of per capita
GDP used for the NHEA as a measure of
income growth, the rate of income
growth for 2015 would be 3.608458790
percent. We note that GDP is a
commonly used measure of income
growth, but we are also considering
other measures of income, such as
indices of wages and salaries, and
measures of personal income. We
welcome comment on our proposed
method for calculating the rate of
income growth as well as alternative
sources of income data that we should
consider. In particular, we request
comment on whether adjustments
should be made to our data source or
methodology, such as ceilings or floors.
For example, similar to our discussion
of ‘‘premium growth’’ above, we note
that section 5000A(e)(1)(D) of the Code
refers to ‘‘the rate of income growth.’’
Again, seek comment on whether
growth should be interpreted to refer to
both positive and negative growth. We
also seek comment on whether we
should seek to measure growth in GDP
per person under the age of 65 or per
worker, or growth in some other form of
income index only for persons under
the age of 65 or per worker, which may
align more closely with certain
measures of premium growth.
We seek comment on all aspects of
these potential approaches.
b. Options for Conducting Eligibility
Determinations for Exemptions
(§ 155.625)
In § 155.625, we established an option
under which a State Exchange could
adopt an eligibility determination for an
exemption from the shared
responsibility payment that was made
by HHS, provided that certain
conditions were met. Section
1311(d)(4)(H) of the Affordable Care Act
specifies that one of the minimum
functions of an Exchange is to, ‘‘. . .
grant a certification attesting that . . .
36 See Table 1 in https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/NationalHealthExpendData/Downloads/
Proj2012.pdf.
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an individual is exempt . . .’’
Accordingly, § 155.625(b)(2) specified
that under this option, effective October
15, 2014, the Exchange would need to
accept the exemption application,
transmit it securely to HHS, receive the
result, and notify the consumer. This
process introduces significant
information technology development
and administrative burden into a
process that could otherwise be
executed at a single entity. In particular,
such an arrangement would require a
split of customer service
responsibilities, which could make it
very difficult for consumers to navigate
the process. It also creates challenges for
exemptions that involve information
that can only be obtained through the
eligibility process for insurance
affordability programs, like the cost of
the lowest-cost bronze plan net of
advance payments of the premium tax
credit, which is a component of one of
the hardship exemptions described in
this subpart, and is only available
through a State Exchange.
Accordingly, we propose to revise
§ 155.625 to remove the option for a
State Exchange to adopt an eligibility
determination for an exemption from
the shared responsibility payment made
by HHS for applications submitted on or
after November 15, 2014 and, for
applications submitted before November
15, 2014, to retain the conditions
currently imposed for adopting an
eligibility determination for an
exemption from the shared
responsibility payment that was made
by HHS under paragraph (b)(1). Under
this proposal, HHS would continue to
provide support in this area for
applications up until that date. HHS has
developed and released a set of model
paper applications that can be adopted
by State Exchanges, and is committed to
providing technical assistance to assist
State Exchanges in developing the
capability to handle the minimum
function of granting certificates of
exemption.
7. Subpart H—Exchange Functions:
Small Business Health Options Program
a. Functions of a SHOP (§ 155.705)
Section 155.705(b)(2) and (3) currently
provide that, for plan years beginning
on or after January 1, 2015, all SHOPs
must make available to qualified
employers the option of selecting an
actuarial value level of coverage as
described in section 1302(d)(1) of the
Affordable Care Act and making all
qualified health plans at that level
available to qualified employees
(‘‘employee choice’’). Based on
communications with issuers and State
insurance commissioners, HHS has
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become concerned that, in some
circumstances, implementing employee
choice in 2015 might significantly
disrupt some small group markets, and
might therefore have a negative effect on
the ability of small business owners to
access coverage. HHS is specifically
concerned that in certain circumstances,
employee choice might lead to sicker
people enrolling in disproportionate
numbers in certain plans, which could
have the effect of discouraging issuers
from participating in the SHOP or
causing adverse selection in the market
that cannot be fully addressed by the
single risk pool provisions of the statute
or the premium stabilization programs.
We have also heard concerns from
issuers and State insurance
commissioners that requiring employee
choice might reduce issuer
participation, leading to minimal value
to consumers when there is not broad
participation among issuers in the
SHOP. At the same time, HHS does not
anticipate that these conditions will
apply in most markets, and HHS is
continuing to work toward
implementing employee choice in all
SHOPs, because in the long run
employee choice will bring significant
benefits to small business owners and
their employees. Not implementing
employee choice may also disrupt the
implementation efforts that issuers,
States, Exchanges, and other
stakeholders have already undertaken.
To address these concerns, we
propose to amend § 155.705(b)(2) and
(3) to provide for a one year transition
policy under which a SHOP would be
permitted to not implement employee
choice in 2015 under specific
circumstances: (1) If employee choice
would result in significant adverse
selection in the State’s small group
market that could not be fully
remediated by the single risk pool or
premium stabilization programs; or (2) if
there is an insufficient number of
issuers offering qualified health plans or
qualified stand-alone dental plans to
allow for meaningful plan choice among
qualified health plans or qualified
stand-alone dental plans for all actuarial
value levels in the State’s SHOP. We
believe that meaningful choice means
sufficient competition in the market to
allow for participation in the SHOP
from multiple issuers throughout the
State. Meaningful choice provides
affordable, quality plan options
throughout the State’s SHOP for all
actuarial value levels.
Under this proposal, a State
regulatory agency, such as the State
department of insurance, would submit
a recommendation to the SHOP (or in
the case of an FF–SHOP, to the
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Secretary) in support of either
circumstance for plan years beginning
in 2015. We are considering whether
such a recommendation by the State
regulatory agency should include a
mitigation plan describing the process
the State regulatory agency will take to
ensure that full implementation of
employee choice in 2016 would not
result in the occurrence of either
aforementioned circumstance, and seek
comment on whether such a plan
should be included with the
recommendation. We expect that the
State would be required to provide in
the recommendation to the SHOP
concrete evidence that employee choice
would result in significant adverse
selection in the State’s small group
market that cannot be remediated
through the premium stabilization
programs or the single risk pool, or that
there would not be a meaningful choice
of QHPs and/or stand-alone dental plans
in the State’s SHOP. The SHOP would
then evaluate the State’s
recommendation and request and
determine whether the State’s small
group market would be significantly
adversely affected by the
implementation of employee choice. In
the FF–SHOPs, CMS would seek public
comment on the State’s request
regarding employee choice before
making this determination. We seek
comment on all aspects of the process
SHOPs should follow in making this
determination.
We seek comment on all aspects of
this proposal, including, but not limited
to: (1) The effect of such a policy on all
SHOPs; (2) the effect of such a policy on
each State’s small group market; (3) the
effect of such a policy on small
employers and their employees and
dependents; (4) the information the
State regulatory agency should provide
in support of any recommendation; (5)
the criteria the SHOP (including, in the
case of an FF–SHOP, the Secretary)
should use in assessing a State
regulatory agency recommendation; (6)
whether all SHOPs should seek public
comment on the State’s request
regarding employee choice; (7) whether
employee choice would have to exist for
both medical QHPs and stand-alone
dental plans, or for neither; and (8)
whether other provisions of the HHS
regulations applicable to SHOPs should
also be subject to a transition in SHOPs
that exercise the proposed option. In
particular, we seek comments on what
should qualify as a significant risk of
adverse selection, what should qualify
as a lack of meaningful plan choice, and
how both these conditions should be
measured.
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We also recognize the importance of
the timing of a State regulatory agency’s
recommendation and the SHOP’s
decision regarding employee choice
under this proposal. Whether or not
employee choice is available in a SHOP
may be relevant information for issuers
to consider as they make QHP
submissions, but State regulatory
agencies also need time to evaluate
market dynamics before they can make
a recommendation about whether the
SHOP should not implement employee
choice in 2015. We are considering
establishing a deadline for the State
regulatory agency’s recommendation to
the SHOP. One option we are
considering is that State regulatory
agencies would make recommendations
prior to the close of the initial QHP
application window, with sufficient
time for issuers to decide whether or not
to participate in SHOP for the following
plan year. Another option would be as
follows: (1) All issuers interested in
participating in SHOP would apply
during the initial application window;
(2) state regulatory agencies then would
have a specific window of time within
which to make a recommendation
regarding whether to not implement
employee choice in 2015 based on the
applications received; (3) the SHOP
would then have a specific window of
time within which to make a decision
about not implementing employee
choice in 2015 based on that
recommendation; (4) issuers could,
based upon the SHOP’s decision, decide
whether to maintain, modify, or
withdraw their QHP applications. In the
FF–SHOPs, under this second scenario,
we do not anticipate that issuers would
be able to submit applications after the
initial deadline to apply for QHP
certification had passed. We solicit
comment on these two options for
timing the State regulatory agency’s
recommendation and the SHOP’s
decision, and also solicit additional,
alternative suggestions for how best to
operationalize this proposal. Generally,
we request comment on the appropriate
time for State regulatory agencies to
submit a request to the Exchange
regarding employee choice, on the
appropriate time for the Exchange to
make a decision on those requests, and
on the effect of the timing of the
decision making process on the QHP
certification timeline as described in
HHS regulations and guidance
(including in the 2015 Annual Issuer
Letter).37 In any event, we expect that
37 2015 Letter to Issuers in the Federallyfacilitated Marketplaces (March 14, 2014). Available
at: https://www.cms.gov/CCIIO/Resources/
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SHOPs would reach a decision about
employee choice no later than early Fall
2014. We also seek comment on
whether adverse selection could be
avoided by allowing an employer to
provide employee choice under the
following circumstances: (1) Within a
single issuer’s plan offerings within an
actuarial value level; (2) for all plans
from a single issuer across two
contiguous actuarial value levels; and
(3) for all plans, all actuarial value
levels, from a single issuer. These
circumstances are transitional policies
and do not reflect the full
implementation of employee choice; we
seek comment on how the proposed
provisions would apply in these
circumstances.
b. Enrollment Periods Under SHOP
(§ 155.725)
We propose amendments to
§ 155.725(c) and (e) to amend the dates
for the annual open enrollment periods
for qualified employers and qualified
employees in all SHOPs, both Statebased or Federally-facilitated. In
proposed §§ 155.725(c)(1), we propose
to align the start of annual employer
election periods in all SHOPs for plan
years beginning in 2015 with the start of
open enrollment in the corresponding
individual market Exchange for the
2015 benefit year, as amended in the
2015 Payment Notice. In accordance
with this proposal, we propose to
modify paragraph (e) of this section to
remove the reference to a period of no
less than 30 days for the annual
employee open enrollment period.
Under this proposal, the annual
employer and employee election
periods would begin no sooner than
November 15, 2014 with employers
making selections first, followed by
employees. The employer’s annual
election period will end when the
employer makes relevant decisions
about the coming year’s participation.
Qualified employers and qualified
employees would still have adequate
time to perform plan selection for plan
years beginning in 2015 under this
proposal. SHOPs would benefit from
having the same amount of time to
complete the QHP certification process
for the SHOP as they have to complete
this process for the individual
Exchange. Notification standards
described in paragraph (d) and (f) of this
section would still apply, as the
standards merely require the SHOP to
notify qualified employers of annual
employer election periods and to notify
qualified employees of the annual
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employee open enrollment periods in
advance of such periods.
The lack of alignment of the start of
annual employer election periods in the
SHOP for plan years beginning in 2015
with the start of open enrollment in the
individual market Exchange for 2015
would place a burden on SHOPs and
QHP issuers. Many Exchanges rely on
the same technology solutions for plan
management and other minimum
functions of Exchanges in both the
individual and small group markets.
Aligning the start dates for the employer
election period with the start of
individual market Exchange open
enrollment for 2015 would provide
Exchanges with a uniform timeline for
improving and launching Exchange
services for 2015. Additionally, a
uniform QHP filing and review timeline
for both markets for 2015 would reduce
confusion and provide efficiencies to
scale in review, providing potential
resource savings to Exchanges and QHP
issuers. These efficiencies would still
exist even if the SHOP and individual
market Exchange were operated by
different entities (such where a State has
exercised the option at § 155.100(a)(2) to
establish and operate only a SHOP, as
many QHP issuers seek QHP
certification in both markets.
We note that pursuant to
§ 147.104(b)(1)(i), group coverage
purchased in the SHOP between
November 15 and December 15 of each
year is not subject to employer
contribution or group participation rules
as defined in § 147.106(b)(3). FF–SHOPs
do not enforce minimum participation
requirements between November 15 and
December 15 of each year, but they are
enforced upon initial enrollment
outside of this window and at renewal.
Aligning the annual employer election
period to the start of the individual
market Exchange to begin no sooner
than November 15, 2014 will provide
qualified employers and employees
with a period of time to enroll for 2015
coverage when the FF–SHOP minimum
participation provisions are not
enforced.
We request comments on whether the
proposed policy concerning aligning the
timing of the SHOP employer election
period for 2015 with the individual
market annual open enrollment period
would pose challenges for State-Based
SHOPs as well as comments on any
special circumstances that they would
face in implementing the proposed
policy. If implementing the proposed
policy would disrupt the operations of
State-Based SHOPs, we request
comments on what flexibilities or
adjustments to the proposed policy may
be necessary to address these concerns.
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For example, a State-based SHOP might
have a 2015 small group market QHP
certification process under which QHPs
for 2015 coverage would be available
sooner than November 15, 2014, such
that the State-based SHOP’s annual
employer election period could start
earlier than that date.
In §§ 155.725(c)(2) and 155.725(e), we
propose to remove the required
minimum lengths of both the employer
election period and the employee open
enrollment period to provide additional
flexibility to SHOPs and qualified
employers. The existing minimum
standards may make it difficult for
groups participating in the SHOP to
renew coverage in a timely manner, as
under the current regulations, the entire
process could take as many as 75 days
or longer to complete: up to 30 days for
the employer’s election, 30 days for the
employees to enroll, and, depending on
when in a given month that enrollment
occurs, 15 or more days before coverage
becomes effective. Further, this
timeframe is not feasible in light of the
proposal above to align the earliest date
that an employer election period could
begin in all SHOPs for plan years
beginning in 2015 with the start of open
enrollment in the corresponding
individual market Exchange for the
2015 benefit year.
This proposal to remove the existing
minimum timeframes for qualified
employer and qualified employee
enrollment decisions will permit SHOPs
and qualified employers to act more
quickly to renew coverage.
Additionally, the existing minimum
lengths for the employer election and
employee open enrollment periods
further complicate the renewal process
for qualified employers renewing
throughout the calendar year in SHOPs
that permit the quarterly update of rates
for QHPs. In many States, the updated
rate may be published fewer than 45
days prior to the rate taking effect.
Therefore, under the existing minimum
standard, a qualified employer might
not be able to consider the most up-todate rate information for the coverage it
intends to offer. Instead, such rate
information might only become
available during the employee open
enrollment period, in which case the
qualified employer may need to reopen
either the employer election period or
the employee open enrollment period to
determine whether the selected QHPs
still meet their needs under the new
rates. This proposal will ameliorate this
concern by permitting SHOPs to
complete the entire election and
enrollment processes in fewer than 45
days.
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We seek comment on all aspects of
these proposals.
c. SHOP Employer and Employee
Eligibility Appeals Requirements
(§ 155.740)
We propose to amend § 155.740(g) by
redesignating paragraphs (g)(1) through
(g)(3) to more clearly delineate between
the requirements associated with valid
appeals and those associated with
invalid appeals.
In § 155.740(i)(1)(i), we propose to
amend the provision by crossreferencing the withdrawal standards
proposed in the individual market at
§ 155.530(a)(1). Under current rules, an
appellant who wishes to withdraw his
or her appeal request must do so in
writing (hard copy or electronic). The
amended provision would allow an
appellant to withdraw his or her appeal
request in writing or by telephone, if the
appeals entity is capable of accepting
telephonic withdrawals. As noted above
in the preamble to § 155.530(a), appeals
entities that wish to provide telephonic
withdrawals must record, in full, the
appellant’s statement and telephonic
signature made under penalty of perjury
and provide a written (in hard copy or
electronically) confirmation to the
appellant documenting the telephonic
interaction. Written confirmation can be
captured in the dismissal notice
required in the case of a withdrawal
under § 155.740(i)(2). Like the proposal
in the individual market, this
amendment is intended to provide
greater efficiency and convenience for
an appellant and appeals entity to close
an appeal in accordance with the
appellant’s wishes. We seek comment
on this proposal.
8. Subpart O—Quality Reporting
Standards for Exchanges
a. Quality Rating System (§ 155.1400)
To implement section 1311(c)(3) of
the Affordable Care Act, we propose
standards for data collection by QHP
issuers and the public reporting by
Exchanges of quality rating information.
We intend to have a beta testing period
in 2015 to provide early feedback to
Exchanges and QHP issuers and begin
public reporting of quality rating
information and enrollee satisfaction
survey information in 2016. We believe
that it is important that the QRS provide
QHP ratings that are based on health
care quality, health outcomes, consumer
experience, accessibility of care and
affordability of care, which is
information that is essential to inform
consumer choices and to perform
certain required functions of an
Exchange. As outlined in the November
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19, 2013 Federal Register Notice with
Comment 38 on the QRS framework
(QRS Notice), in the initial years, HHS
aims to align the measures included in
the QRS, to the extent possible, with
measures health plans currently report
in the commercial markets and public
programs. The general functions of an
Exchange outlined in 45 CFR 155.200(d)
already include a requirement for an
Exchange to oversee implementation of
quality activities, including the ESS and
QRS, and to ensure the reporting of data
for these quality activities.
In § 155.1400, we propose that the
Exchange must prominently display on
its Web site, in accordance with 45 CFR
155.205(b)(1)(v), quality rating
information assigned for each QHP
under the QRS, as calculated by HHS
and in a form and manner specified by
HHS, starting in 2016. The standards for
QHP issuers regarding the collection
and submission of validated quality
measures data for the QRS are described
in Part 156, Subpart L of this proposed
rule. The list of proposed individual
quality measures and the proposed
organization of the QRS measure sets
are described in the QRS Notice. In
addition, we intend to release the
proposed methodology for calculating
quality ratings as well as details
regarding measure specifications and
data validation processes in technical
guidance in 2014.
We believe that the proposed
approach where each Exchange displays
quality ratings calculated by HHS based
on a standard scoring methodology
allows for reliable, uniform, and
comparable QHP ratings across
Exchanges. Therefore, HHS intends to
calculate the quality ratings and provide
the ratings to Exchanges for prominent
display of quality rating information for
each QHP offered in the Exchange. We
encourage State Exchanges to have a
plan review period, similar to what we
intend to offer QHP issuers that
participate in the Federally-facilitated
Exchange, to allow issuers to review
their QHPs’ quality rating information
before the data become public and to
identify any discrepancies or errors with
the data submitted, as appropriate. We
have not incorporated specific criteria
for public display by the Exchanges of
the QHP quality rating information in
proposed § 155.1400. However, we
intend to do so in future technical
guidance and are considering modeling
the display of QHP quality ratings in a
consistent manner with existing CMS
38 Patient Protection and Affordable Care Act;
Exchanges and Qualified Health Plans, Quality
Rating System (QRS) Framework, Measures and
Methodology; Notice with Comment, 78 FR 69418
(Nov. 19, 2013).
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programs. As outlined in the QRS
Notice, we intend to implement a
methodology that would assign a quality
rating to a QHP using a five star scale.
The star ratings would be displayed in
a similar style and format to that of
Medicare Advantage and Prescription
Drug Plan ratings. We believe that the
five star quality rating display of
Medicare Advantage health plans offers
reliable data that is understandable for
consumers. HHS anticipates providing
the calculated rating information, as
proposed in § 155.1400, for display on
an Exchange Web site on an annual
basis for the open enrollment period.
We seek comment on the display of
quality ratings of QHPs offered in an
Exchange for consumers and employers,
which aids comprehension of QHP
quality information and which
facilitates plan selection.
HHS recognizes that some States
already have requirements for and
publicly report health plan quality and
outcomes data, and we want to
encourage State flexibility and
innovation, consistent with the
Affordable Care Act. In addition to
prominently displaying quality rating
information for each QHP, as calculated
by HHS in accordance with the QRS, a
State Exchange may display additional
QHP quality-related information, as
appropriate, to enhance the consumer
experience and help consumers
compare QHPs being offered in an
Exchange. We believe this proposed
approach ensures that standardized
information on the quality of health care
will be collected and displayed across
Exchanges but also provides flexibility
for State Exchanges to incorporate
additional information on their Web
sites to support the plan comparison
and selection process by consumers. We
also are considering allowing State
Exchanges the flexibility to display the
QRS rating information, and satisfy the
obligation under 45 CFR
155.205(b)(1)(v), by prominently
displaying a link to the Federallyfacilitated Exchange Web site that
would present the Federal quality rating
information. We seek comment on this
approach including effective ways to
display quality rating information to
help consumers compare and select
QHPs offered in an Exchange.
b. Enrollee Satisfaction Survey System
(§ 155.1405)
Similar to the display requirement for
the QRS, we propose a display
requirement for the Exchange in
§ 155.1405 relating to the Enrollee
Satisfaction Survey (ESS) to implement
section 1311(c)(4) of the Affordable Care
Act. We propose that the Exchange
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would prominently display results from
the ESS on its Web site, in accordance
with § 155.205(b)(1)(iv), as calculated by
HHS, and in a form and manner
specified by HHS, starting in 2016. The
standards for QHP issuers regarding the
collection and submission of validated
data for the ESS are described in Part
156, Subpart L of this proposed rule.
Because we believe that information
regarding enrollee experience with the
QHP is a fundamental aspect of the
overall quality rating, HHS intends to
incorporate enrollee experience data
from the results of the ESS into the
quality rating for each QHP. Research39
has shown that synthesizing and
simplifying health plan quality
information presented to consumers
eases consumer comprehension;
therefore, we have developed a
methodology to incorporate enrollee
experience data as part of the quality
rating information. We intend for the
display of quality ratings, including the
member experience data from the ESS,
to be capable of drilling down to the
results for individual quality measures
if consumers should choose to access
more detail of the data underlying the
synthesized global quality rating. We
therefore believe that by displaying
quality rating information as described
in § 155.1400 of this proposed rule
(which would incorporate member
experience data from the ESS), an
Exchange would meet the requirement
of displaying ESS information to
consumers and employers for the
purposes of plan comparison and satisfy
the standard outlined in 45 CFR
155.205(b)(1)(iv). HHS anticipates
providing results to the full ESS survey
to an Exchange on an annual basis. An
Exchange may choose to display on its
Web site all ESS results, including those
scores not used as part of the QRS. We
seek comment on this proposed
approach for displaying ESS
information on an Exchange Web site.
Similar to our approach with the QRS,
we also want to encourage State
flexibility and innovation, consistent
with the Affordable Care Act, with
respect to enrollee satisfaction
information. We therefore seek
comment on whether State Exchanges
should have flexibility to display the
ESS 2015 beta test results prior to the
scheduled public display of the Federal
39 Peters EM, Dieckmann N, Dixon A, Hibbard JH,
Mertz CK. Less is more in presenting quality
information to consumers. Med Care Res Rev.
2007;64 (2):169–90; Hibbard JH, Peters EM.
Supporting informed consumer health care
decisions: data presentation approaches that
facilitate the use of information in choice. Annual
Review of Public Health. 2003; 24:413–33.
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ESS in 2016.40 Specifically, we solicit
feedback on effective ways State
Exchanges may share enrollee
satisfaction information to help
consumers compare and select QHPs
offered in an Exchange prior to the
availability of the Federal ESS data for
the 2017 open enrollment period.
F. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
1. Subpart B—Essential Health Benefits
Package
a. Prescription Drug Benefits (§ 156.122)
Section 156.122(c) requires issuers
that provide EHB to have procedures in
place that allow an enrollee to request
and gain access to clinically appropriate
drugs not covered by the plan. We are
concerned that some enrollees,
particularly those with certain complex
medical conditions, are having trouble
accessing in a timely fashion clinically
appropriate prescription drugs, such as
prescription drugs that are combination
drugs not covered by their plans’
formularies. Accordingly, we are
considering amending the formulary
exceptions standards under § 156.122(c)
to require that these processes can be
expedited when necessary based on
exigent circumstances, such as when an
enrollee is suffering from a serious
health condition or an enrollee is in a
current course of treatment using a nonformulary drug. For example, we could
specify that an issuer render decisions
regarding formulary exceptions requests
within 24 hours following the issuers’
receipt of the exceptions requests. This
is currently suggested in the 2014 Letter
to Issuers.41 As clarification, the
prescription drug standard in
§ 156.122(a)(1) was not intended to
discourage issuers from offering
clinically appropriate drugs to enrollees,
including combination drugs.
We seek comment on what specific
standards would be appropriate for
defining this expedited exceptions
process, and on all other aspects of this
proposal.
40 The standards for QHP issuers regarding the
collection and submission of data for the ESS,
including the proposed timeline for public
reporting of such data, are described below in Part
156, Subpart L of this proposed rule. Also see
Agency Information Collection Activities: Health
Insurance Marketplace Consumer Experience
Surveys: Enrollee Satisfaction Survey and
Marketplace Survey Data Collection; Notice, 78 FR
65658 (Nov. 1, 2013).
41 See Appendix C of the 2014 Letter to Issuers
on Federally-facilitated and State Partnership
Exchanges (April 5, 2013). Available at: https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/2014_letter_to_issuers_
04052013.pdf.
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b. Cost-Sharing Requirements
(§ 156.130)
Under § 156.130(a), cost sharing for
2014 for self-only coverage may not
exceed the annual dollar limit described
in section 223(c)(2)(A)(ii)(I) of the Code.
Under § 156.130(b), for a plan year
beginning in calendar year 2014, the
annual deductible for a health plan in
the small group market for self-only
coverage may not exceed $2,000. For
2015 and later years, these limitations
are to be increased by an amount equal
to the products of these amounts and
the premium adjustment percentage
established pursuant to paragraph (e) of
that section. (The limitations for other
than self-only coverage are twice the
limitations for self-only coverage.)
Under § 156.130(d), any increase in
these annual limits that does not result
in a multiple of $50 is to be rounded to
the next lowest multiple of 50 dollars.
Section 156.130(e) provides that the
premium adjustment percentage is the
percentage (if any) by which the average
per capita premium for health insurance
coverage for the preceding calendar year
exceeds such average per capita
premium for health insurance for 2013,
and that this percentage will be
published annually in the HHS notice of
benefit and payment parameters. The
2015 Payment Notice established our
methodology for calculating the
premium adjustment percentage.
In calculating the proposed
limitations on cost sharing and small
group deductible in the proposed 2015
Payment Notice, we rounded these
limitations up to the next lowest
multiple of $50. However, we
subsequently learned that the IRS
convention for interpreting similar
language for a number of longstanding
tax parameters—such as indexing
methodologies for the alternative
minimum tax and the standard
deduction—is to round down to the
nearest applicable multiple. For
example, the Department of the
Treasury, in a rule on how employers
should calculate average annual fulltime-equivalent wages for purposes of
the small employer health insurance tax
credit, provides that if the result is not
a multiple of $1,000, employers should
round the result to the next lowest
multiple of $1,000.42
As a result, to align our rounding
rules with those used by the Department
of the Treasury and the Internal
Revenue Service, we propose to amend
§ 156.130(d) to specify that when
indexing the annual limitation on cost
sharing and the annual limitation on
42 See
19:01 Mar 20, 2014
2. Subpart C—General Functions of an
Exchange
a. QHP Issuer Participation Standards
(§ 156.200)
In § 156.200(b)(5), we propose
technical amendments to clarify that
implementing and reporting for the QRS
and implementing a quality
improvement strategy are conditions of
participation in an Exchange.
Specifically, we propose to include a
reference to sections 1311(c)(3) and
(c)(1)(E) of the Affordable Care Act to
correctly align with other quality
standards listed as part of QHP
certification standards, including the
ESS.
We also propose to amend § 156.200
to add paragraph (h) to require that, in
order to receive QHP certification, the
offering issuer attest that, subsequent to
receiving such certification, it will
comply with all operational
requirements contained in Part 156,
Subparts D, E, H, K, L, and M. We are
proposing to add paragraph (h),
however, to ensure that issuers seeking
QHP certification understand and have
fully committed to compliance with all
operational requirements.
43 See https://www.irs.gov/pub/irs-drop/rp-1325.pdf.
26 CFR 1.45R–2(f)(1).
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small group deductibles for years after
2014, we will round to the multiple of
50 dollars that is lower than the number
calculated by the formula.
Under this proposed amendment to
§ 156.130(d), using the premium
adjustment percentage of 4.213431463
percent for 2015 we established in the
2015 Payment Notice and the 2014
maximum annual limitation on cost
sharing of $6,350 for self-only coverage,
which was published by the IRS on May
2, 2013,43 the 2015 maximum annual
limitation on cost sharing would be
$6,600 for self-only coverage and
$13,200 for other than self-only
coverage.
Similarly, under the proposed
amendment to § 156.130(d), using the
premium adjustment percentage for
2015 of 4.213431463 percent and the
2014 maximum annual limitation on
deductibles of $2,000 for self-only
coverage, as specified in
§ 156.130(b)(1)(i), the 2015 maximum
annual limitation on deductibles would
be $2,050 for self-only coverage and
$4,100 for other than self-only coverage.
We seek comment on our proposed
amendment and its application for 2015.
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3. Subpart G—Minimum Essential
Coverage
a. Other Coverage That Qualifies as
Minimum Essential Coverage
(§ 156.602)
In the final rule published on July 1,
2013 (78 FR 39494), we designated
certain types of coverage as minimum
essential coverage, including selffunded student health coverage (for plan
or policy years beginning on or before
December 31, 2014), Refugee Medical
Assistance supported by the
Administration for Children and
Families, Medicare advantage plans,
State-high risk pool coverage (for plan
or policy years beginning on or before
December 31, 2014) and other coverage
that qualifies pursuant to the minimum
essential coverage application process
in 45 CFR 156.604. We also established
a process by which sponsors of other
coverage not designated as minimum
essential coverage could apply with
HHS to be recognized as minimum
essential coverage.
In guidance published on October 31,
2013, we further indicated that coverage
under a group health plan provided
through insurance regulated by a foreign
government (and not regulated by a
State) is recognized as minimum
essential coverage for a month with
respect to an individual who, for such
month, is physically absent from the
United States for at least one day of the
month. In addition, coverage under a
group health plan provided through
insurance regulated by a foreign
government (and not regulated by a
State) will also be recognized as
minimum essential coverage with
respect to an individual who is
physically present in the United States
for an entire month if the coverage
provides health benefits within the
United States while the individual is an
expatriate.44 The rationale behind this
policy was that insurance that is
regulated by a foreign government and
not subject to regulation by a State does
not meet the definition of health
insurance coverage under the PHS Act,
and thus should not be considered for
purposes of a PHS Act analysis. The
effect of this policy is to place group
health coverage provided through
foreign insurance on the same footing as
self-insured group health coverage with
respect to being deemed minimal
44 See CCIIO Sub-Regulatory Guidance: Process
for Obtaining Recognition as Minimum Essential
Coverage (October 31, 2013. Available at: https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/mec-guidance-10-312013.pdf.
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essential coverage without having to go
through the application process.
We now propose to add new
paragraph (e) to § 156.602 codifying the
treatment of foreign group health
coverage as stated in the October 31,
2013 guidance. We propose to designate
foreign group health coverage for
expatriates as minimum essential
coverage if the coverage is self-insured,
or is insured by an entity that is not
subject to regulation by a State.
Specifically, we propose to clarify in the
regulations that foreign group health
coverage is group health coverage that
(1) is not insured by an issuer regulated
by a State and (2) is for expatriates who
are citizens or nationals of the United
States residing abroad, or is for
expatriates who are not citizens or
nationals of the United States residing
in the United States. We propose that if
coverage for expatriates who are citizens
or nationals of the United States who
reside abroad is provided by a selfinsured group health plan, or is
provided by group health insurance not
regulated by a State or group health
coverage provided by a foreign national
health plan, the coverage is designated
as minimum essential coverage for any
month that the citizen or national of the
United States is physically absent from
the United States for at least one day of
the month.
For purposes of this section, we
propose to define an ‘‘expatriate’’ as an
individual for whom there is a good
faith expectation that such individual
will reside outside of their home
country for at least six months of a 12month period, including any covered
dependents. This definition was
adopted from the January 9, 2014
Affordable Care Act Implementation
FAQs.45 Another option is that we
define ‘‘expatriate’’ more broadly to
apply to individuals that are living
outside of their home country for less
than six months. For example, the
Black’s Law Dictionary defines
‘‘expatriate’’ as a citizen of country A
living in country B where the
classification of this citizen occurs
regardless of if the citizen has a short
stay or an extended or lifetime stay in
country B.46 We solicit comments on
either definition of expatriate discussed
above or another definition that would
be appropriate for this section.
45 See FAQs about Affordable Care Act
Implementation (Part XVIII) and Mental Health
Parity Implementation (January 9, 2014). Available
at: https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_faqs18.html
and https://www.dol.gov/ebsa/faqs/faq-aca18.html.
46 See Black’s Law Dictionary Free (2d ed. 2014).
Available at: https://thelawdictionary.org/expatriate.
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If an expatriate is a citizen or national
of the United States and is physically
present in the United States for an entire
month, we propose that their foreign
group health coverage is designated as
minimum essential coverage if the
coverage provides health benefits within
the United States, and is provided by a
self-insured group health plan, group
health insurance regulated by a foreign
government (and not by a State), or
group health coverage provided by a
foreign national health plan. We
propose this time period so that
expatriates who are citizens or nationals
of the United States working abroad
may visit the United States for a short
period of time without their foreign
group health coverage losing its
designation as minimum essential
coverage. We propose that the coverage
must provide health benefits within the
United States to ensure that the
coverage is not limited to providing
health benefits while an individual is
absent from the United States. We
solicit comments on the time period that
expatriates who are citizens or nationals
of the United States working abroad can
remain in the United States without
their foreign group health coverage
losing its designation as minimum
essential coverage.
In 45 CFR 156.602(e), we propose that
if the foreign group health coverage is
for expatriates residing in the United
States who are not citizens or nationals
of the United States, the coverage is
designated as minimum essential
coverage if the coverage provides health
benefits within the United States, and is
provided by a self-insured group health
plan, group health insurance regulated
by a foreign government (and not
regulated by a State), or group health
coverage provided by a foreign national
health plan. We propose that the
coverage must provide health benefits
within the United States so as to ensure
that the coverage provides health
insurance benefits in the United States
while an individual is living in the
United States.
To ensure that expatriates enrolled in
foreign group health coverage are aware
that their coverage has been designated
as minimum essential coverage and that
foreign group health coverage complies
with the same reporting requirements as
other types of minimum essential
coverage, we propose to require that the
sponsor, issuer, or plan administrator,
as applicable, of any foreign group
health coverage must provide notice to
enrollees who are citizens or nationals
of the United States of its minimum
essential coverage status and comply
with the information and reporting
requirements of section 6055 of the
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Code and implementing regulations
with respect to those enrollees. We
welcome comments on any aspect of
these proposals.
b. Requirements for Recognition as
Minimum Essential Coverage for Types
of Coverage Not Otherwise Designated
Minimum Essential Coverage in the
Statute or This Subpart (§ 156.604)
Section 45 CFR 156.604 outlined a
process by which types of coverage not
statutorily specified and not designated
by regulation as minimum essential
coverage may seek to be recognized as
minimum essential coverage. We
established the requirement that the
application must be submitted to HHS
on behalf of the plan or policy by the
sponsor of the coverage or government
agency.
We now propose to clarify that the
application may also be submitted to
HHS on behalf of the plan or policy by
a health insurance issuer or a plan
administrator because the health
insurance issuer or plan administrator
may be the more appropriate party to
submit the application. For example, a
health insurance issuer may more
efficiently provide the information
required for an application on behalf of
a foreign health insurance plan sold in
the individual market to expatriates
living abroad. We welcome comments
on all aspects of these proposals.
4. Subpart I—Enforcement Remedies in
Federally-Facilitated Exchanges
a. Available Remedies; Scope
(§ 156.800)
In subpart I of 45 CFR part 156,
finalized on August 30, 2013 in the rule
Patient Protection and Affordable Care
Act; Program Integrity: Exchange,
SHOP, and Eligibility Appeals (Program
Integrity Rule),47 we established the
enforcement remedies available to HHS
for enforcing standards applicable to
issuers offering QHPs in the FFEs. Since
the publication of that rule and in the
course of our routine monitoring of QHP
issuers for compliance with applicable
FFE standards, we have received
multiple inquiries from QHP issuers and
States about whether HHS will be
coordinating and sharing information
about QHP issuers with State regulatory
entities as part of its oversight activities.
We propose adding paragraph (d) to
clarify that HHS may consult and share
information about QHP issuers with
other Federal and State regulatory and
enforcement entities to the extent that
47 Patient Protection and Affordable Care Act;
Program Integrity: Exchange, SHOP, and Eligibility
Appeals, 78 FR 54070 (August 30, 2013) (to be
codified at 45 CFR parts 147, 153, 155, and 156).
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this information is necessary for HHS to
determine whether an enforcement
remedy under subpart I is appropriate.
We believe this is consistent with our
intent to coordinate with States in
enforcement actions as described in the
proposed Program Integrity Rule.48
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b. Bases and Process for Imposing Civil
Money Penalties in Federally-Facilitated
Exchanges (§ 156.805)
In the Program Integrity Rules, we
established the bases for HHS to impose
CMPs against QHP issuers for violations
of certain standards applicable to
issuers offering QHPs in the FFEs. In
§ 156.805(d) we set forth the general
process for notifying the QHP issuer
against which the CMP is being
imposed. The general process did not
address how prior to the imposition of
the CMP, the QHP issuer would be
notified of the alleged violation which
forms the basis for the imposition of
CMP. We propose adding § 156.806 to
explain that HHS will provide a written
notice to the issuer, to include a
description of the potential violation, a
30-day period for the QHP issuer to
respond and to provide additional
information to refute an alleged
violation.
If HHS determines that a CMP will be
imposed, HHS will notify the QHP
issuer as required under § 156.805(d).
We note that § 156.805(d) does not
specify the method of delivery of such
notice. We believe it is important to
ensure that such notices are
appropriately delivered to the QHP
issuer to provide the QHP issuer with
proper notice. We propose adding
§ 156.805(d)(3) to require that delivery
of the notice required in paragraph (d)
will be either hand delivered, sent by
certified mail, return receipt requested,
or sent by overnight delivery service
with signature upon delivery required.
This requirement is identical to the
requirement under § 158.613 which
applies to the delivery of notice of civil
penalties under 45 CFR Part 158, with
which we believe QHP issuers will
generally be familiar. We believe this
proposed requirement will ensure that
QHP issuers have proper notice of
HHS’s intent to impose CMPs. Finally,
we also note that paragraph (e)(2)
requires HHS to notify the QHP issuer
of any penalty that has been assessed
and of the means by which the
responsible entity may satisfy the
judgment. We propose rewording the
regulatory text to clarify that the
48 Patient Protection and Affordable Care Act;
Program Integrity: Exchange, SHOP, Premium
Stabilization Programs, and Market Standards;
Proposed Rule, 78 FR 37032 (June 19, 2013).
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responsible entity refers to the QHP
issuer against whom a CMP is being
imposed or another entity responsible
for satisfying the CMP assessment and
that the judgment refers to the CMP
assessed under of this subpart.
c. Bases and Process for Decertification
of a QHP Offered by an Issuer Through
a Federally-Facilitated Exchange
(§ 156.810)
In subpart I of 45 CFR part 156,
finalized in the Program Integrity Rule,
we established the bases for HHS to
decertify QHPs for violations of certain
standards applicable to issuers offering
QHPs in the Federally-facilitated
Exchanges. Under § 156.810(a) we set
forth the bases for decertification. Since
the publication of this final rule, we
believe that certain paragraphs should
be clarified. For example, paragraph
(a)(6) should be reworded to clarify that
the certification criteria means the
standards under subpart C of this part.
In paragraph (a)(9), it was unclear which
laws were intended and we proposing
clarifying that violation of State or
Federal law relating to internal claims
and appeals and external review
processes are bases for decertification
under this paragraph. We propose
aligning the standards set forth under
subparts K and M with the bases for
decertification. We propose adding a
paragraph (12) to reflect that HHS may
decertify a QHP if the QHP issuer
substantially fails to meet the
requirements related to the cases
forwarded to QHP issuers under Subpart
K, and adding a paragraph (13) to reflect
that HHS may decertify a QHP if the
QHP issuer substantially fails to meet
the requirements in Subpart M. Finally,
in the preamble to the proposed
Program Integrity Rule, we explained
that when the basis for a decertification
is one in which the QHP enrollees’
ability to access necessary medical
items or services is at risk or the
integrity of an FFE is substantially
compromised, HHS would have the
authority to pursue an expedited
decertification (78 FR 37062). Because
QHP issuers are required to demonstrate
compliance with the minimum
certification standards in subpart C of
part 156 and Exchanges are required
under section 155.1010(a)(2) to monitor
QHP issuers for demonstration of
ongoing compliance with the
certification requirements, we believe
that it is appropriate for the FFEs to be
able to pursue an expedited
decertification when HHS has
determined that the QHP no longer
meets applicable certification standards.
Accordingly, we propose amending
§ 156.810(d) to reflect this change.
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5. Subpart L—Quality Standards
a. Establishment of Standards for HHSApproved Enrollee Satisfaction Survey
Vendors for Use by QHP Issuers in
Exchanges (§ 156.1105)
In the rule Patient Protection and
Affordable Care Act; Program Integrity:
Exchange, Premium Stabilization
Programs, and Market Standards;
Amendments to the HHS Notice of
Benefit and Payment Parameters for
2014 (Second Program Integrity Rule) 49
at 45 CFR 156.1105, we established
processes for HHS to approve and
oversee ESS vendors that will
administer the ESS on behalf of QHP
issuers. We outlined a process by which
enrollee satisfaction survey vendors
would submit an annual application
demonstrating that they meet all of the
application and approval standards in
paragraphs (a) and (b). Lastly, we noted
that HHS would publish a list of
approved enrollee satisfaction survey
vendors on an HHS Web site.
We propose to amend § 156.1105 to
also include monitoring and appeals
processes that would apply for plan
years beginning 2015. In paragraph (d),
we propose that HHS will monitor HHSapproved enrollee satisfaction survey
vendors to ensure ongoing compliance
with the application and approval
standards. Further, we propose that if
HHS determines that an approved
vendor is non-compliant with the
standards outlined in paragraph (b),
they may be removed from the approved
list described in paragraph (c) and/or
the submitted survey results may be
ineligible to be included for ESS results.
We propose to establish a monitoring
process to prepare for situations when
an HHS-approved enrollee satisfaction
survey vendor is no longer in
compliance with the standards outlined
in § 156.1105. It is possible that once the
enrollee satisfaction survey vendor is
approved and contracts with a QHP
issuer to provide survey administration
services, the HHS-approved vendor may
stop participating in or complying with
required activities described in
paragraph (b)(1) (for example, the
vendor does not participate in site visits
or conferences calls or fails to become
a registered user for the ESS data
warehouse). We propose that in the
event that HHS determines, through its
oversight activities, that the HHSapproved survey vendor is noncompliant, a process would already be
49 Patient Protection and Affordable Care Act;
Program Integrity: Exchange, Premium Stabilization
Programs, and Market Standards; Amendments to
the HHS Notice of Benefit and Payment Parameters
for 2014, 78 FR 65046 (Oct. 30, 2013) (to be codified
at 45 CFR parts 144, 146, 147, 153, 155, and 156).
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in place to take appropriate remedial
action as well as notify QHP issuers and
the public of any changes to the
approved list of vendors. We propose
that, in addition to other existing
remedies, HHS would have the ability to
remove a survey vendor from the
approved list and/or determine that the
submitted survey results are ineligible
to be included for ESS results, as the
validity of the results may be impacted.
HHS would also update the published
list of approved vendors to reflect any
changes. We seek comment to inform
future guidance on the factors that
should be considered, as well as the
conditions that may lead to the removal
of an approved survey vendor from the
HHS approved list and/or a
determination that the submitted survey
results are ineligible to be included for
ESS results.
In paragraph (e), we propose an
appeals process for an ESS vendor that
submits an application to HHS for
approval, as described in paragraph (a),
and is not approved. Specifically, we
propose that an enrollee satisfaction
survey vendor may appeal HHS’s
decision by notifying HHS in writing
within 15 days of the notification of not
being approved by HHS and submitting
additional documentation
demonstrating how the vendor meets
the standards in paragraph (b). HHS will
review the submitted documentation
and make a final approval
determination within 30 days from
receipt of the additional documentation.
An enrollee satisfaction survey vendor
that becomes approved via the appeals
process would be included in the
approved list, described in paragraph
(c). We seek comment on the proposed
approach to implementing an appeals
process for survey vendors that are not
approved by HHS after submission of an
application for approval.
b. Quality Rating System (§ 156.1120)
In addition to proposing standards for
Exchanges to oversee the QRS and
display quality rating information on
Exchange Web sites as set forth in
§ 155.1400 of this proposed rule, we
also propose standards for QHP issuers
to collect and report the necessary
information to implement the QRS
pursuant to section 1311(c)(3) of the
Affordable Care Act. While the QRS
Notice describes areas such as the
overarching goals, framework, measure
selection process and individual
measures of the QRS, this proposed rule
outlines the QRS implementation and
reporting standards for QHP issuers.
In the QRS Notice, we proposed a
QRS measure set that applies to QHPs
that provide family and adult self-only
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coverage and we proposed a separate
Child-only QRS measure set applying to
QHPs that provide child-only coverage.
CMS continues to monitor the number
of child-only QHP offerings on the
Exchanges. A limited number of childonly QHPs and enrollees may prohibit
reliable child-only QHP rating
calculations. As mentioned in the QRS
Notice, we will also consider the
development of a quality rating system
applicable to other Exchange offerings,
such as stand-alone dental plans,
catastrophic plans, and health savings
accounts. After considering public
comment as well as the review by the
Measures Application Partnership’s
Health Insurance Exchange Taskforce
convened by the National Quality
Forum, we intend to finalize the quality
measures outlined in the QRS Notice
and provide measure specifications in
future technical guidance. Our goal is to
publish this future technical guidance
on a HHS Web site in 2014 to provide
time for QHP issuers to collect and
submit the relevant validated data for
the 2015 beta test.
QRS Implementation and Reporting
At § 156.1120(a), we propose data
submission requirements for a QHP
issuer for the information necessary to
calculate the quality ratings under the
QRS, and in § 156.1120(b), we propose
to direct a QHP issuer to annually
submit data necessary to calculate the
QHP’s quality ratings to HHS and the
Exchange, on a timeline and in a
standardized form and manner specified
by HHS. In paragraph (a)(1), we propose
that a QHP issuer must submit data to
calculate quality ratings for each QHP
that has been offered in an Exchange for
at least one year. HHS proposes to phase
in implementation of the QRS over time
in recognition of the fact that QHP
issuers would need time to collect,
ensure the reliability of, and report
quality measure data. In addition,
certain quality measures require one or
two year reference periods, and QHP
issuers would need time for data
collection, validation and submission.
Therefore, we propose that for the first
year that a QHP is offered in an
Exchange, the QHP issuer would
prepare to submit the required validated
data elements for QRS beta testing in the
second year that the QHP is offered in
an Exchange. The QHP issuer would
then submit the required validated data
elements for QRS public reporting in the
third year that the QHP offers coverage
(reflecting second year data). For
example, an issuer that offers a QHP in
the Exchange during the 2013 open
enrollment period for coverage
beginning in January 2014 would
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submit the required validated data for a
QRS beta testing period beginning in
mid-2015 (coverage year two), which
would not be publicly reported by the
Federally-facilitated Exchange. The
issuer would next be required to submit
the required validated data for the QHP
offered in the Exchange to calculate
quality rating information for QRS
public reporting during the 2016 open
enrollment period for the 2017 coverage
year (coverage year four). Specifically,
we intend for the QRS data reporting
period to begin the first month of a
calendar year through the middle of the
sixth month of the calendar year. For
example, a QHP issuer submitting data
for the 2015 QRS beta testing period
would submit data on or around June
15, 2015 and would submit data for its
first QRS public reporting on or around
June 15, 2016. We intend for the QRS
to include data from all eligible QHP
enrollees covered during the
measurement year which would be the
previous calendar year(s) and based on
measure specifications for that year’s
collection. We intend to provide details
of the QRS rating methodology, measure
specifications, criteria for quality rating
display, and information regarding QRS
data validation in technical guidance
that would be periodically updated.
In paragraph (a)(2), we propose to
direct a QHP issuer to submit data that
has been validated in a form and
manner specified by HHS. We believe
that the submission of validated data by
QHP issuers is necessary to ensure the
integrity and reliability of the QRS to
allow consumers objective and
meaningful comparisons of the QHPs’
quality data. We believe that review of
quality measures data by an
independent third party entity will
ensure that only valid and appropriate
data are used to calculate the quality
rating information for QRS public
reporting. In the initial years, HHS
intends to direct QHP issuers to follow
the process specified by the quality
measure steward for validation of its
quality measures that are incorporated
into the QRS. For example, for any
Healthcare Effectiveness Data and
Information Set (HEDIS)® measure in
the QRS, the measure should be
validated through the HEDIS®
Compliance Audit process using a
certified auditor, as defined by the
National Committee for Quality
Assurance (NCQA). We have drawn
from our experience with the Medicare
program which also ensures that clinical
quality HEDIS® data submitted and
reported on behalf of the Medicare
Advantage and Prescription Drug
Programs are valid and reliable by
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requiring data to be validated through
the NCQA HEDIS® Compliance Audit
process before being provided to CMS
for public reporting. HHS would specify
in technical guidance a validation
process for any measures for which the
measure steward has not defined a
validation process. In the future and as
the QRS evolves, HHS is considering
establishing an application and
approval process for independent third
party data validators to allow QHP
issuers to contract with validators that
would be approved and monitored by
HHS.
In paragraph (a)(3), we propose that a
QHP issuer must include information in
its data submission only for those QHP
enrollees at the reporting level specified
by HHS that is necessary to calculate the
quality ratings. As we stated in the QRS
Notice, HHS intends to specify that for
the initial years of QRS implementation,
a QHP issuer must collect and submit
data for enrollees in each product type
offered by a QHP issuer in each State for
which the QHP operates (for example,
Health Maintenance Organization
(HMO), Point of Service (POS), and
Preferred Provider Organization
(PPO)).50 While we understand that
there may be value in reporting quality
rating information at more granular QHP
levels, such as the QHP product metal
level, we believe that a QHP’s
enrollment size at the product metal
level will be too small to ensure reliable
QRS results across the measure domains
in the beginning years of the Exchange.
We intend to revisit the level of QHP
issuer reporting for the QRS as
Exchanges mature and enrollment sizes
increase. We also recognize that a QHP
issuer may offer a QHP outside an
Exchange that would be considered the
same plan as one that is certified as a
QHP and offered through the Exchange,
if the benefits package, provider
network, service areas and cost-sharing
structure of the two offerings are
identical as outlined in the Program
Integrity Final Rule.51 We intend to
allow a QHP issuer to collect data for
the QRS based on enrollees of QHPs
offered through and outside of the
Exchange as long as they are considered
the same plan. If this approach is
finalized, we intend to clarify the
operational details of this approach in
future technical guidance.
50 Patient Protection and Affordable Care Act;
Exchanges and Qualified Health Plans, Quality
Rating System (QRS) Framework, Measures and
Methodology; Notice with Comment, 78 FR 69418
(Nov. 19, 2013).
51 Patient Protection and Affordable Care Act;
Program Integrity: Exchange, SHOP, and Eligibility
Appeals; Final rule, 78 FR 54070 (Aug 30, 2013).
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We seek comment on the data
submission requirements proposed in
paragraph (a) including comment
regarding the reporting timeframes and
any additional criteria for the
submission or reporting of quality data
for QRS purposes. We seek comment on
the proposed approach, for the initial
years of QRS implementation, of
product level reporting and allowing the
incorporation of quality measure data
from QHPs offered outside the
Exchange, if they are considered the
same plan as the QHP offered through
the Exchange. We also solicit comment
to inform future rulemaking regarding
the potential requirement for QHP
issuers to use independent third party
data validators that would be approved
and monitored by HHS for QRS
purposes.
As described in 45 CFR 156.275, QHP
issuers are required to be accredited on
the basis of local performance of a QHP
by an accreditation entity recognized by
HHS, and to submit to such entity
clinical quality measures, such as
HEDIS®. We are seeking comment to
inform future rulemaking on how best to
align QRS measures reporting
requirements with the accreditation
standards for QHP issuers.
We note that multi-State plans, as
defined in § 155.1000(a), are subject to
reporting QRS data for calculation of
quality ratings by HHS, as described in
paragraph (a). The U.S. Office of
Personnel Management (OPM) will
provide guidance on quality reporting to
issuers with whom it holds multi-State
plan contracts.
Marketing Materials
In paragraph (c), we propose that an
issuer may reference its QHP’s quality
rating information in its marketing
materials, in a manner specified by
HHS. In the subsequent section
156.1125 regarding the ESS, we propose
a similar marketing standard in
§ 156.1125(c) that a QHP issuer may
reference the ESS results for its QHPs in
its marketing materials, in a manner
specified by HHS.
A QHP issuer has the option to use
quality rating information and ESS
results in its marketing materials;
however, an issuer that elects to use the
information must do so in a manner that
does not mislead consumers into
enrolling in a QHP based on inaccurate
information. We intend to provide
details regarding display of rating
information and ESS results in
marketing materials in technical
guidance that we anticipate releasing in
2015. We seek comment regarding the
proposed allowance for issuers to
include its QHPs’ quality rating
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information and ESS results in its
marketing materials in paragraphs (c) of
156.1120 and 156.1125 and ways to
prevent the use of the information in a
misleading manner when being
presented to consumers.
c. Enrollee Satisfaction Survey
(§ 156.1125)
Section 1311(c)(4) of the Affordable
Care Act directs the Secretary to
establish an enrollee satisfaction survey
(ESS) system that would evaluate the
level of enrollee satisfaction of members
in each QHP with more than 500
enrollees in the previous year that is
offered through an Exchange. It also
directs Exchanges to display enrollee
satisfaction information on their Web
sites to allow individuals to readily
compare enrollee satisfaction data
between QHPs. To implement this
provision, HHS is developing the ESS as
described in the Federal Register Notice
dated Nov. 1, 2013 (ESS Notice).52 We
outline standards in this proposed rule
for a QHP issuer to collect and submit
validated enrollee experience data from
QHPs offered through an Exchange.
We believe it is important that QHPs
offered through Exchanges be assessed
using a reliable and valid survey,
administered and scored according to
standards developed and monitored by
independent organizations. We based
the ESS on the Consumer Assessment of
Health Providers and Systems
(CAHPS®) Health Plan 5.0 Medicaid
survey to assure consumers and
stakeholders that the ESS survey data
submitted meet the validity and
reliability standards reported by the
CAHPS® program and are comparable to
data from other quality comparison
tools. We used existing CAHPS®
supplemental item sets or other
CAHPS® surveys, when available and
appropriate, to identify any additional
items for the ESS.
ESS Administration
At § 156.1125(a), we propose to direct
QHP issuers to contract with an HHSapproved ESS vendor, as identified by
§ 156.1105, to administer the ESS of the
QHP’s enrollees. We also propose to
direct a QHP issuer to authorize its
contracted ESS vendor to report survey
results to HHS and the Exchange on the
issuer’s behalf. We believe this
proposed approach aligns with the
Medicare program, which uses a similar
process by having approved survey
vendors administer the CAHPS® survey
52 Agency Information Collection Activities:
Health Insurance Marketplace Consumer
Experience Surveys: Enrollee Satisfaction Survey
and Marketplace Survey Data Collection; Notice, 78
FR 65658 (Nov. 1, 2013).
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to an issuer’s Medicare Advantage and
Prescription Drug Program enrollees.
Similar to the proposed general
requirement for the QRS in
§ 156.1120(a), which directs a QHP
issuer to submit data to HHS and the
Exchange, QHPs must ensure that their
contracted ESS vendors submit the data
collected from the ESS survey to HHS
and the Exchange so that HHS can
calculate the ESS scores and
benchmarks based on a standard scoring
methodology that will allow for reliable,
uniform, and comparable scoring across
Exchanges. HHS intends to send
calculated ESS scores to the Exchanges
for their respective QHPs and also
intends to use a subset of scores from
the ESS as part of the quality rating for
QHPs as described in § 156.1120. We
intend for the ESS to be administered
from January through April of each
calendar year beginning in 2015.
HHS is considering the development
of an ESS child-only survey to assess
the experience of children enrolled in
child-only plans. Similar to the
implementation of the QRS child-only
measure set, CMS is currently assessing
the feasibility of a child-only ESS based
upon the number of child-only QHPs
and enrollees in Exchanges.
In paragraph (b), we propose several
data requirements to clarify the
standards for collection and submission
of ESS data. At § 156.1125(b)(1), we
propose to direct a QHP issuer to collect
data of eligible enrollees for each QHP
with more than 500 enrollees in the
previous year that has been offered in an
Exchange for at least one year following
a survey sampling methodology
provided by HHS. We propose that
eligible enrollees would be those
individuals enrolled for at least six
months during the year prior to the
administration of the survey and solicit
comment on this approach.
In paragraph (b)(2), we propose to
direct a QHP issuer to submit data,
necessary to conduct the ESS, that has
been validated in a form and manner
specified by HHS. We propose that the
data for the sample of eligible enrollees
that a QHP issuer provides to their
contracted ESS vendor be validated in a
consistent way as data validated for the
QRS. For example, if a QHP issuer
submits data collected for a quality
measure that is validated through the
HEDIS® Compliance Audit process
using a NCQA certified auditor, we
expect the data that the QHP issuer
provides to its HHS-approved ESS
vendor for the ESS sample be included
in that validation process. We solicit
comment on this approach for
validation of the data for the ESS
sample of eligible enrollees.
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In paragraph (b)(3), we propose to
direct a QHP issuer to include only
those QHP enrollees at the reporting
level specified by HHS, for data
submitted for the ESS. We believe that
the QHP metal level (i.e., HMO Silver,
HMO Bronze, PPO Silver, PPO Bronze)
for each of the issuer’s products is the
appropriate level (if enrollment is
sufficient to ensure credibility) to assess
enrollee experience and would provide
information regarding experience with
plans charging differing premiums. We
intend to aggregate the ESS data from
the QHP metal level to the QHP product
level (for example, a QHP issuer’s HMO
silver and HMO bronze would be
aggregated into one HMO level score)
for public reporting purposes to provide
consistency with the product-level data
that would be submitted for the QRS
and align with the QRS methodology in
the initial years of implementation of
these proposed quality standards for
QHPs.
We recognize that a QHP issuer may
offer a plan outside an Exchange that
would be considered the same plan as
one that is certified as a QHP and
offered through the Exchange, as
defined in § 153.500. Similar to our
proposed approach with the QRS, we
are considering in the initial years to
allow a QHP issuer to include enrollees
of QHPs offered through and outside of
the Exchange, to ensure a reliable ESS
sample size, as long as they are
considered the same plan as established
in § 153.500. We intend to clarify the
operational details of this approach in
future technical guidance. OPM will
issue technical guidance regarding the
sampling methodology for multi-State
plans, as defined in 45 CFR 155.1000(a).
We envision that the sampling
methodology for multi-State plans will
align with that of QHPs.
In paragraph (d), we propose to direct
a QHP issuer to submit data necessary
to conduct the survey to its contracted
ESS vendor on a timeline and in a form
and manner specified by HHS. We
intend to align the timeframes of the
proposed reporting requirements for the
ESS and the QRS. In future technical
guidance, we also intend to specify the
timeframes for a QHP issuer to submit
the sampling data to its contracted ESS
vendor and for the vendor to submit to
HHS and the Exchange, data from the
administration of the survey.
ESS Implementation and Reporting
HHS proposes to phase in
implementation of the ESS over time
which is consistent with the proposed
implementation of the QRS. We believe
this will allow for appropriate
development and testing of the ESS and
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the survey methodology; time for QHP
issuers to prepare for data collection,
validation and submission; and time for
QHP enrollees to build experience with
the QHP and their providers to
adequately assess their experience and
to ensure reliable survey results.
Therefore, we propose that for QHPs
offered in the Exchange during the 2014
open enrollment period, the QHP issuer
would submit the required data
elements for ESS beta testing in 2015.
The QHP Issuer would then submit the
required data elements in 2016 for ESS
public reporting during the 2017 open
enrollment period. Specifically, we
intend for QHP issuers to provide data
necessary to conduct the survey to their
contracted HHS-approved ESS vendors,
as described in paragraph (a), during the
first month of the calendar year and to
ensure that survey results are submitted
to HHS or its’ designee, by the fifth
month of the calendar year. For
example, a QHP issuer reporting data for
the 2015 ESS beta test would provide
sample frame data necessary to conduct
the ESS for eligible enrollees who
would be surveyed, to their contracted
survey vendor in January 2015, allowing
adequate time for the vendor to draw
the sample in time to begin fielding the
survey on February 1. Then, a QHP
issuer would ensure that the ESS survey
results are submitted to HHS on or
around May 31, 2015. For the first year
of ESS public reporting, a QHP issuer
would provide sample frame data
necessary to conduct the ESS in January
2016 and ensure that results are
submitted to HHS or its’ designee on or
around May 31, 2016. We intend for the
ESS sample to include all eligible QHP
enrollees covered during the
measurement year which would be the
previous calendar year and based on
sampling specifications. We intend to
provide details of the ESS sampling
methodology in technical guidance that
would be periodically updated and
which will be published in draft form
on an HHS Web site to obtain feedback
from stakeholders.
We seek comment on the proposed
requirement in paragraph (a) to direct a
QHP issuer to contract with an HHSapproved enrollee satisfaction survey
vendor and to authorize its contracted
vendor to submit data to HHS and the
Exchange. Specifically, request feedback
on our proposed approaches for data
collection from eligible enrollees for
each QHP with more than 500 enrollees
in the previous year that has been
offered in an Exchange for at least one
year, to require validation consistent
with the process for QRS measure data
and to provide data for eligible enrollees
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at the QHP metal level for each of the
issuer’s products offered on the
Exchange. We also seek comment on the
proposed annual data submission
requirements in paragraph (b) and (d).
We note that Multi-State Plans, as
defined in 45 CFR 155.1000(a), are
subject to providing the data described
in paragraph (b). The OPM will provide
guidance on ESS reporting to issuers
with whom it holds Multi-State Plan
contracts.
Marketplace Survey
Sections 1313 and 1321(a) of the
Affordable Care Act provide the
Secretary with general authority to
establish standards and regulations
related to Exchanges, QHPs, and other
components of title I of the Affordable
Care Act. In § 155.1200(b)(3), we direct
State Exchanges to submit performance
monitoring data on an annual basis,
which would include information on
consumer satisfaction. Pursuant to this
legal authority, HHS has proposed a
consumer experience survey, or the
Marketplace survey, to assess consumer
experience with the Exchange.53 Similar
to the ESS, the Marketplace survey has
been developed based on the core set of
CAHPS® principles and the format and
language of the survey drew from
existing CAHPS® items, to the extent
possible. However since the CAHPS®
program does not have a comparable
survey to assess entities similar to
Exchanges, the Marketplace survey
items are new and were developed
based on research and feedback from
public comment, technical experts and
focus groups. We believe it is important
to assess experience of consumers
interacting with an Exchange including
obtaining information regarding aspects
such as the application and eligibility
determination process for Medicaid/
Children’s Health Insurance Program
(CHIP) coverage and the Insurance
Affordability Programs. We anticipate
that results from the Marketplace survey
would drive quality improvement in
Exchanges and provide regulators and
stakeholders with information to use for
monitoring and oversight purposes.
We intend to use a single contracted
survey vendor to administer the annual
Marketplace survey for each Exchange.
We are currently in the survey
developmental testing period for the
Marketplace survey in the States in the
Federally-facilitated Exchange and we
anticipate the survey beta test to be
conducted in early 2015 in all States.
53 Agency Information Collection Activities:
Health Insurance Marketplace Consumer
Experience Surveys: Enrollee Satisfaction Survey
and Marketplace Survey Data Collection; Notice, 78
FR 65658 (Nov. 1, 2013).
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We intend to provide each Exchange
with its respective Marketplace survey
results, beginning in 2015, to be able to
make improvements for upcoming open
enrollment periods.
We seek further comment to inform
future rulemaking regarding data
provided by State Exchanges to conduct
the Marketplace survey. We are
considering directing a State Exchange
to provide sampling data for four types
of consumers in an Exchange including:
(1) Potential applicants (individuals
who provided contact information but
did not submit an application); (2)
potential enrollees (individuals who
successfully applied and were given
eligibility and plan information but did
not enroll); (3) enrollees (individuals
successfully enrolled); and (4)
effectuated enrollees (individuals who
have made their first premium
payment). We are also considering
directing a State Exchange to submit
sampling data for the Marketplace
survey based on language preference
and disability status across each
Exchange and we seek comment on the
feasibility for a State Exchange to
provide such data.
G. Part 158—Issuer Use of Premium
Revenue: Reporting and Rebate
Requirements
1. Subpart A—Disclosure and Reporting
a. ICD–10 Conversion Expenses
(§ 158.150)
In September 2012, the Secretary
changed the date on which issuers are
required to adopt ICD–10 as the
standard medical code set from October
1, 2013 to October 1, 2014. Because
HHS cannot accept claims using the
ICD–10 code sets prior to that date,
issuers may incur conversion costs in
2014 that would otherwise have been
incurred only in 2012 and 2013. In the
2012 and 2013 MLR reporting years,
issuers were allowed to report their
ICD–10 conversion costs as
expenditures for activities that improve
health care quality (QIA), up to 0.3
percent of an issuer’s earned premium
in the relevant State and market (MLR
Final Rule, 76 FR 76574). Because the
ICD–10 implementation date has been
postponed to 2014, we propose that
issuers be allowed to report their 2014
ICD–10 conversion costs as QIA in the
2014 reporting year, up to 0.3 percent of
an issuer’s earned premium in the
relevant State and market. Although
there are no plans to further postpone
the ICD–10 implementation date, in
recognition of this possibility and to
avoid the need for additional regulatory
changes, the regulatory change proposed
herein permits issuers to include their
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ICD–10 conversion costs as QIA through
the MLR reporting year in which ICD–
10 implementation is required by the
Secretary.
2. Subpart B—Calculating and Providing
the Rebate
a. MLR and Rebate Calculations in
States With Merged Individual and
Small Group Markets (§§ 158.211,
158.220, 158.231)
Our previous rulemakings concerning
PHS Act section 2718 permitted issuers
to aggregate individual and small group
market data for MLR purposes in States
that require these two markets to be
merged pursuant to section 1312(c)(3) of
the Affordable Care Act. This proposed
rule would modify the requirements for
data aggregation in § 158.220(a) and
§ 158.231(a) to specify that the
individual and small group market data
must always be aggregated if a State
requires these two markets to be
merged. In addition, this proposed rule
would modify the requirements
regarding a higher State MLR standard
in § 158.211 to clarify that if a State
establishes a higher MLR standard for
the merged market, this higher standard
must be used to calculate any rebates for
the merged market. These modifications
would align the MLR methodology in
the Federal MLR rule with the MLR
methodologies applied by the affected
States.
b. Accounting for Special Circumstances
(§ 158.221)
On November 14, 2013, the Federal
government announced a policy under
which, if certain conditions were met, it
would decline to enforce certain
specified 2014 market reforms against
certain non-grandfathered health
insurance coverage in the individual or
small group market renewed between
January 1, 2014 and October 1, 2014,
and requested that States adopt a similar
non-enforcement policy.54 CMS noted
in the Proposed 2015 Payment Notice
(78 FR 72322) that this transitional
policy would not have been anticipated
by issuers in setting rates for 2014 and
stated that we were exploring
modifications to different programs to
help mitigate the impact of this policy.
Issuers that provided transitional
coverage may have incurred additional
administrative costs, such as expenses
related to developing and sending
required consumers notices, and
creating and submitting new policy and
54 Letter to Insurance Commissioners, Center for
Consumer Information and Insurance Oversight,
November 14, 2013. Available at: https://
www.cms.gov/CCIIO/Resources/Letters/Downloads/
commissioner-letter-11-14-2013.pdf.
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rate filings. We also recognize that
issuers of QHPs in the individual and
small group markets may have incurred
costs due to technical problems during
the launch of the State and Federal
Exchanges.
Pursuant to the direction under PHS
Act 2718(c), our development of the
standardized methodologies for
calculating an issuer’s MLR must be
designed to ‘‘take into account the
special circumstances of smaller plans,
different types of plans, and newer
plans.’’ In the MLR Interim Final Rule
(75 FR 74864), HHS exercised this
authority by making adjustments to the
formula for calculating an issuer’s MLR
with respect to ‘‘expatriate plans’’ (i.e.,
policies that provide coverage to
employees outside their country of
citizenship, employees outside their
country of citizenship and outside their
employer’s country of domicile, and
non-U.S. citizens working in their home
country) and ‘‘mini-med’’ plans (i.e.,
plans with a total annual benefit
maximum of $250,000 or less).
In its discussion of the ‘‘special
circumstances’’ that applied to
expatriate plans, the Interim Final Rule
noted that ‘‘their unique nature results
in a higher percentage of administrative
costs in relation to premiums than plans
that provide coverage primarily within
the United States.’’ 55 Examples of the
higher administrative costs for these
plans include: Identifying and
credentialing providers worldwide in
countries with different licensing and
other requirements from those found in
the United States, processing claims
submitted in various languages that
follow various billing procedures and
standards, providing translation and
other services to enrollees, and helping
subscribers locate qualified providers in
different countries. The Interim Final
Rule also recognized the ‘‘special
circumstances’’ that applied to minimed plans. In this latter case, it was not
higher administrative costs, but lower
claims costs relative to administrative
costs, due to the very low annual dollar
limits of mini-med plans. In both cases,
adjustments were made to the MLR
methodology as applied to such plans so
that they would not be required to pay
rebates based on their plan design, even
if they were relatively as efficient as
other plans that are able to meet the
MLR standard under the standard
methodology.
Consistent with this approach, we are
proposing to exercise our authority to
account for the special circumstances of
plans affected by the transitional policy
or the technical problems during the
55 75
CFR 74871.
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launch of the State and Federal
Exchanges. These adjustments would
only extend to issuers in the individual
and small group markets that offered
transitional coverage or participated in
the State and Federal Exchanges, and
only for the 2014 reporting year. A
transitional policy cost adjustment to
the formula for calculating an issuer’s
MLR would not apply in States that did
not implement the transitional policy,
or in States that did, to issuers that did
not elect to implement it.
With respect to the adjustment for
issuers offering transitional coverage,
we are proposing that the MLR
calculation methodology for the
individual and small group markets
would be changed to allow these issuers
to multiply the incurred claims and
expenses for quality improving
activities incurred in 2014 in the MLR
numerator by 1.0001. This adjustment
takes into account the fact that the
multiplier would be applied to the
issuer’s entire experience in 2014,
which may also include experience for
plans other than transitional coverage in
that State and market. In developing this
adjustment, we considered the
following costs as they relate to the
transitional policy: (1) Developing and
sending required notices; (2) actuarial
work, including that with respect to
premium stabilization programs; (3)
regulatory and rate filings; and (4)
activities related to re-contracting.
With respect to the adjustment for
issuers offering coverage through the
State and Federal Exchanges, we are
proposing that the MLR calculation
methodology for the individual and
small group markets would be changed
to allow issuers participating in the
Exchanges to multiply the incurred
claims and expenses for quality
improving activities incurred in 2014 in
the MLR numerator by 1.0004. This
adjustment takes into account the fact
that the multiplier would be applied to
the issuer’s entire experience in 2014,
which may also include experience for
plans offered off the Exchange in that
State and market. In developing this
adjustment, we considered the
following costs as they relate to the
technical issues during the launch of the
State and Federal Exchanges: (1)
Information technology (IT)
development and testing; (2) IT system
modifications and re-programming; (3)
providing feedback to CMS or a State on
functionality and data transmission; (4)
assistance to enrollees (e.g., enhanced
call center activity); (5) engaging in pilot
projects relating to direct enrollment; (6)
developing technical ‘‘tickets’’ for the
CMS or a State help desk; (7) work with
the Exchange(s) to resolve these
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technical problems; (8) manual
processing of enrollment data, including
but not limited to enrollment and
payment data template creation,
monthly submission of data reports, and
monthly submission of data accuracy
certification forms; and (9) development
of other manual workarounds.
HHS believes that these adjustments
would appropriately account for the
special circumstances related to
implementation of the transitional
policy and the rollout of the Exchanges,
while still requiring issuers to comply
with the statutory MLR requirement.
In addition to seeking comment on
the above proposed approach, we also
invite comment on other options for
making an appropriate adjustment to the
MLR formula to account for the
unanticipated costs related to the
transitional policy and the Exchange
implementation.
c. Distribution of De Minimis Rebates
(§ 158.243)
The MLR December 7, 2011 final rule
defines the threshold amounts below
which rebates are considered to be de
minimis and sets forth the provisions for
distribution of such rebates. In this
proposed rule, we propose to amend the
provisions for de minimis rebates in
§ 158.243 to clarify how issuers must
distribute rebates where (1) all of an
issuer’s rebates are de minimis, or (2)
distribution of de minimis rebates to
enrollee(s) whose rebates are not de
minimis would result in an enrollee
receiving a rebate that exceeds the
enrollee’s annual premium. We propose
that in these two situations, the issuer
must distribute de minimis rebates to
enrollees in the policies that generated
the de minimis rebates. The current de
minimis rebate provisions allow issuers
not to distribute de minimis rebates to
enrollees in the policies that generated
those rebates, but instead to aggregate
such rebates and distribute them to
other enrollees whose rebates are not de
minimis.
IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
(PRA) 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. This proposed
rule contains information collection
requirements (ICRs) that are subject to
review by OMB. In order to fairly
evaluate whether an information
collection should be approved by OMB,
section 3506(c)(2)(A) of the Paperwork
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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.
We are soliciting public comment on
each of these issues, which contain
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A. ICRs Regarding Recertification for
Certified Application Counselors
(§ 155.225)
Under proposed § 155.225(d)(7),
certified application counselors would
be required to be recertified on at least
an annual basis after successfully
completing recertification training as
required by the Exchange. Each
Exchange would be required to establish
its own recertification process and
standards consistent with these
requirements. We expect that
establishing a process for recertification
would include creating a recertification
request form (or similar document) in
Exchanges that directly certify certified
application counselors. We estimate that
up to 18 State Exchanges would develop
their own recertification request form.56
We estimate that the development of a
recertification request form, as may be
applicable for Exchanges that directly
certify certified application counselors
would take a health policy analyst (at
$49.35 labor cost per hour) up to 1 hour
to create, a senior manager (at $79.08
cost per hour) up to .5 hours (30
minutes) for review, and an attorney up
to .5 hours (at $90.15 labor cost per
hour) for legal review. We estimate that
the one-time cost burden would be two
hours with a cost burden of $134 for
each Exchange, and the total burden for
18 State Exchanges would be 36 hours
with a cost burden of $2,412.
There are recordkeeping requirements
associated with developing and
maintaining a request form. We estimate
that the time burden associated with
maintaining a copy of the request form
would be .016 hours (1 minute); we
assume a mid-level health policy
analyst would maintain the form
through electronic copies at minimal
cost, which we estimate as $0.79 as a
one-time requirement for the Exchange.
56 We estimate 18 State Exchanges (which
includes Utah) will develop their own processes for
recertification. HHS will establish a single process
in all FFEs.
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The total burden for 18 Exchanges
would be 1.08 hours and the total cost
burden would be $14.22.
There would also be third-party
disclosure requirements for 18 State
Exchanges associated with reviewing
each certified application counselor’s
recertification request, which would
require the Exchange to notify the
individual of the result of its review and
issue a new certificate for each
individual who successfully completes
recertification. This notice requirement
would apply to the Exchange on an
annual basis. We estimate that it would
take a mid-level health policy analyst in
the Exchange up to .08 hours (5
minutes) to notify an individual. The
estimated cost burden is $4.11 for each
individual notice, including the
certificate. For purposes of this analysis,
we estimate that there would be
approximately 30,000 certified
application counselors nationwide, or
approximately 10,600 application
counselors in 18 State Exchanges. The
total cost burden would be
approximately $2,422 for each State
Exchange. The total burden for 18 State
Exchanges would be approximately 883
hours and the total cost burden would
be $43,593. There would be
recordkeeping requirements associated
with issuing each individual notice. We
estimate that the time burden associated
with maintaining a copy of the notice
and certificate would be .016 hours (1
minute); we assume a mid-level health
policy analyst, with a labor cost of
$49.35 an hour, would maintain the
form through electronic copies at
minimal cost, which we estimate as
$0.79 per notice for each individual
certified application counselor. The
total recordkeeping burden for 10,600
certified application counselors in 18
State Exchanges would be 170 hours
and the total cost burden would be
$8,374, or $265 per Exchange.
For Exchanges that designate
organizations to directly certify certified
application counselors under
§ 155.225(b)(1), there would be
requirements associated with
implementing a recertification process
under the applicable Exchange’s
standards. We expect that this process
would include creating and issuing a
recertification request form (or similar
document) for an organization’s
certified application counselors to
submit to indicate their intention to be
recertified and provide an updated
conflicts of interest disclosure or other
attestations as may be required. We
estimate that up to 5,000 designated
organizations would develop their own
recertification request form. We estimate
that the development of a recertification
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request form would take a health policy
analyst (at $49.35 labor cost per hour)
up to 1 hour to create, a senior manager
(at $79.08 labor cost per hour) up to .5
hours (30 minutes) for review, and an
attorney (at $90.15 labor cost per hour)
up to .5 hours (30 minutes) for legal
review. We estimate that the one-time
cost burden would be $134 for each
organization. The total one-time burden
for 5,000 organizations nationwide
would be 10,000 hours and the total cost
burden would be $670,000.
There would be recordkeeping
requirements associated with
developing and maintaining a request
form. We estimate that the time burden
associated with maintaining a copy of
the request form would be .016 hours (1
minute); we assume a mid-level health
policy analyst with a labor cost of
$49.35 an hour would maintain the form
through electronic copies at minimal
cost, which we estimate as $0.79 as a
one-time requirement for each
organization. The total one-time burden
for 5,000 organizations nationwide
would be 80 hours and the total cost
burden would be $3,950.
There would also be third-party
disclosure requirements for designated
organizations associated with reviewing
each certified application counselor’s
recertification request, which would
require the organization to notify the
individual of the result of its review and
issue a new certificate as appropriate.
This notice requirement would apply to
the organization on an annual basis. For
purposes of estimating the burden on
designated organizations, we assume
that of the estimated 30,000 certified
application counselors nationwide,
approximately 19,400 would be directly
certified by designated organizations, or
four certified applications counselors on
average per designated organization. We
estimate that it would take a mid-level
health policy analyst up to .08 hours (5
minutes) to notify an individual and
issue a new certificate. The estimated
cost burden is $4.11 for each individual
notice. For an estimated 19,400 certified
application counselors nationwide, or
approximately four certified application
counselors on average in each
organization, the total cost burden
would be approximately $16.44 for each
organization. The total burden for 5,000
designated organizations nationwide
would be approximately 1,617 hours
and the total cost burden would be
approximately $79,734.
There would be recordkeeping
requirements associated with issuing a
certificate. We estimate that the time
burden associated with maintaining a
copy of each certificate issued at
recertification would be .016 hours (1
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minute); we assume a mid-level health
policy analyst with a labor cost of
$49.35 an hour would maintain the form
through electronic copies at minimal
cost, which we estimate as $0.79 as a
per certificate for each organization. The
total recordkeeping cost per
organization would be $3.16. The total
burden for 5,000 organizations
nationwide would be 323 hours and the
total cost burden would be
approximately $15,326.
There would be third-party disclosure
requirements for individual certified
application counselors associated with
completing the requirements for
recertification, whether done directly
through the Exchange or through an
Exchange-designated certified
application counselor organization.
Such recertification requirements would
include completing Exchange required
training and might also include
satisfying other requirements consistent
with the Exchange-established
processes, such as providing conflicts of
interest disclosures, other attestations
and submitting a recertification request
form (or similar document) and other
attestations. These requirements would
apply to certified application counselors
on an annual basis. Although nothing
prohibits individual certified
application counselors or organizations
from being funded through sources such
as applicable private, State, or Federal
programs, we expect that certified
application counselors would not be
guaranteed any specific funding. We
estimate the professional wage of
certified application counselors for this
type of work as equivalent to that of an
eligibility interviewer for assistance
from government programs and agency
resources. We estimate that it would
take a certified application counselor
with a labor cost of $26.65 an hour up
to 0.17 hours (10 minutes) to complete
and submit the recertification request to
the organization or Exchange, as
applicable. The estimated cost burden
would be $4.53 for each individual
seeking recertification. We estimate that
there would be approximately 30,000
recertification requests provided, for a
total burden of 5,000 hours and a total
cost burden of $135,915 for all certified
application counselors nationwide.
There would be third-party disclosure
requirements associated with taking
recertification training. We expect that
an individual certified application
counselor would provide proof to the
organization or Exchange that he or she
has successfully completed the
recertification training, in accordance
with the Exchange’s process. We
estimate that it would take a certified
application counselor with a labor cost
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of $26.65 an hour up to .03 hours (2
minutes) to provide the training
certificate to the organization or
Exchange, as may be required. The total
estimated cost burden is $0.80 for each
individual seeking recertification. We
estimate that there would be
approximately 30,000 training
certificates provided, and the total
burden would be 1,000 hours, with a
total cost burden of $24,000 for all
certified application counselors
nationwide.
In addition, there would be
recordkeeping requirements associated
with the training certification. We
expect each person who receives
training would obtain and maintain a
record of training certification. We
estimate that the time burden associated
with maintaining proof of training
certification is .016 hours (1 minute),
since we assume this proof would be
maintained through electronic copies, at
minimal cost. The total cost estimated
for each individual to maintain proof of
training certification would be $0.43.
The total burden would be 500 hours
and the total cost burden would be
$12,900 for all certified application
counselors nationwide.
B. ICRs Regarding Consumer
Authorization (§§ 155.210 and 155.215)
For purposes of the ICRs associated
with this proposal, we use the same
labor cost estimates that were used in
the final Navigator and non-Navigator
assistance personnel standards rule
(Patient Protection and Affordable Care
Act; Exchange Functions: Standards for
Navigators and Non-Navigator
Assistance Personnel, July 17, 2013, 78
FR 42842). Navigator personnel and
non-Navigator assistance personnel to
which § 155.215 applies are estimated to
have a labor cost of $20 per hour.
Navigator and non-Navigator assistance
project leads to which § 155.215 applies
are estimated to have a labor cost of $29
per hour. Navigator and non-Navigator
senior executives to which § 155.215
applies are estimated to have a labor
cost of $48 per hour. These are estimates
commonly used for estimating
paperwork burden and do not represent
a recommendation or a requirement of
how much Navigator and non-Navigator
personnel to which § 155.215 applies
are to be paid. There is nothing in the
proposed regulations that would require
any of these workers to be paid any
specific amount.
In the ICR currently approved under
OMB control number (OCN) 0938–1220,
we noted that there were 105 Navigator
grantee organizations at that time in
FFEs, including SPEs, and we estimated
that there were 3,000 individuals
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working as Navigators. We estimated the
number of non-Navigator assistance
project leads to be 300 and 1,800 for
personnel and we use those estimates
here as well.
In accordance with proposed
§ 155.210(e)(6) and § 155.215(g),
Navigators, as well as those nonNavigator personnel to whom § 155.215
applies, would be required to maintain
procedures to inform consumers of the
functions and responsibilities of
Navigators and non-Navigator assistance
personnel (as applicable), and to obtain
authorization for the disclosure of
consumer information to the Navigator
or non-Navigator assistance personnel
(as applicable). This would be a onetime requirement for the organization.
We estimate that it would take a
Navigator or non-Navigator assistance
personnel project lead up to 2 hours to
create the form for providing
authorization to applicants, and a
Navigator or non-Navigator senior
executive up to 1 hour to review the
procedure, for a total time burden of up
to 3 hours. We estimate the cost burden
associated with creating this procedure
would be $106 per organization. The
total cost for all 105 Navigator grantee
organizations is estimated to be $11,130.
The total cost for all 300 non-Navigator
assistance personnel organizations is
estimated to be $31,800.
There are also recordkeeping
requirements associated with
developing and maintaining a model
agreement and authorization form. Each
organization is expected to maintain a
copy of the executed forms. We estimate
that the time burden associated with
maintaining a copy of executed
agreement and authorization forms for
each consumer would be 0.016 hours (1
minute); we assume these would be
maintained through electronic copies
with minimal cost.
In addition, there would be burdens
on individual Navigators, as well as
those non-Navigator assistance
personnel to whom § 155.215 applies.
Under § 155.210(e)(6) and § 155.215(g),
respectively, Navigators and nonNavigator assistance personnel would
be required to inform consumers of the
functions and responsibilities of
Navigators and non-Navigator assistance
personnel and obtain authorization for
the disclosure of consumer information
to a Navigator or non-Navigator
assistance personnel prior to obtaining
the consumer’s personally identifiable
information. In the final rule on
certified application counselors (78 FR
42824, 42854–42855), we estimated that
it would take a certified application
counselor 0.25 hours (15 minutes) to
provide consumers with information
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about the functions and responsibilities
of a certified application counselor,
obtain their authorizations, and provide
any applicable conflict of interest
disclosures. Because here we are only
estimating the time required to provide
consumers with information about the
functions and responsibilities of a
Navigator or non-Navigator assistance
personnel and obtain their
authorization, we estimate that it would
take a Navigator or non-Navigator
assistance personnel 0.1667 hours (10
minutes) to perform this task. The total
cost estimate for the consumer
authorization process for Navigators and
non-Navigator assistance personnel
therefore would be $3.33. The total time
burden on all 3,000 Navigators is
estimated to be approximately 500
hours, and the total cost burden on all
3,000 Navigators is estimated to be
$9,990. The total time burden on all
1,800 non-Navigator assistance
personnel is estimated to be 300 hours,
and the total cost burden on all 1,800
non-Navigator assistance personnel is
estimated to be $5,994.
related to the ESS outlined in
§ 156.1125 would include the time and
effort required for QHP issuers to
collect, submit and validate ESS data on
an annual basis. The burden and cost
related to the survey respondents and
ESS vendors associated with the ESS
has been approved under OCN 0938–
1221. In addition, we estimate that each
QHP would need an average of 54 hours
or $1,349.60 for the ESS to be
administered by mail, phone and/or by
web for its QHPs. Assuming a total of
575 QHP issuers, we estimate that the
annual burden would be 31,050 hours
or $776,020.
The burden with the Marketplace
survey under § 155.1200(b)(3) would
include the time, cost and effort related
to survey respondents and has been
approved under OCN 0938–1221. In
addition, we will revise the information
collection currently approved under
OCN 0938–1119 to account for any
additional burden for an Exchange if
sampling data is needed from State
Exchanges for CMS to administer the
Marketplace survey.
C. ICRs Regarding Enrollee Satisfaction
& Marketplace Surveys (§§ 155.1200,
156.1105 and 156.1125)
In § 156.1105 of this proposed rule,
we would establish a monitoring and
appeals process for HHS-approved
enrollee satisfaction survey vendors.
Specifically, in § 156.1105(d), we would
establish a process in which HHS would
monitor approved vendors for ongoing
compliance. HHS might require
additional information from approved
vendors to be periodically submitted in
order to ensure continued compliance.
We estimate that HHS would approve
approximately 40 ESS vendors. We
estimate that it would take no longer
than one hour for each vendor (at a cost
of $24.10 per hour) to comply with any
additional monitoring by HHS.
Therefore, we estimate a total annual
burden of 40 hours for all vendors for
a total cost burden estimate of $964.00.
In § 156.1105(e) of this proposed rule,
we propose a process by which an
enrollee satisfaction survey vendor that
is not approved by HHS could appeal
HHS’s determination. It is estimated
that filing an appeal with HHS would
take no longer than one hour. We
estimate that five survey vendors that
apply would not be approved and all of
those vendors would appeal HHS’s
determination and submit additional
documentation to HHS. Therefore, we
estimate five responses, for a total of
five burden hours, for a total cost of
$120.50.
The burden estimate associated with
quality standards for QHP issuers
D. ICR Regarding Quality Rating System
(§ 156.1120)
The burden and cost estimates
associated with quality standards for
QHP issuers related to the QRS outlined
in § 156.1120 would include estimates
for QRS measure data collection,
validation, and submission to CMS. We
estimate that a total of 575 QHP issuers
would be collecting and reporting QRS
measure data, by product type, using
administrative data sources and medical
records. Using the BLS labor category
estimates for a general operations
manager, computer programmer,
business operations specialist,
registered nurse, and medical records
and health information analyst, the
estimated annual cost and hourly
burden for a QHP issuer would be
$117,424 and 1650 hours, for an issuer
who has performance measures data
collection experience. We estimate that
approximately eighty percent of all
issuers, or 460 issuers, have such
experience. We anticipate additional
software purchases to generate measure
data and rates and increased third-party
data validation fees for issuers that do
not have the experience in data
collection and reporting for the QRS as
proposed in § 156.1120. Therefore, we
estimate that the additional cost burden
for each of the remaining 115 issuers
would be approximately $102,500 in the
initial year as they develop their data
collection systems and processes, for a
total of approximately $11,787,500. We
estimate $67,518,800 and 948,750 hours
as the total annual burden for the
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anticipated 575 QHP issuers to collect
and report QRS data.
E. ICRs Regarding Quality Standards for
Exchanges (§§ 155.1400 and 155.1405)
In § 155.1400 and § 155.1405, we
propose that each Exchange must
display, on its Web site, quality rating
and enrollee satisfaction survey result
information for QHPs offered on the
Exchange. We estimate 18 State
Exchanges and the FFE would collect
the relevant QRS and ESS information
for display. The burden estimate
associated with these standards would
include collection of the necessary data
by each Exchange to display on its Web
site. This burden and cost for Exchanges
are currently approved under ONC
0938–1156 in the total Web site site that
provides information including ESS and
quality ratings, on available QHPs. The
provisions of this proposed rule would
not affect the burden.
F. ICR Regarding Medical Loss Ratio
Requirements (§§ 158.150, 158.211,
158.220, 158.221, 158.231 and 158.243)
This proposed rule would amend the
MLR provisions regarding the treatment
of ICD–10 conversion costs. This
proposed rule further proposes MLR
calculation adjustments for issuers
affected by the transitional policy
announced in the CMS letter dated
November 14, 2013 and for issuers
participating in the State and Federal
Exchanges. This proposed rule would
also clarify how issuers are to calculate
their MLRs in States that require the
small group market and individual
market to be merged. In addition, this
proposed rule would clarify how issuers
must distribute de minimis rebates. Both
MLRs and rebates are reported on the
MLR annual reporting form.
The burden for the existing
information collection requirement is
approved under OCN 0938–1164. This
includes the annual reporting form and
instructions that are currently used by
issuers to submit MLR information to
HHS. The MLR annual reporting form
collects information on all distributed
and owed rebate amounts, regardless of
whether they are de minimis. Prior to
the July 31, 2015 deadline for the
submission of the annual MLR report for
the 2014 MLR reporting year, and in
accordance with the PRA, HHS plans to
solicit public comment and seek OMB
approval for an updated MLR annual
form that would reflect the changes in
MLR calculations. In addition, although
HHS is seeking OMB approval for
updates to the MLR annual form that
reflect changes in MLR calculations in
States that require the small group
market and individual market to be
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merged, and changes that would allow
issuers to separately report transitional
coverage, these changes are not
considered new reporting requirements
as they utilize information that is a
subset of information that issuers
already submit to HHS. We do not
anticipate that the proposed changes
would increase the burden on issuers.
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G. ICRs Regarding Civil Money Penalties
(§§ 155.206 and 155.285)
Section 155.206 describes the bases
and processes HHS proposes to use to
impose CMPs on noncompliant
consumer assistance personnel and
organizations. Section 155.285 describes
the bases and processes HHS proposes
to use to impose CMPs on persons who
provide false or fraudulent information
required under section 1411(b) of the
Affordable Care Act or who knowingly
and willfully use or disclose
information in violation of section
1411(g) of the Affordable Care Act. The
ICRs proposed in these provisions are
exempt from PRA requirements in
accordance with 5 CFR 1320.4(a)(2)
because this information would be
collected during the conduct of an
administrative action or investigation
involving an agency against specific
individuals or entities.
H. ICRs Regarding Fixed Indemnity
Insurance, Minimum Essential
Coverage, Certifications of Creditable
Coverage and HIPAA Opt-Out Election
Notice, Notice of Discontinuation,
Notice of Renewal (§§ 146.152, 146.180,
147.106, 148.122, 148.124, 148.220, and
156.602)
In § 148.220 of this proposed rule, we
propose that issuers of individual
market fixed indemnity insurance
include a notice in plan materials
stating that the coverage is not a
substitute for major medical coverage
and that lack of minimum essential
coverage may result in an additional
payment with one’s taxes. The notice
requirement could be satisfied by
inserting a statement into existing plan
documents. HHS would provide the
exact text of the notice and it would not
need to be customized. In addition,
under proposed § 156.602, issuers of
foreign group health coverage would be
required to provide notice to enrollees
who are citizens or nationals of the
United States of its minimum essential
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coverage status. Plan documents are
usually reviewed and updated annually
before a new plan year begins. Issuers
would be able to insert the statements
in their plan documents at that time at
minimal cost. Once the notice is
included in the plan documents the first
year, no additional cost would be
incurred in future years. Sections
146.152, 147.106 and 148.122 of this
proposed rule provide that issuers that
discontinue a product in the group or
individual market, or that provide the
option to renew coverage, would also be
required to provide written notices to
enrollees in a form and manner
specified by the Secretary. HHS would
provide the exact text of the notices and
they would not need to be customized.
The burden associated with these
notices would not be subject to the
Paperwork Reduction Act of 1995 in
accordance with 5 CFR 1320.3(c)(2).
Certifications of creditable coverage
under § 148.124 would no longer be
required to be provided starting
December 31, 2014. The burden is
currently approved under OCN 0938–
0702. In the individual market, the
anticipated reduction in annual burden
hours would be 835,517, with an
anticipated reduction in cost of
$25,625,306. The burden for HIPAA
Opt-out Election notices under
§ 146.180 is currently approved under
OCN 0938–0702 as well. Electronic
submission of opt-out election notice
will also reduce costs for plans by
eliminating the need for mailing paper
forms.
If you comment on these information
collection requirements, please do
either of the following:
1. Submit your comments
electronically as specified in the
ADDRESSES section of this proposed rule;
or
2. Submit your comments to the
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Attention: CMS Desk Officer,
CMS–9949–P. Fax: (202) 395–6974; or
Email: OIRA_submission@omb.eop.gov.
V. Regulatory Impact Analysis
A. Summary
This proposed rule addresses various
requirements applicable to health
insurance issuers, Exchanges,
Navigators, non-Navigator assistance
personnel, and other entities under the
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Affordable Care Act. It also proposes a
number of amendments relating to the
premium stabilization programs, the
medical loss ratio program, certified
application counselor programs,
affordability exemptions, guaranteed
availability and renewability of
coverage, and quality reporting
requirements. Additionally, it proposes
the grounds for imposing CMPs on
persons who provide false or fraudulent
information to the Exchange and on
persons improperly using or disclosing
information; to modify standards related
to opt-out provisions for self-funded
non-Federal governmental plans and
individual market provisions under the
Health Insurance Portability and
Accountability Act of 1996; and
standards for recognition of certain
types of foreign group coverage as
minimum essential coverage.
CMS has crafted this rule to
implement the protections intended by
Congress in an economically efficient
manner. We have examined the effects
of this rule as required by Executive
Order 12866 (58 FR 51735, September
1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96–354),
section 1102(b) of the Social Security
Act, the Unfunded Mandates Reform
Act of 1995 (Pub. L. 104–4), Executive
Order 13132 on Federalism, and the
Congressional Review Act (5 U.S.C.
804(2)). In accordance with OMB
Circular A–4, CMS has quantified the
benefits, costs and transfers where
possible, and has also provided a
qualitative discussion of some of the
benefits, costs and transfers that may
stem from this proposed rule.
B. Executive Orders 13563 and 12866
Executive Order 12866 (58 FR 51735)
directs agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects; distributive impacts; and
equity). Executive Order 13563 (76 FR
3821, January 21, 2011) is supplemental
to and reaffirms the principles,
structures, and definitions governing
regulatory review as established in
Executive Order 12866.
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Section 3(f) of Executive Order 12866
defines a ‘‘significant regulatory action’’
as an action that is likely to result in a
proposed rule—(1) having an annual
effect on the economy of $100 million
or more in any one year, or adversely
and materially affecting a sector of the
economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local or tribal
governments or communities (also
referred to as ‘‘economically
significant’’); (2) creating a serious
inconsistency or otherwise interfering
with an action taken or planned by
another agency; (3) materially altering
the budgetary impacts of entitlement
grants, user fees, or loan programs or the
rights and obligations of recipients
thereof; or (4) raising novel legal or
policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in the Executive
Order.
A regulatory impact analysis (RIA)
must be prepared for major rules with
economically significant effects ($100
million or more in any 1 year), and a
‘‘significant’’ regulatory action is subject
to review by the OMB. HHS has
concluded that this rule is likely to have
economic impacts of $100 million or
more in any one year, and therefore
meets the definition of ‘‘significant
rule’’ under Executive Order 12866.
Therefore, HHS has provided an
assessment of the potential costs,
benefits, and transfers associated with
this proposed regulation.
1. Need for Regulatory Action
Starting in 2014, qualified individuals
and qualified employers are able to
obtain coverage provided through
Exchanges. The proposed provisions,
amendments and clarifications in this
proposed rule would address
stakeholder concerns and inquiries and
ensure smooth functioning of health
insurance markets and Exchanges and
ensure that individuals have access to
high quality and affordable health
insurance coverage. In addition, this
proposed rule would establish
methodologies for calculating the MLR
to address ICD–10 conversion costs,
MLR and rebate calculations in States
that require the individual and small
group markets to be merged, the
distribution of de minimis rebates, and
to accommodate the special
circumstances of issuers affected by the
transitional policy announced in the
CMS letter dated November 14, 2013,
and issuers participating in the State
and Federal Exchanges.
2. Summary of Impacts
In accordance with OMB Circular A–
4, Table V.1 below depicts an
accounting statement summarizing
CMS’s assessment of the benefits, costs,
and transfers associated with this
regulatory action. The period covered by
the RIA is 2014–2018.
HHS anticipates that the provisions of
this proposed rule will ensure that all
consumers have access to quality and
affordable health care and are able to
make informed choices, ensure smooth
operation of Exchanges, ensure that
premium stabilization programs work as
intended, provide flexibility to SHOPs
and employers, and protect consumers
from fraudulent and criminal activities.
Affected entities such as QHP issuers,
Navigators and non-Navigator assistance
personnel, designated certified
application counselor organizations,
survey vendors, and States, would incur
costs to comply with the proposed
provisions, including administrative
costs related to notices, surveys,
training, and recertification
requirements. In accordance with
Executive Order 12866, HHS believes
that the benefits of this regulatory action
justify the costs.
TABLE V.1—ACCOUNTING TABLE
Benefits:
Qualitative:
* Ensure access to affordable and quality health insurance coverage for all individuals.
* Allow consumers to make informed choices.
* Lower out-of-pocket costs for individuals who purchase fixed indemnity insurance.
* Possible reduction in cost sharing due to adjustment in methodology for calculating annual limitations on cost-sharing and small group
deductibles.
* Ensure sufficiency of funds in the reinsurance payment pool.
* Ensure consumer protection and privacy and security of PII.
* Discourage fraudulent or criminal activity by consumer assistance personnel and entities.
* Provide additional flexibility to SHOPs and employers and allow employers to select plans with updated rate information.
* Improve consistency of MLR calculations among issuers in States with merged individual and small group markets and improve accuracy
of rebate payments.
Costs:
Estimate
Annualized Monetized ($millions/year) ...........
Year dollar
$48.78 million 1 ...............................................
$49.52 million 1 ...............................................
2013
2013
Discount
rate percent
Period
covered
7
3
2014–2018
2014–2018
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Net annual costs to enrollees related to ESS and Marketplace survey; recertification of certified application counselors by States; administrative
costs incurred by survey vendors to appeal application denials; administrative costs to QHP issuers related to data submissions for QRS and
ESS administration; costs related to notice and disclosure requirements for certified application counselor recertification; consumer authorization for Navigators and non-Navigator personnel; and a reduction in costs for issuers in the individual market due to discontinuation of certification of creditable coverage.
Qualitative:
* Costs to certified application counselors to obtain required training for recertification.
* Reduction in costs to consumers due to ability to make requests to dismiss appeals by telephone.
* Possible increase in premiums due to adjustments in methodology for calculating annual limitations on cost-sharing and small group
deductibles.
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TABLE V.1—ACCOUNTING TABLE - CONTINUED
Transfers:
Estimate
Annualized Monetized ($millions/year) ...........
Year dollar
$2.93 million ...................................................
$2.99 million ...................................................
2013
2013
Discount
rate percent
Period
covered
7
3
2014–2018
2014–2018
Net annual transfer of rebate dollars to enrollees from shareholders or nonprofit stakeholders, resulting from adjustment in MLR methodology for
issuers in States with merged individual and small group markets.
Qualitative:
* Possible reduction in rebates paid by issuers to enrollees due to adjustment in MLR methodology for issuers affected by the November
2013 transitional policy and unexpected costs during the implementation of the Exchanges, and to account for ICD–10 conversion costs.
* Possible transfer of transitional reinsurance program funds from the Federal government to non-grandfathered reinsurance-eligible plans
in the individual market.
* Possible increase in total risk corridors payment amounts made by the Federal government and decrease in total risk corridors receipts,
although the Federal government intends to implement the risk corridors program in a budget neutral manner.
1. Note: Approximately $13 million in costs are estimated in the RIA below and the remaining costs related to ICRs are estimated in section IV
above.
3. Anticipated Benefits, Costs and
Transfers
The impacts of the existing
regulations that are being amended and
clarified in this proposed rule have
already been addressed in RIAs
included in previous rulemaking. This
RIA only includes the impacts of new
provisions and any changes to previous
estimates as a result of amendments to
existing provisions.
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Benefits
Provisions of this proposed rule
would ensure that all individuals have
access to affordable and quality health
insurance coverage and the necessary
information to make informed choices.
Making quality rating and enrollee
satisfaction survey information available
to consumers would allow them to make
informed choices and provide issuers
with an incentive to improve quality of
care and consumer experience. The
results from the Marketplace survey
would drive quality improvement in
Exchanges and provide regulators and
stakeholders with information to use for
monitoring and oversight purposes. The
proposed amendments to special
enrollment periods would ensure that
individuals who experience loss of
coverage or exceptional circumstances
have continued access to healthcare.
The proposal to designate foreign group
health coverage for individuals on
expatriate status as minimum essential
coverage would ensure that such
individuals have appropriate coverage
while abroad or visiting the United
States.
The proposed amendments for fixed
indemnity insurance would allow such
plans to be sold as secondary to other
health insurance coverage that meets the
definition of minimum essential
coverage. This would allow individuals
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that buy such coverage to lower their
out-of-pocket costs.
The proposed adjustments to the
transitional reinsurance program would
ensure that the reinsurance pool is
sufficient to provide the premium
stabilization benefits intended by
statute. The proposed adjustments to the
risk corridors formula for the 2015
benefit year would help to mitigate
issuers’ unexpected administrative costs
and uncertainties around operations and
the risk pool, and to stabilize the market
as it continues to transition to full
compliance with Affordable Care Act
requirements.
The proposed regulations would
clarify some of the standards for
Navigator and certified application
counselor conduct that would ensure
consumer protection and ensure that
Navigators provide information and
services concerning enrollment in QHPs
in a fair and impartial manner and that
certified application counselors act in
consumers’ best interests. The proposed
rule would also provide HHS with the
authority to impose CMPs on
Navigators, non-Navigator assistance
personnel, certified application
counselors, and certified application
counselor organizations in the FFE who
violate the Exchange standards
applicable to them. This would ensure
that consumers interacting with the
Exchange receive high-quality
assistance and robust consumer
protection. The proposed provisions to
impose CMPs for provision of false or
fraudulent information, and improper
use or disclosure of information would
also ensure privacy and security of
consumers’ PII.
The proposed amendments to the
annual employer and employee
enrollment periods in the SHOP would
benefit SHOPs by providing issuers with
the same amount of time to complete
the SHOP QHP certification process as
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that available for the individual
Exchange. Aligning the start dates for
the employer election period with the
start of individual market Exchange
open enrollment for 2015 would
provide Exchanges with a uniform
timeline for improving and launching
Exchange services for 2015.
Additionally, a uniform QHP filing and
review timeline for both markets for
2015 would reduce confusion and
provide efficiencies to scale in review,
providing potential resource savings to
Exchanges and QHP issuers. Removing
the required minimum lengths of both
the employer election period and the
employee open enrollment period
would provide additional flexibility to
SHOPs and employers and allow
employers to select plans with the most
up-to-date rate information.
The proposed amendment to provide
for a one year transition policy under
which a SHOP would be permitted to
not implement employee choice in 2015
would alleviate concerns that HHS has
with specific circumstances where
employee choice would result in
significant adverse selection in the
State’s small group market that cannot
be remediated through the premium
stabilization programs or the single risk
pool, or that there would not be a
meaningful choice of QHPs and/or
stand-alone dental plans in the State’s
SHOP. Allowing for this transitional
policy in 2015 will provide minimal
disruption to small group markets.
The proposed amendment to our
methodology for calculating the annual
limitation on cost sharing and the
annual limitation on small group
deductibles could reduce cost sharing
paid by some enrollees in the individual
and group markets.
The proposed amendments to the
MLR methodology in States that require
the small group market and individual
market to be merged would improve the
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consistency of MLR calculations among
issuers in those States and improve the
accuracy of rebate payments.
The approaches we are considering to
define the required contribution
percentage would provide that
determinations of affordability
exemptions would take into account the
rate of premium growth over the rate of
income growth. We do not anticipate
that these approaches would
significantly alter the number of
individuals who would be expected to
enroll in health insurance plans or make
shared responsibility payments.
Costs
Affected entities would incur costs to
comply with the provisions of this
proposed rule. Costs related to ICRs
subject to PRA are discussed in detail in
section IV and include administrative
costs incurred by survey vendors to
appeal application denials; costs to QHP
issuers related to data submissions for
QRS, ESS administration; costs related
to notice and disclosure requirements
for certified application counselor
recertification, consumer authorization
for Navigators and non-Navigator
assistance personnel; and a reduction in
costs for issuers in the individual due to
discontinuation of certification of
creditable coverage. In this section, we
discuss other costs related to the
proposed provisions.
Each Exchange must establish its own
recertification process for certified
application counselors and designated
certified application counselor
organizations. We expect that
establishing a process for recertification
would include updating recertification
training materials in all Exchanges. We
estimate that up to 18 State Exchanges
will develop their own training
materials. We expect that an Exchange
would develop training materials for
recertification on an annual basis. We
assume that it would take a mid-level
health insurance analyst (with an hourly
labor cost of $49.35) 8 hours to update
the training, 4 hours for a computer
programmer (at $52.50 per hour) to
update the online training module and
1 hour by a senior manager (at $79.08
per hour) to review. The total cost for
each State Exchange is estimated to be
approximately $680, and the total cost
for 18 State Exchanges would be
approximately $12,240.
The proposed requirement for appeals
entities to dismiss an appeal if the
request is received via telephonic
signature (if the appeals entity is
capable of accepting telephonic
withdrawals) would make the process
more efficient and may reduce costs to
the appellant.
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The enrollee satisfaction survey
would impact enrollees responding to
the survey, survey vendors and QHP
issuers. In 2014, a psychometric test of
the survey would be carried out, while
in 2015 a beta test would be performed.
The cost to issuers is addressed in
section IV. We anticipate that in 2014,
4,200 enrollees would participate in the
psychometric test and in 2015 onwards,
6,000,040 enrollees would complete the
survey. The total cost in 2014 of
administering the survey to enrollees is
estimated to be approximately $45,549
and the total cost to enrollees and
survey vendors is estimated to be
approximately $6,507,964 in 2015 and
future years. In 2014, only one survey
vendor would conduct the psychometric
test and in the following years, about 40
vendors are expected to conduct the
survey.57 In addition, each QHP issuer
would have to contract with an ESS
vendor. We estimate approximately
$16,000 as the annual cost for a QHP
issuer to contract with an ESS vendor,
for a total annual cost of $9.2 million for
575 QHP issuers.
The Marketplace survey would be
administered by a survey vendor under
contract with HHS. A psychometric test
would be conducted in 2014 with a beta
test in 2015. Consumers would incur
burden to respond to the survey. We
estimate that each response would take
0.4 hours for a total of 3,150 responses
requiring 1,260 hours in 2014 and a
total of 61,200 responses requiring
24,480 hours in 2015 onwards. Total
costs would be approximately $30,366
in 2014 and $589,968 in following
years.58
The proposed amendment to our
methodology for calculating the annual
limitation on cost sharing and the
annual limitation on small group
deductibles could lead some issuers to
increase premiums slightly, potentially
resulting in higher premiums for
consumers.
Transfers
Currently, the MLR regulation permits
inclusion of ICD–10 conversion costs in
quality improving activity expenses
57 Detailed burden estimates can be found in the
Supporting Statement for the Health Insurance
Marketplace Consumer Experience Surveys:
Enrollee Satisfaction Survey and Marketplace
Survey Data Collection, found at https://
www.cms.gov/Regulations-and-Guidance/
Legislation/PaperworkReductionActof1995/PRAListing.html.
58 Detailed burden estimates can be found in the
Supporting Statement for the Health Insurance
Marketplace Consumer Experience Surveys:
Enrollee Satisfaction Survey and Marketplace
Survey Data Collection, found at https://
www.cms.gov/Regulations-and-Guidance/
Legislation/PaperworkReductionActof1995/PRAListing.html.
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only through the 2013 MLR reporting
year. However, the Secretary has
changed the date by which issuers are
required to adopt ICD–10 as the
standard medical code set from October
1, 2013 to October 1, 2014. Therefore,
this proposed rule proposes to permit
issuers to include their ICD–10
conversion costs through the MLR
reporting year in which the Secretary
requires conversion to be completed,
which is currently expected to be 2014.
Based on the 2012 MLR data, we
estimate that the current ICD–10
provision reduced total rebates for 2012
by less than 2 percent. To the extent
issuers may have completed a
substantial portion of ICD–10
conversion prior to 2014, we expect that
the impact of the proposed change on
the 2014 rebates would be even smaller.
This proposed rule also proposes to
account for the special circumstances of
issuers affected by the CMS November
2013 transitional policy by allowing
those issuers to multiply the incurred
claims and expenses for quality
improving activities incurred in 2014 in
the MLR numerator by 1.0001. This
adjustment would be limited to issuers
that provided transitional coverage in
the individual or small group markets in
States that adopted the transitional
policy. In addition, this proposed rule
proposes to account for the special
circumstances of the issuers that
provided coverage through the State and
Federal Exchanges by allowing those
issuers to multiply the incurred claims
and expenses for quality improving
activities incurred in 2014 in the
numerator by 1.0004. This adjustment
would be limited to issuers offering
coverage in the individual or small
group markets through the Exchanges.
Based on the 2012 MLR data, we
estimate that the proposed adjustment
for issuers affected by the transitional
policy and for issuers affected by the
Exchanges rollout might reduce the total
rebates by 0.5 percent for 2014.
In addition, this proposed rule
proposes to amend the MLR
methodology to clarify how issuers must
calculate MLRs in States that require the
small group market and individual
market to be merged for MLR
calculation purposes. This would
improve the consistency of MLR
calculations among issuers in those
States and improve the accuracy of
rebate payments. Currently, only
Massachusetts, Vermont, and the
District of Columbia require the small
group market and individual market to
be merged (the Vermont and the District
of Columbia requirements take effect in
2014). If an issuer met the respective
MLR standards in the separate markets,
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then this provision would not have any
impact on rebates. However, if an issuer
met the MLR standards only in one
market and merging the two markets
would result in the issuer meeting (or
being unable to meet) the MLR
standards in the merged market, the
issuer might have to pay lower (or
higher) rebates and there would be a
transfer from enrollees to issuers (or
from issuers to enrollees). Based on the
2012 MLR data, we anticipate that the
proposed change might result in issuers
paying an additional $3.8 million in
rebates.
This proposed rule also proposes that
issuers must distribute rebates directly
to enrollees where (1) all of an issuer’s
rebates are de minimis, or (2)
distribution of de minimis rebates to
enrollee(s) whose rebates are not de
minimis would result in an enrollee
receiving a rebate that exceeds the
enrollee’s annual premium. The current
de minimis rebate provisions allow
issuers not to distribute de minimis
rebates to enrollees, but instead to
aggregate such rebates and distribute
them to enrollees whose rebates are not
de minimis. With respect to the first
proposed de minimis provision, the
current de minimis rebate provisions do
not account for a situation where all of
an issuer’s rebates are de minimis. It is
presumed that in such a circumstance,
issuers would distribute the de minimis
rebates to all enrollees whose rebates are
de minimis since these issuers would
not have any enrollees with non-de
minimis rebates; therefore, we do not
consider the proposed clarification to
create any additional burden. We are
currently aware of one issuer that was
in this situation, but more issuers may
benefit from this clarification as they
begin to come closer to meeting the
MLR standard in future years. With
respect to the second proposed de
minimis provision, we are not currently
aware of any issuers that experienced
this circumstance. Further, there should
not be any impact to the total amount
of rebates disbursed because the
changes proposed here only impact the
recipient of rebates and not the total
amount paid.
In this proposed rule, we propose to
revise our allocation of reinsurance
contributions collected for the 2014 and
2015 benefit years so that reinsurance
contributions collected are allocated
first to the reinsurance pool and
administrative expenses and second to
payments to the U.S. Treasury. We
expect that this proposal would not
have a significant effect on transfers,
because we estimate that we will collect
the full amount of reinsurance
contributions. This proposal could
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lower premiums by reducing the
uncertainty associated with reinsurance
payments to non-grandfathered plans in
the individual market that are eligible
for such payments under 45 CFR
153.234.
The Affordable Care Act creates a
temporary risk corridors program for the
years 2014, 2015, and 2016 that applies
to QHPs, as defined in § 153.500. The
risk corridors program creates a
mechanism for sharing risk for
allowable costs between the Federal
government and QHP issuers. The
Affordable Care Act establishes the risk
corridors program as a Federal program;
consequently, HHS will operate the risk
corridors program under Federal rules
with no State variation. The risk
corridors program will help protect
against inaccurate rate setting in the
early years of the Exchanges by limiting
the extent of issuer losses and gains. For
the 2015 benefit year, we are proposing
an adjustment to the risk corridors
formula that would help mitigate
potential QHP issuers’ unexpected
administrative costs. Although our
initial modeling suggests that this
adjustment could increase the total risk
corridors payment amount made by the
Federal government and decrease risk
corridors receipts, we estimate that,
even with this change, the program can
be implemented in a budget neutral
manner.
C. Regulatory Alternatives
Under the Executive Order, CMS is
required to consider alternatives to
issuing rules and alternative regulatory
approaches. CMS considered the
regulatory alternatives below:
1. Collecting ESS Data at the Product
Level Instead of Each Product per Metal
Tier
Under this alternative, HHS would
require QHPs to collect ESS data from
a single sample for each product (versus
each product in each metal tier). This
option would reduce the cost for issuers
who offer the same product in multiple
tiers. However, collecting data at the
product level would prevent consumers
from understanding differences in
enrollee satisfaction at the individual
product per tier level, which may vary
with differences in cost sharing. This
would reduce the benefits that
consumers derive from ESS data.
2. Using Medicaid CAHPS as Is Instead
of Adding Additional and New
Questions to the ESS
Under this alternative, HHS would
require QHPs to collect enrollee
satisfaction information using the
Medicaid CAHPS instrument without
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further enhancement. The ESS will
include more questions than the
Medicaid CAHPS—including detailed
questions about the patient’s costs—that
are particularly appropriate to Exchange
enrollees. Eliminating these questions
would reduce the cost to issuers, but
also reduce benefits that consumers
derive from the ESS data.
3. Collecting QRS Data for Each Product
per Metal Tier Instead of at the Product
Level
Under this alternative, HHS would
require QHPs to collect the QRS data at
the same level (individual product per
metal tier) as they collect ESS
information. Assuming that QHPs offer
each product in two metal tiers this
option would double the cost to QHPs
of collecting QRS data. However, it
might not appreciably increase
consumer information about QHPs in
the early years of the Exchanges if the
quality of care in the same product does
not differ significantly within tiers (i.e.,
the variation should only be by the
configuration of cost sharing within a
limited range of actuarial value).
Further, a QHP’s enrollment size at the
product metal level may be too small in
the early years of Exchange
implementation to ensure reliable
results.
4. Using the Medicare Advantage (MA)
CAHPS Instrument and Star System
Under this alternative, HHS would
require QHPs to collect enrollee
satisfaction information from Exchange
enrollees using the MA CAHPS
instrument. The ESS presently includes
29 more questions, than MA CAHPS.
Use of the MA CAHPS would reduce the
cost to consumers and also the QHP cost
of data entry. However, the MA CAHPS
instrument and Star ratings are designed
for a different population and are not
necessarily suitable to measure
experience among Exchange enrollees. It
also would have limited applicability
for use by consumers for QHP
comparison and selection purposes.
CMS believes that the options
adopted for this proposed rule would be
more efficient ways to extend the
protections of the Affordable Care Act to
enrollees without imposing significant
burden on issuers and States.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
requires agencies that issue a rule to
analyze options for regulatory relief of
small businesses if a rule has a
significant impact on a substantial
number of small entities. The RFA
generally defines a ‘‘small entity’’ as—
(1) a proprietary firm meeting the size
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standards of the Small Business
Administration (SBA), (2) a nonprofit
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’’). CMS uses as its measure of
significant economic impact on a
substantial number of small entities a
change in revenues of more than 3
percent to 5 percent.
As discussed in the Web Portal
interim final rule with comment period
published on May 5, 2010 (75 FR
24481), CMS examined the health
insurance industry in depth in the RIA
we prepared for the proposed rule on
establishment of the Medicare
Advantage program (69 FR 46866,
August 3, 2004). In that analysis it was
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 entity’’
established by the SBA. Based on data
from MLR annual report submissions for
the 2012 MLR reporting year,59 out of
510 companies offering comprehensive
health insurance policies nationwide,
there are 58 small entities, each with
less than $35.5 million in earned
premiums, that offer individual or group
health insurance coverage and would
therefore be subject to the provisions of
this proposed rule.60 Forty-three percent
of these small entities belong to holding
groups, and many if not all of these
small entities are likely to have other
lines of business (e.g., insurance
business other than health insurance,
and business other than insurance) that
would result in their revenues
exceeding $35.5 million. Based on this
analysis, HHS expects that the proposed
provisions would not affect a substantial
number of small issuers.
The proposed amendments to the
annual employer and employee election
periods in the SHOP, including
removing the required minimum lengths
of both the employer election period
and the employee open enrollment
period would benefit SHOPs and
employers. HHS does not anticipate that
59 These data can be accessed at https://
www.cms.gov/CCIIO/Resources/Data-Resources/
mlr.html.
60 The size threshold for ‘‘small’’ business
established by the SBA is currently $35.5 million
in annual receipts for health insurance issuers. See
‘‘Table of Small Business Size Standards Matched
To North American Industry Classification System
Codes,’’ effective July 23, 2013, U.S. Small Business
Administration, available at https://www.sba.gov.
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this will impose any costs on small
employers.
Some of the entities that voluntarily
act as Navigators and non-Navigator
assistance personnel subject to
§ 155.215, or as designated certified
application counselor organizations,
might be small entities and would incur
costs to comply with the provisions of
this proposed rule. It should be noted
that HHS, in its role as the operator of
the FFEs, does not impose any fees on
these entities for participating in their
respective programs, nor are there fees
for taking the Federally required
training or completing continuing
education or recertification in FFEs.
Further, the cost burden related to
continuing education and
recertification, and recordkeeping
would generally be considered an
allowed cost that would be covered by
the Navigator grants for the FFEs, and
these grant funds may be drawn down
as the grantee incurs such costs. The
costs associated with these proposals
might also be covered by other
compensation provided by an Exchange,
such as payments through contracts to
non-Navigator assistance personnel.
Though it is very likely that all costs
associated with these proposals would
be largely covered by affected entities’
and individuals’ funding sources, HHS
cannot guarantee that all such costs
would be covered because of the
possibility of budget limitations
applicable to the FFE in any given
period, and because there may be
variations in how State Exchanges
provide funding for these programs. To
the extent that all such costs would not
covered by these funding sources, other
outside sources may also be available to
cover unfunded costs that remain. Costs
incurred by designated certified
application counselor organizations
related to continuing education and
recertification and recordkeeping are
expected to be low. In some
circumstances funds from sources
outside of the Exchange, including
Federal funds such as Health Resources
and Services Administration (HRSA)
grants to health centers, or private or
State funds might be available to cover
certified application counselor costs.
E. Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act (UMRA) of 1995
requires that agencies assess anticipated
costs and benefits before issuing any
proposed rule that includes a Federal
mandate that could result in
expenditure in any one year by State,
local or tribal governments, in the
aggregate, or by the private sector, of
$100 million in 1995 dollars, updated
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annually for inflation. In 2014, that
threshold level is approximately $141
million.
UMRA does not address the total cost
of a proposed rule. Rather, it focuses on
certain categories of cost, mainly those
‘‘Federal mandate’’ costs resulting
from—(1) imposing enforceable duties
on State, local, or tribal governments, or
on the private sector; or (2) increasing
the stringency of conditions in, or
decreasing the funding of, State, local,
or tribal governments under entitlement
programs.
This proposed rule includes mandates
on State, local, or tribal governments.
Issuers, certified application counselors
and Exchanges are expected to incur
costs of approximately $13 million in
2014 and approximately $85 million in
2015 onwards to comply with the
provisions of this proposed rule.
However, beginning in 2015, issuers in
the individual market would experience
a reduction in costs of approximately
$26 million due to the discontinuation
of the certification of creditable
coverage. Consistent with policy
embodied in UMRA, this proposed rule
has been designed to be the least
burdensome alternative for State, local
and tribal governments, and the private
sector while achieving the objectives of
the Affordable Care Act.
F. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule that imposes substantial
direct requirement costs on State and
local governments, preempts State law,
or otherwise has Federalism
implications.
States are the primary regulators of
health insurance coverage. States will
continue to apply State laws regarding
health insurance coverage. However, if
any State law or requirement prevents
the application of a Federal standard,
then that particular State law or
requirement would be preempted. State
requirements that are more stringent
than the Federal requirements would be
not be preempted by this proposed rule,
unless they conflict with or prevent
application of the provisions of title I of
the Affordable Care Act within the
meaning of section 1321(d) of the
Affordable Care Act. Accordingly, States
have significant latitude to impose
requirements with respect to health
insurance coverage that are more
restrictive than the Federal law
requirements.
The proposed amendment to
§ 155.225(d) would clarify that certified
application counselors must meet any
licensing, certification or other
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standards prescribed by the State so
long as such standards do not prevent
the application of the provisions of title
I of the Affordable Care Act, within the
meaning of section 1321(d) of the
Affordable Care Act. The proposed
provisions also specify State
requirements applicable to Navigators,
non-Navigator assistance personnel, or
certified application counselors that
would prevent the application of the
provisions of title I of the Affordable
Care Act, within the meaning of section
1321(d) of the Affordable Care Act. They
include requirements that require
referrals to entities or individuals not
required to provide impartial
information or act in a consumer’s best
interest, or prevent Navigators, nonNavigator assistance personnel, or
certified application counselors from
providing services to all individuals
seeking assistance, or providing advice
regarding substantive benefits or
comparative benefits of different health
plans; in FFEs conflict with Federal
standards or make it impossible to fulfill
required duties, as such requirements
are applied or implemented in the State;
in FFEs, render ineligible otherwise
eligible individuals or entities from
participating as Navigators, nonNavigator assistance personnel subject
to § 155.215 or certified application
counselors under standards applicable
to an FFE; and requiring that Navigators
hold an agent or broker license or carry
errors or omissions insurance.
Some States already have
requirements for and publicly report
health plan quality and outcomes data,
and we want to encourage State
flexibility and innovation, consistent
with the Affordable Care Act. In
addition to prominently displaying
quality rating information for each QHP,
as calculated by HHS in accordance
with the QRS, a State Exchange may
display additional QHP quality-related
information, as appropriate.
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have Federalism implications or limit
the policymaking discretion of the
States, HHS has engaged in efforts to
consult with and work cooperatively
with affected States. HHS has consulted
with stakeholders on policies related to
the operation of Exchanges, including
the SHOP and the premium stabilization
programs. HHS has held a number of
listening sessions with State
representatives to gather public input.
HHS consulted with State
representatives through regular
meetings with the National Association
of Insurance Commissioners (NAIC) and
regular contact with States through the
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Exchange Establishment grant and
Exchange Blueprint approval processes.
Throughout the process of developing
this proposed rule, CMS has attempted
to balance the States’ interests in
regulating health insurance issuers. By
doing so, it is CMS’ view that it has
complied with the requirements of
Executive Order 13132. Under the
requirements set forth in section 8(a) of
Executive Order 13132, and by the
signatures affixed to this rule, HHS
certifies that the CMS Center for
Consumer Information and Insurance
Oversight has complied with the
requirements of Executive Order 13132
for the attached proposed rule in a
meaningful and timely manner.
G. Congressional Review Act
This proposed rule is subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801 et seq.), which specifies that
before a rule can take effect, the Federal
agency promulgating the rule shall
submit to each House of the Congress
and to the Comptroller General a report
containing a copy of the rule along with
other specified information, and has
been transmitted to Congress and the
Comptroller General for review.
List of Subjects
45 CFR Part 146
Health care, Health insurance,
Reporting and recordkeeping
requirements.
45 CFR Part 147
Health care, Health insurance,
Reporting and recordkeeping
requirements, State regulation of health
insurance.
45 CFR Part 148
Administrative practice and
procedure, Health care, Health
insurance, Penalties, Reporting and
recordkeeping requirements.
45 CFR Part 153
Administrative practice and
procedure, Adverse selection, Health
care, Health insurance, Health records,
Organization and functions
(Government agencies), Premium
stabilization, Reporting and
recordkeeping requirements,
Reinsurance, Risk adjustment, Risk
corridors, Risk mitigation, State and
local governments.
45 CFR Part 155
Administrative practice and
procedure, Health care access, Health
insurance, Reporting and recordkeeping
requirements, State and local
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governments, Cost-sharing reductions,
Advance payments of premium tax
credit, Administration and calculation
of advance payments of the premium
tax credit, Plan variations, Actuarial
value.
45 CFR Part 156
Administrative appeals,
Administrative practice and procedure,
Administration and calculation of
advance payments of premium tax
credit, Advertising, Advisory
committees, Brokers, Conflict of
interest, Consumer protection, Costsharing reductions, Grant programs—
health, Grants administration, Health
care, Health insurance, Health
maintenance organization (HMO),
Health records, Hospitals, American
Indian/Alaska Natives, Individuals with
disabilities, Loan programs—health,
Organization and functions
(Government agencies), Medicaid,
Payment and collections reports, Public
assistance programs, Reporting and
recordkeeping requirements, State and
local governments, Sunshine Act,
Technical assistance, Women, and
Youth.
45 CFR Part 158
Administrative practice and
procedure, Claims, Health care, Health
insurance, Health plans, Penalties,
Reporting and recordkeeping
requirements, Premium revenues,
Medical loss ratio, Rebating.
For the reasons set forth in the
preamble, the Department of Health and
Human Services proposes to amend 45
CFR parts 146, 147, 148, 153, 155, 156,
and 158 as set forth below:
PART 146—REQUIREMENTS FOR THE
GROUP HEALTH INSURANCE
MARKET
1. The authority citation for part 146
continues to read as follows:
■
Authority: Secs. 2702 through 2705, 2711
through 2723, 2791, and 2792 of the PHS Act
(42 U.S.C. 300gg–1 through 300gg–5, 300gg–
11 through 300gg–23, 300gg–91, and 300gg–
92).
2. Section 146.152 is amended by—
A. Revising paragraphs (c)(1) and (f).
B. Redesignating paragraph (g) as
paragraph (h).
■ C. Adding new paragraph (g).
The revision and addition reads as
follows:
■
■
■
§ 146.152 Guaranteed renewability of
coverage for employers in the group
market.
*
*
*
*
*
(c) * * *
(1) The issuer provides notice in
writing, in a form and manner specified
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by the Secretary, to each plan sponsor
provided that particular product in that
market (and to all participants and
beneficiaries covered under such
coverage) of the discontinuation at least
90 days before the date the coverage will
be discontinued;
*
*
*
*
*
(f) Exception for uniform modification
of coverage. (1) Only at the time of
coverage renewal may issuers modify
the health insurance coverage for a
product offered to a group health plan
in the following—
(i) Large group market; and
(ii) Small group market if, for
coverage available in this market (other
than only through one or more bona fide
associations), the modification is
consistent with State law and is
effective uniformly among group health
plans with that product.
(2) For purposes of this paragraph (f),
modifications made solely pursuant to
applicable Federal or State law are
considered a uniform modification of
coverage. Other types of modifications
are considered a uniform modification
of coverage if the product that has been
modified meets all of the following
criteria:
(i) The product is offered by the same
health insurance issuer (within the
meaning of section 2791(b)(2) of the
PHS Act).
(ii) The product is offered as the same
product type (e.g., preferred provider
organization (PPO) or health
maintenance organization (HMO)).
(iii) The product covers a majority of
the same counties in its service area;
(iv) The product has the same costsharing structure, except for variation in
cost sharing solely related to changes in
cost and utilization of medical care, or
to maintain the same level of coverage
described in sections 1302(d) and (e) of
the Affordable Care Act.
(v) The product provides the same
covered benefits, except for changes in
benefits that cumulatively impact the
rate for the product by no more than 2
percent (not including changes required
by applicable Federal or State law).
(3) A State may establish criteria that
broaden, but not restrict, the definition
of a uniform modification of coverage
under paragraph (f)(2) of this section.
(g) Notice of renewal of coverage. If an
issuer is renewing coverage as described
in paragraph (a) of this section, or
uniformly modifying coverage as
described in paragraph (f) of this
section, the issuer must provide to each
plan sponsor written notice of the
renewal in a form and manner specified
by the Secretary.
*
*
*
*
*
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3. Section 146.180 is revised to read
as follows:
■
§ 146.180 Treatment of non-Federal
governmental plans.
(a) Opt-out election for self-funded
non-Federal governmental plans—(1)
Requirements subject to exemption. The
PHS Act requirements described in this
paragraph are the following:
(i) Limitations on preexisting
condition exclusion periods in
accordance with section 2701 of the
PHS Act as codified before enactment of
the Affordable Care Act.
(ii) Special enrollment periods for
individuals and dependents described
under section 2704(f) of the PHS Act.
(iii) Prohibitions against
discriminating against individual
participants and beneficiaries based on
health status under section 2705 of the
PHS Act, except that the sponsor of a
self-funded non-Federal governmental
plan cannot elect to exempt its plan
from requirements under section
2705(a)(6) and 2705(c) through (f) that
prohibit discrimination with respect to
genetic information.
(iv) Standards relating to benefits for
mothers and newborns under section
2725 of the PHS Act.
(v) Parity in mental health and
substance use disorder benefits under
section 2726 of the PHS Act.
(vi) Required coverage for
reconstructive surgery following
mastectomies under section 2727 of the
PHS Act.
(vii) Coverage of dependent students
on a medically necessary leave of
absence under section 2728 of the PHS
Act.
(2) General rule. For plan years
beginning on or after September 23,
2010, a sponsor of a non-Federal
governmental plan may elect to exempt
its plan, to the extent the plan is not
provided through health insurance
coverage (that is, it is self-funded), from
one or more of the requirements
described in paragraphs (a)(1)(iv)
through (vii) of this section.
(3) Special rule for certain collectively
bargained plans. In the case of a plan
that is maintained pursuant to a
collective bargaining agreement that was
ratified before March 23, 2010, and
whose sponsor made an election to
exempt its plan from any of the
requirements described in paragraphs
(a)(1)(i) through (iii) of this section, the
provisions of paragraph (a)(2) of this
section apply for plan years beginning
after the expiration of the term of the
agreement.
(4) Examples—(i) Example 1. A nonFederal governmental employer has
elected to exempt its self-funded group
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health plan from all of the requirements
described in paragraph (a)(1) of this
section. The plan year commences
September 1 of each year. The plan is
not subject to the provisions of
paragraph (a)(1)(ii) of this section until
the plan year that commences on
September 1, 2011. Accordingly, for that
plan year and any subsequent plan
years, the plan sponsor may elect to
exempt its plan only from the
requirements described in paragraphs
(a)(1)(iv) through (vii) of this section.
(ii) Example 2. A non-Federal
governmental employer has elected to
exempt its collectively bargained selffunded plan from all of the
requirements described in paragraph
(a)(1) of this section. The collective
bargaining agreement applies to five
plan years, October 1, 2009 through
September 30, 2014. For the plan year
that begins on October 1, 2014, the plan
sponsor is no longer permitted to elect
to exempt its plan from the
requirements described in paragraph
(a)(1) of this section. Accordingly, for
that plan year and any subsequent plan
years, the plan sponsor may elect to
exempt its plan only from the
requirements described in paragraphs
(a)(1)(iv) through (vii) of this section.
(5) Limitations. (i) An election under
this section cannot circumvent a
requirement of the PHS Act to the extent
the requirement applied to the plan
before the effective date of the election.
Example 1. A plan is subject to
requirements of section 2727 of the PHS
Act, under which a plan that covers
medical and surgical benefits with
respect to a mastectomy must cover
reconstructive surgery and certain other
services following a mastectomy. An
enrollee who has had a mastectomy
receives reconstructive surgery on
August 24. Claims with respect to the
surgery are submitted to and processed
by the plan in September. The group
health plan commences a new plan year
each September 1. Effective September
1, the plan sponsor elects to exempt its
plan from section 2727 of the PHS Act.
The plan cannot, on the basis of its
exemption election, decline to pay for
the claims incurred on August 24.
(ii) If a group health plan is cosponsored by two or more employers,
then only plan enrollees of the nonFederal governmental employer(s) with
a valid election under this section are
affected by the election.
(6) Stop-loss or excess risk coverage.
For purposes of this section—
(i) Subject to paragraph (a)(6)(ii) of
this section, the purchase of stop-loss or
excess risk coverage by a self-funded
non-Federal governmental plan does not
prevent an election under this section.
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(ii) Regardless of whether coverage
offered by an issuer is designated as
‘‘stop-loss’’ coverage or ‘‘excess risk’’
coverage, if it is regulated as group
health insurance under an applicable
State law, then for purposes of this
section, a non-Federal governmental
plan that purchases the coverage is
considered to be fully insured. In that
event, a plan may not be exempted
under this section from the
requirements described in paragraph
(a)(1) of this section.
(7) Construction. Nothing in this part
should be construed as imposing
collective bargaining obligations on any
party to the collective bargaining
process.
(b) Form and manner of election—(1)
Election requirements. The election
must meet the following requirements:
(i) Be made in an electronic format in
a form and manner as described by the
Secretary in guidance.
(ii) Be made in conformance with all
of the plan sponsor’s rules, including
any public hearing requirements.
(iii) Specify the beginning and ending
dates of the period to which the election
is to apply. This period can be either of
the following periods:
(A) A single specified plan year, as
defined in § 144.103 of this subchapter.
(B) The ‘‘term of the agreement,’’ as
specified in paragraph (b)(2) of this
section, in the case of a plan governed
by collective bargaining.
(iv) Specify the name of the plan and
the name and address of the plan
administrator, and include the name
and telephone number of a person CMS
may contact regarding the election.
(v) State that the plan does not
include health insurance coverage, or
identify which portion of the plan is not
funded through health insurance
coverage.
(vi) Specify each requirement
described in paragraph (a)(1) of this
section from which the plan sponsor
elects to exempt the plan.
(vii) Certify that the person signing
the election document, including (if
applicable) a third party plan
administrator, is legally authorized to
do so by the plan sponsor.
(viii) Include, as an attachment, a
copy of the notice described in
paragraph (f) of this section.
(2) ‘‘Term of the agreement’’ defined.
Except as provided in paragraphs
(b)(2)(i) and (ii), for purposes of this
section ‘‘term of the agreement’’ means
all group health plan years governed by
a single collective bargaining agreement.
(i) In the case of a group health plan
for which the last plan year governed by
a prior collective bargaining agreement
expires during the bargaining process
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for a new agreement, the term of the
prior agreement includes all plan years
governed by the agreement plus the
period of time that precedes the latest of
the following dates, as applicable, with
respect to the new agreement:
(A) The date of an agreement between
the governmental employer and union
officials.
(B) The date of ratification of an
agreement between the governmental
employer and the union.
(C) The date impasse resolution,
arbitration or other closure of the
collective bargaining process is finalized
when agreement is not reached.
(ii) In the case of a group health plan
governed by a collective bargaining
agreement for which closure is not
reached before the last plan year under
the immediately preceding agreement
expires, the term of the new agreement
includes all plan years governed by the
agreement excluding the period that
precedes the latest applicable date
specified in paragraph (b)(2)(i) of this
section.
(3) Construction—(i) Dispute
resolution. Nothing in paragraph
(b)(1)(ii) of this section should be
construed to mean that CMS arbitrates
disputes between plan sponsors,
participants, beneficiaries, or their
representatives regarding whether an
election complies with all of a plan
sponsor’s rules.
(ii) Future elections not preempted. If
a plan must comply with one or more
requirements described in paragraph
(a)(1) of this section for a given plan
year or period of plan coverage, nothing
in this section should be construed as
preventing a plan sponsor from
submitting an election in accordance
with this section for a subsequent plan
year or period of plan coverage.
(c) Filing a timely election—(1) Plan
not governed by collective bargaining.
Subject to paragraph (c)(4) of this
section, if a plan is not governed by a
collective bargaining agreement, a plan
sponsor or entity acting on behalf of a
plan sponsor must file an election with
CMS before the first day of the plan
year.
(2) Plan governed by a collective
bargaining agreement. Subject to
paragraph (d)(4) of this section, if a plan
is governed by a collective bargaining
agreement that was ratified before
March 23, 2010, a plan sponsor or entity
acting on behalf of a plan sponsor must
file an election with CMS before the first
day of the first plan year governed by a
collective bargaining agreement, or by
the 45th day after the latest applicable
date specified in paragraph (b)(2)(i) of
this section, if the 45th day falls on or
after the first day of the plan year.
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15865
(3) Verifying timely filing. For
elections submitted via hard copy
through U.S. Mail, CMS uses the
postmark on the envelope in which the
election is submitted to determine that
the election is timely filed as specified
under paragraphs (c)(1) or (2) of this
section, as applicable. If the latest filing
date falls on a Saturday, Sunday, or a
State or Federal holiday, CMS accepts a
postmark on the next business day.
(4) Filing extension based on good
cause. CMS may extend the deadlines
specified in paragraphs (c)(1) and (2) of
this section for good cause if the plan
substantially complies with the
requirements of paragraph (e) of this
section.
(5) Failure to file a timely election.
Absent an extension under paragraph
(c)(4) of this section, a plan sponsor’s
failure to file a timely election under
paragraph (c)(1) or (2) of this section
makes the plan subject to all
requirements of this part for the entire
plan year to which the election would
have applied, or, in the case of a plan
governed by a collective bargaining
agreement, for any plan years under the
agreement for which the election is not
timely filed.
(d) Additional information required—
(1) Written notification. If an election is
timely filed, but CMS determines that
the election document (or the notice to
plan enrollees) does not meet all of the
requirements of this section, CMS may
notify the plan sponsor, or other entity
that filed the election, that it must
submit any additional information that
CMS has determined is necessary to
meet those requirements. The additional
information must be filed with CMS by
the later of the following dates:
(i) The last day of the plan year.
(ii) The 45th day after the date of
CMS’s written notification requesting
additional information.
(2) Timely response. For submissions
via hard copy via U.S. Mail, CMS uses
the postmark on the envelope in which
the additional information is submitted
to determine that the information is
timely filed as specified under
paragraph (d)(1) of this section. If the
latest filing date falls on a Saturday,
Sunday, or a State or Federal holiday,
CMS accepts a postmark on the next
business day.
(3) Failure to respond timely. CMS
may invalidate an election if the plan
sponsor, or other entity that filed the
election, fails to timely submit the
additional information as specified
under paragraph (d)(1) of this section.
(e) Notice to enrollees—(1) Mandatory
notification. (i) A plan that makes the
election described in this section must
notify each affected enrollee of the
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election, and explain the consequences
of the election. For purposes of this
paragraph (e), if the dependent(s) of a
participant reside(s) with the
participant, a plan need only provide
notice to the participant.
(ii) The notice must be in writing and,
except as provided in paragraph (e)(2) of
this section with regard to initial
notices, must be provided to each
enrollee at the time of enrollment under
the plan, and on an annual basis no later
than the last day of each plan year (as
defined in § 144.103 of this subchapter)
for which there is an election.
(iii) A plan may meet the notification
requirements of this paragraph (e) by
prominently printing the notice in a
summary plan description, or
equivalent description, that it provides
to each enrollee at the time of
enrollment, and annually. Also, when a
plan provides a notice to an enrollee at
the time of enrollment, that notice may
serve as the initial annual notice for that
enrollee.
(2) Initial notices. (i) If a plan is not
governed by a collective bargaining
agreement, with regard to the initial
plan year to which an election under
this section applies, the plan must
provide the initial annual notice of the
election to all enrollees before the first
day of that plan year, and notice at the
time of enrollment to all individuals
who enroll during that plan year.
(ii) In the case of a collectively
bargained plan, with regard to the initial
plan year to which an election under
this section applies, the plan must
provide the initial annual notice of the
election to all enrollees before the first
day of the plan year, or within 30 days
after the latest applicable date specified
in paragraph (b)(2)(i) of this section if
the 30th day falls on or after the first
day of the plan year. Also, the plan must
provide a notice at the time of
enrollment to individuals who—
(A) Enroll on or after the first day of
the plan year, when closure of the
collective bargaining process is reached
before the plan year begins; or
(B) Enroll on or after the latest
applicable date specified in paragraph
(b)(2)(i) of this section if that date falls
on or after the first day of the plan year.
(3) Notice content. The notice must
include at least the following
information:
(i) The specific requirements
described in paragraph (a)(1) of this
section from which the plan sponsor is
electing to exempt the plan, and a
statement that, in general, Federal law
imposes these requirements upon group
health plans.
(ii) A statement that Federal law gives
the plan sponsor of a self-funded non-
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Federal governmental plan the right to
exempt the plan in whole, or in part,
from the listed requirements, and that
the plan sponsor has elected to do so.
(iii) A statement identifying which
parts of the plan are subject to the
election.
(iv) A statement identifying which of
the listed requirements, if any, apply
under the terms of the plan, or as
required by State law, without regard to
an exemption under this section.
(f) Subsequent elections—(1) Election
renewal. A plan sponsor may renew an
election under this section through
subsequent elections. The timeliness
standards described in paragraph (c) of
this section apply to election renewals
under this paragraph (f).
(2) Form and manner of renewal.
Except for the requirement to forward to
CMS a copy of the notice to enrollees
under paragraph (b)(1)(viii) of this
section, the plan sponsor must comply
with the election requirements of
paragraph (b)(1) of this section. In lieu
of providing a copy of the notice under
(b)(1)(viii), the plan sponsor may
include a statement that the notice has
been, or will be, provided to enrollees
as specified under paragraph (e) of this
section.
(3) Election renewal includes
provisions from which plan not
previously exempted. If an election
renewal includes a requirement
described in paragraph (a)(1) of this
section from which the plan sponsor did
not elect to exempt the plan for the
preceding plan year, the advance
notification requirements of paragraph
(e)(2) of this section apply with respect
to the additional requirement(s) of
paragraph (a) from which the plan
sponsor is electing to exempt the plan.
(4) Special rules regarding renewal of
an election under a collective
bargaining agreement—(i) If protracted
negotiations with respect to a new
agreement result in an extension of the
term of the prior agreement (as provided
under paragraph (b)(2)(i) of this section)
under which an election under this
section was in effect, the plan must
comply with the enrollee notification
requirements of paragraph (e)(1) of this
section, and, following closure of the
collective bargaining process, must file
an election renewal with CMS as
provided under paragraph (c)(2) of this
section.
(ii) If a single plan applies to more
than one bargaining unit, and the plan
is governed by collective bargaining
agreements of varying lengths,
paragraph (c)(2) of this section, with
respect to an election renewal, applies
to the plan as governed by the
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agreement that results in the earliest
filing date.
(g) Requirements not subject to
exemption—(1) Genetic information.
Without regard to an election under this
section that exempts a non-Federal
governmental plan from any or all of the
provisions of §§ 146.111 and 146.121,
the exemption election must not be
construed to exempt the plan from any
provisions of this part 146 that pertain
to genetic information.
(2) Enforcement. CMS enforces these
requirements as provided under
paragraph (j) of this section.
(h) Effect of failure to comply with
certification and notification
requirements—(1) Substantial failure—
(i) General rule. Except as provided in
paragraph (h)(1)(iii) of this section, a
substantial failure to comply with
paragraph (e) or (g)(1) of this section
results in the invalidation of an election
under this section with respect to all
plan enrollees for the entire plan year.
That is, the plan is subject to all
requirements of this part for the entire
plan year to which the election
otherwise would have applied.
(ii) Determination of substantial
failure. CMS determines whether a plan
has substantially failed to comply with
a requirement of paragraph (e) or
paragraph (g)(1) of this section based on
all relevant facts and circumstances,
including previous record of
compliance, gravity of the violation and
whether a plan corrects the failure, as
warranted, within 30 days of learning of
the violation. However, in general, a
plan’s failure to provide a notice of the
fact and consequences of an election
under this section to an individual at
the time of enrollment, or on an annual
basis before a given plan year expires,
constitutes a substantial failure.
(iii) Exceptions—(A) Multiple
employers. If the plan is sponsored by
multiple employers, and only certain
employers substantially fail to comply
with the requirements of paragraph (e)
or (g)(1) of this section, then the election
is invalidated with respect to those
employers only, and not with respect to
other employers that complied with
those requirements, unless the plan
chooses to cancel its election entirely.
(B) Limited failure to provide notice.
If a substantial failure to notify enrollees
of the fact and consequences of an
election is limited to certain
individuals, the election under this
section is valid only if, for the plan year
with respect to which the failure has
occurred, the plan agrees not to apply
the election with respect to the
individuals who were not notified and
so informs those individuals in writing.
(2) Examples—(i)
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Example 1. A self-funded, non-Federal
group health plan is co-sponsored by 10
school districts. Nine of the school districts
have fully complied with the requirements of
paragraph (e) of this section, including
providing notice to new employees at the
time of their enrollment in the plan,
regarding the group health plan’s exemption
under this section from requirements of this
part. One school district, which hired 10 new
teachers during the summer for the upcoming
school year, neglected to notify three of the
new hires about the group health plan’s
exemption election at the time they enrolled
in the plan. The school district has
substantially failed to comply with a
requirement of paragraph (e) of this section
with respect to these individuals. The school
district learned of the oversight six weeks
into the school year, and promptly (within 30
days of learning of the oversight) provided
notice to the three teachers regarding the
plan’s exemption under this section and that
the exemption does not apply to them, or
their dependents, during the plan year of
their enrollment because of the plan’s failure
to timely notify them of its exemption. The
plan complies with the requirements of this
part for these individuals for the plan year of
their enrollment. CMS would not require the
plan to come into compliance with the
requirements of this part for other enrollees.
(ii)
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Example 2. Two non-Federal governmental
employers cosponsor a self-funded group
health plan. One employer substantially fails
to comply with the requirements of
paragraph (e) of this section. While the plan
may limit the invalidation of the election to
enrollees of the plan sponsor that is
responsible for the substantial failure, the
plan sponsors determine that administering
the plan in that manner would be too
burdensome. Accordingly, in this example,
the plan sponsors choose to cancel the
election entirely. Both plan sponsors come
into compliance with the requirements of
this part with respect to all enrollees for the
plan year for which the substantial failure
has occurred.
(i) Election invalidated. If CMS finds
cause to invalidate an election under
this section, the following rules apply:
(1) CMS notifies the plan sponsor
(and the plan administrator if other than
the plan sponsor and the administrator’s
address is known to CMS) in writing
that CMS has made a preliminary
determination that an election is
invalid, and states the basis for that
determination.
(2) CMS’s notice informs the plan
sponsor that it has 45 days after the date
of CMS’s notice to explain in writing
why it believes its election is valid. The
plan sponsor should provide applicable
statutory and regulatory citations to
support its position.
(3) CMS verifies that the plan
sponsor’s response is timely filed as
provided under paragraph (c)(3) of this
section. CMS will not consider a
response that is not timely filed.
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(4) If CMS’s preliminary
determination that an election is invalid
remains unchanged after CMS considers
the plan sponsor’s timely response (or
in the event that the plan sponsor fails
to respond timely), CMS provides
written notice to the plan sponsor (and
the plan administrator if other than the
plan sponsor and the administrator’s
address is known to CMS) of CMS’s
final determination that the election is
invalid. Also, CMS informs the plan
sponsor that, within 45 days of the date
of the notice of final determination, the
plan, subject to paragraph (i)(1)(iii) of
this section, must comply with all
requirements of this part for the
specified period for which CMS has
determined the election to be invalid.
(j) Enforcement. To the extent that an
election under this section has not been
filed or a non-Federal governmental
plan otherwise is subject to one or more
requirements of this part, CMS enforces
those requirements under part 150 of
this subchapter. This may include
imposing a civil money penalty against
the plan or plan sponsor, as determined
under subpart C of part 150.
(k) Construction. Nothing in this
section should be construed to prevent
a State from taking the following
actions:
(1) Establishing, and enforcing
compliance with, the requirements of
State law (as defined in § 146.143(d)(1)),
including requirements that parallel
provisions of title XXVII of the PHS Act,
that apply to non-Federal governmental
plans or sponsors.
(2) Prohibiting a sponsor of a nonFederal governmental plan within the
State from making an election under
this section.
PART 147—HEALTH INSURANCE
REFORM REQUIREMENTS FOR THE
GROUP AND INDIVIDUAL HEALTH
INSURANCE MARKETS
4. The authority citation for part 147
continues to read as follows:
■
Authority: Secs. 2701 through 2763, 2791,
and 2792 of the Public Health Service Act (42
U.S.C. 300gg through 300gg–63, 300gg–91,
and 300gg–92), as amended.
5. Section 147.104 is amended by
revising paragraph (b)(1)(i) and adding
paragraph (h) to read as follows:
■
§ 147.104 Guaranteed availability of
coverage.
*
*
*
*
*
(b) * * *
(1) * * *
(i) Group market. (A) Subject to
paragraph (b)(1)(i)(B) of this section, a
health insurance issuer in the group
market must allow an employer to
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purchase health insurance coverage for
a group health plan at any point during
the year.
(B) In the case of a group health plan
in the small group market that cannot
comply with employer contribution or
group participation rules for the offering
of health insurance coverage, as allowed
under applicable State law and in the
case of a QHP offered in the SHOP, as
permitted by § 156.1250(c) of this
subchapter, a health insurance issuer
may restrict the availability of coverage
to an annual enrollment period that
begins November 15 and extends
through December 15 of each calendar
year.
(C) With respect to coverage in the
small group market, and in the large
group market if such coverage is offered
through a Small Business Health
Options Program (SHOP) in a State,
coverage must become effective
consistent with the dates described in
§ 155.725(a)(2) of this subchapter,
except as provided in paragraph
(b)(1)(iii) of this section.
*
*
*
*
*
(h) Construction. Nothing in this
section should be construed to require
an issuer to offer coverage otherwise
prohibited under applicable Federal
law.
■ 6. Section 147.106 is amended by—
■ A. Revising paragraphs (c)(1) and (e).
■ B. Redesignating paragraphs (f), (g),
and (h) as paragraphs (h), (i) and (j).
■ D. Adding new paragraphs (f) and (g).
The revisions and additions read as
follows:
§ 147.106 Guaranteed renewability of
coverage.
*
*
*
*
*
(c) * * *
(1) The issuer provides notice in
writing, in a form and manner specified
by the Secretary, to each plan sponsor
or individual, as applicable, provided
that particular product in that market
(and to all participants and beneficiaries
covered under such coverage) of the
discontinuation at least 90 calendar
days before the date the coverage will be
discontinued.
*
*
*
*
*
(e) Exception for uniform
modification of coverage. (1) Only at the
time of coverage renewal may issuers
modify the health insurance coverage
for a product offered to a group health
plan or an individual, as applicable, in
the following:
(i) Large group market.
(ii) Small group market if, for
coverage available in this market (other
than only through one or more bona fide
associations), the modification is
consistent with State law and is
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effective uniformly among group health
plans with that product.
(iii) Individual market if the
modification is consistent with State
law and is effective uniformly for all
individuals with that product.
(2) For purposes of this paragraph (e),
modifications made solely pursuant to
applicable Federal or State law are
considered a uniform modification of
coverage. Other types of modifications
are considered a uniform modification
of coverage if the product that has been
modified meets all of the following
criteria:
(i) The product is offered by the same
health insurance issuer (within the
meaning of section 2791(b)(2) of the
PHS Act).
(ii) The product is offered as the same
product type (e.g., preferred provider
organization (PPO) or health
maintenance organization (HMO)).
(iii) The product covers a majority of
the same counties in its service area;
(iv) The product has the same costsharing structure, except for variation in
cost sharing solely related to changes in
cost and utilization of medical care, or
to maintain the same level of coverage
described in sections 1302(d) and (e) of
the Affordable Care Act.
(v) The product provides the same
covered benefits, except for changes in
benefits that cumulatively impact the
plan-adjusted index rate for the product
(as described in § 156.80(d)(2)) by no
more than 2 percent (not including
changes required by applicable Federal
or State law).
(3) A State may establish criteria that
broaden, but not restrict, the definition
of a uniform modification of coverage
under paragraph (e)(2) of this section.
(f) Notice of renewal of coverage. If an
issuer is renewing coverage as described
in paragraph (a) of this section, or
uniformly modifying coverage as
described in paragraph (e) of this
section, the issuer must provide to each
plan sponsor or individual, as
applicable, written notice of the renewal
in a form and manner specified by the
Secretary.
(g) Construction. Nothing in this
section should be construed to require
an issuer to renew or continue in force
coverage for which continued eligibility
would otherwise be prohibited under
applicable Federal law.
*
*
*
*
*
PART 148—REQUIREMENTS FOR THE
INDIVIDUAL HEALTH INSURANCE
MARKET
7. The authority citation for part 148
continues to read as follows:
■
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Authority: Secs. 2701 through 2763, 2791,
and 2792 of the Public Health Service Act (42
U.S.C. 300gg through 300gg–63, 300gg–91,
and 300gg–92), as amended.
8. Section 148.101 is revised to read
as follows:
■
§ 148.101
Basis and purpose.
This part implements sections 2741
through 2763 and 2791 and 2792 of the
PHS Act. Its purpose is to guarantee the
renewability of all coverage in the
individual market. It also provides
certain protections for mothers and
newborns with respect to coverage for
hospital stays in connection with
childbirth and protects all individuals
and family members who have, or seek,
individual health insurance coverage
from discrimination based on genetic
information.
■ 9. Section 148.102 is revised to read
as follows:
§ 148.102 Scope, applicability, and
effective dates.
(a) Scope and applicability. (1)
Individual health insurance coverage
includes all health insurance coverage
(as defined in § 144.103 of this
subchapter) that is neither health
insurance coverage sold in connection
with an employment-related group
health plan, nor short-term, limitedduration coverage as defined in
§ 144.103 of this subchapter.
(2) The requirements that pertain to
guaranteed renewability for all
individuals, to protections for mothers
and newborns with respect to hospital
stays in connection with childbirth, and
to protections against discrimination
based on genetic information apply to
all issuers of individual health
insurance coverage in the State.
(b) Applicability date. Except as
provided in § 148.124 (certificate of
creditable coverage), § 148.170
(standards relating to benefits for
mothers and newborns), and § 148.180
(prohibition of health discrimination
based on genetic information), the
requirements of this part apply to health
insurance coverage offered, sold, issued,
renewed, in effect, or operated in the
individual market after June 30, 1997.
§ 148.103
[Removed]
10. Section 148.103 is removed.
11. Section 148.120 is revised to read
as follows:
■
■
§ 148.120 Guaranteed availability of
individual health insurance coverage to
certain individuals with prior group
coverage.
The rules for guaranteeing the
availability of individual health
insurance coverage to certain eligible
individuals with prior group coverage
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have been superseded by the
requirements of § 147.104 of this
subchapter, which set forth Federal
requirements for guaranteed availability
of coverage in the group and individual
markets.
■ 12. Section 148.122 is amended by—
■ A. Revising paragraphs (a), (d)(1), and
(g).
■ B. Redesignating paragraph (h) as
paragraph (i).
■ C. Adding new paragraph (h).
The revisions and addition read as
follows:
§ 148.122 Guaranteed renewability of
individual health insurance coverage.
(a) Applicability. This section applies
to non-grandfathered and grandfathered
health plans (within the meaning of
§ 147.140 of this subchapter) that are
individual health insurance coverage.
See also § 147.106 of this subchapter for
requirements relating to guaranteed
renewability of coverage with respect to
non-grandfathered health plans.
*
*
*
*
*
(d) * * *
(1) Provides notice in writing, in a
form and manner specified by the
Secretary, to each individual provided
coverage of that type of health insurance
at least 90 calendar days before the date
the coverage will be discontinued.
*
*
*
*
*
(g) Exception for uniform
modification of coverage. (1) An issuer
may, only at the time of coverage
renewal, modify the health insurance
coverage for a policy form offered in the
individual market if the modification is
consistent with State law and is
effective uniformly for all individuals
with that policy form.
(2) For purposes of this paragraph (g),
modifications made solely pursuant to
applicable Federal or State law are
considered a uniform modification of
coverage. Other types of modifications
are considered a uniform modification
of coverage if the product that has been
modified meets all of the following
criteria:
(i) The product is offered by the same
health insurance issuer (within the
meaning of section 2791(b)(2) of the
PHS Act).
(ii) The product is offered as the same
product type (e.g., preferred provider
organization (PPO) or health
maintenance organization (HMO)).
(iii) The product covers a majority of
the same counties in its service area;
(iv) The product has the same costsharing structure, except for variation in
cost sharing solely related to changes in
cost and utilization of medical care, or
to maintain the same level of coverage
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described in sections 1302(d) and (e) of
the Affordable Care Act.
(v) The product provides the same
covered benefits, except for changes in
benefits that cumulatively impact the
rate for the product by no more than 2
percent (not including changes required
by applicable Federal or State law).
(3) A State may establish criteria that
broaden, but not restrict, the definition
of a uniform modification of coverage
under paragraph (g)(2) of this section.
(h) Notice of renewal of coverage. If an
issuer is renewing coverage as described
in paragraph (b) of this section, or
uniformly modifying coverage as
described in paragraph (g) of this
section, the issuer must provide to each
individual written notice of the renewal
in a form and manner specified by the
Secretary.
*
*
*
*
*
■ 13. Section 148.124 is revised to read
as follows:
§ 148.124 Certification and disclosure of
coverage.
(a) General rule. The rules for
providing certificates of creditable
coverage and demonstrating creditable
coverage have been superseded by the
prohibition on preexisting condition
exclusions. See § 147.108 of this
subchapter for rules prohibiting the
imposition of a preexisting condition
exclusion.
(b) Applicability. The provisions of
this section apply beginning December
31, 2014.
■ 14. Section 148.126 is revised to read
as follows:
§ 148.126 Determination of an eligible
individual.
The rules for guaranteeing the
availability of individual health
insurance coverage to certain eligible
individuals with prior group coverage
have been superseded by the
requirements of § 147.104 of this
subchapter, which set forth Federal
requirements for guaranteed availability
of coverage in the group and individual
markets.
■ 15. Section 148.128 is revised to read
as follows:
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§ 148.128 State flexibility in individual
market reforms—alternative mechanisms.
The rules for a State to implement an
acceptable alternative mechanism for
purposes of guaranteeing the availability
of individual health insurance coverage
to certain eligible individuals with prior
group coverage have been superseded
by the requirements of § 147.104 of this
subchapter, which set forth Federal
requirements for guaranteed availability
of coverage in the group and individual
markets.
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16. Section 148.220 is amended by—
A. Revising the introductory text.
B. Revising paragraph (b)(3).
C. Redesignating paragraphs (b)(4)
through (6) as paragraphs (b)(5) through
(7), respectively.
■ D. Adding new paragraph (b)(4).
The revisions and additions read as
follows:
■
■
■
■
§ 148.220
Excepted benefits.
The requirements of this part and part
147 do not apply to individual health
insurance coverage in relation to its
provision of the benefits described in
paragraphs (a) and (b) of this section (or
any combination of the benefits).
*
*
*
*
*
(b) * * *
(3) Coverage only for a specified
disease or illness (for example, cancer
policies) if the policies meet the
requirements of § 146.145(b)(4)(ii)(B)
and (C) of this subchapter regarding
noncoordination of benefits.
(4) Hospital indemnity or other fixed
indemnity insurance only if—
(i) The benefits are provided only to
individuals who have other health
coverage that is minimum essential
coverage within the meaning of section
5000A(f) of the Internal Revenue Code.
(ii) There is no coordination between
the provision of benefits and an
exclusion of benefits under any other
health coverage.
(iii) The benefits are paid in a fixed
dollar amount per day of hospitalization
or illness or per service (for example,
$100/day or $50/visit) regardless of the
amount of expenses incurred and
without regard to the amount of benefits
provided with respect to the event or
service under any other health coverage.
(iv) A notice is displayed prominently
in the plan materials in at least 14 point
type that has the following language:
‘‘THIS IS A SUPPLEMENT TO HEALTH
INSURANCE AND IS NOT A
SUBSTITUTE FOR MAJOR MEDICAL
COVERAGE. LACK OF MAJOR
MEDICAL COVERAGE (OR OTHER
MINIMUM ESSENTIAL COVERAGE)
MAY RESULT IN AN ADDITIONAL
PAYMENT WITH YOUR TAXES.’’
*
*
*
*
*
PART 153—STANDARDS RELATED TO
REINSURANCE, RISK CORRIDORS,
AND RISK ADJUSTMENT UNDER THE
AFFORDABLE CARE ACT
17. The authority citation for part 153
continues to read as follows:
■
Authority: Secs. 1311, 1321, 1341–1343,
Pub. L. 111–148, 24 Stat. 119.
18. Section 153.500 is amended by
revising the definition of ‘‘adjustment
■
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15869
percentage,’’ as added on March 11,
2014 (79 FR 13835), effective on May
12, 2014, to read as follows:
§ 153.500
Definitions.
*
*
*
*
*
Adjustment percentage means, with
respect to a QHP:
(1) For benefit year 2014, for a QHP
offered by a health insurance issuer
with allowable costs of at least 80
percent of after-tax premium in a
transitional State, the percentage
specified by HHS for such QHPs in the
transitional State; and otherwise zero
percent.
(2) For benefit year 2015, for a QHP
offered by a health insurance issuer in
any State, two percent.
*
*
*
*
*
PART 155—EXCHANGE
ESTABLISHMENT STANDARDS AND
OTHER RELATED STANDARDS
UNDER THE AFFORDABLE CARE ACT
19. The authority citation for part 155
continues to read as follows:
■
Authority: Title I of the Affordable Care
Act, sections 1301, 1302, 1303, 1304, 1311,
1312, 1313, 1321, 1322, 1331, 1332, 1334,
1402, 1411, 1412, 1413, Pub. L. 111–148, 124
Stat. 119 (42 U.S.C. 18021–18024, 18031–
18033, 18041–18042, 18051, 18054, 18071,
and 18081–18083).
20. Section 155.120 is amended by
revising paragraph (c) to read as follows:
■
§ 155.120 Non-interference with Federal
law and non-discrimination standards.
*
*
*
*
*
(c) Non-discrimination. (1) In carrying
out the requirements of this part, the
State and the Exchange must:
(i) Comply with applicable nondiscrimination statutes; and
(ii) Not discriminate based on race,
color, national origin, disability, age,
sex, gender identity or sexual
orientation.
(2) Exception. Notwithstanding the
provisions of paragraph (c)(1) of this
section, an organization that receives
Federal funds to provide services to a
defined population under the terms of
Federal legal authorities that
participates in the certified application
counselor program under § 155.225 may
limit its provision of certified
application counselor services to the
same defined population. If the
organization limits its provision of
certified application counselor services
pursuant to this exception, but is
approached for certified application
counselor services by an individual who
is not included in the defined
population that the organization serves,
the organization must refer the
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individual to other Exchange-approved
resources that can provide assistance. If
the organization does not limit its
provision of certified application
counselor services pursuant to this
exception, the organization must
comply with paragraph (c)(1) of this
section.
■ 21. Section 155.206 is added to read
as follows:
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§ 155.206 Civil money penalties for
violations of applicable Exchange
standards by consumer assistance entities
in Federally-facilitated Exchanges.
(a) Enforcement actions. If an
individual or entity specified in
paragraph (b) of this section engages in
activity specified in paragraph (c) of this
section, the Department of Health and
Human Services (HHS) may impose the
following sanctions:
(1) Civil money penalties (CMPs),
subject to the provisions of this section.
(2) Corrective action plans. In the
notice of assessment of CMPs specified
in paragraph (l) of this section, HHS
may provide an individual or entity
specified in paragraph (b) of this section
the opportunity to enter into a
corrective action plan to correct the
violation instead of paying the CMP,
based on evaluation of the factors set
forth in paragraph (h) of this section. In
the event that the individual or entity
does not follow such a corrective action
plan, HHS could require payment of the
CMP.
(b) Consumer assistance entities.
CMPs may be assessed under this
section against the following consumer
assistance entities:
(1) Individual Navigators and
Navigator entities in Federallyfacilitated Exchanges, including
grantees, sub-grantees, and all personnel
carrying out Navigator duties on behalf
of a grantee or sub-grantee;
(2) Non-Navigator assistance
personnel authorized under § 155.205(d)
and (e) and non-Navigator assistance
personnel entities in Federallyfacilitated Exchanges, including but not
limited to individuals and entities
under contract with HHS to facilitate
consumer enrollment in QHPs in
Federally-facilitated Exchanges; and
(3) Organizations that the Federallyfacilitated Exchanges have designated as
certified application counselor
organizations and individual certified
application counselors carrying out
certified application counselor duties in
the Federally-facilitated Exchanges.
(c) Grounds for assessing CMPs. HHS
may assess CMPs against a consumer
assistance entity if, based on the
outcome of the investigative process
outlined in paragraphs (d) through (i) of
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this section, HHS has reasonably
determined that the consumer
assistance entity has failed to comply
with the Federally-facilitated Exchange
requirements and standards applicable
to the consumer assistance entity,
unless a CMP has been assessed for the
same conduct under 45 CFR 155.285.
(d) Basis for initiating an investigation
of a potential violation. (1) Information.
Any information received by HHS that
indicates that a consumer assistance
entity may have engaged or may be
engaging in activity specified in
paragraph (c) of this section may
warrant an investigation. Information
that might trigger an investigation
includes, but is not limited to, the
following:
(i) Complaints from the general
public;
(ii) Reports from State regulatory
agencies, and other Federal and State
agencies; or
(iii) Any other information that
indicates potential involvement in
activity specified in paragraph (c) of this
section.
(2) Who may file a complaint. Any
entity or individual, or the legally
authorized representative of an entity or
individual, may file a complaint with
HHS alleging that a consumer assistance
entity has engaged or is engaging in an
activity specified in paragraph (c) of this
section.
(e) Notice of investigation. If HHS
learns of a potential violation described
in paragraph (c) of this section through
the means described in paragraph (d) of
this section, HHS must provide a
written notice of its investigation to the
consumer assistance entity. This notice
must include the following:
(1) Description of the activity that is
being investigated.
(2) Explanation that the consumer
assistance entity has 30 days from the
date of the notice to respond with
additional information or
documentation, including information
or documentation to refute an alleged
violation.
(3) State that a CMP might be assessed
if the allegations are not, as determined
by HHS, refuted within 30 days from the
date of the notice.
(f) Request for extension. In
circumstances in which a consumer
assistance entity cannot prepare a
response to HHS within the 30 days
provided in the notice of investigation
described in (e) of this section, the
entity may make a written request for an
extension from HHS detailing the reason
for the extension request and showing
good cause. If HHS grants the extension,
the consumer assistance entity must
respond to the notice within the time
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frame specified in HHS’s letter granting
the extension of time. Failure to respond
within 30 days, or, if applicable, within
an extended time frame, may result in
HHS’s imposition of a CMP depending
upon the outcome of HHS’s
investigation of the alleged violation.
(g) Responses to allegations of
noncompliance. In determining whether
to impose a CMP, HHS may review and
consider documents or information
received or collected in accordance with
paragraph (d)(1) of this section, as well
as additional documents or information
provided by the consumer assistance
entity in response to receiving a notice
of investigation in accordance with
paragraph (e)(2) of this section. HHS
may also conduct an independent
investigation into the alleged violation,
which may include site visits and
interviews, if applicable, and may
consider the results of this investigation
in its determination.
(h) Factors in determining
noncompliance and CMPs, if any. In
determining whether there has been
noncompliance by the consumer
assistance entity, and whether CMPs are
appropriate,
(1) HHS must take into account the
following:
(i) The consumer assistance entity’s
previous or ongoing record of
compliance, including but not limited to
compliance or noncompliance with any
corrective action plan under section (c)
of this section.
(ii) The gravity of the violation, which
may be determined in part by—
(A) The frequency of the violation,
taking into consideration whether any
violation is an isolated occurrence,
represents a pattern, or is widespread;
and
(B) Whether the violation caused, or
could reasonably be expected to cause,
financial or other adverse impacts on
consumer(s), and the magnitude of those
impacts;
(2) HHS may take into account the
following:
(i) The degree of culpability of the
consumer assistance entity, including
but not limited to—
(A) Whether the violation was beyond
the direct control of the consumer
assistance entity; and
(B) The extent to which the consumer
assistance entity received
compensation—legal or otherwise—for
the services associated with the
violation;
(ii) Aggravating or mitigating
circumstances; or
(iii) Other such factors as justice may
require.
(i) Maximum per-day penalty. The
maximum amount of penalty imposed
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for each violation is $100 for each day
for each consumer assistance entity for
each individual directly affected by the
consumer assistance entity’s
noncompliance; and where the number
of individuals cannot be determined,
the Exchange may reasonably estimate
the number of individuals directly
affected by the violation.
(j) Settlement authority. Nothing in
§ 155.206 limits the authority of HHS to
settle any issue or case described in the
notice furnished in accordance with
paragraph (e) or to compromise on any
penalty provided for in this section.
(k) Limitations on penalties. (1)
Circumstances under which a civil
money penalty is not imposed. HHS will
not impose any civil money penalty on:
(i) Any violation for the period of time
during which none of the consumer
assistance entities knew, or exercising
reasonable diligence would have
known, of the violation; or
(ii) The period of time after any of the
consumer assistance entities knew, or
exercising reasonable diligence would
have known, of the failure, if the
violation was due to reasonable cause
and not due to willful neglect and the
violation was corrected within 30 days
of the first day that any of the consumer
assistance entities against whom the
penalty would be imposed knew, or
exercising reasonable diligence would
have known, that the violation existed.
(2) Burden of establishing knowledge.
The burden is on the consumer
assistance entity or entities to establish
to HHS’s satisfaction that the consumer
assistance entity did not know, or
exercising reasonable diligence would
have known, that the violation existed,
as well as the period of time during
which that limitation applies; or that the
violation was due to reasonable cause
and not due to willful neglect and was
corrected pursuant to the elements in
subparagraph (k)(1)(ii).
(l) Notice of assessment of CMP. If
HHS proposes to assess a CMP in
accordance with this section, HHS will
send a written notice of this decision
to—
(1) The consumer assistance entity
against whom the sanction is being
imposed, which notice must include the
following:
(i) A description of the basis for the
determination;
(ii) The basis for the CMP;
(iii) The amount of the CMP, if
applicable;
(iv) The date the CMP, if applicable,
is due;
(v) Whether HHS would permit the
consumer assistance entity to enter into
a corrective action plan in place of
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paying the CMP, and the terms of any
such corrective action plan;
(vi) An explanation of the consumer
assistance entity’s right to a hearing
under paragraph (m) of this section; and
(vii) Information about the process for
filing a request for a hearing.
(m) Appeal of proposed sanction. Any
consumer assistance entity against
which HHS has assessed a sanction may
appeal that penalty in accordance with
the procedures set forth at 45 CFR Part
150, Subpart D.
(n) Failure to request a hearing. (1) If
the consumer assistance entity does not
request a hearing within 30 days of the
issuance of the notice of assessment of
CMP described in paragraph (l) of this
section, HHS may require payment of
the proposed CMP.
(2) HHS will notify the consumer
assistance entity in writing of any CMP
that has been assessed and of the means
by which the consumer assistance entity
may pay the CMP.
(3) The consumer assistance entity
has no right to appeal a CMP with
respect to which it has not requested a
hearing in accordance with paragraph
(m) of this section unless the consumer
assistance entity can show good cause
in accordance with § 150.405(b) of this
subchapter for failing to timely exercise
its right to a hearing.
■ 22. Section 155.210 is amended—
■ A. By revising paragraph (c)(1)(iii).
■ B. In paragraph (d)(3) by removing
‘‘or,’’ after the semicolon.
■ C. In paragraph (d)(4) by removing the
period at the end of the paragraph and
adding a semicolon in its place.
■ D. By adding paragraphs (d)(5)
through (9) and (e)(6) and (7).
The revision and additions read as
follows:
§ 155.210
Navigator program standards.
(c) * * *
(1) * * *
(iii) Meet any licensing, certification
or other standards prescribed by the
State or Exchange, if applicable, so long
as such standards do not prevent the
application of the provisions of title I of
the Affordable Care Act. Standards that
would prevent the application of the
provisions of title I of the Affordable
Care Act include but are not limited to
the following:
(A) Except as otherwise provided
under § 155.705(d), requirements that
Navigators refer consumers to other
entities not required to provide fair,
accurate, and impartial information.
(B) Except as otherwise provided
under § 155.705(d), requirements that
would prevent Navigators from
providing services to all persons to
whom they are required to provide
assistance.
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(C) Requirements that would prevent
Navigators from providing advice
regarding substantive benefits or
comparative benefits of different health
plans.
(D) Requiring that a Navigator hold an
agent or broker license or carry errors or
omissions insurance.
(E) In a Federally-facilitated
Exchange, imposing standards that
would prohibit individuals or entities
from acting as Navigators that would be
eligible to participate as Navigators
under standards applicable to the
Federally-facilitated Exchange.
(F) In a Federally-facilitated
Exchange, imposing standards that
would, as applied or as implemented in
a State, prevent the application of
requirements applicable to the
Federally-facilitated Exchange.
*
*
*
*
*
(d) * * *
(5) Charge any applicant or enrollee,
or request or receive any form of
remuneration from or on behalf of an
individual applicant or enrollee, for
application or other assistance related to
Navigator duties; or
(6) Provide compensation to
individual Navigators on a perapplication, per-individual-assisted, or
per-enrollment basis.
(7) Provide gifts, including gift cards
or cash, unless they are of nominal
value, or provide promotional items that
market or promote the products or
services of a third party, to any
applicant or potential enrollee in
connection with or as an inducement for
application assistance or enrollment.
(8) Solicit any consumer for
application or enrollment assistance by
going door-to-door or through other
unsolicited means of direct contact,
including calling a consumer to provide
application or enrollment assistance
without the consumer initiating the
contact.
(9) Initiate any telephone call to a
consumer using an automatic telephone
dialing system or an artificial or
prerecorded voice.
(e) * * *
(6) Ensure that applicants—
(i) Are informed of the functions and
responsibilities of Navigators;
(ii) Provide authorization in a form
and manner as determined by the
Secretary prior to a Navigator’s
obtaining access to an applicant’s
personally identifiable information, and
that the Navigator maintains a record of
the authorization provided. The
Exchange must establish a reasonable
retention period for maintaining these
records. In Federally-facilitated
Exchanges, this period is three years,
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unless a different retention period has
already been provided under 45 CFR
92.42 and 45 CFR 74.53 or other
applicable Federal law; and
(iii) May revoke at any time the
authorization provided the Navigator
pursuant to paragraph (e)(6)(ii) of this
section.
(7) Maintain a physical presence in
the Exchange service area, so that faceto-face assistance can be provided to
applicants and enrollees.
*
*
*
*
*
■ 23. Section 155.215 is amended by
adding paragraphs (f) and (g) to read as
follows:
§ 155.215 Standards applicable to
Navigators and Non-Navigator Assistance
Personnel carrying out consumer
assistance functions under §§ 155.205(d)
and (e) and 155.210 in a Federally-facilitated
Exchange and to Non-Navigator Assistance
Personnel funded through an Exchange
Establishment Grant.
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*
*
*
*
(f) State or Exchange standards. All
non-Navigator entities or individuals
carrying out consumer assistance
functions under § 155.205(d) and (e)
must comply with the eligibility
standard set forth under
§ 155.210(c)(1)(iii), except for
§ 155.210(c)(1)(iii)(D).
(g) Consumer authorization. All nonNavigator entities or individuals
carrying out consumer assistance
functions under § 155.205(d) and (e)
must establish procedures to ensure that
applicants—
(1) Are informed of the functions and
responsibilities of non-Navigator
assistance personnel;
(2) Provide authorization in a form
and manner as determined by the
Secretary prior to a non-Navigator
assistance personnel’s obtaining access
to an applicant’s personally identifiable
information, and that the non-Navigator
assistance personnel maintains a record
of the authorization provided. The
Exchange must establish a reasonable
retention period for maintaining these
records. In Federally-facilitated
Exchanges, this period is three years,
unless an different retention period has
already been provided in applicable
Federal law; and
(3) May revoke at any time the
authorization provided the nonNavigator assistance personnel pursuant
to paragraph (g)(2) of this section.
■ 24. Section 155.225 is amended—
■ A. In paragraph (b)(1)(i) by removing
‘‘and’’ after the semicolon.
■ B. In paragraph (b)(1)(ii) by removing
the period at the end of the paragraph
and adding ‘‘; and’’ in its place.
■ C. By adding paragraph (b)(1)(iii).
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D. In paragraph (d)(5) by removing
‘‘and’’ after the semicolon.
■ E. In paragraph (d)(6) by removing the
period at the end of the paragraph and
adding a semicolon in its place.
■ F. By adding paragraphs (d)(7) and (8).
■ G. By revising paragraphs (f)(1) and (2)
and (g).
The revisions and additions read as
follows:
■
§ 155.225
Certified application counselors.
*
*
*
*
*
(b) * * *
(1) * * *
(iii) Maintain a physical presence in
the Exchange service area, so that faceto-face assistance can be provided to
applicants and enrollees.
*
*
*
*
*
(d) * * *
(7) Is recertified on at least an annual
basis after successfully completing
recertification training as required by
the Exchange; and
(8) Meets any licensing, certification,
or other standards prescribed by the
State or Exchange, if applicable, so long
as such standards do not prevent the
application of the provisions of title I of
the Affordable Care Act. Standards that
would prevent the application of the
provisions of title I of the Affordable
Care Act include but are not limited to
the following:
(i) Requirements that certified
application counselors refer consumers
to other entities not required to act in
the best interest of applicants assisted.
(ii) Requirements that would prevent
certified application counselors from
providing services to all persons to
whom they are required to provide
assistance.
(iii) Requirements that would prevent
certified application counselors from
providing advice regarding substantive
benefits or comparative benefits of
different health plans.
(iv) In a Federally-facilitated
Exchange, imposing standards that
would prohibit individuals or entities
from acting as certified application
counselors that would be eligible to
participate as certified application
counselors under standards applicable
to the Federally-facilitated Exchange.
(v) In a Federally-facilitated
Exchange, imposing standards that
would, as applied or as implemented in
a State, prevent the application of
requirements applicable to the
Federally-facilitated Exchange.
*
*
*
*
*
(f) * * *
(1) Are informed of the functions and
responsibilities of certified application
counselors;
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(2) Provide authorization prior to a
certified application counselor
obtaining access to an applicant’s
personally identifiable information and
that the organization or certified
application counselor maintains a
record of the authorization. The
Exchange must establish a reasonable
retention period for maintaining these
records. In Federally-facilitated
Exchanges, this period is three years,
unless a different retention period has
already been provided under other
applicable Federal law; and
*
*
*
*
*
(g) Fees, consideration, solicitation,
and marketing. Organizations
designated by the Exchange under
paragraph (b) of this section and
certified application counselors must
not—
(1) Impose any charge on applicants
or enrollees for application or other
assistance related to the Exchange;
(2) Receive any consideration directly
or indirectly from any health insurance
issuer or issuer of stop-loss insurance in
connection with the enrollment of any
individuals in a QHP or a non-QHP;
(3) Provide compensation to
individual certified application
counselors on a per-application, perindividual- assisted, or per-enrollment
basis;
(4) Provide gifts, including gift cards
or cash, unless they are of nominal
value, or provide promotional items that
market or promote the products or
services of a third party, to any
applicant or potential enrollee in
connection with or as an inducement for
application assistance or enrollment;
(5) Solicit any consumer for
application or enrollment assistance by
going door-to-door or through other
unsolicited means of direct contact,
including calling a consumer to provide
application or enrollment assistance
without the consumer initiating the
contact; or
(6) Initiate any telephone call to a
consumer using an automatic telephone
dialing system or an artificial or
prerecorded voice.
■ 25. Section 155.240 is amended by
adding paragraph (e) to read as follows:
§ 155.240
Payment of premium.
*
*
*
*
*
(e) Premium calculation. The
Exchange may establish one or more
standard processes for premium
calculation.
(1) For a Federally-facilitated
Exchange, the premium for coverage
lasting less than one month must equal
the product of—
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(i) The premium for one month of
coverage divided by the number of days
in the month; and
(ii) The number of days for which
coverage is being provided in the month
described in paragraph (e)(1)(i) of this
section.
(2) [Reserved]
■ 26. Section 156.260 is amended by
revising paragraph (g) to read as follows:
§ 155.260 Privacy and security of
personally identifiable information.
*
*
*
*
*
(g) Improper use and disclosure of
information. Any person who
knowingly and willfully uses or
discloses information in violation of
section 1411(g) of the Affordable Care
Act will be subject to a CMP of not more
than the maximum amount specified in
section 1411(h)(2) of the Affordable Care
Act per person or entity, per use or
disclosure, consistent with the bases
and process for imposing civil penalties
specified at § 155.285 of this subpart, in
addition to other penalties that may be
prescribed by law.
■ 27. Section 155.285 is added to
subpart C to read as follows:
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§ 155.285 Bases and process for imposing
civil penalties for provision of false or
fraudulent information to an Exchange or
improper use or disclosure of information.
(a) Grounds for imposing civil money
penalties. (1) HHS may impose civil
money penalties on any person, as
defined in paragraph (a)(2) of this
section, if, based on credible evidence,
HHS reasonably determines that a
person has engaged in one or more of
the following actions:
(i) Failure to provide correct
information under section 1411(b) of the
Affordable Care Act where such failure
is attributable to negligence or disregard
of any rules or regulations of the
Secretary with negligence and disregard
defined as they are in section 6662 of
the Internal Revenue Code of 1986:
(A) ‘‘Negligence’’ includes any failure
to make a reasonable attempt to provide
accurate, complete, and comprehensive
information; and
(B) ‘‘Disregard’’ includes any careless,
reckless, or intentional disregard for any
rules or regulations of the Secretary.
(ii) Knowing and willful provision of
false or fraudulent information required
under section 1411(b) of the Affordable
Care Act, where knowing and willful
means the intentional provision of
information that the person knows to be
false; or
(iii) Knowing and willful use or
disclosure of information in violation of
section 1411(g) of the Affordable Care
Act, where knowing and willful means
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the intentional use or disclosure of
information in violation of section
1411(g). Such violations would include,
but not be limited to, the following:
(A) Any use or disclosure performed
which violates relevant privacy and
security standards established by the
Exchange pursuant to § 155.260;
(B) Any other use or disclosure which
has not been determined by the
Secretary to be in compliance with
section 1411(g)(2)(A) of the Affordable
Care Act pursuant to § 155.260(a); and
(C) Any other use or disclosure which
is not necessary to carry out a function
described in a contract with a nonExchange entity executed pursuant to
§ 155.260(b)(2).
(2) For purposes of this section, the
term ‘‘person’’ is defined to include, but
is not limited to, all individuals;
corporations; Exchanges; Medicaid and
CHIP agencies; other entities gaining
access to personally identifiable
information submitted to an Exchange
to carry out additional functions which
the Secretary has determined ensure the
efficient operation of the Exchange
pursuant to § 155.260(a)(1); and nonExchange entities as defined in
§ 155.260(b) which includes agents,
brokers, Web-brokers, QHP issuers,
Navigators, non-Navigator assistance
personnel; certified application
counselors, in-person assistors, and
other third party contractors.
(b) Factors in determining the amount
of civil money penalties imposed. In
determining the amount of civil money
penalties, HHS may take into account
factors which include, but are not
limited to, the following:
(1) The nature and circumstances of
the conduct including:
(i) The number of violations;
(ii) The severity of the violations;
(iii) The person’s history with the
Exchange including any prior violations
that would indicate whether the
violation is an isolated occurrence or
represents a pattern of behavior;
(iv) The length of time of the
violation;
(v) The number of individuals
affected or potentially affected;
(vi) The extent to which the person
received compensation or other
consideration associated with the
violation; and
(vii) Any documentation provided in
any complaint or other information, as
well as any additional information
provided by the individual to refute
performing the violation.
(2) The nature of the harm resulting
from, or reasonably expected to result
from, the violation including:
(i) Whether the violation resulted in
financial harm;
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15873
(ii) Whether there was harm to an
individual’s reputation;
(iii) Whether the violation hindered or
could have hindered an individual’s
ability to obtain health insurance
coverage;
(v) The actual or potential impact of
the provision of false or fraudulent
information or of the improper use or
disclosure of the information; and
(vi) Whether any person received a
more favorable eligibility determination
for enrollment in a QHP or insurance
affordability program, such as greater
advance payment of the premium tax
credits or cost-sharing reductions than
he or she would be eligible for if the
correct information had been provided.
(3) No penalty will be imposed under
paragraph (a)(1)(i) of this section if HHS
determines that there was a reasonable
cause for the failure to provide correct
information required under section
1411(b) of the Affordable Care Act and
that the person acted in good faith.
(c) Maximum penalty. The amount of
a civil money penalty will be
determined by HHS in accordance with
paragraph (b) of this section.
(1) The following provisions provide
maximum penalties for a single ‘‘plan
year,’’ where ‘‘plan year’’ has the same
meaning as at § 155.20 of this part:
(i) Any person who fails to provide
correct information as specified in
paragraph (a)(1)(i) of this section may be
subject to a maximum civil money
penalty as specified in section
1411(h)(1)(A)(i) of the Affordable Care
Act for each application, as defined at
paragraph (c)(1)(iii) of this section,
pursuant to which a person fails to
provide correct information.
(ii) Any person who knowingly and
willfully provides false information as
specified in paragraph (a)(1)(ii) of this
section may be subject to a maximum
civil money penalty as specified in
section 1411(h)(1)(B) of the Affordable
Care Act for each application, as defined
at paragraph (c)(1)(iii) of this section, on
which a person knowingly and willfully
provides false information.
(iii) For the purposes of this
subsection, ‘‘application’’ is defined as
a submission of information, whether
through an online portal, over the
telephone through a call center, or
through a paper submission process, in
which the information is provided in
relation to an eligibility determination;
an eligibility redetermination based on
a change in an individual’s
circumstances; or an annual eligibility
redetermination for any of the
following:
(A) Enrollment in a qualified health
plan;
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(B) Premium tax credits or cost
sharing reductions; or
(C) An exemption from the individual
shared responsibility payment.
(2) Any person who knowingly or
willfully uses or discloses information
as specified in paragraph (a)(1)(iii) of
this section may be subject to the
following civil money penalty:
(i) A civil money penalty for each use
or disclosure described in paragraph
(a)(1)(iii) of this section of not more than
the maximum amount specified in
section 1411(h)(2) of the Affordable Care
Act per use or disclosure.
(ii) For purposes of this subsection, a
use or disclosure includes one separate
use or disclosure of a single individual’s
personally identifiable information
where the person against whom a civil
money penalty may be imposed has
made the use or disclosure.
(3) These penalties may be imposed in
addition to any other penalties that may
be prescribed by law.
(d) Notice of intent to issue civil
money penalty. If HHS intends to
impose a civil money penalty in
accordance with this part, HHS will
send a written notice of such intent to
the person against whom it intends to
impose a civil money penalty.
(1) This written notice will be either
hand delivered, sent by certified mail,
return receipt requested, or sent by
overnight delivery service with
signature upon delivery required. The
written notice must include the
following elements:
(i) A description of the findings of fact
regarding the violations with respect to
which the civil money penalty is
proposed;
(ii) The basis and reasons why the
findings of fact subject the person to a
penalty;
(iii) Any circumstances described in
paragraph (b) of this section that were
considered in determining the amount
of the proposed penalty;
(iv) The amount of the proposed
penalty;
(v) An explanation of the person’s
right to a hearing under any applicable
administrative hearing process;
(vi) A statement that failure to request
a hearing within 60 calendar days after
the date of issuance printed on the
notice permits the assessment of the
proposed penalty; and
(vii) Information explaining how to
file a request for a hearing and the
address to which the hearing request
must be sent.
(2) The person may request a hearing
before an ALJ on the proposed penalty
by filing a request in accordance with
the procedure to file a request specified
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in the notice of intent to issue a civil
money penalty.
(e) Failure to request a hearing. If the
person does not request a hearing
within 60 calendar days of the date of
issuance printed on the notice described
in paragraph (d) of this section, HHS
may impose the proposed civil money
penalty.
(1) HHS will notify the person in
writing of any penalty that has been
imposed, the means by which the
person may satisfy the penalty, and the
date on which the penalty is due.
(2) A person has no right to appeal a
penalty with respect to which the
person has not timely requested a
hearing in accordance with paragraph
(d) of this section.
(f) Appeal of proposed penalty.
Subject to paragraph (e)(2) of this
section, any person against whom HHS
has imposed a civil money penalty may
appeal that penalty in accordance with
the rules and procedures outlined at 45
CFR part 150, subpart D, excluding
§§ 150.461, 150.463, and 150.465.
(g) Enforcement authority. (1) CMS.
CMS may impose civil money penalties
up to the maximum amounts specified
in paragraph (d) of this section for any
of the violations described in paragraph
(a) of this section.
(2) OIG. In accordance with the rules
and procedures of 42 CFR part 1003,
and in place of imposition of penalties
by CMS, the OIG may impose civil
money penalties for violations described
in paragraphs (a)(1)(ii) and (iii) of this
section.
(h) Settlement authority. Nothing in
this section limits the authority of CMS
to settle any issue or case described in
the notice furnished in accordance with
§ 155.285(d) or to compromise on any
penalty provided for in this section.
(i) Limitations. No action under this
section will be entertained unless
commenced, in accordance with
§ 155.285(d), within 6 years from the
date on which the violation occurred.
■ 28. Section 155.320 is amended by
revising the section heading and
removing paragraph (d)(4).
The revision reads as follows:
§ 155.320 Verification process related to
eligibility for insurance affordability
programs.
*
*
*
*
*
29. Section 155.330 is amended by
revising paragraph (d)(2)(ii) to read as
follows:
■
§ 155.330 Eligibility redetermination during
a benefit year.
*
*
*
(d) * * *
(2) * * *
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(ii) Comply with the standards
specified in paragraph (e)(2) of this
section.
*
*
*
*
*
■ 30. Section 155.400 is amended by
adding paragraphs (e) and (f) to read as
follows:
§ 155.400 Enrollment of qualified
individuals into QHPs.
*
*
*
*
*
(e) Premium payment. Exchanges
may, and the Federally-facilitated
Exchange will, require payment of the
first month’s premium to effectuate an
enrollment.
(f) Processing enrollment transactions.
The Exchange may provide
requirements to QHP issuers regarding
the instructions for processing
electronic enrollment-related
transactions.
■ 31. Section 155.420 is amended by
revising paragraphs (b)(2)(i) through
(iii), (c), (d)(1), (d)(6)(iii), and (e)
introductory text to read as follows:
§ 155.420
Special enrollment periods.
*
*
*
*
*
(b) * * *
(2) * * *
(i) In the case of birth, adoption,
placement for adoption, or placement in
foster care, 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, but may
permit the qualified individual or
enrollee to elect a later coverage
effective date. If the Exchange permits
the qualified individual or enrollee to
elect a later coverage effective date, the
Exchange must ensure coverage is
effective on the date elected by the
qualified individual or enrollee.
(ii) In the case of marriage, or in the
case where a qualified individual loses
minimum essential coverage or other
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), (d)(9), or
(d)(10) 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.
*
*
*
*
*
(c) Availability and length of special
enrollment periods. (1) Unless
specifically stated otherwise herein, a
qualified individual or enrollee has 60
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days from the date of a triggering event
to select a QHP;
(2) A qualified individual or enrollee
whose coverage specified in paragraph
(d)(1) or whose eligibility for qualifying
coverage in an eligible-employer
sponsored plan as specified in
paragraph (d)(6)(iii) of this section will
end within the next 60 days has 120
days from the date that is 60 days prior
to the end of such coverage or eligibility
to select a QHP, including prior to the
end of his or her existing coverage or
eligibility for qualifying coverage in an
eligible-employer sponsored plan as
specified in paragraph (d)(6)(iii) of this
section, although he or she is not
eligible for advance payments of the
premium tax credit until the end of his
or her existing coverage or eligibility for
qualifying coverage in an eligibleemployer sponsored plan as specified in
paragraph (d)(6)(iii) of this section;
(3) In the case of a qualified
individual or enrollee eligible for a
special enrollment period as described
in paragraphs (d)(4), (d)(5), (d)(9), or
(d)(10) of this section, the Exchange may
define the length of this special
enrollment period as appropriate based
on the circumstances of the special
enrollment period, in accordance with
guidelines issued by HHS.
(d) * * *
(1) The qualified individual or his or
her dependent loses minimum essential
coverage, is enrolled in any noncalendar year individual health
insurance policy as described in
§ 147.104(b)(2) of this subchapter, even
if the qualified individual or his her or
dependent has the option to renew the
expiring non-calendar year individual
health insurance policy, or loses
pregnancy-related coverage described
under section 1902(a)(10)(A)(i)(IV) and
(a)(10)(A)(ii)(IX) of the Social Security
Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV),
(a)(10)(A)(ii)(IX)).
*
*
*
*
*
(6) * * *
(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.
*
*
*
*
*
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(e) Loss of coverage. Loss of minimum
essential coverage or other coverage
described in paragraph (d)(1) of this
section includes those circumstances
described in 26 CFR 54.9801–6(a)(3)(i)
through (iii). Loss of coverage does not
include voluntary termination or loss
due to—
*
*
*
*
*
■ 32. Section 155.430 is amended by
revising paragraph (d)(6) and adding
paragraph (e) to read as follows:
§ 155.430
Termination of coverage.
*
*
*
*
*
(d) * * *
(6) In the case of a termination in
accordance with paragraph (b)(2)(v) of
this section, the last day of coverage in
an enrollee’s prior QHP is the day before
the effective date of coverage in his or
her new QHP, including any retroactive
enrollments effectuated under
§ 155.420(b)(2)(iii). In cases of
retroactive terminations dates, the
Exchange will ensure that appropriate
actions are taken to make necessary
adjustments to advance payments of the
premium tax credit, cost-sharing
reductions, premiums, and claims.
*
*
*
*
*
(e) Termination, cancellation, and
reinstatement. The Exchange may
establish operational instructions as to
the form, manner, and method for
addressing each of the following:
(1) Termination. A termination is an
action taken after a coverage effective
date that ends an enrollee’s coverage
through the Exchange for a date after the
original coverage effective date,
resulting in a period during which the
individual was covered by the issuer.
(2) Cancellation. A cancellation is
specific type of termination action that
ends a qualified individuals’ enrollment
on the date coverage became effective
resulting in coverage never having been
effective with the QHP.
(3) Reinstatement. A reinstatement is
a correction of an erroneous termination
or cancellation action and results in
restoration of an enrollment with no
break in coverage.
§ 155.505
[Amended].
33. Section 155.505 is amended in
paragraph (b)(4) by removing ‘‘; and’’ at
the end of the paragraph and adding a
period in its place.
■ 34. Section 155.530 is amended by
revising paragraph (a)(1) to read as
follows:
■
§ 155.530
Dismissals.
(a) * * *
(1) Withdraws the appeal request in
writing or by telephone, if the appeals
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entity is capable of accepting telephonic
withdrawals.
(i) Accepting telephonic withdrawals
means the appeals entity—
(A) Records in full the appellant’s
statement and telephonic signature
made under penalty of perjury; and
(B) Provides a written confirmation to
the appellant documenting the
telephonic interaction.
(ii) [Reserved]
*
*
*
*
*
■ 35. Section 155.555 is amended by—
■ A. Redesignating paragraphs (d)
introductory text, (d)(1), (d)(2)
introductory text, (d)(2)(i), (ii), (iii),
(d)(3), and (d)(4) as paragraphs (d)(1)
introductory text, (d)(1)(i), (d)(1)(ii)
introductory text, (d)(1)(ii)(A), (B), (C),
(d)(1)(iii), and (d)(2).
■ B. Revising new paragraph (d)(2)
introductory text.
The revision reads as follows:
§ 155.555
Employer appeals process.
*
*
*
*
*
(d) * * *
(2) Upon receipt of an invalid appeal
request, the appeals entity must
promptly and without undue delay send
written notice to the employer that the
appeal request is not valid because it
fails to meet the requirements of this
section. The written notice must inform
the employer—
*
*
*
*
*
■ 36. Section 155.625 is revised to read
as follows:
§ 155.625 Options for conducting eligibility
determinations for exemptions.
(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); or
(2) For an application submitted
before November 15, 2014, through the
approach described in paragraph (b) of
this section.
(b) Use of HHS service.
Notwithstanding the requirements of
this subpart, for an application
submitted before November 15, 2014,
the Exchange may adopt an exemption
eligibility determination made by HHS,
provided that—
(1) The Exchange adheres to the
eligibility determination made by HHS;
(2) The Exchange furnishes to HHS
any information available through the
Exchange that is necessary for an
applicant to utilize the process
administered by HHS; and
(3) The Exchange call center and
Internet Web site specified in
§ 155.205(a) and (b), respectively,
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provide information to consumers
regarding the exemption eligibility
process.
■ 37. Section 155.705, as amended
March 11, 2014 (79 FR 13838), and
effective May 12, 2014, is amended by—
■ A. Revising paragraphs (b)(2) and
(b)(3)(ii) introductory text and (b)(3)(iv)
introductory text.
■ B. Adding paragraph (b)(3)(vi).
The revisions and addition read as
follows:
§ 155.705
Functions of a SHOP.
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*
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(b) * * *
(2) Employer choice requirements.
With regard to QHPs offered through the
SHOP for plan years beginning on or
after January 1, 2015, the SHOP must
allow a qualified employer to select a
level of coverage as described in section
1302(d)(1) of the Affordable Care Act, in
which all QHPs within that level are
made available to the qualified
employees of the employer, unless the
SHOP makes an election pursuant to
paragraph (b)(3)(vi) of this section.
(3) * * *
(ii) Unless the SHOP makes an
election pursuant to paragraph (b)(3)(vi)
of this section, for plan years beginning
on or after January 1, 2015, a SHOP:
*
*
*
*
*
(iv) Unless the Secretary makes an
election pursuant to paragraph (b)(3)(vi)
of this section, for plan years beginning
on or after January 1, 2015, a Federallyfacilitated SHOP will provide a
qualified employer a choice of two
methods to make QHPs available to
qualified employees:
*
*
*
*
*
(vi) For plan years beginning in 2015,
the SHOP may, based on the
recommendation of a State regulatory
agency, elect to provide employers only
with the options set forth at paragraph
(b)(3)(ii)(B) or in the case of a Federallyfacilitated SHOP, only with the option
set forth at paragraph (b)(3)(iv)(B) of this
section, only if:
(A) The implementation of paragraphs
(b)(3)(ii)(A) or (b)(3)(iv)(A) of this
section would result in significant
adverse selection in the State’s small
group market resulting in market
disruptions that could not be
remediated by sections 1312(c), 1342,
and 1343 of the Affordable Care Act
(relating to single risk pool, risk
corridors, and risk adjustment); or
(B) There are insufficient issuers of
qualified health plans or qualified
stand-alone dental plans in the SHOP to
allow for meaningful choice among
qualified health plans or qualified
stand-alone dental plans for all levels of
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coverage as described in section
1302(d)(1) of the Affordable Care Act.
*
*
*
*
*
■ 38. Section 155.725 is amended by
revising paragraphs (c) and (e) to read as
follows:
Subpart O—Quality Reporting Standards for
Exchanges
Sec.
155.1400 Quality rating system.
155.1405 Enrollee satisfaction survey
system.
§ 155.725
Subpart O—Quality Reporting
Standards for Exchanges
Enrollment periods under SHOP.
*
*
*
*
*
(c) Annual employer election period.
(1) Notwithstanding any other
paragraph in this section, for coverage
beginning in 2015, a qualified
employer’s annual election period may
begin no sooner than November 15,
2014.
(2) The SHOP must provide qualified
employers with a standard election
period prior to the completion of the
employer’s plan year and before the
annual employee open enrollment
period, in which the qualified employer
may change its participation in the
SHOP for the next plan year,
including—
(i) The method by which the qualified
employer makes QHPs available to
qualified employees pursuant to
§ 155.705(b)(2) and (3);
(ii) The employer contribution
towards the premium cost of coverage;
(iii) The level of coverage offered to
qualified employees as described in
§ 155.705(b)(2) and (3); and
(iv) The QHP or QHPs offered to
qualified employees in accordance with
§ 155.705.
*
*
*
*
*
(e) Annual employee open enrollment
period. The SHOP must establish a
standardized annual open enrollment
period for qualified employees prior to
the completion of the applicable
qualified employer’s plan year and after
that employer’s annual election period.
*
*
*
*
*
■ 39. Section 155.740 is amended by—
■ A. Redesignating paragraphs (g)
introductory text, (g)(1) introductory
text, (g)(1)(i), (g)(1)(ii), (g)(2), and (g)(3)
as paragraphs (g)(1)(i) introductory text,
(g)(1)(i)(A), (g)(1)(i)(B), (g)(1)(ii), and
(g)(2).
■ B. Revising paragraph (i)(1)(i).
The revision read as follows:
§ 155.740 SHOP employer and employee
eligibility appeals requirements.
*
*
*
*
*
(i) * * *
(1) * * *
(i) Withdraws the request in
accordance with the standards set forth
in § 155.530(a)(1); or
*
*
*
*
*
■ 40. Subpart O is added to read as
follows:
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§ 155.1400
Quality rating system.
The Exchange must prominently
display the quality rating information
assigned to each QHP on its Web site,
in accordance with § 155.205(b)(1)(v), as
calculated by HHS and in a form and
manner specified by HHS.
§ 155.1405
system.
Enrollee satisfaction survey
The Exchange must prominently
display results from the Enrollee
Satisfaction Survey for each QHP on its
Web site, in accordance with
§ 155.205(b)(1)(iv), as calculated by HHS
and in a form and manner specified by
HHS.
PART 156—HEALTH INSURANCE
ISSUER STANDARDS UNDER THE
AFFORDABLE CARE ACT, INCLUDING
STANDARDS RELATED TO
EXCHANGES
41. The authority citation for part 156
continues to read as follows:
■
Authority: Title I of the Affordable Care
Act, sections 1301–1304, 1311–1313, 1321–
1322, 1324, 1334, 1342–1343, 1401–1402,
Pub. L. 111–148, 124 Stat. 119 42 U.S.C.
18021–18024, 18031–18032, 18041–18042,
18044, 18054, 18061, 18063, 18071, 18082,
26 U.S.C. 36B, and 31 U.S.C. 9701).
42. Section 156.130 is amended by
revising paragraph (d) to read as
follows:
■
§ 156.130
Cost-sharing requirements.
*
*
*
*
*
(d) Increase annual dollar limits in
multiples of 50. For a plan year
beginning in a calendar year after 2014,
any increase in the annual dollar limits
described in paragraphs (a) and (b) of
this section that does not result in a
multiple of 50 dollars will be rounded
down, to the next lowest multiple of 50
dollars.
*
*
*
*
*
■ 43. Section 156.200 is amended by
revising paragraph (b)(5) and adding
paragraph (h) to read as follows:
§ 156.200 QHP issuer participation
standards.
*
*
*
*
*
(b) * * *
(5) Implement and report on a quality
improvement strategy or strategies
described in section 1311(c)(1)(E) of the
Affordable Care Act consistent with the
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standards of section 1311(g) of the
Affordable Care Act, disclose and report
information on health care quality and
outcomes described in sections
1311(c)(1)(H), (c)(1)(I), and (c)(3) of the
Affordable Care Act, and implement
appropriate enrollee satisfaction surveys
consistent with section 1311(c)(4) of the
Affordable Care Act;
*
*
*
*
*
(h) Operational requirements. As a
condition of certification of a QHP, an
issuer must attest that it will comply
with all QHP operational requirements
described in Subparts D, E, H, K, L and
M of this part.
■ 44. Section 156.265 is amended by
revising paragraph (d) to read as
follows:
§ 156.265 Enrollment process for qualified
individuals.
*
*
*
*
*
(d) Premium payment. A QHP
issuer—
(1) Must follow the premium payment
process established by the Exchange in
accordance with § 155.240.
(2) Must, for QHPs offered through a
Federally-facilitated Exchange, establish
the date by which a qualified individual
that has selected a QHP within the
enrollment period dates in § 155.410(b)
of this subchapter must make a
premium payment in order to effectuate
coverage by the applicable coverage
date, provided that:
(i) The payment date is no later than
the day before the coverage effective
date.
(ii) The payment date policy is
applied consistently to all applicants in
a non-discriminatory manner.
*
*
*
*
*
■ 45. Section 156.602 is amended by
redesignating paragraph (e) as paragraph
(f) and adding a new paragraph (e) to
read as follows:
§ 156.602 Other coverage that qualifies as
minimum essential coverage.
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(e) Foreign group health coverage. (1)
Foreign group health coverage for
expatriates. The following types of
foreign group health coverage will be
recognized as minimum essential
coverage for expatriates:
(i) Group health coverage for citizens
or nationals of the United States
working abroad, provided by either of
the following:
(A) A foreign, self-insured group
health plan.
(B) Health insurance regulated by a
foreign government or health coverage
provided by a foreign national health
plan with respect to a citizen or national
of the United States who, for such
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month, is physically absent from the
United States for at least one day of the
month, or who is physically present in
the United States for an entire month if
the coverage provides health benefits
within the United States.
(ii) Group health coverage for nonUnited States citizens or nationals
residing in the United States, provided
by a self-insured group health plan,
health insurance regulated by a foreign
government, or health coverage
provided by a foreign national health
plan, if the coverage provides health
benefits within the United States.
(2) Notice. The sponsor, issuer, or
plan administrator of foreign group
health coverage as described in this
paragraph (e) must provide notice to
enrollees who are citizens or nationals
of the United States of its minimum
essential coverage status and must
comply, if applicable, with the
information and reporting requirements
of section 6055 of the Code and
implementing regulations with respect
to those enrollees.
(3) Definition of expatriate. For
purposes of this section, an expatriate
means an individual for whom there is
a good faith expectation that such
individual will reside outside of their
home country or outside of the United
States for at least six months of a 12month period and any covered
dependents.
*
*
*
*
*
■ 46. Section 156.604 is amended by
revising paragraphs (a)(2) introductory
text and (d) to read as follows:
§ 156.800
§ 156.604 Requirements for recognition as
minimum essential coverage for types of
coverage not otherwise designated
minimum essential coverage in the statute
or this subpart.
§ 156.806
(a) * * *
(2) Procedural requirements for
recognition as minimum essential
coverage. To be considered for
recognition as minimum essential
coverage, the sponsor of the coverage,
government agency, health insurance
issuer, or plan administrator must
submit the following information to
HHS:
*
*
*
*
*
(d) Notice. Once recognized as
minimum essential coverage, the
sponsor of the coverage, government
agency, health insurance issuer, or plan
administrator must provide notice to all
enrollees of its minimum essential
coverage status and must comply with
the information reporting requirements
of section 6055 of the Code and
implementing regulations.
■ 47. Section 156.800 is amended by
adding paragraph (d) to read as follows:
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Available remedies; Scope.
*
*
*
*
*
(d) HHS may consult and share
information about QHP issuers with
other Federal and State regulatory and
enforcement entities to the extent that
the consultation and information is
necessary for HHS to determine whether
an enforcement remedy under subpart I
is appropriate.
■ 48. Section 156.805 is amended by—
■ A. Removing ‘‘or’’ after the semicolon
in paragraph (a)(6).
■ B. Removing the period in paragraph
(a)(7) and adding ‘‘; or’’ in its place.
■ C. Adding paragraph (d)(3).
■ D. Revising paragraph (e)(2).
The revisions and additions read as
follows:
§ 156.805 Bases and process for imposing
civil money penalties in Federally-facilitated
Exchanges.
*
*
*
*
*
(d) * * *
(3) HHS will deliver notice under this
paragraph by either hand delivery,
certified mail, return receipt requested,
or by overnight delivery service with
signature upon delivery required.
(e) * * *
(2) HHS will notify the issuer in
writing of any penalty that has been
assessed under this subpart and of the
means by which the QHP issuer or
another responsible entity may satisfy
the CMP assessment.
*
*
*
*
*
■ 49. Section 156.806 is added to read
as follows:
Notice of non-compliance.
If HHS learns of a potential violation
described in § 156.805 or if a State
informs HHS of a potential violation,
prior to imposing any CMPs, HHS must
provide a written notice to the issuer, to
include the following:
(a) Describe the potential violation.
(b) Provide 30 days from the date of
the notice for the QHP issuer to respond
and to provide additional information to
refute an alleged violation.
(c) State that a civil money penalty
may be assessed if the allegations are
not, as determined by HHS, refuted.
■ 50. Section 156.810 is amended—
■ A. By revising paragraph (a)(6).
■ C. In paragraph (a)(9) by removing
‘‘or’’ after the semicolon.
■ D. In paragraph (a)(10) by removing
the period and adding a semicolon in its
place.
■ E. By revising paragraph (a)(11).
■ F. By adding a new paragraph (a)(12).
■ G. By revising paragraph (d)
introductory text.
The revisions and additions read as
follows:
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§ 156.810 Bases and process for
decertification of a QHP offered by an
issuer through a Federally-facilitated
Exchange.
§ 156.1120
(a) * * *
(6) The QHP no longer meets the
applicable standards set forth under
subpart C of Part 156.
*
*
*
*
*
(12) The QHP issuer substantially fails
to meet the requirements related to the
cases forwarded to QHP issuers under
Subpart K; or
(13) The QHP issuer substantially fails
to meet the requirements related to the
offering of a QHP under Subpart M.
*
*
*
*
*
(d) Expedited decertification process.
For decertification actions on grounds
described in paragraphs (a)(6), (7), (8),
or (9) of this section, HHS will provide
written notice to the QHP issuer,
enrollees, and the State department of
insurance in the State in which the QHP
is being decertified. The written notice
must include the following:
*
*
*
*
*
■ 51. Section 156.1105 is amended by
adding paragraphs (d) and (e) to read as
follows:
§ 156.1105 Establishment of standards for
HHS-approved enrollee satisfaction survey
vendors for use by QHP issuers in
Exchanges.
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*
*
*
*
(d) Monitoring. HHS will periodically
monitor HHS-approved enrollee
satisfaction survey vendors to ensure
ongoing compliance with the standards
in paragraph (b) of this section. If HHS
determines that an HHS-approved
enrollee satisfaction survey vendor is
non-compliant with the standards
required in paragraph (b) of this section,
the survey vendor may be removed from
the approved list described in paragraph
(c) of this section and/or the submitted
survey results may be ineligible to be
included for ESS results.
(e) Appeals. An enrollee satisfaction
survey vendor that is not approved by
HHS after submitting the application
described in paragraph (a) of this
section may appeal HHS’s decision by
notifying HHS in writing within 15 days
from receipt of the notification of not
being approved and submitting
additional documentation
demonstrating how the vendor meets
the standards in paragraph (b) of this
section. HHS will review the submitted
documentation and make a final
approval determination within 30 days
from receipt of the additional
documentation.
■ 52. Section 156.1120 is added to
subpart L to read as follows:
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Quality rating system.
(a) Data submission requirement. (1)
A QHP issuer must submit data to HHS
and Exchanges to support the
calculation of quality ratings for each
QHP that has been offered in an
Exchange for at least one year.
(2) In order to ensure the integrity of
the data required to calculate the QRS,
a QHP issuer must submit data that has
been validated in a form and manner
specified by HHS.
(3) A QHP issuer must include in its
data submission information only for
those QHP enrollees at the reporting
level specified by HHS.
(b) Timeline. A QHP issuer must
annually submit data necessary to
calculate the QHP’s quality ratings to
HHS and Exchanges, on a timeline and
in a standardized form and manner
specified by HHS.
(c) Marketing requirement. A QHP
issuer may reference the quality ratings
for its QHPs in its marketing materials,
in a manner specified by HHS.
(d) Multi-State plans. Issuers of multiState plans, as defined in § 155.1000(a)
of this subchapter, must provide the
data described in paragraph (a) of this
section to the U.S. Office of Personnel
management, in the time and manner
specified by the U.S. Office of Personnel
Management.
■ 53. Section 156.1125 is added to
subpart L to read as follows:
§ 156.1125
system.
Enrollee satisfaction survey
(a) General requirement. A QHP issuer
must contract with an HHS-approved
enrollee satisfaction survey (ESS)
vendor, as identified by § 156.1105, in
order to administer the Enrollee
Satisfaction Survey of the QHP’s
enrollees. A QHP issuer must authorize
its contracted ESS vendor to report
survey results to HHS and the Exchange
on the issuer’s behalf.
(b) Data requirement. (1) A QHP
issuer must collect data for each QHP,
with more than 500 enrollees in the
previous year that has been offered in an
Exchange for at least one year and
following a survey sampling
methodology provided by HHS.
(2) In order to ensure the integrity of
the data required to conduct the survey,
a QHP issuer must submit data that has
been validated in a form and manner
specified by HHS, and submit this data
to its contracted ESS vendor.
(3) A QHP issuer must include in its
data submission information only for
those QHP enrollees at the reporting
level specified by HHS.
(c) Marketing requirement. A QHP
issuer may reference the survey results
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for its QHPs in its marketing materials,
in a manner specified by HHS.
(d) Timeline. A QHP issuer must
annually submit data necessary to
conduct the survey to its contracted ESS
vendor on a timeline and in a
standardized form and manner specified
by HHS.
(e) Multi-State plans. Issuers of multiState plans, as defined in § 155.1000(a)
of this subchapter, must provide the
data described in paragraph (b) of this
section to the U.S. Office of Personnel
management, in the time and manner
specified by the U.S. Office of Personnel
Management.
PART 158—ISSUER USE OF PREMIUM
REVENUE: REPORTING AND REBATE
REQUIREMENTS
54. The authority citation for part 158
continues to read as follows:
■
Authority: Section 2718 of the Public
Health Service Act (42 U.S.C. 300gg–18), as
amended.
55. Section 158.150 is amended by
revising paragraph (b)(2)(i)(A)(6) to read
as follows:
■
§ 158.150 Activities that improve health
care quality.
*
*
*
*
*
(b) * * *
(2) * * *
(i) * * *
(A) * * *
(6) Commencing with the 2012
reporting year and extending through
the first reporting year in which the
Secretary requires ICD–10 as the
standard medical data code set,
implementing ICD–10 code sets that are
designed to improve quality and are
adopted pursuant to the Health
Insurance Portability and
Accountability Act (HIPAA), 42 U.S.C.
1320d–2, as amended, limited to 0.3
percent of an issuer’s earned premium
as defined in § 158.130.
*
*
*
*
*
■ 56. Section 158.211 is amended by
revising paragraph (a) to read as follows:
§ 158.211 Requirement in States with a
higher medical loss ratio.
(a) State option to set higher
minimum loss ratio. For coverage
offered in a State whose law provides
that issuers in the State must meet a
higher MLR than that set forth in
§ 158.210, the State’s higher percentage
must be substituted for the percentage
stated in § 158.210. If a State requires
the small group market and individual
market to be merged and also sets a
higher MLR standard for the merged
market, the State’s higher percentage
must be substituted for the percentage
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stated in § 158.210 for both the small
group and individual markets.
*
*
*
*
*
■ 57. Section 158.220 is amended by
revising paragraph (a) to read as follows:
§ 158.220 Aggregation of data in
calculating an issuer’s medical loss ratio.
(a) Aggregation by State and by
market. In general, an issuer’s MLR
must be calculated separately for the
large group market, small group market
and individual market within each
State. However, if a State requires the
small group market and individual
market to be merged, then the data
reported separately under subpart A for
the small group and individual market
in that State must be merged for
purposes of calculating an issuer’s MLR
and any rebates owing.
*
*
*
*
*
■ 58. Section 158.221 is amended by
adding paragraphs (b)(6) and (7) to read
as follows:
§ 158.221 Formula for calculating an
issuer’s medical loss ratio.
*
*
*
*
(b) * * *
(6) The numerator of the MLR in the
individual and small group markets in
States that adopted the transitional
policy outlined in the CMS letter dated
November 14, 2013 must be the amount
specified in this paragraph (b), except
that issuers that provided transitional
coverage may multiply the total
incurred claims and expenditures for
activities that improve health care
quality incurred in 2014 in the
respective State and market by a factor
of 1.0001.
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(7) The numerator of the MLR in the
individual and small group markets for
issuers participating in the State and
Federal Exchanges (sometimes referred
to as ‘‘Marketplaces’’) must be the
amount specified in this paragraph (b),
except that the total incurred claims and
expenditures for activities that improve
health care quality incurred in 2014 in
the respective State and market may be
multiplied by a factor of 1.0004.
*
*
*
*
*
■ 59. Section 158.231 is amended by
revising paragraph (a) to read as follows:
§ 158.231 Life-years used to determine
credible experience.
(a) The life-years used to determine
the credibility of an issuer’s experience
are the life-years for the MLR reporting
year plus the life-years for the two prior
MLR reporting years. If a State requires
the small group market and individual
market to be merged, then life-years
used to determine credibility must be
the life-years from the small group
market and the individual market for
the MLR reporting year plus the lifeyears from the small group market and
the individual market for the two prior
MLR reporting years.
*
*
*
*
*
■ 60. Section 158.243 is amended by
revising paragraph (b)(1) and adding
paragraph (b)(3) to read as follows:
§ 158.243
De minimis rebates.
*
*
*
*
*
(b) * * *
(1) Except as provided in paragraph
(b)(3) of this section, an issuer must
aggregate and distribute any rebates not
provided because they did not meet the
PO 00000
Frm 00073
Fmt 4701
Sfmt 9990
15879
minimum threshold set forth in
paragraph (a) of this section by
aggregating the unpaid rebates by
individual market, small group market
and large group market in a State and
use them to increase the rebates
provided to enrollees who receive
rebates based upon the same MLR
reporting year as the aggregated unpaid
rebates. An issuer must distribute such
aggregated rebates by providing
additional premium credit or payment
divided evenly among enrollees who are
being provided a rebate.
*
*
*
*
*
(3) If distribution of aggregated
unpaid rebates according to paragraph
(b)(1) of this section would result in any
enrollee(s) receiving rebates that exceed
their premium paid during the MLR
reporting year, or if no enrollees receive
rebates based upon the same MLR
reporting year as the aggregated unpaid
rebates, then the issuer must not
aggregate the unpaid rebates according
to paragraph (b)(1) of this section and
must instead distribute them according
to § 158.241 directly to those enrollees
whose rebates did not meet the
minimum threshold set forth in
paragraph (a) of this section.
Dated: March 11, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: March 13, 2014.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2014–06134 Filed 3–17–14; 4:15 pm]
BILLING CODE 4120–01–P
E:\FR\FM\21MRP2.SGM
21MRP2
]]>Agencies
[Federal Register Volume 79, Number 55 (Friday, March 21, 2014)]
[Proposed Rules]
[Pages 15807-15879]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06134]
[[Page 15807]]
Vol. 79
Friday,
No. 55
March 21, 2014
Part II
Department of Health and Human Services
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45 CFR Parts 146, 147, 148, et al.
Patient Protection and Affordable Care Act; Exchange and Insurance
Market Standards for 2015 and Beyond; Proposed Rule
Federal Register / Vol. 79 , No. 55 / Friday, March 21, 2014 /
Proposed Rules
[[Page 15808]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 146, 147, 148, 153, 155, 156, and 158
[CMS-9949-P]
RIN 0938-AS02
Patient Protection and Affordable Care Act; Exchange and
Insurance Market Standards for 2015 and Beyond
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule addresses various requirements applicable
to health insurance issuers, Affordable Insurance Exchanges
(``Exchanges''), Navigators, non-Navigator assistance personnel, and
other entities under 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). Specifically, the rule
proposes standards related to product discontinuation and renewal,
quality reporting, non-discrimination standards, minimum certification
standards and responsibilities of qualified health plan (QHP) issuers,
the Small Business Health Options Program, and enforcement remedies in
Federally-facilitated Exchanges. It also proposes: A modification of
HHS's allocation of reinsurance contributions collected if those
contributions do not meet our projections; certain changes to the
ceiling on allowable administrative expenses in the risk corridors
calculation; modifications to the way we calculate certain cost-sharing
parameters so that we round those parameters down to the nearest $50
increment; certain approaches we are considering to index the required
contribution used to determine eligibility for an exemption from the
shared responsibility payment under section 5000A of the Internal
Revenue Code; grounds for imposing civil money penalties on persons who
provide false or fraudulent information to the Exchange and on persons
who improperly use or disclose information; updated standards for the
consumer assistance programs; standards related to the opt-out
provisions for self-funded, non-Federal governmental plans and the
individual market provisions under the Health Insurance Portability and
Accountability Act of 1996; standards for recognition of certain types
of foreign group health coverage as minimum essential coverage;
amendments to Exchange appeals standards and coverage enrollment and
termination standards; and time-limited adjustments to the standards
relating to the medical loss ratio program.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below no later than 5 p.m. on April 21, 2014.
ADDRESSES: In commenting, please refer to file code CMS-9949-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9949-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9949-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: For general matters and matters
related to Parts 146 through 148: Jacob Ackerman, (301) 492-4179.
For matters related to reinsurance, under Part 153: Adrianne
Glasgow, (410) 786-0686.
For matters related to risk corridors, under Part 153: Jaya
Ghildiyal, (301) 492-5149.
For matters related to non-interference with Federal law and non-
discrimination standards, and Navigator, non-Navigator assistance
personnel, and certified application counselor program standards, under
Part 155, subparts B and C: Joan Matlack, (301) 492-4223.
For matters related to civil money penalties and consumer
authorization forms, under Part 155, subpart C: Emily Ames, (301) 492-
4246.
For matters related to civil money penalties for false or
fraudulent information or improper use of information, under Part 155,
subpart C: Julia Cassidy, (301) 492-4412.
For matters related to enrollment of a qualified individual, under
Part 155, subpart E: Jack Lavelle, (410) 786-0639.
For matters related to special enrollment periods and exemptions
under Part 155, subparts D and G, and matters related to eligibility
appeals, under Part 155, subparts F and H: Christine Hammer, (301) 492-
4431.
For matters related to the Small Business Health Options Program,
under Part 155, subpart H: Christelle Jang, (410) 786-8438.
For matters related to the required contribution percentage for
affordability exemptions, under Part 155, subpart G: Ariel Novick,
(301) 492-4309.
For matters related to cost sharing, under Part 156, subpart B: Pat
Meisol, (410) 786-1917.
For matters related to quality standards, under Parts 155 and 156:
Nidhi Singh Shah, (301) 492-5110.
For matters related to minimum essential coverage, under Part 156,
subpart G: Cam Clemmons, (410) 786-1565.
For all other matters related to Parts 155 and 156: Leigha Basini,
(301) 492-4380.
[[Page 15809]]
For matters related to the medical loss ratio program, under Part
158: Julie McCune, (301) 492-4196.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is also available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the internet at https://www.gpo.gov/fdsys.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
I. Executive Summary
II. Background
A. Legislative Overview
B. Stakeholder Consultation and Input
C. Structure of Proposed Rule
III. Provisions of the Proposed Rule
A. Part 146--Requirements for the Group Health Insurance Market
1. HIPAA Opt-Out Provisions for Plan Sponsors of Self-Funded,
Non-Federal Governmental Plans (Sec. 146.180)
B. Part 147--Health Insurance Reform Requirements for the Group
and Individual Health Insurance Markets
1. Guaranteed Availability and Guaranteed Renewability of
Coverage (Sec. Sec. 147.104 and 147.106)
a. No Effect on Other Laws
b. Product Withdrawal and Uniform Modification of Coverage
Exceptions to Guaranteed Renewability Requirements
C. Part 148--Requirements for the Individual Health Insurance
Market
1. Conforming Changes to Individual Market Regulations
(Sec. Sec. 148.101 Through 148.128)
2. Fixed Indemnity Insurance in the Individual Health Insurance
Market (Sec. 148.220)
D. Part 153--Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment Under the Affordable Care Act
1. Provisions and Parameters for the Transitional Reinsurance
Program (Sec. 153.405)
2. Provisions for the Temporary Risk Corridors Program (Sec.
153.500)
E. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Subpart B--General Standards Related to the Establishment of
the Exchange
a. Non-Interference With Federal Law and Non-Discrimination
Standards (Sec. 155.120)
2. Subpart C--General Functions of an Exchange
a. Civil Money Penalties for Violations of Applicable Exchange
Standards by Consumer Assistance Entities in Federally-Facilitated
Exchanges (Sec. 155.206)
b. Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards (Sec. Sec. 155.210,
155.215, and 155.225)
c. Certified Application Counselors (Sec. 155.225)
d. Payment of Premiums (Sec. 155.240)
e. Privacy and Security of Personally Identifiable Information
(Sec. 155.260)
f. Bases and Process for Imposing Civil Money Penalties for
Provision of False or Fraudulent Information to an Exchange or
Improper Use or Disclosure of Information (Sec. 155.285)
3. Subpart D--Exchange Functions in the Individual Market:
Eligibility Determinations for Exchange Participation and Insurance
Affordability Programs
a. Verification of Eligibility for Minimum Essential Coverage
Other Than Through an Eligible Employer-Sponsored Plan (Sec.
155.320)
b. Eligibility Redetermination During a Benefit Year (Sec.
155.330)
4. Subpart E--Exchange Functions in the Individual Market:
Enrollment in Qualified Health Plans
a. Enrollment of Qualified Individuals in a QHP (Sec. 155.400)
b. Initial and Annual Open Enrollment Periods (Sec. 155.410)
c. Special Enrollment Periods (Sec. 155.420)
d. Termination of Coverage (Sec. 155.430)
5. Subpart F--Appeals of Eligibility Determinations for Exchange
Participation and Insurance Affordability Programs
a. General Eligibility Appeals Requirements (Sec. 155.505)
b. Dismissals (Sec. 155.530)
c. Employer Appeals Process (Sec. 155.555)
6. Subpart G--Exchange Functions in the Individual Market:
Eligibility Determinations for Exemptions
a. Required Contribution Percentage
b. Options for Conducting Eligibility Determinations for
Exemptions (Sec. 155.625)
7. Subpart H--Exchange Functions: Small Business Health Options
Program
a. Functions of a SHOP (Sec. 155.705)
b. Enrollment Periods Under SHOP (Sec. 155.725)
c. SHOP Employer and Employee Eligibility Appeals Requirements
(Sec. 155.740)
8. Subpart O--Quality Standards for Exchanges
a. Quality Rating System (Sec. 155.1400)
b. Enrollee Satisfaction Survey System (Sec. 155.1405)
F. Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
1. Subpart B--Essential Health Benefits Package
a. Prescription Drug Benefits (Sec. 156.122)
b. Cost-Sharing Requirements (Sec. 156.130)
2. Subpart C--General Functions of an Exchange
a. QHP Issuer Participation Standards (Sec. 156.200)
3. Subpart G--Minimum Essential Coverage
a. Other Coverage That Qualifies as Minimum Essential Coverage
(Sec. 156.602)
b. Requirements for Recognition as Minimum Essential Coverage
for Types of Coverage Not Otherwise Designated Minimum Essential
Coverage in the Statute or This Subpart (Sec. 156.604)
4. Subpart I--Enforcement Remedies in Federally-Facilitated
Exchanges
a. Available Remedies; Scope (Sec. 156.800)
b. Bases and Process for Imposing Civil Money Penalties in
Federally-Facilitated Exchanges (Sec. 156.805)
c. Bases and Process for Decertification of a QHP Offered by an
Issuer Through a Federally-Facilitated Exchange (Sec. 156.810)
5. Subpart L--Quality Standards
a. Establishment of Standards for HHS-Approved Enrollee
Satisfaction Survey Vendors for Use by QHP Issuers in Exchanges
(Sec. 156.1105)
b. Quality Rating System (Sec. 156.1120)
c. Enrollee Satisfaction Survey (Sec. 156.1125)
G. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Subpart A--Disclosure and Reporting
a. ICD-10 Conversion Expenses (Sec. 158.150)
2. Subpart B--Calculating and Providing the Rebate
a. MLR and Rebate Calculations in States With Merged Individual
and Small Group Markets (Sec. Sec. 158.211, 158.220, 158.231)
b. Accounting for Special Circumstances (Sec. 158.221)
c. Distribution of de Minimis Rebates (Sec. 158.243)
IV. Collection of Information Requirements
A. ICRs Regarding Recertification for Certified Application
Counselors (Sec. 155.225)
B. ICRs Regarding Consumer Authorization (Sec. Sec. 155.210 and
155.215)
C. ICRs Regarding Enrollee Satisfaction & Marketplace Surveys
(Sec. Sec. 155.1200, 156.1105, and 156.1125)
D. ICR Regarding Quality Rating System (Sec. 156.1120)
E. ICRs Regarding Quality Standards for Exchanges (Sec. Sec.
155.1400 and 155.1405)
F. ICR Regarding Medical Loss Ratio Requirements (Sec. Sec.
158.150, 158.211, 158.220, 158.221, 158.231, and 158.243)
[[Page 15810]]
G. ICRs Regarding Civil Money Penalties (Sec. Sec. 155.206 and
155.285)
H. ICRs regarding Fixed Indemnity Plans, Minimum Essential
Coverage, Certifications of Creditable Coverage and HIPAA Opt-Out
Election Notice, Notice of Discontinuation, Notice of Renewal
(Sec. Sec. 146.152, 146.180, 147.106, 148.122, 148.220, and
156.602)
V. Regulatory Impact Analysis
A. Summary
B. Executive Orders 13563 and 12866
1. Need for Regulatory Action
2. Summary of Impacts
3. Anticipated Benefits, Costs and Transfers
C. Regulatory Alternatives
1. Collecting ESS Data at the Product Level Instead of Each
Product per Metal Tier
2. Using Medicaid CAHPS as Is Instead of Adding Additional and
New Questions to the ESS
3. Collecting QRS Data for Each Product per Metal Tier Instead
of at the Product Level
4. Using the Medicare Advantage (MA) CAHPS Instrument and Star
System
D. Regulatory Flexibility Act
E. Unfunded Mandates Reform Act
F. Federalism
G. Congressional Review Act
VI. Regulations Text
Abbreviations
Affordable Care Act The collective term for the Patient Protection
and Affordable Care Act (Pub. L. 111-148) and the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152)
AV Actuarial Value
CAC Certified Application Counselor
CAHPS[supreg] Consumer Assessment of Healthcare Providers and
Systems
CFR Code of Federal Regulations
CMP Civil Money Penalty
CMS Centers for Medicare & Medicaid Services
CSR Cost-Sharing Reductions
DSH Disproportionate Share Hospital
EHB Essential Health Benefits
ERISA Employee Retirement Income Security Act of 1974 (Pub. L. 93-
406)
ESS Enrollee Satisfaction Survey
FFE Federally-facilitated Exchange
FF-SHOP Federally-facilitated Small Business Health Options Program
FQHC Federally Qualified Health Center
HHS United States Department of Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
IRS Internal Revenue Service
MLR Medical Loss Ratio
NAIC National Association of Insurance Commissioners
OMB Office of Management and Budget
OPM United States Office of Personnel Management
PHS Act Public Health Service Act
PRA Paperwork Reduction Act of 1995
PSO Patient Safety Organization
QHP Qualified health plan
QRS Quality Rating System
SHOP Small Business Health Options Program
The Code Internal Revenue Code of 1986
URL Uniform Resource Locator
I. Executive Summary
Since January 1, 2014, qualified individuals and small employers
have been able to obtain private health insurance through Affordable
Insurance Exchanges, or ``Exchanges'' (also known as Health Insurance
Marketplaces, or ``Marketplaces'').\1\ The Exchanges provide
competitive marketplaces where individuals and small employers can
compare available private health insurance options on the basis of
price, quality, and other factors. The Exchanges help enhance
competition in the health insurance market, improve choice of
affordable health insurance, and give small businesses the same
purchasing power as large businesses.
---------------------------------------------------------------------------
\1\ The word ``Exchanges'' refers to both State Exchanges, also
called State-based Exchanges, and Federally-facilitated Exchanges
(FFEs). In this proposed rule, we use the terms ``State Exchange''
or ``FFE'' when we are referring to a particular type of Exchange.
When we refer to ``FFEs,'' we are also referring to State
Partnership Exchanges, which are a form of FFEs.
---------------------------------------------------------------------------
Individuals who enroll in qualified health plans (QHPs) through
individual market Exchanges may be eligible to receive premium tax
credits to make health insurance purchased through an Exchange more
affordable and cost-sharing reductions that lower out-of-pocket
expenses for health care services. The premium tax credits, combined
with the new insurance reforms, will significantly increase the number
of individuals with health insurance coverage. Premium stabilization
programs--risk adjustment, reinsurance, and risk corridors--protect
against adverse selection in the newly enrolled population. These
programs, in combination with the medical loss ratio program and market
reforms extending guaranteed availability (also known as guaranteed
issue) protections, prohibiting the use of factors such as health
status, medical history, gender, and industry of employment to set
premium rates, will help to ensure that every American has access to
high quality, affordable health insurance.
This proposed rule would address various requirements applicable to
health insurance issuers, Exchanges, Navigators, non-Navigator
assistance personnel, and other entities under the Affordable Care Act.
Specifically, the rule proposes standards related to product
discontinuation and renewal, quality reporting, non-discrimination
standards, minimum certification standards and responsibilities of
qualified health plan (QHP) issuers, the Small Business Health Options
Program, and enforcement remedies in Federally-facilitated Exchanges.
It also proposes: A modification of HHS's allocation of reinsurance
contributions collected if those contributions do not meet our
projections; certain changes to the ceiling on allowable administrative
expenses in the risk corridors calculation; modifications to the way we
calculate certain cost-sharing parameters so that we round those
parameters down to the nearest $50 increment; certain approaches we are
considering to index the required contribution used to determine
eligibility for an exemption from the shared responsibility payment
under section 5000A of the Internal Revenue Code; grounds for imposing
civil money penalties on persons who provide false or fraudulent
information to the Exchange and on persons who improperly use or
disclose information; updated standards for the consumer assistance
programs; standards related to the opt-out provisions for self-funded,
non-Federal governmental plans and the individual market provisions
under the Health Insurance Portability and Accountability Act of 1996;
standards for recognition of certain types of foreign group health
coverage as minimum essential coverage; amendments to Exchange appeals
standards and coverage enrollment and termination standards; and time-
limited adjustments to the standards relating to the medical loss ratio
program. Nearly all of these proposed policies were described in the
preamble to the final rule titled, HHS Notice of Benefit and Payment
Parameters for 2015, published on March 11, 2014 (79 FR 13744) (2015
Payment Notice).\2\
---------------------------------------------------------------------------
\2\ Patient Protection and Affordable Care Act; HHS Notice of
Benefit and Payment Parameters for 2015, 79 FR 13744 (March 11,
2014).
---------------------------------------------------------------------------
Product Withdrawal and Uniform Modification of Coverage Exceptions
to Guaranteed Renewability Requirements: Under sections 2702 and 2703
of the Public Health Service Act (PHS Act), as added by the Affordable
Care Act, health insurance issuers in the group and individual markets
must guarantee the availability and renewability of coverage unless an
exception applies. In this proposed rule, we propose criteria for
determining when modifications made by an issuer to the health
insurance coverage for a product would and would not constitute the
discontinuation of an existing product and the creation of a new
product. We also propose that issuers use standard consumer notices in
a format designated by the Secretary when discontinuing or renewing a
product in the group or
[[Page 15811]]
individual market. Additionally, we propose to clarify that the
guaranteed availability and renewability requirements should not be
construed to supersede other provisions of Federal law in certain
circumstances.
Conforming Changes to Individual Market Provisions: Sections 2741
through 2744 of the PHS Act were added by HIPAA to improve the
portability and continuity of coverage in the individual health
insurance market. These provisions are implemented through regulations
in 45 CFR Part 148. In this proposed rule, we propose to amend the
individual market provisions in Part 148 to reflect the amendments made
by the Affordable Care Act. These amendments are for clarity only.
Fixed Indemnity Insurance in the Individual Market: Consistent with
previously released guidance, we propose to amend the criteria for
fixed indemnity insurance to be treated as an excepted benefit in the
individual health insurance market.\3\ The proposed amendments would
eliminate the requirement that individual fixed indemnity insurance
must pay on a per-period basis (as opposed to a per-service basis), and
instead require, among other things, that it be sold only as secondary
to other health coverage that is minimum essential coverage to be
considered an excepted benefit.
---------------------------------------------------------------------------
\3\ FAQs about Affordable Care Act Implementation (Part XVIII)
and Mental Health Parity Implementation, Q11 (January 9, 2014).
Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.html and https://www.dol.gov/ebsa/faqs/faq-aca18.html.
---------------------------------------------------------------------------
HIPAA Opt-Out for Self-Funded, Non-Federal Governmental Plans:
Prior to enactment of the Affordable Care Act, sponsors of self-funded,
non-Federal governmental plans were permitted to elect to exempt those
plans from (``opt out of'') certain provisions of title XXVII of the
PHS Act. Consistent with previously released guidance, we propose
amendments to the non-Federal governmental plan regulations (45 CFR
146.180) to reflect the amendments made by the Affordable Care Act to
these provisions.\4\
---------------------------------------------------------------------------
\4\ Amendments to the HIPAA opt-out provision (formerly section
2721(b)(2) of the Public Health Service Act) made by the Affordable
Care Act (September 21, 2010). Available at: https://www.cms.gov/CCIIO/Resources/Files/Downloads/opt_out_memo.pdf.
---------------------------------------------------------------------------
Premium Stabilization Programs: The Affordable Care Act establishes
three premium stabilization programs--risk adjustment, reinsurance, and
risk corridors--to protect against adverse selection. The goal of the
permanent risk adjustment program is to mitigate the impacts of
possible adverse selection and stabilize the premiums in the individual
and small group markets as and after insurance market reforms are
implemented. The Affordable Care Act also directs that a transitional
reinsurance program be established in each State to help stabilize
premiums for coverage by helping to pay the cost of treating high-cost
enrollees in the individual market from 2014 through 2016.
Both the reinsurance and risk adjustment programs are subject to
the fiscal year 2015 sequestration. The risk adjustment and reinsurance
programs will be sequestered at a rate of 7.3 percent in fiscal year
2015. The Federal government's 2015 fiscal year begins on October 1,
2014. HHS, in coordination with the OMB, has determined that, pursuant
to section 256(k)(6) of the Balanced Budget and Emergency Deficit
Control Act of 1985 as amended, and the underlying authority for these
programs, funds that are sequestered in fiscal year 2015 from the
reinsurance and risk adjustment programs will become available for
payment to issuers in fiscal year 2016 without further Congressional
action. HHS is still working through operational questions regarding
the structure and timing of these payments, but aims to make payments
of sequestered fiscal year 2015 funding for the reinsurance and risk
adjustment programs, which would have otherwise been paid in the summer
of 2015, as soon as practicably possible in fiscal year 2016, which
begins on October 1, 2015. Should Congress fail to enact deficit
reduction that replaces the Joint Committee reductions, these programs
would be sequestered in future fiscal years, and any sequestered
funding would become available in the fiscal year following that in
which it was sequestered.
In this proposed rule, we solicit feedback on potential revisions
to the allocation of reinsurance contributions collected and we suggest
an approach such that the contributions collected under that program
are allocated first to the reinsurance pool and administrative
expenses, and second to the U.S. Treasury. In addition, we invite
comment on alternative allocation approaches to maximize the premium
stabilization benefits of the program.
We also propose changing the limit on allowable administrative
costs to 22 percent and the limit on profits to 5 percent in the risk
corridors calculation, in recognition of the ongoing uncertainty and
changes in the market in 2015; we expect to implement this change in a
budget neutral way.
Exchange Establishment and QHP Issuer Standards: The rule proposes
amending oversight standards regarding QHP decertification and CMPs. It
also proposes that QHP issuers provide enrollees with an annual notice
of coverage changes. This rule proposes a process for survey vendors to
appeal an HHS decision not to approve its application to become an
enrollee satisfaction survey (ESS) vendor, as well as standards for
revoking HHS-approval of ESS vendors. Finally, it proposes standards
for the ESS and quality rating system (QRS) related to the display of
such information by Exchanges and the submission of validated data by
QHP issuers.
We propose to align the start of annual employer election periods
in all SHOPs for plan years beginning in 2015 with the start of open
enrollment in the corresponding individual market Exchange for the 2015
benefit year and to eliminate the 30-day minimum time frames for the
employer and employee annual election periods. We also propose to allow
State departments of insurance to recommend that, in 2015, a SHOP not
provide employers with the option of selecting a level of coverage as
described in section 1302(d)(1) of the Affordable Care Act, and making
all QHPs at that level of coverage available to their employees if
making that option available would result in significant adverse
selection in the State's small group market resulting in market
disruptions that could not be addressed by the premium stabilization
programs or single risk pool, or if there would be insufficient issuers
of qualified health plans or qualified stand-alone dental plans to
allow for meaningful choice among plans. We propose to allow the
opportunity for a person appealing a determination of SHOP eligibility
to withdraw an appeal by telephone, if the appeals entity is capable of
accepting telephonic signatures.
Civil Money Penalties for False Information or Improper Use of
Information: The proposed rule specifies the grounds for imposing civil
money penalties on persons who provide false or fraudulent information
to the Exchange and on persons who use or disclose information in
violation of section 1411(g) of the Affordable Care Act. The grounds
for imposing a penalty include: negligent failure to provide correct
information, knowing and willful provision of false or fraudulent
information, and knowing and willful use or disclosure of information
in violation of section 1411(g). This section proposes the factors used
to determine the amount of the CMP to be imposed against a person. The
section also provides for the requirements for notices which must be
provided to a
[[Page 15812]]
person if HHS proposes to impose a CMP, and the processes a person may
follow should the person wish to challenge HHS' determination that a
CMP should be imposed, including a process pursuant to which a person
may request a hearing before an administrative law judge. We also
propose to amend current privacy and security regulations at 45 CFR
155.260 to reference the new CMP provisions associated with knowingly
and willfully using or disclosing information in violation of section
1411(g) of the Affordable Care Act.
Civil Money Penalties for Consumer Assistance Entities: The
proposed rule would provide that HHS may impose CMPs against
Navigators, non-Navigator assistance personnel, certified application
counselor designated organizations, and certified application
counselors in FFEs, if these entities and/or individuals violate
Federal requirements applicable to their activities.
Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards: In this proposed rule, we
propose to specify certain types of State laws applicable to
Navigators, non-Navigator assistance personnel, and certified
application counselors that HHS considers to conflict with or prevent
the application of the provisions of title I of the Affordable Care Act
within the meaning of section 1321(d) of the Affordable Care Act. We
would also make several changes to update the standards applicable to
these consumer assistance entities and individuals, such as prohibiting
them from specified marketing or solicitation activities. We propose to
require Navigators and non-Navigator assistance personnel to obtain
authorization before accessing a consumer's personally identifiable
information and to prohibit them from charging consumers for their
services. We also propose to require that certified application
counselors be recertified on at least an annual basis, and propose to
prohibit certified application counselors and certified application
counselor designated organizations from receiving consideration,
directly or indirectly, from health insurance issuers or stop loss
insurance issuers in connection with the enrollment of consumers in
QHPs or non-QHPs. We further propose that, in specific circumstances,
certified application counselor designated organizations can serve
targeted populations without violating the broad non-discrimination
requirement related to Exchange functions.
Indexing of Cost-Sharing Requirements: Under Sec. 156.130(a), the
annual limitation on cost sharing and the annual limitation on
deductibles in the small group market for years after 2014 are to be
indexed by the premium adjustment percentage. We established our
methodology for calculating the premium adjustment percentage in the
2015 Payment Notice. In this rule, we propose calculating these
limitations based on the premium adjustment percentage by rounding down
to the nearest $50 increment.
Required Contribution Percentage: Under section 5000A of the Code,
an applicable individual must maintain minimum essential coverage for
each month, qualify for an exemption, or make a shared responsibility
payment. An individual may qualify for an exemption from the shared
responsibility payment if the amount that he or she would be required
to pay towards minimum essential coverage (required contribution)
exceeds a particular percentage (the required contribution percentage)
of his or her household income. Under section 5000A of the Code, the
required contribution percentage for 2014 is 8 percent, and for each
plan year beginning in a calendar year after 2014, the percentage, as
determined by the Secretary of Health and Human Services (the
Secretary), that reflects the excess of the rate of premium growth
between the preceding calendar year and 2013 over the rate of income
growth for the same period. In this preamble to this proposed rule, we
describe issues related to possible methodologies for determining the
percentage reflecting the excess of the rate of premium growth over the
rate of income growth for plan years after 2014.
Eligibility Appeals: This rule proposes to amend standards related
to eligibility appeals provisions in subparts F and H of Part 155. To
facilitate the efficient conclusion of an appeal at the request of the
appellant, we propose to amend the withdrawal procedure to permit
withdrawals made via telephonic signature.
Minimum Essential Coverage: On October 31, 2013, we published
guidance indicating that certain types of foreign group health coverage
are recognized as minimum essential coverage.\5\ In this proposed rule,
we propose amendments codifying the treatment of foreign group coverage
as described in the October 31, 2013 guidance. We also clarify that
entities other than plan sponsors (for example, issuers) can apply for
their coverage to be recognized as minimum essential coverage, pursuant
to the process outlined in 45 CFR 156.604 and guidance thereunder.
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\5\ See CCIIO Sub-Regulatory Guidance: Process for Obtaining
Recognition as Minimum Essential Coverage (October 31, 2013).
Available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mec-guidance-10-31-2013.pdf.
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Medical Loss Ratio: The MLR program created pursuant to the
Affordable Care Act generally requires issuers to rebate a portion of
premiums if their MLR fails to meet the applicable MLR standard in a
State and market for the applicable reporting year. An issuer's MLR is
the ratio of claims plus quality improvement activities to premium
revenue, with the premium adjusted by the amounts paid for taxes,
licensing and regulatory fees, and the premium stabilization programs.
On December 1, 2010, we published an interim final rule entitled
``Health Insurance Issuers Implementing Medical Loss Ratio (MLR)
Requirements under the Patient Protection and Affordable Care Act'' (75
FR 74864), which established standards for the MLR program. Since then,
we have made several revisions and technical corrections to those
rules. In this proposed rule, we propose to modify the timeframe for
which issuers can include their ICD-10 conversion costs in their MLR
calculation. We also propose to modify the regulation to clarify how
issuers would calculate MLRs and rebates in States that require the
individual and small group markets to be merged. We note that the
standards for ICD-10 conversion costs and merged markets would also
apply to the risk corridors program. Further, we propose to modify the
regulation to account for the special circumstances of the issuers
affected by the CMS November 2013 transitional policy and the issuers
impacted by systems challenges during the implementation of the
Exchanges. We also propose to amend the requirements for distribution
of de minimis rebates.
II. Background
A. Legislative Overview
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised
several provisions of the Patient Protection and Affordable Care Act,
was enacted on March 30, 2010. In this proposed rule, we refer to the
two statutes collectively as the ``Affordable Care Act.''
The Affordable Care Act reorganizes, amends, and adds to the
provisions of title XXVII of the PHS Act relating to group health plans
and health insurance
[[Page 15813]]
issuers in the group and individual markets.
Section 1201 of the Affordable Care Act added sections 2702 and
2703 of the PHS Act. Section 2702 of the PHS Act generally requires an
issuer that offers health insurance coverage in the individual or group
market in a State to offer coverage to and accept every individual or
employer in the State that applies for such coverage. Section 2703 of
the PHS Act generally requires an issuer to renew or continue in force
coverage in the group or individual market at the option of the plan
sponsor or the individual.
Prior to enactment of the Affordable Care Act, HIPAA amended the
PHS Act to improve access to individual health insurance coverage for
certain eligible individuals who previously had group coverage, and to
guarantee the renewability of all coverage in the individual market.
These reforms were added as sections 2741 through 2744 of the PHS Act.
HIPAA also added PHS Act provisions permitting sponsors of self-
funded, non-Federal governmental plans to elect to exempt those plans
from (``opt out of'') certain provisions of title XXVII of the PHS Act.
This election was authorized under section 2721(b)(2) of the PHS Act,
which is now designated as section 2722(a)(2) of the PHS Act by the
Affordable Care Act.
Section 2718 of the PHS Act, as added by the Affordable Care Act,
generally requires health insurance issuers to submit an annual MLR
report to HHS and provide rebates to consumers if they do not achieve
specified MLRs.
Sections 2722 and 2763 of the PHS Act, as implemented in 45 CFR
146.145(b) and 148.220, provide that the requirements of parts A and B
of title XXVII of the PHS Act shall not apply to any individual
coverage or any group health plan (or group health insurance coverage)
in relation to its provision of excepted benefits. Excepted benefits
are described in section 2791(c) of the PHS Act. One category of
excepted benefits, called ``noncoordinated excepted benefits,''
includes coverage for only a specified disease or illness, and hospital
indemnity or other fixed indemnity insurance. Benefits in this category
are excepted only if they meet certain conditions specified in the
statute and regulations.
Section 1302(c) of the Affordable Care Act establishes an annual
limitation on cost sharing and an annual limitation on deductibles in
the small group market for 2014, and provides that those limitations
are to be increased for each year after 2014 by the percentage by which
the average per capita premium for health insurance coverage in the
United States for the preceding year exceeds the average per capita
premium for 2013. Under section 1302(c), those limitations are to be
rounded to the next lowest multiple of $50.
Section 1311(b) of the Affordable Care Act provides that each State
has the opportunity to establish an Exchange that: (1) Facilitates the
purchase of insurance coverage by qualified individuals through QHPs;
(2) provides for the establishment of a SHOP designed to assist
qualified employers in the enrollment of their qualified employees in
QHPs; and (3) meets other requirements specified in the Affordable Care
Act.
Section 1311(c)(3) of the Affordable Care Act requires the
Secretary to develop a rating system to rate QHPs offered through an
Exchange on the basis of quality and price. Section 1311(c)(4) of the
Affordable Care Act directs the Secretary to establish an ESS system
that would evaluate the level of enrollee satisfaction of members in
QHPs offered through an Exchange, for each QHP with more than 500
enrollees in the previous year. Sections 1311(c)(3) and 1311(c)(4) of
the Affordable Care Act further require an Exchange to provide
information to individuals and employers from the rating and ESS
systems on the Exchange's Web site. We have already promulgated
regulations in 45 CFR 155.200(d) that direct Exchanges to oversee
implementation of ESSs and ratings of health care quality and outcomes,
and 45 CFR 156.200(b)(5) \6\ that directs QHP issuers that participate
in Exchanges to report health care quality and outcomes information and
to implement an ESS consistent with the Affordable Care Act.
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\6\ Patient Protection and Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans; Exchange Standards for
Employers; Final Rule, 77 FR 18310 (Mar. 27, 2012) (to be codified
at 45 CFR parts 155, 156, & 157).
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Sections 1311(d)(4)(K) and 1311(i) of the Affordable Care Act
direct all Exchanges to establish a Navigator program.
Section 1321(a) of the Affordable Care Act provides broad authority
for the Secretary to establish standards and regulations to implement
the statutory requirements related to Exchanges, QHPs and other
components of title I of the Affordable Care Act. Section 1321(a)(1)
directs the Secretary to issue regulations that set standards for
meeting the requirements of title I of the Affordable Care Act with
respect to, among other things, the establishment and operation of
Exchanges. Section 1321(a)(2) requires the Secretary to engage in
consultation to ensure balanced representation among interested
parties.
Section 1321 of the Affordable Care Act provides for State
flexibility in the operation and enforcement of Exchanges and related
requirements. Section 1321(d) provides that nothing in title I of the
Affordable Care Act shall be construed to preempt any State law that
does not prevent the application of title I of the Affordable Care Act.
Section 1311(k) specifies that Exchanges may not establish rules that
conflict with or prevent the application of regulations promulgated by
the Secretary.
Section 1321(c)(1) requires the Secretary of HHS (referred to
throughout this rule as the Secretary) to establish and operate an FFE
within States that either: (1) Did not elect to establish an Exchange;
or (2) as determined by the Secretary, did not have any required
Exchange operational by January 1, 2014.
Section 1321(c)(2) of the Affordable Care Act provides that the
provisions of section 2723(b) of the PHS Act \7\ shall apply to the
enforcement under section 1321(c)(1) of requirements of section
1321(a)(1), without regard to any limitation on the application of
those provisions to group health plans. Section 2723(b) of the PHS Act
authorizes the Secretary to impose CMPs as a means of enforcing the
individual and group market reforms contained in Part A of title XXVII
of the PHS Act when, in the Secretary's determination, a State fails to
substantially enforce these provisions.
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\7\ Section 1321(c) of the Affordable Care Act erroneously cites
to section 2736(b) of the PHS Act instead of 2723(b) of the PHS Act.
This was clearly a typographical error, and we have interpreted
section 1321(c) of the Affordable Care Act to incorporate section
2723(b) of the PHS Act.
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Section 1341 of the Affordable Care Act requires the establishment
of a transitional reinsurance program in each State to help pay the
cost of treating high-cost enrollees in the individual market from 2014
through 2016. Section 1342 of the Affordable Care Act directs the
Secretary to establish a temporary risk corridors program that provides
for the sharing in gains or losses resulting from inaccurate rate
setting from 2014 through 2016 between the Federal government and
certain participating health plans.
Section 1411(f)(1) of the Affordable Care Act provides that the
Secretary, in consultation with the Secretary of the Treasury, the
Secretary of Homeland Security, and the Commissioner of Social
Security, shall establish procedures by which the Secretary or one of
such other Federal officers hears and makes decisions with respect to
[[Page 15814]]
appeals of any determination under subsection (e) and redetermines
eligibility on a periodic basis in appropriate circumstances. Section
1411(f)(2) of the Affordable Care Act provides that the Secretary shall
establish a separate appeals process for employers who are notified
under section 1411(e)(4)(C) of the Affordable Care Act that the
employer may be liable for a tax imposed by section 4980H of the
Internal Revenue Code of 1986 (the Code) with respect to an employee
because of a determination that the employer does not provide minimum
essential coverage through an employer-sponsored plan or that the
employer does provide that coverage but it is not affordable coverage
with respect to an employee.
Section 1411(h) of the Affordable Care Act sets forth CMPs to which
any person may be subject if that person provides inaccurate
information as part of an Exchange application or improperly uses or
discloses an applicant's information.
Section 1501(b) of the Affordable Care Act added section 5000A to
the Code. That section, as amended by the TRICARE Affirmation Act of
2010 (Pub. L. 111-159, 124 Stat. 1123) and Public Law 111-173 (124
Stat. 1215), requires nonexempt individuals to either maintain minimum
essential coverage or make a shared responsibility payment for each
month beginning in 2014. It also describes categories of individuals
who may qualify for an exemption from the individual shared
responsibility payment. Section 1311(d)(4)(H) of the Affordable Care
Act specifies that the Exchange will, subject to section 1411 of the
Affordable Care Act, grant certifications of exemption from the
individual shared responsibility payment specified in section 5000A of
the Code. Standards relating to these provisions were established in
IRS regulations titled, Shared Responsibility Payment for Not
Maintaining Minimum Essential Coverage Final Rule published in the
August 30, 2013 Federal Register (78 FR 53646) (IRS Minimum Essential
Coverage Final Rule) and HHS regulations titled, Exchange Functions:
Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage
Provisions Final Rule published in the July 1, 2013 Federal Register
(78 FR 39494) (HHS Minimum Essential Coverage Final Rule).
B. Stakeholder Consultation and Input
HHS has consulted with stakeholders on policies related to the
operation of Exchanges, including the SHOP and the premium
stabilization programs. HHS has held a number of listening sessions
with consumers, providers, employers, health plans, the actuarial
community, and State representatives to gather public input. HHS
consulted with stakeholders through regular meetings with the National
Association of Insurance Commissioners (NAIC), regular contact with
States through the Exchange Establishment grant and Exchange Blueprint
approval processes, technical health care quality measurement experts,
health care survey development experts, and meetings with Tribal
leaders and representatives, health insurance issuers, trade groups,
consumer advocates, employers, and other interested parties. In
addition, HHS received public comment on various notices published in
the Federal Register relating to health care quality in the
Exchanges,\8\ enrollee experience measures and domains,\9\ and the
quality rating system, which provided valuable feedback on quality
reporting and quality rating requirements.\10\ We considered all of the
public input as we developed the policies in this proposed rule.
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\8\ Request for Information Regarding Health Care Quality for
Exchanges: https://www.gpo.gov/fdsys/pkg/FR-2012-11-27/pdf/2012-28473.pdf.
\9\ Request for Domains, Instruments, and Measures for
Development of a Standardized Instrument for Use in Public Reporting
of Enrollee Satisfaction With Their Qualified Health Plan and
Exchange: https://www.gpo.gov/fdsys/pkg/FR-2012-06-21/html/2012-15162.htm.
\10\ Patient Protection and Affordable Care Act; Exchanges and
Qualified Health Plans, Quality Rating System (QRS) Framework,
Measures and Methodology; Notice with Comment, 78 FR 69418 (Nov. 19,
2013).
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C. Structure of Proposed Rule
The regulations outlined in this proposed rule would be codified in
45 CFR parts 146, 147, 148, 153, 155, 156, and 158. Part 146 outlines
the group health insurance market requirements of the PHS Act added by
HIPAA and other laws, including guaranteed renewability standards and
opt-out provisions for sponsors of self-funded, non-Federal
governmental plans. Part 147 outlines health insurance reform
requirements for the group and individual markets added by the
Affordable Care Act, including standards related to guaranteed
availability and guaranteed renewability of coverage. Part 148 outlines
the individual health insurance market requirements of the PHS Act
added by HIPAA and other laws, including standards related to
guaranteed availability with respect to certain eligible individuals
and guaranteed renewability for all individuals. Part 153 outlines
standards related to reinsurance program and risk corridors programs.
Part 155 outlines standards related to the operations and functions of
an Exchange, including standards related to non-discrimination,
accessibility, and enforcement remedies; standards applicable to the
consumer assistance functions performed by Navigators, non-Navigator
assistance personnel, and certified application counselors; standards
related to eligibility appeals; standards related to exemptions;
standards related to quality reporting; and standards related to SHOP.
Part 156 outlines health insurance issuer responsibilities, including
the methodology for calculating the annual limit on cost-sharing and
deductibles for years after 2014; minimum certification standards;
standards for recognition of certain types of foreign group health
coverage as minimum essential coverage; quality standards for QHPs; and
other QHP issuer responsibilities. Part 158 outlines standards related
to the medical loss ratio program, including standards related to
treatment of ICD-10 conversion costs, standards related to adjustments
for issuers affected by the November 2013 CMS transitional policy and
issuers that incurred costs due to the technical problems during the
implementation of the Exchanges, standards related to MLR reporting and
rebate calculations in States with merged individual and small group
markets, and standards related to distribution of de minimis rebates.
III. Provisions of the Proposed Rule
A. Part 146--Requirements for the Group Health Insurance Market
1. HIPAA Opt-Out Provisions for Plan Sponsors of Self-Funded, Non-
Federal Governmental Plans (Sec. 146.180)
Prior to enactment of the Affordable Care Act, sponsors of self-
funded, non-Federal governmental plans were permitted to elect to
exempt those plans from (``opt out of'') certain provisions of title
XXVII of the PHS Act. This election was authorized under section
2721(b)(2) of the PHS Act. Sponsors of those plans could elect to opt
out of all or any of the following title XXVII requirement categories:
1. Limitations on preexisting condition exclusion periods under
section 2701 of the PHS Act (redesignated as section 2704 by the
Affordable Care Act).
2. Requirements for special enrollment periods under section 2701
of the PHS Act (redesignated as section 2704 by the Affordable Care
Act).
3. Prohibitions against discriminating against individual
participants and beneficiaries based on health status (but
[[Page 15815]]
not including provisions added by the Genetic Information
Nondiscrimination Act of 2008) under 2702 of the PHS Act (redesignated
as section 2705 by the Affordable Care Act).
4. Standards relating to benefits for newborns and mothers under
section 2704 of the PHS Act (redesignated as section 2725 by the
Affordable Care Act).
5. Parity in the application of certain limits to mental health and
substance use disorder benefits (including requirements of the Mental
Health Parity and Addiction Equity Act of 2008) under section 2705 of
the PHS Act (redesignated as section 2726 by the Affordable Care Act).
6. Required coverage for reconstructive surgery following
mastectomies under section 2706 of the PHS Act (redesignated as section
2727 of the PHS Act).
7. Coverage of dependent students on a medically necessary leave of
absence under section 2707 of the PHS Act (redesignated as section 2728
by the Affordable Care Act).
The Affordable Care Act made a number of changes, with the result
that sponsors of self-funded, non-Federal governmental plans can no
longer opt out of as many requirements of title XXVII. First, PHS Act
section 2721 was redesignated as section 2722. The new section
2722(a)(2) no longer allows a sponsor of a self-funded, non-Federal
governmental plan to exempt that plan from the first 3 requirement
categories listed above, but may continue to exempt the plan from
requirement categories 4 through 7.
In response to the Affordable Care Act amendments, HHS issued
guidance on September 21, 2010 indicating that, for plan years
beginning on or after September 23, 2010, plan sponsors of non-
collectively bargained plans can only elect to be exempt from
provisions 4-7 and that provisions 1-3 are no longer available for
exemption.\11\ Group health plans maintained pursuant to a collective
bargaining agreement that was ratified before March 23, 2010, and that
has been exempted from any of the first 3 requirement categories listed
above, would not have to come into compliance with those provisions
until the commencement of the first plan year following the expiration
of the last plan year governed by the collective bargaining agreement.
Because of the timing of the guidance, HHS elected not to take any
enforcement actions with respect to opt-out elections for plan years
beginning prior to April 1, 2011 on the provisions 1-3.
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\11\ Amendments to the HIPAA opt-out provision (formerly section
2721(b)(2) of the Public Health Service Act) made by the Affordable
Care Act (September 21, 2010). Available at: https://www.cms.gov/CCIIO/Resources/Files/Downloads/opt_out_memo.pdf.
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We propose to revise the provisions of Sec. 146.180 to reflect the
amendments of the Affordable Care Act and the September 21, 2010
guidance. While the proposed rule restates the current rule in the
procedures for filing an opt-out election with CMS, the following
revisions are being proposed primarily to reflect the Affordable Care
Act amendments: identification of PHS Act provisions subject to the
opt-out election as noted above; deletion of references to the notice
of creditable coverage requirement since that requirement has been
superseded; and the deletion of examples referencing provisions that
are no longer available for opt-out elections.
Additionally, we propose to replace the address for submitting the
election documents with language indicating that opt-out elections must
be submitted in an electronic format as specified by the Secretary in
guidance. We believe that electronic submissions will be easier and
more efficient for both the plan sponsors and for CMS to track the
submissions. We welcome comments on improving the election process in
order for elections to be submitted electronically. Until the issuance
of final regulations, elections will be accepted via U.S. Mail or
facsimile. The current address for the submission, as noted on the CMS/
CCIIO Web site, is Centers for Medicare & Medicaid Services (CMS),
Center for Consumer Information and Insurance Oversight (CCIIO), Attn:
HIPAA Opt-Out, 200 Independence Avenue SW., Room 733H-02, Washington,
DC 20201. Elections can also be submitted via facsimile at 301-492-
4462. Questions regarding the opt-out process can be submitted to CMS
at HIPAAOptOut@cms.hhs.gov. CMS makes publicly available on its Web
site a list of self-funded, non-Federal governmental plans that have
submitted an opt-out election and the PHS Act provisions subject to the
election.\12\
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\12\ See List of HIPAA Opt-Out Elections for Self-Funded Non-
Federal Governmental Plans. Available at: https://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa-nfgp-list-7-9-2013.pdf.
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The proposed rule would clarify that plan sponsors of self-funded,
non-Federal governmental plans offering health coverage subject to a
collectively bargained agreement that was ratified before March 23,
2010 can continue to be exempt from any of the 7 original provisions
for which a timely election was filed with CMS until the expiration of
the last plan year subject to the agreement.
These proposed amendments would generally become applicable upon
the effective date of the final rule. Comments are welcome on the
proposed revisions and on any aspect of the proposed rule, including
the provisions unchanged from the current regulation.
Finally, we note that some plan administrators have been submitting
one opt-out election to CMS for multiple group health plans. While this
is permitted for plans subject to the same collective bargaining
agreement, single elections have been received for multiple plans not
under a collective bargaining agreement. The current regulations
expressly require a separate election for each group health plan not
subject to collective bargaining. We request comments on whether the
regulation should be modified to allow a single opt-out submission for
multiple group health plans not subject to collective bargaining. We
are also considering requiring, as part of the opt-out election
document, that sponsors of plans subject to a collective bargaining
agreement be required to list all plans subject to the agreement. We
welcome comments on this proposal.
B. Part 147--Health Insurance Reform Requirements for the Group and
Individual Health Insurance Markets
1. Guaranteed Availability and Guaranteed Renewability of Coverage
(Sec. Sec. 147.104 and 147.106)
a. No Effect on Other Laws
Section 2702 of the PHS Act generally requires a health insurance
issuer that offers health insurance coverage in the individual or group
market in a State to offer coverage to and accept every individual or
employer in the State that applies for coverage. Section 2703 of the
PHS Act generally requires a health insurance issuer to renew or
continue in force \13\ coverage in the group or individual market at
the option of the plan sponsor or the individual. These sections are
implemented by regulations at 45 CFR 147.104 and 147.106, respectively.
They apply to health plans offered both through and outside of an
Exchange.
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\13\ ``Continue in force'' means that the issuer maintains the
same policy form that the plan sponsor or individual purchased.
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There are several exceptions to these requirements. In addition to
statutorily specified exceptions set forth in sections 2702 and 2703 of
the PHS Act, other Federal laws restrict the products that are
available to certain individuals. For example, section 1882(d) of the
Social
[[Page 15816]]
Security Act establishes an anti-duplication provision that makes it
unlawful for an issuer to knowingly sell to an individual entitled to
benefits under Medicare part A or enrolled under Medicare part B an
individual health insurance policy that duplicates Medicare benefits;
sections 1311(d)(2) and 1312(f) of the Affordable Care Act limit access
of an individual market QHP offered through an Exchange to citizens and
lawful residents; \14\ and section 1302(e) of the Affordable Care Act
provides that only individuals under age 30, and individuals who are
certified as exempt from the requirement to maintain minimum essential
coverage based on lack of affordable coverage or hardship, are eligible
to enroll in catastrophic plans. Consistent with the canons of
statutory construction, which provide that specific statutory language
ordinarily trumps conflicting general language,\15\ the guaranteed
availability and renewability requirements are subordinated to these
and other Federal law requirements limiting access to coverage. As a
result, issuers of coverage subject to specific Federal statutes that
conflict with PHS Act sections 2702 and 2703 could deny enrollment or
reenrollment in coverage where doing otherwise is contrary to law.
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\14\ Although the Affordable Care Act creates a limited
exception to the guaranteed availability requirements for qualified
individuals purchasing coverage through an Exchange, if an
individual declines or is ineligible to enroll through an Exchange
and seeks enrollment directly with the issuer, issuers of coverage
subject to the guaranteed availability requirements of section 2702
of the PHS Act must accept every individual in the State that
applies for such coverage unless an exception applies.
\15\ See Fourco Glass Co. v. Transmirra Products Corp., 353 U.S.
222, 228 (1957) (citations omitted) (providing that, ``However
inclusive may be the general language of a statute, it will not be
held to apply to a matter specifically dealt with in another part of
the same enactment.'' The same principle is used to resolve conflict
between two statutes. See also, e.g., United States v. Estate of
Romani, 523 U.S. 517, 532 (1998) (later, more specific statute
governs). See also Morton v. Mancari, 417 U.S. 535, 550-51 (1974) (a
general statute will not be held to have repealed by implication a
more specific one unless there is ``clear intention otherwise'').
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We propose to amend the guaranteed availability and renewability
regulations to codify this interpretation in regulation text. We
propose to add new paragraph (h) in Sec. 147.104 providing that
nothing in the guaranteed availability requirements should be construed
to require an issuer to offer coverage where other Federal laws operate
to prohibit the issuance of such coverage. Similarly, we propose to
redesignate paragraphs (g) and (h) as (h) and (i), and add new
paragraph (g) in Sec. 147.106 providing that nothing in the guaranteed
renewability requirements should be construed to require an issuer to
renew or continue in force coverage for which continued eligibility
would otherwise be prohibited under applicable Federal law. We believe
that these regulatory changes are consistent with current market
practice and will cause no disruption in the health insurance market.
We solicit comment on these and other clarifications that may be
helpful. We note that only Federal laws, not State laws, can create
exceptions to the Federal guaranteed availability and renewability
requirements.
We also note that, due to a formatting error in the interim final
rule with comment period titled, Patient Protection and Affordable Care
Act; Maximizing January 1, 2014 Coverage Opportunities (78 FR 76212),
the regulation text at Sec. 147.104(b)(1)(i) contains a duplicate
reference to the SHOP regulation at Sec. 155.725. We propose to
correct the duplicate reference in this proposed rule, and to make
other minor regulatory revisions in this paragraph for clarity.
b. Product Withdrawal and Uniform Modification of Coverage Exceptions
to Guaranteed Renewability Requirements
The PHS Act provisions enacted by HIPAA and the Affordable Care Act
require health insurance issuers to guarantee the renewal of coverage
unless at least one of several listed exceptions applies.\16\ One
exception to the guaranteed renewability requirements permits an issuer
to cease offering a particular product in a market and to discontinuing
existing blocks of business with respect to that product (product
withdrawal). This may be done, in accordance with State law, provided
certain other requirements are met. The PHS Act also provides for
issuers, only at the time of coverage renewal, to modify the health
insurance coverage for a product offered to a group health plan or an
individual in the individual market, if the modification is consistent
with State law and effective uniformly for all group health plans or
individuals with that product (uniform modification of coverage). The
law contemplates that a uniform modification does not alter a
policyholder's right to renewability, and that such modifications do
not in effect result in the termination of the existing policy under
the product withdrawal rules.
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\16\ See PHS Act sections 2703 (applicable to non-grandfathered
health plans in the group and individual markets), section 2712 as
codified prior to enactment of the Affordable Care Act (applicable
to grandfathered health plans in the group market), and section 2742
(applicable to both grandfathered and non-grandfathered health plans
in the individual market), as implemented in 45 CFR 146.152,
147.106, and 148.122.
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In this proposed rule, we propose standards defining whether
certain modifications to a policy would constitute ``uniform
modifications'' within the meaning of the PHS Act, or would constitute
the withdrawal of the existing product and the creation of a new
product. These provisions would be codified in each of the guaranteed
renewability regulations at 45 CFR 146.152, 147.106, and 148.122, and
would therefore apply to both grandfathered and non-grandfathered
coverage in the group and individual markets.\17\
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\17\ While the Affordable Care Act amended section 2703 of the
PHS Act to generally apply to health insurance issuers in the group
and individual markets, the uniform modification of coverage
exception in section 2703(d) of the PHS Act addresses only the large
and small group markets. Section 2742 of the PHS Act and the
regulations at Sec. 148.122(g) contain parallel provisions allowing
for the uniform modification of coverage in the individual market.
For ease of reference and to facilitate compliance, we propose to
add a provision in Sec. 147.106(e)(1) reiterating the uniform
modification of coverage exception for non-grandfathered coverage in
the individual market.
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Definition of Uniform Modification of Coverage
We propose that a modification made solely pursuant to applicable
Federal or State law would be considered a modification of coverage
rather than a product withdrawal. These modifications could include
changes required to comply with Affordable Care Act standards (such as
elimination of a prohibited annual limit) and changes permitted based
on updated standards (such as increasing an annual limitation on cost
sharing based on the annual increase in the limit permitted as a result
of the application of the premium adjustment percentage). Additionally,
we propose that if an issuer makes changes to the health insurance
coverage for a product that are not pursuant to applicable Federal or
State law, the modifications would constitute a uniform modification of
coverage for purposes of the guaranteed renewability requirements under
the PHS Act if the product that has been modified meets all of the
following criteria:
The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act);
The product is offered as the same product type (e.g.,
preferred provider organization (PPO) or health maintenance
organization (HMO));
The product covers a majority of the same counties in its
service area;
[[Page 15817]]
The product has the same cost-sharing structure, except
for variation in cost sharing solely related to changes in cost and
utilization of medical care, or to maintain the same level of coverage
described in sections 1302(d) and (e) of the Affordable Care Act (e.g.,
bronze, silver, gold, platinum or catastrophic); and
The product provides the same covered benefits, except for
changes in benefits that cumulatively impact the rate for the product
by no more than 2 percent (not including changes required by applicable
Federal or State law).
Under this proposal, if an issuer modifies the coverage for a
product and the resulting product is consistent with the above
criteria, the issuer would be considered under the PHS Act to have made
a uniform modification of coverage and therefore not to have withdrawn
the product from that market. Conversely, if an issuer modifies the
coverage for a product in a manner that results in a product that
differs from the above criteria, the issuer would be considered to have
changed the coverage to such extent that the issuer has withdrawn the
existing product and created a new product.\18\
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\18\ Whether an issuer is considered to offer the same product
for purposes of this proposal is unrelated to and would not
determine whether a plan maintains status as a grandfathered health
plan under section 1251 of the Affordable Care Act and its
implementing regulations. 26 CFR 54.9815-1251T, 29 CFR 2590.715-
1251, and 45 CFR 147.140.
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These criteria, if finalized, would establish minimum Federal
standards determining whether coverage modifications constitute the
continuance of an existing product in a market within a State for
products offered both through and outside of an Exchange. We believe
these proposed standards will minimize unnecessary terminations of
coverage, ensuring predictability and continuity for consumers, while
reasonably providing issuers the flexibility to make necessary
adjustments to coverage.
We recognize that some States may have different definitions of
what changes to a health insurance product constitute modifications and
what changes constitute withdrawals and re-filings of new products. The
definitions proposed here would preempt any conflicting State
definitions. We acknowledge that the guaranteed renewability sections
of the PHS Act provide that a uniform modification of coverage must,
among other things, be ``consistent with State law.'' We interpret this
statutory language as governing the extent or type of modifications
that may legally be made under State law. As discussed in the preamble
to the final rule published on February 27, 2013 under section 2703 of
the PHS Act (78 FR 13419), State laws that prevent issuers from
uniformly modifying coverage to comply with Federal law requirements
would, in effect, prevent the application of such requirements and
therefore be preempted.\19\ Accordingly, under the approach we are
proposing, States would have the flexibility to apply additional
criteria that broaden the scope of what would be considered a uniform
modification, but not narrow its scope.
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\19\ Patient Protection and Affordable Care Act; Health
Insurance Market Rules; Rate Review, 78 FR 13406 (February 27,
2013).
---------------------------------------------------------------------------
We request comment on all aspects of this proposal.
Standard Consumer Notices When Discontinuing or Renewing a Product in
the Group or Individual Market
To reduce confusion and ensure consumers receive clear, accurate,
and consistent information about their coverage options, we are also
proposing standard notice requirements when issuers discontinue or
renew coverage in the group and individual markets.
First, under the current regulations, issuers electing to
discontinue offering a particular product in a market must provide to
each plan sponsor or individual provided that product (and to all
participants and beneficiaries covered under such coverage) at least 90
calendar days' notice of the discontinuation in writing. We propose
that, to satisfy this requirement, the issuer must provide notice ``in
a form and manner specified by the Secretary.''
Second, we propose to establish a new notice requirement when
issuers provide the option to renew coverage, including a renewal of
coverage with modifications. We propose the issuer in this situation
must provide written notice of the renewal to each plan sponsor in the
small or large group market and to each individual policyholder in the
individual market (as applicable). We propose this notice must also be
provided in a form and manner specified by the Secretary.
We request comment on these proposals. Concurrently with the
issuance of this proposed rule, we are publishing four draft notices in
guidance that would be required to be used when issuers elect to
discontinue or renew a product, consistent with the above
discussion.\20\ We solicit comments on the draft notices as described
in the guidance.
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\20\ Standard Notices When Discontinuing or Renewing a
Particular Product in the Group or Individual Market (March 14,
2014). Available at: https://www.cms.gov/CCIIO/Resources/Files/Downloads/draft-notice-renewal-discontinuation-bulletin-3-14-2014.pdf.
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Rate Review
Section 2794 of the PHS Act, and regulations at 45 CFR Part 154,
establish a process whereby CMS or the applicable State will review
rate increases of health insurance coverage that meet or exceed
specified thresholds to determine if the rate increases are
unreasonable. It has come to our attention, however, that some issuers
may attempt to avoid review of rate increases by withdrawing a
product(s) offered in the individual or small group market in a State
and re-filing the product(s) as a ``new'' product(s) the following
year. Under Sec. 154.102, a ``rate increase'' is defined as ``any
increase of the rates for a specific product offered in the individual
or small group market,'' and a ``product'' is defined as ``a package of
health insurance coverage benefits with a discrete set of rating and
pricing methodologies that a health insurance issuer offers in a
State.''
CMS intends to apply the criteria outlined above regarding product
discontinuation and renewal to determine whether the rate filing is
subject to review under 45 CFR Part 154. Specifically, if an issuer
withdraws a product in a market in a State and, within a 12-month
period, reintroduces a product in that market with modifications of the
discontinued product that do not differ from the above criteria, we
would consider the issuer to be continuing to offer the same
``product'' within the meaning of that term under Sec. 154.102. As
such, the rate filing for the product would be subject to the annual
review of rate increases of health insurance coverage should it meet or
exceed the specified thresholds to determine if the rate increase is
unreasonable. CMS will consider compliance with the proposed criteria
to constitute compliance with PHS Act section 2794 until this
rulemaking is finalized.
We request comment on whether this clarification, or a cross-
reference to the proposed definition of a uniform modification of
coverage in Sec. 147.106 of this proposed rule, should be added to
Part 154.
C. Part 148--Requirements for the Individual Health Insurance Market
1. Conforming Changes to Individual Market Regulations (Sec. Sec.
148.101 through 148.128)
The Health Insurance Portability and Accountability Act of 1996
(HIPAA),
[[Page 15818]]
Public Law 104-191, was enacted in 1996 to provide for, among other
things, improved portability and continuity of coverage in both the
group and individual health insurance markets. Section 111 of HIPAA
added sections 2741 through 2744 of the PHS Act to improve availability
and renewability in the individual market. HIPAA also added provisions
of the Code, the Employee Retirement Income Security Act of 1974
(ERISA), and the PHS Act governing the group health insurance market
and group health plan coverage provided in connection with employment.
These provisions permitted limited exclusions of coverage under certain
circumstances based on preexisting conditions.
The individual health insurance market provisions of HIPAA are
implemented in 45 CFR Part 148. These provisions guarantee the
availability of individual health insurance coverage without
preexisting condition exclusions for certain eligible individuals who
lose group health insurance coverage; require issuance of certificates
of creditable coverage; guarantee the renewability of individual health
insurance coverage for all individuals; and set forth procedures for
States that choose to implement an alternative mechanism under State
law with respect to guaranteed availability for eligible individuals.
The Affordable Care Act added a new section 2704 of the PHS Act,
which renumbered and amended the HIPAA requirements relating to
preexisting condition exclusions.\21\ In general, the new PHS Act
section 2704 provides that a group health plan and a health insurance
issuer offering group or individual health insurance coverage may not
impose any preexisting condition exclusions. Section 2704 and the
regulations under that section are generally effective for plan years
(in the individual market, policy years) beginning on or after January
1, 2014, but for enrollees under the age of 19, the prohibition became
effective for plan years (in the individual market, policy years)
beginning on or after September 23, 2010.\22\
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\21\ The Affordable Care Act adds section 715(a)(1) of ERISA and
section 9815(a)(1) of the Code to incorporate the provisions of part
A of title XXVII of the PHS Act, including section 2704 of the PHS
Act, into ERISA and the Code, and to make them applicable to group
health plans and health insurance issuers providing health insurance
coverage in connection with group health plans.
\22\ PHS Act section 2704 applies to grandfathered and non-
grandfathered group health plans and group health insurance
coverage, and non-grandfathered individual health insurance
coverage. It does not apply to grandfathered individual health
insurance coverage. For more information on grandfathered health
plans, see section 1251 of the Affordable Care Act and its
implementing regulations at 26 CFR 54.9815-1251T, 29 CFR 2590.715-
1251, and 45 CFR 147.140.
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This proposed rule would make conforming amendments to the
individual market provisions contained in Part 148 by removing
provisions concerning preexisting condition exclusions that are
superseded by new section 2704 of the PHS Act. These amendments would
generally become applicable upon the effective date of the final rule.
However, the proposed amendment to eliminate the requirement to issue
certificates of creditable coverage is proposed to apply December 31,
2014, so that individuals needing to offset a preexisting condition
exclusion under a group health plan that will become subject to the
prohibition on preexisting condition exclusions starting with a plan
year beginning on December 31, 2014, would still have access to the
certificate for proof of coverage until that time. These proposed
amendments are consistent with rulemaking amending the group market
regulations under HIPAA \23\ and with previously released guidance
addressing the maintenance of State alternative mechanisms.\24\
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\23\ See Ninety-Day Waiting Period Limitation and Technical
Amendments to Certain Health Coverage Requirements Under the
Affordable Care Act, 78 FR 10296 (February 24, 2014).
\24\ See Questions and Answers Related to Health Insurance
Market Rules, Q2. Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/qa_hmr.html.
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We solicit comment on this proposal.
2. Fixed Indemnity Insurance in the Individual Health Insurance Market
(Sec. 148.220)
Pursuant to PHS Act sections 2722(c)(2), 2763(b) and 2791(c)(3)(B),
insurance that pays a fixed amount under specified conditions without
regard to other insurance (``fixed indemnity insurance'') is considered
to be an excepted benefit, exempt from many of the provisions of title
XXVII of the PHS Act for the group and individual markets, if it meets
all of the following conditions: (1) The benefits are be provided under
a separate policy, certificate or contract of insurance; (2) there is
no coordination between the provision of such benefits and any
exclusion of benefits under any group health plan maintained by the
same plan sponsor; and (3) such benefits are paid with respect to an
event without regard to whether benefits are provided with respect to
such event under any group health plan maintained by the same plan
sponsor.
These statutory requirements are reflected in regulations at 45 CFR
146.145(b)(4) and 148.220(b)(3). In addition, under Sec.
146.145(b)(4), incorporated through Sec. 148.220(b)(3), benefits of
fixed indemnity insurance in the group and individual markets must be
paid on a fixed amount basis without regard to the cost of the item or
service and can only be paid on a per-period basis as opposed to on a
per-service basis in order to be treated as an excepted benefit.
The primary reason fixed indemnity insurance is considered to be an
excepted benefit if it meets the statutory and regulatory criteria is
that its primary purpose is not to provide major medical coverage but
to provide a cash-replacement benefit for those individuals with other
health coverage. Since the issuance of the regulations, however,
various situations have come to the attention of HHS, the Department of
Labor, and the Department of the Treasury (the Departments) where a
health insurance policy is advertised as fixed indemnity coverage but
pays a fixed amount based not on a period of time, but if a particular
service is received. For example, the fixed indemnity coverage pays a
fixed $50 per visit for doctors' visits, or $100 for a day of
hospitalization, different fixed dollar amounts for other various
surgical procedures, and/or a fixed $15 per prescription without regard
to cost. In all cases, these fixed amounts are paid under these
policies without regard to costs, and without regard to other insurance
payments that may cover the same services. In such circumstances, the
fixed payments for doctors' visits, surgery, and prescription drugs are
not made not on a per-period basis, but instead based on the type of
procedure or item, such as the surgery or doctor visit actually
performed or the drug prescribed, and the amount of payment varies
widely based on the type of surgery or the cost of the drug. Because
these payments are not based on a ``fixed dollar amount per day (or per
other period),'' such a policy is not an excepted benefit under the
current regulations.
The Departments issued a frequently asked question (FAQ) on January
24, 2013 affirming that under the current regulations, for fixed
indemnity insurance to be an excepted benefit, payment based on an
event must be paid on a per-period basis as opposed to on a per-service
basis.\25\ While the FAQ only addressed fixed indemnity insurance sold
in the group health
[[Page 15819]]
insurance market, the same analysis also applies to fixed indemnity
insurance sold in the individual health insurance market, as noted
above.
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\25\ See FAQs about Affordable Care Act Implementation (Part
XI), Q7, available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.html and https://www.dol.gov/ebsa/faqs/faq-aca11.html.
---------------------------------------------------------------------------
Since the issuance of the January 24, 2013 FAQ, however,
stakeholders have expressed concerns over the distinction made under
the current regulations between payment on a per-period basis (which is
permitted) and payment on a per-service basis (which is not permitted).
State insurance regulators indicated that they have for years been
approving policies as fixed indemnity insurance that pay on a per-
service basis and treating such coverage as an excepted benefit. In an
August 27, 2013 letter to the Secretaries of the Departments on behalf
of the National Association of Insurance Commissioners (NAIC), it was
stated that ``state regulators believe hospital and other fixed
indemnity coverage with variable fixed amounts based on service types
could provide important options for consumers as supplemental coverage.
Consumers who purchase major medical coverage that meets the definition
of `minimum essential coverage' may still want to buy fixed indemnity
coverage to help meet out-of-pocket medical and other costs.'' Industry
groups representing health insurance issuers have also expressed
similar concerns.
Based on the feedback from stakeholders and the fact that, starting
in 2014, most individuals are required to have minimum essential
coverage in order to satisfy the individual shared responsibility
requirement under section 5000A of the Code, CMS agrees that it is
appropriate to revise the current regulatory criteria for individual
market fixed indemnity coverage to be treated as an excepted benefit by
(1) eliminating the current requirement that payment be made on a per-
period basis and not on a per-service basis, and (2) among other
things, imposing a new requirement that fixed indemnity insurance be
sold only as secondary to other health coverage that meets the
definition of minimum essential coverage.\26\
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\26\ Fixed indemnity plans paying fixed amounts per service that
meet these requirements to be excepted benefits do not qualify as
permitted insurance that can be provided in addition to a High
Deductible Health plan to an eligible individual under section
223(c)(3) of the Code. The statutory language for permitted
hospitalization insurance specifically refers to ``insurance paying
a fixed amount per day (or other period) of hospitalization'' rather
than ``hospital indemnity or other fixed indemnity insurance.''
---------------------------------------------------------------------------
On January 9, 2014, the Departments published an FAQ stating that,
``HHS intends to propose amendments to 45 CFR 148.220(b)(3) that would
allow fixed indemnity coverage sold in the individual health insurance
market to be considered to be an excepted benefit if it meets the
following conditions: (1) It is sold only to individuals who have other
health coverage that is minimum essential coverage within the meaning
of section 5000A(f) of the Code; (2) there is no coordination between
the provision of benefits and an exclusion of benefits under any other
health coverage; (3) the benefits are paid in a fixed dollar amount
regardless of the amount of expenses incurred and without regard to the
amount of benefits provided with respect to an event or service under
any other health coverage; and (4) a notice is displayed prominently in
the plan materials informing policyholders that the coverage does not
meet the definition of minimum essential coverage and will not satisfy
the individual responsibility requirements of section 5000A of the
Code.'' \27\ The FAQ further provided that, ``Until HHS finalizes this
rulemaking related to these proposed amendments, HHS will treat fixed
indemnity coverage in the individual market as excepted benefits for
enforcement purposes if it meets the conditions above in States where
HHS has direct enforcement authority. For States with primary
enforcement authority, HHS encourages those States to also treat this
coverage as an excepted benefit and will not consider that a State is
not substantially enforcing the individual market requirements merely
because it does so.''
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\27\ FAQs about Affordable Care Act Implementation (Part XVIII)
and Mental Health Parity Implementation, Q11 (January 9, 2014).
Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.html and https://www.dol.gov/ebsa/faqs/faq-aca18.html.
---------------------------------------------------------------------------
Consistent with the January 9, 2014 FAQ, we are proposing the
following revised criteria for fixed indemnity insurance to be treated
as an excepted benefit in the individual health insurance market: (1)
The benefits are provided only to individuals who have other health
coverage that is minimum essential coverage within the meaning of
section 5000A(f) of the Code; (2) there is no coordination between the
provision of benefits and an exclusion of benefits under any other
health coverage; (3) the benefits are paid in a fixed dollar amount per
day of hospitalization or illness or per service (for example, $100/day
or $50/visit) regardless of the amount of expenses incurred and without
regard to the amount of benefits provided with respect to the event or
service under any other health coverage; and (4) a notice is displayed
prominently in the plan materials in at least 14 point type that has
the following language: ``THIS IS A SUPPLEMENT TO HEALTH INSURANCE AND
IS NOT A SUBSTITUTE FOR MAJOR MEDICAL COVERAGE. LACK OF MAJOR MEDICAL
COVERAGE (OR OTHER MINIMUM ESSENTIAL COVERAGE) MAY RESULT IN AN
ADDITIONAL PAYMENT WITH YOUR TAXES.''
CMS is aware of at least one State law that requires fixed
indemnity insurance to be sold as secondary to major medical insurance
in order to be treated as an excepted benefit. We welcome comments on
this approach including the language in the required notice. We also
solicit comments on whether the requirement for individuals to have
other minimum essential coverage in order to be sold fixed indemnity
insurance is sufficient protection, especially given the fact that a
group health plan that provides minimum benefits can be minimum
essential coverage. For example, we solicit comment on whether to
require that fixed indemnity insurance must only be sold to individuals
with other health coverage that meets the EHB requirements. To meet the
standard that fixed indemnity insurance must be sold on a secondary
basis, an issuer of fixed indemnity insurance would have to be
reasonably assured that an individual has obtained other health
coverage that is minimum essential coverage. We seek comments on the
extent of verification issuers should require from applicants to be
reasonably assured that they have minimum essential coverage, including
whether an attestation included in the application is sufficient.
The current regulation requires fixed indemnity insurance to be
sold under a separate policy, certificate or contract of insurance but
does not require that it be provided by an issuer other than the issuer
providing the major medical coverage to the enrollees of the fixed
indemnity insurance. The Departments previously released guidance
establishing a safe harbor under which supplemental health insurance
coverage will be considered to be an excepted benefit.\28\ In the
guidance, one of the criteria for the safe harbor is that the
supplemental coverage has to be issued by an entity that does not
provide the primary coverage under the plan in
[[Page 15820]]
order for the supplemental coverage to be an excepted benefit. This
prevents an issuer from carving out certain benefits from its major
medical coverage and packaging those benefits with the major medical
coverage as a supplemental excepted benefit. We are considering adding
the same protection for fixed indemnity insurance sold in the
individual market and welcome comments on this approach.
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\28\ See CMS Insurance Standards Bulletin 08-01 (available at
https://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf ); the Department of Labor's Employee Benefits Security
Administration's Field Assistance Bulletin No. 2007-04 (available at
https://www.dol.gov/ebsa/pdf/fab2007-4.pdf ); and Internal Revenue
Service Notice 2008-23 (available at https://www.irs.gov/irb/2008-07_IRB/ar09.html ).
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This proposal only addresses fixed indemnity insurance sold in the
individual market. For fixed indemnity insurance sold in the group
health insurance market, see the FAQ published by the Departments on
January 9, 2014.
We believe that most fixed indemnity products in the individual
market today will largely satisfy these criteria and we welcome comment
on how this proposal would affect existing market arrangements. If
these proposals are finalized, they would apply for policy years
beginning on or after January 1, 2015. We welcome comments on whether
this would provide a sufficient transition period. We also solicit
comments on whether the existing regulatory criteria for fixed
indemnity insurance to be an excepted benefit (as interpreted in our
January 24, 2013 FAQ) should instead remain in place on a permanent
basis or at least on a temporary basis to ensure a sufficient
transition that avoids market disruption.
D. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment under the Affordable Care Act
1. Provisions and Parameters for the Transitional Reinsurance Program
(Sec. 153.405)
The Affordable Care Act directs that a transitional reinsurance
program be established in each State to help stabilize premiums for
coverage in the individual market from 2014 through 2016. In the 2014
Payment Notice and the 2015 Payment Notice, we expanded on the
standards set forth in subparts C and E of the Premium Stabilization
Rule, and established the reinsurance payment parameters and uniform
reinsurance contribution rate for the 2014 and 2015 benefit years. In
this proposed rule, we solicit feedback on a potential revision to the
allocation of reinsurance contributions collected for all benefit years
such that reinsurance contributions collected are allocated first to
the reinsurance payment pool and administrative expenses and second to
payments to the U.S. Treasury.
Section 1341(b)(3)(B)(iii) of the Affordable Care Act specifies the
total contribution amounts to be collected from contributing entities
for the reinsurance payment pool as $10 billion for 2014, $6 billion
for 2015, and $4 billion for 2016. Sections 1341(b)(3)(B)(iv) and
1341(b)(4) of the Affordable Care Act direct the collection of funds
for contribution to the U.S. Treasury in the amounts of $2 billion for
2014, $2 billion for 2015, and $1 billion for 2016. Section
1341(b)(3)(B)(ii) of the Affordable Care Act allows for the collection
of additional amounts for administrative expenses. Taken together,
these three components make up the total dollar amount to be collected
from contributing entities for each of the three years of the
reinsurance program under a national per capita contribution rate. For
2014, to collect $12.02 billion, HHS set a per capita contribution rate
of $63; for 2015, to collect $8.025 billion, HHS set a per capita
contribution rate of $44.
In the 2014 and 2015 Payment Notices, we provided that if total
contributions collected for 2014 and 2015 exceed $12.02 billion and
$8.025 billion, respectively, we would allocate $2 billion to the U.S.
Treasury, $20.3 or $25.4 million, as applicable, to administrative
expenses, and would allocate all remaining contributions for
reinsurance payments, thus prioritizing excess contributions towards
reinsurance contributions. Due to the uncertainty in our estimates of
reinsurance contributions to be collected, and to help assure that the
reinsurance payment pool is sufficient to provide the premium
stabilization benefits intended by the statute, we propose to revise
our allocation of reinsurance contributions collected and adopt a
similar prioritization in the event that reinsurance collections fall
short of our estimates. Specifically, if collections fall short of our
estimates for a particular benefit year, we propose to alter the
allocation so that the reinsurance contributions that are collected are
allocated first to the reinsurance pool and administrative expenses,
and are allocated to the U.S. Treasury once the targets for reinsurance
payments and administrative expenses are met. For example, as Table 1
provides, in 2014, reinsurance contributions would go first to the
reinsurance payment pool and administrative expenses, up to $10.02
billion, and any additional contributions collected would be allocated
to the U.S. Treasury, up to the total $12.02 billion.
Table 1--Proportion of Reinsurance Contributions Collected Under the Uniform Reinsurance Contribution Rate for
the 2014 Benefit Year for Reinsurance Payments, Payments to the U.S. Treasury, and Administrative Expenses
----------------------------------------------------------------------------------------------------------------
If total contribution
If total contribution collections under the
collections under the 2014 uniform reinsurance If total contribution
2014 uniform reinsurance contribution rate are collections under the
Proportion or amount for: contribution rate are more than $10.02 2014 uniform reinsurance
less than or equal to billion, but less than contribution rate are
$10.02 billion or equal to $12.02 more than $12.02 billion
billion
----------------------------------------------------------------------------------------------------------------
Reinsurance payments............. 99.9 percent ($10 billion/ $10 billion............. Total collections less
$10.02 billion). $2.02 billion (U.S.
Treasury and
administrative
expenses).
Payments to the U.S. Treasury.... 0 percent................ Total collections less $2 billion.
$10.02 billion.
Administrative expenses.......... 0.1 percent ($20.3 $20.3 million........... $20.3 million.
million/$10.02 billion).
----------------------------------------------------------------------------------------------------------------
Therefore, if we collect $11 billion instead of $12.02 billion for
2014, we propose to fully fund the reinsurance payment pool and
administrative expenses, and to pay to the U.S. Treasury $0.98 billion.
Similarly, for 2015, reinsurance contributions would go first to
the reinsurance payment pool and
[[Page 15821]]
administrative expenses, up to $6.025 billion, and any additional
contributions collected would be allocated to the U.S. Treasury, up to
the total $8.025 billion.
Table 2--Proportion of Reinsurance Contributions Collected Under the Uniform Reinsurance Contribution Rate for
the 2015 Benefit Year for Reinsurance Payments, Payments to the U.S. Treasury, and Administrative Expenses
----------------------------------------------------------------------------------------------------------------
If total contribution
If total contribution collections under the
collections under the 2015 uniform reinsurance If total contribution
2015 uniform reinsurance contribution rate are collections under the
Proportion or amount for: contribution rate are more than $6.025 2015 uniform reinsurance
less than or equal to billion, but less than contribution rate are
$6.025 billion or equal to $8.025 more than $8.025 billion
billion
----------------------------------------------------------------------------------------------------------------
Reinsurance payments............. 99.9 percent ($6 billion/ $6 billion.............. Total collections less
$6.025 billion). $2.025 billion (U.S.
Treasury and
administrative
expenses).
Payments to the U.S. Treasury.... 0 percent................ Total collections less $2 billion.
$6.025 billion.
Administrative expenses.......... 0.1 percent ($25.4 $25.4 million........... $25.4 million.
million/$6.025 billion).
----------------------------------------------------------------------------------------------------------------
Therefore, if we collect $7 billion instead of $8.025 billion in
2015, we propose to fully fund the reinsurance payment pool and
administrative expenses, and to pay to the U.S. Treasury $0.975
billion.
We note that in the 2015 Payment Notice, we amended 45 CFR
153.405(c) to provide a bifurcated contribution collection schedule,
under which contributing entities would submit reinsurance
contributions via two payments. The first payment would cover the
contribution amount allocated to reinsurance payments and
administrative expenses; the second payment would cover the
contribution amount allocated to payments to the U.S. Treasury for the
applicable benefit year. In light of our proposed allocation policy, we
note that contributions collected in the second collection would be
allocated for reinsurance payments and administrative expenses if the
first collection does not fully provide for the target reinsurance pool
and administrative expenses. Therefore, for 2014, if the first
collection resulted in a total collection of $9 billion, any
contribution collected via the second collection up to $1.02 billion
would be allocated for reinsurance payments and administrative
expenses.
We seek comment on this allocation proposal, including on the legal
authority to implement a prioritization of reinsurance contributions to
reinsurance payments over payments to the U.S. Treasury. We also seek
comment on the appropriate and permissible prioritization of
reinsurance administrative expenses, and whether those expenses should
have the same or different priority as reinsurance payments or payments
to the U.S. Treasury. In addition, we seek comment on alternative
allocation approaches to provide the premium stabilization benefits of
the reinsurance program, as intended by the statute.
2. Provisions for the Temporary Risk Corridors Program (Sec. 153.500)
In the 2015 Payment Notice, we indicated that we would consider
additional adjustments to the risk corridors program for benefit year
2015. We did so recognizing that issuers of QHPs may face additional
administrative costs, risk pool effects, and uncertainty for that
benefit year related to State extensions of renewals of plans that do
not comply with 2014 market reforms, including the rating rules, the
additional time it will take to fully assess the risk profile of 2014
enrollees given the six-month initial open enrollment period,
protracted phase-outs of high-risk pools, and the scheduled decline in
the reinsurance program payments. We also recognize that issuers of
QHPs may face additional costs from other transitions to the 2014
market rules, including the infrastructure requirements around
Exchanges, and the distributed data collection methodology for risk
adjustment and reinsurance. We note that these uncertainties will
continue through the summer of 2014, while issuers are in the process
of setting their rates for the 2015 benefit year. Therefore, for the
2015 benefit year, we are considering further adjustments to the risk
corridors formula that would help to mitigate these additional
administrative costs and uncertainties around operations and the risk
pool, and to stabilize the market as it continues to transition to full
compliance with Affordable Care Act provisions.
We propose to implement an adjustment to the risk corridors formula
set forth in subpart F of part 153 for each of the individual and small
group markets by increasing the ceiling on allowable administrative
costs (currently set at 20 percent, plus the adjustment percentage, of
after-tax premiums). Such an adjustment could increase a QHP issuer's
risk corridors ratio if administrative expenses are unexpectedly high
or claims costs are unexpectedly low, thereby increasing risk corridors
payments or decreasing risk corridors charges. We propose to raise the
administrative cost ceiling by 2 percentage points, from 20 percent to
22 percent. We also propose to increase the profit margin floor in the
risk corridors formula (currently set at 3 percent, plus the adjustment
percentage, of after-tax premiums). Such an adjustment could increase a
QHP issuer's risk corridors ratio if claims costs are unexpectedly
high, thereby increasing risk corridors payments or decreasing risk
corridors charges. We propose to raise the profit margin floor by 2
percentage points, from 3 percent to 5 percent.
We are proposing to implement this proposed increase to the
administrative cost ceiling and profit floor in a manner similar to the
risk corridors adjustment percentage set forth in the 2015 Payment
Notice. In the 2015 Payment Notice, we provided for an adjustment that
would increase the administrative cost ceiling and profit floor in the
risk corridors formula for QHP issuers in transitional States, in order
to account for the effects of the transitional policy. In this proposed
rule, we are proposing to increase the administrative cost and profit
floor for 2015 for QHP issuers in every State for the reasons described
below.
We note that, because the risk corridors program applies only to
certain plans defined to be qualified health plans at 45 CFR 153.500,
the extent to which an issuer may receive
[[Page 15822]]
the full effect of this adjustment would depend upon the portion of an
issuer's individual and small group enrollees in plans subject to risk
corridors. We intend to implement this program in a budget neutral
manner, and may make future adjustments to program parameters, upwards
or downwards, as necessary to achieve this goal.
We are proposing that these adjustments apply on a national basis
for the 2015 benefit year because we believe that these additional
transitional costs and uncertainties will be faced by issuers in all
States, not just States adopting the transitional policy. Because many
of these costs and uncertainties are difficult to measure, we believe
it would be difficult to estimate them on an issuer-by-issuer or State-
by-State basis. Additionally, we believe that a national adjustment
would be administratively simple for issuers.
For example, issuers will continue to face administrative expenses
in seeking to measure the extent to which issuers will extend renewals
of plans through the 2015 rate-setting period. They will continue to
accrue additional expenses monitoring the risk profile of 2014
enrollees during this period, particularly with the protracted phase-
outs of high-risk pools. And they will continue to face uncertainty and
administrative costs in measuring likely payouts from the reinsurance
program. These costs were not anticipated when we established the 20
percent ceiling on administrative expenses; and we believe that these
uncertainties will be difficult to accommodate as part of 2015 rate
setting.
Although the adjustments that we are considering would affect each
issuer differently, depending on its particular experience and
administrative cost rate, we believe that, on average, the adjustment
could suitably offset some of these increased costs.
We also propose that the medical loss ratio formula not take into
account any additional risk corridors payments resulting from this
adjustment, under our authority under section 2718(c) of the PHS Act to
``take into account the special circumstances of smaller plans,
different types of plans, and newer plans.'' This proposed approach is
similar to the policy established forth in the 2015 Payment Notice,
which removes the effect of the risk corridors adjustment percentage
from an issuer's MLR calculation.
We request comment on all aspects of this proposal. In particular,
we request comment on the specific administrative costs associated with
each of these policies, and other types of additional administrative or
other expenses that will be incurred by issuers of QHP in 2015. We seek
comment on the magnitude of these expenses, and whether these expenses
could have been fairly estimated and included in premium rating. We
seek comment on whether the administrative ceiling or the profit floor
should be raised (or both), and in each case, by how much, to account
for these costs and uncertainties. We also seek comment on alternate
ways of implementing adjustments to the risk corridors program,
including whether raising the administrative cost ceiling or raising
the profit floor would alone be sufficient to help offset issuer's
unexpected administrative expenses. Finally, we seek comment on whether
certain limitations or conditions should be placed on the adjustment,
and whether the adjustment should be limited to certain types of plans
or should apply only in certain States.
E. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Subpart B--General Standards Related to the Establishment of the
Exchange
a. Non-Interference with Federal Law and Non-Discrimination Standards
(Sec. 155.120)
In section 45 CFR 155.120(c), we established the requirement that
the State and the Exchange, when carrying out the requirements of Part
155, must comply with any applicable non-discrimination statutes, and
must not discriminate on the basis of race, color, national origin,
disability, age, sex, gender identity or sexual orientation. We stated
that the non-discrimination provisions of Sec. 155.120(c) apply not
just to the Exchanges themselves, but to Exchange contractors and all
Exchange activities (including but not limited to marketing, outreach
and enrollment), Navigators, non-Navigator assistance personnel,
certified application counselors, and organizations designated to
certify their staff and volunteers as certified application counselors
(78 FR 42829). We also established in 45 CFR 155.105(f) that this non-
discrimination requirement applies to the Federally-facilitated
Exchanges.
We now propose to re-designate the introductory language in
existing Sec. 155.120(c) as a new section Sec. 155.120(c)(1), re-
designate existing Sec. 155.120(c)(1) as a new Sec. 155.120(c)(1)(i),
and re-designate existing Sec. 155.120(c)(2) as a new Sec.
155.120(c)(1)(ii). We are proposing to make these technical changes to
existing Sec. 155.120(c) so that we can add a new paragraph (c)(2) to
Sec. 155.120 that creates a limited exception to the non-
discrimination provisions in existing Sec. 155.120(c)(1) and (c)(2).
Under this proposed exception, an organization receiving Federal funds
to provide services to a defined population under the terms of Federal
legal authorities (for example, a Ryan White HIV/AIDS Program or an
Indian health provider) that participates in the certified application
counselor program under 45 CFR 155.225 may limit its provision of
certified application counselor services to the same defined population
without violating the non-discrimination provisions in existing Sec.
155.120(c). We are proposing to adopt this exception to the non-
discrimination provisions in order to allow such organizations to
provide certified application counselor services and assist their
defined populations in enrolling in health coverage offered through the
Exchanges consistent with the Federal legal authorities under which
such organizations operate.
To the extent that one of these organizations decides to take
advantage of this exception, but is approached for certified
application counselor services by an individual who is not included in
the defined population that the organization serves, we propose that
the organization must refer the individual to other Exchange-approved
resources, such as the toll-free Exchange call center, a Navigator,
non-Navigator assistance personnel, or another designated certified
application counselor organization, that are able to provide assistance
to the individual.
However, to the extent that one of these organizations decides that
it will not take advantage of this proposed exception, we propose that
the non-discrimination provisions in existing Sec. 155.120(c) would
continue to apply. That is, if an organization decides that it will
provide certified application counselor services to individuals that
are not included in the defined population that it serves, it must
provide those services to all individuals consistent with the non-
discrimination provisions in existing Sec. 155.120(c).
2. Subpart C--General Functions of an Exchange
a. Civil Money Penalties for Violations of Applicable Exchange
Standards by Consumer Assistance Entities in Federally-Facilitated
Exchanges (Sec. 155.206)
In a new Sec. 155.206, as part of HHS's enforcement authority
under section
[[Page 15823]]
1321(c)(2) of the Affordable Care Act, we propose to provide for the
imposition of civil money penalties (CMPs) on Navigators, non-Navigator
assistance personnel, and certified application counselors and
certified application counselor designated organizations in FFEs and
State Partnership Exchanges that do not comply with applicable Federal
requirements. This proposal is designed to deter these entities and
individuals from failing to comply with the Federal requirements that
apply to them, and to ensure that consumers interacting with the
Exchange receive high-quality assistance and robust consumer
protection. As a general principle, while HHS proposes to establish
authority to assess CMPs when appropriate, consistent with this
proposed rule, we note that we also intend to continue to work
collaboratively with consumer assistance entities and personnel to
prevent noncompliance issues and address any that may arise before they
might rise to the level where CMP would be assessed.
The Secretary, under the authority of sections 1311(i) and
1321(a)(1) of the Affordable Care Act, has previously established a
range of consumer assistance programs to help consumers apply for and
enroll in QHPs and insurance affordability programs through the
Exchange. These consumer assistance programs include the Navigator
program described at section 1311(i) of the Affordable Care Act and 45
CFR 155.210; the consumer assistance, outreach, and education functions
authorized by section 1321(a)(1) of the Affordable Care Act and
established at 45 CFR 155.205(d) and (e), which can include a non-
Navigator assistance personnel program; and the certified application
counselor program authorized by section 1321(a)(1) of the Affordable
Care Act and set forth at 45 CFR 155.225. Under these authorities and
the authority granted to the Secretary by section 1321(c)(1) of the
Affordable Care Act, the FFE has implemented a Navigator and certified
application counselor program in all States that did not elect to
establish an Exchange, and has implemented a non-Navigator assistance
program in some of those States, through an enrollment assistance
contract.
Under section 1321(c)(2) of the Affordable Care Act, the provisions
of section 2723(b) of the PHS Act \29\ apply to the Secretary's
enforcement, under section 1321(c)(1) of the Affordable Care Act, of
the standards established by the Secretary under section 1321(a)(1) of
the Affordable Care Act for meeting the requirements under title I of
the Affordable Care Act, including the establishment and operation of
Exchanges, without regard to any limitation on the application of the
provisions of section 2723(b) of the PHS Act to group health plans.
Section 2723(b) of the PHS Act provides the Secretary with authority to
assess CMPs against health insurance issuers that fail to meet certain
Federal requirements set forth in the PHS Act that apply to group
health plans, in circumstances where, in the Secretary's determination,
the State that regulates the issuer has failed to ``substantially
enforce'' those requirements. We interpret the cross-reference to
section 2723(b) of the PHS Act in section 1321(c)(2) of the Affordable
Care Act as providing the Secretary with authority to assess CMPs to
enforce requirements established under section 1321(a)(1) of the
Affordable Care Act against any entity subject to those requirements,
under circumstances where the Secretary is exercising her authority
under 1321(c)(1) of the Affordable Care Act. For purposes of this
proposal, we would consider that any State that has not elected to
establish an Exchange, and in which the Secretary has therefore had to
establish and operate an Exchange under section 1321(c)(1), is not
``substantially enforcing'' the requirements related to Exchanges that
the Secretary has established under section 1321(a)(1).
---------------------------------------------------------------------------
\29\ Section 1321(c)(2) of the Affordable Care Act erroneously
cites to section 2736(b) of the PHS Act instead of 2723(b) of the
PHS Act. This was clearly a typographical error, and we have
therefore interpreted section 1321(c)(2) of the Affordable Care Act
to incorporate section 2723(b) of the PHS Act.
---------------------------------------------------------------------------
Accordingly, HHS has the authority under section 1321(c)(2) of the
Affordable Care Act to assess CMPs against Navigators, non-Navigator
assistance personnel, and certified application counselors and
certified application counselor designated organizations in FFEs,
including State Partnership Exchanges, for violations of the
requirements of the Navigator, non-Navigator, and certified application
counselor programs that the Secretary established under section
1321(a)(1) of the Affordable Care Act. This proposal sets forth the
circumstances under which the Secretary would exercise this authority.
It is based on the enforcement scheme laid out in section 2723(b) of
the PHS Act, and the implementing regulations at 45 CFR 150.301 et
seq., but it does not follow that enforcement scheme exactly, in light
of the differences between the circumstances in which the Secretary
would exercise her authority under PHS Act 2723(b) versus those under
which she would exercise her authority under section 1321(c)(2) of the
Affordable Care Act.
Proposed Sec. 155.206(a) would establish the scope and purpose of
the proposed CMP provisions and explains when and against whom HHS
would assess a CMP under this proposal. At Sec. 155.206(a)(2), we
propose that HHS could permit an entity or individual to whom it has
issued a notice of assessment of CMP to enter into a corrective action
plan instead of paying the CMP. We specify that permitting an entity to
enter into a corrective action plan would not limit HHS's authority to
require payment of the assessed CMP if the corrective action plan is
not followed. Under this proposal, the determination of whether HHS
would enter into a corrective action plan in place of imposing a CMP
would depend upon the factors proposed in Sec. 155.206(h). We believe
this approach would allow us not only to penalize violations if
necessary, but also to prioritize working collaboratively with consumer
assistance entities to ensure that improvements are made and future
violations are prevented. We also believe this approach is consistent
with the limitation on imposing CMPs that is set forth at PHS Act
section 2723(b)(2)(C)(iii)(II), under which no CMP may be assessed for
violations due to reasonable cause and not due to willful neglect, if
the violation is corrected during the 30-day period beginning on the
first day any of the entities against whom the penalty would be
assessed knew, or exercising reasonable diligence would have known,
that such failure existed.
We are considering whether to provide for an expedited process
through which HHS may assess and impose CMPs, if extenuating
circumstances exist or if necessary to protect the public. We believe
HHS's ability to take swift action might be particularly useful in
cases where HHS permits an entity to enter into a corrective action
plan in lieu of a CMP, so that the entity would promptly begin remedial
efforts under the corrective action plan without undue delay. We are
considering an expedited process through which HHS would provide the
consumer assistance entity less than the 30-day period provided for
under proposed paragraph (e) to respond to the notice of investigation
under proposed paragraph (e)(1), or possibly omit that period
altogether. In all cases where an expedited process would apply, we
anticipate that the entity against which a CMP is assessed would have
an
[[Page 15824]]
opportunity to appeal the imposition of the penalty after it has been
assessed. We seek comment on whether HHS should provide for such an
expedited process and on all aspects of how it should be structured,
including comments on how such an expedited process could provide
sufficient protection to the public, comments on how such an expedited
process could be sufficiently protective of the rights of entities and
individuals that might be assessed a CMP, and comments on other ways
through which the process for imposing CMPs under this proposal could
be expedited if necessary to protect the public.
We are also considering implementing an approach that would give
the HHS Office of Inspector General (OIG) concurrent authority with CMS
to enforce violations under this section. Given OIG's expertise in
investigating waste, fraud, and abuse in the Medicare and Medicaid
programs, we are considering whether certain violations of an Exchange
consumer assistance entity's program requirements might be most
effectively investigated by OIG, or whether a more streamlined approach
with a single enforcement authority would be preferable. In considering
whether OIG should have concurrent enforcement authority under this
proposed section, we are considering whether both CMS and OIG should
use the procedures laid out in proposed Sec. 155.206 for investigating
potential violations and conducting administrative appeals, or whether
and to what extent OIG should rely on its own enforcement procedures
under 42 CFR, chapter V, subchapter B for either the investigative
process or the administrative appeals process, or both, and whether
some of the procedures outlined in OIG's enforcement procedures under
those regulations should be incorporated into this section. We note
that because our enforcement authority under section 1321(c)(2) of the
Affordable Care Act requires compliance with the provisions of section
2723(b) of the PHS Act, any process used by OIG would have to comply
with the requirements in those statutory provisions. We seek comment on
whether OIG should have concurrent authority to enforce these proposed
CMP provisions. In addition, we seek comment on what procedures we
should use to determine which cases should fall under CMS or OIG
enforcement authority, in the event OIG has concurrent authority. For
example, we are considering providing that OIG would enforce only
consumer assistance personnel or entity noncompliance involving
systemic fraud or gross misconduct, rather than isolated incidents. We
invite comment on this issue, and how those determinations would be
made, as well as comments on any other aspects of a concurrent
authority scheme that we should consider.
In proposed Sec. 155.206(b), we specify the individuals and
entities that could be subject to HHS' enforcement authority under this
proposal. These individuals and entities would include Navigators, non-
Navigator assistance personnel (also referred to as in-person
assistance personnel) authorized under Sec. 155.205(d) and (e), and
certified application counselors and organizations designated as
certified application counselor organizations in FFEs, including in
State Partnership Exchanges. We refer to these individuals and entities
in the proposed rule as ``consumer assistance entities,'' but these
proposed CMPs could be assessed against both entities and individuals.
We seek comment on whether all of the individuals and entities listed
in proposed Sec. 155.205(b) should be subject to CMPs, and on whether
other entities and individuals should be added to that list.
In Sec. 155.206(c), we propose the grounds on which HHS could
impose CMPs on the entities and individuals specified in Sec.
155.206(b). Section 1321(c)(2) of the Affordable Care Act authorizes
the Secretary to enforce the requirements of section 1321(a)(1) of the
Affordable Care Act, which include the requirements established by the
Secretary regarding Exchange consumer assistance functions. Under our
proposal, this statutory provision would authorize HHS to assess a CMP
or, in lieu of a CMP, a corrective action plan against Navigators, non-
Navigator assistance personnel, certified application counselors, and
certified application counselor organizations in FFEs if HHS determines
that these individuals or entities are not in compliance with the
Exchange standards applicable to them. These Exchange standards would
include any applicable regulations implemented under title I of the
Affordable Care Act, as interpreted through applicable HHS guidance,
such as the regulations governing consumer assistance tools and
programs of an Exchange at Sec. 155.205; those governing Navigators at
Sec. 155.210 and Navigators in FFEs at Sec. 155.215; those governing
certified application counselors at Sec. 155.225; and those under
Sec. 155.215 governing non-Navigator assistance personnel in FFEs.
These standards would also include any applicable HHS guidance
interpreting an existing regulatory or statutory provision.
For example, Sec. 155.215(b)(1)(i) requires FFE Navigators to
obtain certification by the Exchange prior to carrying out any consumer
assistance functions under Sec. 155.210. Under this proposal, a
Navigator who facilitates the selection of a QHP (a Navigator duty
under Sec. 155.210(e)(3)) prior to obtaining his or her Exchange
certification might, depending on the circumstances, be subject to CMPs
under Sec. 155.206.
As another example, Sec. 155.210(e)(2) requires Navigators to
provide information and services in a fair, accurate, and impartial
manner, and Sec. 155.215(a)(2)(i) extends this duty to non-Navigator
assistance personnel in FFEs. Any FFE Navigator or FFE non-Navigator
assistance personnel who, while carrying out Exchange-related
activities, furnishes information that he or she knew or should have
known is false or fraudulent to consumers, the Exchange, or to HHS,
would have violated these provisions and might, depending upon the
circumstances, be subject to CMPs under proposed Sec. 155.206. If a
Navigator or any non-Navigator assistance personnel in a FFE encourages
an applicant or enrollee to submit false information on an application
for coverage though the Exchange, we would also consider that to be a
violation of his or her duty to provide information in a fair,
accurate, and impartial manner; and this violation might, depending on
the circumstances, also subject the individual or entity to the
proposed CMPs. Such a Navigator or non-Navigator assistance personnel
would not be providing fair or accurate information to consumers,
because in light of the penalties at section 1411(h) of the Affordable
Care Act for providing false information on an Exchange application, it
is not fair or accurate to state or imply that a consumer would be
permitted to falsify application information.
As a final example, a certified application counselor in an FFE who
steers consumers toward one particular QHP would not be acting in the
best interest of consumers, as required by Sec. 155.225(d)(4), and
would not be giving consumers information about the full range of QHP
options and insurance affordability programs for which they are
eligible, as required by Sec. 155.225(c)(1). Such a certified
application counselor might, depending on the circumstances, be subject
to CMPs under our proposed Sec. 155.206.
We note that Sec. 155.285 of this proposed rule would extend CMPs
to consumer assistance entities who misuse or impermissibly disclose
[[Page 15825]]
personally identifiable information in violation of section 1411 of the
Affordable Care Act. Therefore, we have not addressed penalties for
those actions here. Some conduct by consumer assistance entities may
warrant CMPs under either Sec. 155.285 or Sec. 155.206, and in such
cases we believe HHS has discretion to determine whether to impose a
CMP under this regulation or under Sec. 155.285 of this subpart.
However, we specify in proposed Sec. 155.206(c) that HHS would not
assess a CMP under this section if a CMP has already been assessed for
the same conduct under Sec. 155.285. Additionally, CMPs are not the
only enforcement remedy that would apply to the entities and
individuals who would be subject to proposed Sec. 155.206. For
instance, HHS could take other enforcement actions against FFE
Navigators, which are Federal grantees, under the regulations governing
HHS grants. Furthermore, some of the actions described above may
subject consumer assistance entities to criminal liability under
Federal or State law.
In Sec. 155.206(d), we propose the basis for initiating an
investigation of a potential violation. We propose that HHS could
initiate an investigation based on any information it receives
indicating that a consumer assistance entity might be in noncompliance
with applicable Exchange standards. Such information could include
consumer complaints, reports from State insurance departments and other
Federal and State agencies, and any other information indicating such a
violation. We also propose that any entity or individual could file
such a complaint with HHS.
In Sec. 155.206(e), (f) and (g), we propose to outline the process
that HHS would follow to investigate potential violations in order to
determine whether the consumer assistance entity has engaged in
noncompliance of applicable Exchange standards. Under proposed Sec.
155.206(e), if HHS learns of a potential violation through the means
described in paragraph (d) in this section and determines that further
investigation is warranted, HHS would provide written notice of its
investigation to the consumer assistance entity. Such notice would
describe the potential violation, provide 30 days from the date of the
notice for the consumer assistance entity to respond and provide HHS
with information and documents, including information and documents to
refute an alleged violation, and would state that a CMP might be
assessed if the consumer assistance entity fails to refute the
allegations in HHS' determination.
In Sec. 155.206(f), we propose a process for a consumer assistance
entity to request an extension from HHS when the entity cannot prepare
a response to HHS's notice of investigation within the 30 days provided
in the notice. Under our proposal, if HHS grants the extension, the
responsible entity would be required to respond to the notice of
investigation within the time frame specified in HHS's letter granting
the extension of time, and failure to respond within 30 days, or within
the extended time frame, could result in HHS's imposition of the CMP
that would apply based upon HHS's initial determination of a potential
violation as set forth in the notice of investigation under Sec.
155.206(e).
In Sec. 155.206(g), we propose that HHS could review and consider
documents or information received or collected in accordance with
paragraph (d)(1) of this section or provided by the consumer assistance
entity in response to receiving a notice in accordance with paragraph
(e)(2) of this section. We also propose that HHS may conduct an
independent investigation into the alleged violation, which may include
site visits and interviews, if applicable, and may consider the results
of this investigation in its determination. The purpose of these
proposed provisions is to ensure that HHS would follow reasonable
procedures when investigating a potential violation, and to allow a
consumer assistance entity a reasonable timeframe to provide evidence
refuting the allegation or other information regarding the alleged
violation, including its severity or mitigating circumstances.
In Sec. 155.206(h), we propose the factors that HHS would use to
determine the appropriate CMP amount, and to determine whether it would
be appropriate to offer the entity or individual an opportunity to
enter into a corrective action plan in place of the CMP. We intend that
the CMP amount, and opportunity to enter into a corrective action plan,
would vary based on our assessment of the consumer assistance entity's
previous or ongoing record of compliance; the gravity of the violation,
as determined in part by the frequency of the violation and the
financial harm incurred by a consumer; and the culpability of the
consumer assistance entity, as determined, in part, by whether the
entity received payment for committing the violation. We believe these
factors would allow us to tailor enforcement actions to specific
violations, while maintaining robust enforcement authority in the
interest of protecting consumers.
Section 2723(b)(2)(C) of the PHS Act limits the amount of CMPs
authorized under section 1321(c)(2) of the Affordable Care Act to $100
for each day for each individual directly affected. Therefore in Sec.
155.206(i), we propose that the maximum daily amount of penalty
assessed for each violation would be $100 for each day, for each
consumer assistance entity, for each individual directly affected by
the entity's non-compliance. Similar to our rules on the maximum
penalty for noncompliant QHP issuers in 45 CFR 156.805(c), we
anticipate that there might be situations where HHS cannot determine
the number of individuals directly affected. Therefore, we propose,
consistent with the approach under existing rules at 45 CFR 156.805(c),
that in such situations HHS may reasonably estimate this number, based
on available information, such as data from a Federal Navigator
grantee's quarterly or weekly report concerning the number of consumers
assisted. We also clarify that imposing $100 for each day an individual
is directly affected would mean that we would look at the entirety of
time the consumer was affected by the noncompliance of the assistance
entity. For example, if a certified application counselor in an FFE is
found to be steering consumers into a specific plan without regard to
the consumers' best interests in violation of Sec. 155.225(d)(4), we
might assess CMPs based on our reasonable estimate of the number of
consumers affected by the conduct, as well as the entire time the
conduct took place, including the time during which each consumer is
enrolled in the plan to which he or she was improperly steered.
Although we have proposed a maximum per day penalty, we have not
proposed a cap on the total penalty that could be assessed by HHS, and
we seek comment on whether we should propose such a cap.
In proposed Sec. 155.206(j), we propose to clarify that nothing in
this section limits HHS's authority to settle any issue or case
described in the notice furnished in accordance with paragraph (e), or
to compromise on any CMP provided for in this section. This provision
is based on a similar provision in the HIPAA enforcement scheme at 45
CFR 150.325.
Section 2723(b)(2)(C) of the PHS Act places certain limitations on
CMPs authorized under section 1321(c)(2) of the Affordable Care Act,
including the limitation that HHS will not assess a CMP where the
entity did not know, or exercising reasonable diligence would not have
known, of the violation. We propose to implement these limitations in
Sec. 155.206(k). We believe these limitations would help balance the
interests of HHS, the Exchange, and consumers to have consumer
assistance
[[Page 15826]]
entities exercise reasonable diligence in understanding and executing
their obligations, while not unnecessarily penalizing consumer
assistance entities who are acting in good faith. We also propose,
based on the HIPAA enforcement structure at 45 CFR 150.341, that the
burden is on the consumer assistance entity to establish that the
circumstances triggering these limitations existed.
In Sec. 155.206(l), we propose standards for notifying consumer
assistance entities of the intent to assess a CMP, which notice would
include an explanation of the entity's right to an appeal pursuant to
the process set forth at 45 CFR Part 150, Subpart D, as provided in
proposed Sec. 155.206(m). We seek comment on whether all aspects of
that process should be applicable to appeals of these CMPs. Finally, in
Sec. 155.205(n), we propose that HHS may require payment of the
proposed CMP if the consumer assistance entity does not timely request
a hearing.
We seek comment on all aspects of these proposals, including but
not limited to whether other provisions of 45 CFR Part 150 should be
adopted and made applicable to this proposed enforcement scheme,
whether a specific limitations period should apply, and if so, what
limitations period would be appropriate for violations of applicable
Exchange standards by consumer assistance entities in FFEs.
b. Navigator, Non-Navigator Assistance Personnel, and Certified
Application Counselor Program Standards (Sec. Sec. 155.210, 155.215,
and 155.225)
Sections 1311(d)(4)(K) and 1311(i) of the Affordable Care Act
direct all Exchanges to establish a Navigator program. Section
1321(a)(1) of the Affordable Care Act directs the Secretary to issue
regulations that set standards for meeting the requirements of title I
of the Affordable Care Act, with respect to, among other things, the
establishment and operation of Exchanges. Pursuant to the authority
established in section 1321(a)(1), the Secretary issued 45 CFR
155.205(d) and (e), which authorize Exchanges to perform certain
consumer service functions in addition to the Navigator program. 45 CFR
155.205(d) provides that each Exchange must conduct consumer assistance
activities, and Sec. 155.205(e) provides that each Exchange must
conduct outreach and education activities to inform consumers about the
Exchange and insurance affordability programs, to encourage
participation.
The consumer assistance function authorized by Sec. 155.205(d)
includes the Navigator grant program established under section 1311(i)
of the Affordable Care Act. Section 155.205(d) and (e) also allow for
the establishment of a non-Navigator consumer assistance program. 45
CFR 155.215 establishes standards for non-Navigator assistance
personnel in FFEs, including State Partnership Exchanges, and for non-
Navigator assistance personnel in State Exchanges if they are funded
with section 1311(a) Exchange Establishment grant funds. Also pursuant
to the authority established in section 1321(a)(1), the Secretary
issued 45 CFR 155.225, which establishes the certified application
counselor program as a consumer assistance function of the Exchange,
separate from and in addition to the functions described in Sec. Sec.
155.205(d) and (e), 155.210, and 155.215.
Navigator duties and requirements for all Exchanges are set forth
in section 1311(i) of the Affordable Care Act and 45 CFR 155.210.
Additional duties and requirements for Navigators in Federally-
facilitated and State Partnership Exchanges are set forth at 45 CFR
155.215. Section 155.215 also sets forth duties and requirements for
non-Navigator assistance personnel in Federally-facilitated and State
Partnership Exchanges, and for non-Navigator assistance personnel in
State Exchanges if those personnel are funded with section 1311(a)
Exchange Establishment grant funds. Certified application counselor
duties and requirements for all Exchanges are set forth in 45 CFR
155.225.
In accordance with sections 1311(i)(4) and 1321(d) of the
Affordable Care Act, we previously established in 45 CFR
155.210(c)(1)(iii) that Navigators ``must meet any licensing,
certification or other standards prescribed by the State or Exchange,
if applicable, so long as such standards do not prevent the application
of the provisions of title I of the Affordable Care Act.'' We have not
established a similar requirement for the non-Navigator assistance
personnel that are subject to 45 CFR 155.215. Nor did we finalize a
proposed requirement that would have required certified application
counselors to comply with State law as a condition of certification.
However, we noted in the preamble to the rulemaking establishing the
certified application counselor program that section 1321(d) of the
Affordable Care Act provides that State laws that do not prevent the
application of the provisions of title I of the Affordable Care Act are
not preempted.\30\ These preemption principles apply to all of the
Federal standards and duties that apply to Navigators, non-Navigator
assistance personnel and certified application counselors, since these
have been authorized and established under title I of the Affordable
Care Act.
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\30\ Patient Protection and Affordable Care Act; Exchange
Functions: Standards for Navigators and Non-Navigator Assistance
Personnel; Consumer Assistance Tools and Programs of an Exchange and
Certified Application Counselors, 78 FR 42845 (finalized July 17,
2013).
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We now propose to specify certain non-Federal requirements that
would prevent the application of provisions of title I of the
Affordable Care Act with respect to the Navigator, non-Navigator
assistance personnel, and certified application counselor programs,
within the meaning of section 1321(d) of the Affordable Care Act. This
proposal does not purport to capture the complete universe of State
requirements that might be preempted in this context, and we therefore
recognize that a Federal court may also find other non-Federal
requirements that we do not expressly mention in this proposed rule to
be preempted.\31\
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\31\ The U.S. District Court for the Western District of
Missouri recently granted the plaintiff's motion for a preliminary
injunction in litigation challenging a Missouri law regulating
Navigators and other Exchange consumer assistance personnel on the
grounds, inter alia, that certain provisions of the Missouri law are
preempted by Federal law. The court concluded that ``state laws that
make operation of the [Federally-facilitated Exchange] more
difficult or onerous run afoul of the Affordable Care Act's purpose
and are subject to preemption.'' St. Louis Effort for AIDS, et al.
v. Huff, No. 13-4246-CV-C-ODS, 2014 WL 273201, at *5 (W.D. Mo. Jan.
23, 2014) (order granting preliminary injunction). This decision is
currently under appeal before the United States Court of Appeals for
the Eighth Circuit, St. Louis Effort for AIDS v. Huff, No. 14-1520
(8th Cir. appeal docketed Mar. 6, 2014).
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We propose amending Sec. 155.210(c)(1)(iii) by adding new
paragraphs (A) through (F) to specify certain non-Federal requirements
that would prevent the application of the provisions of title I of the
Affordable Care Act, within the meaning of section 1321(d) of the
Affordable Care Act, with respect to the Navigator program. We also
propose to amend Sec. 155.215(f) to make clear that we would consider
the same types of non-Federal requirements listed in Sec.
155.210(c)(1)(iii)(A) through (F) (except for 155.210(c)(1)(iii)(D)) to
prevent the application of the provisions of title I of the Affordable
Care Act within the meaning of section 1321(d) of the Affordable Care
Act, when applied to non-Navigator assistance personnel subject to
Sec. 155.215. Similarly, with respect to the certified application
counselor program, we propose amending Sec. 155.225(d) by adding a new
paragraph (d)(8) to specify that certified application counselors must
meet any licensing, certification or
[[Page 15827]]
other standards prescribed by the State or Exchange, if applicable, so
long as such standards do not prevent the application of the provisions
of title I of the Affordable Care Act within the meaning of section
1321(d) of the Affordable Care Act. New Sec. 155.225(d)(8) would also
make clear that we would consider non-Federal requirements similar to
those listed in Sec. 155.210(c)(1)(iii)(A) through (F) (except for
155.210(c)(1)(iii)(D)) to prevent the application of the provisions of
title I of the Affordable Care Act within the meaning of section
1321(d) of the Affordable Care Act, when applied to certified
application counselors.
As we discuss in greater detail below, these proposed amendments
are directed at non-Federal requirements that conflict with Federal
statutory or regulatory standards and that either, on their face,
prevent assisters from performing their Federally required duties, or
that would conflict with Federal standards in specific factual
circumstances.
The purpose of these proposed provisions is to specify a non-
exhaustive list of circumstances under which HHS would consider a non-
Federal requirement applicable to Navigators, non-Navigator assistance
personnel, or certified application counselors to prevent the
application of provisions of title I of the Affordable Care Act, within
the meaning of section 1321(d) of the Affordable Care Act. As a general
principle, if a non-Federal requirement would, on its face, prevent
Navigators, non-Navigator assistance personnel subject to Sec.
155.215, or certified application counselors from carrying out
Federally mandated duties or from otherwise meeting Federal standards
that apply to them, or if a non-Federal requirement would make it
impossible for an Exchange to implement those consumer assistance
programs consistent with the Federal statutes and regulations governing
those programs, then, in HHS's view, such a requirement would prevent
the application of the provisions of title I of the Affordable Care
Act.
These proposed preemption standards would not preclude a State from
establishing or implementing additional State law protections for its
consumers, so long as such laws do not prevent the application of
Federal requirements for these consumer assistance programs. For
example, a State may require these types of Exchange-approved assisters
to undergo fingerprinting or background checks before they can operate
in a State, so long as a State's implementation of these additional
requirements does not prevent the Exchange from implementing these
consumer assistance programs in the State consistent with Federal
standards or make it impossible for the assisters to perform their
Federally required duties.
We propose to make some, but not all, of the proposed provisions
applicable to Navigators, non-Navigator assistance personnel subject to
45 CFR 155.215, and certified application counselors (or certified
application counselor designated organizations) that are operating in
State Exchanges. Non-Federal requirements that would prevent these
individuals or entities from carrying out their Federally mandated
duties or from otherwise meeting applicable Federal statutory and
regulatory standards and requirements would prevent the application of
title I of the Affordable Care Act. Generally, for the reasons
addressed below, proposed Sec. 155.210(c)(1)(iii)(A) through (D) would
apply to Navigators in State Exchanges; through the cross reference to
Sec. 155.210(c)(1)(iii), proposed Sec. 155.215(f) would apply
provisions Sec. 155.210(c)(1)(iii)(A) through (C) to non-Navigator
assistance entities or individuals in State Exchanges that are funded
through an Exchange Establishment Grant under section 1311(a) of the
Affordable Care Act; and proposed Sec. 155.225(d)(8)(i) through (iii)
would apply to certified application counselors and/or designated
certified application counselor organizations in State Exchanges. In
general, we believe that the provisions listed above should apply in a
State Exchange because these provisions address requirements that, in
HHS' view, would facially conflict with Federal requirements or
standards established under Federal law, while the provisions that we
propose would not apply in State Exchanges relate to how the State
interacts with an FFE or implements State requirements for the relevant
consumer assistance personnel. Based on our observations, a State
Exchange has an enhanced ability to work with the State to establish
its own standards and coordinate the implementation of State law
applicable to assisters in a manner that does not conflict with Federal
standards or prevent the State Exchange from implementing consumer
assistance programs consistent with Federal requirements. We solicit
comments on whether all the proposed provisions should apply in State
Exchanges. We also seek comments on whether there are other types of
non-Federal requirements for these types of assisters in a State
Exchange that might prevent the application of Federal law within the
meaning of section 1321(d) of the Affordable Care Act.
In our proposal, we first propose that non-Federal laws or
regulations which require Navigators, non-Navigator assistance
personnel subject to Sec. 155.215, and certified application
counselors to refer consumers to agents or brokers, or to any other
sources not required to provide them with impartial advice, would
prevent the application of the provisions of title I of the Affordable
Care Act. Non-Federal laws or regulations that require referrals to
sources that are not required to provide impartial advice would, on
their face, make it impossible for these assisters to comply with
existing Federal statutory and regulatory duties and standards.
Navigators are required to ``distribute fair and impartial information
concerning enrollment in qualified health plans, and the availability
of premium tax credits . . . and cost-sharing reductions . . .,'' under
section 1311(i)(3)(B) of the Affordable Care Act. Additionally, section
1311(i)(5) of the Affordable Care Act requires the Secretary, in
collaboration with States, to ``develop standards to ensure that
information made available by [N]avigators is fair, accurate, and
impartial.'' Accordingly, HHS regulations at Sec. 155.210(e)(2)
require Navigators in all Exchanges to provide ``information and
services in a fair, accurate and impartial manner'' and HHS regulations
at Sec. 155.215(a)(1)(iii) require Navigators in Federally-facilitated
and State Partnership Exchanges to ``provide information to consumers
about the full range of QHP options and insurance affordability
programs for which they are eligible.'' HHS regulations at Sec.
155.215(a)(2)(i) and (iv) impose the same requirements upon non-
Navigator assistance personnel in Federally-facilitated and State
Partnership Exchanges. Similarly, Sec. 155.225(c)(1) requires
certified application counselors to provide ``information to
individuals and employees about the full range of QHP options and
insurance affordability programs for which they are eligible'' and
Sec. 155.225(d)(4) requires certified application counselors to act in
the best interest of the applicants assisted. If a non-Federal law or
regulation requires Navigators or non-Navigator assistance personnel
subject to Sec. 155.215 to refer consumers to third parties that do
not have a duty to provide consumers with information that is fair,
accurate, and impartial or requires a certified application counselor
to refer consumers to third parties that do not
[[Page 15828]]
have a duty to act in the consumer's best interest, that non-Federal
law would prevent Navigators, non-Navigator assistance personnel, or
certified application counselors from meeting the above-mentioned
Federal requirements. This proposal would apply in all Exchanges, with
the following limited exception for certain Navigators. Where a State
has elected to establish and operate only a SHOP Exchange pursuant to
45 CFR 155.100(a)(2), and has opted under 45 CFR 155.705(d) to permit
Navigator duties at Sec. 155.210(e)(3) and (4) in the SHOP-only State
Exchange to be fulfilled through referrals to agents and brokers, we
would not consider State laws or regulations that permit the State to
take the option at Sec. 155.705(d) to prevent the application of the
provisions of title I of the Affordable Care Act, since that option is
authorized under Federal law.
We solicit comment on whether non-Federal requirements that
obligate Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors to refer employers
and employees in the small group market to agents and brokers should
not be considered to prevent the application of the provisions of title
I of the Affordable Care Act within the meaning of section 1321(d) of
the Affordable Care Act.
Second, we propose that non-Federal laws or regulations that
prevent Navigators, non-Navigator assistance personnel subject to Sec.
155.215, and certified application counselors from providing services
to all persons to whom they are required to provide assistance would
also, on their face, prevent the application of the provisions of title
I of the Affordable Care Act within the meaning of section 1321(d) of
the Affordable Care Act. For example, if a non-Federal requirement
prohibited Navigators and non-Navigator assistance personnel subject to
Sec. 155.215 from assisting an employer or employee regarding SHOP
coverage or from acting as an intermediary between that employer and an
issuer without being a licensed insurance agent or broker, then such a
prohibition would prevent Navigators from performing their Federally
required duties and would therefore prevent the application of the
provisions of title I of the Affordable Care Act within the meaning of
section 1321(d) of the Affordable Care Act. Specifically, such non-
Federal requirements would prevent Navigators from providing
``information and services in a fair, accurate and impartial manner''
as required by 45 CFR 155.210(e)(2). They would also prevent non-
Navigator assistance personnel subject to 155.215 from complying with
the same requirement, as is required by Sec. 155.215(a)(2)(i). We
interpret the requirement that Navigators and non-Navigator assistance
personnel subject to Sec. 155.215 provide information and services
fairly and impartially as a requirement that these assisters provide
their services to all consumers seeking assistance. As we have
mentioned in prior rulemaking, Navigators and non-Navigator assistance
personnel should have the ability to help any individual who presents
him or herself for assistance (see 78 FR 42830). Further, these
requirements would prevent Navigators and non-Navigator assistance
personnel subject to Sec. 155.215 from being prepared to serve both
the individual Exchange and SHOP, as required by Sec.
155.215(b)(1)(v). Similarly, with respect to certified application
counselors and certified application counselor organizations, if a non-
Federal requirement barred these individuals or entities from assisting
an employee with SHOP coverage, then such a requirement would prevent
them from performing their Federally required duty to provide
information to employees about the full range of QHP options for which
they are eligible and assist employees to apply for coverage in a QHP
through the Exchange and for insurance affordability programs, as set
forth under Sec. 155.225(c)(1) and (2).
As another example, with respect to Navigators, non-Navigator
assistance personnel subject to Sec. 155.215, and certified
application counselors and organizations, if a non-Federal law required
these individuals or entities to either cease assisting a consumer or
to discourage the consumer from seeking assistance from the assister
whenever a consumer disclosed that he or she was currently insured or
had previously purchased health insurance with the aid of an agent or
broker (even if that consumer expresses to the assister that he or she
does not want to be assisted by an agent or broker), then such a non-
Federal requirement would prevent the application of the provisions of
title I of the Affordable Care Act within the meaning of section
1321(d) of the Affordable Care Act. Specifically, these types of
requirements would prevent Navigators from providing ``information and
services in a fair, accurate and impartial manner'' as required by 45
CFR 155.210(e)(2). They would also prevent non-Navigator assistance
personnel subject to 155.215 from complying with the same requirement,
as is required by Sec. 155.215(a)(2)(i). We interpret the requirement
that Navigators and non-Navigator assistance personnel subject to Sec.
155.215 provide information and services fairly and impartially as a
requirement that these assisters serve any consumer who presents him or
herself for assistance, without regard to whether the consumer has
existing health insurance coverage or previously had such coverage.
Such a non-Federal requirement would also keep these assisters from
performing their Federally required duty to be prepared to serve both
the individual Exchange and SHOP, as required by Sec.
155.215(b)(1)(v). With respect to certified application counselors,
these types of requirements would prevent them from carrying out
required duties under Sec. 155.225(c)(1) and (2), which require that
certified application counselors provide information to employees about
the full range of QHP options for which they are eligible and assist
employees to apply for coverage in a QHP through the Exchange.
Requirements of this type would also potentially prevent certified
application counselors from acting in the best interests of the
applicants assisted, as required by Sec. 155.225(d)(4), especially in
circumstances where a consumer expresses a desire to not consult an
agent or broker.
Where a State has elected to establish and operate only a SHOP
Exchange pursuant to 45 CFR 155.100(a)(2), and has opted under 45 CFR
155.705(d) to permit Navigator duties at Sec. 155.210(e)(3) and (4) in
the SHOP-only State Exchange to be fulfilled through referrals to
agents and brokers, we would not consider State laws or regulations
that permit the State to take the option at Sec. 155.705(d) to prevent
the application of the provisions of title I of the Affordable Care
Act, since that option is authorized under Federal law.
Third, we propose that non-Federal laws that prevent Navigators,
non-Navigator assistance personnel subject to Sec. 155.215, and
certified application counselors from discussing the terms of coverage
of any particular policy or plan, or from providing advice regarding
substantive benefits or comparative benefits of different health plans,
would also, on their face, prevent the application of the provisions of
title I of the Affordable Care Act within the meaning of section
1321(d) of the Affordable Care Act. Such non-Federal requirements would
prevent Navigators from fulfilling their statutory and regulatory
duties under section 1311(i)(3) of the Affordable Care Act and 45 CFR
155.210(e)(2) and (3) to distribute fair and impartial information
concerning enrollment in qualified health plans and to facilitate
enrollment
[[Page 15829]]
in qualified health plans. Such non-Federal requirements would also
prevent non-Navigator assistance personnel subject to Sec. 155.215
from carrying out their required duties under Sec. 155.215(a)(2)(i),
which requires that they comply with Sec. 155.210(e)(2). Finally, such
non-Federal requirements would also prevent certified application
counselors and organizations from fulfilling regulatory duties
established under Sec. 155.225(c) to provide information to
individuals and employees about the full range of QHP options and
insurance affordability programs for which they are eligible, assist
individuals and employees to apply for coverage in a QHP through the
Exchange and for insurance affordability programs, and help to
facilitate enrollment of eligible individuals in QHPs and insurance
affordability programs. CMS interprets these statutory and regulatory
provisions to require Navigators, non-Navigator assistance personnel
subject to Sec. 155.215, and certified application counselors to be
prepared to discuss the terms and features of any coverage for which a
consumer is or might be eligible, consistent with each consumer's
expressed interests and needs, including, for example, plan features
such as deductibles, coinsurance and copayments, coverage limitations
or exclusions, and/or whether a particular provider or hospital is
included within a plan's network. CMS has always interpreted the
statute and regulations to prohibit Navigators, non-Navigators, and
certified application counselors from steering a consumer toward a
particular plan or plans. However, under 45 CFR 155.210(e)(3) and
155.215(a)(2)(i), Navigators and non-Navigator assistance personnel
subject to Sec. 155.215 have a duty to ``facilitate selection of a
QHP,'' and that duty includes providing information to consumers about
the substantive benefits or particular features of a health plan.
Similarly, certified application counselors are required to provide
this same type of information to consumers, since they have a duty
under 45 CFR 155.225(c)(3) to help to facilitate enrollment of eligible
individuals in QHPs and insurance affordability programs. We therefore
propose that non-Federal requirements that prevent assisters from
describing or providing information about the substantive benefits or
particular features of a health plan, including comparative information
to facilitate a consumer's selection of a plan, would prevent the
application of the provisions of title I of the Affordable Care Act
within the meaning of section 1321(d) of the Affordable Care Act.
Fourth, we propose to put into regulatory text a position we
previously expressed in preamble, that a State or an Exchange must not
require that all Navigators be agents or brokers or carry errors and
omissions coverage. Section 1311(i)(2)(B) of the Affordable Care Act
provides that various types of entities may serve as Navigators, and
through Sec. 155.210(c)(2), we established the requirement that in all
Exchanges, at least two types of entities, including one community and
consumer-focused nonprofit group, must serve as Navigators. Requiring
that each Navigator be a licensed agent or broker or carry errors and
omissions coverage (which is typically held only by licensed
professionals such as agents and brokers) would mean that all
Navigators would fall under only one type of entity listed in
155.210(c)(2), specifically, agents and brokers, and would therefore
prevent the application of Sec. 155.210(c)(2)(i). In other words,
these types of non-Federal requirements would make it impossible for
the Exchange in such States to fulfill the Federal requirement that at
least two types of entities listed at 155.210(c)(2), including one
community and consumer-focused nonprofit group, serve as Navigators.
HHS has previously advised (see 77 FR 18310, 18331-32) that such
requirements would prevent the application of Sec. 155.210(c)(2)
within the meaning of section 1321(d) of the Affordable Care Act; this
proposal makes this policy explicit in regulation text.
Fifth, we propose to specify that, in States with an FFE, non-
Federal requirements may not, in effect, render ineligible any
individuals or entities that the FFE would deem eligible under
applicable Federal standards. Such non-Federal requirements would
prevent the FFE from implementing the consumer assistance programs that
they are required (or authorized) to implement under section 1311(i) of
the Affordable Care Act, and 45 CFR 155.205, 155.210, 155.215, and
155.225, consistent with Federal requirements established for those
programs.
For example, non-Federal requirements that prohibit Navigators,
non-Navigator assistance personnel, or certified application counselors
or organizations in an FFE from receiving any consideration, directly
or indirectly, from a health insurance issuer offering health insurance
coverage in or outside of an Exchange, even if not in connection with
the enrollment of individuals into a QHP, go beyond Federal conflict of
interest standards set forth in section 1311(i)(4)(A)(i) and (ii) of
the Affordable Care Act and Sec. Sec. 155.210(d)(4), 155.215(a) and
155.225(d)(2) and (4), as interpreted in Federal guidance, and would
also go beyond the parallel conflict of interest standards proposed for
certified application counselors in our proposed Sec. 155.225(g)(2).
For Navigators, section 1311(i)(4)(A)(i) and (ii) of the Affordable
Care Act and 45 CFR 155.210(d)(4) together provide that a Navigator
shall not be a health insurance or stop loss insurance issuer or
receive any consideration directly or indirectly from a health
insurance issuer or issuer of stop loss insurance in connection with
the enrollment of any qualified individuals or employees of a qualified
employer in a qualified health plan or a non-qualified health plan.
Under 45 CFR 155.215(a)(2), a set of parallel conflict of interest
standards apply in FFEs (including State Partnership Exchanges) to non-
Navigator assistance personnel carrying out consumer assistance
functions under 155.205(d) and (e), and to non-Navigator assistance
personnel in a State Exchange funded through Federal Exchange
Establishment grants.\32\ For certified application counselors,
conflict of interest standards in Sec. 155.225(d)(2) require that each
staff member or volunteer seeking certification disclose to the
organization, or to the Exchange if directly certified by an Exchange,
and to potential applicants, any relationships the certified
application counselor or sponsoring agency has with QHPs or insurance
affordability programs, or other potential conflicts of interest.\33\
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\32\ For Navigators and non-Navigator assistance personnel
subject to 155.215, we have clarified in Federal guidance the scope
of these conflict of interest standards. Specifically, conflict of
interest standards do not apply to consideration received by a
provider to support specific activities, such as the provision of
medical services, if the consideration is not connected to the
enrollment of individuals or employees in QHPs (78 FR 42831). In
addition, Federal regulations do not inherently prohibit Navigators
from receiving grants and other consideration from health insurance
issuers for activities unrelated to enrollment into health plans (77
FR 18332); For example, entities such as chambers of commerce, that
include as a constituent member an association that has members of
or lobbies on behalf of the insurance industry, are not prohibited
from serving as Navigator grantees (78 FR 42835).
\33\ We have clarified in guidance that no conflict of interest
should bar an otherwise eligible individual from serving as a
certified application counselor, provided that they disclose any
conflicts of interest, including but not limited to, any
relationships with QHPs or insurance affordability programs, such as
Medicaid plans and Medicaid managed care organizations (78 FR
42842).
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A non-Federal requirement that prohibits consumer assistance
entities and individuals from receiving any
[[Page 15830]]
consideration, directly or indirectly, from a health insurance issuer
offering health insurance coverage in or outside of an Exchange, even
if not in connection with the enrollment of individuals into a QHP,
would prevent an FFE from approving as Navigators, non-Navigator
assistance personnel, or certified application counselors and
organizations certain entities, including hospitals and community
health care clinics, that would otherwise be eligible to serve in those
capacities. Further, with respect to the Navigator program, we further
note that such a requirement could bar the FFE from awarding a grant to
the most qualified applicants as required and therefore might prevent
HHS from allocating Federal money in the most appropriate manner.
As another example, if a State with an FFE effectively prohibits an
individual or organization from serving as a Navigator, non-Navigator
assistance personnel or certified application counselor in the FFE
merely because the individual or entity does not maintain its principal
place of business in that State, that State could render ineligible
individuals or entities that the FFE would deem eligible under
applicable Federal standards. Such a standard would therefore prevent
the FFE from implementing the consumer assistance programs that it is
required (or authorized) to implement, within the meaning of section
1321(d) of the Affordable Care Act. We mean to address here only non-
Federal requirements that would interpret ``principal place of
business'' as meaning that a business could have only one principal
place of business nationwide, in a single State (similar to the legal
concept that may be used in determining corporate citizenship for
purposes of establishing diversity jurisdiction in Federal court, as
required under 28 U.S.C. 1332(c)). States may however, require
organizations to register with or be incorporated in the State, which
will allow States and Exchanges to work with these organizations to
ensure that they are meeting the needs of their consumers.
Sixth and last, we propose to specify that in the FFEs, States may
not impose requirements that, as applied or as implemented in the
State, prevent the application of Federal standards applicable to
Exchanges, Navigators, non-Navigator assistance personnel subject to
Sec. 155.215, and certified application counselors and designated
organizations. For example, with respect to the Navigator program, if a
State with an FFE implemented a requirement that prevented the only
Navigator entity operating in the State from continuing to perform its
Federally required duties, then such a provision, as applied, would
prevent the Exchange from operating a Navigator program in that State
as section 1311(i)(1) of the Affordable Care Act and Sec. 155.210(a)
require. As another example, a State might impose requirements as
mandatory conditions for continuing to perform any applicable Federally
required duties, such as additional training or fingerprinting or
background checks, which, on their face, we consider as generally
permissible, but might also set a deadline for compliance that made it
impossible for any of individual or entity approved by the FFE to
comply on a timely basis, despite good faith efforts to comply. Under
such circumstances these entities and individuals could not fulfill any
of their Federally required duties, and the FFE could not operate the
consumer assistance programs that it is required (or authorized) to
implement under section 1311(i) of the Affordable Care Act, and 45 CFR
155.205, 155.210, 155.215, and 155.225.
We believe these proposals will provide additional clarity
regarding HHS's position with respect to whether a non-exhaustive list
of specific non-Federal requirements would prevent the application of
Federal requirements applicable to Navigators, non-Navigator assistance
personnel, and certified application counselors and Exchanges'
operation of such programs, within the meaning of section 1321(d) of
the Affordable Care Act. In advancing these proposals, HHS's intent is
to accord all States the comity that they are due under section 1321(d)
of the Affordable Care Act, while preserving the ability of Exchanges,
and the individuals and entities approved by Exchanges, to carry out
such programs. HHS proposes these provisions to ensure that it can
establish and operate the consumer assistance functions of an FFE
consistent with the Federal requirements set forth in section 1311(i)
of the Affordable Care Act and 45 CFR 155.205, 155.210, 155.215, and
155.225. We solicit comments on all aspects of these proposals.
This proposed rule would also amend some of the current regulatory
prohibitions on Navigator conduct. If these proposals are finalized, we
expect that they would be effective on the date the final regulations
are effective.
Section 155.210(d), among other things, currently prohibits
Navigators from being health insurance issuers or stop-loss issuers. We
propose to amend section 155.210(d) by adding a provision that would
provide that Navigators may not charge consumers for performing any
Navigator duties. Our proposal would prohibit Navigators from
requesting any form of remuneration from consumers for Navigator
duties, such as charging fees, asking for favors in exchange for
services provided, or requesting compensation from consumers for
Navigator duties. As we previously explained in preamble when existing
rules establishing a prohibition on charging fees by certified
application counselors were finalized, HHS does not believe that it
would be consistent with the purpose of the Navigator program or the
consumer assistance, education, and outreach functions under Sec.
155.205(d) and (e), for Navigators to charge consumers for their
services. (78 FR 42829) The goal of the Navigator program is to provide
consumers with information about and assistance with enrollment in
coverage through the Exchange, without cost to the consumer. That is
why the Affordable Care Act, at section 1311(i)(1), makes clear that
Navigator duties must be funded by the Exchange through grants. We
believe that having free assistance available to consumers helps
further both the goals of the Navigator program and the Exchanges
generally by supporting access for low-income individuals who might
previously have been priced out of the health insurance market. We now
propose to make this an express prohibition in our regulations, through
the addition of a new provision at Sec. 155.210(d)(5). If finalized,
this prohibition would also apply to non-Navigator assistance personnel
carrying out consumer assistance functions under Sec. Sec. 155.205(d)
and (e) in an FFE and to non-Navigator assistance personnel funded
through an Exchange Establishment Grant, since existing rules at Sec.
155.215(a)(2)(i) require that these entities must comply with the
prohibitions on Navigator conduct set forth at Sec. 155.210(d). We
think the same rationale for the prohibition generally applies in the
case of non-Navigator personnel. This proposal would also align the
Navigator and non-Navigator assistance personnel provisions with the
similar provision applicable to certified application counselors in
existing Sec. 155.225(g).
Our proposal would not prevent Navigators from charging for other,
non-Navigator-related services the organization may offer, given that
section 1311(i)(2) of the Affordable Care Act and implementing
regulations at Sec. 155.210(c)(2) allow for various commercial
entities or associations to become Navigators.\34\ We do not intend
[[Page 15831]]
to prevent a Navigator entity or individual Navigators from pursuing
the normal course of their non-Navigator-related business or
established non-Navigator-related programs. However, Navigators would
not be permitted to solicit customers for their other, non-Navigator-
related services in connection with their Navigator duties. For
example, a hospital conducting outreach and education events as a
Navigator would not be permitted to use these events as opportunities
to solicit new patients.
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\34\ Specifically, section 1311(i)(2)(B) and Sec. 155.210(c)(2)
provide that Navigator entities may include, among others, trade,
industry, and professional associations; commercial fishing industry
organizations; ranching and farming organizations; community and
consumer-focused nonprofit groups; chambers of commerce; unions,
resource partners of the Small Business Administration; and licensed
agents and brokers.
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We also propose to amend Sec. 155.210(d) to provide that Navigator
organizations would be prohibited from compensating individual
Navigators on a per-application, per-person assisted, or per-enrollment
basis. We believe that such practices create adverse incentives that
may result in enrollment errors or even improper conduct on the part of
the Navigator, such as favoring consumers who take less time to assist
than other consumers, or pressuring consumers to make quick decisions
about their health coverage, rather than ensuring that they are fully
informed about the full range of their options. Additionally, such a
compensation methodology is inconsistent with the statutory and
regulatory scheme for Navigators. We request comment on whether this
proposal would negatively affect existing Navigator programs, including
whether it would present implementation challenges for these programs
if it becomes effective before November 15, 2014.
The duties of a Navigator under section 1311(i)(3) of the
Affordable Care Act and Sec. 155.210(e) are not limited to
facilitating selection of a QHP. Navigators' duties also include
conducting public education activities; distributing fair and impartial
information about qualified health plans and advance payments of the
premium tax credit and cost-sharing reductions; providing appropriate
referrals for consumers with complaints, questions, or grievances about
their health plan, coverage, or a determination under such plan or
coverage; and providing information in a manner that is culturally and
linguistically appropriate and accessible to people with disabilities.
We believe that compensating Navigators based on the number of
successful applications or enrollments may create disincentives to
perform the full spectrum of required duties. To discourage improper
conduct and ensure that Navigators fully perform each of their required
duties, we propose to prohibit such compensation arrangements. Under
the proposal, Navigators would be permitted to pay employees on a
salaried basis, on a per-hour basis, or any other way that is not tied
to the numbers of consumers who apply or enroll successfully with the
Navigator's assistance. Because Sec. 155.210 applies to all
Navigators, including those in States with State Exchanges, this
prohibition would apply to Navigators in all States. We seek comment on
this proposal and alternatives that build in rewards for performance
without the unintended consequences previously described.
As with Navigators, we believe it is important that non-Navigator
assistance personnel authorized under Sec. 155.205(d) and (e) in FFEs
and in State Exchanges if funded through section 1311(a) Exchange
Establishment grants focus on providing full and accurate information
rather than on meeting quotas. Because Sec. 155.215(a)(2) applies the
prohibitions on certain conduct established for Navigators in Sec.
155.210(d) to non-Navigator assistance personnel in FFEs, State
Partnership Exchanges, and in State Exchanges if funded with section
1311(a) Exchange Establishment grants, these prohibitions on Navigator
conduct would also apply to these non-Navigator assistance personnel,
and would help decrease the risk of creating adverse incentives that
could potentially lead to improper conduct.
In Sec. 155.210(d)(7), we propose that Navigators be prohibited
from providing gifts to applicants or potential enrollees as an
inducement for application assistance or enrollment, including gift
cards or cash, unless they are of nominal value. We propose to define
nominal value as a cash value of $15 of less, or an item worth $15 or
less, based on the retail purchase price of the item regardless of the
actual cost. This definition would be consistent with the definition
used for nominal value in connection with prohibitions applicable to
the marketing of Medicare Advantage and Medicare Part D plans. (See 73
FR 54236) CMS proposes that it would update the definition of nominal
value in guidance as necessary to account for inflation and other
relevant factors. We seek comment on how nominal value should be
defined in this context.
We also propose in Sec. 155.210(d)(7) to prohibit Navigators from
providing any applicant or potential enrollee with promotional items,
that is, items that market or promote the products or services of a
third party. There are several reasons we are proposing these
prohibitions. First, providing cash or gifts, other than those of
nominal value, would not be an appropriate use of Navigator grant
funds, which are intended to be used to support a Navigator's outreach,
education, and application assistance activities. In addition, section
1311(d)(5)(B) of the Affordable Care Act prohibits an Exchange from
utilizing any funds intended for the administrative and operational
expenses of the Exchange, which would include the funds used to pay for
the Exchange's grants to Navigators, to pay for promotional giveaways.
Second, the provision of cash or gifts to potential applicants or
enrollees may shift the focus of a Navigator's interaction with a
potential applicant or enrollee away from its duties to provide
information and services in a fair, accurate, and impartial manner and
to facilitate selection of a QHP, in appropriate circumstances.
Offering cash or gifts to potential applicants or enrollees could also
cause some consumers to approach Navigators for reasons other than the
receipt of information and Exchange application assistance. Third,
providing to applicants or potential enrollees any promotional items
that market or promote the products or services of a third party would
be in conflict with the Navigator's duty to be fair and impartial in
its dealings with consumers, since it introduces a third party's
interests and marketing goals into the relationship between a Navigator
and the consumers they serve. We believe that the duty of a Navigator
to provide information and services in a fair, accurate and impartial
manner make it inappropriate for a Navigator to engage in activities
that give the appearance of promoting or marketing the products or
services of third party business interests when it is performing
Navigator activities and services.
We are also proposing in Sec. 155.210(d)(8) and (9) new standards
for Navigators with respect to their contacts and interaction with
consumers, and the outreach and marketing practices they use when
offering their services. In Sec. 155.210(d)(8), we propose to prohibit
Navigators from going door-to-door or using other unsolicited means of
direct contact to help consumers fill out applications or enroll in
health coverage, although these proposed rules would not prohibit a
Navigator from going door-to-door to provide consumers with educational
or outreach materials. This would include making cold calls to a
consumer to provide
[[Page 15832]]
application or enrollment assistance, without the consumer initiating
the contact. In Sec. 155.210(d)(9), we propose to prohibit Navigators
from making robocalls, or calls that use an automatic telephone dialing
system or an artificial or prerecorded voice, when initiating contact
with consumers. We believe that these standards will ensure that
Navigator practices are protective of the privacy and security
interests of the consumers they serve, and will also provide important
guidance and peace of mind to consumers, when they are faced with
questions or concerns about what to expect in their interactions with
individuals offering Exchange assistance. We seek comment about whether
any of the activities and strategies that we propose to prohibit for
Navigators are appropriate and consistent with section 1311(i) of the
Affordable Care Act.
For the same reasons, the proposed standards established in Sec.
155.210(d)(7), (8) and (9) would also apply to non-Navigator assistance
personnel in FFEs, State Partnership Exchanges, and in State Exchanges
if funded with section 1311(a) Exchange Establishment grants, through
the reference in Sec. 155.215(a)(2), which applies the prohibitions on
conduct established for Navigators in Sec. 155.210(d) to these types
of non-Navigator assistance personnel.
In addition, we propose to amend paragraph (e), which describes the
duties of a Navigator, by adding a new paragraph (e)(6) that would
require Navigators to provide applicants and enrollees seeking their
assistance with notice of the functions and responsibilities of
Navigators, to obtain written authorization from those they are
assisting, in a form determined by the Secretary, and to retain these
authorization forms. We propose that Exchanges must establish a
reasonable retention period for maintaining this authorization, and
that in FFEs the retention period would be three years, unless a
different retention period has already been provided in the
administrative requirements for CMS grant and cooperative agreement
recipients at 45 CFR 92.42 and 45 CFR 74.53 or in other applicable
Federal law. We have considered specifying a retention period for all
Exchanges, including specifying either a minimum retention period or a
specified retention period ranging from three to five years, and
solicit comments on the best approach. We also propose that consumers
would be able to revoke this authorization at any time. These
provisions would ensure that all consumers receive adequate notice of
the role and duties of a Navigator and that all consumers give their
informed consent before sharing any personally identifiable information
with the Navigator.
For the same reasons, we also propose to add a new Sec. 155.215(g)
applying these authorization provisions to non-Navigator assistance
personnel authorized under Sec. 155.205(d) and (e) in FFEs, State
Partnership Exchanges, and in State Exchanges if funded through section
1311(a) Exchange Establishment grants.
Finally, we propose to add a new Sec. 155.210(e)(7), requiring
Navigators to maintain a physical presence in their Exchange service
area, so that face-to-face assistance can be provided to applicants and
enrollees. Under this proposal, a Navigator would not be required to
have its principal place of business in the State in which Navigator
services are being provided. For the same reasons, we also propose to
add a new Sec. 155.215(g), to make the same provisions proposed for
Navigators under Sec. 155.205(e)(7), as outlined above, also
applicable to non-Navigator assistance personnel subject to Sec.
155.215.
We solicit comments on all aspects of these proposals.
c. Certified Application Counselors (Sec. 155.225)
Section 1321(a)(1) of the Affordable Care Act directs and
authorizes the Secretary to issue regulations setting standards for
meeting the requirements under title I of the Affordable Care Act, with
respect to, among other things, the establishment and operation of
Exchanges. Pursuant to this authority, the Secretary issued Sec.
155.225, which establishes the certified application counselor program
as a consumer assistance function of the Exchange separate from and in
addition to the functions described in Sec. Sec. 155.205(d) and (e),
155.210, and 155.215.
Section 155.225(b) establishes standards for the designation of a
certified application counselor organization by an Exchange. We propose
to add to these designation standards a new Sec. 155.225(b)(iii) which
would establish the requirement that certified application counselor
organizations maintain a physical presence in the Exchange service
area, so that face-to-face assistance would be provided to applicants
and enrollees. This proposed requirement would also facilitate consumer
protection efforts by a State. We note that, under this proposal, an
entity designated as a certified application counselor organization
would not be required to have its principal place of business in the
State in which certified application counselor services are being
provided by the organization.
Section 155.225(d) currently sets forth CAC certification
standards, including the successful completion of Exchange-approved
training. We propose to amend 45 CFR 155.225(d) to propose, in a new
paragraph (d)(7), that individual certified application counselors
would also be required to successfully complete Exchange-approved
recertification training and be recertified on at least an annual
basis. This proposal would ensure that certified application counselors
keep up to date with current Exchange requirements and that they remain
appropriately trained in order to best serve consumers. Under this
proposal, each Exchange would establish its own recertification
standards consistent with these requirements.
Existing Sec. 155.225(f)(2) provides that certified application
counselor organizations, or, if applicable, an Exchange that certifies
staff members or volunteers of organizations directly, must establish
procedures to ensure that consumers provide authorization before a
certified application counselor has access to the consumer's personally
identifiable information, and that the organization or application
counselor must maintain a record of the authorization. We propose to
revise this paragraph to clarify the retention period of the
authorization form. We propose that Exchanges would be required to
establish a reasonable retention period for maintaining this
authorization, and specify that in FFEs, the retention period would be
three years. We based this period on the retention period in the
current administrative requirements for CMS grant and cooperative
agreement recipients at 45 CFR 92.42 and 45 CFR 74.53. Because
certified application counselors perform similar duties to Navigators
and are subject to similar privacy and security requirements, we
believe a similar retention period should apply, even though certified
application counselors would not necessarily be HHS grantees. We have
considered specifying a retention period for all Exchanges, including
specifying either a minimum retention period or a specified retention
period ranging from three to five years, and solicit comments on the
best approach.
Under existing regulations at 45 CFR 155.225(g), certified
application counselors ``may not impose any charge on applicants for
application or other assistance related to the Exchange.'' This was
intended as a strict prohibition on the imposition of charges or fees
by
[[Page 15833]]
certified application counselors. We now propose to amend Sec.
155.225(g) to substitute ``must not'' for ``may not,'' so that there
can be no doubt about the intent of this requirement.
We also propose to amend 45 CFR 155.225(g) to reorganize and
renumber this section and to propose several additional standards for
certified application counselors. We propose that what is now Sec.
155.225(g) should be renamed as a section establishing standards
related to ``fees, consideration, solicitation and marketing.'' We
propose to redesignate amended Sec. 155.225(g) as Sec. 155.225(g)(1)
and add the new prohibitions in this amended section to new Sec. Sec.
155.225(g)(2) through (6).
In Sec. 155.225(g)(2), we propose to expressly prohibit certified
application counselors from receiving consideration, directly or
indirectly, from health insurance issuers or stop loss issuers in
connection with the enrollment of consumers in qualified health plans
(QHPs) or non-QHPs. This proposed new requirement would align with the
same standards of conduct applicable to Navigators and certain non-
Navigator assistance personnel under 45 CFR 155.210(d)(4) and
155.215(a)(2)(ii), and would apply to individual certified application
counselors as well as to the organizations that have been designated as
certified application counselor organizations. The reason for this
proposal is that, in our view, receiving commissions or other
consideration for enrollment in QHPs or non-QHPs is not consistent with
the purpose and scope of certified application counselor program
activities. Under Sec. 155.225(c), certified application counselors
must act in the best interest of consumers they assist, inform
consumers about the full range of health coverage options and
affordability programs for which they are eligible, and help to
facilitate enrollment of eligible individuals in QHPs and insurance
affordability programs. As such, neither an individual certified
application counselor nor his or her designated organization should
have any personal financial incentive to recommend a particular health
coverage option.
Under this proposed amendment, while an Exchange could certify
individuals as certified application counselors who are agents or
brokers, and a designated certified application counselor organization
similarly could certify staff or volunteers as certified application
counselors who are agents or brokers, those individuals and the
certified application counselor organization itself would not be
permitted to receive compensation from health insurance or stop loss
insurance issuers for enrolling individuals in QHPs or non-QHPs. Under
this proposed amendment, in other words, certified application
counselors and the certified application counselor designated
organizations with which they are affiliated would not be strictly
prohibited from being agents and brokers, as long as they do not
receive any consideration in connection with enrollment of a consumer
in a QHP or non-QHP. Therefore, agents and brokers who sell lines of
insurance other than health insurance or stop loss insurance (for
example, auto, life, and homeowners' policies) would not be prohibited
from receiving consideration from the sale of those other lines of
insurance while serving as a certified application counselor, provided
they disclose the relationship to the consumer receiving assistance. We
note that Sec. 155.225(d)(2) requires a certified application
counselor to disclose any relationship he or she or the sponsoring
certified application counselor agency has with QHPs or insurance
affordability programs, ``or other potential conflicts of interest,''
to the appropriate parties outlined in that provision. Consistent with
the interpretation we advanced with respect to the Navigator program,
we interpret ``other potential conflicts of interest'' in this context
to include any private or personal interest sufficient to influence, or
appear to influence, the objective exercise of a certified application
counselor's or certified application counselor organization's official
duties (see 77 FR 18330-31). In an FFE, we interpret ``other potential
conflicts of interest'' to encompass any relationship with a certified
application counselor which may have an influence on the information or
scope of assistance being provided to the consumer during the course of
the certified application counselor's assistance or any relationship
that would confer benefits or indirect financial gain that could
potentially compromise a certified application counselor's ability to
act in the best interests of the consumer.
We also propose to add a new Sec. 155.225(g)(3), which would
prohibit individual certified application counselors from being
compensated on a per-application, per-individual- assisted, or per-
enrollment basis. As with Navigators and non-Navigator assistance
personnel, we believe that in order for application and enrollment
assistance to be effective and appropriate for each consumer, per-
enrollment or per-application incentives that might encourage certified
application counselors to rush through sessions with consumers, or not
to provide them with complete information or enough time to make
complex and important health coverage decisions, should not be
permitted. Such incentives would impede a certified application
counselor's ability to act in the best in the best interests of
consumers, as they are required to do under Sec. 155.225(d)(4). This
proposal would also help streamline requirements for these three types
of assistance personnel. We seek comment on this proposal and
alternatives that build in rewards for performance without the
unintended consequences previously described.
We also propose to add a new paragraph (g)(4) to prohibit certified
application counselors from providing applicants or potential enrollees
any gifts, including gift cards or cash, unless they are of nominal
value. As we also proposed in our earlier discussion with respect to
Navigators, we propose to define nominal value consistent with the
definition used for nominal value in connection with prohibitions
applicable to the marketing of Medicare Advantage and Medicare Part D
plans. (See 73 FR 54236) Specifically, nominal value would be defined
as a cash value of $15 of less, or an item worth $15 or less, based on
the retail purchase price of the item regardless of the actual cost.
CMS proposes that it would update the definition of nominal value in
guidance as necessary to account for inflation and other relevant
factors. We seek comment on how nominal value should be defined in this
context. We also propose in this section to prohibit certified
application counselors from providing applicants and potential
enrollees with promotional items that market or promote the products or
services of a third party, in connection with, or as an inducement for
application assistance or enrollment. We are proposing this prohibition
for certified application counselors for similar reasons to those
expressed above in connection with the prohibition in the Navigator and
non-Navigator assistance programs. We are concerned that the provision
of cash or gifts to potential applicants or enrollees might interfere
with the duties of the individual providing assistance to that
applicant or potential enrollee; and in the case of a certified
application counselor, might shift the focus of a certified application
counselor's interaction with a potential applicant or enrollee away
from the certified application counselor's duties to act in the
consumer's best interest and to
[[Page 15834]]
facilitate selection of a QHP. In addition, if a certified application
counselor provides promotional items that market or promote the
products or services of a third party, this too would conflict with the
duty of a certified application counselor to act in the best interest
of the consumer, since it introduces a third party's interests and
marketing goals into the relationship between the certified application
counselor and the consumer they are assisting and may also cause
consumers to approach certified application counselors for reasons
unrelated to the receipt of information and Exchange application
assistance.
In proposed section Sec. 155.225(g)(5), we would establish a
standard for certified application counselors that would prohibit them
from soliciting consumers for application or enrollment assistance by
going door-to-door to provide this assistance, or to use other
unsolicited means of direct contact, including calling a consumer, to
provide application or enrollment assistance without the consumer
initiating the contact. We also propose in a new Sec. 155.225(g)(6) to
prohibit certified application counselors from making robocalls to
consumers, such as those that are initiated to a consumer using an
automatic telephone dialing system or an artificial or prerecorded
voice. As we explained earlier in this preamble in relation to the
parallel proposed standard for Navigators and non-Navigator assistance
personnel, we believe restrictions on door-to-door solicitation and
cold-calling would ensure that certified application counselors use
practices that are protective of the privacy and security interests of
the consumers they serve, and give those consumers the greatest peace
of mind. We also believe that these standards would provide important
guidance to consumers about what to expect in their interactions with
certified application counselors. As with the parallel proposal for
Navigators and non-Navigator assistance personnel, we clarify that this
proposal would not prohibit a certified application counselor from
going door-to-door to provide consumers with information about the
availability of application assistance services, or other educational
or outreach materials,\35\ We seek comment about whether any of the
activities and strategies that we propose to prohibit are appropriate
and consistent with Federal requirements.
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\35\ We note that certified application counselors are not
required to perform outreach activities. (see 78 FR 42826).
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We solicit public comments on all aspects of these proposals.
d. Payment of Premiums (Sec. 155.240)
There are a limited number of circumstances in which an individual
will be enrolled in a qualified health plan through the Exchange for
less than a full month. In particular, these include situations in
which a child is born, adopted, placed for adoption, or placed for
foster care, or when an individual voluntarily terminates enrollment.
Currently, there are no Federal standards for how premiums are prorated
in these limited situations. In order to provide flexibility for
Exchanges to establish a standardized methodology for partial month
premiums or rely on issuers to prorate premiums in accordance with
State law and issuer policies, we propose in Sec. 155.240(e) that the
Exchange may establish one or more standard processes for premium
calculation. Further, consistent with the methodology finalized for the
FF-SHOP at Sec. 155.705(b)(4)(ii)(B) in the 2015 Payment Notice, in
paragraph (e)(1), we propose that for the Federally-facilitated
Exchange, the premium for coverage lasting less than one month must
equal the product of the premium for one month of coverage divided by
the number of days in the month and the number of days for which
coverage is being provided in the month described in paragraph
(e)(1)(i) of this section. Adopting this policy for the Federally-
facilitated Exchange will address situations in which enrollees have
mid-month changes in enrollment. For example, the proposed policy will
also address mid-month births or adoptions and prevent these enrollees
from paying for coverage on days they were not enrolled in coverage. In
addition, the proposed policy will eliminate issues where consumers who
transition to Medicaid are charged premiums for days on which they are
enrolled in Medicaid. Although it is not a new occurrence for consumers
to transition from private health insurance to Medicaid without the
benefit of premiums that are prorated precisely to the last day of
private health insurance and the first day of Medicaid coverage, we
anticipate that the expansion of private health insurance through the
Exchange will increase the number of individuals who will be able to
move between coverage types. We believe that the proposed policy will
benefit this broadening group. This policy will also be consistent with
proposed 26 CFR 1.36B-3(d)(2), which specifies that when coverage is
terminated before the last day of the month, and the issuer reduces or
refunds a portion of the monthly premium, the premium tax credit is
adjusted using the same methodology described in this regulation for
the FF-SHOP. Aligning with the premium tax credit calculation will
provide a cohesive policy across the Federally-facilitated Exchange for
handling mid-month changes in enrollment, and will simplify the
calculation of net premiums. Finally, the proposed Federally-
facilitated Exchange policy will protect consumers and prevent them
from paying premiums for days in which they are not enrolled in
coverage. We intend to work closely with QHP issuers to implement this
provision in the Federally-facilitated Exchange as soon as is
reasonably possible.
We seek comment on this proposed amendment.
e. Privacy and Security of Personally Identifiable Information (Sec.
155.260)
We propose amending Sec. 155.260(g) to add a reference to Sec.
155.285, which is being proposed as part of this proposed rule. Section
155.285 proposes to specify the grounds for imposing civil money
penalties, the notice required to be given to a person when a civil
money penalty is assessed, and factors to be used to determine the
amount of civil money penalties assessed, as well as some aspects of
the process for imposing civil money penalties. We propose this
addition to Sec. 155.260(g) to clearly link these two regulatory
provisions and to ensure that readers fully understand how civil money
penalties will be assessed for any improper use or disclosure of
information.
f. Bases and Process for Imposing Civil Money Penalties for Provision
of False or Fraudulent Information to an Exchange or Improper Use or
Disclosure of Information (Sec. 155.285)
Section 1411 of the Affordable Care Act sets forth the procedures
for determining eligibility for Exchange participation, premium tax
credits and reduced cost-sharing, and the individual responsibility
exemptions. Section 1411(b) specifies minimum information required to
be provided by an applicant, including name, address, date of birth,
social security number (if applicable, based on the applicant's
citizenship or immigration status), and immigration status. For
applicants seeking eligibility for advance payment of the premium tax
credit or cost sharing reductions, section 1411(b) also specifies that
the applicant must provide information regarding income and family
size, and information regarding employer sponsored coverage.
[[Page 15835]]
For applicants for an exemption from the shared responsibility payment
for failure to maintain minimum essential coverage, section 1411(b)
also requires submission of information relevant to the specific
exemption sought by the applicant. In addition, section 1411(g) of the
Affordable Care Act also requires that any person who receives
information provided by an applicant under section 1411(b), whether
directly from the applicant, by another person at the request of the
applicant, or from a Federal agency may use the information only for
the purposes of, and to the extent necessary in, ensuring the efficient
operation of the Exchange. Finally, section 1411(h) specifies the civil
money penalties which can be imposed for the provision of false or
fraudulent information as well as for the improper use and disclosure
of information. In Sec. 155.285, we propose to regulate on this
statutory authority to impose civil money penalties for the provision
of false and fraudulent information in violation of section 1411(h)(1)
of the Affordable Care Act and the improper use and disclosure of
information in violation of section 1411(g) of the Affordable Care Act.
In Sec. 155.285(a), in accordance with the grounds on which
penalties may be imposed as specified in section 1411(h) of the
Affordable Care Act, we propose the circumstances in which HHS may
impose civil money penalties (CMPs) on a person if HHS determines that
the person has provided false or fraudulent information as prohibited
by section 1411(h)(1) or improperly used or disclosed information in
violation of section 1411(g). We want to ensure that any person who
does not comply with relevant statutory and regulatory provisions,
which limit the ways in which information provided by an applicant or
from a Federal agency can be used, may be appropriately penalized. HHS
may impose CMPs for three specific types of actions related to the
provision of false or fraudulent information and the improper use of
information. HHS intends to work in collaboration with States to
oversee, monitor, and enforce compliance with Sec. 155.285 in order to
protect consumers, avoid duplication of efforts, and provide consistent
enforcement practices.
Section 1411(b) specifies the information that is required to be
provided by an applicant for enrollment in a QHP offered through an
Exchange in the individual market, for premium tax credits or cost
sharing reductions, or for an exemption from the individual shared
responsibility payment based on the individual's status as a member of
an exempt religious sect or division, as an Indian, or as an individual
eligible for a hardship exemption, or based on the individual's lack of
affordable coverage or the individual's status as a taxpayer with
household income less than 100 percent of the poverty line. In Sec.
155.285(a)(1)(i), we propose that if any person (as defined at proposed
Sec. 155.285(a)(2)) fails to provide correct information under section
1411(b) of the Affordable Care Act and such failure is attributable to
negligence or disregard of any regulations of the Secretary, the person
may be subject to a CMP. For purposes of this subsection, the terms
``negligence'' and ``disregard'' have the same meaning as those in
section 6662 of the Code. Thus, we propose that ``negligence'' includes
any failure to make a reasonable attempt to provide accurate, complete,
and comprehensive information, and the term ``disregard'' includes any
careless, reckless, or intentional disregard for any rules or
regulations of the Secretary. Under proposed Sec. 155.285(a)(1)(i), if
a person fails to make a reasonable attempt to provide accurate,
complete and comprehensive information and as a result provides
incorrect information, the person may be subject to a CMP.
Second, in Sec. 155.285(a)(1)(ii), we propose that if a person
knowingly and willfully provides false or fraudulent information under
section 1411(b) of the Affordable Care Act, the person may be subject
to a CMP. Here, HHS must find that a person provided false or
fraudulent information ``knowingly and willfully.'' This provision aims
to ensure that any person who intentionally provides information
required under section 1411(b) of the Affordable Care Act that the
person knew to be false could be subject to a CMP. In addition, if
consumer assistance personnel such as an agent, broker, Navigator,
certified application counselor, or non-Navigator assistance personnel,
were to in some manner directly provide false or incorrect information
required under section 1411(b), they may also be subject to a CMP. If
consumer assistance personnel subject to Sec. 155.206 of this subpart
were to engage in this type of behavior, we propose that it should be
left to HHS' discretion to determine whether it was appropriate to
impose a CMP under this regulation, or under Sec. 155.206 of this
subpart, if applicable. We note that Sec. 155.206 would only apply to
Navigators, certified application counselors, and non-Navigator
assistance personnel in a Federally-facilitated Exchange and that
violations of Sec. 155.285 may not necessarily also constitute
violations of Sec. 155.206. In such instances where consumer
assistance personnel may be subject to a CMP under both Sec. Sec.
155.206 and 155.285, we have considered specifying that HHS may only
impose a CMP under Sec. 155.285. However, we propose that it should be
left to HHS' discretion to determine whether it would be appropriate to
impose a CMP under Sec. 155.206 or Sec. 155.285. We seek comment on
this proposal and whether any alternative approaches should be used.
Third, in Sec. 155.285(a)(1)(iii), we propose that if a person
knowingly and willfully uses or discloses information in violation of
Affordable Care Act section 1411(g), the person may be subject to a
CMP. Section 1411(g) of the Affordable Care Act specifies that any
person who receives information required to be provided by an
applicant, whether the person receives the information directly or by
another person at the request of the applicant, or receives information
from a Federal agency that has been verified as being consistent or
inconsistent with the records of that Federal agency, may use the
information only for the purposes of, and to the extent necessary in,
ensuring the efficient operation of the Exchange. We will refer to the
personally identifiable information (PII) described in the previous
sentence as ``Exchange PII'' for the purposes of this section. Section
1411(g) of the Affordable Care Act also specifies that any person who
receives Exchange PII may not disclose the information to any other
person except as provided in section 1411 of the Affordable Care Act.
Section 155.260(a)(1) and (2) implement section 1411(g) of the
Affordable Care Act by specifying that an Exchange may only use or
disclose Exchange PII to carry out the functions described at Sec.
155.200 or to carry out additional functions which the Secretary has
determined ensure the efficient operation of the Exchange and for which
the individual has provided consent for his or her information to be so
used or disclosed.
In Sec. 155.285(a)(1)(iii)(A) through (C), we propose types of
activities that would be in violation of section 1411(g) of the
Affordable Care Act. Because Sec. 155.260 further describes the
limitations on the use and disclosure of Exchange PII, we propose that
any use or disclosure of Exchange PII that violates relevant privacy
and security standards established by the Exchange pursuant to Sec.
155.260 of this subpart may constitute a violation of section 1411(g)
of the Affordable Care Act. We also propose that any other use or
disclosure that has not been determined by the Secretary to ensure the
efficient
[[Page 15836]]
operation of the Exchange be compliant with section 1411(g)(2)(A) of
the Affordable Care Act pursuant to Sec. 155.260(a), and which is not
necessary to carry out a function described in a contract with a non-
Exchange entity executed pursuant to Sec. 155.260(b)(2) of this
subpart, may constitute a violation of section 1411(g) Affordable Care
Act. More specific examples of activities that would violate section
1411(g) Affordable Care Act include a person selling lists of Exchange
PII belonging to individuals who apply for enrollment or enroll in an
Exchange qualified health plan, or a non-Exchange entity using the PII
of individuals who sought enrollment in an Exchange qualified health
plan to market products or services to those individuals. We note that
without the express, specific consent of the consumer for their PII to
be used for marketing purposes, use of Exchange PII for marketing
purposes is prohibited by section 1411(g). In addition, we note that
any person who obtains specific consent from an applicant or enrollee
to use PII for marketing purposes must clearly inform the applicant or
enrollee that the marketing activities have no relationship to or
bearing on an eligibility determination for or enrollment in the
Exchange. To the extent any person plans to obtain such consent to
market products to Exchange applicants and enrollees, the person should
be prepared to provide proof of consent upon request by the agency
during the course of the agency's normal oversight activities.
In Sec. 155.285(a)(2), we propose a definition of the term
``person.'' We propose that for purposes of this regulation, the term
``person'' should be defined to include, but should not be limited to,
all individuals; corporations; Exchanges; Medicaid and CHIP agencies;
other entities gaining access to PII submitted to an Exchange to carry
out additional functions which the Secretary has determined ensure the
efficient operation of the Exchange pursuant to 155.260(a)(1); and non-
Exchange entities as defined in Sec. 155.260(b) of this subsection,
which includes agents, brokers, Web-brokers, QHP issuers, Navigators,
certified application counselors, in-person assistors, and other third
party contractors. The term ``person'' would also include the employees
of the aforementioned entities. We propose to define the term very
broadly because there are several different types of individuals and
entities that could engage in the actions enumerated in Sec.
155.285(a)(1), and we hope to ensure that all such individuals and
entities are aware of the penalties they could incur. We seek comment
on these proposals.
In Sec. 155.285(b), we propose the factors that HHS may take into
consideration when determining the amount of CMPs to impose. We propose
in Sec. 155.285(b)(1) that HHS may take into account factors that
include, but are not limited to, the following factors: the nature and
circumstances of the conduct including the number of individual
violations; the severity of the violations; the person's history with
the Exchange, including any prior violations that would indicate
whether the violation is an isolated occurrence or represents a pattern
of behavior; the length of time during which the violation(s) occurred;
the number of individuals affected or potentially affected; and the
extent to which the person received compensation or other consideration
associated with the violation. We also propose in Sec. 155.285(b)(2)
that HHS take into account the nature and extent of the harm resulting
from the action, including the number of individuals affected; whether
the violation resulted in financial harm; whether there was harm to an
individual's reputation; whether the violation hindered or could have
hindered an individual's ability to obtain health care coverage; the
actual or potential impact of the provision of false or fraudulent
information or of the improper use or disclosure of information; and
whether any person received a more favorable eligibility determination
for enrollment in a QHP or insurance affordability program, such as
greater advance payment of the premium tax credits or cost-sharing
reduction than he or she would be eligible for if the correct
information had been provided.
In Sec. 155.285(b)(3), we implement the reasonable cause exception
of section 1411(h)(1)(A)(ii) of the Affordable Care Act pursuant to
which no penalty will be imposed under Sec. 155.285(a)(1)(i) if HHS
determines that there was a reasonable cause for the failure to provide
correct information required on an Exchange application and that the
person acted in good faith. We feel that this reasonable cause
exception is very important to ensure that no CMP may be imposed for a
situation in which a person was acting in good faith.
In Sec. 155.285(c), we propose maximum penalties for each
different type of violation, in accordance with the statutory
limitations set forth in section 1411(h) of the Affordable Care Act.
Section 155.285(c)(1) addresses maximum penalties for provision of
incorrect information, where such failure is attributable to negligence
or disregard of any rules or regulations of the Secretary, and for
knowing and willful provision of false or fraudulent information in
violation of section 1411(h) of the Affordable Care Act. We propose
that the maximum penalty may be imposed on a per application basis, as
defined at proposed Sec. 155.285(c)(1)(iii), during a single ``plan
year.'' We propose to use the definition for ``plan year'' at Sec.
155.20, where a ``plan year'' means a consecutive 12 month period
during which a health plan provides coverage for health benefits and
which may be a calendar year or otherwise. In Sec. 155.285(c)(1)(i),
we propose that any person who fails to provide correct information as
specified in Sec. 155.285(a)(1)(i) may be subject to a maximum CMP, as
specified in section 1411(h)(1)(A)(i) of the Affordable Care Act, for
each ``application'' on which the person fails to provide correct
information. In Sec. 155.285(c)(1)(ii), we propose that any person who
knowingly and willfully provides false information as specified in
Sec. 155.285(a)(1)(ii) may be subject to a maximum CMP, as specified
in section 1411(h)(1)(A)(i) of the Affordable Care Act, for each
application on which the person knowingly and willfully provides false
information. Since we are proposing that we would impose a penalty on a
plan year basis, if a person were to elect to use the same information
which he or she entered on an initial application for the subsequent
plan year, and the person had knowingly and willfully entered false
information on an application as described in Sec. 155.285(c)(1)(ii),
the person may be subject to two CMPs, each up to the maximum CMP
specified in section 1411(h)(1)(A)(i) of the Affordable Care Act, based
on the provision of false information for two plan years.
In Sec. 155.285(c)(1)(iii), we propose that for the purposes of
this subsection, an ``application'' is defined as a submission of
information whether submitted through an online portal, over the
telephone through a call center, or through a paper submission process.
This submission of information is provided in relation to any of the
following: An eligibility determination; an eligibility redetermination
based on a change in an individual's circumstances; or an annual
eligibility redetermination for either enrollment in a qualified health
plan, for premium tax credits or cost sharing reductions, or for an
exemption from the individual shared responsibility payment. By
proposing this definition of application, we intend for each submission
of information, regardless of the means of
[[Page 15837]]
submission, to be considered a distinct application. For example, where
a person submits an initial application for enrollment in a QHP, and
later updates his or her information to reflect a change in
circumstance, we propose that this person would have submitted two
applications. We anticipate that there may be situations where a person
submits a false piece of information on an initial application for
coverage, and this false information could be seen as re-submitted on a
second application in the same plan year. We propose to provide HHS
flexibility in such situations as that described above so that HHS may,
in its discretion, and depending on the particular facts of the case,
determine the number of incorrect pieces of information submitted, and
therefore determine the appropriate penalty for this situation. We
solicit comment on this proposal as well as on alternate methods
through which HHS could determine the appropriate amount of penalties
to impose.
In Sec. 155.285(c)(2), we propose that any person who knowingly or
willfully uses or discloses information as specified in Sec.
155.285(a)(1)(iii) may be subject to a CMP. We propose in Sec.
155.285(c)(2)(i) that a person may be subject to a maximum CMP, as
specified in section 1411(h)(2) of the Affordable Care Act, for each
use or disclosure described in paragraph (a)(1)(iii) of this section,
per use or disclosure. We also propose to define, in Sec.
155.285(d)(2)(ii) that a use or disclosure includes one separate use or
disclosure of a single individual's PII that the person against whom a
civil money penalty may be imposed has made. For example, if an agent
were to sell a list of 100 consumers' names and other identifiable
information to another entity, the proposed definition of a use or
disclosure would mean that HHS could impose a total of 100 CMPs, each
with a maximum penalty of the amount specified in section1411(h)(2) of
the Affordable Care Act because the agent had disclosed the PII of 100
individuals. In Sec. 155.285(c)(3), we also propose that these
penalties may be imposed in addition to any other penalties that may be
prescribed by law.
In Sec. 155.285(d), we propose standards for a notice of intent to
issue a CMP that HHS must send to the person against whom the CMP is
being imposed. We propose that the written notice will be either hand
delivered, sent by certified mail, return receipt requested, or sent by
overnight delivery service with signature upon delivery required. In
Sec. 155.285(d)(1)(i)-(viii), we propose eight elements that must be
included in the notice. The elements which must be included are as
follows: (1) A description of the findings of fact regarding the
violations with respect to which the CMP is proposed; (2) the basis and
reasons why the findings of fact subject the person to a penalty; (3)
any circumstances described in Sec. 155.285(c) that were considered in
determining the amount of the proposed penalty; (4) the amount of the
proposed penalty; (5) an explanation of the person's right to a hearing
under any applicable administrative hearing process; (6) a statement
that the failure to request a hearing within 60 calendar days after the
date of the notice permits the assessment of the proposed penalty; and
(7) information explaining how to file a request for a hearing and the
address to which the hearing request must be sent. We propose that the
person may request a hearing before an ALJ on the proposed penalty by
filing a request pursuant to the procedure that will be outlined in the
notice of intent to issue a penalty that the person receives.
In Sec. 155.285(e), we propose the consequences for a person who
fails to request a hearing in a timely manner. We propose that HHS may
assess the proposed CMP 60 calendar days after the date of issuance
printed on the notice of intent to issue a CMP. In Sec. 155.285(e)(1),
we propose that HHS will notify the person in writing of any penalty
that has been imposed, the means by which the person can satisfy the
penalty, and the date on which the penalty is due. We propose in Sec.
155.285(e)(2) that a person has no right to appeal a penalty with
respect to which the person has not timely requested a hearing. We
believe 60 days is a sufficient period for a person to request a
hearing. We seek comment on these proposals.
In Sec. 155.285(f), we propose to use the existing appeals
framework in regulation at 45 CFR Part 150, Subpart D. We propose to
exclude Sec. Sec. 150.461, 150.463, and 150.465 based on their lack of
applicability to Sec. 155.285. In Sec. 155.285(g), we propose that
CMS and OIG will share enforcement authority to impose the CMPs in
Sec. 155.285. In Sec. 155.285(g)(1), we propose that CMS may impose
CMPs for any of the violations at Sec. 155.285(a). In Sec.
155.285(g)(2), we propose that OIG may impose CMPs for violations
specified at Sec. 155.285(a)(1)(ii) and (iii) in place of imposition
of penalties by CMS. We believe OIG has the investigative capabilities
which would be necessary to determine whether a person performed an
action knowingly and willfully, a finding which would be required
before imposing a CMP for the violations specified at Sec.
155.285(a)(1)(ii) and (iii). In light of our proposal to allow OIG to
impose CMPs for violations specified at Sec. 155.285(a)(1)(ii) and
(iii), we anticipate that OIG would amend its regulations at part 1003
of Chapter V of title 42 to encompass the standards set forth in this
section. We seek comment on the proposed use of the regulatory
framework for appeals at 45 CFR Part 150, Subpart D and on the question
of whether any other regulatory framework used by HHS for appeals
presents a more appropriate framework.
In Sec. 155.285(h), we propose a settlement authority provision to
ensure CMS is able to settle any issue or case described in Sec.
155.285(a) if necessary. Finally, in Sec. 155.285(i), we propose a six
year statute of limitations, beginning from the date on which the
violation occurred, within which HHS may impose a CMP against a person.
We seek comment on the proposed 6 year statute of limitations.
3. Subpart D--Exchange Functions in the Individual Market: Eligibility
Determinations for Exchange Participation and Insurance Affordability
Programs
a. Verification of Eligibility for Minimum Essential Coverage Other
Than Through an Eligible Employer-Sponsored Plan (Sec. 155.320)
In Sec. 155.320(d)(4), we established an option under which a
State Exchange could rely on HHS to conduct verifications of enrollment
in an eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible employer-sponsored plan for purposes of
eligibility for advance payments of the premium tax credit. This option
was made available for eligibility determinations that are effective on
or after January 1, 2015. Under this option, a State Exchange would
need to develop an interface through which to transfer information to
HHS, HHS would need to develop a way to receive and process the
information, check data sources, potentially communicate with
consumers, and then return information to the State Exchange, and the
State Exchange would need to modify systems to integrate this response
into what should otherwise be a near-real-time eligibility process.
Responsibilities for customer service would likely be split across the
State Exchange and HHS, which would be difficult to coordinate and
increase administrative costs.
Accordingly, we have determined that the benefit gained by having
HHS provide this function is far outweighed
[[Page 15838]]
by the information technology development and administrative and
consumer complexity that would be introduced for a State through this
approach. As such, we propose to strike paragraph (d)(4). We remain
committed to working with State Exchanges to develop effective
solutions for verifying enrollment in an eligible employer-sponsored
plan and eligibility for qualifying coverage in an eligible employer-
sponsored plan, and will work to make any additional electronic data
sources that are accessible to HHS equally available to State
Exchanges. We note that this proposed modification does not change the
substantive rules regarding the verification of enrollment in an
eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible employer-sponsored plan. Therefore, the change
does not affect program integrity.
b. Eligibility Redetermination During a Benefit Year (Sec. 155.330)
We propose a technical correction in paragraph (d)(2)(ii) to remove
the reference to paragraph (e)(3) of this section. In the final rule
titled, ``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'', 78 FR 32319, we previously removed
paragraph (e)(3) from this section. As such, we now clarify that
paragraph (d)(2)(ii) should only refer to the standards specified in
paragraph (e)(2) of this section.
4. Subpart E--Exchange Functions in the Individual Market: Enrollment
in Qualified Health Plans
a. Enrollment of Qualified Individuals in a QHP (Sec. 155.400)
In Sec. 155.400, we propose to add paragraph (e). In this
paragraph, we propose to establish that the Exchange would provide
instructions to issuers regarding payment of the first month's premium
for enrollments. Additionally, in Sec. 156.265 we propose to establish
a requirement for issuers in the Federally-facilitated Exchanges
regarding payment due dates to collect premiums no later than the day
before the coverage effective date. Our intention is to give the
Exchange the flexibility to establish policy and process rules
regarding premium payment.
We also propose to add paragraph (f), which would authorize
Exchanges to provide requirements to QHP issuers regarding the
instructions for processing electronic enrollment-related transactions.
b. Initial and Annual Open Enrollment Periods (Sec. 155.410)
In 45 CFR 155.410(d), we specify that starting in 2014, the
Exchange must provide a written annual open enrollment notification to
each enrollee no earlier than September 1, and no later than September
30. In 45 CFR 155.335(d), we specify that notice of annual
redetermination for coverage effective January 1, 2015 be provided as a
single, consolidated notice with the notice specified in 45 CFR
155.410(d). In the 2015 Payment Notice, we amended 45 CFR 155.410(e) to
specify that for the benefit year beginning on January 1, 2015, the
annual open enrollment period begins on November 15, 2014. Accordingly,
we believe that it is appropriate to modify the timing of the notice of
annual open enrollment and annual redetermination. Two options we could
consider for this notice include, but are not limited to: (1) Shifting
the period during which the notice would be sent by a month, so that
the notice would be sent no earlier than October 1, and no later than
October 31; and (2) shifting the period during which the notice would
be sent by a month and lengthening this period so that the notice would
be sent no earlier than October 1, and no later than November 15,
provided that electronic notices are available for any consumer who
contacts the Exchange on November 15. We solicit comment on which of
these options we should implement, or if we should implement another
option.
c. Special Enrollment Periods (Sec. 155.420)
In 45 CFR 155.420, we set forth provisions for special enrollment
periods. We now propose amending Sec. 155.420(b)(2)(ii), (d)(1),
(d)(6)(iii) and (e), which pertain to the special enrollment period for
loss of coverage; Sec. 155.420(b)(2)(i) and (iii), which pertain to
effective dates for certain special enrollment periods; and Sec.
155.420(c), to address the length of the special enrollment periods.
In paragraph (b)(2)(i), we propose to provide flexibility for
coverage effective dates in the case of birth, adoption, placement for
adoption, or placement in foster care. We continue to require the
Exchange to 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, but we allow Exchanges to permit
the qualified individual or enrollee to elect a later coverage
effective date. If the Exchange permits the qualified individual or
enrollee to elect a later coverage effective date, the Exchange must
ensure coverage is effective on the date elected by the qualified
individual or enrollee. We are considering establishing parameters for
the dates that may be chosen by the qualified individual or enrollee.
In Sec. 147.104(b)(2), we specified that, ``a health insurance
issuer in the individual market must provide, with respect to
individuals enrolled in non-calendar year individual health insurance
policies, a limited open enrollment period . . .'' Accordingly, in
order to align Exchange regulations with those of the broader insurance
market, in paragraph (d)(1), we propose that the Exchange permit
qualified individuals and their dependents to enroll in or change from
one QHP to another if they are enrolled in a non-calendar year
individual health insurance policy in 2014 described in Sec.
147.104(b)(2), even if such non-calendar year policies are renewing.
Thus, consumers whose individual health insurance policies that renew
outside the Exchange open enrollment period have an opportunity to
enroll in an Exchange, just as they would if their policies renewed
during the Exchange open enrollment period. Without this addition,
consumers with individual health insurance policies renewing outside
the Exchange open enrollment period would be required to renew such
policies, and wait to terminate the policies during the Exchange open
enrollment period, should they wish to enroll in the Exchange, thus
disadvantaging these consumers as compared to consumers enrolled in
calendar year individual market policies.
In 26 CFR 1.5000A-2(b)(1)(ii)(C), the Secretary of the Treasury
specified that coverage of pregnancy-related services under section
1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act
(42 U.S.C. 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX)) was not minimum
essential coverage. In order to ensure that women losing eligibility
for coverage of pregnancy-related services as described above are not
left without an option to enroll in a QHP after the conclusion of
Medicaid eligibility, in paragraph (d)(1), we propose that the Exchange
permit qualified individuals and their dependents to enroll in a new
QHP if they lose eligibility for such pregnancy-related services. We
note that HHS may designate certain specific pregnancy-related programs
to be minimum essential coverage under section 5000A(f)(1)(E) of the
Affordable Care Act, though we propose to require this special
enrollment period, regardless. We solicit comments
[[Page 15839]]
regarding whether there are other situations in which an individual
loses coverage that is not defined as minimum essential coverage, such
as AmeriCorps coverage, and should be provided with a special
enrollment period.
We propose to add to paragraph (c) to specify that the Exchange
must permit qualified individuals and their dependents to access the
special enrollment periods described in paragraph (d)(1) for up to 60
days prior to the end of the qualified individual's or his or her
dependent's existing coverage. This is consistent with existing
regulations in paragraph (d)(6)(iii) that are specific to an individual
who is enrolled in an eligible employer-sponsored plan who 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. To
improve the clarity and structure of this rule, we propose to move the
language in paragraph (d)(6)(iii) regarding the 60 days prior access to
the SEP to paragraph (c). The proposed change, to paragraph (d)(1) that
would expand the ability to report a change in advance to all
individuals who are described in paragraph (d)(1) is designed to allow
an individual who is losing eligibility for coverage outside the
Exchange to transition to coverage offered through an Exchange without
a gap in coverage, but with protections to ensure that advance payments
of the premium tax credit are not provided in advance of the loss of
eligibility for minimum essential coverage outside the Exchange.
Accordingly, we note that individuals are not eligible for advance
payments of the premium tax credit until they are no longer enrolled in
minimum essential coverage outside the Exchange. Lastly, we propose to
make conforming changes to paragraphs (b)(2)(ii) and (e) to align with
the changes in terminology proposed in paragraph (d)(1).
In paragraphs (d)(4), (d)(5), (d)(9) and (d)(10), we provide
special enrollment periods for errors, contract violations, exceptional
circumstances and misconduct. Existing paragraph (b)(2)(iii) specifies
that for a plan selection made during one of the special enrollment
periods under paragraphs (d)(4), (d)(5), and (d)(9), coverage must be
effective on an appropriate date based on the circumstances of the
special enrollment period, in accordance with guidelines issued by HHS,
and provides two options for that effective date. We propose to add
special enrollment periods triggered under paragraph (d)(10) to those
special enrollment periods for which these special coverage effective
dates are available. In order to ensure that the Exchange has
sufficient flexibility with which to address the types of scenarios
that may trigger these special enrollment periods, we propose to amend
paragraph (b)(2)(iii) to remove the restriction to these two options.
The resulting regulatory text would allow the Exchange to set an
effective date based on what is appropriate to the circumstances, in
accordance with any guidelines issued by HHS. Similarly, in order to
ensure that the Exchange sets the length of these same special
enrollment periods to be appropriate to the circumstances of the
specific enrollment period, we propose to modify paragraph (c) to
specify that the Exchange may define the length of these special
enrollment periods as appropriate based on the circumstances of the
special enrollment period, in accordance with any guidelines issued by
HHS. We believe that this flexibility is important to ensure that the
special enrollment periods can be implemented as intended.
Section 155.420(e) clarifies what qualifies as loss of coverage for
purposes of the special enrollment period described in paragraph
(d)(1). We propose to modify this paragraph to clarify that voluntary
termination does not qualify as loss of coverage for purposes of a
special enrollment period, since the intent of this special enrollment
period is to ensure that an individual who is losing coverage can
transition to the Exchange without interruption, and not to allow an
individual to switch from another form of coverage to the Exchange
during the year when the other form of coverage remains available and
he or she does not qualify for another special enrollment period
described in this section. We solicit comments regarding this
clarification.
d. Termination of Coverage (Sec. 155.430)
We propose to add paragraph (e) to Sec. 155.430 to establish the
difference between a termination and a cancellation and establish the
significance of a reinstatement action in the context of QHP coverage
offered through an Exchange. Specifically, we propose to specify that a
cancellation is a specific type of termination action taken either
prior to or after the effective date of coverage that ends a qualified
individual's coverage on or before the effective date, thus rendering
coverage as never effective. In contrast, a termination is an action
taken after the effective date of coverage that ends an enrollee's
coverage effective on a date after the coverage effective date. In a
cancellation, the effect of the QHP's action would be that a qualified
individual never receives coverage from the QHP, whereas in a
termination the QHP covers the enrollee for some period of time and
would be liable for covered services that the enrollee received during
the time period between the coverage effective date and the termination
date, under the terms of the coverage. A reinstatement action is a
correction of an erroneous termination or cancellation action resulting
in restoration of an enrollment with no break in coverage.
In addition to establishing the difference between cancellations
and terminations, we also propose that an Exchange may establish
operational standards for QHP issuers for implementing terminations,
cancellations, and reinstatements. Enrollment systems for both SBEs and
the FFE continue to evolve, and we believe that the Exchange's ability
to issue operational instructions will enable both the Exchange and the
issuer community to respond more effectively to changing systems and
changing processes. We believe the effectiveness of this approach has
been demonstrated in other programs administered by CMS, specifically
the Medicare Advantage and Medicare Part D programs.
Further, we are proposing to clarify in paragraph (d)(6) that the
termination effective date being the day before the effective date of
coverage in the new QHP would also apply in cases of retroactive
enrollments. This could occur when a consumer is granted a special
enrollment period to change QHPs with a retroactive coverage effective
date under 155.420(b)(2)(iii). For coverage that is terminated
retroactively, CMS will adjust any applicable payments to the original
QHP issuer based on the retroactive termination date, in order to
recoup any advance payments of the premium tax credit and cost-sharing
reductions made to the former issuer for the enrollee. The Exchange
would be required to ensure that the former issuer refunds or credits
any premium paid to the issuer by the enrollee, reversing claim
payments, and ensuring the provision of refunds for out-of-pocket
payments made by or for the enrollee for covered benefits and services
incurred, during the retroactive coverage period. We seek comment on
whether to add a specific requirement to this effect on issuers in Part
156.
Conversely, in the case of a retroactive coverage date, CMS will
provide the gaining issuer any applicable advance payments of the
premium tax credit and
[[Page 15840]]
cost-sharing reductions based on the retroactive coverage effective
date. Cost-sharing reduction reconciliation will occur for all cost-
sharing reductions provided beginning with the retroactive coverage
date. The gaining issuer would collect the enrollee's portion of the
premium for all months of coverage and will be required to adjudicate
the enrollee's claims incurred during the retroactive period, and
provide any applicable cost-sharing reductions.
5. Subpart F--Appeals of Eligibility Determinations for Exchange
Participation and Insurance Affordability Programs
a. General Eligibility Appeals Requirements (Sec. 155.505)
In Sec. 155.505, we propose a technical correction to paragraph
(b)(4) by removing ``; and'' at the end of the paragraph and adding a
period in its place.
b. Dismissals (Sec. 155.530)
In Sec. 155.530, we propose to amend paragraph (a)(1) to provide
an additional method for appellants to withdraw appeal requests. The
existing provision requires an appellant who wishes to withdraw his or
her appeal request to do so in writing (hard copy or electronic). We
are proposing to include the alternative for an appellant to withdraw
his or her appeal by telephone, if the appeals entity is capable of
accepting telephonic withdrawals. In paragraphs (a)(1)(i)(A) and (B),
we propose the requirements for providing a telephonic withdrawal
process. Specifically, we propose that the appeals entity must record
in full the appellant's statement and telephonic signature made under
penalty of perjury, and provide a written (in hard copy or
electronically) confirmation to the appellant documenting the
telephonic interaction. This written confirmation can be captured in
the dismissal notice required in the case of a withdrawal under Sec.
155.530(b). We note that a telephonic signature is a verbal
acknowledgement in place of a written signature.
The intent of this proposed amendment is to provide a more
efficient and convenient method for appellants and appeals entities to
conclude an appeal at the request of the appellant. For example, under
the current rules, an appeals entity must keep an appeal open and
proceed to hearing following an informal resolution in every case where
the appellant has not communicated his or her wish to withdraw the
appeal in writing, even if the appellant is satisfied with the informal
resolution decision. Because we anticipate that many appellants will
not take the step of withdrawing their appeal requests in writing in
this scenario, we believe the proposed amendment will provide
appellants an easier process through which they can indicate their wish
to end the appeals process. In addition, we believe the proposed
amendment will also benefit appeals entities by reducing administrative
burden, such as the requirement to convene unnecessary hearings
described in the example above. The telephonic signature process
provides a verifiable record of the appellant's intention to withdraw
the appeal and end the appeals process, including where the appellant
is satisfied with a result he or she has obtained without fully
exhausting the appeals process.
We request comments on this proposed amendment, including the
proposed requirements for accepting telephonic withdrawals. We also
note that, although the proposed amendments to this provision will put
the Exchange rules for withdrawal of an appeal request out of alignment
with the Medicaid fair hearing rules, and we seek comment specifically
on the impacts of this proposed change. Finally, we note that this
proposed amendment also impacts withdrawal procedures for an employer
appeal through the cross-reference in Sec. 155.555(f)(1), which
currently requires withdrawals in writing.
c. Employer Appeals Process (Sec. 155.555)
We propose to amend Sec. 155.555 by redesignating paragraphs
(d)(1) through (d)(4) to more clearly delineate between the
requirements associated with valid appeal requests versus invalid
appeal requests. We note that under this proposed redesignation,
paragraph (d)(4) would become new paragraph (d)(2), stating that upon
receipt of an invalid appeal request, the appeals entity must promptly
and without undue delay send written notice to the employer that the
appeal request is not valid because it fails to meet the requirements
of this section. New paragraph (d)(2) would also provide introductory
language for the requirements provided in paragraphs (d)(2)(i) through
(iv). The result of this proposed revisions would be to separate the
requirements for valid appeal requests in redesignated paragraph (d)(1)
and the requirements for invalid appeal requests in new paragraph
(d)(2).
6. Subpart G--Exchange Functions in the Individual Market: Eligibility
Determinations for Exemptions
a. Required Contribution Percentage
Under section 5000A of the Code, an individual must maintain
minimum essential coverage for each month, qualify for an exemption, or
make a shared responsibility payment. Sections 5000A(d) and (e) provide
for nine categories of exemptions, and authorize the Secretary to
determine individuals' eligibility for some of the exemptions,
including the hardship exemption. Sections 1.5000A-3(a) through (h) of
26 CFR enumerate the circumstances in which an individual may be exempt
from the shared responsibility payment. These grounds for exemption
include: (1) Under 26 CFR 1.5000A-3(e), the individual lacks affordable
coverage because the individual's annualized required contribution for
minimum essential coverage for the month exceeds the required
contribution percentage of the individual's household income; (2) the
individual has in effect a hardship exemption certification described
in 26 CFR 1.5000A-3(h) and issued by an Exchange, as described in 26
CFR 1.5000A-3(h) and, based on the individual's projected household
income, will have no affordable coverage; and (3) the individual and
one or more employed members of his or her family has been determined
eligible for affordable self-only employer-sponsored coverage through
their respective employers, but the aggregate cost of employer-
sponsored coverage for all the employed members of the family exceeds 8
percent of household income for that calendar year, as described in 45
CFR 155.605(g)(5). Determining eligibility for these exemptions
requires comparison between the individual's share of the costs for
obtaining minimum essential coverage and a certain percentage of the
individual's household income, actual or projected, for the taxable
year. Under section 5000A(e)(1)(A) of the Code, the percentage of the
individual's household income is 8 percent. Section 5000A(e)(1)(D) of
the Code and 26 CFR 1.5000A-3(e)(2)(ii) further provide that, for plan
years beginning in any calendar year after 2014, the percentage is
determined by the Secretary to reflect the excess of the rate of
premium growth between the preceding calendar year and 2013 over the
rate of income growth for the period.
Below, we outline and request comments on issues related to various
methodologies we are considering for determining the excess of the rate
of
[[Page 15841]]
premium growth over the rate of income growth. We are considering
publishing the excess of the rate of premium growth over the rate of
income growth for calendar years after 2015 in the annual HHS notice of
benefit and payment parameters. We are also considering modifying Sec.
155.605(g)(5), which currently sets the required contribution
percentage at 8 percent, so that the required contribution percentage
for this exemption in future years reflects the required contribution
percentage for the applicable calendar year.
Methodology for Determining the Excess of Rate of Premium Growth Over
Rate of Income Growth
As one possibility, we are considering establishing the rate of
premium growth over the rate of income growth for a particular calendar
year as the quotient of (x) one plus the rate of premium growth between
the preceding calendar year and 2013, carried out to ten significant
digits, over (y) one plus the rate of income growth between the
preceding calendar year and 2013, carried out to ten significant
digits. (To avoid magnifying rounding errors, any ratio of this sort
would also be carried out to ten significant digits.) This would be
multiplied by the required contribution percentage for 2014, for ease
of application, and the result would be rounded to the nearest
hundredth of a percent to yield the required contribution percentage
for the calendar year. We note that this methodology would lead to a
reduction in the required contribution percentage if the ratio of
premium growth to income growth is less than one. Allowing for such a
possibility would help ensure that changes in the required contribution
standard are proportional to changes in the ratio of premiums over
income observed in the private market as a whole. In contrast, we are
also considering constraining this ratio, the excess of premium growth
over income growth, to be greater than or equal to one. In addition, as
discussed in further detail below, we are considering constraining the
rate of premium growth and/or the rate of income growth to be equal to
or greater than zero in any given year, and seek comment of the impact
of these constraints on the excess of the rate of premium growth over
the rate of income growth. We welcome comment on approaches for
determining the excess of the rate of premium growth over the rate of
income growth. In particular, we seek comment on whether the excess of
the rate of premium growth over income growth should be calculated
based on the difference between the growth rates, the ratio of the
growth rates, or through other methods, and whether the result should
be subject to other adjustments.
Premium Growth: We are considering setting the rate of premium
growth for a calendar year to be the premium adjustment percentage for
the year. We provided in the 2015 Payment Notice that the premium
adjustment percentage, described at 45 CFR 156.130(e), will be
published each year in the HHS notice of benefit and payment
parameters, and will be used to adjust certain cost-sharing parameters
established by the Affordable Care Act. As discussed in the 2015
Payment Notice, the premium adjustment percentage is calculated based
on projections of average per enrollee employer-sponsored insurance
premiums from the National Health Expenditure Accounts (NHEA), which
are calculated by the CMS Office of the Actuary. After the initial
years of implementation of market reforms, once the premium trend is
more stable, we may propose to change the methodology for calculating
the premium adjustment percentage. For 2015, the premium adjustment
percentage is 4.213431463 percent. We note that incorporating the
premium adjustment percentage into the methodology for determining the
required contribution percentage will ensure that adjustments for
premium growth are made in a consistent manner across programs
established by the Affordable Care Act. We welcome comment on whether
we should use the premium adjustment percentage as a measure of premium
growth for the purpose of calculating the contribution percentage
index. We also seek comment on whether adjustments, such as ceilings or
floors, should be made to that index. For example, we are also
considering constraining the rate of premium growth to be equal to or
greater than zero in any given year. We note the language of section
5000A(e)(1)(D) of the Code could be read to support such an
interpretation. That section uses the term ``premium growth,'' which
could be read to mean that the statute envisions an adjustment of the
required contribution percentage to only incorporate an increase in
premiums. However, for purposes of this calculation, we seek comment on
whether growth should be interpreted to refer to both positive and
negative growth. We also seek comment on whether other data sources or
methods should be used, such as alternative NHEA data sources, premium
data from the Federal Employee Health Benefits Program, or any of the
data sources discussed in connection with our proposal for the premium
adjustment percentage index in the proposed 2015 Payment Notice.
Income Growth: We are contemplating calculating the rate of income
growth for a calendar year as the percentage by which the per capita
GDP for the preceding calendar year exceeds the per capita GDP for
2013, carried out to ten significant digits. In alignment with the
premium adjustment percentage, we are considering using the projections
of per capita GDP used for the NHEA.\36\ If we were to use the
projection of per capita GDP used for the NHEA as a measure of income
growth, the rate of income growth for 2015 would be 3.608458790
percent. We note that GDP is a commonly used measure of income growth,
but we are also considering other measures of income, such as indices
of wages and salaries, and measures of personal income. We welcome
comment on our proposed method for calculating the rate of income
growth as well as alternative sources of income data that we should
consider. In particular, we request comment on whether adjustments
should be made to our data source or methodology, such as ceilings or
floors. For example, similar to our discussion of ``premium growth''
above, we note that section 5000A(e)(1)(D) of the Code refers to ``the
rate of income growth.'' Again, seek comment on whether growth should
be interpreted to refer to both positive and negative growth. We also
seek comment on whether we should seek to measure growth in GDP per
person under the age of 65 or per worker, or growth in some other form
of income index only for persons under the age of 65 or per worker,
which may align more closely with certain measures of premium growth.
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\36\ See Table 1 in https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2012.pdf.
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We seek comment on all aspects of these potential approaches.
b. Options for Conducting Eligibility Determinations for Exemptions
(Sec. 155.625)
In Sec. 155.625, we established an option under which a State
Exchange could adopt an eligibility determination for an exemption from
the shared responsibility payment that was made by HHS, provided that
certain conditions were met. Section 1311(d)(4)(H) of the Affordable
Care Act specifies that one of the minimum functions of an Exchange is
to, ``. . . grant a certification attesting that . . .
[[Page 15842]]
an individual is exempt . . .'' Accordingly, Sec. 155.625(b)(2)
specified that under this option, effective October 15, 2014, the
Exchange would need to accept the exemption application, transmit it
securely to HHS, receive the result, and notify the consumer. This
process introduces significant information technology development and
administrative burden into a process that could otherwise be executed
at a single entity. In particular, such an arrangement would require a
split of customer service responsibilities, which could make it very
difficult for consumers to navigate the process. It also creates
challenges for exemptions that involve information that can only be
obtained through the eligibility process for insurance affordability
programs, like the cost of the lowest-cost bronze plan net of advance
payments of the premium tax credit, which is a component of one of the
hardship exemptions described in this subpart, and is only available
through a State Exchange.
Accordingly, we propose to revise Sec. 155.625 to remove the
option for a State Exchange to adopt an eligibility determination for
an exemption from the shared responsibility payment made by HHS for
applications submitted on or after November 15, 2014 and, for
applications submitted before November 15, 2014, to retain the
conditions currently imposed for adopting an eligibility determination
for an exemption from the shared responsibility payment that was made
by HHS under paragraph (b)(1). Under this proposal, HHS would continue
to provide support in this area for applications up until that date.
HHS has developed and released a set of model paper applications that
can be adopted by State Exchanges, and is committed to providing
technical assistance to assist State Exchanges in developing the
capability to handle the minimum function of granting certificates of
exemption.
7. Subpart H--Exchange Functions: Small Business Health Options Program
a. Functions of a SHOP (Sec. 155.705) Section 155.705(b)(2) and
(3) currently provide that, for plan years beginning on or after
January 1, 2015, all SHOPs must make available to qualified employers
the option of selecting an actuarial value level of coverage as
described in section 1302(d)(1) of the Affordable Care Act and making
all qualified health plans at that level available to qualified
employees (``employee choice''). Based on communications with issuers
and State insurance commissioners, HHS has become concerned that, in
some circumstances, implementing employee choice in 2015 might
significantly disrupt some small group markets, and might therefore
have a negative effect on the ability of small business owners to
access coverage. HHS is specifically concerned that in certain
circumstances, employee choice might lead to sicker people enrolling in
disproportionate numbers in certain plans, which could have the effect
of discouraging issuers from participating in the SHOP or causing
adverse selection in the market that cannot be fully addressed by the
single risk pool provisions of the statute or the premium stabilization
programs. We have also heard concerns from issuers and State insurance
commissioners that requiring employee choice might reduce issuer
participation, leading to minimal value to consumers when there is not
broad participation among issuers in the SHOP. At the same time, HHS
does not anticipate that these conditions will apply in most markets,
and HHS is continuing to work toward implementing employee choice in
all SHOPs, because in the long run employee choice will bring
significant benefits to small business owners and their employees. Not
implementing employee choice may also disrupt the implementation
efforts that issuers, States, Exchanges, and other stakeholders have
already undertaken.
To address these concerns, we propose to amend Sec. 155.705(b)(2)
and (3) to provide for a one year transition policy under which a SHOP
would be permitted to not implement employee choice in 2015 under
specific circumstances: (1) If employee choice would result in
significant adverse selection in the State's small group market that
could not be fully remediated by the single risk pool or premium
stabilization programs; or (2) if there is an insufficient number of
issuers offering qualified health plans or qualified stand-alone dental
plans to allow for meaningful plan choice among qualified health plans
or qualified stand-alone dental plans for all actuarial value levels in
the State's SHOP. We believe that meaningful choice means sufficient
competition in the market to allow for participation in the SHOP from
multiple issuers throughout the State. Meaningful choice provides
affordable, quality plan options throughout the State's SHOP for all
actuarial value levels.
Under this proposal, a State regulatory agency, such as the State
department of insurance, would submit a recommendation to the SHOP (or
in the case of an FF-SHOP, to the Secretary) in support of either
circumstance for plan years beginning in 2015. We are considering
whether such a recommendation by the State regulatory agency should
include a mitigation plan describing the process the State regulatory
agency will take to ensure that full implementation of employee choice
in 2016 would not result in the occurrence of either aforementioned
circumstance, and seek comment on whether such a plan should be
included with the recommendation. We expect that the State would be
required to provide in the recommendation to the SHOP concrete evidence
that employee choice would result in significant adverse selection in
the State's small group market that cannot be remediated through the
premium stabilization programs or the single risk pool, or that there
would not be a meaningful choice of QHPs and/or stand-alone dental
plans in the State's SHOP. The SHOP would then evaluate the State's
recommendation and request and determine whether the State's small
group market would be significantly adversely affected by the
implementation of employee choice. In the FF-SHOPs, CMS would seek
public comment on the State's request regarding employee choice before
making this determination. We seek comment on all aspects of the
process SHOPs should follow in making this determination.
We seek comment on all aspects of this proposal, including, but not
limited to: (1) The effect of such a policy on all SHOPs; (2) the
effect of such a policy on each State's small group market; (3) the
effect of such a policy on small employers and their employees and
dependents; (4) the information the State regulatory agency should
provide in support of any recommendation; (5) the criteria the SHOP
(including, in the case of an FF-SHOP, the Secretary) should use in
assessing a State regulatory agency recommendation; (6) whether all
SHOPs should seek public comment on the State's request regarding
employee choice; (7) whether employee choice would have to exist for
both medical QHPs and stand-alone dental plans, or for neither; and (8)
whether other provisions of the HHS regulations applicable to SHOPs
should also be subject to a transition in SHOPs that exercise the
proposed option. In particular, we seek comments on what should qualify
as a significant risk of adverse selection, what should qualify as a
lack of meaningful plan choice, and how both these conditions should be
measured.
[[Page 15843]]
We also recognize the importance of the timing of a State
regulatory agency's recommendation and the SHOP's decision regarding
employee choice under this proposal. Whether or not employee choice is
available in a SHOP may be relevant information for issuers to consider
as they make QHP submissions, but State regulatory agencies also need
time to evaluate market dynamics before they can make a recommendation
about whether the SHOP should not implement employee choice in 2015. We
are considering establishing a deadline for the State regulatory
agency's recommendation to the SHOP. One option we are considering is
that State regulatory agencies would make recommendations prior to the
close of the initial QHP application window, with sufficient time for
issuers to decide whether or not to participate in SHOP for the
following plan year. Another option would be as follows: (1) All
issuers interested in participating in SHOP would apply during the
initial application window; (2) state regulatory agencies then would
have a specific window of time within which to make a recommendation
regarding whether to not implement employee choice in 2015 based on the
applications received; (3) the SHOP would then have a specific window
of time within which to make a decision about not implementing employee
choice in 2015 based on that recommendation; (4) issuers could, based
upon the SHOP's decision, decide whether to maintain, modify, or
withdraw their QHP applications. In the FF-SHOPs, under this second
scenario, we do not anticipate that issuers would be able to submit
applications after the initial deadline to apply for QHP certification
had passed. We solicit comment on these two options for timing the
State regulatory agency's recommendation and the SHOP's decision, and
also solicit additional, alternative suggestions for how best to
operationalize this proposal. Generally, we request comment on the
appropriate time for State regulatory agencies to submit a request to
the Exchange regarding employee choice, on the appropriate time for the
Exchange to make a decision on those requests, and on the effect of the
timing of the decision making process on the QHP certification timeline
as described in HHS regulations and guidance (including in the 2015
Annual Issuer Letter).\37\ In any event, we expect that SHOPs would
reach a decision about employee choice no later than early Fall 2014.
We also seek comment on whether adverse selection could be avoided by
allowing an employer to provide employee choice under the following
circumstances: (1) Within a single issuer's plan offerings within an
actuarial value level; (2) for all plans from a single issuer across
two contiguous actuarial value levels; and (3) for all plans, all
actuarial value levels, from a single issuer. These circumstances are
transitional policies and do not reflect the full implementation of
employee choice; we seek comment on how the proposed provisions would
apply in these circumstances.
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\37\ 2015 Letter to Issuers in the Federally-facilitated
Marketplaces (March 14, 2014). Available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2015-final-issuer-letter-3-14-2014.pdf.
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b. Enrollment Periods Under SHOP (Sec. 155.725)
We propose amendments to Sec. 155.725(c) and (e) to amend the
dates for the annual open enrollment periods for qualified employers
and qualified employees in all SHOPs, both State-based or Federally-
facilitated. In proposed Sec. Sec. 155.725(c)(1), we propose to align
the start of annual employer election periods in all SHOPs for plan
years beginning in 2015 with the start of open enrollment in the
corresponding individual market Exchange for the 2015 benefit year, as
amended in the 2015 Payment Notice. In accordance with this proposal,
we propose to modify paragraph (e) of this section to remove the
reference to a period of no less than 30 days for the annual employee
open enrollment period. Under this proposal, the annual employer and
employee election periods would begin no sooner than November 15, 2014
with employers making selections first, followed by employees. The
employer's annual election period will end when the employer makes
relevant decisions about the coming year's participation. Qualified
employers and qualified employees would still have adequate time to
perform plan selection for plan years beginning in 2015 under this
proposal. SHOPs would benefit from having the same amount of time to
complete the QHP certification process for the SHOP as they have to
complete this process for the individual Exchange. Notification
standards described in paragraph (d) and (f) of this section would
still apply, as the standards merely require the SHOP to notify
qualified employers of annual employer election periods and to notify
qualified employees of the annual employee open enrollment periods in
advance of such periods.
The lack of alignment of the start of annual employer election
periods in the SHOP for plan years beginning in 2015 with the start of
open enrollment in the individual market Exchange for 2015 would place
a burden on SHOPs and QHP issuers. Many Exchanges rely on the same
technology solutions for plan management and other minimum functions of
Exchanges in both the individual and small group markets. Aligning the
start dates for the employer election period with the start of
individual market Exchange open enrollment for 2015 would provide
Exchanges with a uniform timeline for improving and launching Exchange
services for 2015. Additionally, a uniform QHP filing and review
timeline for both markets for 2015 would reduce confusion and provide
efficiencies to scale in review, providing potential resource savings
to Exchanges and QHP issuers. These efficiencies would still exist even
if the SHOP and individual market Exchange were operated by different
entities (such where a State has exercised the option at Sec.
155.100(a)(2) to establish and operate only a SHOP, as many QHP issuers
seek QHP certification in both markets.
We note that pursuant to Sec. 147.104(b)(1)(i), group coverage
purchased in the SHOP between November 15 and December 15 of each year
is not subject to employer contribution or group participation rules as
defined in Sec. 147.106(b)(3). FF-SHOPs do not enforce minimum
participation requirements between November 15 and December 15 of each
year, but they are enforced upon initial enrollment outside of this
window and at renewal. Aligning the annual employer election period to
the start of the individual market Exchange to begin no sooner than
November 15, 2014 will provide qualified employers and employees with a
period of time to enroll for 2015 coverage when the FF-SHOP minimum
participation provisions are not enforced.
We request comments on whether the proposed policy concerning
aligning the timing of the SHOP employer election period for 2015 with
the individual market annual open enrollment period would pose
challenges for State-Based SHOPs as well as comments on any special
circumstances that they would face in implementing the proposed policy.
If implementing the proposed policy would disrupt the operations of
State-Based SHOPs, we request comments on what flexibilities or
adjustments to the proposed policy may be necessary to address these
concerns.
[[Page 15844]]
For example, a State-based SHOP might have a 2015 small group market
QHP certification process under which QHPs for 2015 coverage would be
available sooner than November 15, 2014, such that the State-based
SHOP's annual employer election period could start earlier than that
date.
In Sec. Sec. 155.725(c)(2) and 155.725(e), we propose to remove
the required minimum lengths of both the employer election period and
the employee open enrollment period to provide additional flexibility
to SHOPs and qualified employers. The existing minimum standards may
make it difficult for groups participating in the SHOP to renew
coverage in a timely manner, as under the current regulations, the
entire process could take as many as 75 days or longer to complete: up
to 30 days for the employer's election, 30 days for the employees to
enroll, and, depending on when in a given month that enrollment occurs,
15 or more days before coverage becomes effective. Further, this
timeframe is not feasible in light of the proposal above to align the
earliest date that an employer election period could begin in all SHOPs
for plan years beginning in 2015 with the start of open enrollment in
the corresponding individual market Exchange for the 2015 benefit year.
This proposal to remove the existing minimum timeframes for
qualified employer and qualified employee enrollment decisions will
permit SHOPs and qualified employers to act more quickly to renew
coverage. Additionally, the existing minimum lengths for the employer
election and employee open enrollment periods further complicate the
renewal process for qualified employers renewing throughout the
calendar year in SHOPs that permit the quarterly update of rates for
QHPs. In many States, the updated rate may be published fewer than 45
days prior to the rate taking effect. Therefore, under the existing
minimum standard, a qualified employer might not be able to consider
the most up-to-date rate information for the coverage it intends to
offer. Instead, such rate information might only become available
during the employee open enrollment period, in which case the qualified
employer may need to reopen either the employer election period or the
employee open enrollment period to determine whether the selected QHPs
still meet their needs under the new rates. This proposal will
ameliorate this concern by permitting SHOPs to complete the entire
election and enrollment processes in fewer than 45 days.
We seek comment on all aspects of these proposals.
c. SHOP Employer and Employee Eligibility Appeals Requirements (Sec.
155.740)
We propose to amend Sec. 155.740(g) by redesignating paragraphs
(g)(1) through (g)(3) to more clearly delineate between the
requirements associated with valid appeals and those associated with
invalid appeals.
In Sec. 155.740(i)(1)(i), we propose to amend the provision by
cross-referencing the withdrawal standards proposed in the individual
market at Sec. 155.530(a)(1). Under current rules, an appellant who
wishes to withdraw his or her appeal request must do so in writing
(hard copy or electronic). The amended provision would allow an
appellant to withdraw his or her appeal request in writing or by
telephone, if the appeals entity is capable of accepting telephonic
withdrawals. As noted above in the preamble to Sec. 155.530(a),
appeals entities that wish to provide telephonic withdrawals must
record, in full, the appellant's statement and telephonic signature
made under penalty of perjury and provide a written (in hard copy or
electronically) confirmation to the appellant documenting the
telephonic interaction. Written confirmation can be captured in the
dismissal notice required in the case of a withdrawal under Sec.
155.740(i)(2). Like the proposal in the individual market, this
amendment is intended to provide greater efficiency and convenience for
an appellant and appeals entity to close an appeal in accordance with
the appellant's wishes. We seek comment on this proposal.
8. Subpart O--Quality Reporting Standards for Exchanges
a. Quality Rating System (Sec. 155.1400)
To implement section 1311(c)(3) of the Affordable Care Act, we
propose standards for data collection by QHP issuers and the public
reporting by Exchanges of quality rating information. We intend to have
a beta testing period in 2015 to provide early feedback to Exchanges
and QHP issuers and begin public reporting of quality rating
information and enrollee satisfaction survey information in 2016. We
believe that it is important that the QRS provide QHP ratings that are
based on health care quality, health outcomes, consumer experience,
accessibility of care and affordability of care, which is information
that is essential to inform consumer choices and to perform certain
required functions of an Exchange. As outlined in the November 19, 2013
Federal Register Notice with Comment \38\ on the QRS framework (QRS
Notice), in the initial years, HHS aims to align the measures included
in the QRS, to the extent possible, with measures health plans
currently report in the commercial markets and public programs. The
general functions of an Exchange outlined in 45 CFR 155.200(d) already
include a requirement for an Exchange to oversee implementation of
quality activities, including the ESS and QRS, and to ensure the
reporting of data for these quality activities.
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\38\ Patient Protection and Affordable Care Act; Exchanges and
Qualified Health Plans, Quality Rating System (QRS) Framework,
Measures and Methodology; Notice with Comment, 78 FR 69418 (Nov. 19,
2013).
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In Sec. 155.1400, we propose that the Exchange must prominently
display on its Web site, in accordance with 45 CFR 155.205(b)(1)(v),
quality rating information assigned for each QHP under the QRS, as
calculated by HHS and in a form and manner specified by HHS, starting
in 2016. The standards for QHP issuers regarding the collection and
submission of validated quality measures data for the QRS are described
in Part 156, Subpart L of this proposed rule. The list of proposed
individual quality measures and the proposed organization of the QRS
measure sets are described in the QRS Notice. In addition, we intend to
release the proposed methodology for calculating quality ratings as
well as details regarding measure specifications and data validation
processes in technical guidance in 2014.
We believe that the proposed approach where each Exchange displays
quality ratings calculated by HHS based on a standard scoring
methodology allows for reliable, uniform, and comparable QHP ratings
across Exchanges. Therefore, HHS intends to calculate the quality
ratings and provide the ratings to Exchanges for prominent display of
quality rating information for each QHP offered in the Exchange. We
encourage State Exchanges to have a plan review period, similar to what
we intend to offer QHP issuers that participate in the Federally-
facilitated Exchange, to allow issuers to review their QHPs' quality
rating information before the data become public and to identify any
discrepancies or errors with the data submitted, as appropriate. We
have not incorporated specific criteria for public display by the
Exchanges of the QHP quality rating information in proposed Sec.
155.1400. However, we intend to do so in future technical guidance and
are considering modeling the display of QHP quality ratings in a
consistent manner with existing CMS
[[Page 15845]]
programs. As outlined in the QRS Notice, we intend to implement a
methodology that would assign a quality rating to a QHP using a five
star scale. The star ratings would be displayed in a similar style and
format to that of Medicare Advantage and Prescription Drug Plan
ratings. We believe that the five star quality rating display of
Medicare Advantage health plans offers reliable data that is
understandable for consumers. HHS anticipates providing the calculated
rating information, as proposed in Sec. 155.1400, for display on an
Exchange Web site on an annual basis for the open enrollment period. We
seek comment on the display of quality ratings of QHPs offered in an
Exchange for consumers and employers, which aids comprehension of QHP
quality information and which facilitates plan selection.
HHS recognizes that some States already have requirements for and
publicly report health plan quality and outcomes data, and we want to
encourage State flexibility and innovation, consistent with the
Affordable Care Act. In addition to prominently displaying quality
rating information for each QHP, as calculated by HHS in accordance
with the QRS, a State Exchange may display additional QHP quality-
related information, as appropriate, to enhance the consumer experience
and help consumers compare QHPs being offered in an Exchange. We
believe this proposed approach ensures that standardized information on
the quality of health care will be collected and displayed across
Exchanges but also provides flexibility for State Exchanges to
incorporate additional information on their Web sites to support the
plan comparison and selection process by consumers. We also are
considering allowing State Exchanges the flexibility to display the QRS
rating information, and satisfy the obligation under 45 CFR
155.205(b)(1)(v), by prominently displaying a link to the Federally-
facilitated Exchange Web site that would present the Federal quality
rating information. We seek comment on this approach including
effective ways to display quality rating information to help consumers
compare and select QHPs offered in an Exchange.
b. Enrollee Satisfaction Survey System (Sec. 155.1405)
Similar to the display requirement for the QRS, we propose a
display requirement for the Exchange in Sec. 155.1405 relating to the
Enrollee Satisfaction Survey (ESS) to implement section 1311(c)(4) of
the Affordable Care Act. We propose that the Exchange would prominently
display results from the ESS on its Web site, in accordance with Sec.
155.205(b)(1)(iv), as calculated by HHS, and in a form and manner
specified by HHS, starting in 2016. The standards for QHP issuers
regarding the collection and submission of validated data for the ESS
are described in Part 156, Subpart L of this proposed rule. Because we
believe that information regarding enrollee experience with the QHP is
a fundamental aspect of the overall quality rating, HHS intends to
incorporate enrollee experience data from the results of the ESS into
the quality rating for each QHP. Research\39\ has shown that
synthesizing and simplifying health plan quality information presented
to consumers eases consumer comprehension; therefore, we have developed
a methodology to incorporate enrollee experience data as part of the
quality rating information. We intend for the display of quality
ratings, including the member experience data from the ESS, to be
capable of drilling down to the results for individual quality measures
if consumers should choose to access more detail of the data underlying
the synthesized global quality rating. We therefore believe that by
displaying quality rating information as described in Sec. 155.1400 of
this proposed rule (which would incorporate member experience data from
the ESS), an Exchange would meet the requirement of displaying ESS
information to consumers and employers for the purposes of plan
comparison and satisfy the standard outlined in 45 CFR
155.205(b)(1)(iv). HHS anticipates providing results to the full ESS
survey to an Exchange on an annual basis. An Exchange may choose to
display on its Web site all ESS results, including those scores not
used as part of the QRS. We seek comment on this proposed approach for
displaying ESS information on an Exchange Web site.
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\39\ Peters EM, Dieckmann N, Dixon A, Hibbard JH, Mertz CK. Less
is more in presenting quality information to consumers. Med Care Res
Rev. 2007;64 (2):169-90; Hibbard JH, Peters EM. Supporting informed
consumer health care decisions: data presentation approaches that
facilitate the use of information in choice. Annual Review of Public
Health. 2003; 24:413-33.
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Similar to our approach with the QRS, we also want to encourage
State flexibility and innovation, consistent with the Affordable Care
Act, with respect to enrollee satisfaction information. We therefore
seek comment on whether State Exchanges should have flexibility to
display the ESS 2015 beta test results prior to the scheduled public
display of the Federal ESS in 2016.\40\ Specifically, we solicit
feedback on effective ways State Exchanges may share enrollee
satisfaction information to help consumers compare and select QHPs
offered in an Exchange prior to the availability of the Federal ESS
data for the 2017 open enrollment period.
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\40\ The standards for QHP issuers regarding the collection and
submission of data for the ESS, including the proposed timeline for
public reporting of such data, are described below in Part 156,
Subpart L of this proposed rule. Also see Agency Information
Collection Activities: Health Insurance Marketplace Consumer
Experience Surveys: Enrollee Satisfaction Survey and Marketplace
Survey Data Collection; Notice, 78 FR 65658 (Nov. 1, 2013).
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F. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges
1. Subpart B--Essential Health Benefits Package
a. Prescription Drug Benefits (Sec. 156.122)
Section 156.122(c) requires issuers that provide EHB to have
procedures in place that allow an enrollee to request and gain access
to clinically appropriate drugs not covered by the plan. We are
concerned that some enrollees, particularly those with certain complex
medical conditions, are having trouble accessing in a timely fashion
clinically appropriate prescription drugs, such as prescription drugs
that are combination drugs not covered by their plans' formularies.
Accordingly, we are considering amending the formulary exceptions
standards under Sec. 156.122(c) to require that these processes can be
expedited when necessary based on exigent circumstances, such as when
an enrollee is suffering from a serious health condition or an enrollee
is in a current course of treatment using a non-formulary drug. For
example, we could specify that an issuer render decisions regarding
formulary exceptions requests within 24 hours following the issuers'
receipt of the exceptions requests. This is currently suggested in the
2014 Letter to Issuers.\41\ As clarification, the prescription drug
standard in Sec. 156.122(a)(1) was not intended to discourage issuers
from offering clinically appropriate drugs to enrollees, including
combination drugs.
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\41\ See Appendix C of the 2014 Letter to Issuers on Federally-
facilitated and State Partnership Exchanges (April 5, 2013).
Available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2014_letter_to_issuers_04052013.pdf.
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We seek comment on what specific standards would be appropriate for
defining this expedited exceptions process, and on all other aspects of
this proposal.
[[Page 15846]]
b. Cost-Sharing Requirements (Sec. 156.130)
Under Sec. 156.130(a), cost sharing for 2014 for self-only
coverage may not exceed the annual dollar limit described in section
223(c)(2)(A)(ii)(I) of the Code. Under Sec. 156.130(b), for a plan
year beginning in calendar year 2014, the annual deductible for a
health plan in the small group market for self-only coverage may not
exceed $2,000. For 2015 and later years, these limitations are to be
increased by an amount equal to the products of these amounts and the
premium adjustment percentage established pursuant to paragraph (e) of
that section. (The limitations for other than self-only coverage are
twice the limitations for self-only coverage.) Under Sec. 156.130(d),
any increase in these annual limits that does not result in a multiple
of $50 is to be rounded to the next lowest multiple of 50 dollars.
Section 156.130(e) provides that the premium adjustment percentage
is the percentage (if any) by which the average per capita premium for
health insurance coverage for the preceding calendar year exceeds such
average per capita premium for health insurance for 2013, and that this
percentage will be published annually in the HHS notice of benefit and
payment parameters. The 2015 Payment Notice established our methodology
for calculating the premium adjustment percentage.
In calculating the proposed limitations on cost sharing and small
group deductible in the proposed 2015 Payment Notice, we rounded these
limitations up to the next lowest multiple of $50. However, we
subsequently learned that the IRS convention for interpreting similar
language for a number of longstanding tax parameters--such as indexing
methodologies for the alternative minimum tax and the standard
deduction--is to round down to the nearest applicable multiple. For
example, the Department of the Treasury, in a rule on how employers
should calculate average annual full-time-equivalent wages for purposes
of the small employer health insurance tax credit, provides that if the
result is not a multiple of $1,000, employers should round the result
to the next lowest multiple of $1,000.\42\
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\42\ See 26 CFR 1.45R-2(f)(1).
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As a result, to align our rounding rules with those used by the
Department of the Treasury and the Internal Revenue Service, we propose
to amend Sec. 156.130(d) to specify that when indexing the annual
limitation on cost sharing and the annual limitation on small group
deductibles for years after 2014, we will round to the multiple of 50
dollars that is lower than the number calculated by the formula.
Under this proposed amendment to Sec. 156.130(d), using the
premium adjustment percentage of 4.213431463 percent for 2015 we
established in the 2015 Payment Notice and the 2014 maximum annual
limitation on cost sharing of $6,350 for self-only coverage, which was
published by the IRS on May 2, 2013,\43\ the 2015 maximum annual
limitation on cost sharing would be $6,600 for self-only coverage and
$13,200 for other than self-only coverage.
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\43\ See https://www.irs.gov/pub/irs-drop/rp-13-25.pdf.
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Similarly, under the proposed amendment to Sec. 156.130(d), using
the premium adjustment percentage for 2015 of 4.213431463 percent and
the 2014 maximum annual limitation on deductibles of $2,000 for self-
only coverage, as specified in Sec. 156.130(b)(1)(i), the 2015 maximum
annual limitation on deductibles would be $2,050 for self-only coverage
and $4,100 for other than self-only coverage.
We seek comment on our proposed amendment and its application for
2015.
2. Subpart C--General Functions of an Exchange
a. QHP Issuer Participation Standards (Sec. 156.200)
In Sec. 156.200(b)(5), we propose technical amendments to clarify
that implementing and reporting for the QRS and implementing a quality
improvement strategy are conditions of participation in an Exchange.
Specifically, we propose to include a reference to sections 1311(c)(3)
and (c)(1)(E) of the Affordable Care Act to correctly align with other
quality standards listed as part of QHP certification standards,
including the ESS.
We also propose to amend Sec. 156.200 to add paragraph (h) to
require that, in order to receive QHP certification, the offering
issuer attest that, subsequent to receiving such certification, it will
comply with all operational requirements contained in Part 156,
Subparts D, E, H, K, L, and M. We are proposing to add paragraph (h),
however, to ensure that issuers seeking QHP certification understand
and have fully committed to compliance with all operational
requirements.
3. Subpart G--Minimum Essential Coverage
a. Other Coverage That Qualifies as Minimum Essential Coverage (Sec.
156.602)
In the final rule published on July 1, 2013 (78 FR 39494), we
designated certain types of coverage as minimum essential coverage,
including self-funded student health coverage (for plan or policy years
beginning on or before December 31, 2014), Refugee Medical Assistance
supported by the Administration for Children and Families, Medicare
advantage plans, State-high risk pool coverage (for plan or policy
years beginning on or before December 31, 2014) and other coverage that
qualifies pursuant to the minimum essential coverage application
process in 45 CFR 156.604. We also established a process by which
sponsors of other coverage not designated as minimum essential coverage
could apply with HHS to be recognized as minimum essential coverage.
In guidance published on October 31, 2013, we further indicated
that coverage under a group health plan provided through insurance
regulated by a foreign government (and not regulated by a State) is
recognized as minimum essential coverage for a month with respect to an
individual who, for such month, is physically absent from the United
States for at least one day of the month. In addition, coverage under a
group health plan provided through insurance regulated by a foreign
government (and not regulated by a State) will also be recognized as
minimum essential coverage with respect to an individual who is
physically present in the United States for an entire month if the
coverage provides health benefits within the United States while the
individual is an expatriate.\44\ The rationale behind this policy was
that insurance that is regulated by a foreign government and not
subject to regulation by a State does not meet the definition of health
insurance coverage under the PHS Act, and thus should not be considered
for purposes of a PHS Act analysis. The effect of this policy is to
place group health coverage provided through foreign insurance on the
same footing as self-insured group health coverage with respect to
being deemed minimal
[[Page 15847]]
essential coverage without having to go through the application
process.
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\44\ See CCIIO Sub-Regulatory Guidance: Process for Obtaining
Recognition as Minimum Essential Coverage (October 31, 2013.
Available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mec-guidance-10-31-2013.pdf.
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We now propose to add new paragraph (e) to Sec. 156.602 codifying
the treatment of foreign group health coverage as stated in the October
31, 2013 guidance. We propose to designate foreign group health
coverage for expatriates as minimum essential coverage if the coverage
is self-insured, or is insured by an entity that is not subject to
regulation by a State. Specifically, we propose to clarify in the
regulations that foreign group health coverage is group health coverage
that (1) is not insured by an issuer regulated by a State and (2) is
for expatriates who are citizens or nationals of the United States
residing abroad, or is for expatriates who are not citizens or
nationals of the United States residing in the United States. We
propose that if coverage for expatriates who are citizens or nationals
of the United States who reside abroad is provided by a self-insured
group health plan, or is provided by group health insurance not
regulated by a State or group health coverage provided by a foreign
national health plan, the coverage is designated as minimum essential
coverage for any month that the citizen or national of the United
States is physically absent from the United States for at least one day
of the month.
For purposes of this section, we propose to define an
``expatriate'' as an individual for whom there is a good faith
expectation that such individual will reside outside of their home
country for at least six months of a 12-month period, including any
covered dependents. This definition was adopted from the January 9,
2014 Affordable Care Act Implementation FAQs.\45\ Another option is
that we define ``expatriate'' more broadly to apply to individuals that
are living outside of their home country for less than six months. For
example, the Black's Law Dictionary defines ``expatriate'' as a citizen
of country A living in country B where the classification of this
citizen occurs regardless of if the citizen has a short stay or an
extended or lifetime stay in country B.\46\ We solicit comments on
either definition of expatriate discussed above or another definition
that would be appropriate for this section.
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\45\ See FAQs about Affordable Care Act Implementation (Part
XVIII) and Mental Health Parity Implementation (January 9, 2014).
Available at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.html and https://www.dol.gov/ebsa/faqs/faq-aca18.html.
\46\ See Black's Law Dictionary Free (2d ed. 2014). Available
at: https://thelawdictionary.org/expatriate.
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If an expatriate is a citizen or national of the United States and
is physically present in the United States for an entire month, we
propose that their foreign group health coverage is designated as
minimum essential coverage if the coverage provides health benefits
within the United States, and is provided by a self-insured group
health plan, group health insurance regulated by a foreign government
(and not by a State), or group health coverage provided by a foreign
national health plan. We propose this time period so that expatriates
who are citizens or nationals of the United States working abroad may
visit the United States for a short period of time without their
foreign group health coverage losing its designation as minimum
essential coverage. We propose that the coverage must provide health
benefits within the United States to ensure that the coverage is not
limited to providing health benefits while an individual is absent from
the United States. We solicit comments on the time period that
expatriates who are citizens or nationals of the United States working
abroad can remain in the United States without their foreign group
health coverage losing its designation as minimum essential coverage.
In 45 CFR 156.602(e), we propose that if the foreign group health
coverage is for expatriates residing in the United States who are not
citizens or nationals of the United States, the coverage is designated
as minimum essential coverage if the coverage provides health benefits
within the United States, and is provided by a self-insured group
health plan, group health insurance regulated by a foreign government
(and not regulated by a State), or group health coverage provided by a
foreign national health plan. We propose that the coverage must provide
health benefits within the United States so as to ensure that the
coverage provides health insurance benefits in the United States while
an individual is living in the United States.
To ensure that expatriates enrolled in foreign group health
coverage are aware that their coverage has been designated as minimum
essential coverage and that foreign group health coverage complies with
the same reporting requirements as other types of minimum essential
coverage, we propose to require that the sponsor, issuer, or plan
administrator, as applicable, of any foreign group health coverage must
provide notice to enrollees who are citizens or nationals of the United
States of its minimum essential coverage status and comply with the
information and reporting requirements of section 6055 of the Code and
implementing regulations with respect to those enrollees. We welcome
comments on any aspect of these proposals.
b. Requirements for Recognition as Minimum Essential Coverage for Types
of Coverage Not Otherwise Designated Minimum Essential Coverage in the
Statute or This Subpart (Sec. 156.604)
Section 45 CFR 156.604 outlined a process by which types of
coverage not statutorily specified and not designated by regulation as
minimum essential coverage may seek to be recognized as minimum
essential coverage. We established the requirement that the application
must be submitted to HHS on behalf of the plan or policy by the sponsor
of the coverage or government agency.
We now propose to clarify that the application may also be
submitted to HHS on behalf of the plan or policy by a health insurance
issuer or a plan administrator because the health insurance issuer or
plan administrator may be the more appropriate party to submit the
application. For example, a health insurance issuer may more
efficiently provide the information required for an application on
behalf of a foreign health insurance plan sold in the individual market
to expatriates living abroad. We welcome comments on all aspects of
these proposals.
4. Subpart I--Enforcement Remedies in Federally-Facilitated Exchanges
a. Available Remedies; Scope (Sec. 156.800)
In subpart I of 45 CFR part 156, finalized on August 30, 2013 in
the rule Patient Protection and Affordable Care Act; Program Integrity:
Exchange, SHOP, and Eligibility Appeals (Program Integrity Rule),\47\
we established the enforcement remedies available to HHS for enforcing
standards applicable to issuers offering QHPs in the FFEs. Since the
publication of that rule and in the course of our routine monitoring of
QHP issuers for compliance with applicable FFE standards, we have
received multiple inquiries from QHP issuers and States about whether
HHS will be coordinating and sharing information about QHP issuers with
State regulatory entities as part of its oversight activities. We
propose adding paragraph (d) to clarify that HHS may consult and share
information about QHP issuers with other Federal and State regulatory
and enforcement entities to the extent that
[[Page 15848]]
this information is necessary for HHS to determine whether an
enforcement remedy under subpart I is appropriate. We believe this is
consistent with our intent to coordinate with States in enforcement
actions as described in the proposed Program Integrity Rule.\48\
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\47\ Patient Protection and Affordable Care Act; Program
Integrity: Exchange, SHOP, and Eligibility Appeals, 78 FR 54070
(August 30, 2013) (to be codified at 45 CFR parts 147, 153, 155, and
156).
\48\ Patient Protection and Affordable Care Act; Program
Integrity: Exchange, SHOP, Premium Stabilization Programs, and
Market Standards; Proposed Rule, 78 FR 37032 (June 19, 2013).
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b. Bases and Process for Imposing Civil Money Penalties in Federally-
Facilitated Exchanges (Sec. 156.805)
In the Program Integrity Rules, we established the bases for HHS to
impose CMPs against QHP issuers for violations of certain standards
applicable to issuers offering QHPs in the FFEs. In Sec. 156.805(d) we
set forth the general process for notifying the QHP issuer against
which the CMP is being imposed. The general process did not address how
prior to the imposition of the CMP, the QHP issuer would be notified of
the alleged violation which forms the basis for the imposition of CMP.
We propose adding Sec. 156.806 to explain that HHS will provide a
written notice to the issuer, to include a description of the potential
violation, a 30-day period for the QHP issuer to respond and to provide
additional information to refute an alleged violation.
If HHS determines that a CMP will be imposed, HHS will notify the
QHP issuer as required under Sec. 156.805(d). We note that Sec.
156.805(d) does not specify the method of delivery of such notice. We
believe it is important to ensure that such notices are appropriately
delivered to the QHP issuer to provide the QHP issuer with proper
notice. We propose adding Sec. 156.805(d)(3) to require that delivery
of the notice required in paragraph (d) will be either hand delivered,
sent by certified mail, return receipt requested, or sent by overnight
delivery service with signature upon delivery required. This
requirement is identical to the requirement under Sec. 158.613 which
applies to the delivery of notice of civil penalties under 45 CFR Part
158, with which we believe QHP issuers will generally be familiar. We
believe this proposed requirement will ensure that QHP issuers have
proper notice of HHS's intent to impose CMPs. Finally, we also note
that paragraph (e)(2) requires HHS to notify the QHP issuer of any
penalty that has been assessed and of the means by which the
responsible entity may satisfy the judgment. We propose rewording the
regulatory text to clarify that the responsible entity refers to the
QHP issuer against whom a CMP is being imposed or another entity
responsible for satisfying the CMP assessment and that the judgment
refers to the CMP assessed under of this subpart.
c. Bases and Process for Decertification of a QHP Offered by an Issuer
Through a Federally-Facilitated Exchange (Sec. 156.810)
In subpart I of 45 CFR part 156, finalized in the Program Integrity
Rule, we established the bases for HHS to decertify QHPs for violations
of certain standards applicable to issuers offering QHPs in the
Federally-facilitated Exchanges. Under Sec. 156.810(a) we set forth
the bases for decertification. Since the publication of this final
rule, we believe that certain paragraphs should be clarified. For
example, paragraph (a)(6) should be reworded to clarify that the
certification criteria means the standards under subpart C of this
part. In paragraph (a)(9), it was unclear which laws were intended and
we proposing clarifying that violation of State or Federal law relating
to internal claims and appeals and external review processes are bases
for decertification under this paragraph. We propose aligning the
standards set forth under subparts K and M with the bases for
decertification. We propose adding a paragraph (12) to reflect that HHS
may decertify a QHP if the QHP issuer substantially fails to meet the
requirements related to the cases forwarded to QHP issuers under
Subpart K, and adding a paragraph (13) to reflect that HHS may
decertify a QHP if the QHP issuer substantially fails to meet the
requirements in Subpart M. Finally, in the preamble to the proposed
Program Integrity Rule, we explained that when the basis for a
decertification is one in which the QHP enrollees' ability to access
necessary medical items or services is at risk or the integrity of an
FFE is substantially compromised, HHS would have the authority to
pursue an expedited decertification (78 FR 37062). Because QHP issuers
are required to demonstrate compliance with the minimum certification
standards in subpart C of part 156 and Exchanges are required under
section 155.1010(a)(2) to monitor QHP issuers for demonstration of
ongoing compliance with the certification requirements, we believe that
it is appropriate for the FFEs to be able to pursue an expedited
decertification when HHS has determined that the QHP no longer meets
applicable certification standards. Accordingly, we propose amending
Sec. 156.810(d) to reflect this change.
5. Subpart L--Quality Standards
a. Establishment of Standards for HHS-Approved Enrollee Satisfaction
Survey Vendors for Use by QHP Issuers in Exchanges (Sec. 156.1105)
In the rule Patient Protection and Affordable Care Act; Program
Integrity: Exchange, Premium Stabilization Programs, and Market
Standards; Amendments to the HHS Notice of Benefit and Payment
Parameters for 2014 (Second Program Integrity Rule) \49\ at 45 CFR
156.1105, we established processes for HHS to approve and oversee ESS
vendors that will administer the ESS on behalf of QHP issuers. We
outlined a process by which enrollee satisfaction survey vendors would
submit an annual application demonstrating that they meet all of the
application and approval standards in paragraphs (a) and (b). Lastly,
we noted that HHS would publish a list of approved enrollee
satisfaction survey vendors on an HHS Web site.
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\49\ Patient Protection and Affordable Care Act; Program
Integrity: Exchange, Premium Stabilization Programs, and Market
Standards; Amendments to the HHS Notice of Benefit and Payment
Parameters for 2014, 78 FR 65046 (Oct. 30, 2013) (to be codified at
45 CFR parts 144, 146, 147, 153, 155, and 156).
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We propose to amend Sec. 156.1105 to also include monitoring and
appeals processes that would apply for plan years beginning 2015. In
paragraph (d), we propose that HHS will monitor HHS-approved enrollee
satisfaction survey vendors to ensure ongoing compliance with the
application and approval standards. Further, we propose that if HHS
determines that an approved vendor is non-compliant with the standards
outlined in paragraph (b), they may be removed from the approved list
described in paragraph (c) and/or the submitted survey results may be
ineligible to be included for ESS results.
We propose to establish a monitoring process to prepare for
situations when an HHS-approved enrollee satisfaction survey vendor is
no longer in compliance with the standards outlined in Sec. 156.1105.
It is possible that once the enrollee satisfaction survey vendor is
approved and contracts with a QHP issuer to provide survey
administration services, the HHS-approved vendor may stop participating
in or complying with required activities described in paragraph (b)(1)
(for example, the vendor does not participate in site visits or
conferences calls or fails to become a registered user for the ESS data
warehouse). We propose that in the event that HHS determines, through
its oversight activities, that the HHS-approved survey vendor is non-
compliant, a process would already be
[[Page 15849]]
in place to take appropriate remedial action as well as notify QHP
issuers and the public of any changes to the approved list of vendors.
We propose that, in addition to other existing remedies, HHS would have
the ability to remove a survey vendor from the approved list and/or
determine that the submitted survey results are ineligible to be
included for ESS results, as the validity of the results may be
impacted. HHS would also update the published list of approved vendors
to reflect any changes. We seek comment to inform future guidance on
the factors that should be considered, as well as the conditions that
may lead to the removal of an approved survey vendor from the HHS
approved list and/or a determination that the submitted survey results
are ineligible to be included for ESS results.
In paragraph (e), we propose an appeals process for an ESS vendor
that submits an application to HHS for approval, as described in
paragraph (a), and is not approved. Specifically, we propose that an
enrollee satisfaction survey vendor may appeal HHS's decision by
notifying HHS in writing within 15 days of the notification of not
being approved by HHS and submitting additional documentation
demonstrating how the vendor meets the standards in paragraph (b). HHS
will review the submitted documentation and make a final approval
determination within 30 days from receipt of the additional
documentation. An enrollee satisfaction survey vendor that becomes
approved via the appeals process would be included in the approved
list, described in paragraph (c). We seek comment on the proposed
approach to implementing an appeals process for survey vendors that are
not approved by HHS after submission of an application for approval.
b. Quality Rating System (Sec. 156.1120)
In addition to proposing standards for Exchanges to oversee the QRS
and display quality rating information on Exchange Web sites as set
forth in Sec. 155.1400 of this proposed rule, we also propose
standards for QHP issuers to collect and report the necessary
information to implement the QRS pursuant to section 1311(c)(3) of the
Affordable Care Act. While the QRS Notice describes areas such as the
overarching goals, framework, measure selection process and individual
measures of the QRS, this proposed rule outlines the QRS implementation
and reporting standards for QHP issuers.
In the QRS Notice, we proposed a QRS measure set that applies to
QHPs that provide family and adult self-only coverage and we proposed a
separate Child-only QRS measure set applying to QHPs that provide
child-only coverage. CMS continues to monitor the number of child-only
QHP offerings on the Exchanges. A limited number of child-only QHPs and
enrollees may prohibit reliable child-only QHP rating calculations. As
mentioned in the QRS Notice, we will also consider the development of a
quality rating system applicable to other Exchange offerings, such as
stand-alone dental plans, catastrophic plans, and health savings
accounts. After considering public comment as well as the review by the
Measures Application Partnership's Health Insurance Exchange Taskforce
convened by the National Quality Forum, we intend to finalize the
quality measures outlined in the QRS Notice and provide measure
specifications in future technical guidance. Our goal is to publish
this future technical guidance on a HHS Web site in 2014 to provide
time for QHP issuers to collect and submit the relevant validated data
for the 2015 beta test.
QRS Implementation and Reporting
At Sec. 156.1120(a), we propose data submission requirements for a
QHP issuer for the information necessary to calculate the quality
ratings under the QRS, and in Sec. 156.1120(b), we propose to direct a
QHP issuer to annually submit data necessary to calculate the QHP's
quality ratings to HHS and the Exchange, on a timeline and in a
standardized form and manner specified by HHS. In paragraph (a)(1), we
propose that a QHP issuer must submit data to calculate quality ratings
for each QHP that has been offered in an Exchange for at least one
year. HHS proposes to phase in implementation of the QRS over time in
recognition of the fact that QHP issuers would need time to collect,
ensure the reliability of, and report quality measure data. In
addition, certain quality measures require one or two year reference
periods, and QHP issuers would need time for data collection,
validation and submission. Therefore, we propose that for the first
year that a QHP is offered in an Exchange, the QHP issuer would prepare
to submit the required validated data elements for QRS beta testing in
the second year that the QHP is offered in an Exchange. The QHP issuer
would then submit the required validated data elements for QRS public
reporting in the third year that the QHP offers coverage (reflecting
second year data). For example, an issuer that offers a QHP in the
Exchange during the 2013 open enrollment period for coverage beginning
in January 2014 would submit the required validated data for a QRS beta
testing period beginning in mid-2015 (coverage year two), which would
not be publicly reported by the Federally-facilitated Exchange. The
issuer would next be required to submit the required validated data for
the QHP offered in the Exchange to calculate quality rating information
for QRS public reporting during the 2016 open enrollment period for the
2017 coverage year (coverage year four). Specifically, we intend for
the QRS data reporting period to begin the first month of a calendar
year through the middle of the sixth month of the calendar year. For
example, a QHP issuer submitting data for the 2015 QRS beta testing
period would submit data on or around June 15, 2015 and would submit
data for its first QRS public reporting on or around June 15, 2016. We
intend for the QRS to include data from all eligible QHP enrollees
covered during the measurement year which would be the previous
calendar year(s) and based on measure specifications for that year's
collection. We intend to provide details of the QRS rating methodology,
measure specifications, criteria for quality rating display, and
information regarding QRS data validation in technical guidance that
would be periodically updated.
In paragraph (a)(2), we propose to direct a QHP issuer to submit
data that has been validated in a form and manner specified by HHS. We
believe that the submission of validated data by QHP issuers is
necessary to ensure the integrity and reliability of the QRS to allow
consumers objective and meaningful comparisons of the QHPs' quality
data. We believe that review of quality measures data by an independent
third party entity will ensure that only valid and appropriate data are
used to calculate the quality rating information for QRS public
reporting. In the initial years, HHS intends to direct QHP issuers to
follow the process specified by the quality measure steward for
validation of its quality measures that are incorporated into the QRS.
For example, for any Healthcare Effectiveness Data and Information Set
(HEDIS)[supreg] measure in the QRS, the measure should be validated
through the HEDIS[supreg] Compliance Audit process using a certified
auditor, as defined by the National Committee for Quality Assurance
(NCQA). We have drawn from our experience with the Medicare program
which also ensures that clinical quality HEDIS[supreg] data submitted
and reported on behalf of the Medicare Advantage and Prescription Drug
Programs are valid and reliable by
[[Page 15850]]
requiring data to be validated through the NCQA HEDIS[supreg]
Compliance Audit process before being provided to CMS for public
reporting. HHS would specify in technical guidance a validation process
for any measures for which the measure steward has not defined a
validation process. In the future and as the QRS evolves, HHS is
considering establishing an application and approval process for
independent third party data validators to allow QHP issuers to
contract with validators that would be approved and monitored by HHS.
In paragraph (a)(3), we propose that a QHP issuer must include
information in its data submission only for those QHP enrollees at the
reporting level specified by HHS that is necessary to calculate the
quality ratings. As we stated in the QRS Notice, HHS intends to specify
that for the initial years of QRS implementation, a QHP issuer must
collect and submit data for enrollees in each product type offered by a
QHP issuer in each State for which the QHP operates (for example,
Health Maintenance Organization (HMO), Point of Service (POS), and
Preferred Provider Organization (PPO)).\50\ While we understand that
there may be value in reporting quality rating information at more
granular QHP levels, such as the QHP product metal level, we believe
that a QHP's enrollment size at the product metal level will be too
small to ensure reliable QRS results across the measure domains in the
beginning years of the Exchange. We intend to revisit the level of QHP
issuer reporting for the QRS as Exchanges mature and enrollment sizes
increase. We also recognize that a QHP issuer may offer a QHP outside
an Exchange that would be considered the same plan as one that is
certified as a QHP and offered through the Exchange, if the benefits
package, provider network, service areas and cost-sharing structure of
the two offerings are identical as outlined in the Program Integrity
Final Rule.\51\ We intend to allow a QHP issuer to collect data for the
QRS based on enrollees of QHPs offered through and outside of the
Exchange as long as they are considered the same plan. If this approach
is finalized, we intend to clarify the operational details of this
approach in future technical guidance.
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\50\ Patient Protection and Affordable Care Act; Exchanges and
Qualified Health Plans, Quality Rating System (QRS) Framework,
Measures and Methodology; Notice with Comment, 78 FR 69418 (Nov. 19,
2013).
\51\ Patient Protection and Affordable Care Act; Program
Integrity: Exchange, SHOP, and Eligibility Appeals; Final rule, 78
FR 54070 (Aug 30, 2013).
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We seek comment on the data submission requirements proposed in
paragraph (a) including comment regarding the reporting timeframes and
any additional criteria for the submission or reporting of quality data
for QRS purposes. We seek comment on the proposed approach, for the
initial years of QRS implementation, of product level reporting and
allowing the incorporation of quality measure data from QHPs offered
outside the Exchange, if they are considered the same plan as the QHP
offered through the Exchange. We also solicit comment to inform future
rulemaking regarding the potential requirement for QHP issuers to use
independent third party data validators that would be approved and
monitored by HHS for QRS purposes.
As described in 45 CFR 156.275, QHP issuers are required to be
accredited on the basis of local performance of a QHP by an
accreditation entity recognized by HHS, and to submit to such entity
clinical quality measures, such as HEDIS[supreg]. We are seeking
comment to inform future rulemaking on how best to align QRS measures
reporting requirements with the accreditation standards for QHP
issuers.
We note that multi-State plans, as defined in Sec. 155.1000(a),
are subject to reporting QRS data for calculation of quality ratings by
HHS, as described in paragraph (a). The U.S. Office of Personnel
Management (OPM) will provide guidance on quality reporting to issuers
with whom it holds multi-State plan contracts.
Marketing Materials
In paragraph (c), we propose that an issuer may reference its QHP's
quality rating information in its marketing materials, in a manner
specified by HHS. In the subsequent section 156.1125 regarding the ESS,
we propose a similar marketing standard in Sec. 156.1125(c) that a QHP
issuer may reference the ESS results for its QHPs in its marketing
materials, in a manner specified by HHS.
A QHP issuer has the option to use quality rating information and
ESS results in its marketing materials; however, an issuer that elects
to use the information must do so in a manner that does not mislead
consumers into enrolling in a QHP based on inaccurate information. We
intend to provide details regarding display of rating information and
ESS results in marketing materials in technical guidance that we
anticipate releasing in 2015. We seek comment regarding the proposed
allowance for issuers to include its QHPs' quality rating information
and ESS results in its marketing materials in paragraphs (c) of
156.1120 and 156.1125 and ways to prevent the use of the information in
a misleading manner when being presented to consumers.
c. Enrollee Satisfaction Survey (Sec. 156.1125)
Section 1311(c)(4) of the Affordable Care Act directs the Secretary
to establish an enrollee satisfaction survey (ESS) system that would
evaluate the level of enrollee satisfaction of members in each QHP with
more than 500 enrollees in the previous year that is offered through an
Exchange. It also directs Exchanges to display enrollee satisfaction
information on their Web sites to allow individuals to readily compare
enrollee satisfaction data between QHPs. To implement this provision,
HHS is developing the ESS as described in the Federal Register Notice
dated Nov. 1, 2013 (ESS Notice).\52\ We outline standards in this
proposed rule for a QHP issuer to collect and submit validated enrollee
experience data from QHPs offered through an Exchange.
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\52\ Agency Information Collection Activities: Health Insurance
Marketplace Consumer Experience Surveys: Enrollee Satisfaction
Survey and Marketplace Survey Data Collection; Notice, 78 FR 65658
(Nov. 1, 2013).
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We believe it is important that QHPs offered through Exchanges be
assessed using a reliable and valid survey, administered and scored
according to standards developed and monitored by independent
organizations. We based the ESS on the Consumer Assessment of Health
Providers and Systems (CAHPS[supreg]) Health Plan 5.0 Medicaid survey
to assure consumers and stakeholders that the ESS survey data submitted
meet the validity and reliability standards reported by the
CAHPS[supreg] program and are comparable to data from other quality
comparison tools. We used existing CAHPS[supreg] supplemental item sets
or other CAHPS[supreg] surveys, when available and appropriate, to
identify any additional items for the ESS.
ESS Administration
At Sec. 156.1125(a), we propose to direct QHP issuers to contract
with an HHS-approved ESS vendor, as identified by Sec. 156.1105, to
administer the ESS of the QHP's enrollees. We also propose to direct a
QHP issuer to authorize its contracted ESS vendor to report survey
results to HHS and the Exchange on the issuer's behalf. We believe this
proposed approach aligns with the Medicare program, which uses a
similar process by having approved survey vendors administer the
CAHPS[supreg] survey
[[Page 15851]]
to an issuer's Medicare Advantage and Prescription Drug Program
enrollees. Similar to the proposed general requirement for the QRS in
Sec. 156.1120(a), which directs a QHP issuer to submit data to HHS and
the Exchange, QHPs must ensure that their contracted ESS vendors submit
the data collected from the ESS survey to HHS and the Exchange so that
HHS can calculate the ESS scores and benchmarks based on a standard
scoring methodology that will allow for reliable, uniform, and
comparable scoring across Exchanges. HHS intends to send calculated ESS
scores to the Exchanges for their respective QHPs and also intends to
use a subset of scores from the ESS as part of the quality rating for
QHPs as described in Sec. 156.1120. We intend for the ESS to be
administered from January through April of each calendar year beginning
in 2015.
HHS is considering the development of an ESS child-only survey to
assess the experience of children enrolled in child-only plans. Similar
to the implementation of the QRS child-only measure set, CMS is
currently assessing the feasibility of a child-only ESS based upon the
number of child-only QHPs and enrollees in Exchanges.
In paragraph (b), we propose several data requirements to clarify
the standards for collection and submission of ESS data. At Sec.
156.1125(b)(1), we propose to direct a QHP issuer to collect data of
eligible enrollees for each QHP with more than 500 enrollees in the
previous year that has been offered in an Exchange for at least one
year following a survey sampling methodology provided by HHS. We
propose that eligible enrollees would be those individuals enrolled for
at least six months during the year prior to the administration of the
survey and solicit comment on this approach.
In paragraph (b)(2), we propose to direct a QHP issuer to submit
data, necessary to conduct the ESS, that has been validated in a form
and manner specified by HHS. We propose that the data for the sample of
eligible enrollees that a QHP issuer provides to their contracted ESS
vendor be validated in a consistent way as data validated for the QRS.
For example, if a QHP issuer submits data collected for a quality
measure that is validated through the HEDIS[supreg] Compliance Audit
process using a NCQA certified auditor, we expect the data that the QHP
issuer provides to its HHS-approved ESS vendor for the ESS sample be
included in that validation process. We solicit comment on this
approach for validation of the data for the ESS sample of eligible
enrollees.
In paragraph (b)(3), we propose to direct a QHP issuer to include
only those QHP enrollees at the reporting level specified by HHS, for
data submitted for the ESS. We believe that the QHP metal level (i.e.,
HMO Silver, HMO Bronze, PPO Silver, PPO Bronze) for each of the
issuer's products is the appropriate level (if enrollment is sufficient
to ensure credibility) to assess enrollee experience and would provide
information regarding experience with plans charging differing
premiums. We intend to aggregate the ESS data from the QHP metal level
to the QHP product level (for example, a QHP issuer's HMO silver and
HMO bronze would be aggregated into one HMO level score) for public
reporting purposes to provide consistency with the product-level data
that would be submitted for the QRS and align with the QRS methodology
in the initial years of implementation of these proposed quality
standards for QHPs.
We recognize that a QHP issuer may offer a plan outside an Exchange
that would be considered the same plan as one that is certified as a
QHP and offered through the Exchange, as defined in Sec. 153.500.
Similar to our proposed approach with the QRS, we are considering in
the initial years to allow a QHP issuer to include enrollees of QHPs
offered through and outside of the Exchange, to ensure a reliable ESS
sample size, as long as they are considered the same plan as
established in Sec. 153.500. We intend to clarify the operational
details of this approach in future technical guidance. OPM will issue
technical guidance regarding the sampling methodology for multi-State
plans, as defined in 45 CFR 155.1000(a). We envision that the sampling
methodology for multi-State plans will align with that of QHPs.
In paragraph (d), we propose to direct a QHP issuer to submit data
necessary to conduct the survey to its contracted ESS vendor on a
timeline and in a form and manner specified by HHS. We intend to align
the timeframes of the proposed reporting requirements for the ESS and
the QRS. In future technical guidance, we also intend to specify the
timeframes for a QHP issuer to submit the sampling data to its
contracted ESS vendor and for the vendor to submit to HHS and the
Exchange, data from the administration of the survey.
ESS Implementation and Reporting
HHS proposes to phase in implementation of the ESS over time which
is consistent with the proposed implementation of the QRS. We believe
this will allow for appropriate development and testing of the ESS and
the survey methodology; time for QHP issuers to prepare for data
collection, validation and submission; and time for QHP enrollees to
build experience with the QHP and their providers to adequately assess
their experience and to ensure reliable survey results. Therefore, we
propose that for QHPs offered in the Exchange during the 2014 open
enrollment period, the QHP issuer would submit the required data
elements for ESS beta testing in 2015. The QHP Issuer would then submit
the required data elements in 2016 for ESS public reporting during the
2017 open enrollment period. Specifically, we intend for QHP issuers to
provide data necessary to conduct the survey to their contracted HHS-
approved ESS vendors, as described in paragraph (a), during the first
month of the calendar year and to ensure that survey results are
submitted to HHS or its' designee, by the fifth month of the calendar
year. For example, a QHP issuer reporting data for the 2015 ESS beta
test would provide sample frame data necessary to conduct the ESS for
eligible enrollees who would be surveyed, to their contracted survey
vendor in January 2015, allowing adequate time for the vendor to draw
the sample in time to begin fielding the survey on February 1. Then, a
QHP issuer would ensure that the ESS survey results are submitted to
HHS on or around May 31, 2015. For the first year of ESS public
reporting, a QHP issuer would provide sample frame data necessary to
conduct the ESS in January 2016 and ensure that results are submitted
to HHS or its' designee on or around May 31, 2016. We intend for the
ESS sample to include all eligible QHP enrollees covered during the
measurement year which would be the previous calendar year and based on
sampling specifications. We intend to provide details of the ESS
sampling methodology in technical guidance that would be periodically
updated and which will be published in draft form on an HHS Web site to
obtain feedback from stakeholders.
We seek comment on the proposed requirement in paragraph (a) to
direct a QHP issuer to contract with an HHS-approved enrollee
satisfaction survey vendor and to authorize its contracted vendor to
submit data to HHS and the Exchange. Specifically, request feedback on
our proposed approaches for data collection from eligible enrollees for
each QHP with more than 500 enrollees in the previous year that has
been offered in an Exchange for at least one year, to require
validation consistent with the process for QRS measure data and to
provide data for eligible enrollees
[[Page 15852]]
at the QHP metal level for each of the issuer's products offered on the
Exchange. We also seek comment on the proposed annual data submission
requirements in paragraph (b) and (d).
We note that Multi-State Plans, as defined in 45 CFR 155.1000(a),
are subject to providing the data described in paragraph (b). The OPM
will provide guidance on ESS reporting to issuers with whom it holds
Multi-State Plan contracts.
Marketplace Survey
Sections 1313 and 1321(a) of the Affordable Care Act provide the
Secretary with general authority to establish standards and regulations
related to Exchanges, QHPs, and other components of title I of the
Affordable Care Act. In Sec. 155.1200(b)(3), we direct State Exchanges
to submit performance monitoring data on an annual basis, which would
include information on consumer satisfaction. Pursuant to this legal
authority, HHS has proposed a consumer experience survey, or the
Marketplace survey, to assess consumer experience with the
Exchange.\53\ Similar to the ESS, the Marketplace survey has been
developed based on the core set of CAHPS[supreg] principles and the
format and language of the survey drew from existing CAHPS[supreg]
items, to the extent possible. However since the CAHPS[supreg] program
does not have a comparable survey to assess entities similar to
Exchanges, the Marketplace survey items are new and were developed
based on research and feedback from public comment, technical experts
and focus groups. We believe it is important to assess experience of
consumers interacting with an Exchange including obtaining information
regarding aspects such as the application and eligibility determination
process for Medicaid/Children's Health Insurance Program (CHIP)
coverage and the Insurance Affordability Programs. We anticipate that
results from the Marketplace survey would drive quality improvement in
Exchanges and provide regulators and stakeholders with information to
use for monitoring and oversight purposes.
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\53\ Agency Information Collection Activities: Health Insurance
Marketplace Consumer Experience Surveys: Enrollee Satisfaction
Survey and Marketplace Survey Data Collection; Notice, 78 FR 65658
(Nov. 1, 2013).
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We intend to use a single contracted survey vendor to administer
the annual Marketplace survey for each Exchange. We are currently in
the survey developmental testing period for the Marketplace survey in
the States in the Federally-facilitated Exchange and we anticipate the
survey beta test to be conducted in early 2015 in all States. We intend
to provide each Exchange with its respective Marketplace survey
results, beginning in 2015, to be able to make improvements for
upcoming open enrollment periods.
We seek further comment to inform future rulemaking regarding data
provided by State Exchanges to conduct the Marketplace survey. We are
considering directing a State Exchange to provide sampling data for
four types of consumers in an Exchange including: (1) Potential
applicants (individuals who provided contact information but did not
submit an application); (2) potential enrollees (individuals who
successfully applied and were given eligibility and plan information
but did not enroll); (3) enrollees (individuals successfully enrolled);
and (4) effectuated enrollees (individuals who have made their first
premium payment). We are also considering directing a State Exchange to
submit sampling data for the Marketplace survey based on language
preference and disability status across each Exchange and we seek
comment on the feasibility for a State Exchange to provide such data.
G. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Subpart A--Disclosure and Reporting
a. ICD-10 Conversion Expenses (Sec. 158.150)
In September 2012, the Secretary changed the date on which issuers
are required to adopt ICD-10 as the standard medical code set from
October 1, 2013 to October 1, 2014. Because HHS cannot accept claims
using the ICD-10 code sets prior to that date, issuers may incur
conversion costs in 2014 that would otherwise have been incurred only
in 2012 and 2013. In the 2012 and 2013 MLR reporting years, issuers
were allowed to report their ICD-10 conversion costs as expenditures
for activities that improve health care quality (QIA), up to 0.3
percent of an issuer's earned premium in the relevant State and market
(MLR Final Rule, 76 FR 76574). Because the ICD-10 implementation date
has been postponed to 2014, we propose that issuers be allowed to
report their 2014 ICD-10 conversion costs as QIA in the 2014 reporting
year, up to 0.3 percent of an issuer's earned premium in the relevant
State and market. Although there are no plans to further postpone the
ICD-10 implementation date, in recognition of this possibility and to
avoid the need for additional regulatory changes, the regulatory change
proposed herein permits issuers to include their ICD-10 conversion
costs as QIA through the MLR reporting year in which ICD-10
implementation is required by the Secretary.
2. Subpart B--Calculating and Providing the Rebate
a. MLR and Rebate Calculations in States With Merged Individual and
Small Group Markets (Sec. Sec. 158.211, 158.220, 158.231)
Our previous rulemakings concerning PHS Act section 2718 permitted
issuers to aggregate individual and small group market data for MLR
purposes in States that require these two markets to be merged pursuant
to section 1312(c)(3) of the Affordable Care Act. This proposed rule
would modify the requirements for data aggregation in Sec. 158.220(a)
and Sec. 158.231(a) to specify that the individual and small group
market data must always be aggregated if a State requires these two
markets to be merged. In addition, this proposed rule would modify the
requirements regarding a higher State MLR standard in Sec. 158.211 to
clarify that if a State establishes a higher MLR standard for the
merged market, this higher standard must be used to calculate any
rebates for the merged market. These modifications would align the MLR
methodology in the Federal MLR rule with the MLR methodologies applied
by the affected States.
b. Accounting for Special Circumstances (Sec. 158.221)
On November 14, 2013, the Federal government announced a policy
under which, if certain conditions were met, it would decline to
enforce certain specified 2014 market reforms against certain non-
grandfathered health insurance coverage in the individual or small
group market renewed between January 1, 2014 and October 1, 2014, and
requested that States adopt a similar non-enforcement policy.\54\ CMS
noted in the Proposed 2015 Payment Notice (78 FR 72322) that this
transitional policy would not have been anticipated by issuers in
setting rates for 2014 and stated that we were exploring modifications
to different programs to help mitigate the impact of this policy.
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\54\ Letter to Insurance Commissioners, Center for Consumer
Information and Insurance Oversight, November 14, 2013. Available
at: https://www.cms.gov/CCIIO/Resources/Letters/Downloads/commissioner-letter-11-14-2013.pdf.
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Issuers that provided transitional coverage may have incurred
additional administrative costs, such as expenses related to developing
and sending required consumers notices, and creating and submitting new
policy and
[[Page 15853]]
rate filings. We also recognize that issuers of QHPs in the individual
and small group markets may have incurred costs due to technical
problems during the launch of the State and Federal Exchanges.
Pursuant to the direction under PHS Act 2718(c), our development of
the standardized methodologies for calculating an issuer's MLR must be
designed to ``take into account the special circumstances of smaller
plans, different types of plans, and newer plans.'' In the MLR Interim
Final Rule (75 FR 74864), HHS exercised this authority by making
adjustments to the formula for calculating an issuer's MLR with respect
to ``expatriate plans'' (i.e., policies that provide coverage to
employees outside their country of citizenship, employees outside their
country of citizenship and outside their employer's country of
domicile, and non-U.S. citizens working in their home country) and
``mini-med'' plans (i.e., plans with a total annual benefit maximum of
$250,000 or less).
In its discussion of the ``special circumstances'' that applied to
expatriate plans, the Interim Final Rule noted that ``their unique
nature results in a higher percentage of administrative costs in
relation to premiums than plans that provide coverage primarily within
the United States.'' \55\ Examples of the higher administrative costs
for these plans include: Identifying and credentialing providers
worldwide in countries with different licensing and other requirements
from those found in the United States, processing claims submitted in
various languages that follow various billing procedures and standards,
providing translation and other services to enrollees, and helping
subscribers locate qualified providers in different countries. The
Interim Final Rule also recognized the ``special circumstances'' that
applied to mini-med plans. In this latter case, it was not higher
administrative costs, but lower claims costs relative to administrative
costs, due to the very low annual dollar limits of mini-med plans. In
both cases, adjustments were made to the MLR methodology as applied to
such plans so that they would not be required to pay rebates based on
their plan design, even if they were relatively as efficient as other
plans that are able to meet the MLR standard under the standard
methodology.
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\55\ 75 CFR 74871.
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Consistent with this approach, we are proposing to exercise our
authority to account for the special circumstances of plans affected by
the transitional policy or the technical problems during the launch of
the State and Federal Exchanges. These adjustments would only extend to
issuers in the individual and small group markets that offered
transitional coverage or participated in the State and Federal
Exchanges, and only for the 2014 reporting year. A transitional policy
cost adjustment to the formula for calculating an issuer's MLR would
not apply in States that did not implement the transitional policy, or
in States that did, to issuers that did not elect to implement it.
With respect to the adjustment for issuers offering transitional
coverage, we are proposing that the MLR calculation methodology for the
individual and small group markets would be changed to allow these
issuers to multiply the incurred claims and expenses for quality
improving activities incurred in 2014 in the MLR numerator by 1.0001.
This adjustment takes into account the fact that the multiplier would
be applied to the issuer's entire experience in 2014, which may also
include experience for plans other than transitional coverage in that
State and market. In developing this adjustment, we considered the
following costs as they relate to the transitional policy: (1)
Developing and sending required notices; (2) actuarial work, including
that with respect to premium stabilization programs; (3) regulatory and
rate filings; and (4) activities related to re-contracting.
With respect to the adjustment for issuers offering coverage
through the State and Federal Exchanges, we are proposing that the MLR
calculation methodology for the individual and small group markets
would be changed to allow issuers participating in the Exchanges to
multiply the incurred claims and expenses for quality improving
activities incurred in 2014 in the MLR numerator by 1.0004. This
adjustment takes into account the fact that the multiplier would be
applied to the issuer's entire experience in 2014, which may also
include experience for plans offered off the Exchange in that State and
market. In developing this adjustment, we considered the following
costs as they relate to the technical issues during the launch of the
State and Federal Exchanges: (1) Information technology (IT)
development and testing; (2) IT system modifications and re-
programming; (3) providing feedback to CMS or a State on functionality
and data transmission; (4) assistance to enrollees (e.g., enhanced call
center activity); (5) engaging in pilot projects relating to direct
enrollment; (6) developing technical ``tickets'' for the CMS or a State
help desk; (7) work with the Exchange(s) to resolve these technical
problems; (8) manual processing of enrollment data, including but not
limited to enrollment and payment data template creation, monthly
submission of data reports, and monthly submission of data accuracy
certification forms; and (9) development of other manual workarounds.
HHS believes that these adjustments would appropriately account for
the special circumstances related to implementation of the transitional
policy and the rollout of the Exchanges, while still requiring issuers
to comply with the statutory MLR requirement.
In addition to seeking comment on the above proposed approach, we
also invite comment on other options for making an appropriate
adjustment to the MLR formula to account for the unanticipated costs
related to the transitional policy and the Exchange implementation.
c. Distribution of De Minimis Rebates (Sec. 158.243)
The MLR December 7, 2011 final rule defines the threshold amounts
below which rebates are considered to be de minimis and sets forth the
provisions for distribution of such rebates. In this proposed rule, we
propose to amend the provisions for de minimis rebates in Sec. 158.243
to clarify how issuers must distribute rebates where (1) all of an
issuer's rebates are de minimis, or (2) distribution of de minimis
rebates to enrollee(s) whose rebates are not de minimis would result in
an enrollee receiving a rebate that exceeds the enrollee's annual
premium. We propose that in these two situations, the issuer must
distribute de minimis rebates to enrollees in the policies that
generated the de minimis rebates. The current de minimis rebate
provisions allow issuers not to distribute de minimis rebates to
enrollees in the policies that generated those rebates, but instead to
aggregate such rebates and distribute them to other enrollees whose
rebates are not de minimis.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act (PRA) 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. This
proposed rule contains information collection requirements (ICRs) that
are subject to review by OMB. In order to fairly evaluate whether an
information collection should be approved by OMB, section 3506(c)(2)(A)
of the Paperwork
[[Page 15854]]
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.
We are soliciting public comment on each of these issues, which
contain ICRs.
A. ICRs Regarding Recertification for Certified Application Counselors
(Sec. 155.225)
Under proposed Sec. 155.225(d)(7), certified application
counselors would be required to be recertified on at least an annual
basis after successfully completing recertification training as
required by the Exchange. Each Exchange would be required to establish
its own recertification process and standards consistent with these
requirements. We expect that establishing a process for recertification
would include creating a recertification request form (or similar
document) in Exchanges that directly certify certified application
counselors. We estimate that up to 18 State Exchanges would develop
their own recertification request form.\56\ We estimate that the
development of a recertification request form, as may be applicable for
Exchanges that directly certify certified application counselors would
take a health policy analyst (at $49.35 labor cost per hour) up to 1
hour to create, a senior manager (at $79.08 cost per hour) up to .5
hours (30 minutes) for review, and an attorney up to .5 hours (at
$90.15 labor cost per hour) for legal review. We estimate that the one-
time cost burden would be two hours with a cost burden of $134 for each
Exchange, and the total burden for 18 State Exchanges would be 36 hours
with a cost burden of $2,412.
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\56\ We estimate 18 State Exchanges (which includes Utah) will
develop their own processes for recertification. HHS will establish
a single process in all FFEs.
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There are recordkeeping requirements associated with developing and
maintaining a request form. We estimate that the time burden associated
with maintaining a copy of the request form would be .016 hours (1
minute); we assume a mid-level health policy analyst would maintain the
form through electronic copies at minimal cost, which we estimate as
$0.79 as a one-time requirement for the Exchange. The total burden for
18 Exchanges would be 1.08 hours and the total cost burden would be
$14.22.
There would also be third-party disclosure requirements for 18
State Exchanges associated with reviewing each certified application
counselor's recertification request, which would require the Exchange
to notify the individual of the result of its review and issue a new
certificate for each individual who successfully completes
recertification. This notice requirement would apply to the Exchange on
an annual basis. We estimate that it would take a mid-level health
policy analyst in the Exchange up to .08 hours (5 minutes) to notify an
individual. The estimated cost burden is $4.11 for each individual
notice, including the certificate. For purposes of this analysis, we
estimate that there would be approximately 30,000 certified application
counselors nationwide, or approximately 10,600 application counselors
in 18 State Exchanges. The total cost burden would be approximately
$2,422 for each State Exchange. The total burden for 18 State Exchanges
would be approximately 883 hours and the total cost burden would be
$43,593. There would be recordkeeping requirements associated with
issuing each individual notice. We estimate that the time burden
associated with maintaining a copy of the notice and certificate would
be .016 hours (1 minute); we assume a mid-level health policy analyst,
with a labor cost of $49.35 an hour, would maintain the form through
electronic copies at minimal cost, which we estimate as $0.79 per
notice for each individual certified application counselor. The total
recordkeeping burden for 10,600 certified application counselors in 18
State Exchanges would be 170 hours and the total cost burden would be
$8,374, or $265 per Exchange.
For Exchanges that designate organizations to directly certify
certified application counselors under Sec. 155.225(b)(1), there would
be requirements associated with implementing a recertification process
under the applicable Exchange's standards. We expect that this process
would include creating and issuing a recertification request form (or
similar document) for an organization's certified application
counselors to submit to indicate their intention to be recertified and
provide an updated conflicts of interest disclosure or other
attestations as may be required. We estimate that up to 5,000
designated organizations would develop their own recertification
request form. We estimate that the development of a recertification
request form would take a health policy analyst (at $49.35 labor cost
per hour) up to 1 hour to create, a senior manager (at $79.08 labor
cost per hour) up to .5 hours (30 minutes) for review, and an attorney
(at $90.15 labor cost per hour) up to .5 hours (30 minutes) for legal
review. We estimate that the one-time cost burden would be $134 for
each organization. The total one-time burden for 5,000 organizations
nationwide would be 10,000 hours and the total cost burden would be
$670,000.
There would be recordkeeping requirements associated with
developing and maintaining a request form. We estimate that the time
burden associated with maintaining a copy of the request form would be
.016 hours (1 minute); we assume a mid-level health policy analyst with
a labor cost of $49.35 an hour would maintain the form through
electronic copies at minimal cost, which we estimate as $0.79 as a one-
time requirement for each organization. The total one-time burden for
5,000 organizations nationwide would be 80 hours and the total cost
burden would be $3,950.
There would also be third-party disclosure requirements for
designated organizations associated with reviewing each certified
application counselor's recertification request, which would require
the organization to notify the individual of the result of its review
and issue a new certificate as appropriate. This notice requirement
would apply to the organization on an annual basis. For purposes of
estimating the burden on designated organizations, we assume that of
the estimated 30,000 certified application counselors nationwide,
approximately 19,400 would be directly certified by designated
organizations, or four certified applications counselors on average per
designated organization. We estimate that it would take a mid-level
health policy analyst up to .08 hours (5 minutes) to notify an
individual and issue a new certificate. The estimated cost burden is
$4.11 for each individual notice. For an estimated 19,400 certified
application counselors nationwide, or approximately four certified
application counselors on average in each organization, the total cost
burden would be approximately $16.44 for each organization. The total
burden for 5,000 designated organizations nationwide would be
approximately 1,617 hours and the total cost burden would be
approximately $79,734.
There would be recordkeeping requirements associated with issuing a
certificate. We estimate that the time burden associated with
maintaining a copy of each certificate issued at recertification would
be .016 hours (1
[[Page 15855]]
minute); we assume a mid-level health policy analyst with a labor cost
of $49.35 an hour would maintain the form through electronic copies at
minimal cost, which we estimate as $0.79 as a per certificate for each
organization. The total recordkeeping cost per organization would be
$3.16. The total burden for 5,000 organizations nationwide would be 323
hours and the total cost burden would be approximately $15,326.
There would be third-party disclosure requirements for individual
certified application counselors associated with completing the
requirements for recertification, whether done directly through the
Exchange or through an Exchange-designated certified application
counselor organization. Such recertification requirements would include
completing Exchange required training and might also include satisfying
other requirements consistent with the Exchange-established processes,
such as providing conflicts of interest disclosures, other attestations
and submitting a recertification request form (or similar document) and
other attestations. These requirements would apply to certified
application counselors on an annual basis. Although nothing prohibits
individual certified application counselors or organizations from being
funded through sources such as applicable private, State, or Federal
programs, we expect that certified application counselors would not be
guaranteed any specific funding. We estimate the professional wage of
certified application counselors for this type of work as equivalent to
that of an eligibility interviewer for assistance from government
programs and agency resources. We estimate that it would take a
certified application counselor with a labor cost of $26.65 an hour up
to 0.17 hours (10 minutes) to complete and submit the recertification
request to the organization or Exchange, as applicable. The estimated
cost burden would be $4.53 for each individual seeking recertification.
We estimate that there would be approximately 30,000 recertification
requests provided, for a total burden of 5,000 hours and a total cost
burden of $135,915 for all certified application counselors nationwide.
There would be third-party disclosure requirements associated with
taking recertification training. We expect that an individual certified
application counselor would provide proof to the organization or
Exchange that he or she has successfully completed the recertification
training, in accordance with the Exchange's process. We estimate that
it would take a certified application counselor with a labor cost of
$26.65 an hour up to .03 hours (2 minutes) to provide the training
certificate to the organization or Exchange, as may be required. The
total estimated cost burden is $0.80 for each individual seeking
recertification. We estimate that there would be approximately 30,000
training certificates provided, and the total burden would be 1,000
hours, with a total cost burden of $24,000 for all certified
application counselors nationwide.
In addition, there would be recordkeeping requirements associated
with the training certification. We expect each person who receives
training would obtain and maintain a record of training certification.
We estimate that the time burden associated with maintaining proof of
training certification is .016 hours (1 minute), since we assume this
proof would be maintained through electronic copies, at minimal cost.
The total cost estimated for each individual to maintain proof of
training certification would be $0.43. The total burden would be 500
hours and the total cost burden would be $12,900 for all certified
application counselors nationwide.
B. ICRs Regarding Consumer Authorization (Sec. Sec. 155.210 and
155.215)
For purposes of the ICRs associated with this proposal, we use the
same labor cost estimates that were used in the final Navigator and
non-Navigator assistance personnel standards rule (Patient Protection
and Affordable Care Act; Exchange Functions: Standards for Navigators
and Non-Navigator Assistance Personnel, July 17, 2013, 78 FR 42842).
Navigator personnel and non-Navigator assistance personnel to which
Sec. 155.215 applies are estimated to have a labor cost of $20 per
hour. Navigator and non-Navigator assistance project leads to which
Sec. 155.215 applies are estimated to have a labor cost of $29 per
hour. Navigator and non-Navigator senior executives to which Sec.
155.215 applies are estimated to have a labor cost of $48 per hour.
These are estimates commonly used for estimating paperwork burden and
do not represent a recommendation or a requirement of how much
Navigator and non-Navigator personnel to which Sec. 155.215 applies
are to be paid. There is nothing in the proposed regulations that would
require any of these workers to be paid any specific amount.
In the ICR currently approved under OMB control number (OCN) 0938-
1220, we noted that there were 105 Navigator grantee organizations at
that time in FFEs, including SPEs, and we estimated that there were
3,000 individuals working as Navigators. We estimated the number of
non-Navigator assistance project leads to be 300 and 1,800 for
personnel and we use those estimates here as well.
In accordance with proposed Sec. 155.210(e)(6) and Sec.
155.215(g), Navigators, as well as those non-Navigator personnel to
whom Sec. 155.215 applies, would be required to maintain procedures to
inform consumers of the functions and responsibilities of Navigators
and non-Navigator assistance personnel (as applicable), and to obtain
authorization for the disclosure of consumer information to the
Navigator or non-Navigator assistance personnel (as applicable). This
would be a one-time requirement for the organization. We estimate that
it would take a Navigator or non-Navigator assistance personnel project
lead up to 2 hours to create the form for providing authorization to
applicants, and a Navigator or non-Navigator senior executive up to 1
hour to review the procedure, for a total time burden of up to 3 hours.
We estimate the cost burden associated with creating this procedure
would be $106 per organization. The total cost for all 105 Navigator
grantee organizations is estimated to be $11,130. The total cost for
all 300 non-Navigator assistance personnel organizations is estimated
to be $31,800.
There are also recordkeeping requirements associated with
developing and maintaining a model agreement and authorization form.
Each organization is expected to maintain a copy of the executed forms.
We estimate that the time burden associated with maintaining a copy of
executed agreement and authorization forms for each consumer would be
0.016 hours (1 minute); we assume these would be maintained through
electronic copies with minimal cost.
In addition, there would be burdens on individual Navigators, as
well as those non-Navigator assistance personnel to whom Sec. 155.215
applies. Under Sec. 155.210(e)(6) and Sec. 155.215(g), respectively,
Navigators and non-Navigator assistance personnel would be required to
inform consumers of the functions and responsibilities of Navigators
and non-Navigator assistance personnel and obtain authorization for the
disclosure of consumer information to a Navigator or non-Navigator
assistance personnel prior to obtaining the consumer's personally
identifiable information. In the final rule on certified application
counselors (78 FR 42824, 42854-42855), we estimated that it would take
a certified application counselor 0.25 hours (15 minutes) to provide
consumers with information
[[Page 15856]]
about the functions and responsibilities of a certified application
counselor, obtain their authorizations, and provide any applicable
conflict of interest disclosures. Because here we are only estimating
the time required to provide consumers with information about the
functions and responsibilities of a Navigator or non-Navigator
assistance personnel and obtain their authorization, we estimate that
it would take a Navigator or non-Navigator assistance personnel 0.1667
hours (10 minutes) to perform this task. The total cost estimate for
the consumer authorization process for Navigators and non-Navigator
assistance personnel therefore would be $3.33. The total time burden on
all 3,000 Navigators is estimated to be approximately 500 hours, and
the total cost burden on all 3,000 Navigators is estimated to be
$9,990. The total time burden on all 1,800 non-Navigator assistance
personnel is estimated to be 300 hours, and the total cost burden on
all 1,800 non-Navigator assistance personnel is estimated to be $5,994.
C. ICRs Regarding Enrollee Satisfaction & Marketplace Surveys
(Sec. Sec. 155.1200, 156.1105 and 156.1125)
In Sec. 156.1105 of this proposed rule, we would establish a
monitoring and appeals process for HHS-approved enrollee satisfaction
survey vendors. Specifically, in Sec. 156.1105(d), we would establish
a process in which HHS would monitor approved vendors for ongoing
compliance. HHS might require additional information from approved
vendors to be periodically submitted in order to ensure continued
compliance. We estimate that HHS would approve approximately 40 ESS
vendors. We estimate that it would take no longer than one hour for
each vendor (at a cost of $24.10 per hour) to comply with any
additional monitoring by HHS. Therefore, we estimate a total annual
burden of 40 hours for all vendors for a total cost burden estimate of
$964.00.
In Sec. 156.1105(e) of this proposed rule, we propose a process by
which an enrollee satisfaction survey vendor that is not approved by
HHS could appeal HHS's determination. It is estimated that filing an
appeal with HHS would take no longer than one hour. We estimate that
five survey vendors that apply would not be approved and all of those
vendors would appeal HHS's determination and submit additional
documentation to HHS. Therefore, we estimate five responses, for a
total of five burden hours, for a total cost of $120.50.
The burden estimate associated with quality standards for QHP
issuers related to the ESS outlined in Sec. 156.1125 would include the
time and effort required for QHP issuers to collect, submit and
validate ESS data on an annual basis. The burden and cost related to
the survey respondents and ESS vendors associated with the ESS has been
approved under OCN 0938-1221. In addition, we estimate that each QHP
would need an average of 54 hours or $1,349.60 for the ESS to be
administered by mail, phone and/or by web for its QHPs. Assuming a
total of 575 QHP issuers, we estimate that the annual burden would be
31,050 hours or $776,020.
The burden with the Marketplace survey under Sec. 155.1200(b)(3)
would include the time, cost and effort related to survey respondents
and has been approved under OCN 0938-1221. In addition, we will revise
the information collection currently approved under OCN 0938-1119 to
account for any additional burden for an Exchange if sampling data is
needed from State Exchanges for CMS to administer the Marketplace
survey.
D. ICR Regarding Quality Rating System (Sec. 156.1120)
The burden and cost estimates associated with quality standards for
QHP issuers related to the QRS outlined in Sec. 156.1120 would include
estimates for QRS measure data collection, validation, and submission
to CMS. We estimate that a total of 575 QHP issuers would be collecting
and reporting QRS measure data, by product type, using administrative
data sources and medical records. Using the BLS labor category
estimates for a general operations manager, computer programmer,
business operations specialist, registered nurse, and medical records
and health information analyst, the estimated annual cost and hourly
burden for a QHP issuer would be $117,424 and 1650 hours, for an issuer
who has performance measures data collection experience. We estimate
that approximately eighty percent of all issuers, or 460 issuers, have
such experience. We anticipate additional software purchases to
generate measure data and rates and increased third-party data
validation fees for issuers that do not have the experience in data
collection and reporting for the QRS as proposed in Sec. 156.1120.
Therefore, we estimate that the additional cost burden for each of the
remaining 115 issuers would be approximately $102,500 in the initial
year as they develop their data collection systems and processes, for a
total of approximately $11,787,500. We estimate $67,518,800 and 948,750
hours as the total annual burden for the anticipated 575 QHP issuers to
collect and report QRS data.
E. ICRs Regarding Quality Standards for Exchanges (Sec. Sec. 155.1400
and 155.1405)
In Sec. 155.1400 and Sec. 155.1405, we propose that each Exchange
must display, on its Web site, quality rating and enrollee satisfaction
survey result information for QHPs offered on the Exchange. We estimate
18 State Exchanges and the FFE would collect the relevant QRS and ESS
information for display. The burden estimate associated with these
standards would include collection of the necessary data by each
Exchange to display on its Web site. This burden and cost for Exchanges
are currently approved under ONC 0938-1156 in the total Web site site
that provides information including ESS and quality ratings, on
available QHPs. The provisions of this proposed rule would not affect
the burden.
F. ICR Regarding Medical Loss Ratio Requirements (Sec. Sec. 158.150,
158.211, 158.220, 158.221, 158.231 and 158.243)
This proposed rule would amend the MLR provisions regarding the
treatment of ICD-10 conversion costs. This proposed rule further
proposes MLR calculation adjustments for issuers affected by the
transitional policy announced in the CMS letter dated November 14, 2013
and for issuers participating in the State and Federal Exchanges. This
proposed rule would also clarify how issuers are to calculate their
MLRs in States that require the small group market and individual
market to be merged. In addition, this proposed rule would clarify how
issuers must distribute de minimis rebates. Both MLRs and rebates are
reported on the MLR annual reporting form.
The burden for the existing information collection requirement is
approved under OCN 0938-1164. This includes the annual reporting form
and instructions that are currently used by issuers to submit MLR
information to HHS. The MLR annual reporting form collects information
on all distributed and owed rebate amounts, regardless of whether they
are de minimis. Prior to the July 31, 2015 deadline for the submission
of the annual MLR report for the 2014 MLR reporting year, and in
accordance with the PRA, HHS plans to solicit public comment and seek
OMB approval for an updated MLR annual form that would reflect the
changes in MLR calculations. In addition, although HHS is seeking OMB
approval for updates to the MLR annual form that reflect changes in MLR
calculations in States that require the small group market and
individual market to be
[[Page 15857]]
merged, and changes that would allow issuers to separately report
transitional coverage, these changes are not considered new reporting
requirements as they utilize information that is a subset of
information that issuers already submit to HHS. We do not anticipate
that the proposed changes would increase the burden on issuers.
G. ICRs Regarding Civil Money Penalties (Sec. Sec. 155.206 and
155.285)
Section 155.206 describes the bases and processes HHS proposes to
use to impose CMPs on noncompliant consumer assistance personnel and
organizations. Section 155.285 describes the bases and processes HHS
proposes to use to impose CMPs on persons who provide false or
fraudulent information required under section 1411(b) of the Affordable
Care Act or who knowingly and willfully use or disclose information in
violation of section 1411(g) of the Affordable Care Act. The ICRs
proposed in these provisions are exempt from PRA requirements in
accordance with 5 CFR 1320.4(a)(2) because this information would be
collected during the conduct of an administrative action or
investigation involving an agency against specific individuals or
entities.
H. ICRs Regarding Fixed Indemnity Insurance, Minimum Essential
Coverage, Certifications of Creditable Coverage and HIPAA Opt-Out
Election Notice, Notice of Discontinuation, Notice of Renewal
(Sec. Sec. 146.152, 146.180, 147.106, 148.122, 148.124, 148.220, and
156.602)
In Sec. 148.220 of this proposed rule, we propose that issuers of
individual market fixed indemnity insurance include a notice in plan
materials stating that the coverage is not a substitute for major
medical coverage and that lack of minimum essential coverage may result
in an additional payment with one's taxes. The notice requirement could
be satisfied by inserting a statement into existing plan documents. HHS
would provide the exact text of the notice and it would not need to be
customized. In addition, under proposed Sec. 156.602, issuers of
foreign group health coverage would be required to provide notice to
enrollees who are citizens or nationals of the United States of its
minimum essential coverage status. Plan documents are usually reviewed
and updated annually before a new plan year begins. Issuers would be
able to insert the statements in their plan documents at that time at
minimal cost. Once the notice is included in the plan documents the
first year, no additional cost would be incurred in future years.
Sections 146.152, 147.106 and 148.122 of this proposed rule provide
that issuers that discontinue a product in the group or individual
market, or that provide the option to renew coverage, would also be
required to provide written notices to enrollees in a form and manner
specified by the Secretary. HHS would provide the exact text of the
notices and they would not need to be customized. The burden associated
with these notices would not be subject to the Paperwork Reduction Act
of 1995 in accordance with 5 CFR 1320.3(c)(2).
Certifications of creditable coverage under Sec. 148.124 would no
longer be required to be provided starting December 31, 2014. The
burden is currently approved under OCN 0938-0702. In the individual
market, the anticipated reduction in annual burden hours would be
835,517, with an anticipated reduction in cost of $25,625,306. The
burden for HIPAA Opt-out Election notices under Sec. 146.180 is
currently approved under OCN 0938-0702 as well. Electronic submission
of opt-out election notice will also reduce costs for plans by
eliminating the need for mailing paper forms.
If you comment on these information collection requirements, please
do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
CMS-9949-P. Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov.
V. Regulatory Impact Analysis
A. Summary
This proposed rule addresses various requirements applicable to
health insurance issuers, Exchanges, Navigators, non-Navigator
assistance personnel, and other entities under the Affordable Care Act.
It also proposes a number of amendments relating to the premium
stabilization programs, the medical loss ratio program, certified
application counselor programs, affordability exemptions, guaranteed
availability and renewability of coverage, and quality reporting
requirements. Additionally, it proposes the grounds for imposing CMPs
on persons who provide false or fraudulent information to the Exchange
and on persons improperly using or disclosing information; to modify
standards related to opt-out provisions for self-funded non-Federal
governmental plans and individual market provisions under the Health
Insurance Portability and Accountability Act of 1996; and standards for
recognition of certain types of foreign group coverage as minimum
essential coverage.
CMS has crafted this rule to implement the protections intended by
Congress in an economically efficient manner. We have examined the
effects of this rule as required by Executive Order 12866 (58 FR 51735,
September 1993, Regulatory Planning and Review), the Regulatory
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section
1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of
1995 (Pub. L. 104-4), Executive Order 13132 on Federalism, and the
Congressional Review Act (5 U.S.C. 804(2)). In accordance with OMB
Circular A-4, CMS has quantified the benefits, costs and transfers
where possible, and has also provided a qualitative discussion of some
of the benefits, costs and transfers that may stem from this proposed
rule.
B. Executive Orders 13563 and 12866
Executive Order 12866 (58 FR 51735) directs agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects; distributive impacts; and equity). Executive
Order 13563 (76 FR 3821, January 21, 2011) is supplemental to and
reaffirms the principles, structures, and definitions governing
regulatory review as established in Executive Order 12866.
[[Page 15858]]
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a proposed
rule--(1) having an annual effect on the economy of $100 million or
more in any one year, or adversely and materially affecting a sector of
the economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities
(also referred to as ``economically significant''); (2) creating a
serious inconsistency or otherwise interfering with an action taken or
planned by another agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year), and a ``significant'' regulatory action is subject to review by
the OMB. HHS has concluded that this rule is likely to have economic
impacts of $100 million or more in any one year, and therefore meets
the definition of ``significant rule'' under Executive Order 12866.
Therefore, HHS has provided an assessment of the potential costs,
benefits, and transfers associated with this proposed regulation.
1. Need for Regulatory Action
Starting in 2014, qualified individuals and qualified employers are
able to obtain coverage provided through Exchanges. The proposed
provisions, amendments and clarifications in this proposed rule would
address stakeholder concerns and inquiries and ensure smooth
functioning of health insurance markets and Exchanges and ensure that
individuals have access to high quality and affordable health insurance
coverage. In addition, this proposed rule would establish methodologies
for calculating the MLR to address ICD-10 conversion costs, MLR and
rebate calculations in States that require the individual and small
group markets to be merged, the distribution of de minimis rebates, and
to accommodate the special circumstances of issuers affected by the
transitional policy announced in the CMS letter dated November 14,
2013, and issuers participating in the State and Federal Exchanges.
2. Summary of Impacts
In accordance with OMB Circular A-4, Table V.1 below depicts an
accounting statement summarizing CMS's assessment of the benefits,
costs, and transfers associated with this regulatory action. The period
covered by the RIA is 2014-2018.
HHS anticipates that the provisions of this proposed rule will
ensure that all consumers have access to quality and affordable health
care and are able to make informed choices, ensure smooth operation of
Exchanges, ensure that premium stabilization programs work as intended,
provide flexibility to SHOPs and employers, and protect consumers from
fraudulent and criminal activities. Affected entities such as QHP
issuers, Navigators and non-Navigator assistance personnel, designated
certified application counselor organizations, survey vendors, and
States, would incur costs to comply with the proposed provisions,
including administrative costs related to notices, surveys, training,
and recertification requirements. In accordance with Executive Order
12866, HHS believes that the benefits of this regulatory action justify
the costs.
Table V.1--Accounting Table
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Benefits:
Qualitative:
* Ensure access to affordable and quality health insurance coverage for all individuals.....................
* Allow consumers to make informed choices..................................................................
* Lower out-of-pocket costs for individuals who purchase fixed indemnity insurance..........................
* Possible reduction in cost sharing due to adjustment in methodology for calculating annual limitations on
cost-sharing and small group deductibles..
* Ensure sufficiency of funds in the reinsurance payment pool...............................................
* Ensure consumer protection and privacy and security of PII................................................
* Discourage fraudulent or criminal activity by consumer assistance personnel and entities..................
* Provide additional flexibility to SHOPs and employers and allow employers to select plans with updated
rate information..
* Improve consistency of MLR calculations among issuers in States with merged individual and small group
markets and improve accuracy of rebate payments..
----------------------------------------------------------------------------------------------------------------
Costs: Estimate Year dollar Discount Period
rate percent covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/year). $48.78 million \1\...... 2013 7 2014-2018
$49.52 million \1\...... 2013 3 2014-2018
----------------------------------------------------------------------------------------------------------------
Net annual costs to enrollees related to ESS and Marketplace survey; recertification of certified application
counselors by States; administrative costs incurred by survey vendors to appeal application denials;
administrative costs to QHP issuers related to data submissions for QRS and ESS administration; costs related
to notice and disclosure requirements for certified application counselor recertification; consumer
authorization for Navigators and non-Navigator personnel; and a reduction in costs for issuers in the
individual market due to discontinuation of certification of creditable coverage.
----------------------------------------------------------------------------------------------------------------
Qualitative:
* Costs to certified application counselors to obtain required training for recertification.................
* Reduction in costs to consumers due to ability to make requests to dismiss appeals by telephone...........
* Possible increase in premiums due to adjustments in methodology for calculating annual limitations on cost-
sharing and small group deductibles..
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
[[Page 15859]]
Table V.1--Accounting Table - Continued
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Transfers: Estimate Year dollar Discount Period
rate percent covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/year). $2.93 million........... 2013 7 2014-2018
$2.99 million........... 2013 3 2014-2018
----------------------------------------------------------------------------------------------------------------
Net annual transfer of rebate dollars to enrollees from shareholders or nonprofit stakeholders, resulting from
adjustment in MLR methodology for issuers in States with merged individual and small group markets.
Qualitative:
* Possible reduction in rebates paid by issuers to enrollees due to adjustment in MLR methodology for
issuers affected by the November 2013 transitional policy and unexpected costs during the implementation of
the Exchanges, and to account for ICD-10 conversion costs..
* Possible transfer of transitional reinsurance program funds from the Federal government to non-
grandfathered reinsurance-eligible plans in the individual market..
* Possible increase in total risk corridors payment amounts made by the Federal government and decrease in
total risk corridors receipts, although the Federal government intends to implement the risk corridors
program in a budget neutral manner..
----------------------------------------------------------------------------------------------------------------
1. Note: Approximately $13 million in costs are estimated in the RIA below and the remaining costs related to
ICRs are estimated in section IV above.
3. Anticipated Benefits, Costs and Transfers
The impacts of the existing regulations that are being amended and
clarified in this proposed rule have already been addressed in RIAs
included in previous rulemaking. This RIA only includes the impacts of
new provisions and any changes to previous estimates as a result of
amendments to existing provisions.
Benefits
Provisions of this proposed rule would ensure that all individuals
have access to affordable and quality health insurance coverage and the
necessary information to make informed choices. Making quality rating
and enrollee satisfaction survey information available to consumers
would allow them to make informed choices and provide issuers with an
incentive to improve quality of care and consumer experience. The
results from the Marketplace survey would drive quality improvement in
Exchanges and provide regulators and stakeholders with information to
use for monitoring and oversight purposes. The proposed amendments to
special enrollment periods would ensure that individuals who experience
loss of coverage or exceptional circumstances have continued access to
healthcare. The proposal to designate foreign group health coverage for
individuals on expatriate status as minimum essential coverage would
ensure that such individuals have appropriate coverage while abroad or
visiting the United States.
The proposed amendments for fixed indemnity insurance would allow
such plans to be sold as secondary to other health insurance coverage
that meets the definition of minimum essential coverage. This would
allow individuals that buy such coverage to lower their out-of-pocket
costs.
The proposed adjustments to the transitional reinsurance program
would ensure that the reinsurance pool is sufficient to provide the
premium stabilization benefits intended by statute. The proposed
adjustments to the risk corridors formula for the 2015 benefit year
would help to mitigate issuers' unexpected administrative costs and
uncertainties around operations and the risk pool, and to stabilize the
market as it continues to transition to full compliance with Affordable
Care Act requirements.
The proposed regulations would clarify some of the standards for
Navigator and certified application counselor conduct that would ensure
consumer protection and ensure that Navigators provide information and
services concerning enrollment in QHPs in a fair and impartial manner
and that certified application counselors act in consumers' best
interests. The proposed rule would also provide HHS with the authority
to impose CMPs on Navigators, non-Navigator assistance personnel,
certified application counselors, and certified application counselor
organizations in the FFE who violate the Exchange standards applicable
to them. This would ensure that consumers interacting with the Exchange
receive high-quality assistance and robust consumer protection. The
proposed provisions to impose CMPs for provision of false or fraudulent
information, and improper use or disclosure of information would also
ensure privacy and security of consumers' PII.
The proposed amendments to the annual employer and employee
enrollment periods in the SHOP would benefit SHOPs by providing issuers
with the same amount of time to complete the SHOP QHP certification
process as that available for the individual Exchange. Aligning the
start dates for the employer election period with the start of
individual market Exchange open enrollment for 2015 would provide
Exchanges with a uniform timeline for improving and launching Exchange
services for 2015. Additionally, a uniform QHP filing and review
timeline for both markets for 2015 would reduce confusion and provide
efficiencies to scale in review, providing potential resource savings
to Exchanges and QHP issuers. Removing the required minimum lengths of
both the employer election period and the employee open enrollment
period would provide additional flexibility to SHOPs and employers and
allow employers to select plans with the most up-to-date rate
information.
The proposed amendment to provide for a one year transition policy
under which a SHOP would be permitted to not implement employee choice
in 2015 would alleviate concerns that HHS has with specific
circumstances where employee choice would result in significant adverse
selection in the State's small group market that cannot be remediated
through the premium stabilization programs or the single risk pool, or
that there would not be a meaningful choice of QHPs and/or stand-alone
dental plans in the State's SHOP. Allowing for this transitional policy
in 2015 will provide minimal disruption to small group markets.
The proposed amendment to our methodology for calculating the
annual limitation on cost sharing and the annual limitation on small
group deductibles could reduce cost sharing paid by some enrollees in
the individual and group markets.
The proposed amendments to the MLR methodology in States that
require the small group market and individual market to be merged would
improve the
[[Page 15860]]
consistency of MLR calculations among issuers in those States and
improve the accuracy of rebate payments.
The approaches we are considering to define the required
contribution percentage would provide that determinations of
affordability exemptions would take into account the rate of premium
growth over the rate of income growth. We do not anticipate that these
approaches would significantly alter the number of individuals who
would be expected to enroll in health insurance plans or make shared
responsibility payments.
Costs
Affected entities would incur costs to comply with the provisions
of this proposed rule. Costs related to ICRs subject to PRA are
discussed in detail in section IV and include administrative costs
incurred by survey vendors to appeal application denials; costs to QHP
issuers related to data submissions for QRS, ESS administration; costs
related to notice and disclosure requirements for certified application
counselor recertification, consumer authorization for Navigators and
non-Navigator assistance personnel; and a reduction in costs for
issuers in the individual due to discontinuation of certification of
creditable coverage. In this section, we discuss other costs related to
the proposed provisions.
Each Exchange must establish its own recertification process for
certified application counselors and designated certified application
counselor organizations. We expect that establishing a process for
recertification would include updating recertification training
materials in all Exchanges. We estimate that up to 18 State Exchanges
will develop their own training materials. We expect that an Exchange
would develop training materials for recertification on an annual
basis. We assume that it would take a mid-level health insurance
analyst (with an hourly labor cost of $49.35) 8 hours to update the
training, 4 hours for a computer programmer (at $52.50 per hour) to
update the online training module and 1 hour by a senior manager (at
$79.08 per hour) to review. The total cost for each State Exchange is
estimated to be approximately $680, and the total cost for 18 State
Exchanges would be approximately $12,240.
The proposed requirement for appeals entities to dismiss an appeal
if the request is received via telephonic signature (if the appeals
entity is capable of accepting telephonic withdrawals) would make the
process more efficient and may reduce costs to the appellant.
The enrollee satisfaction survey would impact enrollees responding
to the survey, survey vendors and QHP issuers. In 2014, a psychometric
test of the survey would be carried out, while in 2015 a beta test
would be performed. The cost to issuers is addressed in section IV. We
anticipate that in 2014, 4,200 enrollees would participate in the
psychometric test and in 2015 onwards, 6,000,040 enrollees would
complete the survey. The total cost in 2014 of administering the survey
to enrollees is estimated to be approximately $45,549 and the total
cost to enrollees and survey vendors is estimated to be approximately
$6,507,964 in 2015 and future years. In 2014, only one survey vendor
would conduct the psychometric test and in the following years, about
40 vendors are expected to conduct the survey.\57\ In addition, each
QHP issuer would have to contract with an ESS vendor. We estimate
approximately $16,000 as the annual cost for a QHP issuer to contract
with an ESS vendor, for a total annual cost of $9.2 million for 575 QHP
issuers.
---------------------------------------------------------------------------
\57\ Detailed burden estimates can be found in the Supporting
Statement for the Health Insurance Marketplace Consumer Experience
Surveys: Enrollee Satisfaction Survey and Marketplace Survey Data
Collection, found at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
---------------------------------------------------------------------------
The Marketplace survey would be administered by a survey vendor
under contract with HHS. A psychometric test would be conducted in 2014
with a beta test in 2015. Consumers would incur burden to respond to
the survey. We estimate that each response would take 0.4 hours for a
total of 3,150 responses requiring 1,260 hours in 2014 and a total of
61,200 responses requiring 24,480 hours in 2015 onwards. Total costs
would be approximately $30,366 in 2014 and $589,968 in following
years.\58\
---------------------------------------------------------------------------
\58\ Detailed burden estimates can be found in the Supporting
Statement for the Health Insurance Marketplace Consumer Experience
Surveys: Enrollee Satisfaction Survey and Marketplace Survey Data
Collection, found at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
---------------------------------------------------------------------------
The proposed amendment to our methodology for calculating the
annual limitation on cost sharing and the annual limitation on small
group deductibles could lead some issuers to increase premiums
slightly, potentially resulting in higher premiums for consumers.
Transfers
Currently, the MLR regulation permits inclusion of ICD-10
conversion costs in quality improving activity expenses only through
the 2013 MLR reporting year. However, the Secretary has changed the
date by which issuers are required to adopt ICD-10 as the standard
medical code set from October 1, 2013 to October 1, 2014. Therefore,
this proposed rule proposes to permit issuers to include their ICD-10
conversion costs through the MLR reporting year in which the Secretary
requires conversion to be completed, which is currently expected to be
2014. Based on the 2012 MLR data, we estimate that the current ICD-10
provision reduced total rebates for 2012 by less than 2 percent. To the
extent issuers may have completed a substantial portion of ICD-10
conversion prior to 2014, we expect that the impact of the proposed
change on the 2014 rebates would be even smaller.
This proposed rule also proposes to account for the special
circumstances of issuers affected by the CMS November 2013 transitional
policy by allowing those issuers to multiply the incurred claims and
expenses for quality improving activities incurred in 2014 in the MLR
numerator by 1.0001. This adjustment would be limited to issuers that
provided transitional coverage in the individual or small group markets
in States that adopted the transitional policy. In addition, this
proposed rule proposes to account for the special circumstances of the
issuers that provided coverage through the State and Federal Exchanges
by allowing those issuers to multiply the incurred claims and expenses
for quality improving activities incurred in 2014 in the numerator by
1.0004. This adjustment would be limited to issuers offering coverage
in the individual or small group markets through the Exchanges. Based
on the 2012 MLR data, we estimate that the proposed adjustment for
issuers affected by the transitional policy and for issuers affected by
the Exchanges rollout might reduce the total rebates by 0.5 percent for
2014.
In addition, this proposed rule proposes to amend the MLR
methodology to clarify how issuers must calculate MLRs in States that
require the small group market and individual market to be merged for
MLR calculation purposes. This would improve the consistency of MLR
calculations among issuers in those States and improve the accuracy of
rebate payments. Currently, only Massachusetts, Vermont, and the
District of Columbia require the small group market and individual
market to be merged (the Vermont and the District of Columbia
requirements take effect in 2014). If an issuer met the respective MLR
standards in the separate markets,
[[Page 15861]]
then this provision would not have any impact on rebates. However, if
an issuer met the MLR standards only in one market and merging the two
markets would result in the issuer meeting (or being unable to meet)
the MLR standards in the merged market, the issuer might have to pay
lower (or higher) rebates and there would be a transfer from enrollees
to issuers (or from issuers to enrollees). Based on the 2012 MLR data,
we anticipate that the proposed change might result in issuers paying
an additional $3.8 million in rebates.
This proposed rule also proposes that issuers must distribute
rebates directly to enrollees where (1) all of an issuer's rebates are
de minimis, or (2) distribution of de minimis rebates to enrollee(s)
whose rebates are not de minimis would result in an enrollee receiving
a rebate that exceeds the enrollee's annual premium. The current de
minimis rebate provisions allow issuers not to distribute de minimis
rebates to enrollees, but instead to aggregate such rebates and
distribute them to enrollees whose rebates are not de minimis. With
respect to the first proposed de minimis provision, the current de
minimis rebate provisions do not account for a situation where all of
an issuer's rebates are de minimis. It is presumed that in such a
circumstance, issuers would distribute the de minimis rebates to all
enrollees whose rebates are de minimis since these issuers would not
have any enrollees with non-de minimis rebates; therefore, we do not
consider the proposed clarification to create any additional burden. We
are currently aware of one issuer that was in this situation, but more
issuers may benefit from this clarification as they begin to come
closer to meeting the MLR standard in future years. With respect to the
second proposed de minimis provision, we are not currently aware of any
issuers that experienced this circumstance. Further, there should not
be any impact to the total amount of rebates disbursed because the
changes proposed here only impact the recipient of rebates and not the
total amount paid.
In this proposed rule, we propose to revise our allocation of
reinsurance contributions collected for the 2014 and 2015 benefit years
so that reinsurance contributions collected are allocated first to the
reinsurance pool and administrative expenses and second to payments to
the U.S. Treasury. We expect that this proposal would not have a
significant effect on transfers, because we estimate that we will
collect the full amount of reinsurance contributions. This proposal
could lower premiums by reducing the uncertainty associated with
reinsurance payments to non-grandfathered plans in the individual
market that are eligible for such payments under 45 CFR 153.234.
The Affordable Care Act creates a temporary risk corridors program
for the years 2014, 2015, and 2016 that applies to QHPs, as defined in
Sec. 153.500. The risk corridors program creates a mechanism for
sharing risk for allowable costs between the Federal government and QHP
issuers. The Affordable Care Act establishes the risk corridors program
as a Federal program; consequently, HHS will operate the risk corridors
program under Federal rules with no State variation. The risk corridors
program will help protect against inaccurate rate setting in the early
years of the Exchanges by limiting the extent of issuer losses and
gains. For the 2015 benefit year, we are proposing an adjustment to the
risk corridors formula that would help mitigate potential QHP issuers'
unexpected administrative costs. Although our initial modeling suggests
that this adjustment could increase the total risk corridors payment
amount made by the Federal government and decrease risk corridors
receipts, we estimate that, even with this change, the program can be
implemented in a budget neutral manner.
C. Regulatory Alternatives
Under the Executive Order, CMS is required to consider alternatives
to issuing rules and alternative regulatory approaches. CMS considered
the regulatory alternatives below:
1. Collecting ESS Data at the Product Level Instead of Each Product per
Metal Tier
Under this alternative, HHS would require QHPs to collect ESS data
from a single sample for each product (versus each product in each
metal tier). This option would reduce the cost for issuers who offer
the same product in multiple tiers. However, collecting data at the
product level would prevent consumers from understanding differences in
enrollee satisfaction at the individual product per tier level, which
may vary with differences in cost sharing. This would reduce the
benefits that consumers derive from ESS data.
2. Using Medicaid CAHPS as Is Instead of Adding Additional and New
Questions to the ESS
Under this alternative, HHS would require QHPs to collect enrollee
satisfaction information using the Medicaid CAHPS instrument without
further enhancement. The ESS will include more questions than the
Medicaid CAHPS--including detailed questions about the patient's
costs--that are particularly appropriate to Exchange enrollees.
Eliminating these questions would reduce the cost to issuers, but also
reduce benefits that consumers derive from the ESS data.
3. Collecting QRS Data for Each Product per Metal Tier Instead of at
the Product Level
Under this alternative, HHS would require QHPs to collect the QRS
data at the same level (individual product per metal tier) as they
collect ESS information. Assuming that QHPs offer each product in two
metal tiers this option would double the cost to QHPs of collecting QRS
data. However, it might not appreciably increase consumer information
about QHPs in the early years of the Exchanges if the quality of care
in the same product does not differ significantly within tiers (i.e.,
the variation should only be by the configuration of cost sharing
within a limited range of actuarial value). Further, a QHP's enrollment
size at the product metal level may be too small in the early years of
Exchange implementation to ensure reliable results.
4. Using the Medicare Advantage (MA) CAHPS Instrument and Star System
Under this alternative, HHS would require QHPs to collect enrollee
satisfaction information from Exchange enrollees using the MA CAHPS
instrument. The ESS presently includes 29 more questions, than MA
CAHPS. Use of the MA CAHPS would reduce the cost to consumers and also
the QHP cost of data entry. However, the MA CAHPS instrument and Star
ratings are designed for a different population and are not necessarily
suitable to measure experience among Exchange enrollees. It also would
have limited applicability for use by consumers for QHP comparison and
selection purposes.
CMS believes that the options adopted for this proposed rule would
be more efficient ways to extend the protections of the Affordable Care
Act to enrollees without imposing significant burden on issuers and
States.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires agencies that issue a
rule to analyze options for regulatory relief of small businesses if a
rule has a significant impact on a substantial number of small
entities. The RFA generally defines a ``small entity'' as--(1) a
proprietary firm meeting the size
[[Page 15862]]
standards of the Small Business Administration (SBA), (2) a nonprofit
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''). CMS uses as its measure of significant economic impact on a
substantial number of small entities a change in revenues of more than
3 percent to 5 percent.
As discussed in the Web Portal interim final rule with comment
period published on May 5, 2010 (75 FR 24481), CMS examined the health
insurance industry in depth in the RIA we prepared for the proposed
rule on establishment of the Medicare Advantage program (69 FR 46866,
August 3, 2004). In that analysis it was 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 entity'' established by the SBA. Based on data
from MLR annual report submissions for the 2012 MLR reporting year,\59\
out of 510 companies offering comprehensive health insurance policies
nationwide, there are 58 small entities, each with less than $35.5
million in earned premiums, that offer individual or group health
insurance coverage and would therefore be subject to the provisions of
this proposed rule.\60\ Forty-three percent of these small entities
belong to holding groups, and many if not all of these small entities
are likely to have other lines of business (e.g., insurance business
other than health insurance, and business other than insurance) that
would result in their revenues exceeding $35.5 million. Based on this
analysis, HHS expects that the proposed provisions would not affect a
substantial number of small issuers.
---------------------------------------------------------------------------
\59\ These data can be accessed at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
\60\ The size threshold for ``small'' business established by
the SBA is currently $35.5 million in annual receipts for health
insurance issuers. See ``Table of Small Business Size Standards
Matched To North American Industry Classification System Codes,''
effective July 23, 2013, U.S. Small Business Administration,
available at https://www.sba.gov.
---------------------------------------------------------------------------
The proposed amendments to the annual employer and employee
election periods in the SHOP, including removing the required minimum
lengths of both the employer election period and the employee open
enrollment period would benefit SHOPs and employers. HHS does not
anticipate that this will impose any costs on small employers.
Some of the entities that voluntarily act as Navigators and non-
Navigator assistance personnel subject to Sec. 155.215, or as
designated certified application counselor organizations, might be
small entities and would incur costs to comply with the provisions of
this proposed rule. It should be noted that HHS, in its role as the
operator of the FFEs, does not impose any fees on these entities for
participating in their respective programs, nor are there fees for
taking the Federally required training or completing continuing
education or recertification in FFEs. Further, the cost burden related
to continuing education and recertification, and recordkeeping would
generally be considered an allowed cost that would be covered by the
Navigator grants for the FFEs, and these grant funds may be drawn down
as the grantee incurs such costs. The costs associated with these
proposals might also be covered by other compensation provided by an
Exchange, such as payments through contracts to non-Navigator
assistance personnel. Though it is very likely that all costs
associated with these proposals would be largely covered by affected
entities' and individuals' funding sources, HHS cannot guarantee that
all such costs would be covered because of the possibility of budget
limitations applicable to the FFE in any given period, and because
there may be variations in how State Exchanges provide funding for
these programs. To the extent that all such costs would not covered by
these funding sources, other outside sources may also be available to
cover unfunded costs that remain. Costs incurred by designated
certified application counselor organizations related to continuing
education and recertification and recordkeeping are expected to be low.
In some circumstances funds from sources outside of the Exchange,
including Federal funds such as Health Resources and Services
Administration (HRSA) grants to health centers, or private or State
funds might be available to cover certified application counselor
costs.
E. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995
requires that agencies assess anticipated costs and benefits before
issuing any proposed rule that includes a Federal mandate that could
result in expenditure in any one year by State, local or tribal
governments, in the aggregate, or by the private sector, of $100
million in 1995 dollars, updated annually for inflation. In 2014, that
threshold level is approximately $141 million.
UMRA does not address the total cost of a proposed rule. Rather, it
focuses on certain categories of cost, mainly those ``Federal mandate''
costs resulting from--(1) imposing enforceable duties on State, local,
or tribal governments, or on the private sector; or (2) increasing the
stringency of conditions in, or decreasing the funding of, State,
local, or tribal governments under entitlement programs.
This proposed rule includes mandates on State, local, or tribal
governments. Issuers, certified application counselors and Exchanges
are expected to incur costs of approximately $13 million in 2014 and
approximately $85 million in 2015 onwards to comply with the provisions
of this proposed rule. However, beginning in 2015, issuers in the
individual market would experience a reduction in costs of
approximately $26 million due to the discontinuation of the
certification of creditable coverage. Consistent with policy embodied
in UMRA, this proposed rule has been designed to be the least
burdensome alternative for State, local and tribal governments, and the
private sector while achieving the objectives of the Affordable Care
Act.
F. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule that imposes
substantial direct requirement costs on State and local governments,
preempts State law, or otherwise has Federalism implications.
States are the primary regulators of health insurance coverage.
States will continue to apply State laws regarding health insurance
coverage. However, if any State law or requirement prevents the
application of a Federal standard, then that particular State law or
requirement would be preempted. State requirements that are more
stringent than the Federal requirements would be not be preempted by
this proposed rule, unless they conflict with or prevent application of
the provisions of title I of the Affordable Care Act within the meaning
of section 1321(d) of the Affordable Care Act. Accordingly, States have
significant latitude to impose requirements with respect to health
insurance coverage that are more restrictive than the Federal law
requirements.
The proposed amendment to Sec. 155.225(d) would clarify that
certified application counselors must meet any licensing, certification
or other
[[Page 15863]]
standards prescribed by the State so long as such standards do not
prevent the application of the provisions of title I of the Affordable
Care Act, within the meaning of section 1321(d) of the Affordable Care
Act. The proposed provisions also specify State requirements applicable
to Navigators, non-Navigator assistance personnel, or certified
application counselors that would prevent the application of the
provisions of title I of the Affordable Care Act, within the meaning of
section 1321(d) of the Affordable Care Act. They include requirements
that require referrals to entities or individuals not required to
provide impartial information or act in a consumer's best interest, or
prevent Navigators, non-Navigator assistance personnel, or certified
application counselors from providing services to all individuals
seeking assistance, or providing advice regarding substantive benefits
or comparative benefits of different health plans; in FFEs conflict
with Federal standards or make it impossible to fulfill required
duties, as such requirements are applied or implemented in the State;
in FFEs, render ineligible otherwise eligible individuals or entities
from participating as Navigators, non-Navigator assistance personnel
subject to Sec. 155.215 or certified application counselors under
standards applicable to an FFE; and requiring that Navigators hold an
agent or broker license or carry errors or omissions insurance.
Some States already have requirements for and publicly report
health plan quality and outcomes data, and we want to encourage State
flexibility and innovation, consistent with the Affordable Care Act. In
addition to prominently displaying quality rating information for each
QHP, as calculated by HHS in accordance with the QRS, a State Exchange
may display additional QHP quality-related information, as appropriate.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have Federalism
implications or limit the policymaking discretion of the States, HHS
has engaged in efforts to consult with and work cooperatively with
affected States. HHS has consulted with stakeholders on policies
related to the operation of Exchanges, including the SHOP and the
premium stabilization programs. HHS has held a number of listening
sessions with State representatives to gather public input. HHS
consulted with State representatives through regular meetings with the
National Association of Insurance Commissioners (NAIC) and regular
contact with States through the Exchange Establishment grant and
Exchange Blueprint approval processes.
Throughout the process of developing this proposed rule, CMS has
attempted to balance the States' interests in regulating health
insurance issuers. By doing so, it is CMS' view that it has complied
with the requirements of Executive Order 13132. Under the requirements
set forth in section 8(a) of Executive Order 13132, and by the
signatures affixed to this rule, HHS certifies that the CMS Center for
Consumer Information and Insurance Oversight has complied with the
requirements of Executive Order 13132 for the attached proposed rule in
a meaningful and timely manner.
G. Congressional Review Act
This proposed rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
and has been transmitted to Congress and the Comptroller General for
review.
List of Subjects
45 CFR Part 146
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements, State regulation of health insurance.
45 CFR Part 148
Administrative practice and procedure, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
45 CFR Part 153
Administrative practice and procedure, Adverse selection, Health
care, Health insurance, Health records, Organization and functions
(Government agencies), Premium stabilization, Reporting and
recordkeeping requirements, Reinsurance, Risk adjustment, Risk
corridors, Risk mitigation, State and local governments.
45 CFR Part 155
Administrative practice and procedure, Health care access, Health
insurance, Reporting and recordkeeping requirements, State and local
governments, Cost-sharing reductions, Advance payments of premium tax
credit, Administration and calculation of advance payments of the
premium tax credit, Plan variations, Actuarial value.
45 CFR Part 156
Administrative appeals, Administrative practice and procedure,
Administration and calculation of advance payments of premium tax
credit, Advertising, Advisory committees, Brokers, Conflict of
interest, Consumer protection, Cost-sharing reductions, Grant
programs--health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
American Indian/Alaska Natives, Individuals with disabilities, Loan
programs--health, Organization and functions (Government agencies),
Medicaid, Payment and collections reports, Public assistance programs,
Reporting and recordkeeping requirements, State and local governments,
Sunshine Act, Technical assistance, Women, and Youth.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Health plans, Penalties, Reporting and recordkeeping
requirements, Premium revenues, Medical loss ratio, Rebating.
For the reasons set forth in the preamble, the Department of Health
and Human Services proposes to amend 45 CFR parts 146, 147, 148, 153,
155, 156, and 158 as set forth below:
PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET
0
1. The authority citation for part 146 continues to read as follows:
Authority: Secs. 2702 through 2705, 2711 through 2723, 2791, and
2792 of the PHS Act (42 U.S.C. 300gg-1 through 300gg-5, 300gg-11
through 300gg-23, 300gg-91, and 300gg-92).
0
2. Section 146.152 is amended by--
0
A. Revising paragraphs (c)(1) and (f).
0
B. Redesignating paragraph (g) as paragraph (h).
0
C. Adding new paragraph (g).
The revision and addition reads as follows:
Sec. 146.152 Guaranteed renewability of coverage for employers in the
group market.
* * * * *
(c) * * *
(1) The issuer provides notice in writing, in a form and manner
specified
[[Page 15864]]
by the Secretary, to each plan sponsor provided that particular product
in that market (and to all participants and beneficiaries covered under
such coverage) of the discontinuation at least 90 days before the date
the coverage will be discontinued;
* * * * *
(f) Exception for uniform modification of coverage. (1) Only at the
time of coverage renewal may issuers modify the health insurance
coverage for a product offered to a group health plan in the
following--
(i) Large group market; and
(ii) Small group market if, for coverage available in this market
(other than only through one or more bona fide associations), the
modification is consistent with State law and is effective uniformly
among group health plans with that product.
(2) For purposes of this paragraph (f), modifications made solely
pursuant to applicable Federal or State law are considered a uniform
modification of coverage. Other types of modifications are considered a
uniform modification of coverage if the product that has been modified
meets all of the following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act).
(ii) The product is offered as the same product type (e.g.,
preferred provider organization (PPO) or health maintenance
organization (HMO)).
(iii) The product covers a majority of the same counties in its
service area;
(iv) The product has the same cost-sharing structure, except for
variation in cost sharing solely related to changes in cost and
utilization of medical care, or to maintain the same level of coverage
described in sections 1302(d) and (e) of the Affordable Care Act.
(v) The product provides the same covered benefits, except for
changes in benefits that cumulatively impact the rate for the product
by no more than 2 percent (not including changes required by applicable
Federal or State law).
(3) A State may establish criteria that broaden, but not restrict,
the definition of a uniform modification of coverage under paragraph
(f)(2) of this section.
(g) Notice of renewal of coverage. If an issuer is renewing
coverage as described in paragraph (a) of this section, or uniformly
modifying coverage as described in paragraph (f) of this section, the
issuer must provide to each plan sponsor written notice of the renewal
in a form and manner specified by the Secretary.
* * * * *
0
3. Section 146.180 is revised to read as follows:
Sec. 146.180 Treatment of non-Federal governmental plans.
(a) Opt-out election for self-funded non-Federal governmental
plans--(1) Requirements subject to exemption. The PHS Act requirements
described in this paragraph are the following:
(i) Limitations on preexisting condition exclusion periods in
accordance with section 2701 of the PHS Act as codified before
enactment of the Affordable Care Act.
(ii) Special enrollment periods for individuals and dependents
described under section 2704(f) of the PHS Act.
(iii) Prohibitions against discriminating against individual
participants and beneficiaries based on health status under section
2705 of the PHS Act, except that the sponsor of a self-funded non-
Federal governmental plan cannot elect to exempt its plan from
requirements under section 2705(a)(6) and 2705(c) through (f) that
prohibit discrimination with respect to genetic information.
(iv) Standards relating to benefits for mothers and newborns under
section 2725 of the PHS Act.
(v) Parity in mental health and substance use disorder benefits
under section 2726 of the PHS Act.
(vi) Required coverage for reconstructive surgery following
mastectomies under section 2727 of the PHS Act.
(vii) Coverage of dependent students on a medically necessary leave
of absence under section 2728 of the PHS Act.
(2) General rule. For plan years beginning on or after September
23, 2010, a sponsor of a non-Federal governmental plan may elect to
exempt its plan, to the extent the plan is not provided through health
insurance coverage (that is, it is self-funded), from one or more of
the requirements described in paragraphs (a)(1)(iv) through (vii) of
this section.
(3) Special rule for certain collectively bargained plans. In the
case of a plan that is maintained pursuant to a collective bargaining
agreement that was ratified before March 23, 2010, and whose sponsor
made an election to exempt its plan from any of the requirements
described in paragraphs (a)(1)(i) through (iii) of this section, the
provisions of paragraph (a)(2) of this section apply for plan years
beginning after the expiration of the term of the agreement.
(4) Examples--(i) Example 1. A non-Federal governmental employer
has elected to exempt its self-funded group health plan from all of the
requirements described in paragraph (a)(1) of this section. The plan
year commences September 1 of each year. The plan is not subject to the
provisions of paragraph (a)(1)(ii) of this section until the plan year
that commences on September 1, 2011. Accordingly, for that plan year
and any subsequent plan years, the plan sponsor may elect to exempt its
plan only from the requirements described in paragraphs (a)(1)(iv)
through (vii) of this section.
(ii) Example 2. A non-Federal governmental employer has elected to
exempt its collectively bargained self-funded plan from all of the
requirements described in paragraph (a)(1) of this section. The
collective bargaining agreement applies to five plan years, October 1,
2009 through September 30, 2014. For the plan year that begins on
October 1, 2014, the plan sponsor is no longer permitted to elect to
exempt its plan from the requirements described in paragraph (a)(1) of
this section. Accordingly, for that plan year and any subsequent plan
years, the plan sponsor may elect to exempt its plan only from the
requirements described in paragraphs (a)(1)(iv) through (vii) of this
section.
(5) Limitations. (i) An election under this section cannot
circumvent a requirement of the PHS Act to the extent the requirement
applied to the plan before the effective date of the election.
Example 1. A plan is subject to requirements of section 2727 of the
PHS Act, under which a plan that covers medical and surgical benefits
with respect to a mastectomy must cover reconstructive surgery and
certain other services following a mastectomy. An enrollee who has had
a mastectomy receives reconstructive surgery on August 24. Claims with
respect to the surgery are submitted to and processed by the plan in
September. The group health plan commences a new plan year each
September 1. Effective September 1, the plan sponsor elects to exempt
its plan from section 2727 of the PHS Act. The plan cannot, on the
basis of its exemption election, decline to pay for the claims incurred
on August 24.
(ii) If a group health plan is co-sponsored by two or more
employers, then only plan enrollees of the non-Federal governmental
employer(s) with a valid election under this section are affected by
the election.
(6) Stop-loss or excess risk coverage. For purposes of this
section--
(i) Subject to paragraph (a)(6)(ii) of this section, the purchase
of stop-loss or excess risk coverage by a self-funded non-Federal
governmental plan does not prevent an election under this section.
[[Page 15865]]
(ii) Regardless of whether coverage offered by an issuer is
designated as ``stop-loss'' coverage or ``excess risk'' coverage, if it
is regulated as group health insurance under an applicable State law,
then for purposes of this section, a non-Federal governmental plan that
purchases the coverage is considered to be fully insured. In that
event, a plan may not be exempted under this section from the
requirements described in paragraph (a)(1) of this section.
(7) Construction. Nothing in this part should be construed as
imposing collective bargaining obligations on any party to the
collective bargaining process.
(b) Form and manner of election--(1) Election requirements. The
election must meet the following requirements:
(i) Be made in an electronic format in a form and manner as
described by the Secretary in guidance.
(ii) Be made in conformance with all of the plan sponsor's rules,
including any public hearing requirements.
(iii) Specify the beginning and ending dates of the period to which
the election is to apply. This period can be either of the following
periods:
(A) A single specified plan year, as defined in Sec. 144.103 of
this subchapter.
(B) The ``term of the agreement,'' as specified in paragraph (b)(2)
of this section, in the case of a plan governed by collective
bargaining.
(iv) Specify the name of the plan and the name and address of the
plan administrator, and include the name and telephone number of a
person CMS may contact regarding the election.
(v) State that the plan does not include health insurance coverage,
or identify which portion of the plan is not funded through health
insurance coverage.
(vi) Specify each requirement described in paragraph (a)(1) of this
section from which the plan sponsor elects to exempt the plan.
(vii) Certify that the person signing the election document,
including (if applicable) a third party plan administrator, is legally
authorized to do so by the plan sponsor.
(viii) Include, as an attachment, a copy of the notice described in
paragraph (f) of this section.
(2) ``Term of the agreement'' defined. Except as provided in
paragraphs (b)(2)(i) and (ii), for purposes of this section ``term of
the agreement'' means all group health plan years governed by a single
collective bargaining agreement.
(i) In the case of a group health plan for which the last plan year
governed by a prior collective bargaining agreement expires during the
bargaining process for a new agreement, the term of the prior agreement
includes all plan years governed by the agreement plus the period of
time that precedes the latest of the following dates, as applicable,
with respect to the new agreement:
(A) The date of an agreement between the governmental employer and
union officials.
(B) The date of ratification of an agreement between the
governmental employer and the union.
(C) The date impasse resolution, arbitration or other closure of
the collective bargaining process is finalized when agreement is not
reached.
(ii) In the case of a group health plan governed by a collective
bargaining agreement for which closure is not reached before the last
plan year under the immediately preceding agreement expires, the term
of the new agreement includes all plan years governed by the agreement
excluding the period that precedes the latest applicable date specified
in paragraph (b)(2)(i) of this section.
(3) Construction--(i) Dispute resolution. Nothing in paragraph
(b)(1)(ii) of this section should be construed to mean that CMS
arbitrates disputes between plan sponsors, participants, beneficiaries,
or their representatives regarding whether an election complies with
all of a plan sponsor's rules.
(ii) Future elections not preempted. If a plan must comply with one
or more requirements described in paragraph (a)(1) of this section for
a given plan year or period of plan coverage, nothing in this section
should be construed as preventing a plan sponsor from submitting an
election in accordance with this section for a subsequent plan year or
period of plan coverage.
(c) Filing a timely election--(1) Plan not governed by collective
bargaining. Subject to paragraph (c)(4) of this section, if a plan is
not governed by a collective bargaining agreement, a plan sponsor or
entity acting on behalf of a plan sponsor must file an election with
CMS before the first day of the plan year.
(2) Plan governed by a collective bargaining agreement. Subject to
paragraph (d)(4) of this section, if a plan is governed by a collective
bargaining agreement that was ratified before March 23, 2010, a plan
sponsor or entity acting on behalf of a plan sponsor must file an
election with CMS before the first day of the first plan year governed
by a collective bargaining agreement, or by the 45th day after the
latest applicable date specified in paragraph (b)(2)(i) of this
section, if the 45th day falls on or after the first day of the plan
year.
(3) Verifying timely filing. For elections submitted via hard copy
through U.S. Mail, CMS uses the postmark on the envelope in which the
election is submitted to determine that the election is timely filed as
specified under paragraphs (c)(1) or (2) of this section, as
applicable. If the latest filing date falls on a Saturday, Sunday, or a
State or Federal holiday, CMS accepts a postmark on the next business
day.
(4) Filing extension based on good cause. CMS may extend the
deadlines specified in paragraphs (c)(1) and (2) of this section for
good cause if the plan substantially complies with the requirements of
paragraph (e) of this section.
(5) Failure to file a timely election. Absent an extension under
paragraph (c)(4) of this section, a plan sponsor's failure to file a
timely election under paragraph (c)(1) or (2) of this section makes the
plan subject to all requirements of this part for the entire plan year
to which the election would have applied, or, in the case of a plan
governed by a collective bargaining agreement, for any plan years under
the agreement for which the election is not timely filed.
(d) Additional information required--(1) Written notification. If
an election is timely filed, but CMS determines that the election
document (or the notice to plan enrollees) does not meet all of the
requirements of this section, CMS may notify the plan sponsor, or other
entity that filed the election, that it must submit any additional
information that CMS has determined is necessary to meet those
requirements. The additional information must be filed with CMS by the
later of the following dates:
(i) The last day of the plan year.
(ii) The 45th day after the date of CMS's written notification
requesting additional information.
(2) Timely response. For submissions via hard copy via U.S. Mail,
CMS uses the postmark on the envelope in which the additional
information is submitted to determine that the information is timely
filed as specified under paragraph (d)(1) of this section. If the
latest filing date falls on a Saturday, Sunday, or a State or Federal
holiday, CMS accepts a postmark on the next business day.
(3) Failure to respond timely. CMS may invalidate an election if
the plan sponsor, or other entity that filed the election, fails to
timely submit the additional information as specified under paragraph
(d)(1) of this section.
(e) Notice to enrollees--(1) Mandatory notification. (i) A plan
that makes the election described in this section must notify each
affected enrollee of the
[[Page 15866]]
election, and explain the consequences of the election. For purposes of
this paragraph (e), if the dependent(s) of a participant reside(s) with
the participant, a plan need only provide notice to the participant.
(ii) The notice must be in writing and, except as provided in
paragraph (e)(2) of this section with regard to initial notices, must
be provided to each enrollee at the time of enrollment under the plan,
and on an annual basis no later than the last day of each plan year (as
defined in Sec. 144.103 of this subchapter) for which there is an
election.
(iii) A plan may meet the notification requirements of this
paragraph (e) by prominently printing the notice in a summary plan
description, or equivalent description, that it provides to each
enrollee at the time of enrollment, and annually. Also, when a plan
provides a notice to an enrollee at the time of enrollment, that notice
may serve as the initial annual notice for that enrollee.
(2) Initial notices. (i) If a plan is not governed by a collective
bargaining agreement, with regard to the initial plan year to which an
election under this section applies, the plan must provide the initial
annual notice of the election to all enrollees before the first day of
that plan year, and notice at the time of enrollment to all individuals
who enroll during that plan year.
(ii) In the case of a collectively bargained plan, with regard to
the initial plan year to which an election under this section applies,
the plan must provide the initial annual notice of the election to all
enrollees before the first day of the plan year, or within 30 days
after the latest applicable date specified in paragraph (b)(2)(i) of
this section if the 30th day falls on or after the first day of the
plan year. Also, the plan must provide a notice at the time of
enrollment to individuals who--
(A) Enroll on or after the first day of the plan year, when closure
of the collective bargaining process is reached before the plan year
begins; or
(B) Enroll on or after the latest applicable date specified in
paragraph (b)(2)(i) of this section if that date falls on or after the
first day of the plan year.
(3) Notice content. The notice must include at least the following
information:
(i) The specific requirements described in paragraph (a)(1) of this
section from which the plan sponsor is electing to exempt the plan, and
a statement that, in general, Federal law imposes these requirements
upon group health plans.
(ii) A statement that Federal law gives the plan sponsor of a self-
funded non-Federal governmental plan the right to exempt the plan in
whole, or in part, from the listed requirements, and that the plan
sponsor has elected to do so.
(iii) A statement identifying which parts of the plan are subject
to the election.
(iv) A statement identifying which of the listed requirements, if
any, apply under the terms of the plan, or as required by State law,
without regard to an exemption under this section.
(f) Subsequent elections--(1) Election renewal. A plan sponsor may
renew an election under this section through subsequent elections. The
timeliness standards described in paragraph (c) of this section apply
to election renewals under this paragraph (f).
(2) Form and manner of renewal. Except for the requirement to
forward to CMS a copy of the notice to enrollees under paragraph
(b)(1)(viii) of this section, the plan sponsor must comply with the
election requirements of paragraph (b)(1) of this section. In lieu of
providing a copy of the notice under (b)(1)(viii), the plan sponsor may
include a statement that the notice has been, or will be, provided to
enrollees as specified under paragraph (e) of this section.
(3) Election renewal includes provisions from which plan not
previously exempted. If an election renewal includes a requirement
described in paragraph (a)(1) of this section from which the plan
sponsor did not elect to exempt the plan for the preceding plan year,
the advance notification requirements of paragraph (e)(2) of this
section apply with respect to the additional requirement(s) of
paragraph (a) from which the plan sponsor is electing to exempt the
plan.
(4) Special rules regarding renewal of an election under a
collective bargaining agreement--(i) If protracted negotiations with
respect to a new agreement result in an extension of the term of the
prior agreement (as provided under paragraph (b)(2)(i) of this section)
under which an election under this section was in effect, the plan must
comply with the enrollee notification requirements of paragraph (e)(1)
of this section, and, following closure of the collective bargaining
process, must file an election renewal with CMS as provided under
paragraph (c)(2) of this section.
(ii) If a single plan applies to more than one bargaining unit, and
the plan is governed by collective bargaining agreements of varying
lengths, paragraph (c)(2) of this section, with respect to an election
renewal, applies to the plan as governed by the agreement that results
in the earliest filing date.
(g) Requirements not subject to exemption--(1) Genetic information.
Without regard to an election under this section that exempts a non-
Federal governmental plan from any or all of the provisions of
Sec. Sec. 146.111 and 146.121, the exemption election must not be
construed to exempt the plan from any provisions of this part 146 that
pertain to genetic information.
(2) Enforcement. CMS enforces these requirements as provided under
paragraph (j) of this section.
(h) Effect of failure to comply with certification and notification
requirements--(1) Substantial failure--(i) General rule. Except as
provided in paragraph (h)(1)(iii) of this section, a substantial
failure to comply with paragraph (e) or (g)(1) of this section results
in the invalidation of an election under this section with respect to
all plan enrollees for the entire plan year. That is, the plan is
subject to all requirements of this part for the entire plan year to
which the election otherwise would have applied.
(ii) Determination of substantial failure. CMS determines whether a
plan has substantially failed to comply with a requirement of paragraph
(e) or paragraph (g)(1) of this section based on all relevant facts and
circumstances, including previous record of compliance, gravity of the
violation and whether a plan corrects the failure, as warranted, within
30 days of learning of the violation. However, in general, a plan's
failure to provide a notice of the fact and consequences of an election
under this section to an individual at the time of enrollment, or on an
annual basis before a given plan year expires, constitutes a
substantial failure.
(iii) Exceptions--(A) Multiple employers. If the plan is sponsored
by multiple employers, and only certain employers substantially fail to
comply with the requirements of paragraph (e) or (g)(1) of this
section, then the election is invalidated with respect to those
employers only, and not with respect to other employers that complied
with those requirements, unless the plan chooses to cancel its election
entirely.
(B) Limited failure to provide notice. If a substantial failure to
notify enrollees of the fact and consequences of an election is limited
to certain individuals, the election under this section is valid only
if, for the plan year with respect to which the failure has occurred,
the plan agrees not to apply the election with respect to the
individuals who were not notified and so informs those individuals in
writing.
(2) Examples--(i)
[[Page 15867]]
Example 1. A self-funded, non-Federal group health plan is co-
sponsored by 10 school districts. Nine of the school districts have
fully complied with the requirements of paragraph (e) of this
section, including providing notice to new employees at the time of
their enrollment in the plan, regarding the group health plan's
exemption under this section from requirements of this part. One
school district, which hired 10 new teachers during the summer for
the upcoming school year, neglected to notify three of the new hires
about the group health plan's exemption election at the time they
enrolled in the plan. The school district has substantially failed
to comply with a requirement of paragraph (e) of this section with
respect to these individuals. The school district learned of the
oversight six weeks into the school year, and promptly (within 30
days of learning of the oversight) provided notice to the three
teachers regarding the plan's exemption under this section and that
the exemption does not apply to them, or their dependents, during
the plan year of their enrollment because of the plan's failure to
timely notify them of its exemption. The plan complies with the
requirements of this part for these individuals for the plan year of
their enrollment. CMS would not require the plan to come into
compliance with the requirements of this part for other enrollees.
(ii)
Example 2. Two non-Federal governmental employers cosponsor a
self-funded group health plan. One employer substantially fails to
comply with the requirements of paragraph (e) of this section. While
the plan may limit the invalidation of the election to enrollees of
the plan sponsor that is responsible for the substantial failure,
the plan sponsors determine that administering the plan in that
manner would be too burdensome. Accordingly, in this example, the
plan sponsors choose to cancel the election entirely. Both plan
sponsors come into compliance with the requirements of this part
with respect to all enrollees for the plan year for which the
substantial failure has occurred.
(i) Election invalidated. If CMS finds cause to invalidate an
election under this section, the following rules apply:
(1) CMS notifies the plan sponsor (and the plan administrator if
other than the plan sponsor and the administrator's address is known to
CMS) in writing that CMS has made a preliminary determination that an
election is invalid, and states the basis for that determination.
(2) CMS's notice informs the plan sponsor that it has 45 days after
the date of CMS's notice to explain in writing why it believes its
election is valid. The plan sponsor should provide applicable statutory
and regulatory citations to support its position.
(3) CMS verifies that the plan sponsor's response is timely filed
as provided under paragraph (c)(3) of this section. CMS will not
consider a response that is not timely filed.
(4) If CMS's preliminary determination that an election is invalid
remains unchanged after CMS considers the plan sponsor's timely
response (or in the event that the plan sponsor fails to respond
timely), CMS provides written notice to the plan sponsor (and the plan
administrator if other than the plan sponsor and the administrator's
address is known to CMS) of CMS's final determination that the election
is invalid. Also, CMS informs the plan sponsor that, within 45 days of
the date of the notice of final determination, the plan, subject to
paragraph (i)(1)(iii) of this section, must comply with all
requirements of this part for the specified period for which CMS has
determined the election to be invalid.
(j) Enforcement. To the extent that an election under this section
has not been filed or a non-Federal governmental plan otherwise is
subject to one or more requirements of this part, CMS enforces those
requirements under part 150 of this subchapter. This may include
imposing a civil money penalty against the plan or plan sponsor, as
determined under subpart C of part 150.
(k) Construction. Nothing in this section should be construed to
prevent a State from taking the following actions:
(1) Establishing, and enforcing compliance with, the requirements
of State law (as defined in Sec. 146.143(d)(1)), including
requirements that parallel provisions of title XXVII of the PHS Act,
that apply to non-Federal governmental plans or sponsors.
(2) Prohibiting a sponsor of a non-Federal governmental plan within
the State from making an election under this section.
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
4. The authority citation for part 147 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the Public
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92), as amended.
0
5. Section 147.104 is amended by revising paragraph (b)(1)(i) and
adding paragraph (h) to read as follows:
Sec. 147.104 Guaranteed availability of coverage.
* * * * *
(b) * * *
(1) * * *
(i) Group market. (A) Subject to paragraph (b)(1)(i)(B) of this
section, a health insurance issuer in the group market must allow an
employer to purchase health insurance coverage for a group health plan
at any point during the year.
(B) In the case of a group health plan in the small group market
that cannot comply with employer contribution or group participation
rules for the offering of health insurance coverage, as allowed under
applicable State law and in the case of a QHP offered in the SHOP, as
permitted by Sec. 156.1250(c) of this subchapter, a health insurance
issuer may restrict the availability of coverage to an annual
enrollment period that begins November 15 and extends through December
15 of each calendar year.
(C) With respect to coverage in the small group market, and in the
large group market if such coverage is offered through a Small Business
Health Options Program (SHOP) in a State, coverage must become
effective consistent with the dates described in Sec. 155.725(a)(2) of
this subchapter, except as provided in paragraph (b)(1)(iii) of this
section.
* * * * *
(h) Construction. Nothing in this section should be construed to
require an issuer to offer coverage otherwise prohibited under
applicable Federal law.
0
6. Section 147.106 is amended by--
0
A. Revising paragraphs (c)(1) and (e).
0
B. Redesignating paragraphs (f), (g), and (h) as paragraphs (h), (i)
and (j).
0
D. Adding new paragraphs (f) and (g).
The revisions and additions read as follows:
Sec. 147.106 Guaranteed renewability of coverage.
* * * * *
(c) * * *
(1) The issuer provides notice in writing, in a form and manner
specified by the Secretary, to each plan sponsor or individual, as
applicable, provided that particular product in that market (and to all
participants and beneficiaries covered under such coverage) of the
discontinuation at least 90 calendar days before the date the coverage
will be discontinued.
* * * * *
(e) Exception for uniform modification of coverage. (1) Only at the
time of coverage renewal may issuers modify the health insurance
coverage for a product offered to a group health plan or an individual,
as applicable, in the following:
(i) Large group market.
(ii) Small group market if, for coverage available in this market
(other than only through one or more bona fide associations), the
modification is consistent with State law and is
[[Page 15868]]
effective uniformly among group health plans with that product.
(iii) Individual market if the modification is consistent with
State law and is effective uniformly for all individuals with that
product.
(2) For purposes of this paragraph (e), modifications made solely
pursuant to applicable Federal or State law are considered a uniform
modification of coverage. Other types of modifications are considered a
uniform modification of coverage if the product that has been modified
meets all of the following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act).
(ii) The product is offered as the same product type (e.g.,
preferred provider organization (PPO) or health maintenance
organization (HMO)).
(iii) The product covers a majority of the same counties in its
service area;
(iv) The product has the same cost-sharing structure, except for
variation in cost sharing solely related to changes in cost and
utilization of medical care, or to maintain the same level of coverage
described in sections 1302(d) and (e) of the Affordable Care Act.
(v) The product provides the same covered benefits, except for
changes in benefits that cumulatively impact the plan-adjusted index
rate for the product (as described in Sec. 156.80(d)(2)) by no more
than 2 percent (not including changes required by applicable Federal or
State law).
(3) A State may establish criteria that broaden, but not restrict,
the definition of a uniform modification of coverage under paragraph
(e)(2) of this section.
(f) Notice of renewal of coverage. If an issuer is renewing
coverage as described in paragraph (a) of this section, or uniformly
modifying coverage as described in paragraph (e) of this section, the
issuer must provide to each plan sponsor or individual, as applicable,
written notice of the renewal in a form and manner specified by the
Secretary.
(g) Construction. Nothing in this section should be construed to
require an issuer to renew or continue in force coverage for which
continued eligibility would otherwise be prohibited under applicable
Federal law.
* * * * *
PART 148--REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET
0
7. The authority citation for part 148 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the Public
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92), as amended.
0
8. Section 148.101 is revised to read as follows:
Sec. 148.101 Basis and purpose.
This part implements sections 2741 through 2763 and 2791 and 2792
of the PHS Act. Its purpose is to guarantee the renewability of all
coverage in the individual market. It also provides certain protections
for mothers and newborns with respect to coverage for hospital stays in
connection with childbirth and protects all individuals and family
members who have, or seek, individual health insurance coverage from
discrimination based on genetic information.
0
9. Section 148.102 is revised to read as follows:
Sec. 148.102 Scope, applicability, and effective dates.
(a) Scope and applicability. (1) Individual health insurance
coverage includes all health insurance coverage (as defined in Sec.
144.103 of this subchapter) that is neither health insurance coverage
sold in connection with an employment-related group health plan, nor
short-term, limited-duration coverage as defined in Sec. 144.103 of
this subchapter.
(2) The requirements that pertain to guaranteed renewability for
all individuals, to protections for mothers and newborns with respect
to hospital stays in connection with childbirth, and to protections
against discrimination based on genetic information apply to all
issuers of individual health insurance coverage in the State.
(b) Applicability date. Except as provided in Sec. 148.124
(certificate of creditable coverage), Sec. 148.170 (standards relating
to benefits for mothers and newborns), and Sec. 148.180 (prohibition
of health discrimination based on genetic information), the
requirements of this part apply to health insurance coverage offered,
sold, issued, renewed, in effect, or operated in the individual market
after June 30, 1997.
Sec. 148.103 [Removed]
0
10. Section 148.103 is removed.
0
11. Section 148.120 is revised to read as follows:
Sec. 148.120 Guaranteed availability of individual health insurance
coverage to certain individuals with prior group coverage.
The rules for guaranteeing the availability of individual health
insurance coverage to certain eligible individuals with prior group
coverage have been superseded by the requirements of Sec. 147.104 of
this subchapter, which set forth Federal requirements for guaranteed
availability of coverage in the group and individual markets.
0
12. Section 148.122 is amended by--
0
A. Revising paragraphs (a), (d)(1), and (g).
0
B. Redesignating paragraph (h) as paragraph (i).
0
C. Adding new paragraph (h).
The revisions and addition read as follows:
Sec. 148.122 Guaranteed renewability of individual health insurance
coverage.
(a) Applicability. This section applies to non-grandfathered and
grandfathered health plans (within the meaning of Sec. 147.140 of this
subchapter) that are individual health insurance coverage. See also
Sec. 147.106 of this subchapter for requirements relating to
guaranteed renewability of coverage with respect to non-grandfathered
health plans.
* * * * *
(d) * * *
(1) Provides notice in writing, in a form and manner specified by
the Secretary, to each individual provided coverage of that type of
health insurance at least 90 calendar days before the date the coverage
will be discontinued.
* * * * *
(g) Exception for uniform modification of coverage. (1) An issuer
may, only at the time of coverage renewal, modify the health insurance
coverage for a policy form offered in the individual market if the
modification is consistent with State law and is effective uniformly
for all individuals with that policy form.
(2) For purposes of this paragraph (g), modifications made solely
pursuant to applicable Federal or State law are considered a uniform
modification of coverage. Other types of modifications are considered a
uniform modification of coverage if the product that has been modified
meets all of the following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act).
(ii) The product is offered as the same product type (e.g.,
preferred provider organization (PPO) or health maintenance
organization (HMO)).
(iii) The product covers a majority of the same counties in its
service area;
(iv) The product has the same cost-sharing structure, except for
variation in cost sharing solely related to changes in cost and
utilization of medical care, or to maintain the same level of coverage
[[Page 15869]]
described in sections 1302(d) and (e) of the Affordable Care Act.
(v) The product provides the same covered benefits, except for
changes in benefits that cumulatively impact the rate for the product
by no more than 2 percent (not including changes required by applicable
Federal or State law).
(3) A State may establish criteria that broaden, but not restrict,
the definition of a uniform modification of coverage under paragraph
(g)(2) of this section.
(h) Notice of renewal of coverage. If an issuer is renewing
coverage as described in paragraph (b) of this section, or uniformly
modifying coverage as described in paragraph (g) of this section, the
issuer must provide to each individual written notice of the renewal in
a form and manner specified by the Secretary.
* * * * *
0
13. Section 148.124 is revised to read as follows:
Sec. 148.124 Certification and disclosure of coverage.
(a) General rule. The rules for providing certificates of
creditable coverage and demonstrating creditable coverage have been
superseded by the prohibition on preexisting condition exclusions. See
Sec. 147.108 of this subchapter for rules prohibiting the imposition
of a preexisting condition exclusion.
(b) Applicability. The provisions of this section apply beginning
December 31, 2014.
0
14. Section 148.126 is revised to read as follows:
Sec. 148.126 Determination of an eligible individual.
The rules for guaranteeing the availability of individual health
insurance coverage to certain eligible individuals with prior group
coverage have been superseded by the requirements of Sec. 147.104 of
this subchapter, which set forth Federal requirements for guaranteed
availability of coverage in the group and individual markets.
0
15. Section 148.128 is revised to read as follows:
Sec. 148.128 State flexibility in individual market reforms--
alternative mechanisms.
The rules for a State to implement an acceptable alternative
mechanism for purposes of guaranteeing the availability of individual
health insurance coverage to certain eligible individuals with prior
group coverage have been superseded by the requirements of Sec.
147.104 of this subchapter, which set forth Federal requirements for
guaranteed availability of coverage in the group and individual
markets.
0
16. Section 148.220 is amended by--
0
A. Revising the introductory text.
0
B. Revising paragraph (b)(3).
0
C. Redesignating paragraphs (b)(4) through (6) as paragraphs (b)(5)
through (7), respectively.
0
D. Adding new paragraph (b)(4).
The revisions and additions read as follows:
Sec. 148.220 Excepted benefits.
The requirements of this part and part 147 do not apply to
individual health insurance coverage in relation to its provision of
the benefits described in paragraphs (a) and (b) of this section (or
any combination of the benefits).
* * * * *
(b) * * *
(3) Coverage only for a specified disease or illness (for example,
cancer policies) if the policies meet the requirements of Sec.
146.145(b)(4)(ii)(B) and (C) of this subchapter regarding
noncoordination of benefits.
(4) Hospital indemnity or other fixed indemnity insurance only if--
(i) The benefits are provided only to individuals who have other
health coverage that is minimum essential coverage within the meaning
of section 5000A(f) of the Internal Revenue Code.
(ii) There is no coordination between the provision of benefits and
an exclusion of benefits under any other health coverage.
(iii) The benefits are paid in a fixed dollar amount per day of
hospitalization or illness or per service (for example, $100/day or
$50/visit) regardless of the amount of expenses incurred and without
regard to the amount of benefits provided with respect to the event or
service under any other health coverage.
(iv) A notice is displayed prominently in the plan materials in at
least 14 point type that has the following language: ``THIS IS A
SUPPLEMENT TO HEALTH INSURANCE AND IS NOT A SUBSTITUTE FOR MAJOR
MEDICAL COVERAGE. LACK OF MAJOR MEDICAL COVERAGE (OR OTHER MINIMUM
ESSENTIAL COVERAGE) MAY RESULT IN AN ADDITIONAL PAYMENT WITH YOUR
TAXES.''
* * * * *
PART 153--STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND
RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT
0
17. The authority citation for part 153 continues to read as follows:
Authority: Secs. 1311, 1321, 1341-1343, Pub. L. 111-148, 24
Stat. 119.
0
18. Section 153.500 is amended by revising the definition of
``adjustment percentage,'' as added on March 11, 2014 (79 FR 13835),
effective on May 12, 2014, to read as follows:
Sec. 153.500 Definitions.
* * * * *
Adjustment percentage means, with respect to a QHP:
(1) For benefit year 2014, for a QHP offered by a health insurance
issuer with allowable costs of at least 80 percent of after-tax premium
in a transitional State, the percentage specified by HHS for such QHPs
in the transitional State; and otherwise zero percent.
(2) For benefit year 2015, for a QHP offered by a health insurance
issuer in any State, two percent.
* * * * *
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
19. The authority citation for part 155 continues to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301,
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1332, 1334,
1402, 1411, 1412, 1413, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C.
18021-18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and
18081-18083).
0
20. Section 155.120 is amended by revising paragraph (c) to read as
follows:
Sec. 155.120 Non-interference with Federal law and non-discrimination
standards.
* * * * *
(c) Non-discrimination. (1) In carrying out the requirements of
this part, the State and the Exchange must:
(i) Comply with applicable non-discrimination statutes; and
(ii) Not discriminate based on race, color, national origin,
disability, age, sex, gender identity or sexual orientation.
(2) Exception. Notwithstanding the provisions of paragraph (c)(1)
of this section, an organization that receives Federal funds to provide
services to a defined population under the terms of Federal legal
authorities that participates in the certified application counselor
program under Sec. 155.225 may limit its provision of certified
application counselor services to the same defined population. If the
organization limits its provision of certified application counselor
services pursuant to this exception, but is approached for certified
application counselor services by an individual who is not included in
the defined population that the organization serves, the organization
must refer the
[[Page 15870]]
individual to other Exchange-approved resources that can provide
assistance. If the organization does not limit its provision of
certified application counselor services pursuant to this exception,
the organization must comply with paragraph (c)(1) of this section.
0
21. Section 155.206 is added to read as follows:
Sec. 155.206 Civil money penalties for violations of applicable
Exchange standards by consumer assistance entities in Federally-
facilitated Exchanges.
(a) Enforcement actions. If an individual or entity specified in
paragraph (b) of this section engages in activity specified in
paragraph (c) of this section, the Department of Health and Human
Services (HHS) may impose the following sanctions:
(1) Civil money penalties (CMPs), subject to the provisions of this
section.
(2) Corrective action plans. In the notice of assessment of CMPs
specified in paragraph (l) of this section, HHS may provide an
individual or entity specified in paragraph (b) of this section the
opportunity to enter into a corrective action plan to correct the
violation instead of paying the CMP, based on evaluation of the factors
set forth in paragraph (h) of this section. In the event that the
individual or entity does not follow such a corrective action plan, HHS
could require payment of the CMP.
(b) Consumer assistance entities. CMPs may be assessed under this
section against the following consumer assistance entities:
(1) Individual Navigators and Navigator entities in Federally-
facilitated Exchanges, including grantees, sub-grantees, and all
personnel carrying out Navigator duties on behalf of a grantee or sub-
grantee;
(2) Non-Navigator assistance personnel authorized under Sec.
155.205(d) and (e) and non-Navigator assistance personnel entities in
Federally-facilitated Exchanges, including but not limited to
individuals and entities under contract with HHS to facilitate consumer
enrollment in QHPs in Federally-facilitated Exchanges; and
(3) Organizations that the Federally-facilitated Exchanges have
designated as certified application counselor organizations and
individual certified application counselors carrying out certified
application counselor duties in the Federally-facilitated Exchanges.
(c) Grounds for assessing CMPs. HHS may assess CMPs against a
consumer assistance entity if, based on the outcome of the
investigative process outlined in paragraphs (d) through (i) of this
section, HHS has reasonably determined that the consumer assistance
entity has failed to comply with the Federally-facilitated Exchange
requirements and standards applicable to the consumer assistance
entity, unless a CMP has been assessed for the same conduct under 45
CFR 155.285.
(d) Basis for initiating an investigation of a potential violation.
(1) Information. Any information received by HHS that indicates that a
consumer assistance entity may have engaged or may be engaging in
activity specified in paragraph (c) of this section may warrant an
investigation. Information that might trigger an investigation
includes, but is not limited to, the following:
(i) Complaints from the general public;
(ii) Reports from State regulatory agencies, and other Federal and
State agencies; or
(iii) Any other information that indicates potential involvement in
activity specified in paragraph (c) of this section.
(2) Who may file a complaint. Any entity or individual, or the
legally authorized representative of an entity or individual, may file
a complaint with HHS alleging that a consumer assistance entity has
engaged or is engaging in an activity specified in paragraph (c) of
this section.
(e) Notice of investigation. If HHS learns of a potential violation
described in paragraph (c) of this section through the means described
in paragraph (d) of this section, HHS must provide a written notice of
its investigation to the consumer assistance entity. This notice must
include the following:
(1) Description of the activity that is being investigated.
(2) Explanation that the consumer assistance entity has 30 days
from the date of the notice to respond with additional information or
documentation, including information or documentation to refute an
alleged violation.
(3) State that a CMP might be assessed if the allegations are not,
as determined by HHS, refuted within 30 days from the date of the
notice.
(f) Request for extension. In circumstances in which a consumer
assistance entity cannot prepare a response to HHS within the 30 days
provided in the notice of investigation described in (e) of this
section, the entity may make a written request for an extension from
HHS detailing the reason for the extension request and showing good
cause. If HHS grants the extension, the consumer assistance entity must
respond to the notice within the time frame specified in HHS's letter
granting the extension of time. Failure to respond within 30 days, or,
if applicable, within an extended time frame, may result in HHS's
imposition of a CMP depending upon the outcome of HHS's investigation
of the alleged violation.
(g) Responses to allegations of noncompliance. In determining
whether to impose a CMP, HHS may review and consider documents or
information received or collected in accordance with paragraph (d)(1)
of this section, as well as additional documents or information
provided by the consumer assistance entity in response to receiving a
notice of investigation in accordance with paragraph (e)(2) of this
section. HHS may also conduct an independent investigation into the
alleged violation, which may include site visits and interviews, if
applicable, and may consider the results of this investigation in its
determination.
(h) Factors in determining noncompliance and CMPs, if any. In
determining whether there has been noncompliance by the consumer
assistance entity, and whether CMPs are appropriate,
(1) HHS must take into account the following:
(i) The consumer assistance entity's previous or ongoing record of
compliance, including but not limited to compliance or noncompliance
with any corrective action plan under section (c) of this section.
(ii) The gravity of the violation, which may be determined in part
by--
(A) The frequency of the violation, taking into consideration
whether any violation is an isolated occurrence, represents a pattern,
or is widespread; and
(B) Whether the violation caused, or could reasonably be expected
to cause, financial or other adverse impacts on consumer(s), and the
magnitude of those impacts;
(2) HHS may take into account the following:
(i) The degree of culpability of the consumer assistance entity,
including but not limited to--
(A) Whether the violation was beyond the direct control of the
consumer assistance entity; and
(B) The extent to which the consumer assistance entity received
compensation--legal or otherwise--for the services associated with the
violation;
(ii) Aggravating or mitigating circumstances; or
(iii) Other such factors as justice may require.
(i) Maximum per-day penalty. The maximum amount of penalty imposed
[[Page 15871]]
for each violation is $100 for each day for each consumer assistance
entity for each individual directly affected by the consumer assistance
entity's noncompliance; and where the number of individuals cannot be
determined, the Exchange may reasonably estimate the number of
individuals directly affected by the violation.
(j) Settlement authority. Nothing in Sec. 155.206 limits the
authority of HHS to settle any issue or case described in the notice
furnished in accordance with paragraph (e) or to compromise on any
penalty provided for in this section.
(k) Limitations on penalties. (1) Circumstances under which a civil
money penalty is not imposed. HHS will not impose any civil money
penalty on:
(i) Any violation for the period of time during which none of the
consumer assistance entities knew, or exercising reasonable diligence
would have known, of the violation; or
(ii) The period of time after any of the consumer assistance
entities knew, or exercising reasonable diligence would have known, of
the failure, if the violation was due to reasonable cause and not due
to willful neglect and the violation was corrected within 30 days of
the first day that any of the consumer assistance entities against whom
the penalty would be imposed knew, or exercising reasonable diligence
would have known, that the violation existed.
(2) Burden of establishing knowledge. The burden is on the consumer
assistance entity or entities to establish to HHS's satisfaction that
the consumer assistance entity did not know, or exercising reasonable
diligence would have known, that the violation existed, as well as the
period of time during which that limitation applies; or that the
violation was due to reasonable cause and not due to willful neglect
and was corrected pursuant to the elements in subparagraph (k)(1)(ii).
(l) Notice of assessment of CMP. If HHS proposes to assess a CMP in
accordance with this section, HHS will send a written notice of this
decision to--
(1) The consumer assistance entity against whom the sanction is
being imposed, which notice must include the following:
(i) A description of the basis for the determination;
(ii) The basis for the CMP;
(iii) The amount of the CMP, if applicable;
(iv) The date the CMP, if applicable, is due;
(v) Whether HHS would permit the consumer assistance entity to
enter into a corrective action plan in place of paying the CMP, and the
terms of any such corrective action plan;
(vi) An explanation of the consumer assistance entity's right to a
hearing under paragraph (m) of this section; and
(vii) Information about the process for filing a request for a
hearing.
(m) Appeal of proposed sanction. Any consumer assistance entity
against which HHS has assessed a sanction may appeal that penalty in
accordance with the procedures set forth at 45 CFR Part 150, Subpart D.
(n) Failure to request a hearing. (1) If the consumer assistance
entity does not request a hearing within 30 days of the issuance of the
notice of assessment of CMP described in paragraph (l) of this section,
HHS may require payment of the proposed CMP.
(2) HHS will notify the consumer assistance entity in writing of
any CMP that has been assessed and of the means by which the consumer
assistance entity may pay the CMP.
(3) The consumer assistance entity has no right to appeal a CMP
with respect to which it has not requested a hearing in accordance with
paragraph (m) of this section unless the consumer assistance entity can
show good cause in accordance with Sec. 150.405(b) of this subchapter
for failing to timely exercise its right to a hearing.
0
22. Section 155.210 is amended--
0
A. By revising paragraph (c)(1)(iii).
0
B. In paragraph (d)(3) by removing ``or,'' after the semicolon.
0
C. In paragraph (d)(4) by removing the period at the end of the
paragraph and adding a semicolon in its place.
0
D. By adding paragraphs (d)(5) through (9) and (e)(6) and (7).
The revision and additions read as follows:
Sec. 155.210 Navigator program standards.
(c) * * *
(1) * * *
(iii) Meet any licensing, certification or other standards
prescribed by the State or Exchange, if applicable, so long as such
standards do not prevent the application of the provisions of title I
of the Affordable Care Act. Standards that would prevent the
application of the provisions of title I of the Affordable Care Act
include but are not limited to the following:
(A) Except as otherwise provided under Sec. 155.705(d),
requirements that Navigators refer consumers to other entities not
required to provide fair, accurate, and impartial information.
(B) Except as otherwise provided under Sec. 155.705(d),
requirements that would prevent Navigators from providing services to
all persons to whom they are required to provide assistance.
(C) Requirements that would prevent Navigators from providing
advice regarding substantive benefits or comparative benefits of
different health plans.
(D) Requiring that a Navigator hold an agent or broker license or
carry errors or omissions insurance.
(E) In a Federally-facilitated Exchange, imposing standards that
would prohibit individuals or entities from acting as Navigators that
would be eligible to participate as Navigators under standards
applicable to the Federally-facilitated Exchange.
(F) In a Federally-facilitated Exchange, imposing standards that
would, as applied or as implemented in a State, prevent the application
of requirements applicable to the Federally-facilitated Exchange.
* * * * *
(d) * * *
(5) Charge any applicant or enrollee, or request or receive any
form of remuneration from or on behalf of an individual applicant or
enrollee, for application or other assistance related to Navigator
duties; or
(6) Provide compensation to individual Navigators on a per-
application, per-individual-assisted, or per-enrollment basis.
(7) Provide gifts, including gift cards or cash, unless they are of
nominal value, or provide promotional items that market or promote the
products or services of a third party, to any applicant or potential
enrollee in connection with or as an inducement for application
assistance or enrollment.
(8) Solicit any consumer for application or enrollment assistance
by going door-to-door or through other unsolicited means of direct
contact, including calling a consumer to provide application or
enrollment assistance without the consumer initiating the contact.
(9) Initiate any telephone call to a consumer using an automatic
telephone dialing system or an artificial or prerecorded voice.
(e) * * *
(6) Ensure that applicants--
(i) Are informed of the functions and responsibilities of
Navigators;
(ii) Provide authorization in a form and manner as determined by
the Secretary prior to a Navigator's obtaining access to an applicant's
personally identifiable information, and that the Navigator maintains a
record of the authorization provided. The Exchange must establish a
reasonable retention period for maintaining these records. In
Federally-facilitated Exchanges, this period is three years,
[[Page 15872]]
unless a different retention period has already been provided under 45
CFR 92.42 and 45 CFR 74.53 or other applicable Federal law; and
(iii) May revoke at any time the authorization provided the
Navigator pursuant to paragraph (e)(6)(ii) of this section.
(7) Maintain a physical presence in the Exchange service area, so
that face-to-face assistance can be provided to applicants and
enrollees.
* * * * *
0
23. Section 155.215 is amended by adding paragraphs (f) and (g) to read
as follows:
Sec. 155.215 Standards applicable to Navigators and Non-Navigator
Assistance Personnel carrying out consumer assistance functions under
Sec. Sec. 155.205(d) and (e) and 155.210 in a Federally-facilitated
Exchange and to Non-Navigator Assistance Personnel funded through an
Exchange Establishment Grant.
* * * * *
(f) State or Exchange standards. All non-Navigator entities or
individuals carrying out consumer assistance functions under Sec.
155.205(d) and (e) must comply with the eligibility standard set forth
under Sec. 155.210(c)(1)(iii), except for Sec. 155.210(c)(1)(iii)(D).
(g) Consumer authorization. All non-Navigator entities or
individuals carrying out consumer assistance functions under Sec.
155.205(d) and (e) must establish procedures to ensure that
applicants--
(1) Are informed of the functions and responsibilities of non-
Navigator assistance personnel;
(2) Provide authorization in a form and manner as determined by the
Secretary prior to a non-Navigator assistance personnel's obtaining
access to an applicant's personally identifiable information, and that
the non-Navigator assistance personnel maintains a record of the
authorization provided. The Exchange must establish a reasonable
retention period for maintaining these records. In Federally-
facilitated Exchanges, this period is three years, unless an different
retention period has already been provided in applicable Federal law;
and
(3) May revoke at any time the authorization provided the non-
Navigator assistance personnel pursuant to paragraph (g)(2) of this
section.
0
24. Section 155.225 is amended--
0
A. In paragraph (b)(1)(i) by removing ``and'' after the semicolon.
0
B. In paragraph (b)(1)(ii) by removing the period at the end of the
paragraph and adding ``; and'' in its place.
0
C. By adding paragraph (b)(1)(iii).
0
D. In paragraph (d)(5) by removing ``and'' after the semicolon.
0
E. In paragraph (d)(6) by removing the period at the end of the
paragraph and adding a semicolon in its place.
0
F. By adding paragraphs (d)(7) and (8).
0
G. By revising paragraphs (f)(1) and (2) and (g).
The revisions and additions read as follows:
Sec. 155.225 Certified application counselors.
* * * * *
(b) * * *
(1) * * *
(iii) Maintain a physical presence in the Exchange service area, so
that face-to-face assistance can be provided to applicants and
enrollees.
* * * * *
(d) * * *
(7) Is recertified on at least an annual basis after successfully
completing recertification training as required by the Exchange; and
(8) Meets any licensing, certification, or other standards
prescribed by the State or Exchange, if applicable, so long as such
standards do not prevent the application of the provisions of title I
of the Affordable Care Act. Standards that would prevent the
application of the provisions of title I of the Affordable Care Act
include but are not limited to the following:
(i) Requirements that certified application counselors refer
consumers to other entities not required to act in the best interest of
applicants assisted.
(ii) Requirements that would prevent certified application
counselors from providing services to all persons to whom they are
required to provide assistance.
(iii) Requirements that would prevent certified application
counselors from providing advice regarding substantive benefits or
comparative benefits of different health plans.
(iv) In a Federally-facilitated Exchange, imposing standards that
would prohibit individuals or entities from acting as certified
application counselors that would be eligible to participate as
certified application counselors under standards applicable to the
Federally-facilitated Exchange.
(v) In a Federally-facilitated Exchange, imposing standards that
would, as applied or as implemented in a State, prevent the application
of requirements applicable to the Federally-facilitated Exchange.
* * * * *
(f) * * *
(1) Are informed of the functions and responsibilities of certified
application counselors;
(2) Provide authorization prior to a certified application
counselor obtaining access to an applicant's personally identifiable
information and that the organization or certified application
counselor maintains a record of the authorization. The Exchange must
establish a reasonable retention period for maintaining these records.
In Federally-facilitated Exchanges, this period is three years, unless
a different retention period has already been provided under other
applicable Federal law; and
* * * * *
(g) Fees, consideration, solicitation, and marketing. Organizations
designated by the Exchange under paragraph (b) of this section and
certified application counselors must not--
(1) Impose any charge on applicants or enrollees for application or
other assistance related to the Exchange;
(2) Receive any consideration directly or indirectly from any
health insurance issuer or issuer of stop-loss insurance in connection
with the enrollment of any individuals in a QHP or a non-QHP;
(3) Provide compensation to individual certified application
counselors on a per-application, per-individual- assisted, or per-
enrollment basis;
(4) Provide gifts, including gift cards or cash, unless they are of
nominal value, or provide promotional items that market or promote the
products or services of a third party, to any applicant or potential
enrollee in connection with or as an inducement for application
assistance or enrollment;
(5) Solicit any consumer for application or enrollment assistance
by going door-to-door or through other unsolicited means of direct
contact, including calling a consumer to provide application or
enrollment assistance without the consumer initiating the contact; or
(6) Initiate any telephone call to a consumer using an automatic
telephone dialing system or an artificial or prerecorded voice.
0
25. Section 155.240 is amended by adding paragraph (e) to read as
follows:
Sec. 155.240 Payment of premium.
* * * * *
(e) Premium calculation. The Exchange may establish one or more
standard processes for premium calculation.
(1) For a Federally-facilitated Exchange, the premium for coverage
lasting less than one month must equal the product of--
[[Page 15873]]
(i) The premium for one month of coverage divided by the number of
days in the month; and
(ii) The number of days for which coverage is being provided in the
month described in paragraph (e)(1)(i) of this section.
(2) [Reserved]
0
26. Section 156.260 is amended by revising paragraph (g) to read as
follows:
Sec. 155.260 Privacy and security of personally identifiable
information.
* * * * *
(g) Improper use and disclosure of information. Any person who
knowingly and willfully uses or discloses information in violation of
section 1411(g) of the Affordable Care Act will be subject to a CMP of
not more than the maximum amount specified in section 1411(h)(2) of the
Affordable Care Act per person or entity, per use or disclosure,
consistent with the bases and process for imposing civil penalties
specified at Sec. 155.285 of this subpart, in addition to other
penalties that may be prescribed by law.
0
27. Section 155.285 is added to subpart C to read as follows:
Sec. 155.285 Bases and process for imposing civil penalties for
provision of false or fraudulent information to an Exchange or improper
use or disclosure of information.
(a) Grounds for imposing civil money penalties. (1) HHS may impose
civil money penalties on any person, as defined in paragraph (a)(2) of
this section, if, based on credible evidence, HHS reasonably determines
that a person has engaged in one or more of the following actions:
(i) Failure to provide correct information under section 1411(b) of
the Affordable Care Act where such failure is attributable to
negligence or disregard of any rules or regulations of the Secretary
with negligence and disregard defined as they are in section 6662 of
the Internal Revenue Code of 1986:
(A) ``Negligence'' includes any failure to make a reasonable
attempt to provide accurate, complete, and comprehensive information;
and
(B) ``Disregard'' includes any careless, reckless, or intentional
disregard for any rules or regulations of the Secretary.
(ii) Knowing and willful provision of false or fraudulent
information required under section 1411(b) of the Affordable Care Act,
where knowing and willful means the intentional provision of
information that the person knows to be false; or
(iii) Knowing and willful use or disclosure of information in
violation of section 1411(g) of the Affordable Care Act, where knowing
and willful means the intentional use or disclosure of information in
violation of section 1411(g). Such violations would include, but not be
limited to, the following:
(A) Any use or disclosure performed which violates relevant privacy
and security standards established by the Exchange pursuant to Sec.
155.260;
(B) Any other use or disclosure which has not been determined by
the Secretary to be in compliance with section 1411(g)(2)(A) of the
Affordable Care Act pursuant to Sec. 155.260(a); and
(C) Any other use or disclosure which is not necessary to carry out
a function described in a contract with a non-Exchange entity executed
pursuant to Sec. 155.260(b)(2).
(2) For purposes of this section, the term ``person'' is defined to
include, but is not limited to, all individuals; corporations;
Exchanges; Medicaid and CHIP agencies; other entities gaining access to
personally identifiable information submitted to an Exchange to carry
out additional functions which the Secretary has determined ensure the
efficient operation of the Exchange pursuant to Sec. 155.260(a)(1);
and non-Exchange entities as defined in Sec. 155.260(b) which includes
agents, brokers, Web-brokers, QHP issuers, Navigators, non-Navigator
assistance personnel; certified application counselors, in-person
assistors, and other third party contractors.
(b) Factors in determining the amount of civil money penalties
imposed. In determining the amount of civil money penalties, HHS may
take into account factors which include, but are not limited to, the
following:
(1) The nature and circumstances of the conduct including:
(i) The number of violations;
(ii) The severity of the violations;
(iii) The person's history with the Exchange including any prior
violations that would indicate whether the violation is an isolated
occurrence or represents a pattern of behavior;
(iv) The length of time of the violation;
(v) The number of individuals affected or potentially affected;
(vi) The extent to which the person received compensation or other
consideration associated with the violation; and
(vii) Any documentation provided in any complaint or other
information, as well as any additional information provided by the
individual to refute performing the violation.
(2) The nature of the harm resulting from, or reasonably expected
to result from, the violation including:
(i) Whether the violation resulted in financial harm;
(ii) Whether there was harm to an individual's reputation;
(iii) Whether the violation hindered or could have hindered an
individual's ability to obtain health insurance coverage;
(v) The actual or potential impact of the provision of false or
fraudulent information or of the improper use or disclosure of the
information; and
(vi) Whether any person received a more favorable eligibility
determination for enrollment in a QHP or insurance affordability
program, such as greater advance payment of the premium tax credits or
cost-sharing reductions than he or she would be eligible for if the
correct information had been provided.
(3) No penalty will be imposed under paragraph (a)(1)(i) of this
section if HHS determines that there was a reasonable cause for the
failure to provide correct information required under section 1411(b)
of the Affordable Care Act and that the person acted in good faith.
(c) Maximum penalty. The amount of a civil money penalty will be
determined by HHS in accordance with paragraph (b) of this section.
(1) The following provisions provide maximum penalties for a single
``plan year,'' where ``plan year'' has the same meaning as at Sec.
155.20 of this part:
(i) Any person who fails to provide correct information as
specified in paragraph (a)(1)(i) of this section may be subject to a
maximum civil money penalty as specified in section 1411(h)(1)(A)(i) of
the Affordable Care Act for each application, as defined at paragraph
(c)(1)(iii) of this section, pursuant to which a person fails to
provide correct information.
(ii) Any person who knowingly and willfully provides false
information as specified in paragraph (a)(1)(ii) of this section may be
subject to a maximum civil money penalty as specified in section
1411(h)(1)(B) of the Affordable Care Act for each application, as
defined at paragraph (c)(1)(iii) of this section, on which a person
knowingly and willfully provides false information.
(iii) For the purposes of this subsection, ``application'' is
defined as a submission of information, whether through an online
portal, over the telephone through a call center, or through a paper
submission process, in which the information is provided in relation to
an eligibility determination; an eligibility redetermination based on a
change in an individual's circumstances; or an annual eligibility
redetermination for any of the following:
(A) Enrollment in a qualified health plan;
[[Page 15874]]
(B) Premium tax credits or cost sharing reductions; or
(C) An exemption from the individual shared responsibility payment.
(2) Any person who knowingly or willfully uses or discloses
information as specified in paragraph (a)(1)(iii) of this section may
be subject to the following civil money penalty:
(i) A civil money penalty for each use or disclosure described in
paragraph (a)(1)(iii) of this section of not more than the maximum
amount specified in section 1411(h)(2) of the Affordable Care Act per
use or disclosure.
(ii) For purposes of this subsection, a use or disclosure includes
one separate use or disclosure of a single individual's personally
identifiable information where the person against whom a civil money
penalty may be imposed has made the use or disclosure.
(3) These penalties may be imposed in addition to any other
penalties that may be prescribed by law.
(d) Notice of intent to issue civil money penalty. If HHS intends
to impose a civil money penalty in accordance with this part, HHS will
send a written notice of such intent to the person against whom it
intends to impose a civil money penalty.
(1) This written notice will be either hand delivered, sent by
certified mail, return receipt requested, or sent by overnight delivery
service with signature upon delivery required. The written notice must
include the following elements:
(i) A description of the findings of fact regarding the violations
with respect to which the civil money penalty is proposed;
(ii) The basis and reasons why the findings of fact subject the
person to a penalty;
(iii) Any circumstances described in paragraph (b) of this section
that were considered in determining the amount of the proposed penalty;
(iv) The amount of the proposed penalty;
(v) An explanation of the person's right to a hearing under any
applicable administrative hearing process;
(vi) A statement that failure to request a hearing within 60
calendar days after the date of issuance printed on the notice permits
the assessment of the proposed penalty; and
(vii) Information explaining how to file a request for a hearing
and the address to which the hearing request must be sent.
(2) The person may request a hearing before an ALJ on the proposed
penalty by filing a request in accordance with the procedure to file a
request specified in the notice of intent to issue a civil money
penalty.
(e) Failure to request a hearing. If the person does not request a
hearing within 60 calendar days of the date of issuance printed on the
notice described in paragraph (d) of this section, HHS may impose the
proposed civil money penalty.
(1) HHS will notify the person in writing of any penalty that has
been imposed, the means by which the person may satisfy the penalty,
and the date on which the penalty is due.
(2) A person has no right to appeal a penalty with respect to which
the person has not timely requested a hearing in accordance with
paragraph (d) of this section.
(f) Appeal of proposed penalty. Subject to paragraph (e)(2) of this
section, any person against whom HHS has imposed a civil money penalty
may appeal that penalty in accordance with the rules and procedures
outlined at 45 CFR part 150, subpart D, excluding Sec. Sec. 150.461,
150.463, and 150.465.
(g) Enforcement authority. (1) CMS. CMS may impose civil money
penalties up to the maximum amounts specified in paragraph (d) of this
section for any of the violations described in paragraph (a) of this
section.
(2) OIG. In accordance with the rules and procedures of 42 CFR part
1003, and in place of imposition of penalties by CMS, the OIG may
impose civil money penalties for violations described in paragraphs
(a)(1)(ii) and (iii) of this section.
(h) Settlement authority. Nothing in this section limits the
authority of CMS to settle any issue or case described in the notice
furnished in accordance with Sec. 155.285(d) or to compromise on any
penalty provided for in this section.
(i) Limitations. No action under this section will be entertained
unless commenced, in accordance with Sec. 155.285(d), within 6 years
from the date on which the violation occurred.
0
28. Section 155.320 is amended by revising the section heading and
removing paragraph (d)(4).
The revision reads as follows:
Sec. 155.320 Verification process related to eligibility for
insurance affordability programs.
* * * * *
0
29. Section 155.330 is amended by revising paragraph (d)(2)(ii) to read
as follows:
Sec. 155.330 Eligibility redetermination during a benefit year.
* * * * *
(d) * * *
(2) * * *
(ii) Comply with the standards specified in paragraph (e)(2) of
this section.
* * * * *
0
30. Section 155.400 is amended by adding paragraphs (e) and (f) to read
as follows:
Sec. 155.400 Enrollment of qualified individuals into QHPs.
* * * * *
(e) Premium payment. Exchanges may, and the Federally-facilitated
Exchange will, require payment of the first month's premium to
effectuate an enrollment.
(f) Processing enrollment transactions. The Exchange may provide
requirements to QHP issuers regarding the instructions for processing
electronic enrollment-related transactions.
0
31. Section 155.420 is amended by revising paragraphs (b)(2)(i) through
(iii), (c), (d)(1), (d)(6)(iii), and (e) introductory text to read as
follows:
Sec. 155.420 Special enrollment periods.
* * * * *
(b) * * *
(2) * * *
(i) In the case of birth, adoption, placement for adoption, or
placement in foster care, 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, but may
permit the qualified individual or enrollee to elect a later coverage
effective date. If the Exchange permits the qualified individual or
enrollee to elect a later coverage effective date, the Exchange must
ensure coverage is effective on the date elected by the qualified
individual or enrollee.
(ii) In the case of marriage, or in the case where a qualified
individual loses minimum essential coverage or other 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), (d)(9), or (d)(10) 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.
* * * * *
(c) Availability and length of special enrollment periods. (1)
Unless specifically stated otherwise herein, a qualified individual or
enrollee has 60
[[Page 15875]]
days from the date of a triggering event to select a QHP;
(2) A qualified individual or enrollee whose coverage specified in
paragraph (d)(1) or whose eligibility for qualifying coverage in an
eligible-employer sponsored plan as specified in paragraph (d)(6)(iii)
of this section will end within the next 60 days has 120 days from the
date that is 60 days prior to the end of such coverage or eligibility
to select a QHP, including prior to the end of his or her existing
coverage or eligibility for qualifying coverage in an eligible-employer
sponsored plan as specified in paragraph (d)(6)(iii) of this section,
although he or she is not eligible for advance payments of the premium
tax credit until the end of his or her existing coverage or eligibility
for qualifying coverage in an eligible-employer sponsored plan as
specified in paragraph (d)(6)(iii) of this section;
(3) In the case of a qualified individual or enrollee eligible for
a special enrollment period as described in paragraphs (d)(4), (d)(5),
(d)(9), or (d)(10) of this section, the Exchange may define the length
of this special enrollment period as appropriate based on the
circumstances of the special enrollment period, in accordance with
guidelines issued by HHS.
(d) * * *
(1) The qualified individual or his or her dependent loses minimum
essential coverage, is enrolled in any non-calendar year individual
health insurance policy as described in Sec. 147.104(b)(2) of this
subchapter, even if the qualified individual or his her or dependent
has the option to renew the expiring non-calendar year individual
health insurance policy, or loses pregnancy-related coverage described
under section 1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the
Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV),
(a)(10)(A)(ii)(IX)).
* * * * *
(6) * * *
(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.
* * * * *
(e) Loss of coverage. Loss of minimum essential coverage or other
coverage described in paragraph (d)(1) of this section includes those
circumstances described in 26 CFR 54.9801-6(a)(3)(i) through (iii).
Loss of coverage does not include voluntary termination or loss due
to--
* * * * *
0
32. Section 155.430 is amended by revising paragraph (d)(6) and adding
paragraph (e) to read as follows:
Sec. 155.430 Termination of coverage.
* * * * *
(d) * * *
(6) In the case of a termination in accordance with paragraph
(b)(2)(v) of this section, the last day of coverage in an enrollee's
prior QHP is the day before the effective date of coverage in his or
her new QHP, including any retroactive enrollments effectuated under
Sec. 155.420(b)(2)(iii). In cases of retroactive terminations dates,
the Exchange will ensure that appropriate actions are taken to make
necessary adjustments to advance payments of the premium tax credit,
cost-sharing reductions, premiums, and claims.
* * * * *
(e) Termination, cancellation, and reinstatement. The Exchange may
establish operational instructions as to the form, manner, and method
for addressing each of the following:
(1) Termination. A termination is an action taken after a coverage
effective date that ends an enrollee's coverage through the Exchange
for a date after the original coverage effective date, resulting in a
period during which the individual was covered by the issuer.
(2) Cancellation. A cancellation is specific type of termination
action that ends a qualified individuals' enrollment on the date
coverage became effective resulting in coverage never having been
effective with the QHP.
(3) Reinstatement. A reinstatement is a correction of an erroneous
termination or cancellation action and results in restoration of an
enrollment with no break in coverage.
Sec. 155.505 [Amended].
0
33. Section 155.505 is amended in paragraph (b)(4) by removing ``;
and'' at the end of the paragraph and adding a period in its place.
0
34. Section 155.530 is amended by revising paragraph (a)(1) to read as
follows:
Sec. 155.530 Dismissals.
(a) * * *
(1) Withdraws the appeal request in writing or by telephone, if the
appeals entity is capable of accepting telephonic withdrawals.
(i) Accepting telephonic withdrawals means the appeals entity--
(A) Records in full the appellant's statement and telephonic
signature made under penalty of perjury; and
(B) Provides a written confirmation to the appellant documenting
the telephonic interaction.
(ii) [Reserved]
* * * * *
0
35. Section 155.555 is amended by--
0
A. Redesignating paragraphs (d) introductory text, (d)(1), (d)(2)
introductory text, (d)(2)(i), (ii), (iii), (d)(3), and (d)(4) as
paragraphs (d)(1) introductory text, (d)(1)(i), (d)(1)(ii) introductory
text, (d)(1)(ii)(A), (B), (C), (d)(1)(iii), and (d)(2).
0
B. Revising new paragraph (d)(2) introductory text.
The revision reads as follows:
Sec. 155.555 Employer appeals process.
* * * * *
(d) * * *
(2) Upon receipt of an invalid appeal request, the appeals entity
must promptly and without undue delay send written notice to the
employer that the appeal request is not valid because it fails to meet
the requirements of this section. The written notice must inform the
employer--
* * * * *
0
36. Section 155.625 is revised to read as follows:
Sec. 155.625 Options for conducting eligibility determinations for
exemptions.
(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); or
(2) For an application submitted before November 15, 2014, through
the approach described in paragraph (b) of this section.
(b) Use of HHS service. Notwithstanding the requirements of this
subpart, for an application submitted before November 15, 2014, the
Exchange may adopt an exemption eligibility determination made by HHS,
provided that--
(1) The Exchange adheres to the eligibility determination made by
HHS;
(2) The Exchange furnishes to HHS any information available through
the Exchange that is necessary for an applicant to utilize the process
administered by HHS; and
(3) The Exchange call center and Internet Web site specified in
Sec. 155.205(a) and (b), respectively,
[[Page 15876]]
provide information to consumers regarding the exemption eligibility
process.
0
37. Section 155.705, as amended March 11, 2014 (79 FR 13838), and
effective May 12, 2014, is amended by--
0
A. Revising paragraphs (b)(2) and (b)(3)(ii) introductory text and
(b)(3)(iv) introductory text.
0
B. Adding paragraph (b)(3)(vi).
The revisions and addition read as follows:
Sec. 155.705 Functions of a SHOP.
* * * * *
(b) * * *
(2) Employer choice requirements. With regard to QHPs offered
through the SHOP for plan years beginning on or after January 1, 2015,
the SHOP must allow a qualified employer to select a level of coverage
as described in section 1302(d)(1) of the Affordable Care Act, in which
all QHPs within that level are made available to the qualified
employees of the employer, unless the SHOP makes an election pursuant
to paragraph (b)(3)(vi) of this section.
(3) * * *
(ii) Unless the SHOP makes an election pursuant to paragraph
(b)(3)(vi) of this section, for plan years beginning on or after
January 1, 2015, a SHOP:
* * * * *
(iv) Unless the Secretary makes an election pursuant to paragraph
(b)(3)(vi) of this section, for plan years beginning on or after
January 1, 2015, a Federally-facilitated SHOP will provide a qualified
employer a choice of two methods to make QHPs available to qualified
employees:
* * * * *
(vi) For plan years beginning in 2015, the SHOP may, based on the
recommendation of a State regulatory agency, elect to provide employers
only with the options set forth at paragraph (b)(3)(ii)(B) or in the
case of a Federally-facilitated SHOP, only with the option set forth at
paragraph (b)(3)(iv)(B) of this section, only if:
(A) The implementation of paragraphs (b)(3)(ii)(A) or (b)(3)(iv)(A)
of this section would result in significant adverse selection in the
State's small group market resulting in market disruptions that could
not be remediated by sections 1312(c), 1342, and 1343 of the Affordable
Care Act (relating to single risk pool, risk corridors, and risk
adjustment); or
(B) There are insufficient issuers of qualified health plans or
qualified stand-alone dental plans in the SHOP to allow for meaningful
choice among qualified health plans or qualified stand-alone dental
plans for all levels of coverage as described in section 1302(d)(1) of
the Affordable Care Act.
* * * * *
0
38. Section 155.725 is amended by revising paragraphs (c) and (e) to
read as follows:
Sec. 155.725 Enrollment periods under SHOP.
* * * * *
(c) Annual employer election period. (1) Notwithstanding any other
paragraph in this section, for coverage beginning in 2015, a qualified
employer's annual election period may begin no sooner than November 15,
2014.
(2) The SHOP must provide qualified employers with a standard
election period prior to the completion of the employer's plan year and
before the annual employee open enrollment period, in which the
qualified employer may change its participation in the SHOP for the
next plan year, including--
(i) The method by which the qualified employer makes QHPs available
to qualified employees pursuant to Sec. 155.705(b)(2) and (3);
(ii) The employer contribution towards the premium cost of
coverage;
(iii) The level of coverage offered to qualified employees as
described in Sec. 155.705(b)(2) and (3); and
(iv) The QHP or QHPs offered to qualified employees in accordance
with Sec. 155.705.
* * * * *
(e) Annual employee open enrollment period. The SHOP must establish
a standardized annual open enrollment period for qualified employees
prior to the completion of the applicable qualified employer's plan
year and after that employer's annual election period.
* * * * *
0
39. Section 155.740 is amended by--
0
A. Redesignating paragraphs (g) introductory text, (g)(1) introductory
text, (g)(1)(i), (g)(1)(ii), (g)(2), and (g)(3) as paragraphs (g)(1)(i)
introductory text, (g)(1)(i)(A), (g)(1)(i)(B), (g)(1)(ii), and (g)(2).
0
B. Revising paragraph (i)(1)(i).
The revision read as follows:
Sec. 155.740 SHOP employer and employee eligibility appeals
requirements.
* * * * *
(i) * * *
(1) * * *
(i) Withdraws the request in accordance with the standards set
forth in Sec. 155.530(a)(1); or
* * * * *
0
40. Subpart O is added to read as follows:
Subpart O--Quality Reporting Standards for Exchanges
Sec.
155.1400 Quality rating system.
155.1405 Enrollee satisfaction survey system.
Subpart O--Quality Reporting Standards for Exchanges
Sec. 155.1400 Quality rating system.
The Exchange must prominently display the quality rating
information assigned to each QHP on its Web site, in accordance with
Sec. 155.205(b)(1)(v), as calculated by HHS and in a form and manner
specified by HHS.
Sec. 155.1405 Enrollee satisfaction survey system.
The Exchange must prominently display results from the Enrollee
Satisfaction Survey for each QHP on its Web site, in accordance with
Sec. 155.205(b)(1)(iv), as calculated by HHS and in a form and manner
specified by HHS.
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
41. The authority citation for part 156 continues to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1313, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, Pub.
L. 111-148, 124 Stat. 119 42 U.S.C. 18021-18024, 18031-18032, 18041-
18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C. 36B, and
31 U.S.C. 9701).
0
42. Section 156.130 is amended by revising paragraph (d) to read as
follows:
Sec. 156.130 Cost-sharing requirements.
* * * * *
(d) Increase annual dollar limits in multiples of 50. For a plan
year beginning in a calendar year after 2014, any increase in the
annual dollar limits described in paragraphs (a) and (b) of this
section that does not result in a multiple of 50 dollars will be
rounded down, to the next lowest multiple of 50 dollars.
* * * * *
0
43. Section 156.200 is amended by revising paragraph (b)(5) and adding
paragraph (h) to read as follows:
Sec. 156.200 QHP issuer participation standards.
* * * * *
(b) * * *
(5) Implement and report on a quality improvement strategy or
strategies described in section 1311(c)(1)(E) of the Affordable Care
Act consistent with the
[[Page 15877]]
standards of section 1311(g) of the Affordable Care Act, disclose and
report information on health care quality and outcomes described in
sections 1311(c)(1)(H), (c)(1)(I), and (c)(3) of the Affordable Care
Act, and implement appropriate enrollee satisfaction surveys consistent
with section 1311(c)(4) of the Affordable Care Act;
* * * * *
(h) Operational requirements. As a condition of certification of a
QHP, an issuer must attest that it will comply with all QHP operational
requirements described in Subparts D, E, H, K, L and M of this part.
0
44. Section 156.265 is amended by revising paragraph (d) to read as
follows:
Sec. 156.265 Enrollment process for qualified individuals.
* * * * *
(d) Premium payment. A QHP issuer--
(1) Must follow the premium payment process established by the
Exchange in accordance with Sec. 155.240.
(2) Must, for QHPs offered through a Federally-facilitated
Exchange, establish the date by which a qualified individual that has
selected a QHP within the enrollment period dates in Sec. 155.410(b)
of this subchapter must make a premium payment in order to effectuate
coverage by the applicable coverage date, provided that:
(i) The payment date is no later than the day before the coverage
effective date.
(ii) The payment date policy is applied consistently to all
applicants in a non-discriminatory manner.
* * * * *
0
45. Section 156.602 is amended by redesignating paragraph (e) as
paragraph (f) and adding a new paragraph (e) to read as follows:
Sec. 156.602 Other coverage that qualifies as minimum essential
coverage.
* * * * *
(e) Foreign group health coverage. (1) Foreign group health
coverage for expatriates. The following types of foreign group health
coverage will be recognized as minimum essential coverage for
expatriates:
(i) Group health coverage for citizens or nationals of the United
States working abroad, provided by either of the following:
(A) A foreign, self-insured group health plan.
(B) Health insurance regulated by a foreign government or health
coverage provided by a foreign national health plan with respect to a
citizen or national of the United States who, for such month, is
physically absent from the United States for at least one day of the
month, or who is physically present in the United States for an entire
month if the coverage provides health benefits within the United
States.
(ii) Group health coverage for non-United States citizens or
nationals residing in the United States, provided by a self-insured
group health plan, health insurance regulated by a foreign government,
or health coverage provided by a foreign national health plan, if the
coverage provides health benefits within the United States.
(2) Notice. The sponsor, issuer, or plan administrator of foreign
group health coverage as described in this paragraph (e) must provide
notice to enrollees who are citizens or nationals of the United States
of its minimum essential coverage status and must comply, if
applicable, with the information and reporting requirements of section
6055 of the Code and implementing regulations with respect to those
enrollees.
(3) Definition of expatriate. For purposes of this section, an
expatriate means an individual for whom there is a good faith
expectation that such individual will reside outside of their home
country or outside of the United States for at least six months of a
12-month period and any covered dependents.
* * * * *
0
46. Section 156.604 is amended by revising paragraphs (a)(2)
introductory text and (d) to read as follows:
Sec. 156.604 Requirements for recognition as minimum essential
coverage for types of coverage not otherwise designated minimum
essential coverage in the statute or this subpart.
(a) * * *
(2) Procedural requirements for recognition as minimum essential
coverage. To be considered for recognition as minimum essential
coverage, the sponsor of the coverage, government agency, health
insurance issuer, or plan administrator must submit the following
information to HHS:
* * * * *
(d) Notice. Once recognized as minimum essential coverage, the
sponsor of the coverage, government agency, health insurance issuer, or
plan administrator must provide notice to all enrollees of its minimum
essential coverage status and must comply with the information
reporting requirements of section 6055 of the Code and implementing
regulations.
0
47. Section 156.800 is amended by adding paragraph (d) to read as
follows:
Sec. 156.800 Available remedies; Scope.
* * * * *
(d) HHS may consult and share information about QHP issuers with
other Federal and State regulatory and enforcement entities to the
extent that the consultation and information is necessary for HHS to
determine whether an enforcement remedy under subpart I is appropriate.
0
48. Section 156.805 is amended by--
0
A. Removing ``or'' after the semicolon in paragraph (a)(6).
0
B. Removing the period in paragraph (a)(7) and adding ``; or'' in its
place.
0
C. Adding paragraph (d)(3).
0
D. Revising paragraph (e)(2).
The revisions and additions read as follows:
Sec. 156.805 Bases and process for imposing civil money penalties in
Federally-facilitated Exchanges.
* * * * *
(d) * * *
(3) HHS will deliver notice under this paragraph by either hand
delivery, certified mail, return receipt requested, or by overnight
delivery service with signature upon delivery required.
(e) * * *
(2) HHS will notify the issuer in writing of any penalty that has
been assessed under this subpart and of the means by which the QHP
issuer or another responsible entity may satisfy the CMP assessment.
* * * * *
0
49. Section 156.806 is added to read as follows:
Sec. 156.806 Notice of non-compliance.
If HHS learns of a potential violation described in Sec. 156.805
or if a State informs HHS of a potential violation, prior to imposing
any CMPs, HHS must provide a written notice to the issuer, to include
the following:
(a) Describe the potential violation.
(b) Provide 30 days from the date of the notice for the QHP issuer
to respond and to provide additional information to refute an alleged
violation.
(c) State that a civil money penalty may be assessed if the
allegations are not, as determined by HHS, refuted.
0
50. Section 156.810 is amended--
0
A. By revising paragraph (a)(6).
0
C. In paragraph (a)(9) by removing ``or'' after the semicolon.
0
D. In paragraph (a)(10) by removing the period and adding a semicolon
in its place.
0
E. By revising paragraph (a)(11).
0
F. By adding a new paragraph (a)(12).
0
G. By revising paragraph (d) introductory text.
The revisions and additions read as follows:
[[Page 15878]]
Sec. 156.810 Bases and process for decertification of a QHP offered
by an issuer through a Federally-facilitated Exchange.
(a) * * *
(6) The QHP no longer meets the applicable standards set forth
under subpart C of Part 156.
* * * * *
(12) The QHP issuer substantially fails to meet the requirements
related to the cases forwarded to QHP issuers under Subpart K; or
(13) The QHP issuer substantially fails to meet the requirements
related to the offering of a QHP under Subpart M.
* * * * *
(d) Expedited decertification process. For decertification actions
on grounds described in paragraphs (a)(6), (7), (8), or (9) of this
section, HHS will provide written notice to the QHP issuer, enrollees,
and the State department of insurance in the State in which the QHP is
being decertified. The written notice must include the following:
* * * * *
0
51. Section 156.1105 is amended by adding paragraphs (d) and (e) to
read as follows:
Sec. 156.1105 Establishment of standards for HHS-approved enrollee
satisfaction survey vendors for use by QHP issuers in Exchanges.
* * * * *
(d) Monitoring. HHS will periodically monitor HHS-approved enrollee
satisfaction survey vendors to ensure ongoing compliance with the
standards in paragraph (b) of this section. If HHS determines that an
HHS-approved enrollee satisfaction survey vendor is non-compliant with
the standards required in paragraph (b) of this section, the survey
vendor may be removed from the approved list described in paragraph (c)
of this section and/or the submitted survey results may be ineligible
to be included for ESS results.
(e) Appeals. An enrollee satisfaction survey vendor that is not
approved by HHS after submitting the application described in paragraph
(a) of this section may appeal HHS's decision by notifying HHS in
writing within 15 days from receipt of the notification of not being
approved and submitting additional documentation demonstrating how the
vendor meets the standards in paragraph (b) of this section. HHS will
review the submitted documentation and make a final approval
determination within 30 days from receipt of the additional
documentation.
0
52. Section 156.1120 is added to subpart L to read as follows:
Sec. 156.1120 Quality rating system.
(a) Data submission requirement. (1) A QHP issuer must submit data
to HHS and Exchanges to support the calculation of quality ratings for
each QHP that has been offered in an Exchange for at least one year.
(2) In order to ensure the integrity of the data required to
calculate the QRS, a QHP issuer must submit data that has been
validated in a form and manner specified by HHS.
(3) A QHP issuer must include in its data submission information
only for those QHP enrollees at the reporting level specified by HHS.
(b) Timeline. A QHP issuer must annually submit data necessary to
calculate the QHP's quality ratings to HHS and Exchanges, on a timeline
and in a standardized form and manner specified by HHS.
(c) Marketing requirement. A QHP issuer may reference the quality
ratings for its QHPs in its marketing materials, in a manner specified
by HHS.
(d) Multi-State plans. Issuers of multi-State plans, as defined in
Sec. 155.1000(a) of this subchapter, must provide the data described
in paragraph (a) of this section to the U.S. Office of Personnel
management, in the time and manner specified by the U.S. Office of
Personnel Management.
0
53. Section 156.1125 is added to subpart L to read as follows:
Sec. 156.1125 Enrollee satisfaction survey system.
(a) General requirement. A QHP issuer must contract with an HHS-
approved enrollee satisfaction survey (ESS) vendor, as identified by
Sec. 156.1105, in order to administer the Enrollee Satisfaction Survey
of the QHP's enrollees. A QHP issuer must authorize its contracted ESS
vendor to report survey results to HHS and the Exchange on the issuer's
behalf.
(b) Data requirement. (1) A QHP issuer must collect data for each
QHP, with more than 500 enrollees in the previous year that has been
offered in an Exchange for at least one year and following a survey
sampling methodology provided by HHS.
(2) In order to ensure the integrity of the data required to
conduct the survey, a QHP issuer must submit data that has been
validated in a form and manner specified by HHS, and submit this data
to its contracted ESS vendor.
(3) A QHP issuer must include in its data submission information
only for those QHP enrollees at the reporting level specified by HHS.
(c) Marketing requirement. A QHP issuer may reference the survey
results for its QHPs in its marketing materials, in a manner specified
by HHS.
(d) Timeline. A QHP issuer must annually submit data necessary to
conduct the survey to its contracted ESS vendor on a timeline and in a
standardized form and manner specified by HHS.
(e) Multi-State plans. Issuers of multi-State plans, as defined in
Sec. 155.1000(a) of this subchapter, must provide the data described
in paragraph (b) of this section to the U.S. Office of Personnel
management, in the time and manner specified by the U.S. Office of
Personnel Management.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
54. The authority citation for part 158 continues to read as follows:
Authority: Section 2718 of the Public Health Service Act (42
U.S.C. 300gg-18), as amended.
0
55. Section 158.150 is amended by revising paragraph (b)(2)(i)(A)(6) to
read as follows:
Sec. 158.150 Activities that improve health care quality.
* * * * *
(b) * * *
(2) * * *
(i) * * *
(A) * * *
(6) Commencing with the 2012 reporting year and extending through
the first reporting year in which the Secretary requires ICD-10 as the
standard medical data code set, implementing ICD-10 code sets that are
designed to improve quality and are adopted pursuant to the Health
Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. 1320d-
2, as amended, limited to 0.3 percent of an issuer's earned premium as
defined in Sec. 158.130.
* * * * *
0
56. Section 158.211 is amended by revising paragraph (a) to read as
follows:
Sec. 158.211 Requirement in States with a higher medical loss ratio.
(a) State option to set higher minimum loss ratio. For coverage
offered in a State whose law provides that issuers in the State must
meet a higher MLR than that set forth in Sec. 158.210, the State's
higher percentage must be substituted for the percentage stated in
Sec. 158.210. If a State requires the small group market and
individual market to be merged and also sets a higher MLR standard for
the merged market, the State's higher percentage must be substituted
for the percentage
[[Page 15879]]
stated in Sec. 158.210 for both the small group and individual
markets.
* * * * *
0
57. Section 158.220 is amended by revising paragraph (a) to read as
follows:
Sec. 158.220 Aggregation of data in calculating an issuer's medical
loss ratio.
(a) Aggregation by State and by market. In general, an issuer's MLR
must be calculated separately for the large group market, small group
market and individual market within each State. However, if a State
requires the small group market and individual market to be merged,
then the data reported separately under subpart A for the small group
and individual market in that State must be merged for purposes of
calculating an issuer's MLR and any rebates owing.
* * * * *
0
58. Section 158.221 is amended by adding paragraphs (b)(6) and (7) to
read as follows:
Sec. 158.221 Formula for calculating an issuer's medical loss ratio.
* * * * *
(b) * * *
(6) The numerator of the MLR in the individual and small group
markets in States that adopted the transitional policy outlined in the
CMS letter dated November 14, 2013 must be the amount specified in this
paragraph (b), except that issuers that provided transitional coverage
may multiply the total incurred claims and expenditures for activities
that improve health care quality incurred in 2014 in the respective
State and market by a factor of 1.0001.
(7) The numerator of the MLR in the individual and small group
markets for issuers participating in the State and Federal Exchanges
(sometimes referred to as ``Marketplaces'') must be the amount
specified in this paragraph (b), except that the total incurred claims
and expenditures for activities that improve health care quality
incurred in 2014 in the respective State and market may be multiplied
by a factor of 1.0004.
* * * * *
0
59. Section 158.231 is amended by revising paragraph (a) to read as
follows:
Sec. 158.231 Life-years used to determine credible experience.
(a) The life-years used to determine the credibility of an issuer's
experience are the life-years for the MLR reporting year plus the life-
years for the two prior MLR reporting years. If a State requires the
small group market and individual market to be merged, then life-years
used to determine credibility must be the life-years from the small
group market and the individual market for the MLR reporting year plus
the life-years from the small group market and the individual market
for the two prior MLR reporting years.
* * * * *
0
60. Section 158.243 is amended by revising paragraph (b)(1) and adding
paragraph (b)(3) to read as follows:
Sec. 158.243 De minimis rebates.
* * * * *
(b) * * *
(1) Except as provided in paragraph (b)(3) of this section, an
issuer must aggregate and distribute any rebates not provided because
they did not meet the minimum threshold set forth in paragraph (a) of
this section by aggregating the unpaid rebates by individual market,
small group market and large group market in a State and use them to
increase the rebates provided to enrollees who receive rebates based
upon the same MLR reporting year as the aggregated unpaid rebates. An
issuer must distribute such aggregated rebates by providing additional
premium credit or payment divided evenly among enrollees who are being
provided a rebate.
* * * * *
(3) If distribution of aggregated unpaid rebates according to
paragraph (b)(1) of this section would result in any enrollee(s)
receiving rebates that exceed their premium paid during the MLR
reporting year, or if no enrollees receive rebates based upon the same
MLR reporting year as the aggregated unpaid rebates, then the issuer
must not aggregate the unpaid rebates according to paragraph (b)(1) of
this section and must instead distribute them according to Sec.
158.241 directly to those enrollees whose rebates did not meet the
minimum threshold set forth in paragraph (a) of this section.
Dated: March 11, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: March 13, 2014.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-06134 Filed 3-17-14; 4:15 pm]
BILLING CODE 4120-01-P
